<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Performance Results.............................. 5
Portfolio of Investments......................... 6
Statement of Assets and Liabilities.............. 8
Statement of Operations.......................... 9
Statement of Changes in Net Assets............... 10
Financial Highlights............................. 11
Notes to Financial Statements.................... 12
Dividend Reinvestment Plan....................... 15
</TABLE>
VOF SAR 6/97
<PAGE> 2
LETTER TO SHAREHOLDERS
June 5, 1997
Dear Shareholder,
As mentioned in your previous
report, VK/AC Holding, Inc., the parent
company of Van Kampen American Capital,
Inc., was acquired by Morgan Stanley
Group Inc., a world leader in asset
management. More recently, on February
5, 1997, Morgan Stanley Group Inc. and [PHOTO]
Dean Witter, Discover & Co. announced
their agreement to merge, and you
received a proxy in April. The merger DENNIS J. MCDONNELL AND DON G. POWELL
was completed on May 31, 1997, creating
the combined company of Morgan Stanley, Dean Witter, Discover & Co. This
preeminent global financial services firm boasts a market capitalization of $21
billion and leading market positions in securities, asset management, and credit
services. As the financial industry continues to witness unprecedented
consolidations and new partnerships, we believe that those firms that are
leaders in all facets of their business will be able to offer investors the
greatest opportunities and services as we move into the next century. We are
confident that this merger will provide investors with those benefits.
ECONOMIC REVIEW
Bond prices were volatile during the six months ended April 30, 1997. Prices
initially rose as the economy slowed, erasing fears of an interest rate hike by
the Federal Reserve Board. The November election of a Democratic president and
Republican Congress was positive for bonds because the split government was
viewed as a restraint on spending increases that could potentially swell the
budget deficit. In addition, support diminished for radical tax reform that
could threaten the tax-free status of municipal bonds.
By the beginning of 1997, the situation changed. Bond prices began to fall
as the economy picked up speed, culminating in a 5.60 percent annualized growth
rate in the first quarter. This strength, coupled with warnings by Fed Chairman
Alan Greenspan that tighter monetary policy might be appropriate, reignited
fears of a rate hike. On March 25, the Fed raised short-term rates by a modest
0.25 percent, which sent the 30-year Treasury bond yield above 7.00 percent for
the first time in six months. By the end of April, the 30-year Treasury bond
yield slipped back below 7.00 percent as the market turned its attention to
positive news about inflation, and bonds recovered some of their earlier losses.
Throughout most of the six months ended April 30, municipal bonds generally
outperformed Treasuries. Between October 31 and April 30, yields on long-term
municipal revenue bonds rose 21 basis points, while yields on 30-year Treasury
bonds jumped 31 basis points. Because bond yields move in the opposite direction
of prices, the smaller
Continued on page two
1
<PAGE> 3
increase in municipal yields meant that municipal bond prices did not fall as
sharply as Treasury bond prices did. A relatively stable supply of new issues,
combined with an increase in retail demand, contributed to the improved
performance of municipal bonds.
In Florida, economic growth was strong and outpaced the national average. As
a result, the state government collected higher-than-expected revenues which,
combined with spending restraint, helped to boost reserves. Although these
economic factors were positive for the Florida municipal bond market, a heavy
supply of Florida bonds during early 1997 had a slightly negative impact on
state municipal bond prices. That pressure on prices was lifted when the
increase in the yields of Florida bonds, which move in the opposite direction of
prices, attracted more buyers of the securities.
FUND STRATEGY
In managing the Trust, we maintained a concentration in AAA-rated bonds
during the period. As of April 30, approximately 79 percent of the Trust's
long-term investments were AAA-rated, the highest credit rating assigned to
bonds by the Standard & Poor's Ratings Group. In addition, approximately 11
percent of long-term investments were rated AA or A, and approximately 11
percent were rated BBB, the lowest rating Standard & Poor's assigns to bonds in
the investment-grade category. AAA-rated securities typically have tended to
perform better when interest rates are declining and provide the potential for
safety of principal. They are extremely liquid because most are insured bonds.
BBB-rated securities have tended to perform better when rates are rising, and
they have the potential to provide additional income.
[CREDIT QUALITY GRAPH]
Portfolio Composition by Credit Quality as a Percentage of Long-Term Investments
as of April 30, 1997
<TABLE>
<S> <C>
AAA........... 78.7%
AA............ 9.2%
A............. 1.4%
BBB........... 10.7%
</TABLE>
Based upon credit quality ratings issued by Standard & Poor's. For securities
not rated by Standard & Poor's, the Moody's rating is used.
Portfolio turnover during the period was minimal because market conditions
offered few opportunities to add value over existing holdings. The average
yields of bonds in the portfolio were higher than market yields. In addition,
the tight spreads between the yields of AAA-rated bonds and low-rated bonds
remained narrow due to the increasing number of insured bonds in the municipal
market. As a result, there was often not enough yield reward to justify the
credit risk of purchasing additional lower-rated securities.
The Trust's largest concentrations were in the public education and
health-care industries. The health-care sector continues to improve financially
as facilities focus on keeping expenses under control in order to perform well
in an increasingly competitive
Continued on page three
2
<PAGE> 4
market and to serve the requirements of managed care organizations. When buying
new securities for the portfolio, we attempt to identify those bonds that we
believe will outperform within a particular sector and that can be purchased at
an attractive price. We believe this "bottom-up" approach, supported by our
research, provides significant added value to the portfolio.
We maintained a slightly shorter duration during this period of rising
interest rates in order to potentially reduce the Trust's volatility to rate
increases. Duration, which is expressed in years, is a measure of a portfolio's
sensitivity to interest rate movements. Portfolios with long durations have
tended to perform better when rates are falling, and portfolios with short
durations have tended to perform better when rates are rising. At the end of the
period, the Trust's duration stood at 7.44 years compared to 8.31 years for the
Lehman Brothers Municipal Bond Index benchmark.
Six-month Dividend History
For the Period Ending April 30, 1997
<TABLE>
<S> <C>
Nov 1996........... $.0610
Dec 1996........... $.0610
Jan 1997........... $.0610
Feb 1997........... $.0610
Mar 1997........... $.0610
Apr 1997........... $.0610
</TABLE>
The dividend history represents past performance of the Trust and does not
predict the Trusts future distributions.
PERFORMANCE SUMMARY
For the six-month period ended April 30, 1997, the Van Kampen American
Capital Florida Municipal Opportunity Trust generated a total return at market
price of 0.86 percent(1). The Trust offered a tax-exempt distribution rate of
5.92 percent(3), based on the closing common stock price of $12.375 per share on
April 30, 1997. Because income from the Trust is exempt from federal income tax,
this distribution rate represents a yield equivalent to a taxable investment
earning 9.25 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 10.7 percent discount to its net asset value of $13.86.
Continued on page four
3
<PAGE> 5
TOP FIVE PORTFOLIO INDUSTRY HOLDINGS BY SECTOR AS OF APRIL 30, 1997*
Health Care............................................. 21.4%
Public Education........................................ 21.3%
Transportation.......................................... 9.2%
Industrial Revenue...................................... 8.6%
Water & Sewer........................................... 7.4%
*As a Percentage of Long-Term Investments
MUNICIPAL MARKET OUTLOOK
We continue to see signs of a strong economy, although we do not expect the
unusually brisk growth rate of the first quarter to be sustained throughout the
year. As a result, we believe the Fed will monitor the economy closely and take
aggressive action to control growth if inflation picks up or the high growth
rate is sustained. However, if growth slows, we believe the Fed will leave rates
unchanged. Given this outlook, we expect that yields on the 30-year Treasury
bond will range between 6.75 and 7.40 percent for the remainder of the year,
with higher levels occurring early and lower yields dominating the second half
of 1997. Although short-term interest rates have risen, this has not had a
significant impact on the leveraged structure of the Trust.
We believe the Trust is positioned to perform well in the coming months, and
we do not anticipate major structural changes in the portfolio. In light of our
expectations for interest rates, we will continue to maintain a slightly
defensive posture by keeping a relatively short duration for the portfolio and
adjusting the duration when prudent. We will also continue to seek a balance
between the Trust's total return and its dividend income, as well as to add
value through security selection. Thank you for your continued confidence in Van
Kampen American Capital and your Trust's team of managers.
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 APRIL 30, 1997
VAN KAMPEN AMERICAN CAPITAL FLORIDA MUNICIPAL
OPPORTUNITY TRUST
(AMEX TICKER SYMBOL--VOF)
COMMON SHARE TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C>
Six-month total return based on market price(1)............ 0.86%
Six-month total return based on NAV(2)..................... 1.02%
DISTRIBUTION RATES
Distribution rate as a % of closing common stock
price(3)................................................. 5.92%
Taxable-equivalent distribution rate as a % of closing
common stock price(4)...................................... 9.25%
SHARE VALUATIONS
Net asset value............................................ $13.86
Closing common stock price................................. $12.375
Six-month high common stock price (12/12/96)............... $13.125
Six-month low common stock price (04/30/97)................ $12.375
Preferred share rate(5).................................... 4.00%
</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
income tax bracket.
(5)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.
Market forecasts provided in this report may not necessarily come to pass.
5
<PAGE> 7
PORTFOLIO OF INVESTMENTS
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS
FLORIDA 94.8%
$1,000 Altamonte Springs, FL Hlth Fac Auth Hosp Rev
Adventist Hlth Sunbelt Ser B (AMBAC Insd)........ 5.375% 11/15/23 $ 929,370
1,000 Bay Cnty, FL Sch Brd Ctfs Partn (AMBAC Insd)
(c).............................................. 6.750 07/01/12 1,094,490
1,750 Broward Cnty, FL Edl Fac Auth Rev Nova Southeastn
Univ Proj (Connie Lee Insd)...................... 5.875 04/01/07 1,811,897
565 Clay Cnty, FL Hsg Fin Auth Rev Single Family Mtg
(GNMA Collateralized)............................ 6.500 09/01/21 578,537
1,000 Dade Cnty, FL Aviation Rev Ser C (MBIA Insd)..... 5.500 10/01/04 1,027,200
1,750 Dade Cnty, FL Sch Brd Ctfs Partn Ser A (MBIA
Insd)............................................ 5.750 05/01/08 1,802,640
1,000 Escambia Cnty, FL Pollutn Ctl Rev Champion Intl
Corp Proj........................................ 6.900 08/01/22 1,062,200
1,000 Florida Hsg Fin Agy Homeowner Mtg Ser 3.......... 6.350 07/01/28 1,020,550
235 Florida Hsg Fin Agy Hsg Brittany Rosemont Ser G1
(AMBAC Insd)..................................... 6.150 07/01/25 236,253
350 Florida Hsg Fin Agy Hsg Brittany Rosemont Ser G1
(AMBAC Insd)..................................... 6.250 07/01/35 353,217
1,300 Florida St Brd Edl Cap Outlay Pub Edl Ser C
(Prerefunded @ 06/01/02)......................... 6.625 06/01/22 1,415,167
300 Florida St Brd Regt Univ Sys Impt Rev (MBIA Insd)
(b).............................................. 5.625 07/01/19 296,232
500 Gainesville, FL Utils Sys Rev.................... 8.125 10/01/14 628,845
2,000 Hillsborough Cnty, FL Cap Impt Pgm Rev Criminal
Justice Fac Rfdg (FGIC Insd)..................... 5.250 08/01/16 1,896,540
1,650 Hillsborough Cnty, FL Hosp Auth Hosp Rev Tampa
Genl Hosp Proj Rfdg (FSA Insd)................... 6.375 10/01/13 1,734,332
1,750 Hillsborough Cnty, FL Indl Dev Auth Indl Dev Rev
Univ Cmnty Hosp (MBIA Insd)...................... 5.750 08/15/14 1,750,455
1,500 Hillsborough Cnty, FL Indl Dev Auth Pollutn Ctl
Rev Tampa Elec Co Proj Rfdg (MBIA Insd).......... 6.250 12/01/34 1,567,515
1,000 Hillsborough Cnty, FL Indl Dev Auth Pollutn Ctl
Rev Tampa Elec Co Proj Ser 92 Rfdg............... 8.000 05/01/22 1,156,610
1,750 Hillsborough Cnty, FL Indl Dev Auth Rev Allegany
Hlth Sys J Knox Village (MBIA Insd).............. 6.000 12/01/06 1,830,605
1,740 Hillsborough Cnty, FL Sch Brd Ctfs Partn (MBIA
Insd)............................................ 6.000 07/01/12 1,799,943
1,000 Jacksonville, FL Hosp Rev Univ Med Cent Inc Proj
(Connie Lee Insd)................................ 6.500 02/01/11 1,060,770
1,000 Martin Cnty, FL Indl Dev Auth Indl Dev Rev
Indiantown Cogeneration Proj A Rfdg.............. 7.875 12/15/25 1,129,840
1,000 Okeechobee, FL Wtr & Swr Rev Ser A (Prerefunded @
01/01/03) (MBIA Insd)............................ 6.500 01/01/17 1,099,490
985 Orange Cnty, FL Hlth Fac Auth Rev Pooled Hosp Ln
Ser B Rfdg (BIGI Insd)........................... 7.875 12/01/25 1,007,911
1,000 Orange Cnty, FL Hsg Fin Auth Single Family Mtg
Rev (GNMA Collateralized)........................ 6.550 10/01/21 1,032,310
</TABLE>
See Notes to Financial Statements
6
<PAGE> 8
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FLORIDA (CONTINUED)
$1,000 Orange Cnty, FL Tourist Dev Tax Rev Ser B (AMBAC
Insd)............................................ 6.500% 10/01/19 $ 1,075,060
1,000 Palm Beach Cnty, FL Sch Brd Ctfs Partn Ser A
(AMBAC Insd)..................................... 6.000 08/01/06 1,059,570
1,200 Polk Cnty, FL Sch Brd Ctfs Partn (FSA Insd)...... 5.000 01/01/14 1,115,772
635 Saint Petersburg, FL Excise Tax Rev (FGIC
Insd)............................................ 5.000 10/01/16 580,733
365 Saint Petersburg, FL Excise Tax Rev (Prerefunded
@ 10/01/03) (FGIC Insd).......................... 5.000 10/01/16 339,052
2,000 Santa Rosa Bay Bridge Auth FL Rev................ 6.250 07/01/28 1,984,860
705 Titusville, FL Wtr & Swr Rev (MBIA Insd)......... 5.800 10/01/08 735,886
1,000 Village Cent Cmnty Dev Dist FL Util Rev (FGIC
Insd)............................................ 6.000 11/01/18 1,054,150
-----------
37,268,002
-----------
PUERTO RICO 4.1%
500 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser V
Rfdg............................................. 6.375 07/01/08 527,960
1,000 Puerto Rico Comwlth Hwy & Tran Ser Y (Embedded
Cap) (FSA Insd) (d).............................. 5.730 07/01/21 1,076,260
-----------
1,604,220
-----------
TOTAL LONG-TERM INVESTMENTS 98.9%
(Cost $37,329,350)(a)....................................................... 38,872,222
OTHER ASSETS IN EXCESS OF LIABILITIES 1.1%................................... 451,342
-----------
NET ASSETS 100.0%............................................................ $39,323,564
===========
</TABLE>
(a) At April 30, 1997, cost for federal income tax purposes is $37,329,350; the
aggregate gross unrealized appreciation is $1,550,896 and the aggregate
gross unrealized depreciation is $8,024, resulting in net unrealized
appreciation of $1,542,872.
(b) Securities purchased on a when issued or delayed delivery basis.
(c) Assets segregated as collateral for when issued or delayed delivery purchase
commitments.
(d) An Embedded Cap security includes a cap strike level such that the coupon
payment may be supplemented by cap payments if the floating rate index upon
which the cap is based rises above the strike level. The price of these
securities may be more volatile than the price of a comparable fixed rate
security. The Trust invests in these instruments as a hedge against a rise
in the short-term interest rates which it pays on its preferred shares.
These derivative instruments are marked to market each day with the change
in value reflected in the unrealized appreciation/depreciation on
investments. Upon disposition, a realized gain or loss is recognized
accordingly.
See Notes to Financial Statements
7
<PAGE> 9
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Long-Term Investments, at Market Value (Cost $37,329,350)
(Note 1).................................................. $38,872,222
Cash........................................................ 268,687
Interest Receivable......................................... 673,248
Unamortized Organizational Costs (Note 1)................... 6,231
Other....................................................... 588
-----------
Total Assets.......................................... 39,820,976
-----------
LIABILITIES:
Payables:
Investments Purchased..................................... 295,625
Investment Advisory Fee (Note 2).......................... 20,888
Administrative Fee (Note 2)............................... 6,427
Income Distributions -- Common and Preferred Shares....... 5,989
Affiliates (Note 2)....................................... 1,594
Accrued Expenses............................................ 107,764
Deferred Compensation and Retirement Plans (Note 2)......... 59,125
-----------
Total Liabilities..................................... 497,412
-----------
NET ASSETS.................................................. $39,323,564
===========
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000
shares, 320 issued with liquidation preference of $50,000
per share) (Note 4)....................................... $16,000,000
-----------
Common Shares ($.01 par value with an unlimited number of
shares authorized, 1,683,270 shares issued and
outstanding).............................................. 16,833
Paid in Surplus............................................. 24,681,474
Net Unrealized Appreciation on Investments.................. 1,542,872
Accumulated Undistributed Net Investment Income............. 203,799
Accumulated Net Realized Loss on Investments................ (3,121,414)
-----------
Net Assets Applicable to Common Shares................ 23,323,564
-----------
NET ASSETS.................................................. $39,323,564
===========
NET ASSET VALUE PER COMMON SHARE ($23,323,564 divided
by 1,683,270 shares outstanding).......................... $ 13.86
===========
</TABLE>
See Notes to Financial Statements
8
<PAGE> 10
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $1,138,427
----------
EXPENSES:
Investment Advisory Fee (Note 2)............................ 127,839
Administrative Fee (Note 2)................................. 39,335
Preferred Share Maintenance (Note 4)........................ 28,344
Audit....................................................... 17,557
Accounting Services (Note 2)................................ 13,448
Trustees Fees and Expenses (Note 2)......................... 12,833
Legal (Note 2).............................................. 3,973
Amortization of Organizational Costs (Note 1)............... 2,478
Custody..................................................... 967
Other....................................................... 17,785
----------
Total Expenses.......................................... 264,559
----------
NET INVESTMENT INCOME....................................... $ 873,868
==========
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS:
Net Realized Loss on Investments............................ $ (138)
----------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period................................... 1,899,280
End of the Period......................................... 1,542,872
----------
Net Unrealized Depreciation on Investments During the
Period.................................................... (356,408)
----------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS............. $ (356,546)
==========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 517,322
==========
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended April 30, 1997 and the
Year Ended October 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1997 October 31, 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................... $ 873,868 $ 1,815,272
Net Realized Loss on Investments........................ (138) (24,049)
Net Unrealized Appreciation/Depreciation on Investments
During the Period..................................... (356,408) 60,673
------------ ------------
Change in Net Assets from Operations.................... 517,322 1,851,896
------------ ------------
Distributions from Net Investment Income:
Common Shares......................................... (616,046) (1,232,100)
Preferred Shares...................................... (275,359) (529,655)
------------ ------------
Total Distributions..................................... (891,405) (1,761,755)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES..... (374,083) 90,141
NET ASSETS:
Beginning of the Period................................. 39,697,647 39,607,506
------------ ------------
End of the Period (Including accumulated undistributed
net investment income of $203,799 and $221,336,
respectively)......................................... $39,323,564 $39,697,647
============ ============
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one common share of
the Trust outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
July 30, 1993
Six Months (Commencement
Ended Year Ended October 31 of Investment
April 30, --------------------------- Operations) to
1997 1996 1995 1994 October 31, 1993
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period (a)..................... $14.078 $14.024 $11.735 $14.888 $14.628
------- ------- ------- ------- -------
Net Investment Income............ .520 1.078 1.163 1.050 .091
Net Realized and Unrealized
Gain/Loss on Investments....... (.212) .023 2.226 (3.180) .251
------- ------- ------- ------- -------
Total from Investment
Operations..................... .308 1.101 3.389 (2.130) .342
------- ------- ------- ------- -------
Less:
Distributions from Net
Investment Income:
Paid to Common
Shareholders............... .366 .732 .732 .787 .066
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders..... .164 .315 .368 .236 .016
------- ------- ------- ------- -------
Total Distributions.............. .530 1.047 1.100 1.023 .082
------- ------- ------- ------- -------
Net Asset Value, End of the
Period......................... $13.856 $14.078 $14.024 $11.735 $14.888
======= ======= ======= ======= =======
Market Price Per Share at End of
the Period..................... $12.375 $12.625 $12.000 $9.750 $14.875
Total Investment Return at Market
Price (b)...................... .86%* 11.57% 31.16% (30.20%) (.40%)*
Total Return at Net Asset Value
(c)............................ 1.02%* 5.80% 26.30% (16.27%) (.36%)*
Net Assets at End of the Period
(In millions).................. $39.3 $39.7 $39.6 $35.8 $41.0
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares**....................... 2.25% 1.83% 1.37% 1.49% 2.59%
Ratio of Expenses to Average Net
Assets**....................... 1.35% 1.09% .79% .87% 2.16%
Ratio of Net Investment Income to
Average Net Assets Applicable
to Common Shares** (d)......... 5.10% 5.46% 6.13% 6.06% 2.10%
Portfolio Turnover............... 1%* 16% 24% 101% 0%*
</TABLE>
* Non-Annualized
** If certain expenses had not been waived by the Adviser, total return would
have been lower and the ratios would have been as follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares......................... N/A 2.40% 2.49% 2.50% N/A
Ratio of Expenses to Average Net
Assets......................... N/A 1.43% 1.44% 1.46% N/A
Ratio of Net Investment Income to
Average Net Assets Applicable
to Common Shares (d)........... N/A 4.89% 5.00% 5.05% N/A
</TABLE>
(a) Net Asset Value at July 30, 1993, is adjusted for common and preferred share
offering costs of $.372 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 on NAV.
(d) Net Investment Income is adjusted for the common share equivalent of
distributions paid to preferred shareholders.
N/A = Not Applicable
See Notes to Financial Statements
11
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital Florida Municipal Opportunity 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. The Trust
commenced investment operations on July 30, 1993.
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.
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 in the amount of $25,000. These costs
are being amortized on a
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<PAGE> 14
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
straight line basis over the 60 month period ending July 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 costs in the same proportion as the number of
shares redeemed bears to the number of initial shares held at the time of
redemption.
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 October 31, 1996, the Trust had an accumulated capital loss
carryforward for tax purposes of $3,121,276 which will expire between October
31, 2002 and 2004.
F. DISTRIBUTION OF INCOME AND GAINS--The Trust declares and pays monthly
dividends from net investment income to common shareholders. Net realized gains,
if any, are distributed annually on a pro rata basis to common and preferred
shareholders. Distributions from net realized gains for book purposes may
include short-term capital gains, which are included as ordinary income for tax
purposes.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, 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
(Illinois), counsel to the Trust, of which a trustee of the Trust is an
affiliated person.
For the six months ended April 30, 1997, the Trust recognized expenses of
approximately $16,700 representing VKAC's cost of providing accounting and legal
services to the Trust.
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<PAGE> 15
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
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 trustees' annual retainer fee, which is
currently $2,500.
At April 30, 1997, VKAC owned 6,700 common shares of the Trust.
3. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales, excluding
short-term investments, were $293,469 and $190,000, respectively.
4. PREFERRED SHARES
The Trust has outstanding 320 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 April 30, 1997 was 4.00%. During the six
months ended April 30, 1997, the rates ranged from 3.000% to 4.069%.
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.
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<PAGE> 16
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, of if the Board of
Trustees should declare a dividend or capital gains distribution payable to the
Common Shareholders only in cash, participants in the Plan will be deemed to
have elected to receive Common Shares from the Trust valued at the market price
on that date. Accordingly, in this circumstance, the Plan Agent will, as agent
for the participants, buy the Trust's Common Shares in the open market for the
participants' accounts on or shortly after the payment date. If, before the Plan
Agent has completed its purchases, the market price exceeds the net asset value
per share of the Common Shares, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Trust's Common Shares,
resulting in the acquisition of fewer Common Shares than if the dividend or
distribution had been paid in Common Shares issued by the Trust. All
reinvestments are in full and fractional Common Shares and are carried to three
decimal places.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
changes sent to all Common Shareholders of the Trust at least 90 days before the
record date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent by at least 90 days written notice to all Common
Shareholders of the Trust.
COSTS OF THE PLAN
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. No other charges will be made to participants for reinvesting
dividends or capital gains distributions, except for certain brokerage
commissions, as described above.
TAX IMPLICATIONS
You will receive tax information annually for your personal records and to help
you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income tax
which may be payable on dividends or distributions.
RIGHT TO WITHDRAW
Plan participants may withdraw at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA 02266-
8200. If you withdraw, you will receive, without charge, a share certificate
issued in your name for all full Common Shares credited to your account under
the Plan and a cash payment will be made for any fractional Common Share
credited to your account under the Plan. You may again elect to participate in
the Plan at any time by calling 1-800-341-2929 or writing to the Trust at:
Van Kampen American Capital
Attn: Closed-End Funds
2800 Post Oak Blvd.
Houston, TX 77056
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<PAGE> 17
FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL
GLOBAL AND
INTERNATIONAL
Global Equity Fund
Global Government Securities Fund
Global Managed Assets Fund
Short-Term Global Income Fund
Strategic Income Fund
EQUITY
Growth
Aggressive Growth Fund
Emerging Growth Fund
Enterprise Fund
Growth Fund
Pace Fund
Growth & Income
Comstock Fund
Equity Income Fund
Growth and Income Fund
Harbor Fund
Real Estate Securities Fund
Utility Fund
FIXED INCOME
Corporate Bond Fund
Government Securities Fund
High Income Corporate Bond Fund
High Yield Fund
Limited Maturity Government Fund
Prime Rate Income Trust
Reserve Fund
U.S. Government Fund
U.S. Government Trust for Income
TAX-FREE
California Insured Tax Free Fund
Florida Insured Tax Free
Income Fund
High Yield Municipal Fund
Insured Tax Free Income Fund
Intermediate Term Municipal
Income Fund
Municipal Income Fund
New Jersey Tax Free Income Fund
New York Tax Free Income Fund
Pennsylvania Tax Free Income Fund
Tax Free High Income Fund
Tax Free Money Fund
MORGAN STANLEY
FUND, INC.
Aggressive Equity Fund
American Value Fund
Asian Growth Fund
Emerging Markets Fund
Global Equity Allocation Fund
Global Fixed Income Fund
High Yield Fund
International Magnum Fund
Latin American Fund
U.S. Real Estate Fund
Worldwide High Income Fund
Ask your investment representative for a prospectus containing more complete
information, including sales charges and expenses. Please read it carefully
before you invest or send money. Or call us weekdays from 7:00 a.m. to 7:00 p.m.
Central time at 1-800-341-2911 for Van Kampen American Capital funds, or
1-800-282-4404 for Morgan Stanley retail funds.
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<PAGE> 18
VAN KAMPEN AMERICAN CAPITAL FLORIDA MUNICIPAL OPPORTUNITY 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.
17
