<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
Report of Independent Accountants................ 15
Dividend Reinvestment Plan....................... 16
</TABLE>
VOF ANR 12/97
<PAGE> 2
LETTER TO SHAREHOLDERS
December 4, 1997
Dear Shareholder,
In the past year, we have been
participants in and witnesses to two
mergers that we believe have positioned
our company at the forefront of the
financial industry's evolution. Our
latest announcement continues our
forward progress. I am pleased to
announce that Philip N. Duff, formerly [PHOTO]
the chief financial officer of Morgan
Stanley, has joined Van Kampen American
Capital as president and chief DENNIS J. MCDONNELL AND DON G. POWELL
executive officer. I will continue as
chairman of the firm. Together, we will continue to work to the benefit of our
fund shareholders as Van Kampen American Capital advances toward the next
century.
ECONOMIC REVIEW
The last quarter of 1996 brought renewed strength and rumblings of
inflation, which continued to feed investors' uncertainties about the direction
of interest rates. This was reflected in the volatility of taxable yields, with
the 30-year Treasury ranging from a high of 6.70 percent to a low of 6.35
percent, and ending the period at 6.64 percent.
The bond market advanced in price during the first 10 months of 1997, but
its ascension was not a smooth ride. Bond prices fell early in the period as
economic growth soared, fueling concerns about rising inflation and a potential
interest rate hike by the Federal Reserve Board. When the Fed did raise interest
rates by a modest 0.25 percent in late March, bond prices fell further, sending
the yield of the 30-year U.S. Treasury bond above 7.0 percent for the first time
in six months. By mid-April, however, the market's mood had changed, reflecting
few signs of price pressures despite the economy's strength. Bonds also
benefited from continued heavy purchases by foreign investors and concerns that
the stock market rally was nearing an end. The 7.0 percent slump in the Dow
Jones Industrial Average on October 27 reinforced the benefit of owning bonds
for diversification. By the end of October, the yield on the 30-year Treasury
bond was near its lowest level in 20 months, at 6.15 percent.
Throughout 1997, municipal bond prices moved in the same direction as the
Treasury bond market, but gained less when Treasury prices rallied and lost less
when Treasuries fell. Between December 31, 1996 and October 31, 1997, the yield
on the long-term municipal revenue bond index fell 36 basis points as the yield
on the 30-year Treasury bond fell 48 basis points. Because yields move in the
opposite direction of prices, the smaller yield decline of municipal bonds
indicates that their prices did not rise as much as Treasuries.
Continued on page two
1
<PAGE> 3
Florida's economy remained strong, underpinned by continued growth in the
tourism and construction industries. The combination of brisk growth, which
boosted state tax revenues, and conservative fiscal management led the Standard
& Poor's Ratings Group to upgrade its rating on the state's general obligation
bonds from AA to AA+. During the second half of the year, the supply overhang of
Florida municipal bonds moderated, eliminating a factor that had depressed bond
prices earlier in the year.
[CREDIT QUALITY GRAPH]
Portfolio Composition by Credit Quality*
As of October 31, 1997
<TABLE>
<S> <C>
AAA.................... 82.3%
AA..................... 5.5%
A...................... 1.3%
BBB.................... 10.9%
</TABLE>
*As a Percentage of Long-Term Investments
Based upon the highest credit quality ratings as issued by Standard & Poor's or
Moody's.
TRUST STRATEGY
In managing the Trust, we used the following strategies:
We maintained a portfolio heavily weighted toward high-quality bonds. The
high concentration in AAA-rated securities in the portfolio reflects the
proliferation of insured bonds, which currently comprise well over half of new
issues in the municipal bond market and about 70 percent of new Florida
securities. Bonds rated AAA are extremely liquid and carry minimal credit risk.
When interest rates fall, as they did for most of the second half of the fiscal
year, AAA-rated bonds tend to outperform lower-rated securities. Bonds rated
BBB, the lowest investment-grade credit rating assigned by Standard & Poor's,
tend to perform better when rates are rising, and have the potential to provide
additional income.
Portfolio turnover during the fiscal year was minimal due to market
conditions that afforded few opportunities to add value to existing holdings.
The average yield of bonds in the Trust's portfolio was higher than average
market yields. As a result, there was often little incentive to replace bonds in
the portfolio. Trading was also restrained by a frequent supply shortage of
Florida bonds, and expensive prices for those bonds that were available. In
addition, yield spreads between high-quality and low-quality bonds were narrow
due to the increasing number of insured bonds in the market. In this
environment, it was difficult to justify purchasing lower-rated securities and
assuming additional credit risk.
Acquisitions focused on enhancing the Trust's call protection. Because we
hope to limit the number of bonds that could be "called" at any one time, we
purchased new long-term discount securities that will not be callable for many
years. To increase income, we favored high-yielding, lower-rated bonds from a
diversified mix of market sectors.
When searching for new securities for the Trust's portfolio, we try to
identify bonds that we believe will outperform within a particular sector and
that can be purchased at an
Continued on page three
2
<PAGE> 4
attractive price. We believe this "bottom-up" approach, supported by our
research, provides significant added value to the portfolio.
The Trust remains well-diversified by sector, but continues to maintain its
heaviest weightings in public education and health-care securities. Public
education bonds have benefited from strong retail demand due to their general
obligation backing and the fact that most are insured. Health-care bonds have
been underpinned by the continuing financial improvement of this sector due to
industry consolidation and efforts to control operating expenses.
During the second half of the fiscal year, the duration of the portfolio
declined slightly due to the market rally, which caused some bonds to trade to
their call dates rather than their maturity dates. Duration, which is expressed
in years, is a measure of a portfolio's sensitivity to interest rate movements.
Portfolios with short durations tend to perform better when interest rates are
rising.
Conversely, portfolios with long durations tend to perform better when rates
are falling, which characterized the second half of the period. Looking ahead,
we hope to take advantage of trading opportunities in order to extend the
Trust's duration. As of October 31, the Trust's duration stood at 7.16 years,
compared to 7.34 years for the Lehman Brothers Municipal Bond Index.
Top Five Portfolio Industry Holdings by Sector
as of October 31, 1997*
<TABLE>
<S> <C>
Public Education.................. 21.3%
Health Care....................... 18.8%
Transportation.................... 11.6%
Industrial Revenue................. 8.5%
Water & Sewer...................... 7.4%
</TABLE>
*As a Percentage of Long-Term Investments
PERFORMANCE SUMMARY
For the one-year period ended October 31, 1997, the Van Kampen American
Capital Florida Municipal Opportunity Trust generated a total return at market
price of 9.96 percent(1). The Trust offered a tax-exempt distribution rate of
5.58 percent(3), based on the closing common stock price on October 31, 1997. At
the end of the reporting period, the closing share price of the Trust traded at
$13.125, an 11.08 percent discount to its net asset value of $14.76. Because
income from the Trust is exempt from federal income taxes, this distribution
rate represents a yield equivalent to a taxable investment earning 8.72
percent(4) (for investors in the federal income tax bracket of 36 percent).
Continued on page four
3
<PAGE> 5
[DIVIDEND HISTORY GRAPH]
Twelve-month Dividend History
For the Period Ended October 31, 1997
<TABLE>
<CAPTION>
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
1996 1996 1997 1997 1997 1997 1997 1997 1997 1997 1997 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Distribution per
Common Share $.0610 $.0610 $.0610 $.0610 $.0610 $.0610 $.0610 $.0610 $.0610 $.0610 $.0610 $.0610
</TABLE>
The dividend history represents past performance of the Trust and does not
predict the Trust's future distributions.
OUTLOOK
We expect the economy to remain strong in the coming months, although the
growth rate might slow to a more moderate pace. The weakness in the Far East,
which was the impetus for the recent volatility in world stock markets, will
most likely reduce U.S. exports to the region. In turn, this could trim U.S.
economic growth as well as the earnings of many U.S. companies. As a result, we
believe there is little chance that the Fed will raise interest rates in the
coming months. A rate hike reemerges as a possibility if inflation picks up, or
if growth continues at its current brisk pace.
As a result of this outlook, we expect that the yield on the 30-year
Treasury bond will trade within a range of 5.75 percent and 6.50 percent for the
next six months, possibly falling further in mid-1998. A decline in rates would
not only boost the prices of long-term investments in the portfolio, but could
also positively affect the Trust as a result of its leveraged structure. That
structure, which involves borrowing short-term funds to purchase long-term
municipal bonds, provides common shareholders with above-market levels of
dividend income. It should be noted, however, that if short-term rates rise,
leveraged costs would increase; this would negatively impact the income and
performance of common shares.
We will continue to seek a balance between the Trust's total return and its
dividend income, and to add value through our investment strategies and bond
selection. Thank you for 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 five
4
<PAGE> 6
PERFORMANCE RESULTS FOR THE PERIOD ENDED OCTOBER 31, 1997
VAN KAMPEN AMERICAN CAPITAL FLORIDA MUNICIPAL
OPPORTUNITY TRUST
(AMEX TICKER SYMBOL--VOF)
<TABLE>
<CAPTION>
COMMON SHARE TOTAL RETURNS
<S> <C>
One-year total return based on market price(1)............. 9.96%
One-year total return based on NAV(2)...................... 10.33%
DISTRIBUTION RATES
Distribution rate as a % of closing common stock
price(3)................................................. 5.58%
Taxable-equivalent distribution rate as a % of closing
common stock price(4).................................... 8.72%
SHARE VALUATIONS
Net asset value............................................ $ 14.76
Closing common stock price................................. $13.125
One-year high common stock price (08/04/97)................ $13.625
One-year low common stock price (04/29/97)................. $12.250
Preferred share rate(5).................................... 3.625%
</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.
5
<PAGE> 7
PORTFOLIO OF INVESTMENTS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS 98.7%
FLORIDA 94.6%
$ 1,000 Altamonte Springs, FL Hlth Fac Auth Hosp Rev
Adventist Hlth Sunbelt Ser B (AMBAC Insd)........ 5.375% 11/15/23 $ 976,020
1,000 Bay Cnty, FL Sch Brd Ctfs Partn (AMBAC Insd)..... 6.750 07/01/12 1,127,070
1,750 Broward Cnty, FL Edl Fac Auth Rev Nova Southeastn
Univ Proj (Connie Lee Insd)...................... 5.875 04/01/07 1,893,745
545 Clay Cnty, FL Hsg Fin Auth Rev Single Family Mtg
(GNMA Collateralized)............................ 6.500 09/01/21 577,787
1,000 Dade Cnty, FL Aviation Rev Ser C (MBIA Insd)..... 5.500 10/01/04 1,060,660
1,750 Dade Cnty, FL Sch Brd Ctfs Partn Ser A (MBIA
Insd)............................................ 5.750 05/01/08 1,869,910
1,000 Escambia Cnty, FL Pollutn Ctl Rev Champion Intl
Corp Proj........................................ 6.900 08/01/22 1,110,980
300 Florida Hsg Fin Agy Homeowner Mtg Ser 2 (MBIA
Insd)............................................ 5.900 07/01/29 309,162
1,000 Florida Hsg Fin Agy Homeowner Mtg Ser 3.......... 6.350 07/01/28 1,058,990
235 Florida Hsg Fin Agy Hsg Brittany Rosemont Ser G1
(AMBAC Insd)..................................... 6.150 07/01/25 246,193
350 Florida Hsg Fin Agy Hsg Brittany Rosemont Ser G1
(AMBAC Insd)..................................... 6.250 07/01/35 367,143
900 Florida Ports Fin Comm Rev Tran Trust Fund (MBIA
Insd)............................................ 5.375 06/01/27 892,710
1,300 Florida St Brd Edl Cap Outlay Pub Edl Ser C
(Prerefunded @ 06/01/02)......................... 6.625 06/01/22 1,441,167
300 Florida St Brd Regt Univ Sys Impt Rev (MBIA
Insd)............................................ 5.625 07/01/19 307,842
500 Gainesville, FL Utils Sys Rev.................... 8.125 10/01/14 646,620
2,000 Hillsborough Cnty, FL Cap Impt Pgm Rev Criminal
Justice Fac Rfdg (FGIC Insd)..................... 5.250 08/01/16 2,003,200
1,650 Hillsborough Cnty, FL Hosp Auth Hosp Rev Tampa
Genl Hosp Proj Rfdg (FSA Insd)................... 6.375 10/01/13 1,800,068
1,750 Hillsborough Cnty, FL Indl Dev Auth Indl Dev Rev
Univ Cmnty Hosp (MBIA Insd)...................... 5.750 08/15/14 1,830,623
1,500 Hillsborough Cnty, FL Indl Dev Auth Pollutn Ctl
Rev Tampa Elec Co Proj Rfdg (MBIA Insd).......... 6.250 12/01/34 1,642,125
1,000 Hillsborough Cnty, FL Indl Dev Auth Pollutn Ctl
Rev Tampa Elec Co Proj Ser 92 Rfdg............... 8.000 05/01/22 1,159,900
1,750 Hillsborough Cnty, FL Indl Dev Auth Rev Allegany
Hlth Sys J Knox Village (MBIA Insd).............. 6.000 12/01/06 1,886,255
1,740 Hillsborough Cnty, FL Sch Brd Ctfs Partn (MBIA
Insd)............................................ 6.000 07/01/12 1,868,621
1,000 Jacksonville, FL Hosp Rev Univ Med Cent Inc Proj
(Connie Lee Insd)................................ 6.500 02/01/11 1,088,990
1,000 Martin Cnty, FL Indl Dev Auth Indl Dev Rev
Indiantown Cogeneration Proj A Rfdg.............. 7.875 12/15/25 1,162,660
1,000 Okeechobee, FL Wtr & Swr Rev Ser A (Prerefunded @
01/01/03) (MBIA Insd)............................ 6.500 01/01/17 1,122,140
</TABLE>
See Notes to Financial Statements
6
<PAGE> 8
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FLORIDA (CONTINUED)
$ 775 Orange Cnty, FL Hsg Fin Auth Single Family Mtg
Rev (GNMA Collateralized)........................ 6.550% 10/01/21 $ 821,864
1,000 Orange Cnty, FL Tourist Dev Tax Rev Ser B (AMBAC
Insd)............................................ 6.500 10/01/19 1,117,710
1,000 Palm Beach Cnty, FL Sch Brd Ctfs Partn Ser A
(AMBAC Insd)..................................... 6.000 08/01/06 1,102,710
1,200 Polk Cnty, FL Sch Brd Ctfs Partn (FSA Insd)...... 5.000 01/01/14 1,185,504
635 Saint Petersburg, FL Excise Tax Rev (FGIC
Insd)............................................ 5.000 10/01/16 621,290
365 Saint Petersburg, FL Excise Tax Rev (Prerefunded
@ 10/01/03) (FGIC Insd).......................... 5.000 10/01/16 357,769
2,000 Santa Rosa Bay Brdg Auth FL Rev.................. 6.250 07/01/28 2,096,600
705 Titusville, FL Wtr & Swr Rev (MBIA Insd)......... 5.800 10/01/08 764,636
1,000 Village Cent Cmnty Dev Dist FL Util Rev (FGIC
Insd)............................................ 6.000 11/01/18 1,108,310
-----------
38,626,974
-----------
PUERTO RICO 4.1%
500 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser V
Rfdg............................................. 6.375 07/01/08 537,675
1,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser Y
Rfdg (Embedded Cap) (FSA Insd) (a)............... 5.730 07/01/21 1,148,700
-----------
1,686,375
-----------
TOTAL LONG-TERM INVESTMENTS 98.7%
(Cost $37,223,143).......................................................... 40,313,349
OTHER ASSETS IN EXCESS OF LIABILITIES 1.3%................................... 531,594
-----------
NET ASSETS 100.0%............................................................. $40,844,943
===========
</TABLE>
(a) 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 unrealized appreciation/depreciation. Upon
disposition, a realized gain or loss is recognized accordingly.
See Notes to Financial Statements
7
<PAGE> 9
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $37,223,143)........................ $40,313,349
Cash........................................................ 78,700
Interest Receivable......................................... 677,089
Unamortized Organizational Costs............................ 3,712
Other....................................................... 137
-----------
Total Assets.......................................... 41,072,987
-----------
LIABILITIES:
Payables:
Investment Advisory Fee................................... 22,420
Income Distributions -- Common and Preferred Shares....... 8,520
Administrative Fee........................................ 6,898
Affiliates................................................ 6,623
Accrued Expenses............................................ 113,373
Trustees' Deferred Compensation and Retirement Plans........ 70,210
-----------
Total Liabilities..................................... 228,044
-----------
NET ASSETS.................................................. $40,844,943
===========
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000
shares, 320 issued with liquidation preference of $50,000
per share)................................................ $16,000,000
-----------
Common Shares ($.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................................. 3,090,206
Accumulated Undistributed Net Investment Income............. 177,944
Accumulated Net Realized Loss............................... (3,121,514)
-----------
Net Assets Applicable to Common Shares................ 24,844,943
-----------
NET ASSETS.................................................. $40,844,943
===========
NET ASSET VALUE PER COMMON SHARE ($24,844,943 divided
by 1,683,270 shares outstanding).......................... $ 14.76
===========
</TABLE>
See Notes to Financial Statements
8
<PAGE> 10
STATEMENT OF OPERATIONS
For the Year Ended October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $2,288,839
----------
EXPENSES:
Investment Advisory Fee..................................... 259,819
Administrative Fee.......................................... 79,944
Preferred Share Maintenance................................. 59,756
Audit....................................................... 35,405
Accounting Services......................................... 35,040
Trustees' Fees and Expenses................................. 29,102
Legal....................................................... 6,840
Amortization of Organizational Costs........................ 4,997
Custody..................................................... 569
Other....................................................... 26,093
----------
Total Expenses.......................................... 537,565
----------
NET INVESTMENT INCOME....................................... $1,751,274
==========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Loss........................................... $ (238)
----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 1,899,280
End of the Period......................................... 3,090,206
----------
Net Unrealized Appreciation During the Period............... 1,190,926
----------
NET REALIZED AND UNREALIZED GAIN............................ $1,190,688
==========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $2,941,962
==========
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended October 31, 1997 and 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1997 October 31, 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................... $ 1,751,274 $ 1,815,272
Net Realized Loss....................................... (238) (24,049)
Net Unrealized Appreciation
During the Period..................................... 1,190,926 60,673
----------- -----------
Change in Net Assets from Operations.................... 2,941,962 1,851,896
----------- -----------
Distributions from Net Investment Income:
Common Shares......................................... (1,232,089) (1,232,100)
Preferred Shares...................................... (562,577) (529,655)
----------- -----------
Total Distributions..................................... (1,794,666) (1,761,755)
----------- -----------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES..... 1,147,296 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 $177,944 and $221,336,
respectively)......................................... $40,844,943 $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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
July 30, 1993
(Commencement
Year Ended October 31, of Investment
------------------------------------- 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.............. 1.041 1.078 1.163 1.050 .091
Net Realized and Unrealized
Gain/Loss........................ .707 .023 2.226 (3.180) .251
------- ------- ------- ------- -------
Total from Investment Operations... 1.748 1.101 3.389 (2.130) .342
------- ------- ------- ------- -------
Less:
Distributions from Net Investment
Income:
Paid to Common Shareholders.... .732 .732 .732 .787 .066
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders....... .334 .315 .368 .236 .016
------- ------- ------- ------- -------
Total Distributions................ 1.066 1.047 1.100 1.023 .082
------- ------- ------- ------- -------
Net Asset Value, End of the
Period........................... $14.760 $14.078 $14.024 $11.735 $14.888
======= ======= ======= ======= =======
Market Price Per Share at End of
the Period....................... $13.125 $12.625 $12.000 $9.750 $14.875
Total Investment Return at Market
Price (b)........................ 9.96% 11.57% 31.16% (30.20%) (.40%)*
Total Return at Net Asset Value
(c).............................. 10.33% 5.80% 26.30% (16.27%) (.36%)*
Net Assets at End of the Period (In
millions)........................ $40.8 $39.7 $39.6 $35.8 $41.0
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares**......................... 2.24% 1.83% 1.37% 1.49% 2.59%
Ratio of Expenses to Average Net
Assets**......................... 1.34% 1.09% .79% .87% 2.16%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares** (d).............. 4.96% 5.46% 6.13% 6.06% 2.10%
Portfolio Turnover................. 4% 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
October 31, 1997
- --------------------------------------------------------------------------------
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. At October 31, 1997, there were no
when issued or delayed delivery purchase commitments.
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
12
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1997
- --------------------------------------------------------------------------------
the Trust's organization in the amount of $25,000. These costs are being
amortized on a 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, 1997, the Trust had an accumulated capital loss
carryforward for tax purposes of $3,121,514 which will expire between October
31, 2002 and October 31, 2005.
At October 31, 1997, for federal income tax purposes, cost of long-term
investments is $37,223,143; the aggregate gross unrealized appreciation is
$3,090,206 and the aggregate gross unrealized depreciation is $0, resulting in
net unrealized appreciation of $3,090,206.
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.
For the year ended October 31, 1997, 100% of the income distributions made
by the Trust were exempt from federal income taxes. In January, 1998, the Trust
will provide tax information to shareholders for the 1997 calendar year.
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
13
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1997
- --------------------------------------------------------------------------------
record keeping and reporting responsibilities with respect to the Trust's
portfolio and preferred shares and providing certain services to shareholders.
For the year ended October 31, 1997, the Trust recognized expenses of
approximately $800, representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Trust of which a trustee of the
Trust is an affiliated person.
For the year ended October 31, 1997, the Trust recognized expenses of
approximately $41,000 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.
At October 31, 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 $1,446,714 and $1,439,600, 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 October 31, 1997 was 3.625%. During the
year ended October 31, 1997, the rates ranged from 2.400% 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.
14
<PAGE> 16
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Trustees and Shareholders of
Van Kampen American Capital Florida Municipal Opportunity Trust:
We have audited the accompanying statement of assets and liabilities of Van
Kampen American Capital Florida Municipal Opportunity Trust (the "Trust"),
including the portfolio of investments, as of October 31, 1997, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the periods presented. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Van
Kampen American Capital Florida Municipal Opportunity Trust as of October 31,
1997, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the financial
highlights for each of the periods presented, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
November 24, 1997
15
<PAGE> 17
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
16
<PAGE> 18
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 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 Fund
Global Equity Allocation Fund
Global Fixed Income Fund
High Yield Fund
International Magnum Fund
Latin American Fund
U.S. Real Estate Fund
Value Fund
Worldwide High Income Fund
Ask your investment representative for a prospectus containing more complete
information, including sales charges and expenses. Please read it carefully
before you invest or send money. Or call us weekdays from 7:00 a.m. to 7:00
p.m. Central time at 1-800-341-2911 for Van Kampen American Capital funds or
Morgan Stanley funds.
17
<PAGE> 19
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.
18
<PAGE> 20
RESULTS OF SHAREHOLDER VOTES
The Annual Meeting of Shareholders of the Trust was held on May 28, 1997,
where shareholders voted on a new investment advisory agreement, the election of
Trustees whose terms expired in 1997 and independent public accountants.
1) With regard to the approval of a new investment advisory agreement
between Van Kampen American Capital Investment Advisory Corp. and the Trust,
1,450,660 shares voted for the proposal, 23,619 shares voted against, 23,216
shares abstained and 0 shares represented broker non-votes.
2) With regard to the election of the following Trustees by the common
shareholders of the Trust:
<TABLE>
<CAPTION>
# OF SHARES
-----------------------
IN FAVOR WITHHELD
- -----------------------------------------------------------------------
<S> <C> <C>
David C. Arch 1,470,327 29,840
Howard J Kerr 1,472,327 27,840
Dennis J. McDonnell 1,472,327 27,840
</TABLE>
3) With regard to the ratification of KPMG Peat Marwick LLP as independent
public accountants for its current fiscal year, 1,472,640 shares voted for the
proposal, 4,970 shares voted against, 22,877 shares abstained and 0 shares
represented broker non-votes.
19
<PAGE> 21
VAN KAMPEN AMERICAN CAPITAL FLORIDA MUNICIPAL OPPORTUNITY TRUST
THIS PAGE INTENTIONALLY LEFT BLANK
20
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 37,223,143
<INVESTMENTS-AT-VALUE> 40,313,349
<RECEIVABLES> 677,089
<ASSETS-OTHER> 3,849
<OTHER-ITEMS-ASSETS> 78,700
<TOTAL-ASSETS> 41,072,987
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 228,044
<TOTAL-LIABILITIES> 228,044
<SENIOR-EQUITY> 16,000,000
<PAID-IN-CAPITAL-COMMON> 24,698,307
<SHARES-COMMON-STOCK> 1,683,270
<SHARES-COMMON-PRIOR> 1,683,270
<ACCUMULATED-NII-CURRENT> 177,944
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,121,514)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,090,206
<NET-ASSETS> 40,844,943
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,288,839
<OTHER-INCOME> 0
<EXPENSES-NET> (537,565)
<NET-INVESTMENT-INCOME> 1,751,274
<REALIZED-GAINS-CURRENT> (238)
<APPREC-INCREASE-CURRENT> 1,190,926
<NET-CHANGE-FROM-OPS> 2,941,962
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,794,666)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,147,296
<ACCUMULATED-NII-PRIOR> 221,336
<ACCUMULATED-GAINS-PRIOR> (3,121,276)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 259,819
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 537,565
<AVERAGE-NET-ASSETS> 39,973,341
<PER-SHARE-NAV-BEGIN> 14.078
<PER-SHARE-NII> 1.041
<PER-SHARE-GAIN-APPREC> 0.707
<PER-SHARE-DIVIDEND> (1.066)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 14.760
<EXPENSE-RATIO> 2.24
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
