N-CSR 1 c77305nvcsr.txt SEMIANNUAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-6738 Van Kampen Ohio Value Municipal Income Trust -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 1221 Avenue of the Americas NY NY 10020 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Ronald Robison 1221 Avenue of the Americas New York, NY 10020 -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 212-762-4000 ----------------------------- Date of fiscal year end: 10/31/03 ----------- Date of reporting period: 04/30/03 ----------- Item 1. Report to Shareholders PERFORMANCE SUMMARY RETURN HIGHLIGHTS (as of April 30, 2003) ------------------------------ NYSE Ticker Symbol - VOV ------------------------------
----------------------------------------------------------------------- Six-month total return(1) 13.23% ----------------------------------------------------------------------- One-year total return(1) 21.07% ----------------------------------------------------------------------- Five-year average annual total return(1) 9.07% ----------------------------------------------------------------------- Ten-year average annual total return(1) 6.50% ----------------------------------------------------------------------- Life-of-Trust average annual total return(1) 6.50% ----------------------------------------------------------------------- Commencement date 04/30/93 ----------------------------------------------------------------------- Distribution rate as a % of closing common share market price(2) 5.78% ----------------------------------------------------------------------- Taxable-equivalent distribution rate as a % of closing common share market price(3) 10.18% ----------------------------------------------------------------------- Preferred share rate(4) 1.17% ----------------------------------------------------------------------- Net asset value $15.64 ----------------------------------------------------------------------- Closing common share market price $16.31 ----------------------------------------------------------------------- Six-month high common share market price (04/29/03) $16.44 ----------------------------------------------------------------------- Six-month low common share market price (11/29/02) $14.42 -----------------------------------------------------------------------
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE 1 (1) Total return assumes an investment at the common share 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 share market price at the end of the period indicated. (2) Distribution rate represents the monthly annualized distributions of the Trust at the end of the period and not the earnings of the Trust. (3) The taxable-equivalent distribution rate is calculated assuming the maximum 43.2% combined federal and state income tax rate effective for calendar year 2003, which takes into consideration the deductibility of individual state taxes paid. (4) See "Notes to Financial Statements" footnote #6, 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 is no guarantee of future results. Investment return, common share market price and net asset value will fluctuate and Trust shares, when sold, may be worth more or less than their original cost. An investment in the Trust is subject to investment risks, and you could lose money on your investment in the Trust. As a result of recent market activity, current performance may vary from the figures shown. For more up-to-date information, please visit vankampen.com or speak with your financial advisor. 2 PORTFOLIO AT A GLANCE CREDIT QUALITY (as a percentage of long-term investments)
As of April 30, 2003 AAA/Aaa........................... 54.8% AA/Aa............................. 24.4% A/A............................... 8.2% BBB/Baa........................... 10.2% Non-Rated......................... 2.4%
TOP FIVE SECTORS (as a percentage of long-term investments)
As of April 30, 2003 Health Care....................... 23.6% Higher Education.................. 15.1% Public Education.................. 13.2% General Purpose................... 11.2% Retail Electric/Gas/Telephone..... 8.1%
Based upon the credit quality ratings as issued by Standard & Poor's Credit Market Services/Moody's Investor Services, respectively. Subject to change daily. NET ASSET VALUE AND COMMON SHARE MARKET PRICE (based upon quarter-end values--April 1993 through April 2003) [LINE GRAPH]
NET ASSET VALUE COMMON SHARE MARKET PRICE --------------- ------------------------- 4/93 $14.8400 $15.0000 6/93 $15.1000 $14.6250 $15.6200 $15.0000 $15.7300 $14.0000 $13.4900 $13.2500 6/94 $13.3100 $12.6250 $12.9900 $11.1250 $12.4000 $11.2500 $13.6000 $12.2500 6/95 $13.7800 $11.7500 $14.0200 $11.5000 $14.7700 $11.8750 $14.1000 $11.7500 6/96 $13.9500 $11.5000 $14.3000 $11.3750 $14.5900 $11.6250 $14.2500 $11.5000 6/97 $14.7000 $12.3750 $15.1000 $12.7500 $15.4400 $13.6250 $15.4200 $13.8750 6/98 $15.4600 $13.8750 $15.8600 $13.9375 $15.6200 $14.3750 $15.4700 $14.1250 6/99 $14.7900 $13.6875 $14.3300 $13.0000 $13.8300 $12.1250 $13.9800 $12.0625 6/00 $13.9800 $12.5000 $14.2200 $12.8125 $14.3400 $12.7500 $14.5200 $12.9100 6/01 $14.4400 $13.2900 $14.8600 $13.9000 $14.4700 $13.6900 $14.3400 $14.0300 6/02 $14.9100 $15.2200 $15.8500 $16.1000 $15.5300 $15.2500 $15.5400 $16.2500 4/03 $15.6400 $16.3100
The solid line above represents the trust's net asset value (NAV), which indicates overall changes in value among the trust's underlying securities. The trust's common share market price is represented by the dashed line, which indicates the price the market is willing to pay for shares of the trust at a given time. Common share market price is influenced by a range of factors, including supply and demand and market conditions. 3 Q&A WITH YOUR PORTFOLIO MANAGER WE RECENTLY SPOKE WITH THE MANAGEMENT TEAM OF THE VAN KAMPEN OHIO VALUE MUNICIPAL INCOME TRUST ABOUT THE KEY EVENTS AND ECONOMIC FORCES THAT SHAPED THE MARKETS AND INFLUENCED THE TRUST'S RETURN DURING THE SIX MONTHS ENDED APRIL 30, 2003. TIMOTHY D. HANEY, PORTFOLIO MANAGER, HAS MANAGED THE TRUST SINCE 1996 AND HAS WORKED IN THE INVESTMENT INDUSTRY SINCE 1988. THE FOLLOWING DISCUSSION REFLECTS HIS VIEWS ON THE TRUST'S PERFORMANCE. Q WHAT WAS THE MARKET ENVIRONMENT OF THE PAST SIX MONTHS, AND HOW DID THE TRUST PERFORM IN THAT ENVIRONMENT? A The environment over the past six months has been defined by two major themes. The first of these was the level of interest rates. The period began with interest rates at levels not seen in over three decades and, surprisingly for many, ended with rates slightly lower. The Federal Reserve Board (the Fed) helped keep rates low with a widely anticipated rate cut in November, driven by economic uncertainty and geopolitical risk. The low level of rates led to a boom in issuance by municipalities seeking to lock in low financing costs. As a result, issuance reached a record level of $354 billion in 2002 and continued to be exceptional in the first quarter of 2003. The other theme in the market during the period was the relative attractiveness of municipal bonds, which produced enough demand to absorb the record issuance. Investors, wary of volatility in the equity market and in the geopolitical arena, flocked to perceived safe haven investments. Their risk aversion counteracted growing expectations for economic recovery and rising interest rates and was a key factor in keeping interest rates at historically low levels. In their ongoing preference for low-risk assets, investors bid Treasury prices up to such high levels that municipal bonds became as attractively valued as they have ever been relative to Treasuries. Insurance companies also moved heavily into municipal bonds as their mainstay corporate bond holdings became less attractive. At the same time, issuers recognized investor concerns over economic weakness by insuring roughly 50% of all issuance. This credit enhancement made municipal bonds even more attractive to risk-averse investors. While lower financing costs were a boon to municipal issuers, the continuing weakness in the economy had a negative impact on municipal credit quality, particularly in the first quarter of 2003. Moody's upgrades barely exceeded the number of downgrades in the first quarter, with 4 credit quality facing continued pressure from rising social service costs and weak national and regional economic conditions. As a result, municipalities face enormous deficits in 2003, when their combined shortfall is expected to reach $90 billion. Performance along the yield curve was varied. The Fed's November rate cut fueled a rally in short-term bonds that helped pull yields lower at the front end of the curve. Despite that rally, the best performing segment of the curve was the long-intermediate portion where performance was largely driven by buying activity among institutional investors drawn to the bonds' attractive total return potential. The Ohio economy was quite sluggish during the period. The state's employment levels remained stagnant during the period, with no real sign of improvement. The state entered fiscal 2003 with a projected deficit of $1.15 billion, which it closed largely through a cigarette tax as well as service cuts and other tax measures. Ohio faces an even larger projected deficit of $4 billion for fiscal 2004, though Governor Taft's proposed budget appears to go some way toward adjusting structural problems with the state's economy to address that shortfall. The major ratings agencies responded to the state's malaise by giving its general obligation bonds a negative rating outlook for the near future. The trust's monthly dividend of $0.0785 per share translated to a distribution rate of 5.78 percent based on the trust's closing common share market price on April 30, 2003. Based on these figures, investors would have to earn a distribution rate of 10.18 percent on a taxable investment (for an investor in the 43.20 percent combined federal and state income tax bracket) to match the tax-exempt yield provided by the trust. For the six months ended April 30, 2003, the trust produced a total return of 13.23 percent based on common share market price. By comparison, the Lehman Brothers Ohio Municipal Bond Index posted a total return of 3.88 percent for the same period. Of course, past performance is no guarantee of future results. Investment return, common share market price and net asset value will fluctuate and trust shares, when sold, may be worth more or less than their original cost. As a result of recent market activity, current performance may vary from the figures shown. For more up-to-date information, please visit vankampen.com or speak with your financial advisor. The Lehman Brothers Ohio Municipal Bond Index is an unmanaged, broad-based statistical composite of municipal bonds. Index returns do not include any sales charges or fees that would be paid by an investor purchasing the securities the index represents. Such costs would lower performance. It is not possible to invest directly in an index. For additional information, please refer to the performance summary section. Q WHAT STRATEGIES DID YOU PURSUE IN MANAGING THE TRUST? A While interest rates fell somewhat during the period, they remained largely confined to a relatively tight 5 trading range at historically low levels. Consequently, there were fewer compelling opportunities for reinvesting the proceeds of sales from the portfolio than we've seen in some time. This kept the portfolio's turnover relatively low as we attempted to protect the trust's dividend by limiting the likelihood of having to reinvest in lower-yielding securities. Within this framework, we continued to trade opportunistically among highly liquid bonds as they moved into and out of what we considered to be fair value. We took advantage of attractive yield spreads and invested in two hospital bonds. We were able to sell one of these bonds during the period when it achieved its performance objective. We also trimmed the portfolio's holdings of long-duration zero coupon bonds in order to lock in their outperformance. 6 BY THE NUMBERS YOUR TRUST'S INVESTMENTS April 30, 2003 (Unaudited) THE FOLLOWING PAGES DETAIL YOUR TRUST'S PORTFOLIO OF INVESTMENTS AT THE END OF THE REPORTING PERIOD.
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE MUNICIPAL BONDS 153.4% OHIO 142.0% $ 400 Akron Bath Copley, OH Jt Twp Hosp Fac Summa Hosp Ser A................................... 5.375% 11/15/18 $ 377,068 1,000 Akron, OH Ctf Part Akron Muni Baseball Stad Proj......................................... 6.900 12/01/16 1,110,980 1,145 American Muni Pwr OH Inc Omega JV2 Proj (AMBAC Insd)................................. 5.250 01/01/13 1,263,714 845 Beavercreek, OH Cap Apprec (MBIA Insd)....... * 02/01/21 366,891 930 Cleveland Cuyahoga Cnty, OH Port Auth Rev Dev Port Cleveland Bd Fd Ser A (LOC: Fifth Third Bank)........................................ 6.250 05/15/16 961,490 1,500 Cleveland, OH Arpt Sys Rev Ser A (FGIC Insd)........................................ 5.700 01/01/06 1,565,820 1,250 Cleveland, OH Pub Pwr Sys Rev First Mtg Ser A (Prerefunded @ 11/15/04) (MBIA Insd)......... 7.000 11/15/24 1,385,262 1,000 Crawford Cnty, OH Rfdg (AMBAC Insd).......... 4.750 12/01/19 1,035,050 1,000 Cuyahoga Cnty, OH Multi-Family Rev Hsg Dalebridge Apts (GNMA Collateralized)........ 6.500 10/20/20 1,053,120 400 Cuyahoga Cnty, OH Multi-Family Rev Hsg Wtr Str Assoc (GNMA Collateralized).............. 6.150 12/20/26 433,492 1,000 Cuyahoga, OH Cmnty College Dist Ser A (AMBAC Insd)........................................ 5.000 12/01/32 1,026,010 1,000 Dublin, OH City Sch Dist Constr & Impt....... 5.000 12/01/16 1,078,440 1,225 Fairfield, OH City Sch Dist (Prerefunded @ 12/01/05) (FGIC Insd)........................ 7.200 12/01/12 1,437,182 1,000 Franklin Cnty, OH Rev Mtg Seton Square North Proj (FHA Gtd)............................... 6.150 10/01/18 1,024,960 1,000 Greene Cnty, OH Swr Sys Rev Govtl Enterprise (AMBAC Insd)................................. 5.625 12/01/25 1,104,090 1,000 Guernsey Cnty, OH Pub Impt (AMBAC Insd)...... 6.200 12/01/11 1,020,140 2,025 Hamilton Cnty, OH Sales Tax Sub Ser B Cap Apprec (AMBAC Insd).......................... * 12/01/23 764,235 595 Lake Loc Sch Dist OH Wood Cap Apprec (MBIA Insd)........................................ * 12/01/12 413,281
See Notes to Financial Statements 7 YOUR TRUST'S INVESTMENTS April 30, 2003 (Unaudited)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE OHIO (CONTINUED) $1,000 Lakota, OH Loc Sch Dist (AMBAC Insd)......... 7.000% 12/01/09 $ 1,244,780 900 Logan Cnty, OH (Prerefunded @ 12/01/04)...... 6.250 12/01/14 989,073 1,000 Lorain Cnty, OH Hosp Rev Catholic Hlthcare... 5.375 10/01/30 1,018,450 1,000 Lorain Cnty, OH Hosp Rev Catholic Hlthcare Part Ser B (MBIA Insd)....................... 5.625 09/01/15 1,124,610 1,000 Lorain Cnty, OH Hosp Rev EMH Regl Med Cent Rfdg (AMBAC Insd)............................ 7.750 11/01/13 1,161,940 1,000 Mahoning Cnty, OH Hosp Fac Forum Hlth Oblig Group Ser A.................................. 6.000 11/15/32 1,038,350 385 Marion Cnty, OH Hosp Impt Rev Cmnty Hosp Rfdg......................................... 6.375 05/15/11 409,721 1,030 Marysville, OH Exmp Vlg Sch Dist Rfdg (MBIA Insd)........................................ 5.250 12/01/16 1,145,957 1,000 Miami Cnty, OH Hosp Fac Rev Impt Upper Vly Med Cent Ser C Rfdg.......................... 6.250 05/15/13 1,054,950 1,000 Montgomery Cnty, OH Hosp Rev Grandview Hosp & Med Cent Rfdg (Prerefunded @ 12/01/09)....... 5.600 12/01/11 1,168,100 2,000 Montgomery Cnty, OH Rev Catholic Hlth Initiatives.................................. 6.000 12/01/26 2,175,140 1,000 Ohio Hsg Fin Agy Single Family Mtg Rev (Prerefunded @ 01/15/14) (FGIC Insd)......... * 01/15/15 579,810 1,000 Ohio Muni Elec Generation Agy Jt Venture 5 Ctf Ben Int (MBIA Insd)...................... * 02/15/25 348,960 1,000 Ohio Muni Elec Generation Agy Jt Venture 5 Ctf Ben Int (MBIA Insd)...................... * 02/15/30 268,400 1,000 Ohio St Bldg Auth St Facs Adult Correctional Bldg Fd Ser A (Prerefunded @ 10/01/03) (MBIA Insd)........................................ 6.000 10/01/08 1,040,450 165 Ohio St Econ Dev Rev ABS Ind Inc Proj (Escrowed to Maturity)....................... 6.000 06/01/04 169,442 2,000 Ohio St Univ Gen Rcpt Ser A.................. 5.000 12/01/26 2,062,160 2,215 University Cincinatti, OH Ser F.............. 5.375 06/01/15 2,479,958 500 University Toledo, OH Gen Recpt (FGIC Insd)........................................ 4.750 06/01/20 512,625 ------------ 37,414,101 ------------
See Notes to Financial Statements 8 YOUR TRUST'S INVESTMENTS April 30, 2003 (Unaudited)
PAR AMOUNT MARKET (000) DESCRIPTION COUPON MATURITY VALUE PUERTO RICO 7.1% $1,500 Puerto Rico Comwlth Hwy & Trans Auth Hwy Rev Ser Y Rfdg (FSA Insd)........................ 6.250% 07/01/21 $ 1,875,915 ------------ U. S. VIRGIN ISLANDS 4.3% 1,000 Virgin Islands Pub Fin Auth Rev Gross Rcpt Taxes Ln Nt Ser A............................ 6.375 10/01/19 1,115,930 ------------ TOTAL LONG-TERM INVESTMENTS 153.4% (Cost $36,862,302)..................................................... 40,405,946 SHORT-TERM INVESTMENT 0.8% (Cost $210,000)........................................................ 210,000 ------------ TOTAL INVESTMENTS 154.2% (Cost $37,072,302)..................................................... 40,615,946 OTHER ASSETS IN EXCESS OF LIABILITIES 2.7%.............................. 731,621 PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (56.9%).............. (15,001,443) ------------ NET ASSETS APPLICABLE TO COMMON SHARES 100.0%........................... $ 26,346,124 ============
* Zero coupon bond AMBAC--AMBAC Indemnity Corp. FGIC--Financial Guaranty Insurance Co. FHA--Federal Housing Administration FSA--Financial Security Assurance Inc. GNMA--Government National Mortgage Association LOC--Letter of Credit MBIA--Municipal Bond Investors Assurance Corp. See Notes to Financial Statements 9 FINANCIAL STATEMENTS Statement of Assets and Liabilities April 30, 2003 (Unaudited) ASSETS: Total Investments (Cost $37,072,302)........................ $40,615,946 Cash........................................................ 156,948 Receivables: Interest.................................................. 752,405 Investments Sold.......................................... 25,000 Other....................................................... 75 ----------- Total Assets............................................ 41,550,374 ----------- LIABILITIES: Payables: Investment Advisory Fee................................... 20,264 Affiliates................................................ 3,068 Administrative Fee........................................ 1,689 Trustees' Deferred Compensation and Retirement Plans........ 139,215 Accrued Expenses............................................ 38,571 ----------- Total Liabilities....................................... 202,807 Preferred Shares (including accrued distributions).......... 15,001,443 ----------- NET ASSETS APPLICABLE TO COMMON SHARES...................... $26,346,124 =========== NET ASSET VALUE PER COMMON SHARE ($26,346,124 divided by 1,684,374 shares outstanding)............................. $ 15.64 =========== NET ASSETS CONSIST OF: Common Shares ($.01 par value with an unlimited number of shares authorized, 1,684,374 shares issued and outstanding).............................................. $ 16,844 Paid in Surplus............................................. 23,989,193 Net Unrealized Appreciation................................. 3,543,644 Accumulated Undistributed Net Investment Income............. 178,249 Accumulated Net Realized Loss............................... (1,381,806) ----------- NET ASSETS APPLICABLE TO COMMON SHARES...................... $26,346,124 =========== PREFERRED SHARES ($.01 par value, authorized 100,000,000 shares, 600 issued with liquidation preference of $25,000 per share)................................................ $15,000,000 =========== NET ASSETS INCLUDING PREFERRED SHARES....................... $41,346,124 ===========
See Notes to Financial Statements 10 Statement of Operations For the Six Months Ended April 30, 2003 (Unaudited) INVESTMENT INCOME: Interest.................................................... $1,065,915 ---------- EXPENSES: Investment Advisory Fee..................................... 121,651 Preferred Share Maintenance................................. 33,935 Trustees' Fees and Related Expenses......................... 19,995 Audit....................................................... 12,392 Administrative Fee.......................................... 10,138 Legal....................................................... 5,876 Custody..................................................... 1,314 Other....................................................... 31,596 ---------- Total Expenses.......................................... 236,897 ---------- NET INVESTMENT INCOME....................................... $ 829,018 ========== REALIZED AND UNREALIZED GAIN/LOSS: Net Realized Gain........................................... $ 71,992 ---------- Unrealized Appreciation/Depreciation: Beginning of the Period................................... 2,937,430 End of the Period......................................... 3,543,644 ---------- Net Unrealized Appreciation During the Period............... 606,214 ---------- NET REALIZED AND UNREALIZED GAIN............................ $ 678,206 ========== DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $ (81,115) ========== NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM OPERATIONS................................................ $1,426,109 ==========
See Notes to Financial Statements 11 Statements of Changes in Net Assets (Unaudited)
SIX MONTHS ENDED YEAR ENDED APRIL 30, 2003 OCTOBER 31, 2002 ------------------------------------ FROM INVESTMENT ACTIVITIES: Operations: Net Investment Income.............................. $ 829,018 $ 1,688,726 Net Realized Gain.................................. 71,992 629,739 Net Unrealized Appreciation/Depreciation During the Period........................................... 606,214 (349,459) Distributions to Preferred Shareholders: Net Investment Income............................ (81,115) (212,541) ----------- ----------- Change in Net Assets Applicable to Common Shares from Operations.................................. 1,426,109 1,756,465 Distributions to Common Shareholders: Net Investment Income............................ (788,408) (1,422,542) ----------- ----------- NET CHANGE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM INVESTMENT ACTIVITIES................ 637,701 333,923 FROM CAPITAL TRANSACTIONS: Value of Common Shares Issued Through Dividend Reinvestment..................................... 27,480 17,921 ----------- ----------- TOTAL INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES........................................... 665,181 351,844 NET ASSETS APPLICABLE TO COMMON SHARES: Beginning of the Period............................ 25,680,943 25,329,099 ----------- ----------- End of the Period (Including accumulated undistributed net investment income of $178,249 and $218,754, respectively)...................... $26,346,124 $25,680,943 =========== ===========
See Notes to Financial Statements 12 Financial Highlights (Unaudited) THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
SIX MONTHS ENDED APRIL 30, ------------------- 2003 2002 (f) 2001 --------------------------------- NET ASSET VALUE, BEGINNING OF THE PERIOD (a)......... $ 15.26 $ 15.06 $ 13.87 ------- ------- ------- Net Investment Income.............................. .49 1.01 .96 Net Realized and Unrealized Gain/Loss.............. .41 .17 1.21 Common Share Equivalent of Distributions Paid to Preferred Shareholders: Net Investment Income............................ (.05) (.13) (.28) Net Realized Gain................................ -0- -0- -0- ------- ------- ------- Total from Investment Operations..................... .85 1.05 1.89 Distributions Paid to Common Shareholders: Net Investment Income............................ (.47) (.85) (.70) Net Realized Gain................................ -0- -0- -0- ------- ------- ------- NET ASSET VALUE, END OF THE PERIOD................... $ 15.64 $ 15.26 $ 15.06 ======= ======= ======= Common Share Market Price at End of the Period....... $ 16.31 $ 14.85 $ 13.91 Total Return (b)..................................... 13.23%* 13.09% 21.51% Net Assets Applicable to Common Shares at End of the Period (In millions)............................... $ 26.3 $ 25.7 $ 25.3 Ratio of Expenses to Average Net Assets Applicable to Common Share (c)................................... 1.85% 1.83% 2.10% Ratio of Net Investment Income to Average Net Assets Applicable to Common Shares (c).................... 6.46% 6.73% 6.66% Portfolio Turnover................................... 5%* 33% 26% SUPPLEMENTAL RATIOS: Ratio of Expenses to Average Net Assets Including Preferred Shares (c)............................... 1.17% 1.15% 1.30% Ratio of Net Investment Income to Average Net Assets Applicable to Common Shares (d).................... 5.83% 5.88% 4.71% SENIOR SECURITIES: Total Preferred Shares Outstanding................... 600 600 600 Asset Coverage Per Preferred Share (e)............... $68,913 $67,806 $67,215 Involuntary Liquidating Preference Per Preferred Share.............................................. $25,000 $25,000 $25,000 Average Market Value Per Preferred Share............. $25,000 $25,000 $25,000
* Non-Annualized ** Amount is less than $.01. (a) Net Asset Value at April 30, 1993, is adjusted for common and preferred share offering costs of $.417 per common share. (b) Total return assumes an investment at the common share 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 share market price at the end of the period indicated. (c) Ratios do not reflect the effect of dividend payments to preferred shareholders. (d) Ratios reflect the effect of dividend payments to preferred shareholders. (e) Calculated by subtracting the Trust's total liabilities (not including the preferred shares) from the Trust's total assets and dividing this by the number of preferred shares outstanding. (f) As required, effective November 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on fixed income securities. The effect of this change for the year ended October 31, 2002 was to increase net investment income per share by $.01, decrease net realized and unrealized gains and losses per share by $.01 and increase the ratio of net investment income to average net assets applicable to common shares by .05%. Per share, ratios and supplemental data for periods prior to October 31, 2002 have not been restated to reflect this change in presentation. 13
OCTOBER 31, 1993 YEAR ENDED OCTOBER 31, (COMMENCEMENT ----------------------------------------------------------------------------- OF OPERATIONS) TO 2000 1999 1998 1997 1996 1995 1994 APRIL 30, 1993 ------------------------------------------------------------------------------------------------- $ 13.98 $ 15.72 $ 15.16 $ 14.48 $ 14.32 $ 12.36 $ 15.60 $ 14.58 -------- ------- -------- -------- -------- -------- -------- -------- 1.07 1.00 .99 .99 1.00 .98 1.01 .38 (.08) (1.75) .56 .64 .09 2.02 (3.25) .95 (.35) (.28) (.29) (.29) (.29) (.33) (.22) (.06) -0- -0- -0- -0- -0- -0- -0-** -0- -------- ------- -------- -------- -------- -------- -------- -------- .64 (1.03) 1.26 1.34 .80 2.67 (2.46) 1.27 (.75) (.71) (.70) (.66) (.64) (.71) (.77) (.25) -0- -0- -0- -0- -0- -0- (.01) -0- -------- ------- -------- -------- -------- -------- -------- -------- $ 13.87 $ 13.98 $ 15.72 $ 15.16 $ 14.48 $ 14.32 $ 12.36 $ 15.60 ======== ======= ======== ======== ======== ======== ======== ======== $12.0625 $ 12.25 $13.9375 $12.9375 $ 11.75 $ 11.75 $ 11.125 $ 14.875 4.64% -7.52% 13.24% 16.19% 5.55% 12.04% -20.59% .89% $ 23.3 $ 23.5 $ 26.4 $ 25.5 $ 24.3 $ 24.1 $ 20.8 $ 26.2 2.11% 2.06% 2.12% 2.23% 2.29% 2.39% 2.20% 2.13% 7.67% 6.62% 6.42% 6.75% 7.02% 7.35% 7.16% 5.00% 20% 17% 18% 17% 41% 45% 56% 17% 1.29% 1.29% 1.34% 1.39% 1.41% 1.44% 1.35% 1.60% 5.17% 4.74% 4.51% 4.78% 4.95% 4.89% 5.57% 4.19% 600 600 300 300 300 300 300 300 $ 63,870 $64,181 $138,124 $134,988 $131,142 $130,243 $119,270 $137,426 $ 25,000 $25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 25,000 $25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
See Notes to Financial Statements 14 NOTES TO FINANCIAL STATEMENTS April 30, 2003 (Unaudited) 1. SIGNIFICANT ACCOUNTING POLICIES Van Kampen Ohio Value Municipal Income 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 and Ohio income taxes, consistent with preservation of capital. The Trust will invest substantially all of its assets in Ohio municipal securities rated investment grade at the time of investment. The Trust commenced investment operations on April 30, 1993. The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 Municipal bonds are valued by independent pricing services or dealers using the mean of the bid and asked prices or, in the absence of market quotations, at fair value based upon yield data relating to municipal bonds with similar characteristics and general market conditions. Securities which are not valued by independent pricing services or dealers are valued at fair value using 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, which approximates market value. 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 April 30, 2003, there were no when-issued and delayed delivery purchase commitments. C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Bond premium is amortized and discount is accreted over the expected life of each applicable security. 15 NOTES TO FINANCIAL STATEMENTS April 30, 2003 (Unaudited) D. FEDERAL INCOME TAXES It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no provision for federal income taxes is required. The Trust intends to utilize provisions of the federal income tax laws which allow it to carry a realized capital loss forward for eight years following the year of the loss and offset such losses against any future realized capital gains. At October 31, 2002, the Trust had an accumulated capital loss carryforward for tax purposes of $1,412,001 which will expire between October 31, 2003 and October 31, 2009. Of this amount, $483,916 will expire on October 31, 2003. At April 30, 2003, the cost and related gross unrealized appreciation and depreciation are as follows: Cost of investments for tax purposes........................ $37,089,933 =========== Gross tax unrealized appreciation........................... $ 3,533,430 Gross tax unrealized depreciation........................... (7,417) ----------- Net tax unrealized appreciation on investments.............. $ 3,526,013 ===========
E. DISTRIBUTION OF INCOME AND GAINS The Trust declares and pays monthly dividends from net investment income to common shareholders. Net realized gains, if any, are distributed annually on a pro rata basis to common and preferred shareholders. Distributions from net realized gains for book purposes may include short-term capital gains, which are included as ordinary income for tax purposes. As of October 31, 2002, the components of distributable earnings on a tax basis were as follows: Undistributed ordinary income............................... $12,941
Net realized gains or losses may differ for financial reporting purposes and tax reporting purposes as a result of the deferral of losses relating to wash sale transactions. 2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES Under the terms of the Trust's Investment Advisory Agreement, Van Kampen Investment Advisory Corp. ("the Adviser") will provide investment advice and facilities to the Trust for an annual fee payable monthly of .60% of the average daily net assets of the Trust. In addition, the Trust will pay a monthly administrative fee to Van Kampen Investments Inc. or its affiliates (collectively "Van Kampen"), the Trust's Administrator, at an annual rate of .05% of the average daily net assets of the Trust. 16 NOTES TO FINANCIAL STATEMENTS April 30, 2003 (Unaudited) The administrative services provided by the Administrator include record keeping and reporting responsibilities with respect to the Trust's portfolio and preferred shares and providing certain services to shareholders. For the six months ended April 30, 2003, the Trust recognized expenses of approximately $1,500 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. Under separate Accounting Services and Legal Services agreements, the Adviser provides accounting and legal services to the Trust. The Adviser allocates the cost of such services to each trust. For the six months ended April 30, 2003, the Trust recognized expenses of approximately $10,700 representing Van Kampen's cost of providing accounting and legal services to the Trust, which are reported as part of "Other" and "Legal" expenses, respectively, in the Statement of Operations. Certain officers and trustees of the Trust are also officers and directors of Van Kampen. The Trust does not compensate its officers or trustees who are officers of Van Kampen. The Trust provides deferred compensation and retirement plans for its trustees who are not officers of Van Kampen. 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 upon retirement for a ten-year period and are based upon each trustee's years of service to the Trust. The maximum annual benefit per trustee under the plan is $2,500. 3. CAPITAL TRANSACTIONS At April 30, 2003 and October 31, 2002, paid in surplus related to common shares aggregated $23,989,193 and $23,961,731, respectively. Transaction in common shares were as follows:
SIX MONTHS ENDED YEAR ENDED APRIL 30, 2003 OCTOBER 31, 2002 ---------------- ---------------- Beginning Shares.................................. 1,682,608 1,681,438 Shares Issued Through Dividend Reinvestment....... 1,766 1,170 --------- --------- Ending Shares..................................... 1,684,374 1,682,608 ========= =========
4. INVESTMENT TRANSACTIONS During the period, the cost of purchases and proceeds from sales of investments, excluding short-term investments, were $1,962,750 and $2,298,126, respectively. 17 NOTES TO FINANCIAL STATEMENTS April 30, 2003 (Unaudited) 5. DERIVATIVE FINANCIAL INSTRUMENTS A derivative financial instrument in very general terms refers to a security whose value is "derived" from the value of an underlying asset, reference rate or index. The Trust may seek to manage the portfolio's interest rate exposure in a changing interest rate environment by engaging in transactions involving interest rate swaps, caps, floors or collars. The Trust expects to enter into these transactions primarily as a hedge against anticipated interest rate or fixed-income market changes, for duration management purposes or for risk management purposes but may also enter into these transactions to generate additional income. Risks may arise as a result of the potential inability of the counterparties to meet the terms of their contracts or agreements. During the six months ended April 30, 2003, the Trust did not enter into any of these transactions. 6. PREFERRED SHARES The Trust has outstanding 600 Auction Preferred Shares ("APS"). Dividends are cumulative and the dividend rate is generally reset every seven days through an auction process. The rate in effect on April 30, 2003 was 1.170%. During the six months ended April 30, 2003, the rates ranged from 0.600% to 1.570%. 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 in the Statement of Operations. The APS are redeemable at the option of the Trust in whole or in part at the liquidation value of $25,000 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. 18 DIVIDEND REINVESTMENT PLAN The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which Common Shareholders may elect to have dividends and capital gains distributions reinvested in Common Shares of the Trust. The Trust declares dividends out of net investment income, and will distribute annually net realized capital gains, if any. Common Shareholders may join or withdraw from the Plan at any time. If you decide to participate in the Plan, State Street Bank and Trust Company, as your Plan Agent, will automatically invest your dividends and capital gains distributions in Common Shares of the Trust for your account. HOW TO PARTICIPATE If you wish to participate and your shares are held in your own name, call 1-800-341-2929 for more information and a Plan brochure. If your shares are held in the name of a brokerage firm, bank, or other nominee, you should contact your nominee to see if it would participate in the Plan on your behalf. If you wish to participate in the Plan, but your brokerage firm, bank or nominee is unable to participate on your behalf, you should request that your shares be re-registered in your own name which will enable your participation in the Plan. HOW THE PLAN WORKS Participants in the Plan will receive the equivalent in Common Shares valued on the valuation date, generally at the lower of market price or net asset value, except as specified below. The valuation date will be the dividend or distribution payment date or, if that date is not a trading day on the national securities exchange or market system on which the Common Shares are listed for trading, the next preceding trading day. If the market price per Common Share on the valuation date equals or exceeds net asset value per Common Share on that date, the Trust will issue new Common Shares to participants valued at the higher of net asset value or 95% of the market price on the valuation date. In the foregoing situation, the Trust will not issue Common Shares under the Plan below net asset value. If net asset value per Common Share on the valuation date exceeds the market price per Common Share on that date, or if the Board of Trustees should declare a dividend or capital gains distribution payable to the Common Shareholders only in cash, participants in the Plan will be deemed to have elected to receive Common Shares from the Trust valued at the market price on that date. Accordingly, in this circumstance, the Plan Agent will, as agent for the participants, buy the Trust's Common Shares in the open market for the participants' accounts on or shortly after the payment date. If, before the Plan Agent has completed its purchases, the market price exceeds the net asset value per share of the Common Shares, the average per share purchase price paid by the Plan Agent may exceed the net asset value of the Trust's Common Shares, resulting in 19 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 Funds Inc. Attn: Closed-End Funds 2800 Post Oak Blvd. Houston, TX 77056 20 BOARD OF TRUSTEES AND IMPORTANT ADDRESSES VAN KAMPEN OHIO VALUE MUNICIPAL INCOME TRUST BOARD OF TRUSTEES DAVID C. ARCH ROD DAMMEYER HOWARD J KERR THEODORE A. MYERS RICHARD F. POWERS, III* - Chairman HUGO F. SONNENSCHEIN WAYNE W. WHALEN* INVESTMENT ADVISER VAN KAMPEN INVESTMENT ADVISORY CORP. 1 Parkview Plaza P.O. Box 5555 Oakbrook Terrace, IL 60181-5555 CUSTODIAN AND TRANSFER AGENT STATE STREET BANK AND TRUST COMPANY c/o EquiServe P.O. Box 43011 Providence, Rhode Island 02940-3011 LEGAL COUNSEL SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS) 333 West Wacker Drive Chicago, Illinois 60606 INDEPENDENT AUDITORS DELOITTE & TOUCHE LLP 180 North Stetson Avenue Chicago, Illinois 60601 * "Interested persons" of the Trust, as defined in the Investment Company Act of 1940, as amended. 21 Van Kampen Privacy Notice The Van Kampen companies and investment products* respect your right to privacy. We also know that you expect us to conduct and process your business in an accurate and efficient manner. To do so, we must collect and maintain certain nonpublic personal information about you. This is information we collect from you on applications or other forms, and from the transactions you make with us, our affiliates, or third parties. We may also collect information you provide when using our web site, and text files (a.k.a. "cookies") may be placed on your computer to help us to recognize you and to facilitate transactions you initiate. We do not disclose any nonpublic personal information about you or any of our former customers to anyone, except as permitted by law. For instance, so that we may continue to offer you Van Kampen investment products and services that meet your investing needs, and to effect transactions that you request or authorize, we may disclose the information we collect to companies that perform services on our behalf, such as printers and mailers that assist us in the distribution of investor materials. These companies will use this information only for the services for which we hired them, and are not permitted to use or share this information for any other purpose. To protect your nonpublic personal information internally, we permit access to it only by authorized employees, and maintain physical, electronic and procedural safeguards to guard your nonpublic personal information. * Includes Van Kampen Investments Inc., Van Kampen Investment Advisory Corp., Van Kampen Asset Management Inc., Van Kampen Advisors Inc., Van Kampen Management Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc., Van Kampen Trust Company, Van Kampen System Inc. and Van Kampen Exchange Corp., as well as the many Van Kampen mutual funds and Van Kampen unit investment trusts. Van Kampen Funds Inc. 1 Parkview Plaza, P.O. Box 5555 Oakbrook Terrace, IL 60181-5555 www.vankampen.com [VAN KAMPEN INVESTMENTS LOGO] Copyright (C)2003 Van Kampen Funds Inc. All rights reserved. VOV SAR 6/03 Member NASD/SIPC. 11173F03-AS-6/03 Item 2. Code of Ethics. Not applicable for semi-annual reports. Item 3. Audit Committee Financial Expert. Not applicable for semi-annual reports. Item 4. Principal Accountant Fees and Services. Not applicable for semi-annual reports. Item 5. Audit Committee of Listed Registrants. Not applicable for semi-annual reports. Item 6. [Reserved.] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable for semi-annual reports. Item 8. [Reserved.] Item 9. The Trust's principal executive officer and principal financial officer have concluded that the Trust's disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Trust in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, based upon such officers' evaluation of these controls and procedures as of a date within 90 days of the filing date of the report. There were no significant changes or corrective actions with regard to significant deficiencies or material weaknesses in the Trust's internal controls or in other factors that could significantly affect the Trust's internal controls subsequent to the date of their evaluation. Item 10. Exhibits. (a) Code of Ethics - Not applicable for semi-annual reports. (b) Certifications of Principal Executive Officer and Principal Financial Officer attached hereto as part of EX-99.CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Van Kampen Ohio Value Municipal Income Trust ------------------------------------------------------------------- By: /s/ Ronald E. Robison ---------------------------------------------------------------------------- Name: Ronald E. Robison Title: Principal Executive Officer Date: June 23, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Ronald E. Robison ---------------------------------------------------------------------------- Name: Ronald E. Robison Title: Principal Executive Officer Date: June 23, 2003 By: /s/ John L. Sullivan ---------------------------------------------------------------------------- Name: John Sullivan Title: Principal Financial Officer Date: June 23, 2003