<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Economic Snapshot................................ 2
Performance Results.............................. 3
Glossary of Terms................................ 4
Portfolio Management Review...................... 5
Portfolio Highlights............................. 8
Portfolio of Investments......................... 9
Statement of Assets and Liabilities.............. 15
Statement of Operations.......................... 16
Statement of Changes in Net Assets............... 17
Financial Highlights............................. 18
Notes to Financial Statements.................... 20
Dividend Reinvestment Plan....................... 23
</TABLE>
VIG SAR 6/99
<PAGE> 2
LETTER TO SHAREHOLDERS
May 20, 1999
Dear Shareholder,
With the volatility that we've experienced in many financial markets in
recent months, some investors have sold securities because of uncertainty about
where the markets were going, only to be left rethinking whether they made the
right decision. We've witnessed this kind of market activity numerous times over
the past several years, sparked by concerns such as the impact of the Asian
economic crisis, high stock valuations, or, most recently, the stability of many
high-flying technology companies. While these fears eventually subsided,
investors who may have sold during this period were unable to reap the benefits
of the latest rally. That's partly because most of the recent big gains happened
in relatively short periods of time. This kind of volatility--and the danger of
making short-term decisions--highlights the importance of investing for the long
term, in accordance with your individual financial objectives.
Although the worst of the Asian crisis appears to be behind us, new concerns
are always emerging. In the coming months, we'll likely hear more about how the
year 2000 computer problem may affect the markets or that we're overdue for a
correction. While the markets could undoubtedly suffer as a result of these or
any number of other events, we encourage you to focus on your long-term
investment goals. Although nothing is certain, history has shown us that over
time, the markets tend to recover--and most investors want to be positioned to
take advantage of any recovery.
If you have concerns about market volatility or questions about how your
portfolio is structured to respond to these events, we encourage you to contact
your financial advisor. Your advisor can talk with you about sustaining a
long-term investment plan through a variety of market conditions. We hope that
Van Kampen Funds will play an important role as you and your advisor build a
portfolio designed to help you weather whatever the markets have in store.
Sincerely,
[SIG]
Richard F. Powers III
Chairman
Van Kampen Investment Advisory Corp.
[SIG]
Dennis J. McDonnell
President
Van Kampen Investment Advisory Corp.
1
<PAGE> 3
ECONOMIC SNAPSHOT
A surge in consumer confidence led to strong economic growth over the past
six months, as fears about the impact of the Asian financial crisis subsided. In
the fourth quarter, the nation's gross domestic product (GDP) rose at an
astounding 6.0 percent annual rate and remained strong at 4.5 percent through
the first quarter of 1999. This powerful level of growth is attributed to a
continued increase in consumer spending, a strong housing market, and high
retail sales--all the result of a more confident consumer given the positive
employment environment. The economy began to show signs of slowing down early in
1999, however, as corporate profits and wage growth declined.
Despite continued improvements in Asia and Latin America and the record
economic growth in the United States, inflation remained at bay in late 1998 as
commodity prices tumbled. Although rising oil prices pushed inflation up 3.3
percent on an annualized basis in the first four months of 1999, price increases
remained moderate enough overall to keep inflation-adjusted interest rates
attractive.
Our outlook for the domestic economy remains positive, although we
anticipate slower growth in the second half of the year. We look for a gradual
but steady rise in inflation throughout 1999 to more normal but certainly not
alarming levels. Internationally, low interest rates and improving financial
conditions should continue to support the economic progress we've witnessed
overseas.
INTEREST RATES AND INFLATION
April 30, 1997, through April 30, 1999
[LINE GRAPH]
<TABLE>
<CAPTION>
INTEREST RATES INFLATION
-------------- ---------
<S> <C> <C>
Apr 1997 6.0000 2.5000
5.6250 2.2000
6.5000 2.3000
Jul 1997 6.0000 2.2000
5.5000 2.2000
6.2500 2.2000
Oct 1997 5.7500 2.1000
5.6875 1.8000
6.5000 1.7000
Jan 1998 5.5625 1.6000
5.6250 1.4000
6.1250 1.4000
Apr 1998 5.6250 1.4000
5.6875 1.7000
6.0000 1.7000
Jul 1998 5.5625 1.7000
5.9375 1.6000
5.7500 1.5000
Oct 1998 5.2500 1.5000
4.8750 1.5000
4.0000 1.6000
Jan 1999 4.8125 1.7000
4.8750 1.6000
5.1250 1.7000
Apr 1999 4.9375 2.3000
</TABLE>
Interest rates are represented by the closing midline federal funds rate
on the last day of each month. Inflation is indicated by the annual
percent change of the Consumer Price Index for all urban consumers at
the end of each month.
2
<PAGE> 4
PERFORMANCE RESULTS FOR THE PERIOD ENDED APRIL 30, 1999
VAN KAMPEN INVESTMENT GRADE MUNICIPAL TRUST
(NYSE TICKER SYMBOL--VIG)
<TABLE>
<S> <C>
COMMON SHARE TOTAL RETURNS
Six-month total return based on market price(1)........... .21%
Six-month total return based on NAV(2).................... .84%
DISTRIBUTION RATES
Distribution rate as a % of closing common stock
price(3).................................................. 6.20%
Taxable-equivalent distribution rate as a % of closing
common stock price(4)..................................... 9.69%
SHARE VALUATIONS
Net asset value........................................... $ 10.41
Closing common stock price................................ $10.7500
Six-month high common stock price (12/11/98).............. $11.3750
Six-month low common stock price (04/30/99)............... $10.7500
Preferred share rate(5)................................... 3.31%
</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.
3
<PAGE> 5
GLOSSARY OF TERMS
CALL FEATURE: Allows the issuer to buy back a bond on specific dates at set
prices before maturity. These dates and prices are set when the bond is
issued. To compensate the bondholder for the potential loss of income and
ownership, a bond's call price is usually higher than the face value of the
bond. Bonds are usually called when interest rates drop so significantly
that the issuer can save money by issuing new bonds at lower rates.
CREDIT RATING: An evaluation of an issuer's credit history and capability of
repaying obligations. Standard & Poor's and Moody's Investors Service are
two companies that assign bond ratings. Standard & Poor's ratings range from
a high of AAA to a low of D, while Moody's ratings range from a high of Aaa
to a low of C.
DISCOUNT BOND: A bond whose market price is lower than its face value (or "par
value"). Because bonds usually mature at face value, a discount bond has
more potential to appreciate in price than a par bond does.
INSURED BOND: A bond that is insured against default by the bond insurer. If the
issuer defaults, the insurance company will step in and take over payments
of interest and principal when due. Once a bond is insured, it typically
carries the rating of the insurer. Most insurers are rated AAA.
INVESTMENT-GRADE BONDS: Securities rated BBB and above by Standard & Poor's or
Baa and above by Moody's Investors Service. Bonds rated below BBB or Baa are
noninvestment grade.
MATURITY LENGTH: The time it takes for a bond to mature. A bond issued in 1998
and maturing in 2008 is a 10-year bond.
MUNICIPAL BOND: A debt security issued by a state, municipality, or other
government entity to finance capital expenditures of public projects, such
as the construction of highways, public works, or school buildings. Interest
on public-purpose municipal bonds is exempt from federal income taxes and,
in some states, from state and local income taxes.
PREMIUM BOND: A bond whose market price is above its face value (or "par
value"). Because bonds usually mature at face value, a premium bond has less
potential to appreciate in price than a par bond does.
REFUNDING: Retiring an outstanding bond issue at maturity using money from the
sale of a new offering.
YIELD: The annual rate of return on an investment, expressed as a percentage.
YIELD SPREAD: The additional yield investors can earn by either investing in
bonds with longer maturities or by investing in bonds with lower ratings.
The spread is the difference in yield between bonds with short versus long
maturities or the difference in yield between high-quality bonds and
lower-quality bonds.
4
<PAGE> 6
PORTFOLIO MANAGEMENT REVIEW
VAN KAMPEN INVESTMENT GRADE MUNICIPAL TRUST
We recently spoke with the management team of the Van Kampen Investment Grade
Municipal Trust about the key events and economic forces that shaped the markets
during the reporting period. The team includes David C. Johnson, portfolio
manager, and Peter W. Hegel, chief investment officer for fixed-income
investments. The following comments reflect their views on the Trust's
performance during the six months ended April 30, 1999.
Q HOW WOULD YOU DESCRIBE THE CONDITIONS IN THE MUNICIPAL MARKET DURING THE
PAST SIX MONTHS?
A Although most of the financial markets experienced volatility during the
period, the municipal market remained relatively stable. For the majority
of the six months, long-term municipal bond yields remained within a range
of about 5.1 to 5.3 percent, even as the Federal Reserve cut interest rates.
Much of the stability in the municipal market can be attributed to its isolation
from turbulence abroad. Concerns about the financial conditions in Asia and
Latin America hurt the stock and high-yield bond markets last fall, but had
little effect on municipals.
The positive economic and market conditions encouraged more municipalities
to take advantage of low interest rates and issue new bonds. Although the amount
of municipal debt increased, the credit quality of many issuers was not
compromised--in fact, it improved as the positive economic environment led to
stronger balance sheets. As a result, we saw more issuers using municipal bonds
to finance special growth and expansion projects, as opposed to financing their
regular operations.
The proportion of higher-yielding municipal bonds also increased during the
period as the number of insured bonds declined. Because bond insurers tightened
their underwriting criteria, more issuers came to market without insurance and
offered higher yields to compensate bondholders for the increased credit risk.
This benefited the Trust because it allowed our experienced research staff to
seek out those higher-yielding bonds that we felt had strong underlying quality.
Q WHY WERE MUNICIPAL BONDS SO ATTRACTIVE RELATIVE TO COMPARABLE TREASURY
BONDS?
A Toward the end of 1998, the yields on 30-year insured municipal bonds and
comparable U.S. Treasury bonds reached equivalent levels, which is a rare
occurrence. Typically, investment-grade municipal bonds have offered about
85 to 90 percent as much yield as comparable Treasury bonds because their
interest payments are exempt from federal income taxes. However, as Treasury
yields fell and municipal yields remained stable, the yield difference between
the two types of bonds shrank. Early in 1999, investors recognized the
tremendous opportunities available in the municipal market, and demand for
municipals began to increase. In conjunction with a recent slowdown in supply,
this boost in municipal demand pushed the municipal-to-Treasury yield ratio back
to more traditional but still attractive levels.
5
<PAGE> 7
Q WHAT STRATEGIES DID YOU USE TO MANAGE THE TRUST?
A Our focus was on supporting the Trust's income stream while monitoring its
risk level and price volatility. As a result, trading in the Trust was
very limited because most of our holdings pay interest rates that are much
higher than current market rates. However, we did find value in some new issues,
including AAA rated bonds that offered attractive yields and strong price
appreciation potential. Most of our purchases were bonds with 15 to 20 year
maturities, as the intermediate range of the yield curve offered almost as much
yield as comparable 30-year bonds but is potentially less volatile.
Another strategy we used in seeking to enhance performance was to purchase
bonds issued in states that have strong demand for municipal securities as a
result of heavy state and local taxation. In particular, we found value in bonds
issued in New York and California. The large supply of bonds in these states
provided a number of opportunities to find attractive bonds with appreciation
potential. For additional portfolio highlights, please refer to page 8.
Q HOW DID THE TRUST PERFORM DURING THE PERIOD?
A During the past six months, the Trust generated a total return of 0.21
percent(1) based on market price. This reflects a decrease in market price
from $11.0625 per share on October 31, 1998, to $10.750 on April 30, 1999.
In addition, the Trust provided a distribution rate of 6.20 percent(3) based on
its closing common stock price on April 30, 1999. Because the Trust is exempt
from federal income taxes, this distribution rate is equivalent to a yield of
9.69 percent(4) on a taxable investment for shareholders in the 36 percent
federal income tax bracket.
The Trust's monthly dividend was reduced from $.0570 to $.0555 per share in
March as a result of the low interest rate environment. As higher-yielding bonds
matured or were called away from the portfolio, they were replaced with bonds
paying today's lower rates. For the same reason, the dividend will be reduced to
$.0540 in June. Past performance does not guarantee future results. Please refer
to the footnotes and chart on page 3 for additional Trust performance results.
Q WHAT DO YOU SEE AHEAD FOR THE MUNICIPAL MARKET?
A Strong economic performance should continue to bolster the credit
conditions of municipal issuers. In addition, we expect that this economic
strength will continue to make municipalities more likely to issue debt
for special projects rather than for general operating financing.
Although insured debt has been increasing in recent years, we have started
to see a reversal of this trend in the last few months, as municipal bond
insurers have become more cautious. If this caution continues, credit spreads
may widen as the proportion of higher-yielding uninsured bonds increases.
6
<PAGE> 8
Finally, we see the potential for changes in traditional economic activity
toward the end of the year because of investor concerns about the year 2000
computer problem. These temporary concerns, however, may result in attractive
investment opportunities that our research staff can explore to uncover
potential value.
[SIG]
David C. Johnson
Portfolio Manager
[SIG]
Peter W. Hegel
Chief Investment Officer
Fixed Income Investments
7
<PAGE> 9
PORTFOLIO HIGHLIGHTS
VAN KAMPEN INVESTMENT GRADE MUNICIPAL TRUST
TOP FIVE PORTFOLIO SECTORS AS A PERCENTAGE OF LONG-TERM INVESTMENTS
<TABLE>
<CAPTION>
AS OF APRIL 30, 1999
<S> <C>
Health Care................. 17.5%
Single-Family Housing....... 14.1%
Industrial Revenue.......... 14.0%
Public Education............ 9.3%
Other Care.................. 8.5%
</TABLE>
<TABLE>
<CAPTION>
AS OF OCTOBER 31, 1998
<S> <C>
Health Care................. 18.9%
Industrial Revenue.......... 15.5%
Single-Family Housing....... 14.9%
Retail
Electric/Gas/Telephone.... 10.2%
Public Education............ 7.5%
</TABLE>
PORTFOLIO COMPOSITION BY CREDIT QUALITY AS A PERCENTAGE OF LONG-TERM
INVESTMENTS
<TABLE>
<CAPTION>
AS OF APRIL 30, 1999
<S> <C>
AAA/Aaa..............45.7%
AA/Aa................ 9.8%
A/A..................14.0%
BBB/Baa..............17.3%
BB/Ba................ 2.2%
Non-Rated............11.0%
</TABLE>
[PIE CHART]
<TABLE>
<CAPTION>
AS OF OCTOBER 31, 1998
<S> <C>
AAA/Aaa..............42.4%
AA/Aa................10.9%
A/A..................15.5%
BBB/Baa..............16.2%
BB/Ba................ 3.5%
Non-Rated............11.5%
</TABLE>
[PIE CHART]
Based upon the highest credit quality ratings as issued by Standard & Poor's or
Moody's, respectively.
DIVIDEND HISTORY
FOR THE PERIOD ENDED APRIL 30, 1999
[BAR GRAPH]
<TABLE>
<CAPTION>
DIVIDEND
--------
<S> <C>
Nov 1998 0.0570
Dec 1998 0.0570
Jan 1999 0.0570
Feb 1999 0.0570
Mar 1999 0.0555
Apr 1999 0.0555
</TABLE>
The dividend history represents past performance of the Trust and does not
predict the Trust's future distributions.
8
<PAGE> 10
PORTFOLIO OF INVESTMENTS
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS 102.1%
ALABAMA 6.0%
$ 1,140 Alabama Wtr Pollutn Ctrl Auth Ser B
(AMBAC Insd) (b)...................... 4.750% 08/15/18 $ 1,093,317
1,500 Birmingham, AL Arpt Auth Rev Rfdg
(AMBAC Insd) (a)...................... 5.375 07/01/20 1,496,655
1,185 Jefferson Cnty, AL Sewer Rev Cap Impt
Wts Ser A (FGIC Insd) (b)............. 5.125 02/01/39 1,157,389
800 Mobile, AL Indl Dev Brd Pollutn Ctl
Rev Intl Paper Co Proj Rfdg........... 4.750 04/01/10 787,456
-----------
4,534,817
-----------
ALASKA 4.4%
3,250 Valdez, AK Marine Term Rev BP Pipeline
Inc Proj Ser B Rfdg................... 5.500 10/01/28 3,301,610
-----------
ARIZONA 3.1%
2,675 Maricopa Cnty, AZ Uni Sch Dist No 69
Paradise Vly (FSA Insd) (b)........... 4.000 07/01/16 2,373,260
-----------
ARKANSAS 1.6%
1,000 Dogwood Addition PRD Muni Ppty Owners
Multi-Purp Impt Dist No 8 AR Impt Ser
A (e)................................. 7.500 01/31/06 960,000
919 Dogwood Addition PRD Muni Ppty Owners
Multi-Purp Impt Dist No 8 AR Impt Ser
B (e)................................. 7.500 01/31/06 275,613
-----------
1,235,613
-----------
CALIFORNIA 6.1%
4,490 Contra Costa, CA Home Mtg Fin Auth
Home Mtg Rev (MBIA Insd).............. * 09/01/17 1,805,698
650 Foothill/Eastern Corridor Agy CA Toll
Rd Rev Cap Apprec Sr Lien Ser A....... * 01/01/28 138,859
225 Foothill/Eastern Corridor Agy CA Toll
Rd Rev Cap Apprec Sr Lien Ser A (d)... 0/7.50 01/01/13 189,207
500 Fresno, CA Uni Sch Dist Ser A Rfdg
(MBIA Insd)........................... 6.100 08/01/12 578,895
2,205 San Joaquin Hills, CA Transn Corridor
Agy Toll Rd Cap Apprec Rev Ser A Rfdg
(MBIA Insd)........................... * 01/15/27 520,182
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CALIFORNIA (CONTINUED)
$ 1,500 San Joaquin Hills, CA Trans Corridor
Agy Toll Rd Rev Cap Apprec Ser A Rfdg
(MBIA Insd)........................... * 01/15/28 $ 335,340
1,000 San Marcos, CA Pub Facs Auth Rev
Rfdg.................................. 5.800% 09/01/27 1,012,760
-----------
4,580,941
-----------
COLORADO 10.1%
10,000 Arapahoe Cnty, CO Cap Impt Trust Fund
Hwy Rev E-470 Proj Ser C (Prerefunded
@ 08/31/05)........................... * 08/31/26 1,605,400
2,560 Denver, CO City & Cnty Arpt Rev (b)... 8.500 11/15/23 2,757,991
145 Jefferson Cnty, CO Residential Mtg
Rev................................... 11.500 09/01/03 188,468
160 Jefferson Cnty, CO Residential Mtg
Rev................................... 11.500 09/01/04 216,486
180 Jefferson Cnty, CO Residential Mtg
Rev................................... 11.500 09/01/05 252,659
205 Jefferson Cnty, CO Residential Mtg
Rev................................... 11.500 09/01/06 297,371
235 Jefferson Cnty, CO Residential Mtg
Rev................................... 11.500 09/01/07 350,982
265 Jefferson Cnty, CO Residential Mtg
Rev................................... 11.500 09/01/08 406,690
300 Jefferson Cnty, CO Residential Mtg
Rev................................... 11.500 09/01/09 472,842
340 Jefferson Cnty, CO Residential Mtg
Rev................................... 11.500 09/01/10 546,414
220 Jefferson Cnty, CO Residential Mtg
Rev................................... 11.500 09/01/11 359,810
100 Jefferson Cnty, CO Residential Mtg
Rev................................... 9.000 09/01/12 141,806
-----------
7,596,919
-----------
FLORIDA 5.5%
340 Lee Cnty, FL Indl Dev Auth Hlthcare
Facs Rev (a).......................... 5.750 11/15/13 352,176
500 Lee Cnty, FL Indl Dev Auth Hlthcare
Facs Rev (a).......................... 5.750 11/15/14 515,550
325 Lee Cnty, FL Indl Dev Auth Hlthcare
Facs Rev (a).......................... 5.750 11/15/15 333,349
1,000 Orange Cnty, FL Hlth Fac Auth Rev Hosp
Orlando Genl Hosp Ser A (Prerefunded @
06/01/99) (b)......................... 8.750 06/01/16 1,024,400
1,000 Orange Cnty, FL Hlth Fac Auth Rev Hosp
Orlando Genl Hosp Ser B (Prerefunded @
06/01/99) (b)......................... 8.750 06/01/16 1,024,400
2,300 Sun N Lake of Sebring, FL Impt Dist
Spl Assmt Ser A (c) (e)............... 10.000 12/15/11 920,000
-----------
4,169,875
-----------
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ILLINOIS 20.6%
$ 1,000 Alton, IL Hlth Fac Rev & Impt
Christian Hlth Ser C Rfdg (Prerefunded
@ 02/15/01) (FGIC Insd) (b)........... 7.200% 02/15/21 $ 1,080,320
4,020 Aurora, IL Single Family Mtg Rev Cap
Apprec (AMBAC Insd)................... * 12/01/22 637,572
400 Bedford Park, IL Tax Increment 71st &
Cicero Proj Rfdg...................... 7.000 01/01/06 428,724
7,500 Chicago, IL Brd of Ed Cap Apprec Sch
Reform Ser A (FGIC Insd).............. * 12/01/28 1,551,600
250 Chicago, IL Brd of Ed Chicago Sch
Reform (AMBAC Insd)................... 5.750 12/01/27 266,633
2,535 Chicago, IL O'Hare Intl Arpt Spl Fac
Rev United Airls Inc Ser B (b)........ 8.950 05/01/18 2,775,521
1,115 Chicago, IL Single Family Mtg (GNMA
Collateralized) (b)................... 7.625 09/01/27 1,273,285
575 Cook Cnty, IL Sch Dist No 107 La
Grange................................ 7.200 12/01/09 704,249
625 Cook Cnty, IL Sch Dist No 107 La
Grange................................ 7.000 12/01/10 759,844
510 Cook Cnty, IL Sch Dist No 107 La
Grange (b)............................ 7.150 12/01/08 618,793
500 Hodgkins, IL Tax Increment Ser A
Rfdg.................................. 7.625 12/01/13 552,365
845 Illinois Hlth Fac Auth Rev Glenoaks
Med Cent Ser D........................ 9.500 11/15/15 940,595
745 Illinois Hlth Fac Auth Rev Glenoaks
Med Cent Ser D (Prerefunded @
11/15/00)............................. 9.500 11/15/15 825,780
500 Illinois Hlth Fac Auth Rev Lutheran
Social Svcs Proj Ser A (Prerefunded @
08/01/00) (LOC: Bank of Japan)........ 7.650 08/01/20 534,815
1,910 Illinois Hsg Dev Auth Residential Mtg
Rev Ser B............................. 7.250 08/01/17 2,007,677
250 Lake Cnty, IL Cmnty Unit.............. 7.600 02/01/14 314,790
500 Robbins, IL Res Recovery Rev.......... 8.375 10/15/16 268,750
-----------
15,541,313
-----------
LOUISIANA 2.2%
1,500 Ouachita Parish, LA Hosp Svcs Dist No
1 Rev Glenwood Regl Med Cent
(Prerefunded @ 07/01/01) (b).......... 7.500 07/01/21 1,644,210
-----------
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MARYLAND 2.6%
$ 1,845 Maryland St Cmnty Dev Admin Dept Hsg &
Cmnty Dev Single Family Ser 4 (FHA
Gtd) (b).............................. 7.450% 04/01/32 $ 1,929,741
-----------
MASSACHUSETTS 1.0%
360 Massachusetts St Hlth & Edl Fac Auth
Rev Cent New England Hlth Sys Ser A... 6.125 08/01/13 367,917
395 Massachusetts St Hsg Fin Agy
Multi-Family Residential Dev Ser A
(FNMA Collateralized)................. 8.150 02/01/29 412,917
-----------
780,834
-----------
MICHIGAN 1.2%
800 Michigan St Hosp Fin Auth Rev Battle
Creek Hosp Ser H (Prerefunded @
11/15/00)............................. 9.500 11/15/15 884,944
-----------
MISSISSIPPI 2.0%
1,500 Medical Cent Ed Bldg Corp MS Rev Ref
Univ MS Med Cent Ser B (AMBAC
Insd) (b)............................. 5.000 12/01/16 1,490,400
-----------
MONTANA 4.2%
2,900 Forsyth, MT Pollutn Ctl Rev Puget
Sound Pwr & Lt Ser B Rfdg (AMBAC
Insd)................................. 7.250 08/01/21 3,138,641
-----------
NEVADA 2.2%
1,500 Clark Cnty, NV Indl Dev Rev NV Pwr Co
Proj Ser A (FGIC Insd) (b)............ 6.700 06/01/22 1,630,845
-----------
NEW HAMPSHIRE 4.1%
2,500 New Hampshire Higher Edl & Hlth Fac
Auth Rev Hosp Catholic Med Cent
Rfdg.................................. 8.250 07/01/13 2,561,300
500 New Hampshire St Indl Dev Auth Rev
Pollutn Ctl Pub Svcs Co of NH Proj Ser
C..................................... 7.650 05/01/21 527,580
-----------
3,088,880
-----------
NEW JERSEY 0.9%
600 New Jersey Hlthcare Fac Fin Auth Rev
Palisades Med Cent.................... 7.500 07/01/06 646,506
-----------
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NEW YORK 3.6%
$ 1,240 New York City Muni Wtr Fin Auth Wtr &
Swr Sys Rev (AMBAC Insd).............. 6.750% 06/15/06 $ 1,327,482
1,305 Port Auth NY & NJ Spl Oblig Rev Spl
Proj JFK Intl Arpt Terminal 6 (MBIA
Insd)................................. 5.750 12/01/22 1,397,381
-----------
2,724,863
-----------
OHIO 1.9%
800 Cuyahoga Cnty, OH Multi-Family Rev Hsg
Wtr St Assoc Ltd Proj (GNMA
Collateralized)....................... 6.250 12/20/36 874,888
500 Ohio St Solid Waste Rev Republic
Engineered Steels Proj................ 8.250 10/01/14 522,090
-----------
1,396,978
-----------
PENNSYLVANIA 1.5%
1,000 Beaver Cnty, PA Indl Dev Auth Pollutn
Ctl Rev Collateral Toledo Edison Co
Proj Rfdg (b)......................... 7.625 05/01/20 1,133,380
-----------
TENNESSEE 2.9%
2,105 Shelby Cnty, TN Hlth Edl & Hsg Fac Brd
Rev Open Arms Dev Cent Ser E
(Prerefunded @ 08/01/99) (b).......... 9.750 08/01/19 2,200,525
-----------
TEXAS 9.0%
1,000 Alliance Arpt Auth Inc TX Spl Fac Rev
American Airls Inc (b)................ 7.000 12/01/11 1,174,320
453 Pecos Cnty, TX Ctfs Partn............. 6.000 01/12/08 472,435
2,480 Texas St Pub Ppty Fin Corp Rev Mental
Hlth & Retardation Rfdg (FSA Insd).... 5.500 09/01/13 2,611,737
1,500 Victoria, TX Util Sys Rev (MBIA Insd)
(b)................................... 5.000 12/01/21 1,469,115
1,000 West Side Calhoun Cnty, TX Navig Dist
Solid Waste Disp Union Carbide Chem &
Plastics (b).......................... 8.200 03/15/21 1,080,740
-----------
6,808,347
-----------
WEST VIRGINIA 4.1%
3,000 Braxton Cnty, WV Solid Waste Variable
Weyerhaeuser Co Proj.................. 5.800 06/01/27 3,126,720
-----------
WISCONSIN 1.3%
905 Wisconsin St Hlth & Edl Fac Auth Rev
Chippewa Vly Hosp Ser F Rfdg.......... 9.500 11/15/12 1,007,238
-----------
</TABLE>
See Notes to Financial Statements
13
<PAGE> 15
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Market Value
- ------------------------------------------------------------------------------------------
<S> <C>
TOTAL LONG-TERM INVESTMENTS 102.1%
(Cost $74,515,037)...................................................... $ 76,967,400
SHORT-TERM INVESTMENTS 0.0%
(Cost $71,428).......................................................... 14,286
------------
TOTAL INVESTMENTS 102.1%
(Cost $74,586,465)...................................................... 76,981,686
LIABILITIES IN EXCESS OF OTHER ASSETS (2.1%)............................. (1,607,065)
------------
NET ASSETS 100.0%........................................................ $ 75,374,621
============
</TABLE>
* Zero coupon bond
(a) Securities purchased on a when issued or delayed delivery basis.
(b) Assets segregated as collateral for when issued or delayed delivery purchase
commitments.
(c) Non-Income producing security.
(d) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
(e) Market value is determined in accordance with procedures established in good
faith by the Board of Trustees.
AMBAC--AMBAC Indemnity Corporation
FGIC--Financial Guaranty Insurance Company
FHA--Federal Housing Authority Guaranteed
FSA--Financial Security Assurance Inc.
GNMA--Government National Mortgage Association
MBIA--Municipal Bond Investors Assurance Corp.
See Notes to Financial Statements
14
<PAGE> 16
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $74,586,465)........................ $76,981,686
Receivables:
Interest.................................................. 1,488,561
Investments Sold.......................................... 90,381
Other....................................................... 19,317
-----------
Total Assets.......................................... 78,579,945
-----------
LIABILITIES:
Payables:
Investments Purchased..................................... 2,690,147
Custodian Bank............................................ 210,807
Income Distributions--Common and Preferred Shares......... 54,807
Investment Advisory Fee................................... 37,249
Affiliates................................................ 13,365
Accrued Expenses............................................ 99,715
Trustees' Deferred Compensation and Retirement Plans........ 99,234
-----------
Total Liabilities..................................... 3,205,324
-----------
NET ASSETS.................................................. $75,374,621
===========
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000
shares, 250 issued with liquidation preference of $100,000
per share)................................................ $25,000,000
-----------
Common Shares ($.01 par value with an unlimited number of
shares authorized, 4,839,000 shares issued and
outstanding).............................................. 48,390
Paid in Surplus............................................. 52,700,019
Net Unrealized Appreciation................................. 2,395,221
Accumulated Distributions in Excess of Net Investment
Income.................................................... (994,649)
Accumulated Net Realized Loss............................... (3,774,360)
-----------
Net Assets Applicable to Common Shares................ 50,374,621
-----------
NET ASSETS.................................................. $75,374,621
===========
NET ASSET VALUE PER COMMON SHARE ($50,374,621 divided by
4,839,000 shares outstanding)............................. $ 10.41
===========
</TABLE>
See Notes to Financial Statements
15
<PAGE> 17
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 2,405,131
-----------
EXPENSES:
Investment Advisory Fee..................................... 225,958
Preferred Share Maintenance................................. 48,159
Accounting.................................................. 22,235
Shareholder Services........................................ 19,790
Trustees' Fees and Related Expenses......................... 12,478
Custody..................................................... 4,377
Legal....................................................... 3,776
Other....................................................... 53,639
-----------
Total Expenses.......................................... 390,412
-----------
NET INVESTMENT INCOME....................................... $ 2,014,719
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain (Including reorganization and
restructuring costs of $2,181)............................ $ 54,722
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 3,625,977
End of the Period......................................... 2,395,221
-----------
Net Unrealized Depreciation During the Period............... (1,230,756)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $(1,176,034)
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 838,685
===========
</TABLE>
See Notes to Financial Statements
16
<PAGE> 18
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended April 30,1999 and the
Year Ended October 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1999 October 31, 1998
- --------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income............................. $ 2,014,719 $ 4,194,572
Net Realized Gain................................. 54,722 820,402
Net Unrealized Depreciation
During the Period............................... (1,230,756) (793,140)
------------- -------------
Change in Net Assets from Operations.............. 838,685 4,221,834
------------- -------------
Distributions from and in Excess of Net Investment
Income:
Common Shares................................... (1,640,146) (3,309,358)
Preferred Shares................................ (415,137) (896,885)
------------- -------------
Total Distributions............................... (2,055,283) (4,206,243)
------------- -------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES...................................... (1,216,598) 15,591
NET ASSETS:
Beginning of the Period........................... 76,591,219 76,575,628
------------- -------------
End of the Period (Including accumulated
distributions in excess of net investment income
of $994,649 and $954,085, respectively)......... $ 75,374,621 $ 76,591,219
------------- -------------
</TABLE>
See Notes to Financial Statements
17
<PAGE> 19
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one common share of
the Trust outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended -------------------------------
April 30, 1999 1998 1997 1996
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
the Period (a)............... $10.662 $ 10.658 $ 10.474 $10.754
------- -------- -------- -------
Net Investment Income.......... .416 .867 .959 .882
Net Realized and Unrealized
Gain/Loss.................... (.243) .006 .120 (.195)
------- -------- -------- -------
Total from Investment
Operations................... .173 .873 1.079 .687
------- -------- -------- -------
Less:
Distributions from and in
Excess of Net Investment
Income:
Paid to Common
Shareholders............. .339 .684 .710 .780
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders... .086 .185 .185 .187
------- -------- -------- -------
Total Distributions............ .425 .869 .895 .967
------- -------- -------- -------
Net Asset Value, End of the
Period....................... $10.410 $10.662 $10.658 $10.474
======= ======== ======== =======
Market Price Per Share at End
of the Period................ $10.750 $11.0625 $10.9375 $11.000
Total Investment Return at
Market Price (b)............. .21%* 7.63% 6.13% 11.02%
Total Return at Net Asset Value
(c).......................... .84%* 6.61% 8.91% 4.83%
Net Assets at End of the Period
(In millions)................ $75.4 $76.6 $76.6 $75.7
Ratio of Expenses to Average
Net Assets Applicable to
Common Shares**.............. 1.55% 1.47% 1.47% 1.51%
Ratio of Net Investment Income
to Average Net Assets
Applicable to Common Shares
(d).......................... 6.33% 6.40% 7.38% 6.55%
Portfolio Turnover............. 12%* 33% 25% 39%
* Non-Annualized
**Ratio of Expenses to Average
Net Assets Including
Preferred Shares............. 1.04% .99% .99% 1.01%
</TABLE>
(a) Net Asset Value at November 30, 1989, is adjusted for common and preferred
share offering costs of $.259 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 common share equivalent of
distributions paid to preferred shareholders.
N/A = Not Applicable
18
<PAGE> 20
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
November 30, 1989
(Commencement
Year Ended October 31 of Investment
- ----------------------------------------------------- Operations) to
1995 1994 1993 1992 1991 October 31, 1990
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$10.500 $12.094 $11.151 $11.502 $10.832 $10.901
------- ------- ------- ------- ------- -------
.877 .958 1.090 1.090 1.153 1.001
.406 (1.480) .917 (.348) .647 (.115)
------- ------- ------- ------- ------- -------
1.283 (.522) 2.007 .742 1.800 .886
------- ------- ------- ------- ------- -------
.825 .930 .930 .925 .886 .725
.204 .142 .134 .168 .244 .230
------- ------- ------- ------- ------- -------
1.029 1.072 1.064 1.093 1.130 .955
------- ------- ------- ------- ------- -------
$10.754 $10.500 $12.094 $11.151 $11.502 $10.832
======= ======= ======= ======= ======= =======
$10.625 $11.125 $13.875 $11.750 $12.250 $10.500
2.88% (13.59%) 26.46% 3.10% 25.65% .21%*
10.59% (5.77%) 17.40% 5.04% 14.87% 3.70%*
$ 77.0 $ 75.8 $ 83.5 $ 79.0 $ 80.7 $ 77.4
1.52% 1.47% 1.35% 1.52% 1.53% 1.41%
6.31% 7.20% 8.14% 8.01% 8.12% 7.75%
50% 30% 7% 21% 52% 134%*
1.02% 1.01% .94% 1.05% 1.05% N/A
</TABLE>
See Notes to Financial Statements
19
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Investment Grade Municipal Trust (the "Trust") is registered as a
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 tax, consistent with
preservation of capital. The Trust will normally invest at least 80% of its
total assets in tax-exempt municipal securities rated investment grade at the
time of investment. The Trust commenced investment operations on November 30,
1989.
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--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 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.
B. SECURITY TRANSACTIONS--Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when issued" or "delayed delivery"
basis with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
maintain, in a segregated account with its custodian, assets having an aggregate
value at least equal to the amount of the when issued or delayed delivery
purchase commitments until payment is made.
C. INVESTMENT INCOME--Interest income is recorded on an accrual basis. Bond
premium and original issue discount are amortized over the expected life of each
applicable security.
20
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1999 (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, 1998, the Trust had an accumulated capital loss
carryforward of $3,739,598 which will expire between October 31, 2002 and
October 31, 2005. Net realized gains or losses may differ for financial and tax
reporting purposes primarily as a result of the capitalization of reorganization
and restructuring costs for tax purposes.
At April 30, 1999, for federal income tax purposes, cost of long- and
short-term investments is $74,677,080; the aggregate gross unrealized
appreciation is $5,290,542 and the aggregate gross unrealized depreciation is
$2,985,936 resulting in net unrealized appreciation on long- and short-term
investments of $2,304,606.
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. Due to inherent differences in the recognition
of interest income under generally accepted accounting principles and federal
income tax purposes, for those securities which the Trust has placed on
non-accrual status, the amount of distributable net investment income may differ
between book and federal income tax purposes for a particular period. These
differences are temporary in nature, but may result in book basis distributions
in excess of net investment income for certain periods.
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
net assets of the Trust.
For the six months ended April 30, 1999, the Trust recognized expenses of
approximately $600 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.
21
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
For the six months ended April 30, 1999, the Trust recognized expenses of
approximately $25,400 representing Van Kampen's cost of providing accounting,
legal and certain shareholder services to the Trust.
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 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. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $10,397,878 and $9,024,149, respectively.
4. PREFERRED SHARES
The Trust has outstanding 250 Remarketed Preferred Shares ("RP"). Dividends are
cumulative and the dividend rate is currently reset every 28 days through a
remarketing process. The rate in effect on April 30, 1999 was 3.310%. During the
six months ended April 30, 1999, the rates ranged from 3.150% to 3.790%.
The Trust pays annual fees equivalent to .25% of the preferred share
liquidation value for the remarketing efforts associated with the preferred
shares. These fees are included as a component of Preferred Share Maintenance
expense.
The RP are redeemable at the option of the Trust in whole or in part at the
liquidation value of $100,000 per share plus accumulated and unpaid dividends.
The Trust is subject to certain asset coverage tests and the RP are subject to
mandatory redemption if the tests are not met.
22
<PAGE> 24
DIVIDEND REINVESTMENT PLAN
The Trust offers a Dividend Reinvestment Plan (the "Plan") in which Common
Shareholders may elect to have dividends and capital gains distributions
automatically reinvested in Common Shares of the Trust. The service is entirely
voluntary and you may join or withdraw at any time.
HOW TO PARTICIPATE
If you wish to elect to participate in the Plan and your shares are held in your
own name, call 1-800-341-2929 for more information and a 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
State Street Bank and Trust Company, as your Plan Agent, serves as agent for the
Common Shareholders in administering the Plan. After the Trust declares a
dividend or determines to make a capital gains distribution, the Plan Agent
will, as agent for the participants, receive the cash payment and use it to buy
Common Shares in the open market, on the New York Stock Exchange or elsewhere,
for the participants' accounts. The Trust will not issue any new Common Shares
in connection with the Plan. All reinvestments are in full and fractional Common
Shares, 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 capital gains distribution paid subsequent to written
notice of the change 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, with the written consent of the
Trust, by providing at least 90 days written notice to all Participants in the
Plan.
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 capital gains distributions.
RIGHT TO WITHDRAW
You may withdraw from the Plan at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company. 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
23
<PAGE> 25
VAN KAMPEN INVESTMENT GRADE MUNICIPAL TRUST
BOARD OF TRUSTEES
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
DENNIS J. MCDONNELL*--Chairman
STEVEN MULLER
THEODORE A. MYERS
DON G. POWELL*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*
OFFICERS
DENNIS J. MCDONNELL*
President
A. THOMAS SMITH, III*
Vice President and Secretary
JOHN L. SULLIVAN*
Vice President,
Treasurer and Chief Financial Officer
CURTIS W. MORELL*
Vice President and Chief Accounting Officer
TANYA M. LODEN*
Controller
PETER W. HEGEL*
EDWARD C. WOOD, III*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN
INVESTMENT ADVISORY CORP.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
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 LLP
303 East Wacker Drive
Chicago, Illinois 60601
* "Interested" persons of the Trust, as defined in the Investment
Company Act of 1940.
(C) Van Kampen Funds Inc., 1999 All rights reserved.
(SM) denotes a service mark of Van Kampen Funds Inc.
24
<PAGE> 26
YEAR 2000 READINESS DISCLOSURE
Like other mutual funds, financial and business organizations and individuals
around the world, the Trust could be adversely affected if the computer systems
used by the Trust's investment adviser and other service providers do not
properly process and calculate date-related information and data from and after
January 1, 2000. This is commonly known as the "Year 2000 Problem." The Trust's
investment adviser is taking steps that it believes are reasonably designed to
address the Year 2000 Problem with respect to computer systems that it uses and
to obtain reasonable assurances that comparable steps are being taken by the
Trust's other major service providers. At this time, there can be no assurances
that these steps will be sufficient to avoid any adverse impact to the Trust. In
addition, the Year 2000 Problem may adversely affect the markets and the issuers
of securities in which the Trust may invest that, in turn, may adversely affect
the net asset value of the Trust. Improperly functioning trading systems may
result in settlement problems and liquidity issues. In addition, corporate and
governmental data processing errors may result in production problems for
individual companies or issuers and overall economic uncertainty. Earnings of
individual issuers will be affected by remediation costs, which may be
substantial and may be reported inconsistently in U.S. and foreign financial
statements. Accordingly, the Trust's investments may be adversely affected. The
statements above are subject to the Year 2000 Information and Readiness
Disclosure Act, which may limit the legal rights regarding the use of such
statements in the case of dispute.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> INVESTMENT GRADE MUNI
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> APR-30-1999
<INVESTMENTS-AT-COST> 74,586,465
<INVESTMENTS-AT-VALUE> 76,981,686
<RECEIVABLES> 1,578,942
<ASSETS-OTHER> 19,317
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 78,579,945
<PAYABLE-FOR-SECURITIES> 2,690,147
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 515,177
<TOTAL-LIABILITIES> 3,205,324
<SENIOR-EQUITY> 25,000,000
<PAID-IN-CAPITAL-COMMON> 52,748,409
<SHARES-COMMON-STOCK> 4,839,000
<SHARES-COMMON-PRIOR> 4,839,000
<ACCUMULATED-NII-CURRENT> (994,649)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,774,360)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,395,221
<NET-ASSETS> 75,374,621
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,405,131
<OTHER-INCOME> 0
<EXPENSES-NET> (390,412)
<NET-INVESTMENT-INCOME> 2,014,719
<REALIZED-GAINS-CURRENT> 54,722
<APPREC-INCREASE-CURRENT> (1,230,756)
<NET-CHANGE-FROM-OPS> 838,685
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,055,283)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1,216,598)
<ACCUMULATED-NII-PRIOR> (954,085)
<ACCUMULATED-GAINS-PRIOR> (3,829,082)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 225,958
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 390,412
<AVERAGE-NET-ASSETS> 75,936,878
<PER-SHARE-NAV-BEGIN> 10.662
<PER-SHARE-NII> 0.416
<PER-SHARE-GAIN-APPREC> (0.243)
<PER-SHARE-DIVIDEND> (0.425)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 10.410
<EXPENSE-RATIO> 1.55
</TABLE>
