<PAGE>
INTERCAPITAL QUALITY MUNICIPAL INVESTMENT TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- -----------------------------------------------------------------------------
Fixed-income market conditions have steadily improved since late last
year. Bonds began to rally in November 1994 on signs of slower economic
growth in the wake of a progressively tighter Federal Reserve monetary
policy. The recent trend toward lower long-term interest rates is in marked
contrast to most of 1994 when rapidly rising rates created one of the most
severe bear markets for bonds in recent history.
MUNICIPAL MARKET CONDITIONS
Long-term municipal bond yields, as tracked by The Bond Buyer Revenue Bond
Index,* dropped from a high of 7.37 percent in November 1994 to 6.29 percent
at the end of April 1995. This 108 basis point decline in yield corresponded
to a 13 percent price increase for 30-year municipal bonds. Short-term
municipal interest rates remained basically unchanged over the past six
months. Thus, the yield spread or difference between short-term and long-term
municipal bond interest rates narrowed as long-term rates declined.
The seasonal demand for municipals in December more than offset the
uncertainty caused by the Orange County, California bankruptcy filing. The
market anticipated cash inflows from the reinvestment of coupons and the
proceeds from bond calls and maturities in January at a time of scarce
supply. Tax-exempt bonds outperformed U.S. Treasury bonds through February
1995. The ratio of the Revenue Bond Index yield to the 30-year U.S. Treasury
yield fell from a high of 92 percent in November to 84 percent at the end of
February. A declining ratio means that municipal bond prices have been
stronger than U.S. Treasury prices. Tax reform proposals that advanced the
concept of a flat tax were partially responsible for municipals
underperforming Treasuries in March and April. By the end of April, the
Revenue/Treasury yield ratio had risen to 86 percent.
The pace of new-issue underwriting over the first four months of 1995 was
40 percent below the same period last year. With bond maturities and calls
estimated to exceed new issues coming to market in 1995, the outstanding
supply of municipal securities is expected to decline. This imbalance should
continue to strengthen municipal market conditions.
PERFORMANCE
The net asset value (NAV) of InterCapital Quality Municipal Investment
Trust (IQT) increased from $14.09 to $14.75 per share during the six-month
period ended April 30, 1995. Based on this NAV change plus reinvestment of
tax-free dividends totaling $0.54 per share, the Trust's total NAV return for
the period was 8.79 percent. Concurrently, the Trust's market price on the
New York Stock Exchange rose from $12.75 to $14.375 per share. Based on this
stock price change and reinvestment of dividends, the Trust's total market
return for the period was 17.24 percent. The Trust began the period trading
at a 9.5 percent discount to NAV and closed at a 2.5 percent discount.
- ------------
*The Bond Buyer Revenue Bond Index is an arithmetic average of the yields
of 25 selected municipal revenue bonds with 30-year maturities. Credit
ratings of these bonds range from Aa1 to Baa1 by Moody's and AA+ to A- by
Standard & Poor's.
<PAGE>
<PAGE>
PORTFOLIO STRUCTURE
As of April 30, 1995, IQT's long-term investments were diversified among
14 specific municipal sectors and 50 issuers. The four largest sectors -
mortgage revenue-single family, hospital, refunded and industrial
development/pollution control - represented 55 percent of net assets. The
average maturity, and call protection of the Trust's long-term holdings were
17 years and 7 years, respectively. At the end of the period, the Trust's net
assets totaled approximately $374 million. The credit-quality ratings of the
Trust's long-term portfolio are summarized below:
<TABLE>
<CAPTION>
MOODY'S OR STANDARD & POOR'S RATING PERCENT
- -------------------------------------- -----------
<S> <C>
Aaa or AAA ............................ 44%
Aa or AA .............................. 22
A or A ................................ 33
Baa or BBB ............................ 1
</TABLE>
THE IMPACT OF LEVERAGING
The Trust's common shares continue to be leveraged. As reported
previously, leverage is created through the issuance of auction rate
preferred shares (ARPS). The ARPS's auction periods normally range between
one week and one year. Proceeds from ARPS underwritings are used to purchase
additional long-term municipal bonds. Following the payment of ARPS
dividends, the common shares earn incremental income when the portfolio yield
is higher than the cost of the preferred shares (dividend plus operating and
remarketing expenses). Although higher short-term interest rates have
narrowed the yield spread this year, ARPS continue to provide positive
incremental income to common shareholders.
Leverage also impacts NAV. ARPS normally account for one-third of a
leveraged fund's underwritten capital structure. This produces a volatility
factor for common shares of 1.5 times the price change of bonds held in the
portfolio. Since the value of the preferred shares does not fluctuate, the
NAV of the common shares reflects the full market price change of the
portfolio's investments.
As bond prices eroded in 1994 the degree of leverage and volatility
increased. The purchase and retirement of ARPS mitigated the impact of
leverage. However, as bonds rallied in 1995, leverage improved performance.
Over the last six months, the Trust purchased and retired $15 million in par
amount of ARPS. Currently, $105 million ARPS are outstanding. Additional ARPS
purchases may occur if ARPS become unprofitable (a negative yield spread) or
the degree of leverage increases beyond its normal range.
DIVIDEND RESERVES
The monthly dividend was maintained at $0.09 per share. At the end of
April 1995, the Trust had undistributed net investment income of $0.106 per
share versus $0.139 per share on October 31, 1994. This dividend reserve or
"cushion" helps sustain the Trust's current monthly dividend. Higher yields
in future ARPS auctions and ARPS retirements may further erode the cushion.
Future declines in IQT's cushion may lead to adjustment of the common-share
dividend.
<PAGE>
<PAGE>
LOOKING AHEAD
Slower economic growth in 1995 and the extent of the Federal Reserve
Board's previous interest rate moves have improved bond market expectations.
Investor demand for municipal securities should also be sustained by
significant bond maturities, calls for redemption and diminished new-issue
supply. Changing market conditions and the profitability of ARPS are among
the factors that will continue to determine the Trust's future level of
income and influence its market price.
The Trust's procedure for reinvestment of all dividends and distributions
on common shares is through purchase in the open market. This method helps to
support the market value of the Trust's shares. In addition, we would like to
remind you that the Trustees have approved a procedure whereby the Trust,
when appropriate, may purchase shares in the open market or in privately
negotiated transactions at a price not above market value or net asset value,
whichever is lower at the time of purchase. During the six-month period ended
April 30, 1995, the Trust purchased 223,200 shares of common stock at a
weighted average market discount of 8 percent. The Trust may also utilize
procedures to reduce or eliminate the amount of outstanding ARPS, including
their purchase in the open market or in privately negotiated transactions.
We appreciate your ongoing support of InterCapital Quality Municipal
Investment Trust and look forward to continuing to serve your investment
needs.
Very truly yours,
/s/ Charles A. Fiumefreddo
Charles A. Fiumefreddo
Chairman of the Board
<PAGE>
<PAGE>
INTERCAPITAL QUALITY MUNICIPAL INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS April 30, 1995 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ---------- ---------- --------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS (94.9%)
GENERAL OBLIGATION (0.5%)
$ 2,000 Seattle, Washington, Refg Ser 1993 ............................. 5.65 % 01/01/20 $ 1,838,080
- ----------- --------------
EDUCATIONAL FACILITIES REVENUE (0.6%)
2,500 Auburn University, Alabama, Ser 1993 (MBIA) .................... 5.25 06/01/13 2,281,700
- ----------- --------------
ELECTRIC REVENUE (7.7%)
5,000 North Carolina Municipal Power Agency #1, Catawba Ser 1992 .... 6.25 01/01/17 4,810,250
10,000 San Antonio, Texas, Electric & Gas Refg Ser 1994-A ............ 5.00 02/01/14 8,810,400
4,500 Intermountain Power Agency, Utah, Refg Fifth Crossover Ser .... 7.20 07/01/19 4,722,390
10,000 Washington Public Power Supply System, Proj #1 Refg Ser 1991 A 6.875 07/01/17 10,323,100
- ----------- --------------
29,500 28,666,140
- ----------- --------------
HOSPITAL REVENUE (16.0%)
10,000 Wichita, Kansas, CSJ Health System of Wichita Inc Ser 1991 .... 7.00 11/15/18 10,153,300
Massachusetts Health & Educational Facilities Authority,
10,000 Brigham & Women's Hospital Ser D .............................. 6.75 07/01/24 10,212,500
7,000 St Elizabeth's Hospital of Boston Ser D & E (FSA) ............ 6.70 08/15/21 7,245,980
5,000 Charlotte-Mecklenburg Hospital Authority, North Carolina, Ser
1992 ........................................................... 6.25 01/01/20 5,029,350
9,000 Lorain County, Ohio, Humility of Mary Health Care Corp Ser 1991
B .............................................................. 7.20 12/15/11 9,446,400
11,000 Middleburg Heights, Ohio, Southwest General Hospital Ser 1991 . 7.20 08/15/19 11,507,650
6,000 Salt Lake City, Utah, IHC Hospitals Inc Refg Ser 1991 (AMBAC) . 6.75 05/15/20 6,209,880
- ----------- --------------
58,000 59,805,060
- ----------- --------------
INDUSTRIAL DEVELOPMENT/POLLUTION CONTROL REVENUE (8.6%)
1,000 St Lucie County, Florida, Florida Power & Light Co Ser 1991
(AMT) .......................................................... 7.15 02/01/23 1,045,780
9,000 Hawaii Department of Budget & Financing, Citizens Utilities Co
1991 Ser A & B (AMT) ........................................... 6.66 11/01/21 9,162,540
5,000 Chicago, Illinois, Chicago-O'Hare Int'l Airport/Lufthansa
German
Airlines Inc Ser 1990 (AMT) .................................... 7.125 05/01/18 5,151,750
4,000 New York State Energy Research & Development Authority,
Brooklyn Union Gas Co 1991 Ser A & B (AMT) ..................... 6.952 07/01/26 4,189,920
12,000 Richland County, South Carolina, Union Camp Corp Ser 1991 B
(AMT) .......................................................... 7.125 09/01/21 12,452,160
- ----------- --------------
31,000 32,002,150
- ----------- --------------
MORTGAGE REVENUE - MULTI-FAMILY (7.0%)
10,000 Illinois Housing Development Authority, 1991 Ser A ............ 8.25 07/01/16 10,778,500
15,000 New Jersey Housing & Mortgage Finance Agency, Presidential
Plaza at Newport - FHA Insured Mortgages Refg 1991 Ser 1 ...... 7.00 05/01/30 15,493,800
- ----------- --------------
25,000 26,272,300
- ----------- --------------
MORTGAGE REVENUE - SINGLE FAMILY (16.2%)
6,535 California Housing Finance Agency, Home 1991 Ser G (AMT) ...... 7.05 08/01/27 6,702,231
10,790 Colorado Housing Finance Authority, Refg 1991 Ser A ........... 7.25 11/01/31 11,148,875
</TABLE>
<PAGE>
<PAGE>
INTERCAPITAL QUALITY MUNICIPAL INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS April 30, 1995 (unaudited) (continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ---------- ---------- --------------
<C> <S> <C> <C> <C>
$ 1,100 District of Columbia Housing Finance Agency,
GNMA Collateralized Ser 1990 B (AMT) ........................... 7.10 % 12/01/24 $ 1,139,171
4,635 Maine Housing Authority, Purchase 1988 Ser D-6 (AMT) .......... 7.25 11/15/19 4,804,641
3,000 Michigan Housing Development Authority, 1991 Ser B ............ 6.95 12/01/20 3,083,550
9,800 Nebraska Investment Finance Authority, GNMA-Backed
1991 Ser A & B (AMT) .......................................... 7.025 09/15/23 10,050,586
5,000 New Hampshire Housing Finance Authority, Residential 1991 Ser D
(AMT) .......................................................... 7.25 07/01/15 5,192,500
5,800 Ohio Housing Finance Agency, GNMA-Backed Ser A 1 & 2 (AMT) .... 6.903 03/01/31 5,921,568
4,000 Tennessee Housing Development Agency, Homeownership Issue T
(AMT) .......................................................... 7.375 07/01/23 4,164,680
5,000 Virginia Housing Development Authority, 1992 Ser A ............ 7.15 01/01/33 5,138,850
3,000 Wyoming Community Development Authority, Federally Insured/
Guaranteed Loans 1988 Ser G (AMT) .............................. 7.25 06/01/21 3,114,990
- ----------- --------------
58,660 60,461,642
- ----------- --------------
NURSING & HEALTH RELATED FACILITIES REVENUE (5.0%)
2,700 New York State Medical Care Facilities Finance Agency,
Mental Health 1991 Ser C ....................................... 7.30 02/15/21 2,875,581
15,000 Emmaus General Authority, Pennsylvania, Local Government
Ser 1988 H (FGIC) .............................................. 7.00 05/15/18 15,947,250
- ----------- --------------
17,700 18,822,831
- ----------- --------------
RESOURCE RECOVERY REVENUE (6.7%)
3,660 Broward County, Florida, SES Broward Co South Ser 1984 ........ 7.95 12/01/08 3,979,811
Detroit Economic Development Corporation, Michigan,
5,000 Ser 1991 A (AMT) (FSA) ........................................ 6.60 05/01/02 5,271,700
5,000 Ser 1991 A (AMT) (FSA) ........................................ 6.875 05/01/09 5,304,250
10,000 Montgomery County Industrial Development Authority,
Pennsylvania, Ser 1989 ......................................... 7.50 01/01/12 10,518,400
- ----------- --------------
23,660 25,074,161
- ----------- --------------
STUDENT LOAN REVENUE (3.6%)
13,000 Pennsylvania Higher Education Assistance Agency, 1991 Ser A & B
(AMT) (AMBAC) .................................................. 6.854 09/01/26 13,459,680
--------------
TRANSPORTATION FACILITIES REVENUE (3.3%)
7,000 Hawaii, Airport Second Ser of 1991 (AMT) ....................... 6.90 07/01/12 7,375,550
5,000 Houston, Texas, Airport Sub Lien Ser 1991 A (AMT) (FGIC) ...... 6.75 07/01/21 5,138,200
- ----------- --------------
12,000 12,513,750
- ----------- --------------
WATER & SEWER REVENUE (2.8%)
10,000 Seattle, Washington, Drainage & Wastewater Utility 1990 ....... 7.125 12/01/20 10,490,400
- ----------- --------------
OTHER REVENUE (2.6%)
10,000 New York Local Government Assistance Corporation, Ser 1995 A .. 6.00 04/01/24 9,666,700
--------------
REFUNDED (14.3%)
6,000 Indiana Municipal Power Agency, 1990 Ser A ..................... 7.10 01/01/15 6,614,160
7,000 Massachusetts Water Resources Authority, 1991 Ser A ........... 6.875 12/01/11 7,809,060
Regional Convention & Sports Complex Authority, Missouri,
6,000 St Louis County Ser 1991 B .................................... 7.00 08/15/21 6,685,380
5,000 State Ser 1991 A .............................................. 6.90 08/15/21 5,573,550
5,000 New York City, New York, 1991 Ser D Group C .................... 8.00 08/01/18 5,849,050
</TABLE>
<PAGE>
<PAGE>
INTERCAPITAL QUALITY MUNICIPAL INVESTMENT TRUST
PORTFOLIO OF INVESTMENTS April 30, 1995 (unaudited) (continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ---------- ---------- --------------
<C> <S> <C> <C> <C>
$ 5,000 New York City Municipal Water Finance Authority, New York,
1991 Ser C .................................................... 7.375% 06/15/14 $ 5,647,000
5,000 New York Local Government Assistance Corporation, Ser 1991 C .. 7.00 04/01/21 5,570,800
5,000 New York State Medical Care Facilities Finance Agency,
Mental Health 1991 Ser C ....................................... 7.30 02/15/21 5,684,500
3,500 Arlington County, Virginia, The Arlington Hospital Ser 1991-A . 7.125 09/01/21 3,938,585
- ----------- --------------
47,500 53,372,085
- ----------- --------------
340,520 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $341,055,709) ..................................... 354,726,679
- ----------- --------------
SHORT-TERM MUNICIPAL OBLIGATIONS (3.3%)
5,100 Massachusetts, Dedicated Income Tax Ser 1990 B (Tender
05/01/95) ...................................................... 5.15* 12/01/97 5,100,000
7,100 Harris County Health Facilities Development Corporation, Texas,
Methodist Hospital 1994 (Tender 05/01/95) ...................... 5.00* 12/01/25 7,100,000
- ----------- --------------
12,200 TOTAL SHORT-TERM MUNICIPAL OBLIGATIONS (IDENTIFIED COST $12,200,000) ........ 12,200,000
- ----------- --------------
$352,720 TOTAL INVESTMENTS (IDENTIFIED COST $353,255,709) (A) ......................... 98.2% 366,926,679
===========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ............................... 1.8 6,793,338
------- --------------
NET ASSETS ................................................................... 100.0 % $373,720,017
======= ==============
</TABLE>
- ------------
Bond Insurance:
AMBAC AMBAC Indemnity Corporation.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
AMT Alternative Minimum Tax.
* Variable or floating rate securities. Coupon rate shown reflects
current rate.
(a) The aggregate cost for federal income tax purposes is $353,255,709;
the aggregate gross unrealized appreciation
is $14,949,224 and the aggregate gross unrealized depreciation is
$1,278,254, resulting in net unrealized
appreciation of $13,670,970.
GEOGRAPHIC SUMMARY OF INVESTMENTS
Based on Market Value as a Percent of Net Assets
April 30, 1995 (unaudited)
<TABLE>
<CAPTION>
<S> <C>
Alabama ............. 0.6%
California .......... 1.8
Colorado ............ 3.0
District of Columbia 0.3
Florida ............. 1.3
Hawaii .............. 4.4
Illinois ............ 4.3
Indiana ............. 1.8%
Kansas .............. 2.7
Maine ............... 1.3
Massachusetts ....... 8.1
Michigan ............ 3.7
Missouri ............ 3.3
Nebraska ............ 2.7
New Hampshire ....... 1.4%
New Jersey .......... 4.2
New York ............ 10.6
North Carolina ...... 2.6
Ohio ................ 7.2
Pennsylvania ........ 10.7
South Carolina ...... 3.3
Tennessee ........... 1.1%
Texas ............... 5.6
Utah ................ 2.9
Virginia ............ 2.4
Washington .......... 6.1
Wyoming ............. 0.8
------
Total ............... 98.2%
======
</TABLE>
See Notes to Financial Statements
<PAGE>
<PAGE>
INTERCAPITAL QUALITY MUNICIPAL INVESTMENT TRUST
FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1995 (unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $353,255,709) ......... $366,926,679
Cash .................................... 120,253
Interest receivable ..................... 6,781,539
Deferred organizational expenses ....... 12,685
Prepaid expenses and other assets ...... 69,650
--------------
TOTAL ASSETS .......................... 373,910,806
--------------
LIABILITIES:
Investment management fee payable ...... 108,339
Accrued expenses and other payables .... 82,450
--------------
TOTAL LIABILITIES ..................... 190,789
--------------
NET ASSETS:
Preferred shares of beneficial interest,
(1,000,000 shares authorized of
non-participating $.01 par value, 2,100
shares outstanding) .................... 105,000,000
--------------
Common shares of beneficial interest,
(unlimited shares authorized of $.01
par value, 18,217,813 shares
outstanding) ........................... 253,435,960
Net unrealized appreciation ............. 13,670,970
Accumulated undistributed net investment
income ................................. 1,933,860
Accumulated net realized loss ........... (320,773)
--------------
NET ASSETS APPLICABLE TO COMMON
SHAREHOLDERS ......................... 268,720,017
--------------
TOTAL NET ASSETS ...................... $373,720,017
==============
NET ASSET VALUE PER COMMON SHARE,
($268,720,017 divided by 18,217,813
common shares outstanding) ............. $14.75
==============
</TABLE>
STATEMENT OF OPERATIONS For the six months
ended April 30, 1995 (unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME ........................ $12,099,431
-------------
EXPENSES
Investment management fee ............. 638,423
Auction commission fees ............... 156,328
Transfer agent fees and expenses ..... 54,950
Professional fees ..................... 50,911
Shareholder reports and notices ...... 17,895
Trustees' fees and expenses ........... 16,757
Auction agent fees .................... 15,868
Registration fees ..................... 11,035
Organizational expenses ............... 4,458
Other ................................. 13,620
-------------
TOTAL EXPENSES ....................... 980,245
-------------
NET INVESTMENT INCOME ................ 11,119,186
-------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain ..................... 1,146,372
Net change in unrealized appreciation 11,139,324
-------------
NET GAIN ............................. 12,285,696
-------------
NET INCREASE ......................... $23,404,882
=============
</TABLE>
See Notes to Financial Statements
<PAGE>
<PAGE>
INTERCAPITAL QUALITY MUNICIPAL INVESTMENT TRUST
FINANCIAL STATEMENTS (continued)
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
APRIL 30, 1995 ENDED OCTOBER
(UNAUDITED) 31, 1994
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ................................................... $ 11,119,186 $ 25,125,115
Net realized gain (loss) ................................................ 1,146,372 (1,002,781)
Net change in unrealized appreciation ................................... 11,139,324 (42,743,964)
---------------- ----------------
Net increase (decrease) ................................................ 23,404,882 (18,621,630)
---------------- ----------------
Dividends to shareholders from net investment income:
Common .................................................................. (9,868,026) (22,878,556)
Preferred ............................................................... (1,890,144) (4,001,354)
---------------- ----------------
Total .................................................................. (11,758,170) (26,879,910)
---------------- ----------------
Transactions in shares of beneficial interest:
Common .................................................................. (2,812,961) (2,189,774)
Preferred ............................................................... (15,000,000) (20,000,000)
---------------- ----------------
Total transactions ..................................................... (17,812,961) (22,189,774)
---------------- ----------------
Total decrease ......................................................... (6,166,249) (67,691,314)
NET ASSETS:
Beginning of period ...................................................... 379,886,266 447,577,580
---------------- ----------------
END OF PERIOD (including undistributed net investment income of
$1,933,860 and $2,572,844, respectively) ................................ $373,720,017 $379,886,266
================ ================
</TABLE>
See Notes to Financial Statements
<PAGE>
<PAGE>
INTERCAPITAL QUALITY MUNICIPAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited)
- -----------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- InterCapital Quality Municipal
Investment Trust (the "Trust") is registered under the Investment Company Act
of 1940, as amended, as a diversified, closed-end management investment
company. The Trust was organized as a Massachusetts business trust on July 2,
1991 and commenced operations on September 27, 1991.
The following is a summary of significant accounting policies:
A. Valuation of Investments -- Portfolio securities are valued for the Trust
by an outside independent pricing service approved by the Trustees. The
pricing service has informed the Trust that in valuing the Trust's portfolio
securities, it uses both a computerized matrix of tax-exempt securities and
evaluations by its staff, in each case based on information concerning market
transactions and quotations from dealers which reflect the bid side of the
market each day. The Trust's portfolio securities are thus valued by
reference to a combination of transactions and quotations for the same or
other securities believed to be comparable in quality, coupon, maturity, type
of issue, call provisions, trading characteristics and other features deemed
to be relevant. Short-term debt securities having a maturity date of more
than sixty days at time of purchase are valued on a mark-to-market basis
until sixty days prior to maturity and thereafter at amortized cost based on
their value on the 61st day. Short-term debt securities having a maturity
date of sixty days or less at the time of purchase are valued at amortized
cost.
B. Accounting for Investments -- Security transactions are accounted for on
the trade date (date the order to buy or sell is executed). Realized gains
and losses on security transactions are determined by the identified cost
method. The Trust amortizes premiums and accretes discounts on securities
purchased over the life of the respective securities. Interest income is
accrued daily.
C. Federal Income Tax Status -- It is the Trust's policy to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable and nontaxable
income to its shareholders. Accordingly, no federal income tax provision is
required.
D. Dividends and Distributions to Shareholders -- The Trust records
dividends and distributions to its shareholders on the ex-dividend date. The
amount of dividends and distributions from net investment income and net
realized capital gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassification. Dividends
and distributions which exceed net investment income and net realized capital
gains for financial reporting purposes but not for tax purposes are reported
as dividends in excess of net investment income or distributions in excess of
net realized capital gains. To the extent they exceed net investment income
and net realized capital gains for tax purposes, they are reported as
distributions of paid-in-capital.
<PAGE>
<PAGE>
INTERCAPITAL QUALITY MUNICIPAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- -----------------------------------------------------------------------------
E. Organizational Expenses -- Dean Witter InterCapital Inc. (the
"Investment Manager") paid the organizational expenses of the Trust's common
shares in the amount of $45,000 which have been deferred and are being
amortized by the straight-line method over a period not to exceed five years
from the commencement of operations.
2. INVESTMENT MANAGEMENT AGREEMENT --Pursuant to an Investment Management
Agreement, the Trust pays its Investment Manager a management fee, calculated
weekly and payable monthly, by applying the annual rate of 0.35% to the
Trust's average weekly net assets.
Under the terms of the Agreement, in addition to managing the Trust's
investments, the Investment Manager maintains certain of the Trust's books
and records and furnishes, at its own expense, office space, facilities,
equipment, clerical, bookkeeping and certain legal services and pays the
salaries of all personnel, including officers of the Trust who are employees
of the Investment Manager. The Investment Manager also bears the cost of
telephone services, heat, light, power and other utilities provided to the
Trust.
3. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES -- The cost of
purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended April 30, 1995 aggregated
$9,760,000 and $36,523,002, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Trust's transfer agent. At April 30, 1995, the Trust had transfer agent fees
and expenses payable of approximately $7,000.
The Trust adopted an unfunded noncontributory defined benefit pension plan
covering all independent Trustees of the Trust who will have served as
independent Trustees for at least five years at the time of retirement.
Benefits under this plan are based on years of service and compensation
during the last five years of service. Aggregate pension costs for the six
months ended April 30, 1995, included in Trustees' fees and expenses in the
Statement of Operations amounted to $6,134. At April 30, 1995, the Trust had
an accrued pension liability of $15,539 which is included in accrued expenses
in the Statement of Assets and Liabilities.
4. PREFERRED SHARES OF BENEFICIAL INTEREST --The Trust is authorized to issue
up to 1,000,000 non-participating preferred shares of beneficial interest
having a par value of $.01 per share, in one or more series, with rights as
determined by the Trustees, without approval of the common shareholders. On
November 5, 1991, the Trust issued 2,800 shares of Auction Rate Preferred
Shares ("Preferred Shares") consisting of 1,400 shares each of Series A and
Series B for gross total proceeds of $140,000,000. The preferred shares have
a liquidation value of $50,000 per share plus the redemption premium, if any,
plus accumulated but unpaid dividends, whether or not declared, thereon to
the date of distribution. The Trust may redeem such shares, in whole or in
part, at the original purchase price of $50,000 per share plus accumulated
but unpaid dividends, whether or not declared, thereon to the date of
redemption.
During the six months ended April 30, 1995, the Trust purchased and
retired 300 Series B shares in the amount of $15,000,000.
Dividends, which are cumulative, are reset through auction procedures.
<PAGE>
<PAGE>
INTERCAPITAL QUALITY MUNICIPAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
RESET RANGE OF
SHARES SERIES RATE* DATE DIVIDEND RATES**
- -------- -------- ------- --------- ----------------
<S> <C> <C> <C> <C>
1,400 A 4.30% 5/02/95 2.92% - 4.30%
700 B 4.20 9/07/95 3.06 - 5.25
<FN>
- ------------
* As of April 30, 1995.
** For the period ended April 30, 1995.
</TABLE>
Subsequent to April 30, 1995 and up through June 9, 1995, the Trust paid
dividends to Series A and B at a rate of 4.30% and rates ranging from 3.90%
to 4.45%, respectively, in the aggregate amount of $484,976.
The Trust is subject to certain restrictions relating to the preferred
shares. Failure to comply with these restrictions could preclude the Trust
from declaring any distributions to common shareholders or purchasing common
shares and/or could trigger the mandatory redemption of preferred shares at
liquidation value.
The preferred shares, entitled to one vote per share, generally vote with
the common shares but vote separately as a class to elect two Trustees and on
any matters affecting the rights of the preferred shares.
5. COMMON SHARES OF BENEFICIAL INTEREST --Transactions in common shares of
beneficial interest were as follows:
<TABLE>
<CAPTION>
CAPITAL PAID
IN EXCESS OF
SHARES PAR VALUE PAR VALUE
------------ ---------- --------------
<S> <C> <C> <C>
Balance, October 31, 1993 ............ 18,607,113 $186,071 $258,252,624
Treasury shares purchased and retired
(weighted average discount 8.87%)* . (166,100) (1,661) (2,188,113)
------------ ---------- --------------
Balance, October 31, 1994 ............ 18,441,013 184,410 256,064,511
Treasury shares purchased and retired
(weighted average discount 8.02%)* . (223,200) (2,232) (2,810,729)
------------ ---------- --------------
Balance, April 30, 1995 .............. 18,217,813 $182,178 $253,253,782
============ ========== ==============
<FN>
- ------------
* The Trustees have voted to retire the shares purchased.
</TABLE>
6. FEDERAL INCOME TAX STATUS -- At October 31, 1994, the Trust had a net
capital loss carryover which may be used to offset future capital gains to
the extent provided by regulations as follows:
<TABLE>
<CAPTION>
AVAILABLE THROUGH OCTOBER 31,
- ----------------------------------------------------------
1999 2000 2001 2002 TOTAL
- -------- --------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
$4,000 $89,000 $371,000 $1,003,000 $1,467,000
======== ========= ========== ============ ===========
</TABLE>
<PAGE>
<PAGE>
INTERCAPITAL QUALITY MUNICIPAL INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- -----------------------------------------------------------------------------
7. DIVIDENDS TO COMMON SHAREHOLDERS -- The Trust has declared the following
dividends from net investment income:
<TABLE>
<CAPTION>
DECLARATION AMOUNT PER RECORD PAYABLE
DATE SHARE DATE DATE
- -------------- ------------- --------------- --------------
<S> <C> <C> <C>
April 25, 1995 $0.09 May 5, 1995 May19,1995
June 6, 1995 0.09 June 16, 1995 June 30, 1995
</TABLE>
8. SELECTED QUARTERLY FINANCIAL DATA --
<TABLE>
<CAPTION>
QUARTERS ENDED
------------------------------------
4/30/95 1/31/95
----------------- -----------------
PER PER
TOTAL* SHARE TOTAL* SHARE
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Total investment income .......... $5,924 $0.33 $6,175 $0.33
Net investment income ............ 5,441 0.30 5,678 0.31
Net realized and unrealized gain 6,969 0.39 5,317 0.30
</TABLE>
<TABLE>
<CAPTION>
QUARTERS ENDED
--------------------------------------------------------------------------------
10/31/94 7/31/94 4/30/94 1/31/94
-------------------- ----------------- -------------------- -----------------
PER PER PER PER
TOTAL* SHARE TOTAL* SHARE TOTAL* SHARE TOTAL* SHARE
---------- -------- -------- ------- ---------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income $6,693 $0.36 $6,791 $0.37 $6,776 $0.36 $7,198 $0.39
Net investment income . 6,120 0.33 6,231 0.34 6,195 0.33 6,579 0.35
Net realized and
unrealized gain (loss) (16,393) (0.87) 2,444 0.13 (33,353) (1.79) 3,555 0.19
</TABLE>
<TABLE>
<CAPTION>
QUARTERS ENDED
--------------------------------------------------------------------------
10/31/93 7/31/93 4/30/93 1/31/93
----------------- ----------------- ----------------- -----------------
PER PER PER PER
TOTAL* SHARE TOTAL* SHARE TOTAL* SHARE TOTAL* SHARE
-------- ------- -------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income $7,320 $0.39 $7,186 $0.39 $7,276 $0.39 $7,093 $0.38
Net investment income . 6,686 0.36 6,591 0.35 6,674 0.36 6,554 0.35
Net realized and
unrealized gain ....... 8,711 0.47 5,165 0.28 11,117 0.60 13,099 0.70
<FN>
- ------------
* Totals expressed in thousands.
</TABLE>
<PAGE>
<PAGE>
INTERCAPITAL QUALITY MUNICIPAL INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------
Selected ratios and per share data for a common share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED FOR THE YEAR ENDED OCTOBER 31, SEPTEMBER 27, 1991*
APRIL 30, 1995** THROUGH OCTOBER 31,
(UNAUDITED) 1994** 1993** 1992** 1991**
---------------- ---------- ---------- ---------- -------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period ........................... $ 14.09 $ 16.53 $ 14.51 $ 14.09 $ 14.06
---------------- ---------- ---------- ---------- -------------------
Net investment income ............. 0.61 1.35 1.42 1.41 0.06
Net realized and unrealized gain
(loss) ........................... 0.69 (2.34) 2.05 0.38 (0.01)
---------------- ---------- ---------- ---------- -------------------
Total from investment operations . 1.30 (0.99) 3.47 1.79 0.05
---------------- ---------- ---------- ---------- -------------------
Less dividends and distributions
from:
Net investment income ............ (0.54) (1.23) (1.23) (0.97) --
Common share equivalent of
dividend paid to preferred
shareholders .................... (0.10) (0.22) (0.22) (0.25) --
---------------- ---------- ---------- ---------- -------------------
Total dividends and distributions (0.64) (1.45) (1.45) (1.22) --
Offering costs charged against
capital .......................... -- -- -- (0.15) (0.02)
---------------- ---------- ---------- ---------- -------------------
Net asset value, end of period ... $ 14.75 $ 14.09 $ 16.53 $ 14.51 $ 14.09
================ ========== ========== ========== ===================
Market value, end of period ...... $ 14.375 $ 12.75 $ 16.625 $ 15.00 $ 15.25
================ ========== ========== ========== ===================
TOTAL INVESTMENT RETURN+ .......... 17.24%(1) (16.77)% 19.68% 4.83% 1.67%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) ................... $373,720 $379,886 $447,578 $409,916 $262,146
Ratios to average net assets of
common shareholders:
Total expenses ................... 0.76%(2) 0.82% 0.81% 0.79% 0.49%(2)
Net investment income before
preferred stock dividends ....... 8.58%(2) 8.80% 9.05% 9.64% 5.01%(2)
Preferred stock dividends ........ 1.46%(2) 1.40% 1.38% 1.70% N/A%(2)
Net investment income available
to common shareholders .......... 7.12%(2) 7.40% 7.67% 7.94% 5.01%(2)
Asset coverage on preferred shares
at end of period ................. 355% 316% 320% 293% N/A%
Portfolio turnover rate ........... 3%(1) 10% 3% 9% 0%(1)
</TABLE>
- ------------
* Commencement of operations.
** The per share amounts were computed using an average number of shares
outstanding during the period.
+ Total investment return is based upon the current market value on the
last day of each period reported. Dividends and distributions are assumed
to be reinvested at the prices obtained under the Trust's dividend
reinvestment plan. Total investment return does not reflect sales charges
or brokerage commissions.
(1) Not annualized.
(2) Annualized.
See Notes to Financial Statements
- -----------------------------------------------------------------------------
The financial statements included herein have been taken from the records of
the Trust without examination by the independent accountants and accordingly
they do not express an opinion thereon.
<PAGE>
<PAGE>
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
James F. Willison
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
InterCapital
Quality
Municipal
Investment
Trust
Semiannual Report
April 30, 1995
