<PAGE>
DEAN WITTER INTERCAPITAL INSURED MUNICIPAL TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- - --------------------------------------------------------------------------------
When InterCapital Insured Municipal Trust (NYSE symbol: IMT) began its new
fiscal year in November 1993, municipal yields had reached record lows in a
trend that began six years ago. Strong economic growth in the fourth quarter of
1993 prompted concern about inflation and caused interest rates to rise. This
induced the Federal Reserve Board to tighten monetary policy by raising the
federal-funds rate -- the interest rate that banks charge each other for
overnight loans -- from 3.00 percent to 3.75 percent in three separate moves
between early February and April. This action was presented as a preemptive
strike against inflation. However, the fixed-income markets interpreted the
change in Fed policy as the beginning of a trend toward higher interest rates.
In mid-May the Federal Reserve Board initiated another round of tightening with
a 50 basis point increase in both the federal-funds rate and the discount rate
- - -- the interest rate the Federal Reserve charges member banks for loans.
By the end of April the bond market was battered. Interest rates were at
levels not seen in over a year. Long-term municipal bond yields as measured by
THE BOND BUYER Revenue Bond Index* increased by 86 basis points from 5.56
percent to 6.42 percent between November and April. This corresponded to a price
decline of more than 11 percent.
New-issue underwriting totaled $290 billion in 1993, a 23 percent increase
over the previous high of $235 billion set in 1992. Refunding issues, which are
used by state and local governments to refinance higher-coupon debt, represented
66 percent of total volume last year. It is estimatd that 1994's underwriting
volume will decline by 30 percent to about $200 billion and that approximately
$260 billion in bonds will either mature or be called. Thus, the amount of
municipal debt outstanding will be reduced. In line with these projections,
new-issue volume for the first four months of 1994 declined by 34 percent and
totaled $59 billion. Refunding activity, the catalyst of last year's record
underwriting, dropped even more sharply.
PERFORMANCE
For the six-month period ended April 30, 1994, the Trust paid shareholders
tax-free income dividends totaling $0.61 per share, including an extra income
dividend of $0.10 per share distributed in December. IMT's total return for this
period was -10.05 percent. This calculation is based on a change in the Trust's
New York Stock Exchange market price from $16.75 on October 31, 1993 to $14.50
per share on April 30, 1994 and includes the reinvestment of all dividends and
distributions. Over the same period, the Trust's net asset value fell by roughly
11 percent, from $16.95 per share to $15.07 per share. Although IMT is leveraged
with Auction Rate Preferred Shares (as discussed below), its NAV decline was in
line with the unleveraged Revenue Bond Index. The defensive nature of the high-
coupon bonds in the portfolio aided performance. As of April 30, 1994, the Trust
was trading at a 3.78 percent discount to NAV.
PORTFOLIO STRUCTURE
The portfolio's long-term investments were diversified among 13 specific
municipal sectors and 55 credits. The three largest sectors were hospital
revenue, water and sewer revenue and general obligation bonds, representing 49
percent of net assets. The average maturity and call protection of the Trust's
long-term holdings were 23 years and 8 years, respectively. Bonds subject to the
alternative minimum tax (AMT) represented approximately 9 percent of net assets.
At the end of the period, the Trust's net assets exceeded $534 million.
Each position in the portfolio was backed either by bond insurers that are
rated Aaa by Moody's Investors Service, Inc. and AAA by Standard & Poor's Corp.
or by U.S. government-guaranteed securities. This is to ensure the timely
payment of principal and interest. Additionally, holdings representing 12
percent of the portfolio had been
- - --------------------------
*THE BOND BUYER Revenue Bond Index is an arithmetic average of the yields of 25
selected municipal revenue bonds with 30-year maturities. Ratings of these
bonds range from Aaa to Baa1 by Moody's and AAA to A- by S&P.
<PAGE>
prerefunded and were further secured by escrows of U.S. government or agency
securities. The distribution of long-term credit enhancements was:
<TABLE>
<CAPTION>
MUNICIPAL BOND INSURANCE PERCENT
- - ------------------------------------------------------------------------------------ -----------
<S> <C>
AMBAC Indemnity Corporation (AMBAC)................................................. 30.1%
Financial Guaranty Insurance Company (FGIC)......................................... 24.5
Financial Security Assurance Inc. (FSA)............................................. 4.0
Municipal Bond Investors Assurance Corporation (MBIA)............................... 38.4
U.S. Treasury Escrow or GNMA-Backed Obligations..................................... 3.0
</TABLE>
PREFERRED SHARE LEVERAGE
In addition to common shares, the Trust has also issued two $90 million
series of Auction Rate Preferred Shares (ARPS). Dividend and distribution
payments for these shares rank ahead of the common shares. ARPS are short-term
securities with maturities normally ranging from one week to one year. The
dividend rates on tax-free ARPS are established by an auction process, when the
maturity is rolled over. The Trust uses the proceeds from ARPS issuance to
purchase long-term municipal bonds.
The common shares are impacted by the preferred shares in two ways. First,
following the payment of the dividend on the ARPS, common shares receive any
extra incremental income when the long-term portfolio yield is higher than the
cost of the ARPS (yield plus expenses). Second, the preferred shares leverage
the common shares by a factor of approximately 1.5 times, thus multiplying any
market change in NAV. Over the past six months, incremental tax-free income from
the ARPS leverage maintained common share dividends and increased the level or
cushion of undistributed net investment income. As of April 30, 1994, an amount
equivalent to $0.142 per share had been accumulated in this cushion to help
sustain the Trust's current dividend. The average ARPS rate on the Trust's two
outstanding series as of April 30, 1994 was 2.66 percent, with all resets
scheduled to occur within the next 2 months. Higher yields in future ARPS
auctions may begin to erode the Trust's cushion of undistributed net investment
income available for distribution to common shareholders. If the cushion were to
erode significantly over time, the Trust would take appropriate action, which
could include an adjustment in the common dividend and/or a reduction in the
amount of ARPS.
Leverage was a positive influence on the overall value of the portfolio for
the first two years of the Trust's existence. However, the increase in interest
rates over the past few months has adversely impacted NAV.
LOOKING AHEAD
A continuation of low new-issue supply, coupled with significant bond calls
and maturities should sustain investor demand for municipals. However, the
overall direction of interest rates will primarily be determined by the strength
of the economy, the trend of inflation and the Federal Reserve Board's response
to economic conditions.
The Trust's procedure for reinvestment of all dividends and distributions on
common shares is by purchase in the open market. This method helps to support
the market value of the Trust's shares. In addition, the Trustees have approved
a procedure whereby the Trust may attempt to reduce or eliminate a market value
discount from net asset value by repurchasing common shares in the open market
or in privately negotiated transactions. The Trust may also utilize procedures
to reduce or eliminate the amount of outstanding ARPS, including their
repurchase in the open market or in privately negotiated transactions.
We appreciate your support of InterCapital Insured Municipal Trust and look
forward to continuing to serve your investment needs.
Very truly yours,
Charles A. Fiumefreddo
CHAIRMAN OF THE BOARD
<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS APRIL 30, 1994 (UNAUDITED)
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- - ----------- ---------- --------- ---------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS (95.1%)
GENERAL OBLIGATION (13.0%)
$ 2,000 Wilmington, Delaware, Ser of 1992 B (FGIC Insured) (Prerefunded)...... 6.25 % 4/ 1/12 $ 2,145,240
8,000 Chicago, Illinois, Refg Ser 1992 (AMBAC Insured)...................... 6.25 1/ 1/11 8,031,920
20,000 Cook County, Illinios, Ser 1992 A (MBIA Insured)...................... 6.60 11/15/22 20,394,600
6,000 Louisiana, Ser 1992 A (AMBAC Insured)................................. 6.50 5/ 1/08 6,286,620
9,300 New Orleans, Louisiana, Issue of 1992 (FGIC Insured).................. 7.50 9/ 1/21 10,152,717
7,250 Chippewa Valley Schools, Michigan, 1992 (FGIC Insured) (Prerefunded).. 6.375 5/ 1/21 7,798,535
9,500 Detroit City School District, Michigan, Ser 1991 (Secondary AMBAC
Insured) (Prerefunded).............................................. 7.10 5/ 1/07 10,591,930
4,000 Clark County, Nevada, Transportation Impr Ltd Tax Ser 6/1/92 B (AMBAC
Insured)............................................................ 6.50 6/ 1/17 4,176,160
---------------
- - -----------
69,577,722
66,050
---------------
- - -----------
EDUCATIONAL FACILITIES REVENUE (4.8%)
Massachusetts Health & Educational Facilities Authority,
20,000 Northeastern University Ser E (MBIA Insured)........................ 6.55 10/ 1/22 20,391,600
3,000 Stonehill College Ser E (MBIA Insured).............................. 6.60 7/ 1/20 3,068,730
2,000 University of Pittsburgh, Pennsylvania, 1992 Ser A (MBIA Insured)..... 6.125 6/ 1/21 1,952,120
---------------
- - -----------
25,412,450
25,000
---------------
- - -----------
ELECTRIC REVENUE (9.3%)
5,500 Vero Beach, Florida, Ser 1991 (MBIA Insured) (Prerefunded)............ 6.55 12/ 1/21 5,961,395
10,000 Piedmont Municipal Power Agency, South Carolina, 1991 Refg Ser (FGIC
Insured)............................................................ 6.25 1/ 1/18 9,877,200
South Carolina Public Service Authority,
15,000 1991 Ser D (AMBAC Insured) (Prerefunded)............................ 6.50 7/ 1/24 16,271,250
10,000 1991 Ser D (Secondary MBIA Insured) (Prerefunded)................... 6.625 7/ 1/31 10,929,200
7,000 Lower Colorado River Authority, Texas, Jr Lien Refg Ser 1992 (AMBAC
Insured)............................................................ 6.00 1/ 1/17 6,706,910
---------------
- - -----------
49,745,955
47,500
---------------
- - -----------
HOSPITAL REVENUE (18.1%)
15,000 Delaware Health Facilities Authority, Medical Center of Delaware Ser
1992 (MBIA Insured)................................................. 6.25 10/ 1/06 15,604,350
5,000 Brevard County Health Facilities Authority, Florida, Wuesthoff
Memorial Hospital Ser 1992 A (MBIA Insured)......................... 6.625 4/ 1/13 5,200,450
5,455 Jacksonville Health Facilities Authority, Florida, Memorial Regional
Rehabilitation Center Ser 1992 (MBIA Insured)....................... 6.625 5/ 1/22 5,585,047
10,155 Fulton - Dekalb Hospital Authority, Georgia, Grady Memorial Hospital
Ser 1991 (AMBAC Insured) (Prerefunded).............................. 6.90 1/ 1/20 11,206,449
8,955 Illinois Health Facilities Authority, Southern Illinois Hospital
Services Ser 1991 (MBIA Insured).................................... 6.625 3/ 1/20 9,125,503
</TABLE>
<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS APRIL 30, 1994 (UNAUDITED) (CONTINUED)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- - ----------- ---------- --------- ---------------
<C> <S> <C> <C> <C>
$ 3,700 Massachusetts Health & Educational Facilities Authority, McLean
Hospital Ser C (FGIC Insured)....................................... 6.625 % 7/ 1/15 $ 3,788,837
5,000 Farmington Hills Hospital Finance Authority, Michigan, Botsford
General Hospital Ser 1992 A (MBIA Insured).......................... 6.50 2/15/22 5,064,350
2,500 Chattanooga - Hamilton County Hospital Authority, Tennessee, Erlanger
Medical Center 1991 Ser B RIBS (FSA Insured) (Prerefunded).......... 10.697 + 5/18/21 2,953,125
7,500 Amarillo Health Facilities Corporation, Texas, High Plains Baptist
Hospital Ser 1992 B RIBS (FSA Insured).............................. 9.672 + 1/ 3/22 7,715,625
Wisconsin Health & Educational Facilities Authority,
20,000 Children's Hospital Inc Ser 1992 B (FGIC Insured)................... 6.50 8/15/21 20,146,600
10,000 Wausau Hospital Inc Ser 1991 B (AMBAC Insured)...................... 6.70 8/15/20 10,164,500
---------------
- - -----------
96,554,836
93,265
---------------
- - -----------
INDUSTRIAL DEVELOPMENT / POLLUTION CONTROL REVENUE (12.3%)
6,000 Delaware Economic Development Authority, Delmarva Power & Light Co Ser
1992 A (AMT) (AMBAC Insured)........................................ 6.85 5/ 1/22 6,233,040
5,000 Lawrenceburg, Indiana, Indiana & Michigan Power Co Refg Ser D
(Secondary FGIC Insured)............................................ 7.00 4/ 1/15 5,321,350
20,000 Burlington, Kansas, Kansas Gas & Electric Co Ser 1991 (MBIA Insured).. 7.00 6/ 1/31 21,247,200
7,500 Humboldt County, Nevada, Sierra Pacific Power Co Refg Ser 1987 (AMBAC
Insured)............................................................ 6.55 10/ 1/13 7,731,150
7,000 Montgomery County Industrial Development Authority, Pennsylvania,
Philadelphia Electric Co Refg 1991 Ser B
(MBIA Insured)...................................................... 6.70 12/ 1/21 7,173,390
Brazos River Authority, Texas,
7,500 Houston Lighting & Power Co 1992 A (AMBAC Insured).................. 6.70 3/ 1/17 7,716,675
10,000 Texas Utilities Electric Co Collateralized Ser 1992 A (AMT)
(AMBAC Insured)................................................... 6.75 4/ 1/22 10,238,600
---------------
- - -----------
65,661,405
63,000
---------------
- - -----------
MORTGAGE REVENUE - SINGLE FAMILY (2.9%)
10,700 Nebraska Investment Finance Authority, GNMA-Backed
1992 Ser B RIBS (AMT)............................................... 10.022 + 9/15/24 10,726,750
4,700 Ohio Housing Finance Agency, GNMA-Backed Ser A-2 RIBS (AMT)........... 10.855 + 3/24/31 4,799,875
---------------
- - -----------
15,526,625
15,400
---------------
- - -----------
NURSING & HEALTH RELATED FACILITIES REVENUE (0.7%)
3,500 New York State Medical Care Facilities Finance Agency, Mental Health
1992 Ser A (FGIC Insured)........................................... 6.375 8/15/17 3,538,885
---------------
- - -----------
PUBLIC FACILITIES REVENUE (7.3%)
13,550 Orange County, Florida, Tourist Development Tax Ser 1992 B (AMBAC
Insured)............................................................ 6.00 10/ 1/21 13,107,322
25,000 Hudson County, New Jersey, Correctional Refg Ser 1992 COPs (MBIA
Insured)............................................................ 6.60 12/ 1/21 25,852,000
---------------
- - -----------
38,959,322
38,550
---------------
- - -----------
</TABLE>
<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS APRIL 30, 1994 (UNAUDITED) (CONTINUED)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- - ----------- RESOURCE RECOVERY REVENUE (1.8%) ---------- --------- -------------
<C> <S> <C> <C> <C>
$ 9,000 Detroit Economic Development Corporation, Michigan, Ser 1991 A
(AMT) (FSA Insured)......................................... 6.875% 5/ 1/09 $ 9,439,560
-------------
- - -----------
TAX ALLOCATION REVENUE (0.5%)
2,500 Industry Urban-Development Agency, California, Trans-Ind Redev
Proj #2 Ser 1992 (MBIA Insured)............................. 6.50 11/ 1/16 2,559,975
-------------
- - -----------
TRANSPORTATION FACILITIES REVENUE (5.2%)
3,000 Los Angeles County Metropolitan Transportation Authority,
California, Sales Tax Refg Ser 1993 - A (MBIA Insured)...... 5.625 7/ 1/18 2,743,080
5,000 Greater Orlando Aviation Authority, Florida, Ser 1992 A (AMT)
(FGIC Insured).............................................. 6.50 10/ 1/12 5,075,150
2,500 Hawaii, Airport Second Lien Ser 1991 (AMT) (MBIA Insured)..... 6.75 7/ 1/21 2,570,125
16,000 Harris County, Texas, Sr Lien Toll Road Refg Ser 1992 A (AMBAC
Insured).................................................... 6.50 8/15/17 17,295,520
-------------
- - -----------
27,683,875
26,500
-------------
- - -----------
WATER & SEWER REVENUE (17.5%)
2,500 Jupiter, Florida, Water Refg Ser 1992 A (AMBAC Insured)....... 6.25 10/ 1/18 2,499,800
12,500 Reedy Creek Improvement District, Florida, Utilities Ser
1991-1 (MBIA Insured) (Prerefunded)......................... 6.50 10/ 1/16 13,518,625
7,790 Kenton County Water District #1, Kentucky, Refg Ser 1992 (FGIC
Insured).................................................... 6.375 2/ 1/17 7,907,395
Detroit, Michigan, Water Supply Refg
3,500 Ser 1992 INFLOS (FGIC Insured) (Prerefunded)................ 9.677 + 7/ 1/22 4,055,625
1,500 Ser 1992 INFLOS (FGIC Insured).............................. 9.677 + 7/ 1/22 1,513,125
6,400 Bergen County Utilities Authority, New Jersey, 1992 Water
Pollution Ser A (FGIC Insured).............................. 6.50 12/15/12 6,585,728
5,000 Cleveland, Ohio, Waterworks Ser F 1992 B (AMBAC Insured)...... 6.50 1/ 1/11 5,140,200
15,000 Harrisburg Authority, Pennsylvania, Water Ser of 1992 (FGIC
Insured) (Prerefunded)...................................... 6.50 8/15/16 16,131,450
10,000 Grand Strand Water & Sewer Authority, South Carolina, Refg Ser
1992 (MBIA Insured)......................................... 6.00 6/ 1/19 9,599,200
7,000 North Charleston Sewer District, South Carolina, Refg Ser 1992
A (MBIA Insured)............................................ 6.00 7/ 1/18 6,731,830
20,000 Metropolitan Seattle, Washington, Sewer Ser U (FGIC
Insured).................................................... 6.60 1/ 1/32 20,247,200
-------------
- - -----------
93,930,178
91,190
-------------
- - -----------
OTHER REVENUE (1.7%)
10,000 Indianapolis, Indiana, Gas Utility Ser 1994 A (AMBAC
Insured).................................................... 5.875 6/ 1/24 9,365,200
-------------
- - -----------
491,455 TOTAL MUNICIPAL BONDS (IDENTIFIED COST $484,496,847)................................. 507,955,988
-------------
- - -----------
</TABLE>
<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS APRIL 30, 1994 (UNAUDITED) (CONTINUED)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- - ----------- SHORT-TERM MUNICIPAL OBLIGATIONS (3.2%) ---------- --------- -------------
<C> <S> <C> <C> <C>
$ 5,300 New York City, New York, 1992 Ser D (FGIC Insured) (Tender
5/2/94)..................................................... 2.85* % 2/ 1/21 $ 5,300,000
11,700 New York City Municipal Water Finance Authority, New York,
1994 Ser C (FGIC Insured) (Tender 5/2/94)................... 2.75* 6/15/23 11,700,000
-------------
- - -----------
TOTAL SHORT-TERM MUNICIPAL OBLIGATIONS
17,000 (IDENTIFIED COST $17,000,000)......................................................
17,000,000
-------------
- - -----------
$ 508,455 TOTAL INVESTMENTS (IDENTIFIED COST $501,496,847) (A)................... 98.3 % 524,955,988
- - -----------
- - -----------
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES......................... 1.7 9,314,351
---------- -------------
NET ASSETS............................................................. 100.0 % $ 534,270,339
---------- -------------
---------- -------------
<FN>
- - -------------
* VARIABLE OR FLOATING RATE SECURITIES. COUPON RATE SHOWN REFLECTS CURRENT
RATE.
+ CURRENT COUPON RATE FOR RESIDUAL INTEREST BONDS. THIS RATE RESETS
PERIODICALLY AS THE AUCTION RATE ON THE RELATED SHORT-TERM SECURITIES
FLUCTUATES.
(A) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $501,496,847; THE
AGGREGATED GROSS UNREALIZED APPRECIATION IS $24,221,184 AND THE AGGREGATED
GROSS UNREALIZED DEPRECIATION IS $762,043, RESULTING IN NET UNREALIZED
APPRECIATION OF $23,459,141.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
GEOGRAPHIC SUMMARY OF INVESTMENTS
Based on Market Value as a Percent of Net Assets
APRIL 30, 1994 (UNAUDITED)
- - --------------------------------------------------------------------------------
<TABLE>
<S> <C>
California.......... 1.0 %
Delaware............ 4.5
Florida............. 9.5
Georgia............. 2.1
Hawaii.............. 0.5
Illinois............ 7.0
Indiana............. 2.8
Kansas.............. 3.9
Kentucky............ 1.5%
Louisiana........... 3.1
Maine............... 7.2
Massachusetts....... 5.1
Nebraska............ 2.0
Nevada.............. 2.2
New Jersey.......... 6.1
New York............ 3.8
Ohio................ 1.9%
Pennsylvania........ 4.7
South Carolina...... 10.0
Tennessee........... 0.6
Texas............... 9.3
Washington.......... 3.8
Wisconsin........... 5.7
-------
Total............... 98.3%
-------
-------
</TABLE>
- - --------------------------------------------------------------------------------
<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1994 (UNAUDITED)
- - --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $501,496,847) (Note 1)....... $ 524,955,988
Cash............................................ 509,673
Interest receivable............................. 9,005,140
Deferred organizational expenses (Note 1)....... 43,120
Prepaid expenses and other assets............... 22,130
---------------
TOTAL ASSETS.............................. 534,536,051
---------------
LIABILITIES:
Investment management fee payable
(Note 2)...................................... 185,909
Accrued expenses (Note 3)....................... 79,803
---------------
TOTAL LIABILITIES......................... 265,712
---------------
NET ASSETS:
Preferred shares of beneficial interest
(1,000,000 shares authorized of non-
participating $.01 par value, 3,600 shares
outstanding (Note 4))......................... 180,000,000
---------------
Common shares of beneficial interest (unlimited
shares authorized of $.01 par value,
23,507,113 shares outstanding (Note 5))....... 326,531,630
Accumulated undistributed net realized gain on
investments................................... 950,031
Net unrealized appreciation on investments...... 23,459,141
Accumulated undistributed net investment
income........................................ 3,329,537
---------------
NET ASSETS APPLICABLE TO
COMMON SHAREHOLDERS...................... 354,270,339
---------------
TOTAL NET ASSETS.......................... $ 534,270,339
---------------
---------------
NET ASSET VALUE PER COMMON SHARE ($354,270,339
divided by 23,507,113 common shares
outstanding).................................. $15.07
---------------
---------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1994 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
INTEREST INCOME.............................. $ 17,095,729
--------------
EXPENSES
Investment management fee (Note 2)......... 978,610
Auction commission fees.................... 302,761
Transfer agent fees and expenses........... 78,175
Professional fees.......................... 54,952
Shareholder reports and notices............ 29,330
Registration fees.......................... 18,064
Auction agent fees......................... 16,829
Trustees' fees and expenses (Note 3)....... 15,219
Organizational expenses (Note 1)........... 7,533
Other...................................... 19,077
--------------
TOTAL EXPENSES........................ 1,520,550
--------------
NET INVESTMENT INCOME............... 15,575,179
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 1):
Net realized gain on investments........... 1,015,069
Net change in unrealized appreciation on
investments............................... (44,135,528)
--------------
NET LOSS ON INVESTMENTS............... (43,120,459)
--------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS.......... $ (27,545,280)
--------------
--------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEAR
ENDED APRIL 30, 1994 ENDED
(UNAUDITED) OCTOBER 31, 1993
---------------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income........................................................... $ 15,575,179 $ 31,782,230
Net change in unrealized appreciation on investments............................ (44,135,528) 63,211,553
Net realized gain (loss) on investments......................................... 1,015,069 (65,038)
---------------------- -------------------
Net increase (decrease) in net assets resulting from operations............... (27,545,280) 94,928,745
---------------------- -------------------
Dividends to preferred shareholders from net investment income.................... (2,351,412) (5,207,598)
Dividends to common shareholders from net investment income....................... (14,339,284) (26,239,525)
---------------------- -------------------
Total dividends............................................................... (16,690,696) (31,447,123)
---------------------- -------------------
Total increase (decrease)..................................................... (44,235,976) 63,481,622
NET ASSETS:
Beginning of period................................................................ 578,506,315 515,024,693
---------------------- -------------------
END OF PERIOD (including undistributed net investment income of $3,329,537 and
$4,445,054, respectively)........................................................ $ 534,270,339 $ 578,506,315
---------------------- -------------------
---------------------- -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- - --------------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES--InterCapital Insured Municipal Trust
(the "Trust") is registered under the Investment Company Act of 1940, as
amended, as a diversified, closed-end management investment company. It was
organized on October 3, 1991 as a Massachusetts business trust and commenced
operations on February 28, 1992.
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 grid 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.
B. ACCOUNTING FOR INVESTMENTS--Security transactions are accounted for on
the trade date (date the order to buy or sell is executed). In computing net
investment income, the Trust amortizes premiums and original issue discounts
on fixed income securities. Additionally, with respect to market discount on
bonds purchased after April 30, 1993, a portion of any capital gain realized
upon disposition is recharacterized as taxable investment income. Realized
gains and losses on security transactions are determined on the identified
cost method. 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 reclassifications.
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.
E. ORGANIZATIONAL EXPENSES--The Trust's Investment Manager paid the
organizational expenses of the Trust's common shares in the amount of
$76,000 which have been reimbursed for the full amount thereof 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 "Agreement") with Dean Witter InterCapital Inc., 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.
<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- - --------------------------------------------------------------------------------
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 office space and 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 the proceeds from sales of portfolio securities for the six months
ended April 30, 1994, excluding short-term investments, aggregated $9,844,100
and $24,087,749, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Trust's transfer agent. At April 30, 1994, the Trust had transfer agent fees and
expenses payable of approximately $17,000.
Effective January 1, 1994, the Trust adopted an unfunded noncontributory
defined pension plan covering all independent Trustees of the Trust who will
have served as an independent Trustee 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 cost for
the six months ended April 30, 1994, included in Trustees' fees and expenses in
the Statement of Operations, amounted to $3,945. At April 30, 1994, the Trust
had an accrued pension liability of $4,487 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 the approval of the common shareholders. On April 9, 1992,
the Trust issued 3,600 shares of Auction Rate Preferred Shares ("Preferred
Shares") consisting of 1,800 shares each of Series TU and Series TH for gross
total proceeds of $180,000,000. The preferred shares have a liquidation value of
$50,000 per share plus any accumulated but unpaid dividends plus the redemption
premium, if any, and are redeemable (in whole or in part) on any dividend
payment date.
Dividends, which are cumulative, are reset through auction procedures.
<TABLE>
<CAPTION>
RESET RANGE OF
SHARES SERIES RATE* DATE DIVIDEND RATES**
- - ---------- ---------- ----- ------ ----------------
<S> <C> <C> <C> <C>
1,800 TU 3.10 % 5/3/94 2.05 -3.10 %
1,800 TH 2.581% 7/7/94 2.581-3.29 %
<FN>
- - ----------
* AS OF APRIL 30, 1994.
** FOR THE PERIOD ENDED APRIL 30, 1994.
</TABLE>
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 repurchasing common shares
and/or could trigger the mandatory redemption of preferred shares at liquidation
value.
The preferred shares, which are 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.
<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- - --------------------------------------------------------------------------------
5. COMMON SHARES OF BENEFICIAL INTEREST--Transactions in common shares of
beneficial interest were as follows:
<TABLE>
<CAPTION>
CAPITAL
PAID IN
PAR VALUE EXCESS OF
SHARES OF SHARES PAR VALUE
---------- --------- -----------
<S> <C> <C> <C>
Balance, October 31, 1992, October 31,
1993 and April 30, 1994................ 23,507,113 $235,071 $326,296,559
---------- --------- -----------
---------- --------- -----------
</TABLE>
6. 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 26, 1994 $0.085 May 6, 1994 May 20, 1994
May 31, 1994 $0.085 June 10, 1994 June 24, 1994
</TABLE>
7. FEDERAL INCOME TAX STATUS--At October 31, 1993, the Trust had a net capital
loss carryover of approximately $65,000 which will be available through October
31, 2001 to offset future capital gains, to the extent provided by regulations.
To the extent these carryover losses are used to offset future capital gains, it
is probable that the gains so offset will not be distributed to shareholders.
For the six months ended April 30, 1994 the Trust had approximately $1,015,000
in net realized gains.
8. SELECTED QUARTERLY FINANCIAL DATA--
<TABLE>
<CAPTION>
QUARTERS ENDED*
--------------------------------------
4/30/94 1/31/94
------------------- ---------------
PER PER
TOTAL SHARE TOTAL SHARE
-------- ------- ------ ------
<S> <C> <C> <C> <C>
Total investment income......................... $ 8,361 $ 0.36 $8,735 $0.37
Net investment income........................... 7,629 0.32 7,946 0.34
Net realized and unrealized gain (loss) on
investments.................................... (47,594) (2.02) 4,474 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......................... $ 8,746 $0.37 $8,757 $0.38 $ 8,707 $0.37 $8,557 $0.36
Net investment income........................... 8,031 0.34 7,898 0.34 7,964 0.33 7,889 0.34
Net realized and unrealized gain on
investments.................................... 18,562 0.79 7,109 0.30 16,142 0.69 21,334 0.91
</TABLE>
<TABLE>
<CAPTION>
QUARTERS ENDED*
-------------------------------------------------------
10/31/92 7/31/92 4/30/92**
--------------- ---------------- -----------------
PER PER PER
TOTAL SHARE TOTAL SHARE TOTAL SHARE
------- ----- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Total investment income......................... $ 8,895 $0.37 $8,486 $0.36 $ 3,158 $0.13
Net investment income........................... 8,004 0.34 7,811 0.33 2,847 0.12
Net unrealized gain (loss) on investments....... (27,885) (1.18) 32,013 1.36 255 0.01
<FN>
- - ---------
*TOTALS EXPRESSED IN THOUSANDS OF DOLLARS.
**FOR THE PERIOD FEBRUARY 28, 1992 (COMMENCEMENT OF OPERATIONS) THROUGH APRIL
30, 1992.
</TABLE>
<PAGE>
INTERCAPITAL INSURED MUNICIPAL 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 FEBRUARY 28, 1992*
APRIL 30, 1994 ENDED THROUGH
(UNAUDITED) OCTOBER 31, 1993 OCTOBER 31, 1992
--------------- ---------------- ------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $ 16.95 $14.25 $14.06
------- ------- -------
Net investment income................................ 0.66 1.35 0.79
Net realized and unrealized gain (loss) on
investments......................................... (1.83) 2.69 0.19
------- ------- -------
Total from investment operations....................... (1.17) 4.04 0.98
------- ------- -------
Less dividends and other charges:
Dividends from net investment income................. (0.61) (1.12) (0.49)
Common share equivalent of dividends paid to
preferred shareholders.............................. (0.10) (0.22) (0.13)
Offering costs charged against capital............... -0- -0- (0.17)
------- ------- -------
Total dividends and other charges...................... (0.71) (1.34) (0.79)
------- ------- -------
Net asset value, end of period......................... $ 15.07 $16.95 $14.25
------- ------- -------
------- ------- -------
Market value, end of period............................ $ 14.50 $16.75 $15.25
------- ------- -------
------- ------- -------
TOTAL INVESTMENT RETURN+................................. (10.05)%(1) 17.73% 4.94%(1)
</TABLE>
<TABLE>
<S> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)............... $ 534,270 $ 578,506 $ 515,025
Ratios to average net assets of common shareholders:
Total expenses....................................... 0.80%(2) 0.80% 0.72%(2)
Net investment income before preferred stock
dividends........................................... 8.99%(2) 8.52% 8.10%(2)
Preferred stock dividends............................ 1.24%(2) 1.40% 1.34%(2)
Net investment income available to common
shareholders........................................ 7.75%(2) 7.12% 6.76%(2)
Asset coverage on preferred shares at
end of period......................................... 296% 321% 286%
Portfolio turnover rate................................ 2% 1% 1%
<FN>
- - ---------
* COMMENCEMENT OF OPERATIONS.
+ TOTAL INVESTMENT RETURN IS BASED UPON THE CURRENT MARKET VALUE ON THE FIRST
AND 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.
</TABLE>
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>
TRUSTEES
- - ---------------------------------------
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
Edward R. Telling
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
LEGAL COUNSEL
- - ---------------------------------------
Sheldon Curtis
Two World Trade Center
New York, New York 10048
INDEPENDENT ACCOUNTANTS
- - ---------------------------------------
Price Waterhouse
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
INSURED
MUNICIPAL
TRUST
SEMIANNUAL REPORT
APRIL 30, 1994
