<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
Two World Trade Center, New York, New York 10048
LETTER TO THE SHAREHOLDERS April 30, 1996
DEAR SHAREHOLDER:
During the first six months of InterCapital Insured Municipal Trust's current
fiscal year, interest rates initially declined, but reversed direction in
February and began to move higher. Last year's favorable bond market
environment was created by proposals to achieve a balanced federal budget
within five to seven years and by continued easing of Federal Reserve Board
monetary policy. However, budget negotiations reached a political impasse
early in 1996 and federal offices were partially closed. This had an adverse
impact on bonds. Concerns also developed about an increase in the pace of the
economic recovery, which was marked by unexpectedly strong job growth in
March and rising commodity prices. The bond market reacted to these
developments by pushing yields sharply higher.
MUNICIPAL MARKET CONDITIONS
Long-term municipal revenue bond yields as tracked by The Bond Buyer Revenue
Bond Index* moved from 6.02 percent in October 1995 to a low of 5.63 percent
in January 1996. Interest rates subsequently began to rise in mid-February on
signs of stronger economic growth and renewed inflationary fears. The Index
yield reached 6.16 percent in April. Yields on one-year municipal notes
declined from 3.82 percent to 3.70 percent over the past six months. The
yield pickup for extending maturities from one-to-thirty years was 246 basis
points at the end of April.
The risk of flat-tax legislation had caused the ratio of Revenue Bond Index
yields to 30-year U.S. Treasury bond yields to rise from 85 to 94 percent
between March and September 1995. However, as the prospects of a flat tax
faded, the ratio improved to 92 percent by the end of April. A declining
ratio means that municipal bond prices have outperformed U.S.
- ------------
* 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 Investors Service, Inc., and
AA+ to A- by Standard & Poor's Corp.
<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS April 30, 1996, continued
Treasury prices. Over the previous eight year period prior to the flat-tax
debate, long-term municipal yields averaged 89 percent of U.S. Treasury
yields.
Municipal underwriting activity was fueled by the trend of lower interest
rates in 1995. Between November 1995 and April 1996, new issue volume
increased 45 percent versus the same period a year ago. Despite a resurgence
in underwriting, dealers have continued to withdraw from the municipal
business.
PERFORMANCE
The Trust's new asset value (NAV) declined from $15.86 to $15.41 per share
during the six-month period ended April 30, 1996. Based on this NAV change
plus reinvestment of tax-free dividends totaling $0.51 per share and a
long-term capital gains distribution totaling $0.08 per share, the Trust's
total return was 1.02 percent. Over the same period, the Trust's market price
on the New York Stock Exchange increased from $14.625 to $14.875 per share.
Based on this market price change and reinvestment of tax-free dividends and
distributions, the Trust's total return was 5.75 percent. The Trust began the
period trading at an 8 percent discount to NAV and closed at a 3 percent
discount. Undistributed net investment income totaled $0.096 per share on
April 30, 1996 versus $0.127 per share six months ago.
INTERCAPITAL INSURED QUALITY MUNICIPAL TRUST
(The chart below represents information which appears as a
graphic printed report for the Five Largest Sectors as of April 30, 1996.)
MUNICIPAL SECTORS PERCENT
- ----------------- -------
Other 29%
Refunded 20%
Hospital 18%
Industrial Development/ 15%
Pollution Control
Water & Sewer 11%
General Obligations 7%
A pie chart reflecting the Credit of the total long term
investments as of April 30, 1996.
CREDIT PERCENT
- ------ -------
Municipal Bond Investors Assur. Corp. (MBIA) 35%
AMBAC Indemnity Corp. (AMBAC) 26%
Financial Guaranty Ins. Co. (FGIC) 25%
Financial Security Assur. Inc. (FSA) 8%
GNMA 6%
PORTFOLIO STRUCTURE
On April 30, 1996, the Trust had over $477 million in net assets diversified
among 12 long-term municipal sectors and 51 credits. The five largest sectors
represented 71 percent of net assets. The average maturity and call
protection of the Trust's long-term portfolio were 23 and 6 years,
respectively. Each position in the portfolio was backed by triple "A" rated
bond insurers or U.S. government guaranteed securities. This is to insure the
timely payment of principal and interest.
THE IMPACT OF LEVERAGING
As discussed in previous reports, the total income available for distribution
to common shareholders includes incremental income provided by the Trust's
outstanding Auction Rate Preferred Shares (ARPS). ARPS dividends reflect
prevailing short-term interest rates on maturities normally ranging from one
week
<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS April 30, 1996, continued
to one year. Incremental income to common shares depends on two factors:
first, the spread between interest earned on long-term bonds in the
established portfolio of investments and the ARPS auction rate plus ARPS
expenses; second, the amount of ARPS outstanding. The greater the amount of
ARPS outstanding, the greater the amount of incremental income available for
distribution to common shareholders.
ARPS yields ranged between 3.19 and 4.20 percent during the six-months ended
April 30, 1996. Over the same period, ARPS leverage contributed $0.05 per
share to common share earnings. As of April 30, 1996, $130 million in ARPS
were outstanding, which represented 27 percent of net assets.
LOOKING AHEAD
Tax-reduction proposals may receive additional publicity. However, the
balance between the supply of new issues and demand created by maturities and
calls for redemption should remain positive for the municipal market.
Long-term municipal securities currently yield 90 percent of the yield on
U.S. Treasury securities and may be expected to move in tandem with the
Treasury market.
The Trust's procedure for reinvestment of all dividends and distributions on
common shares is through purchases 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, 1996, the Trust purchased and retired 125,400 shares of common
stock at a weighted average market discount of 6.16 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 Insured Municipal 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>
INTERCAPITAL INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------- ---------------------------------------------------------------- -------- ----------- --------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS (98.0%)
General Obligation (7.3%)
$ 8,000 Chicago, Illinois, Refg Ser 1992 (AMBAC) ....................... 6.25 % 01/01/11 $ 8,457,200
15,000 Cook County, Illinois, Ser 1992 A (MBIA) ....................... 6.60 11/15/22 15,655,200
6,000 Louisiana, Ser 1992 A (AMBAC) .................................. 6.50 05/01/08 6,502,140
4,000 Clark County, Nevada, Transportation Impr Ltd Tax Ser 06/01/92 B
(AMBAC) ...................................................... 6.50 06/01/17 4,337,920
- ----------- --------------
33,000 34,952,460
- ----------- --------------
Educational Facilities Revenue (4.0%)
Massachusetts Health & Educational Facilities Authority,
15,000 Northeastern University Ser E (MBIA) .......................... 6.55 10/01/22 15,862,950
3,000 Stonehill College Ser E (MBIA) ................................ 6.60 07/01/20 3,210,060
- ----------- --------------
18,000 19,073,010
- ----------- --------------
Electric Revenue (3.2%)
10,000 Piedmont Municipal Power Agency, South Carolina, 1991 Refg Ser
(FGIC) ........................................................ 6.25 01/01/18 10,233,900
5,000 Lower Colorado River Authority, Texas, Jr Lien Refg Ser 1992
(AMBAC) ....................................................... 6.00 01/01/17 5,011,400
- ----------- --------------
15,000 15,245,300
- ----------- --------------
Hospital Revenue (18.1%)
15,000 Delaware Health Facilities Authority, Medical Center of Delaware
Ser 1992 (MBIA) .............................................. 6.25 10/01/06 16,380,150
5,000 Brevard County Health Facilities Authority, Florida, Wuesthoff
Memorial Hospital Ser 1992 A (MBIA) ........................... 6.625 04/01/13 5,278,150
5,000 Jacksonville Health Facilities Authority, Florida, Memorial
Regional Rehabilitation Center Ser 1992 (MBIA) ............... 6.625 05/01/22 5,248,100
8,955 Illinois Health Facilities Authority, Southern Illinois Hospital
Services Ser 1991 (MBIA) ..................................... 6.625 03/01/20 9,282,932
3,700 Massachusetts Health & Educational Facilities Authority, McLean
Hospital Ser C (FGIC) ........................................ 6.625 07/01/15 3,876,416
5,000 Farmington Hills Hospital Finance Authority, Michigan, Botsford
General Hospital Ser 1992 A (MBIA) ............................ 6.50 02/15/22 5,143,800
15,000 Amarillo Health Facilities Corporation, Texas, High Plains
Baptist Hospital Ser 1992 A & B (FSA) .......................... 6.562 01/01/22 15,452,700
Wisconsin Health & Educational Facilities Authority,
15,000 Children's Hospital Inc Ser 1992 B (FGIC) ..................... 6.50 08/15/21 15,472,800
10,000 Wausau Hospital Inc Ser 1991 B (AMBAC) ........................ 6.70 08/15/20 10,429,900
- ----------- --------------
82,655 86,564,948
- ----------- --------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited) continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------- ---------------------------------------------------------------- -------- ----------- --------------
Industrial Development/Pollution Control Revenue (15.1%)
$ 6,000 Delaware Economic Development Authority, Delmarva Power & Light
Co Ser 1992 A (AMT) (AMBAC) ............................. ..... 6.85 % 05/01/22 $ 6,324,300
5,000 Lawrenceburg, Indiana, Indiana & Michigan Power Co Refg Ser D
(Secondary FGIC) ............................................. 7.00 04/01/15 5,476,050
20,000 Burlington, Kansas, Kansas Gas & Electric Co Ser 1991 (MBIA) ... 7.00 06/01/31 21,888,200
7,500 Humboldt County, Nevada, Sierra Pacific Power Co Refg Ser 1987
(AMBAC) ....................................................... 6.55 10/01/13 8,017,650
5,000 New York State Energy Research & Development Authority, Brooklyn
Union Gas Co 1996 Ser (MBIA) ................................. 5.50 01/01/21 4,722,750
7,000 Montgomery County Industrial Development Authority,
Pennsylvania, Philadelphia Electric Co Refg 1991 Ser B (MBIA) .. 6.70 12/01/21 7,456,820
Brazos River Authority, Texas,
7,500 Houston Lighting & Power Co 1992 A (AMBAC) .................... 6.70 03/01/17 8,040,975
10,000 Texas Utilities Electric Co Collateralized Ser 1992 A (AMT)
(AMBAC) ....................................................... 6.75 04/01/22 10,498,800
- ----------- --------------
68,000 72,425,545
- ----------- --------------
Mortgage Revenue - Single Family (6.7%)
3,000 Alaska Housing Finance Corporation, Governmental 1995 Ser A
(MBIA) ........................................................ 5.875 12/01/24 2,889,420
19,700 Nebraska Investment Finance Authority, GNMA-Backed 1992 Ser A &
B (AMT) ...................................................... 6.71 09/15/24 19,987,226
9,000 Ohio Housing Finance Agency, GNMA-Backed Ser A 1 & 2 (AMT) ..... 6.903 03/01/31 9,207,720
- ----------- --------------
31,700 32,084,366
- ----------- --------------
Nursing & Health Related Facilities Revenue (0.8%)
3,500 New York State Medical Care Facilities Finance Agency, Mental
Health 1992 Ser A (FGIC) ..................................... 6.375 08/15/17 3,602,270
- ----------- --------------
Public Facilities Revenue (6.5%)
10,000 Orange County, Florida, Tourist Development Tax Ser 1992 B
(AMBAC) ....................................................... 6.00 10/01/21 10,031,000
20,000 Hudson County, New Jersey, Correctional Refg Ser 1992 COPs
(MBIA) ........................................................ 6.60 12/01/21 21,010,600
- ----------- --------------
30,000 31,041,600
- ----------- --------------
Resource Recovery Revenue (2.0%)
9,000 Detroit Economic Development Corporation, Michigan, Ser 1991 A
(AMT) (FSA) .................................................. 6.875 05/01/09 9,582,480
- ----------- --------------
Transportation Facilities Revenue (2.7%)
5,000 Greater Orlando Aviation Authority, Florida, Ser 1992 A (AMT)
(FGIC) ........................................................ 6.50 10/01/12 5,220,100
5,000 Hillsborough County Port District, Florida, Tampa Port Authority
Refg Ser 1995 (AMT) (FSA) .................................... 5.75 06/01/13 5,003,750
2,500 Hawaii, Airports Second Lien Ser 1991 (AMT) (MBIA) ............. 6.75 07/01/21 2,615,075
- ----------- --------------
12,500 12,838,925
- ----------- --------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited) continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------- ---------------------------------------------------------------- -------- ----------- --------------
Water & Sewer Revenue (11.4%)
$ 7,790 Kenton County Water District #1, Kentucky, Refg Ser 1992 (FGIC) 6.375% 02/01/17 $ 8,189,471
3,000 Detroit, Michigan, Water Supply Refg Ser 1992 (FGIC) ........... 6.375 07/01/22 3,079,230
6,400 Bergen County Utilities Authority, New Jersey, 1992 Water
Pollution Ser A (FGIC) ....................................... 6.50 12/15/12 6,732,992
5,000 Cleveland, Ohio, Waterworks Ser F 1992 B (AMBAC) ............... 6.50 01/01/11 5,341,550
10,000 Grand Strand Water & Sewer Authority, South Carolina, Refg Ser
1992 (MBIA) .................................................. 6.00 06/01/19 10,060,000
5,000 North Charleston Sewer District, South Carolina, Refg Ser 1992 A
(MBIA) ........................................................ 6.00 07/01/18 5,025,050
15,000 Metropolitan Seattle, Washington, Sewer Ser U (FGIC) ........... 6.60 01/01/32 15,849,450
- ----------- --------------
52,190 54,277,743
- ----------- --------------
Refunded (20.2%)
10,000 Reedy Creek Improvement District, Florida, Utilities Ser 1991-1
(MBIA) ........................................................ 6.50 10/01/01++ 10,959,800
5,000 Fulton-De Kalb Hospital Authority, Georgia, Grady Memorial
Hospital Ser 1991 (AMBAC) .................................... 6.90 01/01/01++ 5,547,150
9,300 New Orleans, Louisiana, Issue of 1992 (FGIC) ................... 7.50 09/01/02++ 10,662,450
5,000 Chippewa Valley Schools, Michigan, 1992 (FGIC) ................. 6.375 05/01/01++ 5,428,950
7,000 Detroit, Michigan, Water Supply Refg Ser 1992 (FGIC) ........... 6.375 07/01/02++ 7,615,440
6,000 Detroit City School District, Michigan, Ser 1991 (Secondary
AMBAC) ........................................................ 7.10 05/01/01++ 6,728,160
15,000 Harrisburg Authority, Pennsylvania, Water Ser of 1992 (FGIC) ... 6.50 08/15/02++ 16,386,300
15,000 South Carolina Public Service Authority, 1991 Ser D (AMBAC) .... 6.50 07/01/02++ 16,587,450
5,000 Chattanooga-Hamilton County Hospital Authority, Tennessee,
Erlanger Medical Center 1991 Ser A (FSA) ..................... 6.854 05/01/01++ 5,510,550
10,000 Harris County, Texas, Sr Lien Toll Road Refg Ser 1992 A (AMBAC) 6.50 08/15/02++ 11,072,800
- ----------- --------------
87,300 96,499,050
- ----------- --------------
442,845 TOTAL MUNICIPAL BONDS (Identified Cost $437,321,011) ................................ 468,187,697
- ----------- --------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited) continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------- ---------------------------------------------------------------- -------- ----------- --------------
SHORT-TERM MUNICIPAL OBLIGATION (0.4%)
$ 2,100 Metropolitan Nashville Airport Authority, Tennessee, American
Airlines Inc Refg Ser 1995 B (Demand 05/01/96)
(Identified Cost $2,100,000) ................................... 4.05*% 10/01/12 $ 2,100,000
- ----------- --------------
$444,945 TOTAL INVESTMENTS (Identified Cost $439,421,011) (a) .................... 98.4% 470,287,697
===========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES .......................... 1.6 7,633,037
--------------
NET ASSETS .............................................................. 100.0% $477,920,734
==============
</TABLE>
- ------------
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
++ Prerefunded to call date shown.
* Current coupon of variable rate security.
(a) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation was
$31,145,653 and the aggregate gross unrealized depreciation was
$278,967, resulting in net unrealized appreciation of
$30,866,686.
Bond Insurance:
- ---------------
AMBAC AMBAC Indemnity Corporation.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
Geographic Summary of Investments
Based on Market Value as a Percent of Net Assets
April 30, 1996
<TABLE>
<CAPTION>
<S> <C>
Alaska 0.6%
Delaware 4.8
Florida 8.7
Georgia 1.2
Hawaii 0.5
Illinois 7.0
Indiana 1.1
Kansas 4.6
Kentucky 1.7%
Louisiana 3.6
Massachusetts 4.8
Michigan 7.9
Nebraska 4.2
Nevada 2.6
New Jersey 5.8
New York 1.7
Ohio 3.0%
Pennsylvania 5.0
South Carolina 8.8
Tennessee 1.6
Texas 10.5
Washington 3.3
Wisconsin 5.4
------
Total 98.4%
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $439,421,011) ....................................... $470,287,697
Cash .................................................................. 228,963
Interest receivable ................................................... 7,711,908
Deferred organizational expenses ...................................... 12,896
Prepaid expenses and other assets ..................................... 55,169
---------------
TOTAL ASSETS ........................................................ 478,296,633
---------------
LIABILITIES:
Payable for:
Investment management fee ........................................... 147,518
Dividends to preferred shareholders ................................. 113,392
Accrued expenses and other payables ................................... 114,989
---------------
TOTAL LIABILITIES ................................................... 375,899
---------------
NET ASSETS:
Preferred shares of beneficial interest (1,000,000 shares authorized
of non-participating $.01 par value, 2,600 shares outstanding) ...... 130,000,000
---------------
Common shares of beneficial interest (unlimited shares authorized of
$.01 par value, 22,576,813 shares outstanding) ....................... 313,794,664
Net unrealized appreciation ........................................... 30,866,686
Accumulated undistributed net investment income ....................... 2,175,993
Accumulated undistributed net realized gain ........................... 1,083,391
---------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS ........................ 347,920,734
---------------
TOTAL NET ASSETS .................................................... $477,920,734
===============
NET ASSET VALUE PER COMMON SHARE
($347,920,734 divided by 22,576,813 common shares outstanding) ...... $ 15.41
===============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME ........................ $14,561,175
--------------
EXPENSES
Investment management fee .............. 858,620
Auction commission fees ................ 162,184
Transfer agent fees and expenses ...... 86,450
Professional fees ...................... 58,085
Trustees' fees and expenses ............ 20,967
Shareholder reports and notices ....... 19,469
Registration fees ...................... 16,250
Custodian fees ......................... 10,642
Organizational expenses ................ 7,746
Auction agent fees ..................... 7,708
Servicing fees ......................... 6,483
Other .................................. 9,963
--------------
TOTAL EXPENSES BEFORE EXPENSE OFFSET 1,264,567
LESS: EXPENSE OFFSET ................. (10,602)
--------------
TOTAL EXPENSES AFTER EXPENSE OFFSET . 1,253,965
--------------
NET INVESTMENT INCOME ................ 13,307,210
--------------
NET REALIZED AND UNREALIZED GAIN
(LOSS):
Net realized gain ...................... 1,083,388
Net change in unrealized appreciation . (8,890,801)
--------------
NET LOSS ............................. (7,807,413)
--------------
NET INCREASE ........................... $ 5,499,797
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED OCTOBER 31,
APRIL 30, 1996 1995
- -------------------------------------------------- ----------------- -----------------
<S> <C> <C>
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ............................. $ 13,307,210 $ 27,213,113
Net realized gain ................................. 1,083,388 1,805,528
Net change in unrealized appreciation ............. (8,890,801) 35,661,756
------------
NET INCREASE .................................... 5,499,797 64,680,397
----------------- ------------
DIVIDENDS TO PREFERRED SHAREHOLDERS FROM NET
INVESTMENT INCOME ................................. (2,462,950) (5,175,254)
----------------- ------------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS
FROM:
Net investment income ............................. (11,545,049) (23,327,851)
Net realized gain ................................. (1,805,535) (426,388)
--------------- -----------
TOTAL ........................................... (13,350,584) (23,754,239)
----------------- -----------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST:
Preferred ......................................... -- (30,000,000)
Common ............................................ (1,881,937) (6,994,598)
----------------- -----------
TOTAL ........................................... (1,881,937) (36,994,598)
----------------- -----------
TOTAL DECREASE .................................. (12,195,674) (1,243,694)
NET ASSETS:
Beginning of period ............................... 490,116,408 491,360,102
----------------- -----------
END OF PERIOD
(Including undistributed net investment income
of $2,175,993 and $2,876,782, respectively) .... $477,920,734 $490,116,408
================= ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (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. The Trust was organized as a Massachusetts
business trust on October 3, 1991 and commenced operations on February 28,
1992.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- Portfolio securities are valued by an outside
independent pricing service approved by the Trustees. The pricing service has
informed the Trust that in valuing the 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 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 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
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (unaudited) continued
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 -- Dean Witter InterCapital Inc. (the "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.
Such expenses 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 a management
fee, calculated weekly and payable monthly, by applying the annual rate of
0.35% to the Trust's weekly net assets.
Under the terms of the Agreement, 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, 1996
aggregated $4,950,000 and $10,228,455, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Trust's transfer agent. At April 30, 1996, the Trust had transfer agent fees
and expenses payable of approximately $32,000.
The Trust has 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, 1996 included in Trustees' fees and expenses in the
Statement of Operations amounted to $10,279. At April 30, 1996, the Trust had
an accrued pension liability of $30,969 which is included in accrued expenses
in the Statement of Assets and Liabilities.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (unaudited) continued
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 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 TH for gross total proceeds of $180,000,000 of which
1,000 shares of Series TU have subsequently been retired. 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.
Dividends, which are cumulative, are reset through auction procedures.
<TABLE>
<CAPTION>
RESET RANGE OF DIVIDEND
SHARES* SERIES RATE* DATE RATES**
- --------- -------- ----------- ---------- ------------------
<S> <C> <C> <C> <C>
800 TU 3.449% 07/09/96 3.449% -3.60%
1,800 TH 3.85 05/02/96 3.19 - 4.20
</TABLE>
- ------------
* As of April 30, 1996.
** For the six months ended April 30, 1996.
Subsequent to April 30, 1996 and up through June 7, 1996, the Trust paid
dividends to Series TU and TH at rates ranging from 3.40% to 3.85%,
respectively, in the aggregate amount of $497,526.
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.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
INTERCAPITAL INSURED MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (unaudited) continued
5. COMMON SHARES OF BENEFICIAL INTEREST
Transactions in common shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
CAPITAL PAID
PAR IN EXCESS OF
SHARES VALUE PAR VALUE
------------ ---------- --------------
<S> <C> <C> <C>
Balance, October 31, 1994 ............................................... 23,222,113 $232,221 $322,438,977
Treasury shares purchased and retired (weighted average discount 7.50%)* (519,900) (5,199) (6,989,398)
------------ ---------- --------------
Balance, October 31, 1995 ............................................... 22,702,213 227,022 315,449,579
Treasury shares purchased and retired (weighted average discount 6.16%)* (125,400) (1,254) (1,880,683)
------------ ---------- --------------
Balance, April 30, 1996 ................................................. 22,576,813 $225,768 $313,568,896
============ ========== ==============
</TABLE>
- ------------
* The Trustees have voted to retire the shares purchased.
6. DIVIDENDS TO COMMON SHAREHOLDERS
The Trust declared the following dividends from net investment income:
<TABLE>
<CAPTION>
AMOUNT PER
DECLARATION DATE SHARE RECORD DATE PAYABLE DATE
- ----------------- ----------- -------------- ---------------
<S> <C> <C> <C>
April 23, 1996 $0.085 May 3, 1996 May 17, 1996
June 21, 1996
May 28, 1996 $0.085 June 7, 1996
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<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 PERIOD
FOR THE SIX FOR THE YEAR ENDED OCTOBER 31 FEBRUARY 28, 1992*
MONTHS ENDED -------------------------------- THROUGH
APRIL 30, 1996** 1995** 1994** 1993** OCTOBER 31, 1992**
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(unaudited)
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period. $ 15.86 $ 14.27 $ 16.95 $14.25 $14.06
---------------- ----------- ---------- -------- --------
Net investment income ............... 0.67 1.21 1.33 1.35 0.79
Net realized and unrealized gain
(loss) ............................ (0.42) 1.65 (2.67) 2.69 0.19
---------------- ----------- ---------- -------- ---------
Total from investment operations .... 0.25 2.86 (1.34) 4.04 0.98
---------------- ----------- ---------- --------- ---------
Less dividends and distributions
from:
Net investment income ......... (0.51) (1.02) (1.12) (1.12) (0.49)
Common share equivalent of
dividends paid to preferred
shareholders .................... (0.11) (0.23) (0.22) (0.22) (0.13)
Net realized gain ................. (0.08) (0.02) -- -- --
---------------- ----------- ---------- ---------- ---------
Total dividends and distributions .... (0.70) (1.27) (1.34) (1.34) (0.62)
Offering costs charged against
capital ............................. -- -- -- -- (0.17)
---------------- ----------- ---------- ---------- ---------
Net asset value, end of period ....... $ 15.41 $ 15.86 $ 14.27 $16.95 $14.25
================ =========== ========== ========== =========
Market value, end of period .......... $ 14.875 $ 14.625 $ 12.625 $16.75 $15.25
================ =========== ========== ========== =========
TOTAL INVESTMENT RETURN+ ............. 5.75%(1) 24.59% (18.84)% 17.73% 4.94%(1)
RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS:
Total expenses before expense
offset ..... ................ 0.70%(2)(4) 0.72%(3) 0.77% 0.80% 0.72%(2)
Net investment income before
preferred stock dividends ........... 7.38%(2) 7.88%(3) 8.45% 8.52% 8.10%(2)
Preferred stock dividends ............ 1.37%(2) 1.50% 1.38% 1.40% 1.34%(2)
Net investment income available
to common shareholders ............. 6.01%(2) 6.38% 7.07% 7.12% 6.76%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands .......................... $477,921 $490,116 $491,360 $578,506 $515,025
Asset coverage on preferred shares
at end of period .................. 367% 377% 307% 321% 286%
Portfolio turnover rate ............ 1%(1) 3% 6% 1% 1%(1)
<FN>
- ------------
* 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
brokerage commissions.
(1) Not annualized.
(2) Annualized.
(3) The above annualized expense and net investment income ratios would
have been 0.71% and 7.89%, respectively, which reflects 0.01% effect
for custody cash credits.
(4) The above annualized expense ratio would have been 0.70% after expense
offset.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TRUSTEES
- -----------------------------------------------------------------------------
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
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.
INTERCAPITAL
INSURED
MUNICIPAL
TRUST
SEMIANNUAL REPORT
APRIL 30, 1996
