INTERCAPITAL INSURED MUNICIPAL TRUST, N-30D, 1996-01-12

INTERCAPITAL INSURED MUNICIPAL TRUST
N-30D, 1996-01-12

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<PAGE> 1

Two World Trade Center, New York, New York
10048

INTERCAPITAL INSURED MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS October 31, 1995

DEAR SHAREHOLDER:

Bonds have rallied significantly since late last year. Progressive tightening of
monetary policy by the Federal Reserve Board over the 12 months through February
1995 led to slower economic growth and caused bonds to advance. The trend toward
lower long-term interest rates this year was also aided in July by a 25 basis
point reduction in the federal-funds rate (the interest rate banks charge each
other for overnight loans).

MUNICIPAL MARKET CONDITIONS

Long-term municipal bond yields declined from a high of 7.37 percent in November
1994 to 6.02 percent at the end of October 1995, as tracked by The Bond Buyer
Revenue Bond Index*. This 135 basis point decline in yield corresponded to an 11
percent price increase for callable municipal bonds with 30-year maturities.
Similarly, yields on 1-year municipal notes moved from 4.51 percent to 3.82
percent. The yield pickup for extending maturity from 1-to 30-years was at 220
basis points.

Tax-exempt bonds began the year by outperforming U.S. Treasury bonds, but then
deteriorated on a relative basis. The ratio of the Revenue Bond Index yield to
the 30-year U.S. Treasury bond yield moved from 89 percent in December 1994 to
84 percent by the end of February 1995. A declining ratio means that municipal
bond prices have been stronger than U.S. Treasury prices. In the spring the
municipal market began to discount the risk of comprehensive changes in the tax
code created by flat tax rhetoric from Washington. This caused the yield ratio
to reach a high of 95 percent during the summer. Over the past 10 years, long
municipal yields have averaged 89 percent of U.S. Treasury yields.

- ---------------
* 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> 2

INTERCAPITAL INSURED MUNICIPAL TRUST

LETTER TO THE SHAREHOLDERS October 31, 1995, continued

The municipal market continued to experience consolidation in 1995. Municipal
underwriting in the first 10 months of the year was down 16 percent from the
same period in 1994. This change followed a 44 percent drop in volume for all of
1994. The effect of lower volume and profitability was also apparent in the
decisions of several major dealers to withdraw from the municipal business.

TAX REFORM

Flat-tax advocates have generated increased publicity for their proposals and
have affected the municipal market since early 1995. Most of the discussion on
proposed tax-reform measures is based on theoretical concepts, containing broad
assumptions and lacking specific details. Basically, the various plans raise
questions about the fairness of changing from a progressive to a regressive tax
structure. Low flat-tax rate plans call for the elimination of deductions of
mortgage interest, charitable contributions, property taxes, and state and local
income taxes. Should politicians make tax reform a central issue in the 1996
elections, media coverage will expand from the financial page to the front page.
If that happens, municipal bonds could come under further pressure. For example,
when major tax reform turmoil occurred in 1986, municipal yields briefly
exceeded taxable yields.

In addition to the market risk associated with the flat-tax proposals, municipal
credits would also be negatively affected. If mortgage interest and property tax
deductions were eliminated, municipalities would experience a decline in their
property tax base. The loss of state and local income tax deductions would
increase the relative economic disadvantage that high-tax states already face.
The flat tax represents a shift in tax accountability from the federal to local
governments. Taxpayer recognition of the extent of changes under consideration
may impede the passage of comprehensive tax reform.

FUND PERFORMANCE

The net asset value (NAV) of InterCapital Insured Municipal Trust (IMT) rose
from $14.27 to $15.86 per share during the fiscal year ended October 31, 1995.
Based on this NAV change plus reinvestment of tax-free dividends totaling $1.02
per share, the Trust's total return was 19.54 percent. Over the same period,
IMT's market price on the New York Stock Exchange appreciated 15.84 percent from
$12.625 to $14.625 per share. Based on this market price change and reinvestment
of tax-free dividends, the Trust's total return was 24.59 percent. IMT began the
fiscal year trading at an 11.5 percent discount to NAV and closed at an 8
percent discount. Undistributed net investment income totaled $0.127 per share
on October 31, 1995 versus $0.179 per share a year ago.
<PAGE> 3

INTERCAPITAL INSURED MUNICIPAL TRUST

LETTER TO THE SHAREHOLDERS October 31, 1995, continued

PORTFOLIO STRUCTURE
On October 31, 1995, IMT's long-term
portfolio was diversified among 12
long-term municipal sectors and 51
credits. The three largest
sectors -- refunded, hospital revenue and
industrial development/pollution control
revenue bonds -- represented 54 percent of
the portfolio. The average maturity and
call protection of the Trust's long-term
holdings were 20 and 7 years,
respectively. Net assets exceeded $490
million.

Each position in the portfolio was backed
by triple "A" rated bond insurers. This is
to ensure the timely payment of principal
and interest. The distribution of credit
enhancements is illustrated on the right.

THE IMPACT OF LEVERAGING

As discussed in previous reports, the total income available for distribution to
common shareholders includes incremental income provided by Auction Rate
Preferred Share (ARPS) leverage. ARPS dividends reflect prevailing short-term
interest rates on maturities normally ranging from one week to one year.
Incremental income to common shares depends on two factors: first, the spread
between the interest earned on the 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.

The profitability of ARPS declined in 1994 and the first half of 1995. ARPS
yields have moved somewhat lower since the Federal Reserve Board's initial
easing in July 1995. A reduction in the amount of ARPS outstanding -- to control
the portfolio's price volatility last year -- also diminished incremental income
to common shares. Currently, $130 million in ARPS are outstanding. This
represents 27 percent of net assets.

[GRAPH]

CREDIT ENHANCEMENTS AS OF OCTOBER 31, 1995
(% OF TOTAL LONG-TERM INVESTMENTS)

<TABLE>
<S> <C>
MBIA 35%
AMBAC 27%
FGIC 25%
FSA 7%
GNMA 6%
</TABLE>

<PAGE> 4

INTERCAPITAL INSURED MUNICIPAL TRUST

LETTER TO THE SHAREHOLDERS October 31, 1995, continued

LOOKING AHEAD

The slower pace of economic growth in 1995 and the Federal Reserve Board's
previous interest rate moves have improved bond-market expectations. The
decreasing supply of new issues, combined with significant maturities and calls
for redemption, should continue to be positive for the municipal market.
However, tax-reduction proposals are likely to continue to receive publicity and
may cloud the outlook for tax-exempt bonds. With long-term municipal securities
yielding more than 90 percent of the yield on U.S. Treasuries, the market has
already begun the process of discounting the risk that a flat tax might
eventually become law.

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 fiscal year ended October 31, 1995,
the Trust purchased and retired 519,900 shares of common stock at a weighted
average market discount of 7.5 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> 5

INTERCAPITAL INSURED MUNICIPAL TRUST

RESULTS OF ANNUAL MEETING (unaudited)

* * *

On October 31, 1995, an annual meeting of the Trust's shareholders was held for
the purpose of voting on three separate matters, the results of which were as
follows:

(1) ELECTION OF TRUSTEES BY ALL SHAREHOLDERS:

<TABLE>
<S> <C>
Edwin J. Garn
For...................... 16,021,468
Withheld................. 364,274
Michael E. Nugent
For...................... 16,026,596
Withheld................. 359,146
Philip J. Purcell
For...................... 16,028,221
Withheld................. 357,521
</TABLE>

ELECTION OF TRUSTEE BY PREFERRED SHAREHOLDERS:

<TABLE>
<S> <C>
John R. Haire
For.............................................................................................. 2,005
Withheld......................................................................................... 29
</TABLE>

The following Trustees were not standing for reelection at this meeting:

Jack F. Bennett, Michael Bozic, Charles A. Fiumefreddo, Dr. Manuel H.
Johnson, Paul Kolton, and John L. Schroeder.

(2) CONTINUANCE OF THE CURRENTLY EFFECTIVE INVESTMENT MANAGEMENT AGREEMENT:

<TABLE>
<S> <C>
For......................................................................................... 15,455,432
Against..................................................................................... 226,793
Abstain..................................................................................... 703,517
</TABLE>

(3) RATIFICATION OF PRICE WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS:

<TABLE>
<S> <C>
For......................................................................................... 15,780,117
Against..................................................................................... 93,704
Abstain..................................................................................... 511,921
</TABLE>
<PAGE> 6

INTERCAPITAL INSURED MUNICIPAL TRUST

PORTFOLIO OF INVESTMENTS October 31, 1995

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS (98.2%)
General Obligation (7.3%)
$ 8,000 Chicago, Illinois, Refg Ser 1992 (AMBAC)................................. 6.25 % 01/01/11 $ 8,619,680
15,000 Cook County, Illinois, Ser 1992 A (MBIA)................................. 6.60 11/15/22 15,975,600
6,000 Louisiana, Ser 1992 A (AMBAC)............................................ 6.50 05/01/08 6,532,380
4,000 Clark County, Nevada, Transportation Impr Ltd Tax Ser 06/01/92 B
(AMBAC)................................................................. 6.50 06/01/17 4,436,720
- -------- ----------
33,000 35,564,380
- -------- ----------
Educational Facilities Revenue (3.9%)
Massachusetts Health & Educational Facilities Authority,
15,000 Northeastern University Ser E (MBIA)..................................... 6.55 10/01/22 16,075,650
3,000 Stonehill College Ser E (MBIA)........................................... 6.60 07/01/20 3,220,110
- -------- ----------
18,000 19,295,760
- -------- ----------
Electric Revenue (3.1%)
10,000 Piedmont Municipal Power Agency, South Carolina, 1991 Refg Ser (FGIC).... 6.25 01/01/18 10,259,800
5,000 Lower Colorado River Authority, Texas, Jr Lien Refg Ser 1992 (AMBAC)..... 6.00 01/01/17 5,050,750
- -------- ----------
15,000 15,310,550
- -------- ----------
Hospital Revenue (18.0%)
15,000 Delaware Health Facilities Authority, Medical Center of Delaware Ser 1992
(MBIA).................................................................. 6.25 10/01/06 16,642,050
5,000 Brevard County Health Facilities Authority, Florida, Wuesthoff Memorial
Hospital Ser 1992 A (MBIA).............................................. 6.625 04/01/13 5,402,050
5,000 Jacksonville Health Facilities Authority, Florida, Memorial Regional
Rehabilitation Center Ser 1992 (MBIA)................................... 6.625 05/01/22 5,365,700
8,955 Illinois Health Facilities Authority, Southern Illinois Hospital Services
Ser 1991 (MBIA)......................................................... 6.625 03/01/20 9,455,047
3,700 Massachusetts Health & Educational Facilities Authority, McLean Hospital
Ser C (FGIC)............................................................ 6.625 07/01/15 3,965,105
5,000 Farmington Hills Hospital Finance Authority, Michigan, Botsford General
Hospital Ser 1992 A (MBIA).............................................. 6.50 02/15/22 5,304,850
15,000 Amarillo Health Facilities Corporation, Texas, High Plains Baptist
Hospital Ser 1992 A & B (FSA)........................................... 6.562 01/01/22 15,791,250
Wisconsin Health & Educational Facilities Authority,
15,000 Children's Hospital Inc Ser 1992 B (FGIC)................................ 6.50 08/15/21 15,755,550
10,000 Wausau Hospital Inc Ser 1991 B (AMBAC)................................... 6.70 08/15/20 10,683,800
- -------- ----------
82,655 88,365,402
- -------- ----------
Industrial Development/Pollution Control Revenue (14.0%)
6,000 Delaware Economic Development Authority, Delmarva Power & Light Co Ser
1992 A (AMT) (AMBAC).................................................... 6.85 05/01/22 6,463,920
5,000 Lawrenceburg, Indiana, Indiana & Michigan Power Co Refg Ser D
(Secondary FGIC)........................................................ 7.00 04/01/15 5,563,150
20,000 Burlington, Kansas, Kansas Gas & Electric Co Ser 1991 (MBIA)............. 7.00 06/01/31 22,220,000
7,500 Humboldt County, Nevada, Sierra Pacific Power Co Refg Ser 1987 (AMBAC)... 6.55 10/01/13 7,991,325
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7

INTERCAPITAL INSURED MUNICIPAL TRUST

PORTFOLIO OF INVESTMENTS October 31, 1995, continued

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 7,000 Montgomery County Industrial Development Authority, Pennsylvania,
Philadelphia Electric Co Refg 1991 Ser B (MBIA)......................... 6.70 % 12/01/21 $ 7,563,570
Brazos River Authority, Texas,
7,500 Houston Lighting & Power Co 1992 A (AMBAC)............................... 6.70 03/01/17 8,191,125
10,000 Texas Utilities Electric Co Collateralized Ser 1992 A (AMT) (AMBAC)...... 6.75 04/01/22 10,693,600
- -------- ----------
63,000 68,686,690
- -------- ----------
Mortgage Revenue - Single Family (6.7%)
3,000 Alaska Housing Finance Corporation, Governmental 1995 Ser A (MBIA)
(WI).................................................................... 5.875 12/01/24 2,936,400
19,700 Nebraska Investment Finance Authority, GNMA-Backed 1992 Ser A & B (AMT).. 6.71 09/15/24 20,227,369
9,100 Ohio Housing Finance Agency, GNMA-Backed Ser A 1 & 2 (AMT)............... 6.903 03/01/31 9,451,079
- -------- ----------
31,800 32,614,848
- -------- ----------
Nursing & Health Related Facilities Revenue (0.7%)
3,500 New York State Medical Care Facilities Finance Agency, Mental Health 1992
- -------- Ser A (FGIC)............................................................ 6.375 08/15/17 3,646,930
----------
Public Facilities Revenue (6.5%)
10,000 Orange County, Florida, Tourist Development Tax Ser 1992 B (AMBAC)....... 6.00 10/01/21 10,157,500
20,000 Hudson County, New Jersey, Correctional Refg Ser 1992 COPs (MBIA)........ 6.60 12/01/21 21,479,000
- -------- ----------
30,000 31,636,500
- -------- ----------
Resource Recovery Revenue (2.0%)
9,000 Detroit Economic Development Corporation, Michigan, Ser 1991 A (AMT)
(FSA)................................................................... 6.875 05/01/09 9,808,200
- -------- ----------
Transportation Facilities Revenue (2.7%)
5,000 Hillsborough County Port District, Florida, Tampa Port Authority Refg Ser
1995 (AMT) (FSA)........................................................ 5.75 06/01/13 5,067,250
5,000 Greater Orlando Aviation Authority, Florida, Ser 1992 A (AMT) (FGIC)..... 6.50 10/01/12 5,315,800
2,500 Hawaii, Airports Second Lien Ser 1991 (AMT) (MBIA)....................... 6.75 07/01/21 2,643,475
- -------- ----------
12,500 13,026,525
- -------- ----------
Water & Sewer Revenue (11.2%)
7,790 Kenton County Water District #1, Kentucky, Refg Ser 1992 (FGIC).......... 6.375 02/01/17 8,307,801
3,000 Detroit, Michigan, Water Supply Refg Ser 1992 (FGIC)..................... 6.375 07/01/22 3,113,820
6,400 Bergen County Utilities Authority, New Jersey, 1992 Water Pollution Ser A
(FGIC).................................................................. 6.50 12/15/12 6,925,504
5,000 Cleveland, Ohio, Waterworks Ser F 1992 B (AMBAC)......................... 6.50 01/01/11 5,392,300
10,000 Grand Strand Water & Sewer Authority, South Carolina, Refg Ser 1992
(MBIA).................................................................. 6.00 06/01/19 10,123,900
5,000 North Charleston Sewer District, South Carolina, Refg Ser 1992 A
(MBIA).................................................................. 6.00 07/01/18 5,054,150
15,000 Metropolitan Seattle, Washington, Sewer Ser U (FGIC)..................... 6.60 01/01/32 15,855,900
- -------- ----------
52,190 54,773,375
- -------- ----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8

INTERCAPITAL INSURED MUNICIPAL TRUST

PORTFOLIO OF INVESTMENTS October 31, 1995, continued

SHORT-TERM MUNICIPAL OBLIGATIONS (0.9%)
1,400 East Baton Rouge Parish, Louisiana, Exxon Corp Ser 1993 (Demand
11/01/95)............................................................... 4.00* 03/01/22 1,400,000
2,800 Kemmerer, Wyoming, Exxon Corp Ser 1984 (Demand 11/01/95)................. 3.90* 11/01/14 2,800,000
- -------- ------------
4,200 TOTAL SHORT-TERM MUNICIPAL OBLIGATIONS (Identified Cost $4,200,000).............................. 4,200,000
- -------- ------------

$451,145 TOTAL INVESTMENTS (Identified Cost $445,701,213) (a).................................... 99.1% 485,458,700
========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................ 0.9 4,657,708
------ ------------
NET ASSETS............................................................................... 100.0% $490,116,408
====== ============
</TABLE>

- ---------------------

<TABLE>
<C> <S>
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
WI Security purchased on a when issued basis.
* Current coupon of variable rate security.
(a) The aggregate cost for federal income tax purposes is $445,701,213; the aggregate gross unrealized
appreciation is $39,761,604 and the aggregate gross unrealized depreciation is $4,117, resulting in net
unrealized appreciation $39,757,487.

Bond Insurance:
AMBAC AMBAC Indemnity Corporation.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 9

INTERCAPITAL INSURED MUNICIPAL TRUST

PORTFOLIO OF INVESTMENTS October 31, 1995, continued

------------------------------------------------------------------------------
GEOGRAPHIC SUMMARY OF INVESTMENTS
Based on Market Value as a Percent of Net Assets
October 31, 1995

<TABLE>
<S> <C>
Alaska............. 0.6%
Delaware........... 4.7
Florida............ 9.9
Georgia............ 1.2
Hawaii............. 0.5
Illinois........... 7.0
Indiana............ 1.1
Kansas............. 4.5
Kentucky........... 1.7
Louisiana.......... 3.8%
Massachusetts...... 4.8
Michigan........... 8.7
Nebraska........... 4.1
Nevada............. 2.6
New Jersey......... 5.8
New York........... 0.7
Ohio............... 3.0
Pennsylvania....... 5.0
South Carolina..... 8.6%
Tennessee.......... 1.2
Texas.............. 10.4
Washington......... 3.2
Wisconsin.......... 5.4
Wyoming............ 0.6
----
Total.............. 99.1%
====
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 10

INTERCAPITAL INSURED MUNICIPAL TRUST

FINANCIAL STATEMENTS

<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1995
ASSETS:
Investments in securities, at value
(identified cost $445,701,213)....................................... $485,458,700
Cash.................................................................. 71,991
Interest receivable................................................... 7,858,835
Deferred organizational expenses...................................... 20,642
Prepaid expenses and other assets..................................... 30,957
------------
TOTAL ASSETS...................................................... 493,441,125
------------
LIABILITIES:
Payable for:
Investments purchased............................................. 2,955,198
Investment management fee......................................... 150,184
Dividends to preferred shareholders............................... 118,359
Accrued expenses and other payables................................... 100,976
------------
TOTAL LIABILITIES................................................. 3,324,717
------------
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, 22,702,213 shares outstanding)....................... 315,676,601
Net unrealized appreciation........................................... 39,757,487
Accumulated undistributed net investment income....................... 2,876,782
Accumulated undistributed net realized gain........................... 1,805,538
------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS...................... 360,116,408
----------
TOTAL NET ASSETS.................................................. $490,116,408
============
NET ASSET VALUE PER COMMON SHARE
($360,116,408 divided by 22,702,213 common shares outstanding)....... $15.86
======
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 11

INTERCAPITAL INSURED MUNICIPAL TRUST

FINANCIAL STATEMENTS, continued

<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the year ended October 31, 1995
NET INVESTMENT INCOME:
INTEREST INCOME........................................................ $29,675,274
-----------
EXPENSES
Investment management fee.............................................. 1,672,659
Auction commission fees................................................ 344,324
Transfer agent fees and expenses....................................... 129,777
Professional fees...................................................... 114,953
Shareholder reports and notices........................................ 59,441
Registration fees...................................................... 32,864
Trustees' fees and expenses............................................ 32,386
Auction agent fees..................................................... 29,207
Custodian fees......................................................... 21,994
Organizational expenses................................................ 15,329
Other.................................................................. 31,172
-----------
TOTAL EXPENSES BEFORE EXPENSE OFFSET............................... 2,484,106
LESS: EXPENSE OFFSET............................................... (21,945)
-----------
TOTAL EXPENSES AFTER EXPENSE OFFSET................................ 2,462,161
-----------
NET INVESTMENT INCOME.............................................. 27,213,113
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain...................................................... 1,805,528
Net change in unrealized appreciation.................................. 35,661,756
-----------
NET GAIN........................................................... 37,467,284
-----------
NET INCREASE........................................................... $64,680,397
===========
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 12

INTERCAPITAL INSURED MUNICIPAL TRUST

FINANCIAL STATEMENTS, continued

<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
<S> <C> <C>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, OCTOBER 31,
1995 1994
- --------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income............................. $ 27,213,113 $ 31,108,618
Net realized gain................................. 1,805,528 491,436
Net change in unrealized appreciation............. 35,661,756 (63,498,938)
------------ ------------
NET INCREASE (DECREASE)....................... 64,680,397 (31,898,884)
------------ ------------
DIVIDENDS TO PREFERRED SHAREHOLDERS FROM NET
INVESTMENT INCOME............................... (5,175,254) (5,085,324)
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS
FROM:
Net investment income............................. (23,327,851) (26,301,573)
Net realized gain................................. (426,388) --
------------ ------------
TOTAL......................................... (23,754,239) (26,301,573)
------------ ------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST:
Preferred......................................... (30,000,000) (20,000,000)
Common............................................ (6,994,598) (3,860,432)
------------ ------------
TOTAL......................................... (36,994,598) (23,860,432)
------------ ------------
TOTAL DECREASE................................ (1,243,694) (87,146,213)
NET ASSETS:
Beginning of period............................... 491,360,102 578,506,315
------------ ------------
END OF PERIOD
(Including undistributed net investment income
of $2,876,781 and $4,166,775, respectively)... $490,116,408 $491,360,102
============ ============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 13

INTERCAPITAL INSURED MUNICIPAL TRUST

NOTES TO FINANCIAL STATEMENTS October 31, 1995

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 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 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
<PAGE> 14

INTERCAPITAL INSURED MUNICIPAL TRUST

NOTES TO FINANCIAL STATEMENTS October 31, 1995, continued

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.

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 by the Trust 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 average 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 year ended October 31, 1995 aggregated
$13,787,810 and $39,497,281, respectively.

Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Trust's transfer agent. At October 31, 1995, the Trust had transfer agent fees
and expenses payable of approximately $11,500.

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 year ended October 31, 1995 included
in
<PAGE> 15

INTERCAPITAL INSURED MUNICIPAL TRUST

NOTES TO FINANCIAL STATEMENTS October 31, 1995, continued

Trustees' fees and expenses in the Statement of Operations amounted to $12,000.
At October 31, 1995, the Trust had an accrued pension liability of $21,242 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 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. 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.

For the year ended October 31, 1995, the Trust purchased and retired 600 shares
of Series TU in the amount of $30,00,000.

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>
800 TU 3.60 % 01/09/96 3.27% - 6.25%
1,800 TH 3.797 11/02/95 3.34 - 4.65
</TABLE>

- ---------------------

<TABLE>
<C> <S>
* As of October 31, 1995.
** For the year ended October 31, 1995.
</TABLE>

Subsequent to October 31, 1995 and up through December 6, 1995, the Trust paid
dividends to each of the Series TH and TU at rates ranging from 3.70% to 3.82%
and 3.60%, respectively, in the aggregate amount of $508,564.

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.
<PAGE> 16

INTERCAPITAL INSURED MUNICIPAL TRUST

NOTES TO FINANCIAL STATEMENTS October 31, 1995, continued

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.

5. COMMON SHARES OF BENEFICIAL INTEREST

Transactions in common shares of beneficial interest were as follows:

<TABLE>
<CAPTION>
CAPITAL
PAID IN
PAR EXCESS OF
SHARES VALUE PAR VALUE
---------- -------- ------------
<S> <C> <C> <C>
Balance, October 31, 1993................................................... 23,507,113 $235,071 $326,296,559
Treasury shares purchased and retired (weighted average discount 8.78%)*.... (285,000) (2,850) (3,857,582)
---------- -------- ------------
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
========== ======== ============
</TABLE>

- ---------------------
* The Trustees have voted to retire the shares purchased.

6. DIVIDENDS TO COMMON SHAREHOLDERS

The Trust has declared the following dividends from net investment income:

<TABLE>
<CAPTION>
DECLARATION AMOUNT RECORD PAYABLE
DATE PER SHARE DATE DATE
- ------------------ ---------- ------------------ ------------------
<C> <C> <S> <C>
October 31, 1995 $0.085 November 10, 1995 November 24, 1995
November 28, 1995 $0.085 December 8, 1995 December 22, 1995
</TABLE>
<PAGE> 17

INTERCAPITAL INSURED MUNICIPAL TRUST

NOTES TO FINANCIAL STATEMENTS October 31, 1995, continued

7. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
QUARTERS ENDED
---------------------------------------------------------------------------------
10/31/95 7/31/95 4/30/95 1/31/95
---------------- ---------------- ----------------- -----------------
PER PER PER PER
TOTAL* SHARE TOTAL* SHARE TOTAL* SHARE TOTAL* SHARE
------ ----- ------ ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income..................... $7,544 $0.33 $7,290 $0.32 $ 7,244 $0.32 $ 7,597 $0.33
Net investment income....................... 6,891 0.31 6,693 0.30 6,645 0.29 6,984 0.31
Net realized and unrealized gain............ 7,720 0.34 7,342 0.32 11,060 0.50 11,345 0.49
</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................. $ 8,340 $ 0.36 $8,502 $0.36 $ 8,361 $ 0.36 $8,735 $0.37
Net investment income................... 7,679 0.33 7,855 0.33 7,629 0.33 7,946 0.34
Net realized and unrealized gain
(loss)................................. (25,889) (1.10) 6,002 0.26 (47,595) (2.02) 4,474 0.19
</TABLE>

- ---------------------
* Amounts in thousands.
<PAGE> 18

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
FEBRUARY
28,
1992*
FOR THE YEAR ENDED THROUGH
OCTOBER 31 OCTOBER
--------------------------- 31,
1995** 1994** 1993** 1992**
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..................................... $ 14.27 $ 16.95 $14.25 $14.06
------- ------- ------ ------
Net investment income.................................................... 1.21 1.33 1.35 0.79
Net realized and unrealized gain (loss).................................. 1.65 (2.67) 2.69 0.19
------- ------- ------ ------
Total from investment operations......................................... 2.86 (1.34) 4.04 0.98
------- ------- ------ ------
Less dividends and distributions from:
Net investment income................................................. (1.02) (1.12) (1.12) (0.49)
Common share equivalent of dividends paid to preferred shareholders... (0.23) (0.22) (0.22) (0.13)
Net realized gain..................................................... (0.02) -- -- --
------- ------- ------ ------
Total dividends and distributions........................................ (1.27) (1.34) (1.34) (0.62)
Offering costs charged against capital................................... -- -- -- (0.17)
------- ------- ------ ------
Net asset value, end of period........................................... $ 15.86 $ 14.27 $16.95 $14.25
======= ======= ====== ======
Market value, end of period.............................................. $14.625 $12.625 $16.75 $15.25
======= ======= ====== ======
TOTAL INVESTMENT RETURN+................................................. 24.59% (18.84)% 17.73% 4.94%(1)
RATIOS TO AVERAGE NET ASSETS:
Total expenses before expense offset..................................... 0.72%(3) 0.77% 0.80% 0.72%(2)
Net investment income before preferred stock dividends................... 7.88%(3) 8.45% 8.52% 8.10%(2)
Preferred stock dividends................................................ 1.50% 1.38% 1.40% 1.34%(2)
Net investment income available to common shareholders................... 6.38% 7.07% 7.12% 6.76%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.................................. $490,116 $491,360 $578,506 $515,025
Asset coverage on preferred shares at end of period...................... 377% 307% 321% 286%
Portfolio turnover rate.................................................. 3% 6% 1% 1%(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 brokerage commissions.
(1) Not annualized.
(2) Annualized.
(3) The above expense and net investment income ratios would have been 0.71%
and 7.89%, respectively, which reflects 0.01% effect for custody cash
credits.

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 19

INTERCAPITAL INSURED MUNICIPAL TRUST

REPORT OF INDEPENDENT ACCOUNTANTS

TO THE SHAREHOLDERS AND TRUSTEES
OF INTERCAPITAL INSURED MUNICIPAL TRUST

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of InterCapital Insured Municipal
Trust (the "Trust") at October 31, 1995, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the three years in
the period then ended and for the period February 28, 1992 (commencement of
operations) through October 31, 1992, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principals
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 1995 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.

PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
December 6, 1995
--------------------------------------------------------------------

1995 FEDERAL TAX NOTICE (unaudited)

During the year ended October 31, 1995, the Trust paid the
following per share amounts from tax-exempt income: $1.02 to
the common shareholders, $1,731 to Series TU preferred
shareholders and $3,444 to Series TH preferred shareholders.
For the year ended October 31, 1995, the Trust paid the
following per share amounts from long-term capital gains:
$0.02 to the common shareholders, $35.96 to Series TU
preferred shareholders and $20.95 to Series TH preferred
shareholders.
<PAGE> 20

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

DEAN WITTER
INTERCAPITAL
INSURED
MUNICIPAL
TRUST

[PHOTO]

ANNUAL REPORT
OCTOBER 31, 1995