<PAGE> 1
INTERCAPITAL INSURED MUNICIPAL TRUST Two World Trade Center,
New York, New York 10048
LETTER TO THE SHAREHOLDERS April 30, 1998
DEAR SHAREHOLDER:
We are pleased to present the semiannual report on the operations of
InterCapital Insured Municipal Trust (IMT) for the period ended April 30, 1998.
Since last fall domestic economic growth has been tempered by the deflationary
impact of the Asian financial crisis. U.S. employment conditions strengthened
and the unemployment rate declined to its lowest level since 1970. Inflation
remained subdued despite the robust economy. In part this was the result of
productivity gains and the lower costs of oil and other imports. Foreign
currency turmoil strengthened the value of the U.S. dollar and created demand
for U.S. Treasury securities. Municipal bonds followed the trend of Treasuries
and yields declined to levels last seen 20 years ago. The bond market rally was
also aided by prospects of the first federal budget surplus in more than two
decades.
MUNICIPAL MARKET CONDITIONS
Long-term insured index yields ended April 1998 at 5.35 percent after reaching a
low of 5.15 percent in December and January. Over the past
<TABLE>
<CAPTION>
Insured Municipal
30-Year 30-Year U.S. Revenue Yields
Insured Municipal Treasury as a Percentage of U.S.
Yields Yields Treasury Yields
<S> <C> <C> <C>
Dec '93 5.4 6.34 85.17%
5.4 6.24 86.54%
5.8 6.66 87.09%
6.4 7.09 90.27%
6.35 7.32 86.75%
6.25 7.43 84.12%
Jun '94 6.5 7.61 85.41%
6.25 7.39 84.57%
6.3 7.45 84.56%
6.55 7.81 83.87%
6.75 7.96 84.80%
7 8 87.50%
Dec '94 6.75 7.88 85.66%
6.4 7.7 83.12%
6.15 7.44 82.66%
6.15 7.43 82.77%
6.2 7.34 84.47%
5.8 6.66 87.09%
Jun '95 6.1 6.62 92.15%
6.1 6.86 88.92%
6 6.66 90.08%
5.95 6.48 91.82%
5.75 6.33 90.84%
5.5 6.14 89.56%
Dec '95 5.35 5.94 90.07%
5.4 6.03 89.55%
5.8 6.46 86.69%
5.85 6.66 87.84%
5.95 6.89 86.36%
6.05 6.99 86.55%
Jun '96 5.9 6.89 85.63%
5.85 6.97 83.93%
5.9 7.11 82.98%
5.7 6.93 82.25%
5.65 6.64 85.09%
5.5 6.35 86.61%
Dec '96 5.6 6.63 84.46%
5.7 6.79 83.95%
5.65 6.8 83.08%
5.9 7.1 83.10%
5.75 6.94 82.85%
5.65 6.91 81.77%
Jun '97 5.6 6.78 82.60%
5.3 6.3 84.00%
5.5 6.61 83.00%
5.4 6.4 84.40%
5.35 6.15 86.90%
5.3 6.05 87.60%
Dec '97 5.15 5.92 86.90%
Jan '98 5.15 5.8 88.80%
Feb.'98 5.2 5.92 87.80%
Mar '98 5.25 5.93 88.50%
Apr '98 5.35 5.95 89.90%
</TABLE>
<PAGE> 2
INTERCAPITAL INSURED MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS April 30, 1998, continued
12 months the insured index yield has declined from 5.75 percent. The yield on
one-year notes was 3.75 percent at the end of April 1998. Thus, the yield pickup
for extending maturities from 1 to 30 years was 160 basis points.
The overall decline in interest rates led to an increase in new-issue municipal
volume. In contrast, the federal deficit has shrunk and the U.S. Treasury's
borrowing needs have declined. Under these conditions, the municipal rally
lagged the rally in Treasuries. The ratio of municipal yields to Treasury yields
improved from 87 percent in October to almost 90 percent in April. A year ago
the ratio was a relatively rich 83 percent. A rising ratio means that municipals
have underperformed Treasuries but have become relatively more attractive.
Total municipal volume increased 20 percent in 1997. New-issue supply totaled
$220 billion last year, with half the underwritings enhanced with bond
insurance. Overall, refundings represented one-quarter of total new issues. For
the year-to-date, municipal underwriting is up 60 percent with refunding issues
comprising one-third of the total.
PERFORMANCE
During the six-month period ended April 30, 1998, the Trust's net asset value
(NAV) declined from $15.96 to $15.84. Based on this NAV change plus reinvestment
of tax-free dividends totaling $0.48 per share, the Trust's total NAV return was
2.29 percent. IMT's price on the New York Stock Exchange increased from $15.25
to $15.3125 per share. Based on this change in market price plus reinvestment of
dividends, the Trust's total market return was 3.49 percent. On April 30, 1998,
IMT was trading at a 3.33 percent discount to NAV. This means that the market
price of the common stock was lower than the NAV.
Monthly dividends payable in the second quarter of 1998 were declared in March
and remained unchanged at $0.08 per share. The level of undistributed net
investment income increased from $0.062 to $0.065 per share over the past six
months.
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 may,
when appropriate, 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. The Trust may also utilize procedures to reduce
or eliminate the amount of outstanding Auction Rate Preferred Shares (ARPS),
including their purchase in the open market or in privately negotiated
transactions.
2
<PAGE> 3
INTERCAPITAL INSURED MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS April 30, 1998, continued
<TABLE>
<CAPTION>
LARGEST SECTORS as of April 30, 1998
(% of Net Assets)
<S> <C>
REFUNDED 38%
ALL OTHERS 20%
IDR/PCR 15%
HOSPITAL 14%
WATER & SEWER 7%
MORTGAGE 6%
</TABLE>
* Industrial Developement/Polution Control Revenue
Portfolio structure is subject to change.
<TABLE>
<CAPTION>
CREDIT ENHANCEMENTS as of April 30, 1998
(% of Total Long-Term Portfolio)
<S> <C>
MBIA 36%
AMBAC 26%
FGIC 25%
FSA 8%
GNMA 5%
</TABLE>
Portfolio structure is subject to change.
<TABLE>
<CAPTION>
CALL STRUCTURE as of April 30, 1998
(% of Total Long-Term Portfolio) WEIGHTED AVERAGE
Percent Callable CALL PROTECTION: 4 YEARS
YEARS BONDS CALLABLE
<S> <C>
1999 0%
2000 0%
2001 25%
2002 64%
2003 0%
2004 0%
2005 2%
2006 5%
2007 0%
2008 1%
2009+ 3%
</TABLE>
Portfolio structure is subject to change.
3
<PAGE> 4
INTERCAPITAL INSURED MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS April 30, 1998, continued
PORTFOLIO STRUCTURE
The Trust remained fully invested in long-term municipal bonds during the
period. Investments were diversified among 12 long-term sectors and 52 credits.
As illustrated in the accompanying chart, refunded bonds to be called within 10
years comprised 38 percent of net assets. The Trust's weighted average maturity
was 16 years. The distribution of call dates in the portfolio produced 4 years
of weighted average call protection. To assure timely payment of principal and
interest, each position in the portfolio was backed by triple "A" rated bond
insurance.
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 to one year. Incremental income to common shareholders depends on two
factors. The first is the amount of ARPS outstanding, the second the spread
between the portfolio's cost yield and ARPS expenses (ARPS auction rate and
expenses). The greater the spread and the amount of ARPS outstanding, the
greater the amount of incremental income available for distribution to common
shareholders. The level of net investment income available for distribution to
common shareholders varies with the level of short-term interest rates.
During the six-month period, ARPS leverage contributed approximately $0.07 per
share to common share earnings. Weekly ARPS yields ranged between 3.19 and 4.20
percent. IMT's two ARPS series totaled $130 million and represented 27 percent
of net assets.
LOOKING AHEAD
The economic fundamentals are in place for another year of solid, albeit less
spectacular, domestic growth in 1998. Events in Asia have strengthened the U.S.
dollar and contributed to lower interest rates. The Asian financial crisis seems
likely to moderate U.S. economic growth and inflationary pressures. While this
outlook is favorable for municipal bonds it is possible that the Federal Reserve
Board may begin to tighten monetary policy if capacity and labor constraints
cause cost pressures to mount.
4
<PAGE> 5
INTERCAPITAL INSURED MUNICIPAL TRUST
LETTER TO THE SHAREHOLDERS April 30, 1998, continued
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
5
<PAGE> 6
INTERCAPITAL INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TAX-EXEMPT MUNICIPAL BONDS (98.0%)
General Obligation (2.8%)
$ 8,000 Chicago, Illinois, Refg Ser 1992 (AMBAC).................... 6.25 % 01/01/11 $ 8,985,600
4,000 Clark County, Nevada, Transportation Impr Ltd Tax Ser
06/01/92 B (AMBAC)......................................... 6.50 06/01/17 4,643,000
- -------- ------------
12,000 13,628,600
- -------- ------------
Educational Facilities Revenue (4.0%)
Massachusetts Health & Educational Facilities Authority,
15,000 Northeastern University Ser E (MBIA)....................... 6.55 10/01/22 16,370,850
3,000 Stonehill College Ser E (MBIA)............................. 6.60 07/01/20 3,268,710
- -------- ------------
18,000 19,639,560
- -------- ------------
Electric Revenue (2.5%)
10,000 Piedmont Municipal Power Agency, South Carolina, 1991 Refg
Ser (FGIC)................................................. 6.25 01/01/18 10,599,400
1,630 Lower Colorado Authority, Texas, Jr Lien Refg Ser 1992
(AMBAC).................................................... 6.00 01/01/17 1,693,309
- -------- ------------
11,630 12,292,709
- -------- ------------
Hospital Revenue (13.5%)
5,000 Brevard County Health Facilities Authority, Florida,
Wuesthoff Memorial Hospital Ser 1992 A (MBIA).............. 6.625 04/01/13 5,424,000
8,955 Illinois Health Facilities Authority, Southern Illinois
Hospital Services Ser 1991 (MBIA).......................... 6.625 03/01/20 9,821,217
3,700 Massachusetts Health & Educational Facilities Authority,
McLean Hospital Ser C (FGIC)............................... 6.625 07/01/15 4,020,161
3,000 Missouri Health & Educational Facilities Authority, SSM
Healthcare Ser 1998 A (MBIA) (WI).......................... 5.00 06/01/22 2,846,940
15,000 Amarillo Health Facilities Corporation, Texas, High Plains
Baptist Hospital Ser 1992 A & B (FSA)...................... 6.562 01/01/22 16,210,650
Wisconsin Health & Educational Facilities Authority,
15,000 Children's Hospital Inc Ser 1992 B (FGIC).................. 6.50 08/15/21 16,221,750
10,000 Wausau Hospital Inc Ser 1991 B (AMBAC)..................... 6.70 08/15/20 10,819,700
- -------- ------------
60,655 65,364,418
- -------- ------------
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 6,530,880
5,000 Lawrenceburg, Indiana, Indiana & Michigan Power Co Refg Ser
D (Secondary FGIC)......................................... 7.00 04/01/15 5,471,550
20,000 Burlington, Kansas, Kansas Gas & Electric Co Ser 1991
(MBIA)..................................................... 7.00 06/01/31 21,682,800
7,500 Humboldt County, Nevada, Sierra Pacific Power Co Refg Ser
1987 (AMBAC)............................................... 6.55 10/01/13 8,136,150
5,000 New York State Energy Research & Development Authority,
Brooklyn Union Gas Co 1996 Ser (MBIA)...................... 5.50 01/01/21 5,059,400
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE> 7
INTERCAPITAL INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS April 30, 1998 (unaudited) 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 $ 7,575,260
Brazos River Authority, Texas,
7,500 Houston Lighting & Power Co 1992 A (AMBAC)................. 6.70 03/01/17 8,132,025
10,000 Texas Utilities Electric Co Collateralized Ser 1992 A (AMT)
(AMBAC).................................................. 6.75 04/01/22 10,836,000
- -------- ------------
68,000 73,424,065
- -------- ------------
Mortgage Revenue - Single Family (5.8%)
3,000 Alaska Housing Finance Corporation, Governmental 1995 Ser A
(MBIA)..................................................... 5.875 12/01/24 3,114,480
16,300 Nebraska Investment Finance Authority, GNMA-Backed 1992 Ser
A & B (AMT)................................................ 6.70 09/15/24 17,259,581
7,100 Ohio Housing Finance Agency, GNMA-Backed Ser A 1 & 2
(AMT)...................................................... 6.903 03/01/31 7,523,231
- -------- ------------
26,400 27,897,292
- -------- ------------
Nursing & Health Related Facilities Revenue (0.8%)
3,495 New York State Medical Care Facilities Finance Agency,
- -------- Mental Health 1992 Ser A (FGIC)............................ 6.375 08/15/17 3,754,469
------------
Public Facilities Revenue (4.4%)
20,000 Hudson County, New Jersey, Correctional Refg Ser 1992 COPs
- -------- (MBIA)..................................................... 6.60 12/01/21 21,536,600
------------
Resource Recovery Revenue (1.9%)
8,325 Detroit Economic Development Corporation, Michigan, Ser 1991
- -------- A (AMT) (FSA).............................................. 6.875 05/01/09 8,949,542
------------
Transportation Facilities Revenue (2.8%)
5,000 Greater Orlando Aviation Authority, Florida, Ser 1992 A
(AMT) (FGIC)............................................... 6.50 10/01/12 5,413,650
5,000 Hillsborough County Port District, Florida, Tampa Port
Authority Refg Ser 1995 (AMT) (FSA)........................ 5.75 06/01/13 5,222,650
2,500 Hawaii, Airports Second Lien Ser 1991 (AMT) (MBIA).......... 6.75 07/01/21 2,684,550
- -------- ------------
12,500 13,320,850
- -------- ------------
Water & Sewer Revenue (6.7%)
7,790 Kenton County Water District #1, Kentucky, Refg Ser 1992
(FGIC)..................................................... 6.375 02/01/17 8,460,797
3,000 Detroit, Michigan, Water Supply Refg Ser 1992 (FGIC)........ 6.375 07/01/22 3,253,530
4,950 Cleveland, Ohio, Waterworks Ser F 1992 B (AMBAC)............ 6.50 01/01/11 5,338,872
10,000 Grand Strand Water & Sewer Authority, South Carolina, Refg
Ser 1992 (MBIA)............................................ 6.00 06/01/19 10,428,700
5,000 North Charleston Sewer District, South Carolina, Refg Ser
1992 A (MBIA).............................................. 6.00 07/01/18 5,218,150
- -------- ------------
30,740 32,700,049
- -------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE> 8
INTERCAPITAL INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS April 30, 1998 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Refunded (37.7%)
$ 15,000 Delaware Health Facilities Authority, Medical Center of
Delaware Ser 1992 (MBIA) (ETM)............................. 6.25 % 10/01/06+ $ 16,799,850
5,000 Jacksonville Health Facilities Authority, Florida, Memorial
Regional Rehabilitation Center Ser 1992 (MBIA)............. 6.625 05/01/02+ 5,500,450
10,000 Orange County, Florida, Tourist Development Tax Ser 1992 B
(AMBAC).................................................... 6.00 10/01/02+ 10,671,000
10,000 Reedy Creek Improvement District, Florida, Utilities Ser
1991-1 (MBIA).............................................. 6.50 10/01/01+ 10,805,199
5,000 Fulton-De Kalb Hospital Authority, Georgia, Grady Memorial
Hospital Ser 1991 (AMBAC).................................. 6.90 01/01/01+ 5,422,400
15,000 Cook County, Illinois, Ser 1992 A (MBIA).................... 6.60 11/15/02+ 16,632,300
6,000 Louisiana, Ser 1992 A (AMBAC)............................... 6.50 05/01/02+ 6,577,920
9,300 New Orleans, Louisiana, Issue of 1992 (FGIC)................ 7.50 09/01/02+ 10,444,365
5,000 Chippewa Valley Schools, Michigan, 1992 (FGIC).............. 6.375 05/01/01+ 5,366,050
7,000 Detroit, Michigan, Water Supply Refg Ser 1992 (FGIC)........ 6.375 07/01/02+ 7,638,960
6,000 Detroit City School District, Michigan, Ser 1991 (Secondary
AMBAC)..................................................... 7.10 05/01/01+ 6,583,620
5,000 Farmington Hills Hospital Finance Authority, Michigan,
Botsford General Hospital Ser 1992 A (MBIA)................ 6.50 02/15/02+ 5,465,800
6,400 Bergen County Utilities Authority, New Jersey, 1992 Water
Pollution Ser A (FGIC)..................................... 6.50 06/15/02+ 7,027,392
15,000 Harrisburg Authority, Pennsylvania, Water Ser of 1992
(FGIC)..................................................... 6.50 08/15/02+ 16,260,000
15,000 South Carolina Public Service Authority, 1991 Ser D
(AMBAC).................................................... 6.50 07/01/02+ 16,491,450
5,000 Chattanooga-Hamilton County Hospital Authority, Tennessee,
Erlanger Medical Center 1991 Ser A (FSA)................... 6.854 05/15/01+ 5,443,550
10,000 Harris County, Texas, Sr Lien Toll Road Refg Ser 1992 A
(AMBAC)**.................................................. 6.50 08/15/02+ 11,006,401
Lower Colorado River Authority, Texas,
400 Jr Lien Refg Ser 1992 (AMBAC) (ETM)........................ 6.00 01/01/17 444,040
670 Jr Lien Refg Ser 1992 (AMBAC) (ETM)........................ 6.00 01/01/17 745,053
1,070 Jr Lien Refg Ser 1992 (AMBAC) (ETM)........................ 6.00 01/01/17 1,189,112
15,000 Metropolitan Seattle, Washington, Sewer Ser U (FGIC)........ 6.60 01/01/01+ 16,171,500
- -------- ------------
166,840 182,686,412
- -------- ------------
438,585 TOTAL TAX-EXEMPT MUNICIPAL BONDS (Identified Cost $433,083,721)................. 475,194,566
- -------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE> 9
INTERCAPITAL INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS April 30, 1998 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM TAX-EXEMPT MUNICIPAL OBLIGATION (0.8%)
$ 4,100 East Baton Rouge Parish, Louisiana, Exxon Corp Ser 1989
- -------- (Demand 05/01/98) (Identified Cost $4,100,000)............. 4.20*% 11/01/19 $ 4,100,000
------------
$442,685 TOTAL INVESTMENTS (Identified Cost $437,183,721) (a)................... 98.8% 479,294,566
========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES........................... 1.2 5,679,906
----- ------------
NET ASSETS.............................................................. 100.0% $484,974,472
===== ============
</TABLE>
- ---------------------
<TABLE>
<S> <C>
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
ETM Escrowed to maturity.
WI Security purchased on a "when-issued" basis.
+ Prerefunded to call date shown.
* Current coupon of variable rate demand obligation.
** A portion of this security is segregated in connection with
the purchase of a "when-issued" security.
(a) The aggregate cost for federal income tax purposes
approximates identified cost. The aggregate gross unrealized
appreciation is $42,130,555 and the aggregate gross
unrealized depreciation is $19,710, resulting in net
unrealized appreciation of $42,110,845.
<CAPTION>
Bond Insurance:
- ---------------
<S> <C>
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
9
<PAGE> 10
INTERCAPITAL INSURED MUNICIPAL TRUST
PORTFOLIO OF INVESTMENTS April 30, 1998 (unaudited) continued
GEOGRAPHIC SUMMARY OF INVESTMENTS
Based on Market Value as a Percent of Net Assets
April 30, 1998
<TABLE>
<S> <C>
Alaska................... 0.6%
Delaware................. 4.8
Florida.................. 8.9
Georgia.................. 1.1
Hawaii................... 0.6
Illinois................. 7.3
Indiana.................. 1.1
Kansas................... 4.5
Kentucky................. 1.7
Louisiana................ 4.4
Massachusetts............ 4.9
Michigan................. 7.7
Missouri................. 0.6
Nebraska................. 3.6
Nevada................... 2.6
New Jersey............... 5.9
New York................. 1.8
Ohio..................... 2.7
Pennsylvania............. 4.9
South Carolina........... 8.8
Tennessee................ 1.1
Texas.................... 10.3
Washington............... 3.3
Wisconsin................ 5.6
------
Total.................... 98.8%
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE> 11
INTERCAPITAL INSURED MUNICIPAL TRUST
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1998 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $437,183,721)............................. $479,294,566
Cash........................................................ 539,734
Receivable for:
Interest................................................ 7,611,438
Investments sold........................................ 675,000
Prepaid expenses............................................ 153,262
------------
TOTAL ASSETS............................................ 488,274,000
------------
LIABILITIES:
Payable for:
Investments purchased................................... 2,866,650
Dividends to preferred shareholders..................... 186,904
Investment management fee............................... 159,309
Accrued expenses............................................ 86,665
------------
TOTAL LIABILITIES....................................... 3,299,528
------------
NET ASSETS.............................................. $484,974,472
============
COMPOSITION OF 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, 22,416,813 shares
outstanding)............................................... 311,397,840
Net unrealized appreciation................................. 42,110,845
Accumulated undistributed net investment income............. 1,466,243
Net realized loss........................................... (456)
------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS............ 354,974,472
------------
TOTAL NET ASSETS........................................ $484,974,472
============
NET ASSET VALUE PER COMMON SHARE
($354,974,472 divided by 22,416,813 common shares
outstanding)............................................... $15.84
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE> 12
INTERCAPITAL INSURED MUNICIPAL TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended April 30, 1998 (unaudited)
NET INVESTMENT INCOME:
INTEREST INCOME............................................. $14,331,649
-----------
EXPENSES
Investment management fee................................... 850,588
Auction commission fees..................................... 170,974
Transfer agent fees and expenses............................ 52,037
Professional fees........................................... 50,793
Shareholder reports and notices............................. 25,490
Registration fees........................................... 16,138
Custodian fees.............................................. 9,653
Auction agent fees.......................................... 7,925
Servicing fees.............................................. 3,569
Trustees' fees and expenses................................. 3,419
Other....................................................... 5,951
-----------
TOTAL EXPENSES.......................................... 1,196,537
Less: expense offset........................................ (9,608)
-----------
NET EXPENSES............................................ 1,186,929
-----------
NET INVESTMENT INCOME................................... 13,144,720
-----------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss........................................... (456)
Net change in unrealized appreciation....................... (2,956,843)
-----------
NET LOSS................................................ (2,957,299)
-----------
NET INCREASE................................................ $10,187,421
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE> 13
INTERCAPITAL INSURED MUNICIPAL TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
APRIL 30, 1998 OCTOBER 31, 1997
- --------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income.............................. $ 13,144,720 $ 26,508,096
Net realized loss.................................. (456) --
Net change in unrealized appreciation.............. (2,956,843) 5,274,961
----------- ------------
NET INCREASE................................... 10,187,421 31,783,057
----------- ------------
Dividends to preferred shareholders from net
investment income................................. (2,301,002) (4,757,694)
----------- ------------
DIVIDENDS AND DISTRIBUTIONS TO COMMON SHAREHOLDERS
FROM:
Net investment income.............................. (10,760,843) (22,161,286)
Net realized gain.................................. -- (1,233,114)
----------- ------------
TOTAL.......................................... (10,760,843) (23,394,400)
----------- ------------
Decrease from transactions in common shares of
beneficial interest............................... (37,121) (1,594,423)
----------- ------------
NET INCREASE (DECREASE)........................ (2,911,545) 2,036,540
NET ASSETS:
Beginning of period................................ 487,886,017 485,849,477
------------ ------------
END OF PERIOD
(Including undistributed net investment income of
$1,466,243 and $1,383,368, respectively)....... $484,974,472 $487,886,017
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE> 14
INTERCAPITAL INSURED MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1998 (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's investment objective is to provide
current income which is exempt from federal income tax. The Trust was organized
as a Massachusetts business trust on October 3, 1991 and commenced operations on
February 28, 1992.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
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
14
<PAGE> 15
INTERCAPITAL INSURED MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1998 (unaudited) continued
investment income and net realized capital gains are determined in accordance
with federal income tax regulations which may differ from generally accepted
accounting principles. These "book/tax" differences are either considered
temporary or permanent in nature. To the extent these differences are permanent
in nature, such amounts are reclassified within the capital accounts based on
their federal tax-basis treatment; temporary differences do not require
reclassification. Dividends and distributions which exceed net investment income
and net realized capital gains for financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent they exceed
net investment income and net realized capital gains for tax purposes, they are
reported as distributions of paid-in-capital.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Trust pays the Investment
Manager 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, 1998 aggregated
$2,866,650 and $2,375,000, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager, is
the Trust's transfer agent.
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, 1998
included in Trustees' fees and expenses in the Statement of Operations amounted
to $2,059. At April 30, 1998, the
15
<PAGE> 16
INTERCAPITAL INSURED MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1998 (unaudited) continued
Trust had an accrued pension liability of $36,307 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. The Trust has issued Series TU and TH Auction Rate
Preferred Shares ("Preferred Shares") which 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>
AMOUNT IN RESET RANGE OF
SERIES SHARES* THOUSANDS* RATE* DATE DIVIDEND RATES**
- ------ ------- ------------- ----- -------- ----------------
<S> <C> <C> <C> <C> <C>
TU 800 $40,000 3.69% 01/05/99 3.61% - 3.69%
TH 1,800 90,000 3.80 05/01/98 3.19 - 4.20
</TABLE>
- ---------------------
* As of April 30, 1998.
** For the six months ended April 30, 1998.
Subsequent to April 30, 1998 and up through June 5, 1998 the Trust paid
dividends to Series TU and TH at rates ranging from 3.60% to 3.90% in the
aggregate amount of $447,866.
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, 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.
16
<PAGE> 17
INTERCAPITAL INSURED MUNICIPAL TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1998 (unaudited) continued
5. COMMON SHARES OF BENEFICIAL INTEREST
Transactions in common shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
CAPITAL
PAID IN
EXCESS OF
SHARES PAR VALUE PAR VALUE
---------- --------- ------------
<S> <C> <C> <C>
Balance, October 31, 1996................................... 22,525,813 $225,258 $312,804,126
Treasury shares purchased and retired (weighted average
discount 5.03%)*........................................... (106,600) (1,066) (1,593,357)
---------- -------- ------------
Balance, October 31, 1997................................... 22,419,213 224,192 311,210,769
Treasury shares purchased and retired (weighted average
discount 3.27%)*........................................... (2,400) (24) (37,097)
---------- -------- ------------
Balance, April 30, 1998..................................... 22,416,813 $224,168 $311,173,672
========== ======== ============
</TABLE>
- ---------------------
* The Trustees have voted to retire the shares purchased.
6. DIVIDENDS TO COMMON SHAREHOLDERS
On March 24, 1998, the Trust declared the following dividends from net
investment income:
<TABLE>
<CAPTION>
AMOUNT RECORD PAYABLE
PER SHARE DATE DATE
- --------- ------------ -------------
<S> <C> <C>
$0.08 May 8, 1998 May 22, 1998
$0.08 June 5, 1998 June 19, 1998
</TABLE>
17
<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 SIX FOR THE YEAR ENDED OCTOBER 31*
MONTHS ENDED ----------------------------------------------------
APRIL 30, 1998* 1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................. $ 15.96 $15.80 $15.86 $ 14.27 $ 16.95 $14.25
------- ------ ------ ------- ------- ------
Net investment income................................. 0.59 1.18 1.27 1.21 1.33 1.35
Net realized and unrealized gain (loss)............... (0.13) 0.23 (0.02) 1.65 (2.67) 2.69
------- ------ ------ ------- ------- ------
Total from investment operations...................... 0.46 1.41 1.25 2.86 (1.34) 4.04
------- ------ ------ ------- ------- ------
Less dividends and distributions from:
Net investment income.............................. (0.48) (0.99) (1.02) (1.02) (1.12) (1.12)
Common share equivalent of dividends paid to
preferred shareholders............................ (0.10) (0.21) (0.21) (0.23) (0.22) (0.22)
Net realized gain.................................. -- (0.05) (0.08) (0.02) -- --
------- ------ ------ ------- ------- ------
Total dividends and distributions..................... (0.58) (1.25) (1.31) (1.27) (1.34) (1.34)
------- ------ ------ ------- ------- ------
Net asset value, end of period........................ $ 15.84 $15.96 $15.80 $ 15.86 $ 14.27 $16.95
======= ====== ====== ======= ======= ======
Market value, end of period........................... $15.313 $15.25 $15.00 $14.625 $12.625 $16.75
======= ====== ====== ======= ======= ======
TOTAL INVESTMENT RETURN+.............................. 3.49%(1) 8.80% 10.31% 24.59% (18.84)% 17.73%
RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS:
Total expenses........................................ 0.67%(2) 0.69%(3) 0.70%(3) 0.72%(3) 0.77% 0.80%
Net investment income before preferred stock
dividends............................................ 7.36%(2) 7.50% 7.54% 7.88% 8.45% 8.52%
Preferred stock dividends............................. 1.29%(2) 1.35% 1.35% 1.50% 1.38% 1.40%
Net investment income available to common
shareholders......................................... 6.07%(2) 6.15% 6.19% 6.38% 7.07% 7.12%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............... $484,974 $487,886 $485,849 $490,116 $491,360 $578,506
Asset coverage on preferred shares at end of period... 373% 375% 373% 377% 307% 321%
Portfolio turnover rate............................... 1%(1) -- 1% 3% 6% 1%
</TABLE>
- ---------------------
* 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) Does not reflect the effect of expense offset of 0.01%.
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE> 19
(This Page Intentionally Left Blank)
<PAGE> 20
TRUSTEES
- -------------------------------------------------
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
- -------------------------------------------------
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
James F. Willison
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
- -------------------------------------------------
Morgan Stanley Dean Witter Trust FSB
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, 1998
