<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Performance Results.............................. 4
Portfolio of Investments......................... 5
Statement of Assets and Liabilities.............. 12
Statement of Operations.......................... 13
Statement of Changes in Net Assets............... 14
Financial Highlights............................. 15
Notes to Financial Statements.................... 16
</TABLE>
VGM SAR 6/96
<PAGE> 2
LETTER TO SHAREHOLDERS
May 15, 1996
Dear Shareholder,
While interest rates drifted
downward during the fourth quarter of
last year, such was not the case in the
first quarter of 1996. Early in the
quarter, municipal bond prices
demonstrated increased volatility in [PHOTO]
conjunction with February's economic
announcements, which revealed a revival
in economic growth, impressive DENNIS J. MCDONNELL AND DON G. POWELL
employment levels, and moderate
inflation. This positive economic
environment, however, did not translate
into positive movement for the bond markets. Instead, the markets became wary,
because inflation often accompanies economic growth.
Other factors influencing the municipal bond market early in the year
included:
- Intense weather conditions, which hindered distribution and manufacturing,
were experienced by much of the United States and affected certain
municipal bond sectors.
- The expectation that a federal budget agreement was forthcoming helped
bolster municipal bonds, especially at the longer end of the spectrum.
- The proposal of tax reform--and the threat of municipal bonds having
diminished tax-exempt status--continued to dampen demand for municipals,
resulting in lower bond prices.
We believe the beginning of 1996 reflected the market's reaction to the
possibility of a return to long-term economic growth. This, coupled with
continued low inflationary conditions, has served to put the Federal Reserve
Board in a neutral policy mode, bringing relative calm to the market--although
currently at higher interest rate levels for now.
PERFORMANCE SUMMARY
The Van Kampen American Capital Trust for Investment Grade Municipals'
(ticker symbol VGM) common stock price declined 1 percent during the six-month
period, closing at $15.625, while the general municipal bond market was down 4
percent for the same period, according to the Bond Buyer's 40 Municipal Bond
Index.
For the six months ended April 30, 1996, the Trust posted a total return of
2.78 percent(1), based on market price. Longer term, the Trust achieved a
one-year total return of 9.18 percent(1), based on market price for the period
ended April 30, 1996, including reinvestment of dividends.
Continued on page two
1
<PAGE> 3
Many closed-end municipal bond funds are currently offering higher after-tax
yields than taxable income alternatives, and your Trust is no exception. Based
on the closing common stock price on April 30, 1996, the Trust for Investment
Grade Municipals had a tax-exempt distribution rate of 7.30 percent(3). In other
words, investors in the 36 percent federal income tax bracket would have to earn
a yield of 11.41 percent(4) on a taxable investment to equal your Trust's
tax-exempt distribution rate.
MARKET OUTLOOK
The economy rebounded in the first quarter of 1996, despite poor weather in
the East and the remnants of a slow fourth quarter of 1995, which was hindered
by weak construction activity, two government shutdowns, and a strike at Boeing.
We believe the momentum of the first quarter can carry into the second, due in
part to renewed auto production in the aftermath of the General Motors strike
and an end to the budget stalemate between the White House and Congress. We
expect a modest slowdown in the summer months, as higher interest rates could
slow activity in interest-sensitive sectors of the economy, such as housing.
Top 5 Portfolio Holdings by Industry as of April 30,
1996
Industrial Revenue................ 16.8%
General Purpose................... 16.1%
Health Care....................... 10.8%
Single-Family Housing............. 10.2%
Wholesale Electric................. 7.2%
The Fed's protracted period of easing, and relatively neutral stance, favors
the growth we are currently experiencing. Given the strong employment situation
and commodity price increases, we think the Fed will await further economic
evidence before adjusting interest rates again--probably summertime at the
earliest. So far, guides such as the Consumer Price Index continue to indicate
modest levels of inflation. More importantly, we continue to see few signs of
emerging inflation in either unit labor costs, hourly earnings or the employment
cost index.
- --------------------------------------------------------------------------------
INVESTMENT TERM: REVENUE BONDS
Revenue bonds are one of the three most common types of municipal bonds--the
other two are general obligation bonds and municipal notes. Revenue bonds
are issued to finance income-generating projects such as turnpikes, toll
bridges and airports. The revenues these projects bring in are used to pay
interest and principal to bondholders.
- --------------------------------------------------------------------------------
Continued on page three
2
<PAGE> 4
Finally, as the November [CREDIT QUALITY GRAPH]
elections approach, the PORTFOLIO COMPOSITION BY CREDIT QUALITY AS OF
debate on tax reform may APRIL 30, 1996 GRAPH
grow. We believe the outcome
in the long run will be
positive, or at worst AAA............... 37.0%
neutral, for municipal AA............... 11.7%
bonds. That's good news for A............... 17.8%
the market, which was BBB............... 18.9%
concerned that flat tax BB............... 11.9%
proposals could threaten the Non-Rated............... 2.7%
tax-exempt status of
municipal bonds. While the BASED UPON CREDIT QUALITY RATINGS ISSUED BY
debate may not be over and STANDARD & POOR'S. FOR SECURITIES NOT RATED BY
legislation may be STANDARD & POOR'S, THE MOODY'S RATING IS USED.
forthcoming, the market
should be more confident.
Indeed, we expect investor demand for municipal securities to exceed supply,
which should add price stability to the general market. And with municipal bond
yields currently at attractive levels relative to Treasuries, investor demand
for tax-exempt securities should increase.
In summary, our view of the general municipal market is positive. From the
decreasing likelihood of tax reform in the near term to specific market
conditions, we believe the market is on solid ground. With our dedication to
comprehensive research and long-term investment perspective, we believe your
Trust is in a position to benefit in the coming months.
Sincerely,
[SIG]
Don G. Powell
Chairman
Van Kampen American Capital
Investment Advisory Corp.
[SIG]
Dennis J. McDonnell
President
Van Kampen American Capital
Investment Advisory Corp.
3
<PAGE> 5
PERFORMANCE RESULTS FOR THE PERIOD ENDED APRIL 30, 1996
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE MUNICIPALS
(NYSE TICKER SYMBOL--VGM)
<TABLE>
<CAPTION>
COMMON SHARE TOTAL RETURNS
<S> <C>
Six-month total return based on market price(1)........... 2.78%
Six-month total return based on NAV(2).................... .70%
DISTRIBUTION RATES
Distribution rate as a % of closing common stock
price(3)................................................ 7.30%
Taxable-equivalent distribution rate as a % of closing
common stock price(4)................................... 11.41%
SHARE VALUATIONS
Net asset value........................................... $16.14
Closing common stock price................................ $15.625
Six-month high common stock price (02/06/96).............. $16.625
Six-month low common stock price (03/08/96)............... $15.375
Preferred share (Series A) rate(5)........................ 3.800%
Preferred share (Series B) rate(5)........................ 3.485%
Preferred share (Series C) rate(5)........................ 3.875%
Preferred share (Series D) rate(5)........................ 3.775%
</TABLE>
(1)Total return based on market price assumes an investment at the market price
at the beginning of the period indicated, reinvestment of all distributions for
the period in accordance with the Trust's dividend reinvestment plan, and sale
of all shares at the closing common stock price at the end of the period
indicated.
(2)Total return based on net asset value (NAV) assumes an investment at the
beginning of the period indicated, reinvestment of all distributions for the
period, and sale of all shares at the end of the period, all at NAV.
(3)Distribution rate represents the monthly annualized distributions of the
Trust at the end of the period and not the earnings of the Trust.
(4)The taxable-equivalent distribution rate is calculated assuming a 36% federal
income tax bracket.
(5)See "Notes to Financial Statements" footnote number 5, for more information
concerning Preferred Share reset periods.
A portion of the interest income may be taxable for those investors subject to
the federal alternative minimum tax (AMT).
Past performance does not guarantee future results. Investment return, stock
price and net asset value will fluctuate with market conditions. Trust shares,
when sold, may be worth more or less than their original cost.
4
<PAGE> 6
PORTFOLIO OF INVESTMENTS
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
-----------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS
ALABAMA 3.3%
$ 8,000 Birmingham, AL North Med Clinic Brd Rev Ser A
Carraway Methodist Hosp (Prerefunded @
01/01/01)....................................... 7.500% 07/01/15 $ 9,019,680
8,600 Birmingham, AL North Med Clinic Brd Rev Ser B
Carraway Methodist Hosp (Prerefunded @
01/01/01)....................................... 8.000 07/01/15 9,877,960
4,000 Courtland, AL Indl Dev Brd Solid Waste Disp Rev
Champion Intl Corp Proj......................... 7.750 01/01/20 4,279,120
------------
23,176,760
------------
ARKANSAS 1.9%
12,500 Blytheville, AR Solid Waste Recycling & Swr
Treatment Rev Nucor Corp Proj................... 6.900 12/01/21 13,227,750
------------
CALIFORNIA 5.7%
635 California Edl Fac Auth Rev Univ of La Verne.... 5.400 04/01/99 627,901
670 California Edl Fac Auth Rev Univ of La Verne.... 5.600 04/01/00 660,265
2,000 California Pollutn Ctl Fin Auth Pollutn Ctl Rev
Southern CA Edison Co (Embedded Cap) (AMBAC
Insd)........................................... 6.000 07/01/27 1,980,040
5,000 California Statewide Cmnty Dev Auth Rev Ctfs
Partn Sutter Hlth Oblig (MBIA Insd)............. 5.500 08/15/23 4,637,450
25,750 Foothill/Eastern Tran Corridor Agy CA Toll Rd
Rev Sr Lien Ser A............................... * 01/01/23 4,261,367
3,600 Garden Grove, CA Pub Fin Auth Rev Wtr Svcs Cap
Impt Proj (FGIC Insd)........................... 5.250 12/15/15 3,277,260
2,175 Los Angeles Cnty, CA Pub Wks Fin Auth Lease Rev
Multi Cap Fac Proj IV........................... 5.250 12/01/16 1,982,317
4,000 Los Angeles, CA Convention & Exhibition Cent
Auth Lease Rev Ser A Rfdg (MBIA Insd)........... 5.150 08/15/08 3,900,160
2,000 Orange Cnty, CA Recovery Ser A Rfdg (MBIA
Insd)........................................... 6.000 06/01/09 2,067,760
15,000 San Diego, CA Indl Dev Rev San Diego Gas & Elec
Ser A (Embedded Cap) (AMBAC Insd)............... 6.100 09/01/19 14,906,100
2,000 Southern CA Pub Pwr Auth (FSA Insd)............. 6.000 07/01/12 2,011,340
------------
40,311,960
------------
COLORADO 4.9%
1,000 Arapahoe Cnty, CO Cap Impt Trust Fund Hwy Rev
E-470 Proj Ser B................................ 6.950 08/31/20 1,045,870
7,000 Denver, CO City & Cnty Arpt Rev Ser A........... 8.500 11/15/23 8,069,810
5,000 Denver, CO City & Cnty Arpt Rev Ser A........... 8.750 11/15/23 5,950,900
7,915 Denver, CO City & Cnty Arpt Rev Ser A........... 8.000 11/15/25 8,812,323
3,500 Denver, CO City & Cnty Arpt Rev Ser B (MBIA
Insd)........................................... 5.750 11/15/17 3,356,115
2,000 Denver, CO City & Cnty Arpt Rev Ser C (MBIA
Insd)........................................... 5.600 11/15/25 1,862,500
1,685 Meridian Metro Dist CO Peninsular & Oriental
Steam Navig Co Rfdg............................. 7.000 12/01/00 1,795,233
3,250 Meridian Metro Dist CO Peninsular & Oriental
Steam Navig Co Rfdg............................. 7.500 12/01/11 3,507,855
------------
34,400,606
------------
</TABLE>
See Notes to Financial Statements
5
<PAGE> 7
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
-----------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
DISTRICT OF COLUMBIA 0.2%
$ 1,600 District of Columbia Ser E (FSA Insd)........... 6.000% 06/01/13 $ 1,591,456
------------
FLORIDA 1.1%
1,400 Florida St Dept Corrections Ctfs Partn
Okeechobee Correctional (AMBAC Insd)............ 6.250 03/01/15 1,436,988
1,000 Hillsborough Cnty, FL Indl Dev Auth Pollutn Ctl
Rev Tampa Elec Co Proj Ser 92 Rfdg.............. 8.000 05/01/22 1,170,970
2,000 Martin Cnty, FL Indl Dev Auth Indl Dev Rev
Indiantown Cogeneration Proj A Rfdg............. 7.875 12/15/25 2,243,600
3,465 Reedy Creek Impt Dist FL Ser C (AMBAC Insd)..... 4.750 06/01/15 3,024,633
------------
7,876,191
------------
GEORGIA 1.4%
3,150 Burke Cnty, GA Dev Auth Pollutn Ctl Rev GA Pwr
Co Plant Vogtle Proj (MBIA Insd)................ 6.350 05/01/19 3,182,949
5,900 Municipal Elec Auth GA Spl Oblig 5th Crossover
Ser Proj One (MBIA Insd)........................ 6.500 01/01/17 6,396,780
------------
9,579,729
------------
HAWAII 0.9%
6,000 Hawaii St Arpt Sys Rev Ser 2 (MBIA Insd)........ 6.750 07/01/21 6,285,120
------------
ILLINOIS 10.0%
4,865 Chicago, IL Cap Apprec (AMBAC Insd)............. * 07/01/16 1,315,447
1,600 Chicago, IL Cent Pub Lib Ser A (AMBAC Insd)..... 6.650 01/01/05 1,746,864
1,800 Chicago, IL Cent Pub Lib Ser A (AMBAC Insd)..... 6.700 01/01/06 1,980,450
1,600 Chicago, IL Cent Pub Lib Ser B (AMBAC Insd)..... 6.650 01/01/05 1,746,864
1,400 Chicago, IL Cent Pub Lib Ser C (AMBAC Insd)..... 6.650 01/01/05 1,528,506
1,500 Chicago, IL Cent Pub Lib Ser C (AMBAC Insd)..... 6.700 01/01/06 1,650,375
7,000 Chicago, IL O'Hare Intl Arpt Rev Genl Arpt 2nd
Lien Ser A (MBIA Insd).......................... 6.375 01/01/12 7,358,890
13,645 Chicago, IL O'Hare Intl Arpt Spl Fac Rev United
Airls Inc....................................... 8.500 05/01/18 14,995,992
3,670 Chicago, IL O'Hare Intl Arpt Spl Fac Rev United
Airls Inc Proj Ser 84A.......................... 8.850 05/01/18 4,121,153
4,505 East Peoria, IL Ser C Rfdg...................... 7.000 05/01/17 4,853,732
10,010 Hoffman Estates, IL Tax Increment Rev Jr Lien
Sears Roebuck & Co.............................. * 05/15/05 5,860,254
10,000 Hoffman Estates, IL Tax Increment Rev Jr Lien
Sears Roebuck & Co.............................. * 05/15/06 5,448,300
2,000 Illinois Hlth Fac Auth Rev Edward Hosp Assn
Proj............................................ 7.000 02/15/12 2,069,360
1,900 Illinois Hlth Fac Auth Rev Evangelical Hosps Ser
C (FSA Insd).................................... 6.750 04/15/17 1,988,445
2,400 Illinois Hlth Fac Auth Rev Sarah Bush Lincoln
Hlth Cent....................................... 7.250 05/15/22 2,480,184
3,750 Illinois Hlth Fac Auth Rev South Subn Hosp
Rfdg............................................ 7.000 02/15/18 3,875,438
3,185 Illinois Hsg Dev Auth Multi Family Hsg Ser C.... 7.400 07/01/23 3,309,852
8,845 Metropolitan Pier & Expo Auth IL Dedicated St
Tax Rev McCormick Pl Expansion Ser A (FGIC
Insd)........................................... * 06/15/16 2,583,359
</TABLE>
See Notes to Financial Statements
6
<PAGE> 8
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
-----------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
ILLINOIS (CONTINUED)
$ 1,400 Southern IL Univ Rev Hsg & Aux Fac Ser A Rfdg... 6.750% 04/01/12 $ 1,491,182
------------
70,404,647
------------
INDIANA 0.7%
4,500 Indianapolis, IN Arpt Auth Rev Spl Fac Federal
Express Corp Proj............................... 7.100 01/15/17 4,749,435
------------
IOWA 0.4%
2,375 Iowa Student Ln Liquidity Corp Rev Ser C........ 6.950 03/01/06 2,504,295
------------
KENTUCKY 3.1%
10,000 Kenton Cnty, KY Arpt Brd Arpt Rev Spl Fac Delta
Airls Proj Ser A................................ 7.500 02/01/20 10,648,800
11,000 Kenton Cnty, KY Arpt Brd Arpt Rev Spl Fac Delta
Airls Proj Ser A................................ 7.125 02/01/21 11,430,980
------------
22,079,780
------------
LOUISIANA 0.7%
5,000 Louisiana Hsg Fin Agy Mtg Rev Single Family Ser
C2 Rfdg (MBIA Insd)............................. 6.450 06/01/27 5,065,200
------------
MAINE 2.1%
2,650 Maine Muni Bd Bank Ser A Rfdg (MBIA Insd)....... 5.800 11/01/20 2,587,381
5,250 Maine St Hsg Auth Mtg Pur Ser D6................ 7.250 11/15/19 5,431,072
6,755 Maine St Hsg Auth Mtg Pur Ser D6................ 7.250 11/15/22 7,000,139
------------
15,018,592
------------
MARYLAND 0.7%
5,000 Maryland St Cmnty Dev Admin Dept Hsg & Cmnty Dev
Rev Single Family Pgm Seventh Ser............... 7.300 04/01/25 5,196,100
------------
MASSACHUSETTS 2.5%
12,685 Massachusetts St Cons Ln Ser D (Prerefunded @
07/01/01)....................................... 6.875 07/01/10 14,152,147
2,410 Massachusetts St Hsg Fin Agy Residential Dev Ser
C (FNMA Collateralized)......................... 6.875 11/15/11 2,538,188
1,000 Massachusetts St Wtr Res Auth Ser B (MBIA
Insd)........................................... 4.750 12/01/21 832,400
------------
17,522,735
------------
MICHIGAN 4.6%
3,015 Detroit, MI Downtown Dev Auth Tax Increment Rev
Ser C1.......................................... * 07/01/17 715,701
3,050 Detroit, MI Downtown Dev Auth Tax Increment Rev
Ser C1.......................................... * 07/01/18 676,459
3,050 Detroit, MI Downtown Dev Auth Tax Increment Rev
Ser C1.......................................... * 07/01/19 632,021
3,050 Detroit, MI Downtown Dev Auth Tax Increment Rev
Ser C1.......................................... * 07/01/22 509,014
3,050 Detroit, MI Downtown Dev Auth Tax Increment Rev
Ser C1.......................................... * 07/01/23 475,342
3,050 Detroit, MI Downtown Dev Auth Tax Increment Rev
Ser C1.......................................... * 07/01/24 443,928
8,015 Detroit, MI Econ Dev Corp Res Recovery Rev Ser A
(FSA Insd)...................................... 6.875 05/01/09 8,542,788
2,000 Detroit, MI Sewage Disp Rev Ser B Rfdg (MBIA
Insd)........................................... 5.250 07/01/21 1,831,700
1,000 Detroit, MI Sewage Disp Rev Wtr Supply Sys Ser A
(MBIA Insd)..................................... 5.000 07/01/25 870,990
3,500 Grand Rapids, MI Downtown Dev Cap Apprec (MBIA
Insd)........................................... * 06/01/15 1,104,950
2,765 Grand Rapids, MI Downtown Dev Cap Apprec (MBIA
Insd)........................................... * 06/01/16 817,417
</TABLE>
See Notes to Financial Statements
7
<PAGE> 9
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
-----------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MICHIGAN (CONTINUED)
$12,995 Michigan St Hosp Fin Auth Rev Sisters of Mercy
Hlth Corp Ser J (Prerefunded @ 02/15/01)........ 7.000% 02/15/21 $14,326,338
1,400 Portage Lake, MI Wtr & Swr Auth Ser 3
(Prerefunded @ 10/01/02)........................ 7.750 10/01/20 1,645,154
------------
32,591,802
------------
MINNESOTA 0.6%
2,000 Minnesota St Hsg Fin Agy Rental Hsg Ser D (MBIA
Insd)........................................... 5.800 08/01/11 1,991,780
2,000 Minnesota St Hsg Fin Agy Rental Hsg Ser D (MBIA
Insd)........................................... 5.900 08/01/15 1,986,140
------------
3,977,920
------------
MISSISSIPPI 0.4%
3,000 Medical Cent Edl Bldg Corp MS Rev Univ MS Med
Cent Proj (MBIA Insd)........................... 5.900 12/01/23 2,937,840
------------
NEVADA 0.5%
3,000 Clark Cnty, NV Indl Dev Rev NV Pwr Co Proj C
Rfdg (AMBAC Insd)............................... 7.200 10/01/22 3,315,750
------------
NEW HAMPSHIRE 0.6%
4,000 New Hampshire St Indl Dev Auth Rev Pollutn Ctl
Pub Svcs Co NH Proj C........................... 7.650 05/01/21 4,161,920
------------
NEW JERSEY 7.2%
1,000 Essex Cnty, NJ Utils Auth Solid Waste Rev Ser A
(FSA Insd)...................................... 5.500 04/01/11 984,470
1,200 Essex Cnty, NJ Utils Auth Solid Waste Rev Ser A
(FSA Insd)...................................... 5.600 04/01/16 1,161,492
11,000 Mercer Cnty, NJ Impt Auth Rev Solid Waste Ser A
Rfdg (FGIC Insd)................................ 6.700 04/01/13 11,136,400
25,000 New Jersey Econ Dev Auth St Contract Econ
Recovery (Embedded Cap) (b)..................... 5.900 03/15/21 24,770,250
2,000 New Jersey Hlthcare Fac Fin Auth Rev Genl Hosp
Cent at Passaic (FSA Insd)...................... 6.000 07/01/06 2,133,920
10,000 New Jersey St Hsg & Mtg Fin Agy Rev Hsg Ser A
Rfdg............................................ 6.950 05/01/15 10,512,600
------------
50,699,132
------------
NEW YORK 19.1%
12,155 Metropolitan Tran Auth NY Svcs Contract Commuter
Fac Ser 5 Rfdg.................................. 6.500 07/01/16 12,344,618
1,740 New York City Ser A (Prerefunded @ 08/15/01).... 8.000 08/15/20 2,029,606
5,000 New York City Ser A Rfdg........................ 6.500 08/01/14 5,000,950
8,500 New York City Ser C............................. 7.500 08/01/19 9,325,180
2,900 New York City Ser C Rfdg........................ 6.500 08/01/04 3,013,970
2,000 New York City Ser I Rfdg........................ 5.875 03/15/13 1,894,400
2,000 New York City Ser J............................. 5.875 02/15/19 1,851,100
5,250 New York City Tran Auth Tran Fac Livingston
Plaza Proj Rfdg (FSA Insd)...................... 5.400 01/01/18 4,909,537
13,500 New York St Dorm Auth Rev City Univ Sys Ser C... 7.500 07/01/10 15,419,835
1,000 New York St Dorm Auth Rev Court Fac Lease Ser
A............................................... 5.625 05/15/13 930,050
2,000 New York St Dorm Auth Rev Court Fac Lease Ser
A............................................... 5.375 05/15/16 1,783,700
</TABLE>
See Notes to Financial Statements
8
<PAGE> 10
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
-----------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
NEW YORK (CONTINUED)
$ 5,725 New York St Environmental Fac Corp Spl Oblig
Riverbank State Park............................ 7.375% 04/01/22 $ 6,123,116
5,000 New York St Hsg Fin Agy Svcs Contract Oblig Rev
Ser A (Prerefunded @ 03/15/01).................. 7.375 09/15/21 5,747,050
27,700 New York St Loc Govt Assistance Corp Ser D
(Prerefunded @ 04/01/02)........................ 7.000 04/01/18 31,355,292
2,840 New York St Loc Govt Assistance Corp Ser E
Rfdg............................................ 6.000 04/01/14 2,901,032
3,000 New York St Med Care Fac Fin Agy Rev NY Hosp Mtg
Ser A (AMBAC Insd).............................. 6.750 08/15/14 3,204,780
5,875 New York St Med Care Fac Fin Agy Rev Saint
Peter's Hosp Proj Ser A (AMBAC Insd)............ 5.375 11/01/20 5,389,196
2,500 New York St Mtg Agy Rev Homeowner Mtg Ser 54
Rfdg............................................ 6.200 10/01/26 2,486,275
1,500 New York St Urban Dev Corp Rev Proj Cent for
Indl Innovation Rfdg............................ 5.500 01/01/13 1,399,815
11,500 New York St Urban Dev Corp Rev St Fac
(Prerefunded @ 04/01/01)........................ 7.500 04/01/11 13,095,625
4,000 Niagara Falls, NY Brdg Comm Toll Rev Ser B Rfdg
(FGIC Insd)..................................... 5.250 10/01/21 3,618,280
------------
133,823,407
------------
NORTH CAROLINA 4.7%
2,500 North Carolina Eastn Muni Pwr Agy Pwr Sys Rev
Ser B Rfdg...................................... 6.250 01/01/23 2,523,850
10,000 North Carolina Eastn Muni Pwr Agy Pwr Sys Rev
Ser B Rfdg (Embedded Cap)....................... 6.000 01/01/14 9,816,100
15,000 North Carolina Muni Pwr Agy No 1 Catawba Elec
Rev (Embedded Cap).............................. 6.000 01/01/12 14,998,500
5,150 North Carolina Muni Pwr Agy No 1 Catawba Elec
Rev Rfdg (FSA Insd)............................. 6.200 01/01/18 5,275,969
------------
32,614,419
------------
OHIO 1.0%
3,000 Cuyahoga Cnty, Ohio Hosp Rev Ser A Rfdg & Impt
(MBIA Insd)..................................... 5.625 01/15/26 2,838,630
1,000 Ohio St Air Quality Dev Auth Rev JMG Funding Ltd
Partnership Proj Rfdg (AMBAC Insd).............. 6.375 04/01/29 1,027,510
3,000 Ohio St Wtr Dev Auth Pollutn Ctl Fac Rev PA Pwr
Co Proj Rfdg (AMBAC Insd)....................... 6.150 08/01/23 3,074,160
------------
6,940,300
------------
OKLAHOMA 3.8%
17,475 Tulsa, OK Muni Arpt Tran Rev American Airls
Inc............................................. 7.375 12/01/20 18,498,511
7,500 Tulsa, OK Muni Arpt Tran Rev American Airls
Inc............................................. 7.600 12/01/30 8,038,725
------------
26,537,236
------------
OREGON 1.2%
7,670 Oregon St Hsg & Cmnty Svcs Dept Mtg Rev Single
Family Mtg Proj Ser B........................... 6.875 07/01/28 8,102,665
------------
PENNSYLVANIA 3.6%
2,500 Allegheny Cnty, PA Arpt Rev Gtr Pittsburgh Intl
Arpt Ser B (FSA Insd)........................... 6.625 01/01/22 2,572,250
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
-----------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
PENNSYLVANIA (CONTINUED)
$ 1,000 Cambria Cnty, PA Indl Dev Auth Pollutn Ctl Rev
PA Elec Co Proj Ser B Rfdg (MBIA Insd).......... 6.050% 11/01/25 $ 992,520
4,000 Falls Twp, PA Hosp Auth Hosp Rev Delaware Vly
Med Rfdg (FHA Gtd).............................. 7.000 08/01/22 4,152,760
7,000 Montgomery Cnty, PA Indl Dev Auth Rev Pollutn
Ctl Ser E Rfdg (MBIA Insd)...................... 6.700 12/01/21 7,465,640
1,500 Pennsylvania Hsg Fin Agy Single Family Mtg Ser
34B (FHA Gtd)................................... 7.000 04/01/24 1,550,430
6,000 Philadelphia, PA Gas Wks Rev Fourteenth Ser (FSA
Insd)........................................... 6.250 07/01/08 6,375,600
1,000 Philadelphia, PA Hosp & Higher Edl Fac Auth Hosp
Rev Temple Univ Hosp Ser A...................... 6.500 11/15/08 1,034,230
1,000 Philadelphia, PA Wtr & Wastewtr Rev (FGIC
Insd)........................................... 5.650 06/15/12 967,090
------------
25,110,520
------------
RHODE ISLAND 0.2%
1,500 Rhode Island Depositors Econ Protn Corp Spl
Oblig Ser A (Prerefunded @ 08/01/02)............ 6.950 08/01/22 1,697,985
------------
SOUTH CAROLINA 0.4%
2,700 Charleston Cnty, SC Solid Waste (MBIA Insd)..... 6.000 01/01/14 2,730,483
------------
SOUTH DAKOTA 0.4%
2,500 South Dakota Hsg Dev Auth Homeownership Mtg Ser
C............................................... 7.300 05/01/24 2,587,975
------------
TENNESSEE 1.0%
6,795 Memphis, TN Hlth Edl & Hsg Fac Brd Mtg Rev
Edgewater Terr Rfdg (FHA Gtd)................... 7.375 01/20/27 7,166,619
------------
TEXAS 1.8%
9,790 Alliance Arpt Auth Inc TX Spl Fac Rev American
Airls Inc Proj.................................. 7.500 12/01/29 10,411,469
2,000 Coastal Bend Hlth Fac Dev Corp TX Incarnate Word
Hlth Svcs Ser A (FSA Insd)...................... 6.000 11/15/22 2,007,220
------------
12,418,689
------------
UTAH 1.8%
4,000 Murray City, UT Hosp Rev Inc Hlth Serv Inc Rfdg
(MBIA Insd)..................................... 4.750 05/15/20 3,303,760
2,500 Salt Lake City, UT Hosp Rev IHC Hosp Inc Rfdg
(Embedded Cap).................................. 5.500 02/15/17 2,289,475
1,125 Utah St Hsg Fin Agy Single Family Mtg Mezzanine
Issue H1 (AMBAC Insd)........................... 6.000 07/01/12 1,123,740
4,665 Utah St Hsg Fin Agy Single Family Mtg Ser A2
(FHA Gtd)....................................... 7.150 07/01/25 4,834,853
1,195 Utah St Hsg Fin Agy Single Family Mtg Sr Ser A1
(FHA Gtd)....................................... 7.100 07/01/14 1,229,033
------------
12,780,861
------------
VIRGINIA 0.2%
1,000 Henrico Cnty, VA Indl Dev Auth Pub Fac Lease Rev
Henrico Cnty Regl Jail Proj..................... 7.125 08/01/21 1,101,110
------------
WASHINGTON 0.8%
5,000 Washington St Pub Pwr Supply (FGIC Insd)........ 6.875 07/01/17 5,370,200
------------
WEST VIRGINIA 2.7%
3,000 Marshall Cnty, WV Pollutn Ctl Rev OH Pwr Co Proj
Ser C Rfdg (MBIA Insd).......................... 6.850 06/01/22 3,231,420
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
-----------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
WEST VIRGINIA (CONTINUED)
$15,000 West Virginia St Hsg Dev Fd Hsg Fin Ser B (FHA
Gtd)............................................ 7.200% 11/01/20 $15,628,200
------------
18,859,620
------------
WISCONSIN 1.5%
9,855 Wisconsin Hsg & Econ Dev Auth Homeownership Rev
Ser A........................................... 7.100 03/01/23 10,341,738
------------
PUERTO RICO 0.9%
4,485 Puerto Rico Comwlth Aqueduct & Swr Auth Rev
Rfdg............................................ 5.000 07/01/15 3,956,847
1,250 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser
Y............................................... 5.500 07/01/36 1,140,525
1,110 Puerto Rico Comwlth Ser A Rfdg (AMBAC Insd)..... 6.000 07/01/14 1,094,804
------------
6,192,176
------------
TOTAL LONG-TERM INVESTMENTS 98.6%
(Cost $652,973,736) (a)..................................................... 691,050,723
OTHER ASSETS IN EXCESS OF LIABILITIES 1.4%................................... 10,070,038
------------
NET ASSETS 100%.............................................................. $701,120,761
-----------
*Zero coupon bond
</TABLE>
(a) At April 30, 1996, cost for federal income tax purposes is $652,973,736; the
aggregate gross unrealized appreciation is $40,484,558 and the aggregate
gross unrealized depreciation is $2,377,128, resulting in net unrealized
appreciation including option transactions of $38,107,430.
(b) Assets segregated as collateral for open option transactions.
See Notes to Financial Statements
11
<PAGE> 13
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at Market Value (Cost $652,973,736) (Note 1).............. $691,050,723
Receivables:
Interest............................................................. 13,331,879
Investments Sold..................................................... 65,000
Options at Market Value (Net premiums paid of $38,307) (Note 4)........ 68,750
Unamortized Organizational Expenses (Note 1)........................... 5,827
Other.................................................................. 20,092
------------
Total Assets..................................................... 704,542,271
------------
LIABILITIES:
Payables:
Custodian Bank....................................................... 2,075,063
Income Distributions -- Common and Preferred Shares.................. 544,552
Investment Advisory Fee (Note 2)..................................... 374,236
Administrative Fee (Note 2).......................................... 115,149
Accrued Expenses....................................................... 273,261
Deferred Compensation and Retirement Plans (Note 2).................... 39,249
------------
Total Liabilities................................................ 3,421,510
------------
NET ASSETS............................................................. $701,120,761
============
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000 shares, 5,300
issued with liquidation preference of $50,000 per share) (Note 5).... $265,000,000
------------
Common Shares ($.01 par value with an unlimited number of shares
authorized, 27,013,149 shares issued and outstanding)................ 270,131
Paid in Surplus........................................................ 399,318,038
Net Unrealized Appreciation on Investments............................. 38,107,430
Accumulated Undistributed Net Investment Income........................ 3,317,373
Accumulated Net Realized Loss on Investments........................... (4,892,211)
------------
Net Assets Applicable to Common Shares........................... 436,120,761
------------
NET ASSETS............................................................. $701,120,761
============
NET ASSET VALUE PER COMMON SHARE ($436,120,761 divided
by 27,013,149 shares outstanding).................................... $ 16.14
============
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest............................................................... $ 22,308,436
------------
EXPENSES:
Investment Advisory Fee (Note 2)....................................... 2,320,024
Administrative Fee (Note 2)............................................ 713,853
Preferred Share Maintenance (Note 5)................................... 329,206
Trustees Fees and Expenses (Note 2).................................... 12,398
Legal (Note 2)......................................................... 11,318
Amortization of Organizational Expenses (Note 1)....................... 3,989
Other.................................................................. 240,490
------------
Total Expenses..................................................... 3,631,278
------------
NET INVESTMENT INCOME.................................................. $ 18,677,158
============
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS:
Realized Gain/Loss on Investments:
Proceeds from Sales.................................................. $ 74,873,201
Cost of Securities Sold.............................................. (73,406,935)
------------
Net Realized Gain on Investments (Including realized loss on closed and
expired option and futures transactions of $240,291 and $717,442,
respectively)........................................................ 1,466,266
------------
Unrealized Appreciation/Depreciation on Investments:
Beginning of the Period.............................................. 49,784,011
End of the Period (Including unrealized appreciation on open option
transactions of $30,443)........................................... 38,107,430
------------
Net Unrealized Depreciation on Investments During the Period........... (11,676,581)
------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS........................ $(10,210,315)
============
NET INCREASE IN NET ASSETS FROM OPERATIONS............................. $ 8,466,843
============
</TABLE>
See Notes to Financial Statements
13
<PAGE> 15
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended April 30, 1996
and the Year Ended October 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1996 October 31, 1995
<S> <C> <C>
- ------------------------------------------------------------------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................. $ 18,677,158 $ 38,253,162
Net Realized Gain/Loss on Investments................. 1,466,266 (5,954,036)
Net Unrealized Appreciation/Depreciation on
Investments During the Period....................... (11,676,581) 50,573,248
---------- ----------
Change in Net Assets from Operations.................. 8,466,843 82,872,374
---------- ----------
Distributions from Net Investment Income:
Common Shares....................................... (15,397,154) (30,794,473)
Preferred Shares.................................... (4,803,766) (10,276,931)
---------- ----------
Total Distributions................................... (20,200,920) (41,071,404)
---------- ----------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES... (11,734,077) 41,800,970
NET ASSETS:
Beginning of the Period............................... 712,854,838 671,053,868
----------- -----------
End of the Period (Including undistributed net
investment income of $3,317,373 and $4,841,135,
respectively)....................................... $701,120,761 $712,854,838
============ ============
</TABLE>
See Notes to Financial Statements
14
<PAGE> 16
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one common share of
the Trust outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
January 24, 1992
Six Months (Commencement
Ended Year Ended October 31 of Investment
April 30, ---------------------- Operations) to
1996 1995 1994 1993 October 31, 1992
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of the Period (a)...... $16.579 $15.032 $17.954 $15.557 $14.792
------ ------ ------ ------ ------
Net Investment Income............ .692 1.415 1.432 1.454 1.010
Net Realized and Unrealized
Gain/Loss on Investments....... (.379) 1.652 (2.842) 2.424 .550
------ ------ ------ ------ ------
Total from Investment Operations... .313 3.067 (1.410) 3.878 1.560
------ ------ ------ ------ ------
Less:
Distributions from Net Investment
Income:
Paid to Common Shareholders.... .570 1.140 1.140 1.085 .595
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders....... .178 .380 .305 .287 .200
Distributions from Net Realized
Gain on Investments (Note 1):
Paid to Common Shareholders.... -0- -0- .056 .083 -0-
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders....... -0- -0- .011 .026 -0-
------ ------ ------ ------ ------
Total Distributions................ .748 1.520 1.512 1.481 .795
------ ------ ------ ------ ------
Net Asset Value, End of the
Period........................... $16.144 $16.579 $15.032 $17.954 $15.557
======= ======= ======= ======= =======
Market Price Per Share at End of
the Period....................... $15.625 $15.750 $14.000 $17.375 $14.875
Total Investment Return at
Market Price (b)................. 2.78%* 21.15% (13.12%) 25.40% 3.08%*
Total Return at Net Asset Value
(c).............................. .70%* 18.51% (9.99%) 23.53% 7.68%*
Net Assets at End of the Period (In
millions)........................ $ 701.1 $ 712.9 $ 671.1 $ 750.0 $ 685.2
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares........................... 1.60% 1.68% 1.63% 1.59% 1.54%
Ratio of Expenses to Average Net
Assets........................... 1.01% 1.04% 1.03% 1.01% 1.01%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares (d)................ 6.13% 6.55% 6.79% 6.87% 6.71%
Portfolio Turnover................. 10.35%* 14.66% 20.20% 19.77% 37.07%*
</TABLE>
(a) Net asset value at January 24, 1992, is adjusted for common and preferred
share offering costs of $.208 per common share.
(b) Total investment return at market price reflects the change in market value
of the common shares for the period indicated with reinvestment of dividends
in accordance with the Trust's dividend reinvestment plan.
(c) Total return at net asset value (NAV) reflects the change in value of the
Trust's assets with reinvestment of dividends based upon NAV.
(d) Net investment income is adjusted for the common share equivalent of
distributions paid to preferred shareholders.
* Non-annualized
See Notes to Financial Statements
15
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital Trust for Investment Grade Municipals (the "Trust")
is registered as a diversified closed-end management investment company under
the Investment Company Act of 1940, as amended. The Trust's investment objective
is to provide a high level of current income exempt from federal income tax,
consistent with preservation of capital. The Trust will invest substantially all
of its assets in municipal securities rated investment grade at the time of
investment. The Trust commenced investment operations on January 24, 1992.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. SECURITY VALUATION--Investments are stated at value using market quotations
or, if such valuations are not available, estimates obtained from yield data
relating to instruments or securities with similar characteristics in accordance
with procedures established in good faith by the Board of Trustees. Short-term
securities with remaining maturities of less than 60 days are valued at
amortized cost.
B. SECURITY TRANSACTIONS--Security Transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis. The
Trust may purchase and sell securities on a "when issued" or "delayed delivery"
basis with settlement to occur at a later date. The value of the security so
purchased is subject to market fluctuations during this period. The Trust will
maintain, in a segregated account with its custodian, assets having an aggregate
value at least equal to the amount of the when issued or delayed delivery
purchase commitments until payment is made. At April 30, 1996, there were no
when issued or delayed delivery purchase commitments.
C. INVESTMENT INCOME--Interest income is recorded on an accrual basis. Bond
premium and original issue discount are amortized over the expected life of each
applicable security.
16
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
D. ORGANIZATIONAL EXPENSES--The Trust has reimbursed Van Kampen American Capital
Distributors, Inc. or its affiliates (collectively "VKAC") for costs incurred in
connection with the Trust's organization in the amount of $40,000. These costs
are being amortized on a straight line basis over the 60 month period ending
January 23, 1997. Van Kampen American Capital Investment Advisory Corp. (the
"Adviser") has agreed that in the event any of the initial shares of the Trust
originally purchased by VKAC are redeemed during the amortization period, the
Trust will be reimbursed for any unamortized organizational expenses in the same
proportion as the number of shares redeemed bears to the number of initial
shares held at the time of redemption.
E. FEDERAL INCOME TAXES--It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
The Trust intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset such losses against any future realized capital
gains. At October 31, 1995, the Trust had an accumulated capital loss
carryforward for tax purposes of $6,358,477, of which $404,441 and $5,954,036
will expire on October 31, 2002 and 2003, respectively.
F. DISTRIBUTION OF INCOME AND GAINS--The Trust declares and pays dividends from
net investment income to common shareholders monthly. Net realized gains, if
any, are distributed annually on a pro rata basis to common and preferred
shareholders. Distributions from net realized gains for book purposes may
include short-term capital gains, which are included as ordinary income for tax
purposes.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Trust for an annual fee payable
monthly of .65% of the average net assets of the Trust. In addition, the Trust
will pay a monthly administrative fee to VKAC, the Trust's Administrator, at an
annual rate of .20% of the average net assets of the Trust. The administrative
services provided by the Administrator include record keeping and reporting
responsibilities with respect to the Trust's portfolio and preferred shares and
providing certain services to shareholders.
17
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Certain legal expenses are paid to Skadden, Arps, Slate, Meagher & Flom,
counsel to the Trust, of which a trustee of the Trust is an affiliated person.
For the six months ended April 30, 1996, the Trust recognized expenses of
approximately $19,900 representing VKAC's cost of providing accounting and legal
services to the Trust.
Certain officers and trustees of the Trust are also officers and directors
of VKAC. The Trust does not compensate its officers or trustees who are officers
of VKAC.
The Trust has implemented deferred compensation and retirement plans for its
trustees. Under the deferred compensation plan, trustees may elect to defer all
or a portion of their compensation to a later date. The retirement plan covers
those trustees who are not officers of VKAC.
At April 30, 1996, VKAC owned 6,700 common shares of the Trust.
3. INVESTMENT TRANSACTIONS
Aggregate purchases and cost of sales of investment securities, excluding
short-term notes, for the six months ended April 30, 1996, were $88,737,030 and
$73,406,935, respectively.
4. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Trust has a variety of reasons to use derivative instruments, such as to
attempt to protect the Trust against possible changes in the market value of its
portfolio and to manage the portfolio's effective yield, maturity and duration.
All of the Trust's portfolio holdings, including derivative instruments, are
marked to market each day with the change in value reflected in the unrealized
appreciation/depreciation on investments. Upon disposition, a realized gain or
loss is recognized accordingly, except for exercised option contracts where the
recognition of gain or loss is postponed until the disposal of the security
underlying the option contract.
Summarized below are the specific types of derivative financial instruments
used by the Trust.
A. OPTION CONTRACTS--An option contract gives the buyer the right, but not the
obligation to buy (call) or sell (put) an underlying item at a fixed exercise
price during a specified period. These contracts are generally used by the Trust
to manage the portfolio's effective maturity and duration.
18
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Transactions in options for the six months ended April 30, 1996, were as
follows:
<TABLE>
<CAPTION>
CONTRACTS PREMIUM
<S> <C> <C>
- -------------------------------------------------------------------------
Outstanding at October 31, 1995................. -0- $ -0-
Options Written and Purchased (Net)............. 2,000 (746,574)
Options Terminated in Closing Transactions
(Net)......................................... (925) 405,118
Options Expired (Net)........................... (975) 303,149
----- ---------
Outstanding at April 30, 1996................... 100 $ (38,307)
===== =========
</TABLE>
The related futures contracts of the outstanding option transactions as of
April 30, 1996, and the description and market value is as follows:
<TABLE>
<CAPTION>
EXPIRATION
MONTH/
EXERCISE MARKET VALUE
CONTRACTS PRICE OF OPTION
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
June 1996 U.S. Treasury Bond
Purchased Puts..................... 100 June/108 $68,750
=== =======
</TABLE>
B. FUTURES CONTRACTS--A futures contract is an agreement involving the delivery
of a particular asset on a specified future date at an agreed upon price. The
Trust generally invests in futures on U.S. Treasury Bonds and the Municipal Bond
Index and typically closes the contract prior to the delivery date. These
contracts are generally used to manage the portfolio's effective maturity and
duration.
The fluctuation in market value of the contracts is settled daily through a
cash margin account. Realized gains and losses are recognized when the contracts
are closed or expire.
Transactions in futures contracts for the six months ended April 30, 1996,
were as follows:
<TABLE>
<CAPTION>
CONTRACTS
- ---------------------------------------------------------------------
<S> <C>
Outstanding at October 31, 1995............................. 200
Futures Opened.............................................. 200
Futures Closed.............................................. (400)
----
Outstanding at April 30, 1996............................... -0-
====
</TABLE>
C. EMBEDDED CAPS--These securities which are identified in the portfolio of
investments include a cap strike level such that the coupon payment may be
19
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
supplemented by cap payments if the floating rate index upon which the cap is
based rises above the strike level. The price of these securities may be more
volatile than the price of a comparable fixed rate security. The Trust invests
in these instruments as a hedge against a rise in the short term interest rates
which it pays on its preferred shares.
5. PREFERRED SHARES
The Trust has outstanding 5,300 Auction Preferred Shares ("APS") in four series.
Series A, B, and C contain 1,500 shares each while Series D contains 800 shares.
Dividends are cumulative and the dividend rate is currently reset through an
auction process. The dividend period is 28 days for Series A, B, C and D. The
average rate in effect on April 30, 1996, was 3.728%. During the six months
ended April 30, 1996, the rates ranged from 3.36% to 4.04%.
The Trust pays annual fees equivalent to .25% of the preferred share
liquidation value for the remarketing efforts associated with the preferred
auctions. These fees are included as a component of Preferred Share Maintenance
expense.
The APS are redeemable at the option of the Trust in whole or in part at the
liquidation value of $50,000 per share plus accumulated and unpaid dividends.
The Trust is subject to certain asset coverage tests and the APS are subject to
mandatory redemption if the tests are not met.
20
<PAGE> 22
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE MUNICIPALS
OFFICERS AND TRUSTEES
DON G. POWELL*
Chairman and Trustee
DENNIS J. MCDONNELL*
President and Trustee
DAVID C. ARCH
Trustee
ROD DAMMEYER
Trustee
HOWARD J KERR
Trustee
THEODORE A. MYERS
Trustee
HUGO F. SONNENSCHEIN
Trustee
WAYNE W. WHALEN*
Trustee
PETER W. HEGEL*
Vice President
RONALD A. NYBERG*
Vice President and Secretary
EDWARD C. WOOD, III*
Vice President and Treasurer
SCOTT E. MARTIN*
Assistant Secretary
WESTON B. WETHERELL*
Assistant Secretary
NICHOLAS DALMASO*
Assistant Secretary
JOHN L. SULLIVAN*
Controller
STEVEN M. HILL*
Assistant Treasurer
INVESTMENT ADVISER
VAN KAMPEN AMERICAN CAPITAL
INVESTMENT ADVISORY CORP.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
CUSTODIAN AND TRANSFER AGENT
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT AUDITORS
KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, Illinois 60601
* "Interested" persons of the Trust, as defined in
the Investment Company Act of 1940.
(C) Van Kampen American Capital Distributors, Inc., 1996
All rights reserved.
SM denotes a service mark of Van Kampen American
Capital Distributors, Inc.
21
