<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Glossary of Terms................................ 5
Performance Results.............................. 7
Portfolio of Investments......................... 8
Statement of Assets and Liabilities.............. 17
Statement of Operations.......................... 18
Statement of Changes in Net Assets............... 19
Financial Highlights............................. 20
Notes to Financial Statements.................... 21
</TABLE>
VGM SAR 6/98
<PAGE> 2
LETTER TO SHAREHOLDERS
May 22, 1998
Dear Shareholder,
The Taxpayer Relief Act of 1997,
signed into law by President Clinton
last year, was created to fill the need
for a broad variety of tax-advantaged
investments to promote asset growth. We
are pleased that you selected our Trust [PHOTO]
as a vehicle to provide the potential
for tax-free income within your
investment portfolio. As you are aware,
dividends distributed by the Trust are
generally free from federal income DENNIS J. MCDONNELL AND DON G. POWELL
taxes, and often from state and local
taxes as well. At Van Kampen American Capital, we strive not only for a high
level of current income, but total return performance as well.
ECONOMIC OVERVIEW
After nearly seven years of continuous growth, the economy remained buoyant
with few signs of accelerating inflation. Wholesale prices in the first quarter
plummeted at an annual rate of 4.2 percent, while consumer prices inched up 0.2
percent and employment costs rose just 0.7 percent. However, inflationary
pressures were eased by factors such as lower oil prices, increasing
productivity, and a pending budget surplus. The Asian financial crisis led to a
stronger dollar and a decline in the prices of Asian imports, which in turn has
discouraged price increases on competing U.S. goods.
To date, Asia's slowdown has had a modest impact on U.S. economic growth. In
the first quarter, the U.S. economy grew at a 4.2 percent annual rate, its
fastest pace in the past year. Strong consumer spending and inventory buildup by
manufacturers offset a decrease in exports to Asia. Despite the economy's
strength, the Federal Reserve Board refrained from raising interest rates, given
the lack of domestic inflationary pressure and concerns about Asia's economic
future.
MARKET OVERVIEW
Against the backdrop of benign inflation and no action by the Fed, U.S. bond
prices rose during the past six months, although they ended the reporting period
below the highs reached in early January.
The yield of the 30-year Treasury bond, which moves in the opposite
direction of its price, fell from 6.15 percent on October 31 to 5.95 percent on
April 30. Bond prices hit a record high as yields reached 5.69 percent in early
January amidst expectations that the Fed would cut interest rates, but the yield
went back to 6.00 percent in early March after the Fed chose not to act. Yields
were volatile for the rest of the reporting period, as
Continued on page two
1
<PAGE> 3
foreign investors sold U.S. Treasury holdings and investors began to fear that
the Fed was leaning toward a rate hike.
Municipal bond yields generally moved in unison with Treasuries but did not
gain nearly as much in price. By the end of the reporting period, the average
yield of AAA-rated, 30-year generic general obligation bonds was 5.14 percent,
two basis points above the yield posted on October 31 of last year. The
underperformance of municipal bonds can be attributed in part to heavy supply
that outpaced demand. Supply increased as state and local governments took
advantage of low interest rates by issuing bonds to refinance outstanding issues
with higher interest rates, as well as to fund new projects. In the first
quarter, long-term municipal issuance totaled $71 billion, up from $40 billion a
year earlier.
More than half of the new issue volume was AAA-rated and insured, which
significantly diminished the amount of uninsured, higher-yielding securities
available in the marketplace. The dominance of insured volume and the high
demand for uninsured paper created an imbalance that compressed the yields
between higher-quality and lower-quality bonds.
[CREDIT QUALITY GRAPH]
Portfolio Composition by Credit Quality
as of April 30, 1998*
<TABLE>
<S> <C>
AAA.................. 50.6%
AA................... 9.5%
A.................... 14.4%
BBB.................. 23.0%
BB................... 0.2%
Non-Rated............ 2.3%
</TABLE>
*As a Percentage of Long-Term Investments
Based upon the highest credit quality ratings as issued by Standard & Poor's or
Moody's.
TRUST STRATEGY
We used the following strategies to manage the Trust during the period:
We maintained a mix of high-quality and lower-quality bonds in order to
balance the portfolio's volatility in response to changing market conditions.
Higher-quality issues generally have performed better than lower-rated
securities when interest rates are falling, which was the case for most of the
period. Lower-quality securities generally outperform when interest rates are
rising, and they usually pay higher yields. However, as the yield spread between
higher-quality and lower-quality securities was not significant enough to
compensate the investor for the additional credit risk of the lower-rated
securities, we upgraded the quality of the portfolio by replacing some BBB-rated
bonds with securities rated A and higher.
Continued on page three
2
<PAGE> 4
Overall, we limited the number of new acquisitions because current market
yields were below the average yield of bonds in the Trust. Most of our purchases
focused on extending the duration of the Trust in order to maintain its
sensitivity to changing interest rates. The Trust's duration had been declining
steadily as bonds were prerefunded or became priced to their first call date
rather than maturity.
We purchased long-term discount bonds because in a falling interest rate
environment, they have the potential to appreciate in value faster than premium
bonds. These discount bonds also have a longer duration. The purchases also
helped extend the call protection of the Trust. We had little trouble finding
replacement bonds because there was a substantial supply of new, high-quality
securities from which to choose. The yields of these bonds were generally lower
than the yields of the bonds they replaced, due to lower current interest rates.
We favored bonds with coupons of 5 percent or higher that were issued by
high-tax states such as California and New York. These so-called "specialty
state" bonds tend to benefit from strong demand because of their relatively high
after-tax yields. They can be traded easily and have a strong potential to
appreciate. We financed these purchases with sales of bonds that had already
appreciated in value, including housing bonds, which can be easily called.
As of April 30, the duration of the Trust was 6.66 years, compared with 7.76
years for the Lehman Brothers Municipal Bond Index. Because of the longer-term
nature of the Trust, the calculation of this index's duration has been adjusted
to eliminate bonds with maturities of five years or less.
TOP FIVE PORTFOLIO SECTORS AS OF APRIL 30, 1998*
Industrial Revenue................ 16.5%
General Purpose................... 16.3%
Health Care....................... 13.5%
Single-Family Housing............. 11.3%
Transportation..................... 6.4%
*As a Percentage of Long-Term Investments
PERFORMANCE SUMMARY
For the six-month period ended April 30, 1998, the Trust generated a total
return of (0.10) percent(1). This reflects a decrease in market price per common
share from $16.1250 on October 31, 1997, to $15.5625 on April 30, 1998, plus
reinvestment of all dividends. The Trust had a tax-exempt distribution rate of
6.36 percent(3), based on the closing price of its common shares. Because income
from the Trust is exempt from federal income taxes, this distribution rate is
equivalent to a yield of 9.94 percent(4) on a taxable investment for investors
in the 36 percent federal income tax bracket.
As a result of a decrease in Trust earnings, the Board of Trustees approved
a decrease in its monthly dividend from $0.0850 to $0.0825 per common share,
payable April 30, 1998. The Trust declared a capital gains distribution of
$0.0606 per share, first payable December 31, 1997, as a result of the sale of
some assets that had
Continued on page four
3
<PAGE> 5
appreciated in value. The distribution consisted of $0.0177 in short-term gains
and $0.0429 in long-term gains. Please refer to the chart on page seven for
additional performance numbers.
[DISTRIBUTION HISTORY GRAPH]
Six-month Distribution History
For the Period Ended April 30, 1998
<TABLE>
<CAPTION>
Distribution per Common Share
Dividends Capital Gains
<S> <C> <C>
Nov 1997.......................... $.0850 $ -0-
Dec 1997.......................... $.0850 $.0606
Jan 1998.......................... $.0850 $ -0-
Feb 1998.......................... $.0850 $ -0-
Mar 1998.......................... $.0850 $ -0-
Apr 1998.......................... $.0825 $ -0-
</TABLE>
The distribution history represents past performance of the Trust and does
not predict the Trust's future distributions.
ECONOMIC OUTLOOK
We expect the economy to slow from its brisk first-quarter pace, although
the extent of the slowdown depends on the continued effects of Asia's crisis and
on Fed policy. We believe the Fed is biased toward raising rates, given concerns
about the economy's increasing strength. If economic strength ignites
inflationary pressures, then we believe the Fed will raise interest rates later
this year. As a result, the yield of the 30-year Treasury bond could top 6.25
percent.
We will continue to track market developments and their effects on the
Trust. When appropriate, we will make adjustments to the portfolio. As we
mentioned earlier, our goal remains a high level of current income for
investors, plus gains in total return. Thank you for your continued support and
confidence in Van Kampen American Capital and the management of your Trust.
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.
Please see footnotes on page seven
4
<PAGE> 6
GLOSSARY OF TERMS
BASIS POINT: A measure used in quoting bond yields. One hundred basis points is
equal to one percent. For example, if a bond's yield changes from 7.00 to 6.65
percent, it is a 35 basis point move.
CALL FEATURE: Allows the issuer to buy back a bond on specific call dates before
maturity. Call dates and prices are set when the bond is issued. To compensate
the bond holder for loss of income and ownership, the call price is usually
higher than the face value of the bond. Bonds are usually called when interest
rates drop so significantly that the issuer can save money by issuing new bonds
at lower rates.
A callable bond is "priced to call" when it is selling at a premium, because it
is assumed that the issuer will redeem the bond at its call date, rather than at
maturity.
COUPON RATE: The stated rate of interest a bond pays until maturity, expressed
as a percentage of its face value.
CREDIT RATING: An evaluation of an issuer's credit history and capability of
repaying obligations. Standard & Poor's and Moody's Investor Services are two
companies that assign bond ratings. Standard & Poor's ratings range from a high
of AAA to a low of D; Moody's ratings range from a high of Aaa to a low of D.
CREDIT SPREAD: The difference in yield between higher-quality issues and
lower-quality issues. Normally, lower-quality issues provide higher yields than
higher-quality issues in order to compensate investors for the additional credit
risk.
DISCOUNT BOND: A bond whose market price is lower than its face value (or "par
value"). Because bonds usually mature at face value, a discount bond has more
potential to appreciate in price than a par bond.
DURATION: A measure of the sensitivity of a bond's price to changes in interest
rates, expressed in years. Each year of duration represents an expected
one-percent change in the price of the bond for every one-percent change in
interest rates. The longer a fund's duration, the greater the effect of interest
rate movements on net asset value. Typically, funds with shorter durations have
performed better in rising rate environments, while funds with longer durations
have performed better when rates decline.
FEDERAL RESERVE BOARD (THE FED): A group that meets eight times a year to
establish monetary policy and monitor the economic pulse of the United States.
GENERAL OBLIGATION BONDS: Bonds backed by the full faith and credit (taxing
authority) of the issuer for timely payment of interest and principal. These
bonds are issued to finance essential government projects, such as highways and
schools.
5
<PAGE> 7
INFLATION: An economic situation in which money supply and business activity
dramatically increase, accompanied by sharply rising prices. Inflation is widely
measured by the Consumer Price Index, an economic indicator that measures the
change in the cost of purchased goods and services.
INSURED BOND: A bond that is insured against default by the municipal bond
insurer. If the issuer defaults, the insurance company will step in and take
over payments of interest and principal. As a result of this protection against
credit risk, most municipal bonds are AAA-rated. Insurance on the bonds does not
relate to mutual fund shares, which will fluctuate in price.
INVESTMENT GRADE BONDS: Securities rated BBB and above by Standard & Poor's or
Baa and above by Moody's Investor Services. Bonds rated below BBB or Baa are
noninvestment grade.
MARKET PRICE: The price of a share of a closed-end fund trading on a stock
exchange. When the price is less than a fund's NAV, the fund is trading at a
discount. When the price is more than the NAV, the fund is trading at a premium.
MUNICIPAL BOND: A debt security issued by a state, municipality, or other
governmental entity to finance capital expenditures such as the construction of
highways or public works.
NET ASSET VALUE (NAV): The value of a fund share, calculated by deducting a
fund's liabilities from its total assets and dividing this amount by the number
of shares outstanding.
PREREFUNDING: A process whereby new bonds are issued to refinance an outstanding
bond issue. This typically occurs when interest rates decline and an issuer
replaces its higher-yielding bonds with current lower-yielding issues.
PREMIUM BOND: A bond whose market price is above its face value (or "par
value"). Because bonds usually mature at face value, a premium bond has less
potential to appreciate in price than a par bond.
YIELD SPREAD: The difference between the yields of distinct bonds, due to
variant credit ratings or maturities. When yield spreads between bonds of
different credit quality are narrow, there is less incentive to own the
lower-quality bond. When yield spreads between bonds of different maturities are
narrow, there is less incentive to own the bond with the longer maturity. In
both cases, the investor is not being compensated for the additional risk.
ZERO COUPON BONDS: A corporate or municipal debt security that trades at a deep
discount to face value and pays no interest. It may be redeemed at maturity for
full face value.
6
<PAGE> 8
PERFORMANCE RESULTS FOR THE PERIOD ENDED APRIL 30, 1998
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).......... (.10%)
Six-month total return based on NAV(2)................... 2.76%
DISTRIBUTION RATES
Distribution rate as a % of closing common stock
price(3)................................................. 6.36%
Taxable-equivalent distribution rate as a % of closing
common stock price(4).................................... 9.94%
SHARE VALUATIONS
Net asset value.......................................... $ 17.20
Closing common stock price............................... $15.5625
Six-month high common stock price (02/12/98)............. $17.0000
Six-month low common stock price (04/28/98).............. $15.3125
Preferred share (Series A) rate(5)....................... 3.790%
Preferred share (Series B) rate(5)....................... 3.580%
Preferred share (Series C) rate(5)....................... 3.710%
Preferred share (Series D) rate(5)....................... 3.670%
</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 #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.
7
<PAGE> 9
PORTFOLIO OF INVESTMENTS
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS 99.8%
ALABAMA 3.5%
$ 6,500 Birmingham, AL North Med Clinic Brd Rev Ser A
Carraway Methodist Hosp (Prerefunded @
01/01/01)........................................ 7.500% 07/01/15 $ 7,128,680
8,600 Birmingham, AL North Med Clinic Brd Rev Ser B
Carraway Methodist Hosp (Prerefunded @
01/01/01)........................................ 8.000 07/01/15 9,539,120
4,000 Courtland, AL Indl Dev Brd Solid Waste Disp Rev
Champion Intl Corp Proj.......................... 7.750 01/01/20 4,244,680
4,250 Courtland, AL Indl Dev Brd Solid Waste Disp Rev
Champion Intl Corp Proj Ser A.................... 6.500 09/01/25 4,581,840
------------
25,494,320
------------
ARKANSAS 1.9%
12,500 Blytheville, AR Solid Waste Recycling & Swr
Treatment Rev Nucor Corp Proj.................... 6.900 12/01/21 13,526,625
------------
CALIFORNIA 5.7%
1,300 Anaheim, CA Pub Fin Auth Lease Rev Pub Impt Proj
Ser C (FSA Insd)................................. 6.000 09/01/16 1,444,794
635 California Edl Fac Auth Rev Univ of La Verne..... 5.400 04/01/99 640,753
670 California Edl Fac Auth Rev Univ of La Verne..... 5.600 04/01/00 680,305
2,000 California Pollutn Ctl Fin Auth Pollutn Ctl Rev
Southrn CA Edison Co (AMBAC Insd)................ 6.000 07/01/27 2,099,500
5,000 Desert Hosp Dist CA Hosp Rev Com Partn
(Prerefunded @ 07/23/02) (FSA Insd).............. 6.392 07/28/20 5,479,650
25,750 Foothill/Eastern Corridor Agy CA Toll Rd Rev Sr
Lien Ser A....................................... * 01/01/23 6,428,487
1,800 Los Angeles Cnty, CA Metro Trans Auth Sales Tax
Rev (FSA Insd) (a)............................... 5.250 07/01/09 1,825,218
13,765 Orange Cnty, CA Recovery Ctfs Ser A (MBIA Insd)
(b).............................................. 6.000 07/01/06 15,083,687
2,000 Orange Cnty, CA Recovery Ctfs Ser A Rfdg (MBIA
Insd)............................................ 6.000 06/01/09 2,205,460
2,000 Pajaro Vly, CA Unified Sch Dist Ctfs Partn Sch
Fac Brdg Fdg Pgm (FSA Insd)...................... 5.850 09/01/32 2,094,420
7,080 San Joaquin Hills, CA Tran Toll Cap Apprec Ser A
Rfdg (MBIA Insd)................................. * 01/15/26 1,591,513
2,000 Southern CA Pub Pwr Auth (FSA Insd).............. 6.000 07/01/12 2,129,940
------------
41,703,727
------------
COLORADO 4.3%
1,000 Arapahoe Cnty, CO Cap Impt Trust Fund Hwy Rev
E-470 Proj Ser B (Prerefunded @ 08/31/05)........ 6.950 08/31/20 1,175,160
1,000 Colorado Hsg Fin Auth Single Family Pgm Sr Ser
B1............................................... 7.650 11/01/26 1,137,440
2,500 Colorado Hsg Fin Auth Single Family Pgm Sr Ser
B2............................................... 7.450 11/01/27 2,855,975
6,395 Denver, Co City & Cnty Arpt Rev.................. 8.500 11/15/23 7,068,010
3,675 Denver, CO City & Cnty Arpt Rev Ser A............ 8.750 11/15/23 4,191,705
1,325 Denver, Co City & Cnty Arpt Rev (Prerefunded @
11/15/01) Ser A.................................. 8.750 11/15/23 1,539,783
7,230 Denver, CO City & Cnty Arpt Rev Ser A............ 8.000 11/15/25 7,896,244
</TABLE>
See Notes to Financial Statements
8
<PAGE> 10
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COLORADO (CONTINUED)
$ 1,685 Meridian Metro Dist CO Peninsular & Oriental
Steam Navig Co Rfdg (LOC: Meridian Assoc East)... 7.000% 12/01/00 $ 1,787,937
3,250 Meridian Metro Dist CO Peninsular & Oriental
Steam Navig Co Rfdg (LOC: Meridian Assoc East)... 7.500 12/01/11 3,531,840
------------
31,184,094
------------
CONNECTICUT 0.3%
2,000 Connecticut St Dev Auth Wtr Fac Rev Brdgeport
Hydraulic........................................ 6.150 04/01/35 2,146,060
------------
DISTRICT OF COLUMBIA 0.2%
1,600 District of Columbia Ser E (FSA Insd)............ 6.000 06/01/13 1,719,824
------------
FLORIDA 2.1%
1,000 Broward Cnty, FL Hsg Fin Auth Multi-Family Hsg
Rev Pompano Oaks Apts Proj Rfdg (GNMA
Collateralized).................................. 6.000 12/01/27 1,040,190
16,490 Dade Cnty, FL Spl Oblig Cap Apprec Ser B Rfdg
(Prerefunded @ 10/01/08) (AMBAC Insd)............ * 10/01/26 3,348,954
1,400 FL St Dept Corrections Ctfs Partn Okeechobee
Correctional (AMBAC Insd)........................ 6.250 03/01/15 1,524,404
1,000 Hillsborough Cnty, FL Indl Dev Auth Pollutn Ctl
Rev Tampa Elec Co Proj Ser 92 Rfdg............... 8.000 05/01/22 1,149,610
2,000 Martin Cnty, FL Indl Dev Auth Indl Dev Rev
Indiantown Cogeneration Proj A Rfdg.............. 7.875 12/15/25 2,334,360
2,300 Orange Cnty, FL Sch Brd Ctfs Partn Ser A (MBIA
Insd)............................................ 5.375 08/01/17 2,324,196
3,465 Reedy Creek Impt Dist FL Ser C (AMBAC Insd)...... 4.750 06/01/15 3,304,813
------------
15,026,527
------------
GEORGIA 1.6%
3,150 Burke Cnty, GA Dev Auth Pollutn Ctl Rev GA Pwr Co
Plant Vogtle Proj (MBIA Insd).................... 6.350 05/01/19 3,273,197
1,500 George L Smith II GA Wrld Congress Cent Auth Rev
Domed Stadium Proj Rfdg (MBIA Insd) (a).......... 5.500 07/01/20 1,451,055
5,900 Georgia Muni Electric Auth Pwr Rev Ser Y (MBIA
Insd)............................................ 6.500 01/01/17 6,851,375
------------
11,575,627
------------
HAWAII 0.9%
6,000 Hawaii St Arpt Sys Rev Ser 2 (MBIA Insd) (b)..... 6.750 07/01/21 6,446,640
------------
ILLINOIS 10.4%
2,000 Boone, McHenry & Dekalb Cntys, IL Cmnty Unit Schl
Dist No 100 (FSA Insd)........................... * 12/01/12 932,540
2,500 Boone, McHenry & Dekalb Cntys, IL Cmnty Unit Schl
Dist No 100 (FSA Insd)........................... * 12/01/14 1,033,050
2,000 Chicago, IL Brd of Ed Chicago Sch Reform (AMBAC
Insd)............................................ 5.750 12/01/20 2,091,180
4,865 Chicago, IL Cap Apprec (Prerefunded @ 07/01/05)
(AMBAC Insd)..................................... * 07/01/16 1,640,429
1,600 Chicago, IL Cent Pub Lib Ser A (Prerefunded @
04/01/02) (AMBAC Insd)........................... 6.650 01/01/05 1,761,616
1,800 Chicago, IL Cent Pub Lib Ser A (Prerefunded @
04/01/02) (AMBAC Insd)........................... 6.700 01/01/06 1,985,040
1,600 Chicago, IL Cent Pub Lib Ser B (Prerefunded @
04/01/02) (AMBAC Insd)........................... 6.650 01/01/05 1,761,616
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ILLINOIS (CONTINUED)
$ 1,400 Chicago, IL Cent Pub Lib Ser C (Prerefunded @
04/01/02) (AMBAC Insd)........................... 6.650% 01/01/05 $ 1,541,414
1,500 Chicago, IL Cent Pub Lib Ser C (Prerefunded @
04/01/02) (AMBAC Insd)........................... 6.700 01/01/06 1,654,200
7,000 Chicago, IL O'Hare Intl Arpt Rev Genl Arpt Second
Lien Ser A Rfdg (MBIA Insd) (b).................. 6.375 01/01/12 7,666,260
13,645 Chicago, IL O'Hare Intl Arpt Spl Fac Rev United
Airls Inc........................................ 8.500 05/01/18 14,827,203
3,525 Chicago, IL O'Hare Intl Arpt Spl Fac Rev United
Airls Inc Proj Ser 84A........................... 8.850 05/01/18 3,900,025
4,505 East Peoria, IL Ser C Rfdg....................... 7.000 05/01/17 5,003,568
3,285 Illinois Dev Fin Auth Rev Presbyterian Home Lake
Proj B........................................... 6.300 09/01/22 3,585,840
2,000 Illinois Edl Fac Auth Rev Lewis Univ............. 6.100 10/01/16 2,086,040
1,000 Illinois Hlth Fac Auth Rev Rfdg Midwest.......... 5.500 11/15/19 965,600
2,000 Illinois Hlth Fac Auth Rev Edward Hosp Assn Proj
(Prerefunded @ 02/15/02)......................... 7.000 02/15/12 2,214,620
1,900 Illinois Hlth Fac Auth Rev Evangelical Hosps Ser
C (FSA Insd)..................................... 6.750 04/15/17 2,191,593
1,000 Illinois Hlth Fac Auth Rev Highland Park Hosp
Proj Ser A (MBIA Insd)........................... 5.750 10/01/17 1,042,490
2,000 Illinois Hlth Fac Auth Rev OSF Hlthcare Sys
Rfdg............................................. 6.000 11/15/10 2,117,880
2,400 Illinois Hlth Fac Auth Rev Sarah Bush Lincoln
Hlth Cent (Prerefunded @ 05/15/02)............... 7.250 05/15/22 2,694,264
2,275 Illinois Hlth Fac Auth Rev South Suburban Hosp... 7.000 02/15/18 2,702,018
1,475 Illinois Hlth Fac Auth Rev South Suburban Hosp
(Prerefunded @ 02/15/02)......................... 7.000 02/15/18 1,631,645
3,185 Illinois Hsg Dev Auth Multi-Family Hsg Ser C..... 7.400 07/01/23 3,352,149
8,845 Metropolitan Pier & Expo Auth IL Dedicated St Tax
Rev McCormick Pl Expansion Ser A (FGIC Insd)..... * 06/15/16 3,331,735
1,105 Saint Clair Cnty, IL Pub Bldg Comm Bldg Rev Cap
Apprec Ser B (FGIC Insd)......................... * 12/01/15 429,226
1,400 Southern IL Univ Rev Hsg & Aux Fac Ser A Rfdg.... 6.750 04/01/12 1,534,428
------------
75,677,669
------------
INDIANA 0.7%
4,500 Indianapolis, IN Arpt Auth Rev Spl Fac Federal
Express Corp Proj................................ 7.100 01/15/17 5,039,145
1,000 Marion Cnty, IN Convention & Rec Fac Auth Excise
Tax Rev (MBIA Insd).............................. * 06/01/14 424,380
------------
5,463,525
------------
IOWA 0.6%
1,865 Iowa Fin Auth Multi-Family Rev Hsg Hamlet Apts
Proj A Rfdg (GNMA Collateralized)................ 6.150 05/01/32 1,948,403
2,375 Iowa Student Ln Liquidity Corp Rev Ser C......... 6.950 03/01/06 2,562,672
------------
4,511,075
------------
KENTUCKY 3.7%
10,000 Kenton Cnty, KY Arpt Brd Arpt Rev Spl Fac Delta
Airls Proj Ser A................................. 7.500 02/01/20 11,039,900
11,000 Kenton Cnty, KY Arpt Brd Arpt Rev Spl Fac Delta
Airls Proj Ser A................................. 7.125 02/01/21 11,954,690
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KENTUCKY (CONTINUED)
$ 1,000 Kenton Cnty, KY Arpt Brd Rev Cincinnati/Northn KY
Intl Arpt Ser A Rfdg (MBIA Insd)................. 6.200% 03/01/08 $ 1,107,010
1,500 Kenton Cnty, KY Arpt Brd Rev Cincinnati/Northn KY
Intl Arpt Ser A Rfdg (MBIA Insd)................. 6.250 03/01/09 1,672,305
1,315 Kentucky Hsg Corp Hsg Rev Ser B.................. 6.250 07/01/28 1,392,611
------------
27,166,516
------------
MAINE 2.1%
2,650 Maine Muni Bd Bank Ser A Rfdg (MBIA Insd)........ 5.800 11/01/20 2,746,275
5,250 Maine St Hsg Auth Mtg Purch Ser D6............... 7.250 11/15/19 5,539,852
6,755 Maine St Hsg Auth Mtg Purch Ser D6............... 7.250 11/15/22 7,116,865
------------
15,402,992
------------
MARYLAND 0.9%
1,270 Baltimore, MD Ctfs Partn Brd of Edl Admin Proj
Ser A Rfdg (MBIA Insd) (a)....................... 5.000 04/01/15 1,189,253
4,925 Maryland St Cmnty Dev Admin Dept Hsg & Cmnty Dev
Rev Single Family Pgm Seventh Ser................ 7.300 04/01/25 5,273,493
------------
6,462,746
------------
MASSACHUSETTS 2.8%
2,975 Massachusetts Muni Wholesale Elec Co Pwr Supply
Sys Rev Ser A (AMBAC Insd)....................... 5.000 07/01/14 2,894,407
12,685 Massachusetts St Cons Ln Ser D (Prerefunded @
07/01/01)........................................ 6.875 07/01/10 13,893,627
2,410 Massachusetts St Hsg Fin Agy Residential Dev Ser
C (FNMA Collateralized).......................... 6.875 11/15/11 2,618,465
1,000 Massachusetts St Wtr Res Auth Ser B (MBIA
Insd)............................................ 4.750 12/01/21 921,350
------------
20,327,849
------------
MICHIGAN 5.2%
3,015 Detroit, MI Downtown Dev Auth Tax Increment Rev
Ser C1........................................... * 07/01/17 1,026,577
3,050 Detroit, MI Downtown Dev Auth Tax Increment Rev
Ser C1........................................... * 07/01/18 981,734
3,050 Detroit, MI Downtown Dev Auth Tax Increment Rev
Ser C1........................................... * 07/01/19 918,568
3,050 Detroit, MI Downtown Dev Auth Tax Increment Rev
Ser C1........................................... * 07/01/22 771,284
3,050 Detroit, MI Downtown Dev Auth Tax Increment Rev
Ser C1........................................... * 07/01/23 728,645
3,050 Detroit, MI Downtown Dev Auth Tax Increment Rev
Ser C1........................................... * 07/01/24 688,355
7,355 Detroit, MI Econ Dev Corp Res Recovery Rev Ser A
(FSA Insd)....................................... 6.875 05/01/09 7,911,038
3,500 Grand Rapids, MI Downtown Dev Cap Apprec (MBIA
Insd)............................................ * 06/01/15 1,420,020
2,765 Grand Rapids, MI Downtown Dev Cap Apprec (MBIA
Insd)............................................ * 06/01/16 1,062,258
2,500 Kalamazoo, MI Hosp Fin Auth Hosp Fac Rev Bronson
Methodist Rfdg & Impt (MBIA Insd)................ 5.875 05/15/26 2,602,850
1,000 Michigan St Hosp Fin Auth Rev Hosp Genesys Regl
Med Ser A Rfdg................................... 5.375 10/01/13 989,120
1,000 Michigan St Hosp Fin Auth Rev Hosp Genesys Regl
Med Rfdg (ACA Insd).............................. 5.500 10/01/18 1,002,470
2,000 Michigan St Hosp Fin Auth Rev Hosp Genesys Regl
Med Rfdg (ACA Insd).............................. 5.500 10/01/27 1,994,120
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------
<S> <C> <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 $ 14,160,002
1,400 Portage Lake, MI Wtr & Swr Auth Ser 3
(Prerefunded @ 10/01/02)......................... 7.750 10/01/20 1,613,206
------------
37,870,247
------------
MINNESOTA 0.4%
2,800 Minnesota Agricultural & Econ Dev Brd Rev
Hlthcare Sys Fairview Hosp Ser A (MBIA Insd)..... 5.750 11/15/26 2,915,024
------------
MISSISSIPPI 0.5%
3,000 Medical Cent Edl Bldg Corp MS Rev Univ MS Med
Cent Proj (MBIA Insd)............................ 5.900 12/01/23 3,286,230
------------
MISSOURI 1.1%
1,150 Branson, MO Tourism Tax Rev Comb Wtrwks & Swg Sys
Ser B Rfdg (a)................................... 5.000 01/01/18 1,116,282
6,800 Saint Louis, MO Indl Dev Auth Sewage & Solid
Waste Disp Fac Rev Anheuser-Busch Proj........... 5.750 12/01/27 7,042,828
------------
8,159,110
------------
NEVADA 0.5%
3,000 Clark Cnty, NV Indl Dev Rev NV Pwr Co Proj Ser C
Rfdg (AMBAC Insd)................................ 7.200 10/01/22 3,334,680
------------
NEW HAMPSHIRE 0.6%
1,000 New Hampshire St Business Fin Auth Wtr Fac Rev
Pennichuck Wtrwks Inc (AMBAC Insd)............... 6.300 05/01/22 1,086,910
1,500 New Hampshire St Hsg Fin Auth Single Family Rev
Mtg Acquisition Ser B Rfdg....................... 6.100 07/01/28 1,562,775
1,500 New Hampshire St Indl Dev Auth Rev Pollutn Ctl
Pub Svcs Co of NH Proj Ser C..................... 7.650 05/01/21 1,597,965
------------
4,247,650
------------
NEW JERSEY 5.5%
25,000 New Jersey Econ Dev Auth St Contract Econ
Recovery (MBIA Insd)............................. 5.900 03/15/21 27,465,500
2,000 New Jersey Hlthcare Fac Fin Auth Rev Genl Hosp
Cent at Passaic (FSA Insd)....................... 6.000 07/01/06 2,199,460
10,000 New Jersey St Hsg & Mtg Fin Agy Rev Hsg Ser A
Rfdg............................................. 6.950 05/01/15 10,769,100
------------
40,434,060
------------
NEW YORK 17.4%
2,000 Metro Tran Auth NY Tran Fac Rev Svcs Contract Ser
R Rfdg........................................... 5.500 07/01/17 2,008,640
3,000 Metropolitan Tran Auth NY Commuter Fac Rev Ser A
(MBIA Insd)...................................... 5.625 07/01/27 3,076,050
12,155 Metropolitan Tran Auth NY Svcs Contract Commuter
Fac Ser 5 Rfdg................................... 6.500 07/01/16 12,975,098
3,000 New York City Indl Dev Agy Spl Fac United Airls
Inc Proj......................................... 5.650 10/01/32 3,014,880
1,740 New York City Ser A (Prerefunded @ 08/15/01)..... 8.000 08/15/20 1,963,033
2,500 New York City Ser A Rfdg......................... 7.000 08/01/05 2,826,750
3,000 New York City Ser A Rfdg......................... 7.000 08/01/06 3,423,150
745 New York City Ser C Subser C1.................... 7.500 08/01/19 829,692
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
NEW YORK (CONTINUED)
</TABLE>
<TABLE>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 7,755 New York City Ser C Subser C1 (Prerefunded @
08/01/02)........................................ 7.500% 08/01/19 $ 8,804,174
1,850 New York City Ser G.............................. 5.875 10/15/14 1,943,073
5,000 New York City Ser I.............................. 6.000 04/15/12 5,318,700
10,000 New York City Tran Auth Tran Fac Livingston Plaza
Proj Rfdg (FSA Insd)............................. 5.400 01/01/18 10,271,100
2,500 New York St Dorm Auth Lease Rev Muni Hlth Fac
Impt Pgm Ser A (FSA Insd)........................ 5.500 05/15/25 2,528,825
13,500 New York St Dorm Auth Rev City Univ Sys Ser C.... 7.500 07/01/10 16,244,145
1,000 New York St Dorm Auth Rev Court Fac Lease Ser
A................................................ 5.625 05/15/13 1,015,930
2,000 New York St Dorm Auth Rev Court Fac Lease Ser
A................................................ 5.375 05/15/16 1,985,120
2,170 New York St Dorm Auth Rev Mental Hlth Svcs Fac
Ser A............................................ 5.750 08/15/10 2,284,836
5,725 New York St Environmental Fac Corp Spl Oblig
Riverbank State Park (Prerefunded @ 04/01/02).... 7.375 04/01/22 6,453,735
5,000 New York St Hsg Fin Agy Svcs Contract Oblig Rev
Ser A (Prerefunded @ 03/15/02)................... 7.375 09/15/21 5,631,500
2,840 New York St Loc Govt Assistance Corp Ser E
Rfdg............................................. 6.000 04/01/14 3,135,900
3,000 New York St Med Care Fac Fin Agy Rev NY Hosp Mtg
Ser A (Prerefunded @ 02/15/05) (AMBAC Insd)...... 6.750 08/15/14 3,434,370
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 5,876,762
2,500 New York St Mtg Agy Rev Homeowner Mtg Ser 54
Rfdg............................................. 6.200 10/01/26 2,667,750
2,000 New York St Urban Dev Corp Rev Correctional Fac
Rfdg............................................. 5.000 01/01/19 1,872,580
1,500 New York St Urban Dev Corp Rev Proj Cent for Indl
Innovation Rfdg.................................. 5.500 01/01/13 1,536,360
920 New York, NY Ser A (Prerefunded @ 08/01/02)...... 6.500 08/01/14 1,006,820
545 New York, NY Ser C (Prerefunded @ 08/01/02)...... 6.500 08/01/04 596,432
4,080 New York, NY Unrefunded Balance Series A......... 6.500 08/01/14 4,406,686
2,355 New York, NY Unrefunded Balance Series C......... 6.500 08/01/04 2,539,585
3,000 Port Auth NY & NJ Spl Oblig Rev Spl Proj JFK Intl
Arpt Terminal 6 (MBIA Insd)...................... 5.750 12/01/22 3,102,480
4,000 Port Auth NY & NJ Spl Oblig Rev Spl Proj JFK Intl
Arpt Terminal 6 (MBIA Insd)...................... 5.750 12/01/25 4,118,560
------------
126,892,716
------------
NORTH CAROLINA 3.3%
2,000 North Carolina Med Care Commission Hlth Care Fac
Rev (MBIA Insd) (a).............................. 5.000 10/01/18 1,935,300
15,000 North Carolina Muni Pwr Agy No 1 Catawba Elec Rev
(Embedded Cap) (MBIA Insd)....................... 6.000 01/01/12 16,549,800
5,150 North Carolina Muni Pwr Agy No 1 Catawba Elec Rev
Rfdg (FSA Insd).................................. 6.200 01/01/18 5,557,520
------------
24,042,620
------------
</TABLE>
See Notes to Financial Statements
13
<PAGE> 15
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OHIO 0.3%
$ 1,000 Ohio Hsg Fin Agy Mtg Rev Residential Ser A1 (GNMA
Collateralized).................................. 6.150% 03/01/29 $ 1,053,340
1,000 Ohio St Air Quality Dev Auth Rev JMG Funding Ltd
Partn Proj Rfdg (AMBAC Insd)..................... 6.375 04/01/29 1,078,910
------------
2,132,250
------------
OKLAHOMA 3.7%
17,475 Tulsa, OK Muni Arpt Tran Rev American Airls
Inc.............................................. 7.375 12/01/20 18,836,477
7,500 Tulsa, OK Muni Arpt Tran Rev American Airls
Inc.............................................. 7.600 12/01/30 8,198,775
------------
27,035,252
------------
OREGON 1.6%
7,670 Oregon St Hsg & Cmnty Svcs Dept Mtg Rev Single
Family Mtg Proj Ser B............................ 6.875 07/01/28 8,191,637
3,300 Oregon St Vets Welfare Ser 76A................... 6.050 10/01/28 3,471,138
------------
11,662,775
------------
PENNSYLVANIA 5.4%
2,500 Allegheny Cnty, PA Arpt Rev Gtr Pittsburgh Intl
Arpt Ser B (FSA Insd)............................ 6.625 01/01/22 2,692,750
1,000 Allegheny Cnty, PA Hosp Dev Auth Rev Hosp Saint
Francis Med Cent Proj............................ 5.750 05/15/17 1,025,450
2,900 Dauphin Cnty, PA Genl Auth Hlth Sys Rev Pinnacle
Hlth Sys Proj Rfdg (MBIA Insd)................... 5.500 05/15/27 2,933,437
4,780 Erie, PA Sch Dist Cap Apprec Rfdg (FSA Insd)
(a).............................................. * 09/01/19 1,527,162
4,000 Falls Twp, PA Hosp Auth Hosp Rev Delaware Vly Med
Rfdg (FHA Gtd)................................... 7.000 08/01/22 4,386,880
1,905 Harrisburg, PA Cap Apprec Rfdg Ser D (AMBAC
Insd)............................................ * 09/15/16 719,461
1,710 Harrisburg, PA Cap Apprec Rfdg Ser D (AMBAC
Insd)............................................ * 03/15/19 559,974
1,735 Harrisburg, PA Cap Apprec Rfdg Ser F (AMBAC
Insd)............................................ * 09/15/15 692,091
1,385 Harrisburg, PA Cap Apprec Rfdg Ser F (AMBAC
Insd)............................................ * 09/15/19 441,580
7,000 Montgomery Cnty, PA Indl Dev Auth Rev Pollutn Ctl
Ser E Rfdg (MBIA Insd)........................... 6.700 12/01/21 7,580,090
1,000 Penn Hills, PA (FGIC Insd)....................... 5.900 12/01/17 1,060,640
1,500 Pennsylvania Hsg Fin Agy Single Family Mtg Ser
34B (FHA Gtd).................................... 7.000 04/01/24 1,607,475
3,000 Pennsylvania Hsg Fin Agy Single Family Mtg Ser
56A.............................................. 6.150 10/01/27 3,135,750
2,500 Pennsylvania Hsg Fin Agy Single Family Mtg Ser
60A Rfdg......................................... 5.850 10/01/27 2,573,050
1,000 Pennsylvania St Higher Edl Fac Auth College &
Univ Rev Bryn Mawr College (MBIA Insd)........... 5.625 12/01/27 1,025,250
6,000 Philadelphia, PA Gas Wks Rev 14th Ser Rfdg (FSA
Insd)............................................ 6.250 07/01/08 6,562,740
1,000 Philadelphia, PA Hosp & Higher Edl Fac Auth Hosp
Rev Temple Univ Hosp Ser A....................... 6.500 11/15/08 1,108,740
------------
39,632,520
------------
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 1,675,845
------------
SOUTH CAROLINA 0.4%
2,700 Charleston Cnty, SC Solid Waste (MBIA Insd)...... 6.000 01/01/14 2,893,725
------------
</TABLE>
See Notes to Financial Statements
14
<PAGE> 16
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SOUTH DAKOTA 0.4%
$ 1,990 South Dakota Hsg Dev Auth Homeownership Mtg Ser
C................................................ 7.300% 05/01/24 $ 2,087,291
1,000 South Dakota St Hlth & Edl Fac Auth Vocational Ed
Pgm Ser A (AMBAC Insd) (a)....................... 5.400 08/01/13 1,012,970
------------
3,100,261
------------
TENNESSEE 1.0%
6,676 Memphis, TN Hlth Edl & Hsg Fac Brd Mtg Rev
Edgewater Terr Rfdg (FHA Gtd).................... 7.375 01/20/27 7,154,269
------------
TEXAS 3.0%
9,790 Alliance Arpt Auth Inc TX Spl Fac Rev American
Airls Inc Proj................................... 7.500 12/01/29 10,580,836
2,000 Coastal Bend Hlth Fac Dev Corp TX Incarnate Word
Hlth Svcs Ser A (FSA Insd)....................... 6.000 11/15/22 2,118,140
2,200 Dallas, TX Civic Cntr Convention Rfdg &
Improvement (MBIA Insd) (a)...................... 5.000 08/15/28 2,094,466
1,500 North Cent TX Hlth Fac Dev Hlth Fac C C Young Mem
Proj............................................. 6.300 02/15/15 1,595,025
6,000 Plano, TX Hlth Fac Dev Corp TX Hlth Res Sys Ser C
(MBIA Insd)...................................... 5.000 02/15/22 5,687,880
------------
22,076,347
------------
UTAH 1.0%
2,500 Murray City, UT Hosp Rev Inc Hlth Svc Inc Rfdg
(MBIA Insd)...................................... 4.750 05/15/20 2,288,975
1,010 Utah St Hsg Fin Agy Single Family Mtg Mezzanine
Issue H1 (AMBAC Insd)............................ 6.000 07/01/12 1,062,863
2,885 Utah St Hsg Fin Agy Single Family Mtg Ser A2 (FHA
Gtd)............................................. 7.150 07/01/25 3,054,552
905 Utah St Hsg Fin Agy Single Family Mtg Sr Ser A1
(FHA Gtd)........................................ 7.100 07/01/14 970,640
------------
7,377,030
------------
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 1,165,130
------------
WASHINGTON 0.9%
1,000 King Cnty, WA Ser B.............................. 6.625 12/01/15 1,144,880
5,000 Washington St Pub Pwr Supply (Prerefunded @
07/01/01) (FGIC Insd)............................ 6.875 07/01/17 5,463,900
------------
6,608,780
------------
WEST VIRGINIA 2.6%
3,000 Marshall Cnty, WV Pollutn Ctl Rev OH Pwr Co Proj
Ser C Rfdg (MBIA Insd)........................... 6.850 06/01/22 3,277,350
14,700 West Virginia St Hsg Dev Fd Hsg Fin Ser B (FHA
Gtd)............................................. 7.200 11/01/20 15,845,571
------------
19,122,921
------------
WISCONSIN 1.5%
2,000 Southeast WI Professional Baseball Park Dist
Sales Tax Rev (MBIA Insd)........................ * 12/15/18 661,100
1,750 Southeast WI Professional Baseball Park Dist
Sales Tax Rev (MBIA Insd)........................ * 12/15/19 545,930
9,365 Wisconsin Hsg & Econ Dev Auth Homeownership Rev
Ser A............................................ 7.100 03/01/23 9,974,381
------------
11,181,411
------------
</TABLE>
See Notes to Financial Statements
15
<PAGE> 17
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
WYOMING 0.6%
$ 1,495 Wyoming Cmnty Dev Auth Hsg Rev Ser 2............. 6.350% 06/01/29 $ 1,584,057
2,875 Wyoming Cmnty Dev Auth Hsg Rev Ser 4............. 6.550 06/01/28 3,053,509
------------
4,637,566
------------
PUERTO RICO 0.8%
4,485 Puerto Rico Comwlth Aqueduct & Swr Auth Rev
Rfdg............................................. 5.000 07/01/15 4,339,103
1,110 Puerto Rico Comwlth Ser A Rfdg................... 6.000 07/01/14 1,171,216
------------
5,510,319
------------
TOTAL INVESTMENTS 99.8%
(Cost $665,551,129).......................................................... 727,984,554
OTHER ASSETS IN EXCESS OF LIABILITIES 0.2%.................................... 1,521,614
------------
NET ASSETS 100.0%............................................................. $729,506,168
============
</TABLE>
*Zero coupon bond
(a) Securities purchased on a when issued or delayed delivery basis.
(b) Assets segregated as collateral for when issued or delayed delivery purchase
commitments.
See Notes to Financial Statements
16
<PAGE> 18
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $665,551,129)....................... $727,984,554
Receivables:
Interest.................................................. 13,761,780
Investments Sold.......................................... 2,751,267
Other....................................................... 10,794
------------
Total Assets.......................................... 744,508,395
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 12,289,332
Custodian Bank............................................ 1,481,395
Income Distributions -- Common and Preferred Shares....... 494,373
Investment Advisory Fee................................... 392,406
Administrative Fee........................................ 120,740
Affiliates................................................ 22,543
Accrued Expenses............................................ 117,552
Trustees' Deferred Compensation and Retirement Plans........ 83,886
------------
Total Liabilities..................................... 15,002,227
------------
NET ASSETS.................................................. $729,506,168
============
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000
shares, 5,300 issued with liquidation preference of
$50,000 per share)........................................ $265,000,000
------------
Common Shares ($.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................................. 62,433,425
Accumulated Undistributed Net Investment Income............. 1,249,730
Accumulated Net Realized Gain............................... 1,234,844
------------
Net Assets Applicable to Common Shares................ 464,506,168
------------
NET ASSETS.................................................. $729,506,168
============
NET ASSET VALUE PER COMMON SHARE ($464,506,168 divided
by 27,013,149 shares outstanding)......................... $ 17.20
============
</TABLE>
See Notes to Financial Statements
17
<PAGE> 19
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $21,905,356
-----------
EXPENSES:
Investment Advisory Fee..................................... 2,375,465
Administrative Fee.......................................... 730,912
Preferred Share Maintenance................................. 348,470
Custody..................................................... 21,709
Trustees' Fees and Expenses................................. 13,198
Legal....................................................... 2,838
Other....................................................... 172,060
-----------
Total Expenses.......................................... 3,664,652
-----------
NET INVESTMENT INCOME....................................... $18,240,704
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 1,302,195
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 64,193,344
End of the Period......................................... 62,433,425
-----------
Net Unrealized Depreciation During the Period............... (1,759,919)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $ (457,724)
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $17,782,980
===========
</TABLE>
See Notes to Financial Statements
18
<PAGE> 20
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended April 30, 1998
and the Year Ended October 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
April 30, 1998 October 31, 1997
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.................................. $18,240,704 $ 36,992,907
Net Realized Gain...................................... 1,302,195 2,406,978
Net Unrealized Appreciation/Depreciation During the
Period............................................... (1,759,919) 17,548,354
---------- ----------
Change in Net Assets from Operations................... 17,782,980 56,948,239
---------- ----------
Distributions from Net Investment Income:
Common Shares........................................ (13,706,967) (28,227,823)
Preferred Shares..................................... (4,382,544) (9,506,511)
---------- ----------
(18,089,511) (37,734,334)
---------- ----------
Distributions from Net Realized Gain on Investments:
Common Shares........................................ (1,638,685) -0-
Preferred Shares..................................... (565,331) -0-
---------- ----------
(2,204,016) -0-
---------- ----------
Total Distributions.................................... (20,293,527) (37,734,334)
---------- ----------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES.... (2,510,547) 19,213,905
NET ASSETS:
Beginning of the Period................................ 732,016,715 712,802,810
---------- ----------
End of the Period (Including accumulated undistributed
net investment income of $1,249,730 and $1,098,537,
respectively)........................................ $729,506,168 $732,016,715
============ ============
</TABLE>
See Notes to Financial Statements
19
<PAGE> 21
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
1998 1997 1996 1995 1994 1993 October 31, 1992
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of the Period (a)........ $ 17.288 $16.577 $16.579 $15.032 $17.954 $15.557 $14.792
-------- ------- ------- ------- ------- ------- -------
Net Investment Income.... .675 1.370 1.381 1.415 1.432 1.454 1.010
Net Realized and
Unrealized Gain/Loss... (.015) .738 .109 1.652 (2.842) 2.424 .550
-------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations............... .660 2.108 1.490 3.067 (1.410) 3.878 1.560
-------- ------- ------- ------- ------- ------- -------
Less:
Distributions from Net
Investment Income:
Paid to Common
Shareholders......... .508 1.045 1.140 1.140 1.140 1.085 .595
Common Share Equivalent
of Distributions Paid
to Preferred
Shareholders......... .162 .352 .352 .380 .305 .287 .200
Distributions from Net
Realized Gain:
Paid to Common
Shareholders......... .061 -0- -0- -0- .056 .083 -0-
Common Share Equivalent
of Distributions Paid
to Preferred
Shareholders......... .021 -0- -0- -0- .011 .026 -0-
-------- ------- ------- ------- ------- ------- -------
Total Distributions....... .752 1.397 1.492 1.520 1.512 1.481 .795
-------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of
the Period............... $ 17.196 $17.288 $16.577 $16.579 $15.032 $17.954 $15.557
======== ======= ======= ======= ======= ======= =======
Market Price Per Share at
End of the Period........ $15.5625 $16.125 $15.813 $15.750 $14.000 $17.375 $14.875
Total Investment Return at
Market Price (b)......... (.10%)* 8.92% 7.84% 21.15% (13.12%) 25.40% 3.08%*
Total Return at Net Asset
Value (c)................ 2.76%* 10.94% 7.12% 18.51% (9.99%) 23.53% 7.68%*
Net Assets at End of the
Period (In millions)..... $ 729.5 $ 732.0 $ 712.8 $ 712.9 $ 671.1 $ 750.0 $ 685.2
Ratio of Expenses to
Average Net Assets
Applicable to Common
Shares**................. 1.57% 1.60% 1.62% 1.68% 1.63% 1.59% 1.54%
Ratio of Net Investment
Income to Average Net
Assets Applicable to
Common Shares (d)........ 5.92% 6.06% 6.24% 6.55% 6.79% 6.87% 6.71%
Portfolio Turnover........ 15%* 40% 30% 15% 20% 20% 37%*
* Non-annualized
** Ratio of Expenses to
Average Net Assets
Including Preferred
Shares................... 1.00% 1.01% 1.02% 1.04% 1.03% 1.01% 1.01%
</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.
See Notes to Financial Statements
20
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
April 30, 1998 (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 60 days or less 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.
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.
D. 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
21
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
substantially all of its taxable income to its shareholders. Therefore, no
provision for federal income taxes is required.
Net realized gains or losses may differ for financial and tax reporting
purposes primarily as a result of losses from wash sales.
At April 30, 1998, for federal income tax purposes cost of long-term
investments is $665,551,129, the aggregate gross unrealized appreciation is
$62,655,664 and the aggregate gross unrealized depreciation is $222,239,
resulting in a net unrealized appreciation of $62,433,425.
E. DISTRIBUTION OF INCOME AND GAINS--The Trust declares and pays monthly
dividends from net investment income to common shareholders. 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, Van Kampen
American Capital Investment Advisory Corp. (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 Van Kampen American Capital Distributors, Inc.
or its affiliates (collectively "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.
For the six months ended April 30, 1998, the Trust recognized expenses of
approximately $1,500 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Trust, of which a trustee of
the Trust is an affiliated person.
For the six months ended April 30, 1998, the Trust recognized expenses of
approximately $68,100 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.
22
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
The Trust has implemented deferred compensation and retirement plans for its
trustees who are not officers of VKAC. Under the deferred compensation plan,
trustees may elect to defer all or a portion of their compensation to a later
date. Benefits under the retirement plan are payable for a ten-year period and
are based upon each trustee's years of service to the Trust. The maximum annual
benefit per trustee under the plan is $2,500.
3. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $114,349,920 and $119,690,060,
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. Upon disposition, a realized gain or loss is
recognized accordingly, except when exercising an option contract or taking
delivery of a security underlying a futures contract. In these instances the
recognition of gain or loss is postponed until the disposal of the security
underlying the option or futures contract.
Summarized below are the specific types of derivative financial instruments
used by the Trust.
A. FUTURES CONTRACTS--The Trust may invest in 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.
Upon entering into futures contracts, the Trust maintains, in a segregated
account with its custodian, securities with a value equal to its obligation
under the futures contracts. During the period the futures contract is open,
payments are received from or made to the broker based upon changes in the value
of the contract (the variation margin).
23
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
B. INDEXED SECURITIES--These instruments are identified in the portfolio of
investments. The price of these securities may be more volatile than the price
of a comparable fixed rate security.
An Embedded Cap security includes a cap strike level such that the coupon
payment may be supplemented by cap payments if the floating rate index upon
which the cap is based rises above the strike level. The Trust invests in these
instruments as a hedge against a rise in the short-term interest rates which it
pays on the 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, 1998, was 3.690%. During the six months
ended April 30, 1998, the rates ranged from 3.425% to 4.850%.
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.
24
<PAGE> 26
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE MUNICIPALS
BOARD OF TRUSTEES
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
DENNIS J. MCDONNELL*--Chairman
STEVEN MULLER
THEODORE A. MYERS
DON G. POWELL*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*
OFFICERS
DENNIS J. MCDONNELL*
President
RONALD A. NYBERG*
Vice President and Secretary
EDWARD C. WOOD, III*
Vice President and Chief Financial Officer
CURTIS W. MORELL*
Vice President and Chief Accounting Officer
JOHN L. SULLIVAN*
Treasurer
TANYA M. LODEN*
Controller
PETER W. HEGEL*
Vice President
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 (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS
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., 1998
All rights reserved.
(SM) denotes a service mark of Van Kampen American
Capital Distributors, Inc.
25
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> TFIG TRUST FOR INVESTMENT GRADE MUNICIPALS
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 665,551,129
<INVESTMENTS-AT-VALUE> 727,984,554
<RECEIVABLES> 16,513,047
<ASSETS-OTHER> 10,794
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 744,508,395
<PAYABLE-FOR-SECURITIES> 12,289,332
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,712,895
<TOTAL-LIABILITIES> 15,002,227
<SENIOR-EQUITY> 265,000,000
<PAID-IN-CAPITAL-COMMON> 399,588,169
<SHARES-COMMON-STOCK> 27,013,149
<SHARES-COMMON-PRIOR> 27,013,149
<ACCUMULATED-NII-CURRENT> 1,249,730
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,234,844
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 62,433,425
<NET-ASSETS> 729,506,168
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 21,905,356
<OTHER-INCOME> 0
<EXPENSES-NET> (3,664,652)
<NET-INVESTMENT-INCOME> 18,240,704
<REALIZED-GAINS-CURRENT> 1,302,195
<APPREC-INCREASE-CURRENT> (1,759,919)
<NET-CHANGE-FROM-OPS> 17,782,980
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (18,089,511)
<DISTRIBUTIONS-OF-GAINS> (2,204,016)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (2,510,547)
<ACCUMULATED-NII-PRIOR> (1,098,537)
<ACCUMULATED-GAINS-PRIOR> (2,136,665)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,375,465
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,664,652
<AVERAGE-NET-ASSETS> 737,055,498
<PER-SHARE-NAV-BEGIN> 17.288
<PER-SHARE-NII> 0.675
<PER-SHARE-GAIN-APPREC> (0.015)
<PER-SHARE-DIVIDEND> (0.670)
<PER-SHARE-DISTRIBUTIONS> (0.082)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 17.196
<EXPENSE-RATIO> 1.57
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
