<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Performance Results.............................. 4
Portfolio of Investments......................... 5
Statement of Assets and Liabilities.............. 10
Statement of Operations.......................... 11
Statement of Changes in Net Assets............... 12
Financial Highlights............................. 13
Notes to Financial Statements.................... 14
Report of Independent Accountants................ 19
Dividend Reinvestment Plan....................... 20
</TABLE>
VIM ANR 12/96
<PAGE> 2
LETTER TO SHAREHOLDERS
December 10, 1996
Dear Shareholder,
The first ten months of 1996 have
been a mixed experience for most
municipal bond fund investors. The
continuation of the 1995 rally at the
beginning of this year was thwarted
early on as the economy gained [PHOTO]
momentum, causing the bond market to
sell off. But by the second half of the
year, the pattern reversed. Growth
slowed and bonds recovered much of DENNIS J. MCDONNELL AND DON G. POWELL
their earlier losses.
This kind of volatility is not unusual, but it is difficult to predict and
serves as a reminder to investors to maintain their long-term outlook. Bailing
out during price declines and re-entering after market rebounds is often a
losing strategy. We believe it is time in the market, not timing the market,
that potentially maximizes long-term investment gains.
Additionally, we believe our recent acquisition by Morgan Stanley Group Inc.
will further help investors achieve their long-term goals. Morgan Stanley's
strong global presence and commitment to superior investment performance
complement our broad range of investment products, money management
capabilities, and high level of service that we currently offer.
ECONOMIC OVERVIEW
The economy has grown at a moderate pace this year, despite the second
quarter's 4.7 percent surge. By the third quarter, growth slowed to 2.0 percent,
near the level that prevailed early in the year. This moderation of economic
activity, coupled with continued low inflation, eased fears of an interest rate
hike by the Federal Reserve Board--fears that had dominated the market in early
summer and pushed long-term bond yields above 7.0 percent.
Once the market realized that the economy's pace had slowed, bond prices
rose from their 1996 lows and yields fell as they moved in the opposite
direction of bond prices. By the end of October, the 30-year Treasury bond yield
was near 6.5 percent.
During this recovery, municipal bonds rebounded even more than Treasuries,
due to a steady demand that outpaced supply. It is expected that on a nationwide
basis there will be little or no increase in the total number of municipal bonds
outstanding this year. The volume of new issues is expected to almost equal the
volume of bonds that were redeemed or called.
Continued on page two
1
<PAGE> 3
Portfolio Composition by Credit Quality as of October 31, 1996
<TABLE>
<S> <C>
AAA............................... 100%
</TABLE>
Based upon credit quality ratings issued by Standard & Poor's.
For securities not rated by Standard & Poor's, the Moody's rating is used.
PERFORMANCE SUMMARY
Many closed-end municipal bond funds, such as this one, are currently
offering higher after-tax yields than taxable income alternatives. The Trust
generated a tax-exempt distribution of 6.51 percent(3), based on the closing
stock price of $16.125 per common share as of October 31, 1996. For shareholders
in the federal income tax bracket of 36 percent, this distribution rate is
equivalent to a yield of 10.17 percent(4) on a taxable investment.
The Trust's one-year total return was 9.19 percent(1), including
reinvestment of all dividends, reflecting a 2.4 percent increase in market price
for the period ended October 31, 1996.
Top Five Portfolio Holdings by Industry as of October 31, 1996
Airport........................... 19.0%
Health Care....................... 16.2%
Single-Family Housing............. 10.6%
Retail Electric/Gas/Telephone...... 9.6%
Transportation..................... 7.0%
ECONOMIC OUTLOOK
We believe Fed policy will remain unchanged through the end of the year. We
look for the long Treasury bond to trade within a range of 6.25 and 6.75 percent
and the 5-year Treasury to trade between 5.75 percent and 6.25 percent for the
remainder of 1996. After that, interest rates could rise moderately if the
economy rebounds to a 3.0 percent annual growth rate and inflation edges higher.
Based upon this view of moderate growth and slightly higher inflation, we
believe the outlook for fixed-income markets remains positive.
Relatively stable interest rates early next year would be favorable for the
leveraged structure of our closed-end funds, which involves borrowing short-term
funds to purchase long-term municipal securities. Depending on the difference
between long-term and short-term market rates, this structure provides
opportunities for additional earnings over time. The leveraged capital structure
of the Trust continues to provide common shareholders with above-market levels
of dividend income. It should be noted, however, that the rise in short-term
rates would have an unfavorable effect on common share performance.
The bond market should find continued support from the results of the recent
national elections. With a Democratic president and a Republican Congress, there
should be checks on potential spending increases and tax cuts so the budget
deficit does not balloon out of control. This split government should also help
minimize chances of major tax reform, which would likely affect investment
markets, including municipal bonds.
Continued on page three
2
<PAGE> 4
The stock market is another factor that could influence the performance of
the bond market in the coming year. If stocks suffer a protracted setback, the
demand for bonds, including municipals, could increase.
We will closely monitor any new developments in Washington and in the
financial markets in order to evaluate their potential impact on the Trust. We
believe that in the coming year, the municipal market will continue to be an
attractive investment choice for investors seeking high current income. Thank
you for your continued confidence in your investment with Van Kampen American
Capital and for the privilege of working with you to help you achieve your
financial goals.
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 OCTOBER 31, 1996
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INSURED MUNICIPALS
(NYSE TICKER SYMBOL--VIM)
<TABLE>
<S> <C>
TOTAL RETURNS
One-year total return based on market price(1)............. 9.19%
One-year total return based on NAV(2)...................... 6.53%
DISTRIBUTION RATES
Distribution rate as a % of closing stock price(3)......... 6.51%
Taxable-equivalent distribution rate as a % of closing
stock price(4)........................................... 10.17%
SHARE VALUATIONS
Net asset value............................................ $ 16.69
Closing stock price........................................ $16.125
One-year high common stock price (08/13/96)................ $16.500
One-year low common stock price (12/19/95)................. $15.625
Preferred share (Series A) rate(5)......................... 3.40%
Preferred share (Series B) rate(5)......................... 3.40%
</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
tax bracket.
(5)See "Notes to Financial Statements" footnote #6, 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
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS
ALABAMA 1.2%
$1,000 Birmingham-Carraway, AL Methodist Hlth Sys Ser A
(Connie Lee Insd)............................... 5.875% 08/15/25 $ 1,001,480
2,000 Huntsville, AL Pub Bldg Auth Lease Rev Muni
Justice Pub & Safety Cent A (MBIA Insd)......... 5.900 10/01/16 2,044,300
------------
3,045,780
------------
ALASKA 0.4%
935 Alaska St Hsg Fin Corp Coll Mtg Oblig Ser A
Subser A2 (GNMA Collateralized)................. 7.050 06/01/25 989,389
------------
ARIZONA 2.4%
1,500 Arizona Hlth Fac Auth Hosp Sys Rev Phoenix
Baptist Hosp & Med Rfdg (MBIA Insd)............. 6.250 09/01/11 1,615,785
1,556 Peoria, AZ Indl Dev Auth Multi-Family Rev Sr Hsg
Casa Del Rio A Rfdg (GNMA Collateralized)....... 7.300 02/20/15 1,699,323
2,500 Pima Cnty, AZ Indl Dev Auth Indl Rev Lease Oblig
Irvington Proj Tucson Ser A Rfdg (FSA Insd)..... 7.250 07/15/10 2,774,275
------------
6,089,383
------------
CALIFORNIA 14.1%
2,500 California Pollutn Ctl Fin Auth Pollutn Ctl Rev
Pacific Gas & Elec Ser B (FSA Insd)............. 6.350 06/01/09 2,666,400
9,000 Los Angeles Cnty, CA Pension Oblig Ctfs Ltd Muni
Oblig Ser A (MBIA Insd)......................... 6.900 06/30/08 10,449,270
7,500 Mount Diablo, CA Hosp Dist Rev Ser A (Embedded
Cap) (AMBAC Insd)............................... 5.125 12/01/23 6,763,575
1,305 Paramount, CA Redev Agy Tax Alloc (MBIA Insd)... 6.250 08/01/10 1,403,201
3,600 Sacramento Cnty, CA Arpt Ser A (MBIA Insd)...... 5.900 07/01/24 3,619,260
2,000 San Francisco, CA City & Cnty Arpt Comm Intl
Arpt Rev Second Ser Issue 12-A (FGIC Insd)...... 5.800 05/01/21 2,002,340
1,000 San Francisco, CA City & Cnty Redev Agy Hotel
Tax Rev (FSA Insd).............................. 6.750 07/01/15 1,110,040
9,000 San Jose, CA Single Family Mtg Rev Ser A Cap
Apprec (GEMIC Mtg Collateralized)............... * 04/01/16 2,954,430
4,240 University of CA Rev Multi Purp Proj Ser D (MBIA
Insd)........................................... 6.300 09/01/14 4,507,163
------------
35,475,679
------------
COLORADO 0.6%
1,500 Denver, CO City & Cnty Arpt Rev Ser B (MBIA
Insd)........................................... 5.750 11/15/15 1,500,600
------------
FLORIDA 1.8%
1,000 Hillsborough Cnty, FL Aviation Tampa Intl Arpt
Ser A (FGIC Insd)............................... 6.000 10/01/23 1,017,410
</TABLE>
See Notes to Financial Statements
5
<PAGE> 7
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ---------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
FLORIDA (CONTINUED)
$1,000 Jacksonville, FL Wtr & Swr Rev United Wtr FL
Proj (AMBAC Insd)............................... 6.350% 08/01/25 $ 1,066,100
1,000 Melbourne, FL Arpt Rev Rfdg (MBIA Insd)......... 6.250 10/01/18 1,072,720
1,335 Orange Cnty, FL Hsg Fin Auth Single Family Mtg
Rev Ser A (GNMA Collateralized)................. 6.200 10/01/16 1,358,963
------------
4,515,193
------------
HAWAII 1.6%
3,500 Hawaii St Dept Budget & Fin Spl Purp Mtg Rev
Hawaiian Elec Co Proj Ser B (MBIA Insd)......... 7.600 07/01/20 3,880,030
------------
ILLINOIS 11.9%
8,965 Chicago, IL O'Hare Intl Arpt Rev Genl Arpt
Second Lien Ser A (AMBAC Insd).................. 5.500 01/01/16 8,580,581
9,050 Chicago, IL O'Hare Intl Arpt Spl Fac Rev Intl
Terminal (MBIA Insd)............................ 6.750 01/01/18 9,703,410
3,490 Chicago, IL Residential Mtg Rev Ser B Rfdg (MBIA
Insd)........................................... * 10/01/09 1,433,273
3,000 Onterie Cent Hsg Fin Corp IL Mtg Rev Onterie
Cent Proj Ser A Rfdg (MBIA Insd)................ 7.000 07/01/12 3,195,330
6,150 Onterie Cent Hsg Fin Corp IL Mtg Rev Onterie
Cent Proj Ser A Rfdg (MBIA Insd)................ 7.050 07/01/27 6,513,157
1,125 Peoria, IL Pub Bldg Comm Sch Bldg & Sch Fac Rev
Sch Dist 150 Proj B (AMBAC Insd)................ * 12/01/08 532,935
------------
29,958,686
------------
KANSAS 4.1%
3,500 Burlington, KS Pollutn Ctl Rev KS Gas & Elec Co
Proj Rfdg (MBIA Insd)........................... 7.000 06/01/31 3,861,200
2,000 Kansas St Dev Fin Auth Hlth Fac Rev Stormont
Vail Hlthcare Inc F (MBIA Insd)................. 5.800 11/15/21 2,011,280
2,000 Kansas St Dev Fin Auth Hlth Fac Rev Stormont
Vail Hlthcare Inc G (MBIA Insd)................. 5.800 11/15/21 2,011,280
2,145 Olathe Labette Cnty, KS Single Family Mtg Rev
Coll Ser A-I Rfdg (GNMA Collateralized)......... 8.100 08/01/23 2,389,187
------------
10,272,947
------------
LOUISIANA 5.4%
3,145 Calcasieu Parish, LA Mem Hosp Svc Dist Hosp Rev
Lake Charles Mem Hosp Proj Ser A (Connie Lee
Insd)........................................... 6.650 12/01/21 3,426,949
3,395 Louisiana Pub Fac Auth Rev (Embedded Cap) (FGIC
Insd)........................................... 5.875 02/15/11 3,479,637
65 Louisiana Pub Fac Auth Rev Student Ln LA
Opportunity Ln A (FSA Insd)..................... 6.600 01/01/04 69,640
1,005 Louisiana Pub Fac Auth Rev Student Ln LA
Opportunity Ln A (FSA Insd)..................... 6.700 01/01/05 1,077,451
670 Louisiana Pub Fac Auth Rev Student Ln LA
Opportunity Ln A (FSA Insd)..................... 6.800 01/01/06 719,084
</TABLE>
See Notes to Financial Statements
6
<PAGE> 8
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
LOUISIANA (CONTINUED)
$1,420 Louisiana Pub Fac Auth Rev Student Ln LA
Opportunity Ln A (FSA Insd)..................... 6.850% 01/01/09 $ 1,503,539
2,900 New Orleans, LA Pub Impt (Prerefunded @
09/01/02) (FGIC Insd)........................... 7.000 09/01/19 3,259,397
------------
13,535,697
------------
MARYLAND 0.7%
1,675 Prince Georges Cnty, MD Hsg Auth Mtg Rev
Riverview Terrace Ser A Rfdg (GNMA
Collateralized)................................. 6.400 12/20/10 1,766,824
------------
MASSACHUSETTS 1.9%
4,530 Massachusetts Edl Ln Auth Edl Ln Rev Muni
Forwards Issue E Ser A (AMBAC Insd)............. 7.000 01/01/10 4,703,997
------------
MICHIGAN 4.6%
6,000 Detroit, MI Econ Dev Corp Res Recovery Rev Ser A
(FSA Insd)...................................... 6.875 05/01/09 6,465,060
1,000 Monroe Cnty, MI Econ Dev Corp Ltd Oblig Rev Coll
Detroit Edison Co Ser AA Rfdg (FGIC Insd)....... 6.950 09/01/22 1,205,720
3,500 Monroe Cnty, MI Pollutn Ctl Rev Coll Detroit
Edison Monroe Ser 1 (MBIA Insd)................. 6.875 09/01/22 3,822,000
------------
11,492,780
------------
MISSISSIPPI 4.3%
2,475 Mississippi Home Corp Single Family Rev Mtg
Access Pgm (GNMA Collateralized)................ 7.100 05/01/23 2,635,256
1,805 Mississippi Home Corp Single Family Rev Mtg
Access Pgm Ser C (GNMA Collateralized).......... 8.125 12/01/24 2,013,117
1,720 Mississippi Home Corp Single Family Rev Mtg
Access Pgm Ser D (GNMA Collateralized).......... 8.100 12/01/24 1,920,827
1,405 Mississippi Home Corp Single Family Rev Mtg
Access Pgm Ser E (GNMA Collateralized).......... 8.100 12/01/25 1,564,327
2,500 Mississippi Hosp Equip & Fac Auth Rev Rush Med
Fndtn Proj (Connie Lee Insd).................... 6.700 01/01/18 2,705,525
------------
10,839,052
------------
NEBRASKA 1.0%
2,250 Nebraska Invt Fin Auth Single Family Mtg Rev
(Inverse Fltg) (GNMA Collateralized)............ 9.273 09/15/24 2,374,313
------------
NEVADA 3.8%
9,000 Clark Cnty, NV Indl Dev Rev NV Pwr Co Proj Ser A
(FGIC Insd)..................................... 6.700 06/01/22 9,616,410
------------
NEW JERSEY 6.9%
8,500 Mercer Cnty, NJ Impt Auth Rev Solid Waste Ser A
Rfdg (FGIC Insd)................................ 6.700 04/01/13 8,737,830
8,250 New Jersey Hlthcare Fac Fin Auth Rev Overlook
Hosp Assn Ser E (FGIC Insd)..................... 6.700 07/01/13 8,552,692
------------
17,290,522
------------
</TABLE>
See Notes to Financial Statements
7
<PAGE> 9
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
NEW MEXICO 1.7%
$1,900 Albuquerque, NM Arpt Rev Ser A (AMBAC Insd)..... 6.600% 07/01/16 $ 2,057,225
2,070 New Mexico Edl Assistance Fndtn Student Ln Rev
Ser A (AMBAC Insd).............................. 6.850 04/01/05 2,219,019
------------
4,276,244
------------
OHIO 0.4%
1,000 Cuyahoga Cnty, OH Multi-Family Rev Hsg Mtg Natl
Terminal Apartments Proj (FNMA Insd)............ 5.750 07/01/06 1,031,320
------------
PENNSYLVANIA 6.3%
7,500 Allegheny Cnty, PA Arpt Rev Gtr Pittsburgh Intl
Arpt Ser A (FSA Insd)........................... 6.800 01/01/10 8,128,874
4,000 Allegheny Cnty, PA Arpt Rev Gtr Pittsburgh Intl
Arpt Ser B (FSA Insd)........................... 6.625 01/01/22 4,247,400
1,330 Allegheny Cnty, PA Residential Fin Auth Mtg Rev
Single Family (GNMA Collateralized)............. 7.100 05/01/24 1,395,210
1,950 Sayre, PA Hlthcare Fac Auth Rev Hosp VHA PA/VHA
East Fin Pgm B (AMBAC Insd)..................... 6.375 07/01/22 2,068,521
------------
15,840,005
------------
RHODE ISLAND 0.7%
1,500 Rhode Island Port Auth & Econ Dev Corp Arpt Rev
Ser A (FSA Insd)................................ 7.000 07/01/14 1,736,265
------------
SOUTH CAROLINA 3.9%
9,150 South Carolina St Port Auth Port Rev (AMBAC
Insd)........................................... 6.750 07/01/21 9,836,616
------------
TEXAS 12.2%
5,000 Brazos River Auth TX Pollutn Ctl Rev Coll TX
Util Elec Co Proj A (AMBAC Insd)................ 6.750 04/01/22 5,377,000
5,000 Brazos River Auth TX Pollutn Ctl Rev Coll TX
Util Elec Co Proj B (FGIC Insd)................. 6.625 06/01/22 5,364,600
1,000 Brazos River Auth TX Pollutn Ctl Rev Coll TX
Util Elec Co Proj C (FGIC Insd)................. 6.700 10/01/22 1,079,360
2,500 Conroe, TX Indpt Sch Dist Cap Apprec
(Prerefunded @ 02/01/02) (PSFG Insd)............ * 02/01/08 1,331,850
3,000 Conroe, TX Indpt Sch Dist Cap Apprec
(Prerefunded @ 02/01/02) (PSFG Insd)............ * 02/01/09 1,486,920
755 Conroe, TX Indpt Sch Dist Cap Apprec
(Prerefunded @ 02/01/02) (PSFG Insd)............ * 02/01/11 322,966
1,000 Conroe, TX Indpt Sch Dist Cap Apprec
(Prerefunded @ 02/01/02) (PSFG Insd)............ * 02/01/12 396,830
2,305 Harris Cnty, TX Hsg Fin Corp Multi-Family Hsg
Rev Cypress Ridge Apartments (FSA Insd)......... 6.350 06/01/26 2,354,604
4,000 Houston, TX Arpt Sys Rev Sub Lien Ser A (FGIC
Insd)........................................... 6.750 07/01/21 4,308,800
1,800 Midland, TX Ctfs Oblig Arpt Sub Lien (FSA
Insd)........................................... 5.850 03/01/13 1,821,240
</TABLE>
See Notes to Financial Statements
8
<PAGE> 10
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TEXAS (CONTINUED)
$4,510 Texas St Veterans Hsg Assistance (MBIA Insd).... 6.800% 12/01/23 $ 4,736,988
2,000 Tyler, TX Hlth Fac Dev Corp Hosp Rev Mother
Frances Hosp of Tyler (FGIC Insd)............... 6.500 07/01/22 2,128,040
------------
30,709,198
------------
WISCONSIN 2.9%
5,000 Wisconsin St Hlth & Edl Fac Auth Rev Children's
Hosp (Embedded Cap) (FGIC Insd)................. 5.000 08/15/10 4,769,600
1,250 Wisconsin St Hlth & Edl Fac Auth Rev Felician
Hlth Care Ser A Rfdg (AMBAC Insd)............... 7.000 01/01/15 1,347,663
1,000 Wisconsin St Hlth & Edl Fac Auth Rev Saint Lukes
Med Cent Proj (MBIA Insd)....................... 7.100 08/15/19 1,108,880
------------
7,226,143
------------
PUERTO RICO 2.2%
5,000 Puerto Rico Comwlth Hwy & Tran Ser Y (Embedded
Cap) (FSA Insd)................................. 5.730 07/01/21 5,477,550
------------
TOTAL LONG-TERM INVESTMENTS 97.0%
(Cost $228,415,418) (a).................................................... 243,480,623
SHORT-TERM INVESTMENTS AT AMORTIZED COST 0.3%............................... 700,000
OTHER ASSETS IN EXCESS OF LIABILITIES 2.7%.................................. 6,840,060
-------------
NET ASSETS 100.0%........................................................... $251,020,683
=============
</TABLE>
*Zero coupon bond
(a) At October 31, 1996, cost for federal income tax purposes is $228,415,418;
the aggregate gross unrealized appreciation is $15,389,505 and the aggregate
gross unrealized depreciation is $324,300, resulting in net unrealized
appreciation of $15,065,205.
See Notes to Financial Statements
9
<PAGE> 11
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at Market Value (Cost $228,415,418) (Note 1).............. $243,480,623
Short-Term Investments (Note 1)........................................ 700,000
Cash................................................................... 56,666
Receivables:
Interest............................................................. 4,363,411
Securities Sold...................................................... 3,037,562
Unamortized Organizational Expenses (Note 1)........................... 1,797
Other.................................................................. 3,595
------------
Total Assets..................................................... 251,643,654
------------
LIABILITIES:
Payables:
Income Distributions -- Common and Preferred Shares.................. 254,316
Investment Advisory Fee (Note 2)..................................... 126,958
Administrative Fee (Note 2).......................................... 42,319
Affiliates (Note 2).................................................. 2,643
Accrued Expenses....................................................... 146,698
Deferred Compensation and Retirement Plans (Note 2).................... 50,037
------------
Total Liabilities................................................ 622,971
------------
NET ASSETS............................................................. $251,020,683
============
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000 shares, 1,800
issued with liquidation preference of $50,000 per share) (Note 6).... $ 90,000,000
------------
Common Shares ($.01 par value with an unlimited number of shares
authorized, 9,648,688 shares issued and outstanding) (Note 3)........ 96,487
Paid in Surplus........................................................ 142,142,746
Net Unrealized Appreciation on Securities.............................. 15,065,205
Accumulated Net Realized Gain on Securities............................ 2,071,125
Accumulated Undistributed Net Investment Income........................ 1,645,120
------------
Net Assets Applicable to Common Shares........................... 161,020,683
------------
NET ASSETS............................................................. $251,020,683
============
NET ASSET VALUE PER COMMON SHARE ($161,020,683 divided
by 9,648,688 shares outstanding)..................................... $ 16.69
============
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
STATEMENT OF OPERATIONS
For the Year Ended October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest................................................................ $15,290,178
-----------
EXPENSES:
Investment Advisory Fee (Note 2)........................................ 1,495,450
Administrative Fee (Note 2)............................................. 498,483
Preferred Share Maintenance (Note 6).................................... 258,579
Trustees Fees and Expenses (Note 2)..................................... 24,017
Legal (Note 2).......................................................... 16,470
Amortization of Organizational Expenses (Note 1)........................ 8,019
Other................................................................... 250,542
-----------
Total Expenses...................................................... 2,551,560
-----------
NET INVESTMENT INCOME................................................... $12,738,618
===========
REALIZED AND UNREALIZED GAIN/LOSS ON SECURITIES:
Realized Gain/Loss on Securities:
Investments........................................................... $ 2,724,014
Options............................................................... (98,848)
Futures............................................................... 167,686
-----------
Net Realized Gain on Securities......................................... 2,792,852
-----------
Net Unrealized Appreciation/Depreciation on Securities:
Beginning of the Period............................................... 17,319,660
End of the Period:
Investments......................................................... 15,065,205
-----------
Net Unrealized Depreciation on Securities During the Period............. (2,254,455)
-----------
NET REALIZED AND UNREALIZED GAIN ON SECURITIES.......................... $ 538,397
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.............................. $13,277,015
===========
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended October 31, 1996 and 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
October 31, Year Ended
1996 October 31, 1995
- ------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................... $ 12,738,618 $ 12,887,953
Net Realized Gain/Loss on Securities.................... 2,792,852 (439,041)
Net Unrealized Appreciation/Depreciation on
Securities During the Period.......................... (2,254,455) 18,551,787
------------ -----------
Change in Net Assets from Operations.................... 13,277,015 31,000,699
------------ -----------
Distributions from Net Investment Income:
Common Shares......................................... (10,110,226) (10,100,032)
Preferred Shares...................................... (3,199,725) (3,490,755)
------------ -----------
Total Distributions..................................... (13,309,951) (13,590,787)
------------ -----------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES..... (32,936) 17,409,912
FROM CAPITAL TRANSACTIONS (NOTE 3):
Value of Common Shares Issued Through Dividend
Reinvestment........................................ 476,622 -0-
------------ ------------
TOTAL INCREASE IN NET ASSETS............................ 443,686 17,409,912
NET ASSETS:
Beginning of the Period................................. 250,576,997 233,167,085
------------ ------------
End of the Period (Including undistributed net
investment income of $1,645,120 and $2,216,453,
respectively)......................................... $251,020,683 $250,576,997
============ ============
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one common share of
the Trust outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
January 24, 1992
(Commencement
Year Ended October 31 of Investment
-------------------------------------- Operations) to
1996 1995 1994 1993 October 31, 1992
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period (a)......................... $16.693 $14.883 $18.213 $15.278 $14.737
------ ------ ------ ------ ------
Net Investment Income.............. 1.323 1.340 1.351 1.365 .924
Net Realized and Unrealized
Gain/Loss on Securities.......... .054 1.883 (3.150) 2.949 .340
------ ------ ------ ------ ------
Total from Investment Operations..... 1.377 3.223 (1.799) 4.314 1.264
------ ------ ------ ------ ------
Less:
Distributions from Net Investment
Income:
Paid to Common Shareholders...... 1.050 1.050 1.050 .970 .525
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders................... .332 .363 .301 .293 .198
Distributions from Net Realized
Gain on Securities:
Paid to Common Shareholders...... -0- -0- .146 .086 -0-
Common Share Equivalent of
Distributions Paid to Preferred
Shareholders................... -0- -0- .034 .030 -0-
------ ------ ------ ------ ------
Total Distributions.................. 1.382 1.413 1.531 1.379 .723
------ ------ ------ ------ ------
Net Asset Value, End of the Period... $16.688 $16.693 $14.883 $18.213 $15.278
====== ====== ====== ====== ======
Market Price Per Share at End of the
Period............................. $16.125 $15.750 $13.500 $17.250 $14.500
Total Investment Return at Market
Price (b).......................... 9.19% 24.96% (15.57%) 26.98% .09%*
Total Return at Net Asset Value
(c)................................ 6.53% 19.80% (12.20%) 26.75% 5.33%*
Net Assets at End of the Period (In
millions).......................... $ 251.0 $ 250.6 $ 233.2 $ 265.2 $ 237.0
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares............................. 1.60% 1.63% 1.57% 1.54% 1.51%
Ratio of Expenses to Average Net
Assets............................. 1.02% 1.03% 1.01% .99% 1.01%
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares (d).................. 5.99% 6.16% 6.33% 6.29% 6.08%
Portfolio Turnover................... 35% 28% 26% 38% 90%*
</TABLE>
(a) Net asset value at January 24, 1992, is adjusted for common and preferred
share offering costs of $.263 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
13
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
October 31, 1996
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital Trust for Insured 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. In normal market conditions, the Trust
intends to invest substantially all of its assets in municipal securities which
are covered by insurance with respect to the timely payment of principal and
interest. 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. At October 31, 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.
14
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1996
- --------------------------------------------------------------------------------
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.
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.
For the year ended October 31, 1996, 99.98% of the income distributions made
by the Trust were exempt from federal income taxes. In January, 1997, the Trust
will provide tax information to shareholders for the 1996 calendar year.
G. INSURANCE EXPENSE--The Trust typically invests in insured bonds. Any
portfolio securities not specifically covered by a primary insurance policy are
insured either through secondary market insurance or portfolio insurance. The
insurance policies guarantee the timely payment of principal and interest on the
securities in the Trust's portfolio.
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 .60% 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
15
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1996
- --------------------------------------------------------------------------------
record keeping and reporting responsibilities with respect to the Trust's
portfolio and preferred shares and providing certain services to shareholders.
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 year ended October 31, 1996, the Trust recognized expenses of
approximately $17,000 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 October 31, 1996, VKAC owned 6,700 common shares of the Trust.
3. CAPITAL TRANSACTIONS
At October 31, 1996 and October 31, 1995, paid in surplus related to common
shares aggregated $142,142,746 and $141,666,418, respectively.
Transactions in common shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
- ---------------------------------------------------------------------------
<S> <C> <C>
Beginning Shares........................ 9,619,286 9,619,286
Shares Issued Through Dividend
Reinvestment.......................... 29,402 -0-
--------- ---------
Ending Shares........................... 9,648,688 9,619,286
--------- ---------
</TABLE>
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $86,517,161 and $98,204,074,
respectively.
5. 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
16
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1996
- --------------------------------------------------------------------------------
holdings, including derivative instruments, are marked to market each day with
the change in value reflected in the unrealized appreciation/depreciation on
securities. Upon disposition, a realized gain or loss is recognized accordingly.
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.
Transactions in options for the year ended October 31, 1996, were as
follows:
<TABLE>
<CAPTION>
CONTRACTS PREMIUM
- ------------------------------------------------------------------------
<S> <C> <C>
Outstanding at October 31, 1995.................... -0- $ -0-
Options Written and Purchased (Net)................ 800 (381,457)
Options Terminated in Closing Transactions (Net)... (800) 381,457
----- ---------
Outstanding at October 31, 1996.................... -0- $ -0-
===== =========
</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.
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). The cost of securities acquired through
delivery under a contract is adjusted by the unrealized gain or loss on the
contract.
Transactions in futures contracts, each with a par value of $100,000, for
the year ended October 31, 1996, were as follows:
<TABLE>
<CAPTION>
CONTRACTS
- ---------------------------------------------------------------------
<S> <C>
Outstanding at October 31, 1995........................... -0-
Futures Opened............................................ 550
Futures Closed............................................ (550)
----
Outstanding at October 31, 1996........................... -0-
====
</TABLE>
17
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1996
- --------------------------------------------------------------------------------
C. 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 Inverse Floating security is one where the coupon is inversely indexed to
a short-term floating interest rate multiplied by a specified factor. As the
floating rate rises, the coupon is reduced. Conversely, as the floating rate
declines, the coupon is increased. These instruments are typically used by the
Trust to enhance the yield of the portfolio.
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 its preferred shares.
6. PREFERRED SHARES
The Trust has outstanding 1,800 Auction Preferred Shares ("APS") in two series
of 900 shares each. Dividends are cumulative and the dividend rate is
periodically reset through an auction process. The dividend periods for Series A
and Series B are 28 days. The average rate in effect on October 31, 1996, was
3.40%. During the year ended October 31, 1996, the rates ranged from 3.280% to
3.874%.
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.
7. SUBSEQUENT EVENT
The Trust declared a long-term capital gain distribution of $.16077 per common
share to common shareholders of record on December 13, 1996 which will be
payable on December 31, 1996.
18
<PAGE> 20
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Trustees and Shareholders of
Van Kampen American Capital Trust for Insured Municipals:
We have audited the accompanying statement of assets and liabilities of Van
Kampen American Capital Trust for Insured Municipals (the "Trust"), including
the portfolio of investments, as of October 31, 1996, and the related statement
of operations for the year then ended, the statement of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the periods presented. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996, by correspondence with the custodian and broker. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Van
Kampen American Capital Trust for Insured Municipals as of October 31, 1996, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the periods presented, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
December 4, 1996
19
<PAGE> 21
DIVIDEND REINVESTMENT PLAN
The Trust offers a dividend reinvestment plan (the "Plan") pursuant to which
Common Shareholders may elect to have dividends and capital gains distributions
reinvested in Common Shares of the Trust. The Trust declares dividends out of
net investment income, and will distribute annually net realized capital gains,
if any. Common Shareholders may join or withdraw from the Plan at any time.
If you decide to participate in the Plan, State Street Bank and Trust
Company, as your Plan Agent, will automatically invest your dividends and
capital gains distributions in Common Shares of the Trust for your account.
HOW TO PARTICIPATE
If you wish to participate and your shares are held in your own name, call
1-800-341-2929 for more information and a Plan brochure. If your shares are held
in the name of a brokerage firm, bank, or other nominee, you should contact your
nominee to see if it would participate in the Plan on your behalf. If you wish
to participate in the Plan, but your brokerage firm, bank or nominee is unable
to participate on your behalf, you should request that your shares be re-
registered in your own name which will enable your participation in the Plan.
HOW THE PLAN WORKS
Participants in the Plan will receive the equivalent in Common Shares valued on
the valuation date, generally at the lower of market price or net asset value,
except as specified below. The valuation date will be the dividend or
distribution payment date or, if that date is not a trading day on the national
securities exchange or market system on which the Common Shares are listed for
trading, the next preceding trading day. If the market price per Common Share on
the valuation date equals or exceeds net asset value per Common Share on that
date, the Trust will issue new Common Shares to participants valued at the
higher of net asset value or 95% of the market price on the valuation date. In
the foregoing situation, the Trust will not issue Common Shares under the Plan
below net asset value. If net asset value per Common Share on the valuation date
exceeds the market price per Common Share on that date, or if the Board of
Trustees should declare a dividend or capital gains distribution payable to the
Common Shareholders only in cash, participants in the Plan will be deemed to
have elected to receive Common Shares from the Trust valued at the market price
on that date. Accordingly, in this circumstance, the Plan Agent will, as agent
for the participants, buy the Trust's Common Shares in the open market for the
participants' accounts on or shortly after the payment date. If, before the Plan
Agent has completed its purchases, the market price exceeds the net asset value
per share of the Common Shares, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Trust's Common Shares,
resulting in the acquisition of fewer Common Shares than if the dividend or
distribution had been paid in Common Shares issued by the Trust. All
reinvestments are in full and fractional Common Shares and are carried to three
decimal places.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
changes sent to all Common Shareholders of the Trust at least 90 days before the
record date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent by at least 90 days written notice to all Common
Shareholders of the Trust.
COSTS OF THE PLAN
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. No other charges will be made to participants for reinvesting
dividends or capital gains distributions, except for certain brokerage
commissions, as described above.
TAX IMPLICATIONS
You will receive tax information annually for your personal records and to help
you prepare your federal income tax return. The automatic reinvestment of
dividends and capital gains distributions does not relieve you of any income tax
which may be payable on dividends or distributions.
RIGHT TO WITHDRAW
Plan participants may withdraw at any time by calling 1-800-341-2929 or by
writing State Street Bank and Trust Company, P.O. Box 8200, Boston, MA
02266-8200. If you withdraw, you will receive, without charge, a share
certificate issued in your name for all full Common Shares credited to your
account under the Plan and a cash payment will be made for any fractional Common
Share credited to your account under the Plan. You may again elect to
participate in the Plan at any time by calling 1-800-341-2929 or writing to the
Trust at:
Van Kampen American Capital
Attn: Closed-End Funds
2800 Post Oak Blvd.
Houston, TX. 77056
20
<PAGE> 22
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INSURED MUNICIPALS
BOARD OF TRUSTEES
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
DENNIS J. MCDONNELL*--Chairman
THEODORE A. MYERS
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
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., 1996 All rights reserved.
(SM) denotes a service mark of Van Kampen American Capital Distributors, Inc.
RESULTS OF SHAREHOLDER VOTES
An Annual Meeting of Shareholders of the Trust was held on May 23, 1996, where
shareholders voted on the election of trustees and the selection of independent
public accountants. With regard to the election of David C. Arch as elected
trustee by the common shareholders of the Trust, 6,719,160 shares voted in his
favor, 68,670 withheld. With regard to the election of Howard J Kerr as elected
trustee by the common shareholders of the Trust, 6,718,375 shares voted in his
favor, 69,455 withheld. With regard to the election of Dennis J. McDonnell as
elected trustee by the common shareholders of the Trust, 6,718,964 shares voted
in his favor, 68,867 withheld. With regard to the ratification of KPMG Peat
Marwick LLP as independent public accountants for the Trust, 6,677,396 voted in
favor, 27,912 voted against and 84,036 abstained.
A Special Meeting of Shareholders of the Trust was held on October 23, 1996,
where shareholders voted on a new investment advisory agreement and changes to
investment policies. With regard to the approval of a new investment advisory
agreement between Van Kampen American Capital Investment Advisory Corp. and the
Trust, 7,686,745 shares voted for the proposal, 131,697 voted against and
297,451 abstained. With regard to the approval of certain changes to the Trust's
fundamental investment policies with respect to investment in other investment
companies, 4,006,589 shares voted for the proposal, 198,465 voted against and
260,219 abstained.
21
