<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Performance Results.............................. 5
Portfolio of Investments......................... 6
Statement of Assets and Liabilities.............. 9
Statement of Operations.......................... 10
Statement of Changes in Net Assets............... 11
Financial Highlights............................. 12
Notes to Financial Statements.................... 13
Report of Independent Accountants................ 17
Dividend Reinvestment Plan....................... 18
</TABLE>
VTN ANR 12/97
<PAGE> 2
LETTER TO SHAREHOLDERS
December 4, 1997
Dear Shareholder,
In the past year, we have been
participants in and witnesses to two
mergers that we believe have positioned
our company at the forefront of the
financial industry's evolution. Our [PHOTO]
latest announcement continues our
forward progress. I am pleased to
announce that Philip N. Duff, formerly
the chief financial officer of Morgan
Stanley, has joined Van Kampen DENNIS J. MCDONNELL AND DON G. POWELL
American Capital as president and
chief executive officer. I will
continue as chairman of the firm. Together, we will continue to work to the
benefit of our fund shareholders as Van Kampen American Capital advances
toward the next century.
ECONOMIC REVIEW
The last quarter of 1996 brought renewed strength and rumblings of
inflation, which continued to feed investors' uncertainties about the direction
of interest rates. This was reflected in the volatility of taxable yields, with
the 30-year Treasury ranging from a high of 6.70 percent to a low of 6.35
percent, and ending the period at 6.64 percent.
The bond market advanced in price during the first 10 months of 1997, but
its ascension was not a smooth ride. Bond prices fell early in the period as
economic growth soared, fueling concerns about rising inflation and a potential
interest rate hike by the Federal Reserve Board. When the Fed did raise interest
rates by a modest 0.25 percent in late March, bond prices fell further, sending
the yield of the 30-year U.S. Treasury bond above 7.0 percent for the first time
in six months. By mid-April, however, the market's mood had changed, reflecting
few signs of price pressures despite the economy's strength. Bonds also
benefited from continued heavy purchases by foreign investors and concerns that
the stock market rally was nearing an end. The 7.0 percent slump in the Dow
Jones Industrial Average on October 27 reinforced the benefit of owning bonds
for diversification. By the end of October, the yield on the 30-year Treasury
bond was near its lowest level in 20 months, at 6.15 percent.
Throughout 1997, municipal bond prices moved in the same direction as the
Treasury bond market, but gained less when Treasury prices rallied and lost less
when Treasuries fell. Between December 31, 1996 and October 31, 1997, the yield
on the long-term municipal revenue bond index fell 36 basis points as the yield
on the 30-year Treasury bond fell 48 basis points. Because yields move in the
opposite direction of prices, the smaller yield decline of municipal bonds
indicates that their prices did not rise as much as Treasuries.
In New York, the bull market in stocks, coupled with continued state
spending restraints, underpinned a modest economic revival. State coffers
swelled with the collection
Continued on page two
1
<PAGE> 3
of unanticipated revenues due to the sharp gains in the financial markets. As a
result of the state's economic improvement, the Standard & Poor's Ratings Group
upgraded the rating on New York State General obligation bonds from A- to A.
[PIE CHART]
Portfolio Composition by Credit Quality*
as of October 31, 1997
<TABLE>
<S> <C>
AAA................... 38.4%
AA.................... 20.5%
A..................... 10.4%
BBB................... 30.7%
</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
In managing the Trust, we used the following strategies:
We continued to position the credit quality of the portfolio's investments
in a "barbell" pattern. In other words, we invested nearly equal investments in
both high-quality and low-quality bonds, which helps to balance the portfolio's
volatility in response to changing interest rates. Bonds rated AAA, the highest
credit rating from Standard & Poor's Ratings Group, tend to perform better when
interest rates are falling. Most AAA-rated bonds are insured bonds, which
currently comprise well over half the new issues in the municipal bond market.
These bonds are extremely liquid and carry minimal credit risk. Bonds rated BBB,
the lowest investment-grade credit rating used by Standard & Poor's, tend to
perform better when rates are rising. They also have the potential to provide
additional income.
Portfolio turnover during the fiscal year was minimal due to the limited
number of opportunities to add value to existing holdings. The average yield of
bonds in the Trust's portfolio was higher than average market yields. As a
result, there was little incentive to replace many bonds in the portfolio,
because such trades would have reduced the Trust's dividend-paying ability.
Trading was also restrained by tight spreads between yields of AAA-rated
bonds and lower-rated securities. These spreads have compressed to historically
narrow levels due to the increasing number of insured bonds in the municipal
market. For example, a long-term New York City general obligation bond rated
BBB+ yielded only about 15 basis points more than an AAA-rated insured New York
City bond. As a result of these narrow spreads, there was often not enough
incentive to purchase additional lower-rated securities and assume the
additional credit risk. Attempting to reduce credit risk also helps to offset
market risk the Trust might face as a result of its leveraged structure. It
should be noted, however, that if short-term rates rise, borrowing costs would
increase; this would negatively impact the income and performance of common
shares.
Continued on page three
2
<PAGE> 4
Acquisitions focused on enhancing the Trust's call protection and its
potential for price appreciation. Because we hope to limit the number of bonds
that could be "called" at any one time, we purchased new long-term discount
securities that will not be callable for at least 10 years, and sold bonds that
we believed would be called in the near-term. Purchases included AAA-rated
insured bonds as well as BBB-rated bonds, which paid relatively high yields.
Sales included prerefunded bonds, which would be redeemed at their first call
dates.
When searching for new securities for the Trust's portfolio, we try to
identify bonds that we believe will outperform within a particular sector and
that can be purchased at an attractive price. We believe this "bottom-up"
approach, supported by our research, provides significant added value to the
portfolio.
During the second half of the fiscal year, the duration of the portfolio
declined slightly due to the market rally, which caused some bonds to trade to
their call dates rather than their maturity dates. Duration, which is expressed
in years, is a measure of a portfolio's sensitivity to interest rate movements.
Bonds that are expected to be called near term have shorter durations than bonds
that are trading to their maturity dates. Portfolios with short durations tend
to perform better when interest rates are rising, while portfolios with long
durations tend to do better when rates are falling. Over the last six months, a
period of declining interest rates, the Trust's shorter duration was a
hindrance. However, its leveraged structure enhanced performance. Our strategy
going forward is to lengthen the Trust's duration closer to that of its index
through the purchase of longer-term discount securities. As of October 31, the
duration of the Trust's bond portfolio stood at 6.37 years, compared to 7.34
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 Industry Holdings by Sector* As of October 31, 1997
General Purpose................... 22.2%
Transportation.................... 16.8%
Public Building.................... 9.3%
Other Care......................... 8.7%
Health Care........................ 7.3%
*As a Percentage of Long-Term
Investments
PERFORMANCE SUMMARY
For the one-year period ended October 31, 1997, the Van Kampen American
Capital Trust for Investment Grade New York Municipals generated a total return
at market price of 13.08 percent(1). The Trust offered a tax-exempt distribution
rate of 5.78 percent(3), based on the closing common stock price on October 31,
1997. At the end of the reporting period, the closing share price of the Trust
traded at $15.5625, a 10.2 percent discount to its net asset value of $17.33.
Because income from the Trust is exempt from federal and New York income taxes,
this distribution rate represents a yield equivalent to a taxable investment
earning 9.70 percent (for investors in the federal income tax bracket of 40.4
percent).
The Trust declared a capital gains distribution of $0.0323 per share paid
December 31, 1996.
Continued on page four
3
<PAGE> 5
[BAR CHART]
Twelve-month Distribution History
For the Period Ended October 31, 1997
Distribution per Common Share
<TABLE>
<CAPTION>
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
1996 1996 1997 1997 1997 1997 1997 1997 1997 1997 1997 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Gains
Dividends $.0750 $.1070 $.0750 $.0750 $.0750 $.0750 $.0750 $.0750 $.0750 $.0750 $.0750 $.0750
</TABLE>
The distribution history represents past performance of the Trust and does not
predict the Trusts future distributions.
OUTLOOK
We expect the economy to remain strong in the coming months, although the
growth rate might slow to a more moderate pace. The weakness in the Far East,
which was the impetus for the recent volatility in world stock markets, will
most likely reduce U.S. exports to the region. In turn, this could trim U.S.
economic growth as well as the earnings of many U.S. companies. As a result, we
believe there is little chance that the Fed will raise interest rates in the
coming months. A rate hike reemerges as a possibility if inflation picks up, or
if growth continues at its current brisk pace.
As a result of this outlook, we expect that the yield on the 30-year
Treasury bond will trade within a range of 5.75 percent and 6.50 percent for the
next six months, possibly falling further in mid-1998. A decline in rates would
not only boost the prices of long-term investments in the portfolio, but could
also positively affect the Trust as a result of its leveraged structure. That
structure, which involves borrowing short-term funds to purchase long-term
municipal bonds, provides common shareholders with above-market levels of
dividend income.
We will continue to seek a balance between the Trust's total return and its
dividend income, and to add value through our investment strategies and bond
selection. Thank you for your continued confidence in Van Kampen American
Capital and your Trust's portfolio manager.
Sincerely,
/s/ Don G. Powell
Don G. Powell
Chairman
Van Kampen American Capital
Investment Advisory Corp.
/s/ Dennis J. McDonnell
Dennis J. McDonnell
President
Van Kampen American Capital
Investment Advisory Corp.
Please see footnotes on page five
4
<PAGE> 6
PERFORMANCE RESULTS FOR THE PERIOD ENDED OCTOBER 31, 1997
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE
NEW YORK MUNICIPALS
(NYSE TICKER SYMBOL--VTN)
<TABLE>
<CAPTION>
COMMON SHARE TOTAL RETURNS
<S> <C>
One-year total return based on market price(1)............ 13.08%
One-year total return based on NAV(2)..................... 10.12%
DISTRIBUTION RATES
Distribution rate as a % of closing common stock
price(3)................................................ 5.78%
Taxable-equivalent distribution rate as a % of closing
common stock price(4)..................................... 9.70%
SHARE VALUATIONS
Net asset value........................................... $ 17.33
Closing common stock price................................ $15.5625
One-year high common stock price (08/11/97)............... $ 16.250
One-year low common stock price (04/29/97)................ $ 14.250
Preferred share rate(5)................................... 3.500%
</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 40.4%
combined federal and state income tax bracket, which takes into consideration
the deductibility of individual state taxes paid.
(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.
5
<PAGE> 7
PORTFOLIO OF INVESTMENTS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS 99.7%
NEW YORK 90.2%
$ 3,000 Cohoes, NY Indl Dev Agy Indl Dev Rev Norlite
Corp Proj Ser B (Prerefunded @ 05/01/02)........ 6.750% 05/01/09 $ 3,349,320
1,210 Erie Cnty, NY Wtr Auth Wtr Rev Fourth Resolution
Rfdg (AMBAC Insd)............................... * 12/01/17 287,581
3,870 Grand Cent Dist Mgmt Assn Inc NY Business Impt
Dist Cap Impt (Prerefunded @ 01/01/02).......... 6.500 01/01/22 4,272,596
1,145 Groton, NY Cmnty Hlthcare Cent Inc Hlthcare Fac
Rev Groton Cmnty Ser A (FHA Gtd)................ 7.450 07/15/21 1,327,399
2,295 Metropolitan Tran Auth NY Svcs Contract Commuter
Fac
Ser O........................................... 5.750 07/01/07 2,438,162
3,000 Metropolitan Tran Auth NY Svcs Contract Tran Fac
Ser 5 Rfdg...................................... 7.000 07/01/12 3,271,770
1,355 Nassau Cnty, NY Genl Impt Ser Q (FGIC Insd)..... 5.200 08/01/13 1,363,306
1,100 Nassau Cnty, NY Genl Impt Ser Q (FGIC Insd)..... 5.200 08/01/14 1,101,375
2,500 New York City Indl Dev Agy Civic Fac Rev The
Lighthouse Inc ................................. 6.500 07/01/22 2,676,575
2,000 New York City Ser A Rfdg........................ 7.000 08/01/04 2,253,400
10,000 New York City Ser B (Embedded Cap).............. 6.600 10/01/16 10,816,000
2,750 New York City Ser D............................. 6.500 02/15/06 3,025,385
160 New York City Ser D............................. 7.500 02/01/16 178,965
75 New York City Ser D............................. 7.500 02/01/17 84,014
1,855 New York City Ser D (Prerefunded @ 02/01/02).... 7.500 02/01/16 2,114,533
925 New York City Ser D (Prerefunded @ 02/01/02).... 7.500 02/01/17 1,054,417
2,300 New York City Ser G Rfdg........................ 5.700 08/01/08 2,394,576
7,900 New York City Ser I Rfdg (FSA Insd)............. * 08/01/01 6,742,413
1,000 New York City Subser A1 (Embedded Swap)......... 5.915 08/01/12 1,023,720
1,000 New York St Dorm Auth Rev Court Fac Lease Ser
A............................................... 5.625 05/15/13 1,014,380
1,500 New York St Dorm Auth Rev Court Fac Lease Ser
A............................................... 5.375 05/15/16 1,474,920
2,500 New York St Dorm Auth Rev Grace Manor Hlthcare
Fac............................................. 6.150 07/01/18 2,705,150
4,460 New York St Dorm Auth Rev Mtg KMH Homes Inc (FHA
Gtd)............................................ 6.950 08/01/31 4,822,910
1,835 New York St Dorm Auth Rev NY Pub Lib Ser A (MBIA
Insd)........................................... * 07/01/02 1,497,709
1,910 New York St Dorm Auth Rev NY Pub Lib Ser A (MBIA
Insd)........................................... * 07/01/03 1,484,280
1,000 New York St Dorm Auth Rev Nyack Hosp Rfdg....... 6.250 07/01/13 1,052,730
5,010 New York St Dorm Auth Rev St Univ Edl Fac Ser B
Rfdg (AMBAC Insd)............................... 5.250 05/15/19 4,946,273
2,000 New York St Dorm Auth Rev St Univ Edl Facs...... 5.125 05/15/21 1,916,880
4,100 New York St Energy Resh & Dev Auth Elec Fac Rev
Cons Edison Co NY Inc Proj Ser A (MBIA Insd).... 6.750 01/15/27 4,389,952
1,500 New York St Energy Resh & Dev Auth Gas Fac Rev
Brooklyn Union Gas Ser B (MBIA Insd)............ 6.750 02/01/24 1,640,775
</TABLE>
See Notes to Financial Statements
6
<PAGE> 8
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
NEW YORK (CONTINUED)
$ 4,000 New York St Energy Resh & Dev Auth Gas Fac Rev
Brooklyn Union Gas Ser C (MBIA Insd)............ 5.600% 06/01/25 $ 4,011,520
800 New York St Environmental Fac Corp St Wtr
Pollutn Ctl Rev................................. 6.600 06/15/09 900,960
1,200 New York St Environmental Fac Corp St Wtr
Pollutn Ctl Rev (Prerefunded @ 06/15/04)........ 6.600 06/15/09 1,364,400
3,500 New York St Hsg Fin Agy Rev Multi-Family Hsg
Secured Mtg Pgm Ser A........................... 7.050 08/15/24 3,748,675
1,910 New York St Hsg Fin Agy Rev Multi-Family Hsg
Secured Mtg Pgm Ser C........................... 6.950 08/15/24 2,021,716
1,970 New York St Loc Govt Assistance Corp Ser B
(Prerefunded @ 04/01/01)........................ 7.250 04/01/07 2,200,510
4,675 New York St Med Care Fac Fin Agy Rev Hosp &
Nursing Home Methodist Ser A (FHA Gtd).......... 6.700 08/15/23 5,058,116
1,000 New York St Med Care Fac Fin Agy Rev Long Term
Hlth Care Ser A (Cap Guar Insd)................. 6.800 11/01/14 1,103,950
300 New York St Med Care Fac Fin Agy Rev Mental Hlth
Svcs Fac Ser C.................................. 7.300 02/15/21 332,781
570 New York St Med Care Fac Fin Agy Rev Mental Hlth
Svcs Fac Ser C (Prerefunded @ 08/15/01)......... 7.300 02/15/21 641,740
2,050 New York St Med Care Fac Fin Agy Rev Saint
Peter's Hosp Proj Ser A (AMBAC Insd)............ 5.375 11/01/20 2,006,314
4,500 New York St Med Care Fac Fin Agy Rev Shorefront
Saint Lukes & Wtrfront Nursing Homes............ 6.950 02/15/32 4,912,830
4,000 New York St Mtg Agy Rev Homeowner Mtg Ser 28.... 7.050 10/01/23 4,267,160
2,000 New York St Mtg Agy Rev Homeowner Mtg Ser 42
(FHA Gtd)....................................... 6.400 10/01/20 2,077,500
1,790 New York St Mtg Agy Rev Homeowner Mtg Ser 52.... 6.100 04/01/26 1,864,178
1,000 New York St Muni Bond Bk Agy Spl Pgm Rev Buffalo
Ser A........................................... 6.875 03/15/06 1,084,290
2,000 New York St Thruway Auth Svc Contract Rev Loc
Hwy & Brdg...................................... 5.750 04/01/08 2,113,900
2,500 New York St Urban Dev Corp Rev Correctional Cap
Fac Ser A Rfdg.................................. 5.500 01/01/14 2,544,100
1,625 New York St Urban Dev Corp Rev Proj Cent for
Indl Innovation Rfdg............................ 5.500 01/01/13 1,661,010
20,000 New York St Urban Dev Corp Rev St Office South
Mall Ser A...................................... * 01/01/11 9,342,800
1,750 Niagara Falls, NY Brdg Comm Toll Rev
(Prerefunded @ 10/01/02) (FGIC Insd)............ 6.125 10/01/19 1,927,117
4,500 Port Auth NY & NJ Cons 97th Ser (FGIC Insd)..... 6.650 01/15/23 4,927,140
2,000 Port Auth NY & NJ Delta Airls Inc Proj Ser 1R... 6.950 06/01/08 2,185,460
4,000 Port Auth NY & NJ Spl Oblig Rev Spl Proj JFK
Intl Arpt Terminal 6 (MBIA Insd)................ 5.750 12/01/25 4,095,040
2,405 Rensselaer, NY Hsg Auth Multi-Family Rev Mtg
Renwyck Pl Ser A................................ 7.650 01/01/11 2,620,680
</TABLE>
See Notes to Financial Statements
7
<PAGE> 9
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
NEW YORK (CONTINUED)
$ 2,210 Rensselaer, NY Hsg Auth Multi-Family Rev Mtg Van
Rensselaer Heights Ser A........................ 7.750% 01/01/11 $ 2,417,850
1,825 Syracuse, NY Ctfs Partn Syracuse Hancock Intl
Arpt............................................ 6.625 01/01/12 1,945,651
1,000 United Nations Dev Corp New York Rev Rfdg Sr
Lien Ser B...................................... 5.300 07/01/11 1,001,520
------------
151,100,374
------------
GUAM 3.9%
2,000 Guam Arpt Auth Rev Ser B........................ 6.400 10/01/05 2,145,000
3,000 Guam Govt Ltd Oblig Hwy Ser A (FSA Insd)........ 6.250 05/01/07 3,274,980
1,000 Guam Pwr Auth Rev Ser A......................... 6.625 10/01/14 1,086,730
------------
6,506,710
------------
PUERTO RICO 5.6%
5,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser
Y Rfdg (Embedded Cap) (FSA Insd)................ 5.730 07/01/21 5,743,500
2,250 Puerto Rico Comwlth Pub Impt (Prerefunded @
07/01/02)....................................... 6.800 07/01/21 2,528,820
1,000 Puerto Rico Pub Bldgs Auth Rev Gtd Ser K
(Prerefunded @ 07/01/02)........................ 6.875 07/01/21 1,127,070
------------
9,399,390
------------
TOTAL INVESTMENTS 99.7%
(Cost $151,966,220)......................................................... 167,006,474
OTHER ASSETS IN EXCESS OF LIABILITIES 0.3%................................... 471,406
------------
NET ASSETS 100.0%............................................................ $167,477,880
============
</TABLE>
*Zero coupon bond
See Notes to Financial Statements
8
<PAGE> 10
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $151,966,220)....................... $167,006,474
Interest Receivable......................................... 2,452,755
Other....................................................... 1,763
------------
Total Assets.......................................... 169,460,992
------------
LIABILITIES:
Payables:
Custodian Bank............................................ 1,507,462
Income Distributions--Common and Preferred Shares......... 178,786
Investment Advisory Fee................................... 92,092
Administrative Fee........................................ 28,336
Affiliates................................................ 8,650
Accrued Expenses............................................ 95,364
Trustees' Deferred Compensation and Retirement Plans........ 72,422
------------
Total Liabilities..................................... 1,983,112
------------
NET ASSETS.................................................. $167,477,880
----------
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000
shares, 1,200 issued with liquidation preference of
$50,000 per share)........................................ $ 60,000,000
------------
Common Shares ($.01 par value with an unlimited number of
shares authorized, 6,200,987 shares issued and
outstanding).............................................. 62,010
Paid in Surplus............................................. 91,232,016
Net Unrealized Appreciation................................. 15,040,254
Accumulated Undistributed Net Investment Income............. 936,837
Accumulated Net Realized Gain............................... 206,763
------------
Net Assets Applicable to Common Shares................ 107,477,880
------------
NET ASSETS.................................................. $167,477,880
============
NET ASSET VALUE PER COMMON SHARE ($107,477,880 divided
by 6,200,987 shares outstanding).......................... $ 17.33
============
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
STATEMENT OF OPERATIONS
For the Year Ended October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 9,731,009
-----------
EXPENSES:
Investment Advisory Fee..................................... 1,068,186
Administrative Fee.......................................... 328,673
Preferred Share Maintenance................................. 162,844
Trustees' Fees and Expenses................................. 26,613
Custody..................................................... 15,162
Legal....................................................... 9,044
Amortization of Organizational Costs........................ 2,001
Other....................................................... 157,287
-----------
Total Expenses.......................................... 1,769,810
-----------
NET INVESTMENT INCOME....................................... $ 7,961,199
===========
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS:
Net Realized Gain........................................... $ 206,763
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 10,942,209
End of the Period......................................... 15,040,254
-----------
Net Unrealized Appreciation During the Period............... 4,098,045
-----------
NET REALIZED AND UNREALIZED GAIN............................ $ 4,304,808
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $12,266,007
===========
</TABLE>
See Notes to Financial Statements
10
<PAGE> 12
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended October 31, 1997 and 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1997 October 31, 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................... $ 7,961,199 $ 8,071,755
Net Realized Gain....................................... 206,763 339,887
Net Unrealized Appreciation During the Period........... 4,098,045 265,699
------------ ------------
Change in Net Assets from Operations.................... 12,266,007 8,677,341
------------ ------------
Distributions from Net Investment Income:
Common Shares......................................... (5,580,574) (5,580,709)
Preferred Shares...................................... (2,087,165) (2,179,733)
------------ ------------
(7,667,739) (7,760,442)
------------ ------------
Distributions from Net Realized Gain
Common Shares......................................... (200,265) -0-
Preferred Shares...................................... (73,239) -0-
------------ ------------
(273,504) -0-
------------ ------------
Total Distributions..................................... (7,941,243) (7,760,442)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES..... 4,324,764 916,899
NET ASSETS:
Beginning of the Period................................. 163,153,116 162,236,217
------------ ------------
End of the Period (Including accumulated undistributed
net investment income of $936,837 and $643,377,
respectively)......................................... $167,477,880 $163,153,116
============ ============
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one common share of
the Trust outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION> March 27, 1992
(Commencement
Year Ended October 31, of Investment
-------------------------------------------------- Operations) to
1997 1996 1995 1994 1993 October 31, 1992
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Period (a)...... $16.634 $16.487 $14.801 $17.621 $14.812 $14.742
------- ----- ----- ----- ----- ----------
Net Investment Income............ 1.284 1.302 1.303 1.337 1.352 .607
Net Realized and Unrealized
Gain/Loss...................... .695 .097 1.783 (2.869) 2.766 .027
------- ----- ----- ----- ----- ----------
Total from Investment
Operations....................... 1.979 1.399 3.086 (1.532) 4.118 .634
------- ----- ----- ----- ----- ----------
Less:
Distributions from Net Investment
Income:
Paid to Common Shareholders.... .900 .900 1.000 1.020 1.020 .425
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders....... .337 .352 .384 .268 .289 .139
Distributions from Net Realized
Gain
Paid to Common Shareholders.... .032 -0- .013 -0- -0- -0-
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders....... .012 -0- .003 -0- -0- -0-
------- ----- ----- ----- ----- ----------
Total Distributions............... 1.281 1.252 1.400 1.288 1.309 .564
------- ----- ----- ----- ----- ----------
Net Asset Value, End of the
Period........................... $17.332 $16.634 $16.487 $14.801 $17.621 $14.812
======= ======= ======= ======= ======= =======
Market Price Per Share at End of
the Period....................... $15.5625 $14.625 $14.375 $13.125 $17.125 $15.000
Total Investment Return at Market
Price (b)........................ 13.08% 8.09% 17.49% (18.07%) 21.52% 2.79%*
Total Return at Net Asset Value
(c).............................. 10.12% 6.50% 18.88% (10.55%) 26.50% 1.48%*
Net Assets at End of the Period
(In millions).................... $167.5 $163.2 $162.2 $151.8 $169.3 $151.8
Ratio of Expenses to Average Net
Assets Applicable to Common
Shares (d)....................... 1.70% 1.73% 1.78% 1.70% 1.62% 1.49%**
Ratio of Expenses to Average Net
Assets (d)....................... 1.08% 1.09% 1.10% 1.07% 1.02% 1.03%**
Ratio of Net Investment Income to
Average Net Assets Applicable to
Common Shares (e)................ 5.63% 5.78% 5.89% 6.55% 6.45% 5.28%**
Portfolio Turnover................ 8% 20% 54% 38% 18% 24%*
</TABLE>
(a) Net Asset Value at March 27, 1992 is adjusted for common and preferred share
offering costs of $.258 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) Beginning with the year ended October 31, 1995, the Ratios of Expenses are
based upon Total Expenses which does not reflect credits earned on overnight
cash balances.
(e) Net Investment Income is adjusted for the common share equivalent of
distributions paid to preferred shareholders.
* Non-Annualized
** If certain expenses had not been assumed by the investment adviser for the
period ended October 31, 1992, the annualized ratios of expenses to average
net assets applicable to common shares, expenses to average net assets and
net investment income to average net assets applicable to common shares would
have been 1.58%, 1.10% and 5.19%, respectively.
See Notes to Financial Statements
12
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
October 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital Trust for Investment Grade New York Municipals (the
"Trust") is registered as a non-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 as well as New York State and New York City income taxes, consistent
with preservation of capital. The Trust will invest substantially all of its
assets in New York municipal securities rated investment grade at the time of
investment. The Trust commenced investment operations on March 27, 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, 1997, 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.
13
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1997
- --------------------------------------------------------------------------------
D. ORGANIZATIONAL COSTS--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 $25,000. These costs
were amortized on a straight line basis over the 60 month period ended March 26,
1997.
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.
At October 31, 1997, for federal income tax purposes, cost of long-term
investments is $151,966,220; the aggregate gross unrealized appreciation is
$15,040,254 and the aggregate unrealized depreciation is $0, resulting in net
unrealized appreciation on investments of $15,040,254.
F. 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.
For the year ended October 31, 1997, 99.8% of the income distributions made
by the Trust were exempt from federal income taxes. Additionally, during the
period, the Trust paid long-term capital gains of $251,733. In January 1998, the
Trust will provide tax information to the shareholders for the 1997 calendar
year.
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 VKAC, the Trust's Administrator, at an annual
rate of .20% of the average daily 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 year ended October 31, 1997, the Trust recognized expenses of
approximately $2,300 representing legal services provided by Skadden, Arps,
Slate,
14
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1997
- --------------------------------------------------------------------------------
Meagher & Flom (Illinois), counsel to the Trust, of which a trustee of the Trust
is an affiliated person.
For the year ended October 31, 1997, the Trust recognized expenses of
approximately $60,200 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 provides 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 under the plan is equal to the trustees' annual retainer fee, which is
currently $2,500.
3. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sale of investments,
excluding short-term investments, were $13,370,097 and $12,981,529,
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 uses Indexed Securities, a type of derivative instrument, as a
hedge against a rise in short-term interest rates which are paid on the Trust's
preferred shares. All of the Trust's portfolio holdings, including derivative
instruments, are marked to market each day with the change in value reflected in
the unrealized appreciation/depreciation on investments. Upon disposition, a
realized gain or loss is recognized accordingly.
The following types of Indexed Securities 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.
A. 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.
B. An Embedded Swap security includes a swap component such that the fixed
coupon component of the underlying bond is adjusted by the difference between
the security's fixed swap rate and the floating swap index.
15
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1997
- --------------------------------------------------------------------------------
5. PREFERRED SHARES
The Trust has outstanding 1,200 Auction Preferred Shares ("APS"). Dividends are
cumulative and the dividend rate is currently reset every 28 days through an
auction process. The rate in effect on October 31, 1997, was 3.500%. During the
year ended October 31, 1997, the rates ranged from 3.260% to 4.255%.
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.
6. CAPITAL GAIN DISTRIBUTION
On December 1, 1997, the Trust declared a capital gain of $0.0246 per common
share, of which 39.4% is long-term and 60.6% is short-term, to common
shareholders of record on December 15, 1997 which will be payable on December
31, 1997.
16
<PAGE> 18
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Trustees and Shareholders of
Van Kampen American Capital Trust for Investment Grade New York Municipals:
We have audited the accompanying statement of assets and liabilities of Van
Kampen American Capital Trust for Investment Grade New York Municipals (the
"Trust"), including the portfolio of investments, as of October 31, 1997, 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, 1997, by correspondence with the custodian. 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 Investment Grade New York Municipals as of
October 31, 1997, 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, 1997
17
<PAGE> 19
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
18
<PAGE> 20
FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL
GLOBAL AND
INTERNATIONAL
Global Equity Fund
Global Government Securities Fund
Global Managed Assets Fund
Short-Term Global Income Fund
Strategic Income Fund
EQUITY
Growth
Aggressive Growth Fund
Emerging Growth Fund
Enterprise Fund
Growth Fund
Pace Fund
Growth & Income
Comstock Fund
Equity Income Fund
Growth and Income Fund
Harbor Fund
Real Estate Securities Fund
Utility Fund
FIXED INCOME
Corporate Bond Fund
Government Securities Fund
High Income Corporate Bond Fund
High Yield Fund
Limited Maturity Government Fund
Prime Rate Income Trust
Reserve Fund
U.S. Government Fund
U.S. Government Trust for Income
TAX-FREE
California Insured Tax Free Fund
Florida Insured Tax Free Income Fund
High Yield Municipal Fund
Insured Tax Free Income Fund
Intermediate Term Municipal Income Fund
Municipal Income Fund
New York Tax Free Income Fund
Pennsylvania Tax Free Income Fund
Tax Free High Income Fund
Tax Free Money Fund
MORGAN STANLEY
FUND, INC.
Aggressive Equity Fund
American Value Fund
Asian Growth Fund
Emerging Markets Fund
Global Equity Fund
Global Equity Allocation Fund
Global Fixed Income Fund
High Yield Fund
International Magnum Fund
Latin American Fund
U.S. Real Estate Fund
Value Fund
Worldwide High Income Fund
Ask your investment representative for a prospectus containing more complete
information, including sales charges and expenses. Please read it carefully
before you invest or send money. Or call us weekdays from 7:00 a.m. to 7:00
p.m. Central time at 1-800-341-2911 for Van Kampen American Capital funds or
Morgan Stanley funds.
19
<PAGE> 21
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE NEW YORK 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 (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., 1997 All rights reserved.
(SM) denotes a service mark of Van Kampen American Capital Distributors, Inc.
21
<PAGE> 22
RESULTS OF SHAREHOLDER VOTES
The Annual Meeting of Shareholders of the Trust was held on May 28, 1997,
where shareholders voted on a new investment advisory agreement, the election of
Trustees whose terms expired in 1997 and independent public accountants.
1) With regard to the approval of a new investment advisory agreement
between Van Kampen American Capital Investment Advisory Corp. and the Trust,
5,380,081 shares voted for the proposal, 92,470 shares voted against, 92,610
shares abstained and 0 shares represented broker non-votes.
2) With regard to the election of Rod Dammeyer as elected trustee by the
preferred shareholders of the Trust, 700 shares voted in his favor, 5 shares
withheld.
3) With regard to the election of Wayne W. Whalen as elected trustee by the
common shareholders of the Trust, 5,486,911 shares voted in his favor, 78,264
shares withheld.
4) With regard to the ratification of KPMG Peat Marwick LLP as independent
public accountants for the Trust, 5,484,826 shares voted for the proposal,
25,058 shares voted against, 55,997 shares abstained and 0 shares represented
broker non-votes.
21
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 151,966,220
<INVESTMENTS-AT-VALUE> 167,006,474
<RECEIVABLES> 2,452,755
<ASSETS-OTHER> 1,763
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 169,460,992
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,983,112
<TOTAL-LIABILITIES> 1,983,112
<SENIOR-EQUITY> 60,000,000
<PAID-IN-CAPITAL-COMMON> 91,294,026
<SHARES-COMMON-STOCK> 6,200,987
<SHARES-COMMON-PRIOR> 6,200,987
<ACCUMULATED-NII-CURRENT> 936,837
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 206,763
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15,040,254
<NET-ASSETS> 167,477,880
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9,731,009
<OTHER-INCOME> 0
<EXPENSES-NET> (1,769,810)
<NET-INVESTMENT-INCOME> 7,961,199
<REALIZED-GAINS-CURRENT> 206,763
<APPREC-INCREASE-CURRENT> 4,098,045
<NET-CHANGE-FROM-OPS> 12,266,007
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7,667,739)
<DISTRIBUTIONS-OF-GAINS> (273,504)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,324,764
<ACCUMULATED-NII-PRIOR> 643,377
<ACCUMULATED-GAINS-PRIOR> 273,504
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,068,186
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,769,810
<AVERAGE-NET-ASSETS> 164,342,853
<PER-SHARE-NAV-BEGIN> 16.634
<PER-SHARE-NII> 1.284
<PER-SHARE-GAIN-APPREC> 0.695
<PER-SHARE-DIVIDEND> (1.237)
<PER-SHARE-DISTRIBUTIONS> (0.044)
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<PER-SHARE-NAV-END> 17.332
<EXPENSE-RATIO> 1.70
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
