<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Glossary of Terms................................ 5
Performance Results.............................. 7
Portfolio of Investments......................... 8
Statement of Assets and Liabilities.............. 11
Statement of Operations.......................... 12
Statement of Changes in Net Assets............... 13
Financial Highlights............................. 14
Notes to Financial Statements.................... 15
Dividend Reinvestment Plan....................... 19
</TABLE>
VTN SAR 6/98
<PAGE> 2
LETTER TO SHAREHOLDERS
May 22, 1998
Dear Shareholder,
The Taxpayer Relief Act of 1997,
signed into law by President Clinton
last year, was created to fill the need
for a broad variety of tax-advantaged
investments to promote asset growth. We [PHOTO]
are pleased that you selected our Trust
as a vehicle to provide the potential
for tax-free income within your
investment portfolio. As you are aware,
dividends distributed by the Trust are DENNIS J. MCDONNELL AND DON G. POWELL
generally free from federal income
taxes, and often from state and local
taxes as well. At Van Kampen American Capital, we strive not only for a high
level of current income, but total return performance as well.
ECONOMIC OVERVIEW
After nearly seven years of continuous growth, the economy remained buoyant
with few signs of accelerating inflation. Wholesale prices in the first quarter
plummeted at an annual rate of 4.2 percent, while consumer prices inched up 0.2
percent and employment costs rose just 0.7 percent. However, inflationary
pressures were eased by factors such as lower oil prices, increasing
productivity, and a pending budget surplus. The Asian financial crisis led to a
stronger dollar and a decline in the prices of Asian imports, which in turn has
discouraged price increases on competing U.S. goods.
To date, Asia's slowdown has had a modest impact on U.S. economic growth. In
the first quarter, the U.S. economy grew at a 4.2 percent annual rate, its
fastest pace in the past year. Strong consumer spending and inventory buildup by
manufacturers offset a decrease in exports to Asia. Despite the economy's
strength, the Federal Reserve Board refrained from raising interest rates, given
the lack of domestic inflationary pressure and concerns about Asia's economic
future.
In New York, gains on Wall Street continued to boost economic growth,
especially in New York City. Due to the city's economic resurgence, state
personal income tax receipts soared, and Moody's Investors Service upgraded
their rating of New York City general obligation bonds. The state surplus is
projected to drop to $500 million this year from $1.4 billion in 1997, as a
result of spending increases and planned tax cuts. A proposed $7 billion-plus
bond issue for the state takeover of Long Island Lighting Co. could swell
municipal bond supply.
Continued on page two
1
<PAGE> 3
MARKET OVERVIEW
Against the backdrop of benign inflation and no action by the Fed, U.S. bond
prices rose during the past six months, although they ended the reporting period
below the highs reached in early January.
The yield of the 30-year Treasury bond, which moves in the opposite
direction of its price, fell from 6.15 percent on October 31 to 5.95 percent on
April 30. Bond prices hit a record high as yields reached 5.69 percent in early
January amidst expectations that the Fed would cut interest rates, but the yield
went back to 6.00 percent in early March after the Fed chose not to act. Yields
were volatile for the rest of the reporting period, as foreign investors sold
U.S. Treasury holdings and investors began to fear that the Fed was leaning
toward a rate hike.
Municipal bond yields generally moved in unison with Treasuries but did not
gain nearly as much in price. By the end of the reporting period, the average
yield of AAA-rated, 30-year generic general obligation bonds was 5.14 percent,
two basis points above the yield posted on October 31 of last year. The
underperformance of municipal bonds can be attributed in part to heavy supply
that outpaced demand. Supply increased as state and local governments took
advantage of low interest rates by issuing bonds to refinance outstanding issues
with higher interest rates, as well as to fund new projects. In the first
quarter, long-term municipal issuance totaled $71 billion, up from $40 billion a
year earlier.
More than half of the new issue volume was AAA-rated and insured, which
significantly diminished the amount of uninsured, higher-yielding securities
available in the marketplace. The dominance of insured volume and the high
demand for uninsured paper created an imbalance that compressed the yields
between higher-quality and lower-quality bonds.
[CREDIT QUALITY GRAPH]
Portfolio Composition by Credit Quality
as of April 30, 1998*
<TABLE>
<S> <C>
AAA............ 34.6%
AA............. 22.0%
A.............. 25.7%
BBB............ 17.7%
</TABLE>
*As a Percentage of Long-Term Investments
Based upon the highest credit quality ratings as issued by Standard & Poor's
or Moody's.
Continued on page two
2
<PAGE> 4
TRUST STRATEGY
We used the following strategies to manage the Trust during the period:
We maintained a portfolio that emphasized high-quality bonds but also
included lower-rated securities to provide additional yield. High-quality bonds
generally have performed better than lower-rated securities when interest rates
are falling, which was the case for most of the reporting period.
Overall, we limited acquisitions because current market yields were lower
than the average yields of bonds in the portfolio. When some of the Trust's
long-term bonds were prerefunded by their issuers, we looked for opportunities
to replace them but found few opportunities that would have added value to the
portfolio. We expect there will be opportunities to replace these bonds if
interest rates continue to rise.
Despite this lack of acquisition opportunities, the Trust was able to
perform well, due to the credit upgrades of some holdings. These upgrades
included a $27 million position in New York City general obligation bonds, which
was equivalent to 16 percent of the Trust, and two smaller positions in New York
State Dormitory Authority bonds.
The duration of the Trust, which is a measure of its sensitivity to changing
interest rates, declined due to the number of bonds that were prerefunded. As of
April 30, the duration of the Trust was 6.12 years compared with 7.78 years for
the Lehman Brothers New York Municipal Bond Index. Because of the longer-term
nature of the Trust, the calculation of this index's duration has been adjusted
to eliminate bonds with maturities of five years or less.
TOP FIVE PORTFOLIO SECTORS AS OF APRIL 30, 1998*
General Purpose................... 22.9%
Transportation.................... 16.8%
Public Building.................... 9.6%
Other Care......................... 8.7%
Health Care........................ 7.4%
*As a Percentage of Long-Term Investments
PERFORMANCE SUMMARY
For the six-month period ended April 30, 1998, the Trust generated a total
return of 8.76 percent(1). This reflects a gain in market price per common share
from $15.5625 on October 31, 1997, to $16.4375 on April 30, 1998, plus
reinvestment of all dividends. The Trust had a tax-exempt distribution rate of
5.77 percent(3), based on the closing price of its common shares. Because income
from the Trust is exempt from federal and New York state income taxes, this
distribution rate is equivalent to a yield of 9.68 percent(4) on a taxable
investment (for investors in the combined federal and state income tax bracket
of 40.4 percent). Please refer to the chart on page seven for additional
performance numbers.
As a result of improved earnings, the Board of Trustees approved an increase
in the Trust's monthly dividend from $0.0750 to $0.0790 per common share, first
payable December 31, 1997. The Trust also declared a capital gains distribution
of $0.0246 per
Continued on page four
3
<PAGE> 5
share, first payable December 31, 1997, due to the sale of some assets that had
appreciated in value.
[DIVIDEND HISTORY GRAPH]
Six-month Distribution History
For the Period Ended April 30, 1998
<TABLE>
<CAPTION>
Distribution per Common Share
Capital Gains Dividends
<S> <C> <C>
Nov 1997............... $.0 $.0750
Dec 1997............... $.0246 $.0790
Jan 1998............... $.0 $.0790
Feb 1998............... $.0 $.0790
Mar 1998............... $.0 $.0790
Apr 1998............... $.0 $.0790
</TABLE>
The distribution history represents past performance of the Trust and does not
predict the Trust's future distributions.
ECONOMIC OUTLOOK
We expect the economy to slow from its brisk first-quarter pace, although
the extent of the slowdown depends on the continued effects of Asia's crisis and
on Fed policy. We believe the Fed is biased toward raising rates, given concerns
about the economy's increasing strength. If economic strength ignites
inflationary pressures, then we believe the Fed will raise interest rates later
this year. As a result, the yield of the 30-year Treasury bond could top 6.25
percent.
We will continue to track market developments and their effects on the
Trust. When appropriate, we will make adjustments to the portfolio. As we
mentioned earlier, our goal remains a high level of current income for
investors, plus gains in total return. Thank you for your continued support and
confidence in Van Kampen American Capital and the management of your Trust.
Sincerely,
[SIG]
Don G. Powell
Chairman
Van Kampen American Capital
Investment Advisory Corp.
[SIG]
Dennis J. McDonnell
President
Van Kampen American Capital
Investment Advisory Corp.
Please see footnotes on page seven
4
<PAGE> 6
GLOSSARY OF TERMS
BASIS POINT: A measure used in quoting bond yields. One hundred basis points is
equal to one percent. For example, if a bond's yield changes from 7.00 to 6.65
percent, it is a 35 basis point move.
CALL FEATURE: Allows the issuer to buy back a bond on specific call dates before
maturity. Call dates and prices are set when the bond is issued. To compensate
the bond holder for loss of income and ownership, the call price is usually
higher than the face value of the bond. Bonds are usually called when interest
rates drop so significantly that the issuer can save money by issuing new bonds
at lower rates.
A callable bond is "priced to call" when it is selling at a premium, because it
is assumed that the issuer will redeem the bond at its call date, rather than at
maturity.
COUPON RATE: The stated rate of interest a bond pays until maturity, expressed
as a percentage of its face value.
CREDIT RATING: An evaluation of an issuer's credit history and capability of
repaying obligations. Standard & Poor's and Moody's Investor Services are two
companies that assign bond ratings. Standard & Poor's ratings range from a high
of AAA to a low of D; Moody's ratings range from a high of Aaa to a low of D.
CREDIT SPREAD: The difference in yield between higher-quality issues and
lower-quality issues. Normally, lower-quality issues provide higher yields than
higher-quality issues in order to compensate investors for the additional credit
risk.
DISCOUNT BOND: A bond whose market price is lower than its face value (or "par
value"). Because bonds usually mature at face value, a discount bond has more
potential to appreciate in price than a par bond.
DURATION: A measure of the sensitivity of a bond's price to changes in interest
rates, expressed in years. Each year of duration represents an expected
one-percent change in the price of the bond for every one-percent change in
interest rates. The longer a fund's duration, the greater the effect of interest
rate movements on net asset value. Typically, funds with shorter durations have
performed better in rising rate environments, while funds with longer durations
have performed better when rates decline.
FEDERAL RESERVE BOARD (THE FED): A group that meets eight times a year to
establish monetary policy and monitor the economic pulse of the United States.
GENERAL OBLIGATION BONDS: Bonds backed by the full faith and credit (taxing
authority) of the issuer for timely payment of interest and principal. These
bonds are issued to finance essential government projects, such as highways and
schools.
5
<PAGE> 7
INFLATION: An economic situation in which money supply and business activity
dramatically increase, accompanied by sharply rising prices. Inflation is widely
measured by the Consumer Price Index, an economic indicator that measures the
change in the cost of purchased goods and services.
INSURED BOND: A bond that is insured against default by the municipal bond
insurer. If the issuer defaults, the insurance company will step in and take
over payments of interest and principal. As a result of this protection against
credit risk, most municipal bonds are AAA-rated. Insurance on the bonds does not
relate to mutual fund shares, which will fluctuate in price.
INVESTMENT GRADE BONDS: Securities rated BBB and above by Standard & Poor's or
Baa and above by Moody's Investor Services. Bonds rated below BBB or Baa are
noninvestment grade.
MARKET PRICE: The price of a share of a closed-end fund trading on a stock
exchange. When the price is less than a fund's NAV, the fund is trading at a
discount. When the price is more than the NAV, the fund is trading at a premium.
MUNICIPAL BOND: A debt security issued by a state, municipality, or other
governmental entity to finance capital expenditures such as the construction of
highways or public works.
NET ASSET VALUE (NAV): The value of a fund share, calculated by deducting a
fund's liabilities from its total assets and dividing this amount by the number
of shares outstanding.
PREREFUNDING: A process whereby new bonds are issued to refinance an outstanding
bond issue. This typically occurs when interest rates decline and an issuer
replaces its higher-yielding bonds with current lower-yielding issues.
PREMIUM BOND: A bond whose market price is above its face value (or "par
value"). Because bonds usually mature at face value, a premium bond has less
potential to appreciate in price than a par bond.
YIELD SPREAD: The difference between the yields of distinct bonds, due to
variant credit ratings or maturities. When yield spreads between bonds of
different credit quality are narrow, there is less incentive to own the
lower-quality bond. When yield spreads between bonds of different maturities are
narrow, there is less incentive to own the bond with the longer maturity. In
both cases, the investor is not being compensated for the additional risk.
ZERO COUPON BONDS: A corporate or municipal debt security that trades at a deep
discount to face value and pays no interest. It may be redeemed at maturity for
full face value.
6
<PAGE> 8
PERFORMANCE RESULTS FOR THE PERIOD ENDED APRIL 30, 1998
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE
NEW YORK MUNICIPALS
(NYSE TICKER SYMBOL--VTN)
<TABLE>
<S> <C>
COMMON SHARE TOTAL RETURNS
Six-month total return based on market price(1)........... 8.76%
Six-month total return based on NAV(2).................... 2.44%
DISTRIBUTION RATES
Distribution rate as a % of closing common stock
price(3)................................................ 5.77%
Taxable-equivalent distribution rate as a % of closing
common stock price(4)..................................... 9.68%
SHARE VALUATIONS
Net asset value........................................... $ 17.26
Closing common stock price................................ $16.4375
Six-month high common stock price (02/10/98).............. $17.6250
Six-month low common stock price (11/17/97)............... $15.5000
Preferred share rate(5)................................... 3.875%
</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.
7
<PAGE> 9
PORTFOLIO OF INVESTMENTS
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS 98.9%
NEW YORK 89.4%
$ 3,000 Cohoes, NY Indl Dev Agy Indl Dev Rev Norlite
Corp Proj Ser B (Prerefunded @ 05/01/02)........ 6.75% 05/01/09 $ 3,308,310
1,210 Erie Cnty, NY Wtr Auth Wtr Rev Fourth Resolution
Rfdg (AMBAC Insd)............................... * 12/01/17 298,071
3,870 Grand Cent Dist Mgmt Assn Inc NY Business Impt
Dist Cap Impt (Prerefunded @ 01/01/02).......... 6.500 01/01/22 4,229,717
1,140 Groton, NY Cmnty Hlthcare Cent Inc Hlthcare Fac
Rev Groton Cmnty Ser A (FHA Gtd)................ 7.450 07/15/21 1,321,568
2,295 Metropolitan Tran Auth NY Svcs Contract Commuter
Fac Ser O....................................... 5.750 07/01/07 2,425,379
3,000 Metropolitan Tran Auth NY Svcs Contract Tran Fac
Ser 5 Rfdg...................................... 7.000 07/01/12 3,257,160
1,355 Nassau Cnty, NY Genl Impt Ser Q (FGIC Insd)..... 5.200 08/01/13 1,360,569
1,100 Nassau Cnty, NY Genl Impt Ser Q (FGIC Insd)..... 5.200 08/01/14 1,099,186
2,500 New York City Indl Dev Agy Civic Fac Rev The
Lighthouse Inc ................................. 6.500 07/01/22 2,663,475
2,000 New York City Ser A............................. 7.000 08/01/04 2,241,940
10,000 New York City Ser B............................. 6.600 10/01/16 10,817,800
2,750 New York City Ser D............................. 6.500 02/15/06 3,026,155
160 New York City Ser D............................. 7.500 02/01/16 176,493
75 New York City Ser D............................. 7.500 02/01/17 82,731
1,855 New York City Ser D (Prerefunded @ 02/01/02).... 7.500 02/01/16 2,084,167
925 New York City Ser D (Prerefunded @ 02/01/02).... 7.500 02/01/17 1,039,275
1,000 New York City Ser G............................. 5.000 08/01/15 959,720
2,300 New York City Ser G Rfdg........................ 5.700 08/01/08 2,412,332
1,000 New York City Subser A1 (Embedded Swap)......... 4.820 08/01/12 1,020,640
3,765 New York, NY Cap Apprec Ser I (FSA Insd)........ * 08/01/01 3,279,466
4,135 New York, NY Cap Apprec Ser I (FSA Insd)........ * 08/01/01 3,601,750
1,000 New York St Dorm Auth Rev Court Fac Lease Ser
A............................................... 5.625 05/15/13 1,015,930
1,500 New York St Dorm Auth Rev Court Fac Lease Ser
A............................................... 5.375 05/15/16 1,488,840
2,500 New York St Dorm Auth Rev Grace Manor Hlthcare
Fac............................................. 6.150 07/01/18 2,725,850
4,460 New York St Dorm Auth Rev Mtg KMH Homes Inc (FHA
Gtd)............................................ 6.950 08/01/31 4,807,568
1,835 New York St Dorm Auth Rev NY Pub Lib Ser A (MBIA
Insd)........................................... * 07/01/02 1,520,518
1,910 New York St Dorm Auth Rev NY Pub Lib Ser A (MBIA
Insd)........................................... * 07/01/03 1,509,072
1,000 New York St Dorm Auth Rev Nyack Hosp Rfdg....... 6.250 07/01/13 1,065,350
5,010 New York St Dorm Auth Rev St Univ Edl Fac Ser B
Rfdg............................................ 5.250 05/15/19 5,009,850
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 4,341,818
1,500 New York St Energy Resh & Dev Auth Gas Fac Rev
Brooklyn Union Gas Ser B (MBIA Insd)............ 6.750 02/01/24 1,626,870
</TABLE>
See Notes to Financial Statements
8
<PAGE> 10
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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 $ 4,059,960
800 New York St Environmental Fac Corp Pollutn Ctl
Rev St Wtr Rev.................................. 6.600 06/15/09 898,152
1,200 New York St Environmental Fac Corp Pollutn Ctl
Rev St Wtr Rev (Prerefunded @ 06/15/04)......... 6.600 06/15/09 1,350,324
3,500 New York St Hsg Fin Agy Rev Multi-Family Hsg
Secured Mtg Pgm Ser A........................... 7.050 08/15/24 3,744,685
1,910 New York St Hsg Fin Agy Rev Multi-Family Hsg
Secured Mtg Pgm Ser C........................... 6.950 08/15/24 2,017,571
1,970 New York St Loc Govt Assistance Corp Ser B
(Prerefunded @ 04/01/01)........................ 7.250 04/01/07 2,168,556
4,675 New York St Med Care Fac Fin Agy Rev Hosp &
Nursing Home Methodist Ser A (FHA Gtd).......... 6.700 08/15/23 5,055,639
935 New York St Med Care Fac Fin Agy Rev Long Term
Hlthcare Ser A (FSA Insd)....................... 6.800 11/01/14 1,020,337
300 New York St Med Care Fac Fin Agy Rev Mental Hlth
Svcs Fac Ser C.................................. 7.300 02/15/21 330,684
570 New York St Med Care Fac Fin Agy Rev Mental Hlth
Svcs Fac Ser C (Prerefunded @ 08/15/01)......... 7.300 02/15/21 632,848
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 2,050,615
4,500 New York St Med Care Fac Fin Agy Rev Shorefront
Saint Lukes & Wtrfront Nursing Homes............ 6.950 02/15/32 4,899,960
4,000 New York St Mtg Agy Rev Homeowner Mtg Ser 28.... 7.050 10/01/23 4,271,600
2,000 New York St Mtg Agy Rev Homeowner Mtg Ser 42
(FHA Gtd)....................................... 6.400 10/01/20 2,075,820
1,770 New York St Mtg Agy Rev Homeowner Mtg Ser 52.... 6.100 04/01/26 1,873,226
1,000 New York St Muni Bond Bk Agy Spl Pgm Rev Buffalo
Ser A........................................... 6.875 03/15/06 1,080,590
2,000 New York St Thruway Auth Svc Contract Rev Loc
Hwy & Brdg...................................... 5.750 04/01/08 2,114,500
2,500 New York St Urban Dev Corp Rev Correctional Cap
Fac Ser A Rfdg.................................. 5.500 01/01/14 2,552,575
1,625 New York St Urban Dev Corp Rev Proj Cent for
Indl Innovation Rfdg............................ 5.500 01/01/13 1,664,390
20,000 New York St Urban Dev Corp Rev St Office South
Mall Ser A...................................... * 01/01/11 9,603,400
1,750 Niagara Falls, NY Brdg Comm Toll Rev
(Prerefunded @ 10/01/02) (FGIC Insd)............ 6.125 10/01/19 1,906,223
4,500 Port Auth NY & NJ Cons 97th Ser (FGIC Insd)..... 6.650 01/15/23 4,891,680
2,000 Port Auth NY & NJ Delta Airls Inc Proj Ser 1R... 6.950 06/01/08 2,184,040
4,000 Port Auth NY & NJ Spl Oblig Rev Spl Proj JFK
Intl Arpt Terminal 6 (MBIA Insd)................ 5.750 12/01/25 4,118,560
2,405 Rensselaer, NY Hsg Auth Multi-Family Rev Mtg
Renwyck Pl Ser A................................ 7.650 01/01/11 2,611,782
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
PORTFOLIO OF INVESTMENTS (CONTINUED)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NEW YORK (CONTINUED)
$ 2,210 Rensselaer, NY Hsg Auth Multi-Family Rev Mtg Van
Rensselaer Heights Ser A........................ 7.750% 01/01/11 $ 2,408,878
1,825 Syracuse, NY Ctfs Partn Syracuse Hancock Intl
Arpt............................................ 6.625 01/01/12 1,944,080
------------
149,348,245
------------
GUAM 3.9%
2,000 Guam Arpt Auth Rev Ser B........................ 6.400 10/01/05 2,161,000
3,000 Guam Govt Ltd Oblig Hwy Ser A (FSA Insd)........ 6.250 05/01/07 3,249,420
1,000 Guam Pwr Auth Rev Ser A......................... 6.625 10/01/14 1,102,810
------------
6,513,230
------------
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 5,725,950
2,250 Puerto Rico Comwlth Pub Impt (Prerefunded @
07/01/02)....................................... 6.800 07/01/21 2,492,617
1,000 Puerto Rico Pub Bldgs Auth Rev Gtd Ser K
(Prerefunded @ 07/01/02)........................ 6.875 07/01/21 1,110,420
------------
9,328,987
------------
TOTAL INVESTMENTS 98.9%
(Cost $150,505,789)......................................................... 165,190,462
OTHER ASSETS IN EXCESS OF LIABILITIES 1.1%................................... 1,817,535
------------
NET ASSETS 100.0%............................................................ $167,007,997
============
</TABLE>
*Zero coupon bond
See Notes to Financial Statements
10
<PAGE> 12
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $150,505,789)....................... $165,190,462
Receivables:
Interest.................................................. 2,369,559
Investments Sold.......................................... 65,000
Other....................................................... 3,396
------------
Total Assets.......................................... 167,628,417
------------
LIABILITIES:
Payables:
Custodian Bank............................................ 239,921
Income Distributions -- Common and Preferred Shares......... 100,406
Investment Advisory Fee................................... 89,877
Administrative Fee........................................ 27,654
Affiliates................................................ 9,508
Accrued Expenses............................................ 69,171
Trustees' Deferred Compensation and Retirement Plans........ 83,883
------------
Total Liabilities..................................... 620,420
------------
NET ASSETS.................................................. $167,007,997
============
NET ASSETS CONSIST OF:
Preferred Shares ($.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................................. 14,684,673
Accumulated Undistributed Net Investment Income............. 1,004,208
Accumulated Net Realized Gain............................... 25,090
------------
Net Assets Applicable to Common Shares................ 107,007,997
------------
NET ASSETS.................................................. $167,007,997
============
NET ASSET VALUE PER COMMON SHARE ($107,007,997 divided
by 6,200,987 shares outstanding).......................... $ 17.26
============
</TABLE>
See Notes to Financial Statements
11
<PAGE> 13
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $ 4,876,308
-----------
EXPENSES:
Investment Advisory Fee..................................... 543,518
Administrative Fee.......................................... 167,236
Preferred Share Maintenance................................. 80,545
Trustees' Fees and Expenses................................. 13,197
Custody..................................................... 5,546
Legal....................................................... 5,126
Other....................................................... 74,141
-----------
Total Expenses.......................................... 889,309
-----------
NET INVESTMENT INCOME....................................... $ 3,986,999
===========
REALIZED AND UNREALIZED GAIN/LOSS ON INVESTMENTS:
Net Realized Gain........................................... $ 25,090
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 15,040,254
End of the Period......................................... 14,684,673
-----------
Net Unrealized Depreciation During the Period............... (355,581)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $ (330,491)
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 3,656,508
===========
</TABLE>
See Notes to Financial Statements
12
<PAGE> 14
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended April 30, 1998 and
the Year Ended October 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six-Months
Ended Year Ended
April 30, 1998 October 31, 1997
- --------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................... $ 3,986,999 $ 7,961,199
Net Realized Gain....................................... 25,090 206,763
Net Unrealized Appreciation/Depreciation During the
Period................................................ (355,581) 4,098,045
------------ ------------
Change in Net Assets from Operations.................... 3,656,508 12,266,007
------------ ------------
Distributions from Net Investment Income:
Common Shares......................................... (2,914,137) (5,580,574)
Preferred Shares...................................... (1,005,491) (2,087,165)
------------ ------------
(3,919,628) (7,667,739)
------------ ------------
Distributions from Net Realized Gain:
Common Shares......................................... (152,715) (200,265)
Preferred Shares...................................... (54,048) (73,239)
------------ ------------
(206,763) (273,504)
------------ ------------
Total Distributions..................................... (4,126,391) (7,941,243)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES..... (469,883) 4,324,764
NET ASSETS:
Beginning of the Period................................. 167,477,880 163,153,116
------------ ------------
End of the Period (Including accumulated undistributed
net investment income of $1,004,208 and $936,837,
respectively)......................................... $167,007,997 $167,477,880
============ ============
</TABLE>
See Notes to Financial Statements
13
<PAGE> 15
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one common share of
the Trust outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 27, 1992
Six Months (Commencement
Ended Year Ended October 31, of Investment
April 30, ------------------------------------------------ Operations) to
1998 1997 1996 1995 1994 1993 October 31, 1992
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Period
(a).......................... $17.332 $16.634 $16.487 $14.801 $17.621 $14.812 $14.742
------- ------- ------- ------- ------- ------- -------
Net Investment Income........ .643 1.284 1.302 1.303 1.337 1.352 .607
Net Realized and Unrealized
Gain/Loss.................. (.052) .695 .097 1.783 (2.869) 2.766 .027
------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations................... .591 1.979 1.399 3.086 (1.532) 4.118 .634
------- ------- ------- ------- ------- ------- -------
Less:
Distributions from Net
Investment Income:
Paid to Common
Shareholders............. .470 .900 .900 1.000 1.020 1.020 .425
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders... .162 .337 .352 .384 .268 .289 .139
Distributions from Net
Realized Gain
Paid to Common
Shareholders............. .025 .032 -0- .013 -0- -0- -0-
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders... .009 .012 -0- .003 -0- -0- -0-
------- ------- ------- ------- ------- ------- -------
Total Distributions........... .666 1.281 1.252 1.400 1.288 1.309 .564
------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of the
Period....................... $17.257 $17.332 $16.634 $16.487 $14.801 $17.621 $14.812
======= ======= ======= ======= ======= ======= =======
Market Price Per Share at End
of the Period................ $16.4375 $15.5625 $14.625 $14.375 $13.125 $17.125 $15.000
Total Investment Return at
Market Price (b)............. 8.76%* 13.08% 8.09% 17.49% (18.07%) 21.52% 2.79%*
Total Return at Net Asset
Value (c).................... 2.44%* 10.12% 6.50% 18.88% (10.55%) 26.50% 1.48%*
Net Assets at End of the
Period (In millions)......... $167.0 $167.5 $163.2 $162.2 $151.8 $169.3 $151.8
Ratio of Expenses to Average
Net Assets Applicable to
Common Shares (d)(2)......... 1.65% 1.70% 1.73% 1.78% 1.70% 1.62% 1.49%(1)
Ratio of Net Investment Income
to Average Net Assets
Applicable to Common Shares
(e).......................... 5.53% 5.63% 5.78% 5.89% 6.55% 6.45% 5.28%(1)
Portfolio Turnover............ 1%* 8% 20% 54% 38% 18% 24%*
* Non-Annualized
(1) 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 including preferred shares and net investment income to average net assets applicable to common
shares would have been 1.58%, 1.10% and 5.19%, respectively.
(2) Ratio of Expenses to
Average Net Assets
Including Preferred
Shares................... 1.06% 1.08% 1.09% 1.10% 1.07% 1.02% 1.03%(1)
</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.
See Notes to Financial Statements
14
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
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 April 30, 1998, 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.
15
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
D. FEDERAL INCOME TAXES--It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
At April 30, 1998, for federal income tax purposes, cost of long-term
investments is $150,505,789; the aggregate gross unrealized appreciation is
$14,698,975 and the aggregate unrealized depreciation is $14,302, resulting in
net unrealized appreciation on investments of $14,684,673.
E. DISTRIBUTION OF INCOME AND GAINS--The Trust declares and pays monthly
dividends from net investment income to common shareholders. Net realized gains,
if any, are distributed annually on a pro rata basis to common and preferred
shareholders. Distributions from net realized gains for book purposes may
include short-term capital gains, which are included as ordinary income for tax
purposes.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, Van Kampen
American Capital Investment Advisory Corp. (the "Adviser") will provide
investment advice and facilities to the Trust for an annual fee payable monthly
of .65% of the average net assets of the Trust. In addition, the Trust will pay
a monthly administrative fee to Van Kampen American Capital Distributors, Inc.
or its affiliates (collectively "VKAC"), the Trust's Administrator, at an annual
rate of .20% of the average 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 six months ended April 30, 1998, the Trust recognized expenses of
approximately $1,400 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Trust, of which a trustee of
the Trust is an affiliated person.
For the six months ended April 30, 1998, the Trust recognized expenses of
approximately $34,500 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.
16
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
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 per trustee under the plan is $2,500.
3. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sale of investments,
excluding short-term investments, were $973,850 and $2,994,160, 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. 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. EMBEDDED CAPS--These securities include 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. EMBEDDED SWAPS-- These securities include 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.
17
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
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 April 30, 1998, was 3.875%. During the
six months ended April 30, 1998, the rates ranged from 3.048% to 4.250%.
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.
18
<PAGE> 20
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
19
<PAGE> 21
FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL
EQUITY FUNDS
Domestic
MS Aggressive Equity
VKAC Aggressive Growth
MS American Value
VKAC Comstock
VKAC Emerging Growth
VKAC Enterprise
VKAC Equity Income
VKAC Growth
VKAC Growth and Income
VKAC Harbor
VKAC Pace
VKAC Real Estate Securities
MS U.S. Real Estate
VKAC Utility
MS Value
International/Global
MS Asian Growth
MS Emerging Markets
MS Global Equity
MS Global Equity Allocation
VKAC Global Managed Assets
MS International Magnum
MS Latin American
FIXED-INCOME FUNDS
Income
VKAC Corporate Bond
MS Global Fixed Income
VKAC Global Government Securities
VKAC Government Securities
VKAC High Income Corporate Bond
MS High Yield
VKAC High Yield
VKAC Short-Term Global Income
VKAC Strategic Income
VKAC U.S. Government
VKAC U.S. Government Trust for Income
MS Worldwide High Income
Tax Exempt Income
VKAC California Insured Tax Free
VKAC Florida Insured Tax Free Income
VKAC High Yield Municipal
VKAC Insured Tax Free Income
VKAC Intermediate Term Municipal Income
VKAC Municipal Income
VKAC New York Tax Free Income
VKAC Pennsylvania Tax Free Income
VKAC Tax Free High Income
Capital Preservation
VKAC Limited Maturity Government
VKAC Prime Rate Income Trust
VKAC Reserve
VKAC Senior Floating Rate
VKAC Tax Free Money
To find out more about any of these funds, ask your financial adviser for a
prospectus, which contains more complete information, including sales
charges, risks, and expenses. Please read it carefully before you invest or
send money.
To view a current Van Kampen American Capital or Morgan Stanley fund
prospectus or to receive additional fund information, choose from one of the
following:
- visit our web site at WWW.VKAC.COM -- to view prospectuses, select
Investors' Place, then Download a Prospectus
- call us at 1-800-341-2911 weekdays from 7:00 a.m. to 7:00 p.m. Central time
(Telecommunications Device for the Deaf users, call 1-800-421-2833)
- e-mail us by visiting WWW.VKAC.COM and selecting Investors' Place
20
<PAGE> 22
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
STEVE MULLER
THEODORE A. MYERS
DON G. POWELL*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*
OFFICERS
DENNIS J. MCDONNELL*
President
RONALD A. NYBERG*
Vice President and Secretary
EDWARD C. WOOD, III*
Vice President and Chief Financial Officer
CURTIS W. MORELL*
Vice President and Chief Accounting Officer
JOHN L. SULLIVAN*
Treasurer
TANYA M. LODEN*
Controller
PETER W. HEGEL*
Vice President
INVESTMENT ADVISER
VAN KAMPEN AMERICAN CAPITAL
INVESTMENT ADVISORY CORP.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
CUSTODIAN AND
TRANSFER AGENT
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS
KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, Illinois 60601
* "Interested" persons of the Trust, as defined in
the Investment Company Act of 1940.
(C) Van Kampen American Capital Distributors, Inc., 1998
All rights reserved.
(SM) denotes a service mark of
Van Kampen American Capital Distributors, Inc.
21
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> TR. FOR INV. GRADE NEW YORK MUNICIPAL
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 150,505,789
<INVESTMENTS-AT-VALUE> 165,190,462
<RECEIVABLES> 2,434,559
<ASSETS-OTHER> 3,396
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 167,628,417
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 620,420
<TOTAL-LIABILITIES> 620,420
<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> 1,004,208
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 25,090
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14,684,673
<NET-ASSETS> 167,007,997
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,876,308
<OTHER-INCOME> 0
<EXPENSES-NET> (889,309)
<NET-INVESTMENT-INCOME> 3,986,999
<REALIZED-GAINS-CURRENT> 25,090
<APPREC-INCREASE-CURRENT> (355,581)
<NET-CHANGE-FROM-OPS> 3,656,508
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,919,628)
<DISTRIBUTIONS-OF-GAINS> (206,763)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (469,883)
<ACCUMULATED-NII-PRIOR> 936,837
<ACCUMULATED-GAINS-PRIOR> 206,763
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 543,518
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 889,309
<AVERAGE-NET-ASSETS> 168,642,290
<PER-SHARE-NAV-BEGIN> 17.332
<PER-SHARE-NII> 0.643
<PER-SHARE-GAIN-APPREC> (0.052)
<PER-SHARE-DIVIDEND> (0.632)
<PER-SHARE-DISTRIBUTIONS> (0.034)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 17.257
<EXPENSE-RATIO> 1.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
