<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....................... 18
</TABLE>
VTF SAR 6/98
<PAGE> 2
LETTER TO SHAREHOLDERS
May 22, 1998
Dear Shareholder,
The Taxpayer Relief Act of 1997,
signed into law by President Clinton
last year, was created to fill the need
for a broad variety of tax-advantaged
investments to promote asset growth. We
are pleased that you selected our Trust [PHOTO]
as a vehicle to provide the potential
for tax-free income within your
investment portfolio. As you are aware,
dividends distributed by the Trust are
generally free from federal income DENNIS J. MCDONNELL AND DON G. POWELL
taxes, and often from state and local
taxes as well. At Van Kampen American Capital, we strive not only for a high
level of current income, but total return performance as well.
ECONOMIC OVERVIEW
After nearly seven years of continuous growth, the economy remained buoyant
with few signs of accelerating inflation. Wholesale prices in the first quarter
plummeted at an annual rate of 4.2 percent, while consumer prices inched up 0.2
percent and employment costs rose just 0.7 percent. However, inflationary
pressures were eased by factors such as lower oil prices, increasing
productivity, and a pending budget surplus. The Asian financial crisis led to a
stronger dollar and a decline in the prices of Asian imports, which in turn has
discouraged price increases on competing U.S. goods.
To date, Asia's slowdown has had a modest impact on U.S. economic growth. In
the first quarter, the U.S. economy grew at a 4.2 percent annual rate, its
fastest pace in the past year. Strong consumer spending and inventory buildup by
manufacturers offset a decrease in exports to Asia. Despite the economy's
strength, the Federal Reserve Board refrained from raising interest rates, given
the lack of domestic inflationary pressure and concerns about Asia's economic
future.
In Florida, the economy benefited from booming tourism, as well as growth in
other sectors. State revenues rose sharply, but an increase in spending was
expected to reduce fund balances. Looking ahead, the state faces economic
stresses from a growing population of young people needing education, health,
and family services, and a large population of seniors living on fixed incomes.
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.
Continued on page two
1
<PAGE> 3
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.
Protfolio Composition by Credit Quality
as of April 30, 1998*
<TABLE>
<S> <C>
AAA................. 80.6%
AA.................. 13.0%
A................... 2.0%
BBB................. 3.1%
Non-Rated........... 1.3%
</TABLE>
TRUST STRATEGY
We used the following strategies to manage the Trust during the period:
We maintained a portfolio consisting primarily of high-quality bonds with a
heavy emphasis on AAA-rated securities. Under current market conditions, we
believe the yield spread between higher-rated and lower-rated securities does
not adequately compensate the investor for the additional credit risk of the
lower-rated securities. Also, high-quality bonds generally have performed better
than lower-quality holdings when interest rates are falling, which was the case
for most of the reporting period.
Continued on page three
2
<PAGE> 4
Overall, the number of new acquisitions were limited because current market
yields were below the average yield of bonds in the Trust. However, in an effort
to reduce the Trust's reinvestment exposure due to prerefunded securities and
other holdings priced to call dates in the next few years, we sold several of
these positions at a premium to purchase long-term discount securities and
extended the call protection of the Trust. We had little trouble finding
replacement bonds because there was a surplus of new securities from which to
choose. The yields of these bonds were generally lower than the yields of the
bonds they replaced, due to lower current interest rates.
In making purchases, we emphasized long-term discount bonds. In a falling
interest rate environment, these bonds have the potential to appreciate in value
faster than premium bonds as they move closer to maturity. In addition, they
have a longer duration, so they are more sensitive to changing interest rates.
Discount bonds helped offset the declining duration of the portfolio that
occurred as bonds were repriced to their call date rather than to maturity. As
of April 30, the duration of the Trust was 5.87 years, compared with 7.72 years
for the Lehman Brothers Florida 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.
The bulk of our purchases consisted of 40-year highway bonds from Puerto
Rico rated A, and zero-coupon general obligation bonds from Dade County rated
AAA due to bond insurance.
TOP FIVE PORTFOLIO SECTORS AS OF APRIL 30, 1998*
Public Education........................ 21.4%
Health Care............................. 19.3%
General Purpose......................... 13.8%
Retail Electric/Gas/Telephone........... 11.6%
Water & Sewer........................... 8.5%
*As a Percentage of Long-Term Investments
PERFORMANCE SUMMARY
For the six-month period ended April 30, 1998, the Trust generated a total
return of 0.35 percent(1). This reflects a decrease in market price per common
share from $17.1875 on October 31, 1997, to $16.7500 on April 30, 1998, plus
reinvestment of all dividends. The Trust had a tax-exempt distribution rate of
5.91 percent(3), based on the closing price of its common shares. Because income
from the Trust is exempt from federal income taxes, this distribution rate is
equivalent to a yield of 9.23 percent(4) on a taxable investment for investors
in the 36 percent federal income tax bracket. Please refer to the chart on page
seven for additional performance numbers.
Continued on page four
3
<PAGE> 5
Six-month Distribution History
For the Period Ended April 30, 1998
<TABLE>
<CAPTION>
Distribution per Share
<S> <C>
Nov 1997............................ $.0825
Dec 1997............................ $.1050
Jan 1998............................ $.0825
Feb 1998............................ $.0825
Mar 1998............................ $.0825
Apr 1998............................ $.0825
</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
FLORIDA MUNICIPALS
(NYSE TICKER SYMBOL--VTF)
COMMON SHARE TOTAL RETURNS
<TABLE>
<S> <C>
Six-month total return based on market price(1)........... .35%
Six-month total return based on NAV(2).................... 1.61%
DISTRIBUTION RATES
Distribution rate as a % of closing common stock
price(3).................................................. 5.91%
Taxable-equivalent distribution rate as a % of closing
common stock price(4)..................................... 9.23%
SHARE VALUATIONS
Net asset value........................................... $ 17.48
Closing common stock price................................ $16.750
Six-month high common stock price (02/04/98).............. $18.125
Six-month low common stock price (04/30/98)............... $16.750
Preferred share rate(5)................................... 3.570%
</TABLE>
(1)Total return based on market price assumes an investment at the market price
at the beginning of the period indicated, reinvestment of all distributions for
the period in accordance with the Trust's dividend reinvestment plan, and sale
of all shares at the closing common stock price at the end of the period
indicated.
(2)Total return based on net asset value (NAV) assumes an investment at the
beginning of the period indicated, reinvestment of all distributions for the
period, and sale of all shares at the end of the period, all at NAV.
(3)Distribution rate represents the monthly annualized distributions of the
Trust at the end of the period and not the earnings of the Trust.
(4)The taxable-equivalent distribution rate is calculated assuming a 36% federal
income tax bracket.
(5)See "Notes to Financial Statements" footnote #5, for more information
concerning Preferred Share reset periods.
A portion of the interest income may be taxable for those investors subject to
the federal alternative minimum tax (AMT).
Past performance does not guarantee future results. Investment return, stock
price and net asset value will fluctuate with market conditions. Trust shares,
when sold, may be worth more or less than their original cost.
7
<PAGE> 9
PORTFOLIO OF INVESTMENTS
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- -------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS 99.1%
FLORIDA 95.2%
$1,750 Alachua Cnty, FL Hlth Fac Auth Hlth Fac Rev
Santa Fe Hlthcare Fac (Prerefunded @
11/15/00)....................................... 7.600% 11/15/13 $ 1,927,170
1,000 Alachua Cnty, FL Hlth Fac Auth Hlth Fac Rev
Shands Hosp at the Univ of FL (MBIA Insd)....... 6.000 12/01/11 1,056,400
1,000 Alachua Cnty, FL Hlth Fac Auth Hlth Fac Rev
Shands Hosp at the Univ of FL (MBIA Insd)....... 5.750 12/01/15 1,029,110
1,000 Bay Cnty, FL Sch Brd Ctfs Partn (Prerefunded @
07/01/04) (AMBAC Insd).......................... 6.750 07/01/12 1,140,690
3,000 Brevard Cnty, FL Hlth Fac Auth Wuesthoff Mem
Hosp Ser B Rfdg (Prerefunded @ 04/01/02) (MBIA
Insd)........................................... 7.200 04/01/13 3,357,330
1,295 Cape Coral, FL Spl Oblig Rev Wastewtr Impt (FSA
Insd)........................................... 6.375 06/01/12 1,362,988
1,400 Collier Cnty, FL Cap Impt Rev Rfdg (FGIC
Insd)........................................... 5.750 10/01/13 1,474,256
1,815 Dade Cnty, FL Hsg Fin Auth Single Family Mtg Rev
Ser D Rfdg (FSA Insd)........................... 6.950 12/15/12 1,926,405
2,140 Dade Cnty, FL Sch Brd Ctfs Partn Ser A (MBIA
Insd)........................................... 5.750 05/01/09 2,275,997
5,325 Dade Cnty, FL Spl Oblig Cap Apprec Bond Ser B
Rfdg (Prerefunded @ 10/01/08) (AMBAC Insd)...... * 10/01/27 1,005,626
2,000 Duval Cnty, FL Sch Dist Rfdg (AMBAC Insd)....... 6.300 08/01/08 2,132,320
1,000 Escambia Cnty, FL Pollutn Ctl Rev Champion Intl
Corp Proj....................................... 6.900 08/01/22 1,093,490
1,900 Escambia Cnty, FL Sch Brd Ctfs Partn (FSA
Insd)........................................... 6.375 02/01/12 2,010,162
3,100 Escambia Cnty, FL Sch Brd Ctfs Partn
(Prerefunded @ 02/01/02) (FSA Insd)............. 6.375 02/01/12 3,324,719
1,250 Florida Agriculture & Mechanical Univ Rev
Student Apt Fac (MBIA Insd)..................... 6.500 07/01/23 1,348,425
775 Florida Hsg Fin Agy Crossings Indian Run Apts V
(AMBAC Insd).................................... 6.100 12/01/26 816,346
3,000 Florida Hsg Fin Agy Homeowner Mtg Ser 3......... 6.350 07/01/28 3,178,620
4,000 Florida St Brd Edl Cap Outlay Pub Edl Ser A Rfdg
(Prerefunded @ 06/01/00)........................ * 06/01/12 1,603,600
5,000 Florida St Brd Edl Cap Outlay Pub Edl Ser C
(Prerefunded @ 06/01/02)........................ 6.625 06/01/22 5,475,500
250 Florida St Brd Regt Univ Sys Impt Rev (MBIA
Insd)........................................... 5.625 07/01/19 256,700
250 Florida St Dept Trans Alligator Alley Rev (FGIC
Insd)........................................... 5.125 07/01/22 244,390
1,500 Florida St Div Bond Fin Dept Genl Svcs Rev Dept
Natural Res Preservation 2000 Ser A (Prerefunded
@ 07/01/02) (MBIA Insd)......................... 6.250 07/01/13 1,623,315
2,775 Florida St Muni Pwr Agy Rev All Requirements Pwr
Supply Proj (AMBAC Insd)........................ 5.100 10/01/25 2,702,933
</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
- -------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
FLORIDA (CONTINUED)
$2,500 Florida St Muni Pwr Agy Rev All Requirements Pwr
Supply Proj (Prerefunded @ 10/01/02) (AMBAC
Insd)........................................... 6.250% 10/01/12 $ 2,735,650
4,750 Florida St Muni Pwr Agy Rev Stanton Il Proj
(Prerefunded @ 10/01/02) (AMBAC Insd)........... 6.000 10/01/27 5,150,377
500 Greater Orlando Aviation Auth Orlando FL Arpt
Facs Rev (FGIC Insd)............................ 5.250 10/01/23 486,975
1,350 Hillsborough Cnty, FL Edl Fac Univ Tampa Proj
Rfdg............................................ 5.750 04/01/18 1,358,289
3,000 Hillsborough Cnty, FL Hosp Auth Hosp Rev Tampa
Genl Hosp Proj Rfdg (FSA Insd).................. 6.375 10/01/13 3,240,270
1,500 Hillsborough Cnty, FL Indl Dev Auth Pollutn Ctl
Rev Tampa Elec Co Proj Ser 92 Rfdg.............. 8.000 05/01/22 1,724,415
1,000 Jacksonville, FL Hosp Rev Univ Med Cent Inc Proj
(Connie Lee Insd)............................... 6.500 02/01/11 1,077,980
2,250 Jacksonville, FL Hosp Rev Univ Med Cent Inc Proj
(Connie Lee Insd)............................... 6.600 02/01/21 2,422,597
2,000 Jacksonville, FL Wtr & Swr Dev Rev Jacksonville
Suburban Util................................... 6.750 06/01/22 2,160,800
2,500 Jupiter, FL Wtr Rev Ser A Rfdg (AMBAC Insd)..... 6.250 10/01/18 2,677,600
9,970 Lakeland, FL Elec & Wtr Rev..................... * 10/01/13 4,517,806
2,230 Lakeland, FL Elec & Wtr Rev..................... 5.750 10/01/19 2,363,689
1,000 Martin Cnty, FL Indl Dev Auth Indl Dev Rev
Indiantown Cogeneration Proj A Rfdg............. 7.875 12/15/25 1,167,180
6,500 Miami Dade Cnty, FL Spl Oblig Ser B (MBIA
Insd)........................................... * 10/01/32 978,315
650 Miami Dade Cnty, FL Spl Oblig Ser B (MBIA
Insd)........................................... 5.000 10/01/37 614,790
2,500 North Broward, FL Hosp Dist Hosp Rev
(Prerefunded @ 01/01/02) (MBIA Insd)............ 6.500 01/01/12 2,727,900
2,000 Ocala, FL Util Sys Rev Subser A Rfdg (AMBAC
Insd)........................................... 6.250 10/01/15 2,142,080
1,000 Orange Cnty, FL Cap Impt Rev Rfdg (AMBAC
Insd)........................................... * 10/01/12 483,760
1,000 Orange Cnty, FL Cap Impt Rev Rfdg (AMBAC
Insd)........................................... * 10/01/13 456,550
1,940 Orange Cnty, FL Tourist Dev Tax Rev Ser B
(Prerefunded @ 10/01/02) (AMBAC Insd)........... 6.500 10/01/19 2,142,187
1,240 Orlando & Orange Cnty Expwy Auth FL Expwy Rev Jr
Lien (Escrowed to Maturity) (FGIC Insd)......... 6.000 07/01/21 1,288,707
2,000 Osceola Cnty, FL Sch Brd Ctfs Partn Ser A
(Prerefunded @ 06/01/02) (AMBAC Insd)........... 6.250 06/01/07 2,179,200
2,535 Oviedo, FL Pub Impt Rev Rfdg (MBIA Insd)........ 6.500 10/01/18 2,763,809
1,000 Palm Beach Cnty, FL Sch Brd Ctfs Partn Ser A
(Prerefunded @ 08/01/04) (AMBAC Insd)........... 6.000 08/01/06 1,093,890
2,750 Palm Beach Cnty, FL Sch Brd Ctfs Partn Ser A
(Prerefunded @ 08/01/04) (AMBAC Insd)........... 6.375 08/01/15 3,063,995
</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>
FLORIDA (CONTINUED)
$1,000 Pasco Cnty, FL Sch Brd Ctfs Partn Ser A
(Prerefunded @ 08/01/02) (FSA Insd)............. 6.500% 08/01/12 $ 1,084,710
1,000 Pembroke Pines, FL Cons Util Sys Rev (FGIC
Insd)........................................... 6.250 09/01/11 1,069,850
2,390 Polk Cnty, FL Cap Impt Rev Rfdg (MBIA Insd)..... 6.250 12/01/11 2,586,960
1,100 Saint Cloud, FL Util Rev Rfdg (MBIA Insd)....... 6.375 08/01/15 1,179,662
1,000 Saint Lucie Cnty, FL Sales Tax Rev (Prerefunded
@ 10/01/02) (FGIC Insd)......................... 6.375 10/01/12 1,099,240
2,000 Saint Lucie Cnty, FL Solid Waste Disp Rev FL Pwr
& Lt Co Proj.................................... 6.700 05/01/27 2,165,020
3,000 Saint Petersburg, FL Hlth Fac Auth Rev Allegany
Hlth Sys Ser A (Prerefunded @ 12/01/01) (MBIA
Insd)........................................... 7.000 12/01/15 3,322,650
1,000 Santa Rosa Bay Brdg Auth FL Rev................. 6.250 07/01/28 1,073,860
------------
106,967,255
------------
PUERTO RICO 3.9%
3,000 Puerto Rico Comwlth Hwy & Tran Auth Hwy Rev Ser
Y Rfdg (Embedded Cap) (FSA Insd) (a)............ 5.730 07/01/21 3,435,570
1,000 Puerto Rico Comwlth Hwy & Tran Auth Tran Rev Ser
A............................................... 4.750 07/01/38 905,790
------------
4,341,360
------------
TOTAL INVESTMENTS 99.1%
(Cost $100,710,185)................................................. 111,308,615
OTHER ASSETS IN EXCESS OF LIABILITIES 0.9%.................................. 1,039,513
------------
NET ASSETS 100.0%........................................................... $112,348,128
============
</TABLE>
*Zero coupon bond
(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. The price of these
securities may be more volatile than the price of a comparable fixed rate
security. The Trust invests in these instruments as a hedge against a rise
in the short-term interest rates which it pays on its preferred shares.
These derivative instruments are marked to market each day with the change
in value reflected in unrealized appreciation/depreciation. Upon
disposition, a realized gain or loss is recognized accordingly.
See Notes to Financial Statements
10
<PAGE> 12
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Total Investments (Cost $100,710,185)....................... $111,308,615
Interest Receivable......................................... 1,580,257
Other....................................................... 2,651
------------
Total Assets.......................................... 112,891,523
------------
LIABILITIES:
Payables:
Custodian Bank............................................ 157,010
Income Distributions -- Common and Preferred Shares....... 105,988
Investment Advisory Fee................................... 60,393
Administrative Fee........................................ 18,582
Affiliates................................................ 8,503
Accrued Expenses............................................ 109,036
Trustees' Deferred Compensation and Retirement Plans........ 83,883
------------
Total Liabilities..................................... 543,395
------------
NET ASSETS.................................................. $112,348,128
============
NET ASSETS CONSIST OF:
Preferred Shares ($.01 par value, authorized 100,000,000
shares, 800 issued
with liquidation preference of $50,000 per share)......... $ 40,000,000
------------
Common Shares ($.01 par value with an unlimited number of
shares authorized,
4,140,058 shares issued and outstanding).................. 41,401
Paid in Surplus............................................. 60,815,795
Net Unrealized Appreciation................................. 10,598,430
Accumulated Undistributed Net Investment Income............. 597,553
Accumulated Net Realized Gain............................... 294,949
------------
Net Assets Applicable to Common Shares................ 72,348,128
------------
NET ASSETS.................................................. $112,348,128
============
NET ASSET VALUE PER COMMON SHARE ($72,348,128 divided
by 4,140,058 shares outstanding).......................... $ 17.48
============
</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.................................................... $ 3,253,780
-----------
EXPENSES:
Investment Advisory Fee..................................... 366,126
Administrative Fee.......................................... 112,654
Preferred Share Maintenance................................. 52,959
Trustees' Fees and Expenses................................. 14,363
Legal....................................................... 2,435
Custody..................................................... 2,192
Other....................................................... 58,748
-----------
Total Expenses.......................................... 609,477
-----------
NET INVESTMENT INCOME....................................... $ 2,644,303
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Net Realized Gain........................................... $ 294,949
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 11,644,081
End of the Period......................................... 10,598,430
-----------
Net Unrealized Depreciation During the Period............... (1,045,651)
-----------
NET REALIZED AND UNREALIZED LOSS............................ $ (750,702)
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 1,893,601
===========
</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................................ $ 2,644,303 $ 5,359,723
Net Realized Gain.................................... 294,949 123,413
Net Unrealized Appreciation/Depreciation
During the Period.................................. (1,045,651) 1,970,502
------------ ------------
Change in Net Assets from Operations................. 1,893,601 7,453,638
------------ ------------
Distributions from Net Investment Income:
Common Shares...................................... (2,048,779) (4,095,722)
Preferred Shares................................... (694,218) (1,327,406)
------------ ------------
(2,742,997) (5,423,128)
------------ ------------
Distributions from Net Realized Gain:
Common Shares...................................... (92,968) (317,538)
Preferred Shares................................... (30,446) (113,072)
------------ ------------
(123,414) (430,610)
------------ ------------
Total Distributions.................................. (2,866,411) (5,853,738)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES......................................... (972,810) 1,599,900
FROM CAPITAL TRANSACTIONS:
Value of Common Shares Issued Through Dividend
Reinvestment....................................... 49,252 -0-
------------ ------------
TOTAL INCREASE/DECREASE IN NET ASSETS................ (923,558) 1,599,900
NET ASSETS:
Beginning of the Period.............................. 113,271,686 111,671,786
------------ ------------
End of the Period (Including accumulated
undistributed net investment
income of $597,553 and $696,247, respectively)..... $112,348,128 $113,271,686
============ ============
</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)............... $17.710 $17.323 $17.236 $15.236 $17.963 $14.875 $14.697
------- -------- ------- ------- ------- ------- -------
Net Investment Income........ .639 1.295 1.289 1.300 1.288 1.294 .596
Net Realized and Unrealized
Gain/Loss.................. (.181) .507 .118 2.023 (2.731) 3.020 .107
------- -------- ------- ------- ------- ------- -------
Total from Investment
Operations................... .458 1.802 1.407 3.323 (1.443) 4.314 .703
------- -------- ------- ------- ------- ------- -------
Less:
Distributions from Net
Investment Income:
Paid to Common
Shareholders............. .495 .990 .980 .948 .936 .936 .390
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders... .168 .321 .340 .375 .257 .287 .135
Distributions from Net
Realized Gain:
Paid to Common
Shareholders............. .023 .077 -0- -0- .071 .002 -0-
Common Share Equivalent of
Distributions Paid to
Preferred Shareholders... .007 .027 -0- -0- .020 .001 -0-
------- -------- ------- ------- ------- ------- -------
Total Distributions........... .693 1.415 1.320 1.323 1.284 1.226 .525
------- -------- ------- ------- ------- ------- -------
Net Asset Value, End of the
Period....................... $17.475 $17.710 $17.323 $17.236 $15.236 $17.963 $14.875
======= ======== ======= ======= ======= ======= =======
Market Price Per Share at End
of the Period................ $16.750 $17.1875 $16.500 $15.250 $13.500 $16.750 $14.875
Total Investment Return at
Market Price (b)............. .35%* 11.00% 14.89% 20.50% (13.92%) 19.30% 1.74%*
Total Return at Net Asset
Value (c).................... 1.61%* 8.71% 6.32% 19.85% (9.89%) 27.67% 1.65%*
Net Assets at End of the
Period (In millions)......... $ 112.3 $113.3 $ 111.7 $ 111.3 $ 103.0 $ 114.3 $ 101.5
Ratio of Expenses to Average
Net Assets Applicable to
Common Shares**.............. 1.67% 1.70% 1.77% 1.79% 1.81% 1.76% 1.72%
Ratio of Net Investment Income
to Average Net Assets
Applicable to Common
Shares (d)................... 5.34% 5.62% 5.51% 5.67% 6.15% 6.01% 5.11%
Portfolio Turnover............ 11%* 2% 12% 6% 10% 9% 9%*
* Non-Annualized
** Ratio of Expenses to
Average Net Assets including
Preferred Shares............ 1.08% 1.09% 1.13% 1.12% 1.15% 1.12% 1.21%
</TABLE>
(a) Net Asset Value at March 27, 1992, is adjusted for common and preferred
share offering costs of $.303 per common share.
(b) Total Investment Return at Market Price reflects the change in market value
of the common shares for the period indicated with reinvestment of dividends
in accordance with the Trust's dividend reinvestment plan.
(c) Total Return at Net Asset Value (NAV) reflects the change in value of the
Trust's assets with reinvestment of dividends based upon NAV.
(d) Net Investment Income is adjusted for 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 Florida 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 income taxes and Florida state intangibles taxes, consistent with
preservation of capital. The Trust will invest in a portfolio consisting
substantially of Florida municipal obligations 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 $100,710,185; the aggregate gross unrealized appreciation is
$10,633,238 and the aggregate gross unrealized depreciation is $34,808,
resulting in net unrealized appreciation of $10,598,430.
E. DISTRIBUTION OF INCOME AND GAINS--The Trust declares and pays monthly
dividends from net investment income to common shareholders. Net realized gains,
if any, are distributed annually on a pro rata basis to common and preferred
shareholders. Distributions from net realized gains for book purposes may
include short-term capital gains, which are included as ordinary income for tax
purposes.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, Van Kampen
American Capital Investment Advisory Corp. (the "Adviser") will provide
investment advice and facilities to the Trust for an annual fee payable monthly
of .65% of the average net assets of the Trust. In addition, the Trust will pay
a monthly administrative fee to Van Kampen American Capital Distributors, Inc.
or its affiliates (collectively "VKAC"), the Trust's Administrator, at an annual
rate of .20% of the average net assets of the Trust. The administrative services
provided by the Administrator include record keeping and reporting
responsibilities with respect to the Trust's portfolio and preferred shares and
providing certain services to shareholders.
For the six months ended April 30, 1998, the Trust recognized expenses of
approximately $500, representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Trust, of which a trustee of
the Trust is an affiliated person.
For the six months ended April 30, 1998, the Trust recognized expenses of
approximately $20,400 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
16
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
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. CAPITAL TRANSACTIONS
At April 30, 1998, and October 31, 1997, common share paid in surplus aggregated
$60,815,795 and $60,766,571, respectively:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
April 30, 1998 October 31, 1997
- ----------------------------------------------------------------------------------
<S> <C> <C>
Beginning Shares.......................... 4,137,307 4,137,307
Shares Issued Through Dividend
Reinvestment............................ 2,751 -0-
--------- ---------
Ending Shares............................. 4,140,058 4,137,307
========= =========
</TABLE>
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments were $12,992,244 and $13,346,988, respectively.
5. PREFERRED SHARES
The Trust has outstanding 800 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 3.570%. During the
six months ended April 30, 1998, the rates ranged from 3.400% 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.
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
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
19
<PAGE> 21
VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE FLORIDA MUNICIPALS
BOARD OF TRUSTEES
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
DENNIS J. MCDONNELL*--Chairman
STEVEN MULLER
THEODORE A. MYERS
DON G. POWELL*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*
OFFICERS
DENNIS J. MCDONNELL*
President
RONALD A. NYBERG*
Vice President and Secretary
EDWARD C. WOOD, III*
Vice President and
Chief Financial Officer
CURTIS W. MORELL*
Vice President and
Chief Accounting Officer
JOHN L. SULLIVAN*
Treasurer
TANYA M. LODEN*
Controller
PETER W. HEGEL*
Vice President
INVESTMENT ADVISER
VAN KAMPEN AMERICAN CAPITAL
INVESTMENT ADVISORY CORP.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
CUSTODIAN AND
TRANSFER AGENT
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS
KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, Illinois 60601
* "Interested" persons of the Trust, as defined in
the Investment Company Act of 1940.
(C) Van Kampen American Capital Distributors, Inc., 1998
All rights reserved.
(SM) denotes a service mark of
Van Kampen American Capital Distributors, Inc.
20
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> TRUST FOR FL
<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> 100,710,185
<INVESTMENTS-AT-VALUE> 111,308,615
<RECEIVABLES> 1,580,257
<ASSETS-OTHER> 2,651
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 112,891,523
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 543,395
<TOTAL-LIABILITIES> 543,395
<SENIOR-EQUITY> 40,000,000
<PAID-IN-CAPITAL-COMMON> 60,857,196
<SHARES-COMMON-STOCK> 4,140,058
<SHARES-COMMON-PRIOR> 4,137,307
<ACCUMULATED-NII-CURRENT> 597,553
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 294,949
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,598,430
<NET-ASSETS> 112,348,128
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,253,780
<OTHER-INCOME> 0
<EXPENSES-NET> (609,477)
<NET-INVESTMENT-INCOME> 2,644,303
<REALIZED-GAINS-CURRENT> 294,949
<APPREC-INCREASE-CURRENT> (1,045,651)
<NET-CHANGE-FROM-OPS> 1,893,601
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,742,997)
<DISTRIBUTIONS-OF-GAINS> (123,414)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 2,751
<NET-CHANGE-IN-ASSETS> (923,558)
<ACCUMULATED-NII-PRIOR> 696,247
<ACCUMULATED-GAINS-PRIOR> 123,414
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 366,126
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 609,477
<AVERAGE-NET-ASSETS> 113,595,390
<PER-SHARE-NAV-BEGIN> 17.710
<PER-SHARE-NII> 0.639
<PER-SHARE-GAIN-APPREC> (0.181)
<PER-SHARE-DIVIDEND> (0.663)
<PER-SHARE-DISTRIBUTIONS> (0.030)
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 17.475
<EXPENSE-RATIO> 1.67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
