<PAGE> 1
INTERCAPITAL INSURED MUNICIPAL SECURITIES Two World Trade Center, New York,
LETTER TO THE SHAREHOLDERS April 30, 1996 New York 10048
DEAR SHAREHOLDER:
During the first six months of InterCapital Insured Municipal Securities's
current fiscal year, interest rates initially declined, but reversed direction
in February and began to move higher. Last year's favorable bond market
environment was created by proposals to achieve a balanced federal budget within
five to seven years and by continued easing of Federal Reserve Board monetary
policy. However, budget negotiations reached a political impasse early in 1996
and federal offices were partially closed. This had an adverse impact on bonds.
Concerns also developed about an increase in the pace of the economic recovery,
which was marked by unexpectedly strong job growth in March and rising commodity
prices. The bond market reacted to these developments by pushing yields sharply
higher.
MUNICIPAL MARKET CONDITIONS
Long-term municipal revenue bond yields as tracked by The Bond Buyer Revenue
Bond Index* moved from 6.02 percent in October 1995 to a low of 5.63 percent in
January 1996. Interest rates subsequently began to rise in mid-February on signs
of stronger economic growth and renewed inflationary fears. The Index yield
reached 6.16 percent in April. Yields on one-year municipal notes declined from
3.82 percent to 3.70 percent over the past six months. The yield pickup for
extending maturities from one-to-thirty years was 246 basis points at the end of
April.
The risk of flat-tax legislation had caused the ratio of Revenue Bond Index
yields to 30-year U.S. Treasury bond yields to rise from 85 to 94 percent
between March and September 1995. However, as the prospects of a flat tax faded,
the ratio improved to 92 percent by the end of April. A declining ratio means
that municipal bond prices have outperformed U.S. Treasury prices. Over the
previous eight year period prior to the flat-tax debate, long-term municipal
yields averaged 89 percent of U.S. Treasury yields.
- ---------------------
*The Bond Buyer Revenue Bond Index is an arithmetic average of the yields of 25
selected municipal revenue bonds with 30-year maturities. Credit ratings of
these bonds range from Aa1 to Baa1 by Moody's Investors Service, Inc., and AA+
to A- by Standard & Poor's Corp.
<PAGE> 2
INTERCAPITAL INSURED MUNICIPAL SECURITIES
LETTER TO THE SHAREHOLDERS April 30, 1996, continued
Municipal underwriting activity was fueled by the trend of lower interest rates
in 1995. Between November 1995 and April 1996, new-issue volume increased 45
percent versus the same period a year ago. Despite a resurgence in underwriting,
dealers have continued to withdraw from the municipal business.
PERFORMANCE
The Trust's net asset value (NAV) declined from $14.91 to $14.64 per share
during the six-month period ended April 30, 1996. Based on this NAV change plus
reinvestment of tax-free dividends totaling $0.405 per share, the Trust's total
return was 1.24 percent. Over the same period, the Trust's market price on the
New York Stock Exchange increased from $12.625 to $12.75 per share. Based on
this market price change and reinvestment of tax-free dividends, the Trust's
total return was 4.12 percent. The Trust began the period trading at a 15
percent discount to NAV and closed at a 13 percent discount. Undistributed net
investment income totaled $0.093 per share on April 30, 1996 versus $0.099 per
share six months ago.
PORTFOLIO STRUCTURE
On April 30, 1996, the Trust's $136 million of net assets were diversified among
10 long-term municipal sectors and 37 credits. The five largest sectors
represented 78 percent of net assets. The average maturity and call protection
of the Trust's long-term portfolio were 24 and 8 years, respectively. Each
position in the portfolio was backed by bond insurers that are rated triple "A"
by Moody's Investors Service, Inc. and/or Standard & Poor's Corp. This is to
insure the timely payment of principal and interest.
<TABLE>
<CAPTION>
FIVE LARGEST SECTORS AS OF APRIL 30, 1996
(% OF NET ASSETS)
<S> <C>
ELECTRIC 24%
TRANSPORTATION 20%
GENERAL OBLIGATION 14%
HOSPITAL 13%
WATER & SEWER 7%
OTHER 22%
</TABLE>
<TABLE>
<CAPTION>
CREDIT ENHANCEMENTS AS OF APRIL 30, 1996
(% OF TOTAL LONG-TERM INVESTMENTS)
<S> <C>
MBIA 49%
AMBAC 34%
FGIC 15%
CONNIE LEE 2%
</TABLE>
<PAGE> 3
INTERCAPITAL INSURED MUNICIPAL SECURITIES
LETTER TO THE SHAREHOLDERS April 30, 1996, continued
LOOKING AHEAD
Tax-reduction proposals may receive additional publicity. However, the balance
between the supply of new issues and demand created by maturities and calls for
redemption should remain positive for the municipal market. Long-term municipal
securities currently yield 90 percent of the yield on U.S. Treasury securities
and may be expected to move in tandem with the Treasury market.
The Trust's procedure for reinvestment of all dividends and distributions on
common shares is through purchases in the open market. This method helps to
support the market value of the Trust's shares. In addition, we would like to
remind you that the Trustees have approved a procedure whereby the Trust, when
appropriate, may purchase shares in the open market or in privately negotiated
transactions at a price not above market value or net asset value, whichever is
lower at the time of purchase. During the six-month period ended April 30, 1996,
the Trust purchased and retired 223,500 shares of common stock at a weighted
average market discount of 13.09 percent.
We appreciate your ongoing support of InterCapital Insured Municipal Securities
and look forward to continuing to serve your investment needs.
Very truly yours,
/s/ CHARLES A. FIUMEFREDDO
- --------------------------
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE> 4
INTERCAPITAL INSURED MUNICIPAL SECURITIES
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS (97.8%)
General Obligation (13.9%)
$ 3,920 Kodiak Island Borough, Alaska, Ser 1994 A (AMBAC)..................... 5.50% 02/15/14 $ 3,711,142
4,000 Moulton-Niguel Water District, California, 1993 Refg (MBIA)........... 5.00 09/01/19 3,478,200
3,000 Chicago, Illinois, Refg Ser 1993 B (AMBAC)............................ 5.125 01/01/22 2,647,470
1,000 Morley-Stanwood Community Schools, Michigan, 1995 Building & Site
(FGIC)............................................................... 5.625 05/01/15 976,630
8,000 Washoe County School District, Nevada, Ltd Tax Ser 04/01/94 A
(MBIA)............................................................... 5.75 06/01/13 7,999,520
- -------- ------------
19,920 18,812,962
- -------- ------------
Educational Facilities Revenue (6.5%)
2,000 Chicago State University, Illinois, Ser 1994 (MBIA)................... 6.15 12/01/23 2,015,340
2,000 New York State Dormitory Authority, Fordham University Ser 1994
(FGIC)............................................................... 5.50 07/01/23 1,869,120
2,000 Rhode Island Health & Educational Building Corporation, Providence
College Ser 1993 (MBIA).............................................. 5.60 11/01/22 1,832,700
3,000 Wisconsin Health & Educational Facilities Authority, Marquette
University Ser 1994 (FGIC)........................................... 6.50 12/01/19 3,109,230
- -------- ------------
9,000 8,826,390
- -------- ------------
Electric Revenue (24.4%)
4,000 Anchorage, Alaska, Refg Ser 1993 (MBIA)............................... 6.20 12/01/13 4,122,920
5,000 Sacramento Municipal Utility District, California, Refg 1994 Ser I
(MBIA)............................................................... 6.00 01/01/24 4,999,500
3,000 Municipal Electric Authority of Georgia, Power Ser EE (AMBAC)......... 6.00 01/01/22 3,019,380
5,000 Kansas City, Kansas, Utility Refg & Impr Ser 1994 (FGIC).............. 6.375 09/01/23 5,177,400
5,000 Piedmont Municipal Power Agency, South Carolina, Refg Ser 1993
(MBIA)............................................................... 5.375 01/01/25 4,619,200
4,000 Utah Municipal Power Agency, Refg Ser 1993 A (FGIC)................... 5.25 07/01/18 3,620,880
5,000 Bedford, Virginia, Hydro Ser 1994 (AMBAC)............................. 5.25 06/01/25 4,505,650
3,000 Tacoma, Washington, Refg 1994 (FGIC).................................. 6.25 01/01/15 3,071,790
- -------- ------------
34,000 33,136,720
- -------- ------------
Hospital Revenue (12.7%)
3,000 Morgan County Health Care Authority, Alabama, Decatur General Hospital
Ser 1994 (Connie Lee)................................................ 6.375 03/01/24 3,044,520
4,000 California Statewide Communities Development Authority, Sharp Health
Care COPs (MBIA)..................................................... 6.00 08/15/24 3,978,000
3,000 Volusia County Health Facilities Authority, Florida, Memorial Health
Refg & Impr Ser 1994 (AMBAC)......................................... 5.75 11/15/20 2,900,460
1,500 Illinois Health Facilities Authority, University of Chicago Hospital
Ser 1994 (MBIA)...................................................... 6.125 08/15/21 1,493,145
3,105 Massachusetts Health & Educational Facilities Authority, Lahey Clinic
Medical Center Ser B (MBIA).......................................... 5.375 07/01/23 2,807,789
3,000 New Hampshire Higher Educational & Health Facilities Authority,
The Hitchcock Clinic Ser 1994 (MBIA)................................. 6.00 07/01/24 2,947,680
- -------- ------------
17,605 17,171,594
- -------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
INTERCAPITAL INSURED MUNICIPAL SECURITIES
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
<C> <S> <C> <C> <C>
Industrial Development/Pollution Control Revenue (5.3%)
$ 5,550 Hawaii Department of Budget & Finance, Hawaiian Electric Co Inc Ser
1992 (AMT) (MBIA).................................................... 6.55% 12/01/22 $ 5,710,895
1,500 Pennsylvania Industrial Development Authority, Ser 1994 (AMBAC)....... 5.50 01/01/14 1,442,520
- -------- ------------
7,050 7,153,415
- -------- ------------
Mortgage Revenue - Multi-Family (2.3%)
3,000 Los Angeles Community Redevelopment Agency, California, Refg Ser 1994
- -------- A (AMBAC)............................................................ 6.55 01/01/27 3,091,680
------------
Public Facilities Revenue (2.2%)
1,000 Hillsborough County School Board, Florida, Ser 1994 COPs (MBIA)....... 6.00 07/01/14 1,007,470
2,000 Michigan Municipal Bond Authority, Ser 1994 A (FGIC).................. 6.00 12/01/13 2,028,040
- -------- ------------
3,000 3,035,510
- -------- ------------
Transportation Facilities Revenue (19.6%)
5,225 San Francisco Airports Commission, California, San Francisco Int'l
Airport Second Ser Refg (MBIA)....................................... 6.75 05/01/20 5,636,991
3,000 Atlanta, Georgia, Airport Ser 1994 B (AMT) (AMBAC).................... 6.00 01/01/21 2,954,160
2,875 Hawaii, Airports Third Refg Ser of 1994 (AMT) (AMBAC)................. 5.75 07/01/09 2,887,909
Chicago Midway Airport, Illinois,
3,000 1994 Ser A (AMT) (MBIA).............................................. 6.25 01/01/14 3,025,650
4,000 1994 Ser A (AMT) (MBIA).............................................. 6.25 01/01/24 4,008,200
5,000 Regional Transportation Authority, Illinois, Ser 1994 A (AMBAC)....... 6.25 06/01/24 5,089,450
3,000 Pennsylvania Turnpike Commission, Oil Franchise Tax Ser A of 1994
(AMBAC).............................................................. 6.00 12/01/19 3,013,800
- -------- ------------
26,100 26,616,160
- -------- ------------
Water & Sewer Revenue (7.4%)
5,000 Central Coast Water Authority, California, Ser 1992 (AMBAC)........... 6.60 10/01/22 5,311,050
5,000 Los Angeles, California, Wastewater Refg Ser 1993 A (MBIA)............ 5.70 06/01/20 4,803,750
- -------- ------------
10,000 10,114,800
- -------- ------------
Other Revenue (3.5%)
5,000 Indianapolis, Indiana, Gas Utility Refg Ser 1994 A (AMBAC)............ 5.875 06/01/24 4,816,900
- -------- ------------
134,675 TOTAL MUNICIPAL BONDS (Identified Cost $129,640,497)........................................... 132,776,131
- -------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
INTERCAPITAL INSURED MUNICIPAL SECURITIES
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM MUNICIPAL OBLIGATION (0.2%)
$ 300 East Baton Rouge Parish, Louisiana, Exxon Corp Ser 1993
- -------- (Demand 05/01/96) (Identified Cost $300,000)......................... 4.00*% 03/01/22 $ 300,000
------------
$134,975 TOTAL INVESTMENTS (Identified Cost $129,940,497) (a).................................. 98.0% 133,076,131
========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES.......................................... 2.0 2,775,101
----- ------------
NET ASSETS............................................................................. 100.0% $135,851,232
===== ============
</TABLE>
- ---------------------
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
* Current coupon of variable rate security.
(a) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation was
$3,565,895 and the aggregate gross unrealized depreciation was
$430,261, resulting in net unrealized appreciation of $3,135,634.
Bond Insurance:
AMBAC AMBAC Indemnity Corporation.
Connie Lee Connie Lee Insurance Company.
FGIC Financial Guaranty Insurance Company.
MBIA Municipal Bond Investors Assurance Corporation.
- --------------------------------------------------------------------------------
GEOGRAPHIC SUMMARY OF INVESTMENTS
Based on Market Value as a Percent of Net Assets
April 30, 1996
<TABLE>
<S> <C>
Alabama.................. 2.2%
Alaska................... 5.8
California............... 23.0
Florida.................. 2.9
Georgia.................. 4.4
Hawaii................... 6.3
Illinois................. 13.5
Indiana.................. 3.5
Kansas................... 3.8%
Louisiana................ 0.2
Massachusetts............ 2.1
Michigan................. 2.2
Nevada................... 5.9
New Hampshire............ 2.2
New York................. 1.4
Pennsylvania............. 3.3
Rhode Island............. 1.3%
South Carolina........... 3.4
Utah..................... 2.7
Virginia................. 3.3
Washington............... 2.3
Wisconsin................ 2.3
----
Total.................... 98.0%
====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
INTERCAPITAL INSURED MUNICIPAL SECURITIES
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1996 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $129,940,497)....................................... $133,076,131
Cash.................................................................. 89,475
Interest receivable................................................... 2,737,136
Deferred organizational expenses...................................... 24,913
Prepaid expenses...................................................... 13,011
------------
TOTAL ASSETS...................................................... 135,940,666
------------
LIABILITIES:
Investment management fee payable..................................... 41,949
Accrued expenses...................................................... 47,485
------------
TOTAL LIABILITIES................................................. 89,434
------------
NET ASSETS:
Preferred shares of beneficial interest (1,000,000 shares authorized
of non-participating $.01 par value, none issued).................... --
------------
Common shares of beneficial interest (unlimited shares authorized of
$.01 par value, 9,281,513 shares outstanding)........................ 132,163,854
Net unrealized appreciation........................................... 3,135,634
Accumulated undistributed net investment income....................... 864,405
Accumulated net realized loss......................................... (312,661)
------------
NET ASSETS........................................................ $135,851,232
============
NET ASSET VALUE PER COMMON SHARE
($135,851,232 divided by 9,281,513 common shares outstanding)........ $14.64
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8
INTERCAPITAL INSURED MUNICIPAL SECURITIES
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended April 30, 1996 (unaudited)
NET INVESTMENT INCOME:
INTEREST INCOME........................................................ $ 4,066,402
-----------
EXPENSES
Investment management fee.............................................. 247,709
Professional fees...................................................... 26,607
Transfer agent fees and expenses....................................... 24,994
Shareholder reports and notices........................................ 18,851
Trustees' fees and expenses............................................ 8,161
Registration fees...................................................... 7,913
Organizational expenses................................................ 4,386
Custodian fees......................................................... 3,959
Other.................................................................. 6,677
-----------
TOTAL EXPENSES BEFORE EXPENSE OFFSET............................... 349,257
LESS: EXPENSE OFFSET............................................... (3,935)
-----------
TOTAL EXPENSES AFTER EXPENSE OFFSET................................ 345,322
-----------
NET INVESTMENT INCOME.............................................. 3,721,080
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain...................................................... 156,322
Net change in unrealized appreciation.................................. (3,019,895)
-----------
NET LOSS........................................................... (2,863,573)
-----------
NET INCREASE........................................................... $ 857,507
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 9
INTERCAPITAL INSURED MUNICIPAL SECURITIES
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX
MONTHS ENDED FOR THE YEAR
APRIL 30, ENDED
1996 OCTOBER 31, 1995
- ------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income................................ $ 3,721,080 $ 7,591,636
Net realized gain (loss)............................. 156,322 (468,983)
Net change in unrealized appreciation/depreciation... (3,019,895) 15,582,145
------------ ------------
NET INCREASE..................................... 857,507 22,704,798
Dividends to common shareholders from net investment
income.............................................. (3,799,444) (7,234,457)
Decrease from transactions in shares of beneficial
interest............................................ (2,944,397) (6,109,822)
------------ ------------
TOTAL INCREASE (DECREASE)........................ (5,886,334) 9,360,519
NET ASSETS:
Beginning of period.................................. 141,737,566 132,377,047
------------ ------------
END OF PERIOD
(Including undistributed net investment income of
$864,405 and $942,769, respectively)............. $135,851,232 $141,737,566
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 10
INTERCAPITAL INSURED MUNICIPAL SECURITIES
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
InterCapital Insured Municipal Securities (the "Trust") is registered under the
Investment Company Act of 1940, as amended, as a diversified, closed-end
management investment company. The Trust was organized as a Massachusetts
business trust on October 14, 1993 and commenced operations on February 28,
1994.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- Portfolio securities are valued by an outside
independent pricing service approved by the Trustees. The pricing service has
informed the Trust that in valuing the portfolio securities, it uses both a
computerized matrix of tax-exempt securities and evaluations by its staff, in
each case based on information concerning market transactions and quotations
from dealers which reflect the bid side of the market each day. The portfolio
securities are thus valued by reference to a combination of transactions and
quotations for the same or other securities believed to be comparable in
quality, coupon, maturity, type of issue, call provisions, trading
characteristics and other features deemed to be relevant. Short-term debt
securities having a maturity date of more than sixty days at time of purchase
are valued on a mark-to-market basis until sixty days prior to maturity and
thereafter at amortized cost based on their value on the 61st day. Short-term
debt securities having a maturity date of sixty days or less at the time of
purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
The Trust amortizes premiums and accretes discounts over the life of the
respective securities. Interest income is accrued daily.
C. FEDERAL INCOME TAX STATUS -- It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable and nontaxable income to its
shareholders. Accordingly, no federal income tax provision is required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Trust records dividends
and distributions to its shareholders on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations which may
differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences
<PAGE> 11
INTERCAPITAL INSURED MUNICIPAL SECURITIES
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (unaudited) continued
are permanent in nature, such amounts are reclassified within the capital
accounts based on their federal tax-basis treatment; temporary differences do
not require reclassification. Dividends and distributions which exceed net
investment income and net realized capital gains for financial reporting
purposes but not for tax purposes are reported as dividends in excess of net
investment income or distributions in excess of net realized capital gains. To
the extent they exceed net investment income and net realized capital gains for
tax purposes, they are reported as distributions of paid-in-capital.
E. ORGANIZATIONAL EXPENSES -- Dean Witter InterCapital Inc. (the "Investment
Manager") paid the organizational expenses of the Trust's common shares in the
amount of $44,000 which have been reimbursed for the full amount thereof. Such
expenses have been deferred and are being amortized by the straight-line method
over a period not to exceed five years from the commencement of operations.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Trust pays a management fee,
calculated weekly and payable monthly, by applying the annual rate of 0.35% to
the Trust's weekly net assets.
Under the terms of the Agreement in addition to managing the Trust's
Investments, the Investment Manager maintains certain of the Trust's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Trust who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Trust.
3. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended April 30, 1996 aggregated
$985,440 and $2,904,420, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Trust's transfer agent. At April 30, 1996, the Trust had transfer agent fees and
expenses payable of approximately $4,300.
4. PREFERRED SHARES OF BENEFICIAL INTEREST
The Trust is authorized to issue up to 1,000,000 non-participating preferred
shares of beneficial interest having a par value of $.01 per share, in one or
more series, with rights as determined by the Trustees, without approval of the
common shareholders. The preferred shares have a liquidation value of $50,000
per share plus the redemption premium, if any, plus accumulated but unpaid
dividends, whether or not declared, thereon to the date of distribution. The
Trust may redeem such shares, in
<PAGE> 12
INTERCAPITAL INSURED MUNICIPAL SECURITIES
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (unaudited) continued
whole or in part, at the original purchase price of $50,000 per share plus
accumulated but unpaid dividends, whether or not declared, thereon to the date
of redemption.
The Trust is subject to certain restrictions relating to the preferred shares.
Failure to comply with these restrictions could preclude the Trust from
declaring any distributions to common shareholders or purchasing common shares
and/or could trigger the mandatory redemption of preferred shares at liquidation
value.
The preferred shares, entitled to one vote per share, generally vote with the
common shares but vote separately as a class to elect two Trustees and on any
matters affecting the rights of the preferred shares.
5. COMMON SHARES OF BENEFICIAL INTEREST
Transactions in common shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
CAPITAL
PAID IN
EXCESS OF
SHARES PAR VALUE PAR VALUE
---------- ---------- ------------
<S> <C> <C> <C>
Balance, October 31, 1994...................................................... 10,025,313 $100,253 $141,117,820
Treasury shares purchased and retired (weighted average discount 12.16%)*...... (520,300) (5,203) (6,104,619)
--------- -------- ------------
Balance, October 31, 1995...................................................... 9,505,013 95,050 135,013,201
Treasury shares purchased and retired (weighted average discount 13.09%)*...... (223,500) (2,235) (2,942,162)
--------- -------- ------------
Balance, April 30, 1996........................................................ 9,281,513 $ 92,815 $132,071,039
========= ======== ============
</TABLE>
- ---------------------
* The Trustees have voted to retire the shares purchased.
6. FEDERAL INCOME TAX STATUS
At October 31, 1995, the Trust had a net capital loss carryover of approximately
$469,000 which will be available through October 31, 2003 to offset future
capital gains to the extent provided by regulations.
7. DIVIDENDS TO COMMON SHAREHOLDERS
The Trust declared the following dividends from net investment income:
<TABLE>
<CAPTION>
DECLARATION AMOUNT RECORD PAYABLE
DATE PER SHARE DATE DATE
- --------------- --------- ------------- --------------
<S> <C> <C> <C>
April 23, 1996. $0.0675 May 3, 1996 May 17, 1996
May 28, 1996... $0.0675 June 7, 1996 June 21, 1996
</TABLE>
<PAGE> 13
INTERCAPITAL INSURED MUNICIPAL SECURITIES
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a common share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FEBRUARY 28,
FOR THE SIX FOR THE YEAR 1994*
MONTHS ENDED ENDED THROUGH
APRIL 30, OCTOBER 31, OCTOBER 31,
1996** 1995** 1994**++
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................................. $14.91 $ 13.20 $ 14.06
------ ------- -------
Net investment income................................................ 0.40 0.79 0.44
Net realized and unrealized gain (loss).............................. (0.31) 1.58 (0.93)
------ ------- -------
Total from investment operations..................................... 0.09 2.37 (0.49)
------ ------- -------
Less dividends from net investment income............................ (0.41) (0.75) (0.38)
Anti-dilutive effect of acquiring treasury shares.................... 0.05 0.09 0.05
Offering costs charged against capital............................... -- -- (0.04)
------ ------- -------
Net asset value, end of period....................................... $14.64 $ 14.91 $ 13.20
====== ======= =======
Market value, end of period.......................................... $12.75 $12.625 $11.125
====== ======= =======
TOTAL INVESTMENT RETURN+............................................. 4.12%(1) 20.61% (23.56)%(1)
RATIOS TO AVERAGE NET ASSETS:........................................
Total expenses before expense offset................................. 0.49%(2)(4) 0.54%(3) 0.51%(2)
Net investment income................................................ 5.25%(2) 5.51%(3) 4.69%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.............................. $135,851 $141,738 $132,377
Portfolio turnover rate.............................................. 1%(1) --% --%
</TABLE>
- ---------------------
* Commencement of operations.
** The per share amounts were computed using an average number of shares
outstanding during the period.
+ Total investment return is based upon the current market value on the last
day of each period reported. Dividends are assumed to be reinvested at the
prices obtained under the Trust's dividend reinvestment plan. Total
investment return does not reflect brokerage commissions.
++ Restated for comparative purposes.
(1) Not annualized.
(2) Annualized.
(3) The above expense and net investment income ratios would have been 0.53%
and 5.52%, respectively, which includes 0.01% effect for custody cash
credits.
(4) The above annualized expense ratio would have been 0.49% after expense
offset.
SEE NOTES TO FINANCIAL STATEMENTS
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TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
James F. Willison
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
The financial statements included herein have been taken from the records of
the Trust without examination by the independent accountants and accordingly
they do not express an opinion thereon.
INTERCAPITAL
INSURED
MUNICIPAL
SECURITIES
SEMIANNUAL REPORT
APRIL 30, 1996
