<PAGE>
INTERCAPITAL INSURED MUNICIPAL SECURITIES
LETTER TO THE SHAREHOLDERS April 30, 1997
Two World Trade Center, New York, New York 10048
DEAR SHAREHOLDER:
We are pleased to present the semi-annual report on the operations of
InterCapital Insured Municipal Securities (IMS) for the period ended
April 30, 1997.
Economic growth moderated during the third quarter of 1996, causing
fixed-income yields to move lower through November. However, an acceleration
of economic activity led by consumer spending developed in the fourth quarter
of 1996 and continued into the first quarter of 1997. This contributed to
rising interest rates between December and April. On March 25, 1997, the
Federal Reserve Board raised the federal-funds rate
25 basis points to 5.50 percent in a preemptive move against a possible
acceleration in the rate of inflation. Subsequently, the fixed-income markets
began to anticipate the possibility of additional rate hikes by the Fed.
MUNICIPAL MARKET CONDITIONS
Municipal yields followed the trend of Treasury yields, but were less
volatile. Long-term insured revenue bond yields moved as low as
5.45 percent in November 1996, before rising to 5.75 percent in April 1997.
BOND YIELDS 1994-1997
<TABLE>
<CAPTION>
Insured Municipal
30-Year Insured Revenue Yields
Municipal 30-year U.S. as a Percentage of
Revenue Yields Treasury Yields U.S. Treasury Yields
<S> <C> <C> <C>
5.45 6.35 0.8586
Jan '94 5.29 6.24 0.8481
5.64 6.66 0.8468
6.19 7.09 0.8728
6.24 7.31 0.854
6.23 7.43 0.8387
6.31 7.61 0.8293
6.15 7.4 0.8314
6.17 7.45 0.828
6.42 7.82 0.8212
6.66 7.97 0.8356
6.99 8 0.8738
6.65 7.88 0.8438
Jan '95 6.42 7.7 0.834
6.12 7.44 0.8222
6.07 7.43 0.8167
6.05 7.34 0.8245
5.84 6.65 0.8784
6 6.62 0.9066
5.99 6.85 0.875
5.98 6.65 0.8997
5.97 6.5 0.9184
5.79 6.33 0.915
5.61 6.13 0.9151
5.49 5.95 0.923
Jan '96 5.42 6.03 0.8989
5.55 6.47 0.8577
5.89 6.67 0.8835
5.94 6.91 0.8601
5.99 6.99 0.8571
5.86 6.87 0.8529
5.77 6.97 0.8278
5.82 7.12 0.8176
5.71 6.92 0.8248
5.6 6.64 0.8431
5.45 6.35 0.8583
5.56 6.64 0.8372
Jan '97 5.63 6.79 0.8293
5.53 6.8 0.8129
5.83 7.1 0.8216
5.74 6.96 0.8251
</TABLE>
Source: Bloomberg L.P.
<PAGE>
INTERCAPITAL INSURED MUNICIPAL SECURITIES
LETTER TO THE SHAREHOLDERS April 30, 1997, continued
Similarly, yields on one-year municipal notes moved from 3.70 to 3.95 percent
over the past six months. The yield curve pick-up for extending maturities from
1 to 30 years increased to 180 basis points.
The ratio of 30-year insured revenue bond yields to 30-year U.S. Treasury
yields declined from 86 percent at the end of October 1996 to 82 percent in
April 1997. A declining ratio means that municipals have outperformed
Treasuries, but have become relatively more expensive. The ratio has ranged
from 81 to 92 percent over the past three years.
New-issue municipal volume was down 6 percent during the first four months of
1997. However, underwriting volume for the full year is expected to exceed bond
maturities and redemptions.
PERFORMANCE
Over the six-month period ended April 30, 1997, the Trust's net asset value
(NAV) moved from $15.08 to $14.90. Based on this NAV change plus reinvestment
of tax-free dividends totaling $0.41 per share, the Trust's total NAV return
was 1.83 percent. IMS's market price on the New York Stock Exchange moved from
$13.125 to $13.625 per share. Based on this change in market price plus
reinvestment of tax-free dividends, IMS's total market return was 6.99 percent.
On April 30, 1997, the Trust was trading at a 9 percent discount to NAV.
Undistributed net investment income available for dividends declined from
$0.090 to $0.084 per share.
FIVE LARGEST SECTORS AS OF APRIL 30, 1997
(% OF NET ASSETS)
ELECTRIC 23%
TRANSPORTATION 19%
GENERAL OBLIGATION 14%
HOSPITAL 13%
EDUCATION 7%
ALL OTHERS 24%
PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE.
CREDIT ENHANCEMENTS AS OF APRIL 30, 1997
(% OF TOTAL LONG-TERM PORTFOLIO)
AMBAC 35%
CONNIE LEE 2%
FGIC 15%
MBIA 48%
PORTFOLIO STRUCTURE IS SUBJECT TO CHANGE.
<PAGE>
INTERCAPITAL INSURED MUNICIPAL SECURITIES
LETTER TO THE SHAREHOLDERS April 30, 1997, continued
PORTFOLIO STRUCTURE
The Trust remained fully invested in long-term municipal bonds during the
period. Investments were diversified among 11 long-term sectors and 36
credits. IMS's average maturity and call protection were
23 years and 8 years, respectively. To assure the timely payment of principal
and interest, each position in the portfolio was backed by triple-"A"-rated
bond insurance.
LOOKING AHEAD
With the collapse of flat-tax proposals, municipal bonds have improved
relative to U.S. Treasury securities. Although tax-free yields are currently
somewhat "rich" in their historical relationship with Treasury yields, the
long-term benefit of tax-exemption remains intact.
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, 1997, IMS purchased and retired 132,800 shares of beneficial
interest at a weighted average market discount of 11.33 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>
INTERCAPITAL INSURED MUNICIPAL SECURITIES
PORTFOLIO OF INVESTMENTS April 30, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS (97.4%)
General Obligation (13.5%)
$ 3,920 Kodiak Island Borough, Alaska, Ser 1994 A (AMBAC) ............... 5.50 % 02/15/14 $ 3,827,331
4,000 Moulton-Niguel Water District, California, 1993 Refg (MBIA) ..... 5.00 09/01/19 3,569,680
3,000 Chicago, Illinois, Refg Ser 1993 B (AMBAC) ...................... 5.125 01/01/22 2,724,870
8,000 Washoe County School District, Nevada, Ltd Tax Ser 04/01/94 A
(MBIA) ........................................................ 5.75 06/01/13 8,005,120
------- -----------
18,920 18,127,001
------- -----------
Educational Facilities Revenue (6.6%)
2,000 Chicago State University, Illinois, Ser 1994 (MBIA) ............. 6.15 12/01/23 2,027,320
2,000 New York State Dormitory Authority, Fordham University Ser 1994
(FGIC) ........................................................ 5.50 07/01/23 1,898,940
2,000 Rhode Island Health & Educational Building Corporation,
Providence College Ser 1993 (MBIA) ............................. 5.60 11/01/22 1,876,380
3,000 Wisconsin Health & Educational Facilities Authority, Marquette
University Ser 1994 (FGIC) ..................................... 6.45 12/01/19 3,135,690
------- -----------
9,000 8,938,330
------- -----------
Electric Revenue (23.4%)
4,000 Anchorage, Alaska, Refg Ser 1993 (MBIA) ......................... 6.20 12/01/13 4,130,520
5,000 Sacramento Municipal Utility District, California, Refg 1994 Ser
I (MBIA) ...................................................... 6.00 01/01/24 5,049,950
3,000 Municipal Electric Authority of Georgia, Power Ser EE (AMBAC) ... 6.00 01/01/22 3,023,880
5,000 Kansas City, Kansas, Utility Refg & Impr Ser 1994 (FGIC) ........ 6.375 09/01/23 5,293,200
2,745 Piedmont Municipal Power Agency, South Carolina, Refg Ser 1993
(MBIA) ........................................................ 5.375 01/01/25 2,603,029
4,000 Utah Municipal Power Agency, Refg Ser 1993 A (FGIC) ............. 5.25 07/01/18 3,669,600
5,000 Bedford, Virginia, Hydro Ser 1994 (AMBAC) ....................... 5.25 06/01/25 4,569,200
3,000 Tacoma, Washington, Refg 1994 (FGIC) ............................ 6.25 01/01/15 3,111,360
------- -----------
31,745 31,450,739
------- -----------
Hospital Revenue (13.0%)
3,000 Morgan County Health Care Authority, Alabama, Decatur General
Hospital Ser 1994 (Connie Lee) ................................. 6.375 03/01/24 3,121,860
4,000 California Statewide Communities Development Authority, Sharp
Health Care COPs (MBIA) ........................................ 6.00 08/15/24 4,033,560
3,000 Volusia County Health Facilities Authority, Florida, Memorial
Health Refg & Impr Ser 1994 (AMBAC) ............................ 5.75 11/15/20 2,965,590
1,500 Illinois Health Facilities Authority, University of Chicago
Hospital Ser 1994 (MBIA) ....................................... 6.125 08/15/21 1,510,920
3,105 Massachusetts Health & Educational Facilities Authority, Lahey
Clinic Medical Center Ser B (MBIA) ............................. 5.375 07/01/23 2,873,212
3,000 New Hampshire Higher Educational & Health Facilities Authority,
The Hitchcock Clinic Ser 1994 (MBIA) ........................... 6.00 07/01/24 3,008,100
------- -----------
17,605 17,513,242
------- -----------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
INTERCAPITAL INSURED MUNICIPAL SECURITIES
PORTFOLIO OF INVESTMENTS April 30, 1997 (unaudited) continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------------------
Industrial Development/Pollution Control Revenue (5.4%)
$ 5,550 Hawaii Department of Budget & Finance, Hawaiian Electric Co Inc
Ser 1992 (AMT)(MBIA) ........................................... 6.55 % 12/01/22 $5,805,633
1,500 Pennsylvania Industrial Development Authority, Ser 1994 (AMBAC) . 5.50 01/01/14 1,464,705
-------- ------------
7,050 7,270,338
-------- ------------
Mortgage Revenue -Multi-Family (2.3%)
3,000 Los Angeles Community Redevelopment Agency, California,
Refg Ser 1994 A (AMBAC) ........................................ 6.55 01/01/27 3,108,330
-------- ------------
Public Facilities Revenue (2.3%)
1,000 Hillsborough County School Board, Florida, Ser 1994 COPs (MBIA) . 6.00 07/01/14 1,026,130
2,000 Michigan Municipal Bond Authority, Ser 1994 A (FGIC) ............ 6.00 12/01/13 2,060,100
-------- ------------
3,000 3,086,230
-------- ------------
Transportation Facilities Revenue (18.6%)
5,225 San Francisco Airports Commission, California, San Francisco
Int'l Airport Second Ser Refg (MBIA) ........................... 6.75 05/01/20 5,686,524
3,000 Atlanta, Georgia, Airport Ser 1994 B (AMT)(AMBAC) ............... 6.00 01/01/21 3,007,740
2,000 Hawaii, Airports Third Refg Ser of 1994 (AMT)(AMBAC) ............ 5.75 07/01/09 2,029,700
Chicago Midway Airport, Illinois,
3,000 1994 Ser A (AMT)(MBIA) ......................................... 6.25 01/01/14 3,064,050
3,000 1994 Ser A (AMT)(MBIA) ......................................... 6.25 01/01/24 3,059,970
5,000 Regional Transportation Authority, Illinois, Ser 1994 A (AMBAC) . 6.25 06/01/24 5,153,300
3,000 Pennsylvania Turnpike Commission, Oil Franchise Tax Ser A of
1994 (AMBAC) ................................................... 6.00 12/01/19 3,032,490
-------- ------------
24,225 25,033,774
-------- ------------
Water & Sewer Revenue (2.9%)
4,000 Los Angeles, California, Wastewater Refg Ser 1993 A (MBIA) ...... 5.70 06/01/20 3,909,440
-------- ------------
Other Revenue (3.7%)
5,000 Indianapolis, Indiana, Gas Utility Refg Ser 1994 A (AMBAC) ...... 5.875 06/01/24 4,982,900
-------- ------------
Refunded (5.7%)
5,000 Central Coast Water Authority, California, Ser 1992 (AMBAC) ..... 6.60 10/01/02++ 5,517,250
2,255 Piedmont Municipal Power Agency, South Carolina, Refg Ser 1993
(MBIA)(ETM) .................................................... 5.375 01/01/25 2,167,032
-------- ------------
7,255 7,684,282
-------- ------------
$130,800 TOTAL MUNICIPAL BONDS (Identified Cost $125,881,520)(a) ................. 97.4% 131,104,606
======== ============
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES .......................... 2.6 3,498,353
----- ------------
NET ASSETS ............................................................... 100.0% $134,602,959
===== ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
INTERCAPITAL INSURED MUNICIPAL SECURITIES
PORTFOLIO OF INVESTMENTS April 30, 1997 (unaudited) continued
- --------------
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
ETM Escrowed to Maturity.
++ Prerefunded to call date shown.
(a) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$5,235,272 and the aggregate gross unrealized depreciation is
$12,186, resulting in net unrealized appreciation of $5,223,086.
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, 1997
Alabama 2.3%
Alaska 5.9
California 22.9
Florida 3.0
Georgia 4.5
Hawaii 5.8
Illinois 13.0
Indiana 3.7%
Kansas 3.9
Massachusetts 2.1
Michigan 1.6
Nevada 6.0
New Hampshire 2.3
New York 1.4
Pennsylvania 3.3%
Rhode Island 1.4
South Carolina 3.6
Utah 2.7
Virginia 3.4
Washington 2.3
Wisconsin 2.3
----
Total 97.4%
====
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
INTERCAPITAL INSURED MUNICIPAL SECURITIES
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1997 (unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $125,881,520) ...................................... $131,104,606
Cash................................................................... 919,703
Interest receivable ................................................... 2,642,182
Deferred organizational expenses ...................................... 16,117
Prepaid expenses ...................................................... 14,253
------------
TOTAL ASSETS ........................................................ 134,696,861
------------
LIABILITIES:
Investment management fee payable...................................... 43,521
Accrued expenses ...................................................... 50,381
------------
TOTAL LIABILITIES ................................................... 93,902
------------
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, 9,035,213 shares outstanding) ........................ 128,890,501
Net unrealized appreciation ........................................... 5,223,086
Accumulated undistributed net investment income........................ 757,075
Accumulated net realized loss ......................................... (267,703)
------------
NET ASSETS .......................................................... $134,602,959
============
NET ASSET VALUE PER COMMON SHARE
($134,602,959 divided by 9,035,213 common shares outstanding) ....... $ 14.90
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
INTERCAPITAL INSURED MUNICIPAL SECURITIES
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
For the six months ended April 30, 1997 (unaudited)
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME......................... $ 3,932,087
-----------
EXPENSES
Investment management fee............... 237,666
Professional fees ...................... 28,778
Transfer agent fees and expenses ....... 19,996
Shareholder reports and notices ....... 12,153
Registration fees ...................... 8,143
Trustees' fees and expenses............. 6,720
Organizational expenses ................ 4,361
Custodian fees.......................... 3,668
Other................................... 5,125
-----------
TOTAL EXPENSES ....................... 326,610
LESS: EXPENSE OFFSET ................. (3,647)
-----------
NET EXPENSES ......................... 322,963
-----------
NET INVESTMENT INCOME................. 3,609,124
-----------
NET REALIZED AND UNREALIZED GAIN
(LOSS):
Net realized gain....................... 21,092
Net change in unrealized appreciation . (1,808,264)
-----------
NET LOSS ............................. (1,787,172)
-----------
NET INCREASE ........................... $ 1,821,952
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
INTERCAPITAL INSURED MUNICIPAL SECURITIES
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
APRIL 30, 1997 OCTOBER 31, 1996
- ------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ............................. $ 3,609,124 $ 7,424,778
Net realized gain ................................. 21,092 180,188
Net change in unrealized appreciation ............. (1,808,264) 875,821
------------ ------------
NET INCREASE .................................... 1,821,952 8,480,787
Dividends to common shareholders from
net investment income............................. (3,680,847) (7,538,749)
Decrease from transactions in common shares of
beneficial interest............................... (1,778,973) (4,438,777)
------------ ------------
NET DECREASE..................................... (3,637,868) (3,496,739)
NET ASSETS:
Beginning of period................................ 138,240,827 141,737,566
------------ ------------
END OF PERIOD
(Including undistributed net investment income of
$757,075 and $828,798, respectively) ......... $134,602,959 $138,240,827
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
INTERCAPITAL INSURED MUNICIPAL SECURITIES
NOTES TO FINANCIAL STATEMENTS April 30, 1997 (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's investment objective is to provide
current income which is exempt from federal income tax. The Trust was
organized as a Massachusetts business trust on October 14, 1993 and commenced
operations on February 28, 1994.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures. Actual results could differ
from those estimates.
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
<PAGE>
INTERCAPITAL INSURED MUNICIPAL SECURITIES
NOTES TO FINANCIAL STATEMENTS April 30, 1997 (unaudited) continued
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 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 the Investment
Manager 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 proceeds from sales of portfolio securities, excluding short-term
investments, for the six months ended April 30, 1997 aggregated $615,828.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Trust's transfer agent. At April 30, 1997, the Trust had transfer agent fees
and expenses payable of approximately $6,600.
<PAGE>
INTERCAPITAL INSURED MUNICIPAL SECURITIES
NOTES TO FINANCIAL STATEMENTS April 30, 1997 (unaudited) continued
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 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, 1995 .................................................... 9,505,013 $95,050 $135,013,201
Treasury shares purchased and retired (weighted average discount 12.28%)* .... (337,000) (3,370) (4,435,407)
--------- ------- ------------
Balance, October 31, 1996 .................................................... 9,168,013 91,680 130,577,794
Treasury shares purchased and retired (weighted average discount 11.33%)* .... (132,800) (1,328) (1,777,645)
--------- ------- ------------
Balance, April 30, 1997 ...................................................... 9,035,213 $90,352 $128,800,149
========= ======= ============
</TABLE>
- --------------
* The Trustees have voted to retire the shares purchased.
<PAGE>
INTERCAPITAL INSURED MUNICIPAL SECURITIES
NOTES TO FINANCIAL STATEMENTS April 30, 1997 (unaudited) continued
6. FEDERAL INCOME TAX STATUS
At October 31, 1996, the Trust had a net capital loss carryover of
approximately $289,000 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 29, 1997 $0.0675 May 9, 1997 May 23, 1997
May 27, 1997 $0.0675 June 6, 1997 June 20, 1997
</TABLE>
<PAGE>
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, 1994*
FOR THE SIX FOR THE YEAR FOR THE YEAR THROUGH
MONTHS ENDED ENDED ENDED OCTOBER 31,
APRIL 30, 1997** OCTOBER 31, 1996** OCTOBER 31, 1995** 1994**++
- -----------------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.............. $ 15.08 $ 14.91 $ 13.20 $ 14.06
------- ------- ------- -------
Net investment income............................. 0.40 0.80 0.79 0.44
Net realized and unrealized gain (loss)........... (0.20) 0.11 1.58 (0.93)
------- ------- ------- -------
Total from investment operations.................. 0.20 0.91 2.37 (0.49)
------- ------- ------- -------
Less dividends from net investment income ........ (0.41) (0.81) (0.75) (0.38)
------- ------- ------- -------
Anti-dilutive effect of acquiring treasury
shares........................................... 0.03 0.07 0.09 0.05
------- ------- ------- -------
Offering costs charged against capital............ -- -- -- (0.04)
------- ------- ------- -------
Net asset value, end of period.................... $ 14.90 $ 15.08 $ 14.91 $ 13.20
======= ======= ======= =======
Market value, end of period....................... $13.625 $13.125 $12.625 $11.125
======= ======= ======= =======
TOTAL INVESTMENT RETURN+.......................... 6.99%(1) 10.52% 20.61% (23.56)%(1)
RATIOS TO AVERAGE NET ASSETS:
Total expenses.................................... 0.48%(2)(3) 0.49%(3) 0.54%(3) 0.51%(2)
Net investment income............................. 5.31%(2) 5.32% 5.51% 4.69%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands........... $134,603 $138,241 $141,738 $132,377
Portfolio turnover rate........................... -- 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) Does not reflect the effect of expense offset of 0.01%.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TRUSTEES
- -------------------------------------------------
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
- -------------------------------------------------
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
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, 1997
