UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-6472
Van Kampen Trust for Insured Municipals
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
1221 Avenue of the Americas NY NY 10020
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Ronald Robison
1221 Avenue of the Americas
New York, NY 10020
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
-----------------------------
Date of fiscal year end: 10/31/03
-----------
Date of reporting period: 04/30/03
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Item 1. Report to Shareholders
PERFORMANCE SUMMARY
RETURN HIGHLIGHTS
(as of April 30, 2003)
- -----------------------------
NYSE Ticker Symbol - VIM
- -----------------------------
<Table>
- -----------------------------------------------------------------------
Six-month total return(1) 13.92%
- -----------------------------------------------------------------------
One-year total return(1) 19.86%
- -----------------------------------------------------------------------
Five-year average annual total return(1) 8.57%
- -----------------------------------------------------------------------
Ten-year average annual total return(1) 8.12%
- -----------------------------------------------------------------------
Life-of-Trust average annual total return(1) 8.62%
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Commencement date 01/24/92
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Distribution rate as a % of closing common share market
price(2) 6.36%
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Taxable-equivalent distribution rate as a % of closing
common share market price(3) 10.36%
- -----------------------------------------------------------------------
Preferred share (Series A) rate(4) 1.150%
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Preferred share (Series B) rate(4) 1.200%
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Net asset value $16.83
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Closing common share market price $17.37
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Six-month high common share market price (01/06/03) $17.82
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Six-month low common share market price (11/04/02) $15.45
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</Table>
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
1
(1) Total return assumes an investment at the common share 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 share market price at the end of the
period indicated.
(2) Distribution rate represents the monthly annualized distributions of the
Trust at the end of the period and not the earnings of the Trust.
(3) The taxable-equivalent distribution rate is calculated assuming the maximum
38.6% federal income tax rate effective for calendar year 2003.
(4) See "Notes to Financial Statements" footnote #6, 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 is no guarantee of future results. Investment return,
common share market price and net asset value will fluctuate and Trust
shares, when sold, may be worth more or less than their original cost. An
investment in the Trust is subject to investment risks, and you could lose
money on your investment in the Trust. As a result of recent market
activity, current performance may vary from the figures shown. For more
up-to-date information, please visit vankampen.com or speak with your
financial advisor.
2
PORTFOLIO AT A GLANCE
CREDIT QUALITY
(as a percentage of long-term investments)
<Table>
<Caption>
As of April 30, 2003
AAA/Aaa.......................... 100.0%
</Table>
TOP FIVE SECTORS
(as a percentage of long-term investments)
<Table>
<Caption>
As of April 30, 2003
Airport........................... 14.5%
General Purpose................... 11.9%
Higher Education.................. 11.6%
Public Building................... 11.2%
Transportation.................... 10.4%
</Table>
Based upon the credit quality ratings as issued by Standard & Poor's Credit
Market Services/Moody's Investor Services, respectively. Subject to change
daily.
NET ASSET VALUE AND COMMON SHARE MARKET PRICE
(based upon quarter-end values--April 1993 through April 2003)
[LINE GRAPH]
<Table>
<Caption>
NET ASSET VALUE COMMON SHARE MARKET PRICE
--------------- -------------------------
4/93 $17.2400 $16.2500
6/93 $17.6000 $16.2500
$18.2400 $17.0000
$17.9800 $16.5000
$16.1500 $15.2500
6/94 $15.8700 $15.3750
$15.4400 $14.7500
$14.8300 $13.2500
$16.0600 $15.1250
6/95 $16.2800 $15.7500
$16.4800 $15.7500
$17.1400 $16.0000
$16.4000 $16.0000
6/96 $16.1800 $16.2500
$16.5200 $16.2500
$16.5500 $16.2500
$16.1900 $16.0000
6/97 $16.6000 $16.6875
$17.0000 $17.1250
$17.1600 $17.1875
$17.1200 $16.6250
6/98 $17.1100 $16.9375
$17.5600 $17.5625
$17.1800 $17.5625
$17.0200 $17.3750
6/99 $16.2300 $16.3750
$15.7100 $15.1250
$15.1300 $13.6875
$15.5300 $14.0000
6/00 $15.5500 $14.6250
$15.7300 $14.9375
$16.5200 $14.2500
$16.5900 $14.5100
6/01 $16.4200 $14.3300
$16.8000 $14.3700
$15.9800 $15.3400
$15.8500 $15.3900
6/02 $16.4300 $16.6200
$17.6000 $17.2800
$16.7200 $17.3900
$16.6800 $17.1500
4/03 $16.8300 $17.3700
</Table>
The solid line above represents the trust's net asset value (NAV), which
indicates overall changes in value among the trust's underlying securities. The
trust's common share market price is represented by the dashed line, which
indicates the price the market is willing to pay for shares of the trust at a
given time. Common share market price is influenced by a range of factors,
including supply and demand and market conditions.
3
Q&A WITH YOUR PORTFOLIO MANAGER
WE RECENTLY SPOKE WITH THE MANAGEMENT TEAM OF VAN KAMPEN TRUST FOR INSURED
MUNICIPALS ABOUT THE KEY EVENTS AND ECONOMIC FORCES THAT SHAPED THE MARKETS AND
INFLUENCED THE TRUST'S RETURN DURING THE SIX MONTHS ENDED APRIL 30, 2003. JOSEPH
PIRARO, PORTFOLIO MANAGER, HAS MANAGED THE TRUST SINCE 1992 AND HAS WORKED IN
THE INVESTMENT INDUSTRY SINCE 1971. THE FOLLOWING DISCUSSION REFLECTS HIS VIEWS
ON THE TRUST'S PERFORMANCE.
Q WHAT WAS THE MARKET
ENVIRONMENT OF THE PAST SIX MONTHS, AND HOW DID THE TRUST PERFORM IN THAT
ENVIRONMENT?
A The environment over the past six
months has been defined by two major themes. The first of these was the level of
interest rates. The period began with interest rates at levels not seen in over
three decades and, surprisingly for many, ended with rates slightly lower. The
Federal Reserve Board (the Fed) helped keep rates low with a widely anticipated
rate cut in November, driven by economic uncertainty and geopolitical risk. The
low level of rates led to a boom in issuance by municipalities seeking to lock
in low financing costs. As a result, issuance reached a record level of $354
billion in 2002 and continued to be exceptional in the first quarter of 2003.
The other theme in the market during the period was the relative
attractiveness of municipal bonds, which produced enough demand to absorb the
record issuance. Investors, wary of volatility in the equity market and in the
geopolitical arena, flocked to perceived safe haven investments. Their risk
aversion counteracted growing expectations for economic recovery and rising
interest rates and was a key factor in keeping interest rates at historically
low levels. In their ongoing preference for low-risk assets, investors bid
Treasury prices up to such high levels that municipal bonds became as
attractively valued as they have ever been relative to Treasuries. Insurance
companies also moved heavily into municipal bonds as their mainstay corporate
bond holdings became less attractive. At the same time, issuers recognized
investor concerns over economic weakness by insuring roughly 50 percent of all
issuance. This credit enhancement made municipal bonds even more attractive to
risk-averse investors.
While lower financing costs were a boon to municipal issuers, the continuing
weakness in the economy had a negative impact on municipal credit quality,
particularly in the first quarter of 2003. Moody's upgrades barely exceeded the
number of downgrades in the first quarter, with
4
credit quality facing continued pressure from rising social service costs and
weak national and regional economic conditions. As a result, municipalities face
enormous deficits in 2003, when their combined shortfall is expected to reach
$90 billion.
Performance along the yield curve was varied. The Fed's November rate cut
fueled a rally in short-term bonds that helped pull yields lower at the front
end of the curve. Despite that rally, the best performing segment of the curve
was the long-intermediate portion, where performance was largely driven by
buying activity among institutional investors drawn by the bonds' attractive
total return potential.
The trust's monthly dividend of $0.0920 per share translated to a
distribution rate of 6.36 percent based on the trust's closing common share
market price on April 30, 2003. Based on these figures, investors would have to
earn a distribution rate of 10.36 percent on a taxable investment (for an
investor in the 38.60 percent federal income tax bracket) to match the
tax-exempt yield provided by the trust.
For the six months ended April 30, 2003, the trust produced a total return
of 13.92 percent based on common share market price. By comparison, the Lehman
Brothers Municipal Bond Index posted a total return of 3.59 percent for the same
period. Of course, past performance is no guarantee of future results.
Investment return, common share market price and net asset value will fluctuate
and trust shares, when sold, may be worth more or less than their original cost.
As a result of recent market activity, current performance may vary from the
figures shown. For more up-to-date information, please visit vankampen.com or
speak with your financial advisor.
The Lehman Brothers Municipal Bond Index is an unmanaged, broad-based
statistical composite of municipal bonds. Index returns do not include any sales
charges or fees that would be paid by an investor purchasing the securities the
index represents. Such costs would lower performance. It is not possible to
invest directly in an index. For additional information, please refer to the
performance summary section.
Q WHAT STRATEGIES DID YOU PURSUE
IN MANAGING THE TRUST?
A With interest rates hovering near
record lows, we focused on protecting the trust from the potential adverse
effects of rising interest rates while maintaining the trust's yield. One of the
main ways we did this was to adjust the trust's maturity profile by shifting
assets from the short end of the yield curve to securities with maturities
between 18 and 22 years and a shorter call date. Our quantitative analysis
showed that this segment of the yield curve offered the optimal combination of
total return potential as well as downside protection in the form of a
comfortable yield cushion and an intermediate maturity profile.
We were similarly cautious in managing the portfolio's sector exposures.
Over the course of the period, we avoided securities from the health care and
housing sectors that offered less compelling structural and credit
characteristics. We focused
5
instead on bonds backed by revenues from more mainstream municipal sectors such
as transportation and water and sewer. The transportation sector offered
particularly attractive value, especially among airport bonds. These securities
were hit hard by concerns over the financial health of airlines, which caused
investors to bid down the prices of most airport bonds. We took advantage of the
oversold state of the sector by adding to the trust's holdings of insured
airport bonds that were relatively cheap in spite of their credit protection.
One of the sectors we avoided during the period was tobacco bonds. These
bonds were issued by states seeking to securitize their future income streams
resulting from settlements from class action suits against the major tobacco
companies. Recent litigation in Illinois resulted in a judge awarding billions
more in a suit alleging that the companies misled smokers about the amount of
nicotine in "light" cigarettes. In order to appeal, the law required the
companies to put up such substantial amounts of money that some began talking
about potential bankruptcy, and the tobacco bonds' credit ratings and price
performance suffered accordingly. Our decision not to invest in these securities
was a benefit to shareholders during the period.
6
BY THE NUMBERS
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
THE FOLLOWING PAGES DETAIL YOUR TRUST'S PORTFOLIO OF INVESTMENTS AT THE END OF
THE REPORTING PERIOD.
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
MUNICIPAL BONDS 153.6%
ALABAMA 8.2%
$1,000 Alabama Drinking Wtr Fin Auth Revolving Fd
Ln Ser A (AMBAC Insd)....................... 5.125% 08/15/16 $ 1,086,190
1,500 Alabama Drinking Wtr Fin Auth Revolving Fd
Ln Ser A (AMBAC Insd)....................... 5.250 08/15/18 1,624,440
3,570 Alabama St Brd of Ed Tuit Rev John C Calhoun
Cmty College A (FGIC Insd).................. 5.500 05/01/17 4,034,635
1,395 Alabama St Univ Rev Gen Tuit & Fee Ser B
(MBIA Insd)................................. 5.250 03/01/17 1,533,119
1,525 Alabama St Univ Rev Gen Tuit & Fee Ser B
(MBIA Insd)................................. 5.250 03/01/19 1,654,945
1,750 Auburn Univ AL Gen Fee Rev (AMBAC Insd)..... 5.250 06/01/16 1,929,935
1,480 Dothan-Houston Cnty, AL Arpt Auth Arpt Rev
(MBIA Insd)................................. 5.600 12/01/20 1,594,818
-------------
13,458,082
-------------
ALASKA 2.3%
2,110 Alaska St Intl Arpt Rev Ser B (AMBAC
Insd)....................................... 5.750 10/01/18 2,385,861
2,000 North Slope Borough, AK Cap Apprec Ser B
(MBIA Insd)................................. * 06/30/11 1,453,700
-------------
3,839,561
-------------
ARIZONA 4.0%
1,300 Maricopa Cnty, AZ Sch Dist 69 Paradise Vly
Ctf Ownership Ser A Rfdg (FGIC Insd)........ 5.250 07/01/14 1,489,969
2,000 Phoenix, AZ Civic Impt Corp Jr Lien (FGIC
Insd)....................................... 5.375 07/01/29 2,034,080
1,510 Pima Cnty, AZ Indl Dev Auth Indl Rev Lease
Oblig Irvington Proj Tucson Ser A Rfdg (FSA
Insd)....................................... 7.250 07/15/10 1,595,692
1,350 Tucson, AZ Wtr Rev Rfdg (FGIC Insd)......... 5.500 07/01/17 1,532,358
-------------
6,652,099
-------------
ARKANSAS 0.7%
1,095 Fort Smith, AR Wtr & Swr Rev Ser C (FSA
Insd)....................................... 5.000 10/01/18 1,177,092
-------------
</Table>
See Notes to Financial Statements
7
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
CALIFORNIA 5.1%
$2,500 California Pollutn Ctl Fin Auth Pollutn Ctl
Rev Pacific Gas & Elec Ser B (FSA Insd)..... 6.350% 06/01/09 $ 2,560,225
1,825 Palmdale, CA Civic Auth Rev Redev Proj No 1
Ser A (MBIA Insd) (a)....................... 5.000 07/01/25 1,893,419
7,000 San Jose, CA Single Family Mtg Rev Cap
Accumulator (Escrowed to Maturity) (GEMIC
Mtg Collateralized)......................... * 04/01/16 3,902,080
-------------
8,355,724
-------------
COLORADO 2.3%
1,000 Pitkin Cnty, CO Sch Dist No 1 Aspen (FGIC
Insd)....................................... 5.375 12/01/17 1,105,560
2,425 Weld Cnty, CO Sch Dist No 006 (FSA Insd)
(b)......................................... 5.500 12/01/19 2,680,546
-------------
3,786,106
-------------
CONNECTICUT 0.8%
1,165 New Haven, CT Ser B Rfdg (FGIC Insd)........ 5.250 11/01/14 1,324,628
-------------
DISTRICT OF COLUMBIA 2.1%
2,035 District of Columbia Tax Increment Rev
Gallery Place Proj (FSA Insd)............... 5.500 07/01/14 2,296,416
1,000 District of Columbia Tax Increment Rev
Gallery Place Proj (FSA Insd)............... 5.500 07/01/15 1,125,170
-------------
3,421,586
-------------
FLORIDA 7.9%
2,430 Collier Cnty, FL Sch Brd Ctf Master Lease
Pgm Ser B Rfdg (FSA Insd)................... 5.500 02/15/13 2,798,048
2,000 Escambia Cnty, FL Hlth Fac Auth Rev (AMBAC
Insd)....................................... 5.950 07/01/20 2,192,280
2,500 Hillsborough Cnty, FL Aviation Tampa Intl
Arpt Ser A (MBIA Insd)...................... 5.375 10/01/16 2,722,375
2,000 Miami-Dade Cnty, FL Aviation Miami Intl Arpt
(FGIC Insd)................................. 5.375 10/01/27 2,067,400
915 Orange Cnty, FL Hsg Fin Auth Single Family
Mtg Rev Ser A (GNMA Collateralized)......... 6.200 10/01/16 966,167
2,000 Pasco Cnty, FL Solid Waste Disp & Res
Recovery Sys Rev (AMBAC Insd)............... 6.000 04/01/11 2,283,000
-------------
13,029,270
-------------
</Table>
See Notes to Financial Statements
8
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
GEORGIA 5.8%
$3,145 Atlanta, GA Dev Auth Rev Yamacraw Design Ctr
Proj Ser A (MBIA Insd)...................... 5.375% 01/01/17 $ 3,469,910
3,620 Atlanta, GA Dev Auth Rev Yamacraw Design Ctr
Proj Ser A (MBIA Insd)...................... 5.375 01/01/18 3,968,896
1,860 George L Smith II GA Wrld Congress Ctr Auth
Rev Domed Stad Proj Rfdg (MBIA Insd)........ 6.000 07/01/10 2,139,130
-------------
9,577,936
-------------
HAWAII 3.4%
1,255 Hawaii St Dept Budget & Fin Spl Purp Rev
Hawaiian Elec Co & Subsidiaries (MBIA
Insd)....................................... 6.550 12/01/22 1,286,049
585 Hawaii St Dept Budget & Fin Spl Purp Rev
Hawaiian Elec Co Proj Ser B (MBIA Insd)..... 7.600 07/01/20 588,370
2,000 Hawaii St Dept Budget & Fin Spl Purp Rev
Hawaiian Elec Co Proj Ser C (AMBAC Insd).... 6.200 11/01/29 2,301,140
1,250 Hawaii St Dept Budget & Fin Spl Purp Rev
Hawaiian Elec Co Ser D Rfdg (AMBAC Insd).... 6.150 01/01/20 1,418,637
-------------
5,594,196
-------------
ILLINOIS 19.1%
2,000 Bolingbrook, IL Cap Apprec Ser B (MBIA
Insd)....................................... * 01/01/32 411,000
1,000 Chicago, IL Brd of Ed (FGIC Insd)........... 5.500 12/01/31 1,080,090
2,000 Chicago, IL Cap Apprec City Colleges (FGIC
Insd)....................................... * 01/01/29 513,180
2,000 Chicago, IL Cap Apprec City Colleges (FGIC
Insd)....................................... * 01/01/30 486,700
2,000 Chicago, IL O'Hare Intl Arpt Rev Gen Arpt
Second Lien Ser A (AMBAC Insd).............. 5.500 01/01/16 2,146,800
1,000 Chicago, IL Pk Dist Ltd Tax Ser A (FGIC
Insd)....................................... 5.500 01/01/18 1,096,440
5,000 Chicago, IL Proj & Rfdg (FGIC Insd)......... 5.250 01/01/28 5,240,100
3,000 Chicago, IL Proj Ser C Rfdg (FGIC Insd)..... 5.500 01/01/40 3,222,780
80 Chicago, IL Residential Mtg Rev Cap Apprec
Ser B Rfdg (MBIA Insd)...................... * 10/01/09 51,039
1,770 Glenwood, IL (FSA Insd)..................... 5.375 12/01/30 1,848,287
1,000 Illinois Ed Fac Auth Rev DePaul Univ (AMBAC
Insd)....................................... 5.625 10/01/16 1,136,510
1,000 Illinois Ed Fac Auth Rev Robert Morris
College (MBIA Insd)......................... 5.800 06/01/30 1,114,070
3,000 Illinois St First Ser (FGIC Insd)........... 5.500 02/01/16 3,368,220
1,500 Illinois St First Ser (FGIC Insd)........... 5.500 02/01/17 1,673,475
2,000 Illinois St First Ser (FGIC Insd)........... 5.500 02/01/18 2,217,240
1,260 Kendall, Kane & Will Cntys, IL (FGIC
Insd)....................................... 5.500 10/01/12 1,435,455
</Table>
See Notes to Financial Statements
9
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
ILLINOIS (CONTINUED)
$1,250 Kendall, Kane & Will Cntys, IL Ser B (FGIC
Insd)....................................... 5.000% 10/01/22 $ 1,303,850
5,000 Saint Clair Cnty, IL Cap Apprec (FGIC
Insd)....................................... * 10/01/21 1,824,600
1,250 Wilmette, IL Pk Dist (AMBAC Insd)........... 5.200 12/01/21 1,333,825
-------------
31,503,661
-------------
INDIANA 3.4%
1,000 Baugo, IN Sch Bldg Corp First Mtg Ser A
(AMBAC Insd)................................ 5.125 01/15/25 1,034,860
1,875 Indianapolis, IN Loc Pub Impt Ser C (AMBAC
Insd)....................................... 5.125 01/10/17 2,020,800
1,235 Indianapolis, IN Loc Pub Impt Ser D (AMBAC
Insd)....................................... 5.500 02/01/21 1,356,042
1,195 Saint Joseph Cnty, IN Econ Dev Saint Mary's
College Proj (MBIA Insd).................... 5.125 04/01/28 1,233,539
-------------
5,645,241
-------------
KANSAS 2.0%
2,795 Kansas St Dev Fin Auth Lease Juvenile
Justice Auth Ser D (MBIA Insd).............. 5.250 05/01/15 3,083,556
165 Olathe Labette Cnty, KS Single Family Mtg
Rev Coll Ser A-I Rfdg (GNMA
Collateralized)............................. 8.100 08/01/23 177,058
-------------
3,260,614
-------------
KENTUCKY 1.3%
2,000 Kenton Cnty, KY Arpt Brd Rev Cincinnati
Northn KY Ser B (MBIA Insd)................. 5.500 03/01/18 2,161,540
-------------
LOUISIANA 5.9%
3,145 Calcasieu Parish, LA Mem Hosp Svc Dist Hosp
Rev Lake Charles Mem Hosp Proj Ser A (Connie
Lee Insd)................................... 6.650 12/01/21 3,219,536
1,605 Greater New Orleans Expwy Impt Rfdg (AMBAC
Insd)....................................... 5.000 11/01/18 1,726,563
1,685 Greater New Orleans Expwy Impt Rfdg (AMBAC
Insd)....................................... 5.000 11/01/19 1,799,277
1,000 Louisiana Hsg Fin Agy Mtg Rev Coll Mtg Malta
Square Proj (GNMA Collateralized)........... 6.450 09/01/27 1,077,420
5 Louisiana Pub Fac Auth Rev Student Ln LA
Opportunity Ln Ser A (FSA Insd)............. 6.600 01/01/04 5,068
80 Louisiana Pub Fac Auth Rev Student Ln LA
Opportunity Ln Ser A (FSA Insd)............. 6.700 01/01/05 81,061
</Table>
See Notes to Financial Statements
10
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
LOUISIANA (CONTINUED)
$ 55 Louisiana Pub Fac Auth Rev Student Ln LA
Opportunity Ln Ser A (FSA Insd)............. 6.800% 01/01/06 $ 55,722
120 Louisiana Pub Fac Auth Rev Student Ln LA
Opportunity Ln Ser A (FSA Insd)............. 6.850 01/01/09 121,472
1,565 New Orleans, LA Audubon Commn Aquarium Ser A
Rfdg (FSA Insd) (a)......................... 5.000 10/01/12 1,672,688
-------------
9,758,807
-------------
MASSACHUSETTS 1.4%
2,000 Massachusetts St Dev Fin Agy Semass Sys Ser
A (MBIA Insd)............................... 5.625 01/01/15 2,230,720
-------------
MICHIGAN 5.4%
2,605 Lansing, MI Cmnty College (FGIC Insd)....... 5.500 05/01/17 2,915,750
4,250 Michigan St Ctf Part (AMBAC Insd)........... 5.500 06/01/27 4,613,375
1,000 Monroe Cnty, MI Econ Dev Corp Ltd Oblig Rev
Coll Detroit Edison Co Ser AA Rfdg (FGIC
Insd)....................................... 6.950 09/01/22 1,323,240
-------------
8,852,365
-------------
MISSISSIPPI 2.4%
420 Mississippi Home Corp Single Family Rev Mtg
Access Pgm Ser C (GNMA Collateralized)...... 8.125 12/01/24 447,325
508 Mississippi Home Corp Single Family Rev Mtg
Access Pgm Ser D (GNMA Collateralized)...... 8.100 12/01/24 544,139
315 Mississippi Home Corp Single Family Rev Mtg
Access Pgm Ser E (GNMA Collateralized)...... 8.100 12/01/25 337,428
2,500 Mississippi Hosp Equip & Fac Auth Rev Rush
Med Fndtn Proj (Connie Lee Insd)............ 6.700 01/01/18 2,534,400
-------------
3,863,292
-------------
MISSOURI 2.0%
1,050 Grandview, MO Ctf Part (FGIC Insd).......... 5.250 01/01/18 1,149,488
1,000 Missouri St Hsg Dev Commn Multi-Family Hsg
Brookstone Ser A (FSA Insd)................. 6.000 12/01/16 1,063,770
1,095 Missouri St Hsg Dev Commn Multi-Family Hsg
Truman Farm Ser A (FSA Insd)................ 5.750 10/01/11 1,155,871
-------------
3,369,129
-------------
NEBRASKA 0.6%
985 Nebraska Invt Fin Auth Multi-Family Rev Hsg
Summit Club Apt Proj (FSA Insd)............. 5.700 10/01/12 1,030,271
-------------
</Table>
See Notes to Financial Statements
11
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
NEW MEXICO 0.5%
$ 770 New Mexico Mtg Fin Auth Single Family Mtg
Pgm A2 (GNMA Collateralized)................ 6.050% 07/01/16 $ 820,936
-------------
NEW YORK 6.0%
1,000 Buffalo, NY Sch Ser B (MBIA Insd)........... 5.375 11/15/18 1,109,410
2,000 New York City Transitional Future Tax Secd
Ser D (MBIA Insd)........................... 5.250 02/01/18 2,194,200
3,000 New York St Twy Auth Hwy & Brdg Tr Fd Ser A
(FSA Insd).................................. 5.250 04/01/18 3,268,320
3,000 Port Auth NY & NJ Spl Oblig Rev Spl Proj JFK
Intl Arpt Terminal 6 (MBIA Insd)............ 5.750 12/01/25 3,266,490
-------------
9,838,420
-------------
OHIO 5.9%
2,500 Cuyahoga Falls, OH Ser 1 (FGIC Insd)........ 5.250 12/01/17 2,740,425
1,820 Garfield Heights, OH City Sch Dist Sch Impt
(MBIA Insd)................................. 5.500 12/15/19 2,012,501
1,000 New Albany, OH Cmnty Auth Cmnty Fac Rev Ser
B (AMBAC Insd).............................. 5.500 10/01/17 1,119,130
1,875 Ohio Hsg Fin Agy Mtg Rev Residential Mtg Bkd
Sec Ser C (GNMA Collateralized)............. 4.900 03/01/11 1,953,319
1,715 Ohio St Bldg Auth St Fac Admin Bldg Fd Proj
Ser A (FSA Insd)............................ 5.500 04/01/18 1,905,657
-------------
9,731,032
-------------
OKLAHOMA 0.9%
1,250 Tulsa, OK Arpt Impt Tr Gen Rev Ser A (FGIC
Insd)....................................... 6.000 06/01/20 1,480,913
-------------
OREGON 3.8%
1,740 Linn Cnty, OR Sch Dist No 055 Sweet Home
(FSA Insd).................................. 5.500 06/15/20 1,907,440
2,150 Oregon St Bd Bk Rev OR Econ Cmnty Dev Dept
Ser A (MBIA Insd)........................... 5.500 01/01/16 2,417,589
1,715 Oregon St Dept Admin Ser C Rfdg (MBIA
Insd)....................................... 5.250 11/01/18 1,866,949
-------------
6,191,978
-------------
PENNSYLVANIA 9.5%
2,000 Allegheny Cnty, PA Hosp Dev Auth Rev
Pittsburgh Mercy Hlth Sys Inc (Escrowed to
Maturity) (AMBAC Insd)...................... 5.625 08/15/26 2,208,900
1,610 Pennridge, PA Sch Dist (MBIA Insd).......... 5.125 02/15/19 1,735,966
</Table>
See Notes to Financial Statements
12
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
PENNSYLVANIA (CONTINUED)
$5,000 Philadelphia, PA Auth Indl Dev Lease Rev Ser
B (FSA Insd)................................ 5.500% 10/01/15 $ 5,649,600
2,300 Philadelphia, PA Redev Auth Rev Neighborhood
Transformation Ser A (FGIC Insd)............ 5.500 04/15/22 2,511,393
1,950 Sayre, PA Hlthcare Fac Auth Rev Hosp VHA
PA/VHA East Fin Pgm Ser B (AMBAC Insd)...... 6.375 07/01/22 2,014,935
1,350 York Cnty, PA Sch Technology (FGIC Insd)
(a)......................................... 5.375 02/15/17 1,505,466
-------------
15,626,260
-------------
RHODE ISLAND 1.1%
1,500 Rhode Island Port Auth & Econ Dev Corp Arpt
Rev Ser A (FSA Insd)........................ 7.000 07/01/14 1,858,530
-------------
SOUTH CAROLINA 5.2%
3,750 South Carolina Jobs Econ Elec & Gas Co Proj
Ser B (AMBAC Insd).......................... 5.450 11/01/32 3,916,200
4,575 South Carolina St Port Auth Port Rev
(Escrowed to Maturity) (AMBAC Insd)......... 6.750 07/01/21 4,617,685
-------------
8,533,885
-------------
SOUTH DAKOTA 0.7%
1,000 South Dakota St Hlth & Ed Fac Auth
Vocational Ed Pgm Ser A (AMBAC Insd)........ 5.400 08/01/13 1,125,100
-------------
TENNESSEE 3.1%
4,315 Metropolitan Nashville Arpt Auth TN Arpt Rev
Impt Ser A Rfdg (FGIC Insd)................. 6.600 07/01/15 5,145,940
-------------
TEXAS 17.5%
1,085 Brazos River Auth, TX Johnson Cnty Surface
Rfdg (AMBAC Insd)........................... 5.800 09/01/11 1,194,856
2,675 Dallas Cnty, TX Cmnty College Fin Sys (AMBAC
Insd)....................................... 5.375 02/15/18 2,925,969
2,000 Dallas-Fort Worth, TX Intl Arpt Rev Impt Jt
Ser A Rfdg (FGIC Insd)...................... 5.875 11/01/17 2,231,860
1,500 Dallas-Fort Worth, TX Intl Arpt Rev Impt Jt
Ser A Rfdg (FGIC Insd)...................... 5.875 11/01/18 1,662,600
5,000 Dallas-Fort Worth, TX Intl Arpt Rev Impt Jt
Ser A Rfdg (FGIC Insd)...................... 5.500 11/01/31 5,215,400
1,800 Midland, TX Ctf Oblig Arpt Sub Lien (FSA
Insd)....................................... 5.850 03/01/13 1,956,294
</Table>
See Notes to Financial Statements
13
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
TEXAS (CONTINUED)
$5,000 Texas St Tpk Auth Cent TX Tpk First Tier Ser
A (AMBAC Insd).............................. 5.500% 08/15/39 $ 5,336,400
3,285 Texas St Vet Hsg Assistance (MBIA Insd)
(b)......................................... 6.800 12/01/23 3,404,837
1,000 Trinity River Auth TX Rev Impt Tarrant Cnty
Wtr Proj Rfdg (MBIA Insd)................... 5.500 02/01/19 1,108,580
2,000 Tyler, TX Hlth Fac Dev Corp Hosp Rev Mother
Frances Hosp of Tyler (FGIC Insd)........... 6.500 07/01/22 2,042,380
1,500 Wichita Falls, TX Wtr & Swr Rev Priority
Lien (AMBAC Insd)........................... 5.375 08/01/17 1,646,430
-------------
28,725,606
-------------
VIRGINIA 1.0%
1,495 Harrisonburg, VA Redev & Hsg Auth
Multi-Family Hsg Rev (FSA Insd)............. 6.200 04/01/17 1,581,052
-------------
WASHINGTON 8.5%
2,000 Chelan Cnty, WA Pub Util Dist No. 001 Cons
Rev Chelan Hydro Ser A (MBIA Insd).......... 5.600 01/01/36 2,104,980
1,855 Grant Cnty, WA Pub Util Dist No 2 Priest
Rapids Hydro Elec Rev Second Ser D (AMBAC
Insd)....................................... 6.000 01/01/13 2,065,598
1,460 Grant Cnty, WA Pub Util Dist No 2 Priest
Rapids Hydro Elec Rev Second Ser D (AMBAC
Insd)....................................... 6.250 01/01/17 1,638,354
2,235 Grant Cnty, WA Pub Util Dist No 2 Wanapum
Hydro Elec Rev Second Ser D (AMBAC Insd).... 6.000 01/01/13 2,488,740
1,770 Grant Cnty, WA Pub Util Dist No 2 Wanapum
Hydro Elec Rev Second Ser D (AMBAC Insd).... 6.250 01/01/17 1,986,223
1,405 Pierce Cnty, WA (AMBAC Insd)................ 5.750 08/01/13 1,617,127
1,940 Thurston & Pierce Cntys, WA (FSA Insd)...... 5.250 12/01/18 2,115,182
-------------
14,016,204
-------------
</Table>
See Notes to Financial Statements
14
YOUR TRUST'S INVESTMENTS
April 30, 2003 (Unaudited)
<Table>
<Caption>
PAR
AMOUNT MARKET
(000) DESCRIPTION COUPON MATURITY VALUE
PUERTO RICO 3.8%
$5,000 Puerto Rico Comwlth Hwy & Trans Auth Hwy Rev
Ser Y Rfdg (FSA Insd)....................... 6.250% 07/01/21 $ 6,253,050
-------------
TOTAL LONG-TERM INVESTMENTS 153.6%
(Cost $234,910,837).................................................... 252,820,826
SHORT-TERM INVESTMENTS 2.0%
(Cost $3,200,000)...................................................... 3,200,000
-------------
TOTAL INVESTMENTS 155.6%
(Cost $238,110,837).................................................... 256,020,826
LIABILITIES IN EXCESS OF OTHER ASSETS (0.9%)............................ (1,451,986)
PREFERRED SHARES (INCLUDING ACCRUED DISTRIBUTIONS) (54.7%).............. (90,018,862)
-------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0%........................... $ 164,549,978
=============
</Table>
* Zero coupon bond
(a) Securities purchased on a when-issued or delayed delivery basis.
(b) Assets segregated as collateral for when-issued or delayed delivery purchase
commitments and open futures transactions.
AMBAC--AMBAC Indemnity Corp.
Connie Lee--Connie Lee Insurance Co.
FGIC--Financial Guaranty Insurance Co.
FSA--Financial Security Assurance Inc.
GEMIC--General Electric Mortgage Insurance Corp.
GNMA--Government National Mortgage Association
MBIA--Municipal Bond Investors Assurance Corp.
See Notes to Financial Statements
15
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
April 30, 2003 (Unaudited)
<Table>
ASSETS:
Total Investments (Cost $238,110,837)....................... $256,020,826
Cash........................................................ 289,450
Receivables:
Interest.................................................. 3,717,043
Investments Sold.......................................... 3,550,449
Other....................................................... 479
------------
Total Assets............................................ 263,578,247
------------
LIABILITIES:
Payables:
Investments Purchased..................................... 8,398,467
Variation Margin on Futures............................... 267,063
Investment Advisory Fee................................... 114,267
Administrative Fee........................................ 10,388
Affiliates................................................ 6,875
Trustees' Deferred Compensation and Retirement Plans........ 162,643
Accrued Expenses............................................ 49,704
------------
Total Liabilities....................................... 9,009,407
Preferred Shares (including accrued distributions).......... 90,018,862
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $164,549,978
============
NET ASSET VALUE PER COMMON SHARE ($164,549,978 divided by
9,776,415 shares outstanding)............................... $ 16.83
============
NET ASSETS CONSIST OF:
Common Shares ($.01 par value with an unlimited number of
shares authorized, 9,776,415 shares issued and
outstanding).............................................. $ 97,764
Paid in Surplus............................................. 144,258,521
Net Unrealized Appreciation................................. 17,687,272
Accumulated Undistributed Net Investment Income............. 1,332,715
Accumulated Net Realized Gain............................... 1,173,706
------------
NET ASSETS APPLICABLE TO COMMON SHARES...................... $164,549,978
============
PREFERRED SHARES ($.01 par value, authorized 100,000,000
shares, 3,600 issued with liquidation preference of
$25,000 per share)........................................ $ 90,000,000
============
NET ASSETS INCLUDING PREFERRED SHARES....................... $254,549,978
============
</Table>
See Notes to Financial Statements
16
Statement of Operations
For the Six Months Ended April 30, 2003 (Unaudited)
<Table>
INVESTMENT INCOME:
Interest.................................................... $ 6,314,065
-----------
EXPENSES:
Investment Advisory Fee..................................... 688,608
Preferred Share Maintenance................................. 121,575
Administrative Fee.......................................... 62,601
Trustees' Fees and Related Expenses......................... 25,812
Legal....................................................... 12,360
Custody..................................................... 7,920
Other....................................................... 88,553
-----------
Total Expenses.......................................... 1,007,429
-----------
NET INVESTMENT INCOME....................................... $ 5,306,636
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $ 2,160,926
Futures................................................... (1,051,076)
-----------
Net Realized Gain........................................... 1,109,850
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 14,804,936
-----------
End of the Period:
Investments............................................. 17,909,989
Futures................................................. (222,717)
-----------
17,687,272
-----------
Net Unrealized Appreciation During the Period............... 2,882,336
-----------
NET REALIZED AND UNREALIZED GAIN............................ $ 3,992,186
===========
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS..................... $ (573,118)
===========
NET INCREASE IN NET ASSETS APPLICABLE TO COMMON SHARES FROM
OPERATIONS................................................ $ 8,725,704
===========
</Table>
See Notes to Financial Statements
17
Statements of Changes in Net Assets
(Unaudited)
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.............................. $ 5,306,636 $ 10,829,146
Net Realized Gain.................................. 1,109,850 4,024,334
Net Unrealized Appreciation/Depreciation During the
Period........................................... 2,882,336 (790,828)
Distributions to Preferred Shareholders:
Net Investment Income............................ (411,554) (449,870)
Net Realized Gain................................ (161,564) (1,191,458)
------------ ------------
Change in Net Assets Applicable to Common Shares
from Operations.................................. 8,725,704 12,421,324
Distributions to Common Shareholders:
Net Investment Income............................ (5,325,284) (9,850,444)
Net Realized Gain................................ (3,797,757) (3,773,773)
------------ ------------
NET CHANGE IN NET ASSETS APPLICABLE TO COMMON
SHARES FROM INVESTMENT ACTIVITIES................ (397,337) (1,202,893)
FROM CAPITAL TRANSACTIONS:
Value of Common Shares Issued Through Dividend
Reinvestment..................................... 435,437 149,100
------------ ------------
TOTAL INCREASE/DECREASE IN NET ASSETS APPLICABLE TO
COMMON SHARES.................................... 38,100 (1,053,793)
NET ASSETS APPLICABLE TO COMMON SHARES:
Beginning of the Period............................ 164,511,878 165,565,671
------------ ------------
End of the Period (Including accumulated
undistributed net investment income of $1,332,715
and $1,762,917, respectively).................... $164,549,978 $164,511,878
============ ============
</Table>
See Notes to Financial Statements
18
Financial Highlights
(Unaudited)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE COMMON SHARE OF THE
TRUST OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX
MONTHS
ENDED
APRIL 30, -----------------------------
2003 2002 (a) 2001 2000
-----------------------------------------
NET ASSET VALUE, BEGINNING OF THE PERIOD.... $ 16.87 $ 17.00 $ 15.88 $ 15.35
------- ------- ------- --------
Net Investment Income..................... .54 1.11 1.21 1.26
Net Realized and Unrealized Gain/Loss..... .42 .33 1.11 .61
Common Share Equivalent of Distributions
Paid to Preferred Shareholders:
Net Investment Income................... (.04) (.05) (.29) (.38)
Net Realized Gain....................... (.02) (.12) (.02) -0-
------- ------- ------- --------
Total from Investment Operations............ .90 1.27 2.01 1.49
Distributions Paid to Common Shareholders:
Net Investment Income................... (.55) (1.01) (.83) (.96)
Net Realized Gain....................... (.39) (.39) (.06) -0-
------- ------- ------- --------
NET ASSET VALUE, END OF THE PERIOD.......... $ 16.83 $ 16.87 $ 17.00 $ 15.88
======= ======= ======= ========
Common Share Market Price at End of the
Period.................................... $ 17.37 $ 16.12 $ 14.98 $14.3125
Total Return (b)............................ 13.92%* 17.34% 11.18% 5.45%
Net Assets Applicable to Common Shares at
End of the Period (In millions)........... $ 164.5 $ 164.5 $ 165.6 $ 154.7
Ratio of Expenses to Average Net Assets
Applicable to Common Shares (c)........... 1.25% 1.40% 1.49% 1.61%
Ratio of Net Investment Income to Average
Net Assets Applicable to Common Shares
(c)....................................... 6.59% 6.73% 7.34% 8.16%
Portfolio Turnover.......................... 22%* 50% 53% 41%
SUPPLEMENTAL RATIOS:
Ratio of Expenses to Average Net Assets
Including Preferred Shares (c)............ .80% .90% .95% 1.01%
Ratio of Net Investment Income to Average
Net Assets Applicable to Common Shares
(d)....................................... 6.08% 6.46% 5.58% 5.72%
SENIOR SECURITIES:
Total Preferred Shares Outstanding.......... 3,600 3,600 3,600 3,600
Asset Coverage Per Preferred Share (e)...... $70,714 $70,721 $70,990 $ 67,981
Involuntary Liquidating Preference Per
Preferred Share........................... $25,000 $25,000 $25,000 $ 25,000
Average Market Value Per Preferred Share.... $25,000 $25,000 $25,000 $ 25,000
</Table>
* Non-Annualized
(a) As required, effective November 1, 2001, the Trust has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment Companies
and began accreting market discount on fixed income securities. The effect
of this change for the year ended October 31, 2002 was to increase net
investment income per share by less than $.01, decrease net realized and
unrealized gains and losses per share by less than $.01, and increase the
ratio of net investment income to average net assets applicable to common
shares by .02%. Per share, ratios and supplemental data for periods prior to
October 31, 2002 have not been restated to reflect this change in
presentation.
(b) Total return assumes an investment at the common share 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 share market price at the end of the
period indicated.
(c) Ratios do not reflect the effect of dividend payments to preferred
shareholders.
(d) Ratios reflect the effect of dividend payments to preferred shareholders.
(e) Calculated by subtracting the Trust's total liabilities (not including the
preferred shares) from the Trust's total assets and dividing this by the
number of preferred shares outstanding.
19
<Table>
<Caption>
YEAR ENDED OCTOBER 31,
- -----------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------
$ 17.43 $ 17.01 $ 16.69 $ 16.69 $ 14.88 $ 18.21 $ 15.28
------- -------- -------- -------- -------- -------- --------
1.27 1.28 1.30 1.32 1.34 1.35 1.36
(1.87) .59 .58 .06 1.88 (3.15) 2.95
(.28) (.31) (.29) (.33) (.36) (.30) (.29)
(.05) (.03) (.06) -0- -0- (.03) (.03)
------- -------- -------- -------- -------- -------- --------
(.93) 1.53 1.53 1.05 2.86 (2.13) 3.99
(.99) (1.00) (1.05) (1.05) (1.05) (1.05) (.97)
(.16) (.11) (.16) -0- -0- (.15) (.09)
------- -------- -------- -------- -------- -------- --------
$ 15.35 $ 17.43 $ 17.01 $ 16.69 $ 16.69 $ 14.88 $ 18.21
======= ======== ======== ======== ======== ======== ========
$ 14.50 $ 17.75 $ 17.25 $ 16.125 $ 15.75 $ 13.50 $ 17.25
12.42% 9.77% 15.04% 9.19% 24.96% -15.57% 26.98%
$ 149.6 $ 169.1 $ 164.5 $ 161.0 $ 160.6 $ 143.2 $ 175.2
1.56% 1.56% 1.57% 1.60% 1.63% 1.57% 1.54%
7.62% 7.44% 7.81% 8.00% 8.45% 8.14% 8.01%
53% 66% 36% 35% 28% 26% 38%
1.00% 1.01% 1.01% 1.02% 1.03% 1.01% .99%
5.97% 5.65% 6.05% 5.99% 6.16% 6.33% 6.29%
3,600 1,800 1,800 1,800 1,800 1,800 1,800
$66,543 $143,952 $141,362 $139,456 $139,209 $129,537 $147,331
$25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
$25,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
</Table>
See Notes to Financial Statements
20
NOTES TO
FINANCIAL STATEMENTS
April 30, 2003 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Trust for Insured Municipals (the "Trust") is registered as a
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 tax, consistent with
preservation of capital. In normal market conditions, the Trust intends to
invest substantially all of its assets in municipal securities which are covered
by insurance with respect to the timely payment of principal and interest. The
Trust commenced investment operations on January 24, 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 accounting principles
generally accepted in the United States of America 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 Municipal bonds are valued by independent pricing services
or dealers using the mean of the bid and asked prices or, in the absence of
market quotations, at fair value based upon yield data relating to municipal
bonds with similar characteristics and general market conditions. Securities
which are not valued by independent pricing services or dealers are valued at
fair value using procedures established in good faith by the Board of Trustees.
Future contracts are valued at the settlement price established each day on the
exchange on which they are traded. Short-term securities with remaining
maturities of 60 days or less are valued at amortized cost, which approximates
market value.
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, 2003, the Trust had
$5,002,067 of when-issued and delayed delivery purchase commitments.
21
NOTES TO
FINANCIAL STATEMENTS
April 30, 2003 (Unaudited)
C. INVESTMENT INCOME Interest income is recorded on an accrual basis. Bond
premium is amortized and discount is accreted over the expected life of each
applicable security.
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, 2003, the cost and related gross unrealized appreciation and
depreciation are as follows:
<Table>
Cost of investments for tax purposes........................ $238,062,257
============
Gross tax unrealized appreciation........................... $ 17,958,569
Gross tax unrealized depreciation........................... -0-
------------
Net tax unrealized appreciation on investments.............. $ 17,958,569
============
</Table>
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.
The tax character of distributions paid during the year ended October 31,
2002 was as follows:
<Table>
<Caption>
2002
Distributions paid from:
Ordinary income........................................... $2,435,156
Long-term capital gain.................................... 2,563,206
----------
$4,998,362
==========
</Table>
As of October 31, 2002, the components of distributable earnings on a tax
basis were as follows:
<Table>
Undistributed ordinary income............................... $ 820,907
Undistributed long-term capital gain........................ 3,170,913
</Table>
F. INSURANCE EXPENSE The Trust typically invests in insured bonds. Any portfolio
securities not specifically covered by a primary insurance policy are insured
either through secondary market insurance or portfolio insurance. The insurance
policies
22
NOTES TO
FINANCIAL STATEMENTS
April 30, 2003 (Unaudited)
guarantee the timely payment of principal and interest on the securities in the
Trust's portfolio.
2. INVESTMENT ADVISORY AGREEMENT AND
OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Trust's Investment Advisory Agreement, Van Kampen
Investment Advisory Corp. (the "Adviser") will provide investment advice and
facilities to the Trust for an annual fee payable monthly of .55% of the average
daily net assets of the Trust. In addition, the Trust will pay a monthly
administrative fee to Van Kampen Investments Inc. or its affiliates
(collectively "Van Kampen"), the Trust's Administrator, at an annual rate of
..05% of the average daily net assets of the Trust. The administrative services
provided by the Administrator include record keeping and reporting
responsibilities with respect to the Trust's portfolio and preferred shares and
providing certain services to shareholders.
For the six months ended April 30, 2003, the Trust recognized expenses of
approximately $5,800 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.
Under separate Accounting Services and Legal Services agreements, the
Adviser provides accounting and legal services to the Trust. The Adviser
allocates the cost of such services to each trust. For the six months ended
April 30, 2003, the Trust recognized expenses of approximately $17,800
representing Van Kampen's cost of providing accounting and legal services to the
Trust, which are reported as part of "Other" and "Legal" expenses, respectively,
in the Statement of Operations.
Certain officers and trustees of the Trust are also officers and directors
of Van Kampen. The Trust does not compensate its officers or trustees who are
officers of Van Kampen.
The Trust provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable upon retirement 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, 2003 and October 31, 2002, paid in surplus related to common shares
aggregated $144,258,521 and $143,823,345, respectively.
23
NOTES TO
FINANCIAL STATEMENTS
April 30, 2003 (Unaudited)
Transactions in common shares were as follows:
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2003 OCTOBER 31, 2002
Beginning Shares.................................. 9,750,338 9,741,284
Shares Issued Through Dividend Reinvestment....... 26,077 9,054
--------- ---------
Ending Shares..................................... 9,776,415 9,750,338
========= =========
</Table>
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $53,743,582 and $55,999,436,
respectively.
5. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate,
or index.
In order to seek to manage the interest rate exposure of the Trust's
portfolio in a changing interest rate environment, the Trust may purchase or
sell financial futures contracts or engage in transactions involving interest
rate swaps, caps, floors or collars. The Trust expects to enter into these
transactions primarily as a hedge against anticipated interest rate or fixed
income market changes, for duration management or for risk management purposes,
but may also enter into these transactions to generate additional income. All of
the Trust's portfolio holdings, including 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, except when taking delivery of a security underlying a
futures contract. In this instance, the recognition of gain or loss is postponed
until the disposal of the security underlying the futures contract.
During the period, the Trust invested in futures contracts, a type of
derivative. A futures contract is an arrangement involving the delivery of a
particular asset on a specified future date at an agreed upon price. The Trust
generally invests in exchange traded futures on U.S. Treasury Bonds and Notes
and typically closes the contract prior to the delivery date. Upon entering into
futures contracts, the Trust maintains an amount of cash or liquid securities
with a value equal to a percentage of the contract amount with either a futures
commission merchant pursuant to the rules and regulations promulgated under the
1940 Act, as amended, or with its custodian in an account in the broker's name.
This amount is known an initial margin. During the period the futures contract
is open, payments are received from or made to the broker based upon changes in
the value of the contract (the variation margin). The risk of loss associated
with a futures contract is in excess of the variation margin reflected on the
Statement of Assets and Liabilities.
24
NOTES TO
FINANCIAL STATEMENTS
April 30, 2003 (Unaudited)
Transaction in futures contracts for the six months ended April 30, 2003,
were as follows:
<Table>
<Caption>
CONTRACTS
Outstanding at October 31, 2002............................. 602
Futures Opened.............................................. 1,113
Futures Closed.............................................. (1,173)
------
Outstanding at April 30, 2003............................... 542
======
</Table>
The futures contracts outstanding as of April 30, 2003, and the description
and unrealized appreciation/depreciation are as follows:
<Table>
<Caption>
UNREALIZED/APPRECIATION
CONTRACTS DEPRECIATION
SHORT CONTRACTS:
10-Year U.S. Treasury Notes Futures June 2003
(Current Notional Value of $115,125 per
contract)....................................... 104 $ (30,505)
5-Year U.S. Treasury Notes Futures June 2003
(Current Notional Value of $113,750 per
contract)....................................... 438 (192,212)
--- ---------
542 $(222,717)
=== =========
</Table>
6. PREFERRED SHARES
The Trust has outstanding 3,600 Auction Preferred Shares ("APS") in two series
of 1,800 shares each. Dividends are cumulative and the dividend rate is
generally reset every 28 days for both series through an auction process. The
average rate in effect on April 30, 2003 was 1.175%. During the six months ended
April 30, 2003, the rates ranged from 0.950% to 1.580%.
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 in the Statement of Operations.
The APS are redeemable at the option of the Trust in whole or in part at the
liquidation value of $25,000 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.
25
BOARD OF TRUSTEES AND IMPORTANT ADDRESSES
VAN KAMPEN TRUST FOR INSURED MUNICIPALS
BOARD OF TRUSTEES
DAVID C. ARCH
ROD DAMMEYER
HOWARD J KERR
THEODORE A. MYERS
RICHARD F. POWERS, III* - Chairman
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN*
INVESTMENT ADVISER
VAN KAMPEN INVESTMENT ADVISORY CORP.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
CUSTODIAN AND TRANSFER AGENT
STATE STREET BANK
AND TRUST COMPANY
c/o EquiServe
P.O. Box 43011
Providence, Rhode Island 02940-3011
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT AUDITORS
DELOITTE & TOUCHE LLP
180 North Stetson Avenue
Chicago, Illinois 60601
* "Interested persons" of the Trust, as defined in the Investment Company Act
of 1940, as amended.
26
Van Kampen
Privacy Notice
The Van Kampen companies and investment products* respect your right to privacy.
We also know that you expect us to conduct and process your business in an
accurate and efficient manner. To do so, we must collect and maintain certain
nonpublic personal information about you. This is information we collect from
you on applications or other forms, and from the transactions you make with us,
our affiliates, or third parties. We may also collect information you provide
when using our web site, and text files (a.k.a. "cookies") may be placed on your
computer to help us to recognize you and to facilitate transactions you
initiate. We do not disclose any nonpublic personal information about you or any
of our former customers to anyone, except as permitted by law. For instance, so
that we may continue to offer you Van Kampen investment products and services
that meet your investing needs, and to effect transactions that you request or
authorize, we may disclose the information we collect to companies that perform
services on our behalf, such as printers and mailers that assist us in the
distribution of investor materials. These companies will use this information
only for the services for which we hired them, and are not permitted to use or
share this information for any other purpose. To protect your nonpublic personal
information internally, we permit access to it only by authorized employees, and
maintain physical, electronic and procedural safeguards to guard your nonpublic
personal information.
* Includes Van Kampen Investments Inc., Van Kampen Investment Advisory Corp.,
Van Kampen Asset Management Inc., Van Kampen Advisors Inc., Van Kampen
Management Inc., Van Kampen Funds Inc., Van Kampen Investor Services Inc., Van
Kampen Trust Company, Van Kampen System Inc. and Van Kampen Exchange Corp., as
well as the many Van Kampen mutual funds and Van Kampen unit investment
trusts.
Van Kampen Funds Inc.
1 Parkview Plaza, P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
[VAN KAMPEN INVESTMENTS LOGO]
Copyright (C)2003 Van Kampen Funds Inc. All rights reserved.
VIM SAR 6/03 Member NASD/SIPC.
11181F03-AS-6/03
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semi-annual reports.
Item 6. [Reserved.]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable for semi-annual reports.
Item 8. [Reserved.]
Item 9.
The Trust's principal executive officer and principal financial officer have
concluded that the Trust's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Trust in this Form N-CSR
was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.
There were no significant changes or corrective actions with regard to
significant deficiencies or material weaknesses in the Trust's internal controls
or in other factors that could significantly affect the Trust's internal
controls subsequent to the date of their evaluation.
Item 10. Exhibits.
(a) Code of Ethics - Not applicable for semi-annual reports.
(b) Certifications of Principal Executive Officer and Principal Financial
Officer attached hereto as part of EX-99.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Van Kampen Trust for Insured Municipals
-------------------------------------------------------------------
By: /s/ Ronald E. Robison
----------------------------------------------------------------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: June 23, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Ronald E. Robison
----------------------------------------------------------------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: June 23, 2003
By: /s/ John L. Sullivan
----------------------------------------------------------------------------
Name: John Sullivan
Title: Principal Financial Officer
Date: June 23, 2003