UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number: 811-07111
Morgan Stanley Insured California Municipal Securities
(Exact name of registrant as specified in charter)
522 Fifth Avenue, New York, New York 10036
(Address of principal executive offices) (Zip code)
Ronald E. Robison
522 Fifth Avenue, New York, New York 10036
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-296-6990
Date of fiscal year end: October 31, 2007
Date of reporting period: July 31, 2007
ITEM 1. SCHEDULE OF INVESTMENTS.
The Trust's schedule of investments as of the close of the reporting period
prepared pursuant to Rule 12-12 of Regulation S-X is as follows:
MORGAN STANLEY INSURED CALIFORNIA MUNICIPAL SECURITIES
PORTFOLIO OF INVESTMENTS JULY 31, 2007 (UNAUDITED)
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
--------- ------ -------- ------------
TAX - EXEMPT MUNICIPAL BONDS (100.4%)
CALIFORNIA (98.3%)
$ 2,000 Anaheim Public Financing Authority, Distributor Electric
Ser 2007-A (MBIA Insd) ++........................................... 4.50% 10/01/37 $ 1,913,060
1,000 Anaheim Public Financing Authority, Generation
Refg Ser 2002-B (FSA Insd).......................................... 5.25 10/01/18 1,054,190
250 Bay Area Government Association, Pool 1994 Ser A (FSA Insd)........... 6.00 12/15/24 251,965
2,000 California Department of Veterans Affairs, Home Purchase
2002 Ser A (AMBAC Insd)............................................. 5.35 12/01/27 2,102,260
1,500 California Department of Water Resources, Central Valley
Ser Y (FGIC Insd)................................................... 5.25 12/01/19 1,587,405
2,000 California Infrastructure & Economic Development Bank, Bay
Area Toll Bridges Seismic Retrofit First Lien Ser 2003 A (FGIC
Insd) (ETM Insd).................................................... 5.00 07/01/29 2,181,760
1,000 California State University, Ser 2005 A (AMBAC Insd)............. 5.00 11/01/35 1,033,990
1,000 California, Refg Dtd 04/01/07 (MBIA Insd)............................. 4.25 08/01/33 922,290
505 California, Various Purposes Dtd 03/01/94 (FSA Insd)................. 5.50 03/01/20 505,707
400 California, Veterans Ser BH (AMT Insd) (FSA Insd)..................... 5.40 12/01/16 410,088
1,000 Capistrano Unified School District, Community Facilities
District #98-2 Ladera Ser 2005 (FGIC Insd).......................... 5.00 09/01/29 1,037,990
2,000 East Bay Municipal Utility District, Water Ser 2001
(MBIA Isnd)......................................................... 5.00 06/01/26 2,091,660
1,000 Golden State Tobacco Securitization Corporation, Enhanced Asset
Backed Ser 2005 A (FGIC Insd)....................................... 5.00 06/01/38 1,022,370
1,280 Huntington Beach Union High School District,
Ser 2004 (FSA Insd)................................................. 5.00 08/01/26 1,345,984
1,110 Kern County Board of Education, Refg 2006 Ser A
COPs (MBIA Insd).................................................... 5.00 06/01/31 1,147,973
1,100 La Quinta Financing Authority, Local Agency 2004 Ser A (AMBAC
Insd)............................................................... 5.25 09/01/24 1,171,269
1,000 Los Angeles County Metropolitan Transportation Authority
Sales Tax Ser 2006 A (FSA Insd)..................................... 4.50 07/01/29 971,850
1,000 Los Angeles Department of Water & Power, 2001 Ser A (FSA
Insd)............................................................... 5.25 07/01/21 1,041,190
800 Los Angeles Municipal Improvement Corporation, Police
Headquarters Ser 2006 - A (FGIC Insd)............................... 4.75 01/01/31 802,680
1,000 Los Angeles Wastewater Refg Ser 2003 B (FSA Insd)..................... 5.00 06/01/22 1,039,270
1,030 Los Angeles, Ser 2004 A (MBIA Insd)................................... 5.00 09/01/24 1,083,869
1,000 Metropolitan Water District of Southern California, 2003
Ser B-2 (FGIC Insd)................................................. 5.00 10/01/27 1,037,180
2,000 Orange County Transportation Authority, Toll Road Express
Lanes Refg Ser 2003 A (AMBAC Insd).................................. 5.00 08/15/20 2,089,400
1,000 Oxnard Financing Authority,Wastewater 2004 Ser A
(FGIC Insd)......................................................... 5.00 06/01/29 1,034,130
1,000 Rancho Mirage Redevelopment Agency, Ser 2003 A
(MBIA Insd)......................................................... 5.00 04/01/33 1,022,950
1,000 Sacramento County Sanitation District's Financing Authority,
Ser 2006 (FGIC Insd)................................................ 5.00 12/01/28 1,044,580
180 Sacramento Financing Authority, 1999 Solid Waste &
Redevelopment (AMBAC Insd).......................................... 5.75 12/01/22 190,638
1,510 Sacramento Financing Authority, 2005 Refg Solid Waste &
Redevelopment (FGIC Insd) 5.00 12/01/17 1,613,495
2,000 Sacramento Financing Authority, Water & Capital Improvement
2001 Ser A (AMBAC Insd) ........................................... 5.00 12/01/26 2,091,660
1,000 San Diego County Water Authority, Ser 2004 A COPs
(FSA Insd).......................................................... 5.00 05/01/29 1,033,330
1,000 San Francisco City & County, City Buildings Ser 2007 A
COPs (FGIC Insd).................................................... 4.50 09/01/37 957,530
340 San Francisco City & County, Laguna Honda Hospital RITES
PA 1387 (FSA Insd)##................................................ 6.733 06/15/30 384,207
2,000 San Francisco Public Utilities Commission, Water Refg
Ser A 2001(FSA Insd)................................................ 5.00 11/01/31 2,045,540
1,000 San Jose, Airport Ser 2001 A (FGIC Insd).............................. 5.00 03/01/25 1,027,660
1,000 Simi Valley Public Financing Authority, Ser 2004 COPs (AMBAC
Insd)............................................................... 5.00 09/01/30 1,029,090
1,000 Southern California Public Power Authority, Transmission
Refg Ser 2002 A (FSA Insd).......................................... 5.25 07/01/18 1,052,750
1,000 University of California Regents Ser 2007 A (MBIA Insd)............... 4.50 05/15/37 956,920
University of California,
1,000 University of California, Limited Projects Ser 2005 B (FSA Insd)...... 5.00 05/15/30 1,035,120
1,040 University of California, Ser 2007-J (FSA Insd) ++.................... 4.50 05/15/31 1,012,175
960 University of California, Ser 2007-J (FSA Insd) ++.................... 4.50 05/15/35 934,315
1,000 Upland School District, Election 2000 Ser 2001 B
(FSA Insd).......................................................... 5.125 08/01/25 1,047,530
675 Val Verde Unified School District, School Construction COPs
Ser 2005 B (FGIC)................................................... 5.00 01/01/30 695,412
1,375 Washington Unified School District, Election 2004
Ser A (FGIC Insd)................................................... 5.00 08/01/22 1,429,560
1,000 Yucaipa Valley Water District, Ser 2004 A COPs
(MBIA Insd)......................................................... 5.25 09/01/24 1,057,760
------------
50,541,752
------------
PUERTO RICO (2.1%)
1,000 Puerto Rico Infrastructure Financing Authority, 2000 Ser A
(ETM Insd).......................................................... 5.50 10/01/32 1,053,730
------------
TOTAL TAX - EXEMPT MUNICIPAL BONDS
(Cost $50,344,419)........................................................ 51,595,482
------------
SHORT-TERM INVESTMENTS (4.2%)
1,000 California Department of Water, Ser B SubSer B-2...................... 3.67* 05/01/22 1,000,000
1,200 California Infrastructure & Economic Development Bank,
Ser 2005 A (FGIC Insd)................................................ 3.60* 07/01/36 1,200,000
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $2,200,000)....................................................... 2,200,000
------------
52,255 TOTAL INVESTMENTS
--------- (Cost $52,544,419)........................................................ 53,795,482
(3,000) FLOATING RATE NOTE OBLIGATIONS RELATED TO SECURITIES HELD (-5.8%)
Notes with interest rates ranging from 3.61% to 3.62% at July 31, 2007
and contractual maturities of collateral ranging from 05/15/31 to
10/01/37 +++(Cost $(3,000,000))..................................... (3,000,000)
------------
$ 49,255 TOTAL NET INVESTMENTS
=========
(Cost $49,544,419) (a)(b)(c).............................................. 98.8% 50,795,482
OTHER ASSETS IN EXCESS OF LIABILITIES..................................... 1.2 598,247
------ ------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS.............................. 100.0% $ 51,393,729
====== ============
----------
## Current coupon rate for inverse floating rate municipal obligation. This
rate resets periodically as the auction rate on the related security
changes. Position in an inverse floating rate municipal obligation has a
value of $384,207 which represents 0.7% of net assets applicable to common
shareholders.
+ Prerefunded to call date shown.
++ Underlying security related to inverse floaters entered into by the Trust.
+++ Floating rate note obligation related to securities held. The interest
rate shown reflects the rate in effect July 31, 2007.
* Current coupon of variable rate demand obligation.
# A portion of this security has been physically segregated in connection
with open futures contracts in the amount of $20,500.
(a) Securities have been designated as collateral in an amount equal to
$2,168,060 in connection with open futures contracts and an open swap
contract.
(b) The aggregate cost for federal income tax purposes is $49,533,864. The
aggregate gross unrealized appreciation is $1,614,671 and the aggregate
gross unrealized depreciation is $353,053, resulting in net unrealized
appreciation of $1,261,618.
(c) Floating Rate Note Obligations Related to Securities Held - The Trust
enters into transactions in which it transfers to Dealer Trusts ("Dealer
Trusts"), fixed rate bonds in exchange for cash and residual interests in
the Dealer Trusts' assets and cash flows, which are in the form of inverse
floating rate investments. The Dealer Trusts fund the purchases of the
fixed rate bonds by issuing floating rate notes to third parties and
allowing the Trust to retain residual interest in the bonds. The Trust
enters into shortfall agreements with the Dealer Trusts which commit the
Trust to pay the Dealer Trusts, in certain circumstances, the difference
between the liquidation value of the fixed rate bonds held by the Dealer
Trusts and the liquidation value of the floating rate notes held by third
parties, as well as any shortfalls in interest cash flows. The residual
interests held by the Trust (inverse floating rate investments) include
the right of the Fund (1) to cause the holders of the floating rate notes
to tender their notes at par at the next interest rate reset date, and (2)
to transfer the municipal bond from the Dealer Trusts to the Trust,
thereby collapsing the Dealer Trusts. The Trust accounts for the transfer
of bonds to the Dealer Trusts as secured borrowings, with the securities
transferred remaining in the Trust's investment assets, and the related
floating rate notes reflected as Trust liabilities. The notes issued by
the Dealer Trusts have interest rates that reset weekly and the floating
rate note holders have have the option to tender their notes to the Dealer
Trusts for redemption at par at each reset date. At July 31, 2007, Trust
investments with a va a value of $3,859,550 are held by the Dealer Trusts
and serve as collateral for the $3,000,000 in floating rate note
obligations outstanding at tht at date. Contractual maturities of the
floating rate note obligations and interest rates in effect at July 31,
2007 are presented in the "Portfolio of Investments".
Bond Insurance:
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
ETM Escrowed to Maturity.
RITES Residual Interest Tax - Exempt Securities (Illiquid securities).
AMBAC AMBAC Indemnity Corporation.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
FUTURES CONTRACTS OPEN AT JULY 31, 2007:
UNDERLYING
NUMBER OF DESCRIPTION, DELIVERY FACE AMOUNT UNREALIZED
CONTRACTS LONG/SHORT MONTH AND YEAR AT VALUE DEPRECIATION
--------- ---------- --------------------------- ------------ ------------
10 SHORT U.S. Treasury Notes 10 Year
September 2007 $ (1,074,219) $ (3,543)
10 SHORT U.S. Treasury Notes 20 Year
September 2007 (1,100,625) (965)
------------
Total Depreciation......................... $ (4,508)
============
INTEREST RATE SWAP CONTRACTS OPEN AT JULY 31, 2007:
NOTIONAL
AMOUNT PAYMENTS PAYMENTS TERMINATION UNREALIZED
COUNTERPARTY (000) MADE BY TRUST RECEIVED BY TRUST DATE APPRECIATION
---------------------- --------- -------------- ----------------- ----------- ------------
J P Morgan Chase & Co. $ 2,000 Fixed Rate 3.79% Floating Rate 3.85% 08/24/17 $ 18,169
============
ITEM 2. CONTROLS AND PROCEDURES.
(a) 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's in this Form N-Q
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.
(b) There were no changes in the Trust's internal control over financial
reporting that occurred during the registrant's fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Trust's
internal control over financial reporting.
ITEM 3. EXHIBITS.
(a) A separate certification for each principal executive officer and principal
financial officer of the registrant are attached hereto.
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.
Morgan Stanley Insured California Municipal Securities
/s/ Ronald E. Robison
Ronald E. Robison
Principal Executive Officer
September 20, 2007
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.
/s/ Ronald E. Robison
Ronald E. Robison
Principal Executive Officer
September 20, 2007
/s/ Francis Smith
Francis Smith
Principal Financial Officer
September 20, 2007