<PAGE>
InterCapital Insured California Municipal Securities
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- --------------------------------------------------------------------------------
Strong economic growth in the fourth quarter of 1993 and a shift in Federal
Reserve Board monetary policy in February of 1994 caused the fixed-income
markets to reverse direction and led to the sharpest increase in interest rates
in more than six years. At the beginning of the year, market concerns about
inflation developed as the economy approached full employment and commodity
prices moved upward. The Federal Reserve Board responded by tightening monetary
policy. Since early February, the central bank has raised the federal-funds rate
- -- the interest rate banks charge each other for overnight loans -- 250 basis
points from 3.00 percent to 5.50 percent in six separate moves through November.
Between May and November, the discount rate -- the interest rate the Federal
Reserve charges member banks for loans -- increased 175 basis points to 4.75
percent.
During InterCapital Insured California Municipal Securities' (NYSE symbol:
ICS) fiscal year ended October 31, 1994, long-term municipal bond yields, as
measured by THE BOND BUYER Revenue Bond Index,* rose 139 basis points from 5.56
percent to 6.95 percent. In February and March yields jumped 89 basis points
from 5.50 percent to 6.39 percent in response to the Federal Reserve Board's
initial tightening and subsequent municipal bond selling pressure. A semblance
of stability returned to the market between June and August. After Labor Day,
however, continued economic growth, aggressive tax-loss selling, heavy
mutual-fund redemptions and excessive dealer inventory led to further municipal
market deterioration. The total yield increase of 139 basis points during the
fiscal year was equivalent to a 17 percent price decline for a 30-year municipal
bond. One-third of this price decline occurred in September and October.
The municipal market was also influenced by supply and demand conditions.
New-issue underwriting totaled a record $290 billion in 1993. The pace of
new-issue activity over the first 10 months of 1994, however, slowed 44 percent.
The estimated issuance for 1994 is $160 billion. By way of comparison, bond
maturities and calls for redemption are expected to reach $190 billion this year
resulting in a reduction in the amount of municipal debt outstanding. This
scarcity would normally be expected to improve the relative performance of
municipal bonds under stable - to - improving interest rate conditions.
Performance
Since its inception on February 28, 1994, through October 31, 1994, the
Trust's net asset value (NAV), adjusted for offering costs, declined from $13.98
to $13.15 per share. Based on this change and reinvestment of tax-free dividends
totaling $0.36 per share, the Trust's total return since inception was -3.78
percent. Concurrently, the Trust's market price on the New York Stock Exchange
declined from $15.125 to $11.00 per share. Based on this market change and
reinvestment of dividends, the Trust's total return since inception was -24.55
percent. At inception, the Trust was trading at a 7.6 percent premium to NAV and
closed at a 16.4 percent discount on October 31, 1994. Undistributed net
investment income of $0.054 per share was available on October 31, 1994 to help
sustain the Trust's current dividend.
Portfolio Structure
As of October 31, 1994, the portfolio's long-term investments were
diversified among 10 municipal sectors and 24 credits. The three largest sectors
were tax allocation, hospital, and water & sewer revenue bonds, representing 52
percent of net assets. The average maturity and call protection of the
- --------------
*THE BOND BUYER Revenue Bond Index is an arithmetic average of the yields of 25
selected municipal revenue bonds with 30-year maturities. Credit ratings of
these bonds range from Aa1 to Baa1 by Moody's and AA+ to A- by Standard &
Poor's.
<PAGE>
Trust's long-term holdings was 25 years and 9 years, respectively. Bonds subject
to the alternative minimum tax (AMT) represented approximately 4 percent of net
assets. At the end of the period, the Trust had net assets in excess of $58
million.
Each position in the portfolio was backed either by bond insurers that are
rated Aaa by Moody's Investors Service, Inc. and/or AAA by Standard & Poor's
Corp. This is to ensure the timely payment of principal and interest. As of
October 31, 1994, the distribution of long-term credit enhancements was:
<TABLE>
<CAPTION>
Municipal Bond Insurance Percent
- ----------------------------------------------------------------------------------- -------------
<S> <C>
AMBAC Indemnity Corporation (AMBAC)................................................ 28%
Capital Guaranty Insurance Company (CGIC).......................................... 5
Connie Lee Insurance Company (Connie Lee).......................................... 2
Financial Guaranty Insurance Company (FGIC)........................................ 12
Financial Security Assurance Inc. (FSA)............................................ 8
Municipal Bond Investors Assurance Corporation (MBIA).............................. 45
</TABLE>
On December 6, 1994, Orange County, California filed for protection under
federal bankruptcy law as the result of market losses in its pooled investment
fund. Four of the Trust's holdings representing 15.9 percent of net assets have
been identified as possible participants in the pool. All of these triple -- A
rated bonds are insured by MBIA as to principal and interest in the event that
the issuers experience difficulty in meeting debt service payments.
Leveraging Postponed
Proceeds from the Trust's common stock offering were invested over a
four-month period through June, 1994. Under normal market conditions the Trust
would have issued auction rate preferred shares (ARPS) in April and become fully
invested within two months. However, the preferred offering was canceled because
of the volatile market environment. A leveraged portfolio structure could be
utilized if an extended period of favorable price and spread conditions were
foreseen.
Looking Ahead
The overall direction of interest rates will primarily be determined by the
strength of the economy, the trend of inflation and the Federal Reserve Board's
responses. These conditions may continue to move interest rates higher through
mid-1995. Investor demand for municipal securities should be sustained by
significant bond maturities, calls for redemption and diminished new-issue
supply.
The Trust's procedure for reinvestment of all dividends and distributions on
common shares is by purchase in the open market. This method helps to support
the market value of the Trust's shares. In addition, the Trustees have approved
a procedure whereby the Trust, when appropriate, 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. Over the fiscal
year, the Trust purchased 108,000 shares of common stock at a weighted average
discount of 13.3 percent.
We appreciate your ongoing support of InterCapital Insured California
Municipal Securities and look forward to continuing to serve your investment
needs.
Very truly yours,
Charles A. Fiumefreddo
CHAIRMAN OF THE BOARD
<PAGE>
INTERCAPITAL INSURED CALIFORNIA MUNICIPAL SECURITIES
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- --------- --------- -------------
<C> <S> <C> <C> <C>
CALIFORNIA EXEMPT MUNICIPAL BONDS (94.6%)
GENERAL OBLIGATION (8.2%)
$ 3,000 California, Various Purpose 3/1/94 (FSA Insured).................... 5.50 % 3/ 1/20 $ 2,518,860
3,000 Moulton - Niguel Water District, 1993 Refg (MBIA Insured)........... 5.00 9/ 1/19 2,323,860
- ----------- -------------
6,000 4,842,720
- ----------- -------------
EDUCATIONAL FACILITIES REVENUE (2.4%)
1,500 California Educational Facilities Authority, National University
6.20 5/ 1/21 1,404,030
Ser 1994 (Connie Lee Insured).......................................
- ----------- -------------
ELECTRIC REVENUE (7.1%)
1,500 Anaheim Public Financing Authority, San Juan 2nd Ser (FGIC 5.75 10/ 1/22 1,297,410
Insured)..........................................................
3,000 Sacramento Municipal Utility District, Ser B 1992 (MBIA Insured).... 6.375 8/15/22 2,862,870
- ----------- -------------
4,500 4,160,280
- ----------- -------------
HOSPITAL REVENUE (15.5%)
3,000 Anaheim, Anaheim Memorial Hospital Association COPs (AMBAC 5.125 5/15/20 2,361,540
Insured)..........................................................
3,000 California Health Facilities Financing Authority, Catholic 5.00 7/ 1/21 2,299,920
Healthcare West Ser 1994 B (AMBAC Insured)........................
3,000 California Statewide Communities Development Authority, Sharp Health 6.00 8/15/24 2,715,960
Care Obligated Group COPs (MBIA Insured)..........................
2,000 San Mateo County Joint Powers Financing Authority, San Mateo County 5.75 7/15/22 1,730,440
Health Center 1994 Ser A (FSA Insured)............................
- ----------- -------------
11,000 9,107,860
- ----------- -------------
MORTGAGE REVENUE - MULTI-FAMILY (5.0%)
3,000 Los Angeles Community Redevelopment Agency, 1994 Ser A (AMBAC 6.45 7/ 1/17 2,919,630
Insured)..........................................................
- ----------- -------------
PUBLIC FACILITIES REVENUE (3.7%)
1,000 Glendale Unified School District, 1994 Ser A COPs (AMBAC Insured)... 6.00 3/ 1/19 911,970
1,570 Los Angeles Convention & Exhibit Center Authority, Refg Ser A (MBIA 5.375 8/15/18 1,293,460
Insured)..........................................................
- ----------- -------------
2,570 2,205,430
- ----------- -------------
TAX ALLOCATION (23.4%)
3,000 Bay Area Government Association, Pool 1994 Ser A (CGIC Insured)..... 6.00 12/15/24 2,704,350
2,000 Brea Redevelopment Agency, Redev Proj AB Refg Ser (MBIA Insured).... 5.75 8/ 1/23 1,727,080
2,000 Cerritos Public Finance Authority, Los Coyotes Redev Ser 1993 A 5.75 11/ 1/22 1,729,700
(AMBAC Insured)...................................................
3,000 Corona Redevelopment Agency, Proj Area A (FGIC Insured)............. 6.25 9/ 1/13 2,874,900
3,000 Pittsburg Redevelopment Agency, Los Medanos Refg Ser 1993 A (AMBAC 5.00 8/ 1/17 2,352,870
Insured)..........................................................
3,000 Yorba Linda Redevelopment Agency, Ser 1993 A (MBIA Insured)......... 5.25 9/ 1/23 2,383,710
- ----------- -------------
16,000 13,772,610
- ----------- -------------
<PAGE>
</TABLE>
INTERCAPITAL INSURED CALIFORNIA MUNICIPAL SECURITIES
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- --------- --------- -------------
<C> <S> <C> <C> <C>
TRANSPORTATION FACILITIES REVENUE (11.1%)
$ 3,000 Los Angeles County Transportation Commission, Second Sr Ser 1992 A 6.00 % 7/ 1/23 $ 2,719,530
(MBIA Insured)....................................................
San Francisco Airports Commission, San Francisco Intl Airport
2,000 Second Ser Refg Issue 4 (MBIA Insured)............................ 6.00 5/ 1/20 1,820,900
2,000 Second Ser Refg Issue 2 (MBIA Insured)............................ 6.75 5/ 1/20 2,005,940
- ----------- -------------
7,000 6,546,370
- ----------- -------------
WATER & SEWER REVENUE (13.5%)
3,000 Central Coast Water Authority, Ser 1992 (AMBAC Insured)............. 6.60 10/ 1/22 2,965,830
2,900 Garden Grove Public Financing Authority, Ser 1993 (FGIC Insured).... 5.50 12/15/23 2,411,640
3,000 Los Angeles, Wastewater Refg Ser 1993 A (MBIA Insured).............. 5.70 6/ 1/20 2,589,150
- ----------- -------------
8,900 7,966,620
- ----------- -------------
OTHER REVENUE (4.7%)
3,000 South Orange County Public Financing District #88-1, 1994 Ser A 6.00 9/ 1/18 2,748,000
(MBIA Insured)....................................................
- ----------- -------------
63,470 TOTAL CALIFORNIA EXEMPT MUNICIPAL BONDS (IDENTIFIED COST $59,872,065)..................... 55,673,550
- ----------- -------------
CALIFORNIA EXEMPT SHORT-TERM MUNICIPAL OBLIGATION (4.1%)
2,400 California Pollution Control Financing Authority, OMS Equity of
Stanislaus Inc Ser 1987 (AMT) (Tender 11/1/94) (Identified Cost
$2,400,000)....................................................... 3.65* 12/ 1/17 2,400,000
- ----------- -------------
$ 65,870 TOTAL INVESTMENTS (IDENTIFIED COST $62,272,065)(A)..................... 98.7% 58,073,550
- -----------
- -----------
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES......................... 1.3 748,818
---------- ------------
NET ASSETS............................................................. 100.0% $ 58,822,368
---------- ------------
---------- ------------
<FN>
- ----------------
AMT ALTERNATIVE MINIMUM TAX.
COPS CERTIFICATES OF PARTICIPATION.
* VARIABLE OR FLOATING RATE SECURITY. COUPON RATE SHOWN REFLECTS CURRENT
RATE.
(A) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $62,272,065; THE
AGGREGATE GROSS AND NET UNREALIZED DEPRECIATION IS $4,198,515.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
INTERCAPITAL INSURED CALIFORNIA MUNICIPAL SECURITIES
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $62,272,065) (Note 1)... $ 58,073,550
Cash....................................... 136,633
Interest receivable........................ 1,089,762
Deferred organizational expenses (Note
1)....................................... 34,632
Prepaid expenses........................... 4,539
------------
TOTAL ASSETS....................... 59,339,116
------------
LIABILITIES:
Payable for:
Common shares of beneficial interest
purchased.............................. 73,054
Investment management fee (Note 2)....... 17,959
Offering expenses payable (Note 1)......... 336,953
Organizational expenses payable (Note 1)... 40,000
Accrued expenses (Note 3).................. 48,782
------------
TOTAL LIABILITIES.................. 516,748
------------
NET ASSETS:
Preferred shares of beneficial interest,
(1,000,000 shares authorized of non-
participating $.01 par value, none
issued) (Note 4)......................... --
------------
Common shares of beneficial interest
(unlimited shares authorized of $.01 par
value, 4,474,113 shares outstanding)
(Note 5)................................. 62,779,104
Unrealized depreciation on investments..... (4,198,515)
Accumulated undistributed net investment
income................................... 241,779
------------
NET ASSETS......................... $ 58,822,368
------------
------------
NET ASSET VALUE PER COMMON SHARE,
($58,822,368 divided by 4,474,113 common
shares outstanding)......................
$13.15
------------
------------
</TABLE>
STATEMENT OF OPERATIONS FOR THE PERIOD
FEBRUARY 28, 1994 THROUGH OCTOBER 31, 1994 (NOTE 1)
<TABLE>
<S> <C>
INVESTMENT INCOME:
INTEREST INCOME.......................... $ 2,157,754
-----------
EXPENSES
Investment management fee (Note 2)..... 147,881
Professional fees...................... 67,736
Shareholder reports and notices........ 13,900
Transfer agent fees and expenses (Note
3)................................... 13,470
Trustees' fees and expenses (Note 3)... 12,417
Registration fees...................... 11,478
Organizational expenses (Note 1)....... 5,368
Other.................................. 3,753
-----------
TOTAL EXPENSES..................... 276,003
-----------
NET INVESTMENT INCOME............ 1,881,751
-----------
UNREALIZED DEPRECIATION ON INVESTMENTS
(Note 1)................................. (4,198,515)
-----------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS...... $(2,316,764)
-----------
-----------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FEBRUARY 28,1994 THROUGH
OCTOBER 31, 1994
(NOTE 1)
------------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income............................................................... $ 1,881,751
Unrealized depreciation on investments.............................................. (4,198,515)
-------------
Net decrease in net assets resulting from operations............................ (2,316,764)
Dividends to shareholders from net investment income.................................. (1,639,972)
Net increase in transactions in shares of beneficial interest (Note 5)................ 62,679,095
-------------
Total increase.................................................................. 58,722,359
NET ASSETS:
Beginning of period................................................................... 100,009
-------------
END OF PERIOD (including undistributed net investment income of $241,779)............. $ 58,822,368
-------------
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
InterCapital Insured California Municipal Securities
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Organization and Accounting Policies -- InterCapital Insured California
Municipal Securities (the "Trust") is registered under the Investment Company
Act of 1940, as amended, as a diversified, closed-end management investment
company. The Trust was organized as a Massachusetts business trust on October
14, 1993 and had no operations other than those relating to organizational
matters and the issuance of 7,113 common shares of beneficial interest to Dean
Witter InterCapital Inc. (the "Investment Manager") for $100,009. The Trust
commenced operations on February 28, 1994.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- Portfolio securities are valued for the
Trust by an outside independent pricing service approved by the Trustees.
The pricing service has informed the Trust that in valuing the Trust's
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 Trust's 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 on the identified cost
method. The Trust amortizes premiums and discounts on securities purchased
over the life of the respective securities. Interest income is accrued
daily.
C. FEDERAL INCOME TAX STATUS -- It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable and nontaxable income to its
shareholders. Accordingly, no federal income tax provision is required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Trust records
dividends and distributions to its shareholders on the ex-dividend date. The
amount of dividends and distributions from net investment income and net
realized capital gains are determined in accordance with federal income tax
regulations, which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences 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.
<PAGE>
InterCapital Insured California Municipal Securities
Notes to Financial Statements (CONTINUED)
- --------------------------------------------------------------------------------
E. ORGANIZATIONAL AND OFFERING EXPENSES -- The Investment Manager paid the
organizational and offering expenses of the Trust's common shares in the
amounts of approximately $40,000 and $360,000, respectively. The
organizational expenses will be reimbursed by the Trust 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. Offering expenses will be reimbursed by the
Trust and were charged to capital at the time of issuance of the Trust's
common shares.
2. Investment Management Agreement -- Pursuant to an Investment Management
Agreement, the Trust pays its Investment Manager a management fee, calculated
weekly and payable monthly, by applying the annual rate of 0.35% to the Trust's
average weekly net assets.
Under the terms of the Agreement, the Investment Manager maintains certain
of the Trust's books and records and furnishes, at its own expense, office
space, facilities, equipment, clerical, bookkeeping and certain legal services
and pays the salaries of all personnel, including officers of the Trust who are
employees of the Investment Manager. The Investment Manager also bears the cost
of telephone services, heat, light, power and other utilities provided to the
Trust.
3. Security Transactions and Transactions with Affiliates -- The cost of
purchases and proceeds from sales of portfolio securities, excluding short-term
investments, for the period ended October 31, 1994 aggregated $59,860,479 and
$-0-, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Trust's transfer agent. At October 31, 1994, the Trust had transfer agent fees
and expenses payable of approximately $2,400.
Dean Witter Distributors Inc., the Trust's principal underwriter and an
affiliate of the Investment Manager, has informed the Trust that it received
approximately $4,315,000 in underwriting discounts and commissions in connection
with the initial offering of the common shares.
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 the 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.
Upon issuance, the Trust will be 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, which will be entitled to one vote per share, will
generally vote with the common shares but will vote separately as a class to
elect two Trustees and on any matters affecting the rights of the preferred
shares.
<PAGE>
InterCapital Insured California Municipal Securities
Notes to Financial Statements (CONTINUED)
- --------------------------------------------------------------------------------
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 (Note 1)............................................ 7,113 $ 71 $ 99,938
Shares issued at close of public offering on
February 28, 1994*......................................... 4,500,000 45,000 62,865,000
Shares issued on April 7, 1994 to cover over-allotment...... 75,000 750 1,053,750
Treasury shares purchased and retired (weighted average
discount 13.33%)**......................................... (108,000) (1,080) (1,284,325)
----------- ---------- ---------------
Balance, October 31, 1994................................... 4,474,113 $ 44,741 $ 62,734,363
----------- ---------- ---------------
----------- ---------- ---------------
<FN>
- --------------
* NET OF ESTIMATED OFFERING COSTS OF $360,000.
** THE TRUSTEES HAVE VOTED TO RETIRE THE SHARES PURCHASED.
</TABLE>
6. Dividends to Common Shareholders -- The Trust has declared the following
dividends from net investment income --
<TABLE>
<CAPTION>
DECLARATION AMOUNT PER RECORD PAYABLE
DATE SHARE DATE DATE
- ----------------------- ------------------- ----------------------- -----------------------
<S> <C> <C> <C>
November 1, 1994 $ 0.06 November 11, 1994 November 25, 1994
November 29, 1994 $ 0.06 December 9, 1994 December 23, 1994
</TABLE>
7. Selected Quarterly Financial Data -- (UNAUDITED)
<TABLE>
<CAPTION>
QUARTERS ENDED*
----------------------------------------------------------------
10/31/94 7/31/94 4/30/94**
-------------------- -------------------- --------------------
TOTAL PER SHARE TOTAL PER SHARE TOTAL PER SHARE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total investment income.................... $ 950 $ 0.21 $ 901 $ 0.19 $ 307 $ 0.07
Net investment income...................... 848 0.19 794 0.17 240 0.05
Unrealized gain (loss) on investments...... (4,320) (0.92) 867 0.20 (746) (0.16)
<FN>
- --------------
* TOTALS EXPRESSED IN THOUSANDS OF DOLLARS.
** FOR THE PERIOD FEBRUARY 28, 1994 (COMMENCEMENT OF OPERATIONS) THROUGH APRIL
30, 1994.
</TABLE>
<PAGE>
InterCapital Insured California Municipal Securities
Financial Highlights
- --------------------------------------------------------------------------------
Selected ratios and per share data for a common share of beneficial interest
outstanding throughout the period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FEBRUARY 28,
1994*
THROUGH
OCTOBER 31,
1994**
-----------------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of period........................ $ 14.06
--------
Net investment income....................................... 0.41
Unrealized depreciation on investments...................... (0.88)
--------
Total from investment operations............................ (0.47)
--------
Less dividends and other charges:
Dividends to shareholders from net investment income...... (0.36)
Offering costs charged against capital.................... (0.08)
--------
Total dividends and other charges........................... (0.44)
--------
Net asset value, end of period.............................. $ 13.15
--------
--------
Market value, end of period................................. $ 11.00
--------
--------
Total Investment Return+.................................... (24.55)%(1)
Ratios/Supplemental Data:
Net assets, end of period (in thousands).................... $ 58,822
Ratios to average net assets:
Total expenses............................................ 0.65%(2)
Net investment income..................................... 4.45%(2)
Portfolio turnover rate..................................... 0%(1)
<FN>
- ----------------
* 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 THE PERIOD REPORTED. DIVIDENDS AND DISTRIBUTIONS ARE ASSUMED TO BE
REINVESTED AT THE PRICES OBTAINED UNDER THE TRUST'S DIVIDEND REINVESTMENT
PLAN. TOTAL INVESTMENT RETURN DOES NOT REFLECT SALES CHARGES OR BROKERAGE
COMMISSIONS.
(1) NOT ANNUALIZED.
(2) ANNUALIZED.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
InterCapital Insured California Municipal Securities
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Trustees of InterCapital Insured California Municipal
Securities
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of InterCapital Insured California
Municipal Securities (the "Trust") at October 31, 1994, and the results of its
operations, the changes in its net assets and the financial highlights for the
period February 28, 1994 (commencement of operations) through October 31, 1994,
in conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit, which included confirmation of securities owned at
October 31, 1994 by correspondence with the custodian, provides a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
New York, New York
December 5, 1994
1994 FEDERAL TAX NOTICE (UNAUDITED)
During the period ended October 31, 1994, the Trust paid to the common
shareholders $0.36 per share from net investment income. All of the Trust's
dividends from net investment income were exempt interest dividends, excludable
from gross income for Federal income tax purposes.
<PAGE>
TRUSTEES
- -------------------------------------------------
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo INTERCAPITAL
Edwin J. Garn INSURED
John R. Haire CALIFORNIA
Dr. Manuel H. Johnson MUNICIPAL
Paul Kolton SECURITIES
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
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Charles A. Fiumefreddo
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Sheldon Curtis
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
James F. Willison
VICE PRESIDENT
Thomas F. Caloia
TREASURER
TRANSFER AGENT
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Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
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Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
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Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
Annual Report
October 31, 1994
