<PAGE> 1
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- --------------------------------------------------------------------------------
Fixed-income market conditions have steadily improved since late last year.
Bonds began to rally in November 1994 on signs of slower economic growth in the
wake of a progressively tighter Federal Reserve monetary policy. The recent
trend toward lower long-term interest rates is in marked contrast to most of
1994 when rapidly rising rates created one of the most severe bear markets for
bonds in recent history.
MUNICIPAL MARKET CONDITIONS
Long-term municipal bond yields, as tracked by The Bond Buyer Revenue Bond
Index*, dropped from a high of 7.37 percent in November 1994 to 6.29 percent at
the end of April 1995. This 108 basis point decline in yield corresponded to a
13 percent price increase for 30-year municipal bonds. Short-term municipal
interest rates remained basically unchanged over the past six months. Thus, the
yield spread or difference between short-term and long-term municipal bond
interest rates narrowed as long rates declined.
The seasonal demand for municipals in December more than offset the
uncertainty caused by the Orange County, California bankruptcy filing. The
market anticipated cash inflows from the reinvestment of coupons and the
proceeds from bond calls and maturities in January at a time of scarce supply.
Tax-exempt bonds outperformed U.S. Treasury bonds through February 1995. The
ratio of the Revenue Bond Index yield to the 30-year U.S. Treasury yield fell
from a high of 92 percent in November to 84 percent at the end of February. A
declining ratio means that municipal bond prices have been stronger than U.S.
Treasury prices. Tax reform proposals that advanced the concept of a flat tax
were partially responsible for municipals underperforming Treasuries in March
and April. By the end of April, the Revenue/Treasury yield ratio had risen to 86
percent.
The pace of new-issue underwriting over the first four months of 1995 was
40 percent below the same period last year. With bond maturities and calls
estimated to exceed new issues coming to market in 1995 the outstanding supply
of municipal securities is expected to decline. This imbalance should continue
to strengthen municipal market conditions.
PERFORMANCE
The net assets value (NAV) of the InterCapital California Insured Municipal
Income Trust (IIC) increased from $11.29 to $12.51 per share during the
six-month period ended April 30, 1995. Based on this NAV change plus
reinvestment of tax-free dividends of $0.395 per share, the Trust's total NAV
return for the period was 14.65 percent. Concurrently, the Trust's market price
on the New York Stock Exchange rose from $11.125 to $11.375 per share. Based on
this stock price change and reinvestment
- ---------------
* 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 & Poors.
<PAGE> 2
of dividends, the Trust's total market return for the period was 5.88 percent.
The Trust began the period trading at a 1.5 percent discount to NAV and closed
at a 9 percent discount.
PORTFOLIO STRUCTURE
As of April 30, 1995, IIC's long-term investments were diversified among 8
municipal sectors and 35 issuers. The three largest sectors--water and sewer,
tax allocation and electric revenue bonds--represented 56 percent of net assets.
The average maturity and call protection of the Trust's long-term holdings were
24 years and 8 years, respectively. At the end of the period, the Trust's net
assets totaled $239 million.
Each issue in the portfolio was backed by bond insurers rated triple "A" by
both Moody's Investors Service, Inc. and Standard & Poor's Corp. Municipal bond
insurance supports timely payment of principal and interest. As of April 30,
1995, the distribution of bond insurers was:
<TABLE>
<CAPTION>
Municipal Bond Insurance Percent
------------------------------------------------------------------------- -------
<S> <C>
AMBAC Indemnity Corporation (AMBAC)...................................... 24%
Financial Guaranty Insurance Company (FGIC).............................. 20
Financial Security Assurance Inc. (FSA).................................. 4
Municipal Bond Investors Assurance Corporation (MBIA).................... 52
</TABLE>
THE IMPACT OF LEVERAGING
The Trust's common shares continue to be leveraged. As reported previously,
leverage is created through the issuance of auction rate preferred shares
(ARPS). The ARPS auction periods normally range between one week and one year.
Proceeds from ARPS underwritings are used to purchase additional long-term
municipal bonds. Following the payment of ARPS dividends, the common shares earn
incremental income when the portfolio yield is higher than the cost of the
preferred shares (dividends plus operating and remarketing expenses). Although
higher short-term interest rates have narrowed the yield spread, ARPS continue
to provide positive incremental income to common shareholders.
Leverage also impacts net asset value. ARPS normally account for one-third
of a leveraged municipal bond fund's underwritten capital structure. This
produces a volatility factor for common shares of 1.5 times the price change of
bonds held in the portfolio. Since the value of the preferred shares does not
fluctuate, the NAV of the common shares reflects the full market price change of
the portfolio's investments.
As bond prices eroded in 1994 the degree of leverage and volatility
increased. The purchase and retirement of ARPS mitigated the impact of leverage.
However, as bonds rallied in 1995 leverage improved performance. Over the last
six months, the Trust purchased and retired $20 million in par amount of ARPS.
Currently, $65 million ARPS are outstanding. Additional ARPS purchases may occur
if ARPS become unprofitable (a negative yield spread) or the degree of leverage
increases beyond its normal range.
DIVIDEND RESERVES
To more accurately reflect the income being earned by the Trust, the
monthly dividend was reduced from $0.0725 to $0.0625 per share on January 27,
1995. At the end of April 1995, the Trust had undistributed net investment
income of $0.042 per share versus $0.069 per share on October 31, 1994. This
dividend reserve or "cushion" helps sustain the Trust's current monthly
dividend. Higher yields in
<PAGE> 3
future ARPS auctions and/or ARPS retirements may further erode the cushion.
Future declines in IIC's cushion may lead to further adjustment of the
common-share dividend.
LOOKING AHEAD
Slower economic growth in 1995 and the extent of the Federal Reserve
Board's previous interest rate moves have improved bond market expectations.
Investor demand for municipal securities should also be sustained by significant
bond maturities, calls for redemption and diminished new-issue supply. Changing
market conditions and the profitability of ARPS are among the factors that will
continue to determine the Trust's future level of income and influence its
market price.
The Trust's procedure for reinvestment of all dividends and distributions
on common shares is through purchase in the open market. This method helps to
support the market value of the Trust's shares. In addition, we would like to
remind you that the Trustees have approved a procedure whereby the Trust, when
appropriate, may purchase shares in the open market or in privately negotiated
transactions at a price not above market value or net asset value, whichever is
lower at the time of purchase. During the six-month period ended April 30, 1995,
the Trust purchased 153,900 shares of common stock at a weighted average
discount of 7.75 percent. The Trust may also utilize procedures to reduce or
eliminate the amount of outstanding ARPS, including their purchase in the open
market or in privately negotiated transactions.
We appreciate your ongoing support of InterCapital California Insured
Municipal Income Trust and look forward to continuing to serve your investment
needs.
Sincerely yours,
Charles A. Fiumefreddo
Chairman of the Board
<PAGE> 4
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 1995 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(in Coupon Maturity
thousands) Rate Date Value
--------- ------- --------- -------------
<C> <S> <C> <C> <C>
CALIFORNIA EXEMPT MUNICIPAL BONDS (97.1%)
GENERAL OBLIGATION (6.9%)
$ 10,000 California, Various Purpose 04/01/93 (FSA)............. 5.50 % 04/01/19 $ 9,086,100
Industry,
3,000 Refg Issue of 1993 (MBIA)............................ 5.50 07/01/13 2,806,710
4,900 Refg Issue of 1993 (MBIA)............................ 5.50 07/01/16 4,519,760
--------- -------------
17,900 16,412,570
--------- -------------
ELECTRIC REVENUE (16.9%)
5,000 Los Angeles Department of Water & Power, Refg Issue
of 1993 (Secondary MBIA)............................. 5.875 09/01/30 4,747,100
8,000 M-S-R Public Power Agency, San Juan Refg Ser F
(AMBAC).............................................. 6.00 07/01/20 7,776,640
7,000 Northern California Transmission Agency,
California - Oregon
Transmission Refg Ser 1993 A (MBIA).................. 5.25 05/01/20 6,144,180
Sacramento Municipal Utility District,
3,500 Refg 1993 Ser D (FGIC)............................... 5.25 11/15/12 3,178,525
8,000 Refg 1993 Ser D (MBIA)............................... 5.625 11/15/15 7,558,320
12,000 Southern California Public Power Authority, Power
1993 Sub Refg Ser A (FGIC)........................... 5.45 07/01/17 11,003,520
--------- -------------
43,500 40,408,285
--------- -------------
HOSPITAL REVENUE (7.3%)
4,150 Bakersfield, Adventist Health West Ser 1993 (MBIA)..... 5.50 03/01/19 3,785,547
3,000 California Health Facilities Financing Authority,
Children's Hospital - San Diego Ser 1993 (MBIA)...... 5.75 07/01/23 2,798,280
California Statewide Communities Development Authority,
5,000 Motion Picture & Television Fund COPs (AMBAC).......... 5.375 01/01/20 4,441,300
5,000 UniHealth America 1993 Ser A COPs (AMBAC)............ 5.50 10/01/14 4,623,500
2,000 Marysville, Fremont - Rideout Health Group Refg Ser
1993-A
(AMBAC).............................................. 5.55 01/01/13 1,879,760
--------- -------------
19,150 17,528,387
--------- -------------
PUBLIC FACILITIES REVENUE (14.8%)
10,000 Alameda County, Santa Rita Jail 1993 Refg COPs
(MBIA)............................................... 5.70 12/01/14 9,480,000
14,000 Beverly Hills Public Financing Authority, 1993 Refg Ser
A (MBIA)............................................. 5.65 06/01/15 13,291,180
9,000 California Public Works Board, Corrections Refg 1993
Ser B (MBIA)......................................... 5.50 12/01/12 8,421,660
5,000 Modesto, Community Center Refg 1993 Ser A COPs
(AMBAC).............................................. 5.00 11/01/23 4,178,700
--------- -------------
38,000 35,371,540
--------- -------------
</TABLE>
<PAGE> 5
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 1995 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(in Coupon Maturity
thousands) Rate Date Value
--------- ------- --------- -------------
<C> <S> <C> <C> <C>
TAX ALLOCATION (17.5%)
$ 8,000 Long Beach Financing Authority, Ser 1992 (AMBAC)....... 5.50 % 11/01/22 $ 7,255,360
8,000 Orange Redevelopment Agency, Southwest
Refg Issue of 1993 A (AMBAC)......................... 5.70 10/01/23 7,398,000
7,500 Port Hueneme Redevelopment Agency, Central Community
1993 Refg (AMBAC).................................... 5.50 05/01/23 6,797,100
7,000 Poway Redevelopment Agency, Paguay Sub Refg Ser 1993
(FGIC)............................................... 5.50 12/15/23 6,337,940
6,000 Riverside Redevelopment Agency, Merged Refg 1993 Ser A
(MBIA)............................................... 5.625 08/01/23 5,534,520
5,000 Santa Clara Redevelopment Agency, Bayshore North
1992 Refg (AMBAC).................................... 5.75 07/01/14 4,770,600
4,000 Simi Valley Public Financing Authority, 1993 Refg
(MBIA)............................................... 5.50 09/01/15 3,708,920
--------- -------------
45,500 41,802,440
--------- -------------
TRANSPORTATION FACILITIES REVENUE (8.1%)
8,000 Los Angeles County Metropolitan Transportation
Authority, Sales Tax Refg Ser 1993-A (MBIA).......... 5.625 07/01/18 7,465,360
7,000 Los Angeles County Transportation Commission,
Second Sr Ser 1992 A (MBIA).......................... 6.00 07/01/23 6,795,740
5,000 San Francisco Airports Commission, San Francisco Intl
Airport Second Ser Refg Issue 2 (MBIA)............... 6.75 05/01/20 5,267,500
--------- -------------
20,000 19,528,600
--------- -------------
WATER & SEWER REVENUE (21.6%)
10,000 California Department of Water Resources, Central
Valley Ser L (Secondary MBIA)........................ 5.75 12/01/19 9,459,300
7,000 Eastern Municipal Water District, Ser 1993-A COPs
(FGIC)............................................... 5.25 07/01/23 6,101,970
10,000 Los Angeles, Wastewater Refg Ser 1993-A (MBIA)......... 5.80 06/01/21 9,472,900
3,000 Oceanside, Water Refg COPs (AMBAC)..................... 5.70 08/01/14 2,855,010
3,500 Redding Joint Powers Financing Authority, Wastewater
Refg 1992 Ser A (FGIC)............................... 6.00 12/01/11 3,507,350
3,100 San Elijo Joint Powers Authority, 1993 Refg (FGIC)..... 5.00 03/01/20 2,624,460
5,000 Santa Maria, Local Water & Refg Ser 1993 COPs (FGIC)... 5.50 08/01/21 4,542,500
9,000 South County Regional Wastewater Authority, Morgan Hill
Ser 1992 B (FGIC).................................... 5.50 08/01/22 8,164,260
5,000 West & Central Basin Financing Authority, Water Ser
1992
(AMBAC).............................................. 6.125 08/01/22 4,918,000
--------- -------------
55,600 51,645,750
--------- -------------
OTHER REVENUE (4.0%)
10,000 Puerto Rico Telephone Authority, Refg Ser M (MBIA)..... 5.45 01/16/15 9,492,500
--------- -------------
249,650 TOTAL CALIFORNIA EXEMPT MUNICIPAL BONDS
--------- (IDENTIFIED COST $246,193,856)................................................ 232,190,072
-------------
</TABLE>
<PAGE> 6
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 1995 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(in Coupon Maturity
thousands) Rate Date Value
--------- ------- --------- -------------
<C> <S> <C> <C> <C>
CALIFORNIA EXEMPT SHORT-TERM
MUNICIPAL OBLIGATION (1.0%)
$ 2,500 California Health Facilities Financing Authority, St
Joseph
--------- Health 1991 Ser B (Tender 05/01/95)
(Identified Cost $2,500,000)......................... 5.00 %* 07/01/09 $ 2,500,000
-------------
$ 252,150 TOTAL INVESTMENTS
======== (IDENTIFIED COST $248,693,856)(A)............................. 98.1% 234,690,072
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES.................. 1.9 4,492,614
----- -------------
NET ASSETS...................................................... 100.0% $ 239,182,686
===== =============
</TABLE>
- ---------------
Bond Insurance:
<TABLE>
<C> <S>
AMBAC AMBAC Indemnity Corporation.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
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 $248,693,856; the aggregate gross and net
unrealized depreciation is $14,003,784.
</TABLE>
See Notes to Financial Statements
<PAGE> 7
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
- ----------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1995 (unaudited)
- ----------------------------------------------------------
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $248,693,856)........... $ 234,690,072
Cash....................................... 156,835
Interest receivable........................ 4,547,890
Deferred organizational expenses........... 20,362
Prepaid expenses........................... 41,826
-------------
TOTAL ASSETS......................... 239,456,985
-------------
LIABILITIES:
Payable for:
Common shares of beneficial interest
purchased.............................. 116,050
Investment management fee................ 70,511
Accrued expenses........................... 87,738
-------------
TOTAL LIABILITIES.................... 274,299
-------------
NET ASSETS:
Preferred shares of beneficial interest,
(1,000,000 shares authorized of non-
participating $.01 par value, 1,300
shares outstanding)...................... 65,000,000
-------------
Common shares of beneficial interest,
(unlimited shares authorized of $.01 par
value, 13,928,713 shares outstanding).... 194,132,205
Net unrealized depreciation................ (14,003,784)
Accumulated undistributed net investment
income................................... 591,754
Accumulated net realized loss.............. (6,537,489)
-------------
NET ASSETS APPLICABLE TO
COMMON SHAREHOLDERS............... 174,182,686
-------------
TOTAL NET ASSETS................... $ 239,182,686
=============
NET ASSET VALUE PER COMMON SHARE,
($174,182,686 divided by 13,928,713
common shares outstanding)................ $12.51
======
<CAPTION>
STATEMENT OF OPERATIONS For the six months ended April 30,
1995 (unaudited)
- ----------------------------------------------------------
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME.......................... $ 7,085,347
-------------
EXPENSES
Investment management fee.............. 406,748
Auction commission fees................ 99,429
Professional fees...................... 49,046
Transfer agent fees and expenses....... 39,639
Auction agent fees..................... 31,753
Shareholder reports and notices........ 22,189
Trustees' fees and expenses............ 15,442
Registration fees...................... 10,879
Organizational expenses................ 3,569
Other.................................. 16,729
-------------
TOTAL EXPENSES..................... 695,423
-------------
NET INVESTMENT INCOME.............. 6,389,924
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss...................... (1,742,267)
Net change in unrealized
depreciation......................... 19,028,725
-------------
NET GAIN........................... 17,286,458
-------------
NET INCREASE....................... $ 23,676,382
=============
</TABLE>
See Notes to Financial Statements
<PAGE> 8
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the six
months For the
ended April year ended
30, 1995 October 31,
(unaudited) 1994
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income...................................................... $ 6,389,924 $ 15,040,502
Net realized loss.......................................................... (1,742,267) (4,795,222)
Net change in unrealized appreciation/(depreciation)....................... 19,028,725 (45,557,371)
------------- -------------
Net increase (decrease)................................................ 23,676,382 (35,312,091)
------------- -------------
Dividends to preferred shareholders from net investment income............... (1,233,488) (2,851,151)
Dividends and distributions to common shareholders from:
Net investment income...................................................... (5,534,247) (12,253,231)
Net realized gain.......................................................... -- (75,016)
------------- -------------
Total.................................................................. (6,767,735) (15,179,398)
------------- -------------
Transactions in shares of beneficial interest:
Common..................................................................... (1,652,335) (341,173)
Preferred.................................................................. (19,750,000) (15,250,000)
------------- -------------
Total transactions..................................................... (21,402,335) (15,591,173)
------------- -------------
Total decrease......................................................... (4,493,688) (66,082,662)
NET ASSETS:
Beginning of period.......................................................... 243,676,374 309,759,036
------------- -------------
END OF PERIOD (including undistributed net investment income of $591,754 and
$969,565, respectively)..................................................... $ 239,182,686 $ 243,676,374
============= =============
</TABLE>
See Notes to Financial Statements
<PAGE> 9
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- InterCapital California Insured
Municipal Income Trust (the "Trust") is registered under the Investment Company
Act of 1940, as amended, as a non-diversified, closed-end management investment
company. The Trust was organized as a Massachusetts business trust on November
2, 1992 and had no operations until February 26, 1993 other than matters related
to the sale and issuance of 7,113 common shares of beneficial interest to Dean
Witter InterCapital Inc. (the "Investment Manager").
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 by the identified
cost method. The Trust amortizes premiums and accretes 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.
E. Organizational Expenses and Offering Costs -- The Investment Manager
paid the organizational expenses and offering costs of the Trust's common
shares in the amounts of $36,000 and $395,438, respectively, and paid
$293,608 in offering costs of the Trust's preferred shares. Organizational
<PAGE> 10
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- --------------------------------------------------------------------------------
expenses are being amortized by the straight-line method over a period not
to exceed five years from the commencement of operations. Offering costs
were charged to capital at the time of issuance of the Trust's respective
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, in addition to managing the Trust's
investments, the Investment Manager maintains certain of the Trust's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Trust who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Trust.
3. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES -- The cost of
purchases and proceeds from sales of portfolio securities, excluding short-term
investments, for the six months ended April 30, 1995 aggregated $-0- and
$10,243,419, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Trust's transfer agent. At April 30, 1995, the Trust had transfer agent fees and
expenses payable of approximately $6,700.
The Trust adopted an unfunded noncontributory defined benefit pension plan
covering all independent Trustees of the Trust who will have served as
independent Trustees for at least five years at the time of retirement. Benefits
under this plan are based on years of service and compensation during the last
five years of service. Aggregate pension costs for the six months ended April
30, 1995, included in Trustees' fees and expenses in the Statement of Operations
amounted to $5,651. At April 30, 1995 the Trust had an accrued pension liability
of $15,340 which is included in accrued expenses in the Statement of Assets and
Liabilities.
4. PREFERRED SHARES OF BENEFICIAL INTEREST -- The Trust is authorized to issue
up to 1,000,000 non-participating preferred shares of beneficial interest having
a par value of $.01 per share, in one or more series, with rights as determined
by the Trustees, without approval of the common shareholders. On April 15, 1993,
the Trust issued 2,000 shares of Auction Rate Preferred Shares ("Preferred
Shares") consisting of 500 shares each of Series One through Four for gross
total proceeds of $100,000,000. 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.
During the six months ended April 30, 1995, the Trust purchased and retired
preferred shares as follows:
<TABLE>
<CAPTION>
Series Shares Amount
- ------ ---- ------------
<S> <C> <C>
1 295 $14,750,000
4 100 5,000,000
</TABLE>
<PAGE> 11
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- --------------------------------------------------------------------------------
Dividends, which are cumulative, are reset through auction procedures.
<TABLE>
<CAPTION>
Reset Range of
Shares* Series Rate* Date Dividend Rates**
---- --- ---- -------- ----------------
<S> <C> <C> <C> <C>
200 1 4.44% 5/05/95 1.50% - 4.625%
400 2 4.28 5/05/95 3.10 - 4.40
500 3 4.45 5/05/95 3.51 - 4.45
200 4 4.45 5/05/95 2.59 - 5.875
</TABLE>
- ---------------
* As of April 30, 1995.
** For the six months ended April 30, 1995.
Subsequent to April 30, 1995 and up through May 9, 1995, the Trust paid
dividends to each of the Series 1, 2, 3, and 4 at rates ranging from 3.777% to
4.505%, 3.99% to 4.60%, 4.20% to 4.60% and 4.10% to 4.60%, respectively, in the
aggregate amount of $322,481.
The Trust is subject to certain restrictions relating to the preferred
shares. Failure to comply with these restrictions could preclude the Trust from
declaring any distributions to common shareholders or purchasing common shares
and/or could trigger the mandatory redemption of preferred shares at liquidation
value.
The preferred shares, which are entitled to one vote per share, generally
vote with the common shares but vote separately as a class to elect two Trustees
and on any matters affecting the rights of the preferred shares.
5. COMMON SHARES OF BENEFICIAL INTEREST -- Transactions in common shares of
beneficial interest were as follows:
<TABLE>
<CAPTION>
Capital Paid
in Excess of
Shares Par Value Par Value
----------- --------- -------------
<S> <C> <C> <C>
Balance (Note 1)..................................... 7,113 $ 71 $ 99,938
Shares issued at close of public offering on February
26, 1993*.......................................... 13,000,000 130,000 182,254,562
Shares issued on March 25, 1993 to cover
over-allotment..................................... 1,100,000 11,000 15,455,000
Offering costs and underwriting discounts associated
with the issuance of preferred shares.............. -- -- (1,824,858)
----------- --------- -------------
Balance, October 31, 1993............................ 14,107,113 141,071 195,984,642
Treasury shares purchased and retired (weighted
average discount 2.07%)**.......................... (24,500) (245) (340,928)
----------- --------- -------------
Balance, October 31, 1994............................ 14,082,613 140,826 195,643,714
Treasury shares purchased and retired (weighted
average discount 7.75%)**.......................... (153,900) (1,539) (1,650,796)
----------- --------- -------------
Balance, April 30, 1995.............................. 13,928,713 $ 139,287 $ 193,992,918
========== ========= =============
</TABLE>
- ---------------
* Net of offering costs of $395,438.
** The Trustees have voted to retire the shares purchased.
<PAGE> 12
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- --------------------------------------------------------------------------------
6. FEDERAL INCOME TAX STATUS -- At October 31, 1994, the Trust had a net
capital loss carryover of approximately $4,795,000 which will be available
through October 31, 2002 to offset future capital gains to the extent provided
by regulations.
7. DIVIDENDS TO COMMON SHAREHOLDERS -- The Trust has declared the following
dividends from net investment income:
<TABLE>
<CAPTION>
Amount
Declaration per
Date Share Record Date Payable Date
- -------------- -------- -------------- --------------
<S> <C> <C> <C>
April 25, 1995 $ 0.0625 May 5, 1995 May 19, 1995
June 6, 1995 0.0625 June 16, 1995 June 30, 1995
</TABLE>
8. SELECTED QUARTERLY FINANCIAL DATA --
<TABLE>
<CAPTION>
Quarters Ended
----------------------------------------
4/30/95 1/31/95
------------------ -----------------
Per Per
Total* Share Total* Share
------- ------- ------- ------
<S> <C> <C> <C> <C>
Total investment income..................................................... $ 3,470 $0.25 $ 3,615 $ 0.26
Net investment income....................................................... 3,130 0.23 3,260 0.23
Net realized and unrealized gain............................................ 7,687 0.55 9,599 0.69
</TABLE>
<TABLE>
<CAPTION>
Quarters Ended
---------------------------------------------------------------------------------------
10/31/94 7/31/94 4/30/94 1/31/94
------------------- ------------------ ------------------ -----------------
Per Per Per Per
Total* Share Total* Share Total* Share Total* Share
-------- ------- ------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income......... $4,114 $0.29 $4,082 $0.29 $4,168 $0.30 $ 4,332 $ 0.31
Net investment income........... 3,695 0.26 3,674 0.26 3,756 0.27 3,915 0.28
Net realized and unrealized gain
(loss)........................ (19,272) (1.36) 3,068 0.22 (36,281) (2.58) 2,133 0.15
</TABLE>
<TABLE>
<CAPTION>
Quarters Ended
---------------------------------------------------------------
10/31/93 7/31/93 4/30/93+
------------------ ------------------ -----------------
Per Per Per
Total* Share Total* Share Total* Share
------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Total investment income.............................. $ 4,366 $0.31 $4,106 $0.29 $ 1,194 $ 0.08
Net investment income................................ 3,942 0.28 3,721 0.27 1,013 0.07
Net realized and unrealized gain..................... 11,919 0.84 667 0.05 14 --
</TABLE>
- ---------------
* Totals expressed in thousands.
+ For the period February 26, 1993 (commencement of operations) through April
30, 1993.
<PAGE> 13
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected ratios and per share data for a common share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
For the For the
six period
months For the February
ended year 26,
April ended 1993*
30, October through
1995** 31, October
(unaudited) 1994** 31, 1993
-------- -------- --------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period......... $ 11.29 $ 14.87 $ 14.06
-------- -------- --------
Net investment income........................ 0.46 1.07 0.62
Net realized and unrealized gain (loss)...... 1.24 (3.57) 0.89
-------- -------- --------
Total from investment operations............. 1.70 (2.50) 1.51
-------- -------- --------
Less dividends and distributions from:
Net investment income...................... (0.39) (0.87) (0.43)
Common share equivalent of dividends paid
to preferred shareholders............... (0.09) (0.20) (0.11)
Net realized gain.......................... -- (0.01) --
-------- -------- --------
Total dividends and distributions............ (0.48) (1.08) (0.54)
Offering costs charged against capital....... -- -- (0.16)
-------- -------- --------
Net asset value, end of period............... $ 12.51 $ 11.29 $ 14.87
======== ======== ========
Market value, end of period.................. $ 11.375 $ 11.125 $ 15.375
======== ======== ========
TOTAL INVESTMENT RETURN+..................... 5.88%(1) (22.82)% 5.39%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)..... $239,183 $243,676 $309,759
Ratios to average net assets of common
shareholders:
Total expenses............................. 0.85%(2) 0.89% 0.73%(2)
Net investment income before preferred
stock dividends......................... 7.77%(2) 8.12% 6.39%(2)
Preferred stock dividends.................. 1.50%(2) 1.54% 1.11%(2)
Net investment income available to common
shareholders............................ 6.27%(2) 6.58% 5.28%(2)
Asset coverage on preferred shares at end of
period..................................... 368% 287% 309%
Portfolio turnover rate...................... 0% 12% 2%(1)
</TABLE>
- ---------------
<TABLE>
<C> <S>
* Commencement of operations.
** The per share amounts were computed using an average number of shares outstanding during the period.
+ Total investment return is based upon the current market value on the last day of each period reported.
Dividends 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
- --------------------------------------------------------------------------------
The financial statements included herein have been taken from the records of the
Trust without examination by the independent accountants and accordingly they do
not express an opinion thereon.
<PAGE> 14
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<PAGE> 15
(This page has been left blank intentionally.)
<PAGE> 16
TRUSTEES
- ---------------------------------------------------
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
- ---------------------------------------------------
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
James F. Willison
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
- ---------------------------------------------------
Dean Witter Trust Company
Harborside Financial Center -- Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
- ---------------------------------------------------
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
- ---------------------------------------------------
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
INTERCAPITAL
CALIFORNIA
INSURED
MUNICIPAL
INCOME
TRUST
Semiannual Report
April 30, 1995
