<PAGE> 1
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL Two World Trade Center, New York,
INCOME TRUST New York 10048
LETTER TO THE SHAREHOLDERS April 30, 1996
DEAR SHAREHOLDER:
During the first six months of InterCapital California Insured Municipal Income
Trust's current fiscal year, interest rates initially declined, but reversed
direction in February and began to move higher. Last year's favorable bond
market environment was created by proposals to achieve a balanced federal budget
within five to seven years and by continued easing of Federal Reserve Board
monetary policy. However, budget negotiations reached a political impasse early
in 1996 and federal offices were partially closed. This had an adverse impact on
bonds. Concerns also developed about an increase in the pace of the economic
recovery, which was marked by unexpectedly strong job growth in March and rising
commodity prices. The bond market reacted to these developments by pushing
yields sharply higher.
MUNICIPAL MARKET CONDITIONS
Long-term municipal revenue bond yields as tracked by The Bond Buyer Revenue
Bond Index* moved from 6.02 percent in October 1995 to a low of 5.63 percent in
January 1996. Interest rates subsequently began to rise in mid-February on signs
of stronger economic growth and renewed inflationary fears. The Index yield
reached 6.16 percent in April. Yields on one-year municipal notes declined from
3.82 percent to 3.70 percent over the past six months. The yield pickup for
extending maturities from one-to-thirty years was 246 basis points at the end of
April.
The risk of flat-tax legislation had caused the ratio of Revenue Bond Index
yields to 30-year U.S. Treasury bond yields to rise from 85 to 94 percent
between March and September 1995. However, as the prospects of a flat tax faded,
the ratio improved to 92 percent by the end of April.
- ---------------------
*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 Investors Service, Inc., and AA+
to A- by Standard & Poor's Corp.
<PAGE> 2
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
LETTER TO THE SHAREHOLDERS April 30, 1996, continued
A declining ratio means that municipal bond prices have outperformed U.S.
Treasury prices. Over the previous eight year period prior to the flat-tax
debate, long-term municipal yields averaged 89 percent of U.S. Treasury yields.
Municipal underwriting activity was fueled by the trend of lower interest rates
in 1995. Between November 1995 and April 1996, new issue volume increased 45
percent versus the same period a year ago. Despite a resurgence in underwriting,
dealers have continued to withdraw from the municipal business.
PERFORMANCE
The Trust's net asset value (NAV) declined from $13.40 to $12.94 per share
during the six-month period ended April 30, 1996. Based on this NAV change plus
reinvestment of tax-free dividends totaling $0.36 per share, the Trust's total
return was -0.47 percent. Over the same period, the Trust's market price on the
New York Stock Exchange declined from $11.75 to $11.50 per share. Based on this
market price change and reinvestment of tax-free dividends, the Trust's total
return was 0.88 percent. The Trust began the period trading at a 12 percent
discount to NAV and closed at a 11 percent discount. Undistributed net
investment income improved to $0.055 per share on April 30, 1996 versus $0.040
per share six months ago.
PORTFOLIO STRUCTURE
On April 30, 1996, the Trust's $239 million of net assets were diversified among
9 long-term municipal sectors and 38 credits. The five largest sectors
represented 78 percent of net assets. The average maturity and call protection
of the Trust's long-term portfolio were 23 and 7 years, respectively. Each
position in the portfolio was backed by triple "A" rated bond insurers. This is
to insure the timely payment of principal and interest.
<TABLE>
<CAPTION>
FIVE LARGEST SECTORS AS OF APRIL 30, 1996
(% OF NET ASSETS)
<S> <C>
WATER & SEWER 22%
ELECTRIC 17%
PUBLIC FACILITIES 15%
TAX ALLOCATION 15%
TRANSPORTATION 9%
OTHER 22%
</TABLE>
<TABLE>
<CAPTION>
CREDIT ENHANCEMENTS AS OF APRIL 30, 1996
(% OF TOTAL LONG-TERM INVESTMENTS)
<S> <C>
MBIA 53%
AMBAC 23%
FGIC 20%
FSA 4%
</TABLE>
<PAGE> 3
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
LETTER TO THE SHAREHOLDERS April 30, 1996, continued
THE IMPACT OF LEVERAGING
As discussed in previous reports, the total income available for distribution to
common shareholders includes incremental income provided by the Trust's
outstanding Auction Rate Preferred Shares (ARPS). ARPS dividends reflect
prevailing short-term interest rates on maturities normally ranging from one
week to one year. Incremental income to common shares depends on two factors:
first, the spread between interest earned on the long-term bonds in the
established portfolio of investments and the ARPS auction rate plus ARPS
expenses; second, the amount of ARPS outstanding. The greater the amount of ARPS
outstanding, the greater the amount of incremental income available for
distribution to common shareholders.
ARPS yields ranged between 3.37 and 4.19 percent during the six months ended
April 30, 1996. Over the same period, ARPS leverage contributed $0.03 per share
to common share earnings. As of April 30, 1996, $65 million in ARPS were
outstanding, which represented 27 percent of net assets.
LOOKING AHEAD
Tax-reduction proposals may receive additional publicity. However, the balance
between the supply of new issues and demand created by maturities and calls for
redemption should remain positive for the municipal market. Long-term municipal
securities currently yield 90 percent of the yield on U.S. Treasury securities
and may be expected to move in tandem with the Treasury market.
The Trust's procedure for reinvestment of all dividends and distributions on
common shares is through purchases in the open market. This method helps to
support the market value of the Trust's shares. In addition, we would like to
remind you that the Trustees have approved a procedure whereby the Trust, when
appropriate, may purchase shares in the open market or in privately negotiated
transactions at a price not above market value or net asset value, whichever is
lower at the time of purchase. During the six-month period ended April 30, 1996,
the Trust purchased and retired 285,900 shares of common stock at a weighted
average market discount of 12.79 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.
<PAGE> 4
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
LETTER TO THE SHAREHOLDERS April 30, 1996, continued
We appreciate your ongoing support of InterCapital California Insured Municipal
Income Trust and look forward to continuing to serve your investment needs.
Very truly yours,
/s/ CHARLES A. FIUMEFREDDO
- --------------------------
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE> 5
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CALIFORNIA EXEMPT MUNICIPAL BONDS (98.0%)
General Obligation (6.7%)
$ 9,000 California, Various Purpose 04/01/93 (FSA).............................. 5.50 % 04/01/19 $ 8,411,130
Industry,
3,000 Refg Issue of 1993 (MBIA)............................................... 5.50 07/01/13 2,924,970
4,900 Refg Issue of 1993 (MBIA)............................................... 5.50 07/01/16 4,604,236
- -------- ----------
16,900 15,940,336
- -------- ----------
Electric Revenue (17.0%)
5,000 Los Angeles Department of Water & Power, Refg Issue of 1993
(Secondary MBIA)....................................................... 5.875 09/01/30 4,894,800
8,000 M-S-R Public Power Agency, San Juan Refg Ser F (AMBAC).................. 6.00 07/01/20 7,999,200
7,000 Northern California Transmission Agency, California - Oregon
Transmission
Refg Ser 1993 A (MBIA).................................................. 5.25 05/01/20 6,287,610
Sacramento Municipal Utility District,
3,000 Refg 1993 Ser D (FGIC).................................................. 5.25 11/15/12 2,832,000
8,000 Refg 1993 Ser D (MBIA).................................................. 5.625 11/15/15 7,666,240
12,000 Southern California Public Power Authority, Power 1993 Sub Refg Ser A
(FGIC)................................................................. 5.45 07/01/17 11,065,440
- -------- ----------
43,000 40,745,290
- -------- ----------
Hospital Revenue (7.5%)
4,150 Bakersfield, Adventist Health West Ser 1993 (MBIA)...................... 5.50 03/01/19 3,864,231
3,000 California Health Facilities Financing Authority, Children's
Hospital - San Diego
Ser 1993 (MBIA)........................................................ 5.75 07/01/23 2,876,550
California Statewide Communities Development Authority,
5,000 Motion Picture & Television Fund COPs (AMBAC).......................... 5.375 01/01/20 4,542,800
5,000 UniHealth America 1993 Ser A COPs (AMBAC).............................. 5.50 10/01/14 4,733,950
2,000 Marysville, Fremont - Rideout Health Group Refg Ser 1993-A (AMBAC)...... 5.55 01/01/13 1,960,660
- -------- ----------
19,150 17,978,191
- -------- ----------
Mortgage Revenue - Single Family (1.3%)
3,000 California Housing Finance Agency, Home 1996 Ser E (AMT) (MBIA)......... 6.05 08/01/15 2,969,400
- -------- ----------
Public Facilities Revenue (15.1%)
10,000 Alameda County, Santa Rita Jail 1993 Refg COPs (MBIA)................... 5.70 12/01/14 9,706,300
14,000 Beverly Hills Public Financing Authority, 1993 Refg Ser A (MBIA)........ 5.65 06/01/15 13,264,440
9,000 California Public Works Board, Corrections Refg 1993 Ser B (MBIA)....... 5.50 12/01/12 8,826,930
5,000 Modesto, Community Center Refg 1993 Ser A COPs (AMBAC).................. 5.00 11/01/23 4,397,550
- -------- ----------
38,000 36,195,220
- -------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Tax Allocation (14.8%)
$ 7,000 Long Beach Financing Authority, Ser 1992 (AMBAC)........................ 5.50 % 11/01/22 $ 6,494,740
5,000 Orange Redevelopment Agency, Southwest Refg Issue of 1993 A (AMBAC)..... 5.70 10/01/23 4,766,900
7,500 Port Hueneme Redevelopment Agency, Central Community 1993 Refg
(AMBAC)................................................................ 5.50 05/01/23 6,992,175
6,000 Poway Redevelopment Agency, Paguay Sub Refg Ser 1993 (FGIC)............. 5.50 12/15/23 5,620,200
3,000 Riverside Redevelopment Agency, Merged Refg 1993 Ser A (MBIA)........... 5.625 08/01/23 2,822,850
5,000 Santa Clara Redevelopment Agency, Bayshore North 1992 Refg (AMBAC)...... 5.75 07/01/14 4,878,550
4,000 Simi Valley Public Financing Authority, 1993 Refg (MBIA)................ 5.50 09/01/15 3,794,480
- -------- ----------
37,500 35,369,895
- -------- ----------
Transportation Facilities Revenue (9.3%)
8,000 Los Angeles County Metropolitan Transportation Authority, Sales Tax Refg
Ser 1993-A (MBIA)...................................................... 5.625 07/01/18 7,643,520
7,000 Los Angeles County Transportation Commission, Second Sr Ser 1992 A
(MBIA)................................................................. 6.00 07/01/23 6,971,440
5,000 San Francisco Airports Commission, San Francisco Int'l Airport
Second Ser Refg Issue 2 (MBIA)......................................... 6.75 05/01/20 5,394,250
2,300 San Francisco Bay Area Rapid Transit District, Sales Tax Ser 1995
(FGIC)................................................................. 5.50 07/01/20 2,176,444
- -------- ----------
22,300 22,185,654
- -------- ----------
Water & Sewer Revenue (21.9%)
10,000 California Department of Water Resources, Central Valley Ser L
(Secondary MBIA)....................................................... 5.75 12/01/19 9,673,800
7,000 Eastern Municipal Water District, Ser 1993-A COPs (FGIC)................ 5.25 07/01/23 6,214,600
10,000 Los Angeles, Wastewater Refg Ser 1993-A (MBIA).......................... 5.80 06/01/21 9,779,700
3,000 Oceanside, Water 1993 Refg COPs (AMBAC)................................. 5.70 08/01/14 2,891,010
3,500 Redding Joint Powers Financing Authority, Wastewater Refg 1992 Ser A
(FGIC)................................................................. 6.00 12/01/11 3,594,185
2,500 San Elijo Joint Powers Authority, 1993 Refg (FGIC)...................... 5.00 03/01/20 2,184,950
5,000 Santa Maria, Local Water & Refg Ser 1993 COPs (FGIC).................... 5.50 08/01/21 4,615,500
9,000 South County Regional Wastewater Authority, Morgan Hill Ser 1992 B
(FGIC)................................................................. 5.50 08/01/22 8,352,000
5,000 West & Central Basin Financing Authority, Water Ser 1992 (AMBAC)........ 6.125 08/01/22 5,039,650
- -------- ----------
55,000 52,345,395
- -------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Other Revenue (4.4%)
$ 1,250 Sacramento Area Flood Control Agency, Capital Assessment District #2
Ser 1995 (FGIC)........................................................ 5.375% 10/01/25 $ 1,155,538
10,000 Puerto Rico Telephone Authority, Refg Ser M (MBIA)...................... 5.45 01/16/15 9,481,400
- -------- ------------
11,250 10,636,938
- -------- ------------
246,100 TOTAL CALIFORNIA EXEMPT MUNICIPAL BONDS (Identified Cost $242,711,616)........................... 234,366,319
- -------- ------------
CALIFORNIA EXEMPT SHORT-TERM MUNICIPAL OBLIGATION (0.1%)
300 California Health Facilities Financing Authority, St Joseph Health 1991
- -------- Ser B
(Demand 05/01/96) (Identified Cost $300,000)........................... 3.45* 07/01/09 300,000
------------
$246,400 TOTAL INVESTMENTS (Identified Cost $243,011,616) (a).................................... 98.1% 234,666,319
========
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................ 1.9 4,493,313
------ ------------
NET ASSETS............................................................................... 100.0% $239,159,632
====== ============
</TABLE>
- ---------------------
AMT Alternative Minimum Tax.
COPs Certificates of Participation.
* Current coupon of variable rate security.
(a) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation was
$106,941 and the aggregate gross unrealized depreciation was
$8,452,238, resulting in net unrealized depreciation of
$8,345,297.
Bond Insurance:
AMBAC AMBAC Indemnity Corporation.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1996 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $243,011,616)....................................... $234,666,319
Cash.................................................................. 68,405
Interest receivable................................................... 4,523,755
Deferred organizational expenses...................................... 13,144
Prepaid expenses...................................................... 39,673
------------
TOTAL ASSETS...................................................... 239,311,296
------------
LIABILITIES:
Investment management fee payable..................................... 73,831
Accrued expenses...................................................... 77,833
------------
TOTAL LIABILITIES................................................. 151,664
------------
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, 13,464,113 shares outstanding)....................... 188,664,616
Net unrealized depreciation........................................... (8,345,297)
Accumulated undistributed net investment income....................... 742,183
Accumulated net realized loss......................................... (6,901,870)
------------
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS...................... 174,159,632
------------
TOTAL NET ASSETS.................................................. $239,159,632
============
NET ASSET VALUE PER COMMON SHARE
($174,159,632 divided by 13,464,113 common shares outstanding)....... $12.94
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 9
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended April 30, 1996 (unaudited)
NET INVESTMENT INCOME:
INTEREST INCOME........................................................ $ 6,949,452
-----------
EXPENSES
Investment management fee.............................................. 435,871
Auction commission fees................................................ 81,119
Professional fees...................................................... 56,216
Transfer agent fees and expenses....................................... 33,125
Auction agent fees..................................................... 18,140
Trustees' fees and expenses............................................ 16,158
Shareholder reports and notices........................................ 14,669
Registration fees...................................................... 11,513
Custodian fees......................................................... 6,393
Organizational expenses................................................ 3,589
Other.................................................................. 18,003
-----------
TOTAL EXPENSES BEFORE EXPENSE OFFSET............................... 694,796
LESS: EXPENSE OFFSET............................................... (6,297)
-----------
TOTAL EXPENSES AFTER EXPENSE OFFSET................................ 688,499
-----------
NET INVESTMENT INCOME.............................................. 6,260,953
-----------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss...................................................... (169,242)
Net change in unrealized depreciation.................................. (6,704,129)
-----------
NET LOSS........................................................... (6,873,371)
-----------
NET DECREASE........................................................... $ (612,418)
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 10
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
<S> <C> <C>
FOR THE YEAR
FOR THE SIX ENDED
MONTHS ENDED OCTOBER 31,
APRIL 30, 1996 1995
- ---------------------------------------------------------------------------------------
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income............................ $ 6,260,953 $ 12,794,955
Net realized loss................................ (169,242) (1,937,406)
Net change in unrealized depreciation............ (6,704,129) 31,391,341
------------ ------------
NET INCREASE (DECREASE)...................... (612,418) 42,248,890
------------ ------------
DIVIDENDS FROM NET INVESTMENT INCOME:
Preferred........................................ (1,174,897) (2,483,266)
Common........................................... (4,898,854) (10,726,273)
------------ ------------
TOTAL........................................ (6,073,751) (13,209,539)
------------ ------------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST:
Preferred........................................ -- (19,750,000)
Common........................................... (3,386,642) (3,733,282)
------------ ------------
TOTAL........................................ (3,386,642) (23,483,282)
------------ ------------
TOTAL INCREASE (DECREASE).................... (10,072,811) 5,556,069
NET ASSETS:
Beginning of period.............................. 249,232,443 243,676,374
------------ ------------
END OF PERIOD
(Including undistributed net investment
income of $742,183 and $554,981,
respectively)................................ $ 239,159,632 $249,232,443
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 11
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (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 commenced
operations on February 26, 1993.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- Portfolio securities are valued by an outside
independent pricing service approved by the Trustees. The pricing service has
informed the Trust that in valuing the portfolio securities, it uses both a
computerized matrix of tax-exempt securities and evaluations by its staff, in
each case based on information concerning market transactions and quotations
from dealers which reflect the bid side of the market each day. The portfolio
securities are thus valued by reference to a combination of transactions and
quotations for the same or other securities believed to be comparable in
quality, coupon, maturity, type of issue, call provisions, trading
characteristics and other features deemed to be relevant. Short-term debt
securities having a maturity date of more than sixty days at time of purchase
are valued on a mark-to-market basis until sixty days prior to maturity and
thereafter at amortized cost based on their value on the 61st day. Short-term
debt securities having a maturity date of sixty days or less at the time of
purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
The Trust amortizes premiums and accretes discounts over the life of the
respective securities. Interest income is accrued daily.
C. FEDERAL INCOME TAX STATUS -- It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable and nontaxable income to its
shareholders. Accordingly, no federal income tax provision is required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Trust records dividends
and distributions to its shareholders on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations 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
<PAGE> 12
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (unaudited) continued
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in-capital.
E. ORGANIZATIONAL EXPENSES -- Dean Witter InterCapital Inc. (the "Investment
Manager") paid the organizational expenses of the Trust's common shares in the
amount of $36,000 which have been reimbursed for the full amount thereof. Such
expenses have been deferred and are being amortized by the straight-line method
over a period not to exceed five years from the commencement of operations.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Trust pays a management fee,
calculated weekly and payable monthly, by applying the annual rate of 0.35% to
the Trust's weekly net assets.
Under the terms of the Agreement, in addition to managing the Trust's
investments, the Investment Manager maintains certain of the Trust's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Trust who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Trust.
3. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended April 30, 1996 aggregated
$3,000,000 and $5,822,736, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Trust's transfer agent. At April 30, 1996, the Trust had transfer agent fees and
expenses payable of approximately $4,400.
The Trust has 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, 1996
included in Trustees' fees and expenses in the Statement of Operations amounted
to $7,921. At April 30, 1996, the Trust had an accrued pension liability of
$24,463 which is included in accrued expenses in the Statement of Assets and
Liabilities.
<PAGE> 13
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (unaudited) continued
4. PREFERRED SHARES OF BENEFICIAL INTEREST
The Trust is authorized to issue up to 1,000,000 non-participating preferred
shares of beneficial interest having a par value of $.01 per share, in one or
more series, with rights as determined by the Trustees, without approval of the
common shareholders. On April 15, 1993, the Trust issued 2,000 shares of Auction
Rate Preferred Shares ("Preferred Shares") consisting of 500 shares each of
Series 1 through 4 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.
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 3.375% 05/03/96 2.50% - 3.982%
400 2 3.40 05/03/96 3.19 - 5.00
500 3 3.375 05/03/96 3.14 - 5.00
200 4 3.375 05/03/96 2.20 - 5.00
</TABLE>
- ---------------------
* As of April 30, 1996.
** For the six months ended April 30, 1996.
Subsequent to April 30, 1996 and up through June 5, 1996, the Trust paid
dividends to Series 1 through 4 at rates ranging from 3.00% to 3.75%,
respectively, in the aggregate amount of $213,625.
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.
<PAGE> 14
INTERCAPITAL CALIFORNIA INSURED MUNICIPAL INCOME TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (unaudited) 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, October 31, 1994...................................................... 14,082,613 $140,826 $195,643,714
Treasury shares purchased and retired (weighted average discount 8.92%)*....... (332,600) (3,326) (3,729,956)
---------- -------- ------------
Balance, October 31, 1995...................................................... 13,750,013 137,500 191,913,758
Treasury shares purchased and retired (weighted average discount 12.79%)*...... (285,900) (2,859) (3,383,783)
---------- -------- ------------
Balance, April 30, 1996........................................................ 13,464,113 $134,641 $188,529,975
========== ======== ============
</TABLE>
- ---------------------
* The Trustees have voted to retire the shares purchased.
6. FEDERAL INCOME TAX STATUS
At October 31, 1995, the Trust had a net capital loss carryover of approximately
$6,733,000 of which $4,795,000 will be available through October 31, 2002 and
$1,938,000 will be available through October 31, 2003 to offset future capital
gains to the extent provided by regulations.
7. DIVIDENDS TO COMMON SHAREHOLDERS
The Trust declared the following dividends from net investment income:
<TABLE>
<CAPTION>
DECLARATION AMOUNT RECORD PAYABLE
DATE PER SHARE DATE DATE
- --------------- --------- ------------- --------------
<S> <C> <C> <C>
April 23, 1996 $0.06 May 3, 1996 May 17, 1996
May 28, 1996 $0.06 June 7, 1996 June 21, 1996
</TABLE>
<PAGE> 15
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 YEAR
FOR THE SIX ENDED FOR THE PERIOD
MONTHS ENDED OCTOBER 31** FEBRUARY 26, 1993*
APRIL 30, -------------------- THROUGH
1996** 1995 1994 OCTOBER 31, 1993**
- --------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................. $13.40 $11.29 $ 14.87 $ 14.06
------ ------ ------- -------
Net investment income................................ 0.46 0.92 1.07 0.62
Net realized and unrealized gain (loss).............. (0.51) 2.14 (3.57) 0.89
------ ------ ------- -------
Total from investment operations..................... (0.05) 3.06 (2.50) 1.51
------ ------ ------- -------
Less dividends and distributions from:
Net investment income............................. (0.36) (0.77) (0.87) (0.43)
Common share equivalent of dividends paid to
preferred shareholders........................... (0.09) (0.18) (0.20) (0.11)
Net realized gain................................. -- -- (0.01) --
------ ------ ------- -------
Total dividends and distributions.................... (0.45) (0.95) (1.08) (0.54)
Anti-dilutive effect of acquiring treasury shares.... 0.04 -- -- --
Offering costs charged against capital............... -- -- -- (0.16)
------ ------ ------- -------
Net asset value, end of period....................... $12.94 $13.40 $ 11.29 $ 14.87
====== ====== ======= =======
Market value, end of period.......................... $11.50 $11.75 $11.125 $15.375
====== ====== ======= =======
TOTAL INVESTMENT RETURN+............................. 0.88%(1) 12.93% (22.82)% 5.39%(1)
RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS:
Total expenses before expense offset................. 0.75%(2)(4) 0.81%(3) 0.89% 0.73%(2)
Net investment income before preferred stock
dividends........................................... 6.80%(2) 7.39%(3) 8.12% 6.39%(2)
Preferred stock dividends............................ 1.28%(2) 1.44% 1.54% 1.11%(2)
Net investment income available to common
shareholders........................................ 5.52%(2) 5.95% 6.58% 5.28%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.............. $239,160 $249,232 $243,676 $309,759
Asset coverage on preferred shares at end of
period.............................................. 368% 383% 287% 309%
Portfolio turnover rate.............................. 1%(1) 1% 12% 2%(1)
</TABLE>
- ---------------------
* Commencement of operations.
** The per share amounts were computed using an average number of shares
outstanding during the period.
+ Total investment return is based upon the current market value on the last
day of each period reported. Dividends and distributions are assumed to be
reinvested at the prices obtained under the Trust's dividend reinvestment
plan. Total investment return does not reflect brokerage commissions.
(1) Not annualized.
(2) Annualized.
(3) The above expense and net investment income ratios would have been 0.80%
and 7.40%, respectively, which reflects 0.01% effect for custody cash
credits.
(4) The above annualized expense ratio would have been 0.75% after expense
offset.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 16
TRUSTEES
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
The financial statements included herein have been taken from the records of
the Trust without examination by the independent accountants and accordingly
they do not express an opinion thereon.
INTERCAPITAL
CALIFORNIA
INSURED
MUNICIPAL
INCOME
TRUST
SEMIANNUAL REPORT
APRIL 30, 1996
