Edgar Filing: MORGAN STANLEY INSURED CALIFORNIA MUNICIPAL SEC

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-07111

Morgan Stanley Insured California Municipal Securities
(Exact name of registrant as specified in charter)

522 Fifth Avenue, New York, New York 10036
(Address of principal executive offices) (Zip code)

Ronald E. Robison
522 Fifth Avenue, New York, New York 10036
(Name and address of agent for service)

Registrant's telephone number, including area code: 212-296-6990

Date of fiscal year end: October 31, 2007

Date of reporting period: October 31, 2007

Item 1 - Report to Shareholders

Welcome, Shareholder:

In this report, you'll learn about how your investment in Morgan Stanley Insured
California Municipal Securities performed during the annual period. We will
provide an overview of the market conditions, and discuss some of the factors
that affected performance during the reporting period. In addition, this report
includes the Trust's financial statements and a list of Trust investments.

MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO PASS. THERE
IS NO ASSURANCE THAT THE TRUST WILL ACHIEVE ITS INVESTMENT OBJECTIVE. THE TRUST
IS SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY THAT MARKET VALUES OF
SECURITIES OWNED BY THE TRUST WILL DECLINE AND, THEREFORE, THE VALUE OF THE
TRUST'S SHARES MAY BE LESS THAN WHAT YOU PAID FOR THEM. ACCORDINGLY, YOU CAN
LOSE MONEY INVESTING IN THIS TRUST.

INCOME EARNED BY CERTAIN SECURITIES IN THE PORTFOLIO MAY BE SUBJECT TO THE
FEDERAL ALTERNATIVE MINIMUM TAX (AMT).

FUND REPORT

For the year ended October 31, 2007

MARKET CONDITIONS

Fears stemming from a residential housing downturn persisted throughout the
12-month period, hitting a peak late in the second quarter of 2007. Confronted
with increasing delinquency rates on subprime loans, high-profile hedge fund
collapses, and a series of subprime mortgage related credit downgrades, markets
responded severely. The impact was exacerbated by an influx of forced sellers
looking to liquidate assets to help meet margin calls and capital withdrawals,
and a flight to quality ensued. This brought on greater concern about the impact
on the financial markets, the financial system, and the broader economy,
especially with regard to the effect on mortgage securities and mortgage
lenders.

In an effort to help ease the credit and liquidity crunch, the Federal Open
Market Committee (the "Fed") elected to cut the target federal funds by 50 basis
points in September and another 25 basis points in October, bringing the
benchmark overnight rate to 4.50 percent. At each of these meetings the Fed
acknowledged that while some upward pressure on inflation remained, the housing
correction could potentially intensify and restrain growth. However, at the
October meeting, they also noted that the upside risk to inflation roughly
balanced the downside risk to growth, setting expectations for no further cuts
in the target rate.

Throughout the 12-month period, U.S. Treasury yields fluctuated, with the yield
curve beginning the period relatively flat and ending the period steep. As the
yield curve steepened, shorter dated U.S. Treasury yields experienced the
greatest decline, while longer dated yields rose slightly. Overall, municipal
bond yields ended the period higher, but most of the yield increases occurred in
the intermediate to long maturity portion of the yield curve, while yields on
the front end of the curve declined. As a result, the curve steepened and the
spread between two-year and 30-year maturities widened to about 100 basis
points. For the one-year period, municipal bonds underperformed Treasury
securities.

So far, 2007 has been shaping up to be record breaking year for new issuance in
the municipal market, with the majority of it occurring in the development
sector. California and New York continued to lead the nation in new issuance of
municipal bonds. The State of California's $6.1 billion projected budget
shortfall jumped to $10 billion in October, due mainly to the downturn in the
state's real estate market and a weaker economy. Despite these challenges,
California investment pools have been mostly unaffected due to their
conservative investment strategy. Additionally, the credit quality of public and
private higher education institutions in the state has been improving.

PERFORMANCE ANALYSIS

For the 12-month period ended October 31, 2007, the net asset value (NAV) of
Morgan Stanley Insured California Municipal Securities (ICS) decreased from
$15.15 to $14.86 per share. Based on this change plus reinvestment of tax-free
dividends totaling $0.6025 per share and a long-term capital gain distribution
of $0.040983 per share, the Trust's total NAV return was 2.58 percent. ICS's
value on the New York Stock Exchange (NYSE) moved from $14.06 to $14.19 per
share during the same period. Based on this change plus reinvestment of
dividends and distributions, the Trust's total market return was 5.54 percent.
ICS's NYSE market price was at a 4.51 percent discount to its NAV. During the
fiscal period, the Trust purchased and retired 39,900 shares of common stock at
a weighted average market discount of 5.59 percent. Past performance is no
guarantee of future results.

Monthly dividends for the fourth quarter of 2007, declared in September,
increased from $0.05 to $0.0525 per share. The dividend reflects the current
level of the Trust's net investment income. ICS's level of undistributed net
investment income was $0.117 per share on October 31, 2007 versus $0.107 per
share 12 months earlier.(1)

Throughout the 12-month period, the Trust maintained a lower interest rate
sensitivity (as measured by duration*), which was implemented through the use of
a U.S. Treasury futures hedge and a Bond Market Association (BMA) interest rate
swap. This defensive positioning benefited performance when rates were rising.
However, in the last months of the period, as yields at the long end of the
curve declined and the overall spread between short- and long-dated issues
narrowed, this positioning detracted from relative performance.

With regard to yield-curve positioning, we focused on the long end of the yield
curve in an effort to capture more attractive yields. This strategy was also
beneficial early in the period, but hindered overall performance as Fed easing
in the latter months pushed short-term rates lower, causing the short end of the
curve to outperform the long end for the overall period.

In terms of the Trust's sector positioning, an overweight to the hospital/life
care sector hindered returns. Over the course of the period, the performance of
this sector waned as spreads widened. Security selection in the tobacco and
health care sectors also hindered performance.

Conversely, an overweight to the public utility sector, particularly water and
sewer bonds, was additive to performance. The flight to quality that took place
during the period helped boost the performance of the more solid infrastructure
sectors such as utilities and the Trust's holdings there enhanced returns. The
Trust's overall emphasis on higher quality securities was also beneficial,
particularly in the latter months of the period when the higher rated segment of
the market outperformed lower rated bonds.

The Trust's procedure for reinvesting all dividends and distributions in common
shares is through purchases in the open market. This method helps 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 may, 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.

----------------------------------------------------

PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. INVESTMENT RETURN, NET ASSET VALUE AND COMMON SHARE MARKET PRICE WILL
FLUCTUATE AND TRUST SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.

There is no guarantee that any sectors mentioned will continue to perform as
discussed herein or that securities in such sectors will be held by the Trust in
the future.

(1) Income earned by certain securities in the portfolio may be subject to the
federal alternative minimum tax (AMT).

* A measure of the sensitivity of a bond's price to changes in interest rates,
expressed in years. Each year of duration represents an expected 1 percent
change in the price of a bond for every 1 percent change in interest rates.
The longer a bond's duration, the greater the effect of interest-rate
movements on its price. Typically, trusts with shorter durations perform
better in rising-interest-rate environments, while trusts with longer
durations perform better when rates decline.

TOP FIVE SECTORS

Water & Sewer 16.2%
General Obligation 16.0
Refunded 15.4
Appropriation 13.9
Public Power 10.6

LONG-TERM CREDIT ENHANCEMENTS

FGIC 30.8%
FSA 30.1%
MBIA 21.1
AMBAC 15.8
US Gov't Backed 2.2

Data as of October 31, 2007. Subject to change daily. All percentages for top
five sectors are as a percentage of total investments. All percentages for
long-term credit enhancements are as a percentage of total long-term
investments. These data are provided for informational purposes only and should
not be deemed a recommendation to buy or sell the securities mentioned. Morgan
Stanley is a full-service securities firm engaged in securities trading and
brokerage activities, investment banking, research and analysis, financing and
financial advisory services.

FOR MORE INFORMATION
ABOUT PORTFOLIO HOLDINGS

EACH MORGAN STANLEY TRUST PROVIDES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS IN
ITS SEMIANNUAL AND ANNUAL REPORTS WITHIN 60 DAYS OF THE END OF THE TRUST'S
SECOND AND FOURTH FISCAL QUARTERS. THE SEMIANNUAL REPORTS AND THE ANNUAL REPORTS
ARE FILED ELECTRONICALLY WITH THE SECURITIES AND EXCHANGE COMMISSION (SEC) ON
FORM N-CSRS AND FORM N-CSR, RESPECTIVELY. MORGAN STANLEY ALSO DELIVERS THE
SEMIANNUAL AND ANNUAL REPORTS TO TRUST SHAREHOLDERS AND MAKES THESE REPORTS
AVAILABLE ON ITS PUBLIC WEB SITE, WWW.MORGANSTANLEY.COM. EACH MORGAN STANLEY
TRUST ALSO FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE
TRUST'S FIRST AND THIRD FISCAL QUARTERS ON FORM N-Q. MORGAN STANLEY DOES NOT
DELIVER THE REPORTS FOR THE FIRST AND THIRD FISCAL QUARTERS TO SHAREHOLDERS, NOR
ARE THE REPORTS POSTED TO THE MORGAN STANLEY PUBLIC WEB SITE. YOU MAY, K
HOWEVER, OBTAIN THE FORM N-Q FILINGS (AS WELL AS THE FORM N-CSR AND N-CSRS
FILINGS) BY ACCESSING THE SEC'S WEB SITE, HTTP://WWW.SEC.GOV. YOU MAY ALSO
REVIEW AND COPY THEM AT THE SEC'S PUBLIC REFERENCE ROOM IN WASHINGTON, DC.
INFORMATION ON THE OPERATION OF THE SEC'S PUBLIC REFERENCE ROOM MAY BE OBTAINED
BY CALLING THE SEC AT (800) SEC-0330. YOU CAN ALSO REQUEST COPIES OF THESE
MATERIALS, UPON PAYMENT OF A DUPLICATING FEE, BY ELECTRONIC REQUEST AT THE SEC'S
E-MAIL ADDRESS (PUBLICINFO@SEC.GOV) OR BY WRITING THE PUBLIC REFERENCE SECTION
OF THE SEC, WASHINGTON, DC 20549-0102.

DISTRIBUTION BY MATURITY
(% of Long-Term Portfolio) As of October 31, 2007

WEIGHTED AVERAGE MATURITY: 19 YEARS (A)

0-5 9
6-10 2
11-15 17
16-20 20
21-25 34
26-30 16
31+ 2

(a) Where applicable maturities reflect mandatory tenders, puts and call
dates.

Portfolio structure is subject to change.

CALL AND COST (BOOK) YIELD STRUCTURE
(Based on Long-Term Portfolio) As of October 31, 2007

YEARS BONDS CALLABLE -- WEIGHTED AVERAGE CALL PROTECTION: 7 YEARS

2008(a) 2.00
2009 0.00(b)
2010 2.00
2011 17.00
2012 10.00
2013 18.00
2014 16.00
2015 16.00
2016 7.00
2017+ 12.00

COST (BOOK) YIELD(C) -- WEIGHTED AVERAGE BOOK YIELD: 4.9%

2008(b) 5.40
2009 5.90
2010 5.60
2011 5.20
2012 5.20
2013 4.80
2014 4.90
2015 4.60
2016 4.60
2017+ 4.80

(a) May include issues initially callable in previous years.

(b) Less than 1%.

(c) Cost or "book" yield is the annual income earned on a portfolio investment
based on its original purchase price before the Trust's operating expenses.
For example, the Trust is earning a book yield of 5.4% on 2% of the
long-term portfolio that is callable in 2008.

Portfolio structure is subject to change.

Morgan Stanley Insured California Municipal Securities
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 2007

PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
---------------------------------------------------------------------------------------------------------

Tax-Exempt Municipal Bonds (94.3%)
California (92.2%)
$2,000 Anaheim Public Financing Authority, Distribution Electric
Ser 2007-A (MBIA Insd)................................... 4.50 % 10/01/37 $ 1,925,140
1,000 Anaheim Public Financing Authority, Generation Refg Ser
2002-B (FSA Insd)........................................ 5.25 10/01/18 1,065,130
2,000 California Department of Veterans Affairs, Home Purchase
2002 Ser A (AMBAC Insd).................................. 5.35 12/01/27 2,096,800
1,500 California Department of Water Resources, Central Valley
Ser Y (FGIC Insd)........................................ 5.25 12/01/19 1,602,615
2,000 California Infrastructure & Economic Development Bank, Bay
Area Toll Bridges Seismic Retrofit First Lien Ser 2003 A
(FGIC Insd) (ETM)........................................ 5.00 07/01/29 2,180,321
1,000 California, Ser 2007 (MBIA Insd)........................... 4.25 08/01/33 924,000
1,000 California State University, Ser 2005 A (AMBAC Insd)....... 5.00 11/01/35 1,031,210
505 California, Various Purposes Dtd 03/01/94 (FSA Insd)....... 5.50 03/01/20 508,045
400 California, Veterans Ser BH (AMT) (FSA Insd)............... 5.40 12/01/16 409,964
1,000 Capistrano Unified School District, Community Facilities
District #98-2 Ladera Ser 2005 (FGIC Insd)............... 5.00 09/01/29 1,037,660
2,000 East Bay Municipal Utility District, Water Ser 2001 (MBIA
Insd).................................................... 5.00 06/01/26 2,106,700
1,000 Golden State Tobacco Securitization Corporation, Enhanced
Asset Backed Ser 2005 A (FGIC Insd)...................... 5.00 06/01/38 1,021,150
1,280 Huntington Beach Union High School District, Ser 2004 (FSA
Insd).................................................... 5.00 08/01/26 1,329,651
1,110 Kern County Board of Education, Refg 2006 Ser A COPs (MBIA
Insd).................................................... 5.00 06/01/31 1,141,546
1,100 La Quinta Financing Authority, Local Agency 2004 Ser A
(AMBAC Insd)............................................. 5.25 09/01/24 1,179,068
1,030 Los Angeles, Ser 2004 A (MBIA Insd)........................ 5.00 09/01/24 1,077,885
1,000 Los Angeles County Metropolitan Transportation Authority
Sales Tax Ser 2000 A (FGIC Insd)......................... 4.50 07/01/29+ 991,060
1,000 Los Angeles Department of Water & Power, 2001 Ser A (FSA
Insd).................................................... 5.25 07/01/21 1,048,440
800 Los Angeles Municipal Improvement Corporation, Police
Headquarters Ser 2006 -- A (FGIC Insd)................... 4.75 01/01/31 804,976
1,000 Los Angeles Unified School District Election 2005 Ser E
(FSA Insd)............................................... 5.00 07/01/13 590,733
550 Los Angeles Wastewater Refg Ser 2003 B (FSA Insd).......... 5.00 06/01/22 1,048,540
1,000 Metropolitan Water District of Southern California, 2003
Ser B-2 (FGIC Insd)...................................... 5.00 10/01/27 1,040,850
1,000 Oxnard Financing Authority, Wastewater 2004 Ser A (FGIC
Insd).................................................... 5.00 06/01/29 1,033,650
1,000 Rancho Mirage Redevelopment Agency, Ser 2003 A (MBIA
Insd).................................................... 5.00 04/01/33 1,019,670
1,000 Sacramento County Sanitation District's Financing
Authority, Ser 2006 (FGIC Insd).......................... 5.00 12/01/28 1,046,470
180 Sacramento Financing Authority, 1999 Solid Waste &
Redevelopment (AMBAC Insd)............................... 5.75 12/01/22 190,661

See Notes to Financial Statements
7

Morgan Stanley Insured California Municipal Securities
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 2007 continued

PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
---------------------------------------------------------------------------------------------------------

$2,000 Sacramento Financing Authority, Water & Capital Improvement
2001 Ser A (AMBAC Insd).................................. 5.00 % 12/01/26+ $ 2,106,700
1,000 San Diego County Water Authority, Ser 2004 A COPs (FSA
Insd).................................................... 5.00 05/01/29 1,028,640
1,000 San Francisco City & County, City Buildings Ser 2007 A COPs
(FGIC Insd).............................................. 4.50 09/01/37 956,440
340 San Francisco City & County, Laguna Honda Hospital RITES PA
1387 (FSA Insd).......................................... 7.285++ 06/15/30 386,770
2,000 San Francisco Public Utilities Commission, Water Refg Ser A
2001 (FSA Insd).......................................... 5.00 11/01/31 2,041,740
1,000 San Jose, Airport Ser 2001 A (FGIC Insd)................... 5.00 03/01/25 1,032,440
1,000 Simi Valley Public Financing Authority, Ser 2004 COPs
(AMBAC Insd)............................................. 5.00 09/01/30 1,025,230
1,000 Southern California Public Power Authority, Transmission
Refg Ser 2002 A (FSA Insd)............................... 5.25 07/01/18 1,062,960
1,000 University of California, Ser 2007-J (FSA Insd)............ 4.50 05/15/31 982,170
1,000 University of California, Ser 2007-J (FSA Insd)............ 4.50 05/15/35 973,030
1,000 University of California Regents Ser 2007 A (MBIA Insd).... 4.50 05/15/37 962,810
1,000 University of California, Limited Projects Ser 2005 B (FSA
Insd).................................................... 5.00 05/15/30 1,034,040
1,000 Upland School District, Election 2000 Ser 2001 B (FSA
Insd).................................................... 5.125 08/01/25 1,056,690
675 Val Verde Unified School District, School of Construction
COPs Ser 2005 B (FGIC Insd).............................. 5.00 01/01/30 692,732
1,375 Washington Unified School District, Election 2004 Ser A
(FGIC Insd).............................................. 5.00 08/01/22 1,443,489
1,000 Yucaipa Valley Water District, Ser 2004 A COPs (MBIA
Insd).................................................... 5.25 09/01/24 1,054,160
-----------
47,291,976
-----------
Puerto Rico (2.1%)
1,000 Puerto Rico Infrastructure Financing Authority, 2000 Ser A
(ETM)#................................................... 5.50 10/01/32 1,056,150
-----------
Total Tax-Exempt Municipal Bonds (Cost $46,882,352)........................... 48,348,126
-----------
Short-Term Tax-Exempt Municipal Bonds (4.5%)
California
900 Adelanto Public Utility Authority, Ser 2005 A (AMBAC Insd)
(Demand 11/01/07)........................................ 3.46* 11/01/34 900,000

8
See Notes to Financial Statements

Morgan Stanley Insured California Municipal Securities
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 2007 continued

PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
---------------------------------------------------------------------------------------------------------

$1,400 California Infrastructure & Economic Development Bank,
(Demand 11/01/07)........................................ 3.35*% 07/01/36 $ 1,400,000
-----------
Total Short-Term Tax-Exempt Municipal Bonds (Cost $2,300,000)................. 2,300,000
-----------

Total Investments (Cost $49,182,352) (a)(b)........................ 98.8% 50,648,126
Other Assets in Excess of Liabilities.............................. 1.2 634,282
----- -----------
Net Assets Applicable to Common Shareholders....................... 100.0% $51,282,408
===== ===========

---------------------

Note: The categories of investments are shown as a percentage of net assets
applicable to common shareholders.

AMT Alternative Minimum Tax.
COPs Certificates of Participation.
ETM Escrowed to Maturity.
RITES Residual Interest Tax-Exempt Securities.
++ Current coupon rate for inverse floating rate municipal
obligation (See Note 8). This rate resets periodically as
the auction rate on the related security changes. Position
in an inverse floating rate municipal obligation has a value
of $386,770 which represents 0.8% of net assets applicable
to common shareholders.
+ Prerefunded to call date shown.
* Current coupon of variable rate demand obligation.
# A portion of this security has been physically segregated in
connection with open futures contracts in the amount of
$95,080.
(a) Securities have been designated as collateral in an amount
equal to $28,154,654 in connection with open futures
contracts.
(b) The aggregate cost for federal income tax purposes is
$49,171,496. The aggregate gross unrealized appreciation is
$1,673,304 and the aggregate gross unrealized depreciation
is $196,674, resulting in net unrealized appreciation of
$1,476,630.

Bond Insurance:
---------------
AMBAC AMBAC Assurance Corporation.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.

9
See Notes to Financial Statements

Morgan Stanley Insured California Municipal Securities
PORTFOLIO OF INVESTMENTS - OCTOBER 31, 2007 continued

FUTURES CONTRACTS OPEN AT OCTOBER 31, 2007:

UNREALIZED
NUMBER OF DESCRIPTION, DELIVERY UNDERLYING FACE APPRECIATION
CONTRACTS LONG/SHORT MONTH AND YEAR AMOUNT AT VALUE (DEPRECIATION)
-------------------------------------------------------------------------------------------------

96 Long U.S. Treasury Notes 10 Year, $ 10,561,500 $(29,326)
December 2007
42 Long U.S. Treasury Notes 20 Year, 4,728,938 5,697
December 2007
18 Short U.S. Treasury Notes 5 Year, (1,932,188) 7,544
December 2007
53 Short U.S. Treasury Notes 2 Year, (10,976,797) 19,323
December 2007
--------
Net unrealized appreciation............................ $ 3,238
========

10
See Notes to Financial Statements

Morgan Stanley Insured California Municipal Securities
FINANCIAL STATEMENTS

Statement of Assets and Liabilities
October 31, 2007

Assets:
Investments in securities, at value
(cost $49,182,352)........................................ $50,648,126
Cash........................................................ 31,194
Interest receivable......................................... 743,565
Prepaid expenses and other assets........................... 5,546
-----------
Total Assets............................................ 51,428,431
-----------
Liabilities:
Payable for:
Variation margin........................................ 70,768
Investment advisory fee................................. 12,576
Administration fee...................................... 3,726
Common shares of beneficial interest repurchased........ 1,413
Transfer agent fee...................................... 758
Accrued expenses and other payables......................... 56,782
-----------
Total Liabilities....................................... 146,023
-----------
Preferred shares of beneficial interest (1,000,000 shares
non-participating $.01 par value,
none issued).............................................. --
-----------
Net Assets Applicable to Common Shareholders............ $51,282,408
===========
Composition of Net Assets Applicable to Common Shareholders:
Common shares of beneficial interest (unlimited shares
authorized of $.01 par value, 3,450,072 shares
outstanding).............................................. $49,031,475
Net unrealized appreciation................................. 1,469,012
Accumulated undistributed net investment income............. 403,688
Accumulated undistributed net realized gain................. 378,233
-----------
Net Assets Applicable to Common Shareholders............ $51,282,408
===========
Net Asset Value Per Common Share
($51,282,408 divided by 3,450,072 common shares
outstanding)................................................ $14.86
===========

11
See Notes to Financial Statements

Morgan Stanley Insured California Municipal Securities
FINANCIAL STATEMENTS continued

Statement of Operations
For the year ended October 31, 2007

Net Investment Income:
Interest Income............................................. $ 2,490,370
-----------
Expenses
Investment advisory fee..................................... 140,408
Interest and residual trust expenses........................ 74,625
Professional fees........................................... 61,554
Administration fee.......................................... 41,602
Shareholder reports and notices............................. 30,178
Registration fees........................................... 20,435
Transfer agent fees and expenses............................ 4,401
Trustees' fees and expenses................................. 1,448
Custodian fees.............................................. 5,241
Other....................................................... 15,078
-----------
Total Expenses.......................................... 394,970
Less: expense offset........................................ (4,976)
-----------
Net Expenses............................................ 389,994
-----------
Net Investment Income................................... 2,100,376
-----------
Net Realized and Unrealized Gain (Loss):
Net Realized Gain (Loss) on:
Investment.................................................. 341,247
Futures contracts........................................... (17,960)
Swap contract............................................... 34,111
-----------
Net Realized Gain....................................... 357,398
-----------
Net Change in Unrealized Appreciation/Depreciation on:
Investments................................................. (1,295,537)
Futures contracts........................................... 45,485
-----------
Net Change in Unrealized Appreciation/Depreciation...... (1,250,052)
-----------
Net Loss................................................ (892,654)
-----------
Net Increase................................................ $ 1,207,722
===========

12
See Notes to Financial Statements

Morgan Stanley Insured California Municipal Securities
FINANCIAL STATEMENTS continued

Statements of Changes in Net Assets

FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 2007 OCTOBER 31, 2006
---------------- ----------------

Increase (Decrease) in Net Assets:
Operations:
Net investment income....................................... $ 2,100,376 $ 2,151,031
Net realized gain........................................... 357,398 290,993
Net change in unrealized appreciation/depreciation.......... (1,250,052) 743,034
----------- -----------
Net Increase............................................ 1,207,722 3,185,058
----------- -----------
Dividends and Distributions to Common Shareholders from:
Net investment income....................................... (2,092,309) (2,171,173)
Net realized gain........................................... (142,684) (1,228,286)
----------- -----------
Total Dividends and Distributions....................... (2,234,993) (3,399,459)
----------- -----------

Decrease from transactions in common shares of beneficial
interest.................................................. (561,984) (1,327,215)
----------- -----------
Net Decrease............................................ (1,589,255) (1,541,616)
Net Assets Applicable to Common Shareholders:
Beginning of period......................................... 52,871,663 54,413,279
----------- -----------
End of Period
(Including accumulated undistributed net investment income
of $403,688 and $374,219, respectively)..................... $51,282,408 $52,871,663
=========== ===========

See Notes to Financial Statements
13

Morgan Stanley Insured California Municipal Securities
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 2007

1. Organization and Accounting Policies

Morgan Stanley 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's investment
objective is to provide current income which is exempt from both federal and
California income taxes. The Trust was organized as a Massachusetts business
trust on October 14, 1993 and commenced operations on February 28, 1994.

The following is a summary of significant accounting policies:

A. Valuation of Investments -- (1) portfolio securities are valued by an outside
independent pricing service approved by the Trustees. The pricing service uses
both a computerized grid 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 mean between the last reported bid and
asked price. 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.
The Trustees believe that timely and reliable market quotations are generally
not readily available for purposes of valuing tax-exempt securities and that the
valuations supplied by the pricing service are more likely to approximate the
fair value of such securities; (2) futures are valued at the latest sale price
on the commodities exchange on which they trade unless it is determined that
such price does not reflect their market value, in which case they will be
valued at their fair value as determined in good faith under procedures
established by and under the supervision of the Trustees; (3) interest rate
swaps are marked-to-market daily based upon quotations from market makers and
the change, if any, is recorded as unrealized appreciation or depreciation in
the Statement of Operations; and (4) 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.
Discounts are accreted and premiums are amortized over the life of the
respective securities and are included in interest income. Interest income is
accrued daily.

C. Futures Contracts -- A futures contract is an agreement between two parties
to buy and sell financial instruments or contracts based on financial indices at
a set price on a future date. Upon entering into such a contract, the Trust is
required to pledge to the broker cash, U.S. Government

Morgan Stanley Insured California Municipal Securities
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 2007 continued

securities or other liquid portfolio securities equal to the minimum initial
margin requirements of the applicable futures exchange. Pursuant to the
contract, the Trust agrees to receive from or pay to the broker an amount of
cash equal to the daily fluctuation in the value of the contract. Such receipts
or payments known as variation margin are recorded by the Trust as unrealized
gains and losses. Upon closing of the contract, the Trust realizes a gain or
loss equal to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.

D. Floating Rate Note Obligations Related to Securities Held -- The Trust enters
into transactions in which it transfers to Dealer Trusts ("Dealer Trusts"),
fixed rate bonds in exchange for cash and residual interests in the Dealer
Trusts' assets and cash flows, which are in the form of inverse floating rate
investments. The Dealer Trusts fund the purchases of the fixed rate bonds by
issuing floating rate notes to third parties and allowing the Fund to retain
residual interest in the bonds. The Trust enters into shortfall agreements with
the Dealer Trusts which commit the Trust to pay the Dealer Trusts, in certain
circumstances, the difference between the liquidation value of the fixed rate
bonds held by the Dealer Trusts and the liquidation value of the floating rate
notes held by third parties, as well as any shortfalls in interest cash flows.
The residual interests held by the Trust (inverse floating rate investments)
include the right of the Trust (1) to cause the holders of the floating rate
notes to tender their notes at par at the next interest rate reset date, and (2)
to transfer the municipal bond from the Dealer Trusts to the Trust, thereby
collapsing the Dealer Trusts. The Trust accounts for the transfer of bonds to
the Dealer Trusts as secured borrowings, with the securities transferred
remaining in the Trust's investment assets, and the related floating rate notes
reflected as Trust liabilities under the caption "floating rate note
obligations" on the Statement of Assets and Liabilities. The Trust records the
interest income from the fixed rate bonds under the caption "Interest Income"
and records the expenses related to floating rate note obligations and any
administrative expenses of the Dealer Trusts under the caption "Interest and
residual trust expenses" in the Trust's Statement of Operations. The notes
issued by the Dealer Trusts have interest rates that reset weekly and the
floating rate note holders have the option to tender their notes to the Dealer
Trusts for redemption at par at each reset date. As of and for the year ended
October 31, 2007, the Trust did not hold any floating rate note obligations.

E. Interest Rate Swaps -- Interest rate swaps involve the exchange of
commitments to pay and receive interest based on a notional principal amount.
Net periodic interest payments to be received or paid are accrued daily and are
recorded as realized gains or losses in the Statement of Operations.

F. Federal Income Tax Policy -- It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its

Morgan Stanley Insured California Municipal Securities
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 2007 continued

taxable and nontaxable income to its shareholders. Accordingly, no federal
income tax provision is required.

G. Dividends and Distributions to Shareholders -- Dividends and distributions to
shareholders are recorded on the ex-dividend date.

H. Use of Estimates -- The preparation of financial statements in accordance
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts and disclosures.
Actual results could differ from those estimates.

2. Investment Advisory/Administration Agreements

Pursuant to an Investment Advisory Agreement, with Morgan Stanley Investment
Advisors Inc. (the "Investment Adviser"), the Trust pays an advisory fee,
calculated weekly and payable monthly, by applying the annual rate of 0.27% to
the Trust's weekly total net assets.

Pursuant to an Administration Agreement with Morgan Stanley Services Company
Inc. (the "Administrator"), an affiliate of the Investment Adviser, the Trust
pays an administration fee, calculated weekly and payable monthly, by applying
the annual rate of 0.08% to the Trust's weekly total net assets.

Under an agreement between the Administrator and State Street Bank and Trust
Company ("State Street"), State Street provides certain administrative services
to the Trust. For such services, the Administrator pays State Street a portion
of the fee the Administrator receives from 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 year ended October 31, 2007 aggregated
$9,781,385 and $10,975,420, respectively. Included in the aforementioned
transactions are purchases with another Morgan Stanley fund of $414,600.

Effective September 28, 2007, the transfer agent services previously provided to
the Trust by Morgan Stanley Trust was assumed by Computershare Trust Company,
N.A. (the "Transfer Agent").

The Trust has an unfunded Deferred Compensation Plan (the "Compensation Plan")
which allows each independent Trustee to defer payment of all, or a portion, of
the fees he or she receives for serving on the Board of Trustees. Each eligible
Trustee generally may elect to have the deferred amounts credited with a return
equal to the total return on one or more of the Morgan Stanley funds that are
offered as investment options under the Compensation Plan.
Appreciation/depreciation and

Morgan Stanley Insured California Municipal Securities
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 2007 continued

distributions received from these investments are recorded with an offsetting
increase/decrease in the deferred compensation obligation and do not affect the
net asset value of the Trust.

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. 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, 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.

As of October 31, 2007, there were no preferred shares outstanding.

5. Common Shares of Beneficial Interest

Transactions in common shares of beneficial interest were as follows:

CAPITAL
PAID IN
EXCESS OF
SHARES PAR VALUE PAR VALUE
--------- --------- -----------

Balance, October 31, 2005................................... 3,586,372 $35,864 $50,884,810
Treasury shares purchased and retired (weighted average
discount 7.81%)*.......................................... (96,400) (964) (1,326,251)
--------- ------- -----------
Balance, October 31, 2006................................... 3,489,972 34,900 49,558,559
Treasury shares purchased and retired (weighted average
discount 5.59%)*.......................................... (39,900) (399) (561,585)
--------- ------- -----------
Balance, October 31, 2007................................... 3,450,072 $34,501 $48,996,974
========= ======= ===========

---------------------
* The Trustees have voted to retire the shares purchased.

Morgan Stanley Insured California Municipal Securities
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 2007 continued

6. Dividends to Common Shareholders

On September 25, 2007, the Trust declared the following dividends from net
investment income:

AMOUNT RECORD PAYABLE
PER SHARE DATE DATE
--------- ---------------- -----------------

$0.0525 November 9, 2007 November 23, 2007
$0.0525 December 7, 2007 December 21, 2007

7. Expense Offset

The expense offset represents a reduction of the fees and expenses for interest
earned on cash balances maintained by the Trust with the transfer agent and
custodian.

8. Purposes of and Risks Relating to Certain Financial Instruments

The Trust may invest a portion of its assets in inverse floating rate
instruments, either through outright purchases of inverse floating rate
securities or through the transfer of bonds to a Dealer Trusts in exchange for
cash and residual interest in the Dealer Trust. These investments are typically
used by the Trust in seeking to enhance the yield of the portfolio. These
instruments typically involve greater risks than a fixed rate municipal bond. In
particular, these instruments are acquired through leverage or may have leverage
embedded in them and therefore involve many of the risks associated with
leverage. Leverage is a speculative technique that may expose the Trust to
greater risk and increased costs. Leverage may cause the Trust's net asset value
to be more volatile than if it had not been leveraged because leverage tends to
magnify the effect of any increases or decreases in the value of the Trust's
portfolio securities. The use of leverage may also cause the Trust to liquidate
portfolio positions when it may not be advantageous to do so in order to satisfy
its obligations with respect to inverse floating rate instruments.

To hedge against adverse interest rate changes, the Trust may invest in
financial futures contracts or municipal bond index futures contracts ("futures
contracts").

These futures contracts involve elements of market risk in excess of the amount
reflected in the Statement of Assets and Liabilities. The Trust bears the risk
of an unfavorable change in the value of the underlying securities. Risks may
also arise upon entering into these contracts from the potential inability of
the counterparties to meet the terms of their contracts.

The Trust may enter into interest rate swaps and may purchase or sell interest
rate caps, floors and collars. The Trust expects to enter into these
transactions primarily to manage interest rate risk, hedge portfolio positions
and preserve a return or spread on a particular investment or portion of its
portfolio. The Trust may also enter into these transactions to protect against
any increase in the

Morgan Stanley Insured California Municipal Securities
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 2007 continued

price of securities the Trust anticipates purchasing at a later date. Interest
rate swap transactions are subject to market risk, risk of default by the other
party to the transaction, risk of imperfect correlation and manager risk. Such
risks may exceed the related amounts shown in the Statement of Assets and
Liabilities.

9. Federal Income Tax Status

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 tax purposes are reported as distributions of paid-in-capital.

The tax character of distributions paid was as follows:

FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 2007 OCTOBER 31, 2006
---------------- ----------------

Tax-exempt income........................................... $2,092,309 $2,122,683
Ordinary income............................................. -- 134,039
Long-term capital gains..................................... 142,684 1,142,737
---------- ----------
Total distributions......................................... $2,234,993 $3,399,459
========== ==========

As of October 31, 2007, the tax-basis components of accumulated earnings were as
follows:

Undistributed tax-exempt income............................. $ 318,948
Undistributed ordinary income............................... 74,178
Undistributed long-term gains............................... 381,487
----------
Net accumulated earnings.................................... 774,613
Temporary differences....................................... (310)
Net unrealized appreciation................................. 1,476,630
----------
Total accumulated earnings.................................. $2,250,933
==========

As of October 31, 2007, the Trust had temporary book/tax differences primarily
attributable to book amortization of discounts on debt securities and
mark-to-market of open futures contracts.

Morgan Stanley Insured California Municipal Securities
NOTES TO FINANCIAL STATEMENTS - OCTOBER 31, 2007 continued

Permanent differences, due to tax adjustments on debt securities sold by the
Trust, resulted in the following reclassifications among the Trust's components
of net assets at October 31, 2007:

ACCUMULATED ACCUMULATED
UNDISTRIBUTED UNDISTRIBUTED
NET INVESTMENT NET REALIZED
INCOME GAIN PAID-IN-CAPITAL
-------------- -------------- ---------------

$21,402 $(21,402) --
======= ======== =======

10. Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation 48, Accounting for Uncertainty in Income Taxes -- an
interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting
for income taxes by prescribing the minimum recognition threshold a tax position
must meet before being recognized in the financial statements. FIN 48 is
effective for fiscal years beginning after December 15, 2006 and is to be
applied to all open tax years as of the effective date. The impact to the
Trust's financial statements, if any, is currently being assessed.

In addition, in September 2006, Statement of Financial Accounting Standards No.
157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal
years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the impact the
adoption of SFAS 157 will have on the Trust's financial statement disclosures.

Morgan Stanley Insured California Municipal Securities
FINANCIAL HIGHLIGHTS

Selected ratios and per share data for a common share of beneficial interest
outstanding throughout each period:

FOR THE YEAR ENDED OCTOBER 31,
----------------------------------------------------------------
2007 2006 2005 2004 2003
-------- -------- -------- -------- --------

Selected Per Share Data:
Net asset value, beginning of period.................. $15.15 $15.17 $15.35 $15.24 $15.56
------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income*............................ 0.60 0.59 0.62 0.66 0.67
Net realized and unrealized gain (loss)........... (0.26) 0.32 (0.05) 0.25 (0.07)
------ ------ ------ ------ ------
Total income from investment operations............... 0.34 0.91 0.57 0.91 0.60
------ ------ ------ ------ ------
Less dividends and distributions from:
Net investment income............................. (0.60) (0.61) (0.66) (0.63) (0.71)
Net realized gain................................. (0.04) (0.35) (0.13) (0.20) (0.25)
------ ------ ------ ------ ------
Total dividends and distributions..................... (0.64) (0.96) (0.79) (0.83) (0.96)
------ ------ ------ ------ ------
Anti-dilutive effect of acquiring treasury shares*.... 0.01 0.03 0.04 0.03 0.04
------ ------ ------ ------ ------
Net asset value, end of period........................ $14.86 $15.15 $15.17 $15.35 $15.24
====== ====== ====== ====== ======
Market value, end of period........................... $14.19 $14.06 $13.99 $13.96 $13.83
====== ====== ====== ====== ======
Total Return+......................................... 5.54% 7.68% 5.96% 7.19% 4.57%
Ratios to Average Net Assets:
Total expenses (before expense offset)................ 0.76%(1) 0.61%(1) 0.62%(1) 0.58%(1) 0.55%(1)
Total expenses (before expense offset, exclusive of
interest
and residual trust expenses)......................... 0.62%(1) 0.61%(1) 0.62%(1) 0.58%(1) 0.55%(1)
Net investment income................................. 4.05% 4.07% 4.09% 4.37% 4.50%
Supplemental Data:
Net assets, end of period, in thousands............... $51,282 $52,872 $54,413 $56,955 $57,923
Portfolio turnover rate............................... 19% 5% 26% 31% 31%

---------------------

* The per share amounts were computed using an average number
of shares outstanding during the period.
+ Total 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
return does not reflect brokerage commissions.
(1) Does not reflect the effect of expense offset of 0.01%.

See Notes to Financial Statements
21

Morgan Stanley Insured California Municipal Securities
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Trustees of
Morgan Stanley Insured California Municipal Securities:

We have audited the accompanying statement of assets and liabilities of Morgan
Stanley Insured California Municipal Securities (the "Trust"), including the
portfolio of investments, as of October 31, 2007, and the related statements of
operations for the year then ended and changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Trust
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Trust's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
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, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of October 31, 2007, by correspondence with the
custodian. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Morgan
Stanley Insured California Municipal Securities as of October 31, 2007, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended, in conformity with
accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP
New York, New York
December 24, 2007

Morgan Stanley Insured California Municipal Securities
SHAREHOLDER VOTING RESULTS (UNAUDITED)

On June 19, 2007, an annual meeting of the Trust's shareholders was held for the
purpose of voting on the following matter, the results of which were as follows:

Election of Trustees by all Shareholders:

----------------------------------------------
FOR WITHHELD ABSTAIN
----------------------------------------------

Michael F. Klein............................................ 3,202,667 96,703 0
Michael E. Nugent........................................... 3,203,334 96,036 0
W. Allen Reed............................................... 3,203,334 96,036 0

Morgan Stanley Insured California Municipal Securities
PORTFOLIO MANAGEMENT/REVISED INVESTMENT POLICY/ADDITIONAL INFORMATION
(UNAUDITED)

Portfolio Management

As of the date of this report, the Trust is managed within the Morgan Stanley
Municipals team. The team consists of portfolio managers and analysts. Current
members of the team jointly and primarily responsible for the day-to-day
management of the Trust's portfolio are Steven K. Kreider and Neil Stone, each a
Managing Director of the Investment Adviser.

Revised Investment Policy

To the extent permitted by applicable law and the Trust's investment objectives,
policies, and restrictions, the Trust may invest all or some of its short-term
cash investments in any money market fund advised or managed by the Investment
Adviser or its affiliates. In connection with any such investments, the Trust,
to the extent permitted by the Investment Company Act, will pay its share of all
expenses (other than advisory and administrative fees) of a money market fund in
which it invests which may result in the Trust bearing some additional expenses.

The Board of Trustees Approved a Clarification in the Investment Policies
Discussed Below

The Trust may invest in put and call options and futures on its portfolio
securities. The Trust may use options and futures to protect against a decline
in the Trust's securities or an increase in prices of securities that may be
purchased or to adjust the Trust's yield curve exposure.

If the Trust invests in options and/or futures, its participation in these
markets would subject the Trust's portfolio to certain risks. If the Investment
Adviser's predictions of movements in the direction of the markets are
inaccurate, the adverse consequences to the Trust (e.g., a reduction in the
Trust's net asset value or a reduction in the amount of income available for
distribution) may leave the Trust in a worse position than if these strategies
were not used. Other risks inherent in the use of options and futures include,
for example, the possible imperfect correlation between the price of options and
futures contracts and movements in the prices of the securities being hedged.
With respect to futures contracts, this correlation may be further distorted
since the futures contracts that are being used to hedge are not based on
municipal obligations. There is also the possibility of an absence of a liquid
secondary market for any particular instrument. Certain options may be over-
the-counter options which are options negotiated with dealers; there is no
secondary market for these investments and therefore may be difficult to value.
If the Trust uses an option or futures transaction as an alternative to
purchasing or selling an underlying instrument in order to obtain desired
exposure, the Trust will be exposed to the same risks as are incurred in
purchasing and selling the underlying instrument directly.

Morgan Stanley Insured California Municipal Securities
PORTFOLIO MANAGEMENT/REVISED INVESTMENT POLICY/ADDITIONAL INFORMATION
(UNAUDITED) continued

Additional Information

In January 2006, the Kentucky Court of Appeals held in Davis v. Dept. of
Revenue, that a provision in Kentucky law which exempts from taxation interest
earned on municipal obligations of Kentucky or its political subdivisions, but
taxes such income when it is derived from non-Kentucky municipal obligations
violates the Commerce Clause of the United States Constitution. Upon a petition
filed by the Kentucky Department of Revenue, the United States Supreme Court has
agreed to review the decision of the Kentucky Court of Appeals. If the Supreme
Court upholds the decision of the Kentucky Court of Appeals, any state that
makes a distinction between the tax treatment of interest on an in-state
municipal obligation and an out-of-state municipal obligation would most likely
be required to accord all municipal obligations equal tax treatment by requiring
that the state either (1) tax all municipal obligation interest or (2) exempt
all such interest from taxation. Such an outcome may have a material impact on
any investment company that invests substantially or exclusively in municipal
obligations of a single state, such as the Trust. There may be an adverse impact
on the prices of the municipal obligations held by the Trust, which in turn may
affect the Trust's net asset value. There also may be unfavorable changes to the
state tax treatment of the dividend interest paid by the Trust. It is expected
that a decision by the Supreme Court will most likely occur sometime in
mid-2008. While the outcome of this matter cannot be predicted, it should be
noted the Federal tax-exempt status of the Trust's municipal obligations will
not be affected.

Morgan Stanley Insured California Municipal Securities
DIVIDEND REINVESTMENT PLAN (UNAUDITED)

The dividend reinvestment plan (the "Plan") offers you a prompt and simple way
to reinvest your dividends and capital gains distributions into additional
shares of the Trust. Under the Plan, the money you earn from dividends and
capital gains distributions will be reinvested automatically in more shares of
the Trust, allowing you to potentially increase your investment over time. All
shareholders in the Trust are automatically enrolled in the Plan when shares are
purchased.

PLAN BENEFITS

- ADD TO YOUR ACCOUNT

You may increase your shares in the Trust easily and automatically with the
Plan.

- LOW TRANSACTION COSTS

Transaction costs are low because the new shares are bought in blocks and
brokerage commission, is shared among all participants.

- CONVENIENCE

You will receive a detailed account statement from Computershare Trust Company,
N.A., which administers the Plan, whenever shares are reinvested for you. The
statement shows your total distributions, date of investment, shares acquired,
and price per share, as well as the total number of shares in your reinvestment
account. You can also access your account via the Internet. To do this, please
go to morganstanley.com.

- SAFEKEEPING

Computershare Trust Company, N.A. will hold the shares it has acquired for you
in safekeeping.

HOW TO PARTICIPATE IN THE PLAN

If you own shares in your own name, you can participate directly in the Plan. If
your shares are held in "street name" -- in the name of your brokerage firm,
bank, or other financial institution -- you must instruct that entity to
participate on your behalf. If they are unable to participate on your behalf,
you may request that they reregister your shares in your own name so that you
may enroll in the Plan.

If you choose to participate in the Plan, whenever the Trust declares dividend
and capital gains distributions, it will be invested in additional shares of
your Trust that are purchased in the open market.

HOW TO ENROLL

To enroll in the Plan, please read the Terms and Conditions in the Plan
brochure. You can obtain a copy of the Plan Brochure and enroll in the Plan by
visiting morganstanley.com, calling toll-free (888) 421-4015 or notifying us in
writing at Morgan Stanley Closed-End Funds, Computershare Trust Company, N.A.,
P.O. Box 43078, Providence, RI 02940-3078. Please include the Trust name and
account number and ensure that all shareholders listed on the account sign these
written instructions. Your participation in the Plan will begin with the next
dividend or capital gains

Morgan Stanley Insured California Municipal Securities
DIVIDEND REINVESTMENT PLAN (UNAUDITED) continued

distribution payable after Computershare Trust Company, N.A. receives your
authorization, as long as they receive it before the "record date," which is
generally ten business days before the dividend is paid. If your authorization
arrives after such record date, your participation in the Plan will begin with
the following dividend or distribution.

COSTS OF THE PLAN

There is no direct charge to you for reinvesting dividends and capital gains
distributions because the Plan's fees are paid by the Trust. However, when
applicable, you will pay your portion of any brokerage commissions incurred when
the new shares are purchased on the open market. These brokerage commissions are
typically less than the standard brokerage charges for individual transactions,
because shares are purchased for all participants in blocks, resulting in lower
commissions for each individual participant. Any brokerage commissions or
service fees are averaged into the purchase price.

TAX IMPLICATIONS

The automatic reinvestment of dividends and capital gains distributions does not
relieve you of any income tax that may be due on dividends or distributions. You
will receive tax information annually to help you prepare your federal and state
income tax returns.

Morgan Stanley does not offer tax advice. The tax information contained herein
is general and is not exhaustive by nature. It was not intended or written to be
used, and it cannot be used by any taxpayer, for avoiding penalties that may be
imposed on the taxpayer under U.S. federal tax laws. Federal and state tax laws
are complex and constantly changing. Shareholders should always consult a legal
or tax advisor for information concerning their individual situation.
HOW TO WITHDRAW FROM THE PLAN

To withdraw from the Plan please visit morganstanley.com or call (888) 421-4015
or notify us in writing at the address below.

Morgan Stanley Closed-End Funds

Computershare Trust Company, N.A.

P.O. Box 43078

Providence, RI 02940-3078

All shareholders listed on the account must sign any written withdrawal
instructions. If you withdraw, you have three options with regard to the shares
held in your account:

1. If you opt to continue to hold your non-certificated shares, they will be
held by Computershare Trust Company N.A.

2. If you opt to sell your shares through Morgan Stanley, we will sell all full
and fractional shares and send the proceeds via check to your address of
record after deducting brokerage commissions.

Morgan Stanley Insured California Municipal Securities
DIVIDEND REINVESTMENT PLAN (UNAUDITED) continued

3. You may sell your shares through your financial advisor through the Direct
Registration Systems ("DRS"). DRS is a service within the securities industry
that allows Trust shares to be held in your name in electronic format. You
retain full ownership of your shares, without having to hold a stock
certificate.

The Trust and Computershare Trust Company, N.A. may amend or terminate the Plan.
Participants will receive written notice at least 30 days before the effective
date of any amendment. In the case of termination, Participants will receive
written notice at least 30 days before the record date for the payment of any
dividend or capital gains distribution by the Trust. In the case of amendment or
termination necessary or appropriate to comply with applicable law or the rules
and policies of the Securities and Exchange Commission or any other regulatory
authority, such written notice will not be required.

TO OBTAIN A COMPLETE COPY OF THE DIVIDEND REINVESTMENT PLAN, PLEASE CALL OUR
CLIENT RELATIONS DEPARTMENT AT 888-421-4015 OR VISIT MORGANSTANLEY.COM.

Morgan Stanley Insured California Municipal Securities
MORGAN STANLEY ADVISOR CLOSED END FUNDS
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY

We are required by federal law to provide you with a copy of our Privacy Policy
annually.

The following Policy applies to current and former individual investors in
Morgan Stanley Advisor closed end funds. This Policy is not applicable to
partnerships, corporations, trusts or other non-individual clients or account
holders. Please note that we may amend this Policy at any time, and will inform
you of any changes to this Policy as required by law.

WE RESPECT YOUR PRIVACY

We appreciate that you have provided us with your personal financial
information. We strive to maintain the privacy of such information while we help
you achieve your financial objectives. This Policy describes what non-public
personal information we collect about you, why we collect it, and when we may
share it with others. We hope this Policy will help you understand how we
collect and share non-public personal information that we gather about you.
Throughout this Policy, we refer to the non-public information that personally
identifies you or your accounts as "personal information."

1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?

To serve you better and manage our business, it is important that we collect and
maintain accurate information about you. We may obtain this information from
applications and other forms you submit to us, from your dealings with us, from
consumer reporting agencies, from our Web sites and from third parties and other
sources.

FOR EXAMPLE:

- We may collect information such as your name, address, e-mail address,
telephone/fax numbers, assets, income and investment objectives through
applications and other forms you submit to us.

- We may obtain information about account balances, your use of account(s) and
the types of products and services you prefer to receive from us through your
dealings and transactions with us and other sources.

- We may obtain information about your creditworthiness and credit history from
consumer reporting agencies.

- We may collect background information from and through third-party vendors to
verify representations you have made and to comply with various regulatory
requirements.

- If you interact with us through our public and private Web sites, we may
collect information that you provide directly through online communications
(such as an e-mail address). We may also collect information about your
Internet service provider, your domain name, your computer's operating system
and Web browser, your use of our Web sites and your product and service

Morgan Stanley Insured California Municipal Securities
MORGAN STANLEY ADVISOR CLOSED END FUNDS
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY continued

preferences, through the use of "cookies." "Cookies" recognize your computer
each time you return to one of our sites, and help to improve our sites'
content and personalize your experience on our sites by, for example,
suggesting offerings that may interest you. Please consult the Terms of Use of
these sites for more details on our use of cookies.

2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?

To provide you with the products and services you request, to serve you better
and to manage our business, we may disclose personal information we collect
about you to our affiliated companies and to non-affiliated third parties as
required or permitted by law.

A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise required
or permitted by law.

B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except to
enable them to provide services on our behalf, to perform joint marketing
agreements with other financial institutions, or as otherwise required or
permitted by law. For example, some instances where we may disclose information
about you to nonaffiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against fraud,
for institutional risk control, to respond to judicial process or to perform
services on our behalf. When we share personal information with these companies,
they are required to limit their use of personal information to the particular
purpose for which it was shared and they are not allowed to share personal
information with others except to fulfill that limited purpose.

3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE
COLLECT ABOUT YOU?

We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties that
provide support or marketing services on our behalf may also receive personal
information, and we require them to adhere to confidentiality standards with
respect to such information.

Morgan Stanley Insured California Municipal Securities
TRUSTEE AND OFFICER INFORMATION (UNAUDITED)

Independent Trustees:

Number of
Portfolios in
Fund Complex
Position(s) Term of Office Overseen by
Name, Age and Address of Held with and Length of Principal Occupation(s) During Independent
Independent Trustee Registrant Time Served* Past 5 Years Trustee**
--------------------------------------- ----------- -------------- ------------------------------ -------------

Frank L. Bowman (62) Trustee Since August President and Chief Executive 171
c/o Kramer Levin Naftalis & Frankel LLP 2006 Officer, Nuclear Energy
Counsel to the Independent Trustees Institute (policy
1177 Avenue of the Americas organization) (since February
New York, NY 10036 2005); Director or Trustee of
various Retail Funds and
Institutional Funds (since
August 2006); Chairperson of
the Insurance Sub-Committee of
the Valuation, Insurance and
Compliance Committee (since
February 2007); formerly,
variously, Admiral in the U.S.
Navy, Director of Naval
Nuclear Propulsion Program and
Deputy Administrator-Naval
Reactors in the National
Nuclear Security
Administration at the U.S.
Department of Energy (1996-
2004). Honorary Knight
Commander of the Most
Excellent Order of the British
Empire.

Michael Bozic (66) Trustee Since April Private investor; Chairperson 173
c/o Kramer Levin Naftalis & Frankel LLP 1994 of the Valuation, Insurance
Counsel to the Independent Trustees and Compliance Committee
1177 Avenue of the Americas (since October 2006); Director
New York, NY 10036 or Trustee of the Retail Funds
(since April 1994) and the
Institutional Funds (since
July 2003); formerly,
Chairperson of the Insurance
Committee (July 2006-
September 2006); Vice Chairman
of Kmart Corporation (December
1998-October 2000), Chairman
and Chief Executive Officer of
Levitz Furniture Corporation
(November 1995-November 1998)
and President and Chief
Executive Officer of Hills
Department Stores (May
1991-July 1995); variously
Chairman, Chief Executive
Officer, President and Chief
Operating Officer (1987-1991)
of the Sears Merchandise Group
of Sears, Roebuck & Co.

Name, Age and Address of Other Directorships Held by
Independent Trustee Independent Trustee
--------------------------------------- -----------------------------

Frank L. Bowman (62) Director of the National
c/o Kramer Levin Naftalis & Frankel LLP Energy Foundation, the U.S.
Counsel to the Independent Trustees Energy Association, the
1177 Avenue of the Americas American Council for Capital
New York, NY 10036 Formation and the Armed
Services YMCA of the USA.

Michael Bozic (66) Director of various business
c/o Kramer Levin Naftalis & Frankel LLP organizations.
Counsel to the Independent Trustees
1177 Avenue of the Americas
New York, NY 10036

Morgan Stanley Insured California Municipal Securities
TRUSTEE AND OFFICER INFORMATION (UNAUDITED) continued

Kathleen A. Dennis (54) Trustee Since August President, Cedarwood 171
c/o Kramer Levin Naftalis & Frankel LLP 2006 Associates (mutual fund
Counsel to the Independent Trustees consulting) (since July 2006);
1177 Avenue of the Americas Chairperson of the Money
New York, NY 10036 Market and Alternatives Sub-
Committee of the Investment
Committee (since October 2006)
and Director or Trustee of
various Retail Funds and
Institutional Funds (since
August 2006); formerly, Senior
Managing Director of Victory
Capital Management (1993-
2006).

Dr. Manuel H. Johnson (58) Trustee Since July Senior Partner, Johnson Smick 173
c/o Johnson Smick Group, Inc. 1991 International, Inc.
888 16th Street, N.W. (consulting firm); Chairperson
Suite 740 of the Investment Committee
Washington, D.C. 20006 (since October 2006) and
Director or Trustee of the
Retail Funds (since July 1991)
and the Institutional Funds
(since July 2003); Co-Chairman
and a founder of the Group of
Seven Council (G7C)
(international economic
commission); formerly,
Chairperson of the Audit
Committee (July 1991-
September 2006); Vice Chairman
of the Board of Governors of
the Federal Reserve System and
Assistant Secretary of the
U.S. Treasury.

Name, Age and Address of Other Directorships Held by
Independent Trustee Independent Trustee
--------------------------------------- -----------------------------

Kathleen A. Dennis (54) None.
c/o Kramer Levin Naftalis & Frankel LLP
Counsel to the Independent Trustees
1177 Avenue of the Americas
New York, NY 10036

Dr. Manuel H. Johnson (58) Director of NVR, Inc. (home
c/o Johnson Smick Group, Inc. construction); Director of
888 16th Street, N.W. Evergreen Energy.
Suite 740
Washington, D.C. 20006

Morgan Stanley Insured California Municipal Securities
TRUSTEE AND OFFICER INFORMATION (UNAUDITED) continued

Joseph J. Kearns (65) Trustee Since August President, Kearns & Associates 174
c/o Kearns & Associates LLC 1994 LLC (investment consulting);
PMB754 Chairperson of the Audit
23852 Pacific Coast Highway Committee (since October 2006)
Malibu, CA 90265 and Director or Trustee of the
Retail Funds (since July 2003)
and the Institutional Funds
(since August 1994); formerly,
Deputy Chairperson of the
Audit Committee (July 2003-
September 2006) and
Chairperson of the Audit
Committee of the Institutional
Funds (October 2001-July
2003); CFO of the J. Paul
Getty Trust.

Michael F. Klein (48) Trustee Since August Managing Director, Aetos 171
c/o Kramer Levin Naftalis & Frankel LLP 2006 Capital, LLC (since March
Counsel to the Independent Trustees 2000) and Co-President, Aetos
1177 Avenue of the Americas Alternatives Management, LLC
New York, NY 10036 (since January 2004);
Chairperson of the
Fixed-Income Sub-Committee of
the Investment Committee
(since October 2006) and
Director or Trustee of various
Retail Funds and Institutional
Funds (since August 2006);
formerly, Managing Director,
Morgan Stanley & Co. Inc. and
Morgan Stanley Dean Witter
Investment Management,
President, Morgan Stanley
Institutional Funds (June
1998-March 2000) and
Principal, Morgan Stanley &
Co. Inc. and Morgan Stanley
Dean Witter Investment
Management (August
1997-December 1999).

Name, Age and Address of Other Directorships Held by
Independent Trustee Independent Trustee
--------------------------------------- -----------------------------

Joseph J. Kearns (65) Director of Electro Rent
c/o Kearns & Associates LLC Corporation (equipment
PMB754 leasing), The Ford Family
23852 Pacific Coast Highway Foundation, and the UCLA
Malibu, CA 90265 Foundation.

Michael F. Klein (48) Director of certain
c/o Kramer Levin Naftalis & Frankel LLP investment funds managed or
Counsel to the Independent Trustees sponsored by Aetos Capital,
1177 Avenue of the Americas LLC. Director of Sanitized AG
New York, NY 10036 and Sanitized Marketing AG
(specialty chemicals).

Morgan Stanley Insured California Municipal Securities
TRUSTEE AND OFFICER INFORMATION (UNAUDITED) continued

Michael E. Nugent (71) Chairperson Chairperson of General Partner, Triumph 173
c/o Triumph Capital, L.P. of the the Boards Capital, L.P. (private
445 Park Avenue Board and since July investment partnership);
New York, NY 10022 Trustee 2006 and Chairperson of the Boards of
Trustee since the Retail Funds and
July 1991 Institutional Funds (since
July 2006); Director or
Trustee of the Retail Funds
(since July 1991) and the
Institutional Funds (since
July 2001); formerly,
Chairperson of the Insurance
Committee (until July 2006);
Vice President, Bankers Trust
Company and BT Capital
Corporation (1984-1988).

W. Allen Reed (60) Trustee Since August Chairperson of the Equity Sub- 171
c/o Kramer Levin Naftalis & Frankel LLP 2006 Committee of the Investment
Counsel to the Independent Trustees Committee (since October 2006)
1177 Avenue of the Americas and Director or Trustee of
New York, NY 10036 various Retail Funds and
Institutional Funds (since
August 2006); formerly,
President and CEO of General
Motors Asset Management;
Chairman and Chief Executive
Officer of the GM Trust Bank
and Corporate Vice President
of General Motors Corporation
(August 1994-December 2005).

Fergus Reid (75) Trustee Since June Chairman of Lumelite Plastics 174
c/o Lumelite Plastics Corporation 1992 Corporation; Chairperson of
85 Charles Colman Blvd. the Governance Committee and
Pawling, NY 12564 Director or Trustee of the
Retail Funds (since July 2003)
and the Institutional Funds
(since June 1992).

Name, Age and Address of Other Directorships Held by
Independent Trustee Independent Trustee
--------------------------------------- -----------------------------

Michael E. Nugent (71) None.
c/o Triumph Capital, L.P.
445 Park Avenue
New York, NY 10022

W. Allen Reed (60) Director of GMAC (financial
c/o Kramer Levin Naftalis & Frankel LLP services) and Temple-Inland
Counsel to the Independent Trustees Industries (packaging,
1177 Avenue of the Americas banking and forest products);
New York, NY 10036 Director of Legg Mason, Inc.
and Director of the Auburn
University Foundation.

Fergus Reid (75) Trustee and Director of
c/o Lumelite Plastics Corporation certain investment companies
85 Charles Colman Blvd. in the JPMorgan Funds complex
Pawling, NY 12564 managed by J.P. Morgan
Investment Management Inc.

Morgan Stanley Insured California Municipal Securities
TRUSTEE AND OFFICER INFORMATION (UNAUDITED) continued

Interested Trustee:

Number of
Portfolios in
Fund Complex
Position(s) Term of Office Overseen by
Name, Age and Address of Held with and Length of Principal Occupation(s) During Interested
Interested Trustee Registrant Time Served* Past 5 Years Trustee**
------------------------------------- ----------- -------------- ------------------------------ -------------

James F. Higgins (59) Trustee Since June Director or Trustee of the 173
c/o Morgan Stanley Trust 2000 Retail Funds (since June 2000)
Harborside Financial Center and the Institutional Funds
Plaza Two (since July 2003); Senior
Jersey City, NJ 07311 Advisor of Morgan Stanley
(since August 2000).

Name, Age and Address of Other Directorships Held by
Interested Trustee Interested Trustee
------------------------------------- ------------------------------

James F. Higgins (59) Director of AXA Financial,
c/o Morgan Stanley Trust Inc. and The Equitable Life
Harborside Financial Center Assurance Society of the
Plaza Two United States (financial
Jersey City, NJ 07311 services).

---------------------

* This is the earliest date the Trustee began serving the funds advised by
Morgan Stanley Investment Advisors Inc. (the "Investment Adviser") (the
"Retail Funds") or the funds advised by Morgan Stanley Investment Management
Inc. and Morgan Stanley AIP GP LP (the "Institutional Funds").
** The Fund Complex includes all open-end and closed-end funds (including all
of their portfolios) advised by the Investment Adviser and any funds that
have an investment adviser that is an affiliated person of the Investment
Adviser (including, but not limited to, Morgan Stanley Investment Management
Inc.).

Morgan Stanley Insured California Municipal Securities
TRUSTEE AND OFFICER INFORMATION (UNAUDITED) continued

Executive Officers:

Term of
Position(s) Office and
Name, Age and Address of Held with Length of
Executive Officer Registrant Time Served* Principal Occupation(s) During Past 5 Years
----------------------------- --------------- -------------- ------------------------------------------------------------

Ronald E. Robison (68) President and President President (since September 2005) and Principal Executive
522 Fifth Avenue Principal since Officer (since May 2003) of funds in the Fund Complex;
New York, NY 10036 Executive September 2005 President (since September 2005) and Principal Executive
Officer and Principal Officer (since May 2003) of the Van Kampen Funds; Managing
Executive Director, Director and/or Officer of the Investment Adviser
Officer since and various entities affiliated with the Investment Adviser;
May 2003 Director of Morgan Stanley SICAV (since May 2004). Formerly,
Executive Vice President (July 2003-September 2005) of funds
in the Fund Complex and the Van Kampen Funds; President and
Director of the Institutional Funds (March 2001-July 2003);
Chief Administrative Officer of the Investment Adviser;
Chief Administrative Officer of Morgan Stanley Services
Company Inc.

J. David Germany (53) Vice President Since February Managing Director and (since December 2005) Chief Investment
Morgan Stanley Investment 2006 Officer -- Global Fixed Income of Morgan Stanley Investment
Management Limited Management; Managing Director and Director of Morgan Stanley
20 Bank Street Investment Management Limited; Vice President of the Retail
Canary Wharf, Funds and Institutional Funds (since February 2006).
London, England E14 4AD

Dennis F. Shea (54) Vice President Since February Managing Director and (since February 2006) Chief Investment
522 Fifth Avenue 2006 Officer -- Global Equity of Morgan Stanley Investment
New York, NY 10036 Management; Vice President of the Retail Funds and
Institutional Funds (since February 2006). Formerly,
Managing Director and Director of Global Equity Research at
Morgan Stanley.

Amy R. Doberman (45) Vice President Since July Managing Director and General Counsel, U.S. Investment
522 Fifth Avenue 2004 Management of Morgan Stanley Investment Management (since
New York, NY 10036 July 2004); Vice President of the Retail Funds and
Institutional Funds (since July 2004); Vice President of the
Van Kampen Funds (since August 2004); Secretary (since
February 2006) and Managing Director (since July 2004) of
the Investment Adviser and various entities affiliated with
the Investment Adviser. Formerly, Managing Director and
General Counsel -- Americas, UBS Global Asset Management
(July 2000-July 2004).

Carsten Otto (43) Chief Since October Managing Director and Global Head of Compliance for Morgan
522 Fifth Avenue Compliance 2004 Stanley Investment Management (since April 2007); and Chief
New York, NY 10036 Officer Compliance Officer of Morgan Stanley Retail Funds and
Institutional Funds (since October 2004). Formerly, U.S.
Director of Compliance (October 2004-April 2007) and
Assistant Secretary and Assistant General Counsel of the
Retail Funds.

Stefanie V. Chang Yu (40) Vice President Since December Executive Director of the Investment Adviser and various
522 Fifth Avenue 1997 entities affiliated with the Investment Adviser; Vice
New York, NY 10036 President of the Retail Funds (since July 2002) and the
Institutional Funds (since December 1997). Formerly,
Secretary of various entities affiliated with the Investment
Adviser.

Morgan Stanley Insured California Municipal Securities
TRUSTEE AND OFFICER INFORMATION (UNAUDITED) continued

Francis J. Smith (42) Treasurer and Treasurer Executive Director of the Investment Adviser and various
c/o Morgan Stanley Trust Chief Financial since July entities affiliated with the Investment Adviser; Treasurer
Harborside Financial Center Officer 2003 and Chief and Chief Financial Officer of the Retail Funds (since July
Plaza Two Financial 2003). Formerly, Vice President of the Retail Funds
Jersey City, NJ 07311 Officer since (September 2002 to July 2003).
September 2002

Mary E. Mullin (40) Secretary Since June Executive Director of the Investment Adviser and various
522 Fifth Avenue 1999 entities affiliated with the Investment Adviser; Secretary
New York, NY 10036 of the Retail Funds (since July 2003) and the Institutional
Funds (since June 1999).

---------------------

* This is the earliest date the Officer began serving the Retail Funds or
Institutional Funds.

In accordance with Section 303A.12(a) of the New York Exchange Listed Company
Manual, the Trust's Annual CEO Certification certifying as to compliance with
NYSE's Corporate Governance Listing Standards was submitted to the Exchange on
August 8, 2007.

The Trust's Principal Executive Officer and Principal Financial Officer
Certifications required by Section 302 of the Sarbanes-Oxley Act of 2002 were
filed with the Trust's N-CSR and are available on the Securities and Exchange
Commission's Web site at http://www.sec.gov.

2007 FEDERAL TAX NOTICE (UNAUDITED)

For Federal income tax purposes, the following information is
furnished with respect to the distributions paid by the Trust
during its taxable year ended October 31, 2007. The Trust
designated 100% of its income dividends as tax-exempt income
dividends. The Trust designated and paid $142,684 as a
long-term capital gain distribution.

In January, the Trust provides tax information to shareholders
for the preceding calendar year.

(This Page Intentionally Left Blank)

TRUSTEES

Frank L. Bowman
Michael Bozic
Kathleen A. Dennis
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael F. Klein
Michael E. Nugent
W. Allen Reed
Fergus Reid

OFFICERS

Michael E. Nugent
Chairperson of the Board

Ronald E. Robison
President and Principal Executive Officer

J. David Germany
Vice President

Dennis F. Shea
Vice President

Amy R. Doberman
Vice President

Carsten Otto
Chief Compliance Officer

Stefanie V. Chang Yu
Vice President

Francis J. Smith
Treasurer and Chief Financial Officer

Mary E. Mullin
Secretary

TRANSFER AGENT

Computershare Trust Company, N.A.
P.O. Box 43078
Providence, RI 02940-3078

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281

LEGAL COUNSEL

Clifford Chance US LLP
31 West 52nd Street
New York, New York 10019

COUNSEL TO THE INDEPENDENT TRUSTEES

Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10036

INVESTMENT ADVISER

Morgan Stanley Investment Advisors Inc.
522 Fifth Avenue
New York, New York 10036

[MORGAN STANLEY LOGO]

MORGAN STANLEY FUNDS

Morgan Stanley
Insured California
Municipal Securities

Annual Report
October 31, 2007

[MORGAN STANLEY LOGO]

ICSANN
IU07-0552OP-Y10/07

Item 2. Code of Ethics.

(a) The Trust has adopted a code of ethics (the "Code of Ethics") that applies
to its principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the Trust or a third
party.

(b) No information need be disclosed pursuant to this paragraph.

(d) Not applicable.

(e) Not applicable.

(f)

(1) The Trust's Code of Ethics is attached hereto as Exhibit 12 A.

(2) Not applicable.

(3) Not applicable.

Item 3. Audit Committee Financial Expert.

The Trust's Board of Trustees has determined that Joseph J. Kearns, an
"independent" Trustee, is an "audit committee financial expert" serving on its
audit committee. Under applicable securities laws, a person who is determined to
be an audit committee financial expert will not be deemed an "expert" for any
purpose, including without limitation for the purposes of Section 11 of the
Securities Act of 1933, as a result of being designated or identified as an
audit committee financial expert. The designation or identification of a person
as an audit committee financial expert does not impose on such person any
duties, obligations, or liabilities that are greater than the duties,
obligations, and liabilities imposed on such person as a member of the audit
committee and Board of Trustees in the absence of such designation or
identification.

Item 4. Principal Accountant Fees and Services.

(a)(b)(c)(d) and (g). Based on fees billed for the periods shown:

2007

REGISTRANT COVERED ENTITIES(1)
---------- -------------------

AUDIT FEES.............. $31,250 N/A
NON-AUDIT FEES
AUDIT-RELATED FEES... $ -(2) $5,041,000(2)
TAX FEES............. $ 5,047(3) $ 761,000(4)
ALL OTHER FEES....... $______ $_________
TOTAL NON-AUDIT FEES.... $ 5,047 $5,802,000
TOTAL................... $36,297 $5,802,000

2006

REGISTRANT COVERED ENTITIES(1)
---------- -------------------

AUDIT FEES.............. $31,200 N/A
NON-AUDIT FEES
AUDIT-RELATED FEES... $ 531(2) $5,217,590(2)
TAX FEES............. $ 4,900(3) $1,472,895(4)
ALL OTHER FEES....... $______ $_________(5)
TOTAL NON-AUDIT FEES.... $ 5,431 $6,690,485
TOTAL................... $36,631 $6,690,485

N/A- Not applicable, as not required by Item 4.

(1) Covered Entities include the Adviser (excluding sub-advisors) and any
entity controlling, controlled by or under common control with the Adviser
that provides ongoing services to the Registrant.

(2) Audit-Related Fees represent assurance and related services provided that
are reasonably related to the performance of the audit of the financial
statements of the Covered Entities' and funds advised by the Adviser or its
affiliates, specifically data verification and agreed-upon procedures
related to asset securitizations and agreed-upon procedures engagements.

(3) Tax Fees represent tax compliance, tax planning and tax advice services
provided in connection with the preparation and review of the Registrant's
tax returns.

(4) Tax Fees represent tax compliance, tax planning and tax advice services
provided in connection with the review of Covered Entities' tax returns.

(5) All other fees represent project management for future business
applications and improving business and operational processes.

(e)(1) The audit committee's pre-approval policies and procedures are as
follows:

APPENDIX A

AUDIT COMMITTEE
AUDIT AND NON-AUDIT SERVICES
PRE-APPROVAL POLICY AND PROCEDURES
OF THE
MORGAN STANLEY RETAIL AND INSTITUTIONAL FUNDS

AS ADOPTED AND AMENDED JULY 23, 2004,(1)

1. STATEMENT OF PRINCIPLES

The Audit Committee of the Board is required to review and, in its sole
discretion, pre-approve all Covered Services to be provided by the Independent
Auditors to the Fund and Covered Entities in order to assure that services
performed by the Independent Auditors do not impair the auditor's independence
from the Fund.

The SEC has issued rules specifying the types of services that an independent
auditor may not provide to its audit client, as well as the audit committee's
administration of the engagement of the independent auditor. The SEC's rules
establish two different approaches to pre-approving services, which the SEC
considers to be equally valid. Proposed services either: may be pre-approved
without consideration of specific case-by-case services by the Audit Committee
("general pre-approval"); or require the specific pre-approval of the Audit
Committee or its delegate ("specific pre-approval"). The Audit Committee
believes that the combination of these two approaches in this Policy will result
in an effective and efficient procedure to pre-approve services performed by the
Independent Auditors. As set forth in this Policy, unless a type of service has
received general pre-approval, it will require specific pre-approval by the
Audit Committee (or by any member of the Audit Committee to which pre-approval
authority has been delegated) if it is to be provided by the Independent
Auditors. Any proposed services exceeding pre-approved cost levels or budgeted
amounts will also require specific pre-approval by the Audit Committee.

The appendices to this Policy describe the Audit, Audit-related, Tax and All
Other services that have the general pre-approval of the Audit Committee. The
term of any general pre-approval is 12 months from the date of pre-approval,
unless the Audit Committee considers and provides a different period and states
otherwise. The Audit Committee will annually review and pre-approve the services
that may be provided by the Independent Auditors without obtaining specific
pre-approval from the Audit Committee. The Audit Committee will add to or
subtract from the list of general pre-approved services from time to time, based
on subsequent determinations.

----------
(1) This Audit Committee Audit and Non-Audit Services Pre-Approval Policy and
Procedures (the "Policy"), adopted as of the date above, supersedes and
replaces all prior versions that may have been adopted from time to time.

The purpose of this Policy is to set forth the policy and procedures by which
the Audit Committee intends to fulfill its responsibilities. It does not
delegate the Audit Committee's responsibilities to pre-approve services
performed by the Independent Auditors to management.

The Fund's Independent Auditors have reviewed this Policy and believes that
implementation of the Policy will not adversely affect the Independent Auditors'
independence.

2. DELEGATION

As provided in the Act and the SEC's rules, the Audit Committee may delegate
either type of pre-approval authority to one or more of its members. The member
to whom such authority is delegated must report, for informational purposes
only, any pre-approval decisions to the Audit Committee at its next scheduled
meeting.

3. AUDIT SERVICES

The annual Audit services engagement terms and fees are subject to the specific
pre-approval of the Audit Committee. Audit services include the annual financial
statement audit and other procedures required to be performed by the Independent
Auditors to be able to form an opinion on the Fund's financial statements. These
other procedures include information systems and procedural reviews and testing
performed in order to understand and place reliance on the systems of internal
control, and consultations relating to the audit. The Audit Committee will
approve, if necessary, any changes in terms, conditions and fees resulting from
changes in audit scope, Fund structure or other items.

In addition to the annual Audit services engagement approved by the Audit
Committee, the Audit Committee may grant general pre-approval to other Audit
services, which are those services that only the Independent Auditors reasonably
can provide. Other Audit services may include statutory audits and services
associated with SEC registration statements (on Forms N-1A, N-2, N-3, N-4,
etc.), periodic reports and other documents filed with the SEC or other
documents issued in connection with securities offerings.

The Audit Committee has pre-approved the Audit services in Appendix B.1. All
other Audit services not listed in Appendix B.1 must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated).

4. AUDIT-RELATED SERVICES

Audit-related services are assurance and related services that are reasonably
related to the performance of the audit or review of the Fund's financial
statements and, to the extent they are Covered Services, the Covered Entities or
that are traditionally performed by the Independent Auditors. Because the Audit
Committee believes that the provision of Audit-related services does not impair
the independence of the auditor and is consistent with the SEC's rules on
auditor independence, the Audit Committee may grant general pre-approval to
Audit-related services. Audit-related services include, among others, accounting
consultations related to accounting, financial reporting or disclosure matters

not classified as "Audit services"; assistance with understanding and
implementing new accounting and financial reporting guidance from rulemaking
authorities; agreed-upon or expanded audit procedures related to accounting
and/or billing records required to respond to or comply with financial,
accounting or regulatory reporting matters; and assistance with internal control
reporting requirements under Forms N-SAR and/or N-CSR.

The Audit Committee has pre-approved the Audit-related services in Appendix B.2.
All other Audit-related services not listed in Appendix B.2 must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated).

5. TAX SERVICES

The Audit Committee believes that the Independent Auditors can provide Tax
services to the Fund and, to the extent they are Covered Services, the Covered
Entities, such as tax compliance, tax planning and tax advice without impairing
the auditor's independence, and the SEC has stated that the Independent Auditors
may provide such services.

Pursuant to the preceding paragraph, the Audit Committee has pre-approved the
Tax Services in Appendix B.3. All Tax services in Appendix B.3 must be
specifically pre-approved by the Audit Committee (or by any member of the Audit
Committee to which pre-approval has been delegated).

6. ALL OTHER SERVICES

The Audit Committee believes, based on the SEC's rules prohibiting the
Independent Auditors from providing specific non-audit services, that other
types of non-audit services are permitted. Accordingly, the Audit Committee
believes it may grant general pre-approval to those permissible non-audit
services classified as All Other services that it believes are routine and
recurring services, would not impair the independence of the auditor and are
consistent with the SEC's rules on auditor independence.

The Audit Committee has pre-approved the All Other services in Appendix B.4.
Permissible All Other services not listed in Appendix B.4 must be specifically
pre-approved by the Audit Committee (or by any member of the Audit Committee to
which pre-approval has been delegated).

7. PRE-APPROVAL FEE LEVELS OR BUDGETED AMOUNTS

Pre-approval fee levels or budgeted amounts for all services to be provided by
the Independent Auditors will be established annually by the Audit Committee.
Any proposed services exceeding these levels or amounts will require specific
pre-approval by the Audit Committee. The Audit Committee is mindful of the
overall relationship of fees for audit and non-audit services in determining
whether to pre-approve any such services.

8. PROCEDURES

All requests or applications for services to be provided by the Independent
Auditors that do not require specific approval by the Audit Committee will be
submitted to the Fund's Chief Financial Officer and must include a detailed
description of the services to be

rendered. The Fund's Chief Financial Officer will determine whether such
services are included within the list of services that have received the general
pre-approval of the Audit Committee. The Audit Committee will be informed on a
timely basis of any such services rendered by the Independent Auditors. Requests
or applications to provide services that require specific approval by the Audit
Committee will be submitted to the Audit Committee by both the Independent
Auditors and the Fund's Chief Financial Officer, and must include a joint
statement as to whether, in their view, the request or application is consistent
with the SEC's rules on auditor independence.

The Audit Committee has designated the Fund's Chief Financial Officer to monitor
the performance of all services provided by the Independent Auditors and to
determine whether such services are in compliance with this Policy. The Fund's
Chief Financial Officer will report to the Audit Committee on a periodic basis
on the results of its monitoring. Both the Fund's Chief Financial Officer and
management will immediately report to the chairman of the Audit Committee any
breach of this Policy that comes to the attention of the Fund's Chief Financial
Officer or any member of management.

9. ADDITIONAL REQUIREMENTS

The Audit Committee has determined to take additional measures on an annual
basis to meet its responsibility to oversee the work of the Independent Auditors
and to assure the auditor's independence from the Fund, such as reviewing a
formal written statement from the Independent Auditors delineating all
relationships between the Independent Auditors and the Fund, consistent with
Independence Standards Board No. 1, and discussing with the Independent Auditors
its methods and procedures for ensuring independence.

10. COVERED ENTITIES

Covered Entities include the Fund's investment adviser(s) and any entity
controlling, controlled by or under common control with the Fund's investment
adviser(s) that provides ongoing services to the Fund(s). Beginning with
non-audit service contracts entered into on or after May 6, 2003, the Fund's
audit committee must pre-approve non-audit services provided not only to the
Fund but also to the Covered Entities if the engagements relate directly to the
operations and financial reporting of the Fund. This list of Covered Entities
would include:

Morgan Stanley Retail Funds
Morgan Stanley Investment Advisors Inc.
Morgan Stanley & Co. Incorporated
Morgan Stanley DW Inc.
Morgan Stanley Investment Management Inc.
Morgan Stanley Investment Management Limited
Morgan Stanley Investment Management Private Limited
Morgan Stanley Asset & Investment Trust Management Co., Limited
Morgan Stanley Investment Management Company
Van Kampen Asset Management
Morgan Stanley Services Company, Inc.
Morgan Stanley Distributors Inc.
Morgan Stanley Trust FSB

Morgan Stanley Institutional Funds
Morgan Stanley Investment Management Inc.
Morgan Stanley Investment Advisors Inc.
Morgan Stanley Investment Management Limited
Morgan Stanley Investment Management Private Limited
Morgan Stanley Asset & Investment Trust Management Co., Limited
Morgan Stanley Investment Management Company
Morgan Stanley & Co. Incorporated
Morgan Stanley Distribution, Inc.
Morgan Stanley AIP GP LP
Morgan Stanley Alternative Investment Partners LP

(e)(2) Beginning with non-audit service contracts entered into on or after May
6, 2003, the audit committee also is required to pre-approve services to Covered
Entities to the extent that the services are determined to have a direct impact
on the operations or financial reporting of the Registrant. 100% of such
services were pre-approved by the audit committee pursuant to the Audit
Committee's pre-approval policies and procedures (attached hereto).

(f) Not applicable.

(g) See table above.

(h) The audit committee of the Board of Trustees has considered whether the
provision of services other than audit services performed by the auditors to the
Registrant and Covered Entities is compatible with maintaining the auditors'
independence in performing audit services.

Item 5. Audit Committee of Listed Registrants.

(a) The Trust has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Exchange Act whose members are:
Joseph Kearns, Michael Nugent and Allen Reed.

(b) Not applicable.

Item 6.

See Item 1.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.

The Trust invests in exclusively non-voting securities and therefore this item
is not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies

Applicable only to reports covering periods ending on or after December 31,
2005.

PORTFOLIO MANAGEMENT. As of the date of this report, the Fund is managed within
the Morgan Stanley Municipals team. The team consists of portfolio managers and
analysts. Current members of the team jointly and primarily responsible for the
day-to-day management of the Fund's portfolio are Steven K. Kreider and Neil
Stone, each a Managing Director of the Investment Adviser.

Mr. Kreider has been associated with the Investment Adviser in an investment
management capacity since February 1988 and began managing the Fund in September
2007. Mr. Stone has been associated with the Investment Adviser in an investment
management capacity since March 1995 and began managing the Fund in September
2007.

The composition of the team may change from time to time.

OTHER ACCOUNTS MANAGED BY THE PORTFOLIO MANAGERS

The following information is as of October 31, 2007:

Steven K. Kreider managed 45 registered investment companies with a total of
approximately $35.3 billion in assets; no pooled investment vehicles other than
registered investment companies; and 68 other accounts (which include separate
accounts managed under certain "wrap fee programs") with a total of
approximately $12.9 billion in assets. Of these other accounts, 3 accounts with
a total of approximately $1.0 billion in assets had performance-based fees.

Neil Stone managed 19 registered investment companies with a total of
approximately $7.8 billion in assets; no pooled investment vehicles other than
registered investment companies; and 18 other accounts (which include separate
accounts managed under certain "wrap fee programs") with a total of
approximately $4.5 billion in assets.

Because the portfolio managers manage assets for other investment companies,
pooled investment vehicles and/or other accounts (including institutional
clients, pension plans and certain high net worth individuals), there may be an
incentive to favor one client over another resulting in conflicts of interest.
For instance, the Investment Adviser may receive fees from certain accounts that
are higher than the fee it receives from the Fund, or it may receive a
performance-based fee on certain accounts. In those instances, the portfolio
managers may have an incentive to favor the higher and/or performance-based fee
accounts over the Fund. In addition, a conflict of interest could exist to the
extent the Investment Adviser has proprietary investments in certain accounts,
where portfolio managers have personal investments in certain accounts or when
certain accounts are investment options in the Investment Adviser's employee
benefits and/or deferred compensation plans. The portfolio manager may have an
incentive to favor these accounts over others. If the Investment Adviser manages
accounts that engage in short sales of securities of the type in which the Fund
invests, the Investment Adviser could be seen as harming the performance of the
Fund for the benefit of the accounts engaging in short sales if the short sales
cause the market value of the securities to fall. The Investment Adviser has
adopted trade allocation and other policies and procedures that it believes are
reasonably designed to address these and other conflicts of interest.

PORTFOLIO MANAGER COMPENSATION STRUCTURE

Portfolio managers receive a combination of base compensation and
discretionary compensation, comprising a cash bonus and several deferred
compensation programs described below. The methodology used to determine
portfolio manager compensation is applied across all funds/accounts managed by
the portfolio managers.

BASE SALARY COMPENSATION. Generally, portfolio managers receive base salary
compensation based on the level of their position with the Investment Adviser.

DISCRETIONARY COMPENSATION. In addition to base compensation, portfolio
managers may receive discretionary compensation.

Discretionary compensation can include:

- Cash Bonus.

- Morgan Stanley's Long Term Incentive Compensation awards - a
mandatory program that defers a portion of discretionary year-end
compensation into restricted stock units or other awards based on
Morgan Stanley common stock or other investments that are subject
to vesting and other conditions.

- Investment Management Alignment Plan (IMAP) awards - a mandatory
program that defers a portion of discretionary year-end
compensation and notionally invests it in designated funds
advised by the Investment Adviser or its affiliates. The award is
subject to vesting and other conditions. Portfolio managers must
notionally invest a minimum of 25% to a maximum of 100% of the
IMAP deferral into a combination of the designated funds they
manage that are included in the IMAP fund menu, which may or may
not include the Fund.

- Voluntary Deferred Compensation Plans - voluntary programs that
permit certain employees to elect to defer a portion of their
discretionary year-end compensation and directly or notionally
invest the deferred amount: (1) across a range of designated
investment funds, including funds advised by the Investment
Adviser or its affiliates; and/or (2) in Morgan Stanley stock
units.

Several factors determine discretionary compensation, which can vary by
portfolio management team and circumstances. In order of relative importance,
these factors include:

- Investment performance. A portfolio manager's compensation is
linked to the pre-tax investment performance of the
funds/accounts managed by the portfolio manager. Investment
performance is calculated for one-, three- and five-year periods
measured against a fund's/account's primary benchmark (as set
forth in the fund's prospectus), indices and/or peer groups where
applicable. Generally, the greatest weight is placed on the
three- and five-year periods.

- Revenues generated by the investment companies, pooled investment
vehicles and other accounts managed by the portfolio manager.

- Contribution to the business objectives of the Investment
Adviser.

- The dollar amount of assets managed by the portfolio manager.

- Market compensation survey research by independent third parties.

- Other qualitative factors, such as contributions to client
objectives.

- Performance of Morgan Stanley and Morgan Stanley Investment
Management, and the overall performance of the investment team(s)
of which the portfolio manager is a member.

SECURITIES OWNERSHIP OF PORTFOLIO MANAGERS

As of October 31, 2007, the portfolio managers did not own any shares of
the Fund.

Item 9. Closed-End Fund Repurchases

REGISTRANT PURCHASE OF EQUITY SECURITIES

(d) Maximum Number (or
(c) Total Number of Approximate Dollar
Shares (or Units) Value) of Shares (or
(a) Total Number of Purchased as Part of Units) that May Yet Be
Shares (or Units) (b) Average Price Paid Publicly Announced Purchased Under the
Period Purchased per Share (or Unit) Plans or Programs Plans or Programs
------ ------------------- ---------------------- -------------------- ----------------------

November 1---
November 30 8,400 14.1696 N/A N/A
December 1
December 31 6,000 14.1604 N/A N/A
January 1
January 31 2,100 14.3547 N/A N/A
February 1
February 28 N/A N/A
March 1
March 31 N/A N/A
April 1
April 30 N/A N/A
May 1
May 31 N/A N/A
June 1
June 30 1,600 13.8762 N/A N/A
July 1
July 31 3,300 13.8936 N/A N/A
August 1
August 31 4,600 13.9244 N/A N/A
September 1
September 30 6,500 14.0426 N/A N/A
October 1
October 31 7,400 14.0700 N/A N/A
Total 39,900 14.0614 N/A N/A

Item 10. Submission of Matters to a Vote of Security Holders

Not applicable.

Item 11. Controls and Procedures

(a) The Trust's principal executive officer and principal financial officer have
concluded that the Trust's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Trust in this Form N-CSR
was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.

(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the second fiscal quarter of the period covered
by this report that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting.

Item 12. Exhibits

(a) The Code of Ethics for Principal Executive and Senior Financial Officers is
attached hereto.

(b) A separate certification for each principal executive officer and principal
financial officer of the registrant are attached hereto as part of EX-99.CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

Morgan Stanley Insured California Municipal Securities

/s/ Ronald E. Robison
Ronald E. Robison
Principal Executive Officer
December 20, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.

/s/ Ronald E. Robison
Ronald E. Robison
Principal Executive Officer
December 20, 2007

/s/ Francis Smith
Francis Smith
Principal Financial Officer
December 20, 2007