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)

1221 Avenue of the Americas, New York, New York 10020
(Address of principal executive offices) (Zip code)

Ronald E. Robison
1221 Avenue of the Americas, New York, New York 10020
(Name and address of agent for service)

Registrant's telephone number, including area code: 212-762-4000

Date of fiscal year end: October 31, 2006

Date of reporting period: April 30, 2006

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 semiannual 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.

FUND REPORT

For the six months ended April 30, 2006

MARKET CONDITIONS

The U.S. economy navigated a number of challenges and continued to grow during
the reporting period, with particular strong expansion in 2006. Although the
Gulf Coast hurricanes resulted in unprecedented devastation, the negative impact
on the economy was less far-reaching than many had originally anticipated. Even
sharply higher energy prices failed to interrupt the positive economic momentum.

In 2006, developing weakness in the real estate sector and elevated commodity
prices weighed on sentiment. Yet, strong manufacturing surveys, buoyant consumer
confidence and positive employment data pointed toward steady growth in real
gross domestic product. While sustained higher energy costs began to push some
prices upward, headline measures of inflation remained largely stable.

Given the economy's solid growth, the Federal Open Market Committee (the "Fed")
continued to raise the federal funds target rate. Through four increases of 25
basis points each, the Fed brought the rate from 3.75 percent to 4.75 percent
during the period. Yields on short-term municipal bonds followed the target rate
and rose steadily. In contrast, the yields of long-term bonds initially declined
before moving higher in April. Representative yields on 30-year AAA rated
municipal bonds declined from 4.60 percent in October 2005 to a low of 4.30
percent in February, before ending the period at 4.55 percent. Accordingly, the
slope of the municipal yield curve continued to flatten as the difference
between short-term and long-term interest rates narrowed.

Demand for municipal bonds strengthened among individual and institutional
investors alike. Meanwhile, municipal bond supply dropped significantly as the
period progressed. New issue volume continued to be robust in the final months
of 2005, supporting the record pace of issuance during the calendar year (more
than $400 billion). However, volume in the first four months of 2006 fell by
nearly 25 percent compared to the same period in 2005. The decline was largely
attributable to a slowdown in refundings, which dropped by more than 55 percent
as rising interest rates discouraged municipalities from refinancing debt.
Improved fiscal conditions among state and local governments also contributed to
less significant borrowing needs. Bonds backed by insurance fell to under 50
percent of issuance in 2006, from nearly 60 percent in 2005.

Reflecting declining supply and sustained demand, municipal bonds outperformed
U.S. Treasuries with comparable maturities. That said, the relative
attractiveness of tax-exempt bonds ebbed somewhat, and the 30-year
municipal-to-Treasury yield ratio steadily declined from 97 to 88 percent. (The
municipal-to-Treasury yield ratio measures the relative attractiveness of the
two sectors. The higher the ratio, the greater the attractiveness of municipal
yields relative to Treasury yields.)

The State of California continued to lead the nation in municipal issuance.
Moreover, although new volume dipped during 2006, declines were not so steep as
the national average. California's municipal market has benefited from the
continued strengthening of its credit fundamentals; and the near-term credit
outlook for the state is stable. California's large and diverse economy
continued to grow and employment gains were in line with the national average.
On the fiscal front, a rebound in capital gains and stock option taxes
contributed to higher revenues. While his popularity has ebbed, Governor
Schwarzenegger has nonetheless made progress advancing a number of his municipal
funding proposals. The state still faces challenges, however, with budget
deficits, pension funding litigation and immigration issues among the most
significant.

PERFORMANCE ANALYSIS

For the six-month period ended April 30, 2006, the net asset value (NAV) of
Morgan Stanley Insured California Municipal Securities (ICS) decreased from
$15.17 to $14.84 per share. Based on this change plus reinvestment of tax-free
dividends totaling $0.30 per share, a short-term capital gain distribution of
$0.037494 per share and a long-term capital gain distribution of $0.319649 per
share, the Trust's total NAV return was 2.55 percent. ICS's value on the New
York Stock Exchange (NYSE) moved from $13.99 to $13.63 per share during the same
period. Based on this change plus reinvestment of dividends and distributions,
the Trust's total market return was 2.14 percent. ICS's NYSE market price was at
an 8.15 percent discount to its NAV. During the fiscal period, the Trust
purchased and retired 53,300 shares of common stock at a weighted average market
discount of 7.97 percent. Past performance is no guarantee of future results.

Monthly dividends for the second quarter of 2006, declared in March, were
unchanged at $0.05 per share. The dividend reflects the current level of the
Trust's net investment income. ICS's level of undistributed net investment
income was $0.105 per share on April 30, 2006, versus $0.110 per share six
months earlier.(1)

In anticipation of continued Fed tightening and generally higher interest rates,
the Trust made modest ongoing adjustments to its portfolio to reduce volatility.
For example, a U.S. Treasury futures strategy was used to reduce the portfolio's
duration,* as a hedge against rising rates. At the end of April, the Trust's
option-adjusted duration was 7.9 years. The Trust's duration positioning
tempered total returns when rates declined, but helped total returns when rates
rose.

All the long-term holdings in the Trust were either guaranteed by AAA rated
insurance providers or backed by U.S. government securities as of the end of the
period. Purchases during the period included bonds with maturities in the 25- to
30-year range and defensive characteristics. Investments continued to emphasize
essential service sectors such as education, transportation, and water and
sewer. Reflecting a commitment to diversification, the Trust's net assets of
approximately $52 million were invested among 12 long-term sectors and 40
credits.

The Trust's procedure for reinvesting all dividends and distributions on 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 24.7%
Refunded 12.1
Tax Allocation 10.6
General Obligation 10.3
Transportation 7.9

CREDIT ENHANCEMENTS

AMBAC 30.4%
FGIC 27.7%
FSA 25.3%
MBIA 14.5%
US Gov't Backed 2.1%

* Does not include outstanding short futures contracts with underlying face
amount of $6,263,594 with unrealized appreciation of $62,882.

Data as of April 30, 2006. Subject to change daily. All percentages for top five
sectors are as a percentage of net assets applicable to common shareholders. All
percentages for 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, 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 April 30, 2006

WEIGHTED AVERAGE MATURITY: 20 YEARS(A)

0-5 0
6-10 2
11-15 27
16-20 27
21-25 34
26-30 8
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 April 30, 2006

YEARS BONDS CALLABLE -- WEIGHTED AVERAGE CALL PROTECTION: 8 YEARS

2006(a) 4.00
2007 0.00
2008 0.00
2009 0.00
2010 4.00
2011 19.00
2012 13.00
2013 20.00
2014 13.00
2015 14.00
2016+ 13.00

COST (BOOK) YIELD(B) -- WEIGHTED AVERAGE BOOK YIELD: 5.0%

2006(a) 6.40
2007 0.00
2008 0.00
2009 0.00
2010 5.00
2011 5.10
2012 5.00
2013 4.80
2014 4.90
2015 4.40
2016+ 5.40

(a) May include issues callable in previous years.

(b) 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 6.4% on 4% of the
long-term portfolio that is callable in 2006.

Portfolio structure is subject to change.

INVESTMENT ADVISORY AGREEMENT APPROVAL

NATURE, EXTENT AND QUALITY OF SERVICES

The Board reviewed and considered the nature and extent of the investment
advisory services provided by the Investment Adviser under the Advisory
Agreement, including portfolio management, investment research and fixed income
securities trading. The Board also reviewed and considered the nature and extent
of the non-advisory, administrative services provided by the Trust's
Administrator under the Administration Agreement, including accounting,
clerical, bookkeeping, compliance, business management and planning, and the
provision of supplies, office space and utilities at the Investment Adviser's
expense. (The Investment Adviser and the Administrator together are referred to
as the "Adviser" and the Advisory and Administration Agreements together are
referred to as the "Management Agreement.") The Board also compared the nature
of the services provided by the Adviser with similar services provided by
non-affiliated advisers as reported to the Board by Lipper Inc. ("Lipper").

The Board reviewed and considered the qualifications of the portfolio managers,
the senior administrative managers and other key personnel of the Adviser who
provide the administrative and advisory services to the Trust. The Board
determined that the Adviser's portfolio managers and key personnel are well
qualified by education and/or training and experience to perform the services in
an efficient and professional manner. The Board concluded that the nature and
extent of the advisory and administrative services provided were necessary and
appropriate for the conduct of the business and investment activities of the
Trust. The Board also concluded that the overall quality of the advisory and
administrative services was satisfactory.

PERFORMANCE RELATIVE TO COMPARABLE FUNDS MANAGED BY OTHER ADVISERS

On a regular basis, the Board reviews the performance of all funds in the Morgan
Stanley Fund Complex, including the Trust, compared to their peers, paying
specific attention to the underperforming funds. In addition, the Board
specifically reviewed the Trust's performance for the one-, three- and five-year
periods ended November 30, 2005, as shown in a report provided by Lipper (the
"Lipper Report"), compared to the performance of comparable funds selected by
Lipper (the "performance peer group"). The Board considered that the Trust is
unleveraged and Lipper has no closed-end peer group for unleveraged California
funds. As a result, Lipper places the Trust in a peer group of leveraged funds,
which results in an unfavorable comparison for the Trust in a normal rising
yield curve environment. The Board also discussed with the Adviser the
performance goals and the actual results achieved in managing the Trust and
concluded that the Trust's performance was acceptable.

FEES RELATIVE TO OTHER PROPRIETARY FUNDS MANAGED BY THE ADVISER WITH COMPARABLE
INVESTMENT STRATEGIES

The Board reviewed the advisory and administrative fee (together, the
"management fee") rate paid by the Trust under the Management Agreement. The
Board noted that the management fee rate was comparable to the management fee
rates charged by the Adviser to other proprietary funds it manages with
investment strategies comparable to those of the Trust.

FEES AND EXPENSES RELATIVE TO COMPARABLE FUNDS MANAGED BY OTHER ADVISERS

The Board reviewed the management fee rate and total expense ratio of the Trust
as compared to the average management fee rate and average total expense ratio
for funds, selected by Lipper (the "expense peer group"), managed by other
advisers with investment strategies comparable to those of the Trust, as shown
in the Lipper Report. The Board concluded that the Trust's management fee rate
and total expense ratio were competitive with those of its expense peer group.

BREAKPOINTS AND ECONOMIES OF SCALE

The Board reviewed the structure of the Trust's management fee schedule under
the Management Agreement and noted that it does not include any breakpoints. The
Board considered that the Trust is a closed-end fund and, therefore, that the
Trust's assets are not likely to grow with new sales or grow significantly as a
result of capital appreciation. The Board concluded that economies of scale for
the Trust were not a factor that needed to be considered at the present time.

PROFITABILITY OF THE ADVISER AND AFFILIATES

The Board considered information concerning the costs incurred and profits
realized by the Adviser and affiliates during the last year from their
relationship with the Trust and during the last two years from their
relationship with the Morgan Stanley Fund Complex and reviewed with the Adviser
the cost allocation methodology used to determine the profitability of the
Adviser and affiliates. Based on its review of the information it received, the
Board concluded that the profits earned by the Adviser and affiliates were not
excessive in light of the advisory, administrative and other services provided
to the Trust.

FALL-OUT BENEFITS

The Board considered so-called "fall-out benefits" derived by the Adviser and
affiliates from their relationship with the Trust and the Morgan Stanley Fund
Complex, such as commissions on the purchase and sale of Trust shares and
"float" benefits derived from handling of checks for purchases and sales of
Trust shares, through a

broker-dealer affiliate of the Adviser. The Board concluded that the float
benefits were relatively small and that the commissions were competitive with
those of other broker-dealers.

SOFT DOLLAR BENEFITS

The Board considered whether the Adviser realizes any benefits from commissions
paid to brokers who execute securities transactions for the Trust ("soft
dollars"). The Board noted that the Trust invests only in fixed income
securities, which do not generate soft dollars.

ADVISER FINANCIALLY SOUND AND FINANCIALLY CAPABLE OF MEETING THE TRUST'S NEEDS

The Board considered whether the Adviser is financially sound and has the
resources necessary to perform its obligations under the Management Agreement.
The Board noted that the Adviser's operations remain profitable, although
increased expenses in recent years have reduced the Adviser's profitability. The
Board concluded that the Adviser has the financial resources necessary to
fulfill its obligations under the Management Agreement.

HISTORICAL RELATIONSHIP BETWEEN THE TRUST AND THE ADVISER

The Board also reviewed and considered the historical relationship between the
Trust and the Adviser, including the organizational structure of the Adviser,
the policies and procedures formulated and adopted by the Adviser for managing
the Trust's operations and the Board's confidence in the competence and
integrity of the senior managers and key personnel of the Adviser. The Board
concluded that it is beneficial for the Trust to continue its relationship with
the Adviser.

OTHER FACTORS AND CURRENT TRENDS

The Board considered the controls and procedures adopted and implemented by the
Adviser and monitored by the Trust's Chief Compliance Officer and concluded that
the conduct of business by the Adviser indicates a good faith effort on its part
to adhere to high ethical standards in the conduct of the Trust's business.

GENERAL CONCLUSION

After considering and weighing all of the above factors, the Board concluded
that it would be in the best interest of the Trust and its shareholders to
approve renewal of the Management Agreement for another year.

Morgan Stanley Insured California Municipal Securities
PORTFOLIO OF INVESTMENTS - APRIL 30, 2006 (UNAUDITED)

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

California Tax-Exempt Municipal Bonds (95.1%)
General Obligation (10.3%)
$ 505 California, Various Purpose Dtd 03/01/94 (FSA)............. 5.50 % 03/01/20 $ 508,091
1,280 Huntington Beach Union High School District, Ser 2004
(FSA).................................................... 5.00 08/01/26 1,327,680
1,030 Los Angeles, Ser 2004 A (MBIA)............................. 5.00 09/01/24 1,070,881
1,000 Upland School District, Election 2000 Ser 2001 B (FSA)..... 5.125 08/01/25 1,049,440
1,375 Washington Unified School District, Election 2004 Ser A
(FGIC)................................................... 5.00 08/01/22 1,431,154
-----------
-------
5,387,246
5,190
-----------
-------
Educational Facilities Revenue (6.4%)
1,000 California State University, Ser 2005 A (Ambac)............ 5.00 11/01/35 1,032,580
University of California,
1,000 Limited Projects Ser 2005 B (FSA)........................ 5.00 05/15/30 1,033,080
1,250 Multi Purpose Ser Q (FSA)................................ 5.00 09/01/31 1,287,450
-----------
-------
3,353,110
3,250
-----------
-------
Electric Revenue (6.1%)
1,000 Anaheim Public Financing Authority, Generation Refg Ser
2002-B (FSA)............................................. 5.25 10/01/18 1,066,330
1,000 Los Angeles Department of Water & Power, 2001 Ser A
(FSA).................................................... 5.25 07/01/21 1,052,600
1,000 Southern California Public Power Authority, Transmission
------- Refg Ser 2002 A (FSA).................................... 5.25 07/01/18 1,067,170
-----------
3,186,100
3,000
-----------
-------
Mortgage Revenue - Multi-Family (1.4%)
735 Los Angeles Community Redevelopment Agency, 1994 Ser A
------- (Ambac).................................................. 6.45 07/01/17 739,101
-----------
Mortgage Revenue - Single Family (4.2%)
2,000 California Department of Veterans Affairs, Home Purchase
2002 Ser A (Ambac)....................................... 5.35 12/01/27 2,113,720
90 California Housing Financing Agency, 1995 Ser B (AMT)
(Ambac).................................................. 6.25 08/01/14 90,492
-----------
-------
2,204,212
2,090
-----------
-------
Public Facilities Revenue (6.1%)
1,110 Kern County Board of Education, Refg 2006 Ser A COPs (MBIA)
(WI)..................................................... 5.00 06/01/31 1,143,222
1,000 Simi Valley Public Financing Authority, Ser 2004 COPs
(Ambac).................................................. 5.00 09/01/30 1,027,040
1,000 Val Verde Unified School District, School Construction COPs
Ser 2005 B (FGIC)........................................ 5.00 01/01/30 1,027,920
-----------
-------
3,198,182
3,110
-----------
-------

10
See Notes to Financial Statements

Morgan Stanley Insured California Municipal Securities
PORTFOLIO OF INVESTMENTS - APRIL 30, 2006 (UNAUDITED) continued

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

Resource Recovery Revenue (3.4%)
Sacramento Financing Authority,
$ 1,510 2005 Solid Waste & Redevelopment (FGIC).................. 5.00 % 12/01/17 $ 1,596,689
180 1999 Solid Waste & Redevelopment (Ambac)................. 5.75 12/01/22 194,755
-----------
-------
1,791,444
1,690
-----------
-------
Tax Allocation Revenue (10.6%)
250 Bay Area Government Association, Pool 1994 Ser A (FSA)..... 6.00 12/15/24 253,205
1,000 Capistrano Unified School District, Community Facilities
District #98-2 Ladera Special Tax Ser 2005 (FGIC)........ 5.00 09/01/29 1,029,650
1,100 La Quinta Financing Authority, Local Agency 2004 Ser A
(Ambac).................................................. 5.25 09/01/24 1,169,762
1,000 Long Beach Bond Finance Authority, Downtown, North Long
Beach, Poly High and West Beach Areas 2002 Ser A
(MBIA)................................................... 5.375 08/01/21 1,064,460
1,000 Rancho Mirage Redevelopment Agency, Ser 2003 A (MBIA)...... 5.00 04/01/33 1,022,560
1,000 San Jose Redevelopment Agency, Merged Area Ser 2002
(MBIA)................................................... 5.00 08/01/32 1,021,190
-----------
-------
5,560,827
5,350
-----------
-------
Transportation Facilities Revenue (7.9%)
1,000 Los Angeles County Metropolitan Transportation Authority,
Sales Tax Ser 2000 A (FGIC)#............................. 5.25 07/01/30 1,051,430
2,000 Orange County Transportation Authority, Toll Road Express
Lanes Refg Ser 2003 A (Ambac)............................ 5.00 08/15/20 2,081,040
1,000 San Jose, Airport Ser 2001 A (FGIC)........................ 5.00 03/01/25 1,020,820
-----------
-------
4,153,290
4,000
-----------
-------
Water & Sewer Revenue (24.7%)
1,500 California Department of Water Resources, Central Valley
Ser Y (FGIC)............................................. 5.25 12/01/19 1,598,415
2,000 East Bay Municipal Utility District, Water Ser 2001
(MBIA)................................................... 5.00 06/01/26 2,055,601
1,000 Los Angeles, Wastewater Refg Ser 2003 B (FSA).............. 5.00 06/01/22 1,040,560
1,000 Metropolitan Water District of Southern California, 2003
Ser B-2 (FGIC)........................................... 5.00 10/01/27 1,031,550
1,000 Oxnard Financing Authority, Redwood Trunk Sewer& Headworks
Ser 2004 A (FGIC)........................................ 5.00 06/01/29 1,030,480
2,000 Sacramento Financing Authority, Water & Capital Improvement
2001 Ser A (Ambac)....................................... 5.00 12/01/26 2,069,620
1,000 San Diego County Water Authority, Ser 2004 A COPs (FSA).... 5.00 05/01/29 1,029,600
2,000 San Francisco Public Utilities Commission, Water Refg Ser A
2001 (FSA)............................................... 5.00 11/01/31 2,044,880
1,000 Yucaipa Valley Water District, Ser 2004 A COPs (MBIA)...... 5.25 09/01/24 1,063,420
-----------
-------
12,964,126
12,500
-----------
-------

11
See Notes to Financial Statements

Morgan Stanley Insured California Municipal Securities
PORTFOLIO OF INVESTMENTS - APRIL 30, 2006 (UNAUDITED) continued

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

z Other Revenue (1.9%)
$ 1,000 Golden State Tobacco Securitization Corporation, Enhanced
------- Asset Backed Ser 2005 A (FGIC)........................... 5.00 % 06/01/38 $ 1,020,830
-----------
Refunded (12.1%)
2,000 Anaheim, Anaheim Memorial Hospital Assn COPs (Ambac)
(ETM).................................................... 5.125 05/15/20 2,002,220
1,000 California Department of Water Resources, Power Supply
Ser 2002 A (Ambac)....................................... 5.375 05/01/12+ 1,095,370
2,000 California Infrastructure & Economic Development Bank, Bay
Area Toll Bridges Seismic Retrofit First Lien Ser 2003 A
(FGIC)................................................... 5.00 07/01/28+ 2,150,400
1,000 Puerto Rico Infrastructure Financing Authority, 2000 Ser A
(ETM).................................................... 5.50 10/01/32 1,068,430
-----------
-------
6,316,420
6,000
-----------
-------
47,915 Total California Tax-Exempt Municipal Bonds (Cost $48,192,088)................ 49,874,888
-----------
-------
California Short-Term-Tax Exempt Municipal Obligations (4.4%)
1,700 Newport Beach, Hoag Memorial Presbyterian Hospital
1992 Ser (Demand 05/01/06)............................... 3.76* 10/01/22 1,700,000
600 Orange County Sanitation District, California, Ser 2000 B
------- COPs (Demand 05/01/06)................................... 3.75* 08/01/30 600,000
-----------
2,300 Total California Short-Term Tax Exempt Municipal Obligations (Cost
$2,300,000)................................................................... 2,300,000
-----------
-------

$50,215 Total Investments (Cost $50,492,088) (a) (b)....................... 99.5% 52,174,888
=======
Other Assets In Excess of Liabilities.............................. 0.5 257,863
----- -----------
Net Assets Applicable to Common Shareholders....................... 100.0% $52,432,751
===== ===========

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

AMT Alternative Minimum Tax.
COPs Certificates of Participation.
ETM Escrowed to Maturity.
WI Security purchased on a when-issued basis.
+ 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
$26,000.
(a) Securities have been designated as collateral in an amount
equal to $7,437,026 in connection with open futures
contracts and securities purchased on a when-issued basis.
(b) The aggregate cost for federal income tax purposes is
$50,433,150. The aggregate gross unrealized appreciation is
$1,839,775 and the aggregate gross unrealized depreciation
is $98,037, resulting in net unrealized appreciation of
$1,741,738.
Bond Insurance:
---------------
Ambac Ambac Assurance Corporation.
FGIC Financial Guaranty Insurance Company.
FSA Financial Security Assurance Inc.
MBIA Municipal Bond Investors Assurance Corporation.

12
See Notes to Financial Statements

Morgan Stanley Insured California Municipal Securities
PORTFOLIO OF INVESTMENTS - APRIL 30, 2006 (UNAUDITED) continued

FUTURES CONTRACTS OPEN AT APRIL 30, 2006:

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

50 Short U.S. Treasury Notes 5 Year
June 2006 $(5,207,813) $43,222
10 Short U.S. Treasury Notes 10 Year
June 2006 (1,055,781) 19,660
-------
Total Unrealized Appreciation................ $62,882
=======

13
See Notes to Financial Statements

Morgan Stanley Insured California Municipal Securities
FINANCIAL STATEMENTS

Statement of Assets and Liabilities
April 30, 2006 (unaudited)

Assets:
Investments in securities, at value
(cost $50,492,088)........................................ $52,174,888
Cash........................................................ 84,609
Receivable for:
Interest................................................ 758,529
Investment sold......................................... 620,405
Prepaid expenses and other assets........................... 14,149
-----------
Total Assets............................................ 53,652,580
-----------
Liabilities:
Payable for:
Investments purchased................................... 1,136,385
Common shares of beneficial interest repurchased........ 16,413
Investment advisory fee................................. 11,675
Variation margin........................................ 9,531
Administration fee...................................... 3,459
Transfer agent fee...................................... 3,445
Accrued expenses and other payables......................... 38,921
-----------
Total Liabilities....................................... 1,219,829
-----------
Preferred shares of beneficial interest (1,000,000 shares
non-participating $.01 par value, none issued)............ --
-----------
Net Assets Applicable to Common Shareholders............ $52,432,751
===========
Composition of Net Assets Applicable to Common Shareholders:
Common shares of beneficial interest (unlimited shares
authorized of $.01 par value, 3,533,072 shares
outstanding).............................................. $50,187,736
Net unrealized appreciation................................. 1,745,682
Accumulated undistributed net investment income............. 371,524
Accumulated undistributed net realized gain................. 127,809
-----------
Net Assets Applicable to Common Shareholders............ $52,432,751
-----------
Net Asset Value Per Common Share
($52,432,751 divided by 3,533,072 common shares
outstanding)................................................ $14.84
===========

14
See Notes to Financial Statements

Morgan Stanley Insured California Municipal Securities
FINANCIAL STATEMENTS continued

Statement of Operations
For the six months ended April 30, 2006 (unaudited)

Net Investment Income:
Interest Income............................................. $1,244,091
----------
Expenses
Investment advisory fee..................................... 71,449
Professional fees........................................... 25,914
Administration fee.......................................... 21,170
Shareholder reports and notices............................. 11,249
Registration fees........................................... 9,507
Transfer agent fees and expenses............................ 4,185
Custodian fees.............................................. 1,603
Trustees' fees and expenses................................. 340
Other....................................................... 6,469
----------
Total Expenses.......................................... 151,886

Less: expense offset........................................ (1,452)
----------
Net Expenses............................................ 150,434
----------
Net Investment Income................................... 1,093,657
----------
Net Realized and Unrealized Gain (Loss):
Net Realized Gain on:
Investments................................................. 89,791
Futures contracts........................................... 144,090
----------
Net Realized Gain....................................... 233,881
----------
Net Change in Unrealized Appreciation/Depreciation on:
Investments................................................. (187,161)
Futures contracts........................................... (43,187)
----------
Net Depreciation........................................ (230,348)
----------
Net Gain................................................ 3,533
----------
Net Increase................................................ $1,097,190
==========

15
See Notes to Financial Statements

Morgan Stanley Insured California Municipal Securities
FINANCIAL STATEMENTS continued

Statements of Changes in Net Assets

FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
APRIL 30, 2006 OCTOBER 31, 2005
-------------- ----------------
(unaudited)

Increase (Decrease) in Net Assets:
Operations:
Net investment income....................................... $ 1,093,657 $ 2,285,826
Net realized gain........................................... 233,881 1,102,772
Net change in unrealized appreciation/depreciation.......... (230,348) (1,318,642)
----------- -----------
Net Increase............................................ 1,097,190 2,069,956
----------- -----------
Dividends and Distributions to Common Shareholders from:
Net investment income....................................... (1,116,494) (2,405,662)
Net realized gain........................................... (1,228,286) (463,024)
----------- -----------
Total Dividends and Distributions....................... (2,344,780) (2,868,686)
----------- -----------

Decrease from transactions in common shares of beneficial
interest.................................................. (732,938) (1,742,523)
----------- -----------
Net Decrease............................................ (1,980,528) (2,541,253)
Net Assets Applicable to Common Shareholders:
Beginning of period......................................... 54,413,279 56,954,532
----------- -----------
End of Period
(Including accumulated undistributed net investment income
of $371,524 and $394,361, respectively)..................... $52,432,751 $54,413,279
=========== ===========

16
See Notes to Financial Statements

Morgan Stanley Insured California Municipal Securities
NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2006 (UNAUDITED)

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; and (3) 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. 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 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

Morgan Stanley Insured California Municipal Securities
NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2006 (UNAUDITED) continued

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

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

F. 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 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 net assets.

3. Security Transactions and Transactions with Affiliates

The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the six months ended April 30, 2006 aggregated
$1,136,385 and $3,793,586, respectively.

Morgan Stanley Trust, an affiliate of the Investment Adviser and Administrator,
is the Trust's 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 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

Morgan Stanley Insured California Municipal Securities
NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2006 (UNAUDITED) continued

as investment options under the Compensation Plan. Appreciation/depreciation and
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 April 30, 2006, 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, 2004................................... 3,710,113 $37,101 $52,626,096
Treasury shares purchased and retired (weighted average
discount 7.99%)*.......................................... (123,741) (1,237) (1,741,286)
--------- ------- -----------
Balance, October 31, 2005................................... 3,586,372 35,864 50,884,810
Treasury shares purchased and retired (weighted average
discount 7.97%)*.......................................... (53,300) (533) (732,405)
--------- ------- -----------
Balance, April 30, 2006..................................... 3,533,072 $35,331 $50,152,405
========= ======= ===========

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

Morgan Stanley Insured California Municipal Securities
NOTES TO FINANCIAL STATEMENTS - APRIL 30, 2006 (UNAUDITED) continued

6. Dividends to Common Shareholders

On March 28, 2006, the Trust declared the following dividends from net
investment income:

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

$0.05 May 5, 2006 May 19, 2006
$0.05 June 9, 2006 June 23, 2006

7. Expense Offset

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

8. Risks Relating to Certain Financial Instruments

The Trust may invest a portion of its assets in residual interest bonds, which
are inverse floating rate municipal obligations. The prices of these securities
are subject to greater market fluctuations during periods of changing prevailing
interest rates than are comparable fixed rate obligations.

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.

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.

As of October 31, 2005, 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
FINANCIAL HIGHLIGHTS

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

FOR THE SIX FOR THE YEAR ENDED OCTOBER 31
MONTHS ENDED ------------------------------------------------------------
APRIL 30, 2006 2005 2004 2003 2002 2001
-------------- -------- -------- -------- -------- --------
(unaudited)

Selected Per Share Data:
Net asset value, beginning of period............ $15.17 $15.35 $15.24 $15.56 $16.00 $15.24
------ ------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income*...................... 0.29 0.62 0.66 0.67 0.69 0.78
Net realized and unrealized gain (loss)..... 0.02 (0.05) 0.25 (0.07) (0.01) 0.71
------ ------ ------ ------ ------ ------
Total income from investment operations......... 0.31 0.57 0.91 0.60 0.68 1.49
------ ------ ------ ------ ------ ------
Less dividends and distributions from:
Net investment income....................... (0.30) (0.66) (0.63) (0.71) (0.72) (0.75)
Net realized gain........................... (0.36) (0.13) (0.20) (0.25) (0.41) --
------ ------ ------ ------ ------ ------
Total dividends and distributions............... (0.66) (0.79) (0.83) (0.96) (1.13) (0.75)
------ ------ ------ ------ ------ ------
Anti-dilutive effect of acquiring treasury
shares*........................................ 0.02 0.04 0.03 0.04 0.01 0.02
------ ------ ------ ------ ------ ------
Net asset value, end of period.................. $14.84 $15.17 $15.35 $15.24 $15.56 $16.00
====== ====== ====== ====== ====== ======
Market value, end of period..................... $13.63 $13.99 $13.96 $13.83 $14.15 $15.29
====== ====== ====== ====== ====== ======
Total Return+................................... 2.14%(1) 5.96% 7.19% 4.57% (0.14)% 20.34%
Ratios to Average Net Assets:
Total expenses (before expense offset).......... 0.57%(2)(3) 0.62%(3) 0.58%(3) 0.55%(3) 0.55%(3) 0.57%(3)
Net investment income........................... 4.13%(2) 4.09% 4.37% 4.50% 4.68% 5.01%
Supplemental Data:
Net assets, end of period, in thousands......... $52,433 $54,413 $56,955 $57,923 $60,862 $63,150
Portfolio turnover rate......................... 2%(1) 26% 31% 31% 19% 22%

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

* 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) Not annualized.
(2) Annualized.
(3) Does not reflect the effect of expense offset of 0.01%.

21
See Notes to Financial Statements

Morgan Stanley Insured California Municipal Securities
REVISED INVESTMENT POLICY

On August 24, 2005, the Trustees of Morgan Stanley Insured California Municipal
Securities (the "Trust") approved a change to the Trust's investment policy with
respect to inverse floating rate municipal obligations whereby the Trust now
would be permitted to invest up to 15% of its assets in inverse floating rate
municipal obligations. The inverse floating rate municipal obligations in which
the Trust will invest are typically created through a division of a fixed rate
municipal obligation into two separate instruments, a short-term obligation and
a long-term obligation. The interest rate on the short-term obligation is set at
periodic auctions. The interest rate on the long-term obligation is the rate the
issuer would have paid on the fixed income obligation; (i) plus the difference
between such fixed rate and the rate on the short-term obligation, if the
short-term rate is lower than the fixed rate; or (ii) minus such difference if
the interest rate on the short-term obligation is higher than the fixed rate.
The interest rates on these obligations generally move in the reverse direction
of market interest rates. If market interest rates fall, the interest rate on
the obligation will increase and if market interest rates increase, the interest
rate on the obligation will fall. Inverse floating rate municipal obligations
offer the potential for higher income than is available from fixed rate
obligations of comparable maturity and credit rating. They also carry greater
risks. In particular, the prices of inverse floating rate municipal obligations
are more volatile, i.e., they increase and decrease in response to changes in
interest rates to a greater extent than comparable fixed rate obligations.

(This Page Intentionally Left Blank)

TRUSTEES

Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
James F. Higgins
Dr. Manuel H. Johnson
Joseph J. Kearns
Michael E. Nugent
Fergus Reid

OFFICERS

Charles A. Fiumefreddo
Chairman of the Board

Ronald E. Robison
President and Principal Executive Officer

J. David Germany
Vice President

Dennis F. Shea
Vice President

Barry Fink
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

Morgan Stanley Trust
Harborside Financial Center, Plaza Two
Jersey City, New Jersey 07311

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

INVESTMENT ADVISER

Morgan Stanley Investment Advisors Inc.
1221 Avenue of the Americas
New York, New York 10020

The financial statements included herein have been taken from the records of the
Trust without examination by the independent auditors and accordingly they do
not express an opinion thereon.

Investments and services offered through Morgan Stanley DW Inc., member SIPC.

[MORGAN STANLEY LOGO]

MORGAN STANLEY FUNDS

Morgan Stanley
Insured California
Municipal Securities

Semiannual Report
April 30, 2006

[MORGAN STANLEY LOGO]

ICSRPT-38622RPT-RA06-00493P-Y04/06

Item 2. Code of Ethics.