MFS California Insured Municipal Fund

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM N-Q

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF

REGISTERED MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number 811-9537

 

 

MFS CALIFORNIA INSURED MUNICIPAL FUND

(Exact name of registrant as specified in charter)

 

500 Boylston Street, Boston, Massachusetts 02116

(Address of principal executive offices) (Zip code)

 

Susan S. Newton

Massachusetts Financial Services Company

500 Boylston Street

Boston, Massachusetts 02116

(Name and address of agents for service)

 

Registrant’s telephone number, including area code: (617) 954-5000

 

Date of fiscal year end: November 30

 

Date of reporting period: February 29, 2008

ITEM 1. SCHEDULE OF INVESTMENTS.

LOGO

 

MFS California Insured Municipal Fund

PORTFOLIO OF INVESTMENTS (Unaudited) 2/29/08

 

Issuer

    Shares/Par    Value ($)

Municipal Bonds – 172.6%

      

Airport & Port Revenue – 8.4%

      

Port of Oakland, CA, “K”, FGIC, 5.75%, 2029

    $ 1,000,000    $ 985,310

San Diego County, CA, Regional Airport Authority, AMBAC, 5.25%, 2020

      500,000      503,120

San Diego, CA, Port District Rev., “B”, MBIA, 5%, 2029

      1,250,000      1,222,613
         
      $ 2,711,043
         

General Obligations - General Purpose – 6.4%

      

State of California, AMBAC, 6%, 2017

    $ 1,000,000    $ 1,114,450

State of California, AMBAC, 5%, 2034

      1,000,000      941,810
         
      $ 2,056,260
         

General Obligations - Schools – 26.2%

      

Allan Hancock, CA, Joint Community College (Election of 2006), “A”, FSA, 4.375%, 2031

    $ 100,000    $ 83,998

Culver City, CA, School Facilities Financing Authority Rev. (Culver City Unified School District), FSA, 5.5%, 2025

      1,000,000      1,056,420

Dublin, CA, Unified School District (Election of 2004), “C”, MBIA, 0%, 2032

      3,000,000      651,180

Pomona, CA, Unified School District, “A”, MBIA, 6.55%, 2029

      1,000,000      1,058,590

Rancho Santiago, CA, Community College District, FSA, 5.125%, 2029

      1,000,000      1,013,700

Rescue, CA, Unified School District (Election of 1998), MBIA, 0%, 2026

      1,125,000      376,425

San Diego, CA, Unified School District (Election of 1998), “B”, MBIA, 6%, 2019

      1,000,000      1,113,060

Union, CA, Elementary School District, “A”, FGIC, 0%, 2018

      1,630,000      968,041

Vallejo City, CA, Unified School District, “A”, MBIA, 5.9%, 2025

      500,000      503,270

West Contra Costa, CA, Unified School District, “A”, MBIA, 5.7%, 2023

      500,000      493,305

West Covina, CA, Unified School District, “A”, MBIA, 5.8%, 2021

      500,000      506,985

Yuba City, CA, Unified School District, FGIC, 0%, 2018

      1,000,000      593,890
         
      $ 8,418,864
         

Healthcare Revenue - Hospitals – 6.6%

      

California Municipal Finance Authority, Certificates of Participation (Community Hospitals of Central California), 5.25%, 2027

    $ 250,000    $ 223,755

California Statewide Communities Development Authority Rev. (Catholic West), 6.5%, 2010 (c)

      145,000      157,864

California Statewide Communities Development Authority Rev. (Daughters of Charity Health), “A”, 5.25%, 2030

      500,000      446,270

Oakland, CA, Rev. (Harrison Foundation), “A”, AMBAC, 6%, 2010 (c)

      1,000,000      1,057,700

Sierra View, CA, Local Health Care District Rev., 5.25%, 2037

      130,000      113,064

Turlock, CA, Health Facilities Rev. (Emanuel Medical Center), "B", 5.5%, 2037

      115,000      102,673
         
      $ 2,101,326
         

Healthcare Revenue - Long Term Care – 7.2%

      

ABAG Finance Authority for Non-Profit Corps. (Odd Fellows Home), MBIA, 6%, 2024

    $ 2,000,000    $ 2,025,680

California Statewide Communities Development Authority Rev. (Eskaton Properties, Inc.), 8.25%, 2010 (c)

      250,000      285,173
         
      $ 2,310,853
         

Human Services – 0.4%

      

California Statewide Communities Development Authority Rev. (Inland Regional Center), 5.375%, 2037

    $ 140,000    $ 124,387
         

Industrial Revenue - Other – 1.2%

      

California Statewide Communities Development Authority Rev. (Anheuser-Busch), 4.8%, 2046

    $ 500,000    $ 387,120
         

Miscellaneous Revenue - Other – 3.1%

      

San Francisco, CA, City & County Redevelopment Agency, Hotel Tax Rev., FSA, 6.75%, 2025

    $ 1,000,000    $ 1,003,250
         

Single Family Housing - Local – 2.9%

      

California Housing Finance Agency Rev., “A”, 4.95%, 2036

    $ 1,000,000    $ 865,890

 

1

MFS California Insured Municipal Fund

PORTFOLIO OF INVESTMENTS (Unaudited) 2/29/08 - continued

 

Issuer

    Shares/Par    Value ($)

Municipal Bonds – continued

      

Single Family Housing - Local – continued

      

California Rural Home Mortgage Finance Authority Rev., Mortgage Backed Securities Program, “A”, GNMA, 6.35%, 2029

    $ 25,000    $ 25,538

California Rural Home Mortgage Finance Authority Rev., Mortgage Backed Securities Program, “B4”, GNMA, 6.35%, 2029

      25,000      25,178
         
      $ 916,606
         

Single Family Housing - Other – 2.8%

      

California Department of Veterans Affairs, Home Purchase Rev., “B”, 5.25%, 2037

    $ 1,000,000    $ 903,520
         

Single Family Housing - State – 2.8%

      

California Housing Finance Agency Rev., Home Mortgage, “E”, FGIC, 5.05%, 2026

    $ 995,000    $ 912,843
         

Solid Waste Revenue – 1.5%

      

Salinas Valley, CA, Solid Waste Authority Rev., AMBAC, 5.125%, 2022

    $ 500,000    $ 491,235
         

State & Local Agencies – 25.1%

      

California Public Works Board Lease Rev., Department of Mental Health (Coalinga), “A”, 5.5%, 2019

    $ 500,000    $ 518,365

Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., Enhanced, “A”, FGIC, 5%, 2035

      1,000,000      918,070

Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., Enhanced, “A”, FGIC, 5%, 2038

      1,000,000      906,320

Huntington Park, CA, Public Financing Authority Rev., “A”, FSA, 5.25%, 2019

      1,000,000      1,050,990

Los Angeles County, CA, Schools Regionalized Business Service Corp., Capital Appreciation Pooled Financing, “A”, AMBAC, 0%, 2018

     2,020,000      1,192,467

Los Angeles County, CA, Schools Regionalized Business Service Corp., Capital Appreciation Pooled Financing, “A”, AMBAC, 0%, 2023

     2,220,000      898,301

Pacifica, CA, Certificates of Participation (Street Improvement Project), AMBAC, 5.875%, 2009 (c)

      1,500,000      1,611,105

Sacramento, CA, City Financing Authority (Master Lease Program Facilities), “E”, AMBAC, 5.25%, 2026

      1,000,000      976,610
         
      $ 8,072,228
         

Tax - Other – 2.2%

      

Southern California Logistics Airport Authority (Southern California Authority Project), XLCA, 5%, 2043

      820,000    $ 689,112
         

Tax Assessment – 16.6%

      

Fontana, CA, Public Finance Authority, Tax Allocation Rev. (Sub Lien North Fontana Redevelopment), “A”, AMBAC, 5%, 2029

    $ 1,000,000    $ 927,100

Huntington Beach, CA, Community Facilities District, Special Tax (Grand Coast Resort), “2000-1”, 6.45%, 2031

      100,000      100,548

Lancaster, CA, Financing Authority, Tax Allocation Rev. (Projects No. 5 & 6 Redevelopment Projects), MBIA, 5.25%, 2020

      1,075,000      1,117,441

Long Beach, CA, Bond Finance Authority, Tax Allocation Rev., “C”, AMBAC, 5.5%, 2031

      750,000      716,348

Oceanside, CA, Community Development Commission, Tax Allocation (Downtown Redevelopment Project Escrow Bonds), 5.7%, 2025

      500,000      492,925

Orange County, CA, Community Facilities District, Special Tax (Ladera Ranch), “A”, 6.7%, 2009 (c)

      200,000      215,730

San Jose, CA, Redevelopment Agency, Tax Allocation (Merged Area Redevelopment Project), “C”, MBIA, 4.25%, 2030

      1,000,000      777,670

San Jose, CA, Redevelopment Agency, Tax Allocation (Merged Area Redevelopment Project), “D”, AMBAC, 5%, 2021

      1,000,000      981,760
         
      $ 5,329,522
         

Tobacco – 6.5%

      

Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., “A-1”,

      

5.75%, 2047

    $ 500,000    $ 448,805

 

2

MFS California Insured Municipal Fund

PORTFOLIO OF INVESTMENTS (Unaudited) 2/29/08 - continued

 

Issuer

    Shares/Par    Value ($)  

Municipal Bonds – continued

      

Tobacco – continued

      

Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., Asset Backed, “A-1”, 5%, 2033

    $ 1,000,000    $ 828,850  

Golden State, CA, Tobacco Securitization Corp., Tobacco Settlement Rev., Asset Backed, “A-1”, 5.125%, 2047

      1,000,000      812,630  
           
      $ 2,090,285  
           

Transportation - Special Tax – 5.5%

      

Puerto Rico Highway & Transportation Authority, Highway Rev., “Y”, FSA, 5.5%, 2016 (c)

    $ 1,000,000    $ 1,115,730  

San Francisco, CA, Bay Area Rapid Transit District, Sales Tax Rev., “A”, MBIA, 5%, 2030 (f)

      685,000      655,648  
           
      $ 1,771,378  
           

Universities - Colleges – 10.9%

      

California Educational Facilities Authority Rev. (Pepperdine University), “A”, AMBAC, 5%, 2035

    $ 1,000,000    $ 922,100  

California Educational Facilities Authority Rev., “B”, 6.625%, 2010 (c)

      205,000      223,911  

California Educational Facilities Authority Rev., Unrefunded, “B”, 6.625%, 2010 (c)

      45,000      49,151  

California University Rev., “C”, MBIA, 5%, 2029

      1,500,000      1,420,170  

Chabot Las Positas, CA, Community College (Election of 2004), “B”, AMBAC, 0%, 2026

      970,000      313,485  

Hastings College of the Law, CA, Assured GTY, 4.75%, 2037

      195,000      169,147  

University Enterprises, Inc. (Auxiliary Organization), “A”, FGIC, 4.375%, 2030

      500,000      402,365  
           
      $ 3,500,329  
           

Utilities - Investor Owned – 9.3%

      

California Pollution Control Financing Authority, Pollution Control Rev. (Pacific Gas & Electric Co.), MBIA, 5.35%, 2016

    $ 1,000,000    $ 1,010,120  

California Pollution Control Financing Authority, Pollution Control Rev. (San Diego Gas & Electric Co.), “A”, 6.8%, 2015

     500,000      557,905  

California Pollution Control Financing Authority, Pollution Control Rev. (Southern California Edison Co.), “B”, MBIA, 5.45%, 2029

     1,500,000      1,401,180  
           
      $ 2,969,205  
           

Utilities - Other – 1.6%

      

Southern California Public Power Authority (Natural Gas Project No. 1), “A”, 5%, 2033

    $ 585,000    $ 500,081  
           

Water & Sewer Utility Revenue – 25.4%

      

Culver City, CA, Wastewater Facilities Rev., “A”, FGIC, 5.7%, 2029

    $ 1,500,000    $ 1,557,015  

Elsinore Valley, CA, Municipal Water District, Certificates of Participation, FGIC, 5.375%, 2018

      1,160,000      1,221,434  

Los Angeles, CA, Department of Water & Power, Waterworks Rev., “A-2”, AMBAC, 5%, 2027

      400,000      388,392  

Los Angeles, CA, Department of Water & Power, Waterworks Rev., “C”, MBIA, 5%, 2022

      1,000,000      1,010,727  

Metropolitan Water District of Southern California Waterworks Rev., “A”, FSA, 5%, 2030

      1,000,000      976,270  

Pico Rivera, CA, Water Authority Rev. (Water Systems Project), “A”, MBIA, 5.5%, 2029

      2,000,000      2,076,500  

Westlands, CA, Water District Rev., Certificates of Participation, “A”, MBIA, 5%, 2030

      1,000,000      934,860  
           
      $ 8,165,198  
           

Total Municipal Bonds

       $ 55,424,645  
           

Floating Rate Demand Notes – 0.3%

      

Lincoln County, WY, Pollution Control Rev. (Exxon Mobil Corp.), “C”, 3.19%, due 3/03/08

    $ 100,000    $ 100,000  
           

Total Investments

       $ 55,524,645  
           

Other Assets, Less Liabilities – 3.2%

         1,036,735  
           

Preferred shares (issued by the fund) – (76.1)%

         (24,450,000 )
           

Net Assets applicable to common shares – 100.0%

       $ 32,111,380  
           

 

(c) Refunded bond.

 

(f) All or a portion of the security has been segregated as collateral for an open futures contract.

 

3

MFS California Insured Municipal Fund

PORTFOLIO OF INVESTMENTS (Unaudited) 2/29/08 - continued

The following abbreviations are used in this report and are defined:

BMA                      Bond Market Assn.

 

Insurers

AMBAC

    AMBAC Indemnity Corp.

ASSD GTY

    Assured Guaranty Insurance Co.

FGIC

    Financial Guaranty Insurance Co.

FSA

    Financial Security Assurance Inc.

GNMA

    Government National Mortgage Assn.

MBIA

    MBIA Insurance Corp.

XLCA

    XL Capital Insurance Co.

See attached supplemental information. For more information see notes to financial statements as disclosed in the most recent semiannual or annual report.

 

4

MFS California Insured Municipal Fund

Supplemental Information (Unaudited) 2/29/08

(1) Fair Value Disclosure

The fund adopted FASB Statement No. 157, Fair Value Measurements (the “Statement”) in this reporting period. This Statement provides a single definition of fair value, a hierarchy for measuring fair value and expanded disclosures about fair value measurements.

Various inputs are used in determining the value of the fund's investments. These inputs are categorized into three broad levels. Level 1 include quoted prices in active markets for identical assets or liabilities. Level 2 include other significant observable market-based inputs (including quoted prices for similar securities, interest rates, prepayment speed, credit risk, etc.). Level 3 include unobservable inputs, which may include the adviser's own assumptions in determining the fair value of investments. Other financial instruments are derivative instruments not reflected in Total Investments, such as futures, forwards, swap contracts and written options, which are valued at the unrealized appreciation/depreciation on the instrument. The following is a summary of the levels used as of February 29, 2008, in valuing the fund's assets carried at market value:

 

     Level 1     Level 2    Level 3    Total  

Investments in Securities

    —       55,524,645    —      55,524,645  

Other Financial Instruments

    (499,434 )   52,630    —      (446,804 )

(2) Portfolio Securities

The cost and unrealized appreciation and depreciation in the value of the investments owned by the fund, as computed on a federal income tax basis, are as follows:

 

Aggregate Cost

    $  57,851,474  
        

Gross unrealized appreciation

    $ 1,118,816  

Gross unrealized depreciation

      (3,445,645 )
        

Net unrealized appreciation (depreciation)

    $ (2,326,829 )
        

The aggregate cost above includes prior fiscal year end tax adjustments.

(3) Derivative Contracts at 2/29/08

Futures contracts outstanding at 2/29/08

 

Description

    Contracts    Value    Expiration
Date		    Unrealized
Appreciation
(Depreciation)		  

U.S. Treasury Note 10 yr (Short)

    166    $ 19,468,688    Jun-08    $ (499,434 )

Swap Agreements at 2/29/08

 

Expiration

         Notional
Amount		    Counterparty    Cash Flows
to Receive		   

Cash Flows

to Pay

    Value  

Interest Rate Swaps

                  

6/19/2018

    USD    2,000,000    Morgan Stanley
Capital Services, Inc.		    7-Day BMA    3.492% (Fixed rate)    $ (12,708 )

4/02/2023

    USD    3,000,000    Goldman Sachs
International		    7-Day BMA    3.675% (Fixed rate)      (6,442 )

7/09/2023

    USD    1,000,000    Merrill Lynch
Capital Services		    7-Day BMA    3.581% (Fixed rate)      12,484  

6/19/2028

    USD    3,000,000    Merrill Lynch
Capital Services		    7-Day BMA    3.820% (Fixed rate)      9,745  

 

5

Swap Agreements at 2/29/08 - continued

 

Expiration

         Notional
Amount		    Counterparty    Cash Flows
to Receive		   

Cash Flows

to Pay

    Value

Interest Rate Swaps

                  

8/06/2028

    USD    2,000,000    Merrill Lynch
Capital Services		    7-Day BMA    3.673% (Fixed rate)    $ 49,551
                     
                  $ 52,630
                     

At February 29, 2008, the fund had sufficient cash and/or other liquid securities to cover any commitments under these derivative contracts.

 

6

ITEM 2. CONTROLS AND PROCEDURES.

 

(a) Based upon their evaluation of the effectiveness of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as conducted within 90 days of the filing date of this Form N-Q, the registrant’s principal financial officer and principal executive officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

 

(b) There were no changes in the registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

ITEM 3. EXHIBITS.

File as exhibits as part of this Form a separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2): Attached hereto.

Notice

A copy of the Agreement and Declaration of Trust, as amended, of the Registrant is on file with the Secretary of State of The Commonwealth of Massachusetts and notice is hereby given that this instrument is executed on behalf of the Registrant by an officer of the Registrant as an officer and not individually and the obligations of or arising out of this instrument are not binding upon any of the Trustees or shareholders individually, but are binding only upon the assets and property of the respective constituent series of the Registrant.

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.

Registrant: MFS CALIFORNIA INSURED MUNICIPAL FUND

 

By (Signature and Title)*    ROBERT J. MANNING
 

Robert J. Manning,

President

Date: April 14, 2008

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

 

By (Signature and Title)*    ROBERT J. MANNING
 

Robert J. Manning,

President (Principal Executive Officer)

Date: April 14, 2008

 

By (Signature and Title)*    MARIA F. DWYER
 

Maria F. Dwyer,

Treasurer (Principal Financial Officer and Accounting Officer)

Date: April 14, 2008

 

* Print name and title of each signing officer under his or her signature.