TAURUS MUNICALIFORNIA HOLDINGS, INC.
Semi-Annual
Report
April 30, 1994
This report, including the financial information
herein, is transmitted to the shareholders of Taurus
MuniCalifornia Holdings, Inc. for their information.
It is not a prospectus, circular or representation
intended for use in the purchase of shares of the
fund or any securities mentioned in the report. Past
performance results shown in this report should not
be considered a representation of future performance.
The fund has leveraged its Common Stock by issuing
Preferred Stock to provide the Common Stock share-
holders with a potentially higher rate of return.
Leverage creates risks for Common Stock shareholders,
including the likelihood of greater volatility of net
asset value and market price of shares of the Common
Stock, and the risk that fluctuations in the short-
term dividend rates of the Preferred Stock may affect
the yield to Common Stock shareholders.
Taurus MuniCalifornia Holdings, Inc.
Box 9011
Princeton, NJ
08543-9011
<PAGE>
TO OUR SHAREHOLDERS
For the six-month period ended April 30, 1994, the Common Stock
of Taurus MuniCalifornia Holdings, Inc. earned $0.463 per share
income dividends, which includes earned and unpaid dividends of
$0.060. This represents a net annualized yield of 8.57%, based on
a month-end per share net asset value of $10.88. Over the same
period, the total investment return on the fund's Common Stock
was -8.72%, based on a change in per share net asset value from
$12.51 to $10.88, and assuming reinvestment of $0.465 per share
income dividends and $0.096 per share capital gains distributions.
For the six-month period ended April 30, 1994, the fund's Auction
Market Preferred Stock had an average yield of 2.53%.
The Environment
Inflationary expectations and investor sentiment changed for the
worse during the three-month period ended April 30, 1994. Follow-
ing stronger-than-expected economic results through year-end 1993,
the Federal Reserve Board broke with tradition on February 4,
1994 and publicly announced a modest 25 basis point (0.25%) in-
crease in short-term interest rates. At the March 22 meeting of
the Federal Open Market Committee, the Federal Reserve Board
again raised the Federal Funds rate by 25 basis points, followed
by another 25 basis point increase on April 18.
Rather than view the Federal Reserve Board's first tightening
move as a preemptive strike against inflation, fixed-income
investors focused on Chairman Greenspan's implicit promise of
further tightening should the rate of inflation accelerate, and
bond prices declined sharply. The setback in the bond market was
also reflected in greater stock market volatility. While the
second and third increases in the Federal Funds rate were less of
a surprise, investors remained concerned that interest rates
would trend upward sharply as the central bank aggressively
attempted to contain the inflationary pressures of an improving
economy. At the same time, highly leveraged investors were forced
to liquidate positions in the face of declining stock and bond
prices. Investor confidence was not restored with the announce-
ment of the surprisingly slow 2.6% gross domestic product growth
rate for the first calendar quarter of 1994. Instead, investors
focused on the higher-than-expected (but still moderate) broad
inflation measures and became concerned that business activity
was beginning to stagnate as inflationary pressures were in-
creasing.
The volatility in the US capital markets was mirrored in inter-
national markets during the period. Political and economic de-
velopments, along with concerns of heightened global inflationary
pressures, led to a sell-off in most capital markets, especially
the emerging markets that had appreciated strongly in 1993.
<PAGE>
The Municipal Market
During the six months ended April 30, 1994, tax-exempt bond
yields exhibited considerable volatility as they rose to their
highest level in the past two years. As measured by the Bond
Buyer Revenue Bond Index, the yield on newly issued municipal
bonds maturing in 30 years rose over 90 basis points to 6.42% by
the end of April. Yields on seasoned municipal revenue bonds rose
by over 100 basis points in sympathy with the equally dramatic
increase in long-term US Treasury bond yields. By the end of
April, yields on US Treasury securities rose by over 95 basis
points to approximately 7.30%.
Long-term tax-exempt bond yields were essentially unchanged from
the end of October 1993 to the end of January 1994. However, on a
weekly basis, tax-exempt bond yields fluctuated by as much as 15
basis points as investors were unable to reconcile the rapid
economic growth seen late last year with continued low inflation.
Following the initial interest rate increase by the Federal
Reserve Board in early February, municipal bond prices began to
erode in concert with taxable bond prices as investors began to
sell securities in anticipation of further interest rate in-
creases. This fear led investors to withdraw from the tax-
exempt market. From early February to the end of March, total
assets of all tax-exempt bond funds declined by $14 billion to
$247 billion. This decline in investor demand, coupled with fears
that the robust economic recovery seen during the fourth quarter
of 1993 would continue well into 1994, helped push municipal bond
yields higher in February and March. Attracted by tax-exempt
yields in excess of 6.25%, investor demand returned in April,
allowing yields to decline approximately 15 basis points to end
the April period at approximately 6.40%.
A rise in tax-exempt bond yields the magnitude of that exper-
ienced over the past six months has not been seen since 1987 when
municipal bond rates rose 250 basis points between March and
October of that year. It is very important to note that the re-
cent municipal bond price declines were largely the result of
consistent and insistent selling pressures over the last two
months. In 1987, the tax-exempt bond market was much more vol-
atile and, at times, chaotic as investors sought to liquidate
positions without concern for fundamental value. For the most
part, the recent price deterioration has been orderly, and the
municipal bond market's liquidity and integrity have not been
challenged or jeopardized.
<PAGE>
To a large extent, the municipal bond market has continued to be
supported by its strong technical position. New-issue volume for
the last six months has been less than $105 billion. This rep-
resents a decline of approximately 20% versus the comparable
period a year ago. This decline was expected and has been dis-
cussed in previous shareholder reports. This reduced issuance
has minimized potential selling pressure in recent months since
institutional investors have been wary of selling appreciable
amounts of securities that they may be unable to replace later
this year at any price level. We expect this decline in issuance
to continue since we anticipate recent yield increases to sig-
nificantly impact future municipal bond issuance. Just as higher
mortgage rates slow home mortgage refinancings, the recent rise
in bond yields will prevent bond refinancings from becoming the
driving force in bond issuance in 1994 as they were in 1993.
Despite recent price declines, tax-exempt securities remain among
the most attractive investment alternatives available. After the
recent yield increases, longer-term municipal securities yield
approximately 90% of comparable US Treasury yields. Purchasers of
these municipal bonds also accrue substantial after-tax yield
advantages. To investors in the 39% marginal Federal income tax
bracket, the purchase of a municipal bond yielding 6.50% rep-
resents an after-tax equivalent of 10.65%. With prevailing es-
timates of 1994 inflation at no more than 3%--4%, real after-
tax rates in excess of 6.50% easily compensate longer-term in-
vestors for much of the price volatility recently experienced.
Portfolio Strategy
Taurus MuniCalifornia Holdings, Inc. has been structured to
pursue a high current return for Common Stock shareholders. The
portfolio largely consists of performance-oriented coupons which
we expect to provide an attractive degree of price appreciation
as stability returns to fixed-income markets. Recent volatility
has created some opportunities to purchase municipal bonds at
higher yield levels than have been available in over a year.
We used this rise in interest rates to commit a portion of our
cash reserves to the longer-term maturity sector of the Cal-
ifornia bond market because we anticipate that a positive tech-
nical backdrop for bonds will help stabilize prices later this
year. Narrow credit quality spreads have continued to be a re-
ality during the early part of 1994. Therefore, we have con-
centrated our new purchases in securities rated AA/Aa or AAA/Aaa
by Moody's Investors Service, Inc. or Standard & Poor's Corp.
<PAGE>
We appreciate your ongoing interest in Taurus MuniCalifornia
Holdings, Inc., and we look forward to serving your investment
needs and objectives in the months and years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
May 24, 1994
THE BENEFITS AND RISKS OF LEVERAGING
Taurus MuniCalifornia Holdings, Inc. utilizes leveraging to seek
to enhance the yield and net asset value of its Common Stock.
However, these objectives cannot be achieved in all interest rate
environments. To leverage, the fund issues Preferred Stock, which
pays dividends at prevailing short-term interest rates, and
invests the proceeds in long-term municipal bonds. The interest
earned on these investments is paid to Common Stock shareholders
in the form of dividends, and the value of these portfolio
holdings is reflected in the per share net asset value of the
fund's Common Stock. However, in order to benefit Common Stock
shareholders, the yield curve must be positively sloped; that is,
short-term interest rates must be lower than long-term interest
rates. At the same time, a period of generally declining interest
rates will benefit Common Stock shareholders. If either of these
conditions change, then the risks of leveraging will begin to
outweigh the benefits.
To illustrate these concepts, assume a fund's Common Stock cap-
italization of $100 million and the issuance of Preferred Stock
for an additional $50 million, creating a total value of $150
million available for investment in long-term municipal bonds.
If prevailing short-term interest rates are approximately 3% and
long-term interest rates are approximately 6%, the yield curve
has a strongly positive slope. The fund pays dividends on the
$50 million of Preferred Stock based on the lower short-term
interest rates. At the same time, the fund's total portfolio
of $150 million earns the income based on long-term interest
rates.
<PAGE>
In this case, the dividends paid to Preferred Stock shareholders
are significantly lower than the income earned on the fund's
long-term investments, and therefore the Common Stock share-
holders are the beneficiaries of the incremental yield. However,
if short-term interest rates rise, narrowing the differential be-
tween short-term and long-term interest rates, the incremental
yield pick-up on the Common Stock will be reduced. At the same
time, the market value of the fund's Common Stock (that is, its
price as listed on the New York Stock Exchange) may, as a result,
decline. Furthermore, if long-term interest rates rise, the Common
Stock's net asset value will reflect the full decline in the price
of the portfolio's investments, since the value of the fund's Pre-
ferred Stock does not fluctuate. In addition to the decline in
net asset value, the market value of the fund's Common Stock may
also decline.
PORTFOLIO ABBREVIATIONS
To simplify the listings of Taurus MuniCalifornia Holdings, Inc.'s
portfolio holdings in the Schedule of Investments, we have abbrev-
iated the names of many of the securities according to the list at
right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
DATES Daily Adjustable Tax-Exempt Securities
HFA Housing Finance Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
RIB Residual Interest Bonds
S/F Single-Family
VRDN Variable Rate Demand Notes
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
California--90.6%
<S> <S> <C> <S> <C>
California Health Facilities Financing Authority Revenue Bonds:
A1+ VMIG1 $ 100 (Saint Joseph's Health System), VRDN, Series B, 2.85% due 7/01/2009 (g) $ 100
AAA Aaa 2,180 (San Francisco Children's Hospital), Series A, 7.50% due 10/01/2020 (d) 2,416
A1+ VMIG1 400 (Sutter Health Facilities), VRDN, Series A, 2.85% due 3/01/2020 (g) 400
California HFA, Home Mortgage Revenue Bonds:
A+ Aa 1,750 Series A, 8.20% due 8/01/2017 1,821
A+ Aa 695 Series C, AMT, 7.60% due 8/01/2030 709
A+ Aa 1,165 Series D, AMT, 7.75% due 8/01/2010 1,190
A+ Aa 1,000 California HFA, Revenue Bonds, AMT, RIB, 9.621% due 8/01/2023 (h) 1,007
AA Aa 395 California State Department of Veterans' Affairs, Home Purchase Revenue Bonds, 1984
Series A, 10.50% due 8/01/2010 407
A A1 1,500 California State Public Works Board, Lease Revenue Bonds (California State University
Projects), Series A, 5.25% due 12/01/2013 1,329
AAA Aaa 1,000 California Statewide Community Development Authority Revenue Bonds (Sutter Health
Obligated Group), COP, 5.50% due 8/15/2023 (d) 884
NR Baa 1,000 Clovis, California, COP, 7.20% due 8/01/2011 1,015
AAA Aaa 2,200 Compton, California, Community Redevelopment Agency, Refunding Tax Allocation Bonds
(Walnut Industrial Park), Series A, 7.50% due 8/01/2013 (a) 2,440
BBB NR 2,000 Contra Costa County, California, Public Financing Authority, Tax Allocation Revenue
Refunding Bonds, Series A, 7.10% due 8/01/2022 2,021
NR A 810 Cypress, California, S/F Residential Mortgage Revenue Refunding Bonds, Series B, 7.25%
due 1/01/2012 (i) 925
AAA Aaa 2,000 Eureka, California, Public Financing Authority, Tax Allocation Revenue Refunding Bonds
(Eureka Redevelopment Project), 5% due 11/01/2016 1,679
A1+ VMIG1 600 Foothill/Eastern Transportation Corridor Agency Revenue Bonds (California Toll Road),
VRDN, 3% due 7/01/2023 (g) 600
A- NR 1,100 Foster City, California, Public Financing Authority Revenue Bonds (Foster City Community
Development Project Loan), Series A, 6% due 9/01/2013 1,025
NR Baa 1,500 Huntington Beach, California, Public Financing Authority, Revenue Refunding Bonds
(Huntington Beach Redevelopment Projects), 7% due 8/01/2024 1,501
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
California (continued)
<S> <S> <C> <S> <C>
Irvine Ranch, California, Water District Consolidated Bonds, DATES (g):
A1 NR $ 600 Series B, 2.90% due 10/01/2005 $ 600
A1 NR 200 Series C, 2.90% due 10/01/2010 200
AAA Aaa 3,000 LaQuinta, California, Redevelopment Agency, Tax Allocation Refunding Bonds (LaQuinta
Redevelopment Project), 8.40% due 9/01/2012 (d) 3,492
AA- Aa 1,000 Long Beach, California, Harbor Revenue Bonds, AMT, Series A, 7.375% due 5/15/2009 1,072
Los Angeles, California, Community Redevelopment Agency, Subordinate Tax Allocation
Refunding Bonds (Bunker Hill):
AAA Aaa 1,500 Series C, 9% due 12/01/2001 (d)(i) 1,838
AAA Aaa 1,700 Series H, 5.625% due 12/01/2023 (c) 1,543
Los Angeles, California, Department of Water and Power, Electric Plant Revenue Bonds:
AA Aa 2,000 Refunding, 5.75% due 9/01/2013 1,891
AA Aa 1,350 RIB, 9.103% due 2/01/2020 (h) 1,347
AA Aa 2,950 Los Angeles, California, Department of Water and Power, Waterworks Revenue Refunding
Bonds, 6.40% due 5/15/2028 2,953
A+ A1 2,000 Los Angeles, California, Municipal Improvement Corporation, Lease Revenue Refunding
Bonds (Central Library Project), Series A, 6.35% due 6/01/2020 1,932
AAA NR 330 Los Angeles, California, S/F Home Mortgage Revenue Bonds, AMT, Series A, 7.55% due
12/01/2023 (e) 342
AAA Aaa 2,500 Los Angeles, California, Wastewater System Revenue Refunding Bonds, Series 1993-D,
4.70% due 11/01/2019 (b) 1,988
AAA Aaa 1,000 Los Angeles County, California, Public Works Financing Authority, Lease Revenue Bonds
(Multiple Capital Facilities Project-IV), 4.75% due 12/01/2010 (d) 859
NR Baa 80 Moreno Valley, California, COP (Unified School District--Palm Middle School), 7.375%
due 9/01/2011 82
AAA Aaa 1,000 Moulton-Niguel Water District, California, COP, Series 1993, 4.80% due 9/01/2017 (a) 815
AAA Aaa 2,650 Oakland, California, Revenue Refunding Bonds (Pension Financing), Series A, 7.60% due
8/01/2021 (b) 2,920
AAA Aaa 1,500 Ontario, California, Redevelopment Financing Authority Revenue Bonds (Ontario
Redevelopment Project No. 1), 5.50% due 8/01/2018 (d) 1,352
<PAGE>
NR A 2,000 Orange County, California, Community Facilities District No. 87-3, Special Tax
Revenue Bonds (Mission Viejo), Series A, 8.125% due 8/15/2013 2,205
Orange County, California, Local Transportation Authority, Sales Tax Revenue
Bonds, RIB (h):
AA Aa 1,000 9.023% due 2/14/2011 999
AAA Aaa 2,000 Second Series, 9.023% due 2/14/2011 (b) 1,995
NR Baa 1,970 Pleasanton, California, Joint Powers Financing Authority, Revenue Reassessment Bonds,
Series A, 6.15% due 9/02/2012 1,821
AAA Aaa 2,000 Rancho Cucamonga, California, Redevelopment Agency, Tax Allocation Refunding Bonds
(Rancho Redevelopment Project), 5% due 9/01/2015 (d) 1,703
NR Baa 1,000 Riverside, California, Redevelopment Agency, M/F Housing Revenue Bonds (First and Market
Project), AMT, Series A, 7.75% due 9/01/2021 1,018
AA Aa 1,750 Sacramento County, California, Sanitation District Financing Authority, Revenue Refunding
Bonds, 4.75% due 12/01/2023 1,372
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
California (concluded)
<S> <S> <C> <S> <C>
A+ Aa3 $2,500 San Diego, California, IDR, Refunding (San Diego Gas and Electric), Series C, 5.90%
due 9/01/2018 $ 2,329
AA Aa 2,105 San Francisco, California, City and County, Public Utilities Commission, Water Revenue
Refunding Bonds, Series A, 6% due 11/01/2015 (i) 2,046
AAA NR 115 San Francisco, California, City and County, S/F Mortgage Revenue Bonds, AMT, 7.45% due
1/01/2024 (e)(f) 119
AAA Aaa 1,000 San Joaquin County, California, COP, Refunding Bonds (Capital Facilities Project),
4.75% due 11/15/2019 (d) 801
Southern California Home Financing Authority, S/F Mortgage Revenue Bonds, AMT (e):
AAA NR 1,150 Series A, 7.625% due 10/01/2023 1,202
AAA NR 210 Series B, 7.75% due 3/01/2024 (f) 219
AA- Aa 1,100 Southern California Public Power Authority Revenue Bonds (Transmission Project), RIB,
8.925% due 7/01/2012 (h) 1,052
<PAGE>
AAA VMIG1 100 Southern California Public Power Authority, Subordinated Revenue Refunding Bonds
(Transmission Project), VRDN, 3.35% due 7/01/2019 (a)(g) 100
AAA Aaa 1,585 Suisun City, California, Redevelopment Agency, Tax Allocation Refunding Bonds
(Suisun City Redevelopment Project), 5.625% due 10/01/2013 1,481
AAA Aaa 2,000 University of California, Revenue Refunding Bonds (Multiple Purpose Projects),
Series B, 6% due 9/01/2013 (d) 1,959
Puerto Rico--5.6%
A Baa1 3,000 Puerto Rico, Commonwealth Highway and Transportation Authority, Highway Revenue
Refunding Bonds, Series V, 6.625% due 7/01/2012 3,061
A Baa1 1,230 Puerto Rico, Commonwealth Refunding Bonds, Series A, 6.25% due 7/01/2010 1,224
Total Investments (Cost--$74,603)--96.2% 73,401
Other Assets Less Liabilities--3.8% 2,896
-------
Net Assets--100.0% $76,297
=======
<FN>
(a)AMBAC Insured.
(b)FGIC Insured.
(c)FSA Insured.
(d)MBIA Insured.
(e)GNMA Collateralized.
(f)FNMA Collateralized.
(g)The interest rate is subject to change periodically based upon
the prevailing market rate. The interest rate shown is the rate
in effect at April 30, 1994.
(h)The interest rate is subject to change periodically and
inversely to the prevailing market rate. The interest rate shown
is the rate in effect at April 30, 1994.
(i)Escrowed to Maturity.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of April 30, 1994
<CAPTION>
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$74,603,251) (Note 1a) $73,400,905
Cash 1,980,664
Receivables:
Securities sold $ 2,812,187
Interest 1,245,102 4,057,289
-----------
Deferred organization expenses (Note 1e) 15,387
Prepaid expenses 6,772
-----------
Total assets 79,461,017
-----------
Liabilities: Payables:
Securities purchased 3,006,326
Dividend to shareholders (Note 1g) 70,532
Investment adviser (Note 2) 30,183 3,107,041
-----------
Accrued expenses and other liabilities 56,702
-----------
Total liabilities 3,163,743
-----------
Net Assets: Net assets $76,297,274
===========
Capital: Capital Stock (200,000,000 shares authorized)(Note 4):
Preferred Stock, par value $.10 per share (400 shares of AMPS*
issued and outstanding at $50,000 per share liquidation preference) $20,000,000
Common Stock, par value $.10 per share (5,175,539 shares issued
and outstanding) $ 517,554
Paid-in capital in excess of par 56,540,121
Undistributed investment income--net 600,273
Undistributed realized capital losses--net (158,328)
Unrealized depreciation on investments--net (1,202,346)
-----------
Total--Equivalent to $10.88 net asset value per share of Common Stock
(market price--$10.125) 56,297,274
-----------
Total capital $76,297,274
===========
<PAGE>
<FN>
* Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months Ended
April 30, 1994
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 2,549,217
Income (Note 1d):
Expenses: Investment advisory fees (Note 2) $ 202,733
Professional fees 34,079
Commission fees (Note 4) 25,526
Transfer agent fees 18,428
Printing and shareholder reports 17,668
Accounting services (Note 2) 15,645
Directors' fees and expenses 10,460
Listing fees 9,655
Amortization of organization expenses (Note 1e) 5,992
Custodian fees 4,236
Pricing fees 2,982
Other 11,937
-----------
Total expenses 359,341
-----------
Investment income--net 2,189,876
-----------
Realized & Realized loss on investments--net (153,663)
Unrealized Loss on Change in unrealized depreciation on investments--net (7,281,049)
Investments--Net -----------
(Notes 1d & 3): Net Decrease in Net Assets Resulting from Operations $(5,244,836)
===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the Year
Months Ended Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 1994 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 2,189,876 $ 4,726,204
Realized gain (loss) on investments--net (153,663) 1,109,420
Change in unrealized appreciation/depreciation on investments--net (7,281,049) 4,649,718
----------- -----------
Net increase (decrease) in net assets resulting from operations (5,244,836) 10,485,342
----------- -----------
Dividends & Investment income--net:
Distributions to Common Stock (1,883,306) (4,225,407)
Shareholders Preferred Stock (185,600) (411,312)
(Note 1g): Realized gain on investments--net:
Common Stock (1,023,587) (735,917)
Preferred Stock (85,836) (96,900)
----------- -----------
Net decrease in net assets resulting from dividends and distributions
to shareholders (3,178,329) (5,469,536)
----------- -----------
Common Stock Value of shares issued to Common Stock shareholders in reinvestment
Transactions of dividends and distributions -- 1,185,162
(Note 4): Value of shares tendered -- (510,041)
----------- -----------
Net increase in net assets derived from Common Stock transactions -- 675,121
----------- -----------
Net Assets: Total increase (decrease) in net assets (8,423,165) 5,690,927
Beginning of period 84,720,439 79,029,512
----------- -----------
End of period* $76,297,274 $84,720,439
=========== ===========
<FN>
* Undistributed investment income--net $ 600,273 $ 479,303
=========== ===========
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<PAGE>
<TABLE>
Financial Highlights
<CAPTION>
For the For the
Six Period
The following per share data and ratios have been derived Months Feb. 1,
from information provided in the financial statements. Ended 1990+ to
April 30,For the Year Ended October 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 12.51 $ 11.53 $ 11.66 $ 11.05 $ 11.16
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .43 .91 .99 1.01 .67
Realized and unrealized gain (loss) on invest-
ments--net (1.44) 1.13 (.05) .62 --
-------- -------- -------- -------- --------
Total from investment operations (1.01) 2.04 .94 1.63 .67
-------- -------- -------- -------- --------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net (.36) (.82) (.88) (.82) (.49)
Realized gain on investments--net (.20) (.14) (.06) (.01) --
-------- -------- -------- -------- --------
Total dividends and distributions to Common Stock
shareholders (.56) (.96) (.94) (.83) (.49)
-------- -------- -------- -------- --------
Capital charge resulting from issuance of
Common Stock -- -- -- -- (.07)
-------- -------- -------- -------- --------
Effect of Preferred Stock activity++++:
Dividends and distributions to Preferred Stock
shareholders:
Investment income--net (.04) (.08) (.12) (.19) (.11)
Realized gain on investments--net (.02) (.02) (.01) -- --
-------- -------- -------- -------- --------
Capital charge resulting from issuance of
Preferred Stock. -- -- -- -- (.11)
-------- -------- -------- -------- --------
Total effect of Preferred Stock Activity (.06) (.10) (.13) (.19) (.22)
-------- -------- -------- -------- --------
Net asset value, end of period $ 10.88 $ 12.51 $ 11.53 $ 11.66 $ 11.05
======== ======== ======== ======== ========
Market price per share, end of period $ 10.125 $ 13.00 $ 12.50 $ 12.25 $ 11.125
======== ======== ======== ======== ========
<PAGE>
Total Investment Based on market price per share (18.26%)+++ 12.52% 10.18% 18.41% (3.04%)+++
Return:** ======== ======== ======== ======== ========
Based on net asset value per share (8.72%)+++ 17.39% 6.77% 13.47% 3.56%+++
======== ======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement .89%* .94% .88% .91% .82%*
Net Assets:*** ======== ======== ======== ======== ========
Expenses .89%* .94% .88% .91% .97%*
======== ======== ======== ======== ========
Investment income--net 5.40%* 5.76% 6.36% 6.60% 6.65%*
======== ======== ======== ======== ========
Supplemental Net assets, net of Preferred Stock, end of period
Data: (in thousands) $ 56,297 $ 64,720 $ 59,030 $ 58,543 $ 54,500
======== ======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $ 20,000 $ 20,000 $ 20,000 $ 20,000 $ 20,000
======== ======== ======== ======== ========
Portfolio turnover 33.10% 52.04% 50.50% 27.89% 85.91%
======== ======== ======== ======== ========
<FN>
++ Commencement of Operations.
++++ The fund's Preferred Stock was issued on April 30, 1990.
* Annualized.
** Total investment returns based on market value, which can
be significantly greater or lesser than the net asset value,
result in substantially different returns. Total investment
returns exclude the effects of sales loads.
*** Do not reflect the effect of dividends to Preferred Stock
Shareholders.
+++ Aggregate total investment returns.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Taurus MuniCalifornia Holdings, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a non-diversified,
closed-end management investment company. The Fund determines and
makes available for publication the net asset value of its Common
Stock on a weekly basis. The Fund's Common Stock is listed on the
New York Stock Exchange under the symbol MCF. The following is a
summary of significant accounting policies followed by the Fund.
<PAGE>
(a) Valuation of investments--Municipal bonds are traded prim-
arily in the over-the-counter market and are valued at the most
recent bid price or yield equivalent as obtained by the Fund's
pricing service from dealers that make markets in such secur-
ities. Financial futures contracts, which are traded on exchanges,
are valued at their closing prices as of the close of such ex-
changes. Options, which are traded on exchanges, are valued at
their last sale price as of the close of such exchanges or,
lacking any sales, at the last available bid price. Short-term
securities with a remaining maturity of sixty days or less are
valued at amortized cost which approximates market. Securities
for which market quotations are not readily available are val-
ued at their fair value as determined in good faith by or under
the direction of the Board of Directors of the Fund including
valuations furnished by a pricing service retained by the Fund
which may utilize a matrix system for valuations. The procedures
of the pricing service and its valuations are reviewed by the
officers of the Fund under the general supervision of the Di-
rectors.
(b) Financial futures contracts--The Fund may purchase or sell
interest rate futures contracts and options on such futures
contracts for the purpose of hedging the market risk on existing
or the intended purchase of securities. Futures contracts are
contracts for delayed delivery of securities at a specific future
date and at a specific price or yield. Upon entering into a
contract, the Fund deposits and maintains as collateral such
initial margins as required by the exchange on which the trans-
action is effected. Pursuant to the contract, the Fund agrees
to receive from or pay to the broker an amount of cash equal to
the daily fluctuation in value of the contract. Such receipts
or payments are known as variation margin and are recorded by
the Fund as unrealized gains or losses. When the contract is
closed, the Fund records a realized 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.
(c) Income taxes--It is the Fund'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 income to its shareholders. Therefore, no Federal income
tax provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are
entered into (the trade dates). Interest income is recognized on
the accrual basis. Discounts and market premiums are amortized
into interest income. Realized gains and losses on security
transactions are determined on the identified cost basis.
<PAGE>
(e) Deferred organization expenses--Deferred organization
expenses are amortized on a straight-line basis over a five-year
period.
(f) Non-income producing investments--Written and purchased
options are non-income producing investments.
(g) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital
gains are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and Transactions with
Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Fund Asset Management, L.P. ("FAM"). Effective January 1, 1994,
the investment advisory business of FAM was reorganized from a
corporation to a limited partnership. Both prior to and after the
reorganization, ultimate control of FAM was vested with Merrill
Lynch & Co., Inc. ("ML & Co."). The general partner of FAM is
Princeton Services, Inc., an indirect wholly-owned subsidiary of
ML & Co. The limited partners are ML & Co. and Merrill Lynch
Investment Management, Inc. ("MLIM"), which is also an indirect
wholly-owned subsidiary of ML & Co.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and
certain other services necessary to the operations of the Fund.
For such services, the Fund pays a monthly fee at an annual rate
of .50% of the Fund's average weekly net assets.
Accounting services are provided to the Fund by FAM at cost.
NOTES TO FINANCIAL STATEMENTS (concluded)
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, MLIM, Merrill Lynch, Pierce, Fenner & Smith
Inc. ("MLPF&S"), and/or ML & Co.
<PAGE>
3. Investments:
Purchases and sales of investments, excluding short-term
securities, for the six months ended April 30, 1994 were
$26,567,537 and $33,421,654, respectively.
Net realized and unrealized gains (losses) as of April 30, 1994
were as follows:
Realized
Gains Unrealized
(Losses) Losses
Long-term investments $ 73,377 $(1,202,346)
Short-term investments (227,040) --
--------- -----------
Total $(153,663) $(1,202,346)
========= ===========
As of April 30, 1994, net unrealized depreciation for Federal
income tax purposes aggregated $1,202,346, of which $1,354,681
related to appreciated securities and $2,557,027 related to
depreciated securities. The aggregate cost of investments at
April 30, 1994 for Federal income tax purposes was $74,603,251.
4. Capital Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of capital
stock, including Preferred Stock, par value $.10 per share, all
of which were initially classified as Common Stock. The Board of
Directors is authorized, however, to reclassify any unissued
shares of capital stock without approval of the holders of Common
Stock.
Common Stock
For the six months ended April 30, 1994, shares issued and
outstanding remained constant at 5,175,539. At April 30, 1994,
total paid-in capital amounted to $57,057,675.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred
Stock of the Fund that entitle their holders to receive cash
dividends at an annual rate that may vary for the successive
dividend periods. The yield in effect at April 30, 1994 was
2.85%.
For the six months ended April 30, 1994, there were 400 AMPS
shares authorized, issued and outstanding with a liquidation
preference of $50,000 per share plus accumulated and unpaid
dividends of $124,191.
<PAGE>
The Fund pays commissions to certain broker-dealers at the end of
each auction at the annual rate of one-quarter of 1% calculated
on the proceeds of each auction.
For the six months ended April 30, 1994, MLPF&S, an affiliate of
MLIM, earned $23,810 as commissions.
5. Subsequent Event:
On May 6, 1994, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the
amount of $.059964 per share, payable on May 27, 1994 to
shareholders of record as of May 17, 1994.
PER SHARE INFORMATION
<TABLE>
Per Share Selected Quarterly Financial Data*
<CAPTION>
Dividends/Distributions
Net Realized Unrealized
Investment Gains Gains Net Investment Income Capital Gains
For the Quarter Income (Losses) (Losses) Common Preferred Common Preferred
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1992 to July 31, 1992 $0.25 $ 0.02 $ 0.61 $0.22 $0.03 -- --
August 1, 1992 to October 31, 1992 0.24 0.11 (0.76) 0.23 0.02 -- --
November 1, 1992 to January 31, 1993 0.24 0.02 0.42 0.21 0.02 $0.14 $0.02
February 1, 1993 to April 30, 1993 0.23 0.07 0.22 0.21 0.02 -- --
May 1, 1993 to July 31, 1993 0.23 0.05 0.03 0.20 0.02 -- --
August 1, 1993 to October 31, 1993 0.22 0.08 0.22 0.20 0.02 -- --
November 1, 1993 to January 31, 1994 0.22 0.22 (0.16) 0.18 0.02 0.20 0.01
February 1, 1994 to April 30, 1994 0.21 (0.25) (1.25) 0.18 0.02 -- 0.01
<CAPTION>
Net Asset Value Market Price**
For the Quarter High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
May 1, 1992 to July 31, 1992 $12.23 $11.56 $13.875 $12.50 362
August 1, 1992 to October 31, 1992 12.15 11.48 14.00 11.875 282
November 1, 1992 to January 31, 1993 11.92 11.53 13.125 12.00 245
February 1, 1993 to April 30, 1993 12.40 11.82 13.375 12.125 311
May 1, 1993 to July 31, 1993 12.29 12.07 13.625 12.125 267
August 1, 1993 to October 31, 1993 12.66 12.20 13.00 12.375 207
November 1, 1993 to January 31, 1994 12.46 12.11 12.875 11.25 381
February 1, 1994 to April 30, 1994 12.33 10.56 12.25 10.00 307
<PAGE>
<FN>
*Calculations are based upon shares of Common Stock
outstanding at the end of each quarter.
**As reported in the consolidated transaction reporting
system.
***In thousands.
</TABLE>
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
The Bank of New York
110 Washington Street
New York, New York 10286
Transfer Agents
Common Stock:
The Bank of New York
110 Washington Street
New York, New York 10286
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
NYSE Symbol
MCF
