MUNIYIELD
CALIFORNIA
INSURED
FUND, INC.
FUND LOGO
Semi-Annual Report
April 30, 1995
Officers and Directors
Arthur Zeikel, President and Director
Herbert I. London, Director
Robert R. Martin, Director
Joseph L. May, Director
Andre F. Perold, 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
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
<PAGE>
Transfer Agents
Common Stock:
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
NYSE Symbol
MIC
This report, including the financial information herein, is
transmitted to the shareholders of MuniYield California Insured
Fund, 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
shareholders 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.
MuniYield California
Insured Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MuniYield California Insured Fund, Inc.
TO OUR SHAREHOLDERS
For the six-month period ended April 30, 1995, the Common Stock of
MuniYield California Insured Fund, Inc. earned $0.424 per share
income dividends, which included earned and unpaid dividends of
$0.068. This represents a net annualized yield of 6.26%, based on a
month-end per share net asset value of $13.64. Over the same period,
the total investment return on the Fund's Common Stock was +9.66%,
based on a change in per share net asset value from $12.88 to
$13.64, and assuming reinvestment of $0.430 per share income
dividends.
<PAGE>
For the six-month period ended April 30,1995, the Fund's Auction
Market Preferred Stock had an average yield of 3.76% for Series A
and 3.57% for Series B.
The Environment
During the six months ended April 30, 1995, the perception that the
US economy was overheating and inflationary pressures were
increasing gave way to a more benign economic outlook. With more
signs of slowing growth, investors now appear to be forecasting a
"soft landing" for the US economy. Although gross domestic product
was reported to have increased at a revised 5.1% rate during the
final quarter of 1994, declines in other indicators such as new home
sales and durable goods orders registered thus far in 1995 have led
investors to anticipate that the economy is losing enough momentum
to keep inflation under control and preclude further significant
monetary policy tightening by the Federal Reserve Board. A further
indication of a slowing economy was the reported decline in the
Index of Leading Economic Indicators for March.
As US stock and bond markets have risen on more positive economic
news, the value of the US dollar has reached new lows relative to
the yen and the Deutschemark. Persistent trade deficits and exports
of capital from the United States have kept the US currency in a
decade-long decline relative to the Japanese and German currencies.
Over the longer term, since the United States has the highest
productivity among industrialized nations and among the lowest labor
costs, demand for US dollar-denominated assets may improve. However,
a reduction of the still-widening US trade deficit may be necessary
before the US dollar appreciates substantially relative to the yen
and the Deutschemark.
The first months of 1995 have been very positive for the stock and
bond markets. Continued signs of a moderating expansion and well-
contained inflationary pressures would provide further assurance
that the peak in interest rates is behind us. On the other hand,
indications of reaccelerating growth and further significant
monetary policy tightening by the Federal Reserve Board would be a
decided negative for the US financial markets.
The Municipal Market
During the six-month period ended April 30, 1995, the tax-exempt
bond market gradually recouped much of the losses sustained during
1994. Signs of a weakening domestic economy and ongoing moderate
inflationary pressures have fostered an environment of declining
interest rates. Since October 31, 1994, A-rated uninsured municipal
revenue bond yields, as measured by the Bond Buyer Revenue Bond
Index, have declined over 65 basis points (0.65%) to close the six-
month period ended April 30, 1995 at 6.29%. Tax-exempt bond yields
initially continued to climb in late 1994, reaching a high of 7.37%
in late November 1994. Municipal bond yields have since declined
over 100 basis points from their recent highs and are presently
lower than they were a year ago. US Treasury bond yields have
experienced similar declines over the last six months to end the
April period at 7.34%.
<PAGE>
Much of the recent improvement in the tax-exempt bond market,
however, has occurred over the last three months. During this most
recent quarter, municipal bond yields have fallen approximately 50
basis points, while US Treasury bond yields declined only 35 basis
points. Tax-exempt bond yields declined more than their taxable
counterparts in recent months, largely in response to the
significant decline in new bond issuance in recent quarters. Over
the last six months, less than $60 billion in new long-term
municipal securities were underwritten, a decline of nearly 45%
versus the comparable period a year earlier. Issuance was
particularly low this past January and February, with monthly volume
of less than $8 billion. These levels are the lowest monthly totals
since the mid-1980s.
To compound the municipal market's already strong technical posture,
both institutional and individual investors have seen significant
cash inflows in recent months. These assets were derived from
regular coupon payments, bond maturities and the proceeds from early
bond calls and redemptions. It has been estimated that investors
received over $20 billion in principal redemptions and coupon income
in January 1995 alone. With monthly issuance in the $10 billion
range thus far this year, the current supply/demand imbalance has
dominated the municipal market and bond prices have risen
accordingly. The tax-exempt bond market's technical position is
likely to remain very strong throughout most of 1995. Investors are
expected to receive almost $40 billion in principal and coupon
payments on July 1, 1995. Investor proceeds from all sources have
been estimated to exceed $200 billion for all of 1995. Estimates of
total new bond issuance for 1995 have continued to be lowered with
most estimates now in the $125 billion range. Investors should find
it increasingly difficult to replace existing holdings as they
mature and to reinvest coupon income in such an environment.
The municipal bond market's outperformance thus far this year caused
the tax-exempt market to become temporarily expensive relative to
its taxable counterpart in late April. Investor concerns regarding
the international currency situation and the future impact of
proposed revisions to US taxation policies upon the tax advantage
inherent to municipal bonds have combined to cause tax-exempt bond
yields to increase marginally in recent weeks. Municipal bond yields
have risen approximately 15 basis points from their lows in mid-
April 1995. Long-term US Treasury bond yields have remained
essentially stable.
<PAGE>
Such an underperformance by the tax-exempt bond market is likely to
be limited in duration. The recent increase in tax-exempt bond
yields has already begun to attract institutional investors since
some municipal bonds yielding in excess of 85% of US Treasury bond
yields are again available. Also, concerns regarding the implication
for municipal bonds' tax advantage resulting from various proposed
tax law changes (for example, flat-tax, value-added tax or national
sales tax) are all likely to quickly recede as investors realize
that such, if any, changes are unlikely to be enacted before late
1996 at the earliest. Long-term investors will also recall 1986 when
similar tax proposals were made and tax-exempt bond yields initially
rose and then quickly fell. Investors are likely to view the current
situation as an opportunity to purchase very attractively priced tax-
advantaged products. This should cause municipal bond yields to
quickly return to their more historic relationship.
Portfolio Strategy
For the six-month period ended April 30, 1995, our portfolio
strategy shifted slightly on the belief that bond yields were
attractive. Cash reserves, which averaged 5% of net assets during
the six-month period ended October 31, 1994, were drawn down to an
average of 1% by April 30, 1995. We did this to seek to enhance
income for shareholders while slightly extending duration to better
capture any market appreciation. Another factor in the decision to
lower cash reserves was the 61% decrease in municipal issuance of
California bonds for this six-month period versus the same six-month
period last year. This decline in issuance raised concerns that it
would be difficult to buy bonds when the market becomes more active.
However, the Fund's credit quality remained high, with 94% of long-
term assets rated AA or better by at least one of the major rating
agencies. Looking forward, our strategy will consist of seeking to
enhance the total return of the Fund as yields begin their expected
downward path.
The Fund's two classes of Preferred Stock, which are auctioned on a
seven-day and 28-day schedule, averaged 4.01% for the six-month
period ended April 30, 1995. These short-term interest rates have
continued to provide generous yield benefits to the Fund's Common
Stock shareholders as a result of leveraging in a steep yield curve
environment. However, should the spread between short-term and long-
term interest rates narrow, the benefits of the leverage will
diminish and reduce the yield of the Common Stock. (For a complete
explanation of the benefits and risks of leveraging, see page 4 of
this report to shareholders.)
In Conclusion
We appreciate your ongoing interest in MuniYield California Insured
Fund, Inc., and we look forward to serving your investment needs in
the months and years to come.
<PAGE>
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
May 30, 1995
THE BENEFITS AND RISKS OF LEVERAGING
MuniYield California Insured Fund, 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
capitalization 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. Of course, increases in
short-term interest rates would reduce (and even eliminate) the
dividends on the Common Stock.
<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 shareholders are the
beneficiaries of the incremental yield. However, if short-term
interest rates rise, narrowing the differential between short-term
and long-term interest rates, the incremental yield pick-up on the
Common Stock will be reduced or eliminated completely. 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
Preferred 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 MuniYield California Insured Fund,
Inc.'s portfolio holdings in the Schedule of Investments, we have
abbreviated the names of many of the securities according to the
list below and at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
GO General Obligation Bonds
HFA Housing Finance Agency
INFLOS Inverse Floating Rate Municipal Bonds
RIB Residual Interest Bonds
RITES Residual Interest Tax-Exempt Securities
SAVRS Select Auction Variable Rate Securities
S/F Single-Family
UT Unlimited Tax
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--95.8%
<S> <S> <C> <S> <C>
AAA Aaa $ 1,960 Berkeley, California, Unified School District, GO, UT, Series C, 6.50% due
8/01/2019 (b) $ 2,025
AAA Aaa 2,000 Beverly Hills, California, Public Financing Authority, Lease Revenue Bonds,
Series A, INFLOS, 6.73% due 6/01/2015 (d)(e) 1,795
California Health Facilities Financing Authority, Hospital Revenue Bonds:
AAA Aaa 2,850 (Adventist Health System Hospital), Series B, 6.50% due 3/01/2011 (d) 2,949
AAA Aaa 4,500 (Centinela Medical Hospital), 6.25% due 9/01/2015(d) 4,518
AAA Aaa 1,415 (Kaiser Permanente), Series A, 7% due 10/01/2018 (b) 1,506
AAA Aaa 5,000 Refunding (San Diego Hospital), Series A, 6.20% due 8/01/2020 (d) 4,943
AAA Aaa 2,500 (Scripps Memorial Hospital), Series A, 6.25% due 10/01/2013 (d) 2,529
AAA Aaa 2,750 (Scripps Memorial Hospital), Series A, 6.375% due 10/01/2022 (d) 2,784
California HFA, Home Mortgage Revenue Bonds, AMT:
AA- Aa 265 Series B, 8% due 8/01/2029 278
AA- Aa 4,260 Series F-1, 7% due 8/01/2026 4,369
AA- Aa 6,000 Series G, 7.05% due 8/01/2027 6,154
AA- Aa 2,000 California HFA, Revenue Bonds, AMT, Linked SAVRS and RIB, 7.59% due 8/01/2023 1,988
NR* P1 2,200 California Pollution Control Financing Authority, Resource Recovery Revenue
Bonds (Delano Project), VRDN, AMT, 5.20% due 8/01/2019 (a) 2,200
A1+ VMIG1++ 400 California Pollution Control Financing Authority, Solid Waste Disposal Revenue
Bonds (Shell Oil Co.-Martinez Project), VRDN, AMT, Series A, 4.95% due
10/01/2024 (a) 400
NR* Aaa 1,060 California Rural Home Mortgage Finance Authority, S/F Mortgage Revenue Bonds
(Mortgage-Backed Securities Program), AMT, Series A-1, 6.90% due 12/01/2024
(g)(h) 1,091
California State GO, UT (c):
AAA Aaa 5,000 6.90% due 11/01/2011 5,494
AAA Aaa 2,700 7% due 11/01/2014 2,936
NR* Baa 2,465 California State Public Capital Improvements Financing Authority Revenue Bonds
(Joint Powers Agency Pooled Projects), Series E, 8.25% due 3/01/1998 2,670
California State Public Works Board, Lease Revenue Bonds:
AAA Aaa 1,000 (Department of Corrections-California State Prison-Susanville), Series D,
5.25% due 6/01/2015 (i) 898
AAA Aaa 4,500 (Department of Corrections-Madera State Prison), Series E, 5.50% due
6/01/2015 (d) 4,204
AAA Aaa 5,110 Refunding (Department of Corrections-State Prisons), Series A, 5% due
12/01/2019 (b) 4,358
A- A 1,785 (Various California State University Projects), Series A, 6.70% due
10/01/2017 1,834
A- A 3,000 (Various Community College Projects), 7% due 3/01/2014 3,156
AAA Aaa 1,955 (Various University of California Projects), Series A, 6.40% due
12/01/2016 (b) 1,997
</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>
AAA Aaa $ 2,000 California Statewide Community Development Authority Revenue Bonds, COP
(Good Samaritan Health System), 6.50% due 5/01/2024 (j) $ 2,055
AAA Aaa 1,000 Cerritos, California, Public Financing Authority Revenue Bonds (Los Coyotes
Redevelopment Project Loan), Series A, 6.50% due 11/01/2023 (b) 1,058
AAA Aaa 5,720 Contra Costa, California, Water District, Water Revenue Bonds, Series D,
6.375% due 10/01/2022 (b) 5,790
AAA Aaa 2,000 Coronado, California, Community Development Agency, Tax Allocation Revenue
Bonds (Coronado Community Development Project), 6.30% due 9/01/2022 (d) 2,013
AAA Aaa 5,000 Cucamonga County, California, Water District COP, Facilities Refinancing
Bonds, 6.50% due 9/01/2022 (c) 5,125
AAA Aaa 7,000 East Bay, California, Municipal Utility District, Wastewater Treatment
System Revenue Bonds, 6.375% due 6/01/2021 (b) 7,080
AAA Aaa 5,000 El Camino, California, Hospital District Revenue Refunding Bonds, Series A,
6.25% due 8/15/2017 (b) 5,021
AAA Aaa 3,500 Elk Grove, California, Unified School District Number 1, Community Facilities,
Special District Tax Bonds, 7% due 12/01/2017 (b) 3,785
AAA Aaa 1,000 Fairfield-Suisun, California, Sewer District, Sewer Revenue Refunding Bonds,
Series A, 6.25% due 5/01/2016 (d) 1,004
AAA Aaa 1,250 Fresno, California, Sewer Revenue Bonds, Series A1, 6.25% due 9/01/2014 (b) 1,294
BBB Baa 4,890 Inglewood, California, Public Financing Authority Revenue Bonds (Manchester-
Prairie-N. Inglewood Industrial Park Project), Series B, 7% due 5/01/2022 4,958
AAA Aaa 2,780 Los Angeles, California, Community Redevelopment Agency, Tax Allocation Bonds
(Hollywood Redevelopment Project), Series B, 6.10% due 7/01/2022 (d) 2,711
AAA Aaa 17,000 Los Angeles, California, Convention and Exhibition Center Authority, Lease
Revenue Refunding Bonds, Series A, 5.125% due 8/15/2021 (d) 14,603
AAA Aaa 2,000 Los Angeles, California, Department of Water and Power, Electric Plant Revenue
Refunding Bonds (Second Issue), 5.25% due 11/15/2026 (c) 1,728
<PAGE>
AAA Aaa 1,780 Los Angeles, California, Wastewater System Revenue Bonds, Series B, 5.70%
due 6/01/2023 (d) 1,660
AAA Aaa 1,000 Los Angeles County, California, COP (Correctional Facilities Project),
6.50% due 9/01/2013 (d) 1,027
AAA Aaa 11,950 Los Angeles County, California, Metropolitan Transportation Authority,
Sales Tax Revenue Refunding Bonds (Proposition A), Series A, 5% due 7/01/2021 (c) 10,077
M-S-R Public Power Agency, California, Revenue Bonds (San Juan Project):
AAA Aaa 955 Refunding, Series F, 6% due 7/01/2020 (b) 928
AAA Aaa 1,000 Series E, 6.50% due 7/01/2017 (d) 1,028
AA Aa 4,750 Metropolitan Water District, Southern California, Waterworks Revenue Refunding
Bonds, Series A, 5.75% due 7/01/2021 4,519
AAA Aaa 5,140 Mount Diablo, California, Unified School District, Community Facilities-
Special District Tax Bonds, 6.30% due 8/01/2022 (b) 5,175
AAA Aaa 3,000 Northern California Public Power Agency, Revenue Refunding Bonds (Hydroelectric
Project Number 1), Series A, 6.25% due 7/01/2012 (d) 3,046
</TABLE>
<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>
AAA Aaa $ 9,000 Northern California Transmission Revenue Refunding Bonds (California-Oregon
Transmission Project), Series A, 5.25% due 5/01/2020 (d) $ 7,900
AAA Aaa 1,900 Oakland, California, Redevelopment Agency Refunding Bonds, INFLOS, 7.662% due
9/01/2019 (d)(e) 1,803
AAA Aaa 4,885 Ontario, California, Redevelopment Financing Authority Revenue Bonds (Center
City-Cimarron Project 1), 6.25% due 8/01/2015 (d) 4,904
Orange County, California, Local Transportation Authority, Sales Tax Revenue
Bonds, Linked SAVRS and RIB:
AAA Aaa 8,000 6.20% due 2/14/2011 (b) 8,243
AAA Aaa 16,000 Second Series, 6.10% due 2/14/2011 (c) 16,241
AAA Aaa 1,000 Palm Springs, California, Financing Authority, Lease Revenue Bonds (Convention
Center Project), Series A, 6.75% due 11/01/2021 (d) 1,051
<PAGE>
Port Oakland, California, Port Revenue Bonds, AMT, Series E (d):
AAA Aaa 11,000 6.50% due 11/01/2016 11,163
AAA Aaa 11,495 6.40% due 11/01/2022 11,511
AAA Aaa 2,000 Rancho, California, Water District Financing Authority Revenue Bonds, RITES,
8.374% due 8/15/2021 (b)(e)(f) 2,350
AAA Aaa 1,910 Rancho Cucamonga, California, Redevelopment Agency, Tax Allocation Bonds (Rancho
Redevelopment Project), 7.125% due 9/01/2019 (d) 2,065
NR* A 2,500 Rancho Mirage, California, Joint Powers Financing Authority, COP (Eisenhower
Memorial Hospital), 7% due 3/01/2022 2,591
AAA Aaa 2,495 Rio Linda, California, Unified School District GO, UT, Series A, 6.25% due
8/01/2015 (b) 2,507
AAA Aaa 4,500 Sacramento, California, City Financing Authority, Lease Revenue Refunding
Bonds, Series A, 5.40% due 11/01/2020 (b) 4,063
Sacramento, California, Municipal Utility District, Electric Revenue Bonds (d):
AAA Aaa 1,000 Refunding, Series G, 6.50% due 9/01/2013 1,068
AAA Aaa 4,500 Series B, 6.375% due 8/15/2022 5,571
AAA Aaa 7,500 San Francisco, California, City and County International Airports Commission,
Revenue Refunding Bonds, Second Series, Issue 2, 6.75% due 5/01/2020 (d) 7,901
San Francisco, California, City and County Redevelopment Agency, Lease Revenue
Bonds (George R. Moscone Convention Center) (i):
AAA Aaa 1,200 6.80% due 7/01/2019 1,279
AAA Aaa 2,060 6.75% due 7/01/2024 2,183
AAA Aaa 2,530 San Jose, California, Redevelopment Agency, Tax Allocation Refunding Bonds
(Merged Area Redevelopment Project), 5% due 8/01/2020 (d) 2,139
AAA Aaa 4,000 San Mateo County, California, Transportation District, Sales Tax Revenue
Refunding Bonds, Series A, 8% due 6/01/2020 (d) 4,988
AAA Aaa 6,945 Santa Ana, California, Financing Authority, Lease Revenue Bonds (Police
Administration and Holding Facility), Series A, 6.25% due 7/01/2024 (d) 7,114
Santa Clara, California, Electric Revenue Bonds, Series A (d):
AAA Aaa 7,500 6.25% due 7/01/2019 7,513
AAA Aaa 1,350 6.50% due 7/01/2021 1,385
</TABLE>
<PAGE>
<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>
AAA Aaa $1,350 Santa Clara County, California, COP, Refunding Bonds (Capital Project I),
6.25% due 10/01/2016 (b) $ 1,355
Santa Clara County, California, Financing Authority, Lease Revenue Bonds (VMC
Facility Replacement Project), Series A (b):
AAA Aaa 3,540 7.75% due 11/15/2011 4,264
AAA Aaa 2,700 6.75% due 11/15/2020 2,860
AAA Aaa 8,875 Santa Fe Springs, California, Redevelopment Agency, Tax Allocation Revenue
Bonds (Construction Redevelopment Project), Series A, 6.40% due 9/01/2022 (d) 9,030
AAA Aaa 2,185 Santa Rosa, California, High School District GO, UT, 6.375% due 5/01/2016 (d) 2,223
AAA Aaa 4,300 Santa Rosa, California, Water Revenue Bonds (Sub-Regional Wastewater Project),
Series A, 6.50% due 9/01/2016 (b) 4,418
AAA Aaa 1,500 Stockton, California, COP, Revenue Bonds (Wastewater Treatment Plant Expansion),
Series A, 6.80% due 9/01/2024 (c) 1,598
AAA Aaa 4,950 University of California Revenue Bonds (Multiple Purpose Projects), Series D,
6.375% due 9/01/2024 (d) 5,010
AAA Aaa 8,250 West Sacramento, California, Redevelopment Agency, Tax Allocation Bonds
(West Sacramento Redevelopment Project), 6.25% due 9/01/2021 (d) 8,265
Total Investments (Cost--$306,671)--95.8% 309,317
Other Assets Less Liabilities--4.2% 13,451
--------
Net Assets--100.0% $322,768
========
<FN>
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at April 30, 1995.
(b)AMBAC Insured.
(c)FGIC Insured
(d)MBIA Insured
(e)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, 1995.
(f)Prerefunded.
(g)GNMA Collateralized.
(h)FHLMC Collateralized.
(i)Capital Guaranty Insured.
(j)CAPMAC Insured.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
<PAGE>
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of April 30, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$306,670,664) (Note 1a) $309,316,533
Cash 50,887
Receivables:
Securities sold $ 8,968,688
Interest 5,977,516 14,946,204
------------
Deferred organization expenses (Note 1e) 18,439
Prepaid expenses and other assets 102,652
------------
Total assets 324,434,715
------------
Liabilities: Payables:
Securities purchased 1,053,042
Dividends to shareholders (Note 1f) 361,308
Investment adviser (Note 2) 125,781 1,540,131
------------
Accrued expenses and other liabilities 126,409
------------
Total liabilities 1,666,540
------------
Net Assets: Net assets $322,768,175
============
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.10 per share (4,000 shares
of AMPS* issued and outstanding at $25,000 per share
liquidation preference) $100,000,000
Common Stock, par value $.10 per share (16,328,873 shares
issued and outstanding) $ 1,632,887
Paid-in capital in excess of par 227,673,373
Undistributed investment income--net 1,778,507
Accumulated realized capital losses on investments--net (Note 5) (10,962,461)
Unrealized appreciation on investments--net 2,645,869
------------
Total--Equivalent to $13.64 net asset value per share of
Common Stock (market price--$12.625) 222,768,175
------------
Total capital $322,768,175
============
<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, 1995
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 9,816,093
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 771,116
Commission fees (Note 4) 125,808
Professional fees 44,677
Transfer agent fees 29,876
Printing and shareholder reports 25,521
Accounting services (Note 2) 22,323
Listing fees 12,121
Directors' fees and expenses 11,025
Custodian fees 8,405
Pricing fees 5,451
Amortization of organization expenses (Note 1e) 3,380
Other 15,958
------------
Total expenses 1,075,661
------------
Investment income--net 8,740,432
------------
Realized & Realized loss on investments (9,246,959)
Unrealized Change in unrealized appreciation/depreciation on investments--net 21,843,513
Gain (Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 21,336,986
(Notes 1b, 1d ============
& 3):
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 1995 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 8,740,432 $ 18,002,892
Realized loss on investments--net (9,246,959) (1,662,888)
Change in unrealized appreciation/depreciation on invest-
ments--net 21,843,513 (44,359,302)
------------ ------------
Net increase (decrease) in net assets resulting from operations 21,336,986 (28,019,298)
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (7,026,592) (14,563,738)
Shareholders Preferred Stock (1,796,740) (2,943,730)
(Note 1f): Realized gain on investments--net:
Common Stock -- (276,122)
Preferred Stock -- (47,570)
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (8,823,332) (17,831,160)
------------ ------------
Net Assets: Total increase (decrease) in net assets 12,513,654 (45,850,458)
Beginning of period 310,254,521 356,104,979
------------ ------------
End of period* $322,768,175 $310,254,521
============ ============
<FN>
*Undistributed investment income--net $ 1,778,507 $ 1,861,407
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
For the For the
Six Period
The following per share data and ratios have been derived Months For the June 26
from information provided in the financial statements. Ended Year Ended 1992++ to
April 30, October 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 12.88 $ 15.68 $ 13.25 $ 14.18
Operating -------- -------- -------- --------
Performance: Investment income--net .54 1.10 1.10 .28
Realized and unrealized gain (loss) on invest-
ments--net .76 (2.81) 2.45 (.87)
-------- -------- -------- --------
Total from investment operations 1.30 (1.71) 3.55 (.59)
-------- -------- -------- --------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net (.43) (.89) (.93) (.18)
Realized gain on investments--net -- (.02) (.02) --
-------- -------- -------- --------
Total dividends and distributions to Common Stock
shareholders (.43) (.91) (.95) (.18)
-------- -------- -------- --------
Capital charge resulting from issuance of Common
Stock -- -- -- (.02)
-------- -------- -------- --------
Effect of Preferred Stock activity:++++
Dividends and distributions to Preferred Stock
shareholders:
Investment income--net (.11) (.18) (.17) (.02)
Capital charge resulting from issuance of
Preferred Stock -- -- -- (.12)
-------- -------- -------- --------
Total effect of Preferred Stock activity (.11) (.18) (.17) (.14)
-------- -------- -------- --------
Net asset value, end of period $ 13.64 $ 12.88 $ 15.68 $ 13.25
======== ======== ======== ========
Market price per share, end of period $ 12.625 $ 11.25 $ 15.00 $ 14.875
======== ======== ======== ========
Total Investment Based on market price per share 16.21%+++ (19.71%) 7.48% .44%+++
Return:** ======== ======== ======== ========
Based on net asset value per share 9.66%+++ (12.06%) 26.13% (5.36%)+++
======== ======== ======== ========
<PAGE>
Ratios to Average Expenses, net of reimbursement .70%* .68% .63% .13%*
Net Assets:*** ======== ======== ======== ========
Expenses .70%* .68% .64% .63%*
======== ======== ======== ========
Investment income--net 5.68%* 5.34% 5.27% 5.33%*
======== ======== ======== ========
Supplemental Net assets, net of Preferred Stock, end of
Data: period (in thousands) $222,768 $210,255 $256,105 $211,776
======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $100,000 $100,000 $100,000 $100,000
======== ======== ======== ========
Portfolio turnover 35.35% 38.06% 15.17% 32.97%
======== ======== ======== ========
Dividends Per Series A--Investment income--net $ 461 $ 684 $ 644 $ 94
Share on Series B--Investment income--net 437 788 740 101
Preferred Stock
Outstanding:++++++
<FN>
*Annualized.
**Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, may 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.
++Commencement of Operations.
++++The Fund's Preferred Stock was issued on September 16, 1992.
++++++Dividends per share have been adjusted to reflect a two-for-
one stock split.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniYield California Insured Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a non-diversified,
closed-end management investment company. These unaudited financial
statements reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the
interim period presented. All such adjustments are of a normal
recurring nature. 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 MIC. The following is a summary of
significant accounting policies followed by the Fund.
<PAGE>
(a) Valuation of investments--Municipal bonds are traded primarily
in the over-the-counter markets 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 securities. Financial
futures contracts and options thereon, which are traded on
exchanges, are valued at their closing prices as of the close of
such exchanges. 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. Securities with
remaining maturities of sixty days or less are valued at amortized
cost, which approximates market value. Securities for which market
quotations are not readily available are valued at their fair value
as determined in good faith by or under the direction of the Board
of Directors of the Fund.
(b) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* 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
securities 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
margin as required by the exchange on which the transaction 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.
<PAGE>
* Options--The Fund is authorized to write covered call options and
purchase put options. When the Fund writes an option, an amount
equal to the premium received by the Fund is reflected as an asset
and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written. When a security is purchased or sold through an
exercise of an option, the related premium paid (or received) is
added to (or deducted from) the basis of the security acquired or
deducted from (or added to) the proceeds of the security sold. When
an option expires (or the Fund enters into a closing transaction),
the Fund realizes a gain or loss on the option to the extent of the
premiums received or paid (or gain or loss to the extent the cost of
the closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(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.
(e) Deferred organization expenses--Deferred organization expenses
are amortized on a straight-line basis over a five-year period.
NOTES TO FINANCIAL STATEMENTS (concluded)
(f) 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"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
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 0.50% of
the Fund's average weekly net assets.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, 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, 1995 were $107,547,782 and
$130,912,490, respectively.
Net realized and unrealized gains (losses) as of April 30, 1995 were
as follows:
Realized Unrealized
Losses Gains
Long-term investments $(4,494,440) $2,645,869
Short-term investments (814,024) --
Financial futures contracts (3,938,495) --
----------- ----------
Total $(9,246,959) $2,645,869
=========== ==========
As of April 30, 1995, net unrealized appreciation for Federal income
tax purposes aggregated $2,645,869, of which $5,344,335 related to
appreciated securities and $2,698,466 related to depreciated
securities. The aggregate cost of April 30, 1995 for Federal income
tax purposes was $306,670,664.
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 holders of Common Stock.
Common Stock
For the six months ended April 30, 1995, shares issued and
outstanding remained constant at 16,328,873. At April 30, 1995,
total paid-in capital amounted to $229,306,260.
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 yields in effect at April 30, 1995 were as
follows: Series A, 4.05% and Series B, 4.50%.
A two-for-one stock split occurred on December 1, 1994. As a result,
at April 30, 1995, there were 4,000 AMPS shares authorized, issued
and outstanding with a liquidation preference of $25,000 per share,
plus accumulated and unpaid dividends of $129,183.
<PAGE>
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from 0.25% to 0.375%,
calculated on the proceeds of each auction. For the six months ended
April 30, 1995, MLPF&S, an affiliate of FAM, earned $81,255 as
commissions.
5. Capital Loss Carryforward:
At October 31, 1994, the Fund had a capital loss carryforward of
approximately $1,715,000, all of which expires in 2002. This amount
will be available to offset like amounts of any future taxable
gains.
6. Subsequent Event:
On May 9, 1995, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$.068120 per share, payable on May 30, 1995 to shareholders of
record as of May 19, 1995.
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, 1993 to July 31, 1993 $.27 $ .02 $ .19 $.23 $.04 -- --
August 1, 1993 to October 31, 1993 .27 -- .66 .23 .04 -- --
November 1, 1993 to January 31, 1994 .28 .06 .05 .22 .04 $.02 --
February 1, 1994 to April 30, 1994 .27 (.08) (1.91) .21 .04 -- --
May 1, 1994 to July 31, 1994 .27 -- .26 .23 .05 -- --
August 1, 1994 to October 31, 1994 .28 (.08) (1.11) .23 .05 -- --
November 1, 1994 to January 31, 1995 .28 (.48) .99 .22 .06 -- --
February 1, 1995 to April 30, 1995 .26 (.09) .34 .21 .05 -- --
<CAPTION>
Net Asset Value Market Price**
For the Quarter High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
May 1, 1993 to July 31, 1993 $15.25 $14.73 $15.25 $14.75 910
August 1, 1993 to October 31, 1993 15.99 15.03 15.75 14.875 1,422
November 1, 1993 to January 31, 1994 15.79 15.08 15.25 14.00 1,655
February 1, 1994 to April 30, 1994 15.73 13.05 14.75 12.50 1,663
May 1, 1994 to July 31, 1994 14.37 13.41 13.75 12.75 1,289
August 1, 1994 to October 31, 1994 14.09 12.87 13.375 11.25 1,950
November 1, 1994 to January 31, 1995 13.42 11.75 12.75 10.25 4,511
February 1, 1995 to April 30, 1995 14.02 13.42 13.00 12.375 1,372
<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>
