MUNIYIELD
CALIFORNIA
INSURED
FUND, INC.
FUND LOGO
Annual Report
October 31, 1995
<PAGE>
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
<PAGE>
MuniYield California Insured Fund, Inc.
TO OUR SHAREHOLDERS
For the year ended October 31, 1995, the Common Stock of MuniYield
California Insured Fund, Inc. earned $0.832 per share income
dividends, which included earned and unpaid dividends of $0.069.
This represents a net annualized yield of 5.77%, based on a
month-end net asset value of $14.43 per share. Over the same period,
the total investment return on the Fund's Common Stock was +19.81%,
based on a change in per share net asset value from $12.88 to
$14.43, and assuming reinvestment of $0.838 per share income
dividends.
For the six-month period ended October 31, 1995, the total
investment return on the Fund's Common Stock was +9.26%, based on a
change in per share net asset value from $13.64 to $14.43, and
assuming reinvestment of $0.408 per share income dividends.
For the six-month period ended October 31, 1995, the Fund's Auction
Market Preferred Stock had an average yield of 3.54% for Series A
and 4.16% for Series B.
The Municipal Market
Tax-exempt bond yields continued to decline during the six-month
period ended October 31, 1995. As measured by the Bond Buyer Revenue
Bond Index, the yield on uninsured, long-term municipal revenue
bonds fell 30 basis points (0.30%) to end the October period at
approximately 6.00%. While tax-exempt bond yields have declined
dramatically from their highs one year ago, municipal bond yields
have exhibited considerable yield volatility on a weekly basis. In
recent months, tax-exempt bond yields have fluctuated by as much as
20 basis points on a week-to-week basis. US Treasury bond yields
have displayed similar volatility, but the extent of their decline
has been greater. By the end of October, long-term US Treasury bond
yields had declined almost 100 basis points to 6.33%. Proposed
Federal tax restructuring continued to weigh heavily on the
tax-exempt bond market. Thus far in 1995, US Treasury bond yields
have declined approximately 150 basis points. Municipal bond yields
have fallen approximately 95 basis points as the uncertainty
surrounding any changes to the existing Federal income tax structure
has prevented the municipal bond market from rallying as strongly as
its taxable counterpart.
<PAGE>
A general view of a moderately expanding domestic economy, supported
by a very favorable inflationary environment, allowed interest rates
to significantly decline from their recent highs in November 1994.
However, this decline was not a smooth downward curve. Conflicting
economic indicators were released during recent months that have
prevented a clear consensus regarding the near-term direction of
interest rates from being reached. The resultant uncertainty has
promoted more of a saw-toothed pattern as interest rate declines
were repeatedly interrupted by indications of stronger-than-expected
economic growth. As these concerns were overcome by subsequent
weaker economic releases, interest rate declines have resumed. These
periods of volatility are likely to continue for the remainder of
1995, or until proposed Federal budget deficit reduction packages
are resolved and any resultant responses by the Federal Reserve
Board have occurred.
However, the municipal bond market's technical position remained
supportive throughout recent quarters. Approximately $82 billion in
long-term municipal securities were issued during the six months
ended October 31, 1995. While this issuance is virtually identical
to underwritings during the October 31, 1994 quarter, tax-exempt
bond issuance over the last 12 months remained approximately 25%
below comparable 1994 levels. The municipal bond market should
maintain this positive technical position well into 1996. Annual
issuance for 1995 is now projected to be approximately $140 billion,
significantly less than last year's already low level of $162
billion. Projected maturities and early redemptions for the
remainder of 1995 and throughout 1996 will lead to a continued
decline in the total outstanding municipal bond supply throughout
1996 and, perhaps, into 1998 should new bond issuance remain at
historically low levels.
Despite the municipal bond market's relative underperformance
compared to the US Treasury market thus far in 1995, the extent of
the tax-exempt bond market's rally was nonetheless quite impressive.
Municipal bond yields have fallen 135 basis points from their highs
reached in November 1994 and municipal bond prices rose accordingly.
Most tax-exempt products recouped almost all of the losses incurred
in 1994 and are well on their way to posting double-digit total
returns for all of 1995. This relative underperformance so far in
1995 provided long-term investors with the rare opportunity to
purchase tax-exempt securities at yield levels near those of taxable
securities.
<PAGE>
Additionally, many of the factors that led to the relative
underperformance of the tax-exempt bond market thus far in 1995,
namely investor concern regarding Federal budget deficit reductions
and proposed changes in the Federal income tax structure, are
nearing resolution. The Federal budget reconciliation process has
already begun, and may be essentially completed by year-end. Recent
public opinion polls suggest that the majority of American taxpayers
prefer the existing Federal income tax system compared to proposed
changes, such as the flat tax or national sales tax. In an upcoming
election year, neither party is likely to advocate a clearly
unpopular position, particularly one that can be expected to
negatively impact the Federal budget deficit reduction program
through reduced tax revenues. As these factors are resolved, we
believe that much of the resistance that the municipal bond market
met this year should dissipate. This should allow municipal bond
yields to significantly decline from current levels in order to
return to more normal historic yield relationships.
Portfolio Strategy
For the fiscal year ended October 31, 1995, our portfolio strategy
was essentially constructive. However, within this period there were
a few months of volatility that we took advantage of to purchase
bonds that we believed would better suit our optimistic outlook. We
sought to anticipate shifts in investor sentiment, whether they were
motivated by perceived changes in economic conditions or the belief
that interest rates had gone too high. The Fund was positioned
accordingly throughout the 12-month period to take full advantage of
the declining interest rate environment.
The only constant throughout the 12-month period was that cash
reserves were kept at minimum levels. This was done for two reasons:
First, to enhance income for the shareholders, and second, to keep
reserves low out of concern about an extremely tight technical
market for California bonds. Compared to the prior 12 months,
California bond issuance declined 42%. Looking ahead, our strategy
will continue to focus on seeking to provide an attractive total
return and a generous level of tax-exempt income for our
shareholders.
In Conclusion
We appreciate your ongoing interest in MuniYield California Insured
Fund, Inc., and we look forward to assisting you with your financial
needs in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
<PAGE>
(Vincent R. Giordano)
Vincent R. Giordano
Vice President
(Walter C. O'Connor)
Walter C. O'Connor
Portfolio Manager
December 1, 1995
We are pleased to announce that Walter C. O'Connor is responsible
for the day to-day management of MuniYield California Insured Fund,
Inc. Mr. O'Connor has been employed by Merrill Lynch Asset
Management, L.P. (an affiliate of the Fund's investment adviser)
since 1993 as Vice President and Portfolio Manager, and was
Assistant Vice President from 1991 to 1993. Prior thereto, he was
Assistant Vice President with Prudential Securities from 1984 to
1991.
<TABLE>
PROXY RESULTS
<CAPTION>
During the six-month period ended October 31, 1995, MuniYield
California Insured Fund, Inc. Common Stock shareholders voted on the
following proposals. The proposals were approved at a special
shareholders' meeting on June 16, 1995. The description of each
proposal and number of shares voted are as follows:
Shares Shares Voted
Voted For Without Authority
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors: Herbert I. London 15,624,314 416,978
Robert R. Martin 15,623,396 417,896
Arthur Zeikel 15,622,497 418,795
<PAGE>
<CAPTION>
Shares Shares Voted Shares Voted
Voted For Against Abstain
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the
Fund's independent auditors for the current fiscal year. 15,531,526 107,928 401,837
<CAPTION>
During the six-month period ended October 31, 1995, MuniYield
California Insured Fund, Inc. Preferred Stock shareholders voted on
the following proposals. The proposals were approved at a special
shareholders' meeting on June 16, 1995. The description of each
proposal and number of shares voted are as follows:
Shares Shares Voted
Voted For Without Authority
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors: Herbert I. London,
Robert R. Martin, Joseph L. May, Andre F. Perold
and Arthur Zeikel as follows:
Series A 1,746 10
Series B 1,821 0
<CAPTION>
Shares Shares Voted Shares Voted
Voted For Against Abstain
<S> <S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent auditors for the current fiscal year as follows:
Series A 1,746 0 10
Series B 1,821 0 0
</TABLE>
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.
<PAGE>
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.
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.
<PAGE>
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
GO General Obligation Bonds
HFA Housing Finance Agency
INFLOS Inverse Floating Rate Municipal Bonds
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITES Residual Interest Tax-Exempt Securities
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
California--97.8%
<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) $ 2,091
AAA Aaa 2,000 Beverly Hills, California, Public Financing Authority, Lease Revenue
Bonds, Series A, INFLOS, 6.77% due 6/01/2015 (d)(e) 1,893
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) 3,030
A1+ VMIG1++ 600 (Catholic Health Care), VRDN, Series C, 3.60% due 7/01/2020 (a)(d) 600
AAA Aaa 4,500 (Centinela Medical Hospital), 6.25% due 9/01/2015 (d) 4,673
AAA Aaa 1,415 (Kaiser Permanente), Series A, 7% due 10/01/2018 (b) 1,563
AAA Aaa 2,750 (Scripps Memorial Hospital), Series A, 6.375% due 10/01/2022 (d) 2,872
California HFA, Home Mortgage Revenue Bonds:
AA- Aa 265 AMT, Series B, 8% due 8/01/2029 282
AA- Aa 4,260 AMT, Series F-1, 7% due 8/01/2026 4,466
AA- Aa 6,000 AMT, Series G, 7.05% due 8/01/2027 6,238
AA- Aa 2,100 Series A, 6.55% due 8/01/2026 2,160
AA- Aa 1,950 California HFA, Revenue Bonds, AMT, RIB, 8.777% due 8/01/2023 (e) 2,033
California Pollution Control Financing Authority, PCR, VRDN (a):
A1+ VMIG1++ 300 Refunding (Shell Oil Co. Project), Series A, 3.80% due 10/01/2007 300
A1 P1 1,300 (Southern California Edison), Series D, 3.75% due 2/28/2008 1,300
NR* P1 100 California Pollution Control Financing Authority, Resource Recovery Revenue
Bonds (Delano Project), VRDN, AMT, Series 1991, 4% due 8/01/2019 (a) 100
<PAGE>
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) 1,118
California State GO, UT (c):
AAA Aaa 1,700 6.80% due 11/01/2009 1,912
AAA Aaa 5,000 6.90% due 11/01/2011 5,602
AAA Aaa 2,700 7% due 11/01/2014 3,044
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 2,669
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) 947
AAA Aaa 4,500 (Department of Corrections-Madera State Prison), Series E, 5.50% due
6/01/2015 (d) 4,426
AAA Aaa 5,110 Refunding (Department of Corrections-State Prisons), Series A, 5% due
12/01/2019 (b) 4,657
A- A 1,785 (Various California State University Projects), Series A, 6.70% due
10/01/2017 1,879
A- A 3,000 (Various Community College Projects), 7% due 3/01/2014 3,266
</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>
California Statewide Community Development Authority Revenue Bonds, COP:
AAA Aaa $ 2,000 (Good Samaritan Health System), 6.50% due 5/01/2024 (j) $ 2,227
AA Aa 1,750 (Saint Joseph Health System Group), 6.50% due 7/01/2015 1,859
AAA Aaa 3,000 Cerritos, California, Public Financing Authority, Revenue Refunding Bonds
(Los Coyotes Redevelopment Project Loan), Series A, 6.50% due 11/01/2023 (b) 3,366
AAA Aaa 7,000 Compton, California, Community Redevelopment Agency, Tax Allocation Refunding
Bonds (Compton Redevelopment Project), Series A, 6.50% due 8/01/2013 (i) 7,555
AAA Aaa 5,720 Contra Costa, California, Water District, Water Revenue Bonds, Series D, 6.375%
due 10/01/2022 (b) 5,999
AAA Aaa 5,000 Cucamonga County, California, Water District COP, Facilities Refinancing Bonds,
6.50% due 9/01/2022 (c) 5,301
<PAGE>
AAA Aaa 7,000 East Bay, California, Municipal Utility District, Wastewater Treatment System
Revenue Bonds, 6.375% due 6/01/2021 (b) 7,335
AAA Aaa 5,000 El Camino, California, Hospital District Revenue Refunding Bonds, Series A,
6.25% due 8/15/2017 (b) 5,159
AAA Aaa 3,500 Elk Grove, California, Unified School District Number 1, Community Facilities,
Special District Tax Bonds, 7% due 12/01/2003 (b)(f) 4,123
AAA Aaa 1,000 Fairfield-Suisun, California, Sewer District, Sewer Revenue Refunding Bonds,
Series A, 6.25% due 5/01/2016 (d) 1,040
AAA Aaa 1,250 Fresno, California, Sewer Revenue Bonds, Series A-1, 6.25% due 9/01/2014 (b) 1,354
BBB Baa 4,825 Inglewood, California, Public Financing Authority Revenue Bonds (Manchester-
Prairie-N. Inglewood Industrial Park Project), Series B, 7% due 5/01/2022 4,997
Los Angeles, California, Community Redevelopment Agency, Tax Allocation Refunding
Bonds (Bunker), Series C (d)(f):
AAA Aaa 1,500 6% due 12/01/2001 1,652
AAA Aaa 1,000 6.80% due 12/01/2001 1,143
Los Angeles, California, Convention and Exhibition Center Authority, Lease
Revenue Refunding Bonds, Series A (d):
AAA Aaa 6,750 5.375% due 8/15/2018 6,455
AAA Aaa 6,500 5.125% due 8/15/2021 5,981
Los Angeles, California, Department of Water and Power, Electric Plant Revenue
Bonds:
AAA Aaa 2,500 Refunding, 5.375% due 9/01/2023 (d) 2,380
AAA Aaa 2,000 Refunding, Second Issue, 5.25% due 11/15/2026 (c) 1,848
AAA Aaa 1,885 Second Issue, 5.125% due 10/15/2024 (d) 1,722
A- A 1,400 Los Angeles, California, State Building Authority, Lease Revenue Refunding Bonds
(California State Department of General Services), Series A, 5.625% due 5/01/2011 1,379
AAA Aaa 1,000 Los Angeles County, California, COP (Correctional Facilities Project), 6.50% due
9/01/2013 (d) 1,051
Los Angeles County, California, Metropolitan Transportation Authority, Sales Tax
Revenue Bonds:
AAA Aaa 1,000 (Proposition C-Second Senior), Series B, 5.25% due 7/01/2023 (b) 935
AAA Aaa 2,500 (Proposition C), Second Series A, 5% due 7/01/2025 (b) 2,247
AAA Aaa 9,250 Refunding (Proposition A), Series A, 5% due 7/01/2021 (c) 8,359
A1+ VMIG1++ 1,300 Refunding (Proposition C-Second Senior), VRDN, Series A, 3.85% due
7/01/2020 (a)(d) 1,300
<PAGE>
AA Aa 1,000 Los Angeles County, California, Sanitation Districts Financing Authority Revenue
Bonds (Capital Projects), Series A, 5% due 10/01/2023 882
</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>
Los Angeles County, California, Transportation Commission, Sales Tax Revenue
Bonds, Series A (f):
AAA Aaa $ 1,000 6.75% due 7/01/2001 (c) $ 1,133
AAA Aaa 1,000 (Proposition C-Second Senior), 6.50% due 7/01/2002 (d) 1,130
AAA Aaa 6,475 M-S-R Public Power Agency, California, Revenue Bonds (San Juan Project),
Series E, 6.50% due 7/01/2017 (d) 6,846
Metropolitan Water District, Southern California, Waterworks Revenue Bonds,
Series A:
AAA Aaa 5,400 5.50% due 7/01/2025 (d) 5,268
AA Aa 4,750 Refunding, 5.75% due 7/01/2021 4,769
AAA Aaa 3,000 Mount Diablo, California, Unified School District, Community Facilities-
Special District Number 1 Tax Bonds, 6.30% due 8/01/2022 (b) 3,127
Northern California Public Power Agency, Revenue Refunding Bonds (Hydroelectric
Project No. 1), Series A (d):
AAA Aaa 3,000 6.25% due 7/01/2012 3,155
AAA Aaa 1,500 5.50% due 7/01/2023 1,448
AAA Aaa 9,000 Northern California Transmission Revenue Refunding Bonds (California-Oregon
Transmission Project), Series A, 5.25% due 5/01/2020 (d) 8,491
AAA Aaa 1,900 Oakland, California, Redevelopment Agency Refunding Bonds, INFLOS, 7.865% due
9/01/2019 (d)(e) 1,905
Orange County, California, Local Transportation Authority, Sales Tax Revenue Bonds:
AAA Aaa 8,000 6.20% due 2/14/2011 (b) 8,453
AAA Aaa 16,000 Second Series, 6.10% due 2/14/2011 (c) 16,504
AAA Aaa 2,000 Orchard, California, School District, GO, Series A, 6.50% due 8/01/2019 (c) 2,143
AAA Aaa 1,000 Palm Springs, California, Financing Authority, Lease Revenue Bonds (Convention
Center Project), Series A, 6.75% due 11/01/2021 (d) 1,077
AAA Aaa 11,000 Port Oakland, California, Port Revenue Bonds, AMT, Series E, 6.50% due
11/01/2016 (d) 11,542
<PAGE>
AAA Aaa 2,000 Rancho, California, Water District Financing Authority Revenue Bonds,
RITES, 8.974% due 9/11/2001 (b)(e)(f) 2,480
AAA Aaa 1,910 Rancho Cucamonga, California, Redevelopment Agency, Tax Allocation Bonds (Rancho
Redevelopment Project), 7.125% due 9/01/2019 (d) 2,119
NR* A 4,900 Rancho Mirage, California, Joint Powers Financing Authority, COP (Eisenhower
Memorial Hospital), 7% due 3/01/2022 5,142
AAA Aaa 4,500 Sacramento, California, City Financing Authority, Lease Revenue Refunding Bonds,
Series A, 5.40% due 11/01/2020 (b) 4,356
Sacramento, California, Municipal Utility District, Electric Revenue Bonds (d):
AAA Aaa 3,000 Refunding, Series D, 5.25% due 11/15/2020 2,813
AAA Aaa 1,000 Refunding, Series G, 6.50% due 9/01/2013 1,105
AAA Aaa 8,500 Series B, 6.375% due 8/15/2022 8,921
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) 8,204
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 1,304
AAA Aaa 2,060 6.75% due 7/01/2024 2,233
AAA Aaa 1,000 San Francisco, California, City and County Sewer Revenue Refunding Bonds,
5.375% due 10/01/2022 (c) 956
</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>
AAA Aaa $ 2,530 San Jose, California, Redevelopment Agency, Tax Allocation Refunding Bonds
(Merged Area Redevelopment Project), 5% due 8/01/2020 (d) $ 2,290
AAA Aaa 4,000 San Mateo County, California, Transportation District, Sales Tax Revenue
Refunding Bonds, Series A, 8% due 6/01/2020 (d) 5,254
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) 7,553
<PAGE>
Santa Clara, California, Electric Revenue Bonds, Series A (d):
AAA Aaa 6,000 6.25% due 7/01/2019 6,229
AAA Aaa 1,350 6.50% due 7/01/2021 1,432
AAA Aaa 1,350 Santa Clara County, California, COP, Refunding Bonds (Capital Project I), 6.25%
due 10/01/2016 (b) 1,399
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 4,356
AAA Aaa 2,700 6.75% due 11/15/2020 2,943
AAA Aaa 5,000 Santa Fe Springs, California, Redevelopment Agency, Tax Allocation Bonds
(Consolidated Redevelopment Project), Series A, 6.40% due 9/01/2022 (d) 5,258
AAA Aaa 2,185 Santa Rosa, California, High School District GO, UT, 6.375% due 5/01/2016 (d) 2,315
AAA Aaa 4,300 Santa Rosa, California, Wastewater Revenue Bonds (Sub-Regional Wastewater
Project), Series A, 6.50% due 9/01/2016 (b) 4,539
AA- Aa 5,000 Southern California Public Power Authority, Revenue Refunding Bonds (Power
Project), Series A, 5% due 7/01/2015 4,518
AAA Aaa 1,500 Stockton, California, COP, Revenue Bonds (Wastewater Treatment Plant Expansion),
Series A, 6.80% due 9/01/2024 (c) 1,635
AAA Aaa 2,000 Suisun City, California, Redevelopment Agency, Tax Allocation Refunding Bonds
(Suisun City Redevelopment Project), 5.50% due 10/01/2023 (d) 1,939
AAA Aaa 10,000 University of California, Revenue Refunding Bonds (Multiple Purpose Projects),
Series C, 5% due 9/01/2023 (b) 9,002
Total Investments (Cost--$313,753)--97.8% 328,056
Other Assets Less Liabilities--2.2% 7,547
--------
Net Assets--100.0% $335,603
========
<PAGE>
<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 October 31, 1995.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)MBIA Insured.
(e)The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rate shown is the
rate in effect at October 31, 1995.
(f)Prerefunded.
(g)GNMA Collateralized.
(h)FHLMC Collateralized.
(i)CGIC Insured.
(j)CAPMAC Insured.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of October 31, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$313,753,382) (Note 1a) $328,055,900
Cash 1,935,193
Interest receivable 6,105,820
Deferred organization expenses (Note 1e) 11,514
Prepaid expenses and other assets 11,826
------------
Total assets 336,120,253
------------
Liabilities: Payables:
Dividends to shareholders (Note 1f) $ 280,266
Investment adviser (Note 2) 146,019 426,285
------------
Accrued expenses and other liabilities 91,270
------------
Total liabilities 517,555
------------
Net Assets: Net assets $335,602,698
============
<PAGE>
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 1,935,840
Accumulated realized capital losses on investments--net (Note 5) (9,941,920)
Unrealized appreciation on investments--net 14,302,518
------------
Total--Equivalent to $14.43 net asset value per share of
Common Stock (market price--$12.625) 235,602,698
------------
Total capital $335,602,698
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Year Ended
October 31, 1995
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 19,757,553
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 1,609,953
Commission fees (Note 4) 263,916
Professional fees 79,941
Transfer agent fees 57,717
Accounting services (Note 2) 56,965
Printing and shareholder reports 51,050
Listing fees 26,144
Directors' fees and expenses 23,861
Custodian fees 16,053
Pricing fees 10,692
Amortization of organization expenses (Note 1e) 6,925
Other 32,352
------------
Total expenses 2,235,569
------------
Investment income--net 17,521,984
------------
Realized & Realized loss on investments--net (8,226,418)
Unrealized Gain Change in unrealized appreciation/depreciation on investments--net 33,500,162
(Loss) on ------------
Investments Net Increase in Net Assets Resulting from Operations $ 42,795,728
- --Net (Notes 1b, ============
1d & 3):
</TABLE>
<PAGE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended
October 31,
Increase (Decrease) in Net Assets: 1995 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 17,521,984 $ 18,002,892
Realized loss on investments--net (8,226,418) (1,662,888)
Change in unrealized appreciation/depreciation on
investments--net 33,500,162 (44,359,302)
------------ ------------
Net increase (decrease) in net assets resulting from operations 42,795,728 (28,019,298)
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (13,688,151) (14,563,738)
Shareholders Preferred Stock (3,759,400) (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 (17,447,551) (17,831,160)
------------ ------------
Net Assets: Total increase (decrease) in net assets 25,348,177 (45,850,458)
Beginning of year 310,254,521 356,104,979
------------ ------------
End of year* $335,602,698 $310,254,521
============ ============
<FN>
*Undistributed investment income--net $ 1,935,840 $ 1,861,407
============ ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<PAGE>
<TABLE>
Financial Highlights
<CAPTION>
For the
Period
The following per share data and ratios have been derived June 26,
from information provided in the financial statements. For the Year Ended 1992++ to
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 1.09 1.10 1.10 .28
Realized and unrealized gain (loss) on
investments--net 1.53 (2.81) 2.45 (.87)
-------- -------- -------- --------
Total from investment operations 2.62 (1.71) 3.55 (.59)
-------- -------- -------- --------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net (.84) (.89) (.93) (.18)
Realized gain on investments--net -- (.02) (.02) --
-------- -------- -------- --------
Total dividends and distributions to Common Stock
shareholders (.84) (.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 (.23) (.18) (.17) (.02)
Capital charge resulting from issuance
of Preferred Stock -- -- -- (.12)
-------- -------- -------- --------
Total effect of Preferred Stock activity (.23) (.18) (.17) (.14)
-------- -------- -------- --------
Net asset value, end of period $ 14.43 $ 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 20.01% (19.71%) 7.48% .44%+++
Return:** ======== ======== ======== ========
Based on net asset value per share 19.81% (12.06%) 26.13% (5.36%)+++
======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement .70% .68% .63% .13%*
Net Assets:*** ======== ======== ======== ========
Expenses .70% .68% .64% .63%*
======== ======== ======== ========
Investment income--net 5.45% 5.34% 5.27% 5.33%*
======== ======== ======== ========
<PAGE>
Supplemental Net assets, net of Preferred Stock, end of period
Data: (in thousands) $235,603 $210,255 $256,105 $211,776
======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $100,000 $100,000 $100,000 $100,000
======== ======== ======== ========
Portfolio turnover 83.26% 38.06% 15.17% 32.97%
======== ======== ======== ========
Dividends Per Series A--Investment income--net $ 912 $ 684 $ 644 $ 94
Share on Series B--Investment income--net 967 788 740 101
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. 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 and assets for
which market quotations are not readily available are valued at 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 Board of Directors.
(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.
* 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).
<PAGE>
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.
(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.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended October 31, 1995 were $257,831,713 and
$267,953,112, respectively.
<PAGE>
Net realized and unrealized gains (losses) as of October 31, 1995
were as follows:
Realized Unrealized
Losses Gains
Long-term investments $(3,473,661) $14,302,518
Short-term investments (814,262) --
Financial futures contracts (3,938,495) --
----------- -----------
Total $(8,226,418) $14,302,518
=========== ===========
As of October 31, 1995, net unrealized appreciation for Federal
income tax purposes aggregated $13,462,518, of which $13,777,852
related to appreciated securities and $315,334 related to
depreciated securities. The aggregate cost as of October 31, 1995
for Federal income tax purposes was $314,593,382.
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 year ended October 31, 1995, shares issued and outstanding
remained constant at 16,328,873. At October 31, 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 October 31, 1995 were as
follows: Series A, 3.60% and Series B, 3.40%.
A two-for-one stock split occurred on December 1, 1994. As a result,
as of October 31, 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 $83,563.
<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 year ended
October 31, 1995, MLPF&S, an affiliate of FAM, earned $96,584 as
commissions.
5. Capital Loss Carryforward:
At October 31, 1995, the Fund had a capital loss carryforward of
approximately $6,102,000, of which $1,715,000 expires in 2002 and
$4,387,000 expires in 2003. This amount will be available to offset
like amounts of any future taxable gains.
6. Subsequent Event:
On November 13, 1995, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the amount
of $.068995 per share, payable on November 29, 1995 to shareholders
of record as of November 24, 1995.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
MuniYield California Insured Fund, Inc.:
We have audited the accompanying statement of assets, liabilities
and capital, including the schedule of investments, of MuniYield
California Insured Fund, Inc. as of October 31, 1995, the related
statements of operations for the year then ended and changes in net
assets for each of the years in the two-year period then ended, and
the financial highlights for each of the years in the three-year
period then ended and the period June 26, 1992 (commencement of
operations) to October 31, 1992. These financial statements and the
financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at October
31, 1995 by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
<PAGE>
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
MuniYield California Insured Fund, Inc. as of October 31, 1995, the
results of its operations, the changes in its net assets, and the
financial highlights for the respective stated periods in conformity
with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 1, 1995
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid monthly by
MuniYield California Insured Fund, Inc. during its taxable year
ended October 31, 1995 qualify as tax-exempt interest dividends for
Federal income tax purposes. Additionally, there were no capital
gains distributed by the Fund during the year.
Please retain this information for your records.
PER SHARE INFORMATION (unaudited)
<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>
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 -- --
May 1, 1995 to July 31, 1995 .28 .04 .15 .20 .06 -- --
August 1, 1995 to October 31, 1995 .27 .02 .56 .21 .06 -- --
<PAGE>
<CAPTION>
Net Asset Value Market Price**
For the Quarter High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
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
May 1, 1995 to July 31, 1995 14.63 13.62 13.00 12.25 1,495
August 1, 1995 to October 31, 1995 14.48 13.54 12.875 12.125 1,407
<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
James H. Bodurtha, 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, Massachusetts 02110
Transfer Agents
Common Stock:
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
<PAGE>
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
NYSE Symbol
MIC
