MUNIYIELD
CALIFORNIA
INSURED
FUND, INC.
FUND LOGO
Semi-Annual Report
April 30, 1996
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. Statements and other information
herein are as dated and are subject to change.
<PAGE>
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, 1996, the Common Stock of
MuniYield California Insured Fund, Inc. earned $0.421 per share
income dividends, which included earned and unpaid dividends of
$0.068. This represents a net annualized yield of 6.01%, based on a
month-end per share net asset value of $14.03. Over the same period,
the total investment return on the Fund's Common Stock was +0.28%,
based on a change in per share net asset value from $14.43 to
$14.03, and assuming reinvestment of $0.422 per share income
dividends.
For the six-month period ended April 30, 1996, the Fund's Auction
Market Preferred Stock had an average yield of 3.39% for Series A
and 3.39% for Series B.
<PAGE>
The Environment
Investor perceptions regarding the US economy changed over the
course of the six-month period ended April 30, 1996. As 1995 drew to
a close and 1996 began, it appeared that the US economy was losing
momentum. Lackluster retail sales, increases in initial unemployment
claims (along with weak job and income growth), and evidence of
slowing in the manufacturing sector all suggested that the rate of
economic growth was decelerating, with some forecasters even
suggesting the possibility of an imminent recession.
However, the consensus outlook for the rate of future economic
growth changed dramatically with the report of stronger-than-
expected employment data for February and March. As a result,
investors began to anticipate renewed economic growth. Long-term
interest rates rose, and the Federal Reserve Board left monetary
policy on hold. Adding to investor concerns was the report that the
Knight Ridder-Commodity Research Bureau Index was near an eight-year
high, largely because of an increase in agricultural prices and an
upward spike in the price of crude oil.
Investors are likely to continue to focus on the probable direction
of economic activity and Federal Reserve Board monetary policy in
the weeks ahead. At this time, inflationary pressures do not seem to
be building and the capital spending, housing and consumption
sectors are still relatively weak, which suggest that the economy is
not on the verge of overheating. Nevertheless, it is likely that
further indications of stronger economic activity in the weeks ahead
may add to investor concerns that accelerating economic activity
could lead to higher inflation and interest rates.
The Municipal Market
During the six months ended April 30, 1996, tax-exempt bond yields
rose as investors became increasingly concerned that recent economic
growth would reignite inflationary pressures. Through early February
1996, municipal bond yields continued their earlier declines
supported by continued moderate economic growth and favorable
inflationary expectations. As measured by the Bond Buyer Revenue
Bond Index, yields on uninsured, A-rated municipal revenue bonds
declined an additional 30 basis points (0.30%) to 5.70% by early
February. As signs of emerging economic growth became more numerous,
particularly with the release of the strong March employment
figures, inflation fears increased and bond yields rose in response
for the remainder of the six-month period ended April 30, 1996. At
April 30, 1996, long-term municipal bond yields were approximately
6.30%, an increase of approximately 30 basis points over the last
six months. The rise in US Treasury bond yields was more
substantial. Over the last six months, yields on US Treasury
securities rose approximately 60 basis points to 6.90%. During the
April period, the municipal bond market reversed the trend seen
throughout much of 1995 and significantly outperformed the US
Treasury bond market.
<PAGE>
The municipal bond market's recent outperformance was largely the
result of two principal factors. First, and perhaps more important,
much of the earlier concern regarding proposed changes in Federal
income tax codes and their effect on the tax treatment of tax-exempt
bond income has dissipated. As the negative revenue impact of the
various proposals, such as the flat tax, became apparent, the
likelihood of immediate reform quickly diminished. When the Kemp
Commission dealing with Federal income tax reform released its
findings early in 1996, the obvious need for reform was highlighted.
However, no specific recommendations of a flat tax, value-added tax
or any other reform were made. Consequently, fears of losing the
favored tax treatment of municipal bond income declined even
further. As a percentage of Treasury bond yields, tax-exempt bond
yield ratios quickly declined from 95% to approximately 90%. This
allowed the municipal bond market to maintain much of the gains made
since early 1995.
The second major factor leading to the municipal bond market's
recent improvement was the return of a more favorable technical
environment. Over the past six months, approximately $90 billion in
municipal securities were underwritten, an increase of approximately
45% versus the comparable period a year earlier. However, much of
this increase was biased by recent underwritings dedicated toward
refinancing. Like individual homeowners, municipal issuers sought to
refinance their existing higher-couponed debt as tax-exempt bond
yields declined from their highs in 1995. In recent months such
refinancings were estimated to represent at least 50% of total
issuance. However, the recent rise in tax-exempt interest rates
slowed the pace of such refinancings. Over the last three months
approximately $40 billion in long-term tax-exempt securities were
underwritten, an increase of 35% compared to the same period a year
ago. At current interest rate levels large amounts of refundings are
unlikely and the rate of new bond issuance should continue to
decline.
Additionally, investors continue to receive significant amounts of
assets derived from coupon income, bond maturities, and proceeds
from early redemptions. In recent months investors received over $30
billion in such assets. These cash flows helped maintain individual
retail investor demand in recent months. Additionally, major
institutional investors, such as certain insurance companies whose
underwriting profits were cyclically high, demonstrated significant
ongoing interest in the tax-exempt bond market, particularly on
higher-quality securities. Individual and institutional investor
demand was strong enough during the six-month period ended April 30,
1996 to absorb the relative increase in bond issuance.
<PAGE>
Looking ahead, we believe the municipal bond market is likely to
continue to outperform the US Treasury market. Investor demand
should remain adequate to absorb new bond issuance. It is also
unlikely that the rapid pace of issuance seen thus far in 1996 will
be maintained. The recent rise in yields made further bond
refinancings economically unfeasible. Since these refinancings were
the driving force of recent bond issuance, as the amount of these
refundings decline, overall issuance should decline. This should
allow the current demand/supply balance to be easily maintained in
upcoming months.
Additionally, as a percentage of US Treasury bond yields, long-term
municipal bond yields remain historically attractive. It is likely
that recent interest rate increases will have a negative impact on
economic growth, perhaps as early as late summer 1996. With long-
term mortgage rates above 8%, the domestic housing sector has
already indicated signs of slower growth. If other interest rate
sectors of the economy, such as the automobile industry, begin to
show similar adverse effects, taxable interest rates would be poised
to resume their decline. With long-term tax-exempt revenue bonds
yielding approximately 90% of their taxable counterparts, municipal
bond yields are poised to decline further.
Portfolio Strategy
We entered the six-month period ended April 30, 1996 very optimistic
that interest rates would decline. This optimism was based on the
belief that the economy was slowing and that advances on a balanced
Federal budget agreement would be beneficial to the fixed-income
markets. To take advantage of this anticipated decline in interest
rates, we decreased cash reserves to 1% of net assets, and increased
the Fund's duration. This strategy benefited the portfolio's
performance as long-term interest rates declined over 30 basis
points through the end of December.
The new year brought the beginning of a reversal in the trend of
lower interest rates. By late February, signs of a strengthening
economy began to undermine investor confidence in the fixed-income
market. In March an explosive employment report seemed to confirm a
surge in the growth of the US economy, and yields began to rise
rapidly. Prior to the back up in yields, we gradually increased the
Fund's cash reserves while decreasing its duration. This strategy
enabled the Fund to be less sensitive to the significant back up in
yields experienced in the fixed-income markets. One other positive
factor for the Fund during this back up in yields was that municipal
bonds significantly outperformed US Treasury securities.
Because of the various influences that affected the economy, such as
the severe winter weather and the Government shutdowns, the economic
data released so far in 1996 was cloudy and subject to many
interpretations, but overall pointed to a stronger economy. The data
suggested that the economy may be picking up steam, which warrants a
cautious approach to the market until a clearer view of the
economy's direction emerges. Looking ahead, we will maintain the
Fund's cautious approach to the market until a clearer path for
interest rates becomes evident.
<PAGE>
In Conclusion
We appreciate your ongoing interest in MuniYield California Insured
Fund, 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
Senior Vice President
(Roberto Roffo)
Roberto Roffo
Vice President and Portfolio Manager
May 24, 1996
We are pleased to announce that Roberto Roffo is responsible for the
day-to-day management of MuniYield California Insured Fund, Inc. Mr.
Roffo has been employed by Merrill Lynch Asset Management, L.P. (an
affiliate of the Fund's investment adviser) since 1996 as Vice
President and Portfolio Manager and was Assistant Portfolio Manager
thereof from 1992 to 1996. Prior thereto, he was Operations Manager
with State Street Bank and Trust Company.
<PAGE>
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.
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.
<PAGE>
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
CP Commercial Paper
GO General Obligation Bonds
HFA Housing Finance Agency
INFLOS Inverse Floating Rate Municipal 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--98.1%
<S> <S> <C> <S> <C>
AAA Aaa $ 1,960 Berkeley, California, Unified School District, UT, Series C, 6.50% due
8/01/2019 (b) $ 2,058
AAA Aaa 2,000 Beverly Hills, California, Public Financing Authority, Lease Revenue
Bonds, Series A, INFLOS, 7.145% due 6/01/2015 (d)(e) 1,787
California Health Facilities Financing Authority Revenue Bonds:
AAA Aaa 2,850 (Adventist Health System Hospital), Series B, 6.50% due 3/01/2011 (d) 2,994
AAA Aaa 4,500 (Centinela Medical Hospital), 6.25% due 9/01/2015 (d) 4,698
AAA Aaa 1,415 (Kaiser Permanente), Series A, 7% due 10/01/2018 (b) 1,522
AAA Aaa 2,750 (Scripps Memorial Hospital), Series A, 6.375% due 10/01/2022 (d) 2,845
A1+ VMIG1++ 200 (Scripps Memorial Hospital), VRDN, Series A, 3.75% due 12/01/2005 (a)(d) 200
California HFA, Home Mortgage Revenue Bonds:
AA- Aa 265 AMT, Series B, 8% due 8/01/2029 279
AA- Aa 4,260 AMT, Series F-1, 7% due 8/01/2026 4,406
AA- Aa 6,000 AMT, Series G, 7.05% due 8/01/2027 6,156
AA- Aa 2,095 Series A, 6.55% due 8/01/2026 2,139
<PAGE>
AA- Aa 1,950 California HFA, Revenue Bonds, RIB, AMT, 9.237% due 8/01/2023 (e) 1,969
AAA Aaa 3,250 California Maritime Infrastructure Authority, Airport Revenue Bonds (San
Diego Unified Port District Airport), AMT, 5% due 11/01/2020 (b) 2,798
California Pollution Control Financing Authority, Resource Recovery Revenue
Bonds, VRDN, AMT (a):
NR* P1 1,300 (Delano Project), Series 1991, 4.10% due 8/01/2019 1,300
NR* Aa3 200 (Honey Lake Power Project), 4.10% due 9/01/2018 200
NR* P1 1,200 Refunding (Ultra Power Rocklin Project), Series B, 4.15% due 6/01/2017 1,200
A1+ VMIG1++ 4,100 California Pollution Control Financing Authority, Solid Waste Disposal Revenue
Bonds (Shell Oil Co.--Martinez Project), VRDN, AMT, Series A, 3.80% due
10/01/2024 (a) 4,100
NR* Baa 1,720 California Public Capital Improvements Financing Authority Revenue Bonds
(Joint Powers Agency--Pooled Projects), Series E, 8.25% due 3/01/1998 1,813
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) 1,112
California State, GO (c):
AAA Aaa 6,500 4.75% due 9/01/2023 5,310
AAA Aaa 4,840 UT, 6.90% due 11/01/2004 (f) 5,581
AAA Aaa 2,615 UT, 7% due 11/01/2004 (f) 3,032
AAA Aaa 1,700 UT, 6.80% due 11/01/2009 1,878
AAA Aaa 160 UT, 6.90% due 11/01/2011 177
AAA Aaa 85 UT, 7% due 11/01/2014 94
</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 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)(k) $ 927
AAA Aaa 4,500 (Department of Corrections-Madera State Prison), Series E, 5.50% due
6/01/2015 (d) 4,340
AAA Aaa 5,110 Refunding (Department of Corrections-State Prisons), Series A, 5% due
12/01/2019 (b) 4,546
A- A 1,785 (Various California State University Projects), Series A, 6.70% due
10/01/2017 1,867
A- A 3,000 (Various Community College Projects), Series B, 7% due 3/01/2014 3,252
AAA Aaa 5,955 (Various University of California Projects), Series A, 6.40% due 12/01/2016 (b) 6,194
<PAGE>
AAA Aaa 3,995 California State University, Housing System Revenue Refunding Bonds, 5.90%
due 11/01/2021 (c) 3,948
California Statewide Community Development Authority Revenue Bonds, COP:
AAA Aaa 2,000 (Good Samaritan Health System), 6.50% due 5/01/2004 (f)(j) 2,240
AA Aa 1,750 (Saint Joseph Health System Group), 6.50% due 7/01/2015 1,809
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) 3,269
AAA Aaa 7,000 Compton, California, Community Redevelopment Agency, Tax Allocation Refunding
Bonds (Compton Redevelopment Project), Series A, 6.50% due 8/01/2013 (k) 7,430
AAA Aaa 5,720 Contra Costa, California, Water District, Water Revenue Bonds, Series D,
6.375% due 10/01/2022 (b) 5,925
AAA Aaa 5,000 Cucamonga County, California, Water District Facilities Refinancing Bonds,
COP, 6.50% due 9/01/2022 (c) 5,206
AAA Aaa 7,000 East Bay, California, Municipal Utility District, Wastewater Treatment System
Revenue Bonds, 6.375% due 12/01/2001 (b)(f) 7,714
AAA Aaa 5,000 El Camino, California, Hospital District Revenue Refunding Bonds, Series A,
6.25% due 8/15/2017 (b) 5,082
AAA Aaa 3,500 Elk Grove, California, Unified School District Number 1, Community Facilities,
Special Tax Bonds, 7% due 12/01/2003 (b)(f) 4,041
AAA Aaa 1,000 Fairfield-Suisun, California, Sewer District, Sewer Revenue Refunding Bonds,
Series A, 6.25% due 5/01/2016 (d) 1,022
Fresno, California, Sewer Revenue Bonds:
AAA Aaa 2,305 Series A, 4.75% due 9/01/2026 (d) 1,891
AAA Aaa 1,250 Series A-1, 6.25% due 9/01/2014 (b) 1,338
AAA Aaa 5,470 Fresno, California, Water System Revenue Refunding Bonds, Series A, 5.30%
due 6/01/2020 (c) 4,940
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 4,989
AA Aa 1,000 Los Angeles, California, Harbor Department Revenue Bonds, AMT, Series B,
6.625% due 8/01/2025 1,041
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 1,377
<PAGE>
Los Angeles, California, Wastewater System Revenue Refunding Bonds, Series D (c):
AAA Aaa 3,000 4.70% due 11/01/2017 2,501
AAA Aaa 1,500 4.70% due 11/01/2019 1,233
AAA Aaa 1,000 Los Angeles County, California, COP (Correctional Facilities Project), 6.50%
due 9/01/2013 (d) 1,047
A1+ VMIG1++ 4,000 Los Angeles County, California, Metropolitan Transportation Authority, Sales
Tax Revenue Refunding Bonds (Proposition C), VRDN, Second Senior Series A, 3.85%
due 7/01/2020 (a)(d) 4,000
</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 $10,000 Los Angeles County, California, Public Works Financing Authority, Lease
Revenue Bonds (Multiple Capital Facilities Project-IV), 4.75% due 12/01/2013 (d) $ 8,643
AAA Aaa 7,260 Los Angeles County, California, Transportation Commission, Sales Tax Revenue
Bonds, Series A, 6.75% due 7/01/2001 (c)(f) 8,092
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) 6,756
Metropolitan Water District, Southern California Waterworks, Revenue Refunding
Bonds:
AA Aa 4,750 Series A, 5.75% due 7/01/2021 4,675
AAA Aaa 2,000 Series B, 4.75% due 7/01/2021 (d) 1,666
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) 3,077
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) 3,100
AAA Aaa 1,900 Oakland, California, Redevelopment Agency Refunding Bonds, INFLOS, 8.321% due
9/01/2019 (d)(e) 1,815
Orange County, California, Local Transportation Authority, Sales Tax Revenue
Bonds:
AAA Aaa 8,000 6.20% due 2/14/2011 (b) 8,225
AAA Aaa 16,000 Second Series, 6.10% due 2/14/2011 (c) 16,359
<PAGE>
AAA Aaa 2,000 Orchard, California, School District, GO, Series A, 6.50% due 8/01/2019 (c) 2,108
AAA Aaa 1,000 Palm Springs, California, Financing Authority, Lease Revenue Bonds (Convention
Center Project), Series A, 6.75% due 11/01/2021 (d) 1,071
AAA Aaa 12,000 Port Oakland, California, Port Revenue Bonds, AMT, Series E, 6.50% due
11/01/2016 (d) 12,323
Rancho, California, Water District Financing Authority Revenue Bonds (b):
AAA Aaa 3,000 Refunding, 4.75% due 8/15/2021 2,478
AAA Aaa 2,000 RITES, 9.094% due 9/11/2001 (e)(f) 2,365
AAA Aaa 1,910 Rancho Cucamonga, California, Redevelopment Agency, Tax Allocation Bonds
(Rancho Redevelopment Project), 7.125% due 9/01/2019 (d) 2,064
NR* A 4,900 Rancho Mirage, California, Joint Powers Financing Authority, COP (Eisenhower
Memorial Hospital), 7% due 3/01/2022 5,137
AAA Aaa 4,500 Sacramento, California, City Financing Authority, Lease Revenue Refunding
Bonds, Series A, 5.40% due 11/01/2020 (b) 4,216
Sacramento, California, Municipal Utility District, Electric Revenue Bonds (d):
AAA Aaa 1,000 Refunding, Series G, 6.50% due 9/01/2013 1,093
AAA Aaa 8,500 Series B, 6.375% due 8/15/2022 8,800
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) 8,091
San Francisco, California, City and County Redevelopment Agency, Lease Revenue
Bonds (George R. Moscone Convention Center) (k):
AAA Aaa 1,200 6.80% due 7/01/2019 1,302
AAA Aaa 2,060 6.75% due 7/01/2024 2,228
AAA Aaa 2,000 San Francisco, California, City and County Sewer Revenue Refunding Bonds, 6%
due 10/01/2011 (b) 2,053
AAA Aaa 2,000 San Jose, California, Redevelopment Agency, Tax Allocation Refunding Bonds
(Merged Area Redevelopment Project), 4.75% due 8/01/2024 (d) 1,659
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<PAGE>
California (concluded)
<S> <S> <C> <S> <C>
AAA Aaa $ 4,000 San Mateo County, California, Transportation District, Sales Tax Revenue
Refunding Bonds, Series A, 8% due 6/01/2020 (d) $ 5,122
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) 7,296
AAA Aaa 1,350 Santa Clara County, California, COP, Refunding (Capital Project I), 6.25%
due 10/01/2016 (b) 1,374
Santa Clara County, California, Electric Revenue Bonds, Series A (d):
AAA Aaa 6,000 6.25% due 7/01/2019 6,117
AAA Aaa 1,350 6.50% due 7/01/2021 1,425
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 4,344
AAA Aaa 2,700 6.75% due 11/15/2020 2,924
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) 5,176
AAA Aaa 2,185 Santa Rosa, California, High School District GO, UT, 6.375% due 5/01/2016 (d) 2,272
AAA Aaa 4,300 Santa Rosa, California, Wastewater Revenue Bonds (Sub-Regional Wastewater
Project), Series A, 6.50% due 9/01/2000 (b)(f) 4,711
A1+ VMIG1++ 8,200 Southern California Public Power Authority, Subordinated Revenue Refunding
Bonds (Southern Transmission Project), VRDN, 3.80% due 7/01/2019 (a)(b) 8,200
AAA Aaa 1,500 Stockton, California, Revenue Bonds (Wastewater Treatment Plant Expansion),
COP, Series A, 6.80% due 9/01/2024 (c) 1,620
Puerto Rico--1.5%
A1+ P1 4,900 Puerto Rico Commonwealth, CP (Government Development Bank), 4.10% due
5/03/1996 4,900
Total Investments (Cost--$320,750)--99.6% 327,694
Other Assets Less Liabilities--0.4% 1,366
--------
Net Assets--100.0% $329,060
========
<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 April 30, 1996.
(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 April 30, 1996.
(f)Prerefunded.
(g)GNMA Collateralized.
(h)FHLMC Insured.
(i)CGIC Insured.
(j)CAPMAC Insured.
(k)FSA Insured.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of April 30, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$320,749,830) (Note 1a) $327,694,278
Cash 4,112
Interest receivable 5,828,542
Deferred organization expenses (Note 1e) 11,514
Prepaid expenses and other assets 10,910
------------
Total assets 333,549,356
------------
Liabilities: Payables:
Securities purchased $ 3,967,035
Dividends to shareholders (Note 1f) 293,433
Investment adviser (Note 2) 144,487 4,404,955
------------
Accrued expenses and other liabilities 84,899
------------
Total liabilities 4,489,854
------------
Net Assets: Net assets $329,059,502
============
<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 1,922,297
Accumulated realized capital losses on investments--net (Note 5) (9,113,503)
Unrealized appreciation on investments--net 6,944,448
------------
Total--Equivalent to $14.03 net asset value per share of Common
Stock (market price--$13.25) 229,059,502
------------
Total capital $329,059,502
============
<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, 1996
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 9,699,539
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 845,089
Commission fees (Note 4) 120,989
Professional fees 39,451
Transfer agent fees 30,580
Accounting services (Note 2) 26,543
Printing and shareholder reports 24,467
Listing fees 12,054
Directors' fees and expenses 11,241
Custodian fees 9,916
Pricing fees 5,731
Amortization of organization expenses (Note 1e) 3,450
Other 6,623
------------
Total expenses 1,136,134
------------
Investment income--net 8,563,405
------------
Realized & Realized gain on investments--net 828,417
Unrealized Change in unrealized appreciation on investments--net (7,358,070)
Gain (Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 2,033,752
(Notes 1b, 1d & 3): ============
<PAGE>
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 1996 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 8,563,405 $ 17,521,984
Realized gain (loss) on investments--net 828,417 (8,226,418)
Change in unrealized appreciation/depreciation on investments--net (7,358,070) 33,500,162
------------ ------------
Net increase in net assets resulting from operations 2,033,752 42,795,728
------------ ------------
Dividends to Investment income--net:
Shareholders Common Stock (6,886,408) (13,688,151)
(Note 1f): Preferred Stock (1,690,540) (3,759,400)
------------ ------------
Net decrease in net assets resulting from dividends to
shareholders (8,576,948) (17,447,551)
------------ ------------
Net Assets: Total increase (decrease) in net assets (6,543,196) 25,348,177
Beginning of period 335,602,698 310,254,521
------------ ------------
End of period* $329,059,502 $335,602,698
============ ============
<FN>
*Undistributed investment income--net $ 1,922,297 $ 1,935,840
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
For the Six For the Period
The following per share data and ratios have been derived Months June 26,
from information provided in the financial statements. Ended For the Year Ended 1992++ to
April 30, October 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 14.43 $ 12.88 $ 15.68 $ 13.25 $ 14.18
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .52 1.09 1.10 1.10 .28
Realized and unrealized gain (loss) on
investments--net (.40) 1.53 (2.81) 2.45 (.87)
-------- -------- -------- -------- --------
Total from investment operations .12 2.62 (1.71) 3.55 (.59)
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.42) (.84) (.89) (.93) (.18)
Realized gain on investments--net -- -- (.02) (.02) --
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Stock shareholders (.42) (.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 (.10) (.23) (.18) (.17) (.02)
Realized gain on investments--net -- -- (.00)+++++(.00)+++++ --
-------- -------- -------- -------- --------
Capital charge resulting from issuance of
Preferred Stock -- -- -- -- (.12)
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity (.10) (.23) (.18) (.17) (.14)
-------- -------- -------- -------- --------
Net asset value, end of period $ 14.03 $ 14.43 $ 12.88 $ 15.68 $ 13.25
======== ======== ======== ======== ========
Market price per share, end of period $ 13.25 $ 12.625 $ 11.25 $ 15.00 $ 14.875
======== ======== ======== ======== ========
Total Investment Based on market price per share 8.24%+++ 20.01% (19.71%) 7.48% .44%+++
Return:** ======== ======== ======== ======== ========
Based on net asset value per share .28%+++ 19.81% (12.06%) 26.13% (5.36%)+++
======== ======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement .67%* .70% .68% .63% .13%*
Net Assets:*** ======== ======== ======== ======== ========
Expenses .67%* .70% .68% .64% .63%*
======== ======== ======== ======== ========
Investment income--net 5.05%* 5.45% 5.34% 5.27% 5.33%*
======== ======== ======== ======== ========
<PAGE>
Supplemental Net assets, net of Preferred Stock, end of
Data: period (in thousands) $229,060 $235,603 $210,255 $256,105 $211,776
======== ======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $100,000 $100,000 $100,000 $100,000 $100,000
======== ======== ======== ======== ========
Portfolio turnover 42.70% 83.26% 38.06% 15.17% 32.97%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,291 $ 3,356 $ 3,103 $ 3,561 $ 3,118
======== ======== ======== ======== ========
Dividends Per Series A--Investment income--net $ 422 $ 912 $ 684 $ 644 $ 94
Share on ======== ======== ======== ======== ========
Preferred Stock Series B--Investment income--net $ 423 $ 967 $ 788 $ 740 $ 101
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 that occurred on December 1, 1994.
+++Aggregate total investment return.
+++++Amount is less than $.01 per share.
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 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.
<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.
NOTES TO FINANCIAL STATEMENTS (concluded)
(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.
<PAGE>
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 six months ended April 30, 1996 were $139,561,438 and
$153,270,252, respectively.
Net realized and unrealized gains (losses) as of April 30, 1996 were
as follows:
Realized Unrealized
Gains (Losses) Gains
Long-term investments $ 317,755 $ 6,944,448
Short-term investments (854) --
Financial futures contracts 511,516 --
------------ ------------
Total $ 828,417 $ 6,944,448
============ ============
As of April 30, 1996, net unrealized appreciation for Federal income
tax purposes aggregated $6,944,448, of which $9,845,931 related to
appreciated securities and $2,901,483 related to depreciated
securities. The aggregate cost as of April 30, 1996 for Federal
income tax purposes was $320,749,830.
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, 1996, shares issued and
outstanding remained constant at 16,328,873. At April 30, 1996,
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, 1996 were as
follows: Series A, 3.446% and Series B, 3.05%.
<PAGE>
As of April 30, 1996, there were 4,000 AMPS shares authorized,
issued and outstanding with a liquidation preference of $25,000 per
share.
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, 1996, MLPF&S, an affiliate of FAM, earned $84,773 as
commissions.
5. Capital Loss Carryforward:
At October 31, 1995, the Fund had a net 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 May 10, 1996, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$0.067797 per share, payable on May 30, 1996 to shareholders of
record as of May 21, 1996.
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
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Walter C. O'Connor, Vice President
Roberto Roffo, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
<PAGE>
Transfer Agents
Common Stock:
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
NYSE Symbol
MIC
