MUNIYIELD
CALIFORNIA
INSURED
FUND, INC.
[FUND LOGO]
STRATEGIC
Performance
Semi-Annual Report
April 30, 1997
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.
MuniYield
California
Insured Fund, Inc.
Box 9011
Princeton, NJ
08543-9011 #16338 -- 4/97
MuniYield California Insured Fund, Inc.
TO OUR SHAREHOLDERS
For the six-month period ended April 30, 1997, the Common Stock of
MuniYield California Insured Fund, Inc. earned $0.426 per share income
dividends, which included earned and unpaid dividends of $0.069. This
represents a net annualized yield of 6.00%, based on a month-end per
share net asset value of $14.32. Over the same period, the total
investment return on the Fund's Common Stock was +1.21%, based on a
change in per share net asset value from $14.59 to $14.32, and
assuming reinvestment of $0.430 per share income dividends.
For the six-month period ended April 30, 1997, the Fund's Auction Market
Preferred Stock had an average yield of 3.53% for Series A and 3.29%
for Series B.
The Municipal Market Environment
Long-term tax-exempt revenue bonds traded in a relatively narrow range
throughout much of the six-month period ended April 30, 1997. By mid-
January 1997, municipal bond yields rose to over 6% as investors
reacted negatively to reports of progressively stronger domestic
economic growth. However, a continued lack of any material
inflationary pressures allowed bond yields to decline to their prior
levels by late February. Bond yields rose again as investors became
increasingly concerned that the US domestic economic strength seen
thus far in 1997 would continue, and that the increase in short-term
interest rates by the Federal Reserve Board (FRB) in late March would
be the first in a series of such moves designed to slow the US economy
before any dormant inflationary pressures were awakened. Long-term
tax-exempt bond yields rose approximately 15 basis points (0.15%) to
almost 6.15% by mid-April. Similarly, long-term US Treasury bond
yields rose over 35 basis points over the same period to 7.16%.
However, in late April economic indicators were released showing that
despite considerable economic growth any inflationary pressures,
particularly those associated with wage increases, were well-contained
and of no immediate concern. Fixed-income bond prices staged a
significant rally during the last week in April with long-term US
Treasury bond yields falling nearly 20 basis points to end the month
at 6.95%. Municipal bond yields, as measured by the Bond Buyer Revenue
Bond Index, declined nearly 15 basis points to stand at 6.01% by April
30, 1997.
As in recent quarters, the relative stability of long-term tax-exempt
bond yields was supported by low levels of new municipal bond
issuance. During the six months ended April 30, 1997, approximately
$90 billion in long-term tax-exempt bonds was underwritten, a decline
of over 6% compared to the corresponding period a year earlier. During
the three months ended April 30, 1997, $41 billion in new long-term
municipal bonds was issued, also a 6% decline in issuance compared to
the three months ended April 30, 1996. Overall investor demand
remained strong, particularly from property and casualty insurance
companies and individual retail investors. In recent years, investor
demand increased whenever tax-exempt bond yields approached or
exceeded the 6% level as they have in the past few months.
Additionally, in recent months much of the new bond issuance was
dominated by a number of larger issues. These included $710 million in
New York City Water bonds, $600 million in state of California bonds,
$1 billion in New York City general obligation bonds, $435 million in
Dade County, Florida water and sewer revenue bonds, $450 million in
Puerto Rico Electric Authority issues and $930 million in Port
Authority of New York and New Jersey issues. These bonds have
typically been issued in states with relatively high state income
taxes and consequently were generally underwritten at yields that were
relatively unattractive to residents in other states. This has
exacerbated the general decline in overall issuance in recent years,
making the decrease in supply even more dramatic for general market
investors.
The present economic situation remains nearly ideal. The domestic
economy continues to grow steadily with little, if any, sign of a
resurgence in inflation. Recent economic growth generated considerable
unexpected tax revenues for the Federal government. Forecasts for the
1997 Federal fiscal deficit were reduced to under $100 billion, a
level not seen since the early 1980s. Such a reduced Federal deficit
enhances the prospect for a balanced Federal budget. All these factors
support a scenario of steady, or even falling, interest rates in the
coming years. Present annual estimates of future municipal bond
issuance remain centered around $175 billion, indicating that the
current relative scarcity of tax-exempt bonds should continue for at
least the remainder of the year. Should interest rates begin to
decline later this year, either as the result of a balanced Federal
budget or continued benign inflation, investors are unlikely to be
able to purchase long-term municipal bonds at their currently
attractive levels.
Portfolio Strategy
For the six-month period ended April 30, 1997, we focused on
sustaining an appealing level of tax-exempt income while seeking to
achieve an above-average total return for the Fund. We entered the
April period optimistic that interest rates would decline because of
the seemingly attractive level of interest rates and the tight
technical market in municipal bonds. To take advantage of this
scenario, we extended the portfolio's duration and lowered cash
reserves to a minimal level. From November 1996 to the beginning of
December 1996, this strategy prevailed as interest rates declined
about 30 basis points.
The following three months proved to be extremely volatile as economic
reports suggested strength in the economy with benign inflation
combined with the threat of a monetary tightening by the FRB. Our
investment strategy shifted at this point to seek to take advantage of
the trading ranges the municipal market maintained during this time.
Finally in late March 1997 when the FRB raised the Federal Funds rate
by 25 basis points, interest rates broke out of the trading range in
which they had vacillated. At this point our strategy shifted again
because of the attractive level of interest rates. Therefore, we
extended the portfolio's duration and again lowered cash reserves to
minimal levels in anticipation of a decline in interest rates. This
strategy proved correct as interest rates rallied during the last week
of April and declined nearly 25 basis points very quickly. Looking
forward, we anticipate a volatile market that will once again remain
caught within a constrained trading range until the economy either
moderates or accelerates even further.
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.
Sincerely,
/S/ARTHUR ZEIKEL
Arthur Zeikel
President
/S/VINCENT R. GIORDANO
Vincent R. Giordano
Senior Vice President
/S/ROBERTO ROFFO
Roberto Roffo
Vice President and Portfolio Manager
June 4, 1997
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 pickup 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.
<TABLE>
<CAPTION>
MuniYield California Insured Fund, Inc. April 30, 1997
SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <C>
California -- 97.8%
Anaheim, California, Public Financing Authority, Lease Revenue Bonds (Public
Improvement Project), Sub-Series C (i):
AAA Aaa $6,310 5.90%** due 9/01/2019 $1,703
AAA Aaa 17,630 5.90%** due 9/01/2020 4,447
AAA Aaa 1,960 Berkeley, California, Unified School District, UT, Series C, 6.50% due 8/01/2019 (b) 2,093
AAA Aaa 2,000 Beverly Hills, California, Public Financing Authority, Lease Revenue Bonds, INFLOS,
Series A, 7.47% due 6/01/2015 (d)(e) 1,865
AAA Aaa 2,000 Big Bear Lake, California, Water Revenue Refunding Bonds, 6% due 4/01/2022 (d) 2,090
California Health Facilities Financing Authority Revenue Bonds:
AAA Aaa 2,850 (Adventist Health System Hospital), Series B, 6.50% due 3/01/2011 (d) 3,025
AAA Aaa 1,415 (Kaiser Permanente), Series A, 7% due 10/01/2018 (b) 1,507
AAA Aaa 2,750 (Scripps Memorial Hospital), Series A, 6.375% due 10/01/2022 (d) 2,869
California HFA, Home Mortgage Revenue Bonds, AMT:
AA- Aa 210 Series B, 8% due 8/01/2029 219
AA- Aa 4,220 Series F-1, 7% due 8/01/2026 4,451
AA- Aa 5,675 Series G, 7.05% due 8/01/2027 5,903
AA- Aa 1,950 California HFA, Revenue Bonds, RIB, AMT, 9.112% due 8/01/2023 (e) 2,040
NR* P1 1,400 California Pollution Control Financing Authority, Resource Recovery Revenue Refunding
Bonds (Ultra Power Rocklin Project), VRDN, AMT, Series B, 4.45% due 6/01/2017 (a) 1,400
California Pollution Control Financing Authority, Solid Waste Disposal Revenue Bonds, AMT:
A A2 3,000 (Keller Canyon Landfill Company Project), 6.875% due 11/01/2027 3,220
A1+ VMIG1+ 8,000 (Shell Oil Co. - Martinez Project), VRDN, Series A, 4.15% due 10/01/2024 (a) 8,000
NR* Baa 900 California Public Capital Improvements Financing Authority Revenue Bonds
(Joint Powers Agency - Pooled Projects), Series E, 8.25% due 3/01/1998 925
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) 1,131
California State, GO, UT (c):
AAA Aaa 4,840 6.90% due 11/01/2004 (f) 5,525
AAA Aaa 2,615 7% due 11/01/2004 (f) 3,002
AAA Aaa 1,700 6.80% due 11/01/2009 1,891
AAA Aaa 160 6.90% due 11/01/2011 179
AAA Aaa 85 7% due 11/01/2014 94
A1+ NR* 1,700 California State, Municipal Securities Trust Receipts, VRDN, 4.60% due 8/01/2019 (a) 1,700
California State Public Works Board, Lease Revenue Bonds:
AAA Aaa 5,110 Refunding (Department of Corrections - California State Prisons), Series A,
5% due 12/01/2019 (b) 4,671
A Aaa 1,785 (Various California State University Projects), Series A, 6.70% due 10/01/2002 (f) 1,978
A Aaa 3,000 Various Community College Projects), Series B, 7% due 3/01/2004 (f) 3,414
SP1+ MIG1+ 1,300 California State, RAN, Series A, 4.50% due 6/30/1997 1,301
AAA Aaa 3,000 California State, Revenue Refunding Bonds, 5.375% due 6/01/2026 (c) 2,842
California Statewide Community Development Authority Revenue Bonds, COP:
AAA Aaa 2,000 (Good Samaritan Health System), 6.50% due 5/01/2004 (f)(j) 2,219
AA Aa 1,750 (Saint Joseph Health System Group), 6.50% due 7/01/2015 1,876
NR* Aa2 1,500 California Statewide Community Development Authority, Solid Waste Facilities Revenue
Bonds (Chevron U.S.A. Inc. Project), VRDN, AMT, 4.15% due 12/15/2024 (a) 1,500
AAA Aaa 5,000 Central Coast Water Authority, California, Revenue Refunding Bonds (State Water Project
Regional Facilities), Series A, 5% due 10/01/2022 (b) 4,502
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) 3,344
AAA Aaa 7,000 Compton, California, Community Redevelpment Agency, Tax Allocation Refunding Bonds
(Compton Redevelopment Project), Series A, 6.50% due 8/01/2013 (i) 7,531
AAA Aaa 5,720 Contra Costa, California, Water District, Water Revenue Bonds, Series D, 6.375%
due 10/01/2022 (b) 5,989
AAA Aaa 5,000 Cucamonga County, California, Water District Facilities Refinancing Bonds, COP,
6.50% due 9/01/2022 (c) 5,329
AAA Aaa 1,000 East Bay, California, Municipal Utility District, Wastewater Treatment System Revenue
Refunding Bonds, 5% due 6/01/2026 (c) 895
AAA Aaa 2,000 East Bay, California, Municipal Utility District, Water System Subordinated Revenue
Refunding Bonds, 5% due 6/01/2026 (c) 1,789
AAA Aaa 5,000 El Camino, California, Hospital District Revenue Refunding Bonds, Series A,
6.25% due 8/15/2017 (b) 5,137
AAA Aaa 5,100 El Dorado County, California, Public Agency, Financing Authority Revenue Refunding Bonds,
5.50% due 2/15/2021 (c) 4,929
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) 3,981
AAA Aaa 1,000 Fairfield - Suisun, California, Sewer District Revenue Refunding Bonds, Series A,
6.25% due 5/01/2016 (d) 1,034
BBB Baa 4,695 Inglewood, California, Public Financing Authority Revenue Bonds (Manchester - Prairie -
N. Inglewood Industrial Park Project), Series B, 7% due 5/01/2022 4,982
AAA Aaa 7,365 Los Angeles, California, Harbor Department Revenue Bonds, RITR, AMT, 7.645%
due 11/01/2026 (d)(e) 7,789
Los Angeles County, California, Metropolitan Transportation Authority,
Sales Tax Revenue Bonds:
AAA Aaa 4,750 (Proposition C), Second Series A, 5% due 7/01/2025 (b) 4,243
A1+ VMIG1+ 2,800 Refunding (Proposition C - Second Senior), VRDN, Series A, 4.50% due 7/01/2020 (a)(d) 2,800
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) 6,926
AA Aa 4,750 Metropolitan Water District, Southern California, Waterworks Revenue Refunding Bonds,
Series A, 5.75% due 7/01/2021 4,837
Mount Diablo, California, Unified School District, Community Facilities, Special District
Number 1 Tax Bonds (b):
AAA Aaa 3,000 6.30% due 8/01/2022 3,114
AAA Aaa 7,290 Refunding, 5.375% due 8/01/2019 6,949
AA Aa3 2,000 Mountain View - Los Altos, California, Unified High School District, Series B, 6.50%
due 5/01/2017 2,158
AAA Aaa 3,000 Northern California Public Power Agency, Revenue Refunding Bonds
(Hydroelectric Project No. 1), Series A, 6.25% due 7/01/2012 (d) 3,142
AAA Aaa 1,900 Oakland, California, Redevelopment Agency, Revenue Refunding Bonds, INFLOS, 7.915%
due 9/01/2019 (d)(e) 1,872
AAA Aaa 16,000 Orange County, California, Local Transportation Authority, Sales Tax Revenue Bonds,
Second Series, 6.10% due 2/14/2011 (c) 16,529
AAA Aaa 2,000 Orchard, California, School District, GO, UT, Series A, 6.50% due 8/01/2019 (c) 2,132
AAA Aaa 1,000 Palm Springs, California, Financing Authority, Lease Revenue Bonds
(Convention Center Project), Series A, 6.75% due 11/01/2021 (d) 1,082
AAA Aaa 16,955 Port Oakland, California, Port Revenue Bonds, AMT, Series E, 6.50% due 11/01/2016 (d) 17,763
AAA Aaa 2,000 Rancho, California, Water District Financing Authority Revenue Bonds, RITES, 8.924%
due 9/11/2001 (b)(e)(f) 2,340
Rancho Cucamonga, California, Redevelopment Agency Tax Allocation Bonds (Rancho
Redevelopment Project) (d):
AAA Aaa 1,910 7.125% due 9/01/2019 2,052
AAA Aaa 1,000 5.25% due 9/01/2026 924
NR* A2 4,900 Rancho Mirage, California, Joint Powers Financing Authority, COP (Eisenhower Memorial
Hospital), 7% due 3/01/2002 (f) 5,436
AAA Aaa 8,000 Sacramento, California, City Financing Authority, Lease Revenue Refunding Bonds,
Series A, 5.40% due 11/01/2020 (b) 7,731
Sacramento, California, Municipal Utility District, Electric Revenue Bonds (d):
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 8,920
AAA Aaa 1,500 San Diego, California, IDR, RITR, 7.435% due 9/01/2018 (e) 1,566
San Diego, California, Public Facilities Financing Authority, Sewer Revenue Bonds (c):
AAA Aaa 6,500 5% due 5/15/2020 5,874
AAA Aaa 1,390 5.25% due 5/15/2022 1,297
AAA Aaa 18,250 5% due 5/15/2025 16,331
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) 8,163
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 1,315
AAA Aaa 2,060 6.75% due 7/01/2024 2,251
AAA Aaa 2,000 San Francisco, California, City and County Sewer Revenue Refunding Bonds,
6% due 10/01/2011 (b) 2,066
AAA Aaa 7,500 San Francisco, California, State Building Authority, Lease Revenue Bonds
(San Francisco Civic Center Complex), Series A, 5.25% due 12/01/2021 (b) 7,009
AAA Aaa 4,000 San Mateo County, California, Transportation District, Sales Tax Revenue Refunding Bonds,
Series A, 8% due 6/01/2020 (d) 5,198
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) 7,499
AAA Aaa 1,350 Santa Clara, California, Electric Revenue Bonds, Series A, 6.50% due 7/01/2021 (d) 1,439
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 4,307
AAA Aaa 2,700 6.75% due 11/15/2020 2,959
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) 5,244
AAA Aaa 2,185 Santa Rosa, California, High School District GO, UT, 6.375% due 5/01/2016 (d) 2,297
Santa Rosa, California, Wastewater Revenue Bonds (Sub-Regional Wastewater Project),
Series A:
AAA Aaa 4,300 6.50% due 9/01/2000 (b)(f) 4,633
AAA Aaa 1,590 Refunding, 5.15% due 9/01/2017 (c) 1,484
AAA Aaa 1,500 Stockton, California, COP, Revenue Bonds (Wastewater Treatment Plant Expansion),
Series A, 6.80% due 9/01/2024 (c) 1,646
AAA Aaa 2,000 University of California Revenue Bonds (Multiple Purpose Projects), Series D,
6.375% due 9/01/2024 (d) 2,099
AAA Aaa 2,000 Visalia, California, COP, Refunding (Multiple Projects), Series B, 5.375%
due 12/01/2026 (d) 1,886
Puerto Rico -- 1.2%
A1+ VMIG1+ 4,000 Puerto Rico Commonwealth, Government Development Bank, Revenue Refunding Bonds,
VRDN, 4.30% due 12/01/2015 (a) 4,000
Total Investments (Cost -- $320,129) -- 99.0% 330,328
Other Assets Less Liabilities -- 1.0% 3,438
--------
Net Assets -- 100.0% $333,766
========
(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, 1997.
(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, 1997.
(f) Prerefunded.
(g) GNMA Collateralized.
(h) FHLMC Collateralized.
(i) FSA Insured.
(j) CAPMAC Insured.
* Not Rated.
** Represents a zero coupon bond; the interest rate shown
is the effective yield at the time of purchase by the Fund.
+ Highest short-term ratings by Moody's Investors Service, Inc.
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
IDR Industrial Development Revenue Bonds
INFLOS Inverse Floating Rate Municipal Bonds
RAN Revenue Anticipation Notes
RIB Residual Interest Bonds
RITES Residual Interest Tax-Exempt Securities
RITR Residual Interest Trust Receipts
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL INFORMATION
Statement of Assets, Liabilities and Capital as of April 30, 1997
<S> <C> <C> <C>
Assets: Investments, at value (identified cost -- $320,128,577) (Note 1a) $330,327,862
Cash 94,377
Receivables:
Interest $6,006,290
Securities sold 1,433,491 7,439,781
-------------
Deferred organization expenses (Note 1e) 4,571
Prepaid expenses and other assets 12,161
-------------
Total assets 337,878,752
-------------
Liabilities: Payables:
Securities purchased 3,455,688
Dividends to shareholders (Note 1f) 437,951
Investment adviser (Note 2) 135,879 4,029,518
-------------
Accrued expenses and other liabilities 82,827
-------------
Total liabilities 4,112,345
-------------
Net Assets: Net assets $333,766,407
=============
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.05 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 1,639,609
Accumulated realized capital losses on investments -- net (Note 5) (7,378,747)
Unrealized appreciation on investments -- net 10,199,285
-------------
Total -- Equivalent to $14.32 net asset value per share of Common Stock
(market price -- $13.75) 233,766,407
-------------
Total capital $333,766,407
=============
* Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
For the Six
Months Ended
April 30, 1997
<S> <C> <C> <C>
Investment Interest and amortization of premium and discount earned $9,621,392
Income (Note 1d):
Expenses: Investment advisory fees (Note 2) $836,927
Commission fees (Note 4) 123,678
Professional fees 37,664
Transfer agent fees 31,030
Accounting services (Note 2) 21,512
Listing fees 11,849
Directors' fees and expenses 11,129
Custodian fees 8,423
Printing and shareholder reports 8,120
Pricing fees 6,771
Amortization of organization expenses (Note 1e) 2,233
Other 12,089
-------------
Total expenses 1,111,425
-------------
Investment income -- net 8,509,967
-------------
Realized & Realized gain on investments -- net 1,854,000
Unrealized Change in unrealized appreciation on investments -- net (6,089,619)
Gain (Loss) on -------------
Investments -- Net Increase in Net Assets Resulting from Operations $4,274,348
Net (Notes 1b, =============
1d & 3):
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
April 30, October 31,
1997 1996
Increase (Decrease) in Net Assets:
<S> <C> <C>
Operations: Investment income -- net $8,509,967 $17,028,803
Realized gain on investments -- net 1,854,000 709,173
Change in unrealized appreciation on investments -- net (6,089,619) 1,986,386
------------- -------------
Net increase in net assets resulting from operations 4,274,348 19,724,362
------------- -------------
Dividends to Investment income -- net:
Shareholders Common Stock (7,020,501) (13,706,880)
(Note 1f): Preferred Stock (1,690,200) (3,417,420)
------------- -------------
Net decrease in net assets resulting from dividends to shareholders (8,710,701) (17,124,300)
------------- -------------
Net Assets: Total increase (decrease) in net assets (4,436,353) 2,600,062
Beginning of period 338,202,760 335,602,698
------------- -------------
End of period* $333,766,407 $338,202,760
============= =============
* Undistributed investment income -- net $1,639,609 $1,840,343
============= =============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended
April 30, For the Year Ended October 31,
1997 1996 1995 1994 1993
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $14.59 $14.43 $12.88 $15.68 $13.25
Operating --------- --------- --------- --------- ---------
Performance: Investment income -- net .52 1.04 1.09 1.10 1.10
Realized and unrealized gain (loss) on
investments -- net (.26) .17 1.53 (2.81) 2.45
--------- --------- --------- --------- ---------
Total from investment operations .26 1.21 2.62 (1.71) 3.55
--------- --------- --------- --------- ---------
Less dividends and distributions to
Common Stock shareholders:
Investment income -- net (.43) (.84) (.84) (.89) (.93)
Realized gain on investments -- net -- -- -- (.02) (.02)
--------- --------- --------- --------- ---------
Total dividends and distributions to Common
Stock shareholders (.43) (.84) (.84) (.91) (.95)
--------- --------- --------- --------- ---------
Effect of Preferred Stock activity:
Dividends and distributions to
Preferred Stock shareholders:
Investment income -- net (.10) (.21) (.23) (.18) (.17)
Realized gain on investments -- net -- -- -- --+ --+
--------- --------- --------- --------- ---------
Total effect of Preferred Stock activity (.10) (.21) (.23) (.18) (.17)
Net asset value, end of period $14.32 $14.59 $14.43 $12.88 $15.68
========= ========= ========= ========= =========
Market price per share, end of period $13.75 $13.75 $12.63 $11.25 $15.00
========= ========= ========= ========= =========
Total Investment Based on market price per share 3.12%++++ 15.84% 20.01% (19.71%) 7.48%
Return:** ========= ========= ========= ========= =========
Based on net asset value per share 1.21%++++ 7.54% 19.81% (12.06%) 26.13%
========= ========= ========= ========= =========
Ratios to Average Expenses, net of reimbursement .66%* .67% .70% .68% .63%
Net Assets:*** ========= ========= ========= ========= =========
Expenses .66%* .67% .70% .68% .64%
========= ========= ========= ========= =========
Investment income -- net 5.08%* 5.06% 5.45% 5.34% 5.27%
========= ========= ========= ========= =========
Supplemental Net assets, net of Preferred Stock, end
Data: of period (in thousands) $233,766 $238,203 $235,603 $210,255 $256,105
========= ========= ========= ========= =========
Preferred Stock outstanding, end of period
(in thousands) $100,000 $100,000 $100,000 $100,000 $100,000
========= ========= ========= ========= =========
Portfolio turnover 35.60% 79.39% 83.26% 38.06% 15.17%
========= ========= ========= ========= =========
Leverage: Asset coverage per $1,000 $3,338 $3,382 $3,356 $3,103 $3,561
========= ========= ========= ========= =========
Dividends Series A -- Investment income -- net $438 $882 $912 $684 $644
Per Share on ========= ========= ========= ========= =========
Preferred Stock Series B -- Investment income -- net $407 $826 $967 $788 $740
Outstanding:++ ========= ========= ========= ========= =========
* 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.
+ Amount is less than $.01 per share.
++ Dividends per share have been adjusted to reflect a two-for-one stock split that
occurred on December 1, 1994.
++++ Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
MuuniYield California Insured Fund, Inc. April 30, 1997
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.
(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.
[bullet] 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.
[bullet] 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.
(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, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for
the six months ended April 30, 1997 were $112,986,968 and $139,218,808,
respectively.
Net realized and unrealized gains (losses) as of April 30, 1997 were as
follows:
Realized Unrealized
Gains Gains (Losses)
Long-term investments $1,854,000 $10,200,230
Short-term investments -- (945)
----------- -----------
Total $1,854,000 $10,199,285
=========== ===========
As of April 30, 1997, net unrealized appreciation for Federal income tax
purposes aggregated $10,199,285, of which $11,590,838 related to
appreciated securities and $1,391,553 related to depreciated securities.
The aggregate cost as of April 30, 1997 for Federal income tax purposes
was $320,128,577.
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, 1997, shares issued and outstanding
remained constant at 16,328,873. At April 30, 1997, 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, 1997 were as follows: Series A, 3.57% and
Series B, 4.00%.
As of April 30, 1997, 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, 1997,
Merrill Lynch, Pierce, Fenner & Smith Inc., an affiliate of FAM, earned
$53,268 as commissions.
5. Capital Loss Carryforward:
At October 31, 1996, the Fund had a capital loss carryforward of
approximately $4,405,000, of which $18,000 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 9, 1997, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of $.068504
per share, payable on May 29, 1997 to shareholders of record as of May
19, 1997.
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
Roberto Roffo, Vice President
Gerald M. Richard, Treasurer
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
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
