MUNIYIELD
CALIFORNIA
INSURED
FUND, INC.
FUND LOGO
Semi-Annual Report
April 30, 1998
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
Printed on post-consumer recycled paper
MuniYield California Insured Fund, Inc.
TO OUR SHAREHOLDERS
For the six-month period ended April 30, 1998, the Common Stock of
MuniYield California Insured Fund, Inc. earned $0.409 per share
income dividends, which included earned and unpaid dividends of
$0.066. This represents a net annualized yield of 5.48%, based on a
month-end per share net asset value of $15.04. Over the same period,
the total investment return on the Fund's Common Stock was +1.61%,
based on a change in per share net asset value from $15.21 to
$15.04, and assuming reinvestment of $0.414 per share income
dividends.
For the six-month period ended April 30, 1998, the Fund's Auction
Market Preferred Stock had an average yield of 3.88% for Series A
and 3.30% for Series B.
The Municipal Market Environment
During the six months ended April 30, 1998, bond yields generally
moved lower, and by mid-January 1998 had declined to recent historic
lows. Long-term US Treasury bond yields declined 20 basis points
(0.20%) during the same period and stood at 5.95% by April 30, 1998.
Similarly, long-term uninsured tax-exempt bond yields, as measured
by the Bond Buyer Revenue Bond Index, fell approximately 35 basis
points to 5.25%, a level not seen since the mid-1970s. While low
inflation has supported lower interest rates, much of the decline in
bond yields in late 1997 and early 1998 was driven more by the
turmoil in Asian financial markets than by domestic economic
fundamentals. Weak economic conditions in Asia were expected to
negatively impact US growth through reduced export demand.
Additionally, inflation in the United States was also expected to
decline in response to lower prices on goods imported from Asian
manufacturers.
However, in recent months, many investors have become increasingly
concerned that most of the downturn in Asia, especially in Japan,
has already occurred and any future deterioration will not be severe
enough to constrain US economic growth and inflationary pressures.
These concerns served to push interest rates higher in the latter
part of the period, causing fixed-income yields to retrace much of
their earlier gains.
Thus far in 1998, the municipal bond market has experienced
unexpectedly strong supply pressures. These supply pressures have
prevented tax-exempt bond yields from declining as much as US
Treasury bond yields. Over the last six months, more than $135
billion in new tax-exempt bonds were underwritten, an increase of
over 40% compared to the same period a year ago. During the last
three months, municipalities issued over $72 billion in new
securities, an increase of more than 60% compared to the same three-
month period in 1997. Additionally, corporate issuers have also
viewed current interest rate levels as an opportunity to issue
significant amounts of taxable securities. Thus far in 1998, over
$100 billion in investment-grade corporate bonds have been
underwritten, an increase of more than 60% relative to the
comparable period a year ago. This sizeable corporate bond issuance
has tended to support generally higher fixed-income yields and
reduce the demand for tax-exempt bonds.
However, the recent pace of new municipal bond issuance is unlikely
to be maintained. Continued increases in bond issuance will require
lower and lower tax-exempt bond yields to generate the economic
savings necessary for additional municipal bond refinancing.
Preliminary estimates for 1998 total municipal bond issuance are
presently in the $200 billion--$225 billion range. These estimates
suggest that recent supply pressures are likely to abate later in
the year. Municipal bond investors received approximately $30
billion earlier this year in coupon payments, bond maturities and
proceeds from early redemptions. The demand generated by these
assets has helped offset the increase in supply seen thus far this
year. Furthermore, looking ahead, June and July have also tended to
be periods of strong investor demand as seasonal factors are likely
to generate strong income flows similar to those seen earlier this
year.
MuniYield California Insured Fund, Inc.
April 30, 1998
It is also possible that at least some of the recent economic
strength seen in the United States will be reversed in the coming
months. A particularly mild winter has been partially responsible
for a strong housing sector, as well as other construction
industries. This recent strong trend may not be sustained and may
lead to weaker construction growth later this year. Additionally,
strong economic growth in 1997 and the increased use of electronic
tax filing have resulted in larger and earlier Federal and state
income tax refunds to many individuals. These refunds appear to have
supported strong consumer spending in recent months, but may be
borrowing against weaker spending later this year. In addition, the
continued impact of the Asian financial crisis on the US domestic
economy's future growth remains unclear. Barring a dramatic and
unexpected resurgence of domestic inflation, we do not believe that
the Federal Reserve Board will be willing to raise interest rates
until the full impact of the Asian situation can be established.
All these factors suggest that over the near term, tax-exempt as
well as taxable bond yields are unlikely to rise by any appreciable
amount. Recent supply pressures have caused municipal bond yield
ratios to rise relative to US Treasury bond yields. At April 30,
1998, long-term tax-exempt bond yields were at attractive yield
ratios relative to comparable US Treasury securities (over 90%), and
well in excess of their expected range of 85%--88%. Any further
pressure upon the municipal market may well represent a very
attractive investment opportunity.
Portfolio Strategy
For the six months ended April 30, 1998, we managed MuniYield
California Insured Fund, Inc. with the intent of sustaining an
appealing level of tax-exempt income while simultaneously seeking to
achieve an above-average total return. During the period, our
portfolio strategy was to maintain a fully invested position and to
use any dips in the market to aggressively restructure the Fund,
while using market rallies to sell more aggressively structured
bonds.
While the overall trend in interest rates for the six-month period
ended April 30, 1998 was down, market volatility created a trading
range. Interest rates fluctuated rapidly during the period as
opinions vacillated on inflation and whether the Federal Reserve
Board was going to raise interest rates. Overall, we believed that
inflation was not a problem and therefore positioned the Fund to
benefit from a decline in interest rates. As a result of this
strategy, the Fund had an above-average total return and yield
relative to comparable California insured tax-exempt funds.
Looking ahead, we believe that interest rates will continue to
fluctuate until a sustained slowdown in the US economy drives them
lower. To that end, our strategy will concentrate on extending
duration on any market back-ups in order to seek to enhance the
total return of the Fund.
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 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 29, 1998
MuniYield California Insured Fund, Inc.
April 30, 1998
PORTFOLIO INSURANCE
MuniYield California Insured Fund, Inc. seeks to provide its
shareholders with the benefits of an insured municipal bond
portfolio. Previously, the Fund generally achieved this objective by
limiting at least 80% of portfolio investments to municipal bonds
insured under policies obtained by the issuer or another party,
including the Fund itself, and issued by insurance carriers with
claims paying ability ratings of AAA or its equivalent from at least
two nationally recognized rating agencies, such as Standard & Poor's
Ratings Services, Moody's Investor Service, Inc., or Fitch IBCA,
Inc. In order to increase the Fund's flexibility to obtain
appropriate investments, the Fund has modified its practice with
respect to the ratings criteria it applies to the carriers that
provide insurance for the municipal bonds in its portfolio.
Currently, the Fund may also invest in municipal bonds insured by,
or may itself purchase an insurance policy for all or a portion of
its municipal bond portfolio from, an insurance carrier with a
claims paying ability rating of AAA or its equivalent from at least
one of such nationally recognized rating agencies. There can be no
assurance that insurance of the kind described above will continue
to be available to the Fund, and the Fund has reserved its right to
modify its criteria for portfolio insurance, or discontinue its
policy of maintaining an insured portfolio if such insurance is no
longer available or if the cost of such insurance outweighs the
benefits to the Fund. Although we periodically review the financial
condition of each insurer, there can be no assurance that the
insurers will be able to honor their obligations under the
circumstances of any claim thereunder.
QUALITY PROFILE
The quality ratings of securities in the Fund as of April 30, 1998
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 85.5%
AA/Aa 7.6
A/A 1.5
BBB/Baa 1.5
NR (Not Rated) 0.5
Other++ 2.3
[FN]
++Temporary investments in short-term municipal securities.
MuniYield California Insured Fund, Inc.
April 30, 1998
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 California 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.
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute substantially all of its
net investment income to its shareholders on a monthly basis.
However, in order to provide shareholders with a more consistent
yield to the current trading price of shares of Common Stock of the
Fund, the Fund may at times pay out less than the entire amount of
net investment income earned in any particular month and may at
times in any month pay out such accumulated but undistributed income
in addition to net investment income earned in that month. As a
result, the dividends paid by the Fund for any particular month may
be more or less than the amount of net investment income earned by
the Fund during such month. The Fund's current accumulated but
undistributed net investment income, if any, is disclosed in the
Statement of Assets, Liabilities and Capital, which comprises part
of the Financial Information included in this report.
MuniYield California Insured Fund, Inc.
April 30, 1998
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
PCR Pollution Control Revenue Bonds
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
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
California--98.3%
<S> <S> <C> <S> <C>
AAA Aaa $ 2,000 ABC, California, Unified School District, UT, Series A, 4.75% due
8/01/2022 (i) $ 1,835
AAA Aaa 1,250 Alameda County, California, COP, Participation Refunding and Capital Projects,
5% due 6/01/2022 (b) 1,193
Anaheim, California, Public Financing Authority, Lease Revenue Bonds
(Public Improvements Project) (i):
AAA Aaa 10,000 Senior Series A, 5% due 3/01/2037 9,429
AAA Aaa 12,485 Sub-Series C, 5.37%** due 9/01/2034 1,732
AAA Aaa 20,000 Sub-Series C, 5.25%** due 9/01/2035 2,624
AAA Aaa 2,000 Bay Area, California, Government Association, Tax Allocation Revenue Bonds
(California Redevelopment Agency), Series A, 6% due 12/15/2024 (i) 2,128
AAA Aaa 1,960 Berkeley, California, Unified School District, UT, Series C, 6.50% due
8/01/2019 (b) 2,174
AAA Aaa 2,000 Beverly Hills, California, Public Financing Authority, Lease Revenue
Bonds, INFLOS, Series A, 7.32% due 6/01/2015 (d)(e) 2,105
AAA Aaa 2,000 Big Bear Lake, California, Water Revenue Refunding Bonds, 6% due 4/01/2022 (d) 2,223
NR* Aaa 12,000 California Educational Facilities Authority, Student Loan Revenue Bonds
(Caledge Loan Program), AMT, 5.55% due 4/01/2028 (b) 11,827
California HFA, Home Mortgage Revenue Bonds, AMT:
AA- Aa 195 Series B, 8% due 8/01/2029 202
AA- Aa 4,220 Series F-1, 7% due 8/01/2026 4,547
AA- Aa 5,515 Series G, 7.05% due 8/01/2027 5,826
AAA Aaa 1,675 Series I, 5.75% due 2/01/2029 (d) 1,722
AA- Aa 1,950 California HFA, Revenue Bonds, RIB, AMT, 9.162% due 8/01/2023 (e) 2,211
California Health Facilities Financing Authority Revenue Bonds:
AAA Aaa 2,850 (Adventist Health System-West), Series B, 6.50% due 3/01/2011 (d) 3,039
A1+ VMIG1++ 1,100 (Adventist Hospital), VRDN, Series B, 4.10% due 9/01/2028 (a)(d) 1,100
AAA Aaa 5,000 RITR, Series 17, 6.37% due 8/15/2030 (d)(e) 5,019
A1+ VMIG1++ 1,900 Refunding (Sutter/CHS), VRDN, Series B, 4.05% due 7/01/2012 (a)(b) 1,900
A1+ VMIG1++ 400 Refunding (Sutter/CHS), VRDN, Series C, 4.05% due 7/01/2022 (a)(i) 400
AAA Aaa 2,750 (Scripps Memorial Hospital), Series A, 6.375% due 10/01/2022 (d) 2,978
A1+ NR* 2,700 California Pollution Control Financing Authority, PCR, Refunding (Pacific Gas
and Electric Co.), VRDN, Series C, 4.05% due 11/01/2026 (a) 2,700
</TABLE>
MuniYield California Insured Fund, Inc.
April 30, 1998
<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>
A1 VMIG1++ $ 100 California Pollution Control Financing Authority, Resource Recovery
Revenue Bonds (Atlantic Richfield Company Project), VRDN, AMT, Series A,
4.15% due 12/01/2024 (a) $ 100
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 3,274
A1+ VMIG1++ 200 (Shell Oil Co.-Martinez Project), VRDN, Series A, 4.05% due 10/01/2024 (a) 200
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) 1,150
California State, GO (c):
AAA Aaa 5,000 4.75% due 9/01/2023 4,593
AAA Aaa 5,000 Refunding, 5% due 2/01/2015 4,916
AAA Aaa 160 UT, 6.90% due 11/01/2011 182
California State Public Works Board, Lease Revenue Bonds (Department of
Corrections-State Prisons):
AAA Aaa 2,000 AMT, 6% due 6/01/2007 (i) 2,176
AAA Aaa 7,635 Refunding, Series A, 5% due 12/01/2019 (b) 7,448
AA Aa2 1,000 California State Water Department Resources, Water System Revenue Bonds
(Central Valley Project), Series O, 4.75% due 12/01/2017 933
AAA Aaa 2,000 California Statewide Community Development Authority Revenue Bonds, COP
(Good Samaritan Health System), 6.50% due 5/01/2004 (f)(j) 2,247
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) 3,555
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) 7,848
AAA Aaa 5,000 Cucamonga County, California, Water District Facilities Refinancing Bonds, COP,
6.50% due 9/01/2022 (c) 5,378
AAA Aaa 5,000 El Camino, California, Hospital District Revenue Refunding Bonds, Series A,
6.25% due 8/15/2017 (b)(k) 5,201
AAA Aaa 1,000 Fairfield-Suisun, California, Sewer District Revenue Refunding Bonds,
Series A, 6.25% due 5/01/2016 (d) 1,065
BBB Baa 4,625 Inglewood, California, Public Financing Authority Revenue Bonds (Manchester-
Prairie-N. Inglewood Industrial Park Project), Series B, 7% due 5/01/2022 4,994
AAA Aaa 3,750 Los Angeles, California, Community College District, COP, Refunding,
Series A, 6% due 8/15/2020 (i) 3,988
AAA Aaa 7,365 Los Angeles, California, Harbor Department Revenue Bonds, RITR, AMT,
Series 7, 7.995% due 11/01/2026 (d)(e) 9,031
AAA Aaa 1,460 Los Angeles, California, Unified School District, UT, Series A, 6% due
7/01/2012 (c) 1,615
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) 6,958
AAA Aaa 6,500 Madera County, California, COP (Children's Valley Hospital Project), 4.75%
due 3/15/2018 (d) 6,048
Metropolitan Water District, Southern California, Waterworks Revenue
Bonds, Series A:
AAA Aaa 13,465 5% due 7/01/2030 (d) 12,764
AA Aa2 8,000 5% due 7/01/2037 7,542
AA Aa2 4,750 Refunding, 5.75% due 7/01/2021 5,112
AAA Aaa 4,000 Modesto, California, Irrigation District Financing Authority, Revenue
Refunding Bonds (Domestic Water Project), Series D, 4.75% due 9/01/2022 (b) 3,675
</TABLE>
MuniYield California Insured Fund, Inc.
April 30, 1998
<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 $ 4,500 Modesto, California, Public Financing Authority, Lease Revenue Refunding
Bonds (Capital Improvements & Refinancing Project), 4.75% due 9/01/2024 (b) $ 4,121
AAA Aaa 3,340 Monterey County, California, COP (Matividad Medical Improvement Center),
Series E, 4.75% due 8/01/2019 (d) 3,083
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) 3,239
AA Aa3 2,000 Mountain View-Los Altos, California, Unified High School District, UT,
Series B, 6.50% due 5/01/2017 2,255
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) 3,236
AAA Aaa 1,900 Oakland, California, Redevelopment Agency, Refunding Bonds, INFLOS, 7.915% due
9/01/2019 (d)(e) 2,123
AAA Aaa 4,200 Oakland, California, State Building Authority, Lease Revenue Bonds (Elihu M.
Harris), Series A, 5% due 4/01/2023 (b) 4,010
AAA Aaa 2,000 Orchard, California, School District, GO, UT, Series A, 6.50% due 8/01/2019 (c) 2,236
AAA Aaa 1,000 Palm Springs, California, Financing Authority, Lease Revenue Bonds (Convention
Center Project), Series A, 6.75% due 11/01/2021 (d) 1,088
AAA Aaa 16,955 Port Oakland, California, Port Revenue Bonds, AMT, Series E, 6.50% due
11/01/2016 (d) 18,341
AAA Aaa 3,500 Poway, California, Unified School District, Special Tax Refunding Bonds
(Community Facilities District No. 1), 4.75% due 10/01/2023 (d) 3,205
AAA Aaa 4,000 Rancho, California, Water District Financing Authority Revenue Bonds, RITES,
6.287% due 9/11/2001 (b)(e)(f) 4,341
Richmond, California, Redevelopment Agency, Tax Allocation Refunding Bonds
(Harbour), Series A (d):
AAA Aaa 1,150 5%** due 7/01/2014 496
AAA Aaa 1,150 5.05%** due 7/01/2015 467
AAA Aaa 1,150 5.10%** due 7/01/2016 439
A1+ Aa1 1,400 Roseville, California, Finance Authority, Hospital Lease Revenue Bonds
(Roseville Hospital), VRDN, Series A, 3.95% due 10/01/2014 (a) 1,400
AAA Aaa 8,000 Sacramento, California, City Financing Authority, Lease Revenue Refunding Bonds,
Series A, 5.40% due 11/01/2020 (b) 8,246
Sacramento, California, Municipal Utility District, Electric Revenue Bonds:
AAA Aaa 1,000 Refunding, Series G, 6.50% due 9/01/2013 (d) 1,164
AAA Aaa 7,500 Series K, 5.25% due 7/01/2024 (b) 7,531
AAA Aaa 10,000 Sacramento County, California, COP, Refunding (Public Facilities Project-
Coroner/Crime Lab), 4.75% due 10/01/2027 (b) 9,074
AAA Aaa 7,000 Sacramento County, California, Sanitation District Finance Authority, Revenue
Refunding Bonds, 4.75% due 12/01/2023 (d) 6,409
San Diego, California, IDR:
AAA Aaa 1,500 RITR, 7.785% due 9/01/2018 (e) 1,717
AAA Aaa 5,000 Refunding (San Diego Gas and Electric), Series C, 5.90% due 9/01/2018 (i) 5,223
AAA Aaa 13,000 San Francisco, California, Bay Area Rapid Transit District, Sales Tax Revenue
Refunding Bonds, 4.75% due 7/01/2023 (b) 11,944
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) 8,283
</TABLE>
MuniYield California Insured Fund, Inc.
April 30, 1998
<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>
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 $ 1,349
AAA Aaa 2,060 6.75% due 7/01/2024 2,310
AAA Aaa 2,000 San Francisco, California, City and County Sewer Revenue Refunding Bonds,
6% due 10/01/2011 (b) 2,134
AAA Aaa 2,300 San Jose, California, Redevelopment Agency, Tax Allocation Bonds (Merged
Area), AMT, Series E, 5.85% due 8/01/2027 (d) 2,392
AAA Aaa 4,000 San Mateo County, California, Transportation District, Sales Tax Revenue
Refunding Bonds, Series A, 8% due 6/01/2020 (d) 5,474
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) 7,979
AAA Aaa 5,000 Santa Clara, California, Electric Revenue Bonds, Series A, 5% due 7/01/2027 (b) 4,757
AAA Aaa 1,350 Santa Clara County, COP, Refunding (Capital Project I), 6.25% due 10/01/2016 (b) 1,431
AAA Aaa 3,540 Santa Clara County, California, Financing Authority, Lease Revenue Bonds
(VMC Facility Replacement Project), Series A, 7.75% due 11/15/2011 (b) 4,563
AAA Aaa 1,850 Santa Fe Springs, California, Redevelopment Agency, Tax Allocation Bonds
(Consolidated Redevelopment Project), Series A, 6.40% due 9/01/2022 (d) 2,003
AAA Aaa 2,185 Santa Rosa, California, High School District, GO, UT, 6.375% due 5/01/2016 (d) 2,382
AAA Aaa 1,800 Simi Valley, California, Unified School District, COP (Refunding and
Capital Improvement Projects), 5.25% due 8/01/2022 (b) 1,805
AAA Aaa 1,500 Stockton, California, COP, Revenue Bonds (Wastewater Treatment Plant Expansion),
Series A, 6.80% due 9/01/2004 (c)(f) 1,721
AAA Aaa 4,000 Walnut Valley, California, Unified School District, Refunding, UT, Series A,
7.20% due 2/01/2016 (d) 4,872
Puerto Rico--0.6%
A Baa1 2,300 Puerto Rico Commonwealth, Public Improvement Refunding Bonds, 4.50% due
7/01/2023 2,017
Total Investments (Cost--$331,427)--98.9% 341,767
Other Assets Less Liabilities--1.1% 3,823
--------
Net Assets--100.0% $345,590
========
<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, 1998.
(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, 1998.
(f)Prerefunded.
(g)GNMA Collateralized.
(h)FHLMC Collateralized.
(i)FSA Insured.
(j)CAPMAC Insured.
(k)Escrowed to maturity.
*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 rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
MuniYield California Insured Fund, Inc.
April 30, 1998
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of April 30, 1998
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$331,426,970) (Note 1a) $341,766,907
Cash 446,192
Receivables:
Interest $ 5,721,291
Securities sold 3,229,412 8,950,703
------------
Prepaid expenses and other assets 12,071
------------
Total assets 351,175,873
------------
Liabilities: Payables:
Securities purchased 4,989,464
Dividends to shareholders (Note 1e) 400,248
Investment adviser (Note 2) 144,248 5,533,960
------------
Accrued expenses and other liabilities 51,971
------------
Total liabilities 5,585,931
------------
Net Assets: Net assets $345,589,942
============
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 1,391,008
Undistributed realized capital gains on investments--net
(Note 5) 4,552,737
Unrealized appreciation on investments--net 10,339,937
------------
Total--Equivalent to $15.04 net asset value per share of
Common Stock (market price--$14.8125) 245,589,942
------------
Total capital $345,589,942
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
MuniYield California Insured Fund, Inc.
April 30, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months Ended
April 30, 1998
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $9,432,763
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 862,946
Commission fees (Note 4) 125,359
Professional fees 39,779
Accounting services (Note 2) 30,328
Transfer agent fees 28,957
Listing fees 12,011
Directors' fees and expenses 11,376
Custodian fees 9,808
Pricing fees 7,287
Printing and shareholder reports 5,539
Other 12,727
------------
Total expenses 1,146,117
------------
Investment income--net 8,286,646
------------
Realized & Unreal- Realized gain on investments--net 9,873,954
ized Gain Change in unrealized appreciation on investments--net (12,419,800)
(Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 5,740,800
(Notes 1b, ============
1d & 3):
See Notes to Financial Statements.
</TABLE>
MuniYield California Insured Fund, Inc.
April 30, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: April 30, 1998 Oct. 31, 1997
<S> <S> <C> <C>
Operations: Investment income--net $ 8,286,646 $ 17,147,491
Realized gain on investments--net 9,873,954 3,911,530
Change in unrealized appreciation on investments--net (12,419,800) 6,470,833
------------ ------------
Net increase in net assets resulting from operations 5,740,800 27,529,854
------------ ------------
Dividends to Investment income--net:
Shareholders Common Stock (6,765,150) (14,026,322)
(Note 1e): Preferred Stock (1,761,900) (3,330,100)
------------ ------------
Net decrease in net assets resulting from dividends to
shareholders (8,527,050) (17,356,422)
------------ ------------
Net Assets: Total increase (decrease) in net assets (2,786,250) 10,173,432
Beginning of period 348,376,192 338,202,760
------------ ------------
End of period* $345,589,942 $348,376,192
============ ============
<FN>
*Undistributed investment income--net $ 1,391,008 $ 1,631,412
============ ============
See Notes to Financial Statements.
</TABLE>
MuniYield California Insured Fund, Inc.
April 30, 1998
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended For the Year Ended
April 30, October 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 15.21 $ 14.59 $ 14.43 $ 12.88 $ 15.68
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .51 1.05 1.04 1.09 1.10
Realized and unrealized gain (loss) on
investments--net. (.16) .63 .17 1.53 (2.81)
-------- -------- -------- -------- --------
Total from investment operations .35 1.68 1.21 2.62 (1.71)
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.41) (.86) (.84) (.84) (.89)
Realized gain on investments--net -- -- -- -- (.02)
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Stock shareholders (.41) (.86) (.84) (.84) (.91)
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:
Dividends and distributions to Preferred Stock
shareholders:
Investment income--net (.11) (.20) (.21) (.23) (.18)
Realized gain on investments--net -- -- -- -- --++
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity (.11) (.20) (.21) (.23) (.18)
-------- -------- -------- -------- --------
Net asset value, end of period $ 15.04 $ 15.21 $ 14.59 $ 14.43 $ 12.88
======== ======== ======== ======== ========
Market price per share, end of period $14.8125 $ 15.125 $ 13.75 $ 12.625 $ 11.25
======== ======== ======== ======== ========
Total Investment Based on market price per share .64%+++ 16.74% 15.84% 20.01% (19.71%)
Return:** ======== ======== ======== ======== ========
Based on net asset value per share 1.61%+++ 10.64% 7.54% 19.81% (12.06%)
======== ======== ======== ======== ========
Ratios to Average Expenses .66%* .66% .67% .70% .68%
Net Assets:*** ======== ======== ======== ======== ========
Investment income--net 4.80%* 5.01% 5.06% 5.45% 5.34%
======== ======== ======== ======== ========
Supplemental Net assets, net of Preferred Stock, end of
Data: period (in thousands) $245,590 $248,376 $238,203 $235,603 $210,255
======== ======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $100,000 $100,000 $100,000 $100,000 $100,000
======== ======== ======== ======== ========
Portfolio turnover 45.75% 71.36% 79.39% 83.26% 38.06%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,456 $ 3,484 $ 3,382 $ 3,356 $ 3,103
======== ======== ======== ======== ========
Dividends Series A--Investment income--net $ 476 $ 858 $ 882 $ 912 $ 684
Per Share On ======== ======== ======== ======== ========
Preferred Stock Series B--Investment income--net $ 405 $ 807 $ 826 $ 967 $ 788
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.
++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>
MuniYield California Insured Fund, Inc.
April 30, 1998
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.
* Financial futures contracts--The Fund may purchase or sell
financial 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).
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.
MuniYield California Insured Fund, Inc.
April 30, 1998
NOTES TO FINANCIAL STATEMENTS (concluded)
(e) 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, including proceeds from the
issuance of Preferred Stock.
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, 1998 were $159,513,587 and
$153,578,351, respectively.
Net realized gains for the six months ended April 30, 1998 and net
unrealized gains as of April 30, 1998 were as follows:
Realized Unrealized
Gains Gains
Long-term investments $9,606,742 $10,339,937
Financial futures contracts 267,212 --
---------- -----------
Total $9,873,954 $10,339,937
========== ===========
As of April 30, 1998, net unrealized appreciation for Federal income
tax purposes aggregated $10,339,937, of which $13,241,498 related to
appreciated securities and $2,901,561 related to depreciated
securities. The aggregate cost as of April 30, 1998 for Federal
income tax purposes was $331,426,970.
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
Shares issued and outstanding during the six months ended April 30,
1998 and the year ended October 31, 1997 remained constant.
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, 1998 were as
follows: Series A, 3.50% and Series B, 3.90%.
As of April 30, 1998, 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, 1998, Merrill Lynch, Pierce, Fenner & Smith Inc., an
affiliate of FAM, earned $79,093 as commissions.
5. Capital Loss Carryforward:
At October 31, 1997, the Fund had a capital loss carryforward of
approximately $1,004,000, all of which expires in 2003. This amount
will be available to offset like amounts of any future taxable
gains.
6. Subsequent Event:
On May 7, 1998, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$.065829 per share, payable on May 28, 1998 to shareholders of
record as of May 21, 1998.
MuniYield California Insured Fund, Inc.
April 30, 1998
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
Philip M. Mandel, Secretary
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
