MUNIYIELD
CALIFORNIA
INSURED
FUND II, INC.
FUND LOGO
Semi-Annual Report
April 30, 1995
This report, including the financial information herein, is
transmitted to the shareholders of MuniYield California Insured Fund
II, 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.
<PAGE>
MuniYield California
Insured Fund II, Inc.
Box 9011
Princeton, NJ
08543-9011
MuniYield California Insured Fund II, Inc.
TO OUR SHAREHOLDERS
For the six-month period ended April 30, 1995, the Common Stock of
MuniYield California Insured Fund II, Inc. earned $0.441 per share
income dividends, which included earned and unpaid dividends of
$0.071. This represents a net annualized yield of 6.33%, 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 +9.15%,
based on a change in per share net asset value from $13.39 to
$14.03, and assuming reinvestment of $0.448 per share income
dividends and $0.071 per share capital gains distributions.
For the six-month period ended April 30, 1995, the Fund's Auction
Market Preferred Stock had an average yield of 4.41% for Series A
and 4.05% for Series B.
The Environment
During the six months ended April 30, 1995, the perception that the
US economy was overheating and inflationary pressures were
increasing gave way to a more benign economic outlook. With more
signs of slowing growth, investors now appear to be forecasting a
"soft landing" for the US economy. Although gross domestic product
was reported to have increased at a revised 5.1% rate during the
final quarter of 1994, declines in other indicators such as new home
sales and durable goods orders registered thus far in 1995 have led
investors to anticipate that the economy is losing enough momentum
to keep inflation under control and preclude further significant
monetary policy tightening by the Federal Reserve Board. A further
indication of a slowing economy was the reported decline in the
Index of Leading Economic Indicators for March.
As US stock and bond markets have risen on more positive economic
news, the value of the US dollar has reached new lows relative to
the yen and the Deutschemark. Persistent trade deficits and exports
of capital from the United States have kept the US currency in a
decade-long decline relative to the Japanese and German currencies.
Over the longer term, since the United States has the highest
productivity among industrialized nations and among the lowest labor
costs, demand for US dollar-denominated assets may improve. However,
a reduction of the still-widening US trade deficit may be necessary
before the US dollar appreciates substantially relative to the yen
and the Deutschemark.
<PAGE>
The first months of 1995 have been very positive for the stock and
bond markets. Continued signs of a moderating expansion and well-
contained inflationary pressures would provide further assurance
that the peak in interest rates is behind us. On the other hand,
indications of reaccelerating growth and further significant
monetary policy tightening by the Federal Reserve Board would be a
decided negative for the US financial markets.
The Municipal Market
During the six-month period ended April 30, 1995, the tax-exempt
bond market gradually recouped much of the losses sustained during
1994. Signs of a weakening domestic economy and ongoing moderate
inflationary pressures have fostered an environment of declining
interest rates. Since October 31, 1994, A-rated uninsured municipal
revenue bond yields, as measured by the Bond Buyer Revenue Bond
Index, have declined over 65 basis points (0.65%) to close the six-
month period ended April 30, 1995 at 6.29%. Tax-exempt bond yields
initially continued to climb in late 1994, reaching a high of 7.37%
in late November 1994. Municipal bond yields have since declined
over 100 basis points from their recent highs and are presently
lower than they were a year ago.
US Treasury bond yields have experienced similar declines over the
last six months to end the April period at 7.34%. Much of the recent
improvement in the tax-exempt bond market, however, has occurred
over the last three months. During this most recent quarter
municipal bond yields have fallen approximately 50 basis points,
while US Treasury bond yields declined only 35 basis points. Tax-
exempt bond yields declined more than their taxable counterparts in
recent months, largely in response to the significant decline in new
bond issuance in recent quarters. Over the last six months, less
than $60 billion in new long-term municipal securities were
underwritten, a decline of nearly 45% versus the comparable period a
year earlier. Issuance was particularly low this past January and
February, with monthly volume of less than $8 billion. These levels
are the lowest monthly totals since the mid-1980s.
To compound the municipal market's already strong technical posture,
both institutional and individual investors have seen significant
cash inflows in recent months. These assets were derived from
regular coupon payments, bond maturities and the proceeds from early
bond calls and redemptions. It has been estimated that investors
received over $20 billion in principal redemptions and coupon income
in January 1995 alone. With monthly issuance in the $10 billion
range thus far this year, the current supply/demand imbalance has
dominated the municipal market and bond prices have risen
accordingly. The tax-exempt bond market's technical position is
likely to remain very strong throughout most of 1995. Investors are
expected to receive almost $40 billion in principal and coupon
payments on July 1, 1995. Investor proceeds from all sources have
been estimated to exceed $200 billion for all of 1995. Estimates of
total new bond issuance for 1995 have continued to be lowered with
most estimates now in the $125 billion range. Investors should find
it increasingly difficult to replace existing holdings as they
mature and to reinvest coupon income in such an environment.
<PAGE>
The municipal bond market's outperformance thus far this year caused
the tax-exempt market to become temporarily expensive relative to
its taxable counterpart in late April. Investor concerns regarding
the international currency situation and the future impact of
proposed revisions to US taxation policies upon the tax advantage
inherent to municipal bonds have combined to cause tax-exempt bond
yields to increase marginally in recent weeks. Municipal bond yields
have risen approximately 15 basis points from their lows in mid-
April 1995. Long-term US Treasury bond yields have remained
essentially stable.
Such an underperformance by the tax-exempt bond market is likely to
be limited in duration. The recent increase in tax-exempt bond
yields has already begun to attract institutional investors since
some municipal bonds yielding in excess of 85% of US Treasury bond
yields are again available. Also, concerns regarding the implication
for municipal bonds' tax advantage resulting from various proposed
tax law changes (for example, flat-tax, value-added tax or national
sales tax) are all likely to quickly recede as investors realize
that such, if any, changes are unlikely to be enacted before late
1996 at the earliest. Long-term investors will also recall 1986 when
similar tax proposals were made and tax-exempt bond yields initially
rose and then quickly fell. Investors are likely to view the current
situation as an opportunity to purchase very attractively priced tax-
advantaged products. This should cause municipal bond yields to
quickly return to their more historic relationship.
Portfolio Strategy
For the six-month period ended April 30, 1995, our portfolio
strategy shifted slightly on the belief that bond yields were
attractive. Cash reserves, which averaged 5% of net assets during
the six-month period ended October 31, 1994, were drawn down to an
average of 1% by April 30, 1995. We did this to seek to enhance
income for shareholders while slightly extending duration to better
capture any market appreciation. Another factor in the decision to
lower cash reserves was the 61% decrease in that municipal issuance
of California bonds for this six-month period versus the same six-
month period last year. This decline in issuance raised concerns
that it would be difficult to buy bonds when the market becomes more
active. However, the Fund's credit quality remained high, with 97%
of long-term assets rated AA or better by at least one of the major
rating agencies. Looking forward, our strategy will consist of
seeking to enhance the total return of the Fund as yields begin
their expected downward path.
<PAGE>
The Fund's two classes of Preferred Stock, which are auctioned on a
seven-day and 28-day schedule, averaged 3.88% for the six-month
period ended April 30, 1995. These short-term interest rates have
continued to provide generous yield benefits to the Fund's Com-
mon Stock shareholders as a result of leveraging in a steep yield
curve environment. However, should the spread between short-term and
long-term interest rates narrow, the benefits of the leverage will
diminish and reduce the yield of the Common Stock. (For a complete
explanation of the benefits and risks of leveraging, see page 4 of
this report to shareholders.)
In Conclusion
We appreciate your ongoing interest in MuniYield California Insured
Fund II, Inc., and we look forward to serving your investment needs
in the months and years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
May 30, 1995
<PAGE>
THE BENEFITS AND RISKS OF LEVERAGING
MuniYield California Insured Fund II, Inc. utilizes leveraging to
seek to enhance the yield and net asset value of its Common Stock.
However, these objectives cannot be achieved in all interest rate
environments. To leverage, the Fund issues Preferred Stock, which
pays dividends at prevailing short-term interest rates, and invests
the proceeds in long-term municipal bonds. The interest earned on
these investments is paid to Common Stock shareholders in the form
of dividends, and the value of these portfolio holdings is reflected
in the per share net asset value of the Fund's Common Stock.
However, in order to benefit Common Stock shareholders, the yield
curve must be positively sloped; that is, short-term interest rates
must be lower than long-term interest rates. At the same time, a
period of generally declining interest rates will benefit Common
Stock shareholders. If either of these conditions change, then the
risks of leveraging will begin to outweigh the benefits.
To illustrate these concepts, assume a fund's Common Stock
capitalization of $100 million and the issuance of Preferred Stock
for an additional $50 million, creating a total value of $150
million available for investment in long-term municipal bonds. If
prevailing short-term interest rates are approximately 3% and long-
term interest rates are approximately 6%, the yield curve has a
strongly positive slope. The fund pays dividends on the $50 million
of Preferred Stock based on the lower short-term interest rates. At
the same time, the fund's total portfolio of $150 million earns the
income based on long-term interest rates. Of course, increases in
short-term interest rates would reduce (and even eliminate) the
dividends on the Common Stock.
<PAGE>
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term
investments, and therefore the Common Stock shareholders are the
beneficiaries of the incremental yield. However, if short-term
interest rates rise, narrowing the differential between short-term
and long-term interest rates, the incremental yield pick-up on the
Common Stock will be reduced or eliminated completely. At the same
time, the market value of the fund's Common Stock (that is, its
price as listed on the New York Stock Exchange) may, as a result,
decline. Furthermore, if long-term interest rates rise, the Common
Stock's net asset value will reflect the full decline in the price
of the portfolio's investments, since the value of the fund's
Preferred Stock does not fluctuate. In addition to the decline in
net asset value, the market value of the fund's Common Stock may
also decline.
PORTFOLIO ABBREVIATIONS
To simplify the listings of MuniYield California Insured Fund II,
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
M/F Multi-Family
RIB Residual Interest Bonds
SAVRS Select Auction Variable Rate 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--94.0%
<S> <S> <C> <S> <C>
AAA Aaa $ 2,000 Berkeley, California, Unified School District, UT, Series C, 6.50% due
8/01/2019 (b) $ 2,066
California Health Facilities Financing Authority Revenue Bonds:
AAA Aaa 1,000 (Adventist Health System-West), Series B, 6.25% due 3/01/2021 (d) 1,001
AAA Aaa 1,000 (Kaiser Permanente), Series A, 7% due 10/01/2018 (b) 1,064
AAA Aaa 15,750 (San Diego Children's Hospital), 6.50% due 7/01/2020 (d) 16,174
<PAGE>
California HFA, Home Mortgage Revenue Bonds:
AA- Aa 3,900 AMT, Series F-1, 7% due 8/01/2026 4,000
AA- Aa 2,435 Refunding, AMT, Series H, 7.50% due 8/01/2025 2,595
AA- Aa 5,750 Series B, 6.90% due 8/01/2016 5,865
AA- Aa 2,000 California HFA, Revenue Bonds, AMT, RIB, 7.59% due 8/01/2023 (h) 1,987
A1+ VMIG1++ 2,200 California Pollution Control Financing Authority, Solid Waste Disposal Revenue
Bonds (Shell Oil Co.-Martinez Project), VRDN, AMT, Series A, 4.95% due
10/01/2024 (a) 2,200
NR* Aaa 1,000 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) 1,029
California State GO:
AAA Aaa 5,000 5.50% due 3/01/2020 (e) 4,535
AAA Aaa 2,000 UT, 7% due 11/01/2014 (c) 2,175
AAA Aaa 3,500 UT, 5.125% due 10/01/2017 (d)(f) 3,032
California State Public Works Board, Lease Revenue Bonds:
AAA Aaa 3,000 (Department of Corrections-California State Prison-Susanville), Series D,
5.25% due 6/01/2015 (f) 2,694
AAA Aaa 3,000 Refunding (Department of Corrections-State Prisons), Series A, 5%
due 12/01/2019 (b) 2,559
AAA Aaa 900 (Secretary of State), Series A, 6.40% due 12/01/2007 (b) 960
A- A 2,000 (Various Community College Projects), 7% due 3/01/2014 2,104
AAA Aaa 3,200 (Various Universities of California Projects), Series A, 6.40% due 12/01/2016 (b) 3,269
AAA Aaa 1,000 California Statewide Community Development Authority Revenue Bonds, COP (Good
Samaritan Health System), 6.50% due 5/01/2024 (i) 1,028
Central Coast Water Authority, California, Water Project Regional Facilities
Revenue Bonds (b):
AAA Aaa 2,385 6.50% due 10/01/2014 2,466
AAA Aaa 7,500 6.60% due 10/01/2022 7,787
AAA Aaa 2,000 Cucamonga County, California, Water District COP, Refinancing Facilities,
6.50% due 9/01/2022 (c) 2,050
AAA Aaa 2,200 Culver City, California, Redevelopment Finance Authority, Tax Allocation Revenue
Refunding Bonds, 5.50% due 11/01/2014 (b) 2,062
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
California (continued)
<S> <S> <C> <S> <C>
AAA Aaa $ 6,000 El Cajon, California, Redevelopment Agency, Tax Allocation Bonds (El Cajon
Redevelopment Project), 6.60% due 10/01/2022 (b) $ 6,257
AAA Aaa 3,125 Elk Grove, California, Unified School District, Special Tax Community Facilities
District No.1, 7% due 12/01/2017 (b) 3,380
AAA Aaa 1,340 Fairfield, California, Public Financing Authority Revenue Bonds, Municipal
Park Improvement District No. 1, 6.30% due 7/01/2023 (c) 1,349
AAA Aaa 18,000 Los Angeles, California, Convention and Exhibition Center Authority, Lease
Revenue Refunding Bonds, Series A, 5.125% due 8/15/2021 (d) 15,462
AAA Aaa 3,000 Los Angeles, California, Department of Water and Power, Electric Plant Revenue
Refunding Bonds, 5.375% due 9/01/2023 (c) 2,664
AA Aa 1,000 Los Angeles, California, Harbor Department Revenue Bonds, AMT, Series B, 6.625%
due 8/01/2025 1,016
Los Angeles, California, Wastewater System Revenue Refunding Bonds:
AAA Aaa 6,575 Series C, 5.60% due 6/01/2020 (d) 6,068
AAA Aaa 1,250 Series D, 5.20% due 11/01/2021 (c) 1,085
AAA Aaa 5,500 Los Angeles County, California, Metropolitan Transportation Authority, Sales
Tax Revenue Refunding Bonds (Proposition A), Series A, 5% due 7/01/2021 (c) 4,638
<PAGE>
AAA Aaa 1,000 M-S-R Public Power Agency, California, Revenue Bonds (San Juan Project),
Series E, 6.50% due 7/01/2017 (d) 1,028
AAA Aaa 4,250 Marysville, California, Hospital Revenue Bonds (Fremont-Rideout Health Group),
Series A, 6.30% due 1/01/2022 (b) 4,280
AA Aa 6,500 Metropolitan Water District, Southern California, Waterworks Revenue Refunding
Bonds, Series A, 5.75% due 7/01/2021 6,183
AAA Aaa 3,850 Mountain View, California, Capital Improvements Financing Authority Revenue Bonds
(City Hall Community Theatre), 6.50% due 8/01/2016 (d) 3,956
Northern California Power Agency, Multiple Capital Facilities Revenue Bonds (d):
AAA Aaa 2,500 RIB, 8.544% due 9/02/2025 (h) 2,669
AAA Aaa 2,000 Series A, 6.50% due 8/01/2012 2,074
Northern California Transmission Revenue Bonds (California-Oregon Transmission
Project), Series A (d):
AAA Aaa 2,000 6.50% due 5/01/2016 2,062
AAA Aaa 6,400 Refunding, 5.25% due 5/01/2020 5,618
AAA Aaa 7,000 Orange County, California, Local Transportation Authority, Sales Tax Revenue
Bonds, Linked SAVRS and RIB, 6.20% due 2/14/2011 (b) 7,212
AAA Aaa 15,000 Pasadena, California, Community Development Commission, M/F Housing Revenue Bonds
(Civic Center), AMT, Series A, 6.45% due 12/01/2021 (e) 14,980
AAA Aaa 2,000 Port Oakland, California, Port Revenue Bonds, AMT, Series E, 6.50% due
11/01/2016 (d) 2,030
AAA Aaa 7,000 Sacramento, California, City Financing Authority, Lease Revenue Refunding Bonds,
Series A, 5.40% due 11/01/2020 (b) 6,320
Sacramento, California, Municipal Utility District, Electric Revenue Bonds (d):
AAA Aaa 5,000 Refunding, Series D, 5.25% due 11/15/2020 4,383
AAA Aaa 1,270 Refunding, Series G, 6.50% due 9/01/2013 1,356
AAA Aaa 4,000 Series B, 6.375% due 8/15/2022 4,051
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
California (concluded)
<S> <S> <C> <S> <C>
San Francisco, California, City and County Airport Commission, International
Airport Revenue Bonds, Second Series:
AAA Aaa $ 3,000 AMT, Issue 6, 6.50% due 5/01/2018 (b) $ 3,054
AAA Aaa 10,000 Refunding, Issue 2, 6.75% due 5/01/2020 (d) 10,535
AAA Aaa 1,550 San Francisco, California, City and County Redevelopment Agency, Lease Revenue
Bonds (George R. Moscone Convention Center), 6.75% due 7/01/2024 (f) 1,642
AAA Aaa 2,470 San Francisco, California, City and County Sewer Revenue Refunding Bonds, 5.375%
due 10/01/2022 (c) 2,197
AAA Aaa 4,845 San Jose, California, Redevelopment Agency, Tax Allocation Refunding Bonds (Merged
Area Redevelopment Project), 5% due 8/01/2020 (d) 4,096
AAA Aaa 3,430 Santa Ana, California, Financing Authority, Lease Revenue Bonds (Police
Administration and Holding Facility), Series A, 6.25% due 7/01/2024 (d) 3,514
Santa Clara County, California, Financing Authority, Lease Revenue Bonds (VMC
Facility Replacement Project), Series A (b):
AAA Aaa 2,500 7.75% due 11/15/2011 3,011
AAA Aaa 10,770 6.875% due 11/15/2014 11,649
AAA Aaa 1,700 6.75% due 11/15/2020 1,801
AAA Aaa 3,400 Santa Fe Springs, California, Redevelopment Agency, Tax Allocation Bonds (Con-
solidated Redevelopment Project), Series A, 6.40% due 9/01/2022 (d) 3,459
AAA Aaa 3,000 Santa Rosa, California, Wastewater Revenue Bonds (Subregional Wastewater Project),
Series A, 6.50% due 9/01/2022 (c) 3,086
AAA NR* 3,335 Southern California, HFA, S/F Mortgage Revenue Bonds Program, AMT, Series B, 6.90%
due 10/01/2024 (g) 3,409
BBB+ NR* 1,280 Stanislaus, California, Waste-to-Energy Financing Agency, Solid Waste Facility
Revenue Refunding Bonds (Ogden Martin System, Inc., Project), 7.625% due 1/01/2010 1,339
A NR* 4,175 Torrance, California, Hospital Revenue Refunding Bonds (Little Company of Mary
Hospital), 6.875% due 7/01/2015 4,264
AAA Aaa 6,920 University of California Revenue Bonds (Multiple Purpose Projects), Series D,
6.375% due 9/01/2019 (d) 7,009
AAA Aaa 3,000 West and Central Basin, California, Financing Authority Revenue Bonds, 6.125% due
8/01/2022 (b) 2,951
Total Investments (Cost--$247,206)--94.0% 251,839
Other Assets Less Liabilities--6.0% 16,023
--------
Net Assets--100.0% $267,862
========
<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, 1995.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)MBIA Insured.
(e)FSA Insured.
(f)Capital Guaranty.
(g)FNMA/GNMA Collateralized.
(h)The interest rate is subject to change periodically and inversely
to the prevailing market rate. The interest rate shown is the rate
in effect at April 30, 1995.
(i)CAPMAC 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, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$247,205,929) (Note 1a) $251,838,968
Cash 46,053
Receivables:
Securities sold $ 11,644,355
Interest 4,883,155 16,527,510
------------
Deferred organization expenses (Note 1e) 22,820
Prepaid expenses and other assets 19,470
------------
Total assets 268,454,821
------------
Liabilities: Payables:
Dividends to shareholders (Note 1f) 438,345
Investment adviser (Note 2) 104,469 542,814
------------
Accrued expenses and other liabilities 49,529
------------
Total liabilities 592,343
------------
Net Assets: Net assets $267,862,478
============
<PAGE>
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.10 per share (3,600 shares
of AMPS* issued and outstanding at $25,000 per share
liquidation preference) $ 90,000,000
Common Stock, par value $.10 per share (12,678,633 shares
issued and outstanding) $ 1,267,863
Paid-in capital in excess of par 176,474,591
Undistributed investment income--net 1,618,811
Accumulated realized capital losses on investments--net (6,131,826)
Unrealized appreciation on investments--net 4,633,039
------------
Total--Equivalent to $14.03 net asset value per share of
Common Stock (market price--$13.125) 177,862,478
------------
Total capital $267,862,478
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months Ended
April 30, 1995
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 8,183,397
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 642,977
Commission fees (Note 4) 111,610
Professional fees 37,157
Accounting services (Note 2) 33,669
Transfer agent fees 29,112
Printing and shareholder reports 16,961
Listing fees 12,095
Directors' fees and expenses 11,307
Custodian fees 6,666
Pricing fees 4,866
Amortization of organization expenses (Note 1e) 3,741
Other 14,092
------------
Total expenses 924,253
------------
Investment income--net 7,259,144
------------
<PAGE>
Realized & Realized loss on investments--net (6,132,058)
Unrealized Gain Change in unrealized appreciation/depreciation on investments--net 15,422,917
(Loss) on ------------
Investments Net Increase in Net Assets Resulting from Operations $ 16,550,003
- --Net (Notes ============
1b, 1d & 3):
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: 1995 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 7,259,144 $ 14,861,089
Realized gain (loss) on investments--net (6,132,058) 1,066,977
Change in unrealized appreciation/depreciation on investments--net 15,422,917 (37,816,850)
------------ ------------
Net increase (decrease) in net assets resulting from operations 16,550,003 (21,888,784)
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (5,681,206) (11,722,512)
Shareholders Preferred Stock (1,696,824) (2,381,373)
(Note 1f): Realized gain on investments--net:
Common Stock (895,821) (1,352,849)
Preferred Stock (170,928) (300,357)
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (8,444,779) (15,757,091)
------------ ------------
Capital Stock Offering and underwriting costs from issuance of Preferred Stock -- (1,000)
Transactions ------------ ------------
(Notes 1e & 4): Net decrease in net assets derived from capital stock transactions -- (1,000)
------------ ------------
<PAGE>
Net Assets: Total increase (decrease) in net assets 8,105,224 (37,646,875)
Beginning of period 259,757,254 297,404,129
------------ ------------
End of period* $267,862,478 $259,757,254
============ ============
<FN>
*Undistributed investment income--net $ 1,618,811 $ 1,737,697
============ ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
For the For the
Six Period
The following per share data and ratios have been derived Months For the Oct. 30
from information provided in the financial statements. Ended Year Ended 1992++ to
April 30, October 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.39 $ 16.36 $ 14.15 $ 14.18
Operating -------- -------- -------- --------
Performance: Investment income--net .57 1.17 1.12 --
Realized and unrealized gain (loss) on invest-
ments--net .73 (2.90) 2.27 --
-------- -------- -------- --------
Total from investment operations 1.30 (1.73) 3.39 --
-------- -------- -------- --------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net (.45) (.92) (.84) --
Realized gain on investments--net (.07) (.11) -- --
-------- -------- -------- --------
Total dividends and distributions to Common Stock
shareholders (.52) (1.03) (.84) --
-------- -------- -------- --------
Capital charge resulting from issuance of Common
Stock -- -- -- (.03)
-------- -------- -------- --------
Effect of Preferred Stock activity:++++
Dividends and distributions to Preferred Stock
shareholders:
Investment income--net (.13) (.19) (.20) --
Realized gain on investments--net (.01) (.02) -- --
Capital charge resulting from issuance of
Preferred Stock -- -- (.14) --
-------- -------- -------- --------
Total effect of Preferred Stock activity (.14) (.21) (.34) --
-------- -------- -------- --------
Net asset value, end of period $ 14.03 $ 13.39 $ 16.36 $ 14.15
======== ======== ======== ========
Market price per share, end of period $ 13.125 $ 11.875 $ 15.375 $ 15.00
======== ======== ======== ========
<PAGE>
Total Investment Based on market price per share 15.14%+++ (16.78%) 8.24% .00%+++
Return:** ======== ======== ======== ========
Based on net asset value per share 9.15%+++ (11.82%) 22.09% (.21%)+++
======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement . .72%* .70% .56% --
Net Assets:*** ======== ======== ======== ========
Expenses . .72%* .70% .68% --
======== ======== ======== ========
Investment income--net . 5.65%* 5.28% 5.17% --
======== ======== ======== ========
Supplemental Net assets, net of Preferred Stock, end of
Data: period (in thousands) $177,862 $169,757 $207,404 $178,555
======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $ 90,000 $ 90,000 $ 90,000 $ --
======== ======== ======== ========
Portfolio turnover 58.42% 41.67% 15.85% 0.00%
======== ======== ======== ========
Dividends Per Series A--Investment income--net $ 496 $ 636 $ 743 $ --
Share on Preferred Series B--Investment income--net 447 687 685 --
Stock Out-
standing:++++++
<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 November 30, 1992.
++++++Dividends per share have been adjusted to reflect a two-for-
one stock split.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniYield California Insured Fund II, 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 MCA. 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 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.
(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.
<PAGE>
* Financial futures contracts--The Fund may purchase or sell
interest rate futures contracts and options on such futures
contracts for the purpose of hedging the market risk on existing
securities or the intended purchase of securities. Futures contracts
are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a
contract, the Fund deposits and maintains as collateral such initial
margin as required by the exchange on which the transaction is
effected. Pursuant to the contract, the Fund agrees to receive from
or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are
known as variation margin and are recorded by the Fund as unrealized
gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed.
* Options--The Fund is authorized to write covered call options and
purchase put options. When the Fund writes an option, an amount
equal to the premium received by the Fund is reflected as an asset
and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written.
When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
<PAGE>
Written and purchased options are non-income producing investments.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Deferred organization expenses and offering expenses--Deferred
organization expenses are amortized on a straight-line basis over a
five-year period. Direct expenses relating to the public offering of
the Common and Preferred Stock were charged to capital at the time
of issuance.
(f) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of 0.50% of
the Fund's average weekly net assets.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, Merrill Lynch, Pierce, Fenner & Smith Inc.
("MLPF&S"), and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 1995 were $146,697,867 and
$159,687,289, respectively.
<PAGE>
Net realized and unrealized gains (losses) as of April 30, 1995 were
as follows:
Realized
Gains Unrealized
(Losses) Gains
Long-term investments $(2,850,626) $4,633,039
Short-term investments 26,475 --
Financial futures contracts (3,307,907) --
----------- ----------
Total $(6,132,058) $4,633,039
=========== ==========
As of April 30, 1995, net unrealized appreciation for Federal income
tax purposes aggregated $4,633,039, of which $6,378,594 related to
appreciated securities and $1,745,555 related to depreciated
securities. The aggregate cost of investments at April 30, 1995 for
Federal income tax purposes was $247,205,929.
4. Capital Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of capital stock,
including Preferred Stock, par value $.10 per share, all of which
were initially classified as Common Stock. The Board of Directors is
authorized, however, to reclassify any unissued shares of capital
stock without approval of holders of Common Stock.
Common Stock
For the six months ended April 30, 1995, shares issued and
outstanding remained constant at 12,678,633. At April 30, 1995,
total paid-in capital amounted to $177,742,454.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred
Stock of the Fund that entitle their holders to receive cash
dividends at an annual rate that may vary for the successive
dividend periods. The yields in effect at April 30, 1995 were as
follows: Series A, 4.10% and Series B, 4.19%.
A two-for-one stock split occurred on December 1, 1994. As a result,
at April 30, 1995, there were 3,600 AMPS shares authorized, issued
and outstanding with a liquidation preference of $25,000 per share,
plus accumulated and unpaid dividends of $80,305.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from 0.25% to 0.375%
calculated on the proceeds of each auction. For the six months ended
April 30, 1995, MLPF&S, an affiliate of FAM, earned $88,269 as
commissions.
<PAGE>
5. Subsequent Event:
On May 9, 1995, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$.071462 per share, payable on May 30, 1995 to shareholders of
record as of May 19, 1995.
PER SHARE INFORMATION
<TABLE>
Per Share Selected Quarterly Financial Data*
<CAPTION>
Dividends/Distributions
Net Realized Unrealized
Investment Gains Gains Net Investment Income Capital Gains
For the Quarter Income (Losses) (Losses) Common Preferred Common Preferred
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1993 to July 31, 1993 $.28 $ .07 $ .18 $.24 $.05 -- --
August 1, 1993 to October 31, 1993 .29 .02 .73 .23 .05 -- --
November 1, 1993 to January 31, 1994 .30 .11 .01 .23 .05 $.11 $.02
February 1, 1994 to April 30, 1994 .28 .11 (2.21) .22 .04 -- --
May 1, 1994 to July 31, 1994 .29 (.07) .34 .23 .05 -- --
August 1, 1994 to October 31, 1994 .30 (.07) (1.12) .24 .05 -- --
November 1, 1994 to January 31, 1995 .29 (.45) .94 .23 .07 .07 .01
February 1, 1995 to April 30, 1995 .28 (.04) .28 .22 .06 -- --
<CAPTION>
Net Asset Value Market Price**
For the Quarter High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
May 1, 1993 to July 31, 1993 $15.80 $15.26 $15.375 $14.75 960
August 1, 1993 to October 31, 1993 16.67 15.62 16.00 15.00 1,374
November 1, 1993 to January 31, 1994 16.38 15.78 15.375 14.375 1,568
February 1, 1994 to April 30, 1994 16.33 13.64 15.125 12.875 1,553
May 1, 1994 to July 31, 1994 14.89 13.95 13.675 13.25 1,207
August 1, 1994 to October 31, 1994 14.61 13.37 13.50 11.75 1,504
November 1, 1994 to January 31, 1995 13.81 12.22 12.875 10.625 3,424
February 1, 1995 to April 30, 1995 14.45 13.79 13.375 12.75 1,019
<FN>
*Calculations are based upon shares of Common Stock outstanding at
the end of each quarter.
**As reported in the consolidated transaction reporting system.
***In thousands.
</TABLE>
<PAGE>
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Herbert I. London, Director
Robert R. Martin, Director
Joseph L. May, Director
Andre F. Perold, Director
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
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
MCA
