MUNIYIELD
CALIFORNIA
INSURED
FUND II, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
April 30, 2000
<PAGE>
MUNIYIELD CALIFORNIA INSURED FUND II, INC.
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.
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.
As a part of its investment strategy, the Fund may invest in certain securities
whose potential income return is inversely related to changes in a floating
interest rate ("inverse floaters"). In general, income on inverse floaters will
decrease when short-term interest rates increase and increase when short-term
interest rates decrease. Investments in inverse floaters may be characterized as
derivative securities and may subject the Fund to the risks of reduced or
eliminated interest payments and losses of invested principal. In addition,
inverse floaters have the effect of providing investment leverage and, as a
result, the market value of such securities will generally be more volatile than
that of fixed-rate, tax-exempt securities. To the extent the Fund invests in
inverse floaters, the market value of the Fund's portfolio and the net asset
value of the Fund's shares may also be more volatile than if the Fund did not
invest in these securities.
<PAGE>
MuniYield California Insured Fund II, Inc., April 30, 2000
TO OUR SHAREHOLDERS
For the six months ended April 30, 2000, the Common Stock of MuniYield
California Insured Fund II, Inc. earned $0.401 per share income dividends, which
included earned and unpaid dividends of $0.067. This represents a net annualized
yield of 6.04%, based on a month-end per share net asset value of $13.32. Over
the same period, the total investment return on the Fund's Common Stock was
+4.67%, based on a change in per share net asset value from $13.14 to $13.32,
and assuming reinvestment of $0.403 per share income dividends.
For the six-month period ended April 30, 2000, the Fund's Auction Market
Preferred Stock had an average yield of 3.66% for Series A, 3.19% for Series B
and 3.48% for Series C.
The Municipal Market Environment
Since October 1999 through mid-January 2000, fixed-income bond yields rose
steadily higher. US economic growth, in part intensified by Year 2000
preparations, grew at a 7.3% rate in the fourth quarter of 1999 and at a 4.2%
annual rate for all of 1999. Initial estimates for the first quarter of 2000
were reported at 5.4%. However, despite these significant growth rates, no price
measure indicator has shown any considerable signs of future price pressures at
the consumer level, despite the lowest unemployment rates since January 1970.
Given no signs of an economic slowdown, the Federal Reserve Board continued to
raise short-term interest rates in November 1999 and again in February and March
2000. In each instance, the Federal Reserve Board cited both the continued
growth of US employment and the impressive strength of the US equity markets as
reasons for attempting to moderate US economic growth before inflationary price
increases are realized. By mid-January 2000, US Treasury bond yields rose 60
basis points (0.60%) to 6.75%. Similarly, as measured by the Bond Buyer Revenue
Bond Index, long-term tax-exempt bond yields rose approximately 20 basis points
to 6.35%.
Since mid-January, fixed-income markets have largely ignored strong economic
fundamentals and concentrated on very positive technical supply factors.
Declining bond issuance, both current, and more importantly, expected future
issuance, helped push bond yields lower from mid-January to mid-April 2000. In
late January and early February 2000, the US Treasury announced its intention to
reduce the number of issues to be auctioned in the quarterly Treasury note and
bond auctions. Furthermore, budgetary surpluses would allow the US Treasury to
repurchase outstanding, higher-couponed Treasury issues, primarily in the
15-year and longer-term maturity sector. Both these actions would result in a
significant reduction in the outstanding supply of long-term US Treasury debt.
Domestic and international investors quickly began to accumulate what was
expected to become a scarce commodity and bond prices quickly rose.
By mid-April 2000, US Treasury bond yields had declined over 100 basis points to
5.67%. However, bond yields rose somewhat during the last two weeks of the
period as economic statistics were released, indicating that the economic
strength seen in late 1999 was continuing into early 2000. The decline in
long-term US Treasury bond yields resulted in an inverted taxable yield curve as
short-term and intermediate-term interest rates have not fallen proportionately
since the Federal Reserve Board is expected to continue to raise short-term
interest rates. The current inversion has had much more to do with debt
reduction and Treasury buybacks than with investor expectations of slower
economic growth. Over the last six months, long-term US Treasury bond yields
have fallen almost 20 basis points to close the six-month period ended April 30,
2000 at 5.96%.
Tax-exempt bond yields have also declined in recent months. The decline has
largely been in response to the rally in US Treasury securities, as well as a
continued positive technical supply environment. States such as California and
Maryland have announced that their large current and anticipated future budget
surpluses will permit the cancellation or postponement of expected bond
issuance. Additionally, some issuers have also initiated tenders to repurchase
existing debt, reducing the supply of tax-exempt bonds in the secondary market
as well. Since their recent peak in January 2000, long-term municipal bond
yields declined over 25 basis points to finish the six-month period ended April
30, 2000 at 6.07%. During the last six months, municipal bond yields declined
just 10 basis points overall.
The relative underperformance of the municipal bond market in recent months has
been especially disappointing given the strong technical position the tax-exempt
bond market enjoyed. The issuance of long-term tax-exempt securities has
dramatically declined. Over the last year, $203 billion in new long-term
municipal securities was issued, a decline of almost 25% compared to the same
period a year earlier. For the six months ended April 30, 2000, approximately
$90 billion in new tax-exempt bonds was underwritten, a decline of more than 25%
compared to the same period in 1999. Although investors received over $30
billion in coupon payments, bond maturities, and the proceeds from early bond
redemptions, coupled with the highest municipal bond yields in three years,
overall investor demand has diminished. Long-term municipal bond mutual funds
have seen consistent outflows in recent months as the yields of individual
securities have risen faster than those of larger, more diverse mutual funds.
Over the last four months, tax-exempt mutual funds have had net redemptions of
more than $8 billion. Also, the demand from property and casualty insurance
companies has weakened as a result of the losses and anticipated losses incurred
from a series of damaging storms across much of the eastern United States.
Additionally, many institutional investors who have in recent years been
attracted to the municipal bond market by historically attractive tax-exempt
bond yield ratios of over 90% found other asset classes even more attractive.
Even with a favorable supply position, tax-exempt municipal bond yields have
underperformed their taxable counterparts.
Any significantly lower municipal bond yields are still likely to require weaker
US employment growth and consumer spending. The actions taken in recent months
by the Federal Reserve Board should eventually slow US economic growth. The
recent declines in US home sales are perhaps the first sign that consumer
spending is being slowed by higher interest rates. Until further signs develop,
it is likely that the municipal bond market's current favorable technical
position will dampen significant tax-exempt interest rate volatility and provide
a stable environment for eventual improvement in municipal bond prices.
Portfolio Strategy
For the six months ended April 30, 2000, we managed the Fund with the intent of
sustaining an attractive level of tax-exempt income. Our strategy for the Fund
was to remain invested in the highest-yielding bonds that could be purchased
without sacrificing the credit quality of the Fund as well as to maintain a
neutral portfolio structure. We accomplished this by purchasing higher coupon
bonds in the 10-year-15-year maturity range and selling lower coupon bonds in
the 20-year-30-year maturity range. These transactions were accomplished with a
minimal forfeit in yield. This strategy proved advantageous throughout the
period because although the market experienced interest rate volatility, the
Fund was able to increase its income without being subjected to broad swings in
volatility.
The Fund's cost of borrowing increased somewhat in recent months as short-term
tax-exempt interest rates rose along with the adjustment evident in the taxable
market. Long-term tax exempt interest rates have actually declined modestly,
causing
2 & 3
<PAGE>
MuniYield California Insured Fund II, Inc., April 30, 2000
the municipal yield curve to flatten. While this flattening has reduced the
incremental yield enhancement resulting from leveraging the Fund's Common Stock,
it is important to note that in contrast to the inverted shape of the US
Treasury yield curve, the municipal yield curve remained positively sloped. (For
a complete explanation of the benefits and risks of leveraging, see page 1 of
this report to shareholders.)
Looking ahead, we believe that interest rates will be volatile until the markets
regain confidence that the Federal Reserve Board has inflation under control.
Within this environment, we anticipate that there will be opportunities to
purchase bonds at attractive levels that will enhance the Fund's return when
interest rates return to lower levels. In the meantime, we expect to maintain
our neutral position and purchase longer-duration bonds when interest rates rise
to levels that are not consistent with current economic activity.
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,
/s/ Terry K. Glenn
Terry K. Glenn
President and Director
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ Roberto Roffo
Roberto Roffo
Vice President and Portfolio Manager
May 30, 2000
PROXY RESULTS
During the six-month period ended April 30, 2000, MuniYield California Insured
Fund II, Inc.'s Common Stock shareholders voted on the following proposals. The
proposals were approved at a shareholders' meeting on April 27, 2000. The
description of each proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. To elect the Fund's Board of Directors: Terry K. Glenn 12,083,071 250,155
James H. Bodurtha 12,083,071 250,155
Herbert I. London 12,083,071 250,155
Roberta Cooper Ramo 12,083,071 250,155
Arthur Zeikel 12,083,071 250,155
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent auditors for the current fiscal year. 12,062,622 48,544 222,060
----------------------------------------------------------------------------------------------------------------------
</TABLE>
During the six-month period ended April 30, 2000, MuniYield California Insured
Fund II, Inc.'s Preferred Stock shareholders (Series A, B and C) voted on the
following proposals. The proposals were approved at a shareholders' meeting on
April 27, 2000. The description of each proposal and number of shares voted are
as follows:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. To elect the Fund's Board of Directors: Terry K. Glenn,
James H. Bodurtha, Herbert I. London, Joseph L. May,
Andre F. Perold, Roberta Cooper Ramo and Arthur Zeikel as follows:
Series A 1,621 28
Series B 1,335 1
Series C 1,207 0
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the
Fund's independent auditors for the current fiscal year as follows:
Series A 1,649 0 0
Series B 1,336 0 0
Series C 1,207 0 0
----------------------------------------------------------------------------------------------------------------------
</TABLE>
4 & 5
<PAGE>
MuniYield California Insured Fund II, Inc., April 30, 2000
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
Ratings Ratings Amount Issue Value
====================================================================================================================================
<S> <C> <C> <C> <C>
California--94.8%
AAA Aaa $ 3,500 ABAG Finance Authority for Nonprofit Corporations, California, COP (Children's Hospital
Medical Center), 6% due 12/01/2029 (a) $ 3,541
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AAA Aaa 2,110 ABC, California, Unified School District, GO, Series A, 4.75% due 8/01/2022 (d) 1,784
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 3,000 Alameda County, California, Water District Revenue Refunding Bonds, 4.75% due 6/01/2020 (i) 2,581
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,985 Arcadia, California, Unified School District, GO, Series B, 6.50% due 7/01/2015 (c) 2,106
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 3,675 Bakersfield, California, COP, Refunding (Convention Center Expansion Project),
5.80% due 4/01/2017 (i) 3,731
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,450 Big Bear Lake, California, Water Revenue Refunding Bonds, 6% due 4/01/2015 (i) 1,554
------------------------------------------------------------------------------------------------------------------------------------
California Community College Financing Authority, Lease Revenue Bonds, Series A (i):
AAA Aaa 3,215 5.95% due 12/01/2022 3,249
AAA Aaa 1,100 6% due 12/01/2029 1,113
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NR* Aaa 6,000 California Educational Facilities Authority Revenue Bonds, RITR, AMT, Series 37,
5.47% due 4/01/2028 (a)(k) 5,269
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California Educational Facilities Authority, Revenue Refunding Bonds:
NR* Aa1 3,000 (Claremont McKenna College), 5% due 11/01/2029 2,595
NR* Aa2 2,750 RIB, Series 147, 5.79% due 10/01/2027 (k) 2,512
------------------------------------------------------------------------------------------------------------------------------------
California HFA, Home Mortgage Revenue Bonds, AMT:
AAA Aaa 1,420 Series E, 6.15% due 8/01/2025 (i) 1,414
AA- Aa2 2,555 Series F-1, 7% due 8/01/2026 (d) 2,624
------------------------------------------------------------------------------------------------------------------------------------
A+ Aa2 3,750 California HFA, Revenue Bonds, RIB, AMT, Series B-2, 8.483% due 8/01/2023 (d)(k) 3,938
------------------------------------------------------------------------------------------------------------------------------------
California Health Facilities Finance Authority Revenue Bonds (Kaiser Permanente), RIB (g)(k):
AAA NR* 8,750 Series 26, 5.765% due 6/01/2022 7,953
NR* Aaa 6,625 Series 152, 5.79% due 6/01/2022 6,022
------------------------------------------------------------------------------------------------------------------------------------
A1+ VMIG1+ 300 California Health Facilities Finance Authority, Revenue Refunding Bonds (Adventist
Hospital), VRDN, Series C, 5.45% due 9/01/2015 (i)(l) 300
------------------------------------------------------------------------------------------------------------------------------------
California Pollution Control Financing Authority, PCR, Refunding (Pacific Gas and
Electric), VRDN (l):
A1+ NR* 400 AMT, Series C, 5.45% due 11/01/2026 400
A1+ NR* 500 Series C, 6.15% due 11/01/2026 500
A1+ NR* 800 Series D, 6.10% due 11/01/2026 800
A1+ VMIG1+ 9,600 Series E, 6.15% due 11/01/2026 9,600
------------------------------------------------------------------------------------------------------------------------------------
California Pollution Control Financing Authority, PCR, Refunding (Southern California
Edison Company), VRDN (l):
A1 VMIG1+ 3,600 Series A, 6.15% due 2/28/2008 3,600
A1 P1 1,600 Series C, 6.15% due 2/28/2008 1,600
A1 P1 5,000 Series D, 6.15% due 2/28/2008 5,000
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A1+ VMIG1+ 1,000 California Pollution Control Financing Authority, Solid Waste Disposal Revenue Bonds
(Shell Oil Company--Martinez Project), VRDN, AMT, Series A, 6.15% due 10/01/2024 (l) 1,000
------------------------------------------------------------------------------------------------------------------------------------
California Rural Home Mortgage Finance Authority, S/F Mortgage Revenue Bonds
(Mortgage-Backed Securities Program), AMT:
AAA NR* 3,345 Series A, 6.35% due 12/01/2029 (e)(f) 3,463
AAA NR* 5,000 Series A, 5.40% due 12/01/2030 (f) 4,580
NR* Aaa 1,000 Series A-1, 6.90% due 12/01/2024 (e)(h) 1,050
AAA NR* 3,565 Series B, 6.25% due 12/01/2031 (f) 3,580
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California State, GO:
AAA Aaa 18,000 6.25% due 10/01/2019 (i) 18,983
AAA Aaa 4,000 4.50% due 12/01/2021 (c) 3,266
AAA Aaa 17,500 4.50% due 12/01/2024 (c) 14,051
------------------------------------------------------------------------------------------------------------------------------------
California State Public Works Board, Lease Revenue Refunding Bonds (i):
AAA Aaa 2,230 (California Community College), Series D, 5.375% due 3/01/2013 2,236
AAA Aaa 8,675 (Department of Corrections), Series B, 5.625% due 11/01/2016 8,748
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,375 California State University and Colleges, Housing System Revenue Refunding Bonds,
5.90% due 11/01/2021 (c) 2,394
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 5,500 California Statewide Communities Development Authority, COP (Kaiser Permanente),
5.30% due 12/01/2015 (g) 5,343
------------------------------------------------------------------------------------------------------------------------------------
NR* Aaa 3,520 California Statewide Communities Development Authority, Revenue Refunding Bonds, RIB,
Series 151, 5.79% due 8/01/2011 (a)(k) 3,692
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,200 Calleguas--Las Virgines, California, Public Financing Authority, Installment Purchase
Revenue Refunding Bonds (Las Virgenes Municipal Water District), 5% due 11/01/2023 (g) 1,057
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 4,600 Ceres, California, Redevelopment Agency, Tax Allocation Bonds (Ceres Redevelopment
Project Area No. 1), 5.75% due 11/01/2030 (i) 4,522
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Coalinga, California, Public Financing Authority, Local Obligation Revenue Refunding
Bonds, Senior Lien, Series A (a):
AAA Aaa 495 5.75% due 9/15/2015 518
AAA Aaa 1,270 6% due 9/15/2018 1,350
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AAA Aaa 10,480 Contra Costa County, California, COP, Refunding (Merrithew Memorial Hospital Project),
5.375% due 11/01/2017 (i) 10,151
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AAA Aaa 5,450 Corona, California, Public Financing Authority, Water Revenue Refunding Bonds,
4.75% due 9/01/2023 (c) 4,582
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Fontana, California, Redevelopment Agency, Tax Allocation Refunding Bonds (Southwest
Industrial Park Project) (i):
AAA Aaa 2,060 4.75% due 9/01/2026 1,719
AAA Aaa 5,795 5.20% due 9/01/2030 5,202
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AAA Aaa 2,500 Fresno, California, Sewer Revenue Bonds, Series A-1, 5.25% due 9/01/2019 (a) 2,392
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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
IDR Industrial Development Revenue Bonds
INFLOS Inverse Floating Rate Municipal Bonds
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
VRDN Variable Rate Demand Notes
6 & 7
<PAGE>
MuniYield California Insured Fund II, Inc., April 30, 2000
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
Ratings Ratings Amount Issue Value
====================================================================================================================================
<S> <C> <C> <C> <C>
California (continued)
AAA Aaa $ 2,545 Imperial Irrigation District, California, Electric Revenue
Refunding Bonds, 5% due 11/01/2018 (i) $ 2,305
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AAA Aaa 2,500 Los Angeles, California, Airports Department, Airport Revenue Bonds (Ontario International
Airport), AMT, Series A, 6% due 5/15/2017 (c) 2,540
------------------------------------------------------------------------------------------------------------------------------------
Los Angeles, California, Community Redevelopment Agency, Tax Allocation Refunding Bonds
(Bunker Hill), Series H (g):
AAA Aaa 1,500 6.50% due 12/01/2015 1,595
AAA Aaa 3,500 6.50% due 12/01/2016 3,717
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AAA Aaa 19,200 Los Angeles, California, Department of Water and Power, Electric Plant Revenue Bonds,
5.50% due 6/15/2025 (g) 18,368
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Los Angeles, California, Department of Water and Power, Electric Plant Revenue
Refunding Bonds:
A+ Aa3 3,400 5.50% due 2/15/2014 3,393
A+ Aa3 3,000 6% due 2/15/2016 3,054
A+ Aa3 2,000 5.875% due 2/15/2020 2,000
A+ Aa3 2,500 6% due 2/15/2030 2,502
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NR* Aaa 7,000 Los Angeles, California, Harbor Department Revenue Bonds, RITR, AMT, Series RI-7,
6.845% due 11/01/2026 (i)(k) 7,324
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 3,000 Los Angeles, California, Unified School District, GO, Series C, 5.50% due 7/01/2012 (i) 3,070
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,930 Los Angeles, California, Wastewater System Revenue Refunding Bonds, Series C, 4% due
6/01/2016 (i) 2,359
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Los Angeles County, California, Metropolitan Transportation Authority, Sales Tax Revenue
Refunding Bonds:
AAA Aaa 4,425 Proposition A--First Tier, Senior Series C, 5% due 7/01/2026 (a) 3,870
AAA Aaa 5,000 Proposition C, Second Series, Series A, 4.75% due 7/01/2026 (g) 4,174
------------------------------------------------------------------------------------------------------------------------------------
AA Aa2 500 Los Gatos--Saratoga, California, Joint Union High School District, GO, Series A, 4.375%
due 10/01/2023 394
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,500 M-S-R Public Power Agency, California, Revenue Refunding Bonds (San Juan Project), Series
D, 6.75% due 7/01/2020 (b)(i) 1,659
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AAA Aaa 2,200 Madera, California, Redevelopment Agency, Tax Allocation Bonds (Tax Allocation
Redevelopment Project), 4.75% due 9/01/2028 (g) 1,850
------------------------------------------------------------------------------------------------------------------------------------
AAA NR* 1,500 Madera County, California, COP, Refunding (Valley Children's Hospital Project),
4.75% due 3/15/2018 (i) 1,311
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 Metropolitan Water District of Southern California, Waterworks Revenue Bonds, Series A,
5% due 7/01/2030 (i) 1,730
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 4,960 Modesto, California, Public Financing Authority, Lease Revenue Refunding Bonds
(Capital Improvements and Refinancing Project), 4.75% due 9/01/2024 (a) 4,160
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 Natomas, California, Unified School District, GO, Refunding, 5.25% due 9/01/2016 (c) 1,928
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Oakland, California, Redevelopment Agency, Tax Allocation Refunding Bonds, INFLOS,
7.661% due 9/01/2019 (i)(k) 995
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Oakland, California, State Building Authority, Lease Revenue Bonds (Elihu M. Harris),
Series A (a):
AAA Aaa 2,000 5.50% due 4/01/2011 2,058
AAA Aaa 3,295 5.50% due 4/01/2014 3,328
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,360 Orchard, California, School District, GO, Series A, 6.50% due 8/01/2005 (c)(j) 2,583
------------------------------------------------------------------------------------------------------------------------------------
A+ A1 2,000 Pasadena, California, COP, Refunding (Old Pasadena Parking Facility Project),
6.25% due 1/01/2018 2,150
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 7,500 Pioneers Memorial Hospital District, California, GO, Refunding, 6.50% due 10/01/2024 (a) 7,987
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 Port Oakland, California, RITR, AMT, Class R, Series 5, 6.42% due 11/01/2012 (c)(k) 5,208
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 3,755 Poway, California, Unified School District, Special Tax Refunding Bonds (Community
Facilities District No. 1), 4.75% due 10/01/2023 (i) 3,156
------------------------------------------------------------------------------------------------------------------------------------
NR* Aaa 2,250 Riverside County, California, Asset Leasing Corporation, Leasehold Revenue Refunding
Bonds, RIB, Series 148, 6.19% due 6/01/2016 (i)(k) 2,278
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 Roseville, California, Special Tax Refunding Bonds (Community Facilities District
1-Northwest), 4.75% due 9/01/2020 (g) 4,297
------------------------------------------------------------------------------------------------------------------------------------
A+ A1 4,100 Sacramento, California, City Financing Authority, Lease Revenue Refunding Bonds, Series
B, 5.40% due 11/01/2020 3,952
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AAA Aaa 5,000 San Diego, California, IDR, Refunding (San Diego Gas & Electric Company), Series C,
5.90% due 9/01/2018 (g) 5,060
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,500 San Diego, California, Public Facilities Financing Authority, Sewer Revenue Bonds, Series
B, 5% due 5/15/2029 (c) 1,300
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 5,200 San Diego County, California, COP (Salk Institute for Bio Studies), 5.75% due 7/01/2031 (i) 5,114
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,500 San Diego County, California, Water Authority, COP, Series A, 4.75% due 5/01/2028 (c) 1,236
------------------------------------------------------------------------------------------------------------------------------------
San Francisco, California, City and County Airport Commission, International Airport
Revenue Bonds, Second Series:
AAA Aaa 3,500 AMT, Issue 5, 6.50% due 5/01/2019 (c) 3,680
AAA Aaa 3,000 AMT, Issue 6, 6.50% due 5/01/2018 (a) 3,160
AAA Aaa 2,000 AMT, Issue 6, 6.60% due 5/01/2020 (a) 2,119
AAA Aaa 2,500 AMT, Issue 22, 4.75% due 5/01/2023 (a) 2,056
AAA Aaa 3,000 Issue 12-B, 5.625% due 5/01/2021 (c) 2,947
------------------------------------------------------------------------------------------------------------------------------------
San Francisco, California, City and County Airport Commission, International Airport
Revenue Refunding Bonds, Second Series, Issue 20 (i):
AAA Aaa 5,000 4.50% due 5/01/2013 4,501
AAA Aaa 6,000 4.50% due 5/01/2026 4,802
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San Francisco, California, City and County Redevelopment Agency, Lease Revenue Refunding
Bonds (George R. Moscone Convention Center) (g):
AAA Aaa 2,800 6.75% due 7/01/2015 3,015
AAA Aaa 3,050 6.75% due 7/01/2024 3,280
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AAA Aaa 3,170 San Francisco State University, California, Revenue Bonds (Student Union), Series B,
4.20% due 11/01/2023 (i) 2,445
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San Mateo County, California, Joint Powers Authority, Lease Revenue Refunding Bonds
(Capital Projects Program):
AAA Aaa 2,450 5.125% due 7/01/2018 (i) 2,313
AAA Aaa 4,250 Series A, 4.75% due 7/15/2023 (g) 3,575
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,600 San Mateo County, California, Transportation District, Sales Tax Revenue Refunding Bonds,
Series A, 5.25% due 6/01/2019 (i) 1,531
------------------------------------------------------------------------------------------------------------------------------------
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 (i) 3,648
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,500 Santa Clara County, California, Financing Authority, Lease Revenue Bonds (VMC Facility
Replacement Project), Series A, 7.75% due 11/15/2011 (a) 3,063
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8 & 9
<PAGE>
MuniYield California Insured Fund II, Inc., April 30, 2000
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
Ratings Ratings Amount Issue Value
====================================================================================================================================
<S> <C> <C> <C> <C>
California (concluded)
AAA Aaa $ 1,310 Tustin, California, Public Financing Authority Revenue Bonds (Tustin Ranch), Series D,
5.25% due 9/02/2013 (g) $ 1,296
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 5,500 Tustin, California, Unified School District, Special Tax Refunding Bonds (Community
Facilities District No. 88-1), 4.50% due 9/01/2024 (g) 4,433
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,500 Walnut, California, Public Financing Authority, Tax Allocation Revenue Refunding Bonds
(Walnut Improvement Project), 6.50% due 9/01/2022 (i) 1,577
====================================================================================================================================
Puerto Rico--3.6%
NR* Aaa 5,000 Puerto Rico Municipal Finance Agency, RIB, GO, Series 225, 6.29% due 8/01/2012 (g)(k) 5,454
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 8,750 Puerto Rico Public Buildings Authority Revenue Bonds (Government Facilities), Series B,
5% due 7/01/2027 (a) 7,679
====================================================================================================================================
Total Investments (Cost--$375,782)--98.4% 368,244
Other Assets Less Liabilities--1.6% 6,026
--------
Net Assets--100.0% $374,270
========
====================================================================================================================================
</TABLE>
(a) AMBAC Insured.
(b) Escrowed to maturity.
(c) FGIC Insured.
(d) FHA Insured.
(e) FHLMC Collateralized.
(f) FNMA/GNMA Collateralized.
(g) FSA Insured.
(h) GNMA Collateralized.
(i) MBIA Insured.
(j) Prerefunded.
(k) 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, 2000.
(l) 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,
2000.
* Not Rated.
+ Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
================================================================================
Quality Profile
The quality ratings of securities in the Fund as of April 30, 2000 were as
follows:
--------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
--------------------------------------------------------------------------------
AAA/Aaa................................................. 84.5%
AA/Aa................................................... 6.2
A/A..................................................... 1.6
Other+.................................................. 6.1
--------------------------------------------------------------------------------
+ Temporary investments in short-term municipal securities.
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<TABLE>
<CAPTION>
As of April 30, 2000
=======================================================================================================================
<S> <C> <C>
Assets: Investments, at value (identified cost--$375,781,930) ................ $368,243,895
Receivables:
Interest .......................................................... $ 6,401,855
Securities sold ................................................... 1,202,598 7,604,453
-------------
Prepaid expenses and other assets .................................... 193,724
------------
Total assets ......................................................... 376,042,072
------------
=======================================================================================================================
Liabilities: Payables:
Custodian bank .................................................... 1,301,897
Dividends to shareholders ......................................... 244,415
Investment adviser ................................................ 145,510 1,691,822
-------------
Accrued expenses and other liabilities ............................... 80,692
------------
Total liabilities .................................................... 1,772,514
------------
=======================================================================================================================
Net Assets: Net assets ........................................................... $374,269,558
============
=======================================================================================================================
Capital: Capital Stock (200,000,000 shares authorized):
Preferred Stock, par value $.10 per share (5,200 shares of AMPS*
issued and outstanding at $25,000 per share liquidation preference) $130,000,000
Common Stock, par value $.10 per share (18,344,946 shares issued
and outstanding) .................................................. $ 1,834,495
Paid-in capital in excess of par ..................................... 263,550,257
Undistributed investment income--net ................................. 2,359,864
Accumulated realized capital losses on investments--net .............. (9,467,291)
Accumulated distributions in excess of realized capital gains on
investments--net ..................................................... (6,469,732)
Unrealized depreciation on investments--net .......................... (7,538,035)
-------------
Total--Equivalent to $13.32 net asset value per Common Stock
(market price--$12.75) ............................................... 244,269,558
------------
Total capital ........................................................ $374,269,558
============
=======================================================================================================================
</TABLE>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
10 & 11
<PAGE>
MuniYield California Insured Fund II, Inc., April 30, 2000
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Six Months Ended April 30, 2000
==================================================================================================================
<S> <C> <C> <C>
Investment Interest and amortization of premium and discount
Income: earned ................................................ $ 10,489,912
==================================================================================================================
Expenses: Investment advisory fees ............................... $927,366
Commission fees ........................................ 164,629
Professional fees ...................................... 41,099
Accounting services .................................... 37,208
Transfer agent fees .................................... 36,127
Listing fees ........................................... 14,145
Printing and shareholder reports ....................... 12,980
Directors' fees and expenses ........................... 12,232
Custodian fees ......................................... 11,239
Pricing fees ........................................... 7,755
Other .................................................. 13,117
--------
Total expenses ......................................... 1,277,897
------------
Investment income--net ................................. 9,212,015
------------
==================================================================================================================
Realized & Realized loss on investments--net ...................... (9,467,291)
Unrealized Change in unrealized depreciation on investments--net .. 13,174,460
Gain (Loss) on ------------
Investments--Net: Net Increase in Net Assets Resulting from Operations ... $ 12,919,184
============
==================================================================================================================
</TABLE>
See Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: April 30, 2000 Oct. 31, 1999
======================================================================================================
<S> <C> <C>
Operations: Investment income--net ........................ $ 9,212,015 $ 18,738,440
Realized loss on investments--net ............. (9,467,291) (1,192,946)
Change in unrealized appreciation/depreciation
on investments--net ........................... 13,174,460 (42,458,713)
------------- -------------
Net increase (decrease) in net assets resulting
from operations ............................... 12,919,184 (24,913,219)
------------- -------------
======================================================================================================
Dividends & Investment income--net:
Distributions to Common Stock ............................... (7,391,179) (15,883,092)
Shareholders: Preferred Stock ............................ (2,231,156) (2,691,092)
Realized gain on investments--net:
Common Stock ............................... -- (6,023,067)
Preferred Stock ............................ -- (1,039,332)
In excess of realized gain on investments--net:
Common Stock ............................... -- (5,515,839)
Preferred Stock ............................ -- (951,806)
------------- -------------
Net decrease in net assets resulting from
dividends and distributions to shareholders ... (9,622,335) (32,104,228)
------------- -------------
======================================================================================================
Capital Stock Value of shares issued to Common Stock
Transactions: shareholders in reinvestment of dividends
and distributions ............................. -- 4,321,286
------------- -------------
======================================================================================================
Net Assets: Total increase (decrease) in net assets ....... 3,296,849 (52,696,161)
Beginning of period ........................... 370,972,709 423,668,870
------------- -------------
End of period* ................................ $ 374,269,558 $ 370,972,709
============= =============
======================================================================================================
*Undistributed investment income--net ......... $ 2,359,864 $ 2,770,184
============= =============
======================================================================================================
</TABLE>
See Notes to Financial Statements.
12 & 13
<PAGE>
MuniYield California Insured Fund II, Inc., April 30, 2000
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
The following per share data and ratios
have been derived from information For the Six
provided in the financial statements. Months Ended For the Year Ended October 31,
April 30, ---------------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ..... $ 13.14 $ 16.25 $ 15.70 $ 15.04 $ 14.92
-------- -------- -------- -------- --------
Operating Investment income--net ................... .50 1.03 1.08 1.10 1.10
Performance: Realized and unrealized gain (loss) on
investments--net ......................... .20 (2.37) .63 .68 .13
-------- -------- -------- -------- --------
Total from investment operations ......... .70 (1.34) 1.71 1.78 1.23
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net ................. (.40) (.87) (.86) (.88) (.87)
Realized gain on investments--net ...... -- (.33) (.05) --++++ --
In excess of realized gain on
investments--net ....................... -- (.31) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions to
Common Stock shareholders ................ (.40) (1.51) (.91) (.88) (.87)
-------- -------- -------- -------- --------
Capital charge resulting from issuance of
Common Stock ............................. -- -- -- (.01) --
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:++
Dividends and distributions to Preferred
Stock shareholders:
Investment income--net ............... (.12) (.15) (.20) (.23) (.24)
Realized gain on investments--net .... -- (.06) (.05) --++++ --
In excess of realized gain on
investments--net ..................... -- (.05) -- -- --
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity . (.12) (.26) (.25) (.23) (.24)
-------- -------- -------- -------- --------
Net asset value, end of period ........... $ 13.32 $ 13.14 $ 16.25 $ 15.70 $ 15.04
======== ======== ======== ======== ========
Market price per share, end of period .... $ 12.75 $12.6875 $16.0625 $15.0625 $ 14.125
======== ======== ======== ======== ========
====================================================================================================================================
Total Investment Based on market price per share .......... 3.77%+++ (12.83%) 13.04% 13.20% 14.52%
Return:** ======== ======== ======== ======== ========
Based on net asset value per share ....... 4.67%+++ (10.76%) 9.72% 10.82% 7.26%
======== ======== ======== ======== ========
====================================================================================================================================
Ratios Based on Total expenses*** ........................ 1.06%* 1.02% .96% 1.00% 1.02%
Average Net Assets ======== ======== ======== ======== ========
Of Common Stock: Total investment income--net*** .......... 7.61%* 6.86% 6.84% 7.35% 7.35%
======== ======== ======== ======== ========
Amount of dividends to Preferred Stock
shareholders ............................. 1.84%* .98% 1.27% 1.52% 1.62%
======== ======== ======== ======== ========
Investment income--net, to Common Stock
shareholders ............................. 5.77%* 5.88% 5.57% 5.83% 5.73%
======== ======== ======== ======== ========
====================================================================================================================================
Ratios Based on Total expenses ........................... .69%* .69% .66% .68% .69%
Total Average Net ======== ======== ======== ======== ========
Assets:***+ Total investment income--net ............. 4.96%* 4.65% 4.72% 4.97% 4.99%
======== ======== ======== ======== ========
====================================================================================================================================
Ratios Based on Dividends to Preferred Stock shareholders 3.44%* 2.08% 2.80% 3.20% 3.43%
Average Net Assets ======== ======== ======== ======== ========
Of Preferred Stock:
====================================================================================================================================
Supplemental Net assets, net of Preferred Stock, end of
Data: period (in thousands) .................... $244,270 $240,973 $293,669 $283,661 $190,653
======== ======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) ........................... $130,000 $130,000 $130,000 $130,000 $ 90,000
======== ======== ======== ======== ========
Portfolio turnover ....................... 48.95% 86.51% 103.93% 85.35% 119.52%
======== ======== ======== ======== ========
====================================================================================================================================
Leverage: Asset coverage per $1,000 ................ $ 2,879 $ 2,854 $ 3,259 $ 3,182 $ 3,118
======== ======== ======== ======== ========
====================================================================================================================================
Dividends Per Share Series A--Investment income--net ......... $ 456 $ 493 $ 734 $ 809 $ 870
On Preferred Stock ======== ======== ======== ======== ========
Outstanding: Series B--Investment income--net ......... $ 398 $ 555 $ 672 $ 821 $ 844
======== ======== ======== ======== ========
Series C--Investment income--net ......... $ 434 $ 503 $ 697 $ 574 --
======== ======== ======== ======== ========
====================================================================================================================================
</TABLE>
* 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 charges.
*** Do not reflect the effect of dividends to Preferred
Stock shareholders.
+ Includes Common and Preferred Stock average net assets.
++ The Fund's Preferred Stock was issued on November 30,
1992 (Series A and B) and January 27, 1997 (Series C).
+++ Aggregate total investment return.
++++ Amount is less than $.01 per share.
See Notes to Financial Statements.
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. The Fund's financial statements are prepared in accordance
with accounting principles generally accepted in the United States of America,
which may require the use of management accruals and estimates. 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 written or purchased are valued at the last
sale price in the case of exchange-traded options. In the case of options traded
in the over-the-counter market, valuation is the last asked price (options
written) or the last bid price (options purchased). 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
14 & 15
<PAGE>
MuniYield California Insured Fund II, Inc., April 30, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
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
investment strategies to increase or decrease the level of risk to which the
Fund is exposed more quickly and efficiently than transactions in other types of
instruments. Losses may arise due to changes in the value of the contract or if
the counterparty does not perform under the contract.
o 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.
o 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) Dividends and distributions--Dividends from net investment income are
declared and paid monthly. Distributions of capital gains are recorded on the
ex-dividend dates. Distributions in excess of realized capital gains are due to
primarily differing tax treatments for future transactions.
(f) Custodian Bank--The Fund recorded an amount payable to the Custodian Bank
reflecting an overnight overdraft which resulted from management estimates of
available cash.
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 .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, 2000 were $169,023,272 and $175,162,038, respectively.
Net realized losses for the six months ended April 30, 2000 and net unrealized
losses as of April 30, 2000 were as follows:
--------------------------------------------------------------------------------
Realized Unrealized
Losses Losses
--------------------------------------------------------------------------------
Long-term investments .............. $(9,089,173) $(7,538,035)
Financial futures contracts ........ (378,118) --
----------- -----------
Total .............................. $(9,467,291) $(7,538,035)
=========== ===========
--------------------------------------------------------------------------------
As of April 30, 2000, net unrealized depreciation for Federal income tax
purposes aggregated $7,538,035, of which $4,694,076 related to appreciated
securities and $12,232,111 related to depreciated securities. The aggregate cost
of investments at April 30, 2000 for Federal income tax purposes was
$375,781,930.
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, 2000
remained constant and during the year ended October 31, 1999 increased by
277,909 as a result of dividend reinvestment.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred Stock of the
Fund, with a par value of $.10 per share and a liquidation preference of $25,000
per share, 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, 2000 were as follows: Series A, 3.85%; Series B, 4.50%; and Series C,
3.90%.
Shares issued and outstanding during the six months ended April 30, 2000 and
during the year ended October 31, 1999 remained constant.
The Fund pays commissions to certain broker-dealers at the end of each auction
at an annual rate ranging from .25% to .375%, calculated on the proceeds of each
auction. For the six months ended April 30, 2000, Merrill Lynch, Pierce, Fenner
& Smith Incorporated, an affiliate of FAM, earned $53,297 as commissions.
5. Capital Loss Carryforward:
At October 31, 1999, the Fund had a net capital loss carryforward of
approximately $4,997,000, all of which expires in 2007. This amount will be
available to offset like amounts of any future taxable gains.
6. Subsequent Event:
On May 5, 2000, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.067300 per share,
payable on May 30, 2000 to shareholders of record as of May 16, 2000.
16 & 17
<PAGE>
MuniYield California Insured Fund II, Inc., April 30, 2000
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute all or a portion of its net
investment income to its shareholders on a monthly basis. 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.
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
James H. Bodurtha, Director
Herbert I. London, Director
Joseph L. May, Director
Andre F. Perold, Director
Roberta Cooper Ramo, Director
Arthur Zeikel, Director
Vincent R. Giordano, Senior Vice President
Kenneth A. Jacob, Vice President
Roberto Roffo, Vice President
Donald C. Burke, Vice President and Treasurer
Alice A. Pellegrino, Secretary
--------------------------------------------------------------------------------
Robert R. Martin, Director of MuniYield California Insured Fund II, Inc. has
recently retired. The Fund's Board of Directors wishes Mr. Martin well in his
retirement.
--------------------------------------------------------------------------------
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:
The Bank of New York
100 Church Street
New York, NY 10286
NYSE Symbol
MCA
18 & 19
<PAGE>
MuniYield California Insured Fund II, Inc. seeks to provide shareholders with as
high a level of current income exempt from Federal and California income taxes
as is consistent with its investment policies and prudent investment management
by investing primarily in a portfolio of long-term municipal obligations the
interest on which, in the opinion of bond counsel to the issuer, is exempt from
Federal and California income taxes.
This report, including the financial information herein, is transmitted to
shareholders of MuniYield California Insured Fund II, Inc. for their
information. It is not a prospectus. 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 II, Inc.
Box 9011
Princeton, NJ
08543-9011 #16388--4/00
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