MUNIVEST
CALIFORNIA
INSURED
FUND, INC.
FUND LOGO
Annual Report
October 31, 1994
This report, including the financial information herein,
is transmitted to the shareholders of MuniVest California
Insured Fund, Inc. for their information. It is not a
prospectus, circular or representation intended for use
in the purchase of shares of the Fund or any securities
mentioned in the report. Past performance results shown
in this report should not be considered a representation
of future performance. The Fund has leveraged its
Common Stock by issuing Preferred Stock to provide the
Common Stock shareholders with a potentially higher
rate of return. Leverage creates risks for Common
Stock shareholders, including the likelihood of greater
volatility of net asset value and market price 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.
MuniVest California
Insured Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
<PAGE>
MUNIVEST CALIFORNIA INSURED FUND, INC.
The Benefits and
Risks of
Leveraging
MuniVest California Insured Fund, Inc. utilizes leveraging to seek
to enhance the yield and net asset value of its Common Stock.
However, these objectives cannot be achieved in all interest rate
environments. To leverage, the Fund issues Preferred Stock,
which pays dividends at prevailing short-term interest rates, and
invests the proceeds in long-term municipal bonds. The interest
earned on these investments is paid to Common Stock shareholders
in the form of dividends, and the value of these portfolio holdings
is reflected in the per share net asset value of the Fund's Common
Stock. However, in order to benefit Common Stock shareholders,
the yield curve must be positively sloped; that is, short-term
interest rates must be lower than long-term interest rates. At the
same time, a period of generally declining interest rates will
benefit Common Stock shareholders. If either of these conditions
change, then the risks of leveraging will begin to outweigh
the benefits.
To illustrate these concepts, assume a fund's Common Stock
capitalization of $100 million and the issuance of Preferred Stock
for an additional $50 million, creating a total value of $150 million
available for investment in long-term municipal bonds. If prevail-
ing 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.
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. At the same
time, the market value on the fund's Common Stock (that is, its
price as listed on the New York Stock Exchange) may, as a result,
decline. Furthermore, if long-term interest rates rise, the
Common Stock's net asset value will reflect the full decline in the
price of the portfolio's investments, since the value of the fund's
Preferred Stock does not fluctuate. In addition to the decline
in net asset value, the market value of the fund's Common Stock
may also decline.
<PAGE>
Officers and
Directors
Arthur Zeikel, President and Director
Donald Cecil, Director
M. Colyer Crum, Director
Edward H. Meyer, Director
Jack B. Sunderland, Director
J. Thomas Touchton, 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
Robert E. Putney, III, Assistant Secretary
Custodian
The Bank of New York
90 Washington Street
New York, New York 10286
NYSE Symbol
MVC
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, New York 10286
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
<PAGE>
DEAR SHAREHOLDER
For the year ended October 31, 1994,
the Common Stock of MuniVest
California Insured Fund, Inc. earned
$0.880 per share income dividends,
which included earned and unpaid
dividends of $0.067. This represents
a net annualized yield of 7.48%, based
on a month-end net asset value of
$11.80 per share. Over the same
period, the total investment return
on the Fund's Common Stock was
- -15.58%, based on a change in per
share net asset value from $15.01 to
$11.80, and assuming reinvestment
of $0.888 per share income dividends.
For the six-month period ended
October 31, 1994, the total investment
return on the Fund's Common Stock
was -4.13%, based on a change in per
share net asset value from $12.74 to
$11.80, and assuming reinvestment of
$0.399 per share income dividends.
The average yield on the Fund's
Auction Market Preferred Stock for
the six months ended October 31,
1994 was 3.09%.
The Municipal Market
The long-term tax-exempt market
continued to erode throughout the
three months ended October 31, 1994.
As measured by the Bond Buyer
Revenue Bond Index, yields on A-rated
municipal revenue bonds maturing
in 30 years rose by almost 50 basis
points (0.50%) to 6.95% during the
October 31, 1994 quarter. This repre-
sents the highest level in tax-
exempt bond yields in over two years.
US Treasury bonds suffered even
greater declines during the quarter
as Treasury bond yields rose approxi-
mately 60 basis points to end the
quarter at 8.00%.
The tax-exempt bond market reacted
negatively throughout the October
quarter to indications that, despite a
series of interest rate increases by the
Federal Reserve Board, the strength
of the domestic economy seen in
recent quarters has not yet been
significantly reduced. While infla-
tionary pressures have remained
well contained, additional Federal
Reserve Board actions have been
expected both to ensure that domes-
tic economic growth is eventually
confined to current levels and to
assure nervous financial markets of
its anti-inflationary intentions.
<PAGE>
Fortunately, while the demand for
tax-exempt bonds has declined
somewhat in recent months, new
bond issuance has remained greatly
reduced. During the quarter ended
October 31, 1994, only $32 billion in
long-term tax-exempt securities
were issued, a decline of over 50%
versus the October 31, 1993 quarter.
Similarly, for the six months ended
October 31, 1994, only $75 billion in
municipal securities were underwrit-
ten, a decline of over 50% versus the
comparable period a year earlier.
This reduction in issuance in recent
quarters has allowed the municipal
bond market to react to both the
decline in investor demand and the
rise in fixed-income yields in a more
orderly fashion than in similar
situations in the past, particularly
during 1987.
Long-term tax-exempt revenue bonds
currently yield approximately 7%, or
almost 11.5% on an after-tax equivalent
basis, to an investor in the 39.6%
Federal income tax bracket. As infla-
tion has only marginally increased
in the past year, real tax-exempt
interest rates have risen dramatically.
The Federal Reserve Board appears
committed to maintaining inflation at
or below its current levels. Indeed,
most forecasts expect inflation to
remain in its present range of 3%--4%
throughout 1995 and, potentially, for
the remainder of the 1990s. Real after-
tax equivalent interest rates exceed-
ing 7% represent historically attractive
municipal investments for long-term
investors.
<PAGE>
Federal Reserve Board actions taken
thus far have yet to fully impact US
domestic growth and expected addi-
tional actions should promote only a
modest economic expansion within a
benign inflationary context beginning
sometime early in 1995. Within such
an environment, it is unlikely that
tax-exempt interest rates will remain
at their current attractive levels.
Tax-exempt bond issuance is unlikely
to return to the historic high levels
seen in 1992 and 1993, while investor
demand should return as markets
stabilize. As we have discussed in
earlier reports, the total number of
tax-exempt bonds outstanding is
scheduled to decline dramatically in
1994 and 1995 as a result of both
regular bond maturities and early
redemptions. Investors seeking tax-
advantaged issues are likely to find
it very difficult to obtain currently
available tax-exempt yields as the
current supply/demand balance is
unlikely to be maintained in the
coming quarters.
Portfolio Strategy
The California municipal bond market
experienced two notable positive
technical developments over the past
year. Following a series of rating
downgrades in response to budgetary
shortfalls from an ailing, contracting
state economy, California stabilized
as a municipal credit. The general
improvement in the overall national
economic scene has been shared,
although to a lesser degree, by
California, providing a base where
California municipal securities can be
purchased with greater confidence
by tax-exempt investors. Second,
issuance of California municipal
bonds, although still the highest of
any state, is down drastically from
prior years' figures. This has provided
some degree of support for a market-
place that over the past year has
witnessed a historic rise in long-term
interest rates. We have managed the
Fund's assets toward the dual purpose
of seeking a high current return for
the Fund's shareholders consistent
with prudent investment management.
<PAGE>
At the inception of MuniVest California
Insured Fund, Inc. (April 30, 1993),
the market environment was one of
historically low interest rates. As
interest rates backed up over the past
year, we pursued a strategy of "up
couponing" in order to generate higher
current return while providing some
price valuation protection during this
period of market volatility. Cash
equivalent reserve positions varied in
a range between 5%--15% of net assets,
depending on our shorter-term views
of market strength and weakness.
However, it was not our intention to
allow the Fund to hold large cash
reserves over a prolonged period to the
point that current yield would have
been negatively impacted. Tight
credit quality yield spreads allowed
the Fund to maintain a large per-
centage of total assets (nearly 90%)
committed to AAA-rated municipal
paper. As these yield spreads widen,
which will occur during periods of
market volatility, we will begin to
shift a portion of assets towards
higher-yielding securities within
the credit standards of the Fund's
research team.
Looking back, our strategy has been
to seek to cushion the effect of nega-
tive market action. Going forward into
next year, we anticipate a scenario
more accommodative to positive gains
for municipal securities. As eventual
slowing in the US economy material-
izes, the tight technical condition of
the California bond market in partic-
ular will benefit from a high coupon,
fully invested portfolio mix.
We appreciate your ongoing interest
in MuniVest California Insured Fund,
Inc., and we look forward to serving
your investment needs and objectives
in the months and years to come.
<PAGE>
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
November 22, 1994
Portfolio To simplify the listings of MuniVest California Insured
Abbreviations Fund, Inc.'s portfolio holdings in the Schedule of
Investments, we have abbreviated the names of many
of the securities according to the list at below and right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
DATES Daily Adjustable Tax-Exempt Securities
GO General Obligation Bonds
HFA Housing Finance Authority
INFLOS Inverse Floating Rate Municipal Bonds
RIB Residual Interest Bonds
S/F Single-Family
TRAN Tax Revenue Anticipation Notes
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
California--106.0% AAA Aaa $ 3,175 California Health Facilities Financing Authority Revenue Bonds
(Scripps Memorial Hospital), Series A, 6.375% due 10/01/2022 (d) $ 3,030
AA- Aa 2,500 California HFA, Home Mortgage Revenue Bonds, AMT, Series F-1,
7% due 8/01/2026 2,468
AA Aa 2,000 California HFA, Revenue Bonds, AMT, RIB, 9.111% due 8/01/2023 (e) 1,735
NR* Aaa 670 California Rural Home Mortgage Financing Authority, S/F Mortgage
Revenue Bonds (Mortgage-Backed Securities Program), AMT, Series A-2,
7.95% due 12/01/2024 (f) 736
California State Public Works Board, Lease Revenue Bonds, Series A:
A A 3,500 (Department of Corrections--Monterey County), 7% due 11/01/2019 3,492
AAA Aaa 2,000 (Various Community College Projects), 6% due 12/01/2017 (b) 1,843
AAA Aaa 11,300 (Various Universities of California Projects), 6.40% due
12/01/2016 (b) 11,000
California Statewide Community Development Authority Revenue
Bonds, COP:
AAA Aaa 1,500 Refunding (Sutter Health), 6.125% due 8/15/2022 (b) 1,385
AA Aa 2,000 (Saint Joseph Health System Group), 6.625% due 7/01/2021 1,955
AAA Aaa 2,750 Campbell, California, Unified School District Revenue Bonds,
Series A, 6.25% due 8/01/2019 (d) 2,589
AAA Aaa 2,000 Central Coast Water Authority, California, Revenue Bonds (Water
Project Regional Facilities), 6.60% due 10/01/2022 (b) 1,977
AAA Aaa 500 Contra Costa, California, Water District, Water Revenue Bonds,
Series E, 5.75% due 10/01/2018 (b) 437
AAA Aaa 2,150 Fairfield, California, Public Financing Authority, Revenue Refunding
Bonds, Series B, 5.80% due 4/01/2023 (d) 1,871
AAA Aaa 1,400 Folsom, California, Public Financing Authority, Revenue Refunding
Bonds, 6% due 10/01/2019 (b) 1,276
A1 NR* 1,100 Irvine Ranch, California, Water District, Consolidated Revenue
Refunding Bonds, DATES, Series B, 3.50% due 10/01/2004 (a) 1,100
A1+ VMIG1 1,200 Irvine Ranch, California, Water District, COP (Capital Improvement
Project), VRDN, 3.45% due 8/01/2016 (a) 1,200
AAA Aaa 3,500 Los Angeles, California, Community Redevelopment Agency, Tax
Allocation Refunding Bonds (Bunker Hill), Series H, 6.50% due
12/01/2016 (g) 3,396
<PAGE>
AAA Aaa 5,650 Los Angeles, California, Wastewater System Revenue Bonds, AMT,
Series B, 5.70% due 6/01/2023 (d) 4,846
Los Angeles County, California, COP (Correctional Facilities
Project) (d):
AAA Aaa 7,335 6.50% due 9/01/2013 7,236
AAA Aaa 2,000 6% due 9/01/2015 1,854
M-S-R Public Power Agency, California, Revenue Bonds (San Juan
Project):
AAA Aaa 1,500 Refunding, 6.75% due 7/01/2020 (d) 1,518
AAA Aaa 3,500 Refunding, Series F, 6% due 7/01/2020 (b) 3,185
AAA Aaa 2,000 Series E, 6.75% due 7/01/2011 (d) 2,029
AAA Aaa 2,000 Northern California Power Agency, Public Power Revenue Refunding Bonds
(Hydroelectric Project Number 1), Series A, 6.25% due 7/01/2012 (d) 1,927
AAA Aaa 1,000 Oakland, California, Redevelopment Agency, Refunding Bonds, INFLOS,
8.321% due 9/01/2019 (d) (e) 801
AAA Aaa 2,750 Oceanside, California, COP (Watereuse Association, California,
Financing Project), Series A, 6.50% due 10/01/2017 (b) 2,702
AAA Aaa 5,000 Ontario, California, Redevelopment Financing Authority Revenue Bonds
(Ontario Redevelopment Project No. 1), 6% due 8/01/2015 (d) 4,636
Orange County, California, COP, Various Sanitation Districts,
VRDN (a):
A1+ VMIG1 2,900 Nos. 1, 2, 3, 6, 7 & 11, Series C, 3.45% due 8/01/2017 (c) 2,900
A1+ VMIG1 600 Refunding, Nos. 1-7 & 11, 3.45% due 8/01/2016 (b) 600
AAA Aaa 3,000 Pioneers Memorial Hospital District, California, GO, UT, 6.50%
due 10/01/2024 (b) 2,919
NR* Baa 2,920 Pleasanton, California, Joint Powers Financing Authority, Revenue
Reassessment Bonds, Series A, 6.15% due 9/02/2012 2,655
AAA Aaa 3,000 Rancho Cucamonga, California, Redevelopment Agency, Tax Allocation
Bonds (Rancho Redevelopment Project), 6.75% due 9/01/2020 (d) 2,992
Sacramento, California, Municipal Utilities District, Electric
Revenue Bonds, Series B (d):
AAA Aaa 2,000 6.25% due 8/15/2011 1,941
AAA Aaa 5,000 6.375% due 8/15/2022 4,771
San Francisco, California, City and County Airports Commission,
International Airport Revenue Bonds, AMT, Second Series:
AAA Aaa 2,000 Issue 5, 6.50% due 5/01/2019 (c) 1,912
AAA Aaa 2,000 Issue 6, 6.60% due 5/01/2020 (b) 1,934
San Jose, California, Airport Revenue Refunding Bonds:
AAA Aaa 2,750 5.75% due 3/01/2016 (d) 2,419
AAA Aaa 2,000 AMT, 5.70% due 3/01/2018 (c) 1,729
<PAGE>
SP1+ NR* 4,200 Santa Cruz County, California, TRAN, GO, 4.50% due 8/01/1995 4,199
AAA Aaa 3,500 Simi Valley, California, Public Financing Authority, Revenue
Refunding Bonds, 5.75% due 9/01/2023 (d) 3,022
AAA Aaa 1,000 Stockton-East Water District, California, Revenue Refunding Bonds,
COP (1990 Project), Series A, 6.40% due 4/01/2022 (b) 966
AAA Aaa 3,000 Suisun City, California, Redevelopment Agency, Tax Allocation
Refunding Bonds (Suisun City Redevelopment Project), 6% due
10/01/2018 (d) 2,748
University of California, Revenue Bonds (Multiple Purpose
Projects) (d):
AAA Aaa 2,845 Refunding, Series B, 6% due 9/01/2013 2,653
AAA Aaa 1,500 Series D, 6.30% due 9/01/2015 1,441
AAA Aaa 1,500 Vacaville, California, Public Financing Authority, Tax Allocation
Revenue Refunding Bonds (Vacaville Redevelopment Projects), 6.35%
due 9/01/2022 (d) 1,430
AAA Aaa 1,500 Walnut, California, Public Financing Authority, Tax Allocation
Revenue Refunding Bonds (Walnut Improvement Project), 6.50% due
9/01/2022 (d) 1,462
Total Investments (Cost--$124,451)--106.0% 116,917
Liabilities in Excess of Other Assets--(6.0%) (6,566)
--------
Net Assets--100.0% $110,351
========
<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 October 31, 1994.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)MBIA Insured.
(e)The interest rate is subject to change periodically and inversely based
upon prevailing market rates. The interest rate shown is the rate in effect
at October 31, 1994.
(f)FNMA/GNMA Collateralized.
(g)FSA Insured.
*Not Related.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of October 31, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$124,450,812) (Note 1a) $116,916,713
Cash 102,766
Interest receivable 1,680,770
Deferred organization expenses (Note 1e) 18,982
Prepaid expenses 7,069
------------
Total assets 118,726,300
------------
Liabilities: Payables:
Securities purchased $ 8,007,612
Dividends to shareholders (Note 1g) 232,678
Investment adviser (Note 2) 44,639 8,284,929
------------
Accrued expenses 90,235
------------
Total liabilities 8,375,164
------------
Net Assets: Net assets $110,351,136
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.10 per share (800 shares of AMPS* issued and
outstanding at $50,000 per share liquidation preference) $ 40,000,000
Common Stock, par value $.10 per share (5,961,365 shares issued and outstanding) $ 596,136
Paid-in capital in excess of par 82,965,863
Undistributed investment income--net 428,186
Accumulated realized capital losses--net (Note 5) (6,104,950)
Unrealized depreciation on investments--net (7,534,099)
------------
Total--Equivalent to $11.80 net asset value per share of Common Stock
(market price--$10.50) 70,351,136
------------
Total capital $110,351,136
============
*Auction Market Preferred Stock.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Year Ended October 31, 1994
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 6,973,907
Income
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 598,833
Commission fees (Note 4) 150,296
Professional fees 58,581
Accounting services (Note 2) 58,367
Printing and shareholder reports 35,058
Transfer agent fees 26,149
Directors' fees and expenses 21,247
Listing fees 9,954
Custodian fees 6,702
Pricing fees 5,569
Amortization of organization expenses (Note 1e) 5,434
------------
Total expenses before reimbursement 976,190
Reimbursement of expenses (Note 2) (70,995)
------------
Total expenses after reimbursement 905,195
------------
Investment income--net 6,068,712
------------
Realized & Realized loss on investments--net (6,104,947)
Unrealized Change in unrealized appreciation/depreciation on investments--net (12,568,883)
Loss on ------------
Investments Net Decrease in Net Assets Resulting from Operations $(12,605,118)
- --Net (Notes
1d & 3): ============
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the For the Period
Year Ended Apr. 30, 1993++
Increase (Decrease) in Net Assets: Oct. 31, 1994 to Oct. 31, 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 6,068,712 $ 2,869,528
Realized gain (loss) on investments--net (6,104,947) 473,023
Change in unrealized appreciation/depreciation on investments--net (12,568,883) 5,034,784
------------ ------------
Net increase (decrease) in net assets resulting from operations (12,605,118) 8,377,335
------------ ------------
Dividends & Investment income--net:
Distributions Common Stock (4,886,495) (2,026,175)
to Share- Preferred Stock (1,215,832) (381,552)
holders Realized gain on investments--net:
Note 1g): Common Stock (410,130) --
Preferred Stock (62,896) --
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (6,575,353) (2,407,727)
------------ ------------
Capital Stock Net proceeds from issuance of Common Stock -- 83,636,531
Transactions Proceeds from issuance of Preferred Stock -- 40,000,000
(Notes 1e Value of shares issued to Common Stock shareholders in reinvestment of
& 4): dividends and distributions -- 546,050
Offering and underwriting costs from the issuance of Prefered Stock 34,413 (755,000)
------------ ------------
Net increase in net assets derived from capital stock transactions 34,413 123,427,581
------------ ------------
Net Assets: Total increase (decrease) in net assets (19,146,058) 129,397,189
Beginning of period 129,497,194 100,005
------------ ------------
End of period* $110,351,136 $129,497,194
============ ============
<FN>
*Undistributed investment income--net $ 428,186 $ 461,801
============ ============
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have been derived For the For the Period
from information provided in the financial statements. Year Ended April 30, 1993++
October 31, to October 31,
Increase (Decrease) in Net Asset Value: 1994 1993
<S> <S> <C> <C>
Per Share Net asset value, beginning of period $ 15.01 $ 14.18
Operating ------------ ------------
Performance: Investment income--net 1.01 .48
Realized and unrealized gain (loss) on investments--net (3.13) .91
------------ ------------
Total from investment operations (2.12) 1.39
------------ ------------
Less dividends and distributions to Common Stock shareholders:
Investment income--net (.82) (.34)
Realized gain on investments--net (.07) -
------------ ------------
Total dividends and distributions (.89) (.34)
------------ ------------
Capital charge resulting from issuance of Common Stock -- (.03)
------------ ------------
Effect of Preferred Stock activity:++++
Dividends and distributions to Preferred Stock shareholders:
Investment income--net (.20) (.06)
Realized gain on investments--net (.01) --
Capital charge resulting from issuance of Preferred Stock .01 (.13)
------------ ------------
Total effect of Preferred Stock activity (.20) (.19)
------------ ------------
Net asset value, end of period $ 11.80 $ 15.01
============ ============
Market price per share, end of period $ 10.50 $ 14.75
============ ============
Total Based on market price per share (23.56%) 0.64%+++
Investment ============ ============
Return:** Based on net asset value per share (15.58%) 8.34%+++
============ ============
<PAGE>
Ratios to Expenses, net of reimbursement .76% .41%*
Average ============ ============
Net Assets:***Expenses .81% .83%*
============ ============
Investment income--net 5.06% 4.82%*
============ ============
Supplemental Net assets, net of Preferred Stock, end of period (in thousands) $ 70,351 $ 89,497
Data: ============ ============
Preferred Stock outstanding, end of period (in thousands) $ 40,000 $ 40,000
============ ============
Portfolio turnover 81.53% 38.34%
============ ============
Dividends Investment income--net $ 1,520 $ 477
Per Share on
Preferred
Stock
Outstanding:
<FN>
*Annualized.
**Total investment returns based on market value, which can be significantly
greater or lesser than the net asset value, 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 June 1, 1993.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniVest California Insured Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a non-diversified,
closed-end management investment company. The Fund's Common
Stock is listed on the New York Stock Exchange under the symbol
MVC. 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, 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) 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.
(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 trans-
actions 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.
<PAGE>
(e) Deferred organization and offering expenses--Deferred organiza-
tion expenses are amortized on a straight-line basis over a five-year
period beginning with the commencement of operations of the Fund.
Direct expenses relating to the public offering of the Fund's Common
and Preferred Stock were charged to capital at the time of issuance of
the shares.
(f) Non-income producing investments--Written and purchased
options are non-income producing investments.
(g) 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"). Effective January 1, 1994, the
investment advisory business of FAM was reorganized from a
corporation to a limited partnership. Both prior to and after the
reorganization, ultimate control of FAM was vested with Merrill
Lynch & Co., Inc. ("ML & Co."). The general partner of FAM is Princeton
Services, Inc. ("PSI"), an indirect wholly-owned subsidiary of
ML & Co. The limited partners are ML & Co. and Fund Asset
Management, Inc. ("FAMI"), which is also an indirect wholly-owned
subsidiary of ML & Co.
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. For the year ended October 31,
1994, FAM earned fees of $598,833, of which $70,995 was voluntarily
waived.
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, FAMI, 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 year ended October 31, 1994 were $91,917,075 and $94,227,057,
respectively.
<PAGE>
Net realized and unrealized losses as of October 31, 1994 were as
follows:
Realized Unrealized
Losses Losses
Long-term investments $(5,676,860) $(7,534,099)
Financial futures contracts (428,087) --
----------- -----------
Total $(6,104,947) $(7,534,099)
=========== ===========
As of October 31, 1994, net unrealized depreciation for Federal
income tax purposes aggregated $7,534,099, of which $70 related to
appreciated securities and $7,534,169 related to depreciated securities.
The aggregate cost of investments at October 31, 1994 for Federal
income tax purposes was $124,450,812.
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 year ended October 31, 1994, shares issued and outstanding
remained constant at 5,961,365. At October 31, 1994, total paid-in
capital amounted to $83,561,999.
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 yield in effect at October 31, 1994 was 3.09%.
In connection with the offering of AMPS, the Fund reclassified 800
shares of unissued capital stock as AMPS. For the year ended October
31, 1994, there were 800 AMPS authorized, issued and outstanding
with a liquidation preference of $50,000 per share, plus accumulated
and unpaid dividends of $30,424. Effective December 1, 1994, as a
result of a two-for-one stock split, there will be 1,600 AMPS shares
with a liquidation preference of $25,000 per share.
The Fund pays commissions to certain broker-dealers at the end of
each auction at the annual rate ranging from 0.25% to 0.375%,
calculated on the proceeds of each auction. For the year ended
October 31, 1994, MLPF&S, an affiliate of MLIM, earned $90,998
as commissions.
<PAGE>
5. Capital Loss Carryforward:
At October 31, 1994, the Fund had a capital loss carryforward of
approximately $6,105,000, all of which expires in 2002. This amount
will be available to offset like amounts of any future taxable gains.
6. Subsequent Event:
On November 8, 1994, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the
amount of $.066723 per share, payable on November 29, 1994 to
shareholders of record as of November 18, 1994.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
MuniVest California Insured Fund, Inc.:
We have audited the accompanying statement of assets, liabilities
and capital, including the schedule of investments, of MuniVest
California Insured Fund, Inc. as of October 31, 1994, the related
statements of operations for the year then ended and changes in
net assets, and the financial highlights for the year then ended and
for the period April 30, 1993 (commencement of operations) to
October 31, 1993. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements
and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and the financial highlights are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities
owned at October 31, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting prin-
ciples used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
MuniVest California Insured Fund, Inc. as of October 31, 1994, the
results of its operations, the changes in its net assets, and the
financial highlights for the respective stated periods in conformity
with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
November 30, 1994
</AUDIT-REPORT>
<PAGE>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid monthly by
MuniVest California Insured Fund, Inc. during its taxable year
ended October 31, 1994, qualify as tax-exempt interest dividends for
Federal income tax purposes. Additionally, the following table
summarizes the per share capital gain distributions paid by the
Fund during the year:
Payable Short-Term Long-Term
Date Capital Gains Capital Gains
Common Stock Shareholders 12/30/93 $ .068798 --
Preferred Stock Shareholders 12/01/93 $78.62 --
Please retain this information for your records.
PER SHARE INFORMATION (unaudited)
<TABLE>
Per Share
Selected Quarterly
Financial Data*
<CAPTION>
Net Realized Unrealized Dividends/Distributions
Investment Gains Gains Net Investment Income Capital Gains
For the Period Income (Losses) (Losses) Common Preferred Common Preferred
<S> <C> <C> <C> <C> <C> <C> <C>
April 30, 1993++ to July 31, 1993 $.22 $.03 $ .17 $.12 $.02 -- --
August 1, 1993 to October 31, 1993 .26 .05 .66 .22 .04 -- --
November 1, 1993 to January 31, 1994 .26 .06 -- .21 .05 $.07 $.01
February 1, 1994 to April 30, 1994 .26 (.08) (2.17) .21 .05 -- --
May 1, 1994 to July 31, 1994 .24 (.42) .64 .20 .05 -- --
August 1, 1994 to October 31, 1994 .25 (.58) (.58) .20 .05 -- --
<CAPTION>
Net Asset Value Market Price**
For the Period High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
April 30, 1993++ to July 31, 1993 $14.56 $14.12 $15.125 $12.375 382
August 1, 1993 to October 31, 1993 15.35 14.30 15.25 14.50 491
November 1, 1993 to January 31, 1994 15.00 14.28 15.00 13.25 436
February 1, 1994 to April 30, 1994 14.94 11.88 14.25 11.50 592
May 1, 1994 to July 31, 1994 13.33 12.30 12.625 11.50 455
August 1, 1994 to October 31, 1994 13.00 11.80 11.875 10.375 726
<PAGE>
<FN>
++Commencement of Operations.
*Calculations are based upon share of Common Stock outstanding at the end of each period.
**As reported in the consolidated transaction reporting system.
***In thousands.
</TABLE>
