-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, AmL1XEqeR7ngqvMYj/qCt1owGz07rQr9iJAFMJkQ2G7sMTfQr4XiLM/Rwc9idw2X 0NAs9zlEFQ4sZQxqO5qnJg== 0000900092-95-000165.txt : 19950612 0000900092-95-000165.hdr.sgml : 19950612 ACCESSION NUMBER: 0000900092-95-000165 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950430 FILED AS OF DATE: 19950609 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MUNIVEST FLORIDA FUND CENTRAL INDEX KEY: 0000899177 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-07580 FILM NUMBER: 95546190 BUSINESS ADDRESS: STREET 1: 800 SCUDDERS MILL RD CITY: PLAINSBORO STATE: NJ ZIP: 08536 BUSINESS PHONE: 6092822800 MAIL ADDRESS: STREET 1: PO BOX 9011 CITY: PRINCETON STATE: NJ ZIP: 08543-9011 N-30D 1 SEMI-ANNUAL REPORT MUNIVEST CALIFORNIA INSURED FUND, INC. FUND LOGO Semi-Annual Report April 30, 1995 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 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. 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 pick-up on the Common Stock will be reduced or eliminated completely. 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. 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 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 DEAR SHAREHOLDER For the six-month period ended April 30, 1995, the Common Stock of Muni- Vest California Insured Fund, Inc. earned $0.382 per share income dividends, which included earned and unpaid divi- dends of $0.063. This represents a net annualized yield of 6.13%, based on a month-end per share net asset value of $12.59. Over the same period, the total investment return on the Fund's Com- mon Stock was +10.41%, based on a change in per share net asset value from $11.80 to $12.59, and assuming rein- vestment of $0.386 per share income dividends. For the six-month period ended April 30, 1995, the Fund's Auction Market Prefer- red Stock had an average yield of 3.75%. The Environment During the six months ended April 30, 1995, the perception that the US econ- omy was overheating and inflationary pressures were increasing gave way to a more benign economic outlook. With more signs of slowing growth, investors now appear to be forecasting a "soft landing" for the US economy. Although gross domestic product was reported to have increased at a revised 5.1% rate during the final quarter of 1994, declines in other indicators such as new home sales and durable goods orders regis- tered thus far in 1995 have led investors to anticipate that the economy is losing enough momentum to keep inflation under control and preclude further significant monetary policy tightening by the Federal Reserve Board. A further indication of a slowing economy was the reported decline in the Index of Leading Economic Indicators for March. As US stock and bond markets have risen on more positive economic news, the value of the US dollar has reached new lows relative to the yen and the Deutschemark. Persistent trade deficits and exports of capital from the United States have kept the US currency in a decade-long decline relative to the Japanese and German currencies. Over the longer term, since the United States has the highest productivity among industrialized nations and among the lowest labor costs, demand for US dollar- denominated assets may improve. How- ever, a reduction of the still-widening US trade deficit may be necessary before the US dollar appreciates substantially relative to the yen and the Deutschemark. The first months of 1995 have been very positive for the stock and bond markets. Continued signs of a moderating expan- sion and well-contained inflationary pressures would provide further assur- ance that the peak in interest rates is behind us. On the other hand, indica- tions of reaccelerating growth and further significant monetary policy tightening by the Federal Reserve Board would be a decided negative for the US financial markets. The Municipal Market During the six-month period ended April 30, 1995, the tax-exempt bond market gradually recouped much of the losses sustained during 1994. Signs of a weakening domestic economy and ongo- ing moderate inflationary pressures have fostered an environment of declining interest rates. Since October 31, 1994, A-rated, uninsured municipal revenue bond yields, as measured by the Bond Buyer Revenue Bond Index, have declined over 65 basis points (0.65%) to close the six-month period ended April 30, 1995 at 6.29%. Tax-exempt bond yields initially continued to climb in late 1994, reaching a high of 7.37% in late November 1994. Municipal bond yields have since declined over 100 basis points from their recent highs and are presently lower than they were a year ago. US Treasury bond yields have ex- perienced similar declines over the last six months to end the April period at 7.34%. Much of the recent improvement in the tax-exempt bond market, however, has occurred over the last three months. During this most recent quarter, munici- pal bond yields have fallen approxi- mately 50 basis points, while US Treasury bond yields declined only 35 basis points. Tax-exempt bond yields declined more than their taxable counterparts in recent months, largely in response to the significant decline in new bond issuance in recent quarters. Over the last six months, less than $60 billion in new long-term municipal securities were underwritten, a decline of nearly 45% versus the comparable period a year earlier. Issuance was particularly low this past January and February, with monthly volume of less than $8 billion. These levels are the lowest monthly totals since the mid-1980s. To compound the municipal market's already strong technical posture, both institutional and individual investors have seen significant cash inflows in recent months. These assets were derived from regular coupon payments, bond maturities and the proceeds from early bond calls and redemptions. It has been estimated that investors received over $20 billion in principal redemp- tions and coupon income in January 1995 alone. With monthly issuance in the $10 billion range thus far this year, the current supply/demand imbalance has dominated the municipal market and bond prices have risen accordingly. The tax-exempt bond market's technical position is likely to remain very strong throughout most of 1995. Investors are expected to receive almost $40 billion in principal and coupon payments on July 1, 1995. Investor proceeds from all sources have been estimated to exceed $200 billion for all of 1995. Estimates of total new bond issuance for 1995 have continued to be lowered with most estimates now in the $125 billion range. Investors should find it increasingly difficult to replace existing holdings as they mature and to reinvest coupon income in such an environment. The municipal bond market's outper- formance thus far this year caused the tax-exempt market to become tempo- rarily expensive relative to its taxable counterpart in late April. Investor con- cerns regarding the international cur- rency situation and the future impact of proposed revisions to US taxation poli- cies upon the tax advantage inherent to municipal bonds have combined to cause tax-exempt bond yields to increase marginally in recent weeks. Municipal bond yields have risen approximately 15 basis points from their lows in mid-April 1995. Long-term US Treasury bond yields have remained essentially stable. Such an underperformance by the tax- exempt bond market is likely to be limited in duration. The recent increase in tax-exempt bond yields has already begun to attract institutional investors since some municipal bonds yielding in excess of 85% of US Treasury bond yields are again available. Also, con- cerns regarding the implication for municipal bonds' tax advantage result- ing from various proposed tax law changes (for example, flat-tax, value- added tax or national sales tax) are all likely to quickly recede as investors realize that such, if any, changes are unlikely to be enacted before late 1996 at the earliest. Long-term investors will also recall 1986 when similar tax propos- als were made and tax-exempt bond yields initially rose and then quickly fell. Investors are likely to view the current situation as an opportunity to purchase very attractively priced tax- advantaged products. This should cause municipal bond yields to quickly return to their more historic relationship. Portfolio Strategy For the six-month period ended April 30, 1995, our portfolio strategy shifted slightly on the belief that bond yields were attractive. Cash reserves, which averaged 5% of net assets during the six-month period ended October 31, 1994, were drawn down to an average of 1% by April 30, 1995. We did this to seek to enhance income for shareholders while slightly extending duration to better capture any market appreciation. Another factor in the decision to lower cash reserves was the 61% decrease in municipal issuance of California bonds for this six-month period versus the same six-month period last year. This decline in issuance raised concerns that it would be difficult to buy bonds when the market becomes more active. How- ever, the Fund's credit quality remained high, with 94% of long-term assets rated AA or better by at least one of the major rating agencies. Looking forward, our strategy will consist of seeking to enhance the total return of the Fund as yields begin their expected downward path. The Fund's Preferred Stock, which aver- aged 3.88% for the six-month period, is auctioned on a weekly basis in response to the lower average rate associated with the seven-day auction schedule as opposed to a longer auction rate sched- ule. These short-term interest rates have continued to provide generous yield benefits to the Fund's Common Stock shareholders as a result of lever- aging in a steep yield curve environ- ment. However, should the spread between short-term and long-term inter- est rates narrow, the benefits of the leverage will diminish and reduce the yield of the Common Stock. (For a complete explanation of the benefits and risks of leveraging, see page 1 of this report to shareholders.) In Conclusion We appreciate your ongoing interest in MuniVest California Insured Fund, Inc., and we look forward to serving your investment needs in the months and years to come. Sincerely, (Arthur Zeikel) Arthur Zeikel President (Vincent R. Giordano) Vincent R. Giordano Vice President and Portfolio Manager May 26, 1995 Portfolio Abbreviations To simplify the listings of MuniVest California Insured Fund, Inc.'s portfolio holdings in the Schedule of Investments, we have abbreviated the names of many of the securities according to the list below and at right. AMT Alternative Minimum Tax (subject to) COP Certificates of Participation GO General Obligation Bonds HFA Housing Finance Agency INFLOS Inverse Floating Rate Municipal Bonds RIB Residual Interest Bonds SAVRS Select Auction Variable Rate Securities S/F Single-Family UT Unlimited Tax VRDN Variable Rate Demand Notes SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face Value STATE Ratings Ratings Amount Issue (Note 1a) California--93.6% AAA Aaa $ 2,485 California Health Facilities Financing Authority Revenue Bonds (Children's Hospital of San Diego), 7% due 7/01/2013 (d) $ 2,671 AA- Aa 2,500 California HFA, Home Mortgage Revenue Bonds, AMT, Series F-1, 7% due 8/01/2026 2,564 AA- Aa 2,000 California HFA, Revenue Bonds, AMT, Linked SAVRS and RIB, 7.59% due 8/01/2023 1,987 A1+ VMIG1++ 300 California Pollution Control Financing Authority, Solid Waste Disposal Revenue Bonds (Shell Oil Co.--Martinez Project), VRDN, AMT, Series A, 4.95% due 10/01/2024 (a) 300 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) 811 California State Public Works Board, Lease Revenue Bonds: AAA Aaa 5,500 (Department of Corrections--California State Prison--Susanville), Series D, 5.25% due 6/01/2015 (h) 4,939 A- A 3,500 (Department of Corrections--Monterey County), 7% due 11/01/2019 3,681 AAA Aaa 4,000 (Various Universities of California Projects), Series A, 6.40% due 12/01/2016 (b) 4,086 AA Aa 2,000 California Statewide Community Development Authority Revenue Bonds, COP (Saint Joseph Health System Group), 6.625% due 7/01/2021 2,051 AAA Aaa 2,750 Campbell, California, Unified School District Bonds, Series A, 6.25% due 8/01/2019 (d) 2,752 AAA Aaa 2,000 Central Coast Water Authority, California, Revenue Bonds (Water Project Regional Facilities), 6.60% due 10/01/2022 (b) 2,077 AAA Aaa 500 Fresno, California, Sewer Revenue Bonds, Series A-1, 6.25% due 9/01/2014 (b) 518 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) 3,594 AAA Aaa 3,000 Los Angeles, California, Convention & Exhibition Center Authority, Lease Revenue Refunding Bonds, Series A, 5.375% due 8/15/2018 (d) 2,704 AAA Aaa 3,500 Los Angeles, California, Department of Water and Power, Electric Plant Revenue Refunding Bonds, 5.375% due 9/01/2023 (c) 3,108 AA Aa 5,000 Los Angeles, California, Harbor Department Revenue Bonds, AMT, Series B, 6.625% due 8/01/2025 5,080 AAA Aaa 9,000 Los Angeles, California, Wastewater System Revenue Bonds, Series B, 5.70% due 6/01/2023 (d) 8,393 AAA Aaa 7,335 Los Angeles County, California, COP (Correctional Facilities Project), 6.50% due 9/01/2013 (d) 7,536 AAA Aaa 1,500 Los Angeles County, California, Metropolitan Transportation Authority, Sales Tax Revenue Refunding Bonds (Proposition A), Series A, 5.625% due 7/01/2018 (d) 1,400 M-S-R Public Power Agency, California, Revenue Bonds (San Juan Project): AAA Aaa 1,500 Refunding, 6.75% due 7/01/2020 (d) 1,631 AAA Aaa 2,000 Refunding, Series F, 6% due 7/01/2020 (b) 1,944 AAA Aaa 2,000 Series E, 6.75% due 7/01/2011 (d) 2,121 Northern California Power Agency, Public Power Revenue Refunding Bonds (Hydroelectric Project Number 1), Series A (d): AAA Aaa 2,000 6.25% due 7/01/2012 2,030 AAA Aaa 3,500 5.50% due 7/01/2024 3,167 AAA Aaa 1,000 Oakland, California, Redevelopment Agency, Refunding Bonds, INFLOS, 7.662% due 9/01/2019 (d)(e) 949 AAA Aaa 2,750 Oceanside, California, COP (Watereuse Association, California, Financing Project), Series A, 6.50% due 10/01/2017 (b) 2,832 A+ A1 3,000 Pasadena, California, COP, Refunding (Old Pasadena Package Facility Project), 6.25% due 1/01/2018 3,032 AAA Aaa 3,000 Pioneers Memorial Hospital District, California, Refunding, GO, UT, 6.50% due 10/01/2024 (b) 3,102 AAA Aaa 3,000 Rancho Cucamonga, California, Redevelopment Agency, Tax Allocation Bonds (Rancho Redevelopment Project), 6.75% due 9/01/2020 (d) 3,133 AAA Aaa 4,000 Sacramento, California, Municipal Utilities District, Electric Revenue Bonds, Series B, 6.375% due 8/15/2022 (d) 4,051 AAA Aaa 1,000 Sacramento County, California, COP, GO, 6.50% due 6/01/2015 (d) 1,027 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) 2,036 AAA Aaa 2,000 Issue 6, 6.60% due 5/01/2020 (b) 2,057 San Francisco, California, City and County Redevelopment Agency, Lease Revenue Bonds (George R. Moscone Convention Center)(h): AAA Aaa 2,800 6.75% due 7/01/2015 2,974 AAA Aaa 1,500 6.75% due 7/01/2024 1,589 AAA Aaa 1,700 San Mateo County, California, Joint Powers Financing Authority, Lease Revenue Refunding Bonds (Capital Projects Program), 5.125% due 7/01/2018 (d) 1,491 AAA Aaa 3,500 Stockton, California, Revenue Bonds, COP (Wastewater Treatment Plant Expansion), Series A, 6.70% due 9/01/2014 (c) 3,705 AAA Aaa 1,500 University of California, Revenue Bonds (Multiple Purpose Projects), Series D, 6.30% due 9/01/2015 (d) 1,518 AAA Aaa 1,500 Vacaville, California, Public Financing Authority, Tax Allocation Revenue Refunding Bonds (Vacaville Redevelopment Projects), 6.35% due 9/01/2022 (d) 1,510 AAA Aaa 1,500 Walnut, California, Public Financing Authority, Tax Allocation Revenue Refunding Bonds (Walnut Improvement Project), 6.50% due 9/01/2022 (d) 1,543 Total Investments (Cost--$106,270)--93.6% 107,694 Other Assets Less Liabilities--6.4% 7,376 -------- Net Assets--100.0% $115,070 ======== *Not Rated. (a)The interest rate is subject to change periodically based upon prevailing market rates. The interest rate shown is the rate in effect at April 30, 1995. (b)AMBAC Insured. (c)FGIC Insured. (d)MBIA Insured. (e)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, 1995. (f)GNMA Collateralized. (g)FSA Insured. (h)Capital Guaranty. ++Highest short-term rating by Moody's Investors Service, Inc. See Notes to Financial Statements.
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
As of April 30, 1995 Assets: Investments, at value (identified cost--$106,270,329) (Note 1a) $107,693,851 Cash 94,296 Receivables: Securities sold $ 5,415,482 Interest 2,036,941 7,452,423 ------------ Deferred organization expenses (Note 1e) 18,982 Prepaid expenses 7,070 ------------ Total assets 115,266,622 ------------ Liabilities: Payables: Dividends to shareholders (Note 1f) 107,873 Investment adviser (Note 2) 44,837 152,710 ------------ Accrued expenses and other liabilities 44,295 ------------ Total liabilities 197,005 ------------ Net Assets: Net assets $115,069,617 ============ Capital: Capital Stock (200,000,000 shares authorized) (Note 4): Preferred Stock, par value $.10 per share (1,600 shares of AMPS* issued and outstanding at $25,000 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 433,701 Accumulated realized capital losses on investments--net (Note 5) (10,349,605) Unrealized appreciation on investments--net 1,423,522 ------------ Total--Equivalent to $12.59 net asset value per share of Common Stock (market price--$11.625) 75,069,617 ------------ Total capital $115,069,617 ============ *Auction Market Preferred Stock.
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1995 Investment Interest and amortization of premium and discount earned $ 3,519,501 Income (Note 1d): Expenses: Investment advisory fees (Note 2) $ 277,986 Commission fees (Note 4) 54,309 Professional fees 39,060 Printing and shareholder reports 23,122 Accounting services (Note 2) 14,354 Listing fees 13,430 Directors' fees and expenses 12,186 Transfer agent fees 12,079 Custodian fees 5,261 Pricing fees 4,131 Amortization of organization expenses (Note 1e) 2,909 Other 11,546 ------------ Total expenses 470,373 ------------ Investment income--net 3,049,128 ------------ Realized & Realized loss on investments--net (4,244,655) Unrealized Gain Change in unrealized appreciation/depreciation on investments--net 8,957,621 (Loss) on ------------ Investments--Net Net Increase in Net Assets Resulting from Operations $ 7,762,094 (Notes 1b, 1d & 3): ============
STATEMENTS OF CHANGES IN NET ASSETS
For the Six For the Months Ended Year Ended Increase (Decrease) in Net Assets: April 30, 1995 Oct. 31, 1994 Operations: Investment income--net $ 3,049,128 $ 6,068,712 Realized loss on investments--net (4,244,655) (6,104,947) Change in unrealized appreciation/depreciation on investments--net 8,957,621 (12,568,883) ------------ ------------ Net increase (decrease) in net assets resulting from operations 7,762,094 (12,605,118) ------------ ------------ Dividends & Investment income--net: Distributions to Common Stock (2,300,717) (4,886,495) Shareholders Preferred Stock (742,896) (1,215,832) (Note 1f): Realized gain on investments--net: Common Stock -- (410,130) Preferred Stock -- (62,896) ------------ ------------ Net decrease in net assets resulting from dividends and distributions to shareholders (3,043,613) (6,575,353) ------------ ------------ Capital Stock Offering and underwriting costs resulting from the issuance of Transactions Preferred Stock -- 34,413 (Notes 1e & 4): Value of shares issued to Common Stock shareholders in reinvestment of dividends and distributions -- -- ------------ ------------ Net increase in net assets derived from capital stock transactions -- 34,413 ------------ ------------ Net Assets: Total increase (decrease) in net assets 4,718,481 (19,146,058) Beginning of period 110,351,136 129,497,194 ------------ ------------ End of period* $115,069,617 $110,351,136 ============ ============ *Undistributed investment income--net $ 433,701 $ 428,186 ============ ============ See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
The following per share data and ratios have been derived For the Six For the For the Period from information provided in the financial statements. Months Ended Year Ended April 30, 1993++ April 30, October 31, to October 31, Increase (Decrease) in Net Asset Value: 1995 1994 1993 Per Share Net asset value, beginning of period $ 11.80 $ 15.01 $ 14.18 Operating -------- -------- -------- Performance: Investment income--net .51 1.01 .48 Realized and unrealized gain (loss) on investments--net .79 (3.13) .91 -------- -------- -------- Total from investment operations 1.30 (2.12) 1.39 -------- -------- -------- Less dividends and distributions to Common Stock shareholders: Investment income--net (.39) (.82) (.34) Realized gain on investments--net -- (.07) -- -------- -------- -------- Total dividends and distributions to Common Stock shareholders (.39) (.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 (.12) (.20) (.06) Realized gain on investments--net -- (.01) -- Capital charge resulting from issuance of Preferred Stock -- .01 (.13) -------- -------- -------- Total effect of Preferred Stock activity (.12) (.20) (.19) -------- -------- -------- Net asset value, end of period $ 12.59 $ 11.80 $ 15.01 ======== ======== ======== Market price per share, end of period $ 11.625 $ 10.50 $ 14.75 ======== ======== ======== Total Investment Based on market price per share 14.57%+++ (23.56%) .64%+++ Return:** ======== ======== ======== Based on net asset value per share 10.41%+++ (15.58%) 8.34%+++ ======== ======== ======== Ratios to Average Expenses, net of reimbursement .85%* .76% .41%* Net Assets:*** ======== ======== ======== Expenses .85%* .81% .83%* ======== ======== ======== Investment income--net 5.50%* 5.06% 4.82%* ======== ======== ======== Supplemental Net assets, net of Preferred Stock, end of period Data: (in thousands) $ 75,070 $ 70,351 $ 89,497 ======== ======== ======== Preferred Stock outstanding, end of period (in thousands) $ 40,000 $ 40,000 $ 40,000 ======== ======== ======== Portfolio turnover 49.62% 81.53% 38.34% ======== ======== ======== Dividends Per Investment income--net $ 464 $ 760 $ 239 Share on Preferred Stock Outstanding:++++++ ++Commencement of Operations. ++++The Fund's Preferred Stock was issued on June 1, 1993. ++++++Dividends per share have been adjusted to reflect a two-for-one stock split. +++Aggregate total investment return. *Annualized. **Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Total investment returns exclude the effects of sales loads. ***Do not reflect the effect of dividends to Preferred Stock shareholders. See Notes to Financial Statements.
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. 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 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 and options thereon, which are traded on exchanges, are valued at their closing prices as of the close of such exchanges. Options, which are traded on exchanges, are valued at their last sale price as of the close of such exchanges or, lacking any sales, at the last available bid price. Securities with remaining maturities of sixty days or less are valued at amortized cost, which approximates market value. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Board of Directors of the Fund. (b) Derivative financial instruments--The Fund may engage in various portfolio strategies to seek to increase its return by hedging its portfolio against adverse movements in the debt markets. Losses may arise due to changes in the value of the contract or if the counterparty does not perform under the contract. * Financial futures contracts--The Fund may purchase or sell interest rate futures contracts and options on such futures contracts for the purpose of hedging the market risk on existing securities or the intended purchase of securities. Futures contracts are contracts for delayed delivery of securities at a specific future date and at a specific price or yield. Upon entering into a contract, the Fund deposits and maintains as collateral such initial margin as required by the exchange on which the transaction is effected. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. * Options--The Fund is authorized to write covered call options and purchase put options. When the Fund writes an option, an amount equal to the premium received by the Fund is reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market to reflect the current market value of the option written. When a security is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the security acquired or deducted from (or added to) the proceeds of the security sold. When an option expires (or the Fund enters into a closing transaction), the Fund realizes a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction exceeds the premium paid or received). 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 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. (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) Dividends and distributions--Dividends from net investment income are declared and paid monthly. Distributions of capital gains are recorded on the ex-dividend dates. NOTES TO FINANCIAL STATEMENTS (concluded) 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 sub- sidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the limited partner. FAM is responsible for the management of the Fund's portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Fund. For such services, the Fund pays a monthly fee at an annual rate of 0.50% of the Fund's average weekly net assets. Accounting services are provided to the Fund by FAM at cost. Certain officers and/or directors of the Fund are officers and/or directors of FAM, PSI, Merrill Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S"), and/or ML & Co. 3. Investments: Purchases and sales of investments, excluding short-term securities, for the six months ended April 30, 1995 were $53,710,963 and $59,338,993, respectively. Net realized and unrealized gains (losses) as of April 30, 1995 were as follows: Realized Unrealized Losses Gains Long-term investments $(2,791,936) $ 1,423,522 Short-term investments (32,480) -- Financial futures contracts (1,420,239) -- ----------- ----------- Total $(4,244,655) $ 1,423,522 =========== =========== As of April 30, 1995, net unrealized appreciation for Federal income tax purposes aggregated $1,423,522, of which $2,159,252 related to appreciated securities and $735,730 related to depreciated securities. The aggregate cost of investments at April 30, 1995 for Federal income tax purposes was $106,270,329. 4. Capital Stock Transactions: The Fund is authorized to issue 200,000,000 shares of capital stock, including Preferred Stock, par value $.10 per share, all of which were initially classified as Common Stock. The Board of Directors is authorized, however, to reclassify any unissued shares of capital stock without approval of holders of Common Stock. Common Stock For the six months ended April 30, 1995, shares issued and out- standing remained constant at 5,961,365. At April 30, 1995, 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 April 30, 1995 was 4.20%. A two-for-one stock split occurred on December 1, 1994. As a result, at April 30, 1995 there were 1,600 AMPS authorized, issued and outstanding with a liquidation preference of $25,000 per share, plus accumulated and unpaid dividends of $23,017. The Fund pays commissions to certain broker-dealers at the end of each auction at an annual rate ranging from 0.25% to 0.375%, calculated on the proceeds of each auction. For the six months ended April 30, 1995, MLPF&S, an affiliate of FAM, earned $42,418 as commissions. 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 May 9, 1995, the Fund's Board of Directors declared an ordinary income dividend to Common Stock shareholders in the amount of $.063219 per share, payable on May 30, 1995 to shareholders of record as of May 19, 1995. PER SHARE INFORMATION Per Share Selected Quarterly Financial Data*
Net Realized Unrealized Dividends/Distributions Investment Gains Gains Net Investment Income Capital Gains For the Quarter Income (Losses) (Losses) Common Preferred Common Preferred 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 -- -- November 1, 1994 to January 31, 1995 .26 (.50) 1.03 .20 .06 -- -- February 1, 1995 to April 30, 1995 .25 (.21) .47 .19 .06 -- -- Net Asset Value Market Price** For the Quarter High Low High Low Volume*** April 30, 1993++ to July 31, 1993 $14.56 $14.11 $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 November 1, 1994 to January 31, 1995 12.32 10.71 11.00 9.375 1,365 February 1, 1995 to April 30, 1995 12.97 12.31 11.625 11.125 428 ++Commencement of Operations. *Calculations are based upon shares of Common Stock outstanding at the end of each quarter. **As reported in the consolidated transaction reporting system. ***In thousands.
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