UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-08573
Name of Fund: MuniHoldings California Insured Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., President,
MuniHoldings California Insured Fund, Inc., 800 Scudders Mill Road,
Plainsboro, NJ 08536. Mailing address: P.O. Box 9011, Princeton, NJ
08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 06/30/05
Date of reporting period: 07/01/04 - 12/31/04
Item 1 - Report to Stockholders
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MuniHoldings California
Insured Fund, Inc.
Semi-Annual Report
December 31, 2004
[LOGO] Merrill Lynch Investment Managers
MuniHoldings California Insured Fund, Inc.
The Benefits and Risks of Leveraging
MuniHoldings California Insured Fund, Inc. utilizes leverage 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, net of dividends to Preferred Stock, 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. As of December 31, 2004, the percentage of the
Fund's total net assets in inverse floaters was 1.83%, before the deduction of
Preferred Stock.
Swap Agreements
The Fund may also invest in swap agreements, which are over-the-counter
contracts in which one party agrees to make periodic payments based on the
change in market value of a specified bond, basket of bonds, or index in return
for periodic payments based on a fixed or variable interest rate or the change
in market value of a different bond, basket of bonds or index. Swap agreements
may be used to obtain exposure to a bond or market without owning or taking
physical custody of securities. Swap agreements involve the risk that the party
with whom the Fund has entered into the swap will default on its obligation to
pay the Fund and the risk that the Fund will not be able to meet its obligations
to pay the other party to the agreement.
2 MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004
A Letter From the President and Chief Investment Officer
Dear Shareholder
The U.S. equity market ended 2004 in positive territory, although not without
some suspense along the way. Fixed income markets also performed well, with high
yield bond investors enjoying some of the greatest returns.
Over the past year, the equity market generally found support from a healthy
economic environment, above-average corporate earnings, increased capital
spending and still-low interest rates. Stalling the momentum somewhat throughout
the year was a contentious election, negligible inflation amid a rising federal
funds interest rate, record-high oil prices and the seemingly ever-present
worries over terrorism and the war in Iraq.
Still, the Standard & Poor's 500 Index posted a 12-month return of +10.88% and a
six-month return of +7.19% as of December 31, 2004. The fourth quarter of the
year proved to be the most telling, as the S&P 500 Index was up only 1.51%
year-to-date as of September 30, 2004. As the price of oil relaxed and election
uncertainties subsided, the market headed more convincingly upward in the last
quarter of the year.
Given the relatively positive environment for equities, the favorable
performance of the bond market came as somewhat of a surprise. The Lehman
Brothers Aggregate Bond Index posted a 12-month return of +4.34% and a six-month
return of +4.18% as of December 31, 2004. The tax-exempt market performed just
as well, with a 12-month return of +4.48% and a six-month return of +5.19%, as
measured by the Lehman Brothers Municipal Bond Index. Those comfortable with a
higher degree of risk benefited this past year, as the Credit Suisse First
Boston High Yield Index posted a 12-month return of +11.95% and a six-month
return of +9.26%. Interestingly, as the Federal Reserve Board began raising its
target short-term interest rate, long-term bond yields were little changed. In
fact, the yield on the 10-year Treasury was 4.24% at year-end compared to 4.27%
at December 31, 2003. The yield on the two-year Treasury climbed to 3.08% at
year-end 2004 from 1.84% a year earlier.
As always, our investment professionals are closely monitoring the markets, the
economy and the overall environment in an effort to make well-informed decisions
for the portfolios they manage. For the individual investor, the key to
investment success -- particularly during uncertain times -- is to maintain a
long-term perspective and adhere to the disciplines of asset allocation,
diversification and rebalancing. We encourage you to work with your financial
advisor to ensure these time-tested techniques are incorporated into your
investment plan.
We thank you for trusting Merrill Lynch Investment Managers with your investment
assets, and we look forward to serving you in the new year and beyond.
Sincerely,
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
President and Chief Investment Officer
Merrill Lynch Investment Managers
MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004 3
[LOGO] Merrill Lynch Investment Managers
A Discussion With Your Fund's Portfolio Manager
Although long-term bond yields declined sharply over the past six months,
we maintained the Fund's defensive positioning to limit volatility and safeguard
the Fund's net asset value in anticipation of rising long-term interest rates
ahead.
Describe the market environment relative to municipal bonds.
Over the past six months, long-term bond yields declined significantly as their
prices, which move in the opposite direction, increased. The rise in bond prices
came as somewhat of a surprise, as the economy generally continued to improve.
Gross domestic product growth was recently reported at 4% for the third quarter
of 2004, up from 3.4% in the second quarter. However, recent improvements in
domestic business activity have been offset by inflationary measures remaining
in the 1.5% - 2% range.
For its part, the Federal Reserve Board (the Fed) raised its short-term interest
rate target by 25 basis points (.25%) to 1.25% in June, the first change in more
than a year. In its accompanying statement, the Fed called for a "measured"
approach to interest rate increases, removing much of the earlier concern that
it might embark on a dramatic series of interest rate increases. The prospect
for a more moderate tightening sequence helped support higher bond prices for
the remainder of the period. Four subsequent Fed interest rate hikes brought the
federal funds rate to 2.25% by period-end, but had limited market impact as
monthly U.S. employment gains remained modest. In addition, strong
currency-related demand for U.S. Treasury issues from many foreign governments
helped bolster fixed income bond prices. By the end of December 2004, long-term
U.S. Treasury bond yields stood at 4.85%, a decline of 46 basis points over the
past six months. The 10-year U.S. Treasury note yield fell 36 basis points to
4.24%.
The municipal bond market benefited from a generally supportive technical
environment throughout the six-month period. Consequently, while tax-exempt bond
yields followed the same pattern as their taxable counterparts, yield volatility
was more subdued than that seen in the U.S. Treasury market. Long-term revenue
bond yields, as measured by the Bond Buyer Revenue Bond Index, fell 30 basis
points over the six months. As reported by Municipal Market Data, AAA-rated
issues maturing in 30 years saw their yields decline 41 basis points to 4.61%,
while yields on 10-year, AAA-rated issues declined 43 basis points to 3.52%.
During the period, more than $170 billion in new long-term tax-exempt bonds was
underwritten, a decline of nearly 7.5% versus the same six months a year ago.
The declining supply trend allowed tax-exempt bond prices to register
significant gains over the period, performing similarly to their taxable
counterparts.
Describe conditions in the State of California during the period.
California entered 2005 with a budget shortfall of approximately $8 billion,
prompting the governor to outline new steps to deal with the state's fiscal
problems. These included a series of new debt issues, including additional
"economic recovery" bonds, tribal gaming revenue bonds, a possible
pension-obligation bond, cutbacks in state spending on local school districts,
and other nonspecific budget cuts. The State Legislature's original 2005 budget
relied heavily on revenue growth stemming from an improving economy. Planned
budget cuts, however, proved more politically difficult to enact.
During 2004, the major credit-rating agencies upgraded California's long-term
credit rating to A3 (Moody's), A (Standard & Poor's) and A- (Fitch). The
agencies cited the state's increased ability to meet its financial challenges,
thanks to a relatively aggressive program of borrowing at attractive financing
rates. The ratings upgrades, however, were not attributable to any significant
progress in mending the state's budget problems.
Despite the ongoing fiscal challenges, credit spreads for California general
obligation (GO) bonds continued to narrow, indicating strong investor demand. At
the height of the state's budget troubles, California GO debt traded as wide as
80 basis points above comparable AAA-rated tax-exempt securities. By year's end,
spreads for California GO bonds in general tightened to 10 basis points - 20
basis points. "Cushion securities" -- higher-coupon, defensively structured
bonds that are popular when the market is anticipating higher rates -- were
spread even tighter.
How did the Fund perform during the period in light of the existing market
conditions?
For the six-month period ended December 31, 2004, the Common Stock of
MuniHoldings California Insured Fund, Inc. had net annualized yields of 6.13%
and 6.63%, based on a period-end per share net asset value of $15.35 and a per
share market price of $14.19, respectively, and $.474 per share income
dividends. Over the same period, the total
4 MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004
investment return on the Fund's Common Stock was +7.68%, based on a change in
per share net asset value from $14.73 to $15.35, and assuming reinvestment of
all distributions.
The Fund's total return, based on net asset value, modestly trailed that of its
comparable Lipper category of California Insured Municipal Debt Funds, which had
an average return of +7.84% for the six-month period. (Funds in this Lipper
category invest primarily in securities that are exempt from taxation in
California, and are insured as to timely payment). Impacting relative results
was the Fund's below-average duration -- or sensitivity to changes in interest
rates. We maintained portfolio duration at a relatively low level to reduce
volatility and protect the Fund's net asset value in anticipation of rising
interest rates. However, as rates fell over the past six months, our
shorter-than-average duration hindered total-return performance somewhat.
Nevertheless, the Fund maintained an attractive yield throughout the period.
For a description of the Fund's total investment return based on a change in the
per share market value of the Fund's Common Stock (as measured by the trading
price of the Fund's shares on the New York Stock Exchange), and assuming
reinvestment of dividends, please refer to the Financial Highlights section of
this report. As a closed-end fund, the Fund's shares may trade in the secondary
market at a premium or discount to the Fund's net asset value. As a result,
total investment returns based on changes in the market value of the Fund's
Common Stock can vary significantly from total investment returns based on
changes in the Fund's net asset value.
What changes were made to the portfolio during the period?
We continued to focus on generating a high level of tax-exempt income and
maintaining a high credit-quality portfolio, with 94% of net assets invested in
insured AAA-rated securities at period-end. Throughout the period, we kept the
Fund essentially fully invested, with cash reserves of less than 2% of net
assets. We viewed the performance penalty associated with keeping assets in
short-term cash equivalents yielding just near 1.5% as far too severe. Our fully
invested stance allowed us to meet our monthly distribution requirements while
also increasing the Fund's undistributed net income reserve.
Given our concern about future interest rate volatility, we sought to protect
the Fund's net asset value by maintaining duration below the industry average.
We also believe this positions the Fund for relative outperformance once
long-term bond yields begin to follow short-term rates higher. We made no
significant structural changes to the portfolio during the period, continuing to
emphasize bonds with above-average coupon income. However, we did make some
selective bond swaps in an effort to improve book yields, call features and
liquidity in the portfolio.
For the six months ended December 31, 2004, the Fund's Auction Market Preferred
Stock (AMPS) had average yields as follows: Series A, 1.01%; Series B, 1.16%;
Series C, 1.15%; Series D, 1.06%; and Series E, 1.11%. These still attractive
funding levels, in combination with the steep municipal yield curve, continued
to provide a significant income benefit to the Fund's Common Stock shareholders
from the leveraging of Preferred Stock. While the Fed is likely to continue
raising short-term interest rates, the increases are expected to be gradual and
should not have an immediate material impact on the positive advantage leverage
has had on the Fund's Common Stock yield. However, should the spread between
short-term and long-term interest rates narrow, the benefits of leveraging will
decline and, as a result, reduce the yield on the Fund's Common Stock. At the
end of the period, the Fund's leverage amount, due to AMPS, was 38.46% of total
net assets. (For a more complete explanation of the benefits and risks of
leveraging, see page 2 of this report to shareholders.)
How would you characterize the Fund's position at the close of the period?
Despite recent improvements in bond prices, we continue to believe the Fund's
emphasis on protecting net asset value is appropriate. We are not looking to
chase the current market rally by purchasing more interest rate-sensitive
securities. Instead, our approach has been, and for the foreseeable future will
continue to be, to maintain the portfolio's high credit quality. With tighter
credit spreads making lower-rated bonds more expensive on a relative basis, we
believe this is not the time to be reaching for yield in lower-rated securities,
particularly given their inherently higher risk. Finally, we have maintained the
Fund's defensive positioning to limit the negative price impact associated with
rising interest rates.
Walter C. O'Connor, CFA
Vice President and Portfolio Manager
January 10, 2005
MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004 5
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (in Thousands)
Face
Amount Municipal Bonds Value
===================================================================================================================================
California--153.8%
- -----------------------------------------------------------------------------------------------------------------------------------
$ 1,000 ABAG Finance Authority for Nonprofit Corporations, California, COP (Children's
Hospital Medical Center), 6% due 12/01/2029 (a) $ 1,127
---------------------------------------------------------------------------------------------------------
3,345 ABC California Unified School District, GO, Series A, 5.625% due 8/01/2020 (f)(j) 3,645
---------------------------------------------------------------------------------------------------------
4,000 Acalanes, California, Unified High School District, GO, 5.80% due 8/01/2007 (f)(i) 4,400
---------------------------------------------------------------------------------------------------------
2,250 Alameda, California, GO, 5% due 8/01/2027 (b) 2,344
---------------------------------------------------------------------------------------------------------
Alameda County, California, COP (b):
12,380 (Financing Project), 6% due 9/01/2006 (i) 13,357
2,585 RIB, Series 410, 9.71% due 9/01/2021 (g) 2,993
---------------------------------------------------------------------------------------------------------
11,000 Anaheim, California, Public Financing Authority, Electric System Distribution
Facilities Revenue Bonds, Series A, 5% due 10/01/2031 (f) 11,269
---------------------------------------------------------------------------------------------------------
4,535 Bakersfield, California, COP, Refunding (Convention Center Expansion Project),
5.875% due 4/01/2022 (b) 4,891
---------------------------------------------------------------------------------------------------------
3,885 Berkeley, California, GO, Series C, 5.375% due 9/01/2029 (c) 4,161
---------------------------------------------------------------------------------------------------------
Berkeley, California, Unified School District, GO, Series I (f):
1,000 5.75% due 8/01/2019 1,113
1,000 5.75% due 8/01/2020 1,106
4,520 5.875% due 8/01/2024 5,018
---------------------------------------------------------------------------------------------------------
2,925 Cajon Valley, California, Union School District, GO, Series B, 5.50%
due 8/01/2027 (b) 3,201
---------------------------------------------------------------------------------------------------------
2,180 California Community College Financing Authority, Lease Revenue Bonds
(Grossmont-Palomar-Shasta), Series A, 5.625% due 4/01/2026 (b) 2,417
---------------------------------------------------------------------------------------------------------
California Educational Facilities Authority Revenue Refunding Bonds (Occidental
College) (b):
5,815 5.625% due 10/01/2017 6,400
5,000 5.70% due 10/01/2027 5,457
---------------------------------------------------------------------------------------------------------
975 California HFA, Home Mortgage Revenue Bonds, Series D, 5.85% due 8/01/2017 1,033
---------------------------------------------------------------------------------------------------------
California HFA, S/F Mortgage Revenue Bonds, AMT, Class II (b):
800 Series A-1, 6% due 8/01/2020 836
1,220 Series C-2, 5.625% due 8/01/2020 (d) 1,272
---------------------------------------------------------------------------------------------------------
9,250 California Health Facilities Financing Authority Revenue Bonds (Kaiser
Permanente), Series A, 5.50% due 6/01/2022 (f)(j) 10,131
---------------------------------------------------------------------------------------------------------
California Health Facilities Financing Authority Revenue Refunding Bonds:
1,500 (Adventist Hospital), VRDN, Series A, 1.94% due 9/01/2028 (b)(h) 1,500
1,700 (Adventist Hospital), VRDN, Series B, 1.94% due 9/01/2028 (b)(h) 1,700
2,500 (Catholic Healthcare West), Series A, 6% due 7/01/2025 (b) 2,669
4,500 (Children's Hospital), 5.375% due 7/01/2020 (b) 4,742
3,950 (De Las Companas), Series A, 5.75% due 7/01/2015 (a) 4,096
3,300 (Sutter/Catholic Healthcare System), VRDN, Series B, 1.91%
due 7/01/2012 (a)(h) 3,300
---------------------------------------------------------------------------------------------------------
1,900 California Infrastructure and Economic Development Bank Revenue Bonds (Los
Angeles County Department of Public Social Services), 5.75% due 9/01/2023 (a) 2,161
---------------------------------------------------------------------------------------------------------
5,000 California State Department of Veteran Affairs, Home Purpose Revenue Refunding
Bonds, Series C, 6.15% due 12/01/2027 5,116
Portfolio Abbreviations
To simplify the listings of MuniHoldings 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 at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
DRIVERS Derivative Inverse Tax-Exempt Receipts
GO General Obligation Bonds
HFA Housing Finance Agency
M/F Multi-Family
RIB Residual Interest Bonds
S/F Single-Family
VRDN Variable Rate Demand Notes
6 MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
===================================================================================================================================
California (continued)
- -----------------------------------------------------------------------------------------------------------------------------------
California State Department of Water Resources, Power Supply Revenue Bonds:
$ 6,000 Series A, 5.75% due 5/01/2017 $ 6,751
750 VRDN, Series C-3, 1.98% due 5/01/2022 (a)(h) 750
---------------------------------------------------------------------------------------------------------
6,400 California State Department of Water Resources Revenue Bonds (Central Valley
Project), 5.25% due 7/01/2022 6,408
---------------------------------------------------------------------------------------------------------
2,000 California State, GO, 5.50% due 6/01/2025 (c) 2,164
---------------------------------------------------------------------------------------------------------
California State, GO, Refunding:
3,175 5.75% due 12/01/2029 3,488
7,000 RIB, AMT, Series 777X, 8.42% due 12/01/2021 (b)(g) 7,387
4,130 Veterans, AMT, Series B, 5.45% due 12/01/2017 (b) 4,208
---------------------------------------------------------------------------------------------------------
20,000 California State Public Works Board, Lease Revenue Bonds (Various University of
California Projects), Series C, 5.125% due 9/01/2022 (a) 21,391
---------------------------------------------------------------------------------------------------------
California State Public Works Board, Lease Revenue Refunding Bonds:
5,025 (California State University), Series A, 5.50% due 10/01/2014 (b) 5,394
8,750 (Department of Corrections), Series B, 5.625% due 11/01/2019 (b) 9,417
2,625 (Various Community College Projects), Series B, 5.625% due 3/01/2019 (a) 2,774
---------------------------------------------------------------------------------------------------------
7,050 California State, Various Purpose, GO, 5.50% due 11/01/2033 7,527
---------------------------------------------------------------------------------------------------------
California Statewide Communities Development Authority, COP:
9,500 Refunding (Huntington Memorial Hospital), 5.80% due 7/01/2026 (e) 10,101
5,000 (Sutter Health Obligation Group), 6% due 8/15/2025 (b) 5,204
---------------------------------------------------------------------------------------------------------
4,915 California Statewide Communities Development Authority, Health Facility Revenue
Bonds (Memorial Health Services), Series A, 6% due 10/01/2023 5,331
---------------------------------------------------------------------------------------------------------
1,090 California Statewide Communities Development Authority Revenue Bonds (Los Angeles
Orthopaedic Hospital Foundation), 5.50% due 6/01/2019 (a) 1,171
---------------------------------------------------------------------------------------------------------
1,640 Campbell, California, Unified High School District, GO, 5.70% due 8/01/2025 (f) 1,825
---------------------------------------------------------------------------------------------------------
Capistrano, California, Unified Public Financing Authority, Special Tax Revenue
Refunding Bonds, First Lien, Series A (a):
16,770 5.70% due 9/01/2016 17,995
10,640 5.70% due 9/01/2020 11,406
---------------------------------------------------------------------------------------------------------
8,705 Castaic Lake, California, Water Agency Revenue Bonds, COP (Water System
Improvement Project), 5.50% due 8/01/2023 (a) 9,595
---------------------------------------------------------------------------------------------------------
6,810 Chaffey, California, Unified High School District, GO, Series B, 5.375%
due 8/01/2022 (c) 7,500
---------------------------------------------------------------------------------------------------------
Chino, California, Unified School District, COP, Refunding (f):
1,695 6.125% due 9/01/2005 (i) 1,775
5,300 6.125% due 9/01/2026 5,532
---------------------------------------------------------------------------------------------------------
2,500 Colton, California, Joint Unified School District, GO, Series A, 5.375%
due 8/01/2026 (c) 2,720
---------------------------------------------------------------------------------------------------------
4,675 Commerce, California, Joint Powers Financing Authority Revenue Bonds
(Redevelopment Projects), Series A, 5% due 8/01/2028 (k) 4,741
---------------------------------------------------------------------------------------------------------
7,800 Contra Costa, California, Community College District, GO (Election of 2002), 5%
due 8/01/2028 (b) 8,088
---------------------------------------------------------------------------------------------------------
5,000 Contra Costa, California, Water District, Water Revenue Bonds, Series G, 5%
due 10/01/2024 (b) 5,060
---------------------------------------------------------------------------------------------------------
Contra Costa County, California, COP, Refunding:
4,570 (Capital Projects Program), 5.25% due 2/01/2021 (a) 4,861
6,000 DRIVERS, Series 154, 8.465% due 11/01/2017 (b)(g) 7,102
2,000 (Merrithew Memorial Hospital Project), 5.50% due 11/01/2022 (b) 2,171
---------------------------------------------------------------------------------------------------------
8,500 Corona, California, COP (Clearwater Cogeneration Project), 5% due 9/01/2028 (b) 8,728
---------------------------------------------------------------------------------------------------------
2,395 Covina-Valley, California, Unified School District, GO, Refunding, Series A,
5.50% due 8/01/2026 (f) 2,639
MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004 7
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
===================================================================================================================================
California (continued)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 3,750 Culver City, California, Redevelopment Finance Authority, Revenue Refunding
Bonds, Tax Allocation, Series A, 5.60% due 11/01/2025 (f) $ 4,155
---------------------------------------------------------------------------------------------------------
1,870 Davis, California, Joint Unified School District, Community Facilities District,
Special Tax Refunding Bonds, Number 1, 5.50% due 8/15/2021 (b) 1,972
---------------------------------------------------------------------------------------------------------
7,500 Desert Sands, California, Unified School District, GO (Election of 2001), 5%
due 6/01/2029 (f) 7,756
---------------------------------------------------------------------------------------------------------
East Side Union High School District, California, Santa Clara County, GO,
Series E (c)(j):
6,205 5% due 9/01/2022 6,465
5,655 5% due 9/01/2023 5,892
---------------------------------------------------------------------------------------------------------
7,000 El Dorado County, California, Public Agency Financing Authority, Revenue
Refunding Bonds, 5.50% due 2/15/2021 (c) 7,359
---------------------------------------------------------------------------------------------------------
Escondido, California, COP, Refunding:
1,000 Series A, 5.75% due 9/01/2024 (c) 1,127
5,000 (Wastewater Project), 5.70% due 9/01/2006 (a)(i) 5,335
---------------------------------------------------------------------------------------------------------
5,000 Fontana, California, Redevelopment Agency, Tax Allocation Refunding Bonds
(Southwest Industrial Park Project), 5% due 9/01/2022 (b) 5,290
---------------------------------------------------------------------------------------------------------
5,000 Foothill-De Anza, California, Community College District, GO, Refunding, 5%
due 8/01/2030 (c) 5,133
---------------------------------------------------------------------------------------------------------
4,455 Fresno, California, Airport Revenue Bonds, AMT, Series B, 5.50% due 7/01/2020 (f) 4,754
---------------------------------------------------------------------------------------------------------
4,040 Garden Grove, California, COP (Financing Project), Series A, 5.50%
due 3/01/2026 (a) 4,419
---------------------------------------------------------------------------------------------------------
5,200 Glendale, California, Unified School District, GO, Series B, 5.125%
due 9/01/2023 (f) 5,566
---------------------------------------------------------------------------------------------------------
Hacienda La Puente, California, Unified School District, GO, Series A (b):
1,700 5.50% due 8/01/2020 1,888
1,500 5.25% due 8/01/2025 1,615
---------------------------------------------------------------------------------------------------------
4,565 Hemet, California, Unified School District, GO, Series A, 5.375% due 8/01/2026 (b) 4,947
---------------------------------------------------------------------------------------------------------
5,000 Huntington Beach, California, Union High School District, GO (Election of 2004),
5% due 8/01/2029 (f) 5,173
---------------------------------------------------------------------------------------------------------
9,205 Industry, California, Urban Development Agency, Tax Allocation Refunding Bonds
(Civic-Recreational-Industrial Redevelopment Project No. 1), 5.50%
due 5/01/2020 (b) 9,879
---------------------------------------------------------------------------------------------------------
1,700 Inglewood, California, Unified School District, GO, Series A, 5.60%
due 10/01/2024 (c) 1,887
---------------------------------------------------------------------------------------------------------
2,300 Irvine, California, Unified School District, Special Tax (Community Facilities
District Number 86-1), 5.375% due 11/01/2020 (a) 2,523
---------------------------------------------------------------------------------------------------------
4,665 Irvine, California, Unified School District, Special Tax Refunding Bonds
(Community Facilities District Number 86-1), 5.80% due 11/01/2020 (a) 5,147
---------------------------------------------------------------------------------------------------------
2,500 La Quinta, California, Financing Authority, Local Agency Revenue Bonds, Series A,
5.25% due 9/01/2024 (a) 2,705
---------------------------------------------------------------------------------------------------------
7,500 La Quinta, California, Redevelopment Agency, Housing Tax Allocation Bonds
(Redevelopment Project Areas Number 1 & 2), 6% due 9/01/2005 (b)(i) 7,822
---------------------------------------------------------------------------------------------------------
4,000 Long Beach, California, Bond Finance Authority, Lease Revenue Bonds (Rainbow
Harbor Refinancing Project), Series A, 5.25% due 5/01/2024 (a) 4,314
---------------------------------------------------------------------------------------------------------
3,740 Long Beach, California, Harbor Revenue Bonds, AMT, 5.375% due 5/15/2020 (b) 3,847
---------------------------------------------------------------------------------------------------------
10,650 Los Altos, California, School District GO, Series A, 5% due 8/01/2023 (f) 11,065
8 MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
===================================================================================================================================
California (continued)
- -----------------------------------------------------------------------------------------------------------------------------------
$12,265 Los Angeles, California, Community College District, GO, Series A, 5.50%
due 8/01/2020 (b) $ 13,719
---------------------------------------------------------------------------------------------------------
10,000 Los Angeles, California, Community Redevelopment Agency, Community Redevelopment
Financing Authority Revenue Bonds (Bunker Hill Project), Series A, 5%
due 12/01/2027 (f) 10,380
---------------------------------------------------------------------------------------------------------
Los Angeles, California, Department of Water and Power, Electric Plant Revenue
Refunding Bonds:
490 5.875% due 2/15/2005 (i) 497
1,030 RIB, Series 370, 9.71% due 2/15/2024 (g) 1,061
---------------------------------------------------------------------------------------------------------
2,000 Los Angeles, California, Harbor Department Revenue Bonds, AMT, Series B, 5.375%
due 11/01/2023 2,090
---------------------------------------------------------------------------------------------------------
350 Los Angeles, California, M/F Housing Revenue Refunding Bonds, Senior Series G,
5.65% due 1/01/2014 (f) 356
---------------------------------------------------------------------------------------------------------
3,175 Los Angeles, California, Unified School District, GO (Election of 2004),
Series C, 5% due 7/01/2029 3,297
---------------------------------------------------------------------------------------------------------
7,450 Los Angeles, California, Wastewater System Revenue Refunding Bonds, Series A, 5%
due 6/01/2032 (f) 7,654
---------------------------------------------------------------------------------------------------------
3,750 Los Angeles County, California, Metropolitan Transportation Authority, Sales Tax
Revenue Refunding Bonds, Proposition C, Second Tier Senior Series A, 5.25%
due 7/01/2030 (c) 3,951
---------------------------------------------------------------------------------------------------------
2,735 Los Gatos, California, Unified School District, GO (Election 2001), Series B, 5%
due 8/01/2030 (f) 2,816
---------------------------------------------------------------------------------------------------------
1,890 Los Rios, California, Community College District, GO (Election of 2002),
Series B, 5% due 8/01/2027 (b) 1,969
---------------------------------------------------------------------------------------------------------
5,000 Menlo Park, California, Community Development Agency, Tax Allocation (Las Pulgas
Community Development Project), 5.50% due 6/01/2025 (a) 5,502
---------------------------------------------------------------------------------------------------------
9,000 Metropolitan Water District of Southern California, Waterworks Revenue Bonds,
Series B-1, 5% due 10/01/2033 (c) 9,250
---------------------------------------------------------------------------------------------------------
5,000 Modesto, California, Schools Infrastructure Financing Agency, Special Tax Bonds,
5% due 9/01/2029 (a) 5,162
---------------------------------------------------------------------------------------------------------
3,500 Mojave, California, Water Agency, GO, Refunding (Improvement District--Morongo
Basin), 5.80% due 9/01/2022 (c) 3,761
---------------------------------------------------------------------------------------------------------
2,000 Montebello, California, Community Redevelopment Agency, Housing Tax Allocation
Bonds, Series A, 5.45% due 9/01/2019 (f) 2,183
---------------------------------------------------------------------------------------------------------
4,150 Moorpark, California, Redevelopment Agency, Tax Allocation Bonds (Moorpark
Redevelopment Project), 5.125% due 10/01/2031 (a) 4,306
---------------------------------------------------------------------------------------------------------
2,315 Morgan Hill, California, Unified School District, GO, 5.75% due 8/01/2019 (c) 2,620
---------------------------------------------------------------------------------------------------------
3,730 Mount San Antonio, California, Community College District, GO, Series A, 5.375%
due 5/01/2022 (c) 4,105
---------------------------------------------------------------------------------------------------------
16,000 Norco, California, Redevelopment Agency, Tax Allocation Refunding Bonds (Norco
Redevelopment Project--Area Number 1), 5.75% due 3/01/2026 (b) 16,880
---------------------------------------------------------------------------------------------------------
2,140 North City West, California, School Facilities Financing Authority, Special Tax
Refunding Bonds, Series B, 6% due 9/01/2019 (f) 2,308
---------------------------------------------------------------------------------------------------------
3,275 Northern California Power Agency, Public Power Revenue Refunding Bonds
(Hydroelectric Project Number One), Series A, 5.125% due 7/01/2023 (b) 3,471
---------------------------------------------------------------------------------------------------------
9,995 Oakland, California, Alameda County Unified School District, GO, Refunding,
Series C, 5.50% due 8/01/2019 (c) 10,283
---------------------------------------------------------------------------------------------------------
Oakland, California, Alameda County Unified School District, GO, Series F (b):
3,705 5.625% due 8/01/2020 4,107
5,245 5.625% due 8/01/2021 5,814
6,000 5.50% due 8/01/2024 6,613
---------------------------------------------------------------------------------------------------------
Oakland, California, GO:
2,500 Measure 1, 5.85% due 12/15/2022 (c) 2,712
1,300 Measure K, Series C, 5.80% due 12/15/2018 (b) 1,409
MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004 9
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
===================================================================================================================================
California (continued)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 7,105 Oakland, California, Joint Powers Financing Authority, Lease Revenue Bonds
(Oakland Administration Buildings), 5.75% due 8/01/2006 (a)(i) $ 7,645
---------------------------------------------------------------------------------------------------------
5,000 Orange County, California, Sanitation District, COP, 5% due 2/01/2033 (c) 5,112
---------------------------------------------------------------------------------------------------------
3,300 Orange County, California, Water District Revenue Bonds, COP, Series B, 5%
due 8/15/2034 (b) 3,374
---------------------------------------------------------------------------------------------------------
10,000 Oxnard, California, Financing Authority, Wastewater Revenue Bonds (Redwood Trunk
Sewer and Headworks Projects), Series A, 5.25% due 6/01/2034 (c) 10,591
---------------------------------------------------------------------------------------------------------
6,475 Palm Desert, California, Financing Authority, Tax Allocation Revenue Bonds
(Project Area Number 2), 5% due 8/01/2033 (b) 6,646
---------------------------------------------------------------------------------------------------------
5,750 Palm Desert, California, Financing Authority, Tax Allocation Revenue Refunding
Bonds (Project Area Number 1), 5.45% due 4/01/2018 (b) 6,214
---------------------------------------------------------------------------------------------------------
1,000 Palm Springs, California, COP, Refunding (Multiple Capital Facilities Project),
5.75% due 4/01/2017 (a) 1,088
---------------------------------------------------------------------------------------------------------
1,600 Palm Springs, California, Financing Authority, Lease Revenue Refunding Bonds
(Convention Center Project), Series A, 5.50% due 11/01/2035 (b) 1,757
---------------------------------------------------------------------------------------------------------
4,000 Pittsburg, California, Public Financing Authority, Water Revenue Bonds, 5.50%
due 6/01/2027 (b) 4,300
---------------------------------------------------------------------------------------------------------
Pleasanton, California, Unified School District, GO (i):
2,700 Series D, 5.375% due 8/01/2007 (b) 2,941
9,100 Series E, 5.50% due 8/01/2008 (c) 10,201
---------------------------------------------------------------------------------------------------------
5,000 Port Oakland, California, Port Revenue Refunding Bonds, Series I, 5.40%
due 11/01/2017 (b) 5,478
---------------------------------------------------------------------------------------------------------
Port Oakland, California, Revenue Bonds, AMT, Series K (c):
3,500 5.75% due 11/01/2014 3,861
17,120 5.75% due 11/01/2029 18,549
---------------------------------------------------------------------------------------------------------
25,355 Port Oakland, California, Revenue Refunding Bonds, AMT, Series L, 5.375%
due 11/01/2027 (c) 26,545
---------------------------------------------------------------------------------------------------------
2,205 Richmond, California, Joint Powers Financing Authority, Tax Allocation Revenue
Bonds, Series A, 5.50% due 9/01/2018 (b) 2,451
---------------------------------------------------------------------------------------------------------
3,000 Riverside, California, COP, 5% due 9/01/2028 (a) 3,089
---------------------------------------------------------------------------------------------------------
5,475 Riverside County, California, Public Financing Authority, Tax Allocation Revenue
Bonds (Redevelopment Projects), 5% due 10/01/2035 (l) 5,587
---------------------------------------------------------------------------------------------------------
10,825 Sacramento, California, Municipal Utility District, Electric Revenue Refunding
Bonds, Series L, 5.125% due 7/01/2022 (b) 11,546
---------------------------------------------------------------------------------------------------------
3,500 Sacramento, California, Power Authority Revenue Bonds (Cogeneration Project),
5.875% due 7/01/2015 (b) 3,740
---------------------------------------------------------------------------------------------------------
1,700 Sacramento County, California, Airport System Revenue Bonds, Series A, 5.25%
due 7/01/2017 (f) 1,855
---------------------------------------------------------------------------------------------------------
3,715 Sacramento County, California, Sanitation District Financing Authority, Revenue
Refunding Bonds, 5% due 12/01/2027 (a) 3,826
---------------------------------------------------------------------------------------------------------
4,115 Saddleback Valley, California, Unified School District, GO, 5% due 8/01/2029 (f) 4,257
---------------------------------------------------------------------------------------------------------
5,440 San Bernardino, California, Joint Powers Financing Authority, Lease Revenue
Bonds (Department of Transportation Lease), Series A, 5.50% due 12/01/2020 (b) 5,686
---------------------------------------------------------------------------------------------------------
5,000 San Bernardino, California, Joint Powers Financing Authority, Tax Allocation
Revenue Refunding Bonds, Series A, 5.75% due 10/01/2025 (f) 5,214
---------------------------------------------------------------------------------------------------------
1,480 San Bernardino County, California, COP, Refunding (Medical Center Financing
Project), 5.50% due 8/01/2019 (b) 1,513
---------------------------------------------------------------------------------------------------------
5,055 San Diego, California, Public Facilities Financing Authority, Sewer Revenue
Bonds, Series A, 5.25% due 5/15/2027 (c) 5,315
---------------------------------------------------------------------------------------------------------
San Diego, California, Unified School District, GO (Election of 1998) (f):
4,865 Series E, 5% due 7/01/2028 5,028
6,480 Series F, 5% due 7/01/2028 6,718
10 MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
===================================================================================================================================
California (concluded)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 2,075 San Francisco, California, Bay Area Rapid Transit District, Revenue Refunding
Bonds (BART SFO Extension), Series A, 4.875% due 6/15/2009 (a) $ 2,080
---------------------------------------------------------------------------------------------------------
6,795 San Francisco, California, Bay Area Rapid Transit District, Sales Tax Revenue
Bonds, 5.50% due 7/01/2026 (c) 7,381
---------------------------------------------------------------------------------------------------------
San Francisco, California, City and County Airport Commission, International
Airport Revenue Bonds, AMT, Second Series:
5,830 Issue 10A, 5.50% due 5/01/2013 (b) 6,153
5,750 Issue 12A, 5.80% due 5/01/2021 (c) 6,002
6,430 Issue 24A, 5.50% due 5/01/2024 (f) 6,788
---------------------------------------------------------------------------------------------------------
8,900 San Francisco, California, State Building Authority, Lease Revenue Bonds (San
Francisco Civic Center Complex), Series A, 5.25% due 12/01/2021 (a) 9,459
---------------------------------------------------------------------------------------------------------
2,000 San Jose-Santa Clara, California, Water Financing Authority, Sewer Revenue Bonds,
Series A, 5.375% due 11/15/2020 (c) 2,063
---------------------------------------------------------------------------------------------------------
San Juan, California, Unified School District, GO:
3,955 5.625% due 8/01/2018 (c) 4,451
3,830 5.625% due 8/01/2019 (c) 4,310
4,250 (Election of 2002), 5% due 8/01/2028 (b) 4,394
---------------------------------------------------------------------------------------------------------
2,300 San Mateo County, California, Community College District, COP, 5%
due 10/01/2029 (b) 2,370
---------------------------------------------------------------------------------------------------------
5,000 San Mateo-Foster City, California, School District, GO, 5.30% due 8/01/2029 (c) 5,306
---------------------------------------------------------------------------------------------------------
14,000 Santa Clara, California, Redevelopment Agency, Tax Allocation Bonds (Bayshore
North Project), Series A, 5.50% due 6/01/2023 (a) 15,389
---------------------------------------------------------------------------------------------------------
6,050 Santa Clara, California, Subordinated Electric Revenue Bonds, Series A, 5%
due 7/01/2028 (b) 6,253
---------------------------------------------------------------------------------------------------------
9,750 Santa Clara County, California, Financing Authority, Lease Revenue Refunding
Bonds, Series A, 5% due 11/15/2022 (a) 10,319
---------------------------------------------------------------------------------------------------------
9,000 Santa Fe Springs, California, Community Development, Commission Tax Allocation
Refunding Bonds (Consolidated Redevelopment Project), Series A, 5%
due 9/01/2022 (b) 9,521
---------------------------------------------------------------------------------------------------------
5,110 Santa Monica, California, Redevelopment Agency, Tax Allocation Bonds (Earthquake
Recovery Redevelopment Project), 6% due 7/01/2029 (a) 5,713
---------------------------------------------------------------------------------------------------------
2,855 Santa Rosa, California, High School District, GO (Election of 2002), 5%
due 8/01/2028 (b) 2,951
---------------------------------------------------------------------------------------------------------
5,000 Southern California Public Power Authority, Power Project Revenue Bonds (Magnolia
Power Project), Series A-1, 5% due 7/01/2033 (a) 5,132
---------------------------------------------------------------------------------------------------------
6,590 Stanislaus, California, Waste-to-Energy Financing Agency, Solid Waste Facility
Revenue Refunding Bonds (Ogden Martin System Inc. Project), VRDN, 2%
due 1/01/2010 (b)(h) 6,590
---------------------------------------------------------------------------------------------------------
13,250 Tracy, California, Area Public Facilities Financing Agency, Special Tax Refunding
Bonds (Community Facilities District Number 87-1), Series H, 5.875%
due 10/01/2019 (b) 14,283
---------------------------------------------------------------------------------------------------------
6,655 Turlock, California, Public Finance Authority, Sewer Revenue Bonds, Series A, 5%
due 9/15/2033 (c) 6,839
---------------------------------------------------------------------------------------------------------
7,475 University of California, COP, Series A, 5.25% due 11/01/2024 (a) 7,995
---------------------------------------------------------------------------------------------------------
9,875 University of California, Hospital Revenue Bonds (University of California
Medical Center), 5.75% due 7/01/2006 (a)(i) 10,497
---------------------------------------------------------------------------------------------------------
1,410 University of California Revenue Bonds, Series K, 5.25% due 9/01/2024 (c) 1,522
---------------------------------------------------------------------------------------------------------
16,000 University of California, Revenue Refunding Bonds (Multiple Purpose Projects),
Series E, 5.125% due 9/01/2020 (b) 16,966
---------------------------------------------------------------------------------------------------------
Vista, California, Unified School District, GO:
10,000 Series A, 5.25% due 8/01/2025 (f) 10,748
2,550 Series B, 5% due 8/01/2028 (c) 2,636
---------------------------------------------------------------------------------------------------------
6,690 West Contra Costa, California, Unified School District, GO, Series B, 5%
due 8/01/2032 (f) 6,857
MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004 11
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (concluded) (in Thousands)
Face
Amount Municipal Bonds Value
===================================================================================================================================
Puerto Rico--4.3%
- -----------------------------------------------------------------------------------------------------------------------------------
$ 5,825 Puerto Rico Commonwealth, GO, Public Improvement, 5.75% due 7/01/2010 (b)(i) $ 6,613
---------------------------------------------------------------------------------------------------------
7,670 Puerto Rico Commonwealth Highway and Transportation Authority, Transportation
Revenue Bonds, Series B, 6% due 7/01/2005 (i) 7,899
---------------------------------------------------------------------------------------------------------
11,215 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series HH, 5.30%
due 7/01/2020 (f) 12,284
---------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost--$922,087)--158.1% 986,861
=========================================================================================================
Shares
Held Short-Term Securities
=========================================================================================================
165 CMA California Municipal Money Fund * 165
---------------------------------------------------------------------------------------------------------
Total Short-Term Securities (Cost--$165)--0.0% 165
=========================================================================================================
Total Investments (Cost--$922,252**)--158.1% 987,026
Other Assets Less Liabilities--4.4% 27,152
Preferred Stock, at Redemption Value--(62.5%) (390,040)
---------
Net Assets Applicable to Common Stock--100.0% $ 624,138
=========
(a) AMBAC Insured.
(b) MBIA Insured.
(c) FGIC Insured.
(d) FHA Insured.
(e) Connie Lee Insured.
(f) FSA Insured.
(g) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(h) Security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically
based upon prevailing market rates.
(i) Prerefunded.
(j) Escrowed to maturity.
(k) Radian Insured.
(l) XL Capital Insured.
* Investments in companies considered to be an affiliate of the Fund (such
companies are defined as "Affiliated Companies" in Section 2 (a)(3) of the
Investment Company Act of 1940) were as follows:
(in Thousands)
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
CMA California Municipal Money Fund 129 $35
--------------------------------------------------------------------------
** The cost and unrealized appreciation/depreciation of investments as of
December 31, 2004, as computed for federal income tax purposes, were as
follows:
(in Thousands)
--------------------------------------------------------------------------
Aggregate cost ......................................... $ 921,807
=========
Gross unrealized appreciation .......................... $ 65,261
Gross unrealized depreciation .......................... (42)
---------
Net unrealized appreciation ............................ $ 65,219
=========
--------------------------------------------------------------------------
See Notes to Financial Statements.
12 MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004
Statement of Net Assets
As of December 31, 2004
=================================================================================================================================
Assets
- ---------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value (identified
cost--$922,086,426) .............................................. $ 986,860,855
Investments in affiliated securities, at value (identified
cost--$165,336) .................................................. 165,336
Cash .............................................................. 61,398
Receivables:
Interest ....................................................... $ 15,752,490
Securities sold ................................................ 12,214,965
Dividends from affiliates ...................................... 6 27,967,461
-------------
Prepaid expenses and other assets ................................. 38,851
-------------
Total assets ...................................................... 1,015,093,901
-------------
=================================================================================================================================
Liabilities
- ---------------------------------------------------------------------------------------------------------------------------------
Payables:
Investment adviser ............................................. 501,261
Dividends to Common Stock shareholders ......................... 280,100
Other affiliates ............................................... 5,406 786,767
-------------
Accrued expenses .................................................. 128,864
-------------
Total liabilities ................................................. 915,631
-------------
=================================================================================================================================
Preferred Stock
- ---------------------------------------------------------------------------------------------------------------------------------
Preferred Stock, at redemption value, par value $.10 per share
(1,920 Class A Shares, 3,880 Class B Shares, 3,200 Class C Shares,
2,960 Class D Shares and 3,640 Class E Shares of AMPS* authorized,
issued and outstanding at $25,000 per share liquidation
preference) ...................................................... 390,040,348
-------------
=================================================================================================================================
Net Assets Applicable to Common Stock
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock ............................. $ 624,137,922
=============
=================================================================================================================================
Analysis of Net Assets Applicable to Common Stock
- ---------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.10 per share (40,657,301 shares issued
and outstanding) ................................................. $ 4,065,730
Paid-in capital in excess of par .................................. 599,718,612
Undistributed investment income--net .............................. $ 10,477,871
Accumulated realized capital losses--net .......................... (54,898,720)
Unrealized appreciation--net ...................................... 64,774,429
-------------
Total accumulated earnings--net ................................... 20,353,580
-------------
Total--Equivalent to $15.35 net asset value per share of Common
Stock (market price--$14.19) ..................................... $ 624,137,922
=============
* Auction Market Preferred Stock.
See Notes to Financial Statements.
MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004 13
[LOGO] Merrill Lynch Investment Managers
Statement of Operations
For the Six Months Ended December 31, 2004
=================================================================================================================================
Investment Income
- ---------------------------------------------------------------------------------------------------------------------------------
Interest .......................................................... $ 25,649,903
Dividends from affiliates ......................................... 34,817
-------------
Total income ...................................................... 25,684,720
-------------
=================================================================================================================================
Expenses
- ---------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees .......................................... $ 2,827,845
Commission fees ................................................... 490,480
Accounting services ............................................... 139,756
Transfer agent fees ............................................... 45,637
Professional fees ................................................. 30,739
Custodian fees .................................................... 24,793
Printing and shareholder reports .................................. 22,499
Directors' fees and expenses ...................................... 17,955
Listing fees ...................................................... 15,518
Pricing fees ...................................................... 13,584
Other ............................................................. 26,467
-------------
Total expenses before waiver and reimbursement .................... 3,655,273
Waiver and reimbursement of expenses .............................. (206,817)
-------------
Total expenses after waiver and reimbursement ..................... 3,448,456
-------------
Investment income--net ............................................ 22,236,264
-------------
=================================================================================================================================
Realized & Unrealized Gain (Loss)--Net
- ---------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on:
Investments--net ............................................... 2,649,903
Financial futures contracts--net ............................... (2,122,419) 527,484
-------------
Change in unrealized appreciation/depreciation on:
Investments--net ............................................... 23,830,797
Financial futures contracts--net ............................... 122,344 23,953,141
---------------------------------
Total realized and unrealized gain--net ........................... 24,480,625
-------------
=================================================================================================================================
Dividends to Preferred Stock Shareholders
- ---------------------------------------------------------------------------------------------------------------------------------
Investment income--net ............................................ (2,215,277)
-------------
Net Increase in Net Assets Resulting from Operations .............. $ 44,501,612
=============
See Notes to Financial Statements.
14 MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
December 31, June 30,
Increase (Decrease) in Net Assets: 2004 2004
=================================================================================================================================
Operations
- ---------------------------------------------------------------------------------------------------------------------------------
Investment income--net ............................................ $ 22,236,264 $ 42,628,497
Realized gain (loss)--net ......................................... 527,484 (811,121)
Change in unrealized appreciation/depreciation--net ............... 23,953,141 (33,198,262)
Dividends to Preferred Stock shareholders ......................... (2,215,277) (3,307,999)
---------------------------------
Net increase in net assets resulting from operations .............. 44,501,612 5,311,115
---------------------------------
=================================================================================================================================
Dividends to Common Stock Shareholders
- ---------------------------------------------------------------------------------------------------------------------------------
Investment income--net ............................................ (19,271,560) (37,973,919)
---------------------------------
Net decrease in net assets resulting from dividends to Common Stock
shareholders ..................................................... (19,271,560) (37,973,919)
---------------------------------
=================================================================================================================================
Net Assets Applicable to Common Stock
- ---------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets applicable to Common Stock 25,230,052 (32,662,804)
Beginning of period ............................................... 598,907,870 631,570,674
---------------------------------
End of period* .................................................... $ 624,137,922 $ 598,907,870
=================================
* Undistributed investment income--net ......................... $ 10,477,871 $ 9,728,444
=================================
See Notes to Financial Statements.
MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004 15
[LOGO] Merrill Lynch Investment Managers
Financial Highlights
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended For the Year Ended June 30,
December 31, -----------------------------------------------
Increase (Decrease) in Net Asset Value: 2004 2004 2003 2002 2001
===============================================================================================================================
Per Share Operating Performance
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period . $ 14.73 $ 15.53 $ 14.82 $ 14.46 $ 13.31
--------------------------------------------------------------
Investment income--net** ............. .55 1.05 1.09 1.10 1.10
Realized and unrealized gain
(loss)--net ......................... .59 (.84) .63 .30 1.17
Dividends and distributions to
Preferred Stock shareholders:
Investment income--net ............ (.05) (.08) (.10) (.15) (.33)
Realized gain--net ................ -- -- -- --@@ --
--------------------------------------------------------------
Total from investment operations ..... 1.09 .13 1.62 1.25 1.94
--------------------------------------------------------------
Less dividends and distributions to
Common Stock shareholders:
Investment income--net ............ (.47) (.93) (.91) (.89) (.79)
Realized gain--net ................ -- -- -- --@@ --
--------------------------------------------------------------
Total dividends and distributions to
Common Stock shareholders ........... (.47) (.93) (.91) (.89) (.79)
--------------------------------------------------------------
Net asset value, end of period ....... $ 15.35 $ 14.73 $ 15.53 $ 14.82 $ 14.46
==============================================================
Market price per share, end of period $ 14.19 $ 13.36 $ 14.85 $ 14.19 $ 13.18
==============================================================
===============================================================================================================================
Total Investment Return@
- -------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ... 7.68%+ 1.28% 11.60% 9.10% 15.36%
==============================================================
Based on market price per share ...... 9.75%+ (3.93%) 11.45% 14.61% 13.67%
==============================================================
===============================================================================================================================
Ratios Based on Average Net Assets of Common Stock
- -------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of waiver and
reimbursement and excluding
reorganization expenses* ............ 1.09%++ 1.10% 1.11% 1.14% 1.13%
==============================================================
Total expenses, excluding
reorganization expenses* ............ 1.16%++ 1.17% 1.17% 1.20% 1.22%
==============================================================
Total expenses* ...................... 1.16%++ 1.17% 1.17% 1.22% 1.29%
==============================================================
Total investment income--net* ........ 7.05%++ 6.87% 7.09% 7.41% 7.71%
==============================================================
Amount of dividends to Preferred Stock
shareholders ........................ .70%++ .53% .65% 1.02% 2.22%
==============================================================
Investment income--net, to Common
Stock shareholders .................. 6.35%++ 6.34% 6.44% 6.39% 5.49%
==============================================================
===============================================================================================================================
Ratios Based on Average Net Assets of Common and Preferred Stock*
- -------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of waiver and
reimbursement and excluding
reorganization expenses ............. .67%++ .68% .68% .69% .67%
==============================================================
Total expenses, excluding
reorganization expenses ............. .71%++ .72% .72% .73% .73%
==============================================================
Total expenses ....................... .71%++ .72% .72% .74% .77%
==============================================================
Total investment income--net ......... 4.32%++ 4.21% 4.36% 4.50% 4.60%
==============================================================
16 MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004
Financial Highlights (concluded)
For the Six
Months Ended For the Year Ended June 30,
The following per share data and ratios have been derived December 31, -----------------------------------------------
from information provided in the financial statements. 2004 2004 2003 2002 2001
===============================================================================================================================
Ratios Based on Average Net Assets of Preferred Stock
- -------------------------------------------------------------------------------------------------------------------------------
Dividends to Preferred Stock
shareholders ........................ 1.11%++ .85% 1.03% 1.57% 3.28%
==============================================================
===============================================================================================================================
Supplemental Data
- -------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock,
end of period (in thousands) ........ $624,138 $598,908 $631,571 $602,571 $587,924
==============================================================
Preferred Stock outstanding, end of
period (in thousands) ............... $390,000 $390,000 $390,000 $390,000 $390,000
==============================================================
Portfolio turnover ................... 22.15% 35.59% 26.99% 41.35% 63.37%
==============================================================
===============================================================================================================================
Leverage
- -------------------------------------------------------------------------------------------------------------------------------
Asset coverage per $1,000 ............ $ 2,600 $ 2,536 $ 2,619 $ 2,545 $ 2,507
==============================================================
===============================================================================================================================
Dividends Per Share on Preferred Stock Outstanding
- -------------------------------------------------------------------------------------------------------------------------------
Series A--Investment income--net ..... $ 128 $ 195 $ 253 $ 362 $ 793
==============================================================
Series B--Investment income--net ..... $ 148 $ 216 $ 269 $ 400 $ 533
==============================================================
Series C--Investment income--net ..... $ 151 $ 218 $ 248 $ 375 $ 812
==============================================================
Series D--Investment income--net ..... $ 135 $ 210 $ 255 $ 400 $ 853
==============================================================
Series E--Investment income--net ..... $ 141 $ 213 $ 262 $ 408 $ 813
==============================================================
* Do not reflect the effect of dividends to Preferred Stock shareholders.
** Based on average shares outstanding.
+ 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 effect of sales
charges. The Fund's Investment Adviser waived a portion of its management
fee. Without such waiver, the Fund's performance would have been lower.
@@ Amount is less than $(.01) per share.
See Notes to Financial Statements.
MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004 17
[LOGO] Merrill Lynch Investment Managers
Notes to Financial Statements
1. Significant Accounting Policies:
MuniHoldings California Insured Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a non-diversified, closed-end
management investment company. The Fund's financial statements are prepared in
conformity with U.S. generally accepted accounting principles, which may require
the use of management accruals and estimates. Actual results may differ from
these estimates. These unaudited financial statements reflect all adjustments,
which are, in the opinion of management, necessary to present a fair statement
of the results for the interim period. 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 daily basis. The Fund's Common Stock is
listed on the New York Stock Exchange under the symbol MUC. 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 last available bid price in the
over-the-counter market or on the basis of values as obtained by a pricing
service. Pricing services use valuation matrixes that incorporate both
dealer-supplied valuations and valuation models. The procedures of the pricing
service and its valuations are reviewed by the officers of the Fund under the
general direction of the Board of Directors. Such valuations and procedures are
reviewed periodically by the Board of Directors of the Fund. 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). Swap agreements are valued by quoted fair values received daily by
the Fund's pricing service. Short-term investments with a remaining maturity of
60 days or less are valued at amortized cost which approximates market value,
under which method the investment is valued at cost and any premium or discount
is amortized on a straight line basis to maturity. Investments in open-end
investment companies are valued at their net asset value each business day.
Securities and other 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.
(b) Derivative financial instruments -- The Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge, or
protect, its exposure to interest rate movements and movements in the securities
markets. 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. 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 may 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.
o Forward interest rate swaps -- The Fund may enter into forward interest
rate swaps. In a forward interest rate swap, the Fund and the counterparty
agree to make net periodic payments on a specified notional contract
amount, commencing on a specified future effective date,
18 MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004
Notes to Financial Statements (concluded)
unless terminated earlier. When the agreement is closed, the Fund records
a realized gain or loss in an amount equal to the value of the agreement.
(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).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis. The Fund amortizes all
premiums and discounts on debt securities.
(e) Dividends and distributions -- Dividends from net investment income are
declared and paid monthly. Distributions of capital gains are recorded on the
ex-dividend dates.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect, wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML
& Co."), which is the limited partner.
FAM is responsible for the management of the Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. For such services, the Fund pays a monthly fee at
an annual rate of .55% of the Fund's average daily net assets, including
proceeds from the issuance of Preferred Stock. For the six months ended December
31, 2004, FAM earned fees of $2,827,845, of which $190,587 was waived. In
addition, FAM has agreed to reimburse its advisory fee by the amount of advisory
fees the Fund pays to FAM indirectly through its investment in CMA California
Municipal Money Fund. For the six months ended December 31, 2004, FAM reimbursed
the Fund in the amount of $16,230.
For the six months ended December 31, 2004, the Fund reimbursed FAM $10,579 for
certain accounting services.
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 December 31, 2004 were $215,647,881 and $235,201,246, respectively.
4. Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of 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 stock without approval of holders of Common Stock.
Preferred Stock
Auction Market Preferred Stock 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 December 31,
2004 were: Series A, 1.05%; Series B, 1.65%; Series C, 1.80%; Series D, 1.85%;
and Series E, 1.75%.
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 December 31, 2004, Merrill Lynch, Pierce,
Fenner & Smith Incorporated earned $182,918 as commissions.
5. Capital Loss Carryforward:
On June 30, 2004, the Fund had a net capital loss carryforward of $46,148,915,
of which $10,359,976 expires in 2007, $7,894,678 expires in 2008, $24,786,894
expires in 2009 and $3,107,367 expires in 2012. This amount will be available to
offset like amounts of any future taxable gains.
6. Subsequent Event:
On January 6, 2005, the Fund paid a tax-exempt income dividend to holders of
Common Stock in the amount of $.079000 per share, payable on January 28, 2005 to
shareholders of record on January 19, 2005.
MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004 19
[LOGO] Merrill Lynch Investment Managers
Quality Profile
The quality ratings of securities in the Fund as of December 31, 2004 were as
follows:
- --------------------------------------------------------------------------------
Percent of
Total
S&P Rating/Moody's Rating Investments
- --------------------------------------------------------------------------------
AAA/Aaa ............................................... 94.1%
AA/Aa ................................................. 2.1
A/A ................................................... 3.1
Other* ................................................ 0.7
- --------------------------------------------------------------------------------
* Includes portfolio holdings in short-term investments and variable rate
municipal bonds.
20 MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004
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. However, in order to
provide shareholders with a more stable level of dividend distributions, 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 particular 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
Net Assets, which comprises part of the financial information included in this
report.
MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004 21
[LOGO] Merrill Lynch Investment Managers
Officers and Directors
Terry K. Glenn, President and Director
James H. Bodurtha, Director
Joe Grills, Director
Herbert I. London, Director
Roberta Cooper Ramo, Director
Robert S. Salomon, Jr., Director
Stephen B. Swensrud, Director
Kenneth A. Jacob, Senior Vice President
John M. Loffredo, Senior Vice President
Walter C. O'Connor, Vice President
Donald C. Burke, Vice President and Treasurer
Jeffrey Hiller, Chief Compliance Officer
Alice A. Pellegrino, Secretary
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street -- 11 East
New York, NY 10286
Preferred Stock:
The Bank of New York
101 Barclay Street -- 7 West
New York, NY 10286
NYSE Symbol
MUC
- --------------------------------------------------------------------------------
Andre F. Perold resigned as a Director of MuniHoldings California Insured Fund,
Inc. effective October 22, 2004.
Effective January 1, 2005, Terry K. Glenn retired as President and Director of
the Fund. The Fund's Board of Directors wishes Mr. Glenn well in his retirement.
Effective January 1, 2005, Robert C. Doll, Jr. became President and Director of
the Fund.
- --------------------------------------------------------------------------------
22 MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's Web site at
http://www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the
SEC's Public Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Electronic Delivery
The Fund offers electronic delivery of communications to its shareholders. In
order to receive this service, you must regis-ter your account and provide us
with e-mail information. To sign up for this service, simply access this Web
site at http://www.icsdelivery.com/live and follow the instructions. When you
visit this site, you will obtain a personal identification number (PIN). You
will need this PIN should you wish to update your e-mail address, choose to
discontinue this service and/or make any other changes to the service. This
service is not available for certain retirement accounts at this time.
MUNIHOLDINGS CALIFORNIA INSURED FUND, INC. DECEMBER 31, 2004 23
[LOGO] Merrill Lynch Investment Managers www.mlim.ml.com
MuniHoldings California Insured Fund, Inc. seeks to provide shareholders with
current income exempt from federal and California income taxes. The Fund seeks
to achieve this objective by investing primarily in a portfolio of long-term
investment grade 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 MuniHoldings California Insured Fund, 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 and intends to remain leveraged 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.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free 1-800-MER-FUND (1-800-637-3863); (2)
at www.mutualfunds.ml.com; and (3) on the Securities and Exchange Commission's
Web site at http://www.sec.gov. Information about how the Fund voted proxies
relating to securities held in the Fund's portfolio during the most recent
12-month period ended June 30 is available (1) at www.mutualfunds.ml.com and (2)
on the Securities and Exchange Commission's Web site at http://www.sec.gov.
MuniHoldings California Insured Fund, Inc.
Box 9011
Princeton, NJ 08543-9011
#HOLDCA -- 12/04
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this semi-annual
report
Item 4 - Principal Accountant Fees and Services - Not Applicable to this
semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable to this
semi-annual report
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable to this semi-annual
report
Item 8 - Portfolio Managers of Closed-End Management Investment Companies - Not
Applicable to this semi-annual report
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - Not Applicable
Item 11 - Controls and Procedures
11(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others particularly
during the period in which this report is being prepared. The
registrant's certifying officers have determined that the registrant's
disclosure controls and procedures are effective based on our evaluation
of these controls and procedures as of a date within 90 days prior to
the filing date of this report.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR
270.30a-3(d)) that occurred during the last fiscal half-year of the
period covered by this report that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - Not Applicable to this semi-annual report
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MuniHoldings California Insured Fund, Inc.
By: /s/ Robert C. Doll, Jr.
------------------------------------
Robert C. Doll, Jr.,
President of
MuniHoldings California Insured Fund, Inc.
Date: February 24, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by
the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
By: /s/ Robert C. Doll, Jr.
------------------------------------
Robert C. Doll, Jr.,
President of
MuniHoldings California Insured Fund, Inc.
Date: February 24, 2005
By: /s/ Donald C. Burke
------------------------------------
Donald C. Burke,
Chief Financial Officer of
MuniHoldings California Insured Fund, Inc.
Date: February 24, 2005