MuniInsured Fund, Inc.
Annual
Report
September 30, 1994
Officers and Directors
Arthur Zeikel, President and Director
Walter Mintz, Director
Melvin R. Seiden, Director
Stephen B. Swensrud, Director
Harry Woolf, Director
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
National Westminster Bank NJ
10 Exchange Place
Jersey City, New Jersey 07302
Transfer Agent
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02101
(617) 328-5000
ASE Symbol
MIF
<PAGE>
This report, including the financial information herein, is
transmitted to the shareholders of MuniInsured Fund, Inc. for their
information. It is not a prospectus, circular or representation
intended for use in the purchase of shares of the Fund or any
securities mentioned in the report. Past performance results shown
in this report should not be considered a representation of
future performance.
MuniInsured Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
DEAR SHAREHOLDER
During the six months ended September 30, 1994, MuniInsured Fund,
Inc. earned $0.279 per share income dividends, representing a net
annualized yield of 5.85%, based on a month-end net asset value of
$9.50 per share. Over the same period, the Fund's total investment
return was +0.63%, based on a change in per share net asset value
from $9.72 to $9.50, and assuming reinvestment of $0.280 per share
income dividends.
For the year ended September 30, 1994, the Fund earned $0.572 per
share income dividends, representing a net annualized yield of
6.02%, based on a month-end net asset value of $9.50 per share. Over
the same period, the Fund's total investment return was -4.10%,
based on a change in per share net asset value from $10.72 to $9.50,
and assuming reinvestment of $0.575 per share income dividends and
$0.224 per share capital gains distributions.
<PAGE>
The Environment
Concerns of increasing inflationary pressures continued to prompt
volatility in the US stock and bond markets during the July--
September period. In addition, the weakness of the US dollar in
foreign exchange markets caused intermittent stock and bond market
declines during the period. While the immediate concerns regarding
the US dollar had diminished by late July, the possibility of
continued tightening by the Federal Reserve Board persisted for most
of the period. However, a lower-than-expected rate of growth
reported for the US economy during the second calendar quarter
allayed inflationary concerns to some degree, despite the fifth
increase this year in short-term interest rates made by the central
bank in mid-August. Inflationary expectations surfaced again with
the announcement of significant upward revision in industrial
production and capacity utilization for the May--July period. When
the central bank did not raise short-term interest rates at the late
September Federal Open Market Committee meeting, financial markets
rallied on the expectation that the US economy was not overheating,
and therefore significant further monetary policy tightening would
not be necessary.
Despite the stronger-than-expected industrial production results,
other economic data suggest that while the economic recovery is
continuing, it is losing some momentum. Consumer spending is
increasing, but at a relatively slow pace, and existing home sales
may have peaked. Inflation remains subdued at the retail level. In
the industrial sector, the sharp increase in manufacturing
production in August was largely the result of a strong increase in
motor vehicle assemblies, which may level off in the weeks ahead. On
balance, it appears that the growth in US industry is progressing at
a steady, modest rate.
Despite evidence of a moderating trend in the US economy, Chairman
Greenspan indicated in his July Humphrey-Hawkins testimony that the
central bank would prefer to err on the side of too much monetary
tightening rather than too little. In the weeks ahead, investors
will continue to assess economic data and inflationary trends in
order to gauge whether further increases in short-term interest
rates are imminent. Continued indications of moderate and
sustainable levels of economic growth would be positive for the US
capital markets.
The Municipal Market
During the September quarter, long-term municipal bond yields rose
slightly amid continued weekly volatility. Tax-exempt revenue bond
yields, as measured by the Bond Buyer Revenue Bond Index, rose 11
basis points (0.11%) to 6.70% during the three months ended
September 30, 1994. However, as in recent quarters, yields continued
to fluctuate by as much as 15 basis points from week to week. US
Treasury bond yields rose 14 basis points to end the September
quarter at 7.85%.
<PAGE>
The fixed-income markets, including the municipal bond market, were
largely without conviction during the September quarter. Investors
were faced with mixed economic signals throughout the quarter, with
modest economic growth coupled with moderate inflationary pressures
being the dominant theme. Yields fluctuated as economic indicators
either supported or undermined this theme. The principal stabilizing
factor within the tax-exempt market has been the dramatic reduction
in new-issue supply. During the September quarter, less than $35
billion in long-term securities was issued, a decline of more than
50% versus the September 1993 quarter. As discussed in earlier
reports, this reduction in new-issue supply has helped minimize
selling pressures from institutional investors supporting the
municipal market at current levels for most of the past six months.
The overall attractiveness of municipal securities has continued
throughout the September quarter. For example, long-term tax-exempt
issues yielding 6.70% represent an after-tax equivalent of more than
10.95%. Current long-term municipal bonds also yield over 85% of
comparable US Treasury securities. This level is at the upper end of
the trading range seen thus far in 1994. Municipal bonds have traded
as high as approximately 80% of US Treasury bonds. Given their
strong after-tax yield advantage and attractive yield relationship
to taxable securities, currently available municipal bond yields
should prove attractive to long-term investors.
Portfolio Strategy
During the six months ended September 30, 1994, the composition and
strategy of the portfolio remained basically unchanged. We continued
to concentrate on sustaining an attractive level of tax-exempt
income in the portfolio by acquiring high-quality, current-coupon,
income-oriented issues in specific high tax states.
It is our opinion that long-term interest rates are likely to
continue to be subjected to episodes of market volatility as a
result of conflicting indications of economic strength. The market's
volatility provided attractive buying opportunities, and our
strategy entailed selective buying during periods of market
weakness. In addition, we engaged in the sale of particular issues
that we regarded as fully valued in relation to the market as a
whole and prerefunded bonds with approaching call dates.
<PAGE>
In Conclusion
We appreciate your ongoing interest in MuniInsured Fund, Inc., and
we look forward to serving your investment needs and objectives in
the months and years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
October 28, 1994
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Alaska--1.3% AAA Aaa $1,000 Ketchikan, Alaska, Municipal Utility Revenue Bonds, Series R,
6.65% due 12/01/2012 (f) $ 1,020
California--12.8% AAA Aaa 750 California State, RAN, Series C, 5.75% due 4/25/1996 (d) 761
AAA Aaa 1,000 Cucamonga, California, County Water District, COP (Water
Facility Projects), 5.45% due 9/01/2023 (d) 856
AAA Aaa 10 Culver City, California, Redevelopment Financing Authority
Revenue Bonds (Senior Lien Project), Series A, 6.75% due
11/01/1999 (a)(c) 11
AA Aa 1,400 Los Angeles, California, Department of Water and Power, Electric
Plant Revenue Bonds, 5.30% due 2/15/2021 1,157
AAA Aaa 2,000 Los Angeles, California, Wastewater Systems, Revenue Refunding
Bonds, Series A, 5.80% due 6/01/2021 (b) 1,821
AAA Aaa 1,000 San Bernardino County, California, COP (West Valley Detention
Center), 6.50% due 11/01/2012 (b) 1,012
AAA Aaa 1,000 San Francisco, California, GO, UT (City and County Variable
Purpose Projects), Series A, 10% due 12/15/2000 (b) 1,243
SP-1+ MIG1++ 3,000 Santa Clara County, California, TRAN, UT, 4.25% due 7/07/1995 2,991
District of AAA Aaa 3,000 Metropolitan Washington DC Airports Authority, General
Columbia--3.5% Airports Revenue Bonds, AMT, Series A, 5.75% due 10/01/2020 (b) 2,675
Florida--6.5% AAA Aaa 1,250 Florida State Turnpike Authority Revenue Bonds, Series A,
9.50% due 7/01/2000 (a) 1,511
A-1 VMIG1 100 Pinellas County, Florida, Health Facilities Authority, Revenue
Refunding Bonds (Pooled Hospital Loan Project), DATES, 3.80%
due 12/01/2015 (g) 100
AAA Aaa 3,000 Reedy Creek, Florida, Improvement District, Florida Utility
Revenue Bonds, AMT, Series 1, 9% due 10/01/2007 (b) 3,373
Illinois--9.9% AAA Aaa 1,000 Chicago, Illinois, Central Public Library, GO, Series C, 6.85%
due 7/01/2002 (a)(c) 1,099
AAA Aaa 1,000 Chicago, Illinois, Wastewater Transmission Revenue Bonds,
6.375% due 1/01/2024 (b) 975
AAA Aaa 1,000 Decatur, Illinois, Hospital Revenue Refunding Bonds (Decatur
Memorial Hospital), Series A, 7.75% due 10/01/2021 (b) 1,107
AAA Aaa 3,000 Illinois Health Facilities Authority Revenue Bonds (Ingalls
Health System Project), Series A, 6.25% due 5/15/2024 (b) 2,849
AAA Aaa 1,500 Illinois Regional Transportation Authority Revenue Bonds,
Series A, 7.20% due 11/01/2020 (a) 1,631
</TABLE>
<PAGE>
PORTFOLIO ABBREVIATIONS
To simplify the listings of MuniInsured Fund, Inc.'s portfolio
holdings in the Schedule of Investments, we have abbreviated the
names of many of the securities according to the list below and at
right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
DATES Daily Adjustable Tax-Exempt Securities
GO General Obligation Bonds
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
INFLOS Inverse Floating Rate Municipal Bonds
PCR Pollution Control Revenue Bonds
RAN Revenue Anticipation Notes
RIB Residual Interest Bonds
S/F Single-Family
TRAN Tax Revenue Anticipation Notes
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Indiana--5.2% AAA Aaa $4,100 Indiana Municipal Power Agency, Power Supply System,
Revenue Refunding Bonds, Series B, 6% due 1/01/2012 (b) $ 3,963
Iowa--6.1% AAA Aaa 4,500 Cedar Rapids, Iowa, PCR, Refunding (Iowa Electric Light &
Power Company Project), 5.50% due 11/01/2023 (b) 3,832
A-1+ NR 900 Iowa Finance Authority, Solid Waste Disposal Revenue Bonds
(Cedar River Paper Company Project), VRDN, Series A, 4.30%
due 7/01/2023 (a)(g) 900
Kansas--1.4% AAA Aaa 1,000 Burlington, Kansas, PCR, Refunding (Kansas Gas and Electric
Company Project), 7% due 6/01/2031 (b) 1,045
Kentucky--2.9% AAA Aaa 2,000 Louisville and Jefferson County, Kentucky, Regional Airport
Authority, Airport System Revenue Bonds, AMT, Series A, 8.50%
due 7/01/2017 (b) 2,199
Louisiana--4.8% AAA Aaa 2,300 Louisiana Stadium and Expo District, Revenue Refunding Bonds
(Hotel and Stadium Occupancy Tax), Series A, 6% due
7/01/2024 (d) 2,152
AAA Aaa 1,465 New Orleans, Louisiana, Public Improvement, GO, UT, 6.60% due
9/01/2011 (d) 1,495
Maine--1.3% AA- A1 1,000 Maine Housing Authority, Mortgage Purchase Revenue Bonds,
AMT, Series C-2, 6.875% due 11/15/2023 988
Maryland--2.9% AAA Aaa 2,330 Baltimore, Maryland, Revenue Refunding Bonds (Wastewater
Projects), Series A, 6% due 7/01/2015 (d) 2,255
Massachusetts--1.3% A+ Aa 1,000 Massachusetts State Housing Finance Agency, S/F Housing
Revenue Bonds, AMT, Series 32, 6.60% due 12/01/2026 967
New Jersey--4.4% New Jersey Health Care Facilities and Financing Authority
Revenue Bonds (Saint Peter's Medical Center), Series C (b):
AAA Aaa 2,520 8.60% due 7/01/1997 (c) 2,804
AAA Aaa 480 8.60% due 7/01/2017 530
New York--3.3% A- Baa1 2,000 New York City, New York, GO, UT, Refunding, Series F, 7.625%
due 2/01/2015 2,140
A-1+ NR 400 New York City, New York, IDA, IDR (Japan Airlines Company Ltd.
Project), VRDN, AMT, 3.90% due 11/01/2015 (g) 400
Oregon--3.6% AAA Aaa 3,000 Western Lane Hospital District, Oregon, Hospital Facility
Authority, Revenue Refunding Bonds (Sisters of St. Joseph's
Peace), 5.75% due 8/01/2019 (b) 2,773
Pennsylvania--3.7% AAA Aaa 1,000 Pennsbury, Pennsylvania, School District, GO, 6.50% due
1/15/2012 (a)(h) 1,014
BBB+ Baa1 2,000 Philadelphia, Pennsylvania, Hospital and Higher Education
Facilities Authority, Hospital Revenue Refunding Bonds (Temple
University Hospital), Series A, 6.625% due 11/15/2023 1,829
Rhode Island--2.7% AAA Aaa 2,000 Rhode Island Depositors, Economic Protection Corporation,
Special Obligation Bonds, Series A, 6.50% due 8/01/2007 (f) 2,074
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
South Carolina--1.3% AAA Aaa $1,000 South Carolina State Port Authority Revenue Bonds, AMT, 6.75%
due 7/01/2021 (a) $ 1,010
Texas--6.7% AAA Aaa 1,150 Brazos River Authority, Texas, Revenue Refunding Bonds
(Houston Light and Power), Series A, 6.70% due 3/01/2017 (a) 1,165
AAA Aaa 1,000 Harris County, Texas, Health Facilities Development Corp.,
Hospital Revenue Bonds, 6.375% due 10/01/2024 (b) 965
AAA Aaa 1,000 Houston, Texas, Airport System Revenue Bonds (Sub-Lien),
AMT, Series A, 6.75% due 7/01/2021 (d) 1,006
AA- A2 1,000 Port Corpus Christi Authority, Texas, Nueces County, PCR
(Hoechst Celanese Corporation Project), AMT, 6.875% due
4/01/2017 1,009
AA Aa 1,000 Texas State, Public Financing Authority, GO, RIB, UT, Series B-1
and B-2, 8.871% due 9/30/2011 (e) 992
Utah--4.0% AAA Aaa 3,000 Salt Lake City, Utah, Hospital Revenue Refunding Bonds
(IHC Hospitals, Inc.), INFLOS, 9.92% due 5/15/2020 (a)(e) 3,049
Virginia--2.7% AAA Aaa 1,000 Prince William County, Virginia, Service Authority, Water and
Sewer System Revenue Bonds, 6.50% due 7/01/2001 (c)(d) 1,081
NR Aa 1,000 Virginia State Housing Development Authority, Commonwealth
Mortgage, Series J, 6.75% due 7/01/2017 995
Washington--3.7% AAA Aaa 2,000 Snohomish County, Washington, School District #006, Revenue
Refunding Bonds (Mukilteo), UT, 5.70% due 12/01/2012 (d) 1,855
AAA Aaa 1,000 Washington State Public Power Supply System, Revenue
Refunding Bonds (Nuclear Project No. 1), Series A, 6.25% due
7/01/2017 (b) 961
West AAA Aaa 1,500 Harrison County, West Virginia, Solid Waste Disposal Revenue
Virginia--2.0% Bonds, 6.75% due 8/01/2024 (a) 1,506
Wisconsin--1.9% AAA Aaa 1,300 Wisconsin Municipal Insurance Commission Revenue Bonds,
8.70% due 4/01/2007 (a) 1,429
Total Investments (Cost--$77,047)--99.9% 76,575
Other Assets Less Liabilities--0.1% 87
-------
Net Assets--100.0% $76,662
=======
<PAGE>
<FN>
(a)AMBAC Insured.
(b)MBIA Insured.
(c)Prerefunded.
(d)FGIC Insured.
(e)The interest rate is subject to change periodically and inversely to the prevailing market rate.
The interest rate shown is the rate in effect at September 30, 1994.
(f)FSA Insured.
(g)The interest rate is subject to change periodically based upon the prevailing market rate.
The interest rate shown is the rate in effect at September 30, 1994.
(h)Bank Qualified.
++Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL INFORMATION
<CAPTION>
Statement of Assets, Liabilities and Capital as of September 30, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$77,047,352) (Note 1a) $ 76,574,649
Cash 70,594
Receivables:
Securities sold $ 3,292,172
Interest 1,377,694 4,669,866
-----------
Prepaid expenses fees and other assets 31,879
------------
Total assets 81,346,988
------------
Liabilities: Payables:
Securities purchased 4,492,734
Dividends to shareholders (Note 1e) 82,918
Investment adviser (Note 2) 31,901 4,607,553
-----------
Accrued expenses and other liabilities 77,468
------------
Total liabilities 4,685,021
------------
Net Assets: Net assets $ 76,661,967
============
<PAGE>
Capital: Common Stock, par value $.10 per share; 150,000,000 shares
authorized; 8,070,426 shares issued and outstanding $ 807,043
Paid-in capital in excess of par 74,433,719 $ 75,240,762
----------- ------------
Undistributed investment income--net 367,367
Undistributed realized capital gains--net 1,526,541
Unrealized depreciation on investments--net (472,703)
------------
Total capital--Equivalent to $9.50 net asset value per share of
Common Stock (market price--$8.875) (Note 4) $ 76,661,967
============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>
Statement of Operations for the Year Ended September 30, 1994
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount $ 5,159,357
Income
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 404,908
Professional fees 58,437
Directors' fees and expenses 37,693
Transfer agent fees 33,032
Accounting services (Note 2) 26,250
Printing and shareholder reports 24,848
Listing fees 9,875
Custodian fees 9,261
Pricing fees 6,361
Other 16,595
-----------
Total expenses 627,260
------------
Investment income--net 4,532,097
------------
Realized & Realized gain on investments--net 2,354,713
Unrealized Gain Change in unrealized appreciation/depreciation on investments--net (10,322,871)
(Loss) on -------------
Investments--Net Net Decrease in Net Assets Resulting from Operations $ (3,436,061)
(Notes 1d & 3): =============
</TABLE>
<PAGE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended
September 30,
Increase (Decrease) in Net Assets: 1994 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 4,532,097 $ 4,751,040
Realized gain on investments--net 2,354,713 1,305,529
Change in unrealized appreciation/depreciation on investments--net (10,322,871) 4,088,797
------------ ------------
Net increase (decrease) in net assets resulting from operations (3,436,061) 10,145,366
------------ ------------
Dividends & Investment income--net (4,549,578) (4,773,030)
Distributions to Realized gain on investments--net (1,857,618) (1,714,912)
Shareholders ------------ ------------
(Note 1e): Net decrease in net assets resulting from dividends and distributions
to shareholders (6,407,196) (6,487,942)
------------ ------------
Common Stock Net increase in net assets derived from shares issued to shareholders
Transactions in reinvestment of dividends 969,935 1,140,297
(Note 4): ------------ ------------
Net Assets: Total increase (decrease) in net assets (8,873,322) 4,797,721
Beginning of year 85,535,289 80,737,568
------------ ------------
End of year* $ 76,661,967 $ 85,535,289
============ ============
<FN>
*Undistributed investment income--net $ 367,367 $ 384,848
============ ============
</TABLE>
<PAGE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. For the Year Ended September 30,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 10.72 $ 10.26 $ 10.21 $ 9.68 $ 10.00
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .57 .60 .62 .64 .65
Realized and unrealized gain (loss) on
investments--net (.99) .68 .45 .60 (.11)
-------- -------- -------- -------- --------
Total from investment operations (.42) 1.28 1.07 1.24 .54
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.57) (.60) (.62) (.63) (.64)
Realized gain on investments--net (.23) (.22) (.40) (.08) (.22)
-------- -------- -------- -------- --------
Total dividends and distributions (.80) (.82) (1.02) (.71) (.86)
-------- -------- -------- -------- --------
Net asset value, end of year $ 9.50 $ 10.72 $ 10.26 $ 10.21 $ 9.68
======== ======== ======== ======== ========
Market price per share, end of year $ 8.75 $ 10.875 $ 10.875 $ 10.00 $ 9.00
======== ======== ======== ======== ========
Total Investment Based on market price per share (12.93%) 8.27% 20.15% 19.40% (1.29%)
Return:* ======== ======== ======== ======== ========
Based on net asset value per share (4.10%) 13.12% 11.03% 13.35% 5.61%
======== ======== ======== ======== ========
Ratios to Average Expenses .77% .80% .85% .89% .91%
Net Assets: ======== ======== ======== ======== ========
Investment income--net 5.58% 5.81% 6.17% 6.47% 6.57%
======== ======== ======== ======== ========
Supplemental Data: Net assets, end of year (in thousands) $ 76,662 $ 85,535 $ 80,737 $ 79,033 $ 74,293
======== ======== ======== ======== ========
Portfolio turnover 47.17% 27.89% 84.01% 92.07% 132.60%
======== ======== ======== ======== ========
<FN>
*Total investment returns based on market value, which can be significantly
greater or lesser than the net asset value, result in substantially different
returns. Total investment returns exclude the effects of sales loads.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniInsured Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a non-diversified, closed-end
management investment company. The Fund determines and makes
available for publication the net asset value of its Common Stock on
a weekly basis. The Fund's Common Stock is listed on the American
Stock Exchange under the symbol MIF. The following is a summary of
significant accounting policies followed by the Fund.
(a) Valuation of investments -- Municipal bonds are traded primarily
in the over-the-counter markets and are valued at the most recent
bid price or yield equivalent as obtained by the Fund's pricing
service from dealers that make markets in such securities. Municipal
bonds for which quotations are not readily available are valued at
fair value on a consistent basis as determined by the pricing
service using a matrix system to determine valuations. The
procedures of the pricing service and its valuations are reviewed by
the officers of the Fund under the general supervision of the Board
of Directors. The Board of Directors has determined in good faith
that the use of a pricing service is a fair method of determining
the valuation of portfolio securities. Obligations with remaining
maturities of sixty days or less are valued at amortized cost, which
approximates market value. Financial futures contracts, which are
traded on exchanges, are valued at their closing prices as of the
close of such exchanges. Options, which are traded on exchanges, are
valued at their last sale price as of the close of such exchanges
or, lacking any sales, at the last available bid price. Securities
for which market quotations are not readily available are valued at
their fair value as determined in good faith by or under the
direction of the Board of Directors of the Fund.
(b) Financial futures contracts -- The Fund may purchase or sell
interest rate futures contracts and options on such futures
contracts for the purpose of hedging the market risk on existing
securities or the intended purchase of securities. Futures contracts
are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a
contract, the Fund deposits and maintains as collateral such initial
margin as required by the exchange on which the transaction is
effected. Pursuant to the contract, the Fund agrees to receive from
or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are
known as variation margin and are recorded by the Fund as unrealized
gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed.
<PAGE>
(c) Income taxes -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income -- Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Dividends and distributions -- Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). Effective January 1, 1994, the
investment advisory business of FAM was reorganized from a
corporation to a limited partnership. Both prior to and after the
reorganization, ultimate control of FAM was vested with Merrill
Lynch & Co., Inc. ("ML & Co."). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of ML & Co. The limited partners are ML & Co. and Fund
Asset Management, Inc. ("FAMI"), which is also an indirect wholly-
owned subsidiary of ML & Co.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of .50% of
the Fund's average weekly net assets.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, FAMI, PSI, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended September 30, 1994 were $36,473,700 and
$40,117,752, respectively.
<PAGE>
Net realized and unrealized gains (losses) as of September 30, 1994
were as follows:
Realized Unrealized
Gains Losses
Long-term investments $2,354,713 $ (452,040)
Short-term investments -- (20,663)
---------- ----------
Total $2,354,713 $ (472,703)
========== ==========
As of September 30, 1994, net unrealized depreciation for Federal
income tax purposes aggregated $472,703, of which $1,874,386 related
to appreciated securities and $2,347,089 related to depreciated
securities. The aggregate cost of investments at September 30, 1994
for Federal income tax purposes was $77,047,352.
4. Capital Stock Transactions:
At September 30, 1994, the Fund had one class of shares of Common
Stock, par value $.10 per share, of which 150,000,000 shares were
authorized. For the year ended September 30, 1994, shares issued and
outstanding increased by 93,810 to 8,070,426 as a result of dividend
reinvestment. At September 30, 1994 total Common Stock paid-in
capital amounted to $75,240,762.
5. Subsequent Event:
On October 7, 1994, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the amount
of $.0455 per share, payable on October 28, 1994 to shareholders on
record as of October 18, 1994.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
MuniInsured Fund, Inc.
We have audited the accompanying statement of assets, liabilities
and capital, including the schedule of investments, of MuniInsured
Fund, Inc. as of September 30, 1994, the related statements of
operations for the year then ended and changes in net assets for
each of the years in the two-year period then ended, and the
financial highlights for each of the years in the five-year period
then ended. These financial statements and the financial highlights
are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the
financial highlights based on our audits.
<PAGE>
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at
September 30, 1994 by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
MuniInsured Fund, Inc. as of September 30, 1994, the results of its
operations, the changes in its net assets, and the financial
highlights for the respective stated periods in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
October 31, 1994
</AUDIT-REPORT>
PER SHARE INFORMATION (Unaudited)
<TABLE>
Per Share Selected Quarterly Financial Data*
<CAPTION>
Net Realized Unrealized Dividends/Distributions
Investment Gains Gains Net Investment Capital
For the Quarter Income (Losses) (Losses) Income Gains
<S> <C> <C> <C> <C> <C>
October 1, 1992 to December 31, 1992 $0.15 -- $ 0.02 $(0.15) $(0.22)
January 1, 1993 to March 31, 1993 0.15 $0.03 0.19 (0.15) --
April 1, 1993 to June 30, 1993 0.15 0.13 0.07 (0.15) --
July 1, 1993 to September 30, 1993 0.15 -- 0.24 (0.15) --
October 1, 1993 to December 31, 1993 0.15 0.10 (0.13) (0.15) (0.23)
January 1, 1994 to March 31, 1994 0.14 0.10 (0.86) (0.14) --
April 1, 1994 to June 30, 1994 0.14 0.12 (0.18) (0.14) --
July 1, 1994 to September 30, 1994 0.14 (0.03) (0.11) (0.14) --
<PAGE>
<CAPTION>
Net Asset Value Market Price**
For the Quarter High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
October 1, 1992 to December 31, 1992 $10.29 $ 9.98 $10.875 $10.00 409
January 1, 1993 to March 31, 1993 10.57 10.01 10.875 10.125 384
April 1, 1993 to June 30, 1993 10.49 10.25 10.75 10.00 492
July 1, 1993 to September 30, 1993 10.78 10.37 11.00 10.125 475
October 1, 1993 to December 31, 1993 10.82 10.39 11.125 10.25 431
January 1, 1994 to March 31, 1994 10.59 9.72 10.875 8.875 464
April 1, 1994 to June 30, 1994 10.00 9.48 10.00 9.25 370
July 1, 1994 to September 30, 1994 9.82 9.50 9.875 8.50 538
<FN>
*Calculations are based upon Common Stock outstanding at the end of each quarter.
**As reported in the consolidated transaction reporting system.
***In thousands.
</TABLE>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid monthly by
MuniInsured Fund, Inc. during its taxable year ended September 30,
1994 qualify as tax-exempt interest dividends for Federal income tax
purposes. Additionally, the Fund distributed short-term capital
gains of $0.008633 per share and long-term capital gains of
$0.223797 per share to shareholders of record on December 20, 1993.
Please retain this information for your records.
