MuniInsured
Fund, Inc.
FUND LOGO
Annual Report
September 30, 1995
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.
<PAGE>
MuniInsured
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MuniInsured Fund, Inc.
DEAR SHAREHOLDER
During the six months ended September 30, 1995, MuniInsured Fund,
Inc. earned $0.255 per share income dividends, representing a net
annualized yield of 5.28%, based on a month-end net asset value of
$9.64 per share. Over the same period, the Fund's total investment
return was +4.69%, based on a change in per share net asset value
from $9.48 to $9.64, and assuming reinvestment of $0.256 per share
income dividends.
For the year ended September 30, 1995, the Fund earned $0.523 per
share income dividends, representing a net annualized yield of
5.42%, based on a month-end net asset value of $9.64 per share. Over
the same period, the Fund's total investment return was +10.06%,
based on a change in per share net asset value from $9.50 to $9.64,
and assuming reinvestment of $0.527 per share income dividends and
$0.193 per share capital gains distributions.
<PAGE>
The Environment
After losing momentum through the second calendar quarter of 1995,
it now appears that the US economy has resumed a moderate growth
trend. Gross domestic product growth for the three months ended June
30 was revised to show that the economy expanded at a 1.1% pace,
rather than the 0.5% rate that was originally reported. The
employment report for August exceeded consensus expectations,
although most of the new jobs created were in the service sector,
reflecting the ongoing sluggishness in manufacturing. However,
durable goods orders rebounded somewhat in August, supported by
stronger automobile sales. Reflecting the trend of renewed economic
growth and continued containment of inflationary pressures, the
Federal Reserve Board signaled no shift in monetary policy following
its September meeting.
One of the major developments during the latter part of the period
under review was the strengthening of the US dollar relative to the
yen and the Deutschemark. Improving interest rate differentials
favoring the US currency, combined with coordinated central bank
intervention and more positive investor sentiment, have helped to
bolster the dollar in foreign exchange markets. Other factors that
appear to be improving the US dollar's outlook in the near term are
a pick-up in capital flows to the United States and the prospect of
increased capital outflows from Japan. However, it remains to be
seen if the US dollar's strengthening trend can continue without
significant improvements in the US budget and trade deficits.
In the weeks ahead, investor interest will continue to focus on US
economic activity. Clear signs of a moderate, noninflationary
expansion could further benefit the US stock and bond markets. In
addition, should the current Federal budget deficit reduction
efforts now underway in Washington prove successful, the
implications would likely be positive for the US financial markets.
The Municipal Market
Tax-exempt bond yields remained essentially unchanged during the
three months ended September 30, 1995. As measured by the Bond Buyer
Revenue Bond Index, long-term uninsured municipal revenue bond
yields ended the September quarter at 6.27%. Long-term tax-exempt
bonds have traded at this general level for much of the last six
months. However, municipal bond yields have exhibited considerable
volatility on a week-to-week basis. Throughout the September
quarter, municipal bond yields fluctuated by as much as 20 basis
points (0.20%) on a weekly basis. US Treasury bond yields displayed
similar volatility, but continued to decline during the quarter. By
the end of the September quarter, long-term US Treasury bond yields
had fallen approximately 10 basis points to 6.50%. Proposed Federal
tax restructuring continued to weigh heavily on the tax-exempt bond
market. Thus far in 1995, US Treasury bond yields declined over 135
basis points. Tax-exempt bond yields fell approximately 70 basis
points as the uncertainty surrounding changes to the existing
Federal income tax structure prevented the municipal bond market
from rallying as strongly as its taxable counterpart.
<PAGE>
A general view of a moderately expanding domestic economy, supported
by a very favorable inflationary environment, allowed interest rates
to significantly decline from their recent highs in November 1994.
However, this decline was not a smooth downward curve. Conflicting
economic indicators were released during recent months that have
prevented a clear consensus regarding the near-term direction of
interest rates from being reached. The resultant uncertainty
promoted a saw-toothed pattern as interest rate declines were
repeatedly interrupted by indications of stronger-than-expected
economic growth. As these concerns were overcome by subsequent
weaker economic releases, interest rate declines resumed. These
periods of volatility are likely to continue for the remainder of
1995, or until proposed Federal budget deficit reduction packages
are resolved and any resultant responses by the Federal Reserve
Board have occurred.
However, the municipal bond market's technical position remained
supportive throughout recent quarters. Approximately $35 billion in
long-term municipal securities were issued during the September 30,
1995 quarter. While this issuance is virtually identical to
underwritings during the September 30, 1994 quarter, tax-exempt bond
issuance over the last 12 months remained over 25% below comparable
1994 levels. The municipal bond market should maintain this positive
technical position well into 1996. Annual issuance for 1995 is now
projected to be approximately $140 billion, significantly less than
last year's already low level of $162 billion. Projected maturities
and early redemptions for the remainder of 1995 and throughout 1996
will lead to a continued decline in the total outstanding municipal
bond supply throughout 1996 and perhaps into 1998, should new bond
issuance remain at historically low levels.
Despite the municipal bond market's relative underperformance
compared to the US Treasury market thus far in 1995, the extent of
the tax-exempt bond market's rally was nonetheless quite impressive.
Municipal bond yields fell 110 basis points from the highs reached
in November 1994, and municipal bond prices rose accordingly. Most
tax-exempt products recouped almost all of the losses incurred in
1994 and have produced double digit total returns to date in 1995.
This relative underperformance so far in 1995 provided long-term
investors with the rare opportunity to purchase tax-exempt
securities at essentially taxable yield levels.
<PAGE>
Additionally, many of the factors that led to the relative
underperformance of the tax-exempt bond market thus far in 1995,
namely investor concern regarding budget deficit reduction and
proposed changes in the Federal income tax structure, are nearing
resolution. The Federal budget reconciliation process has already
begun and is expected to be essentially completed by year end.
Recent public opinion polls suggest that the majority of American
taxpayers prefer the existing Federal income tax system compared to
proposed changes, such as flat tax or national sales tax. In an
upcoming election year, neither party is likely to advocate a
clearly unpopular position, particularly one that can be expected to
negatively impact the Federal budget deficit-reduction program
through reduced tax revenues. As these factors are resolved, much of
the resistance that the municipal bond market met this year should
dissipate. This should allow municipal bond yields to significantly
decline from current levels in order to return to more normal
historic yield relationships.
Portfolio Strategy
During the 12-month period ended September 30, 1995, there were two
different market environments. The Municipal Bond Buyer Revenue
Index went from 6.70% in September 1994 to a high of 7.27% in
December 1994 and back to 6.27% in September 1995. During the first
six months of the Fund's fiscal year, we followed a cautious
investment strategy. We sold a portion of the Fund's
performance-oriented deeply discounted securities and replaced them
with less volatile current and premium coupon securities. During the
last six months of the Fund's fiscal year, our investment strategy
reflected our more optimistic view toward the municipal bond market.
Therefore, we kept the Fund fully invested and cash reserves at a
minimum. This investment approach resulted in the Fund benefiting
from the municipal bond market rebound that occurred during the last
half of the year.
Looking forward, we plan to continue our strategy of concentrating
on maintaining an appealing level of tax-exempt income and total
return by continuing to emphasize the Fund's present coupon and high
credit quality structure. Our use of these strategies resulted in a
positive return and a competitive current yield for our
shareholders.
In Conclusion
We appreciate your ongoing interest in MuniInsured Fund, Inc., and
we look forward to assisting you with your financial needs in the
months and years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
<PAGE>
(Vincent R. Giordano)
Vincent R. Giordano
Vice President
(William R. Bock)
William R. Bock
Portfolio Manager
October 30, 1995
We are pleased to announce that William R. Bock is responsible for
the day-to-day management of MuniInsured Fund, Inc. Mr. Bock has
been employed by Merrill Lynch Asset Management, L.P. since 1989 as
Vice President and Portfolio Manager. Prior thereto, Mr. Bock was
employed by Bear Stearns and E.F. Hutton in the Tax-Exempt Bond
Division from 1979 to 1989.
PROXY RESULTS
During the six-month period ended September 30, 1995, MuniInsured
Fund, Inc. shareholders voted on the following proposals. The
proposals were approved at a special shareholders' meeting on May
12, l995. The description of each proposal and number of shares
voted are as follows:
<PAGE>
<TABLE>
<CAPTION>
Shares Shares Voted
Voted For Without Authority
<S> <S> <C> <C>
1. To elect two Directors to serve until the Harry Woolf 7,259,583 169,184
1998 Annual Meeting of Stockholders: Arthur Zeikel 7,258,391 170,376
<CAPTION>
Shares Shares Voted Shares Voted
Voted For Against Abstain
<S> <C> <C> <C>
2. To select Deloitte & Touche LLP as the Fund's
independent auditors. 7,258,652 41,357 128,757
</TABLE>
PER SHARE INFORMATION (UNAUDITED)
<TABLE>
Per Share Selected Quarterly Financial Data*
<CAPTION>
Dividends/Distributions
Net Realized Unrealized
Investment Gains Gains Net Investment Capital
For the Quarter Income (Losses) (Losses) Income Gains
<S> <C> <C> <C> <C> <C>
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 0.11 (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) --
October 1, 1994 to December 31, 1994 0.13 (0.13) (0.15) (0.14) (0.19)
January 1, 1995 to March 31, 1995 0.13 (0.01) 0.47 (0.13) --
April 1, 1995 to June 30, 1995 0.13 0.04 0.03 (0.13) --
July 1, 1995 to September 30, 1995 0.13 -- 0.09 (0.13) --
<CAPTION>
Net Asset Value Market Price**
For the Quarter High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
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
October 1, 1994 to December 31, 1994 9.50 8.84 9.25 8.125 1,232
January 1, 1995 to March 31, 1995 9.52 9.00 9.50 8.625 425
April 1, 1995 to June 30, 1995 9.85 9.42 9.00 8.4375 761
July 1, 1995 to September 30, 1995 9.76 9.43 9.00 8.375 543
<PAGE>
<FN>
*Calculations are based upon shares of Common Stock outstanding at
the end of each quarter.
**As reported in the consolidated transaction reporting system.
***In thousands.
</TABLE>
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
GO General Obligation Bonds
HFA Housing Finance Authority
INFLOS Inverse Floating Rate Municipal Bonds
PCR Pollution Control Revenue Bonds
RAW Revenue Anticipation Warrents
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<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--1.4% AAA Aaa $1,000 Ketchikan, Alaska, Municipal Utility Revenue Bonds, Series R,
6.65% due 12/01/2012 (e) $ 1,069
Arkansas--0.4% NR* P1 100 Crosset, Arkansas, PCR (Georgia-Pacific Corp. Project), VRDN,
4.35% due 10/01/2007 (c) 100
A1+ Aaa 200 Little Rock, Arkansas, Health Facilities Board, Hospital Revenue
Bonds (Southwest Hospital Capital Guaranty), VRDN, 4.05% due
10/01/2018 (c) 200
<PAGE>
California--12.4% AAA Aaa 1,500 California, HFA, Home Mortgage Revenue Bonds, Series F, 6% due
8/01/2017 (b) 1,477
AAA Aaa 750 California State, RAW, Series C, 5.75% due 4/25/1996 (d) 758
Los Angeles, California, Wastewater Systems Revenue Bonds (b)(h):
AAA Aaa 2,000 Refunding, Series A, 5.80% due 6/01/2021 1,945
AAA Aaa 1,000 Series A, 5.875% due 6/01/2024 986
AAA Aaa 1,000 Sacramento, California, City Financing Authority, Lease
Revenue Refunding Bonds, Series A, 5.40% due 11/01/2020 (a)(h) 935
AAA Aaa 1,500 Sacramento, California, Municipal Utility District, Electric
Revenue Refunding Bonds, Series A, 5.75% due 8/15/2013 (b) 1,490
AAA Aaa 2,000 San Francisco, California, City and County Public Safety
Improvement Projects, Series B, 6.30% due 6/15/2014 (d) 2,063
Colorado--3.3% AAA Aaa 1,500 Auraria, Colorado, Higher Education Center Revenue Bonds
(Student Fee), Series B, 6.50% due 11/01/2016 (a) 1,579
A1+ VMIG1++ 5 Colorado Health Facilities Authority Revenue Bonds (Boulder
Community Hospital Project), VRDN, Series B, 4.40% due
10/01/2014 (b)(c) 5
AA Aa 1,000 Colorado Springs, Colorado, Utilities Revenue Bonds, Series A,
6.10% due 11/15/2024 1,011
Connecticut--3.9% AA Aa 1,000 Connecticut State HFA (Housing Mortgage Finance Program),
AMT, Series A, Sub-Series A-2, 6.45% due 5/15/2022 1,000
AAA Aaa 2,000 South Central Connecticut, Regulation Water Authority, Water
System Revenue Bonds, 11th Series, 5.75% due 8/01/2012 (d) 2,018
Florida--2.5% AAA Aaa 1,000 Dade County, Florida, Seaport Revenue Refunding Bonds,
Series 95, 5.75% due 10/01/2015 (b) 985
AAA Aaa 1,000 Florida State Department of Transportation (Right of Way),
5.875% due 7/01/2024 (b)(h) 996
Georgia--2.0% AAA Aaa 1,450 Municipal Electric Authority, Georgia, Special Obligation Bonds
(Fifth Crossover Series Project One), 6.40% due 1/01/2013 (a) 1,547
</TABLE>
<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>
Illinois--16.3% AAA Aaa $1,000 Chicago, Illinois, Wastewater Transmission Revenue Bonds,
6.375% due l/01/2024 (b) $ 1,028
AAA Aaa 1,000 Decatur, Illinois, Hospital Revenue Refunding Bonds (Decatur
Memorial Hospital), Series A, 7.75% due 10/01/2021 (b) 1,151
AAA Aaa 3,000 Illinois Health Facilities Authority Revenue Bonds (Ingalls
Health System Project), 6.25% due 5/15/2024 (b) 3,039
AA Aa 1,000 Illinois Housing Development Authority, Homeowner Mortgage
Revenue Bonds, Sub-Series D-1, 6.40% due 8/01/2017 1,008
Illinois Regional Transportation Authority, GO:
AAA Aaa 2,500 Series A, 7.20% due 11/01/2020 (a) 2,930
AAA Aaa 1,000 UT, Series C, 7.75% due 6/01/2020 (d) 1,242
AAA Aaa 2,180 Waukegan, Illinois, GO, UT, Series A, 6.75% due 11/15/2013 (d) 2,331
<PAGE>
Indiana--1.4% A NR* 1,000 Indiana Bond Bank Revenue Bonds (State Revolving Fund
Program), Series A, 6.75% due 2/01/2017 1,054
Kansas--3.5% AAA Aaa 2,500 Burlington, Kansas, PCR, Refunding (Kansas Gas and Electric
Company Project), 7% due 6/01/2031 (b) 2,753
Maine--1.3% AA- A1 1,000 Maine Housing Authority, Mortgage Purchase Revenue Bonds,
AMT, Series C-2, 6.875% due 11/15/2023 1,028
Massachusetts--2.8% AAA Aaa 1,050 Massachusetts Education Loan Authority, Educational Loan
Revenue Bonds, AMT, Issue E, Series A, 7.375% due l/01/2012 (a) 1,160
A+ Aa 1,000 Massachusetts State HFA, S/F Housing Revenue Bonds, AMT,
Series 32, 6.60% due 12/01/2026 1,009
Michigan--1.6% AAA Aaa 1,250 Chelsea, Michigan, School District, UT, 5.875% due
5/01/2025 (d)(h) 1,237
Nevada--4.4% AAA Aaa 1,800 Clark County, Nevada, Passenger Facility Revenue Bonds
(Las Vegas McCarran International Airport), Series A, 6% due
7/01/2022 (a) 1,774
AAA Aaa 1,500 Clark County, Nevada, School District Revenue Bonds, 6.75% due
6/15/2015 (d) 1,614
New Jersey--1.3% AAA Aaa 1,000 New Jersey State Housing and Mortgage Finance Agency Revenue
Bonds (Home Buyer), AMT, Series K, 6.375% due 10/01/2026 (b) 1,012
New York--5.4% BBB+ Baa1 2,000 New York City, New York, GO, UT, Refunding, Series F, 7.625% due
2/01/2015 2,181
AAA Aaa 1,000 New York City, New York, Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds, Series B, 5.375% due
6/15/2019 (a) 935
BBB Baa1 1,000 New York State Urban Development Corporation Revenue Bonds
(State Facilities), 7.50% due 4/01/2020 1,107
Pennsylvania--2.8% AAA Aaa 2,000 Somerset County, Pennsylvania, General Authority Commonwealth,
Lease Revenue Bonds, 6.25% due 10/15/2001 (d)(g) 2,178
Rhode Island--2.8% AAA Aaa 2,000 Rhode Island Depositors, Economic Protection Corporation,
Special Obligation Bonds, Series A, 6.50% due 8/01/2007 (e) 2,209
</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--1.4% AAA Aaa $1,000 South Carolina State Port Authority Revenue Bonds, AMT, 6.75%
due 7/01/2021 (a) $ 1,057
Texas--8.3% AAA Aaa 1,150 Brazos River Authority, Texas, Revenue Refunding Bonds
(Houston Light and Power), Series A, 6.70% due 3/01/2017 (a) 1,248
AAA Aaa 3,000 Harris County, Texas, Health Facilities Development Corp.,
Hospital Revenue Bonds (Hermann Hospital Project), 6.375% due
10/01/2024 (b) 3,092
AAA Aaa 1,000 Houston, Texas, Airport System Revenue Bonds (Sub-Lien), AMT,
Series A, 6.75% due 7/01/2021 (d) 1,057
A+ A2 1,000 Port Corpus Christi Authority, Texas, Nueces County, PCR (Hoechst
Celanese Corporation Project), AMT, 6.875% due 4/01/2017 1,045
Utah--4.3% AAA Aaa 3,000 Salt Lake City, Utah, Hospital Revenue Refunding Bonds
(IHC Hospitals, Inc.), INFLOS, 9.261% due 5/15/2020 (a)(f) 3,319
Virginia--2.6% Virginia State Housing Development Authority, Commonwealth
Mortgage:
AAA Aaa 1,000 AMT, Series A, Sub-Series A-4, 6.45% due 7/01/2028 (b) 1,013
AA+ Aal 1,000 Series J, Sub-Series J-2, 6.75% due 7/01/2017 1,036
Washington--9.6% AAA Aaa 2,275 Tacoma, Washington, Sewer Revenue Bonds, Series B, 6.375% due
12/01/2015 (d) 2,353
AAA Aaa 2,240 Washington State, COP, 5.80% due 10/01/2015 (a)(h) 2,170
AAA Aaa 2,500 Washington State Public Power Supply System, Revenue Refunding
Bonds (Nuclear Project No. 3), Series C, 7.50% due 7/01/2008 (b) 2,964
West Virginia--2.0% AAA Aaa 1,500 Harrison County, West Virginia, Solid Waste Disposal Revenue
Bonds (Monongahela Power), AMT, Series C, 6.75% due
8/01/2024 (a) 1,601
Total Investments (Cost--$72,875)--97.7% 76,099
Variation Margin on Financial Futures Contracts--(0.1%)** (98)
Other Assets Less Liabilities--2.4% 1,857
-------
Net Assets--100.0% $77,858
=======
<PAGE>
<FN>
(a)AMBAC Insured.
(b)MBIA Insured.
(c)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at September 30, 1995.
(d)FGIC Insured.
(e)FSA Insured.
(f)The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rate shown is the
rate in effect at September 30, 1995.
(g)Prerefunded.
(h)Security held as collateral in connection with open financial
futures contracts.
*Not Rated.
**Financial futures contracts sold as of September 30, 1995 were as
follows (in thousands):
Number of Expiration Value
Contracts Issue Date (Note 1a & 1b)
70 US Treasury Bonds December 1995 $7,986
Total (Contract Price--$7,861) $7,986
======
++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>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of September 30, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$72,875,200) (Note 1a) $ 76,099,050
Cash 564,073
Receivables:
Interest $ 1,459,858
Securities sold 958,482 2,418,340
------------
Prepaid expenses and other assets 24,393
------------
Total assets 79,105,856
------------
<PAGE>
Liabilities: Payables:
Securities purchased 975,562
Variation margin (Note 1b) 98,438
Dividends to shareholders (Note 1e) 74,782
Investment adviser (Note 2) 31,136 1,179,918
------------
Accrued expenses and other liabilities 67,897
------------
Total liabilities 1,247,815
------------
Net Assets: Net assets $ 77,858,041
============
Capital: Common Stock, par value $.10 per share; 150,000,000 shares authorized;
8,079,388 shares issued and outstanding (Note 4) $ 807,939
Paid-in capital in excess of par 74,515,276
Undistributed investment income--net 326,916
Accumulated realized capital losses on investments--net (Note 5) (857,753)
Accumulated distributions in excess of realized capital gains
on investments--net (32,875)
Unrealized appreciation on investments--net 3,098,538
------------
Total capital--Equivalent to $9.64 net asset value per share of Common
Stock (market price--$8.75) $ 77,858,041
============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations for the Year Ended September 30, 1995
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 4,808,905
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 379,218
Professional fees 63,133
Transfer agent fees 33,985
Accounting services (Note 2) 31,377
Printing and shareholder reports 26,955
Directors' fees and expenses 25,335
Listing fees 9,625
Pricing fees 6,689
Custodian fees 5,543
Other 15,552
------------
Total expenses 597,412
------------
Investment income--net 4,211,493
------------
<PAGE>
Realized & Realized loss on investments--net (857,534)
Unrealized Gain Change in unrealized depreciation on investments--net 3,571,241
(Loss) on ------------
Investments Net Increase in Net Assets Resulting from Operations $ 6,925,200
- --Net (Notes 1b, ============
1d & 3):
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended
September 30,
Increase (Decrease) in Net Assets: 1995 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 4,211,493 $ 4,532,097
Realized gain (loss) on investments--net (857,534) 2,354,713
Change in unrealized appreciation/depreciation on invest-
ments--net 3,571,241 (10,322,871)
------------ ------------
Net increase (decrease) in net assets resulting from operations 6,925,200 (3,436,061)
------------ ------------
Dividends & Investment income--net (4,252,163) (4,549,578)
Distributions to Realized gain on investments--net (1,526,541) (1,857,618)
Shareholders In excess of realized gain on investments--net (32,875) --
(Note 1e): ------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (5,811,579) (6,407,196)
------------ ------------
Common Stock Net increase in net assets derived from shares issued to
Transactions shareholders in reinvestment of dividends and distributions 82,453 969,935
(Note 4): ------------ ------------
<PAGE>
Net Assets: Total increase (decrease) in net assets 1,196,074 (8,873,322)
Beginning of year 76,661,967 85,535,289
------------ ------------
End of year* $ 77,858,041 $ 76,661,967
============ ============
<FN>
*Undistributed investment income--net (Note 1f) $ 326,916 $ 367,367
============ ============
See Notes to Financial Statements.
</TABLE>
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: 1995 1994 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 9.50 $ 10.72 $ 10.26 $ 10.21 $ 9.68
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .52 .57 .60 .62 .64
Realized and unrealized gain (loss) on
investments--net .34 (.99) .68 .45 .60
-------- -------- -------- -------- --------
Total from investment operations .86 (.42) 1.28 1.07 1.24
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.53) (.57) (.60) (.62) (.63)
Realized gain on investments--net (.19) (.23) (.22) (.40) (.08)
In excess of realized gain on
investments--net --** -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions (.72) (.80) (.82) (1.02) (.71)
-------- -------- -------- -------- --------
Net asset value, end of year $ 9.64 $ 9.50 $ 10.72 $ 10.26 $ 10.21
======== ======== ======== ======== ========
Market price per share, end of year $ 8.75 $ 8.75 $ 10.875 $ 10.875 $ 10.00
======== ======== ======== ======== ========
Total Investment Based on market price per share 8.46% (12.93%) 8.27% 20.15% 19.40%
Return:* ======== ======== ======== ======== ========
Based on net asset value per share 10.06% (4.10%) 13.12% 11.03% 13.35%
======== ======== ======== ======== ========
<PAGE>
Ratios to Average Expenses .79% .77% .80% .85% .89%
Net Assets: ======== ======== ======== ======== ========
Investment income--net 5.55% 5.58% 5.81% 6.17% 6.47%
======== ======== ======== ======== ========
Supplemental Net assets, end of year (in thousands) $ 77,858 $ 76,662 $ 85,535 $ 80,737 $ 79,033
Data: ======== ======== ======== ======== ========
Portfolio turnover 83.52% 47.17% 27.89% 84.01% 92.07%
======== ======== ======== ======== ========
<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.
**Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
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 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 and related options, 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, including
valuations furnished by a pricing service retained by the Fund,
which may utilize a matrix system for valuations. The procedures of
the pricing service and its valuations are reviewed by the officers
of the Fund under the general supervision of the Directors.
<PAGE>
(b) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell interest
rate futures contracts and options on such futures contracts for the
purpose of hedging the market risk on existing securities or the
intended purchase of securities. Futures contracts are contracts for
delayed delivery of securities at a specific future date and at a
specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
* Options--The Fund is authorized to write covered call options and
purchase put options. When the Fund writes an option, an amount
equal to the premium received by the Fund is reflected as an asset
and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written. When a security is purchased or sold through an
exercise of an option, the related premium paid (or received) is
added to (or deducted from) the basis of the security acquired or
deducted from (or added to) the proceeds of the security sold. When
an option expires (or the Fund enters into a closing transaction),
the Fund realizes a gain or loss on the option to the extent of the
premiums received or paid (or gain or loss to the extent the cost of
the closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
<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. Distributions in excess of
realized capital gains are due primarily to differing tax treatments
for futures transactions and post-October losses.
(f) Reclassification--Generally accepted accounting principles
require that certain differences between accumulated net realized
capital losses for financial reporting and tax purposes, if
permanent, be reclassified to undistributed net investment income.
Accordingly, current year's permanent book/tax differences of $219
have been reclassified from accumulated net realized capital losses
to undistributed net investment income. These reclassifications have
no effect on net assets or net asset value per share.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of .50% of
the Fund's average weekly net assets.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, Merrill Lynch, Pierce, Fenner & Smith Inc.
("MLPF&S"), and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended September 30, 1995 were $61,402,851 and
$60,422,142, respectively.
<PAGE>
Net realized and unrealized gains (losses) as of September 30, 1995
were as follows:
Unrealized
Realized Gains
Losses (Losses)
Long-term investments $ (18,092) $3,223,850
Short-term investments (27,780) --
Financial futures contracts (811,662) (125,312)
---------- ----------
Total $ (857,534) $3,098,538
========== ==========
As of September 30, 1995, net unrealized appreciation for Federal
income tax purposes aggregated $3,098,538, of which $3,324,307
related to appreciated securities and $225,769 related to
depreciated securities. The aggregate cost of investments at
September 30, 1995 for Federal income tax purposes was $72,875,200.
4. Common Stock Transactions:
At September 30, 1995, the Fund had one class of Common Stock, par
value $.10 per share, of which 150,000,000 shares were authorized.
For the year ended September 30, 1995, shares issued and outstanding
increased by 8,962 to 8,079,388 as a result of dividend
reinvestment. At September 30, 1995, total paid-in capital amounted
to $75,323,215.
5. Capital Loss Carryforward:
At September 30, 1995, the Fund had a net capital loss carryforward
of approximately $19,000, all of which expires in 2003. This amount
will be available to offset like amounts of any future taxable
gains.
6. Subsequent Event:
On October 10, 1995, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the amount
of $.041824 per share, payable on October 30, 1995 to shareholders
of record as of October 20, 1995.
<PAGE>
<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, 1995, 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.
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, 1995 by correspondence with the custodian and broker.
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, 1995, the results of its
operations, the changes in its net assets, and the financial
highlights for the respective stated periods in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
November 2, 1995
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid monthly by
MuniInsured Fund, Inc. during its taxable year ended September 30,
1995 qualify as tax-exempt interest dividends for Federal income tax
purposes. Additionally, the Fund distributed long-term capital gains
of $0.193226 per share to shareholders of record on December 19, 1994.
Please retain this information for your records.
<PAGE>
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
State Street Bank & Trust Company
One Heritage Drive, P2N
North Quincy, Massachusetts 02171
Transfer Agent
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02101
(617) 328-5000
ASE Symbol
MIF
