MuniInsured
Fund, Inc.
FUND LOGO
Semi-Annual Report
March 31, 1996
<PAGE>
Officers and Directors
Arthur Zeikel, President and Director
Joe Grills, Director
Walter Mintz, Director
Robert S. Salomon Jr., Director
Melvin R. Seiden, Director
Stephen B. Swensrud, 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, MA 02171
Transfer Agent
State Street Bank & Trust Company
225 Franklin Street
Boston, MA 02101
(617) 328-5000
ASE Symbol
MIF
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. Statements and other information herein are as dated
and are subject to change.
<PAGE>
MuniInsured
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MuniInsured Fund, Inc.
DEAR SHAREHOLDER
During the six-month period ended March 31, 1996, MuniInsured Fund,
Inc. earned $0.252 per share income dividends, representing a net
annualized yield of 5.17%, based on a month-end net asset value of
$9.73 per share. Over the same period, the Fund's total investment
return was +3.82%, based on a change in per share net asset value
from $9.64 to $9.73, and assuming reinvestment of $0.251 per share
income dividends.
The Environment
As 1995 drew to a close and 1996 began, it appeared that the US
economy was losing momentum. Lackluster retail sales, increases in
initial unemployment claims (along with weak job and income growth),
and evidence of slowing in the manufacturing sector all suggested
that the rate of economic growth was slowing, with some forecasters
even suggesting the possibility of an imminent recession. With
inflationary pressures well subdued, these signs of economic
weakness led the Federal Reserve Board to follow a more
accommodative monetary policy.
However, investor perceptions regarding the rate of future economic
growth changed dramatically with the report of stronger-than-
expected employment data for February and March. As a result, the
consensus outlook regarding the direction of business activity
shifted from expectations of weakness to anticipation of a revival
in growth of the economy. Long-term interest rates rose, and the
Federal Reserve Board left monetary policy on hold.
<PAGE>
Investors are likely to continue to focus on the probable direction
of economic activity and Federal Reserve Board monetary policy in
the weeks ahead. At this time, inflationary pressures do not seem to
be building and the manufacturing sector is still relatively weak,
which suggest that the economy is not on the verge of overheating.
Nevertheless, it is likely that any further indication of stronger
economic activity in the weeks ahead may add to investor concerns
that accelerating economic activity could lead to higher interest
rates.
The Municipal Market
Long-term tax-exempt bond yields were little changed during the six
months ended March 31, 1996. Buoyed by investor expectations of mild
inflation and weakening domestic economic growth, tax-exempt bond
yields steadily declined as 1995 ended. As measured by the Bond
Buyer Revenue Bond Index, A-rated municipal revenue bond yields
declined over 55 basis points (0.55%) to 5.63%. Economic indicators
released in early 1996, and particularly the surging employment
growth seen in early March, suggested that earlier expectations of
weaker economic growth might have been overly optimistic. As
investor confidence waned, tax-exempt bond yields rose to end the
March period at 6.15%, down approximately 10 basis points from the
beginning of the period ended March 31, 1996. US Treasury bond
yields followed a similar, although more volatile, pattern during
the last six months. By the end of 1995, US Treasury bonds had
fallen over 65 basis points to 5.95%. They rose significantly for
the remainder of the period to 6.65%. For the six months ended March
31, 1996, US Treasury bond yields rose approximately 5 basis points,
while long-term municipal bond yields fell approximately 10 basis
points.
The municipal bond market's recent outperformance was largely the
result of two principal factors. First, and perhaps more
importantly, much of the earlier concern regarding proposed changes
in Federal income tax codes and their effect on the tax treatment of
tax-exempt bond income has dissipated. As the negative revenue
impact of the various proposals, such as the flat tax, became
apparent, the likelihood of immediate reform quickly diminished.
When the Kemp Commission dealing with Federal income tax reform
released its findings early in 1996, the obvious need for reform was
highlighted. However, no specific recommendations of a flat tax,
value-added tax or any other specific reform were made.
Consequently, fears of losing the favored tax treatment of municipal
bond income declined even further. As a percentage of Treasury bond
yields, tax-exempt bond yield ratios quickly declined from 95% to
approximately 90%. This allowed the municipal bond market to
maintain much of the gains it made in recent months.
<PAGE>
The second major factor leading to the municipal bond market's
recent improvement was the return of a more favorable technical
environment. Over the past six months, approximately $92 billion in
municipal securities were underwritten, an increase of nearly 40%
versus the comparable period a year earlier. However, much of this
increase was biased by recent underwritings over the last three
months. Municipal issuers sought to refinance their existing higher-
couponed debt as tax-exempt bond yields approached their recent
historic lows. Over the past three months such refundings
contributed to total bond issuance of about $40 billion. However, at
the same time, investors continue to receive significant amounts of
assets derived from coupon income, bond maturities and proceeds from
early redemptions. In January and February investors received
approximately $35 billion in such assets, nearly equal to the total
amount of bonds issued during the previous three months. These cash
flows helped maintain individual retail investor demand during
recent months. Additionally, major institutional investors, such as
certain insurance companies whose underwriting profits were
cyclically high, demonstrated significant ongoing interest in the
tax-exempt bond market, particularly on higher-quality securities.
Individual and institutional investor demand was strong enough
during the period ended March 31, 1996 to absorb the relative
increase in bond issuance and still allow tax-exempt bond yields to
decline further.
Looking ahead, we believe the municipal bond market is likely to
continue to outperform the US Treasury bond market. Investor demand
should remain adequate to absorb new bond issuance. In addition, it
is unlikely that the rapid pace of issuance seen thus far in 1996
will be maintained. The recent rise in yields made further bond
refinancings economically unfeasible. Since these refinancings were
the driving force of recent bond issuance, as the amount of these
refundings decline, overall issuance should decline. This should
allow the current demand/supply balance to be easily maintained.
Additionally, as a percentage of Treasury bond yields, long-term
municipal bond yields remain historically attractive. With long-
term, tax-exempt revenue bonds yielding approximately 90% of their
taxable counterparts, should taxable interest rates resume their
decline, municipal bond yields are poised to decline further.
Portfolio Strategy
As we entered the six-month period ended March 31, 1996, we expected
municipal bond yields to decline further because of continued
slowing in the economy and the prospect of additional monetary
easing by the Federal Reserve Board. Therefore, we concentrated on
seeking to enhance the Fund's total return potential by investing in
performance-oriented securities. However, given the recent strength
evident in the economic data, we adopted a more cautious investment
strategy. To be more defensive in our investment strategy, we added
higher-coupon issues and raised the cash reserve level of the Fund.
<PAGE>
Over the next several months, we expect the municipal market to
increase in volatility within a wide trading range. Therefore, we
will seek to increase the Fund's cash level as the market moves
higher and selectively buy during periods of market weakness, thus
emphasizing high-quality issues of high-tax states.
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
(Vincent R. Giordano)
Vincent R. Giordano
Vice President
(William R. Bock)
William R. Bock
Portfolio Manager
April 30, 1996
<PAGE>
PER SHARE INFORMATION
<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, 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) --
October 1, 1995 to December 31, 1995 0.13 0.09 0.32 (0.13) --
January 1, 1996 to March 31, 1996 0.12 --+++ (0.32) (0.12) --
<CAPTION>
Net Asset Value Market Price**
For the Quarter High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
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
October 1, 1995 to December 31, 1995 10.06 9.65 9.1875 8.375 716
January 1, 1996 to March 31, 1996 10.15 9.61 9.375 8.4375 657
<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.
+++Amount is less than $.01 per share.
</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
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
IDR Industrial Development Revenue Bonds
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--3.8% AAA Aaa $2,000 Alaska State Housing Finance Corporation, Revenue
Refunding Bonds, Series A, 5.875% due 12/01/2024 (b)(i) $ 1,947
AAA Aaa 1,000 Ketchikan, Alaska, Municipal Utility Revenue Bonds,
Series R, 6.65% due 12/01/2012 (e) 1,070
Arkansas--0.3% NR* P1 100 Crosset, Arkansas, PCR (Georgia-Pacific Corp. Project),
VRDN, 3.30% due 10/01/2007 (c) 100
A1+ Aaa 100 Little Rock, Arkansas, Health Facilities Board, Hospital
Revenue Bonds (Southwest Hospital), VRDN, 3.35%
due 10/01/2018 (c)(d) 100
California AAA Aaa 1,500 California, HFA, Home Mortgage Revenue Bonds, Series F,
- --7.9% 6% due 8/01/2017 (b) 1,501
AAA Aaa 750 California State, RAW, Series C, 5.75% due 4/25/1996 (d) 751
AAA Aaa 1,000 Sacramento, California, City Financing Authority, Lease
Revenue Refunding Bonds, Series A, 5.40% due 11/01/2020 (a) 957
AAA Aaa 1,000 San Francisco, California, Bay Area Rapid Transit
District, Sales Tax Revenue Bonds, 5.50% due 7/01/2020 (d) 954
AAA Aaa 2,000 San Francisco, California, City and County Public Safety
Improvement Projects, UT, Series B, 6.30% due 6/15/2014 (d) 2,068
Colorado--3.5% AAA Aaa 1,500 Auraria, Colorado, Higher Education Center Revenue
Bonds (Student Fee), Series B, 6.50% due 11/01/2000 (a)(g) 1,654
AA Aa 1,000 Colorado Springs, Colorado, Utilities Revenue Bonds,
Series A, 6.10% due 11/15/2024 1,020
A1+ NR* 100 Pitkin County, Colorado, IDR, Refunding (Aspen Skiing
Co. Project), VRDN, AMT, Series B, 3.45% due 4/01/2014 (c) 100
Connecticut AA Aa 1,000 Connecticut State, HFA (Housing Mortgage Finance Program),
- --1.3% AMT, Series A, Sub-Series A-2, 6.45% due 5/15/2022 1,007
<PAGE>
Florida--3.7% AAA Aaa 1,000 Dade County, Florida, Aviation Revenue Bonds, Series B,
5.60% due 10/01/2026 (b) 966
AAA Aaa 1,000 Florida State Department of Transportation (Right of Way),
5.875% due 7/01/2024 (b) 994
AAA Aaa 1,000 Sarasota County, Florida, Utility System Revenue Refunding
Bonds, Series A, 5.25% due 10/01/2025 (d) 927
</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 1/01/2024 (b) $ 1,038
AAA Aaa 1,000 Decatur, Illinois, Hospital Revenue Refunding Bonds (Decatur
Memorial Hospital), Series A, 7.75% due 10/01/2021 (b)(h) 1,140
AA Aa 1,000 Illinois HDA, Homeowner Mortgage Revenue Bonds,
Sub-Series D-1, 6.40% due 8/01/2017 1,009
AAA Aaa 3,000 Illinois Health Facilities Authority Revenue Bonds
(Ingalls Health System Project), 6.25% due 5/15/2024 (b) 3,047
Illinois Regional Transportation Authority, GO:
AAA Aaa 2,500 Series A, 7.20% due 11/01/2020 (a) 2,959
AAA Aaa 1,000 UT, Series C, 7.75% due 6/01/2020 (d) 1,256
AAA Aaa 2,180 Waukegan, Illinois, GO, UT, Series A, 6.75% due 11/15/2013 (d) 2,377
Indiana--1.4% A NR* 1,000 Indiana Bond Bank Revenue Bonds (State Revolving Fund
Program), Series A, 6.75% due 2/01/2017 1,086
Kansas--3.5% AAA Aaa 2,500 Burlington, Kansas, PCR, Refunding (Kansas Gas and
Electric Company Project), 7% due 6/01/2031 (b) 2,757
Maine--1.3% AA- A1 1,000 Maine State Housing Authority, Mortgage Purchase
Revenue Bonds, AMT, Series C-2, 6.875% due 11/15/2023 1,024
Maryland--0.6% NR* VMIG1++ 500 Maryland State Health and Higher Educational Facilities
Authority Revenue Bonds, VRDN, Pooled Loan Program,
Series A, 3.40% due 4/01/2035 (a)(c) 500
Massachusetts AAA Aaa 1,050 Massachusetts Education Loan Authority, Education
- --3.7% Loan Revenue Bonds, AMT, Issue E, Series A, 7.375%
due 1/01/2012 (a) 1,056
A+ Aa 1,000 Massachusetts State HFA, S/F Housing Revenue Bonds,
AMT, Series 32, 6.60% due 12/01/2026 1,007
AAA Aaa 1,000 Massachusetts State Water Resource Authority Revenue
Bonds, Series B, 4.75% due 12/01/2021 (b) 853
<PAGE>
Michigan--4.0% AAA Aaa 1,250 Chelsea, Michigan, School District, UT, 5.875% due 5/01/2025 (d) 1,239
AAA Aaa 2,000 Grand Ledge, Michigan, Public School District, Refunding, UT,
5.375% due 5/01/2024 (b) 1,885
Nevada--2.2% AAA Aaa 1,500 Clark County, Nevada, School District Revenue Bonds,
6.75% due 12/15/2004 (d)(g) 1,708
New Jersey AAA Aaa 1,000 New Jersey State Housing and Mortgage Finance Agency
- --2.4% Revenue Bonds (Home Buyer), AMT, Series K, 6.375% due
10/01/2026 (b) 1,008
AAA Aaa 1,000 New Jersey State Transportation Trust Fund Authority
(Transportation System), GO, Series A, 4.75% due 12/15/2016 (b) 879
New Mexico A1+ P1 900 Farmington, New Mexico, PCR (Arizona Public Service Co.),
- --1.1% VRDN, AMT, Series C, 3.60% due 9/01/2024 (c) 900
New York--6.4% BBB+ Baa1 2,000 New York City, New York, GO, UT, Refunding, Series F,
7.625% due 2/01/2015 2,199
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) 939
AAA Aaa 2,000 New York State Dormitory Authority Revenue Bonds (City
University System), 5.375% due 7/01/2025 (a) 1,873
Oregon--1.0% A1 VMIG1++ 800 Medford, Oregon, Hospital Facilities Authority Revenue
Bonds (Gross-Rogue Valley Health Services), VRDN,
3.65% due 10/01/2016 (c) 800
</TABLE>
<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>
Pennsylvania AAA Aaa $2,000 Allegheny County, Pennsylvania, Hospital Development
- --2.5% Authority, Health Center Revenue Bonds (University of
Pittsburgh Medical Center System), 5.375% due 12/01/2025 (b) $ 1,856
A1+ VMIG1++ 100 Philadelphia, Pennsylvania, Hospitals and Higher Education
Facilities Authority, Hospital Revenue Bonds (Children's
Hospital of Philadelphia Project), VRDN, 3.40% due 3/01/2027 (c) 100
South AAA Aaa 2,250 Greenville County, South Carolina, Public Facilities Corp., COP,
Carolina--2.8% Refunding (Courthouse and Detention Center), 5.70%
due 4/01/2017 (a) 2,199
<PAGE>
Texas--11.8% AAA Aaa 1,150 Brazos River Authority, Texas, Revenue Refunding Bonds
(Houston Light and Power), Series A, 6.70% due 3/01/2017 (a) 1,243
AAA Aaa 3,000 Harris County, Texas, Health Facilities Development
Corp., Hospital Revenue Bonds (Hermann Hospital Project),
6.375% due 10/01/2024 (b) 3,122
AAA Aaa 1,000 Houston, Texas, Airport System Revenue Bonds (Sub-Lien),
AMT, Series A, 6.75% due 7/01/2021 (d) 1,063
A+ A2 1,000 Port Corpus Christi Authority, Texas, Nueces County,
PCR (Hoechst Celanese Corporation Project), AMT, 6.875%
due 4/01/2017 1,058
AAA Aaa 3,000 Texas State Turnpike Authority, Dallas North Thruway Revenue
Bonds (President George Bush Turnpike), 5.25% due 1/01/2023 (d) 2,758
Utah--4.4% AAA Aaa 3,000 Salt Lake City, Utah, Hospital Revenue Refunding Bonds
(IHC Hospitals, Inc.), INFLOS, 9.768% due 5/15/2020 (a)(f) 3,427
Virginia--2.6% Virginia State, HDA, Commonwealth Mortgage:
AAA Aaa 1,000 AMT, Series A, Sub-Series A-4, 6.45% due 7/01/2028 (b) 1,020
AA+ Aa1 1,000 Series J, Sub-Series J-2, 6.75% due 7/01/2017 1,033
Washington AAA Aaa 2,275 Tacoma, Washington, Sewer Revenue Bonds, Series B, 6.375%
- --5.8% due 12/01/2015 (d) 2,395
AAA Aaa 2,240 Washington State, COP, 5.80% due 10/01/2015 (a) 2,204
West AAA Aaa 1,500 Harrison County, West Virginia, Commonwealth Solid Waste
Virginia--2.1% Disposal Revenue Bonds (Monongahela Power), AMT, Series C,
6.75% due 8/01/2024 (a) 1,652
Wisconsin--1.8% AAA Aaa 1,500 Wisconsin State Health and Educational Facilities Authority
Revenue Bonds (Aurora Medical Group Inc. Project),
5.60% due 11/15/2016 (e) 1,440
Total Investments (Cost--$74,367)--98.2% 77,225
Variation Margin on Financial Futures Contracts--(0.1%)** (60)
Other Assets Less Liabilities--1.9% 1,458
-------
Net Assets--100.0% $78,623
=======
<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 March 31, 1996.
(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 March 31, 1996.
(g)Prerefunded.
(h)Security held as collateral in connection with open financial
futures contracts.
(i)FNMA/GNMA Collateralized.
*Not Rated.
**Financial futures contracts sold as of March 31, 1996 were as
follows (in thousands):
<PAGE>
Number of Expiration Value
Contracts Issue Date (Notes 1a & 1b)
80 US Treasury Bonds June 1996 $8,918
Total (Contract Price--$9,233) $8,918
======
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of March 31, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$74,367,006) (Note 1a) $ 77,225,147
Cash 24,382
Interest receivable 1,564,743
Prepaid expenses and other assets 24,472
------------
Total assets 78,838,744
------------
Liabilities: Payables:
Dividends to shareholders (Note 1e) $ 67,051
Variation margin (Note 1b) 60,000
Investment adviser (Note 2) 31,126 158,177
------------
Accrued expenses and other liabilities 58,016
------------
Total liabilities 216,193
------------
<PAGE>
Net Assets: Net assets $ 78,622,551
============
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 323,140
Accumulated realized capital losses on investments--net (Note 5) (164,070)
Accumulated distributions in excess of realized capital gains on
investments--net (32,875)
Unrealized appreciation on investments--net 3,173,141
------------
Total capital--Equivalent to $9.73 net asset value per share
of Common Stock (market price--$8.625) $ 78,622,551
============
</TABLE>
<TABLE>
Statement of Operations for the Six Months Ended March 31, 1996
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 2,342,404
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 198,539
Professional fees 31,097
Accounting services (Note 2) 17,297
Transfer agent fees 16,481
Printing and shareholder reports 14,069
Directors' fees and expenses 13,637
Listing fees 4,662
Pricing fees 3,928
Custodian fees 3,007
Other 12,378
------------
Total expenses 315,095
------------
Investment income--net 2,027,309
------------
Realized & Realized gain on investments--net 693,683
Unrealized Gain on Change in unrealized appreciation/depreciation on investments--net 74,603
Investments--Net ------------
(Notes 1b, Net Increase in Net Assets Resulting from Operations $ 2,795,595
1d & 3): ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: March 31, 1996 Sept. 30, 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 2,027,309 $ 4,211,493
Realized gain (loss) on investments--net 693,683 (857,534)
Change in unrealized appreciation/depreciation on
investments--net 74,603 3,571,241
------------ ------------
Net increase in net assets resulting from operations 2,795,595 6,925,200
------------ ------------
Dividends & Investment income--net (2,031,085) (4,252,163)
Distributions to Realized gain on investments--net -- (1,526,541)
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 (2,031,085) (5,811,579)
------------ ------------
Common Stock Net increase in net assets derived from shares issued to
Transactions shareholders in reinvestment of dividends and distributions -- 82,453
(Note 4): ------------ ------------
Net Assets: Total increase in net assets 764,510 1,196,074
Beginning of period 77,858,041 76,661,967
------------ ------------
End of period* $ 78,622,551 $ 77,858,041
============ ============
<FN>
*Undistributed investment income--net $ 323,140 $ 326,916
============ ============
</TABLE>
<PAGE>
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
March 31, For the Year Ended September 30,
Increase (Decrease) in Net Asset Value: 1996 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 9.64 $ 9.50 $ 10.72 $ 10.26 $ 10.21
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .25 .52 .57 .60 .62
Realized and unrealized gain (loss) on
investments--net .09 .34 (.99) .68 .45
-------- -------- -------- -------- --------
Total from investment operations .34 .86 (.42) 1.28 1.07
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.25) (.53) (.57) (.60) (.62)
Realized gain on investments--net -- (.19) (.23) (.22) (.40)
In excess of realized gain on
investments--net -- --+++++ -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions (.25) (.72) (.80) (.82) (1.02)
-------- -------- -------- -------- --------
Net asset value, end of period $ 9.73 $ 9.64 $ 9.50 $ 10.72 $ 10.26
-------- -------- -------- -------- --------
Market price per share, end of period $ 8.625 $ 8.75 $ 8.75 $ 10.875 $ 10.875
======== ======== ======== ======== ========
Total Investment Based on market price per share 1.39%+++ 8.46% (12.93%) 8.27% 20.15%
Return:** ======== ======== ======== ======== ========
Based on net asset value per share 3.82%+++ 10.06% (4.10%) 13.12% 11.03%
======== ======== ======== ======== ========
Ratios to Average Expenses .79%* .79% .77% .80% .85%
Net Assets: ======== ======== ======== ======== ========
Investment income--net 5.09%* 5.55% 5.58% 5.81% 6.17%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 78,623 $ 77,858 $ 76,662 $ 85,535 $ 80,737
Data: ======== ======== ======== ======== ========
Portfolio turnover 48.89% 83.52% 47.17% 27.89% 84.01%
======== ======== ======== ======== ========
<FN>
+++Aggregate total investment return.
+++++Amount is less than $.01 per share.
*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 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. These unaudited financial statements
reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the interim period
presented. All such adjustments are of a normal recurring nature.
The Fund determines and makes available for publication the net
asset value of its Common Stock on a weekly basis. The Fund's Common
Stock is listed on the 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 Board of Directors.
(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.
<PAGE>
* 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).
(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.
<PAGE>
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 0.50% of
the Fund's average weekly net assets.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, Merrill Lynch, Pierce, Fenner & Smith Inc.
("MLPF&S"), and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended March 31, 1996 were $37,292,875 and
$38,915,960, respectively.
Net realized and unrealized gains (losses) as of March 31, 1996 were
as follows:
Realized
Gains Unrealized
(Losses) Gains
Long-term investments $ 828,795 $2,857,761
Short-term investments -- 380
Financial futures contracts (135,112) 315,000
---------- ----------
Total $ 693,683 $3,173,141
========== ==========
As of March 31, 1996, net unrealized appreciation for Federal income
tax purposes aggregated $2,858,141, of which $3,227,845 related to
appreciated securities and $369,704 related to depreciated
securities. The aggregate cost of investments at March 31, 1996 for
Federal income tax purposes was $74,367,006.
4. Common Stock Transactions:
At March 31, 1996, 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 six months ended March 31, 1996, shares issued
and outstanding remained constant at 8,079,388. At March 31, 1996,
total paid-in capital amounted to $75,323,215.
<PAGE>
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 April 9, 1996, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$0.042764 per share, payable on April 29, 1996 to shareholders of
record as of April 19, 1996.
