MuniInsured
Fund, Inc.
FUND LOGO
Semi-Annual Report
March 31, 1998
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.
MuniInsured
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MuniInsured Fund, Inc.
DEAR SHAREHOLDER
During the six-month period ended March 31, 1998, MuniInsured Fund,
Inc. earned $0.301 per share income dividends. This represents a net
annualized yield of 6.01%, based on a month-end net asset value of
$10.05 per share. Over the same period, the Fund's total investment
return was +4.55%, based on a change in per share net asset value
from $10.02 to $10.05, and assuming reinvestment of $0.301 per share
income dividends and $0.099 per share capital gains distributions.
The Municipal Market Environment
During the six months ended March 31, 1998, bond yields declined to
recent historic lows. While the positive combination of moderate
economic growth and low inflation has continued to support lower
interest rates, much of the recent decline in bond yields has been
driven more by the continued turmoil in Asian financial markets than
by fundamental concerns. A significant "flight-to-quality" has
benefited US assets, particularly longer maturity US Treasury bonds,
as foreign investors have sought safe haven in the relative
stability of US financial markets. Over the six months ended March
31, 1998, US Treasury bond yields declined approximately 55 basis
points (0.55%) to 5.93%. Long-term municipal revenue bonds, as
measured by the Bond Buyer Revenue Bond Index, declined over 15
basis points to end the March period at 5.43%. Tax-exempt bond
yields have not been at these levels since the mid-1970s.
Without the ability to benefit from the tax advantage inherent in
municipal bonds, foreign investors have not participated in the tax-
exempt market. Consequently, municipal bond yields have not declined
as dramatically as have taxable US Treasury securities. The increase
in new municipal bond issuance over the past six months has also
prevented the tax-exempt bond market from more closely mirroring the
yield declines exhibited by its taxable counterpart. Over the last
six months, more than $130 billion in new long-term municipal bonds
were underwritten, an increase of over 40% compared to the same
period a year earlier. As interest rates have continued to decline
in recent months, new tax-exempt bond issuance has dramatically
increased. Over $65 billion in long-term municipal securities were
issued during the last three months, an increase of over 70%
compared to the same three-month period a year earlier. During the
past month, almost $30 billion in new long-term municipal securities
were underwritten, representing an increase of nearly 70% compared
to the March 1997 level and the largest March issuance ever.
In our opinion, the recent correction in Asian financial markets has
enhanced the near-term prospects for continued low interest rates in
the United States. It is likely that the recent corrections will
result in slower US economic growth in the coming months. This
decline in growth should be generated in part by reduced US export
growth to these troubled economies. Additionally, US inflation
should be positively impacted by lower import prices as Asian
producers lower the cost of their goods in order to accelerate their
struggling economies. More important, it is likely that, barring a
dramatic and unexpected resurgence of domestic inflation, the
Federal Reserve Board will be unwilling to raise interest rates
until the full impact of the Asian situation can be established. It
is also likely that at least some of the recent economic strength
seen in the United States will be reversed in the coming months. A
particularly mild winter has been partially responsible for a strong
housing sector, as well as for other parts of the construction
industry. This past winter's economic strength may have borrowed
from future quarters' growth. This recent strong trend may not be
sustainable and may lead to weaker construction growth later in the
year. Additionally, strong economic growth in 1997 and the increased
use of electronic tax filings has resulted in larger and earlier
Federal and state income tax refunds to many individuals. These
refunds appear to have supported strong consumer spending in recent
months which again may be borrowing against weaker consumer spending
later this year.
MuniInsured Fund, Inc.
March 31, 1998
All these factors suggest that over the near term, interest rates,
including tax-exempt bond yields, are unlikely to rise by any
appreciable amount. It is probable that municipal bond yields will
remain under some relative pressure because of continued strong new-
issue supply. However, the recent pace of municipal bond issuance is
unlikely to escalate. Continued increases in bond issuance will
require lower and lower tax-exempt bond yields to generate the
economic savings necessary for additional municipal bond
refinancings. Preliminary estimates of 1998 total municipal bond
issuance are presently in the $195 billion--$220 billion range.
These estimates suggest that recent supply pressures are likely to
abate somewhat next year, or at least exert only minimal technical
pressures during 1998. Additionally, municipal bond investors
received approximately $30 billion during the March quarter in
coupon payments, bond maturities and proceeds from early
redemptions, which should serve to intensify investor demand in the
near future. With tax-exempt bond yields at already attractive yield
ratios relative to US Treasury bonds (approximately 90% at the end
of March) any further pressure on the municipal bond market may well
represent an attractive investment opportunity.
Portfolio Strategy
During the six-month period ended March 31, 1998, we continued to
follow the portfolio strategy that was adopted in the six months
ended September 30, 1997 when our outlook became positive toward the
municipal market. Since we believed that risk was biased toward
lower rather than higher interest rates, we adopted a more
aggressive investment strategy. We have essentially maintained a
fully invested position and kept cash reserves at a minimum in order
to seek to enhance the Fund's dividend income.
Looking ahead, we expect to remain fully invested during the coming
months in an effort to continue to enhance the Fund's performance.
With vigilance, we will be monitoring economic data for any signs of
either inflationary pressure or economic downturn so that we can
modify our portfolio strategy to further seek to enhance capital
preservation and total return.
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
Senior Vice President
(William R. Bock)
William R. Bock
Vice President and Portfolio Manager
April 28, 1998
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute substantially all of its
net investment income to its shareholders on a monthly basis.
However, in order to provide shareholders with a more consistent
yield to the current trading price of shares of Common Stock of the
Fund, the Fund may at times pay out less than the entire amount of
net investment income earned in any particular month and may at
times in any month pay out such accumulated but undistributed income
in addition to net investment income earned in that month. As a
result, the dividends paid by the Fund for any particular month may
be more or less than the amount of net investment income earned by
the Fund during such month. The Fund's current accumulated but
undistributed net investment income, if any, is disclosed in the
Statement of Assets, Liabilities and Capital, which comprises part
of the Financial Information included in this report.
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
IDA Industrial Development Authority
INFLOS Inverse Floating Rate Municipal Bonds
PCR Pollution Control Revenue Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
MuniInsured Fund, Inc.
March 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <S> <C>
Alaska--2.7% AAA Aaa $1,000 Alaska State Housing Finance Corporation, RITR, Series 2,
7.62% due 12/01/2024 (b)(f)(g) $ 1,078
AAA Aaa 1,000 Ketchikan, Alaska, Municipal Utility Revenue Bonds, Series R,
6.65% due 12/01/2012 (e) 1,108
Arizona--0.7% A1+ P1 500 Coconino County, Arizona, Pollution Control Corporation, Public
Service Revenue Bonds (Navajo Project), VRDN, AMT, Series A,
3.80% due 10/01/2029 (c) 500
A1+ P1 100 Pinal County, Arizona, IDA, PCR (Magma Copper/Newmont
Mining Corp.), VRDN, 3.65% due 12/01/2009 (c) 100
California AAA Aaa 1,000 Anaheim, California, Public Finance Authority, Lease Revenue
- --20.8% Bonds (Public Improvement Project), Senior Series A,
5% due 3/01/2037 (e) 962
AAA Aaa 1,405 California Educational Facilities Authority Revenue Bonds
(Loyola Marymount University), Series 1996, 5.90% due
10/01/2021 (b) 1,505
AAA Aaa 1,500 California HFA, Home Mortgage Revenue Bonds, Series F,
6% due 8/01/2017 (b) 1,584
AAA Aaa 3,025 California State Revenue Refunding Bonds, 5.375% due
6/01/2026 (d) 3,071
AAA Aaa 2,670 California State Variable Purpose Bonds, 5.90% due 3/01/2025 (a) 2,849
AAA Aaa 1,000 Los Angeles, California, Harbor Department Revenue Bonds,
RITR, AMT, 8.445% due 11/01/2026 (b)(f) 1,250
AAA Aaa 1,605 Los Angeles County, California, Metropolitan Transportation
Authority, Sales Tax Revenue Bonds (Proposition A--First Tier),
Senior Series A, 6% due 7/01/2026 (b) 1,735
AAA Aaa 1,000 San Francisco, California, Bay Area Rapid Transit District, Sales
Tax Revenue Bonds, 5.50% due 7/01/2020 (d) 1,027
AAA Aaa 1,000 San Joaquin Hills, California, Transportation Corridor Agency,
Toll Road Revenue Refunding Bonds, Series A, 5.25% due
1/15/2030 (b) 1,000
AAA Aaa 2,000 Santa Clara, California, Electric Revenue Refunding Bonds,
Series A, 5% due 7/01/2027 (a) 1,937
Colorado--1.4% AAA Aa2 1,000 Colorado Springs, Colorado, Utilities Revenue Bonds, Series A,
6.10% due 11/15/2005 (h) 1,114
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 1,060
</TABLE>
MuniInsured Fund, Inc.
March 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <S> <C>
Illinois--15.5% AAA Aaa $2,000 Chicago, Illinois, Board of Education (Chicago School Reform),
UT, 5.75% due 12/01/2020 (a) $ 2,119
AAA Aaa 1,000 Chicago, Illinois, Wastewater Transmission Revenue Bonds,
6.375% due 1/01/2005 (b)(h) 1,133
AAA Aaa 1,000 Decatur, Illinois, Hospital Revenue Refunding Bonds (Decatur
Memorial Hospital), Series A, 7.75% due 10/01/2021 (b) 1,118
AA Aa3 1,000 Illinois HDA, Homeowner Mortgage Revenue Bonds, Sub-Series
D-1, 6.40% due 8/01/2017 1,058
AAA Aaa 3,000 Illinois Health Facilities Authority Revenue Bonds (Ingalls Health
System Project), 6.25% due 5/15/2024 (b) 3,286
AAA Aaa 1,000 Regional Transportation Authority, Illinois, GO, UT, Series C,
7.75% due 6/01/2020 (d) 1,353
AAA Aaa 2,180 Waukegan, Illinois, GO, UT, Series A, 6.75% due 11/15/2013 (d) 2,484
Indiana--3.2% AAA Aaa 1,360 Hammond, Indiana, Multi-School Building Corp., Revenue
Refunding Bonds (First Mortgage), 6.125% due 7/15/2019 (b) 1,494
AAA NR* 1,000 Indiana Bond Bank Revenue Bonds (State Revolving Fund
Program), Series A, 6.75% due 2/01/2017 1,133
Kansas--3.4% AAA Aaa 2,500 Burlington, Kansas, PCR, Refunding (Kansas Gas and Electric
Company Project), 7% due 6/01/2031 (b) 2,726
Kentucky--2.9% AAA Aaa 2,500 Louisville and Jefferson County, Kentucky, Sewer and Drain
System Revenue Bonds (Metropolitan Sewer District), Series A,
4.75% due 5/15/2028 (d) 2,326
Maine--1.3% AA Aa2 1,000 Maine State Housing Authority, Mortgage Purchase Revenue
Bonds, AMT, Series C-2, 6.875% due 11/15/2023 1,069
Maryland--0.5% A1+ VMIG1++ 400 University of Maryland, University Revenue Bonds (Equipment
Loan Program), VRDN, Series A, 3.65% due 7/01/2015 (c) 400
Massachusetts AAA Aaa 955 Massachusetts Education Loan Authority, Educational Loan
- --7.2% Revenue Bonds, AMT, Issue E, Series A, 7.375% due 1/01/2012 (a) 1,035
A+ Aa 970 Massachusetts State, HFA, S/F Housing Revenue Bonds,
AMT, Series 32, 6.60% due 12/01/2026 1,030
AAA Aaa 3,985 Massachusetts State Turnpike Authority, Metropolitan
Highway System Revenue Bonds, Series A, 5% due 1/01/2037 (b) 3,808
Michigan--1.8% AAA Aaa 1,000 Michigan State Hospital Finance Authority, Revenue Refunding
Bonds (Oakwood Obligations Group), Series A, 5% due
8/15/2031 (e) 947
NR* P1 500 Michigan State Strategic Fund, PCR, Refunding (Consumers
Power Project), VRDN, Series A, 3.70% due 4/15/2018 (c) 500
Nevada--0.2% A1+ P1 200 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra
Pacific Power Co. Project), VRDN, AMT, 3.80% due 12/01/2020 (c) 200
New York--2.3% AAA Aaa 1,500 New York City, New York, City Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds, RITR, 7.345% due
6/15/2026 (b)(f) 1,652
BBB+ A3 160 New York City, New York, GO, UT, Series F, 7.625% due 2/01/2015 179
Oregon--7.4% A1 VMIG1++ 4,000 Medford, Oregon, Hospital Facilities Authority Revenue Bonds
(Gross-Rogue Valley Health Services), VRDN, 3.70% due
10/01/2016 (c) 4,000
AA Aa2 1,000 Oregon State Veterans Welfare Bonds, Series 77, 5.30% due
10/01/2029 1,000
AAA Aaa 1,000 Port of Portland, Oregon, International Airport Revenue Bonds
(Portland International Airport), AMT, Series 11, 5.625% due
7/01/2026 (d) 1,033
</TABLE>
MuniInsured Fund, Inc.
March 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <S> <C>
Texas--8.4% AAA Aaa $1,150 Brazos River Authority, Texas, Revenue Refunding Bonds
(Houston Light and Power), Series A, 6.70% due 3/01/2017 (a) $ 1,257
AAA Aaa 1,500 Dallas-Fort Worth, Texas, Regional Airport Revenue Refunding
Bonds (JT Dallas-Fort Worth International), AMT, 5.75% due
11/01/2024 (b) 1,539
AAA Aaa 1,500 Harris County, Texas, Health Facilities Development Corp.,
Hospital Revenue Bonds, RITR, Series 12, 8.62% due
10/01/2024 (b)(f) 1,871
AAA Aaa 1,000 Houston, Texas, Airport System Revenue Bonds (Sub-Lien), AMT,
Series A, 6.75% due 7/01/2021 (d) 1,080
A+ A2 1,000 Port Corpus Christi Authority, Texas, Nueces County, PCR
(Hoechst Celanese Corporation Project), AMT, 6.875% due
4/01/2017 1,093
Utah--4.4% AAA Aaa 3,000 Salt Lake City, Utah, Hospital Revenue Refunding Bonds
(IHC Hospitals, Inc.), INFLOS, 9.716% due 5/15/2020 (a)(f) 3,544
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) 1,069
AA+ Aa1 1,000 Series J, Sub-Series J-2, 6.75% due 7/01/2017 1,076
Washington--9.6% AAA Aaa 2,275 Tacoma, Washington, Sewer Revenue Bonds, Series B, 6.375%
due 12/01/2015 (d) 2,490
AAA Aaa 2,240 Washington State, COP, 5.80% due 10/01/2015 (a) 2,361
AAA Aaa 1,520 Washington State Health Care Facilities Authority, Revenue
Refunding Bonds (Catholic Health Initiatives), Series A,
5.125% due 12/01/2021 (b) 1,482
AAA Aaa 1,500 Washington State Public Power Supply Systems, Revenue
Refunding Bonds (Nuclear Project No. 1), Series B, 5.125%
due 7/01/2017 (a) 1,474
West Virginia AAA Aaa 1,500 Harrison County, West Virginia, Commonwealth Solid Waste
- --2.1% Disposal Revenue Bonds (Monongahela Power), AMT, Series C,
6.75% due 8/01/2024 (a) 1,680
Wisconsin--1.5% AAA Aaa 1,120 Wisconsin Public Power Inc., Power Supply System Revenue
Bonds, Series A, 6% due 7/01/2015 (b) 1,216
Total Investments (Cost--$76,701)--101.2% 82,195
Liabilities in Excess of Other Assets--(1.2%) (969)
-------
Net Assets--100.0% $81,226
=======
<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, 1998.
(d)FGIC Insured.
See Notes to Financial Statements.
(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, 1998.
(g)FNMA/GNMA Collateralized.
(h)Prerefunded.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
</TABLE>
MuniInsured Fund, Inc.
March 31, 1998
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of March 31, 1998
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$76,701,217) (Note 1a) $ 82,194,699
Cash 1,347
Receivables:
Securities sold $ 2,148,972
Interest 1,280,521 3,429,493
------------
Prepaid expenses and other assets 27,322
------------
Total assets 85,652,861
------------
Liabilities: Payables:
Securities purchased 4,286,210
Dividends to shareholders (Note 1e) 55,530
Investment adviser (Note 2) 33,335 4,375,075
------------
Accrued expenses and other liabilities 51,700
------------
Total liabilities 4,426,775
------------
Net Assets: Net assets $ 81,226,086
============
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 338,367
Undistributed realized capital gains on investments--net 71,022
Unrealized appreciation on investments--net 5,493,482
------------
Total capital--Equivalent to $10.05 net asset value per share of Common
Stock (market price--$9.1875) $ 81,226,086
============
See Notes to Financial Statements.
</TABLE>
MuniInsured Fund, Inc.
March 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations for the Six Months Ended March 31, 1998
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 2,338,175
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 203,083
Professional fees 31,330
Accounting services (Note 2) 24,505
Transfer agent fees 16,534
Directors' fees and expenses 12,456
Printing and shareholder reports 6,059
Listing fees 5,159
Pricing fees 4,256
Custodian fees 3,053
Other 7,454
------------
Total expenses 313,889
------------
Investment income--net 2,024,286
------------
Realized & Realized gain on investments--net 943,583
Unrealized Gain on Change in unrealized appreciation on investments--net 524,238
Investments--Net ------------
(Notes 1b, 1d & 3): Net Increase in Net Assets Resulting from Operations $ 3,492,107
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
March 31, September 30,
Increase (Decrease) in Net Assets: 1998 1997
<S> <S> <C> <C>
Operations: Investment income--net $ 2,024,286 $ 4,085,429
Realized gain on investments--net 943,583 1,031,451
Change in unrealized appreciation on investments--net 524,238 1,532,475
------------ ------------
Net increase in net assets resulting from operations 3,492,107 6,649,355
------------ ------------
Dividends & Investment income--net (2,022,392) (4,083,840)
Distributions to Realized gain on investments--net (1,206,851) (518,066)
Shareholders ------------ ------------
(Note 1e): Net decrease in net assets resulting from dividends and
distributions to shareholders (3,229,243) (4,601,906)
------------ ------------
Net Assets: Total increase in net assets 262,864 2,047,449
Beginning of period 80,963,222 78,915,773
------------ ------------
End of period* $ 81,226,086 $ 80,963,222
============ ============
<FN>
*Undistributed investment income--net $ 338,367 $ 336,473
============ ============
See Notes to Financial Statements.
</TABLE>
MuniInsured Fund, Inc.
March 31, 1998
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended
March 31, For the Year Ended September 30,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 10.02 $ 9.77 $ 9.64 $ 9.50 $ 10.72
Operating ------- ------- ------- ------- -------
Performance: Investment income--net .25 .51 .51 .52 .57
Realized and unrealized gain (loss) on
investments--net .18 .31 .13 .34 (.99)
------- ------- ------- ------- -------
Total from investment operations .43 .82 .64 .86 (.42)
------- ------- ------- ------- -------
Less dividends and distributions:
Investment income--net (.25) (.51) (.51) (.53) (.57)
Realized gain on investments--net (.15) (.06) -- (.19) (.23)
In excess of realized gain on
investments--net -- -- -- --++++ --
------- ------- ------- ------- -------
Total dividends and distributions (.40) (.57) (.51) (.72) (.80)
------- ------- ------- ------- -------
Net asset value, end of period $ 10.05 $ 10.02 $ 9.77 $ 9.64 $ 9.50
======= ======= ======= ======= =======
Market price per share, end of period $9.1875 $ 9.50 $ 8.75 $ 8.75 $ 8.75
======= ======= ======= ======= =======
Total Investment Based on market price per share .81%++ 15.73% 5.91% 8.46% (12.93%)
Return:** ======= ======= ======= ======= =======
Based on net asset value per share 4.55%++ 9.33% 7.34% 10.06% (4.10%)
======= ======= ======= ======= =======
Ratios to Average Expenses .77%* .78% .78% .79% .77%
Net Assets: ======= ======= ======= ======= =======
Investment income--net 4.98%* 5.15% 5.15% 5.55% 5.58%
======= ======= ======= ======= =======
Supplemental Net assets, end of period (in thousands) $81,226 $80,963 $78,916 $77,858 $76,662
Data: ======= ======= ======= ======= =======
Portfolio turnover 39.72% 73.22% 94.61% 83.52% 47.17%
======= ======= ======= ======= =======
<FN>
*Annualized.
**Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, may result
in substantially different returns. Total investment returns exclude
the effects of sales loads.
++Aggregate total investment return.
++++Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
MuniInsured Fund, Inc.
March 31, 1998
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.
* Financial futures contracts--The Fund may purchase or sell financial
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).
MuniInsured Fund, Inc.
March 31, 1998
NOTES TO FINANCIAL STATEMENTS (concluded)
(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"). 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, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended March 31, 1998 were $31,051,025 and
$32,284,547, respectively.
Net realized gains for the six months ended March 31, 1998 and net
unrealized gains as of March 31, 1998 were as follows:
Realized Unrealized
Gains Gains
Long-term investments $943,583 $5,493,482
-------- ----------
Total $943,583 $5,493,482
======== ==========
As of March 31, 1998, net unrealized appreciation for Federal income
tax purposes aggregated $5,493,482, of which $5,505,285 related to
appreciated securities and $11,803 related to depreciated
securities. The aggregate cost of investments at March 31, 1998 for
Federal income tax purposes was $76,701,217.
4. Common Stock Transactions:
At March 31, 1998, the Fund had one class of shares of Common Stock,
par value $.10 per share, of which 150,000,000 shares were
authorized. Shares issued and outstanding during the six months
ended March 31, 1998 and the year ended September 30, 1997 remained
constant.
5. Subsequent Event:
On April 8, 1998, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$.041880 per share, payable on April 29, 1998 to shareholders of
record as of April 22, 1998.
MuniInsured Fund, Inc.
March 31, 1998
QUALITY PROFILE
The quality ratings of securities in the Fund as of March 31, 1998
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 83.5%
AA/Aa 9.1
A/A 1.6
Other* 7.0
[FN]
*Temporary investments in short-term securities.
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
Vincent R. Giordano, Senior Vice President
William R. Bock, Vice President
Donald C. Burke, Vice President
Gerald M. Richard, Treasurer
Patrick D. Sweeney, Secretary
Custodian
State Street Bank and Trust Company
One Heritage Drive, P2N
North Quincy, MA 02171
Transfer Agent
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02101
(617) 328-5000
ASE Symbol
MIF
