MuniInsured
Fund, Inc.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
March 31, 2000
<PAGE>
MuniInsured Fund, Inc.
DEAR SHAREHOLDER
For the six months ended March 31, 2000, MuniInsured Fund, Inc. earned $0.230
per share income dividends, which included earned and unpaid dividends of
$0.039. This represents a net annualized yield of 5.00%, based on a month-end
per share net asset value of $9.15. Over the same period, the Fund's total
investment return was +1.92%, based on a change in per share net asset value
from $9.27 to $9.15, and assuming reinvestment of $0.228 per share ordinary
income dividends and $0.020 per share capital gains distributions.
The Municipal Market Environment
Since October 1, 1999 through mid-January 2000, fixed-income bond yields rose
steadily higher. US economic growth, in part intensified by Year 2000
preparations, grew at a 7.3% rate in the fourth quarter of 1999 and at a 4.2%
annual rate for all of 1999. Current estimates for first quarter 2000 economic
growth are in the 4.5%-5.5% range. However, despite these significant growth
rates, no price measure indicator has shown any considerable signs of future
price pressure at either the consumer level or from labor, despite the lowest
unemployment rates since January 1970. Given no signs of an economic slowdown,
the Federal Reserve Board continued to raise short-term interest rates in
November 1999 and again in February and March 2000. In each instance the Federal
Reserve Board cited both the continued growth of US employment and the
impressive strength of the US equity markets as reasons for attempting to
moderate US economic growth before inflationary price increases are realized. By
mid-January 2000, US Treasury bond yields had risen almost 70 basis points
(0.70%) to 6.75%. Similarly, as measured by the Bond Buyer Revenue Bond Index,
long-term tax-exempt bond yields rose nearly 40 basis points to 6.35%.
Since mid-January, fixed-income markets have largely ignored continued strong
economic fundamentals and concentrated on very positive technical supply
factors. Declining bond issuance, both current and, more importantly, expected
future issuance, helped push bond yields lower in February and March 2000. In
late January and early February 2000, the US Treasury announced it intended to
reduce the number of issues to be auctioned in the quarterly Treasury note and
bond auctions. Furthermore, budgetary surpluses would also allow the US Treasury
to repurchase outstanding, higher-couponed Treasury issues, primarily in the
15-year and longer-term maturity sector. Both these actions would result in a
significant reduction in the outstanding supply of long-term US Treasury debt.
Domestic and international investors quickly began to accumulate what was
expected to become a scarce commodity, and bond prices quickly rose. By March
31, 2000, US Treasury bond yields had declined 60 basis points to 5.83%. The
dramatic decline in long-term US Treasury bond yields resulted in an inverted
taxable yield curve as short-term and intermediate-term interest rates have not
fallen proportionately since the Federal Reserve Board is expected to continue
to raise short-term interest rates. The current inversion has had more to do
with debt reduction and Treasury buybacks than with investor expectations of
slower economic growth. Over the last six months, long-term US Treasury bond
yields have fallen more than 20 basis points.
Tax-exempt bond yields have also declined in recent months. The decline has
largely been in response to the rally in US Treasury securities, as well as a
continued positive technical supply environment. States such as California and
Maryland have announced that their large current and anticipated future budget
surpluses will permit the cancellation or postponement of expected bond
issuance. Additionally, some issuers have also initiated tenders to repurchase
existing debt, reducing the supply of tax-exempt bonds in the secondary market
as well. Since their recent peak in January 2000, long-term municipal bond
yields declined over 30 basis points to finish the six-month period ended March
31, 2000 at 6.03%. During the last six months, municipal bond yields declined
overall less than 10 basis points.
The relative underperformance of the municipal bond market in recent months has
been especially
1
<PAGE>
MuniInsured Fund, Inc. March 31, 2000
disappointing given the strong technical position the tax-exempt bond market has
enjoyed. The issuance of long-term tax-exempt securities has dramatically
declined. Over the last year, $206 billion in new long-term municipal securities
was issued, a decline of almost 25% compared to the same period a year earlier.
For the three months ended March 31, 2000, approximately $40 billion in new
tax-exempt bonds was underwritten, a decline of more than 30% compared to the
March 31, 1999 quarter. Although investors received over $30 billion in coupon
payments, bond maturities and the proceeds from early bond redemptions, coupled
with the highest municipal bond yields in three years, overall investor demand
has diminished. Long-term municipal bond mutual funds have seen consistent
outflows in recent months as the yields of individual securities have risen
faster than those of larger, more diverse mutual funds. Over the last three
months, tax-exempt mutual funds have had net redemptions of approximately $6
billion. Also, the demand from property and casualty insurance companies has
weakened as a result of the losses and anticipated losses incurred from a series
of damaging storms across much of the eastern United States. Additionally, many
institutional investors who have in recent years been attracted to the municipal
bond market by historically attractive tax-exempt bond yield ratios of over 90%
found other asset classes even more attractive. Even with a favorable supply
position, tax-exempt municipal bond yields have underperformed their taxable
counterparts.
Any significantly lower municipal bond yields are still likely to require weaker
US employment growth and consumer spending. The actions taken in recent months
by the Federal Reserve Board, as well as those expected in May and perhaps June
2000, should eventually slow US economic growth. The recent decline in US home
sales is perhaps the first sign that consumer spending is being slowed by higher
interest rates. Until further signs develop, it is likely that the municipal
bond market's current favorable technical position will dampen significant
tax-exempt interest rate volatility and provide a stable environment for an
eventual improvement in municipal bond prices.
Portfolio Strategy
During the six-month period ended March 31, 2000, we continued to focus on
seeking to enhance the level of tax-exempt income to shareholders and to
moderate price volatility of the Fund. We continued to concentrate on the
acquisition of larger couponed issues in the 15-year-20-year maturity range and
the sale of long duration bonds. In response to the steepness of the municipal
bond market's yield curve, these issues represented 90%-95% of the yield
available on the long-term end of the yield curve. This maturity sector also
provided greater protection from current market volatility.
Looking ahead, we expect to maintain the Fund's fully invested position in order
to seek to enhance shareholder income. Because tax-exempt bond yields are
expected to stay in a narrow range, we do not foresee any consequential changes
to the portfolio's current structure. We plan to continue to maintain our
present investment strategy in the coming months. If either the US economy or
equity markets display any major weakness, we are prepared to adopt a more
positive position in an effort to enhance portfolio appreciation.
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,
/s/ Terry K. Glenn
Terry K. Glenn
President and Director
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ William R. Bock
William R. Bock
Vice President and Portfolio Manager
April 24, 2000
2
<PAGE>
MuniInsured Fund, Inc. March 31, 2000
PROXY RESULTS
During the six-month period ended March 31, 2000, MuniInsured Fund, Inc.'s
shareholders voted on the following proposals. The proposals were approved at a
shareholders' meeting on December 15, 1999. The description of each proposal and
number of shares voted are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. To elect the Fund's Directors: Terry K. Glenn 7,134,485 634,204
Joe Grills 7,135,575 633,113
Walter Mintz 7,131,207 637,481
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Shares Voted Shares Voted Shares Voted
For Against Abstain
- ------------------------------------------------------------------------------------------------------------------------------------
2. To ratify the selection of Deloitte & Touche LLP as the Fund's independent
auditors for the current fiscal year. 7,669,590 29,881 69,217
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</TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
State Ratings Ratings Amount Issue Value
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <S> <C>
Alaska--2.9% AAA Aaa $1,150 Alaska, Energy Authority, Power Revenue Refunding Bonds
(Bradley Lake), 4th Series, 6% due 7/01/2020 (j) $ 1,198
NR* Aaa 1,000 Alaska State Housing Finance Corporation, Revenue Refunding
Bonds, RITR, Series 2, 7.42% due 12/01/2024 (b)(f)(g)(i) 965
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California--21.0% AAA Aaa 1,405 California Educational Facilities Authority Revenue Bonds
(Loyola Marymount University), 5.90% due 10/01/2021 (b) 1,431
AAA Aaa 1,500 California HFA, Revenue Bonds, Series F, 6% due 8/01/2017 (b) 1,508
BBB+ Baa1 1,000 California Health Facilities Finance Authority, Revenue
Refunding Bonds (Catholic Healthcare West), Series A,
5% due 7/01/2028 736
AAA Aaa 3,025 California State, GO, 5.375% due 6/01/2026 (d) 2,896
A+ Aa3 3,000 Los Angeles, California, Department of Water and Power,
Electric Plant Revenue Refunding Bonds, 6.10% due 2/15/2017 3,078
NR* Aaa 1,000 Los Angeles, California, Harbor Department Revenue Bonds,
RITR, AMT, Series RI-7, 8.045% due 11/01/2026 (b)(f) 1,064
AAA Aaa 1,450 Los Angeles County, California, Metropolitan Transportation
Authority, Sales Tax Revenue Refunding Bonds (Property A),
First Tier, Senior Series A, 5.25% due 7/01/2016 (b) 1,425
AAA Aaa 2,145 Port Oakland, California, Revenue Bonds, AMT, Series K,
5.75% due 11/01/2021 (d) 2,137
AAA Aaa 1,300 San Bernardino County, California, COP, Refunding (Medical
Center Financing Project), 5.50% due 8/01/2019 (b) 1,273
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</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
HDA Housing Development Authority
HFA Housing Finance Agency
IDR Industrial Development Revenue Bonds
PCR Pollution Control Revenue Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
VRDN Variable Rate Demand Notes
3
<PAGE>
MuniInsured Fund, Inc. March 31, 2000
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
State Ratings Ratings Amount Issue Value
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <S> <C>
Colorado--3.4% NR* Aaa $1,000 Colorado Health Facilities Authority, Hospital Revenue
Refunding Bonds (Poudre Valley Health Care), Series A,
5.75% due 12/01/2023 (j) $ 988
AAA VMIG1+ 100 Moffat County, Colorado, PCR, Refunding (Pacificorp Projects),
VRDN, 3.85% due 5/01/2013 (a)(c) 100
A1 NR* 1,400 Pitkin County, Colorado, IDR, Refunding (Aspen Skiing Company
Project), VRDN, AMT, Series B, 4% due 4/01/2014 (c) 1,400
- -----------------------------------------------------------------------------------------------------------------------------------
Connecticut--3.4% AAA Aaa 1,750 Bridgeport, Connecticut, GO, Refunding, Series A, 5.875%
due 7/15/2019 (d) 1,775
AA Aa2 755 Connecticut State, HFA, Revenue Refunding Bonds (Housing
Mortgage Finance Program), AMT, Series A, Sub-Series A-2,
6.45% due 5/15/2022 764
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Illinois--12.7% AAA Aaa 2,000 Chicago, Illinois, Board of Education, GO (Chicago School Reform),
5.75% due 12/01/2020 (a) 1,985
AAA Aaa 1,000 Chicago, Illinois, Wastewater Transmission Revenue Bonds,
6.375% due 1/01/2005 (b)(h) 1,077
AAA Aaa 1,000 Decatur, Illinois, Hospital Revenue Refunding Bonds (Decatur
Memorial Hospital), Series A, 7.75% due 10/01/2021 (b) 1,060
AA Aa2 1,000 Illinois HDA, Homeowner Mortgage Revenue Bonds, Sub-Series
D-1, 6.40% due 8/01/2017 1,010
AAA Aaa 3,000 Illinois Health Facilities Authority, Revenue Refunding Bonds
(Ingalls Health System Project), 6.25% due 5/15/2024 (b) 3,042
AAA Aaa 1,000 Regional Transportation Authority, Illinois, Revenue Bonds,
Series C, 7.75% due 6/01/2020 (d) 1,243
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Indiana--3.4% AAA Aaa 1,360 Hammond, Indiana, Multi-School Building Corporation, Revenue
Refunding Bonds, First Mortgage, 6.125% due 7/15/2019 (b) 1,400
AAA NR* 1,000 Indiana Bond Bank Revenue Bonds (State Revolving Fund
Program), Series A, 6.75% due 2/01/2017 1,080
- -----------------------------------------------------------------------------------------------------------------------------------
Kansas--3.5% AAA Aaa 2,500 Burlington, Kansas, PCR, Refunding (Kansas Gas and Electric
Company Project), 7% due 6/01/2031 (b) 2,607
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Maine--0.8% AA Aa2 565 Maine State Housing Authority, Mortgage Purchase Revenue
Bonds, AMT, Series C-2, 6.875% due 11/15/2023 585
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Massachusetts--3.3% AAA Aaa 785 Massachusetts Education Loan Authority, Education Loan
Revenue Bonds, AMT, Issue E, Series A, 7.375% due 1/01/2012 (a) 828
AAA Aaa 1,500 Massachusetts State, GO, Consolidated Loan, Series B, 5.875%
due 8/01/2004 (d)(h) 1,586
- -----------------------------------------------------------------------------------------------------------------------------------
Michigan--0.4% A1+ VMIG1+ 100 University of Michigan, University Hospital Revenue Bonds,
VRDN, Series A, 3.85% due 12/01/2027 (c) 100
A1+ VMIG1+ 200 University of Michigan, University Revenue Bonds (Medical
Service Plan), VRDN, Series A, 3.85% due 12/01/2027 (c) 200
- -----------------------------------------------------------------------------------------------------------------------------------
New York--5.2% AAA Aaa 1,450 Metropolitan Transportation Authority, New York, Commuter
Facilities Revenue Bonds, Series A, 6% due 7/01/2016 (d) 1,500
AAA Aaa 1,500 New York City, New York, City Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds, RITR, Series FR-6,
7.145% due 6/15/2026 (b)(f) 1,472
AAA Aaa 1,000 New York State Dormitory Authority, Revenue Refunding Bonds
(Mental Health Services Facilities Improvement), Series D,
5% due 2/15/2023 (b) 884
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Ohio--1.3% AAA Aaa 1,000 Ohio HFA, Mortgage Revenue Refunding Bonds (Residential),
AMT, Series C, 5.75% due 9/01/2030 (e) 957
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Oregon--0.4% NR* VMIG1+ 300 Oregon State Health, Housing, Educational and Cultural
Facilities Authority Revenue Bonds (Guide Dogs for the Blind),
VRDN, Series A, 3.95% due 7/01/2025 (c) 300
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</TABLE>
4
<PAGE>
MuniInsured Fund, Inc. March 31, 2000
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
State Ratings Ratings Amount Issue Value
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <S> <C>
Pennsylvania--5.6% NR* Aaa $2,725 Allegheny County, Pennsylvania, COP, 5% due 12/01/2024 (a) $ 2,399
AAA Aaa 2,000 Pittsburgh and Allegheny Counties, Pennsylvania, Public
Auditorium Revenue Bonds (Hotel Room), 5% due 2/01/2024 (a) 1,766
- -----------------------------------------------------------------------------------------------------------------------------------
Tennessee--3.3% AAA Aaa 2,400 Memphis-Shelby County, Tennessee, Airport Authority, Airport
Revenue Bonds, AMT, Series D, 6% due 3/01/2024 (a) 2,409
- -----------------------------------------------------------------------------------------------------------------------------------
Texas--9.3% AAA Aaa 1,150 Brazos River Authority, Texas, Revenue Refunding Bonds
(Houston Light and Power), Series A, 6.70% due 3/01/2017 (a) 1,202
AAA Aaa 1,500 Dallas-Fort Worth, Texas, Regional Airport Revenue Refunding
Bonds (Joint Dallas-Fort Worth International), AMT, 5.75%
due 11/01/2024 (b) 1,454
AAA Aaa 3,000 Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds (Hermann Hospital Project), 6.375%
due 10/01/2004 (b)(h) 3,203
AAA Aaa 1,000 Houston, Texas, Airport System Revenue Bonds, AMT, Sub-Lien,
Series A, 6.75% due 7/01/2021 (d) 1,040
- -----------------------------------------------------------------------------------------------------------------------------------
Washington--14.8% AAA Aaa 2,000 Port Seattle, Washington, Passenger Facility Charge Revenue
Bonds, Series A, 5% due 12/01/2023 (b) 1,763
AAA Aaa 1,720 Seattle, Washington, Drain and Wastewater Utility Revenue
Bonds, 5.75% due 11/01/2029 (b) 1,691
AAA Aaa 2,000 Seattle, Washington, Water System Revenue Bonds, Series B,
due 7/01/2029 (d) 2,026
AAA Aaa 2,275 Tacoma, Washington, Sewer Revenue Bonds, Series B, 6.375%
due 12/01/2015 (d) 2,397
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) 1,353
NR* Aaa 1,630 Washington State Housing Finance Commission Revenue Bonds
(S/F Program), AMT, Series 1A, 6.40% due 12/01/2019 (e)(i) 1,666
- -----------------------------------------------------------------------------------------------------------------------------------
West Virginia--2.2% AAA Aaa 1,500 Harrison County, West Virginia, County Commission for Solid
Waste Disposal Revenue Bonds (Monongahela Power), AMT,
Series C, 6.75% due 8/01/2024 (a) 1,602
- -----------------------------------------------------------------------------------------------------------------------------------
Wisconsin--1.6% AAA Aaa 1,120 Wisconsin Public Power Inc., Power Supply System Revenue
Bonds, Series A, 6% due 7/01/2015 (b) 1,158
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Total Investments (Cost--$72,278)--98.5% 72,783
Other Assets Less Liabilities--1.5% 1,111
-------
Net Assets--100.0% $73,894
=======
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</TABLE>
(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,
2000.
(d) FGIC Insured.
(e) GNMA Collateralized.
(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, 2000.
(g) FHA Insured.
(h) Prerefunded.
(i) FNMA Collateralized.
(j) FSA Insured.
* Not Rated.
+ Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
5
<PAGE>
MuniInsured Fund, Inc. March 31, 2000
FINANCIAL INFORMATION
Statement of Assets, Liabilities and Capital as of March 31, 2000
<TABLE>
<S> <C> <C>
Assets: Investments, at value (identified cost--$72,278,383) ........................... $ 72,782,604
Cash ........................................................................... 46,472
Receivables:
Securities sold .............................................................. $ 3,255,605
Interest ..................................................................... 1,231,277 4,486,882
------------
Prepaid expenses and other assets .............................................. 22,210
------------
Total assets ................................................................... 77,338,168
------------
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Liabilities: Payables:
Securities purchased ......................................................... 3,320,455
Dividends to shareholders .................................................... 44,337
Investment adviser ........................................................... 28,025 3,392,817
------------
Accrued expenses and other liabilities ......................................... 51,810
------------
Total liabilities .............................................................. 3,444,627
------------
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Net Assets: Net assets ..................................................................... $ 73,893,541
============
- -----------------------------------------------------------------------------------------------------------------------------------
Capital: Common Stock, par value $.10 per share; 150,000,000 shares authorized;
8,079,388 shares issued and outstanding ........................................ $ 807,939
Paid-in capital in excess of par ............................................... 74,515,276
Undistributed investment income--net ........................................... 338,666
Accumulated realized capital losses on investments--net ........................ (1,947,464)
Accumulated distributions in excess of realized capital gains
on investments--net ............................................................ (325,097)
Unrealized appreciation on investments--net .................................... 504,221
------------
Total capital--Equivalent to $9.15 net asset value per share of
Common Stock (market price--$7.625) ............................................ $ 73,893,541
============
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
MuniInsured Fund, Inc. March 31, 2000
FINANCIAL INFORMATION (continued)
Statement of Operations for the Six Months Ended March 31, 2000
<TABLE>
<S> <C> <C>
Investment Income: Interest and amortization of premium and discount earned ................... $ 2,161,647
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fees ................................................... $184,629
Professional fees .......................................................... 26,898
Transfer agent fees ........................................................ 16,730
Accounting services ........................................................ 15,763
Directors' fees and expenses ............................................... 12,537
Printing and shareholder reports ........................................... 10,190
Listing fees ............................................................... 5,220
Pricing fees ............................................................... 4,584
Custodian fees ............................................................. 3,069
Other ...................................................................... 6,960
--------
Total expenses ............................................................. 286,580
-----------
Investment income--net ..................................................... 1,875,067
-----------
- -----------------------------------------------------------------------------------------------------------------------------------
Realized & Unrealized Realized loss on investments--net .......................................... (1,788,567)
Gain (Loss) on Change in unrealized appreciation/depreciation on investments--net ......... 923,525
Investments--Net: -----------
Net Increase in Net Assets Resulting from Operations ....................... $ 1,010,025
===========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
March 31, September 30,
Increase (Decrease) in Net Assets: 2000 1999
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations: Investment income--net ................................................... $ 1,875,067 $ 3,784,514
Realized gain (loss) on investments--net ................................. (1,788,567) 770,017
Change in unrealized appreciation/depreciation on investments--net ....... 923,525 (7,605,314)
------------ ------------
Net increase (decrease) in net assets resulting from operations .......... 1,010,025 (3,050,783)
------------ ------------
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends & Investment income--net ................................................... (1,841,349) (3,813,859)
Distributions to Realized gain on investments--net ........................................ (158,897) (1,181,313)
Shareholders: In excess of realized gain on investments--net ........................... -- (325,097)
------------ ------------
Net decrease in net assets resulting from dividends and distributions
to shareholders .......................................................... (2,000,246) (5,320,269)
------------ ------------
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets: Total decrease in net assets ............................................. (990,221) (8,371,052)
Beginning of period ...................................................... 74,883,762 83,254,814
------------ ------------
End of period* ........................................................... $ 73,893,541 $ 74,883,762
============ ============
- -----------------------------------------------------------------------------------------------------------------------------------
* Undistributed investment income--net ..................................... $ 338,666 $ 304,948
============ ============
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
MuniInsured Fund, Inc. March 31, 2000
FINANCIAL INFORMATION (concluded)
Financial Highlights
<TABLE>
<CAPTION>
For the
The following per share data and ratios have been derived Six Months For the Year Ended
from information provided in the financial statements. Ended September 30,
March 31, --------------------------------------
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ................ $ 9.27 $ 10.30 $ 10.02 $ 9.77 $ 9.64
Operating ------- ------- ------- ------- -------
Performance: Investment income--net .............................. .23 .47 .50 .51 .51
Realized and unrealized gain (loss) on
investments--net .................................... (.10) (.84) .43 .31 .13
------- ------- ------- ------- -------
Total from investment operations .................... .13 (.37) .93 .82 .64
------- ------- ------- ------- -------
Less dividends and distributions:
Investment income--net ............................ (.23) (.47) (.50) (.51) (.51)
Realized gain on investments--net ................. (.02) (.15) (.15) (.06) --
In excess of realized gain on investments--net .... -- (.04) -- -- --
------- ------- ------- ------- -------
Total dividends and distributions ................... (.25) (.66) (.65) (.57) (.51)
------- ------- ------- ------- -------
Net asset value, end of period ...................... $ 9.15 $ 9.27 $ 10.30 $ 10.02 $ 9.77
======= ======= ======= ======= =======
Market price per share, end of period ............... $ 7.625 $ 8.00 $9.8125 $ 9.50 $ 8.75
======= ======= ======= ======= =======
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on market price per share ..................... (1.58%)+ (12.58%) 10.55% 15.73% 5.91%
Return:** ======= ======= ======= ======= =======
Based on net asset value per share .................. 1.92%+ (3.49%) 10.02% 9.33% 7.34%
======= ======= ======= ======= =======
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses ............................................ .77%* .78% .77% .78% .78%
Net Assets: ======= ======= ======= ======= =======
Investment income--net .............................. 5.06%* 4.74% 4.96% 5.15% 5.15%
======= ======= ======= ======= =======
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, end of period (in thousands) ............ $73,894 $74,884 $83,255 $80,963 $78,916
Data: ======= ======= ======= ======= =======
Portfolio turnover .................................. 39.73% 71.48% 53.14% 73.22% 94.61%
======= ======= ======= ======= =======
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</TABLE>
* 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
charges.
+ Aggregate total investment return.
See Notes to Financial Statements.
8
<PAGE>
MuniInsured Fund, Inc. March 31, 2000
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's financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, which may require
the use of management accruals and estimates. 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. 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 written or purchased are valued at the last
sale price in the case of exchange-traded options. In the case of options traded
in the over-the-counter market, valuation is the last asked price (options
written) or the last bid price (options purchased). Securities with remaining
maturities of sixty days or less are valued at amortized cost, which
approximates market value. Securities and assets 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
investment strategies to increase or decrease the level of risk to which the
Fund is exposed more quickly and efficiently than transactions in other types of
instruments. Losses may arise due to changes in the value of the contract or if
the counterparty does not perform under the contract.
o Financial futures contracts--The Fund may purchase or sell financial futures
contracts and options on such futures contracts 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.
o Options--The Fund is authorized to write covered call options and purchase put
and call 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.
(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.
9
<PAGE>
MuniInsured Fund, Inc. March 31, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
(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 post-October losses.
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, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended March 31, 2000, were $28,941,023 and $27,254,865, respectively.
Net realized losses for the six months ended March 31, 2000 and net unrealized
gains as of March 31, 2000, were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Losses Gains
- --------------------------------------------------------------------------------
Long-term investments ................... $(1,542,998) $ 504,221
Financial futures contracts ............. (245,569) --
----------- -----------
Total ................................... $(1,788,567) $ 504,221
=========== ===========
- --------------------------------------------------------------------------------
As of March 31, 2000, net unrealized appreciation for Federal income tax
purposes aggregated $504,221, of which $1,650,434 related to appreciated
securities and $1,146,213 related to depreciated securities. The aggregate cost
of investments at March 31, 2000 for Federal income tax purposes was
$72,278,383.
4. Common Stock Transactions:
At March 31, 2000, 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, 2000 and for the year ended
September 30, 1999 remained constant.
5. Subsequent Event:
On April 6, 2000, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.039384 per share,
payable on April 27, 2000 to shareholders of record as of April 17, 2000.
QUALITY PROFILE
The quality ratings of securities in the Fund as of March 31, 2000 were as
follows:
- --------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
- --------------------------------------------------------------------------------
AAA/Aaa ............................................................ 87.3%
AA/Aa .............................................................. 7.4
BBB/Baa ............................................................ 1.0
Other* ............................................................. 2.8
- --------------------------------------------------------------------------------
* Temporary investments in short-term municipal securities.
10
<PAGE>
MuniInsured Fund, Inc. March 31, 2000
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute all or a portion of its net
investment income to its shareholders on a monthly basis. 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.
ABOUT INVERSE FLOATERS
As a part of its investment strategy, the Fund may invest in certain securities
whose potential income return is inversely related to changes in a floating
interest rate ("inverse floaters"). In general, income on inverse floaters will
decrease when short-term rates increase and increase when short-term rates
decrease. Investments in inverse floaters may be characterized as derivative
securities and may subject the Fund to the risks of reduced or eliminated
interest payments and losses of invested principal. In addition, inverse
floaters have the effect of providing investment leverage and, as a result, the
market value of such securities will generally be more volatile than that of
fixed-rate, tax-exempt securities. To the extent the Fund invests in inverse
securities, the market value of the Fund's portfolio and the net asset value of
the Fund's shares may also be more volatile than if the Fund did not invest in
these securities.
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
Joe Grills, Director
Walter Mintz, Director
Robert S. Salomon Jr., Director
Melvin R. Seiden, Director
Stephen B. Swensrud, Director
Arthur Zeikel, Director
Vincent R. Giordano, Senior Vice President
William R. Bock, Vice President
Donald C. Burke, Vice President and Treasurer
Bradley J. Lucido, 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
11
<PAGE>
This report, including the financial information herein, is transmitted to the
shareholders of MuniInsured Fund, Inc. for their information. It is not a
prospectus, circular or representation intended for use in the purchase of
shares of the Fund or any securities mentioned in the report. Past performance
results shown in this report should not be considered a representation of future
performance. Statements and other information herein are as dated and are
subject to change.
MuniInsured
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011 #10662--3/00
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