MuniYield Insured Fund, Inc.
Semi-Annual
Report
April 30, 1994
Officers and Directors
Arthur Zeikel, President and Director
Joe Grills, Director
Walter Mintz, Director
Melvin R. Seiden, Director
Stephen B. Swensrud, Director
Henry Woolf, Director
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Transfer Agents
Common Stock:
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
NYSE Symbol
MYI
<PAGE>
This report, including the financial
information herein, is transmitted to the
shareholders of MuniYield Insured Fund,
Inc. for their information. It is not a pros-
pectus, 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. The Fund has leveraged
its Common Stock by issuing Preferred Stock
to provide the Common Stock shareholders
with a potentially higher rate of return.
Leverage creates risks for Common Stock
shareholders, including the likelihood of
greater volatility of net asset value and market
price of shares of the Common Stock, and
the risk that fluctuations in the short-term
dividend rates of the Preferred Stock may
affect the yield to Common Stock shareholders.
MuniYield Insured Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MuniYield Insured Fund, Inc.
TO OUR SHAREHOLDERS
For the six-month period ended April 30, 1994, the
Common Stock of MuniYield Insured Fund, Inc.
earned $0.658 per share income dividends, which
includes earned and unpaid dividends of $0.078. This
represents a net annualized yield of 8.98%, based on
a month-end per share net asset value of $14.77. Over
the same period, the total investment return on the
Fund's Common Stock was -7.47%, based on a change
in per share net asset value from $16.76 to $14.77,
and assuming reinvestment of $0.665 per share
income dividends and $0.089 per share capital gains
distributions.
For the six-month period ended April 30, 1994, the
Fund's Auction Market Preferred Stock had an average
yield as follows: Series A, 2.47%; Series B, 2.48%;
Series C, 2.98%; Series D, 2.38%; and Series E, 2.94%.
<PAGE>
The Environment
Inflationary expectations and investor sentiment
changed for the worse during the three-month period
ended April 30, 1994. Following stronger-than-
expected economic results through year-end 1993,
the Federal Reserve Board broke with tradition on
February 4, 1994 and publicly announced a modest 25
basis point (0.25%) increase in short-term interest
rates. At the March 22, 1994 meeting of the Federal
Open Market Committee, the Federal Reserve Board
again raised the Federal Funds rate by 25 basis points,
followed by another 25 basis point increase on
April 18, 1994.
Rather than view the Federal Reserve Board's first
tightening move as a preemptive strike against infla-
tion, fixed-income investors focused on Chairman
Greenspan's implicit promise of further tightening
should the rate of inflation accelerate, and bond
prices declined sharply. The setback in the bond
market was also reflected in greater stock market
volatility. While the second and third increases in the
Federal Funds rate were less of a surprise, investors
remained concerned that interest rates would trend
upward sharply as the central bank aggressively
attempted to contain the inflationary pressures of an
improving economy. At the same time, highly leveraged
investors were forced to liquidate positions in the face
of declining stock and bond prices. Investor confidence
was not restored with the announcement of the
surprisingly slow 2.6% gross domestic product growth
rate for the first calendar quarter of 1994. Instead,
investors focused on the higher-than-expected (but
still moderate) broad inflation measures and became
concerned that business activity was beginning to
stagnate as inflationary pressures were increasing.
The Municipal Market
During the six months ended April 30, 1994, tax-
exempt bond yields exhibited considerable volatility
as they rose to their highest level in the past two years.
As measured by the Bond Buyer Revenue Bond Index,
the yield on newly issued municipal bonds maturing
in 30 years rose over 90 basis points to 6.42% by the
end of April. Yields on seasoned municipal revenue
bonds rose by over 100 basis points in sympathy with
the equally dramatic increase in US Treasury bond
yields. By the end of April, yields on US Treasury
securities rose by over 95 basis points to approxi-
mately 7.30%.
<PAGE>
Long-term tax-exempt bond yields were essentially
unchanged from the end of October 1993 to the end of
January 1994. However, on a weekly basis, tax-exempt
bond yields fluctuated by as much as 15 basis points
as investors were unable to reconcile the rapid eco-
nomic growth seen late last year with continued low
inflation. Following the initial interest rate increase by
the Federal Reserve Board in early February, munici-
pal bond prices began to erode in concert with tax-
able bond prices as investors began to sell securities
in anticipation of further interest rate increases. This
fear led investors to withdraw from the tax-exempt
market. From early February to the end of March,
total assets of all tax-exempt bond funds declined by
$14 billion to $247 billion. This decline in investor
demand, coupled with fears that the robust economic
recovery seen during the fourth quarter of 1993 would
continue well into 1994, helped push municipal bond
yields higher in February and March. Attracted by
tax-exempt yields in excess of 6.25%, investor demand
returned in April, allowing yields to decline approxi-
mately 15 basis points to end the April period at
approximately 6.40%.
A rise in tax-exempt bond yields the magnitude of
that experienced over the past six months has not
been seen since 1987 when municipal bond rates rose
250 basis points between March and October of that
year. It is very important to note that the recent
municipal bond price declines were largely the result
of consistent and insistent selling pressures over the
last two months. In 1987, the tax-exempt bond market
was much more volatile and, at times, chaotic as
investors sought to liquidate positions without concern
for fundamental value. For the most part, the recent
price deterioration has been orderly, and the munici-
pal bond market's liquidity and integrity have not been
challenged or jeopardized.
<PAGE>
To a large extent, the municipal bond market has
continued to be supported by its strong technical
position. New-issue volume for the last six months
has been less than $105 billion. This represents a
decline of approximately 20% versus the comparable
period a year ago. This decline was expected and has
been discussed in previous shareholder reports. This
reduced issuance has minimized potential selling
pressure in recent months since institutional investors
have been wary of selling appreciable amounts of
securities that they may be unable to replace later
this year at any price level. We expect this decline in
issuance to continue since we anticipate recent yield
increases to significantly impact future municipal
bond issuance.
Despite recent price declines, tax-exempt securities
remain among the most attractive investment alter-
natives available. After the recent yield increases,
longer-term municipal securities yielded approxi-
mately 90% of comparable US Treasury yields. Pur-
chasers of these municipal bonds also accrue substantial
after-tax yield advantages. To investors in the 39%
marginal Federal income tax bracket, the purchase of a
municipal bond yielding 6.50% represents an after-tax
equivalent of 10.65%. With prevailing estimates of
1994 inflation at no more than 3%--4%, real after-tax
rates in excess of 6.50% easily compensate longer-term
investors for much of the price volatility recently
experienced.
Portfolio Strategy
During the period ended April 30, 1994, our strategy
was to continue to structure the Fund's portfolio so
that it would maintain an attractive level of tax-exempt
income. Within this framework, we sold prerefunded
bonds with approaching call dates and individual
issues that we perceived to be fully valued in relation
to the market as a whole. Subsequently, we had an
opportunity to make additions to the portfolio,
notably in the insured sector of the municipal market.
We emphasized the acquisition of current coupon
income-oriented issues in specific high-tax states.
Our expectations for long-term municipal interest
rates is positive. Given the recent rise in yields
and the alternative investment choices, municipal
securities are offering very attractive yield levels.
<PAGE>
We have kept the Fund's cash reserves at a minimum
to take advantage of the steep yield spread between
short-term and long-term interest rates, which con-
tinues to generate positive benefits to Common Stock
shareholders as a result of the leveraging of the
Preferred Stock. Dividends paid to Preferred Stock
shareholders are significantly lower than the income
earned on the Fund's long-term investments, and
therefore the Common Stock shareholders are the
beneficiaries of the incremental yield. Should the
interest rate differential between short-term and
long-term interest rates narrow because of a rise
in short-term interest rates, the incremental yield
"pick up" on the Common Stock will be reduced.
Furthermore, if long-term interest rates rise, the
Common Stock's net asset value will reflect the full
decline in the entire portfolio holdings, since the
value of the Fund's Preferred Stock does not fluctuate.
During the six-month period ended April 30, 1994,
long-term interest rates rose, reflected in the decline
in the net asset value of the Fund's Common Stock.
For a complete explanation of leveraging, see page 3
of this report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
<PAGE>
June 2, 1994
THE BENEFITS AND RISKS OF LEVERAGING
MuniYield Insured Fund, Inc. utilizes leveraging to
seek to enhance the yield and net asset value of its
Common Stock. However, these objectives cannot be
achieved in all interest rate environments. To leverage,
the Fund issues Preferred Stock, which pays dividends
at prevailing short-term interest rates, and invests the
proceeds in long-term municipal bonds. The interest
earned on these investments is paid to Common Stock
shareholders in the form of dividends, and the value of
these portfolio holdings is reflected in the per share
net asset value of the Fund's Common Stock. However, in
order to benefit Common Stock shareholders, the yield
curve must be positively sloped; that is, short-term
interest rates must be lower than long-term interest
rates. At the same time, a period of generally declining
interest rates will benefit Common Stock shareholders.
If either of these conditions change, then the risks of
leveraging will begin to outweigh the benefits.
To illustrate these concepts, assume a fund's Common
Stock capitalization of $100 million and the issuance of
Preferred Stock for an additional $50 million, creating
a total value of $150 million available for investment
in long-term municipal bonds. If prevailing short-term
interest rates are approximately 3% and long-term
interest rates are approximately 6%, the yield curve
has a strongly positive slope. The fund pays dividends
on the $50 million of Preferred Stock based on the lower
short-term interest rates. At the same time, the fund's
total portfolio of $150 million earns the income based on
long-term interest rates.
<PAGE>
In this case, the dividends paid to Preferred Stock share-
holders are significantly lower than the income earned
on the fund's long-term investments, and therefore the
Common Stock shareholders are the beneficiaries of the
incremental yield. However, if short-term interest rates
rise, narrowing the differential between short-term and
long-term interest rates, the incremental yield pick-up
on the Common Stock will be reduced. At the same time,
the market value on the fund's Common Stock (that is, its
price as listed on the New York Stock Exchange) may, as
a result, decline. Furthermore, if long-term interest
rates rise, the Common Stock's net asset value will reflect
the full decline in the price of the portfolio's invest-
ments, since the value of the fund's Preferred Stock does
not fluctuate. In addition to the decline in net asset
value, the market value of the fund's Common Stock may
also decline.
PER SHARE INFORMATION
<TABLE>
Per Share Selected Quarterly Financial Data*
<CAPTION>
Net Unrealized Dividends/Distributions
Investment Realized Gains Net Investment Income Capital Gains
For the Quarter Income Gains (Losses) Common Preferred Common Preferred
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1992 to July 31, 1992 $.29 $.09 $ 1.19 $.23 $.04 -- --
August 1, 1992 to October 31, 1992 .30 .03 (1.20) .25 .06 -- --
November 1, 1992 to January 31, 1993 .30 .01 .85 .25 .04 $.10 $.02
February 1, 1993 to April 30, 1993 .31 .08 .56 .25 .05 -- --
May 1, 1993 to July 31, 1993 .30 .11 .21 .25 .05 -- --
August 1, 1993 to October 31, 1993 .30 .11 .66 .25 .05 -- --
November 1, 1993 to January 31, 1994 .31 .03 .07 .25 .02 .26 .04
February 1, 1994 to April 30, 1994 .29 .12 (1.94) .25 .05 -- --
<CAPTION>
Net Asset Value Market Price**
For the Quarter High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
May 1, 1992 to July 31, 1992 $15.60 $14.30 $15.375 $14.375 1,692
August 1, 1992 to October 31, 1992 15.38 14.10 15.625 14.25 3,016
November 1, 1992 to January 31, 1993 15.01 14.27 15.375 14.50 2,855
February 1, 1993 to April 30, 1993 16.18 14.99 15.75 15.00 3,558
May 1, 1993 to July 31, 1993 16.20 15.60 16.00 15.125 4,021
August 1, 1993 to October 31, 1993 17.08 16.00 16.625 15.625 4,706
November 1, 1993 to January 31, 1994 16.78 16.19 16.50 15.00 4,038
February 1, 1994 to April 30, 1994 16.55 14.26 16.25 13.25 4,706
<FN>
* Calculations are based upon shares of Common Stock outstanding
at the end of each quarter.
** As reported in the consolidated transaction reporting system.
*** In thousands.
</TABLE>
<PAGE>
PORTFOLIO ABBREVIATIONS
To simplify the listings of MuniYield Insured Fund,
Inc.'s portfolio holdings in the Schedule of Invest-
ments, we have abbreviated the names of many of the
securities according to the list below and at right.
ACESSM Adjustable Convertible Extendable Securities
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
CP Commercial Paper
EDA Economic Development Authority
GO General Obligation Bonds
HFA Housing Finance Authority
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
TAN Tax Anticipation Notes
TRAN Tax Revenue Anticipation Notes
UPDATES Unit Priced Daily Adjustable Tax-Exempt Securities
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>
Alabama--0.3% AAA Aaa $ 3,000 East Alabama Health Care Authority, Health Care Facilities,
Revenue Refunding Bonds, TAN, Series A, 5.25%
due 9/01/2014 (d) $ 2,641
Arizona--0.2% A1+ VMIG1 1,800 Maricopa County, Arizona, IDA, Hospital Facility Revenue
Bonds (Samaritan Health Services Hospital),
VRDN, Series B2, 2.95% due 12/01/2008 (a) 1,800
AA P1 400 Pinal County, Arizona, IDA, PCR (Magma Copper/Newmont
Mining Corp.), VRDN, 2.95% due 12/01/2009 (a) 400
Arkansas--0.4% North Little Rock, Arkansas, Electric Revenue Refunding
Bonds, Series A (d):
AAA Aaa 1,500 6.50% due 7/01/2010 1,577
AAA Aaa 1,500 6.50% due 7/01/2015 1,572
<PAGE>
California--15.9% AAA Aaa 6,550 Anaheim, California, Public Financing Authority,
Revenue Refunding Bonds (Anaheim Electric Utilities Projects),
5.625% due 10/01/2022 (d) 5,968
California HFA, Revenue Bonds, AMT:
A+ Aa 4,000 RIB, 9.621% due 8/01/2023 (i) 4,030
AAA Aaa 2,090 Series E, 7% due 8/01/2026 (d) 2,158
AAA Aaa 8,000 California State, GO (Variable Purpose), 6% due 10/01/2021 (d) 7,708
California State Public Works Board Lease Revenue Bonds:
AAA Aaa 4,000 (Department of Corrections--California State Prison),
Series B, 5.375% due 12/01/2019 (d) 3,519
A- A1 2,750 (University of California Project), Series A, 6.375% due 10/01/2019 2,684
AAA Aaa 3,000 (Various University of California Projects), Series A, 6.40%
due 12/01/2016 (b) 3,020
AAA Aaa 5,000 Contra Costa, California, Water District, Water Revenue
Bonds, Series D, 6.375% due 10/01/2022 (b) 5,058
AAA Aaa 3,920 Fresno, California, Sewer Revenue Bonds, Series A-1, 6.25%
due 9/01/2014 (b) 3,960
Los Angeles, California, Department of Water and Power,
Electric Plant Revenue Bonds:
AA Aa 5,000 5.30% due 2/15/2021 4,328
AA Aa 6,000 Crossover Refunding, Second Issue, 5.25% due 11/15/2026 5,067
Los Angeles, California, Wastewater System Revenue Bonds:
AAA Aaa 16,000 Refunding, Series A, 5.70% due 6/01/2020 (d) 14,777
AAA Aaa 3,250 Series B, 6% due 6/01/2022 (b) 3,130
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
California AAA Aaa $ 5,000 Los Angeles County, California, Metropolitan Transportation
(concluded) Authority, Sales Tax Revenue Refunding Bonds
(Proposition A), Series A, 5.625% due 7/01/2018 (d) $ 4,572
SP-1+ MIG1++ 5,000 Los Angeles County, California, TRAN, Series A, 3% due 6/30/1994 5,000
Los Angeles County, California, Transportation Commission,
Sales Tax Revenue Bonds (c):
AAA Aaa 5,000 Refunding, Series B, AMT, 6.50% due 7/01/2015 5,096
AAA Aaa 10,000 Series A, 6.75% due 7/01/2001 (g) 11,062
M-S-R Public Power Agency, California, Revenue Bonds
(San Juan Project), Series E (d):
AAA Aaa 8,210 6.75% due 7/01/2011 8,565
AAA Aaa 4,750 6% due 7/01/2022 4,569
AAA Aaa 3,000 Moulton-Niguel, California, Water District Revenue Bonds, COP,
4.80% due 9/01/2017 (b) 2,444
AAA Aaa 2,190 Northern California Transmission Revenue Bonds
(California-Oregon Transmission Project), Series A,
6.50% due 5/01/2016 (d) 2,232
AAA Aaa 5,000 Oakland, California, COP, Refunding (Oakland Museum),
Series A, 6% due 4/01/2012 (b) 4,914
AAA Aaa 1,345 Oakland, California, GO, UT, 6% due 6/15/2017 (c) 1,298
AAA Aaa 3,000 Orange County, California, Financing Authority, Tax Allocation
Revenue Refunding Bonds, Series A, 6.25% due 9/01/2014 (d) 2,989
AAA Aaa 2,000 Rancho Cucamonga, California, Redevelopment Agency, Tax
Allocation Refunding Bonds (Rancho Redevelopment Project),
5.50% due 9/01/2023 (d) 1,787
AAA Aaa 3,000 Redwood City, California, Public Financing Authority,
Local Agency Revenue Refunding Bonds, Series A,
6.50% due 7/15/2011 (b) 3,071
AAA Aaa 3,650 Sacramento, California, Municipal Utility District,
Electric Revenue Refunding Bonds, Series D,
5.25% due 11/15/2020 (d) 3,146
AAA Aaa 3,000 Sacramento County, California, COP, Refunding
(Sacramento Main Detention), 5.75% due 6/01/2015 (d) 2,829
AAA Aaa 9,000 San Jose, California, Redevelopment Agency, Tax Allocation
Revenue Bonds (Merged Area Redevelopment Project),
Series A, 6.20% due 8/01/2002 (d) (g) 9,498
AAA Aaa 5,375 San Mateo County, California, Joint Powers Financing Authority,
Lease Revenue Bonds (San Mateo County Health Care Center),
Series A, 5.75% due 7/15/2022 (e) 4,987
Southern California Public Power Authority, Project Revenue
Bonds, Series A:
AAA Aaa 2,000 Refunding (Mead Adelanto Project), 4.875% due 7/01/2020 (b) 1,630
AAA Aaa 5,000 (San Juan Unit 3), 5.25% due 1/01/2014 (d) 4,422
AAA Aaa 3,000 Southern California Public Power Authority, Transmission Project,
Revenue Refunding Bonds, Sub-series A, 5.25% due 7/01/2020 (d) 2,588
NR Aa 5,700 University of California, COP, Refunding (UCLA Center Chiller/
Cogen Project), 5.60% due 11/01/2020 5,088
Colorado--0.4% AAA Aaa 3,200 Denver, Colorado, City and County, COP (School District No. 001),
Series B, 6.75% due 12/01/2002 (d) (g) 3,516
Connecticut--0.6% AAA Aaa 6,000 Connecticut State HFA, Revenue Bonds (Mortgage Finance
Program), Series B, 6.75% due 11/15/2023 (d) 6,095
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Delaware--1.1% AAA Aaa $ 2,000 Delaware River and Bay Authority, Revenue Refunding Bonds,
4.75% due 1/01/2024 (d) $ 1,606
AAA Aaa 8,490 Delaware State EDA, PCR, Refunding (Delmarva Power Project),
Series B, 7.15% due 7/01/2018 (c) 9,240
District of AAA Aaa 20,100 Metropolitan of Washington, DC, Airport Authority
Columbia--2.1% Revenue Bonds, AMT, Series A, 6.625% due 10/01/2019 (d) 20,500
Florida--1.8% A-1 VMIG1 1,500 Dade County, Florida, Solid Waste, IDR (Montenay-Dade Limited
Project), VRDN, Series A, 2.20% due 12/01/2013 (a) 1,500
Florida State Municipal Power Agency Revenue Bonds:
AAA Aaa 3,000 (Power Supply Project), 5.10% due 10/01/2025 2,492
AAA Aaa 3,000 Refunding (Saint Lucie Project), 5.25% due 10/01/2021 (c) 2,612
AA- Aa2 200 Hillsborough County, Florida, IDA, PCR, Refunding (Tampa
Electric Company Project), VRDN, 2.90% due 9/01/2025 (a) 200
Orange County, Florida, Tourist Development, Tax Revenue
Bonds (b):
AAA Aaa 1,000 Refunding, Series A, 6.50% due 10/01/2010 1,041
AAA Aaa 9,940 Series B, 6.50% due 10/01/2019 10,135
Georgia--3.2% AAA Aaa 4,000 Atlanta, Georgia, COP (Atlanta Pre-trial Detention Center),
6.25% due 12/01/2017 (d) 3,985
AAA Aaa 4,000 Douglasville-Douglas County, Georgia, Water and Sewer Authority,
Water and Sewer Revenue Bonds, 5.625% due 6/01/2015 (b) 3,744
AAA Aaa 3,000 Macon-Bibb County, Georgia, Hospital Authority Revenue Bonds
(Revenue Anticipation Certificates--Medical Center of Georgia),
6.75% due 8/01/1999 (c)(g) 3,276
AAA Aaa 8,955 Metropolitan Atlanta Rapid Transportation Authority, Georgia,
Sales Tax Revenue Bonds, Series O, 6.55% due 7/01/2020 (c) 9,114
AAA Aaa 10,800 Municipal Electric Authority, Georgia, Special Obligation Bonds
(Fifth Crossover Series--Project One), 6.40% due 1/01/2013 (b) 11,268
Hawaii--1.8% AAA Aaa 17,145 Hawaii State Airport Systems Revenue Bonds, AMT, Second Series,
6.75% due 7/01/2021 (d) 17,626
<PAGE>
Illinois--9.1% Chicago, Illinois, GO (Central Public Library) (b)(g):
AAA Aaa 7,000 Series B, 6.85% due 7/01/2002 7,716
AAA Aaa 3,400 Series C, 6.85% due 7/01/2002 3,762
AAA Aaa 8,200 Chicago, Illinois, Midway Airport Revenue Bonds, Series A,
6.25% due 1/01/2024 (d) 7,869
AAA Aaa 2,750 Chicago, Illinois, O'Hare International Airport, Special Facilities
Revenue Bonds (International Terminal), AMT, 6.75% due
1/01/2012 (d) 2,848
AAA Aaa 12,000 Chicago, Illinois, Public Building Commission, Building Revenue
Bonds, Series A, 6.50% due 1/01/2018 (d) (h) 12,783
AAA Aaa 3,690 Cook County, Illinois, Community Consolidated School District,
GO, UT (No. 054--Schaumburg Township), Series A, 6.50% due
1/01/2010 (c) 3,788
Cook County, Illinois, GO, UT:
AAA Aaa 1,000 7% due 11/01/2000 (d)(g) 1,112
AAA Aaa 12,570 6.75% due 11/01/2001 (b)(g) 13,832
AAA Aaa 15,000 Series A, 6.60% due 11/15/2022 (d) 15,296
Illinois Development Finance Authority, Revenue Refunding Bonds
(Olin Corporation Project), VRDN (a):
A1+ NR 600 Series A, 3% due 6/01/2004 600
A1+ NR 600 Series D, 3% due 3/01/2016 600
Illinois Health Facilities Authority Revenue Bonds:
AAA Aaa 6,000 Refunding (Carle Foundation), Series A, 6.75% due 1/01/2010 (c) 6,252
A+ A 1,500 Refunding (Lutheran General Health), Series C, 7% due 4/01/2014 1,609
A+ A 3,000 Refunding (Lutheran General Health), Series C, 6% due 4/01/2018 2,738
AAA Aaa 8,545 (Rockford Memorial Hospital), Series B, 6.75% due 8/15/2018 (b) 8,775
</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>
Indiana--2.2% AAA Aaa $10,000 Indiana Health Facilities Financing Authority, Hospital Revenue
Bonds (Lutheran Hospital of Indiana, Inc.), 7% due 2/15/2019 (b) $10,584
AAA Aaa 5,000 Indianapolis, Indiana, Gas Utility Revenue Bonds, Series A,
6.20% due 6/01/2023 (c) 4,907
Indianapolis, Indiana, Local Public Improvement Refunding Bonds,
Series D:
A+ NR 1,960 6.60% due 2/01/2007 2,006
A+ NR 2,350 6.75% due 2/01/2020 2,338
AAA Aaa 2,000 Monroe County, Indiana, Hospital Authority Revenue Bonds
(Bloomington Hospital Project), 6.70% due 5/01/2012 (d) 2,082
Kansas--2.2% AAA Aaa 20,250 Burlington, Kansas, PCR, Refunding (Kansas Gas and Electric
Company Project), 7% due 6/01/2031 (d) 21,513
Kentucky--0.9% AAA Aaa 9,030 Owensboro, Kentucky, Water Revenue Improvement and
Refunding Bonds, 6.25% due 9/15/2017 (c) 9,018
<PAGE>
Louisiana--0.3% AAA Aaa 3,000 Jefferson Parish, Louisiana, Hospital Service District No. 001,
Hospital Revenue Refunding Bonds, 5.25% due 1/01/2013 (c) 2,693
Massachusetts--2.2% A+ A 5,400 Massachusetts State GO, Refunding, Series B, 6.50% due
8/01/2008 5,661
Massachusetts State Health and Higher Educational Facilities
Authority Revenue Bonds:
A A 3,450 (New England Deaconess Hospital), Series D, 6.875%
due 4/01/2022 3,523
AAA Aaa 7,130 (New England Medical Center), Series F, 6.625% due 7/01/2025 (c) 7,307
AAA Aaa 5,000 Massachusetts State Industrial Finance Agency Revenue Bonds
(Brandeis University), Series C, 6.80% due 10/01/2019 (d) 5,137
Michigan--3.7% A-1 NR 900 Detroit, Michigan, Tax Increment Finance Authority Revenue
Bonds (Reserve Fund--Central Industrial Park Project), VRDN,
2.90% due 10/01/2010 (a) 900
A- A 2,900 Michigan State Hospital Finance Authority, Revenue Refunding
Bonds (Detroit Medical Center), Series A, 6.50% due 8/15/2018 2,820
AAA Aaa 21,750 Michigan State Strategic Fund, Limited Obligation Revenue
Refunding Bonds (Detroit--Edison Company Pollution Project),
6.875% due 12/01/2021 (c) 22,638
Monroe County, Michigan, PCR (Detroit Edison County College),
AMT (d):
AAA Aaa 5,000 Series CC, 6.55% due 6/01/2024 5,078
AAA Aaa 5,000 Series I-B, 6.55% due 9/01/2024 5,079
Missouri--0.5% NR Baa1 6,000 Missouri State Health and Educational Facilities Authority,
Health Facilities Revenue Refunding Bonds (Jefferson Memorial
Hospital Association Project), 6% due 8/15/2023 5,197
Nevada--5.8% Humboldt County, Nevada, PCR, Refunding (Sierra Pacific Power
Company Project) (b):
AAA Aaa 14,250 6.55% due 10/01/2013 14,689
AAA Aaa 4,500 Series A, 6.30% due 7/01/2022 4,441
Las Vegas, Nevada, GO, Refunding (c):
AAA Aaa 3,915 6.60% due 10/01/2009 4,082
AAA Aaa 4,180 6.60% due 10/01/2010 4,346
AAA Aaa 4,470 6.60% due 10/01/2011 4,626
AAA Aaa 4,770 6.60% due 10/01/2012 4,922
AAA Aaa 2,400 Reno, Nevada, Hospital Revenue Bonds (Saint Mary's Regional
Medical Center), Series A, 6.70% due 7/01/2021 (d) 2,449
AAA Aaa 2,000 Washoe County, Nevada, Gas and Water Facilities, Revenue Refunding
Bonds (Sierra Pacific Power Company), 6.30% due 12/01/2014 (b) 1,988
AAA Aaa 15,000 Washoe County, Nevada, Gas Facilities Revenue Bonds
(Sierra Pacific Power Company), AMT, 6.65% due 12/01/2017 (b) 15,278
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
New Hampshire--0.8% AAA Aaa $ 7,660 New Hampshire Higher Educational and Health Facilities Authority
Revenue Bonds (Elliot Hospital of Manchester),
6.25% due 10/01/2021 (b) $ 7,522
New Jersey--0.5% AAA Aaa 5,000 New Jersey EDA, Water Facilities, Revenue Refunding Bonds
(Hackensack Water Company Project), Series A, 5.80% due
3/01/2024 (d) 4,729
New Mexico--0.3% AAA Aaa 2,600 New Mexico Educational Assistance Foundation, Student Loan
Revenue Bonds, AMT, Series A, 6.85% due 4/01/2005 (b) 2,771
<PAGE>
New York--12.3% BBB Baa1 10,980 Metropolitan Transportation Authority, New York, Service
Contract Revenue Refunding Bonds (Transit Facilities),
Series 5,7% due 7/01/2012 11,399
New York City Municipal Water Finance Authority, Water and
Sewer System Revenue Bonds:
AAA Aaa 7,000 Series F, 5.75% due 6/15/2020 (d) 6,526
AAA VMIG1 4,700 VRDN, Series G, 2.80% due 6/15/2024 (a)(c) 4,700
New York City, New York, GO:
A- Baa1 2,210 Series C, Sub-series C-1, 7.50% due 8/01/2019 2,403
AAA Aaa 7,000 UT, Series C, Sub-series C-1, 6.625% due 8/01/2014 7,588
A- Baa1 1,000 UT, Series D, 7.50% due 2/01/2016 1,081
A- Baa1 12,000 UT, Series D, 7.50% due 2/01/2019 13,005
A- Baa1 5,000 UT, Series H, 7.10% due 2/01/2011 5,298
A- Baa1 3,000 UT, Series H, 7% due 2/01/2019 3,126
A- Baa1 1,925 UT, Series H, 7% due 2/01/2020 2,005
A- Baa1 9,000 UT, Series H, Sub-series H-1, 6.125% due 8/01/2011 8,643
New York City, New York, GO, VRDN, UT (a):
A-1 VMIG1 200 Sub-series A-4, 2.90% due 8/01/2021 200
A1+ VMIG1 1,200 Sub-series A-10, 2.95% due 8/01/2016 1,200
BBB+ Baa1 7,595 New York State Dormitory Authority Revenue Refunding Bonds
(State University Educational Facilities), Series B,
7% due 5/15/2016 8,019
New York State Energy Research and Development Authority,
Electric Facilities Revenue Bonds (Long Island Lighting), AMT,
Series A:
BB+ Baa3 15,000 7.15% due 12/01/2020 15,225
BB+ Baa3 4,950 7.15% due 2/01/2022 4,988
AAA Aaa 5,000 New York State Energy Research and Development Authority, PCR,
Refunding (Rochester Gas and Electric Project), AMT, Series B,
6.50% due 5/15/2032 (d) 5,059
A A 3,500 New York State Local Government Assistance Corporation Revenue
Bonds, Series D, 5% due 4/01/2023 2,854
BBB+ Baa1 11,000 New York State Medical Care Facilities Finance Agency Revenue
Bonds (Mental Health Services Facility), Series F, 5.375%
due 2/15/2014 9,665
BBB Baa1 7,950 New York State Urban Development Corporation, Correctional
Capital Facilities, Series 4, 5.375% due 1/01/2023 6,681
A+ Aa 2,500 Triborough Bridge and Tunnel Authority, New York, Revenue Bonds
(General Purposes), Series A, 4.75% due 1/01/2019 2,023
North Carolina--0.2% NR Aa2 1,000 Halifax County, North Carolina, Industrial Facilities and
Pollution Control Finance Authority Revenue Bonds (Westmoreland
Facilities), VRDN, AMT, 3.05% due 12/01/2019 (a) 1,000
NR VMIG1 800 North Carolina Medical Care Community, Hospital Revenue Bonds
(Pooled Financing Project), ACES, VRDN, Series A, 2.95%
due 10/01/2020 (a) 800
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Ohio--2.2% AAA Aaa $ 14,735 Cuyahoga County, Ohio, Hospital Improvement and Revenue
Refunding Bonds (University Hospital Health Systems), Series A,
6.875% due 1/15/2019 (f) $15,280
AAA Aaa 4,000 Ohio Municipal Electric Generation Agency Revenue Bonds,
5.375% due 2/15/2024 (b) 3,539
AAA Aaa 2,500 Ohio State Higher Educational Facilities Commission, Mortgage
Revenue Bonds (University of Dayton Project),6.60%
due 12/01/2017 (c) 2,582
Pennsylvania--2.4% AAA Aaa 5,000 Bristol Township, Pennsylvania, School District GO, Series A,
6.625% due 2/15/2002 (d) (g) 5,458
AAA Aaa 2,500 Delaware County, Pennsylvania, Hospital Authority Revenue Bonds
(Crozer-Chester Medical Center), 5.30% due 12/15/2020 (d) 2,153
AAA Aaa 16,000 Montgomery County, Pennsylvania, IDA, PCR, Refunding
(Philadelphia Electric Company), Series B, 6.70% due 12/01/2021 (d) 16,396
Rhode Island--0.5% AAA Aaa 5,000 Rhode Island Depositors Economic Protection Corporation,
Special Obligation, Refunding, GO, Series A, 5.75% due 8/01/2019 (e) 4,630
South Carolina--5.6% South Carolina State Port Authority Revenue Bonds, AMT (b):
AAA Aaa 4,560 6.625% due 7/01/2011 4,700
AAA Aaa 10,250 6.75% due 7/01/2021 10,530
South Carolina State Public Service Authority, Revenue Bonds
(Santee Cooper), Series D (b):
AAA Aaa 17,375 6.50% due 7/01/2004 (g) 18,848
AAA Aaa 9,900 6.50% due 7/01/2014 10,053
AAA Aaa 5,000 South Carolina State Public Service Authority, Revenue Refunding
Bonds, Series C, 5% due 1/01/2018 (c) 4,179
AAA Aaa 7,000 Spartanburg County, South Carolina, Hospital Facilities Revenue
Refunding Bonds (Spartanburg General Hospital System), Series A,
6.625% due 4/15/2022 (e) 7,127
Tennessee--1.7% Johnson City, Tennessee, Health and Educational Facilities
Board, Hospital Revenue Refunding and Improvement Bonds
(Johnson City Medical Center) (d):
AAA Aaa 7,080 6.75% due 7/01/2001 (g) 7,791
AAA Aaa 3,820 6.75% due 7/01/2016 3,941
AAA Aaa 4,450 Metropolitan Nashville Airport Authority, Tennessee, Airport
Revenue Bonds, Series C, 6.60% due 7/01/2015 (c) 4,563
<PAGE>
Texas--6.7% AAA Aaa 3,800 Brazos River Authority, Texas, PCR (Texas Utilities Electric
Company Project), AMT, Series A, 6.75% due 4/01/2022 (b) 3,891
AAA Aaa 12,140 Brazos River Authority, Texas, Revenue Refunding Bonds
(Houston Light and Power), Series A, 6.70% due 3/01/2017 (b) 12,491
AAA Aaa 4,750 Colorado River, Texas, Municipal Water District, Water Revenue
Bonds (Water Transmission Facilities Project), Series A,
6.625% due 1/01/2001 (b)(g) 5,086
Corpus Christi, Texas, Improvement and Refunding, GO (c):
AAA Aaa 9,730 6.65% due 3/01/2007 10,213
AAA Aaa 3,500 6.70% due 3/01/2008 3,664
Harris County, Texas, Toll Road Revenue Refunding Bonds,
Series A (c):
AAA Aaa 9,290 (Senior Lien), 6.50% due 8/15/2002 10,110
AAA Aaa 1,750 6.50% due 8/15/2011 1,789
AAA Aaa 6,885 Houston, Texas, Airport System Revenue Bonds (Sub-Lien), AMT,
Series A, 6.75% due 7/01/2021 (c) 7,035
AAA Aaa 11,795 Matagorda County, Texas, Navigational District No. 1, Revenue
Refunding Bonds (Houston Light & Power), Series A, 6.70%
due 3/01/2027 (b) 12,136
</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>
Utah--1.1% AAA Aaa $ 1,800 Provo City, Utah, Energy Systems, Revenue Refunding Bonds,
Series A, 5.50% due 11/15/2011 (d) $ 1,674
AAA Aaa 10,000 Salt Lake City, Utah, Airport Revenue Bonds, Series A, AMT,
6.125% due 12/01/2022 (c) 9,628
Virginia--0.3% AAA A2 2,600 Peninsula Ports Authority, Virginia, Port Facility Revenue
Refunding Bonds (Shell Oil Company Project), UPDATES, AMT,
CP, Series A, 2.90% due 12/01/2005 (a) (i) 2,600
<PAGE>
Washington--8.1% AAA Aaa 9,495 Port Seattle, Washington, Revenue Bonds (Sub-Lien) Series C,
6.625% due 8/01/2017 (d) 9,753
Seattle, Washington, Metropolitan Seattle Municipality Sewer
Revenue Bonds:
AAA Aaa 10,560 Series U, 6.60% due 1/01/2032 (c) 10,691
AAA Aaa 1,750 Series W, 6.25% due 1/01/2022 (d) 1,736
AA Aa 7,000 Seattle, Washington, Water System Revenue Refunding Bonds,
5.50% due 6/01/2014 6,396
AAA Aaa 5,115 Snohomish County, Washington, Public Utility District No. 001,
Electric Revenue Refunding Bonds (Generation System), UT,
6% due 1/01/2018 (c) 4,873
AAA Aaa 9,550 Tacoma, Washington, Electric Systems Revenue Refunding Bonds,
6.25% due 1/01/2011 (b) 9,659
A+ A1 8,300 Washington State Health Care Facilities Authority Revenue Bonds
(Children's Hospital and Medical Center), 6% due 10/01/2022 7,795
Washington State Public Power Supply Systems, Revenue
Refunding Bonds (Nuclear Project No. 1) (d):
AA Aa 5,000 Series A, 5.375% due 7/01/2011 4,446
AAA Aaa 11,175 Series A, 6.25% due 7/01/2017 11,026
AAA Aaa 7,000 Series B, 5.60% due 7/01/2015 6,393
Washington State Public Power Supply Systems, Revenue
Refunding Bonds (Nuclear Project No. 2), Series A:
AA Aa 3,500 5.375% due 7/01/2010 3,141
AAA Aaa 5,000 5.70% due 7/01/2017 4,608
West Virginia--0.4% AAA Aaa 2,000 Putnam County, West Virginia, PCR, Refunding (Appalachian Power
Company Project), Series D, 5.45% due 6/01/2019 (b) 1,770
AAA Aaa 2,500 West Virginia School Building Authority, Revenue and Capital
Improvement Bonds, Series B, 6.75% due 7/01/2017 (d) 2,561
Wisconsin--1.1% AAA Aaa 6,000 Wisconsin State Health and Educational Facilities Authority
Revenue Bonds (Aurora Health Care Obligated Group), 5.25%
due 8/15/2023 (d) 5,057
Wisconsin State Health and Educational Facilities Authority,
Revenue Refunding Bonds (Wheaton--Franciscan Services) (d):
AAA Aaa 3,955 6.50% due 8/15/2011 4,046
AAA Aaa 2,000 6% due 8/15/2015 1,921
Total Investments (Cost--$955,111)--98.7% 974,485
Other Assets Less Liabilities--1.3% 12,779
--------
Net Assets--100.0% $987,264
========
<PAGE>
<FN>
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rates shown are the rates
in effect at April 30, 1994.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)MBIA Insured.
(e)FSA Insured.
(f)BIG Insured.
(g)Prerefunded.
(h)Escrowed to maturity.
(i)The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rates shown
are the rates in effect at April 30, 1994.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Statement of Assets, Liabilities and Capital as of April 30, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$955,111,077) (Note 1a) $ 974,485,298
Cash 89,253
Receivables:
Securities sold $ 26,085,563
Interest 17,590,516 43,676,079
-------------
Deferred organization expenses (Note 1e) 21,498
Prepaid expenses and other assets 303,456
--------------
Total assets 1,018,575,584
--------------
Liabilities: Payables:
Securities purchased 29,076,999
Dividends to shareholders (Note 1g) 1,843,443
Investment adviser (Note 2) 390,850 31,311,292
------------- --------------
Total liabilities 31,311,292
--------------
Net Assets: Net assets $ 987,264,292
==============
<PAGE>
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.10 per share (6,400 shares of AMPS* issued and
outstanding at $50,000 per share liquidation preference) $ 320,000,000
Common Stock, par value $.10 per share (45,187,339 shares issued
and outstanding) $ 4,518,734
Paid-in capital in excess of par 630,233,103
Undistributed investment income--net 6,326,936
Undistributed realized capital gains--net 6,811,298
Unrealized appreciation on investments--net 19,374,221
-------------
Total-Equivalent to $14.77 net asset value per share of Common Stock
(market price--$13.50) 667,264,292
--------------
Total capital $ 987,264,292
==============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months Ended
April 30, 1994
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 30,343,220
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 2,591,827
Commission fees (Note 4) 469,936
Transfer agent fees 73,105
Professional fees 50,226
Printing and shareholder reports 28,695
Directors' fees and expenses 28,185
Accounting services (Note 2) 24,979
Custodian fees 22,399
Listing fees 19,002
Pricing fees 9,747
Amortization of organization expenses (Note 1e) 3,001
Other 24,744
------------
Total expenses 3,345,846
------------
Investment income--net 26,997,374
------------
<PAGE>
Realized & Realized gain on investments--net 6,811,339
Unrealized Gain Change in unrealized appreciation/depreciation on investments--net (84,541,186)
(Loss) on ------------
Investments--Net Net Decrease in Net Assets Resulting from Operations $(50,732,473)
(Notes 1d & 3): ============
</TABLE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the Year
Months Ended Ended
Increase (Decrease) in Net Assets: April 30, 1994 Oct.31, 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 26,997,374 $ 54,800,742
Realized gain on investments--net 6,811,339 13,666,112
Change in unrealized appreciation/depreciation on investments--net (84,541,186) 102,799,939
-------------- --------------
Net increase (decrease) in net assets resulting from operations (50,732,473) 171,266,793
-------------- --------------
Dividends & Investment income--net:
Distributions to Common Stock (22,374,647) (45,166,236)
Shareholders Preferred Stock (3,089,775) (8,488,818)
(Note 1g): Realized gain on investments--net:
Common Stock (11,709,621) (4,381,621)
Preferred Stock (1,956,511) (937,775)
-------------- --------------
Net decrease in net assets resulting from dividends and distributions
to shareholders (39,130,554) (58,974,450)
-------------- --------------
Capital Stock Value of shares issued to Common Stock shareholders in reinvestment of
Transactions dividends -- 6,696,023
(Notes 1e & 4): Offering and underwriting costs from the issuance of Common Stock (10,766) --
-------------- --------------
Net increase (decrease) in net assets derived from capital stock transactions (10,766) 6,696,023
-------------- --------------
<PAGE>
Net Assets: Total increase (decrease) in net assets (89,873,793) 118,988,366
Beginning of period 1,077,138,085 958,149,719
-------------- --------------
End of period* $ 987,264,292 $1,077,138,085
============== ==============
<FN>
*Undistributed investment income--net $ 6,326,936 $ 4,793,984
============== ==============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
For the Six For the Period
The following per share data and ratios have been derived Months For the Year March 27,
from information provided in the financial statements. Ended Ended 1992++ to
April 30, October 31, October 31,
Increase (Decrease) in Net Asset Value: 1994 1993 1992
<S> <S> <C> <C> <C>
Per Share Operating Net asset value, beginning of period $ 16.76 $ 14.27 $ 14.18
Performance: ----------- ----------- ------------
Investment income--net .60 1.21 .66
Realized and unrealized gain (loss) on investments--net (1.72) 2.59 .16
----------- ----------- ------------
Total from investment operations (1.12) 3.80 .82
----------- ----------- ------------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net (.50) (1.00) (.48)
Realized gain on investments--net (.26) (.10) --
----------- ----------- ------------
Total dividends and distributions to Common Stock
shareholders (.76) (1.10) (.48)
----------- ----------- ------------
Capital charge resulting from issuance of Common Stock -- -- (.01)
----------- ----------- ------------
Effect of Preferred Stock activity++++:
Dividends and distributions to
Preferred Stock shareholders:
Investment income--net (.07) (.19) (.10)
Realized gain on investments--net (.04) (.02) --
Capital charge resulting from issuance of
Preferred Stock -- -- (.14)
----------- ----------- ------------
Total effect of Preferred Stock activity (.11) (.21) (.24)
----------- ----------- ------------
Net asset value, end of period $ 14.77 $ 16.76 $ 14.27
=========== =========== ============
Market price per share, end of period $ 13.50 $ 15.875 $ 14.875
=========== =========== ============
<PAGE>
Total Investment Based on market price per share (10.71%)+++ 14.51% 2.46%+++
Return:** =========== =========== ============
Based on net asset value per share (7.47%)+++ 26.01% 3.97%+++
=========== =========== ============
Ratios to Average Expenses, net of reimbursement .64%* .65% .47%*
Net Assests:*** =========== =========== ============
Expenses .64%* .65% .66%*
=========== =========== ============
Investment income--net 5.19%* 5.35% 5.69%*
=========== =========== ============
Supplemental Net assets, net of Preferred Stock,
Data: end of period (in thousands) $ 667,264 $ 757,138 $ 638,150
=========== =========== ============
Preferred Stock outstanding,
end of period (in thousands) $ 320,000 $ 320,000 $ 320,000
=========== =========== ============
Portfolio turnover 20.06% 39.93% 21.89%
=========== =========== ============
Dividends Per Share Series A--Investment income--net $ 495 $ 1,150 $ 688
On Preferred Stock Series B--Investment income--net 398 1,253 656
Outstanding Series C--Investment income--net 612 1,175 659
Series D--Investment income--net 344 1,426 767
Series E--Investment income--net 528 1,492 766
<FN>
* Annualized.
** Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, result in
substantially different returns. Total investment returns exclude
the effects of sales loads.
*** Do not reflect the effect of dividends to Preferred Stock shareholders.
++ Commencement of Operations.
++++ The Fund's Preferred Stock was issued on May 22, 1992.
+++ Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniYield Insured Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a non-
diversified, closed-end management investment
company. The Fund determines and makes available
for publication the net asset value of its Common Stock
on a weekly basis. The Fund's Common Stock is listed
on the New York Stock Exchange under the symbol
MYI. 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 market
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, which are traded on
exchanges, are valued at their last sale price as of the
close of such exchanges. Options, which are traded on
exchanges, are valued at their closing prices as of the
close of such exchanges or, lacking any sales, at the
last available bid price. Securities with remaining
maturities of sixty days or less are valued at amortized
cost, which approximates market value. Securities for
which market quotations are not readily available
are valued at fair value as determined in good faith by
or under the direction of the Board of Directors of
the Fund.
(b) Financial futures contracts--The Fund may
purchase or sell interest rate futures contracts and
options on such futures contracts for the purpose of
hedging the market risk on existing securities or the
intended purchase of securities. Futures contracts are
contracts for delayed delivery of securities at a
specific future date and at a specific price or yield.
Upon entering into a contract, the Fund deposits and
maintains as collateral such initial margin as required
by the exchange on which the transaction is effected.
Pursuant to the contract, the Fund agrees to receive
from or pay to the broker an amount of cash equal to
the daily fluctuation in value of the contract. Such
receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or
losses. When the contract is closed, the Fund records
a realized gain or loss equal to the difference between
the value of the contract at the time it was opened
and the value at the time it was closed.
<PAGE>
(c) Income taxes--It is the Fund's policy to comply
with the requirements of the Internal Revenue Code
applicable to regulated investment companies and to
distribute substantially all of its taxable income to
its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income--
Security transactions are recorded on the dates the
transactions are entered into (the trade dates).
Interest income is recognized on the accrual basis.
Discounts and market premiums are amortized into interest
income. Realized gains and losses on security trans-
actions are determined on the identified cost basis.
(e) Deferred organization expenses and offering
expenses--Deferred organization expenses are amor-
tized on a straight-line basis over a five-year period.
Direct expenses relating to the public offering of the
Common and Preferred Stock were charged to capital
at the time of issuance.
(f) Non-income producing investments--Written and pur-
chased options are non-income producing investments.
(g) Dividends and distributions--Dividends from net
investment income are declared and paid monthly.
Distributions of capital gains are recorded on the
ex-dividend dates.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory
Agreement with Fund Asset Management, L.P.
("FAM"). Effective January 1, 1994, the investment
advisory business of FAM was reorganized from a
corporation to a limited partnership. Both prior
to and after the reorganization, ultimate control of
FAM was vested with Merrill Lynch & Co., Inc.
("ML & Co."). The general partner of FAM is Princeton
Services, Inc., an indirect wholly-owned subsidiary
of ML & Co. The limited partners are ML & Co. and
Merrill Lynch Investment Management, Inc. ("MLIM"),
which is also an indirect wholly-owned subsidiary
of ML & Co.
<PAGE>
FAM is responsible for the management of the Fund's
portfolio and provides the necessary personnel, facil-
ities, 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, MLIM, 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 April 30,
1994 were $200,007,908 and $203,843,664,
respectively.
Net realized and unrealized gains (losses) as of April
30, 1994 were as follows:
Unrealized
Realized Gains
Gains (Losses)
Long-term investments $ 4,471,281 $19,375,852
Short-term investments 16,058 (1,631)
Financial futures contracts 2,324,000 --
----------- -----------
Total $ 6,811,339 $19,374,221
=========== ===========
As of April 30, 1994, net unrealized appreciation for
Federal income tax purposes aggregated $19,374,221,
of which $31,208,451 related to appreciated securities
and $11,834,230 related to depreciated securities.
The aggregate cost of investments at April 30, 1994 for
Federal income tax purposes was $955,111,077.
4. Capital Stock Transactions:
The Fund is authorized to issue 200,000,000 shares
of capital stock, including Preferred Stock, par value
$0.10 per share, all of which were initially classified
as Common Stock. The Board of Directors is author-
ized, however, to reclassify any unissued shares of
capital stock without approval of the holders of
Common Stock.
<PAGE>
Common Stock
For the six months ended April 30, 1994, shares issued
and outstanding remained constant at 45,187,339. At
April 30, 1994, total paid-in capital amounted to
$634,751,837.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares
of Preferred Stock of the Fund that entitle their
holders to receive cash dividends at an annual rate
that may vary for the successive dividend periods.
The yields in effect at April 30, 1994 were as follows:
Series A, 2.78%; Series B, 2.78%; Series C, 3.05%;
Series D, 2.45%; and Series E, 3.03%.
For the six months ended April 30,
1994, there were 6,400 AMPS shares authorized, issued
and outstanding with a liquidation preference of
$50,000 per share, plus accumulated and unpaid
dividends of $1,321,655.
The Fund generally pays commissions to certain
broker-dealers at the end of each auction at the annual
rate of one-quarter of 1% calculated on the proceeds of
each auction. For the six months ended April 30,
1994, MLPF&S, an affiliate of MLIM, earned $449,853
as commissions.
5. Subsequent Event:
On May 6, 1994, the Fund's Board of Directors de-
clared an ordinary income dividend to Common Stock
shareholders in the amount of $0.078343 per share
payable on May 27, 1994 to shareholders of record as
of May 17, 1994.
