MUNIYIELD
INSURED
FUND, INC.
FUND LOGO
STRATEGIC
Performance
Annual Report
October 31, 1994
This report, including the financial information herein,
is transmitted to the shareholders of MuniYield Insured
Fund, Inc. for their information. It is not a prospectus,
circular or representation intended for use in the pur-
chase 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 share-
holders, 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
<PAGE>
MuniYield Insured Fund, Inc.
TO OUR SHAREHOLDERS
For the year ended October 31, 1994, the Common
Stock of MuniYield Insured Fund, Inc. earned $1.148
per share income dividends, which includes earned
and unpaid dividends of $0.082. This represents a net
annualized yield of 8.29%, based on a month-end net
asset value of $13.85 per share. Over the same period,
the total investment return on the Fund's Common
Stock was -9.98%, based on a change in per share net
asset value from $16.76 to $13.85, and assuming
reinvestment of $1.152 per share income dividends
and $0.089 per share capital gain distributions.
For the six-month period ended October 31, 1994, the
total investment return on the Fund's Common Stock
was -2.72%, based on a change in per share net asset
value from $14.77 to $13.85, and assuming reinvest-
ment of $0.487 per share income dividends.
The average yields of the Fund's Auction Market
Preferred Stock for the six months ended October 31,
1994 were: Series A, 3.06%; Series B, 3.07%; Series C,
3.13%; Series D, 3.04%; and Series E, 3.03%.
The Environment
As discussed in our last report to shareholders, the
Federal Reserve Board moved to counteract inflation-
ary pressures by tightening monetary policy. This
trend continued during the May--October period.
Despite the series of preemptive strikes against
inflation by the central bank, concerns of increasing
inflationary pressures continued to prompt volatility
in the US capital markets during the period. In
addition, the weakness of the US dollar in foreign
exchange markets prolonged stock and bond market
declines.
<PAGE>
Ongoing strength in the manufacturing sector and
better-than-expected economic results continue to
fuel speculation that the Federal Reserve Board will
continue to raise short-term interest rates in the
months ahead. However, although consumer spending
is increasing, it is doing so at a lower rate than has
been the case in recent economic recoveries. In the
weeks ahead, investors will continue to assess eco-
nomic data and inflationary trends in order to gauge
whether further increases in short-term interest rates
are imminent. Continued indications of moderate
and sustainable levels of economic growth would be
positive for the US capital markets. At the same
time, greater US dollar stability in foreign exchange
markets would help to dampen expectations of
significantly higher short-term interest rates.
The Municipal Market
The long-term tax-exempt market continued to erode
throughout the three months ended October 31, 1994.
As measured by the Bond Buyer Revenue Bond Index,
yields on A-rated municipal revenue bonds maturing
in 30 years rose by almost 50 basis points (0.50%) to
6.95% during the October 31, 1994 quarter. This
represents the highest level in tax-exempt bond yields
in over two years. US Treasury bonds suffered even
greater declines during the quarter as Treasury bond
yields rose approximately 60 basis points to end the
quarter at 8.00%.
The tax-exempt bond market reacted negatively
throughout the October quarter to indications that,
despite a series of interest rate increases by the
Federal Reserve Board, the strength of the domestic
economy seen in recent quarters has not yet been
significantly reduced. While inflationary pressures
have remained well contained, additional Federal
Reserve Board actions have been expected both to
ensure that domestic economic growth is eventually
confined to current levels and to assure nervous
financial markets of its anti-inflationary intentions.
Fortunately, while the demand for tax-exempt bonds
has declined somewhat in recent months, new bond
issuance has remained greatly reduced. During the
quarter ended October 31, 1994, only $32 billion in
long-term tax-exempt securities were issued, a decline
of over 50% versus the October 31, 1993 quarter. Simi-
larly, for the six months ended October 31, 1994, only
$75 billion in municipal securities were underwritten,
a decline of over 50% versus the comparable period a
year earlier. This reduction in issuance in recent
quarters has allowed the municipal bond market to
react to both the decline in investor demand and the
rise in fixed-income yields in a more orderly fashion
than in similar situations in the past, particularly
during 1987.
<PAGE>
Long-term tax-exempt revenue bonds currently yield
approximately 7%, or almost 11.5% on an after-tax
equivalent basis, to an investor in the 39.6% Federal
income tax bracket. As inflation has only marginally
increased in the past year, real tax-exempt interest
rates have risen dramatically. The Federal Reserve
Board appears committed to maintaining inflation at
or below its current levels. Indeed, most forecasts
expect inflation to remain in its present range of
3%-4% throughout 1995 and, potentially, for the
remainder of the 1990s. Real after-tax equivalent
interest rates exceeding 7% represent historically
attractive municipal investments for long-term
investors.
Federal Reserve Board actions taken thus far have yet
to fully impact US domestic growth and expected
additional actions should promote only a modest
economic expansion within a benign inflationary
context beginning sometime early in 1995. Within
such an environment, it is unlikely that tax-exempt
interest rates will remain at their current attractive
levels. Tax-exempt bond issuance is unlikely to return
to the historic high levels seen in 1992 and 1993, while
investor demand should return as markets stabilize.
As we have discussed in earlier reports, the total
number of tax-exempt bonds outstanding is sched-
uled to decline dramatically in 1994 and 1995 as a
result of both regular bond maturities and early
redemptions. Investors seeking tax-advantaged issues
are likely to find it very difficult to obtain currently
available tax-exempt yields as the current supply/
demand balance is unlikely to be maintained in the
coming quarters.
Portfolio Strategy
During the quarter ended October 31, 1994, we
adopted a somewhat more defensive stance by mod-
estly altering the composition of the portfolio. Our
course of action was to sell discounted securities and
purchase current coupon securities, which increased
the average coupon level of the portfolio. Within this
framework, we concentrated on increasing the Fund's
holdings of high tax state issues because we believe
that the yield ratio to other municipal bonds will
decline as we go out to 1995-1996.
<PAGE>
We kept cash reserves at a minimum in order to seek
to take advantage of the steep yield spread between
short-term and long-term interest rates. As of
October 31, 1994, the yield spread was 300 basis
points, which continued to generate positive benefits
to Common Stock shareholders, derived from the
leveraging of the Preferred Stock. However, should the
spread between short-term and long-term interest
rates narrow, the benefits of the leverage will decline
and, as a result, reduce the yield of the Fund's
Common Stock. (For a complete explanation of the
benefits and risks of leveraging, see page 3 of this
report to shareholders.)
We appreciate your ongoing interest in MuniYield
Insured Fund, Inc., and we look forward to assisting
you with your financial needs in the months and
years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
December 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 prevail-
ing 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.
<PAGE>
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.
In this case, the dividends paid to Preferred Stock
shareholders are significantly lower than the income
earned on the fund's long-term investments, and there-
fore the Common Stock shareholders are the benefici-
aries 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 investments, 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.
<PAGE>
<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--0.4% NR* NR* $ 3,500 Huntsville, Alabama, Health Care Authority Facilities Revenue
Bonds, Series B, 6.625% due 6/01/2023 (d) $ 3,500
Arizona--1.1% SP-1 MIG2 6,000 Maricopa County, Arizona, CP, TAN, 5% due 7/28/1995 6,032
A1+ VMIG1 1,100 Maricopa County, Arizona, IDA, Hospital Facility Revenue
Bonds (Samaritan Health Services Hospital),
VRDN, Series B2, 3.70% due 12/01/2008 (a) (d) 1,100
A1+ NR* 2,500 Phoenix, Arizona, IDA, M/F Housing Revenue Refunding Bonds
(Lynwood Apartments Projects), VRDN, 3.05% due 10/01/2025 (a) 2,500
AA P1 1,000 Pinal County, Arizona, IDA, PCR (Magma Copper/Newmont
Mining Corp.), VRDN, 3.70% due 12/01/2009 (a) 1,000
Arkansas--0.6% AAA NR* 2,625 Arkansas State Development Finance Authority, S/F Mortgage
Revenue Bonds, Series C, 6.60% due 7/01/2017 (j) (k) 2,556
NR* P1 350 Crosset, Arkansas, PCR (Georgia Pacific Corp. Project), VRDN,
3.40% due 10/01/2007 (a) 350
A1+ Aaa 1,700 Little Rock, Arkansas, Health Facilities Board Hospital Revenue
Bonds (Southwest Hospital Capital Guaranty), VRDN, 3.525%
due 10/01/2018 (a) 1,700
AAA Aaa 1,500 North Little Rock, Arkansas, Electric Revenue Refunding Bonds,
Series A, 6.50% due 7/01/2010 (d) 1,531
California--16.4% AAA Aaa 6,550 Anaheim, California, Public Financing Authority, Revenue
Refunding Bonds (Anaheim Electric Utilities Projects), 5.625%
due 10/01/2022 (d) (l) 5,564
California HFA, Revenue Bonds, AMT:
AA- Aa 4,000 RIB, 9.111% due 8/01/2023 (i) 3,470
AAA Aaa 2,090 Series E, 7% due 8/01/2026 (d) 2,087
AAA Aaa 10,000 California State, GO, 6% due 5/01/2018 (b) 9,144
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) 3,277
A A 8,500 (Department of Corrections--Monterey County),
Series A, 7% due 11/01/2019 8,480
A- A 3,500 Refunding (Various University of California Projects), Series A,
5.50% due 6/01/2021 2,810
A- A 2,750 (University of California Project), Series A, 6.375%
due 10/01/2019 2,539
AAA Aaa 3,000 (Various University of California Projects), Series A, 6.40%
due 12/01/2016 (b) 2,920
A- A1 4,000 (Various University of California Projects), Series B, 6.625%
due 12/01/2019 3,810
</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.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
CP Commercial Paper
DATES Daily Adjustable Tax-Exempt Securities
EDA Economic Development Authority
GO General Obligation Bonds
HFA Housing Finance Authority
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RAN Revenue Anticipation Notes
S/F Single Family
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 (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 California State, RAN, Series C, 5.75% due 4/25/1996 (c) $ 5,064
(concluded) AAA Aaa 5,000 Calleguas-Las Virgines, California, Public Financing Authority
Installment Purchase, Revenue Refunding Bonds (Calleguas
Municipal Water District Project), 5.125% due 7/01/2014 (c) 4,047
AAA Aaa 5,000 Contra Costa, California, Water District, Water Revenue Bonds,
Series D, 6.375% due 10/01/2022 (b) 4,783
AA Aa 6,000 Los Angeles, California, Department of Water and Power,
Electric Plant Revenue Bonds, Crossover Refunding,
Second Issue, 5.25% due 11/15/2026 4,671
AA Aa 4,500 Los Angeles, California, Department of Water and Power,
Waterworks Revenue Cross Refunding Bonds, 5.25% due 4/15/2018 3,625
Los Angeles, California, Wastewater System Revenue Bonds:
AAA Aaa 16,000 Refunding, Series A, 5.70% due 6/01/2020 (d) 13,809
AAA Aaa 3,000 Series A, 5.875% due 6/01/2024 (d) 2,638
AAA Aaa 3,250 Series B, 6% due 6/01/2022 (b) 2,965
AAA Aaa 5,000 Los Angeles County, California, Transportation Commission,
Sales Tax Revenue Refunding Bonds, AMT, Series B, 6.50%
due 7/01/2015 (c) 4,916
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 8,327
AAA Aaa 4,750 6% due 7/01/2022 4,311
AAA Aaa 2,190 Northern California Transmission Revenue Bonds
(California-Oregon Transmission Project), Series A,
6.50% due 5/01/2016 (d) 2,150
AAA Aaa 3,000 Orange County, California, Financing Authority, Tax Allocation
Revenue Refunding Bonds, Series A, 6.25% due 9/01/2014 (d) 2,875
AAA Aaa 3,000 Redwood City, California, Public Financing Authority,
Local Agency Revenue Refunding Bonds, Series A,
6.50% due 7/15/2011 (b) 2,987
AAA Aaa 3,000 Sacramento County, California, COP, Refunding
(Sacramento Main Detention), 5.75% due 6/01/2015 (d) 2,644
SP-1+ NR* 5,600 San Diego, California, Area Local Government, COP, TRAN,
4.50% due 6/30/1995 5,611
A+ Aa3 4,000 San Diego, California, IDR, Refunding (San Diego Gas &
Electric), Series C, 5.90% due 9/01/2018 3,535
AAA Aaa 6,000 San Francisco, California, City and County Airports,
Revenue Bonds (Commerce International Airports), AMT,
2nd Series, 6.60% due 5/01/2024 (b) 5,774
AAA Aaa 3,000 San Francisco, California, City and County Sewer Revenue
Refunding Bonds, 5.375% due 10/01/2022 (c) 2,443
<PAGE> 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) 4,651
AAA Aaa 3,000 Southern California Public Power Authority, Transmission
Project, Revenue Refunding Bonds, Sub-series A, 5.25%
due 7/01/2020 (d) 2,408
NR* Aa 5,700 University of California, COP, Refunding (UCLA Center Chiller/
Cogen Project), 5.60% due 11/01/2020 4,677
AAA Aaa 5,000 University of California, Revenue Bonds (Multiple Purpose
Projects), Series D, 6.375% due 9/01/2024 (d) 4,778
West Covina, California, COP, GO (Queen of the Valley Hospital):
A A 5,410 6.50% due 8/15/2014 5,061
A A 2,500 6.50% due 8/15/2019 2,326
</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>
Colorado--0.7% AAA Aaa $ 3,200 Denver, Colorado, City and County, COP (School District No. 001),
Series B, 6.75% due 12/01/2002 (d) (g) $ 3,431
AAA Aaa 2,500 Douglas County, Colorado, School District No. 1 (Douglas and Elbert
Counties Improvement), Series A, 6.50% due 12/15/2016 (d) 2,468
AAA Aaa 1,000 Eagle, Garfield and Routt Counties, Colorado, School District
No. 50J, UT, 6.30% due 12/01/2012 (c) 980
Connecticut--0.4% AAA Aaa 3,500 Connecticut State HFA, Revenue Bonds (Mortgage
Finance Program), Series B, 6.75% due 11/15/2023 (d) 3,430
Delaware--1.1% AAA Aaa 2,000 Delaware River and Bay Authority, Revenue Refunding Bonds,
4.75% due 1/01/2024 (d) 1,475
AAA Aaa 8,490 Delaware State EDA, PCR, Refunding (Delmarva Power Project),
Series B, 7.15% due 7/01/2018 (c) 8,709
District of AAA Aaa 7,000 District of Columbia, UT, Series B, 6.10% due 6/01/2011 (d) 6,616
Columbia--3.0% Metropolitan of Washington, D.C., Airport Authority,
Revenue Bonds, AMT, Series A (d):
AAA Aaa 20,100 6.625% due 10/01/2019 19,376
AAA Aaa 3,000 5.50% due 10/01/2024 2,445
Florida--2.0% A1+ VMIG1 3,000 Dade County, Florida, Water and Sewer System Revenue Bonds,
VRDN, 3.30% due 10/05/2022 (a) (c) 3,000
AA Aa 3,500 Florida HFA, S/F Mortgage Revenue Bonds, AMT, Series B,
6.65% due 7/01/2026 3,298
AAA Aaa 9,940 Orange County, Florida, Tourist Development Tax, Revenue
Refunding Bonds, Series B, 6.50% due 10/01/2019 (b) 9,854
NR* VMIG1 200 Palm Beach County, Florida, Water and Sewer Revenue Bonds,
VRDN, 3.70% due 10/01/2011 (a) 200
A1 VMIG1 300 Pinellas County, Florida, Health Facilities Authority, Revenue
Refunding Bonds (Pooled Hospital Loan Project), DATES, 3.70%
due 12/01/2015 (a) 300
A1 VMIG1 1,900 Saint Lucie County, Florida, PCR, Refunding (Florida Power &
Light Company Project), VRDN, 3.75% due 1/01/2026 (a) 1,900
<PAGE>
Georgia--4.4% AAA Aaa 4,000 Atlanta, Georgia, COP (Atlanta Pre-trial Detention Center),
6.25% due 12/01/2017 (d) 3,772
AAA Aaa 3,000 Chatam County, Georgia, School District Revenue Bonds,
GO, UT, 6.75% due 8/01/2018 (d) 3,011
AAA Aaa 10,000 Georgia Municipal Electric Authority Power Revenue Bonds,
Series EE, 6.40% due 1/01/2023 (b) 9,596
AAA Aaa 8,955 Metropolitan Atlanta Rapid Transportation Authority, Georgia,
Sales Tax Revenue Bonds, Series O, 6.55% due 7/01/2020 (c) 8,833
AAA Aaa 6,000 Municipal Electric Authority, Georgia (Project One),
Sub-series A, 6.25% due 1/01/2014 (b) 5,754
AAA Aaa 10,800 Municipal Electric Authority, Georgia, Special Obligation Bonds
(Fifth Crossover Series--Project One), 6.40% due 1/01/2013 (b) 10,583
Hawaii--1.8% AAA Aaa 17,145 Hawaii State Airport Systems Revenue Bonds, AMT, Second Series,
6.75% due 7/01/2021 (d) 16,913
Illinois--8.0% Chicago, Illinois, GO (Central Public Library) (b) (g):
AAA Aaa 7,000 Series B, 6.85% due 7/01/2002 7,535
AAA Aaa 3,400 Series C, 6.85% due 7/01/2002 3,673
AAA Aaa 8,200 Chicago, Illinois, Midway Airport Revenue Bonds, AMT, Series A,
6.25% due 1/01/2024 (d) 7,514
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Illinois AAA Aaa $ 2,750 Chicago, Illinois, O'Hare International Airport, Special Facilities
(concluded) Revenue Bonds (International Terminal), AMT, 6.75% due
1/01/2012 (d) $ 2,751
AAA Aaa 12,000 Chicago, Illinois, Public Building Commission, Building Revenue
Bonds, Series A, 6.50% due 1/01/2018 (d) (h) 12,201
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) 3,675
Cook County, Illinois, GO, UT:
AAA Aaa 7,000 6.75% due 11/01/2001 (b) (g) 7,539
AAA Aaa 15,000 Series A, 6.60% due 11/15/2022 (d) 14,489
Illinois Health Facilities Authority Revenue Bonds:
AAA Aaa 6,000 Refunding (Carle Foundation), Series A, 6.75% due 1/01/2010 (c) 6,077
A+ A 1,500 Refunding (Lutheran General Health), Series C, 7% due 4/01/2014 1,520
AAA Aaa 8,545 (Rockford Memorial Hospital), Series B, 6.75% due 8/15/2018 (b) 8,375
Indiana--2.0% AAA Aaa 10,000 Indiana Health Facilities Financing Authority, Hospital Revenue
Bonds (Lutheran Hospital of Indiana, Inc.), 7% due 2/15/2019 (b) 10,062
AAA Aaa 5,000 Indianapolis, Indiana, Gas Utility Revenue Bonds, Series A,
6.20% due 6/01/2023 (c) 4,612
A+ NR* 2,350 Indianapolis, Indiana, Local Public Improvement Revenue
Refunding Bonds, Series D, 6.75% due 2/01/2020 2,240
AAA Aaa 2,000 Monroe County, Indiana, Hospital Authority Revenue Bonds
(Bloomington Hospital Project), 6.70% due 5/01/2012 (d) 2,004
<PAGE>
Iowa--0.2% A1+ NR* 2,300 Iowa Finance Authority, Solid Waste Disposal Revenue Bonds
(Cedar River Paper Company Project), VRDN, Series A,
3.80% due 6/01/2024 (a) 2,300
Kansas--2.2% AAA Aaa 20,250 Burlington, Kansas, PCR, Refunding (Kansas Gas and Electric
Company Project), 7% due 6/01/2031 (d) 20,505
Kentucky--0.9% AAA Aaa 9,030 Owensboro, Kentucky, Water Revenue Improvement and
Refunding Bonds, 6.25% due 9/15/2017 (c) 8,628
Maryland--1.2% AAA Aaa 8,700 Maryland State Health and Higher Educational Facilities
Authority, Revenue Refunding Bonds (University of Maryland
Medical System), 5% due 7/01/2020 (c) 6,672
AAA Aaa 5,000 Maryland State Transportation Authority, Special Obligation
Revenue Bonds (Baltimore/Washington International Airport
Project), AMT, Series A, 6.25% due 7/01/2014 (c) 4,714
Massachusetts--3.2% AAA Aaa 4,000 Massachusetts Municipal Wholesale Electric Company, Power Supply
System Revenue Refunding Bonds, Series B, 5% due 7/01/2017 (d) 3,127
Massachusetts State Health and Higher Educational Facilities
Authority Revenue Bonds (c):
AAA Aaa 6,400 (Bay State Medical Center), Series D, 5.50% due 7/01/2016 5,412
AAA Aaa 7,130 (New England Medical Center Hospitals), Series F, 6.625%
due 7/01/2025 6,996
AAA Aaa 5,000 Massachusetts State Industrial Finance Agency Revenue Bonds
(Brandeis University), Series C, 6.80% due 10/01/2019 (d) 5,016
AAA Aaa 11,000 Massachusetts State Water Resources Authority, Series A,
6% due 8/01/2024 (d) 9,985
</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>
Michigan--3.7% A1+ VMIG1 $ 800 Grand Rapids, Michigan, Water Supply Systems, Revenue
Refunding Bonds, VRDN, 3.70% due 1/01/2020 (a) (d) $ 800
A- A 2,900 Michigan State Hospital Finance Authority, Revenue Refunding
Bonds (Detroit Medical Center Obligation Group), Series A,
6.50% due 8/15/2018 2,649
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) 22,034
Monroe County, Michigan, PCR (Detroit Edison County College),
AMT (d):
AAA Aaa 5,000 Series CC, 6.55% due 6/01/2024 4,829
AAA Aaa 5,000 Series I-B, 6.55% due 9/01/2024 4,828
<PAGE>
Minnesota--0.7% Minnesota State HFA, S/F Mortgage Revenue Bonds, AMT:
AA+ Aa 3,800 Series H, 6.50% due 1/01/2026 3,551
AA+ Aa 3,000 Series L, 6.70% due 7/01/2020 2,910
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 4,883
Nevada--5.3% Humboldt County, Nevada, PCR, Refunding (Sierra Pacific Power
Company Project) (b):
AAA Aaa 14,250 6.55% due 10/01/2013 14,022
AAA Aaa 4,500 Series A, 6.30% due 7/01/2022 4,189
Las Vegas, Nevada, GO, Refunding (c):
AAA Aaa 4,180 6.60% due 10/01/2010 4,176
AAA Aaa 4,470 6.60% due 10/01/2011 4,447
AAA Aaa 4,770 6.60% due 10/01/2012 4,720
AAA Aaa 2,400 Reno, Nevada, Hospital Revenue Bonds (Saint Mary's Regional
Medical Center), Series A, 6.70% due 7/01/2021 (d) 2,341
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) 1,891
AAA Aaa 15,000 Washoe County, Nevada, Gas Facilities Revenue Bonds
(Sierra Pacific Power Company), AMT, 6.65% due 12/01/2017 (b) 14,336
New Hampshire-- AAA Aaa 7,660 New Hampshire Higher Educational and Health Facilities
0.7% Authority Revenue Bonds (Elliot Hospital of Manchester),
6.25% due 10/01/2021 (b) 7,089
New Jersey--1.5% New Jersey State Housing and Mortgage Finance Agency,
Revenue Bonds (Home Buyer), AMT (d):
AAA Aaa 4,695 Series K, 6.375% due 10/01/2026 4,322
NR* NR* 5,000 Series M, 6.95% due 10/01/2022 4,969
AAA Aaa 5,000 Port Authority of New York and New Jersey, Consolidated
Revenue Bonds, AMT, 96th Series, 6.60% due 10/01/2023 (c) 4,868
New Mexico--1.4% AAA Aaa 10,275 Farmington, New Mexico, PCR, Refunding (Southern California
Edison Company), Series A, 5.875% due 6/01/2023 (d) 8,967
AAA Aaa 1,600 New Mexico Educational Assistance Foundation, Student Loan
Revenue Bonds, AMT, Series A, 6.85% due 4/01/2005 (b) 1,651
AAA Aaa 3,000 Santa Fe, New Mexico, Revenue Bonds, Series A, 6.30%
due 6/01/2024 (b) 2,842
</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 York--8.5% BBB Baa1 $ 10,980 Metropolitan Transportation Authority, New York, Service Contract
Revenue Refunding Bonds (Transit Facilities), Series 5,
7% due 7/01/2012 $ 11,028
New York City, New York, GO, UT:
A- Baa1 2,210 Series C, Sub-series C-1, 7.50% due 8/01/2019 2,277
A- Baa1 1,000 Series D, 7.50% due 2/01/2016 1,031
A- Baa1 12,000 Series D, 7.50% due 2/01/2019 12,353
A- Baa1 5,000 Series H, 7.10% due 2/01/2011 5,019
A- Baa1 3,000 Series H, 7% due 2/01/2019 2,955
A- Baa1 1,925 Series H, 7% due 2/01/2020 1,893
AAA Aaa 6,650 New York City, New York, GO, UT, Refunding, Series C,
Subseries C-1, 6.625% due 8/01/2002 (d) (g) 7,095
SP-1+ MIG1++ 7,000 New York City, New York, UT, TAN, Series A, 4.25% due 2/15/1995 7,010
New York State Dormitory Authority Revenue Refunding Bonds
(State University Educational Facilities):
BBB+ Baa1 7,595 Refunding, Series B, 7% due 5/15/2016 7,595
BBB+ Baa1 6,250 Series A, 6% due 5/15/2022 5,464
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) 4,758
AAA Aaa 1,750 New York State Medical Care Facilities Finance Agency
Revenue Bonds (Mental Health Services), Series A, 5.25%
due 8/15/2023 (e) 1,376
AAA Aaa 4,050 New York State Thruway Authority, General Revenue Bonds,
Series A, 5.50% due 1/01/2023 (c) 3,384
BBB Baa1 2,950 New York State Urban Development Corporation, Correctional
Capital Facilities Revenue Bonds, Series 4, 5.375% due 1/01/2023 2,307
A+ Aa 6,000 Triborough Bridge and Tunnel Authority, New York, Revenue Bonds
(General Purposes), Series A, 5.20% due 1/01/2020 4,831
North Dakota--0.2% AAA Aaa 2,500 Grand Forks, North Dakota, Health Care Facilities Revenue Bonds
(United Hospital Obligated Group), 6.25% due 12/01/2024 (d) 2,301
Ohio--2.1% AAA Aaa 3,000 Columbus, Ohio, Municipal Airport Authority, Revenue
Improvement Bonds (Port Columbus International Airport), AMT,
Series A, 6.25% due 1/01/2024 (d) 2,788
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) 14,803
AAA Aaa 2,500 Ohio State Higher Educational Facilities Commission, Mortgage
Revenue Bonds (University of Dayton Project), 6.60%
due 12/01/2017 (c) 2,485
<PAGE>
Oregon--0.4% A+ A1 3,750 Portland, Oregon, Sewer System Revenue Bonds, Series A, 6.25%
6/01/2015 3,563
Pennsylvania--2.3% AAA Aaa 5,000 Bristol Township, Pennsylvania, School District, GO, Series A,
6.625% due 2/15/2002 (d) (g) 5,332
AAA Aaa 16,000 Montgomery County, Pennsylvania, IDA, PCR, Refunding
(Philadelphia Electric Company), Series B, 6.70%
due 12/01/2021 (d) 15,959
</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>
South Carolina--6.3% South Carolina State Port Authority Revenue Bonds, AMT (b):
AAA Aaa $ 4,560 6.625% due 7/01/2011 $ 4,463
AAA Aaa 10,250 6.75% due 7/01/2021 9,893
South Carolina State Public Service Authority, Revenue Bonds
(Santee Cooper), Series D (b):
AAA Aaa 17,375 6.50% due 7/01/2002 (g) 18,452
AAA Aaa 9,900 6.50% due 7/01/2014 9,684
AAA Aaa 12,500 South Carolina State Public Service Authority, Revenue Refunding
Bonds, Series A, 5.50% due 7/01/2021 (d) 10,351
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) 6,781
Tennessee--2.1% 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) 7,629
AAA Aaa 3,820 6.75% due 7/01/2016 3,827
AAA Aaa 4,450 Metropolitan Nashville Airport Authority, Tennessee, Airport
Revenue Bonds, Series C, 6.60% due 7/01/2015 (c) 4,395
A+ A1 3,900 Tennessee, Housing Development Agency Mortgage Finance,
AMT, Series A, 6.90% due 7/01/2025 3,779
Texas--6.3% AAA Aaa 3,800 Brazos River Authority, Texas, PCR (Texas Utilities Electric
Company Project), AMT, Series A, 6.75% due 4/01/2022 (b) 3,703
AAA Aaa 12,140 Brazos River Authority, Texas, Revenue Refunding Bonds
(Houston Light and Power), Series A, 6.70% due 3/01/2017 (b) 12,055
Corpus Christi, Texas, Improvement and Refunding, GO (c):
AAA Aaa 9,730 6.65% due 3/01/2007 9,927
AAA Aaa 3,500 6.70% due 3/01/2008 3,573
Harris County, Texas, Toll Road Revenue Refunding Bonds,
Series A (c):
<PAGE> AAA Aaa 9,290 (Senior Lien), 6.50% due 8/15/2002 (g) 9,871
AAA Aaa 1,750 6.50% due 8/15/2011 1,734
AAA Aaa 6,885 Houston, Texas, Airport System Revenue Bonds (Sub-Lien), AMT,
Series A, 6.75% due 7/01/2021 (c) 6,710
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) 11,594
Utah--0.9% AAA Aaa 10,000 Salt Lake City, Utah, Airport Revenue Bonds, AMT, Series A,
6.125% due 12/01/2022 (c) 8,975
Virginia--0.1% AAA Aa2 900 Peninsula Ports Authority, Virginia, Port Facility Revenue
Refunding Bonds (Shell Oil Company Project), UPDATES, AMT,
CP, Series A, 3.65% due 12/01/2005 (a) 900
Washington--5.3% AAA Aaa 9,495 Port Seattle, Washington, Revenue Bonds (Sub-Lien) Series C,
6.625% due 8/01/2017 (d) 9,335
Seattle, Washington, Metropolitan Seattle Municipality Sewer
Revenue Bonds:
AAA Aaa 10,560 Series U, 6.60% due 1/01/2032 (c) 10,136
AAA Aaa 1,750 Series W, 6.25% due 1/01/2022 (d) 1,633
</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>
Washington AAA Aaa $ 5,115 Snohomish County, Washington, Public Utility District No. 001,
(concluded) Electric Revenue Refunding Bonds (Generation System), UT,
6% due 1/01/2018 (c) $ 4,586
AAA Aaa 2,000 University of Washington Alumni Association, Lease Revenue
Bonds (University of Washington Medical Center-Roosevelt II),
6.25% due 8/15/2012 1,899
A+ A1 8,300 Washington State Health Care Facilities Authority Revenue Bonds
(Children's Hospital and Medical Center), 6% due 10/01/2022 7,426
Washington State Public Power Supply Systems, Revenue
Refunding Bonds (Nuclear Project No. 1), Series A (d):
AAA Aaa 5,000 5.70% due 7/01/2017 4,296
AAA Aaa 11,175 6.25% due 7/01/2017 10,407
West Virginia--0.9% AAA Aaa 4,425 Harrison County, West Virginia, Commonwealth Solid Waste Disposal,
Revenue Bonds (Monongahela Power), AMT, Series C,
6.75% due 8/01/2024 (b) 4,287
AAA Aaa 1,300 Putnam County, West Virginia, PCR, Refunding (Appalachian
Power Company Project), Series D, 5.45% due 6/01/2019 (b) 1,068
<PAGE> AAA Aaa 2,800 West Virginia School Building Authority, Revenue and Capital
Improvement Bonds, Series B, 6.75% due 7/01/2017 (d) 2,758
Wisconsin--1.3% AA Aa 2,000 Wisconsin, Housing & Economic Development Authority, Home
Ownership Revenue Bonds, AMT, Series B, 6.75% due 9/01/2025 1,901
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) 4,682
Wisconsin State Health and Educational Facilities Authority,
Revenue Refunding Bonds (Wheaton-Franciscan Services) (d):
AAA Aaa 3,955 6.50% due 8/15/2011 3,841
AAA Aaa 2,000 6% due 8/15/2015 1,802
Wyoming--0.1% NR* P1 800 Unita County, Wyoming, PCR, Refunding (Chevron USA Inc.,
Project), VRDN, 3.60% due 8/15/2020 (a) 800
Puerto Rico--0.0% A1 VMIG1 400 Puerto Rico Commonwealth, Government Development Bank
Refunding Bonds, VRDN, 3.10% due 12/01/2015 (a) 400
Total Investments (Cost--$965,940)--100.2% 947,486
Variation Margin on Futures Contracts**--0.0% 46
Liabilities in Excess of Other Assets--(0.2)% (1,902)
--------
Net Assets--100.0% $945,630
========
<FN>
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate
in effect at October 31, 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 rate shown
is the rate in effect at October 31, 1994.
(j)FNMA Collateralized.
(k)GNMA Collateralized.
(l)Portion of security held in connection with open futures contracts.
++Highest short-term rating by Moody's Investors Service, Inc.
*Not Rated.
**Financial futures contracts sold as of October 31, 1994 were as follows:
(in thousands)
Number of Expiration Value
Contracts Issue Date (Note 1a)
1,480 US Treasury Notes December 1994 ($150,428)
(Total Contract Price--$152,332) ($150,428)
============
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of October 31, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$965,939,750) (Note 1a) $ 947,486,060
Cash 527,794
Receivables:
Securities sold $ 34,085,216
Interest 18,357,898
Variation margin (Note 1b) 46,250 52,489,364
--------------
Deferred organization expenses (Note 1e) 15,186
Prepaid expenses and other assets 124,610
--------------
Total assets 1,000,643,014
--------------
Liabilities: Payables:
Securities purchased 52,915,755
Dividends to shareholders (Note 1g) 1,562,668
Investment adviser (Note 2) 407,717 54,886,140
--------------
Accrued expenses and other liabilities 126,946
--------------
Total liabilities 55,013,086
--------------
Net Assets: Net assets $ 945,629,928
==============
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 7,243,470
Undistributed realized capital gains on investments--net 184,233
Unrealized depreciation on investments--net (16,549,612)
--------------
Total--Equivalent to $13.85 net asset value per share of Common Stock
(market price--$11.625) 625,629,928
--------------
Total capital $ 945,629,928
==============
<PAGE>
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Year Ended
October 31, 1994
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 61,249,626
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 5,083,469
Commission fees (Note 4) 971,571
Transfer agent fees 150,057
Professional fees 114,122
Accounting services (Note 2) 82,794
Printing and shareholder reports 64,246
Directors' fees and expenses 58,972
Custodian fees 46,478
Listing fees 39,971
Pricing fees 23,625
Amortization of organization expenses (Note 1e) 6,313
Other 48,454
Total expenses 6,690,072
--------------
Investment income--net 54,559,554
--------------
Realized & Unreal- Realized gain on investments--net 184,275
ized Gain (Loss) Change in unrealized appreciation/depreciation on investments--net (120,465,020)
on Investments-- --------------
Net (Notes 1b, Net Decrease in Net Assets Resulting from Operations $ (65,721,191)
1d & 3): ==============
</TABLE>
<PAGE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 1994 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 54,559,554 $ 54,800,742
Realized gain on investments--net 184,275 13,666,112
Change in unrealized appreciation/depreciation on investments--net (120,465,020) 102,799,939
-------------- --------------
Net increase (decrease) in net assets resulting from operations (65,721,191) 171,266,793
-------------- --------------
Dividends & Investment income--net:
Distributions to Common Stock (44,380,022) (45,166,236)
Shareholders Preferred Stock (7,730,046) (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 (65,776,200) (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 (18,766) --
Offering and underwriting costs from the issuance of Preferred Stock 8,000 --
-------------- --------------
Net increase (decrease) in net assets derived from capital stock
transactions (10,766) 6,696,023
-------------- --------------
Net Assets: Total increase (decrease) in net assets (131,508,157) 118,988,366
Beginning of year 1,077,138,085 958,149,719
-------------- --------------
End of year* $ 945,629,928 $1,077,138,085
============== ==============
<PAGE>
<FN>
*Undistributed investment income--net $ 7,243,470 $ 4,793,984
============== ==============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
For the Period
The following per share data and ratios have been derived March 27,
from information provided in the financial statements. For the Year Ended 1992++ to
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 1.20 1.21 .66
Realized and unrealized gain (loss) on investments--net (2.66) 2.59 .16
----------- ----------- -----------
Total from investment operations (1.46) 3.80 .82
----------- ----------- -----------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net (.98) (1.00) (.48)
Realized gain on investments--net (.26) (.10) --
----------- ----------- -----------
Total dividends and distributions (1.24) (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 (.17) (.19) (.10)
Realized gain on investments--net (.04) (.02) --
Capital charge resulting from issuance of Preferred
Stock -- -- (.14)
----------- ----------- -----------
Total effect of Preferred Stock activity (.21) (.21) (.24)
----------- ----------- -----------
Net asset value, end of period $ 13.85 $ 16.76 $ 14.27
=========== =========== ===========
Market price per share, end of period $ 11.625 $ 15.875 $ 14.875
=========== =========== ===========
Total Investment Based on market price per share (20.23%) 14.51% 2.46%+++
Return:** =========== =========== ===========
Based on net asset value per share (9.98%) 26.01% 3.97%+++
=========== =========== ===========
<PAGE>
Ratios to Average Expenses, net of reimbursement .66% .65% .47%*
Net Assets:*** =========== =========== ===========
Expenses .66% .65% .66%*
=========== =========== ===========
Investment income--net 5.35% 5.35% 5.69%*
=========== =========== ===========
Supplemental Net assets, net of Preferred Stock, end of period
Data: (in thousands) $ 625,630 $ 757,138 $ 638,150
=========== =========== ===========
Preferred Stock outstanding, end of period (in thousands) $ 320,000 $ 320,000 $ 320,000
=========== =========== ===========
Portfolio turnover 45.71% 39.93% 21.89%
=========== =========== ===========
Dividends Per Share Series A--Investment income--net $ 1,184 $ 1,150 $ 688
On Preferred Stock Series B--Investment income--net 1,090 1,253 656
Outstanding: Series C--Investment income--net 1,278 1,175 659
Series D--Investment income--net 1,144 1,426 767
Series E--Investment income--net 1,282 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 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, which are traded on
exchanges, are valued at their closing price as of the
close of such exchanges. Options, which are traded on
exchanges, are valued at their last sale price as of the
close of such exchanges or, lacking any sales, at the
last available bid price. Securities 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.
(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.
<PAGE>
(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. ("PSI"), an indirect wholly-owned subsidiary of
ML & Co. The limited partners are ML & Co. and Fund
Asset Management, Inc. ("FAMI"), which is also an
indirect wholly-owned subsidiary of ML & Co.
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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
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, FAMI, PSI, Merrill
Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S"),
and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-
term securities, for the year ended October 31, 1994
were $441,492,674 and $451,972,397, respectively.
Net realized and unrealized gains (losses) as of
October 31, 1994 were as follows:
Realized Unrealized
Gains Gains
(Losses) (Losses)
Long-term investments $(1,537,427) $(18,446,816)
Short-term investments (31,254) (6,874)
Financial futures contracts 1,752,956 1,904,078
----------- -------------
Total $ 184,275 $(16,549,612)
=========== ============
As of October 31, 1994, net unrealized depreciation for
Federal income tax purposes aggregated $18,453,690,
of which $7,630,515 related to appreciated securities
and $26,084,205 related to depreciated securities.
The aggregate cost of investments at October 31, 1994
for Federal income tax purposes was $965,939,750.
4. Capital Stock Transactions:
The Fund is authorized to issue 200,000,000 shares
of capital stock, including Preferred Stock, par value
$.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.
Common Stock
For the year ended October 31, 1994, shares issued
and outstanding remained constant at 45,187,339. At
October 31, 1994, total paid-in capital amounted to
$634,751,837.
<PAGE>
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 October 31, 1994 were as
follows: Series A, 3.34%; Series B, 3.33%; Series C,
3.29% Series D, 3.375%; and Series E, 3.03%.
For the year ended October 31, 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 $1,628,346.
Effective December 1, 1994, as a result of a two-for-one
stock split, there will be 12,800 AMPS shares with a
liquidation preference of $25,000 per share.
The Fund pays commissions to certain broker-dealers
at the end of each auction at an annual rate ranging
from 0.25% to 0.375%, calculated on the proceeds of
each auction. For the year ended October 31, 1994,
MLPF&S, an affiliate of FAMI, earned $591,736 as
commissions.
5. Subsequent Event:
On November 8, 1994, the Fund's Board of Directors
declared an ordinary income dividend to Common
Stock shareholders in the amount of $.081534 per
share, payable on November 29, 1994 to shareholders
of record as of November 18, 1994.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
MuniYield Insured Fund, Inc.:
We have audited the accompanying statement of
assets, liabilities and capital, including the schedule
of investments, of MuniYield Insured Fund, Inc. as of
October 31, 1994, the related statements of operations
for the year then ended and changes in net assets
for each of the years in the two-year period then
ended, and the financial highlights for each of the
years in the two-year period then ended and the
period March 27, 1992 (commencement of operations)
to October 31, 1992. These financial statements and
the financial highlights are the responsibility of the
Fund's management. Our responsibility is to express
an opinion on these financial statements and the
financial highlights based on our audits.
<PAGE>
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reason-
able assurance about whether the financial state-
ments and the financial highlights are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and dis-
closures in the financial statements. Our procedures
included confirmation of securities owned at October
31, 1994 by correspondence with the custodian and
brokers. An audit also includes assessing the account-
ing principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements and the finan-
cial highlights present fairly, in all material respects,
the financial position of MuniYield Insured Fund, Inc.
as of October 31, 1994, the results of its operations,
the changes in its net assets, and the financial high-
lights for the respective stated periods in conformity
with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 5, 1994
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid monthly by MuniYield
Insured Fund, Inc. during its taxable year ended October 31, 1994 qualify
as tax-exempt interest dividends for Federal income tax purposes.
Additionally, the following table summarizes the per share capital gains
distributions declared by the Fund during the year:
<PAGE>
<TABLE>
<CAPTION>
Payable Short-Term Long-Term
Date Capital Gains Capital Gains
<S> <C> <C> <C>
Common Stock Shareholders 12/30/93 $ .169974 $ .089161
Preferred Stock Shareholders: Series A 12/02/93 $106.21 $51.78
12/30/93 $ 66.13 $38.62
Series B 12/02/93 $108.29 $52.80
12/30/93 $ 81.55 $46.79
Series C 11/18/93 $ 97.88 $47.72
12/01/93 $ 57.27 $30.35
12/30/93 $ 21.95 $14.83
Series D 11/26/93 $101.80 $49.63
12/23/93 $ 98.29 $50.92
01/20/94 $ 15.47 $12.53
Series E 12/01/93 $127.19 $62.00
12/09/93 $ 32.90 $17.48
12/16/93 $ 22.43 $12.35
12/30/93 $ 43.98 $26.98
Please retain this information for your records.
</TABLE>
PER SHARE INFORMATION (unaudited)
<TABLE>
Per Share Selected Quarterly Financial Data*
<CAPTION>
Net Realized Unrealized Dividends/Distributions
Investment Gains Gains Net Investment Income Capital Gains
For the Quarter Income (Losses) (Losses) Common Preferred Common Preferred
<S> <C> <C> <C> <C> <C> <C> <C>
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 -- --
May 1, 1994 to July 31, 1994 .30 (.02) .22 .24 .05 -- --
August 1, 1994 to October 31, 1994 .30 (.13) (1.01) .24 .05 -- --
<PAGE>
<CAPTION>
Net Asset Value Market Price**
For the Quarter High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
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
May 1, 1994 to July 31, 1994 15.36 14.38 14.00 13.125 3,962
August 1, 1994 to October 31, 1994 15.00 13.85 13.75 11.625 7,359
<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>
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
<PAGE>
NYSE Symbol
MYI
