MUNIYIELD
INSURED
FUND, INC.
FUND LOGO
Semi-Annual Report
April 30, 1995
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 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 Com-mon Stock shareholders.
MuniYield
Insured Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
<PAGE>
MuniYield Insured Fund, Inc.
TO OUR SHAREHOLDERS
For the six months ended April 30, 1995, the Common Stock of
MuniYield Insured Fund, Inc. earned $0.463 per share income
dividends, which included earned and unpaid dividends of $0.076.
This represents a net annualized yield of 6.35%, based on a month-
end net asset value of $14.71 per share. Over the same period, the
total investment return on the Fund's Common Stock was +10.48%,
based on a change in per share net asset value from $13.85 to
$14.71, and assuming reinvestment of $0.469 per share income
dividends and $0.040 per share capital gains distributions.
The average yields of the Fund's Auction Market Preferred Stock for
the six months ended April 30, 1995 were: Series A, 4.42%; Series B,
4.41%; Series C, 4.42%; Series D, 3.70%; and Series E, 3.65%.
The Environment
During the six months ended April 30, 1995, the perception that the
US economy was overheating and inflationary pressures were
increasing gave way to a more benign economic outlook. With more
signs of slowing growth, investors now appear to be forecasting a
"soft landing" for the US economy. Although gross domestic product
was reported to have increased at a revised 5.1% rate during the
final quarter of 1994, declines in other indicators such as new home
sales and durable goods orders registered thus far in 1995 have led
investors to anticipate that the economy is losing enough momentum
to keep inflation under control and preclude further significant
monetary policy tightening by the Federal Reserve Board. A further
indication of a slowing economy was the reported decline in the
Index of Leading Economic Indicators for March.
As US stock and bond markets have risen on more positive economic
news, the value of the US dollar has reached new lows relative to
the yen and the Deutschemark. Persistent trade deficits and exports
of capital from the United States have kept the US currency in a
decade-long decline relative to the Japanese and German currencies.
Over the longer term, since the United States has the highest
productivity among industrialized nations and among the lowest labor
costs, demand for US dollar-denominated assets may improve. However,
a reduction of the still-widening US trade deficit may be necessary
before the US dollar appreciates substantially relative to the yen
and the Deutschemark.
<PAGE>
The first months of 1995 have been very positive for the stock and
bond markets. Continued signs of a moderating expansion and well-
contained inflationary pressures would provide further assurance
that the peak in interest rates is behind us. On the other hand,
indications of reaccelerating growth and further significant
monetary policy tightening by the Federal Reserve Board would be a
decided negative for the US financial markets.
The Municipal Market
During the six-month period ended April 30, 1995, the tax-exempt
bond market gradually recouped much of the losses sustained during
1994. Signs of a weakening domestic economy and ongoing moderate
inflationary pressures have fostered an environment of declining
interest rates. Since October 31, 1994, A-rated, uninsured municipal
revenue bond yields, as measured by the Bond Buyer Revenue Bond
Index, have declined over 65 basis points (0.65%) to close the six-
month period ended April 30, 1995 at 6.29%. Tax-exempt bond yields
initially continued to climb in late 1994, reaching a high of 7.37%
in late November 1994. Municipal bond yields have since declined
over 100 basis points from their recent highs and are presently
lower than they were a year ago. US Treasury bond yields have
experienced similar declines over the last six months to end the
April period at 7.34%.
Much of the recent improvement in the tax-exempt bond market,
however, has occurred over the last three months. During this most
recent quarter, municipal bond yields have fallen approximately 50
basis points, while US Treasury bond yields declined only 35 basis
points. Tax-exempt bond yields declined more than their taxable
counterparts in recent months, largely in response to the
significant decline in new bond issuance in recent quarters. Over
the last six months, less than $60 billion in new long-term
municipal securities were underwritten, a decline of nearly 45%
versus the comparable period a year earlier. Issuance was
particularly low this past January and February, with monthly volume
of less than $8 billion. These levels are the lowest monthly totals
since the mid-1980s.
To compound the municipal market's already strong technical posture,
both institutional and individual investors have seen significant
cash inflows in recent months. These assets were derived from
regular coupon payments, bond maturities and the proceeds from early
bond calls and redemptions. It has been estimated that investors
received over $20 billion in principal redemptions and coupon income
in January 1995 alone. With monthly issuance in the $10 billion
range thus far this year, the current supply/demand imbalance has
dominated the municipal market and bond prices have risen
accordingly. The tax-exempt bond market's technical position is
likely to remain very strong throughout most of 1995. Investors are
expected to receive almost $40 billion in principal and coupon
payments on July 1, 1995. Investor proceeds from all sources have
been estimated to exceed $200 billion for all of 1995. Estimates of
total new bond issuance for 1995 have continued to be lowered with
most estimates now in the $125 billion range. Investors should find
it increasingly difficult to replace existing holdings as they
mature and to reinvest coupon income in such an environment.
<PAGE>
The municipal bond market's outperformance thus far this year caused
the tax-exempt market to become temporarily expensive relative to
its taxable counterpart in late April. Investor concerns regarding
the international currency situation and the future impact of
proposed revisions to US taxation policies upon the tax advantage
inherent to municipal bonds have combined to cause tax-exempt bond
yields to increase marginally in recent weeks. Municipal bond yields
have risen approximately 15 basis points from their lows in mid-
April 1995. Long-term US Treasury bond yields have remained
essentially stable.
Such an underperformance by the tax-exempt bond market is likely to
be limited in duration. The recent increase in tax-exempt bond
yields has already begun to attract institutional investors since
some municipal bonds yielding in excess of 85% of US Treasury bond
yields are again available. Also, concerns regarding the implication
for municipal bonds' tax advantage resulting from various proposed
tax law changes (for example, flat-tax, value-added tax or national
sales tax) are all likely to quickly recede as investors realize
that such, if any, changes are unlikely to be enacted before late
1996 at the earliest. Long-term investors will also recall 1986 when
similar tax proposals were made and tax-exempt bond yields initially
rose and then quickly fell. Investors are likely to view the current
situation as an opportunity to purchase very attractively priced tax-
advantaged products. This should cause municipal bond yields to
quickly return to their more historic relationship.
Portfolio Strategy
During the six-month period ended April 30, 1995, we adapted a more
constructive posture toward the municipal bond market. From November
1994 to late December 1994, our investment strategy was more
defensive. We held the Fund's cash reserves at more than 6% to seek
to limit additional capital depreciation. We sold some of the Fund's
performance-oriented deeply discounted securities and replaced them
with less volatile current and premium coupon securities. By January
31, 1995 we had lowered the Fund's cash reserve position to below
3%. At that time, we believed interest rates had stabilized and the
market would be subjected to minimum interest rate instability;
therefore we sought to increase the amount of income for our Common
Stock shareholders. We concentrated on the acquisition of high-
quality, current coupon income-oriented securities of high-tax
states that offered the best overall value in the municipal market.
This enabled us to participate fully in the continued improvement in
the tax-exempt bond market. Looking forward, we will continue to
concentrate on sustaining an attractive level of tax-exempt income
and total return by continuing to emphasize the Fund's present
coupon and high credit quality structure.
<PAGE>
Short-term tax-exempt interest rates traded in the 3.00%--4.50%
range for most of the last six months. Traditional year-end
financing pressures briefly caused short-term interest rates to rise
into the 4.00%--4.50% range. Cash equivalent securities quickly
rallied once these temporary pressures abated and yielded below 4%
by mid-January. Despite year-end pressures, the municipal yield
curve re-mained steeply positive. This generated a beneficial impact
on the yield paid to the Common Stock shareholder. However, should
the spread between short-term and long-term interest rates narrow,
the benefits of the leverage effect will diminish and the yield on
the Fund's Common Stock will be reduced. (For a complete explanation
of the benefits and risks of leveraging, see page 4 of this report
to shareholders.)
In Conclusion
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
May 31, 1995
<PAGE>
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. Of course, increases in
short-term interest rates would reduce (and even eliminate) the
dividends of the Common Stock.
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 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 or eliminated completely. 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>
PORTFOLIO ABBREVIATIONS
To simplify the listings of MuniYield Insured Fund, Inc.'s portfolio
holdings in the Schedule of Investments, we have abbreviated the
names of many of the securities according to the list below and at
right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
CP Commercial Paper
EDA Economic Development Authority
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
PCR Pollution Control Revenue Bonds
RAW Revenue Anticipation Warrants
RIB Residual Interest Bonds
SAVRS Select Auction Variable Rate Securities
S/F Single Family
TAN Tax Anticipation Notes
TRAN Tax Revenue Anticipation Notes
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> <C> <C> <C> <S> <C>
Alabama--0.4% AAA Aaa $ 3,500 Huntsville, Alabama, Health Care Authority, Facilities
Revenue Bonds, Series B, 6.625% due 6/01/2023 (d) $ 3,632
Arizona--0.9% Arizona Educational Loan Marketing Corporation, Educational
Loan Revenue Bonds, VRDN, AMT, Series A (a):
AAA VMIG1++ 600 4.75% due 3/01/2015 (d) 600
NR* VMIG1++ 200 4.75% due 12/01/2020 200
SP1 MIG2 1,000 Maricopa County, Arizona, CP, GO, TAN, UT, 5% due 7/28/1995 1,001
NR* NR* 3,500 Mohave County, Arizona, IDA, IDR (North Star Steel Co. Project),
AMT, 6.70% due 3/01/2020 3,487
AA P1 1,300 Pinal County, Arizona, IDA, PCR (Magma Copper/Newmont
Mining Corporation), VRDN, 5% due 12/01/2009 (a) 1,300
AAA Aaa 2,525 Salt River Project, Arizona, Agricultural Improvement and Power
District, Electric Systems Revenue Refunding Bonds (Salt River
Project), Series B, 5.25% due 1/01/2019 (d) 2,266
<PAGE>
Arkansas--0.3% NR* VMIG1++ 100 Arkansas State Student Loan Authority Revenue Bonds, VRDN,
AMT, Series B-4, 4.75% due 6/01/2010 (a) 100
NR* P1 700 Crosset, Arkansas, PCR (Georgia Pacific Corp. Project),
VRDN, 4.60% due 10/01/2007 (a) 700
AAA Aaa 1,500 North Little Rock, Arkansas, Electric Revenue Refunding Bonds,
Series A, 6.50% due 7/01/2010 (d) 1,627
California--19.3% Anaheim, California, Public Financing Authority, Revenue
Bonds:
AAA Aaa 7,500 (Electric Utility-San Juan 4), 2nd Series, 5.75% due
10/01/2022 (c) 7,057
AAA Aaa 6,550 Refunding (Anaheim Electric Utilities Projects),
5.625% due 10/01/2022 (d) 6,048
California HFA, Revenue Bonds, AMT:
AAA Aaa 1,595 Series E, 7% due 8/01/2026 (d) 1,647
AA- Aa 8,000 Special Linked SAVRS and RIB, 6.598% due 8/01/2023 7,979
California State, GO:
AAA Aaa 10,000 6% due 5/01/2018 (b) 9,721
AAA Aaa 7,000 5.90% due 4/01/2023 (c) 6,731
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) 3,577
A- A 8,500 (Department of Corrections--Monterey County), Series A,
7% due 11/01/2019 8,939
A- A 3,500 Refunding (Various University of California Projects),
Series A, 5.50% due 6/01/2021 3,087
AAA Aaa 3,000 (Various University of California Projects), Series A,
6.40% due 12/01/2016 (b) 3,064
A- A 2,750 (Various University of California Projects), Series A,
6.375% due 10/01/2019 2,721
A- A1 4,000 (Various University of California Projects), Series B,
6.625% due 12/01/2019 4,076
AAA Aaa 5,000 California State, RAW, Series C, 5.75% due 4/25/1996 (c) 5,072
AAA Aaa 4,400 Cerritos, California, Public Financing Authority Revenue
Bonds (Los Coyotes Redevelopment Project Loan), Series A,
5.75% due 11/01/2022 (b) 4,135
AAA Aaa 5,000 Contra Costa, California, Water District, Water Revenue Bonds,
Series D, 6.375% due 10/01/2022 (b) 5,061
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <S> <C>
California AAA Aaa $ 6,000 Los Angeles, California, Department of Water and Power,
(concluded) Electric Plant Revenue Refunding Bonds (Second Issue),
5.25% due 11/15/2026 (c) $ 5,185
Los Angeles, California, Harbor Department Revenue Bonds,
AMT, Series B (b):
AAA Aaa 3,000 6.625% due 8/01/2019 3,080
AAA Aaa 8,725 6.625% due 8/01/2025 8,957
Los Angeles, California, Wastewater System Revenue Bonds,
Series A (d):
AAA Aaa 3,000 5.875% due 6/01/2024 2,865
AAA Aaa 13,250 Refunding, 5.70% due 6/01/2020 12,395
AAA Aaa 5,000 Los Angeles County, California, Metropolitan Transportation
Authority, Sales Tax Revenue Bonds, Senior Series B,
Proposition C, 5.25% due 7/01/2023 (b) 4,359
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) 5,149
AAA Aaa 8,210 M-S-R Public Power Agency, California, Revenue Bonds
(San Juan Project), Series E, 6.75% due 7/01/2011 (d) 8,706
AAA Aaa 2,190 Northern California Transmission Revenue Bonds (California-
Oregon Transmission Project), Series A, 6.50% due 5/01/2016 (d) 2,258
AAA Aaa 3,000 Orange County, California, Financing Authority, Tax Allocation
Revenue Refunding Bonds, Series A, 6.25% due 9/01/2014 (d) 3,004
AAA Aaa 3,000 Redwood City, California, Public Financing Authority, Local
Agency Revenue Refunding Bonds, Series A, 6.50% due
7/15/2011 (b) 3,118
AAA Aaa 5,000 Sacramento, California, City Financing Authority, Lease Revenue
Refunding Bonds, Series A, 5.40% due 11/01/2020 (b) 4,514
AAA Aaa 7,500 Sacramento, California, Municipal Utility District, Electric
Revenue Refunding Bonds, Series A, 5.75% due 8/15/2013 (d) 7,180
AAA Aaa 3,000 Sacramento County, California, COP, Refunding (Sacramento
Main Detention), 5.75% due 6/01/2015 (d) 2,846
AAA Aaa 2,700 San Diego, California, Area Local Government, COP, TRAN,
4.50% due 6/30/1995 (d) 2,700
AAA Aaa 6,000 San Francisco, California, City and County Airports Revenue
Bonds (Commerce International Airport), AMT, Second Series,
Issue 6, 6.60% due 5/01/2024 (b) 6,175
AAA Aaa 3,000 San Francisco, California, City and County Sewer Revenue
Refunding Bonds, 5.375% due 10/01/2022 (c) 2,668
AAA Aaa 3,250 San Jose, California, Airport Revenue Refunding Bonds, 5.75%
<PAGE> due 3/01/2016 (d) 3,091
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) 5,012
AAA Aaa 3,000 Santa Rosa, California, Wastewater Revenue Refunding Bonds,
Series A, 5.25% due 9/01/2016 (c) 2,689
AAA Aaa 3,000 Southern California Public Power Authority, (Transmission
Project), Revenue Refunding Bonds, Sub-Series A, 5.25% due
7/01/2020 (d) 2,632
AAA Aaa 5,000 University of California, Revenue Bonds (Multiple Purpose
Projects), Series D, 6.375% due 9/01/2024 (d) 5,061
West Covina, California, COP, GO (Queen of the Valley Hospital):
A A 5,410 6.50% due 8/15/2014 5,345
A A 2,500 6.50% due 8/15/2019 2,476
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <S> <C>
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) $ 3,544
AAA Aaa 2,500 Douglas County, Colorado, School District No. 1 (Douglas and
Elbert Counties Improvement Project), Series A, 6.50%
due 12/15/2016 (d) 2,613
Connecticut AAA Aaa 3,500 Connecticut State HFA, Revenue Bonds (Mortgage Finance
- --0.9% Program), Series B, 6.75% due 11/15/2023 (d) 3,601
AA- A1 5,000 Connecticut State Health and Educational Facilities Authority
Revenue Bonds (Nursing Home Program-AHF/Hartford), 7.125%
due 11/01/2024 5,334
Delaware--1.3% AAA Aaa 8,490 Delaware State EDA, PCR, Refunding (Delmarva Power Project),
Series B, 7.15% due 7/01/2018 (c) 9,219
AAA Aaa 3,525 Delaware Transportation Authority, System Revenue Bonds,
7% due 7/01/2013 (c) 3,861
District of AAA Aaa 7,000 District of Columbia, UT, Series B, 6.10% due 6/01/2011 (d) 6,866
Columbia--2.8% AAA Aaa 20,100 Metropolitan Washington, D.C., Airport Authority, General
Airport Revenue Bonds, AMT, Series A, 6.625% due 10/01/2019 (d) 20,572
Florida--2.1% AA Aa 4,000 Florida State Board of Education, Capital Outlay, Series C,
5.85% due 6/01/2018 3,858
AAA Aaa 7,000 Florida State Department of Transportation (Right of Way),
5.875% due 7/01/2024 (d) 6,795
AAA Aaa 9,940 Orange County, Florida, Tourist Development, Tax Revenue
Bonds, Series B, 6.50% due 10/01/2019 (b) 10,300
<PAGE>
Georgia--4.3% AAA Aaa 3,000 Chatam County, Georgia, School District Revenue Bonds, GO,
UT, 6.75% due 8/01/2018 (d) 3,187
AAA Aaa 10,000 Georgia Municipal Electric Authority, Power Revenue Bonds,
Series EE, 6.40% due 1/01/2023 (b) 10,161
Metropolitan Atlanta Rapid Transportation Authority, Georgia,
Sales Tax Revenue Bonds:
AAA Aaa 6,500 Second Indenture, Series A, 6.90% due 7/01/2020 (d) 7,084
AAA Aaa 8,955 Series O, 6.55% due 7/01/2020 (c) 9,280
AAA Aaa 12,800 Municipal Electric Authority, Georgia, Special Obligation
Bonds (Fifth Crossover Series--Project One), Series Y, 6.40%
due 1/01/2013 (b)(h) 13,495
Hawaii--1.8% AAA Aaa 17,145 Hawaii State Airport Systems Revenue Bonds, AMT, Second
Series, 6.75% due 7/01/2021 (d) 17,718
Illinois--7.0% Chicago, Illinois, GO (Central Public Library)(b)(g):
AAA Aaa 7,000 Series B, 6.85% due 7/01/2002 7,779
AAA Aaa 3,400 Series C, 6.85% due 7/01/2002 3,789
AAA Aaa 9,160 Chicago, Illinois, Midway Airport Revenue Bonds, AMT,
Series A, 6.25% due 1/01/2024 (d) 8,909
AAA Aaa 12,000 Chicago, Illinois, Public Building Commission, Building
Revenue Bonds, Series A, 6.50% due 1/01/2018 (d)(h) 12,199
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) 3,806
AAA Aaa 15,000 Cook County, Illinois, GO, UT, Series A, 6.60% due
11/15/2022 (d) 15,394
Illinois Health Facilities Authority Revenue Bonds:
AAA Aaa 6,000 Refunding (Carle Foundation), Series A, 6.75%
due 1/01/2010 (c) 6,279
A+ A 1,500 Refunding (Lutheran General Health), Series C, 7%
due 4/01/2014 1,564
AAA Aaa 8,545 (Rockford Memorial Hospital), Series B, 6.75%
due 8/15/2018 (b) 8,801
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <S> <C>
Indiana--1.8% AAA Aaa $10,000 Indiana Health Facility Financing Authority, Hospital Revenue
Bonds (Lutheran Hospital of Indiana, Inc.), 7% due
2/15/2019 (b) $ 10,577
AAA Aaa 5,000 Indianapolis, Indiana, Gas Utility Revenue Bonds, Series A,
6.20% due 6/01/2023 (c) 4,934
AAA Aaa 2,000 Monroe County, Indiana, Hospital Authority Revenue Bonds
(Bloomington Hospital Project), 6.70% due 5/01/2012 (d) 2,080
<PAGE>
Kansas--2.2% AAA Aaa 20,250 Burlington, Kansas, PCR, Refunding (Kansas Gas and Electric
Company Project), 7% due 6/01/2031 (d) 21,755
Kentucky--0.9% AAA Aaa 9,030 Owensboro, Kentucky, Water Revenue Improvement and
Refunding Bonds, 6.25% due 9/15/2017 (c) 9,162
Maryland--2.0% NR* Aa 2,000 Maryland State Community Development Administration,
Department of Housing and Community Development, S/F
Program, AMT, Second Series, 6.55% due 4/01/2026 1,980
Maryland State Health and Higher Educational Facilities
Authority Revenue Bonds:
AAA Aaa 8,700 Refunding (University of Maryland Medical System), 5% due
7/01/2020 (c) 7,397
NR* VMIG1++ 800 (Saint Agnes Hospital), VRDN, 4.05% due 7/01/2013 (a) 800
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) 5,039
AA+ MIG1++ 5,000 University of Maryland Revenue Bonds, 4.45% due 7/01/2015 5,000
Massachusetts Massachusetts State Health and Educational Facilities
- --1.8% Authority Revenue Bonds (c):
AAA Aaa 6,400 (Bay State Medical Center), Series D, 5.50% due 7/01/2016 5,896
AAA Aaa 7,130 (New England Medical Center Hospitals), Series F,
6.625% due 7/01/2025 7,374
AAA Aaa 5,000 Massachusetts State Industrial Finance Agency Revenue Bonds
(Brandeis University), Series C, 6.80% due 10/01/2019 (d) 5,281
Michigan--4.0% AAA Aaa 21,685 Lowell, Michigan, Area Schools, Capital Appreciation, UT,
5.75% due 5/01/2005 (c)(g)(j) 4,206
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 2,838
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) 23,012
Monroe County, Michigan, PCR (Detroit Edison County College),
AMT (d):
AAA Aaa 5,000 Series CC, 6.55% due 6/01/2024 5,084
AAA Aaa 5,000 Series I-B, 6.55% due 9/01/2024 5,086
Minnesota--0.7% Minnesota State HFA, S/F Mortgage Revenue Bonds, AMT:
AA+ Aa 3,800 Series H, 6.50% due 1/01/2026 3,789
AA+ Aa 3,000 Series L, 6.70% due 7/01/2020 3,036
Missouri--0.8% AAA Aaa 4,000 Kansas City, Missouri, Airport General Revenue Improvement
Bonds, Series B, 6.875% due 9/01/2014 (i) 4,306
NR* Baa1 4,000 Missouri State Health and Educational Facilities Authority,
Health Facilities Revenue Refunding Bonds (Jefferson Memorial
Hospital Association Project), 6% due 8/15/2023 3,470
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <S> <C>
Nevada--5.0% Humboldt County, Nevada, PCR, Refunding (Sierra Pacific
Power Company Project) (b):
AAA Aaa $ 9,250 6.55% due 10/01/2013 $ 9,604
AAA Aaa 4,500 Series A, 6.30% due 7/01/2022 4,517
Las Vegas, Nevada, GO, Refunding (c):
AAA Aaa 4,180 6.60% due 10/01/2010 4,357
AAA Aaa 4,470 6.60% due 10/01/2011 4,647
AAA Aaa 4,770 6.60% due 10/01/2012 4,942
AAA Aaa 2,400 Reno, Nevada, Hospital Revenue Bonds (Saint Mary's Regional
Medical Center), Series A, 6.70% due 7/01/2021 (d) 2,480
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) 2,013
AAA Aaa 15,000 Washoe County, Nevada, Gas Facilities Revenue Bonds (Sierra
Pacific Power Company), AMT, 6.65% due 12/01/2017 (b) 15,410
New Hampshire AAA Aaa 7,660 New Hampshire Higher Educational and Health Facilities
- --0.8% Authority Revenue Bonds (Elliot Hospital of Manchester),
6.25% due 10/01/2021 (b) 7,611
New Jersey--1.9% 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 4,722
AAA Aaa 5,000 Series M, 6.95% due 10/01/2022 5,241
Port Authority of New York and New Jersey, Consolidated
Revenue Bonds, AMT (c):
AAA Aaa 5,000 96th Series, 6.60% due 10/01/2023 5,174
AAA Aaa 3,875 Refunding, 97th Series, UT, 6.65% due 1/15/2023 4,028
New Mexico AAA Aaa 10,275 Farmington, New Mexico, PCR, Refunding (Southern California
- --1.5% Edison Company), Series A, 5.875% due 6/01/2023 (d) 9,912
AAA Aaa 1,495 New Mexico Educational Assistance Foundation, Student Loan
Revenue Bonds, AMT, Series A, 6.85% due 4/01/2005 (b) 1,583
AAA Aaa 3,000 Santa Fe, New Mexico, Revenue Bonds, Series A, 6.30% due
6/01/2024 (b) 3,039
New York--4.8% BBB Baa1 10,980 Metropolitan Transportation Authority, New York, Service
Contract Revenue Refunding Bonds (Transit Facilities),
Series 5, 7% due 7/01/2012 11,557
New York City, New York, GO, UT:
A- Baa1 2,210 Series C, Sub-Series C-1, 7.50% due 8/01/2019 2,349
A- Baa1 1,000 Series D, 7.50% due 2/01/2016 1,060
A- Baa1 12,000 Series D, 7.50% due 2/01/2019 12,722
BBB+ Baa1 7,595 New York State Dormitory Authority, Revenue Refunding Bonds
(State University Educational Facilities), Series B, 7%
due 5/15/2016 7,933
NR* VMIG1++ 50 New York State Job Development Authority Revenue Bonds,
State Guaranteed, Special Purpose (Series A-1 thru A-25),
<PAGE> VRDN, AMT, 4.90% due 3/01/2007 (a) 50
AAA Aaa 4,050 New York State Thruway Authority, General Revenue Bonds,
Series A, 5.50% due 1/01/2023 (c) 3,702
BBB Baa1 7,000 New York State Urban Development Corporation Revenue Bonds
(State Facilities), 7.50% due 4/01/2020 7,539
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <S> <C>
North Dakota AAA Aaa $ 2,500 Grand Forks, North Dakota, Health Care Facilities Revenue
- --0.3% Bonds (United Hospital Obligated Group), 6.25% due
12/01/2024 (d) $ 2,483
Ohio--1.9% 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) 15,611
AAA Aaa 2,500 Ohio State Higher Educational Facilities Commission, Mortgage
Revenue Bonds (University of Dayton Project), 6.60% due
12/01/2017 (c) 2,636
Pennsylvania AAA Aaa 16,000 Montgomery County, Pennsylvania, IDA, PCR, Refunding
- --1.7% (Philadelphia Electric Company), Series B, 6.70% due
12/01/2021 (d) 16,720
South Carolina AAA Aaa 10,250 South Carolina State Port Authority Revenue Bonds, AMT, 6.75%
- --3.4% due 7/01/2021 (b) 10,547
AAA Aaa 9,900 South Carolina State Public Service Authority Revenue Bonds
(Santee Cooper), Series D, 6.50% due 7/01/2014 (b) 10,202
AAA Aaa 2,500 South Carolina State Public Service Authority, Revenue
Refunding Bonds, Series A, 5.50% due 7/01/2021 (d) 2,281
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) 7,202
NR* NR* 4,200 Spartanburg County, South Carolina, Solid Waste Disposal
Facilities Revenue Bonds (BMW Project), AMT, 7.55% due
11/01/2024 4,435
Tennessee-- Johnson City, Tennessee, Health and Educational Facilities
2.3% Board, Hospital Revenue Refunding and Improvement Bonds
(Johnson City Medical Center) (d):
AAA Aaa 7,080 6.75% due 7/01/2001 (g) 7,815
AAA Aaa 3,820 6.75% due 7/01/2016 4,005
AAA Aaa 6,500 Metropolitan Government Nashville and Davidson County,
<PAGE> Tennessee, Water and Sewer Revenue Bonds, Special
Linked SAVRS and RIB, 5.933% due 1/01/2022 (b) 6,427
A+ A1 3,900 Tennessee Housing Development Agency, Mortgage Finance,
AMT, Series A, 6.90% due 7/01/2025 3,966
Texas--6.9% AAA Aaa 2,900 Austin, Texas, Utility System Revenue Refunding Bonds,
Prior-Lien, 5.75% due 11/15/2016 (b) 2,762
AAA Aaa 3,800 Brazos River Authority, Texas, PCR (Texas Utilities Electric
Company Project), AMT, Series A, 6.75% due 4/01/2022 (b) 3,907
AAA Aaa 12,140 Brazos River Authority, Texas, Revenue Refunding Bonds
(Houston Light and Power), Series A, 6.70% due 3/01/2017 (b) 12,724
A+ MIG1++ 14,700 Harris County, Texas, Toll Road (Sub-Lien), VRDN, UT, Series
F, 4.60% due 8/01/2015 (a) 14,700
AAA Aaa 6,885 Houston, Texas, Airport System Revenue Bonds (Sub-Lien),
AMT, Series A, 6.75% due 7/01/2021 (c) 7,075
AAA Aaa 11,795 Matagorda County, Texas, Navigational District No. 1, Revenue
Refunding Bonds (Houston Light and Power), Series A, 6.70%
due 3/01/2027 (b) 12,329
SP1+ MIG1++ 14,000 Texas State, CP, TRAN, UT, 5% due 8/31/1995 14,035
Utah--1.0% AAA Aaa 10,000 Salt Lake City, Utah, Airport Revenue Bonds, AMT, Series A,
6.125% due 12/01/2022 (c) 9,620
Virginia--1.2% AAA Aaa 5,540 Loudon County, Virginia, COP, 6.90% due 3/01/2019 (e) 5,937
AAA Aaa 6,500 Virginia State Housing Development Authority, Commonwealth
Mortgage, AMT, Series A, Sub-Series A-4, 6.45% due 7/01/2028 (d) 6,403
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <S> <C>
Washington-- AAA Aaa $ 1,200 Douglas County, Washington, Public Utility District No. 001,
5.9% Electric District System Revenue Bonds, 6% due 1/01/2015 (d) $ 1,172
AAA Aaa 9,495 Port Seattle, Washington, Revenue Bonds (Sub-Lien), Series C,
6.625% due 8/01/2017 (d) 9,849
Seattle, Washington, Metropolitan Seattle Municipality Sewer
Revenue Bonds:
AAA Aaa 10,560 Series U, 6.60% due 1/01/2032 (c) 10,794
AAA Aaa 1,750 Series W, 6.25% due 1/01/2022 (d) 1,754
Snohomish County, Washington, Public Utility District No. 001,
Electric Revenue Bonds (Generation System):
AAA Aaa 5,000 AMT, Series B, 5.80% due 1/01/2024 (d) 4,559
AAA Aaa 5,115 Refunding, 6% due 1/01/2018 (c) 4,907
AAA Aaa 3,500 Tacoma, Washington, Refuse Utility Revenue Bonds, 7% due
<PAGE> 12/01/2019 (b) 3,843
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 (i) 2,009
A+ A1 8,300 Washington State Health Care Facilities Authority Revenue Bonds
(Children's Hospital and Medical Center), 6% due 10/01/2022 7,751
AAA Aaa 11,175 Washington State Public Power Supply Systems, Revenue
Refunding Bonds (Nuclear Project No. 1), Series A, 6.25% due
7/01/2017 (d) 11,042
West Virginia AAA Aaa 4,425 Harrison County, West Virginia, Commonwealth Solid Waste
- --0.8% Disposal Revenue Bonds (Monongahela Power), AMT, Series C,
6.75% due 8/01/2024 (b) 4,576
AAA Aaa 2,800 West Virginia School Building Authority, Revenue and Capital
Improvement Bonds, Series B, 6.75% due 7/01/2017 (d) 2,916
Wisconsin-- AA Aa 2,000 Wisconsin, Housing and EDA, Home Ownership Revenue
1.3% Bonds, AMT, Series B, 6.75% due 9/01/2025 2,004
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) 5,137
Wisconsin State Health and Educational Facilities Authority,
Revenue Refunding Bonds (Wheaton--Franciscan Services) (d):
AAA Aaa 3,955 6.50% due 8/15/2011 4,061
AAA Aaa 2,000 6% due 8/15/2015 1,929
Puerto Rico A1+ VMIG1++ 200 Puerto Rico Commonwealth, Government Development Bank
- --0.1% Revenue Refunding Bonds, VRDN, 4.55% due 12/01/2015 (a) 200
AAA Aaa 1,500 Puerto Rico Housing and Banking Agency, S/F Mortgage Revenue
Bonds (Affordable Housing Mortgage--Portfolio I), AMT, 6.25%
due 4/01/2029 1,471
Total Investments (Cost--$921,933)--96.8% 953,391
Other Assets Less Liabilities--3.2% 31,486
--------
Net Assets--100.0% $984,877
========
<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 April 30, 1995.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)MBIA Insured.
(e)FSA Insured.
(f)BIG Insured.
(g)Prerefunded.
(h)Escrowed to maturity.
(i)Capital Guaranteed.
(j)Represents a zero coupon bond. The interest rate shown is the
effective yield at the time of purchase.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of April 30, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$921,933,224) (Note 1a) $ 953,391,170
Cash 799,818
Receivables:
Securities sold $ 57,249,025
Interest 17,680,163 74,929,188
--------------
Deferred organization expenses (Note 1e) 15,186
Prepaid expenses and other assets 124,611
--------------
Total assets 1,029,259,973
--------------
Liabilities: Payables:
Securities purchased 42,832,844
Dividends to shareholders (Note 1f) 1,059,935
Investment adviser (Note 2) 382,584 44,275,363
--------------
Accrued expenses and other liabilities 107,130
--------------
Total liabilities 44,382,493
--------------
Net Assets: Net assets $ 984,877,480
==============
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.10 per share (12,800 shares
of AMPS* issued and outstanding at $25,000 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 7,014,563
Accumulated realized capital losses on investments--net (8,346,866)
Unrealized appreciation on investments--net 31,457,946
--------------
Total--Equivalent to $14.71 net asset value per share of
Common Stock (market price--$13.125) 664,877,480
--------------
Total capital $ 984,877,480
==============
<FN>
*Auction Market Preferred Stock.
<PAGE>
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months Ended
April 30, 1995
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 30,135,913
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 2,354,793
Commission fees (Note 4) 405,304
Transfer agent fees 67,733
Professional fees 43,243
Accounting services (Note 2) 40,858
Printing and shareholder reports 37,882
Directors' fees and expenses 37,844
Custodian fees 27,190
Listing fees 19,266
Pricing fees 10,551
Amortization of organization expenses (Note 1e) 3,073
Other 36,537
--------------
Total expenses 3,084,274
--------------
Investment income--net 27,051,639
--------------
Realized & Realized loss on investments--net (6,445,853)
Unrealized Change in unrealized appreciation/depreciation on investments--net 48,007,558
Gain (Loss) --------------
on Investments Net Increase in Net Assets Resulting from Operations $ 68,613,344
- --Net (Notes 1b, ==============
1d & 3):
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: April 30, 1995 Oct. 31, 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 27,051,639 $ 54,559,554
Realized gain (loss) on investments--net (6,445,853) 184,275
Change in unrealized appreciation/depreciation on invest-
ments--net 48,007,558 (120,465,020)
-------------- --------------
Net increase (decrease) in net assets resulting from
operations 68,613,344 (65,721,191)
-------------- --------------
Dividends & Investment income--net:
Distributions to Common Stock (21,212,293) (44,380,022)
Shareholders Preferred Stock (6,068,253) (7,730,046)
(Note 1f): Realized gain on investments--net:
Common Stock (1,789,825) (11,709,621)
Preferred Stock (295,421) (1,956,511)
-------------- --------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (29,365,792) (65,776,200)
-------------- --------------
Capital Stock Offering costs resulting from the issuance of Common Stock -- (18,766)
Transactions Offering costs resulting from the issuance of Preferred
(Notes 1e & 4): Stock -- 8,000
-------------- --------------
Net decrease in net assets derived from capital stock
transactions -- (10,766)
============== ==============
Net Assets: Total increase (decrease) in net assets 39,247,552 (131,508,157)
Beginning of period 945,629,928 1,077,138,085
-------------- --------------
End of period* $ 984,877,480 $ 945,629,928
============== ==============
<PAGE>
<FN>
*Undistributed investment income--net $ 7,014,563 $ 7,243,470
============== ==============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
For the
For the Period
The following per share data and ratios have been derived Six Months March 27,
from information provided in the financial statements. Ended For the Year Ended 1992++ to
April 30, October 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.85 $ 16.76 $ 14.27 $ 14.18
Operating -------- -------- -------- --------
Performance: Investment income--net .59 1.20 1.21 .66
Realized and unrealized gain (loss) on
investments--net .92 (2.66) 2.59 .16
-------- -------- -------- --------
Total from investment operations 1.51 (1.46) 3.80 .82
-------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.47) (.98) (1.00) (.48)
Realized gain on investments--net (.04) (.26) (.10) --
-------- -------- -------- --------
Total dividends and distributions to Common
Stock shareholders (.51) (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 (.13) (.17) (.19) (.10)
Realized gain on investments--net (.01) (.04) (.02) --
<PAGE> Capital charge resulting from issuance of
Preferred Stock -- -- -- (.14)
-------- -------- -------- --------
Total effect of Preferred Stock activity (.14) (.21) (.21) (.24)
-------- -------- -------- --------
Net asset value, end of period $ 14.71 $ 13.85 $ 16.76 $ 14.27
======== ======== ======== ========
Market price per share, end of period $ 13.125 $ 11.625 $ 15.875 $ 14.875
======== ======== ======== ========
Total Investment Based on market price per share 17.44%+++ (20.23%) 14.51% 2.46%+++
Return:** ======== ======== ======== ========
Based on net asset value per share 10.48%+++ (9.98%) 26.01% 3.97%+++
======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement . .66%* .66% .65% .47%*
Net Assets:*** ======== ======== ======== ========
Expenses . .66%* .66% .65% .66%*
======== ======== ======== ========
Investment income--net . 5.75%* 5.35% 5.35% 5.69%*
======== ======== ======== ========
Supplemental Net assets, net of Preferred Stock, end of
Data: period (in thousands) $664,877 $625,630 $757,138 $638,150
======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $320,000 $320,000 $320,000 $320,000
======== ======== ======== ========
Portfolio turnover 24.63% 45.71% 39.93% 21.89%
======== ======== ======== ========
Dividends Per Series A--Investment income--net $ 514 $ 592 $ 575 $ 344
Share on Series B--Investment income--net 520 545 627 328
Preferred Series C--Investment income--net 518 639 588 330
Stock Out- Series D--Investment income--net 432 572 713 384
standing:++++++ Series E--Investment income--net 423 641 746 383
<FN>
*Annualized.
**Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, may result
in substantially different returns. Total investment returns exclude
the effects of sales loads.
***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.
++++++Dividends per share have been adjusted to reflect a two-for-
one stock split.
+++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. These unaudited financial statements
reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the interim period
presented. All such adjustments are of a normal recurring nature.
The Fund determines and makes available for publication the net
asset value of its Common Stock on a weekly basis. The Fund's Common
Stock is listed on the 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 and options thereon, which are traded on
exchanges, are valued at their closing prices as of the close of
such exchanges. Options, which are traded on exchanges, are valued
at their last sale price as of the close of such ex-changes 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) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell 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>
* Options--The Fund is authorized to write covered call options and
purchase put options. When the Fund writes an option, an amount
equal to the premium received by the Fund is reflected as an asset
and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written.
When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired, or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Deferred organization expenses and offering expenses--Deferred
organization expenses are amortized 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 time of
issuance.
(f) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
<PAGE>
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of 0.50% of
the Fund's average weekly net assets.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, Merrill Lynch, Pierce, Fenner & Smith Inc.
("MLPF&S"), and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30,1995 were $222,997,573 and
$284,978,122, respectively.
Net realized and unrealized gains (losses) as of April 30, 1995 were
as follows:
Realized
Gains Unrealized
(Losses) Gains
Long-term investments $ 1,887,910 $31,444,173
Short-term investments (60,857) 13,773
Financial futures contracts (8,272,906) --
----------- -----------
Total $(6,445,853) $31,457,946
=========== ===========
As of April 30, 1995, net unrealized appreciation for Federal income
tax purposes aggregated $31,457,946, of which $34,373,618 related to
appreciated securities and $2,915,672 related to depreciated
securities. The aggregate cost of April 30, 1995 for Federal income
tax purposes was $921,933,224.
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
authorized, however, to reclassify any unissued shares of capital
stock without approval of holders of Common Stock.
<PAGE>
Common Stock
For the six months ended April 30, 1995, shares issued and
outstanding remained constant at 45,187,339. At April 30, 1995,
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, 1995 were as
follows: Series A, 4.134%; Series B, 4.134%; Series C, 4.15%; Series
D, 3.99%; and Series E, 4.45%.
A two-for-one stock split occured on December 1, 1994. As a result,
at April 30, 1995, there were 12,800 AMPS shares authorized, issued
and outstanding with a liquidation preference of $25,000 per share,
plus accumulated and unpaid dividends of $487,039.
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 six months ended
April 30, 1995, MLPF&S, an affiliate of FAM, earned $224,864 as
commissions.
5. Subsequent Event:
On May 9, 1995, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$0.075514 per share, payable on May 30, 1995 to shareholders of
record as of May 19, 1995.
PER SHARE INFORMATION
<TABLE>
Per Share Selected Quarterly Financial Data*
<CAPTION>
Dividends/Distributions
Net Realized Unrealized
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>
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 -- --
November 1, 1994 to January 31, 1995 .30 (.07) .57 .24 .07 .04 .01
February 1, 1995 to April 30, 1995 .29 (.07) .49 .23 .06 -- --
<PAGE>
<CAPTION>
Net Asset Value Market Price**
For the Quarter High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
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
November 1, 1994 to January 31, 1995 14.30 12.82 13.125 10.375 9,324
February 1, 1995 to April 30, 1995 15.07 14.32 13.375 12.875 4,003
<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
<PAGE>
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
