MUNIYIELD
INSURED
FUND, INC.
FUND LOGO
Annual Report
October 31, 1995
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
<PAGE>
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Transfer Agents
Common Stock:
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
NYSE Symbol
MYI
<PAGE>
This report, including the financial information herein, is
transmitted to the shareholders of MuniYield Insured Fund, Inc. for
their information. It is not a 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 Common Stock shareholders.
MuniYield
Insured Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MuniYield Insured Fund, Inc.
TO OUR SHAREHOLDERS
For the year ended October 31, 1995, the Common Stock of MuniYield
Insured Fund, Inc. earned $0.921 per share income dividends, which
included earned and unpaid dividends of $0.078. This represents a
net annualized yield of 5.95%, based on a month-end net asset value
of $15.46 per share. Over the same period, the total investment
return on the Fund's Common Stock was +20.09%, based on a change in
per share net asset value from $13.85 to $15.46, and assuming
reinvestment of $0.924 per share income dividends and $0.040 per
share capital gains distributions.
For the six-month period ended October 31, 1995, the total
investment return on the Fund's Common Stock was +8.69%, based on a
change in per share net asset value from $14.71 to $15.46, and
assuming reinvestment of $0.455 per share income dividends.
For the six-month period ended October 31, 1995, the Fund's Auction
Market Preferred Stock had an average yield as follows: Series A,
4.11%; Series B, 4.10%; Series C, 4.12%; Series D, 4.07%; and Series
E, 4.00%.
<PAGE>
The Environment
After losing momentum through the second calendar quarter of 1995,
it now appears that the US economic expansion has resumed. Gross
domestic product growth for the three months ended September 30 was
reported to be 4.2%, higher than generally expected. September
durable goods orders increased a surprisingly strong 3%, and
existing home sales rose to a near-record level. At the same time,
there is evidence that inflationary pressures remain subdued.
Reflecting the trend of renewed economic growth--and continued good
news on the inflation front--the Federal Reserve Board signaled no
near-term shift in monetary policy following its September meeting.
Thus, official interest rates may not be reduced further in the
immediate future.
Another significant development has been the strengthening of the US
dollar relative to the yen and the Deutschemark. Improving interest
rate differentials favoring the US currency, combined with
coordinated central bank intervention and more positive investor
sentiment, have helped to bolster the dollar in foreign exchange
markets. Other factors that appear to be improving the US dollar's
outlook in the near term are a pick-up in capital flows to the
United States and the prospect of increased capital outflows from
Japan. However, it remains to be seen if the US dollar's
strengthening trend can continue without significant improvements in
the US budget and trade deficits.
In the weeks ahead, investor interest will continue to focus on US
economic activity. Clear signs of a moderate, noninflationary
expansion could further benefit the US stock and bond markets. In
addition, should the current Federal budget deficit reduction
efforts now underway in Washington prove successful, the
implications would likely be positive for the US financial markets.
The Municipal Market
Tax-exempt bond yields continued to decline during the six-month
period ended October 31, 1995. As measured by the Bond Buyer Revenue
Bond Index, the yield on uninsured, long-term municipal revenue
bonds fell 30 basis points (0.30%) to end the October period at
approximately 6.00%. While tax-exempt bond yields have declined
dramatically from their highs one year ago, municipal bond yields
have exhibited considerable yield volatility on a weekly basis. In
recent months, tax-exempt bond yields have fluctuated by as much as
20 basis points on a week-to-week basis. US Treasury bond yields
have displayed similar volatility, but the extent of their decline
has been greater. By the end of October, long-term US Treasury bond
yields had declined almost 100 basis points to 6.33%. Proposed
Federal tax restructuring continued to weigh heavily on the tax-
exempt bond market. Thus far in 1995, US Treasury bond yields have
declined approximately 150 basis points. Municipal bond yields have
fallen approximately 95 basis points, as the uncertainty surrounding
any changes to the existing Federal income tax structure has
prevented the municipal bond market from rallying as strongly as its
taxable counterpart.
<PAGE>
A general view of a moderately expanding domestic economy, supported
by a very favorable inflationary environment, allowed interest rates
to significantly decline from their recent highs in November 1994.
However, this decline was not a smooth downward curve. Conflicting
economic indicators were released during recent months that have
prevented a clear consensus regarding the near-term direction of
interest rates from being reached. The resultant uncertainty has
promoted more of a saw-toothed pattern as interest rate declines
were repeatedly interrupted by indications of stronger-than-expected
economic growth. As these concerns were overcome by subsequent
weaker economic releases, interest rate declines have resumed. These
periods of volatility are likely to continue for the remainder of
1995, or until proposed Federal budget deficit reduction packages
are resolved and any resultant responses by the Federal Reserve
Board have occurred.
However, the municipal bond market's technical position remained
supportive throughout recent quarters. Approximately $82 billion in
long-term municipal securities were issued during the six months
ended October 31, 1995. While this issuance is virtually identical
to underwritings during the October 31, 1994 quarter, tax-exempt
bond issuance over the last 12 months remained approximately 25%
below comparable 1994 levels. The municipal bond market should
maintain this positive technical position well into 1996. Annual
issuance for 1995 is now projected to be approximately $140 billion,
significantly less than last year's already low level of $162
billion. Projected maturities and early redemptions for the
remainder of 1995 and throughout 1996 will lead to a continued
decline in the total outstanding municipal bond supply throughout
1996 and, perhaps, into 1998 should new bond issuance remain at
historically low levels.
Despite the municipal bond market's relative underperformance
compared to the US Treasury market thus far in 1995, the extent of
the tax-exempt bond market's rally was nonetheless quite impressive.
Municipal bond yields have fallen 135 basis points from their highs
reached in November 1994 and municipal bond prices rose accordingly.
Most tax-exempt products recouped almost all of the losses incurred
in 1994 and are well on their way to posting double-digit total
returns for all of 1995. This relative underperformance so far in
1995 provided long-term investors with the rare opportunity to
purchase tax-exempt securities at yield levels near those of taxable
securities.
<PAGE>
Additionally, many of the factors that led to the relative
underperformance of the tax-exempt bond market thus far in 1995,
namely investor concern regarding Federal budget deficit reductions
and proposed changes in the Federal income tax structure, are
nearing resolution. The Federal budget reconciliation process has
already begun, and may be essentially completed by year-end. Recent
public opinion polls suggest that the majority of American taxpayers
prefer the existing Federal income tax system compared to proposed
changes, such as the flat tax or national sales tax. In an upcoming
election year, neither party is likely to advocate a clearly
unpopular position, particularly one that can be expected to
negatively impact the Federal budget deficit reduction program
through reduced tax revenues. As these factors are resolved, we
believe that much of the resistance that the municipal bond market
met this year should dissipate. This should allow municipal bond
yields to significantly decline from current levels in order to
return to more normal historic yield relationships.
Portfolio Strategy
During the 12-month period ended October 31, 1995, there were two
different municipal bond market environments. The Municipal Bond
Buyer Revenue Index went from 6.95% in October 1994 to a high of
7.27% in December 1994 and back to 6.02% in October 1995. During the
first six months of the Fund's fiscal year, we followed a more
cautious investment strategy. We sold a portion of the Fund's
performance-oriented deeply discounted securities and replaced them
with less volatile current and premium coupon securities. Throughout
the last six months of the Fund's fiscal year, our investment
strategy reflected our decidedly more optimistic view toward the
municipal bond market. As a consequence, we kept the Fund
essentially fully invested and cash reserves at a minimum. At the
beginning of August, we concentrated on the acquisition of more
performance-oriented securities of high tax states because the
portfolio was not totally positioned to take full advantage of our
view of a falling interest rate scenario. This partial emphasis
toward performance-oriented securities is still ongoing. This
investment approach resulted in the Fund benefiting from the
municipal bond market rebound that occurred during the last half of
the year.
Looking forward, we plan to continue our strategy of concentrating
on maintaining an appealing level of tax-exempt income and total
return by continuing to emphasize the Fund's present coupon and high
credit quality structure. Our use of these strategies resulted in
positive returns and a competitive current yield for our
shareholders during the fiscal year.
We are pleased to announce that William R. Bock is responsible for
the day-to-day management of MuniYield Insured Fund, Inc. Mr. Bock
has been employed by Merrill Lynch Asset Management, L.P. (an
affiliate of the Fund's investment adviser) since 1989 as Vice
President and Portfolio Manager. Prior thereto, Mr. Bock was
employed by Bear Stearns and E.F. Hutton in the Tax-Exempt Bond
Division from 1978 to 1989.
<PAGE>
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
(William R. Bock)
William R. Bock
Portfolio Manager
December 8, 1995
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, 1995 qualify as tax-exempt interest dividends for Federal income
tax purposes. Additionally, the following table summarizes the per
share capital gains distributions paid by the Fund during the year.
<PAGE>
<TABLE>
<CAPTION>
Payable Long-Term
Date Capital Gains
<S> <C> <C> <C>
Common Stock Shareholders 12/29/94 $ 0.039609
Preferred Stock Shareholders: Series A 12/01/94 $45.27
Series B 12/01/94 $41.66
Series C 12/01/94 $48.86
Series D 11/25/94 $43.72
Series E 12/01/94 $48.98
Please retain this information for your records.
</TABLE>
PROXY RESULTS
During the six-month period ended October 31, 1995, MuniYield
Insured Fund, Inc. Common Stock shareholders voted on the following
proposals. The proposals were approved at a special shareholders'
meeting on September 8, 1995. The description of each proposal and
number of shares voted are as follows:
<TABLE>
<CAPTION>
Shares Voted Shares Voted
For Without Authority
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors: Joe Grills 43,259,214 1,067,868
Stephen B. Swensrud 43,251,165 1,075,917
Harry Woolf 43,241,072 1,086,010
Arthur Zeikel 43,246,302 1,080,779
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the
Fund's independent auditors for the current fiscal year. 43,199,211 265,999 861,872
</TABLE>
<PAGE>
During the six-month period ended October 31, 1995, MuniYield
Insured Fund, Inc. Preferred Stock shareholders (Series A, B, C, D
and E) voted on the following proposals. The proposals were approved
at a special shareholders' meeting on September 8, 1995. The
description of each proposal and number of shares voted are as
follows:
<TABLE>
<CAPTION>
Shares Voted Shares Voted
For Without Authority
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors:
Walter Mintz, Melvin R. Seiden,
Joe Grills, Stephen B. Swensrud,
Harry Woolf and Arthur Zeikel as follows: Series A 1,652 0
Series B 1,240 0
Series C 1,149 0
Series D 1,514 0
Series E 2,224 0
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche
LLP as the Fund's independent auditors
for the current fiscal year as follows: Series A 1,652 0 0
Series B 1,240 0 0
Series C 1,149 0 0
Series D 1,934 0 0
Series E 2,715 0 0
</TABLE>
THE BENEFITS AND RISKS OF LEVERAGING
<PAGE>
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 of 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.
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.
<PAGE>
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
DATES Daily Adjustable Tax-Exempt Securities
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
S/F Single-Family
SAVRS Select Auction Variable Rate Securities
TAN Tax 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> <S> <S> <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) $ 3,749
Alaska--0.5% AAA Aaa 5,000 Alaska State Housing Finance Corporation, Series A,
5.875% due 12/01/2024 (d) 4,894
Arizona--0.6% Arizona Educational Loan Marketing Corporation,
Educational Loan Revenue Bonds, VRDN, AMT, Series A (a):
AAA VMIG1++ 600 4.05% due 3/01/2015 (d) 600
NR* MIG1++ 200 4.05% due 12/01/2020 200
A1+ VMIG1++ 1,900 Maricopa County, Arizona, IDA, Hospital Facility Revenue
Bonds (Samaritan Health Service Hospital), VRDN,
Series B-2, 4% due 12/01/2008 (a)(d) 1,900
NR* NR* 3,500 Mohave County, Arizona, IDA, IDR (North Star Steel Co.
Project), AMT, 6.70% due 3/01/2020 3,744
Arkansas NR* P1 600 Crosset, Arkansas, PCR (Georgia Pacific Corp. Project),
- --0.2% VRDN, 3.90% due 10/01/2007 (a) 600
AAA Aaa 1,500 North Little Rock, Arkansas, Electric Revenue Refunding
Bonds, Series A, 6.50% due 7/01/2010 (d) 1,695
<PAGE>
California AAA Aaa 7,500 Anaheim, California, Public Financing Authority
- --14.0% Revenue Bonds (Electric Utility--San Juan 4), 2nd
Series, 5.75% due 10/01/2022 (c) 7,369
California HFA, Revenue Bonds, AMT:
AA- Aa 3,950 RIB, 8.777% due 8/01/2023 (i) 4,118
AAA Aaa 1,595 Series E, 7% due 8/01/2026 (d) 1,675
AAA Aaa 7,000 California State GO, 5.90% due 4/01/2023 (c) 7,010
California State Public Works Board Lease Revenue Bonds:
A- A 8,500 (Department of Corrections--Monterey County), Series A,
7% due 11/01/2019 9,246
AAA Aaa 3,000 (Various University of California Projects), Series A,
6.40% due 12/01/2016 (b) 3,171
A- A 2,750 (Various University of California Projects), Series A,
6.375% due 10/01/2019 2,803
A- A1 4,000 (Various University of California Projects), Series B,
6.625% due 12/01/2019 4,223
California State, RAW, Series C:
SP-1 MIG1++ 4,615 5.75% due 4/25/1996 4,658
AAA Aaa 5,000 5.75% due 4/25/1996 (c) 5,041
AAA Aaa 2,000 Cerritos, California, Public Financing Authority Revenue
Bonds (Los Coyotes Redevelopment Project Loan),
Series A, 5.75% due 11/01/2022 (b) 1,978
AAA Aaa 5,000 Contra Costa, California, Water District, Water Revenue
Bonds, Series D, 6.375% due 10/01/2022 (b) 5,244
Los Angeles, California, Harbor Department Revenue
Bonds, AMT, Series B (b):
AAA Aaa 3,000 6.625% due 8/01/2019 3,197
AAA Aaa 8,725 6.625% due 8/01/2025 9,268
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) 4,675
AAA Aaa 5,000 Los Angeles County, California, Transportation Commission,
Sales Tax Revenue Refunding Bonds, Series B, 6.50%
due 7/01/2015 (c) 5,290
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) 8,971
AAA Aaa 2,190 Northern California Transmission Revenue Bonds
(California--Oregon Transmission Project), Series A,
6.50% due 5/01/2016 (d) 2,336
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
California AAA Aaa $ 3,000 Orange County, California, Financing Authority, Tax
(concluded) Allocation Revenue Refunding Bonds, Series A, 6.25%
due 9/01/2014 (d) $ 3,109
AAA Aaa 3,000 Redwood City, California, Public Financing Authority,
Local Agency Revenue Refunding Bonds, Series A, 6.50%
due 7/15/2011 (b) 3,229
AAA Aaa 5,000 Sacramento, California, City Financing Authority, Lease
Revenue Refunding Bonds, Series A, 5.40% due
11/01/2020 (b) 4,840
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) 6,422
San Francisco, California, City and County Sewer
Revenue Bonds (c):
AAA Aaa 3,000 Refunding, 5.375% due 10/01/2022 2,866
AAA Aaa 10,000 Series A, 5.95% due 10/01/2025 10,104
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) 5,288
AAA Aaa 3,000 Santa Rosa, California, Wastewater Revenue Refunding
Bonds, Series A, 5.25% due 9/01/2016 (c) 2,886
AAA Aaa 5,000 University of California Revenue Bonds (Multiple
Purpose Projects), Series D, 6.375% due 9/01/2024 (d) 5,238
West Covina, California, COP, GO (Queen of the Valley
Hospital):
A A 5,410 6.50% due 8/15/2014 5,536
A A 2,500 6.50% due 8/15/2019 2,540
Colorado AA Aa 9,000 Colorado Springs, Colorado, Utilities Revenue Bonds,
- --1.2% Series A, 6.10% due 11/15/2024 9,231
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) 2,719
Connecticut A1 VMIG1++ 1,500 Connecticut State Economic Recovery Notes, VRDN,
- --1.8% Series B, 3.90% due 6/01/1996 (a) 1,500
AA- A1 5,000 Connecticut State Health and Educational Facilities
Authority Revenue Bonds (Nursing Home
Program--AHF/Hartford), 7.125% due 11/01/2024 5,628
AAA Aaa 3,500 Connecticut State HFA, Revenue Bonds (Mortgage
Finance Program), Series B, 6.75% due 11/15/2023 (d) 3,664
AAA Aaa 6,500 Connecticut State Special Tax Obligation Revenue Bonds
(Transportation Infrastructure), Series A, 5.60% due
6/01/2015 (c) 6,484
AAA Aaa 1,500 South Central Connecticut, Regional Water Authority,
Water System Revenue Bonds, 11th Series, 5.75% due
8/01/2012 (c) 1,534
Delaware--1.3% AAA Aaa 8,490 Delaware State EDA, PCR, Refunding (Delmarva Power
Project), Series B, 7.15% due 7/01/2018 (c) 9,491
AAA Aaa 3,525 Delaware Transportation Authority, System Revenue
Bonds, 7% due 7/01/2013 (c) 3,963
District of AAA Aaa 20,100 Metropolitan Washington, D.C., Airport Authority,
Columbia--2.1% General Airport Revenue Bonds, AMT, Series A, 6.625%
due 10/01/2019 (d) 21,240
</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>
Florida--3.5% AA Aa $ 4,000 Florida State Board of Education, Capital Outlay,
Series C, 5.85% due 6/01/2018 $ 4,019
AAA Aaa 11,000 Florida State Department of Transportation (Right of
Way), 5.875% due 7/01/2024 (d) 11,107
A1+ VMIG1++ 1,000 Hillsborough County, Florida, IDA, PCR, Refunding
(Tampa Electric Company--Gannon), VRDN, 3.85% due
5/15/2018 (a) 1,000
A1+ VMIG1++ 200 Manatee County, Florida, PCR, Refunding (Florida Power
and Light Co. Project), VRDN, 4% due 9/01/2024 (a) 200
AAA Aaa 9,940 Orange County, Florida, Tourist Development Tax Revenue
Bonds, Series B, 6.50% due 10/01/2019 (b) 10,683
AA- Aa 3,000 Orlando, Florida, Utilities Commission, Water and Electric
Revenue Refunding Bonds, Sub-Series A, 5.25% due 10/01/2023 2,808
A1 VMIG1++ 2,600 Pinellas County, Florida, Health Facilities Authority,
Revenue Refunding Bonds (Pooled Hospital Loan
Program), DATES, 4% due 12/01/2015 (a) 2,600
A1+ VMIG1++ 3,200 Saint Lucie County, Florida, PCR, Refunding (Florida
Power and Light Co. Project), VRDN, 3.85% due
3/01/2027 (a) 3,200
Georgia--4.5% AAA Aaa 3,000 Chatam County, Georgia, School District Revenue Bonds,
GO, UT, 6.75% due 8/01/2018 (d) 3,313
AAA Aaa 10,000 Georgia Municipal Electric Authority, Power Revenue
Bonds, Series EE, 6.40% due 1/01/2023 (b) 10,478
AAA Aaa 1,200 Medical Center Hospital Authority, Georgia, Anticipation
Certificates (Columbus Regional Healthcare System),
5.50% due 8/01/2015 (d) 1,156
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) 7,225
AAA Aaa 8,955 Series O, 6.55% due 7/01/2020 (c) 9,575
AAA Aaa 12,800 Municipal Electric Authority, Georgia, Special Obligation
Bonds (Fifth Crossover Series--Project One), 6.40% due
1/01/2013 (b)(g) 13,919
Hawaii--1.8% AAA Aaa 17,145 Hawaii State Airport Systems Revenue Bonds, AMT, Second
Series, 6.75% due 7/01/2021 (d) 18,129
<PAGE>
Illinois AAA Aaa 9,160 Chicago, Illinois, Midway Airport Revenue Bonds, AMT,
- --6.0% Series A, 6.25% due 1/01/2024 (d) 9,345
AAA Aaa 12,000 Chicago, Illinois, Public Building Commission, Building
Revenue Bonds, Series A, 6.50% due 1/01/2018 (d)(g) 12,760
AAA Aaa 15,000 Cook County, Illinois, GO, UT, Series A, 6.60% due
11/15/2022 (d) 15,976
Illinois Health Facilities Authority Revenue Bonds:
AAA Aaa 6,000 Refunding (Carle Foundation), Series A, 6.75% due
1/01/2010 (c) 6,408
A+ A 1,500 Refunding (Lutheran General Health), Series C, 7%
due 4/01/2014 1,696
AAA Aaa 8,545 (Rockford Memorial Hospital), Series B, 6.75% due
8/15/2018 (b) 9,064
AAA Aaa 5,860 Illinois Municipal Electric Agency, Power Supply System
Revenue Bonds, Series A, 5.75% due 2/01/2021 (b) 5,783
Indiana--0.7% AAA Aaa 5,000 Indianapolis, Indiana, Gas Utility Revenue Bonds,
Series A, 6.20% due 6/01/2023 (c) 5,130
AAA Aaa 2,000 Monroe County, Indiana, Hospital Authority Revenue Bonds
(Bloomington Hospital Project), 6.70% due 5/01/2012 (d) 2,153
</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>
Kansas--2.2% AAA Aaa $ 20,250 Burlington, Kansas, PCR, Refunding (Kansas Gas and
Electric Company Project), 7% due 6/01/2031 (d) $ 22,498
Kentucky--0.9% AAA Aaa 9,030 Owensboro, Kentucky, Water Revenue Improvement and
Refunding Bonds, 6.25% due 9/15/2017 (c) 9,376
Maryland NR* Aa 2,000 Maryland State Community Development Administration,
- --0.2% Department of Housing and Community Development,
S/F Program, AMT, Second Series, 6.55% due 4/01/2026 2,034
Massachusetts Massachusetts Bay Transportation Authority, General
- --4.4% Transportation Systems Revenue Bonds, Series B (b):
A+ Aaa 7,000 5.375% due 3/01/2020 6,755
AAA Aaa 7,500 5.375% due 3/01/2025 7,195
Massachusetts State Health and Educational
Facilities Authority Revenue Bonds (c):
AAA Aaa 6,400 (Bay State Medical Center), Series D, 5.50% due
7/01/2016 6,177
AAA Aaa 7,130 (New England Medical Center Hospitals), Series F,
6.625% due 7/01/2025 7,641
AAA Aaa 7,000 Massachusetts State HFA, Housing Revenue Refunding
Bonds, Series A, 6.10% due 12/01/2016 (d) 7,035
AAA Aaa 5,000 Massachusetts State Industrial Finance Agency Revenue
Bonds (Brandeis University), Series C, 6.80% due
10/01/2019 (d) 5,498
AAA Aaa 5,000 Massachusetts State Water Resource Authority, General
Revenue Bonds, Series A, 5.90% due 8/01/2016 (d) 5,039
<PAGE>
Michigan A1+ VMIG1++ 200 Grand Rapids, Michigan, Water Supply Systems, Revenue
- --3.4% Refunding Bonds, VRDN, 3.90% due 1/01/2020 (a)(c) 200
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) 23,803
Monroe County, Michigan, PCR (Detroit Edison Co.
Project), AMT:
AAA Aaa 5,000 Series CC, 6.55% due 6/01/2024 5,231
AAA Aaa 5,000 Series I-B, 6.55% due 9/01/2024 5,266
Minnesota Minnesota State HFA, S/F Mortgage Revenue Bonds, AMT:
- --0.7% AA+ Aa 3,800 Series H, 6.50% due 1/01/2026 3,852
AA Aa 3,000 Series L, 6.70% due 7/01/2020 3,089
Missouri AAA Aaa 4,000 Kansas City, Missouri, Airport General Revenue
- --0.4% Improvement Bonds, Series B, 6.875% due 9/01/2014 (h) 4,393
Nebraska AAA Aaa 5,000 Nebraska Public Power District Revenue Bonds, Series A,
- --0.5% 5.25% due 1/01/2022 (d) 4,761
Nevada--6.6% AAA Aaa 5,000 Clark County, Nevada, Passenger Facility Revenue Bonds
(Las Vegas McCarran International Airport), Series A,
6% due 7/01/2022 (b) 5,033
Humboldt County, Nevada, PCR, Refunding (Sierra Pacific
Power Company Project) (b):
AAA Aaa 9,250 6.55% due 10/01/2013 9,856
AAA Aaa 4,500 Series A, 6.30% due 7/01/2022 4,698
Las Vegas, Nevada, GO, Refunding (c):
AAA Aaa 4,180 6.60% due 10/01/2010 4,537
AAA Aaa 4,470 6.60% due 10/01/2011 4,831
AAA Aaa 4,770 6.60% due 10/01/2012 5,134
AAA Aaa 15,255 Nevada State GO, Nos. 49 and 50, 5.50% due 11/01/2025 (c) 14,683
</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>
Nevada AAA Aaa $ 2,400 Reno, Nevada, Hospital Revenue Bonds (Saint Mary's
(concluded) Regional Medical Center), Series A, 6.70% due
7/01/2021 (d) $ 2,570
AAA Aaa 15,000 Washoe County, Nevada, Gas Facilities Revenue Bonds
(Sierra Pacific Power Company), AMT, 6.65% due 12/01/2017 (b) 16,008
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) 7,881
New New Jersey State Housing and Mortgage Finance Agency,
Jersey--2.4% Revenue Bonds (Home Buyer), AMT (d):
AAA Aaa 4,695 Series K, 6.375% due 10/01/2026 4,780
AAA Aaa 5,000 Series M, 6.95% due 10/01/2022 5,286
AAA Aaa 5,000 New Jersey State Transportation Trust Fund Authority,
Refunding Bonds (Transportation System), Series A,
5.25% due 6/15/2014 (d) 4,838
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 5,309
AAA Aaa 3,875 Refunding, 97th Series, UT, 6.65% due 1/15/2023 4,133
New AAA Aaa 10,275 Farmington, New Mexico, PCR, Refunding (Southern
Mexico--1.5% California Edison Company), Series A, 5.875% due
6/01/2023 (d) 10,315
AAA Aaa 1,480 New Mexico Educational Assistance Foundation, Student
Loan Revenue Bonds, AMT, Series A, 6.85% due
4/01/2005 (b) 1,593
AAA Aaa 3,000 Santa Fe, New Mexico, Revenue Bonds, Series A, 6.30%
due 6/01/2024 (b) 3,129
New York--9.2% BBB Baa1 10,980 Metropolitan Transportation Authority, New York, Service
Contract Revenue Refunding Bonds (Transit Facilities),
Series 5, 7% due 7/01/2012 11,827
New York City, New York, GO:
A1+ VMIG1++ 7,300 Series B, Sub-Series B-4, VRDN, UT, 4% due
8/15/2023 (a)(d) 7,300
BBB+ Baa1 2,210 Series C, Sub-Series C-1, UT, 7.50% due 8/01/2019 2,421
BBB+ Baa1 2,000 Series D, 6% due 2/15/2015 1,971
BBB+ Baa1 5,000 Series D, 6% due 2/15/2016 4,913
BBB+ Baa1 1,000 Series D, UT, 7.50% due 2/01/2016 1,086
BBB+ Baa1 12,000 Series D, UT, 7.50% due 2/01/2019 13,089
New York City, New York, Municipal Water Finance
Authority, Water and Sewer System Revenue Bonds:
AAA Aaa 7,000 Series B, 5.375% due 6/15/2019 (b) 6,741
AAA VMIG1++ 12,400 VRDN, Series A, 4% due 6/15/2025 (a)(c) 12,400
AAA VMIG1++ 5,300 VRDN, Series G, 3.90% due 6/15/2024 (a)(c) 5,300
SP-1+ MIG1++ 5,900 New York City, New York, TAN, UT, Series A, 4.50%
due 2/15/1996 5,912
A1+ VMIG1++ 200 New York State Dormitory Authority Revenue Bonds (Cornell
University), VRDN, Series B, 3.90% due 7/01/2025 (a) 200
BBB+ Baa1 7,595 New York State Dormitory Authority, Revenue Refunding
Bonds (State University Educational Facilities),
Series B, 7% due 5/15/2016 8,115
AAA MIG1++ 4,600 New York State Thruway Authority, General Revenue
Bonds, VRDN, Series B, 3.90% due 1/01/2024 (a)(c) 4,600
BBB Baa1 7,000 New York State Urban Development Corporation Revenue
Bonds (State Facilities), 7.50% due 4/01/2020 7,804
</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>
North NR* VMIG1++ $ 1,800 Person County, North Carolina, Industrial Facilities
Carolina--0.2% and Pollution Control Financing Authority, Solid Waste
Disposal Revenue Bonds (Carolina Power and Light
Company), AMT, DATES, 4% due 11/01/2016 (a) $ 1,800
North AAA Aaa 2,500 Grand Forks, North Dakota, Health Care Facilities
Dakota--0.3% Revenue Bonds (United Hospital Obligated Group),
6.25% due 12/01/2024 (d) 2,576
Ohio--1.8% 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) 16,014
AAA Aaa 2,500 Ohio State Higher Educational Facilities Commission,
Mortgage Revenue Bonds (University of Dayton Project),
6.60% due 12/01/2017 (c) 2,711
Pennsylvania AAA Aaa 16,000 Montgomery County, Pennsylvania, IDA, PCR, Refunding
- --3.5% (Philadelphia Electric Company), Series B, 6.70% due
12/01/2021 (d) 17,288
AAA Aaa 6,250 Philadelphia, Pennsylvania, Water and Wastewater
Revenue Bonds, 5.60% due 8/01/2018 (d) 6,178
AAA Aaa 12,000 Pittsburgh, Pennsylvania, Water and Sewer Authority
Revenue Bonds, Series B, 5.75% due 9/01/2025 (e) 11,864
<PAGE>
South Carolina AAA Aaa 10,250 South Carolina State Port Authority Revenue Bonds, AMT,
- --4.0% 6.75% due 7/01/2021 (b) 10,954
AAA Aaa 9,900 South Carolina State Public Service Authority Revenue
Bonds (Santee Cooper), Series D, 6.50% due 7/01/2014 (b) 10,595
South Carolina State Public Service Authority, Revenue
Refunding Bonds:
AAA Aaa 2,500 Series A, 5.50% due 7/01/2021(d) 2,420
AAA Aaa 4,850 Series B, 5.875% due 1/01/2023(c) 4,864
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) 7,533
NR* NR* 4,200 Spartanburg County, South Carolina, Solid Waste
Disposal Facilities Revenue Bonds (BMW Project), AMT,
7.55% due 11/01/2024 4,586
Tennessee--1.4% AAA Aaa 3,820 Johnson City, Tennessee, Health and Educational
Facilities Board, Hospital Revenue Refunding and
Improvement Bonds (Johnson City Medical Center),
6.75% due 7/01/2016 (d) 4,131
Metropolitan Government Nashville and Davidson County,
Tennessee, Water and Sewer Revenue Bonds (b):
AAA Aaa 3,000 RIB, 8.054% due 1/01/2022 (i) 3,086
AAA Aaa 3,000 SAVRS, 4.04% due 1/01/2022 (a) 3,000
A+ A1 3,900 Tennessee, Housing Development Agency, Mortgage
Finance, AMT, Series A, 6.90% due 7/01/2025 4,052
Texas--7.0% AAA Aaa 2,800 Austin, Texas, Utility System Revenue Refunding Bonds,
5.50% due 5/15/2020 (d) 2,723
AAA Aaa 3,200 Bexar, Texas, Metropolitan Water District, Waterworks
System Revenue Refunding Bonds, 6.35% due
5/01/2025 (d) 3,374
AAA Aaa 3,800 Brazos River Authority, Texas, PCR (Texas Utilities
Electric Company Project), AMT, Series A, 6.75% due
4/01/2022 (b) 4,064
AAA Aaa 12,140 Brazos River Authority, Texas, Revenue Refunding Bonds
(Houston Light and Power), Series A, 6.70% due 3/01/2017 (b) 13,259
</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>
Texas AAA Aaa $ 6,885 Houston, Texas, Airport System Revenue Bonds (Sub-Lien),
(concluded) AMT, Series A, 6.75% due 7/01/2021 (c) $ 7,358
AAA Aaa 4,750 Houston, Texas, Hotel Occupany Tax Revenue Refunding
Bonds (Senior-Lien), 5.50% due 7/01/2015 (e) 4,627
AAA Aaa 7,500 Houston, Texas, Water and Sewer System Revenue Refunding
Bonds (Junior Lien), Series A, 6.20% due 12/01/2020 (d) 7,767
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) 12,769
San Antonio, Texas, Electric and Gas Revenue Bonds,
Series 95 (d):
AAA Aaa 5,500 5.375% due 2/01/2016 5,318
AAA Aaa 7,000 5.375% due 2/01/2017 6,763
AAA Aaa 3,000 5.375% due 2/01/2018 2,896
<PAGE>
Utah--1.9% AA- Aa 10,250 Intermountain Power Agency, Utah, Power Supply Revenue
Refunding Bonds, Series A, 5.50% due 7/01/2020 9,732
AAA Aaa 10,000 Salt Lake City, Utah, Airport Revenue Bonds, AMT,
Series A, 6.125% due 12/01/2022 (c) 10,131
Virginia--1.2% AAA Aaa 5,540 Loudon County, Virginia, COP, 6.90% due 3/01/2019 (e) 6,111
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) 6,631
Washington AAA Aaa 1,200 Douglas County, Washington, Public Utility District No. 001,
- --7.3% Electric District System Revenue Bonds, 6% due 1/01/2015 (d) 1,215
AAA Aaa 9,495 Port Seattle, Washington, Revenue Bonds (Sub-Lien),
Series C, 6.625% due 8/01/2017 (d) 10,243
Seattle, Washington, Metropolitan Seattle Municipality
Sewer Revenue Bonds:
AAA Aaa 5,000 Refunding, Series X, 5.50% due 1/01/2016 (c) 4,892
AAA Aaa 10,560 Series U, 6.60% due 1/01/2032 (c) 11,163
AAA Aaa 1,750 Series W, 6.25% due 1/01/2022 (d) 1,803
Seattle, Washington, Municipal Light and Power Revenue
Bonds, Series A (d):
AAA Aaa 3,000 5.625% due 9/01/2017 2,971
AAA Aaa 3,000 5.625% due 9/01/2018 2,968
AAA Aaa 5,000 Snohomish County, Washington, Public Utility District
No. 001, Electric Revenue Bonds (Generation System), AMT,
Series B, 5.80% due 1/01/2024 (d) 4,891
AAA Aaa 3,500 Tacoma, Washington, Refuse Utility Revenue Bonds,
7% due 12/01/2019 (b) 3,909
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 (h) 2,114
AA Aa 8,500 Washington State, GO, UT, Series 93A, 5.75% due 10/01/2017 8,416
A+ A1 8,300 Washington State Health Care Facilities Authority Revenue
Bonds (Children's Hospital and Medical Center), 6% due
10/01/2022 8,158
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) 11,482
</TABLE>
<PAGE>
<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>
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) $ 4,798
AAA Aaa 2,800 West Virginia School Building Authority, Revenue and
Capital Improvement Bonds, Series B, 6.75% due 7/01/2017 (d) 3,039
Wisconsin AAA Aaa 6,000 Wisconsin State Health and Educational Facilities
- --1.3% Authority Revenue Bonds (Aurora Health Care Obligated
Group), 5.25% due 8/15/2023 (d) 5,477
Wisconsin State Health and Educational Facilities
Authority, Revenue Refunding Bonds (Wheaton-Franciscan
Services) (d):
AAA Aaa 3,955 6.50% due 8/15/2011 4,154
AAA Aaa 2,000 6% due 8/15/2015 2,012
AA Aa 2,000 Wisconsin State Housing and EDA, Home Ownership Revenue
Bonds, AMT, Series B, 6.75% due 9/01/2025 2,054
Puerto AAA Aaa 500 Puerto Rico Housing and Banking Agency, S/F
Rico--0.0% Mortgage Revenue Bonds (Affordable Housing Mortgage--
Portfolio I), AMT, 6.25% due 4/01/2029 504
Total Investments (Cost--$984,814)--102.5% 1,044,468
Liabilities in Excess of Other Assets--(2.5%) (25,956)
----------
Net Assets--100.0% $1,018,512
==========
<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, 1995.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)MBIA Insured.
(e)FSA Insured.
(f)BIG Insured.
(g)Escrowed to maturity.
(h)CGIC Insured.
(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, 1995.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
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, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$984,813,712) (Note 1a) $1,044,468,282
Cash 36,144
Receivables:
Interest $ 17,279,916
Securities sold 11,085,578 28,365,494
--------------
Deferred organization expenses (Note 1e) 8,873
Prepaid expenses and other assets 47,140
--------------
Total assets 1,072,925,933
--------------
Liabilities: Payables:
Securities purchased 52,379,427
Dividends to shareholders (Note 1f) 1,511,720
Investment adviser (Note 2) 444,673 54,335,820
--------------
Accrued expenses and other liabilities 78,057
--------------
Total liabilities 54,413,877
--------------
Net Assets: Net assets $1,018,512,056
==============
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 7,213,796
Accumulated realized capital losses on investments--net (1,207,134)
Accumulated distributions in excess of realized
capital gains--net (1,901,013)
Unrealized appreciation on investments--net 59,654,570
--------------
Total--Equivalent to $15.46 net asset value per Common Stock
(market price--$13.625) 698,512,056
--------------
Total capital $1,018,512,056
==============
<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, 1995
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 60,869,852
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 4,914,408
Commission fees (Note 4) 834,817
Transfer agent fees 149,777
Accounting services (Note 2) 109,921
Professional fees 86,275
Directors' fees and expenses 77,751
Printing and shareholder reports 75,317
Custodian fees 55,719
Listing fees 39,708
Pricing fees 20,941
Amortization of organization expenses (Note 1e) 6,313
Other 56,703
--------------
Total expenses 6,427,650
--------------
Investment income--net 54,442,202
--------------
Realized & Realized loss on investments--net (1,207,134)
Unrealized Gain Change in unrealized appreciation/depreciation on
(Loss) on investments--net 76,204,182
Investments--Net --------------
(Notes 1b, Net Increase in Net Assets Resulting from Operations $ 129,439,250
1d & 3): ==============
</TABLE>
<PAGE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 1995 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 54,442,202 $ 54,559,554
Realized gain (loss) on investments--net (1,207,134) 184,275
Change in unrealized appreciation/depreciation on
investments--net 76,204,182 (120,465,020)
-------------- --------------
Net increase (decrease) in net assets resulting from
operations 129,439,250 (65,721,191)
-------------- --------------
Dividends & Investment income--net:
Distributions to Common Stock (41,768,871) (44,380,022)
Shareholders Preferred Stock (12,703,005) (7,730,046)
(Note 1f): Realized gain on investments--net:
Common Stock (158,132) (11,709,621)
Preferred Stock (26,101) (1,956,511)
In excess of realized gain on investments--net:
Common Stock (1,631,693) --
Preferred Stock (269,320) --
-------------- --------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (56,557,122) (65,776,200)
-------------- --------------
Capital Stock Offering costs resulting from the issuance of Common Stock -- (18,766)
Transactions Offering costs resulting from the issuance of
(Notes 1e & 4): Preferred Stock -- 8,000
-------------- --------------
Net decrease in net assets derived from capital stock
transactions -- (10,766)
============== ==============
Net Assets: Total increase (decrease) in net assets 72,882,128 (131,508,157)
Beginning of year 945,629,928 1,077,138,085
-------------- --------------
End of year* $1,018,512,056 $ 945,629,928
============== ==============
<FN>
*Undistributed investment income--net $ 7,213,796 $ 7,243,470
============== ==============
See Notes to Financial Statements.
</TABLE>
<PAGE>
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. 1992++ to
For the Year Ended 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 1.20 1.20 1.21 .66
Realized and unrealized gain (loss) on
investments--net 1.66 (2.66) 2.59 .16
-------- -------- -------- --------
Total from investment operations 2.86 (1.46) 3.80 .82
-------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.92) (.98) (1.00) (.48)
Realized gain on investments--net --+++ (.26) (.10) --
In excess of realized gains on investments--net (.04) -- -- --
-------- -------- -------- --------
Total dividends and distributions to Common Stock
shareholders (.96) (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 (.28) (.17) (.19) (.10)
Realized gain on investments--net --+++ (.04) (.02) --
In excess of realized gains on investments--net (.01) -- -- --
Capital charge resulting from issuance of
Preferred Stock -- -- -- (.14)
-------- -------- -------- --------
Total effect of Preferred Stock activity (.29) (.21) (.21) (.24)
-------- -------- -------- --------
Net asset value, end of period $ 15.46 $ 13.85 $ 16.76 $ 14.27
======== ======== ======== ========
Market price per share, end of period $ 13.625 $ 11.625 $ 15.875 $ 14.875
======== ======== ======== ========
<PAGE>
Total Investment Based on market price per share 26.09% (20.23%) 14.51% 2.46%+++++
Return:** ======== ======== ======== ========
Based on net asset value per share 20.09% (9.98%) 26.01% 3.97%+++++
======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement .65% .66% .65% .47%*
Net Assets:*** ======== ======== ======== ========
Expenses .65% .66% .65% .66%*
======== ======== ======== ========
Investment income--net 5.55% 5.35% 5.35% 5.69%*
======== ======== ======== ========
Supplemental Net assets, net of Preferred Stock, end of
Data: period (in thousands) $698,512 $625,630 $757,138 $638,150
======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $320,000 $320,000 $320,000 $320,000
======== ======== ======== ========
Portfolio turnover 59.71% 45.71% 39.93% 21.89%
======== ======== ======== ========
Dividends Per Series A--Investment income--net $ 1,043 $ 1,184 $ 1,150 $ 688
Share on Series B--Investment income--net 1,043 1,090 1,253 656
Preferred Stock Series C--Investment income--net 1,042 1,278 1,175 659
Outstanding:++++++ Series D--Investment income--net 950 1,144 1,426 767
Series E--Investment income--net 933 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, 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.
+++Amount less than $.01 per share.
+++++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 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 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, including valuations furnished by a pricing
service retained by the Fund, which may utilize a matrix system for
valuations. The procedures of the pricing service and its valuations
are reviewed by the officers of the Fund under the general
supervision of the Board of Directors.
(b) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell
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. Distributions in excess of
realized capital gains are due primarily to differing tax treatments
for futures transactions and post-October losses.
NOTES TO FINANCIAL STATEMENTS (concluded)
<PAGE>
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of 0.50% of
the Fund's average weekly net assets.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, 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, 1995 were $555,583,347 and
$569,854,939, respectively.
Net realized and unrealized gains (losses) as of October 31, 1995
were as follows:
Realized Unrealized
Gains Gains
(Losses) (Losses)
Long-term investments $ 8,738,527 $59,639,327
Short-term investments (40,911) 15,243
Financial futures contracts (9,904,750) --
----------- -----------
Total $(1,207,134) $59,654,570
=========== ===========
As of October 31, 1995, net unrealized appreciation for Federal
income tax purposes aggregated $59,654,570, of which $59,814,243
related to appreciated securities and $159,673 related to
depreciated securities. The aggregate cost of investments at October
31, 1995 for Federal income tax purposes was $984,813,712.
<PAGE>
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.
Common Stock
For the year ended October 31, 1995, shares issued and outstanding
remained constant at 45,187,339. At October 31, 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 October 31, 1995 were as
follows: Series A, 3.77%; Series B, 3.77%; Series C, 3.77%; Series
D, 3.667%; and Series E, 3.77%.
A two-for-one stock split occurred on December 1, 1994. As a result,
as of October 31, 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 $197,820.
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, 1995, MLPF&S, an affiliate of FAM, earned $450,570 as
commissions.
5. Subsequent Event:
On November 13, 1995, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the amount
of $0.077732 per share, payable on November 29, 1995, to
shareholders of record as of November 24, 1995.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
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, 1995, 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 three-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 reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at October
31, 1995 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting 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 financial highlights
present fairly, in all material respects, the financial position of
MuniYield Insured Fund, Inc. as of October 31, 1995, the results of
its operations, the changes in its net assets, and the financial
highlights for the respective stated periods in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 8, 1995
</AUDIT-REPORT>
<TABLE>
PER SHARE SELECTED QUARTERLY FINANCIAL DATA* (unaudited)
<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>
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 -- --
May 1, 1995 to July 31, 1995 .31 .08 .17 .22 .07 -- --
August 1, 1995 to October 31, 1995 .30 .03 .46 .23 .08 -- --
<PAGE>
<CAPTION>
Net Asset Value Market Price**
For the Quarter High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
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 13.00 3,962
August 1, 1994 to October 31, 1994 15.00 13.85 13.75 11.650 7,359
November 1, 1994 to January 31, 1995 14.30 12.82 13.125 10.75 9,324
February 1, 1995 to April 30, 1995 15.07 14.32 13.375 12.875 4,003
May 1, 1995 to July 31, 1995 15.62 14.71 13.75 12.75 4,040
August 1, 1995 to October 31, 1995 15.54 14.69 13.75 13.25 3,741
<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>
