MUNIYIELD
INSURED
FUND, INC.
FUND LOGO
Semi-Annual Report
April 30, 1997
Officers and Directors
Arthur Zeikel, President and Director
Joe Grills, Director
Walter Mintz, Director
Robert S. Salomon Jr., Director
Melvin R. Seiden, Director
Stephen B. Swensrud, Director
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
William R. Bock, Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
<PAGE>
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
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. Statements and other information
herein are as dated and are subject to change.
MuniYield Insured
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MuniYield Insured Fund, Inc.
TO OUR SHAREHOLDERS
<PAGE>
For the six-month period ended April 30, 1997, the Common Stock of
MuniYield Insured Fund, Inc. earned $0.463 per share income
dividends, which included earned and unpaid dividends of $0.077.
This represents a net annualized yield of 6.22%, based on a month-
end per share net asset value of $15.01. Over the same period, the
total investment return on the Fund's Common Stock was +1.01%, based
on a change in per share net asset value from $15.52 to $15.01, and
assuming reinvestment of $0.464 per share income dividends and
$0.153 per share capital gains distributions.
The average yields of the Fund's Auction Market Preferred Stock for
the six months ended April 30, 1997 were as follows: Series A,
3.65%; Series B, 3.66%; Series C, 3.66%; Series D, 3.60%; Series E,
3.89%; Series F, 3.64%; and Series G, 3.29%.
The Municipal Market Environment
Long-term tax-exempt revenue bonds traded in a relatively narrow
range throughout much of the six-month period ended April 30, 1997.
By mid-January 1997, municipal bond yields rose to over 6% as
investors reacted negatively to reports of progressively stronger
domestic economic growth. However, a continued lack of any material
inflationary pressures allowed bond yields to decline to their prior
levels by late February. Bond yields rose again as investors became
increasingly concerned that the US domestic economic strength seen
thus far in 1997 would continue, and that the increase in short-term
interest rates by the Federal Reserve Board (FRB) in late March
would be the first in a series of such moves designed to slow the US
economy before any dormant inflationary pressures were awakened.
Long-term tax-exempt bond yields rose approximately 15 basis points
(0.15%) to almost 6.15% by mid-April. Similarly, long-term US
Treasury bond yields rose over 35 basis points over the same period
to 7.16%. However, in late April economic indicators were released
showing that despite considerable economic growth any inflationary
pressures, particularly those associated with wage increases, were
well-contained and of no immediate concern. Fixed-income bond prices
staged a significant rally during the last week in April with long-
term US Treasury bond yields falling nearly 20 basis points to end
the month at 6.95%. Municipal bond yields, as measured by the Bond
Buyer Revenue Bond Index, declined nearly 15 basis points to stand
at 6.01% by April 30, 1997.
As in recent quarters, the relative stability of long-term tax-
exempt bond yields was supported by low levels of new municipal bond
issuance. During the six months ended April 30, 1997, approximately
$90 billion in long-term tax-exempt bonds was under-written, a
decline of over 6% compared to the corresponding period a year
earlier. During the three months ended April 30, 1997, $41 billion
in new long-term municipal bonds was issued, also a 6% decline in
issuance compared to the three-month period ended April 30, 1996.
Overall investor demand remained strong, particularly from property
and casualty insurance companies and individual retail investors. In
recent years, investor demand increased whenever tax-exempt bond
yields approached or exceeded the 6% level as they have in the past
few months.
<PAGE>
Additionally, in recent months much of the new bond issuance was
dominated by a number of larger issues. These included $710 million
in New York City water bonds, $600 million in state of California
bonds, $1 billion in New York City general obligation bonds, $435
million in Dade County, Florida water and sewer revenue bonds, $450
million in Puerto Rico Electric Authority issues and $930 million in
Port Authority of New York and New Jersey issues. These bonds have
typically been issued in states with relatively high state income
taxes and consequently were generally underwritten at yields that
were relatively unattractive to residents in other states. This has
exacerbated the general decline in overall issuance in recent years,
making the decrease in supply even more dramatic for general market
investors.
The present economic situation remains nearly ideal. The domestic
economy continues to grow steadily with little, if any, sign of a
resurgence in inflation. Recent economic growth generated
considerable unexpected tax revenues for the Federal government.
Forecasts for the 1997 Federal fiscal deficit were reduced to under
$100 billion, a level not seen since the early 1980s. Such a reduced
Federal deficit enhances the prospect for a balanced Federal budget.
All these factors support a scenario of steady, or even falling,
interest rates in the coming years. Present annual estimates of
future municipal bond issuance remain centered around $175 billion,
indicating that the current relative scarcity of tax-exempt bonds
should continue for at least the remainder of the year. Should
interest rates begin to decline later this year, either as the
result of a balanced Federal budget or continued benign inflation,
investors are unlikely to be able to purchase long-term municipal
bonds at their currently attractive levels.
Portfolio Strategy
During the six-month period ended April 30, 1997, we maintained our
portfolio strategy of purchasing higher-quality, current coupon,
income-oriented securities with extended call protection in high-tax
states, and selling short call bonds. Throughout the April period,
the municipal market continued to exhibit price volatility, and we
took advantage of investment opportunities as they became available.
Looking forward, recent economic data indicates that the economy is
growing at an above-trend pace with no sign that a slowdown is
imminent. Therefore, we will implement a slightly more defensive
portfolio structure for the near term by increasing the Fund's cash
reserves and reducing the maturity duration.
<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
Senior Vice President
(William R. Bock)
William R. Bock
Vice President and Portfolio Manager
June 9, 1997
PROXY RESULTS
<PAGE>
<TABLE>
During the six-month period ended April 30, 1997, MuniYield Insured
Fund, Inc. Common Stock shareholders voted on the following
proposals. The proposals were approved at a shareholders' meeting on
December 12, 1996. The description of each proposal and number of
shares voted are as follows:
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
1.To consider and act upon a proposal to approve the
Agreement and Plan of Reorganization between the
Fund and MuniYield Insured Fund II, Inc. 25,041,790 815,963 1,540,327
<CAPTION>
Shares Voted Shares Voted
For Without Authority
<S> <S> <C> <C>
2.To elect the Fund's Board of Directors: Joe Grills 42,541,895 1,368,982
Robert S. Salomon Jr. 42,540,987 1,369,890
Stephen B. Swensrud 42,539,196 1,371,682
Arthur Zeikel 42,527,689 1,383,189
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
3.To consider and act upon a proposal to ratify
the selection of Ernst & Young LLP as the
independent auditors of the Fund to serve
for the current fiscal year. 41,584,681 572,581 1,753,615
</TABLE>
<TABLE>
During the six-month period ended April 30, 1997, 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 shareholders' meeting on November 14, 1996.
The description of each proposal and number of shares voted
are as follows:
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <S> <C> <C> <C>
1.To consider and act upon a proposal Series A 1,356 4 23
to approve the Agreement and Plan of Series B 1,592 0 0
Reorganization between the Fund and Series C 673 0 1
MuniYield Insured Fund II, Inc. as Series D 1,459 0 0
follows: Series E 1,455 0 105
<PAGE>
<CAPTION>
Shares Voted Shares Voted
For Without Authority
<S> <S> <C> <C>
2.To elect the Fund's Board of Directors:
Joe Grills, Walter Mintz, Robert S. Series A 2,172 0
Salomon Jr., Melvin R. Seiden, Series B 2,080 0
Stephen B. Swensrud and Arthur Series C 2,012 9
Zeikel as follows: Series D 2,014 0
Series E 3,271 0
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <S> <C> <C> <C>
3.To consider and act upon a proposal Series A 2,134 34 4
to ratify the selection of Ernst & Series B 2,080 0 0
Young LLP as the independent auditors Series C 2,012 0 9
of the Fund to serve for the current Series D 2,014 0 0
fiscal year as follows: Series E 3,266 0 5
</TABLE>
PROXY RESULTS (concluded)
<TABLE>
During the six-month period ended April 30, 1997, MuniYield Insured
Fund II, Inc. Common Stock shareholders voted on the following
proposals. The proposals were approved at a shareholders' meeting on
December 12, 1996. The description of each proposal and number of
shares voted are as follows:
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
1.To consider and act upon a proposal to approve the
Agreement and Plan of Reorganization between the
Fund and MuniYield Insured Fund, Inc. 9,220,359 256,401 494,724
<CAPTION>
Shares Voted Shares Voted
For Without Authority
<S> <S> <C> <C>
2.To consider and act upon a proposal Edward H. Meyer 15,726,264 457,020
to elect the following persons as Jack B. Sunderland 15,726,264 457,020
Directors of the Fund: J. Thomas Touchton 15,724,074 459,210
Arthur Zeikel 15,732,907 450,377
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
3.To consider and act upon a proposal to ratify the
selection of Ernst & Young LLP as the independent
auditors of the Fund to serve for the current
fiscal year. 15,580,177 153,184 449,424
</TABLE>
<PAGE>
<TABLE>
During the six-month period ended April 30, 1997, MuniYield Insured
Fund II, Inc. Preferred Stock shareholders voted on the following
proposals. The proposals were approved at a shareholders' meeting on
November 14, 1996. The description of each proposal and number of
shares voted are as follows:
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <S> <C> <C> <C>
1.To consider and act upon a proposal to
approve the Agreement and Plan of
Reorganization between the Fund and
MuniYield Insured Fund, Inc. as Series A 1,473 40 0
follows: Series B 1,151 4 6
<CAPTION>
Shares Voted Shares Voted
For Without Authority
<S> <S> <C> <C>
2.To consider and act upon a proposal
to elect the following persons as
Directors of the Fund, Donald Cecil,
M. Colyer Crum, Edward H. Meyer,
Jack B. Sunderland, J. Thomas Touchton Series A 2,300 0
and Arthur Zeikel as follows: Series B 1,965 0
Shares Voted Shares Voted
For Against
<S> <S> <C> <C>
3.To consider and act upon a proposal
to ratify the selection of Ernst &
Young LLP as the independent auditors
of the Fund to serve for the current Series A 2,300 0
fiscal year as follows: Series B 1,965 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 share-
holders. 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 on 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 pickup 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 accordingto 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
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
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--0.6% A1+ NR* $ 1,900 Birmingham, Alabama, Medical Clinic Board Revenue Bonds
(U.A.H.S.F.), VRDN, 4.40% due 12/01/2026 (a) $ 1,900
AAA Aaa 6,000 Huntsville, Alabama, Health Care Authority, Health Care
Facilities Revenue Bonds, Series B, 6.625% due 6/01/2023 (d) 6,495
Alaska--1.6% AAA Aaa 21,775 Alaska State Housing Finance Corporation, Refunding,
Series A, 5.875% due 12/01/2024 (d)(f)(i) 21,323
Arizona--0.5% A1+ VMIG1++ 200 Apache County, Arizona, IDA, IDR (Tucson Electric Power--
Springerville Project), VRDN, Series B, 4.55% due 12/15/2018 (a) 200
A1+ P1 600 Maricopa County, Arizona, Pollution Control Corporation, PCR,
Refunding (Arizona Public Service Company), VRDN, Series B,
4.30% due 5/01/2029 (a) 600
NR* NR* 5,000 Mohave County, Arizona, IDA, IDR (North Star Steel Company
Project), AMT, 6.70% due 3/01/2020 5,275
A1+ P1 200 Pinal County, Arizona, IDA, PCR (Magma Copper/Newmont
Mining Corporation), VRDN, 4.60% due 12/01/2009 (a) 200
A1+ NR* 200 Tempe, Arizona, IDA, M/F Revenue Bonds (Elliots Crossing),
VRDN, 4.60% due 10/01/2008 (a) 200
<PAGE>
California-- Anaheim, California, Public Financing Authority, Lease Revenue
17.8% Bonds (Public Improvements Project), Senior Series A (e):
AAA Aaa 5,250 6% due 9/01/2024 5,496
AAA Aaa 8,300 5% due 9/01/2027 7,389
AAA Aaa 1,500 California HFA, Home Mortgage Revenue Bonds, Series F,
6% due 8/01/2017 (d) 1,512
AAA Aaa 1,595 California HFA, Housing Revenue Bonds, AMT, Series E,
7% due 8/01/2026 (d) 1,665
AA- Aa 3,800 California HFA, Revenue Bonds, RIB, AMT, 9.112% due
8/01/2023 (j) 3,976
AA Aa 5,000 California State Department of Water Resources, Water System
Revenue Bonds (Central Valley Project), Series O, 5% due
12/01/2022 4,482
AAA Aaa 10,000 California State, GO, Refunding, 5.25% due 6/01/2021 (b) 9,352
</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>
California California State Public Works Board, Lease Revenue Bonds:
(continued) A Aaa $ 8,500 (Department of Corrections--California State Prison--
Monterey County--Soledad II), Series A, 7% due
11/01/2004 (g) $ 9,757
AAA Aaa 4,100 Refunding (Department of Corrections--California State
Prison--Monterey County--Soledad II), Series B, 5.625%
due 11/01/2019 (d) 4,016
A A 2,750 (Various California State University Projects), Series A,
6.375% due 10/01/2019 2,884
A A1 4,000 (Various University of California Projects), Series B,
6.625% due 12/01/2004 (g) 4,483
AAA Aaa 11,085 California State, Various Purpose Bonds, 5.90% due
3/01/2025 (b) 11,133
AAA Aaa 5,000 Contra Costa, California, Water District, Water Revenue
Bonds, Series D, 6.375% due 10/01/2022 (b) 5,235
AAA Aaa 6,250 Fairfield, California, Water Revenue Refunding Bonds, 5.375%
due 4/01/2017 (b) 5,967
Los Angeles, California, Harbor Department Revenue
Bonds, AMT:
AAA Aaa 4,000 RITR, Series RI-7, 8.692% due 11/01/2026 (d)(j) 4,230
AAA Aaa 6,330 Series B, 6.625% due 8/01/2019 (b) 6,669
AAA Aaa 8,725 Series B, 6.625% due 8/01/2025 (b) 9,193
AAA Aaa 15,000 Los Angeles County, California, Metropolitan Transportation
Authority, Sales Tax Revenue Bonds (Proposition A--First Tier),
Senior Series A, 6% due 7/01/2026 (d) 15,181
AAA Aaa 5,000 Los Angeles County, California, Transportation Commission,
Sales Tax Revenue Refunding Bonds, Series B, 6.50%
due 7/01/2015 (c) 5,348
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) 8,845
<PAGE> AAA Aaa 2,190 Northern California Transmission Revenue Bonds (California--
Oregon Transmission Project), Series A, 6.50% due 5/01/2016 (d) 2,350
AAA Aaa 6,720 Port of Oakland, California, Port Revenue Bonds, AMT, Series G,
5.50% due 11/01/2017 (d) 6,426
AAA Aaa 3,000 Sacramento, California, Municipal Utility District Electric
Revenue Bonds, Series I, 6% due 1/01/2024 (d) 3,030
San Diego, California, Public Facilities Financing Authority,
Sewer Revenue Bonds (c):
AAA Aaa 5,000 5% due 5/15/2025 4,474
AAA Aaa 12,000 Series A, 5.25% due 5/15/2027 11,146
AAA Aaa 22,480 San Francisco, California, Bay Area Rapid Transit District,
Sales Tax Revenue Bonds, 5.50% due 7/01/2020 (c) 21,569
San Francisco, California, City and County Airports
Commission, Revenue Bonds (International Airport), Second
Series:
AAA Aaa 6,000 AMT, Issue 6, 6.60% due 5/01/2024 (b) 6,329
AAA Aaa 2,500 Issue 8B, 6.10% due 5/01/2025 (c) 2,541
AAA Aaa 13,500 Issue 9B, 5.25% due 5/01/2020 (c) 12,580
AAA Aaa 5,000 San Francisco, California, City and County, COP (San Francisco
Courthouse Project), 5.875% due 4/01/2021 (e) 4,990
AAA Aaa 10,000 San Francisco, California, City and County Sewer Revenue
Bonds, Series A, 5.95% due 10/01/2025 (c) 10,039
San Jose, California, Redevelopment Agency (Tax Allocation--
Merged Area Redevelopment Project), Refunding (d):
AAA Aaa 6,895 5.60% due 8/01/2019 6,732
AAA Aaa 5,000 5% due 8/01/2020 4,452
AAA Aaa 5,725 5.625% due 8/01/2025 5,594
</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>
California AAA Aaa $ 2,000 Santa Clara County, California, Financing Authority, Lease
(concluded) Revenue Bonds (VMC Facility Replacement Project), Series A,
6.75% due 11/15/2020 (b) $ 2,192
Santa Rosa, California, Wastewater Revenue Refunding
Bonds (c):
AAA Aaa 3,000 Series A, 5.25% due 9/01/2016 2,873
AAA Aaa 3,295 Series B, 6.125% due 9/01/2017 3,366
AAA Aaa 5,000 University of California Revenue Bonds (Multiple Purpose
Projects), Series D, 6.375% due 9/01/2024 (d) 5,248
<PAGE>
Colorado--1.4% AA Aa 14,500 Colorado Springs, Colorado, Utilities Revenue Bonds, Series A,
6.10% due 11/15/2024 14,848
AAA Aaa 5,000 Denver, Colorado, City and County Airport, Revenue Refunding
Bonds, Series D, 5.50% due 11/15/2025 (d) 4,772
AAA Aaa 105 Douglas County, Colorado, School District No. Re-1 (Douglas
and Elbert Counties Improvement), Series A, 6.50%
due 12/15/2016 (d) 113
Connecticut-- AAA Aaa 10,095 Connecticut State, HFA (Housing Mortgage Finance Program),
1.3% Series B, 6.75% due 11/15/2023 (d) 10,530
Connecticut State Health and Educational Facilities Authority
Revenue Bonds (Nursing Home Program):
AA- A1 5,000 (AHF/Hartford), 7.125% due 11/01/2024 5,551
AA- A1 1,035 (AHF/Windsor Project), 7.125% due 11/01/2024 1,149
Delaware--0.3% AAA Aaa 3,525 Delaware Transportation Authority, Transportation System
Revenue Bonds, Senior Series, 7% due 7/01/2013 (c) 3,904
District of A1+ VMIG1++ 1,200 District of Columbia Revenue Bonds (American Association for
Columbia--1.6% the Advancement of Science--Issue Project), VRDN, 4.40% due
10/01/2022 (a) 1,200
AAA Aaa 20,100 Metropolitan Washington, DC, Virginia Airports Authority,
General Airport Revenue Bonds, AMT, Series A, 6.625% due
10/01/2019 (d) 21,087
Florida--5.8% AA- VMIG1++ 13,400 Dade County, Florida, IDA, Exempt Facilities Revenue
Refunding Bonds (Florida Power and Light Company), VRDN,
4.30% due 6/01/2021 (a) 13,400
AAA Aaa 3,500 Dade County, Florida, School Board, COP, Series A, 5.50%
due 5/01/2025 (b) 3,337
AAA Aaa 22,750 Dade County, Florida, Water and Sewer System Revenue Bonds,
5.25% due 10/01/2026 (c) 21,174
AA Aa 9,500 Gainesville, Florida, Utilities System Revenue Refunding Bonds,
Series A, 5.20% due 10/01/2026 8,737
NR* VMIG1++ 5,600 Jacksonville, Florida, Health Facilities Authority, Hospital
Revenue Refunding Bonds (Genesis Rehabilitation Hospital),
VRDN, 4.40% due 5/01/2021 (a) 5,600
AAA Aaa 9,940 Orange County, Florida, Tourist Development, Tax Revenue
Bonds, Series B, 6.50% due 10/01/2019 (b) 10,674
NR* VMIG1++ 4,100 Palm Beach County, Florida, Water and Sewer Revenue Bonds,
VRDN, 4.60% due 10/01/2011 (a) 4,100
A-1 VMIG1++ 10,300 Pinellas County, Florida, Health Facilities Authority, Revenue
Refunding Bonds (Pooled Hospital Loan Program), DATES,
4.60% due 12/01/2015 (a) 10,300
A1+ VMIG1++ 1,300 Saint Lucie County, Florida, Solid Waste Disposal Revenue
Bonds (Florida Light and Power Company Project), VRDN, AMT,
4.50% due 1/01/2027 (a) 1,300
</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>
Georgia--1.9% AAA Aaa $ 4,700 Albany, Georgia, Sewer System Revenue Bonds, 6.70% due
7/01/2002 (d)(g) $ 5,166
A-1 NR* 600 Burke County, Georgia, Development Authority, PCR,
Refunding (Georgia Power Company--Plant Vogtle Project),
VRDN, 4.35% due 9/01/2026 (a) 600
AAA Aaa 10,000 Georgia Municipal Electric Authority, Power Revenue Bonds,
Series EE, 6.40% due 1/01/2023 (b) 10,522
AAA Aaa 6,500 Metropolitan Atlanta, Rapid Transportation Authority, Georgia,
Sales Tax Revenue Bonds, Second Indenture, Series A, 6.90%
due 7/01/2004 (d)(g) 7,344
AAA Aaa 2,000 Municipal Electric Authority, Georgia, Project One,
Sub-Series A, 6.50% due 1/01/2026 (b) 2,125
Hawaii--1.8% Hawaii State Airports Systems Revenue Bonds, AMT, Second
Series (d):
AAA Aaa 6,000 7% due 7/01/2018 6,499
AAA Aaa 17,145 6.75% due 7/01/2021 18,239
Illinois--7.9% AAA Aaa 7,000 Chicago, Illinois, Board of Education (Chicago School Reform),
UT, 5.75% due 12/01/2020 (b) 6,849
AAA Aaa 9,160 Chicago, Illinois, Midway Airport Revenue Bonds, AMT, Series A,
6.25% due 1/01/2024 (d) 9,343
AAA Aaa 3,870 Chicago, Illinois, O'Hare International Airport, Special
Facilities Revenue Bonds (International Terminal), AMT, 6.75%
due 1/01/2018 (d) 4,127
AAA Aaa 12,000 Chicago, Illinois, Public Building Commission, Building Revenue
Bonds, Series A, 6.50% due 1/01/2018 (d)(h) 12,516
AAA Aaa 6,000 Chicago, Illinois, Wastewater Transmission Revenue Bonds,
6.375% due 1/01/2024 (d) 6,248
AAA Aaa 15,000 Cook County, Illinois, GO, UT, Series A, 6.60% due 11/15/2022 (d) 16,142
Illinois Health Facilities Authority Revenue Bonds:
AAA Aaa 8,545 (Rockford Memorial Hospital), Series B, 6.75% due
8/15/2018 (b) 9,171
AAA Aaa 3,000 (Servantcor Project), Series A, 6.375% due 8/15/2021 (e) 3,109
Metropolitan Pier and Exposition Authority, Illinois, Dedicated
State Tax Revenue Bonds (McCormick Place Expansion Project),
Series A (b):
AAA Aaa 5,000 6.50% due 6/15/2003 (g) 5,490
AAA Aaa 175 6.50% due 6/15/2027 186
AAA Aaa 37,050 Refunding, 5.25% due 6/15/2027 33,916
A1+ VMIG1++ 600 Southwestern Illinois Development Authority, Solid Waste
Disposal Revenue Bonds (Shell Oil Company--Wood River
Project), VRDN, AMT, 4.50% due 4/01/2022 (a) 600
<PAGE>
Indiana--1.7% AAA Aaa 2,400 Indiana State Vocational Technical College Building Facilities
Fee Refunding Bonds (Student Fee), Series D, 6.50% due
7/01/2014 (b) 2,570
AAA Aaa 10,000 Indianapolis, Indiana, Economic Development Revenue Bonds
(Archdiocese of Indianapolis Education Facilities Project),
5.50% due 7/01/2026 (d) 9,512
AAA Aaa 5,000 Indianapolis, Indiana, Gas Utility Revenue Bonds, Series A,
6.20% due 6/01/2023 (c) 5,120
A+ NR* 3,000 Indianapolis, Indiana, Local Public Improvement Bond Bank,
Refunding, Series D, 6.75% due 2/01/2020 3,222
AAA Aaa 2,000 Monroe County, Indiana, Hospital Authority, Hospital Revenue
Bonds (Bloomington Hospital Project), 6.70% due 5/01/2012 (d) 2,141
</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>
Iowa--0.2% AAA Aaa $ 2,150 Iowa Finance Authority, S/F Mortgage, Refunding, Series F,
6.35% due 7/01/2009 (b) $ 2,245
Kansas--1.9% AAA Aaa 20,250 Burlington, Kansas, PCR, Refunding (Kansas Gas and Electric
Company Project), 7% due 6/01/2031 (d) 21,880
AAA Aaa 5,000 Kansas State Turnpike Authority, Turnpike Revenue Refunding
Bonds, 5.25% due 9/01/2017 (b) 4,731
Maryland--0.3% NR* Aa 1,985 Maryland State Community Development Administration,
Department of Housing and Community Development, S/F
Program, AMT, Second Series, 6.55% due 4/01/2026 2,039
NR* Aa 2,085 Maryland State Community Development Administration,
M/F Housing Revenue Bonds (Department of Housing and
Community Development), Series C, 6.65% due 5/15/2025 2,162
Massachusetts Massachusetts State Health and Educational Facilities
- --1.7% Authority Revenue Bonds:
AAA Aaa 5,000 (Massachusettes General Hospital), Series F, 6.25% due
7/01/2020 (b) 5,190
AAA Aaa 7,130 (New England Medical Center Hospitals), Series F, 6.625%
due 7/01/2025 (c) 7,600
AAA Aaa 10,000 (Northeastern University), Series E, 6.55% due
10/01/2022 (d) 10,752
Michigan--3.5% AAA Aaa 2,750 Caledonia, Michigan, Community Schools, Refunding, UT,
6.625% due 5/01/2014 (b) 2,966
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) 23,469
Monroe County, Michigan, PCR (Detroit Edison Company
Project), AMT (d):
AAA Aaa 5,000 Series CC, 6.55% due 6/01/2024 5,236
AAA Aaa 8,500 Series I-B, 6.55% due 9/01/2024 8,910
AAA Aaa 6,300 Western Michigan University, General Revenue Bonds, 6.125%
due 11/15/2022 (c) 6,404
<PAGE>
Minnesota-- A- A 4,500 Minneapolis and Saint Paul, Minnesota, Housing and
0.9% Redevelopment Authority, Health Care Systems Revenue Bonds
(Group Health Plan Inc. Project), 6.90% due 10/15/2022 4,848
Minnesota State, HFA, S/F Mortgage, AMT:
AA+ Aa2 3,685 Series H, 6.50% due 1/01/2026 3,758
AA+ Aa2 2,900 Series L, 6.70% due 7/01/2020 2,998
Mississippi-- AAA Aaa 3,930 Mississippi Hospital Equipment and Facilities Authority,
0.3% Revenue Refunding Bonds (Mississippi Baptist Medical
Center), 6.50% due 5/01/2011 (d) 4,223
Missouri--0.8% AAA Aaa 7,000 Kansas City, Missouri, Airport Revenue Bonds, General
Improvement, Series B, 6.875% due 9/01/2004 (e)(g) 7,878
AAA Aaa 2,775 Missouri State Health and Educational Facilities Authority,
Health Facilities Revenue Refunding Bonds (SSM Health Care),
Series AA, 6.25% due 6/01/2016 (d) 2,876
Nebraska--0.3% AAA Aaa 5,000 Nebraska Public Power District Revenue Bonds (Power Supply
System), Series A, 5.25% due 1/01/2022 (d) 4,653
</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>
Nevada--7.5% AAA Aaa $15,000 Clark County, Nevada, GO, School District, 6% due 6/15/2014 (c) $ 15,365
AAA Aaa 4,570 Clark County, Nevada, Refunding (Las Vegas Convention and
Visitors Authority), 5.50% due 7/01/2021 (d) 4,387
AAA Aaa 12,000 Clark County, Nevada, School District, Building and Renovation,
Series B, 5.25% due 6/15/2016 (c) 11,282
AAA Aaa 9,250 Humboldt County, Nevada, PCR, Refunding (Sierra Pacific
Power Company Project), 6.55% due 10/01/2013 (b) 9,879
AAA Aaa 33,755 Nevada State, GO, Nos. 49 and 50, 5.50% due 11/01/2025 (c) 32,261
AAA Aaa 2,400 Reno, Nevada, Hospital Revenue Bonds (Saint Mary's Regional
Medical Center), Series A, 6.70% due 7/01/2021 (d) 2,564
Washoe County, Nevada, Gas Facilities Revenue Bonds
(Sierra Pacific Power Company), AMT:
AAA Aaa 15,000 6.65% due 12/01/2017 (b) 15,870
AAA Aaa 5,000 6.55% due 9/01/2020 (d) 5,224
AAA Aaa 5,000 Washoe County, Nevada, Water Facilities Revenue Bonds
(Sierra Pacific Power Company), AMT, 6.65% due 6/01/2017 (d) 5,310
<PAGE>
New Hampshire-- AAA Aaa 7,660 New Hampshire Higher Educational and Health Facilities
0.6% Authority Revenue Bonds (Elliot Hospital of Manchester), 6.25%
due 10/01/2021 (b) 7,838
New Jersey-- SP1+ VMIG1++ 100 Mercer County, New Jersey, Improvement Authority Revenue
0.7% Bonds, VRDN, 4.55% due 11/01/1998 (a) 100
AAA Aaa 9,195 New Jersey State Housing and Mortgage Finance Agency
Revenue Bonds (Home Buyer), AMT, Series K, 6.375% due
10/01/2026 (d) 9,389
A1+ P1 400 Union County, New Jersey, Industrial Pollution Control
Financing Authority, PCR, Refunding (Exxon Project), VRDN,
4.20% due 10/01/2024 (a) 400
New Mexico-- AAA Aaa 10,000 Farmington, New Mexico, PCR, Refunding (Southern California
1.4% Edison Company), Series A, 5.875% due 6/01/2023 (d) 10,009
AAA Aaa 5,750 Gallup, New Mexico, PCR, Refunding (Plains Electric
Generation), 6.65% due 8/15/2017 (d) 6,185
NR* A 2,635 New Mexico Educational Assistance Foundation, Student Loan
Revenue Bonds, AMT, First Sub-Series A-2, 6.65% due 11/01/2025 2,650
New York--9.4% AAA Aaa 3,500 Metropolitan Transportation Authority, New York, Commuter
Facilities Revenue Bonds, RITR, Series 9, 7.97% due
7/01/2026 (j) 3,675
BBB Baa1 10,980 Metropolitan Transportation Authority, New York, Transit
Facilities Service Contract, Refunding, Series 5, 7%
due 7/01/2012 11,794
AAA Aaa 6,180 New York City, New York, Educational Construction Fund
Revenue Bonds, Junior Sub-Series, 5.50% due 4/01/2026 (b) 5,938
New York City, New York, GO, UT:
BBB+ Aaa 1,565 Series C, Sub-Series C-1, 7.50% due 8/01/2002 (g) 1,777
BBB+ Baa1 530 Series C, Sub-Series C-1, 7.50% due 8/01/2019 588
BBB+ Baa1 8,000 Series D, 7.50% due 2/01/2019 8,813
BBB+ Baa1 11,250 Series I, 6% due 4/15/2009 11,307
New York City, New York, Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds (d):
AAA Aaa 18,830 RITR, Series RI 97-6, 7.795% due 6/15/2026 (j) 18,383
AAA Aaa 6,500 Series B, 5.75% due 6/15/2026 6,436
</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>
New York New York State Dormitory Authority Revenue Bonds:
(concluded) AAA Aaa $ 6,000 (Mental Health Services Facilities Improvement),
Series B, 5.125% due 8/15/2021 (d) $ 5,512
BBB+ Baa1 11,900 Refunding (Mental Health Services Facilities), Series B,
5.625% due 2/15/2021 11,194
BBB+ Baa1 7,595 Refunding (State University Educational Facilities),
Series B, 7% due 5/15/2016 8,083
AAA Aaa 35,000 New York State Energy Research and Development Authority,
Gas Facilities Revenue Refunding Bonds (Brooklyn Union Gas
Company), Series A, 5.50% due 1/01/2021 (d) 33,741
<PAGE>
North Carolina NR* VMIG1++ 2,100 Person County, North Carolina, Industrial Facilities and
- --0.2% Pollution Control Financing Authority, Solid Waste Disposal
Revenue Bonds (Carolina Power and Light Company), DATES, AMT,
4.30% due 11/01/2016 (a) 2,100
North Dakota-- AAA Aaa 2,500 Grand Forks, North Dakota, Health Care Facilities Revenue Bonds
0.2% (United Hospital Obligated Group), 6.25% due 12/01/2024 (d) 2,582
Ohio--0.4% AAA Aaa 2,500 North Canton, Ohio, School District Improvement, UT,
6.70% due 12/01/2019 (b) 2,738
AAA Aaa 2,500 Ohio State Higher Educational Facilities Commission, Mortgage
Revenue Bonds (University of Dayton Project), 6.60% due
12/01/2017 (c) 2,710
Oregon--0.6% AAA Aaa 5,000 Port of Portland, International Airport Revenue Bonds (Portland
International Airport), AMT, Series 11, 5.625% due 7/01/2026 (c) 4,800
A1+ VMIG1++ 3,000 Port Saint Helen's, Oregon, PCR (Portland General Electric
Company Project), VRDN, Series B, 4.30% due 6/01/2010 (a) 3,000
Pennsylvania AAA Aaa 7,250 Allegheny County, Pennsylvania, Hospital Development Authority,
- --2.1% Revenue Refunding Bonds (University of Pittsburgh Health
Center), Series A, 5.625% due 4/01/2027 (d) 6,971
A1+ P1 400 Beaver County, Pennsylvania, IDA, PCR, Refunding (Duquesne
Light Company--Manfield), VRDN, Series B, 4.60% due
8/01/2009 (a) 400
AAA Aaa 16,000 Montgomery County, Pennsylvania, IDA, PCR, Refunding
(Philadelphia Electric Company), Series B, 6.70% due
12/01/2021 (d) 17,206
AA Aa 4,000 Pennsylvania, HFA, RIB, AMT, 8.009% due 4/01/2025 (j) 3,955
A1+ VMIG1++ 300 Philadelphia, Pennsylvania, Hospitals and Higher Education
Facilities Authority, Hospital Revenue Bonds (Children's
Hospital of Philadelphia Project), VRDN, Series A, 4.40%
due 3/01/2027 (a) 300
South Carolina AAA Aaa 10,000 Piedmont, South Carolina, Municipal Power Agency, Electric
- --2.9% Revenue Refunding Bonds, 6.30% due 1/01/2022 (d) 10,399
South Carolina State Public Service Authority Revenue Bonds:
AAA Aaa 4,850 Refunding, Series B, 5.875% due 1/01/2023 (c) 4,855
AAA Aaa 11,900 (Santee Cooper), Series D, 6.50% due 7/01/2014 (b) 12,786
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) 7,482
NR* NR* 4,200 Spartanburg County, South Carolina, Solid Waste Disposal
Facilities Revenue Bonds (BMW Project), AMT, 7.55% due
11/01/2024 4,564
</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>
Tennessee--1.0% 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) $ 4,095
AAA Aaa 5,000 Metropolitan Government, Nashville and Davidson County,
Tennessee, Water and Sewer Revenue Bonds, RIB, 8.429%
due 1/01/2022 (b)(j) 5,056
A+ A1 4,900 Tennessee, HDA, Mortgage Finance, AMT, Series A, 6.90% due
7/01/2025 5,105
Texas--4.5% AAA Aaa 3,200 Bexar, Texas, Metropolitan Water District, Waterworks System
Revenue Refunding Bonds, 6.35% due 5/01/2025 (d) 3,357
Brazos River Authority, Texas, PCR (Texas Utilities Electric
Company Project), AMT:
AAA Aaa 11,500 Refunding, 6.50% due 12/01/2027 (b) 11,980
AAA Aaa 3,800 Series A, 6.75% due 4/01/2022 (b) 4,057
A1+ VMIG1++ 3,700 VRDN, Series A, 4.50% due 4/01/2030 (a) 3,700
AAA Aaa 7,000 Brazos River Authority, Texas, Revenue Refunding Bonds
(Houston Light and Power), Series A, 6.70% due 3/01/2017 (b) 7,534
A1+ VMIG1++ 1,300 Gulf Coast Waste Disposal Authority, Texas, PCR (Amoco Oil
Company Project), VRDN, AMT, 4.50% due 5/01/2023 (a) 1,300
AAA Aaa 2,150 Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds, RITR, Series 12, 8.32% due
10/01/2024 (d)(j) 2,338
A1+ VMIG1++ 100 Harris County, Texas, Health Facilities Development Corporation,
Special Facilities Revenue Bonds (Texas Medical Center Project),
VRDN, 4.25% due 2/15/2022 (a)(d) 100
AAA Aaa 6,885 Houston, Texas, Airport System Revenue Bonds (Sub-Lien),
AMT, Series A, 6.75% due 7/01/2021 (c) 7,332
Houston, Texas, Water and Sewer Systems Revenue Bonds
(Junior Lien), Series A (d):
AAA Aaa 1,100 6.375% due 12/01/2002 (g) 1,199
AAA Aaa 4,465 6.375% due 12/01/2022 4,662
AAA Aaa 11,795 Matagorda County, Texas, Navigation District No. 1, Revenue
Refunding Bonds (Houston Light and Power Company), Series A,
6.70% due 3/01/2027 (b) 12,694
AAA Aaa 1,500 Sabine River Authority, Texas, PCR, Refunding (Texas Utilities
Electric Company Project), 6.55% due 10/01/2022 (c) 1,608
Utah--0.3% AAA Aaa 4,000 Salt Lake City, Utah, Airport Revenue Bonds, AMT, Series A,
6.125% due 12/01/2022 (c) 4,017
NR* P1 100 Salt Lake County, Utah, PCR, Refunding (Service Station
Holdings Project), VRDN, 4.35% due 2/01/2008 (a) 100
<PAGE>
Virginia--2.3% AAA Aaa 6,075 Fredericksburg, Virginia, IDA, Hospital Facilities Revenue
Refunding Bonds (Medicorp Health Systems Obligation), 5.25%
due 6/15/2023 (b) 5,628
AAA Aaa 5,540 Loudon County, Virginia, COP, 6.90% due 3/01/2019 (e) 6,086
Virginia State, HDA, Commonwealth Mortgage:
AAA Aaa 9,000 AMT, Series A, Sub-Series A-4, 6.45% due 7/01/2028 (d) 9,201
AA+ Aa1 6,000 AMT, Series B, Sub-Series B-1, 6.375% due 7/01/2026 6,083
AA+ Aa1 3,500 Series J, Sub-Series J-2, 6.75% due 7/01/2017 3,703
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (In Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Washington--6.6% AAA Aaa $ 9,495 Port Seattle, Washington, Revenue Bonds (Sub-Lien),
Series C, 6.625% due 8/01/2017 (d) $ 10,204
Seattle, Washington, Metropolitan Seattle Municipality
Sewer Revenue Bonds:
AAA Aaa 5,560 Series U, 6.60% due 1/01/2001 (c)(g) 6,004
AAA Aaa 1,465 Series W, 6.25% due 1/01/2021 (d) 1,507
AAA Aaa 1,750 Series W, 6.25% due 1/01/2022 (d) 1,800
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) 4,900
AAA Aaa 7,875 Spokane, Washington, Lease Revenue Refunding
Financing Bonds (Multi-Purpose Arena Project), AMT,
Series A, 6.60% due 1/01/2014 (b) 8,312
AAA Aaa 6,000 Tacoma, Washington, Refuse Utility Revenue Bonds, 7% due
12/01/2004 (b)(g) 6,848
AAA Aaa 8,705 Tacoma, Washington, Solid Waste Utilities, Revenue Refunding
Bonds, Series B, 5.50% due 12/01/2019 (b) 8,294
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 (e) 2,101
AAA Aaa 14,860 Washington State, GO, Series C, 5% due 1/01/2022 (c) 13,399
Washington State Health Care Facilities Authority Revenue Bonds:
A+ A1 8,300 (Children's Hospital and Medical Center), 6% due 10/01/2022 8,109
AAA Aaa 2,500 (Virginia Mason Obligation Group of Seattle), 6.30% due
2/15/2017 (d) 2,582
AAA Aaa 15,175 Washington State Public Power Supply Systems, Revenue
Refunding Bonds (Nuclear Project No. 1), Series A, 6.25%
due 7/01/2017 (d) 15,560
West Virginia AAA Aaa 4,425 Harrison County, West Virginia, Commission of Solid Waste
- --0.4% Disposal Revenue Bonds (Monongahela Power), AMT, Series C,
6.75% due 8/01/2024 (b) 4,792
<PAGE>
Wisconsin--2.0% AA Aa 2,000 Wisconsin, Housing and EDA, Home Ownership Revenue
Bonds, AMT, Series B, 6.75% due 9/01/2025 2,063
Wisconsin Public Power Incorporated, Power Supply System
Revenue Bonds, Series A (d):
AAA Aaa 5,000 6% due 7/01/2015 5,139
AAA Aaa 13,685 5.75% due 7/01/2023 13,520
Wisconsin State Health and Educational Facilities Authority,
Revenue Refunding Bonds (Wheaton--Franciscan Services) (d):
AAA Aaa 3,955 6.50% due 8/15/2011 4,131
AAA Aaa 2,000 6% due 8/15/2015 2,020
Wyoming--0.2% A-1 VMIG1++ 3,300 Sweetwater County, Wyoming, PCR, Refunding (Idaho Power
Company Project), VRDN, Series B, 4.40% due 7/15/2026 (a) 3,300
Total Investments (Cost--$1,270,291)--97.4% 1,324,610
Other Assets Less Liabilities--2.6% 35,994
----------
Net Assets--100.0% $1,360,604
==========
<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, 1997.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)MBIA Insured.
(e)FSA Insured.
(f)FNMA Collateralized.
(g)Prerefunded.
(h)Escrowed to maturity.
(i)GNMA Collateralized.
(j)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 April 30, 1997.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<PAGE>
<TABLE>
Statement of Assets, Liabilities and Capital as of April 30, 1997
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$1,270,291,250) (Note 1a) $1,324,610,237
Cash 8,336
Receivables:
Interest $ 23,810,139
Securities sold 21,142,209 44,952,348
--------------
Deferred organization expenses (Note 1e) 2,542
Prepaid expenses and other assets 123,568
--------------
Total assets 1,369,697,031
--------------
Liabilities: Payables:
Securities purchased 6,787,857
Dividends to shareholders (Note 1f) 1,258,812
Investment adviser (Note 2) 554,285 8,600,954
--------------
Accrued expenses and other liabilities 491,989
--------------
Total liabilities 9,092,943
--------------
Net Assets: Net assets $1,360,604,088
==============
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.05 per share (17,600 shares
of AMPS* issued and outstanding at $25,000 per share
liquidation preference) $ 440,000,000
Common Stock, par value $.10 per share (61,351,136
shares issued and outstanding) $ 6,135,114
Paid-in capital in excess of par 858,323,144
Undistributed investment income--net 10,720,144
Accumulated realized capital losses on investments--net (7,979,744)
Accumulated distributions in excess of realized capital
gains--net (Note 1f) (913,557)
Unrealized appreciation on investments--net 54,318,987
--------------
Total--Equivalent to $15.01 net asset value per share of
Common Stock (market price--$14.375) 920,604,088
--------------
Total capital $1,360,604,088
==============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months Ended April 30, 1997
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 35,096,852
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 2,978,370
Commission fees (Note 4) 490,984
Transfer agent fees 77,751
Accounting services (Note 2) 49,879
Professional fees 49,581
Printing and shareholder reports 37,603
Custodian fees 36,511
Directors' fees and expenses 36,176
Listing fees 18,771
Pricing fees 15,562
Amortization of organization expenses (Note 1e) 1,219
Other 32,218
--------------
Total expenses 3,824,625
--------------
Investment income--net 31,272,227
--------------
Realized & Unreal- Realized gain on investments--net 2,906,742
ized Gain (Loss)on Change in unrealized appreciation on investments--net (20,819,570)
Investments--Net --------------
(Notes 1b, 1d & 3): Net Increase in Net Assets Resulting from Operations $ 13,359,399
==============
</TABLE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: April 30, 1997 Oct. 31, 1996
<S> <S> <C> <C>
Operations: Investment income--net $ 31,272,227 $ 53,184,275
Realized gain on investments--net 2,906,742 7,245,480
Change in unrealized appreciation on investments--net (20,819,570) (391,582)
-------------- --------------
Net increase in net assets resulting from operations 13,359,399 60,038,173
-------------- --------------
<PAGE>
Dividends & Investment income--net:
Distributions to Common Stock (23,611,052) (41,238,191)
Shareholders Preferred Stock (5,323,582) (10,788,626)
(Note 1f): Realized gain on investments--net:
Common Stock (6,926,993) (3,872,510)
Preferred Stock (1,762,542) (1,178,380)
-------------- --------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (37,624,169) (57,077,707)
-------------- --------------
Capital Stock Net proceeds from issuance of Common Stock resulting from
Transactions reorganization 243,396,336 --
(Note 4): Proceeds from issuance of Preferred Stock resulting from
reorganization 120,000,000 --
-------------- --------------
Net increase in net assets derived from capital stock
transactions 363,396,336 --
-------------- --------------
Net Assets: Total increase in net assets 339,131,566 2,960,466
Beginning of period 1,021,472,522 1,018,512,056
-------------- --------------
End of period* $1,360,604,088 $1,021,472,522
============== ==============
<FN>
*Undistributed investment income--net $ 10,720,144 $ 8,382,551
============== ==============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<PAGE>
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
April 30, For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1997 1996 1995 1994 1993
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 15.52 $ 15.46 $ 13.85 $ 16.76 $ 14.27
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .56 1.18 1.20 1.20 1.21
Realized and unrealized gain (loss) on
investments--net (.30) .15 1.66 (2.66) 2.59
-------- -------- -------- -------- --------
Total from investment operations .26 1.33 2.86 (1.46) 3.80
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.46) (.91) (.92) (.98) (1.00)
Realized gain on investments--net (.15) (.09) --++ (.26) (.10)
In excess of realized gain on investments
--net -- -- (.04) -- --
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Stock shareholders (.61) (1.00) (.96) (1.24) (1.10)
-------- -------- -------- -------- --------
Capital charge resulting from the issuance of
Common Stock (.01) -- -- -- --
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:++++
Dividends and distributions to Preferred
Stock shareholders:
Investment income--net (.11) (.24) (.28) (.17) (.19)
Realized gain on investments--net (.04) (.03) --++ (.04) (.02)
In excess of realized gain on investments
--net -- -- (.01) -- --
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity (.15) (.27) (.29) (.21) (.21)
-------- -------- -------- -------- --------
Net asset value, end of period $ 15.01 $ 15.52 $ 15.46 $ 13.85 $ 16.76
======== ======== ======== ======== ========
Market price per share, end of period $ 14.375 $ 14.00 $ 13.625 $ 11.625 $ 15.875
======== ======== ======== ======== ========
<PAGE>
Total Investment Based on market price per share 7.24%+++ 10.30% 26.09% (20.23%) 14.51%
Return:** ======== ======== ======== ======== ========
Based on net asset value per share 1.01%+++ 7.76% 20.09% (9.98%) 26.01%
======== ======== ======== ======== ========
Ratios to Average Expenses .64%* .64% .65% .66% .65%
Net Assets:*** ======== ======== ======== ======== ========
Investment income--net 5.24%* 5.22% 5.55% 5.35% 5.35%
======== ======== ======== ======== ========
Supplemental Net assets, net of Preferred Stock, end of
Data: period (in thousands) $920,604 $701,473 $698,512 $625,630 $757,138
======== ======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $440,000 $320,000 $320,000 $320,000 $320,000
======== ======== ======== ======== ========
Portfolio turnover 48.88% 100.49% 59.71% 45.71% 39.93%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,092 $ 3,192 $ 3,183 $ 2,955 $ 3,366
======== ======== ======== ======== ========
Dividends Series A--Investment income--net $ 317 $ 832 $ 1,043 $ 1,184 $ 1,150
Per Share on ======== ======== ======== ======== ========
Preferred Stock Series B--Investment income--net $ 317 $ 835 $ 1,043 $ 1,090 $ 1,253
Outstanding:++++++ ======== ======== ======== ======== ========
Series C--Investment income--net $ 317 $ 841 $ 1,042 $ 1,278 $ 1,175
======== ======== ======== ======== ========
Series D--Investment income--net $ 304 $ 865 $ 950 $ 1,144 $ 1,426
======== ======== ======== ======== ========
Series E--Investment income--net $ 345 $ 842 $ 933 $ 1,282 $ 1,492
======== ======== ======== ======== ========
Series F--Investment income--net $ 284 -- -- -- --
======== ======== ======== ======== ========
Series G--Investment income--net $ 209 -- -- -- --
======== ======== ======== ======== ========
<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.
++Amount is less than $.01 per share.
++++The Fund's Preferred Stock was issued on May 22,1992 (Series A,
B, C, D and E) and January 27, 1997 (Series F and G).
++++++Dividends per share have been adjusted to reflect a two-for-
one stock split that occurred on December 1, 1994.
+++Aggregate total investment return.
<PAGE>
See Notes to Financial Statements.
</TABLE>
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 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.
<PAGE>
* 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.
* 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--Deferred organization expenses
are amortized on a straight-line basis over a five-year period.
<PAGE>
(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.
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, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities
and securities acquired through the reorganization, for the six
months ended April 30, 1997 were $567,563,580 and $635,001,830,
respectively.
Net realized and unrealized gains (losses) as of April 30, 1997 were
as follows:
Realized Unrealized
Gains (Losses) Gains
Long-term investments $4,656,539 $54,318,987
Options purchased (1,749,797) --
---------- -----------
Total $2,906,742 $54,318,987
========== ===========
As of April 30, 1997, net unrealized appreciation for Federal income
tax purposes aggregated $54,318,987, of which $56,088,749 related to
appreciated securities and $1,769,762 related to depreciated
securities. The aggregate cost of investments at April 30, 1997 for
Federal income tax purposes was $1,270,291,250.
<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 the holders of Common Stock.
Common Stock
For the six months ended April 30, 1997, shares issued and
outstanding increased by 16,163,797 pursuant to a plan of
reorganization. At April 30, 1997, shares issued and outstanding
amounted to 61,351,136 and total paid-in capital amounted to
$864,458,258.
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, 1997 were as
follows: Series A, 3.65%; Series B, 3.73%; Series C, 3.70%; Series
D, 3.55%; Series E, 4.125%; Series F, 3.71%; and Series G, 4.00%.
In addition, AMPS shares increased by 4,800 pursuant to a plan of
reorganization. As a result, as of April 30, 1997, there were 17,600
AMPS shares authorized, issued and outstanding with a liquidation
preference of $25,000 per share.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from 0.25% to 0.375%,
calculated on the proceeds of each auction. For the six months ended
April 30, 1997, Merrill Lynch, Pierce, Fenner & Smith Inc., an
affiliate of FAM, earned $192,898 as commissions.
5. Acquisition of MuniYield Insured Fund II, Inc.:
On January 27, 1997, MuniYield Insured Fund, Inc. acquired all of
the net assets of MuniYield Insured Fund II, Inc. pursuant to a plan
of reorganization. The acquisition was accomplished by a tax-free
exchange of 16,163,797 Common Stock shares and 4,800 AMPS shares of
MuniYield Insured Fund, Inc. for 16,420,827 Common Stock shares and
4,800 AMPS shares outstanding of MuniYield Insured Fund II, Inc.
MuniYield Insured Fund II, Inc.'s net assets on that date of
$363,897,323, including $15,875,569 of unrealized appreciation and
$2,185,654 of accumulated net realized capital losses, were combined
with those of MuniYield Insured Fund, Inc. The aggregate net assets
of MuniYield Insured Fund, Inc. immediately after the acquisition
amounted to $1,365,945,620.
6. Subsequent Event:
On May 9, 1997, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$.077276 per share, payable on May 29, 1997, to shareholders of
record as of May 19, 1997.
<PAGE>
