MUNIYIELD INSURED FUND INC, DEF 14A, 1998-08-28

MUNIYIELD INSURED FUND INC
DEF 14A, 1998-08-28

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 28, 1998

SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934 (AMENDMENT NO. )

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

MUNIYIELD INSURED FUND, INC.
P.O. BOX 9011
PRINCETON, NEW JERSEY 08543-9011
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(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (4) and 0-11.

(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.

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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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Notes:

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1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>

MUNIYIELD INSURED FUND, INC.
P.O. BOX 9011
PRINCETON, NEW JERSEY 08543-9011

----------------
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS

----------------
OCTOBER 8, 1998

TO THE STOCKHOLDERS OF MUNIYIELD INSURED FUND, INC.:

Notice is hereby given that the 1998 Annual Meeting of Stockholders (the
"Meeting") of MuniYield Insured Fund, Inc. (the "Fund") will be held at the
offices of Merrill Lynch Asset Management, 800 Scudders Mill Road, Plainsboro,
New Jersey, on Thursday, October 8, 1998 at 9:30 a.m. for the following
purposes:

(1) To elect a Board of Directors to serve for the ensuing year;

(2) To consider and act upon a proposal to ratify the selection of Ernst &
Young LLP to serve as independent auditors of the Fund for its current
fiscal year; and

(3) To transact such other business as may properly come before the Meeting
or any adjournment thereof.

The Board of Directors has fixed the close of business on August 12, 1998
as the record date for the determination of stockholders entitled to notice of
and to vote at the Meeting or any adjournment thereof.

A complete list of the stockholders of the Fund entitled to vote at the
Meeting will be available and open to the examination of any stockholder of the
Fund for any purpose germane to the Meeting during ordinary business hours from
and after September 24, 1998, at the office of the Fund, 800 Scudders Mill Road,
Plainsboro, New Jersey. You are cordially invited to attend the Meeting.
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE REQUESTED TO
COMPLETE, DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED FOR THIS PURPOSE. The enclosed proxy is being solicited on
behalf of the Board of Directors of the Fund.

By Order of the Board of Directors

PATRICK D. SWEENEY
SECRETARY

Plainsboro, New Jersey
Dated: August 28, 1998
<PAGE>

PROXY STATEMENT
----------------
MUNIYIELD INSURED FUND, INC.
P.O. BOX 9011
PRINCETON, NEW JERSEY 08543-9011
----------------
1998 ANNUAL MEETING OF STOCKHOLDERS
----------------
OCTOBER 8, 1998

INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of MuniYield Insured Fund, Inc., a
Maryland corporation (the "Fund"), to be voted at the 1998 Annual Meeting of
Stockholders of the Fund (the "Meeting"), to be held at the offices of Merrill
Lynch Asset Management, L.P. ("MLAM"), 800 Scudders Mill Road, Plainsboro, New
Jersey, on Thursday, October 8, 1998 at 9:30 a.m. The approximate mailing date
of this Proxy Statement is August 31, 1998.

All properly executed proxies received prior to the Meeting will be voted
at the Meeting in accordance with the instructions marked thereon or otherwise
as provided therein. Unless instructions to the contrary are marked, proxies
will be voted FOR the election of the Board of Directors to serve for the
ensuing year, and FOR the ratification of the selection of independent auditors
to serve for the Fund's current fiscal year. Any proxy may be revoked at any
time prior to the exercise thereof by giving written notice to the Secretary of
the Fund at the Fund's address indicated above or by voting in person at the
Meeting.

The Board of Directors has fixed the close of business on August 12, 1998
as the record date (the "Record Date") for the determination of stockholders
entitled to notice of and to vote at the Meeting and at any adjournment thereof.
Stockholders on the Record Date will be entitled to one vote for each share
held, with no shares having cumulative voting rights. As of the Record Date, the
Fund had outstanding 61,351,136 shares of common stock, par value $.10 per share
("Common Stock"), and 17,600 shares of auction market preferred stock, par value
$.05 per share and liquidation preference of $25,000 per share plus an amount
equal to accumulated but unpaid dividends thereon ("AMPS"). To the knowledge of
the Fund, as of the Record Date, no person is the beneficial owner of more than
five percent of the outstanding shares of Common Stock or AMPS.

With respect to Item 1 Election of Directors, holders of AMPS, voting
separately as a class, are entitled to elect the two Directors designated below
to be elected by holders of AMPS, and holders of AMPS and Common Stock, voting
together as a single class, are entitled to elect the remaining Directors.
Assuming a quorum is present, (i) election of the two Directors to be elected by
the holders of AMPS, voting separately as a class, will require the affirmative
vote of a majority of the votes cast by the holders of AMPS represented at the
Meeting and entitled to vote; (ii) election of the remaining Directors will
require the affirmative vote of a majority of the votes cast by the holders of
shares of Common Stock and AMPS represented at the Meeting and entitled to vote,
voting together as a single class; and (iii) approval of Item 2. Selection of
Independent Auditors will require the affirmative vote of a majority of the
votes cast by the holders of Common Stock and AMPS represented at the Meeting
and entitled to vote, voting together as a single class.

The Board of Directors of the Fund knows of no business other than that
mentioned in Items 1 and 2 of the Notice of Meeting that will be presented for
consideration at the Meeting. If any other matter is properly presented, it is
the intention of the persons named in the enclosed proxy to vote in accordance
with their best judgment.

<PAGE>

ITEM 1. ELECTION OF DIRECTORS

At the Meeting, the Board of Directors will be elected to serve until the
next Annual Meeting of Stockholders and until their successors are elected and
qualified. It is intended that all properly executed proxies will be voted
(unless such authority has been withheld in the proxy) as follows:

(1) All proxies of the holders of shares of AMPS, voting separately as a
class, will be voted in favor of the two (2) persons designated as Directors
to be elected by holders of AMPS; and

(2) All proxies of the holders of shares of AMPS and Common Stock, voting
together as a single class, will be voted in favor of the four (4) persons
designated as Directors to be elected by holders of Common Stock and AMPS.

The Board of Directors of the Fund knows of no reason why any of these
nominees will be unable to serve, but in the event of any such unavailability,
the proxies received will be voted for such substitute nominee or nominees as
the Board of Directors may recommend.

Certain information concerning the nominees, including their designated
classes, is set forth as follows:

TO BE ELECTED BY HOLDERS OF AMPS, VOTING SEPARATELY AS A CLASS:

1982.
Melvin R. Seiden(1)(2) ......... 67 Director of Silbanc Properties, 1992 -0- -0-
780 Third Avenue Ltd. (real estate, investments and
Suite 2502 consulting) since 1987;
New York, New York 10017 Chairman and President of Seiden
& de Cuevas, Inc. (private
investment firm) from 1964 to
1987.
</TABLE>

2
<PAGE>

TO BE ELECTED BY HOLDERS OF AMPS AND COMMON
STOCK, VOTING TOGETHER AS A SINGLE CLASS:

<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED AT
THE RECORD DATE
---------------
PRINCIPAL OCCUPATIONS DURING PAST DIRECTOR COMMON
NAME AND ADDRESS OF NOMINEE AGE FIVE YEARS AND PUBLIC DIRECTORSHIPS (1) SINCE STOCK AMPS
- -------------------------------------- ----- ----------------------------------------- ---------- ------- -----
<S> <C> <C> <C> <C> <C>
Joe Grills(1)(2) ..................... 63 Member of the Committee of 1994 -0- -0-
P.O. Box 98 Investment of Employee Benefit
Rapidan, Virginia 22733 Assets of the Financial
Executives Institute ("CIEBA")
since 1986, Member of CIEBA's
Executive Committee since 1988
and its Chairman from 1991 to
1992; Assistant Treasurer of
International Business Machines
Corporation ("IBM") and Chief
Investment Officer of IBM
Retirement Funds from 1986
until 1993; Member of the
Investment Advisory Committees
of the State of New York Common
Retirement Fund and the Howard
Hughes Medical Institute;
Director, Duke Management
Company since 1992 and Vice
Chairman thereof since May
1998; Director, LaSalle Street
Fund since 1995; Director of
Hotchkis and Wiley Mutual Funds
since 1996; Director Kimco
Realty Corporation since 1997;
Member of the Investment
Advisory Committee of the
Virginia Retirement System
since 1998.
Robert S. Salomon, Jr.(1)(2) ......... 61 Principal of STI Management 1996 -0- -0-
106 Dolphin Cove Quay (investment adviser) since 1994;
Stamford, Connecticut 06902 Chairman and CEO of Salomon
Brothers Asset Management from
1992 until 1995; Monthly
columnist with the FORBES
Magazine since 1992; Chairman
of Salomon Brothers equity
mutual funds from 1992 until
1995; Director of Stock
Research and U.S. Equity
Strategist at Salomon Brothers
Inc from 1975 until 1991;
Trustee, The Common Fund since
1980.
Stephen B. Swensrud(1)(2) ............ 65 Chairman of Fernwood Advisors 1992 -0- -0-
24 Federal Street (investment adviser) since 1996;
Suite 400 Principal of Fernwood Associates
Boston, Massachusetts 02110 (financial consultant) since 1975.
</TABLE>

3
<PAGE>

- --------
(1) Each of the nominees is a director, trustee or member of an advisory board
of certain other investment companies for which FAM or MLAM acts as
investment adviser.
(2) Member of the Audit Committee of the Board of Directors.

(3) Interested person, as defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act"), of the Fund.

COMMITTEES AND BOARD OF DIRECTORS' MEETINGS. The Board of Directors has a
standing Audit Committee, which consists of the Directors who are not
"interested persons" of the Fund within the meaning of the Investment Company
Act. The principal purpose of the Audit Committee is to review the scope of the
annual audit conducted by the Fund's independent auditors and the evaluation by
such auditors of the accounting procedures followed by the Fund. The
non-interested Directors have retained independent legal counsel to assist them
in connection with these duties. The Board of Directors does not have a
nominating committee.

During the fiscal year ended October 31, 1997, the Board of Directors held
four meetings and the Audit Committee held four meetings. Each of the Directors
then in office attended at least 75% of the aggregate of the total number of
meetings of the Board of Directors and, if a member, of the total number of
meetings of the Audit Committee held during such period.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Fund's officers and directors and persons who own more than
ten percent of a registered class of the Fund's equity securities, to file
reports of ownership and changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission ("SEC") and the New York Stock Exchange.
Officers, directors and greater than ten percent stockholders are required by
SEC regulations to furnish the Fund with copies of all Forms 3, 4 and 5 they
file.

Based solely on the Fund's review of the copies of such forms, and
amendments thereto, furnished to it during or with respect to its most recent
fiscal year, and written representations from certain reporting persons that
they were not required to file Form 5 with respect to the most recent fiscal
year, the Fund believes that all of its officers, directors, greater than ten
percent beneficial owners and other persons subject to Section 16 of the
Exchange Act because of the requirements of Section 30 of the Investment Company
Act, (I.E., any advisory board member, investment adviser or affiliated person
of the Fund's investment adviser), have complied with all filing requirements
applicable to them with respect to transactions during the Fund's most recent
fiscal year,

4
<PAGE>

except that Michael J. Hennewinkel made a late Form 3 filing reporting his
election as Senior Vice President of FAM, which report indicated that he owned
no shares of the Fund.

INTERESTED PERSONS. The Fund considers Mr. Zeikel to be an "interested
person" of the Fund within the meaning of Section 2(a)(19) of the Investment
Company Act as a result of the positions he holds with FAM and its affiliates.
Mr. Zeikel is the President of the Fund and the Chairman of FAM and MLAM.

COMPENSATION OF DIRECTORS. FAM, the investment adviser, pays all
compensation of all officers of the Fund and all Directors of the Fund who are
affiliated with ML & Co. or its subsidiaries. The Fund pays each Director not
affiliated with the investment adviser (each a "non-affiliated Director") a fee
of $4,000 per year plus $1,000 per regular meeting attended, together with such
Director's actual out-of-pocket expenses relating to attendance at meetings. The
Fund also pays each member of its Audit Committee, which consists of all the
non-affiliated Directors, a fee of $4,000 per year plus $750 per meeting
attended, together with such Director's out-of-pocket expenses relating to
attendance at meetings. These fees and expenses aggregated $75,201 for the
fiscal year ended October 31, 1997.

The following table sets forth for the fiscal year ended October 31, 1997
compensation paid by the Fund to the non-affiliated Directors and, for the
calendar year ended December 31, 1997, the aggregate compensation paid by all
investment companies advised by FAM and its affiliate, MLAM ("FAM/MLAM Advised
Funds"), to the non-affiliated Directors.

<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
FROM FUND, OTHER
PENSION OR FAM/MLAM ADVISED
RETIREMENT BENEFITS FUNDS AND HOTCHKIS AND
COMPENSATION ACCRUED AS PART WILEY FUNDS
NAME OF DIRECTOR FROM FUND OF FUND EXPENSES PAID TO DIRECTORS
- ----------------------------------- -------------- --------------------- -----------------------
<S> <C> <C> <C>
Joe Grills(1) ..................... $15,000 None $171,500
Walter Mintz(1) ................... $15,000 None $159,500
Robert S. Salomon, Jr.(1) ......... $15,000 None $159,500
Melvin R. Seiden(1) ............... $15,000 None $159,500
Stephen B. Swensrud(1) ............ $15,000 None $175,500
</TABLE>

- --------
(1) The Directors serve on the boards of FAM/MLAM Advised Funds and Hotchkis and
Wiley Funds as follows: Mr. Grills (22 registered investment companies
consisting of 55 portfolios); Mr. Mintz (20 registered investment companies
consisting of 41 portfolios); Mr. Salomon (20 registered investment
companies consisting of 41 portfolios); Mr. Seiden (20 registered investment
companies consisting of 41 portfolios); Mr. Swensrud (23 registered
investment companies consisting of 56 portfolios).

5
<PAGE>

OFFICERS OF THE FUND. The Board of Directors has elected eight officers of
the Fund. The following sets forth information concerning each of these
officers:

<TABLE>
<CAPTION>
OFFICER
NAME AND PRINCIPAL OCCUPATION OFFICE AGE SINCE
- ----------------------------------------------------------------- -------------------------- ----- --------
<S> <C> <C> <C>
Arthur Zeikel ................................................... President 66 1992
Chairman of FAM and MLAM since 1997; President of FAM and MLAM from 1977 to
1997; Chairman of Princeton Services since 1997 and Director thereof since
1993; President of Princeton Services from 1993 to 1997; Executive Vice
President of ML & Co. since 1990.
Terry K. Glenn ............................................................... Executive Vice President 57 1992
Executive Vice President of FAM and MLAM since 1983;
Executive Vice President and Director of Princeton Services
since 1993; President of Princeton Funds Distributor, Inc.
("PFD") since 1986 and Director thereof since 1991; President
of Princeton Administrators, L.P. since 1988.
Vincent R. Giordano .......................................................... Senior Vice President 53 1992
Senior Vice President of FAM and MLAM since 1984;
Senior Vice President of Princeton Services since 1993.
Kenneth A. Jacob ............................................................. Vice President 47 1992
First Vice President of MLAM since 1997; Vice President of
FAM and MLAM from 1984 to 1997.
William R. Bock .............................................................. Vice President 62 1997
Vice President of MLAM since 1989.
Donald C. Burke .............................................................. Vice President 38 1993
First Vice President of MLAM since 1997; Vice President of
MLAM from 1990 to 1997; Director of Taxation of MLAM since 1990.
Gerald M. Richard ............................................................ Treasurer 49 1992
Senior Vice President and Treasurer of FAM and MLAM since
1984; Senior Vice President and Treasurer of Princeton Services since 1993;
Treasurer of PFD since 1984 and Vice President thereof since 1981.
Patrick D. Sweeney ........................................................... Secretary 44 1997
First Vice President of MLAM since 1997; Vice President of
MLAM from 1990 to 1997.

</TABLE>

STOCK OWNERSHIP. At the Record Date, the Directors and officers of the Fund
as a group (13 persons) owned an aggregate of less than 1% of the Common Stock
of the Fund outstanding at such date and owned none of the AMPS outstanding at
such date. At such date, Mr. Zeikel, a Director and Officer of the Fund, and the
other officers of the Fund owned an aggregate of less than 1% of the outstanding
shares of common stock of ML & Co.

ITEM 2. SELECTION OF INDEPENDENT AUDITORS

The Board of Directors of the Fund, including a majority of the Directors
who are not interested persons of the Fund, has selected the firm of Ernst &
Young LLP ("E&Y") to examine the financial statements of the Fund for the
current fiscal year. The Fund knows of no direct or indirect financial interest
of E&Y in the Fund.

6
<PAGE>

Such appointment is subject to ratification or rejection by the stockholders of
the Fund. Unless a contrary specification is made, the accompanying proxy will
be voted in favor of ratifying the selection of such auditors.

E&Y also acts as independent auditors for several other investment
companies for which FAM or its affiliate, MLAM acts as investment adviser. The
fees received by E&Y from these other entities are substantially greater, in the
aggregate, than the total fees received by it from the Fund. The Board of
Directors of the Fund considered the fact that E&Y has been retained as the
independent auditors for the other entities described above in its evaluation of
the independence of E&Y with respect to the Fund.

Deloitte & Touche LLP ("D&T") served as the Fund's independent auditors
from the commencement of the Fund's operations through the fiscal year ended
October 31, 1996. In January 1997, the Fund acquired all of the assets and
assumed all of the liabilities of MuniYield Insured Fund II, Inc. ("Insured II")
in consideration for the issuance to Insured II of shares of the Fund's Common
Stock and a newly-created series of AMPS (collectively, the "Reorganization").
In connection with the Reorganization, the Board of Directors determined to
retain E&Y, the independent auditors for Insured II, as independent auditors for
the Fund for the fiscal year ended October 31, 1997. The report of D&T on the
Fund's financial statements did not contain an adverse opinion or a disclaimer
of opinion, nor was it qualified or modified as to uncertainty, audit scope, or
accounting principles. This change in accountants was recommended by the Audit
Committee of the Board of Directors. During the Fund's two most recently
completed fiscal years and for the period subsequent to the dismissal of D&T,
there were no disagreements with D&T on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure.

Representatives of E&Y are expected to be present at the meeting and will
have the opportunity to make a statement if they so desire and to respond to
questions from stockholders.

LEGAL PROCEEDINGS

On June 21, 1996, a purported class action titled JACK GREEN, ET AL. V.
FUND ASSET MANAGEMENT, L.P., ET AL. was filed in the United States District
Court for the District of Massachusetts. Among the named defendants in the
action are seven of the leveraged closed-end municipal bond funds (including the
Fund) for which FAM serves as the investment adviser (two of these seven funds
have merged since the commencement of the litigation). In addition to the named
defendants, plaintiffs also purport to bring claims against a defendant class
consisting of all other publicly traded, closed-end investment companies for
which FAM serves as investment adviser and which, among other things, have
issued AMPS. The named plaintiffs, who claim to be investors in the seven named
funds, purport to bring the action on behalf of a class consisting of all
holders of the common stock of the subject funds.

Plaintiffs allege that FAM and other affiliated defendants received
excessive compensation for managing the subject funds. Plaintiffs claim, among
other things, that the registration statements, annual reports and other
documents filed by the funds with the SEC were misleading because such documents
allegedly failed to disclose that proceeds arising from the issuance of AMPS
would be included in a fund's net assets for the purposes of calculating the
investment advisory fee payable to FAM. In addition, plaintiffs allege that a
conflict of interest existed because it would always be in the defendants'
interest to keep the funds fully leveraged to maximize the advisory fees and
collateral compensation notwithstanding adverse market conditions. Plaintiffs
also allege an additional conflict of interest arising from the receipt by such
affiliates of underwriting discounts, or other revenues in connection with the
sale of the AMPS by the funds. The complaint asserts claims under Sections 8(e),
34(b), 36(a) and 36(b) of the Investment Company Act and the common law.
Plaintiffs seek unspecified monetary damages as well as injunctive relief.

7
<PAGE>

On August 27, 1996, defendants moved to transfer the action to the United
States Court for the District of New Jersey. By order dated July 16, 1997, the
District Court Judge ordered the case transferred to the District of New Jersey.

On September 17, 1997, defendants moved to dismiss plaintiffs' complaint on
the ground that, even if the allegations in the complaint were true, plaintiffs
had failed to state a claim upon which relief could be granted. On February 23,
1998, the Court granted defendants' motion in substantial part and dismissed
plaintiffs' claims under Sections 8(e), 34(b) and 36(a) of the Investment
Company Act with prejudice, but declined to dismiss plaintiffs' claims under
Section 36(b) and state law. Plaintiffs filed a First Amended Complaint on March
31, 1998, realleging their claims under Section 36(b) and state law. Defendants
filed an Answer on April 30, 1998, denying the substantive allegations in the
First Amended Complaint.

The defendants believe that the plaintiffs' allegations are entirely
without merit and intend to defend the action vigorously. FAM has agreed to
indemnify the named defendant funds (including the Fund) for any liabilities or
expenses that they may incur in connection with this litigation.

ADDITIONAL INFORMATION

The expenses of preparation, printing and mailing of the enclosed form of
proxy and accompanying Notice and Proxy Statement will be borne by the Fund. The
Fund will reimburse banks, brokers and others for their reasonable expenses in
forwarding proxy solicitation material to the beneficial owners of the shares of
the Fund. The Fund may also hire proxy solicitors at the expense of the Fund.

In order to obtain the necessary quorum at the Meeting (I.E., a majority of
the shares of each class of the Fund's securities entitled to vote at the
Meeting, present in person or by proxy), supplementary solicitation may be made
by mail, telephone, telegraph or personal interview by officers of the Fund. It
is anticipated that the cost of such supplementary solicitation, if any, will be
nominal.

The Directors are to be elected by class vote, two Directors being elected
by the holders of AMPS voting separately as a class and the remaining Directors
by the holders of AMPS and Common Stock, voting together as a single class.
Assuming a quorum is present, (1) the affirmative vote of a majority of the
votes cast by the holders of AMPS, present in person or by proxy at the Meeting
and entitled to vote, voting separately as a class, is required for the election
of the two (2) persons designated as Directors to be elected by the holders of
AMPS; (2) the affirmative vote of a majority of the votes cast by the holders of
AMPS and Common Stock, present in person or by proxy at the Meeting and entitled
to vote, voting together as a single class, is required for the election of the
remaining Directors (Item 1); and (3) the proposal to ratify the selection of
the Fund's independent auditors (Item 2) may be approved by the affirmative vote
of a majority of the votes cast by the holders of Common Stock and AMPS, present
in person or by proxy at the Meeting and entitled to vote, voting together as a
single class.

Broker-dealer firms, including Merrill Lynch, Pierce, Fenner & Smith
Incorporated, holding Fund shares in "street name" for the benefit of their
customers and clients will request the instructions of such customers and
clients on how to vote their shares on each Item before the Meeting. The Fund
understands that, under the rules of the New York Stock Exchange, such
broker-dealer firms may, without instructions from their customers and clients,
grant authority to the proxies designated to vote on the election of Directors
(Item 1) and ratification of the selection of independent auditors (Item 2) if
no instructions have been received prior to the date specified in the
broker-dealer firm's request for voting instructions. Accordingly, the Fund will
include shares held of record by broker-dealers as to which such authority has
been granted in its tabulation of the total number of votes present

8
<PAGE>

for purposes of determining whether the necessary quorum of stockholders exists.
Proxies that are returned but that are marked "abstain" or on which a
broker-dealer has declined to vote on any proposal ("broker non-votes") will be
counted as present for the purposes of a quorum. Merrill Lynch has advised the
Fund that except as limited by agreement or applicable law, it intends to
exercise discretion over shares held in its name for which no instructions have
been received by voting such shares in the same proportion as the votes received
from the beneficial owners of those shares for which instructions have been
received, whether or not held in nominee name. Abstentions and broker non-votes
will not be counted as votes cast. Abstentions and broker non-votes, therefore,
will have no effect on the vote on Item 1 or Item 2.

ADDRESS OF INVESTMENT ADVISER

The principal office of FAM is located at 800 Scudders Mill Road,
Plainsboro, New Jersey 08536.

ANNUAL REPORT DELIVERY

The Fund will furnish, without charge, a copy of its annual report for the
fiscal year ended October 31, 1997 or its semi annual report for the six months
ended April 30, 1998 to any stockholder upon request. Such requests should be
directed to MuniYield Insured Fund, Inc., P.O. Box 9011, Princeton, New Jersey
08543-9011, Attention: Patrick D. Sweeney, Secretary, or to 1-800-456-4587 ext.
123.

STOCKHOLDER PROPOSALS

It is currently intended that the 1999 Annual Meeting of Stockholders of
the Fund will be held in August, 1999. If a stockholder intends to present a
proposal at the 1999 Annual Meeting of Stockholders of the Fund and desires to
have the proposal included in the Fund's proxy statement and form of proxy for
that meeting, the stockholder must deliver the proposal to the offices of the
Fund by March 2, 1999.

By Order of the Board of Directors
PATRICK D. SWEENEY
SECRETARY

Dated: August 28, 1998

9
<PAGE>

********************************************************************************
APPENDIX

COMMON STOCK
MUNIYIELD INSURED FUND, INC.
P.0 BOX 9011
PRINCETON, NEW JERSEY 08543-9011
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Arthur Zeikel, Terry K. Glenn and Patrick
D. Sweeney as proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated on the reverse hereof,
all of the shares of Common Stock of MuniYield Insured Fund, Inc. (the "Fund")
held of record by the undersigned on August 12, 1998 at the annual meeting of
stockholders of the Fund to be held on October 8, 1998 or any adjournment
thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted for Proposals 1 and 2.

By signing and dating the reverse side of this card, you authorize the
proxies to vote each proposal as marked, or if not marked, to vote "FOR" each
proposal, and to use their discretion to vote for any other matter as may
properly come before the meeting or any adjournment thereof. If you do not
intend to personally attend the meeting, please complete and return this card at
once in the enclosed envelope.

(Continued and to be signed on the reverse side)

<PAGE>

1. ELECTION OF DIRECTORS
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) [ ] to vote for all nominees
listed below [ ]
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEES'S NAME IN
THE LIST BELOW.) Joe Grills, Robert S. Salomon, Jr., Stephen B. Swensrud and
Arthur Zeikel
2. Proposal to ratify the selection of Ernst & Young LLP as the
independent auditors of the Fund to serve for the current
fiscal year.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In the discretion of such proxies, upon such other business as may properly
come before the meeting or any adjournment thereof.

Please sign exactly as name
appears hereon. When shares are
held by joint tenants, both
should sign. When signing as
attorney or as executor,
administrator, trustee or
guardian, please give full title
as such. If a corporation,
please sign in full corporate
name by president or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
persons.

Dated ------------------------, 1998

X ------------------------------
Signature

X ------------------------------
Signature, if held jointly

PLEASE MARK BOXES [ ] OR [X] IN BLUE OR BLACK INK. SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE>

MUNIYIELD INSURED FUND, INC. AUCTION MARKET
P.0 BOX 9011 PREFERRED STOCK
PRINCETON, NEW JERSEY 08543-9011

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Arthur Zeikel, Terry K. Glenn and Patrick
D. Sweeney as proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated on the reverse hereof,
all of the shares of Auction Market Preferred Stock of MuniYield Insured Fund,
Inc. (the "Fund") held of record by the undersigned on August 12, 1998 at the
annual meeting of stockholders of the Fund to be held on October 8, 1998 or any
adjournment thereof.

This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted for Proposals 1 and 2.

(Continued and to be signed on the reverse side)

<PAGE>

1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to
(except as marked to the contrary below) vote for all nominees listed
below

(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Walter Mintz, Melvin R. Seiden, Joe Grills, Robert S. Salomon, Jr., Stephen B.
Swensrud and Arthur Zeikel
2. Proposal to ratify the selection of Ernst & Young LLP as the independent
auditors of the Fund to serve for the current fiscal year.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In the discretion of such proxies, upon such other business as may properly
come before the meeting or any adjournment thereof.

Please sign exactly as name appears hereon. When shares are
held by joint tenants, both should sign. When signing as attorney
or as executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized
persons.

Dated---------------------------- , 1998

--------------------------------------
Signature

--------------------------------------
Signature, if held jointly

PLEASE MARK BOXES [ ] OR [X] IN BLUE OR BLACK INK. SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.