MUNIYIELD
INSURED
FUND, INC.
FUND LOGO
Annual Report
October 31, 1998
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
Patrick D. Sweeney, Secretary
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Transfer Agents
Common Stock:
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
NYSE Symbol
MYI
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
Printed on post-consumer recycled paper
MuniYield Insured Fund, Inc.
TO OUR SHAREHOLDERS
For the year ended October 31, 1998, the Common Stock of MuniYield
Insured Fund, Inc. earned $0.924 per share income dividends, which
included earned and unpaid dividends of $0.083. This represents a
net annualized yield of 5.68%, based on a month-end per share net
asset value of $16.28. Over the same period, the total investment
return on the Fund's Common Stock was +9.95%, based on a change in
per share net asset value from $15.84 to $16.28, and assuming
reinvestment of $0.916 per share income dividends and $0.119 per
share capital gains distributions.
For the six-month period ended October 31, 1998, the total
investment return on the Fund's Common Stock was +7.21%, based on a
change in per share net asset value from $15.62 to $16.28, and
assuming reinvestment of $0.432 per share income dividends.
For the six-month period ended October 31, 1998, the Fund's Auction
Market Preferred Stock had an average yield as follows: Series A,
4.34%; Series B, 4.08%; Series C, 4.36%; Series D, 4.04%; Series E,
3.70%; Series F, 3.53%; and Series G, 4.00%.
The Municipal Market Environment
During the six months ended October 31, 1998, long-term bond yields
declined significantly. The near absence of any inflationary
pressures in the United States continued to support historic low
interest rates. Additionally, foreign economic factors have
continued to outweigh US domestic fundamentals, as they have for
much of 1998. The economic crisis that began in Asia over a year ago
has spread both to Russia and South America. However, economic
factors in these countries have begun to negatively impact US
growth. For example, employment in the US manufacturing sector
declined in recent months as a result of reduced demand for export
goods. Concern that the modest decline in US economic growth seen
thus far would spread and intensify led the Federal Reserve Board to
lower short-term interest rates in late September, in mid-October
and in mid-November. These actions were taken to offset the drag of
foreign economies on future US growth.
US Treasury bond yields continued to benefit from a strong "flight
to quality" as foreign investors were drawn to the relative safe
haven of US Government securities. Additionally, the sharp equity
market correction, which began at the end of August, triggered a
further flight into US Treasury securities. Long-term US Treasury
bond yields fell over 90 basis points (0.90%) to approximately 5% by
the end of September. This is the lowest level since the US Treasury
reintroduced 30-year maturity bond auctions in 1977.
By early October, worldwide investor confidence began to rise,
reducing the demand for the safety and liquidity of US Treasury
securities. Investor confidence was restored by the belief that
major world governments, as well as the International Monetary Fund,
would take the necessary action to support weak domestic economies
in Asia and Latin America. Additionally, rapid recovery in US and
world equity markets caused some investors to reallocate funds from
US debt instruments back to various world equity markets. US
Treasury security yields rose for the remainder of the month to end
October at 5.15%. During the six-month period ended October 31,
1998, long-term Treasury security yields declined approximately 80
basis points.
During the past 12 months, the tax-exempt bond market has contended
with significant new-issue supply pressures. Over the past year,
more than $277 billion in new long-term tax-exempt bonds were
underwritten, an increase of almost 30% compared to the same period
a year ago. During the most recent six-month period, approximately
$140 billion in new long-term municipal bonds were underwritten,
representing an increase of more than 15% over the same six-month
period last year. This increased supply, coupled with the high
returns the US equity market generated for much of 1998, was one of
the major reasons municipal bond yields declined less than their
taxable counterparts during the period.
MuniYield Insured Fund, Inc.
October 31, 1998
The continued increase in new bond issuance has required ever-lower
tax-exempt bond yields to generate the economic savings necessary
for additional municipal bond financings. Consequently, the pace of
new bond issuance has slowed in recent months. In fact, the trend
may be reversing. During the three months ended October 31, 1998,
just over $60 billion in new long-term municipal bonds were
underwritten, a decline of 4% compared to the same quarter a year
ago. During the month of October, there were less than $20 billion
in new municipal bond securities issued, a decline of over 10%
compared to October 1997. We will monitor this trend closely in the
coming months to determine if the supply pressures exerted thus far
in 1998 are abating and fostering a more balanced supply/demand
environment.
Throughout the six-month period ended October 31, 1998, municipal
bond yields followed a pattern that was similar to US Treasury
securities, although the yield declines were more muted. As measured
by the unmanaged Bond Buyer Revenue Bond Index, long-term, uninsured
tax-exempt revenue bond yields declined over 40 basis points to
5.09% by the end of September, their lowest level since the early
1970s. Municipal bond yields rose during October to end the period
at 5.24%. Over the past six months, long-term tax-exempt bond yields
declined almost 30 basis points.
Although municipal bond yields declined during the six-month period,
recent supply pressures and the absence of the safe haven status
enjoyed by US securities caused municipal bond yields to rise
relative to US Treasury bond yields. At October 31, 1998, long-term
tax-exempt bond yield spreads were attractive relative to US
Treasury securities of comparable maturities (over 100%), well in
excess of their historic range of 85%--88%. Tax-exempt bond yield
ratios have rarely exceeded 90% in the 1980s and 1990s.
Historically, yield spreads have been wider than these levels when
there have been potential changes in Federal tax codes that would
have adversely affected the tax-favored status of municipal bonds.
Currently, municipal bond investors find themselves in a unique
investment environment. Previous opportunities to purchase tax-
exempt bonds with yields exceeding that of comparable US Treasury
issues have been limited to relatively brief episodes and then
further limited to a few municipal credits undergoing specific
financial pressures. At present, almost the entire municipal bond
universe, across nearly all maturity and credit sectors, can be
purchased at yields greater than their taxable counterparts.
However, the current opportunity may quickly disappear should tax-
exempt bond supply pressures diminish or the safe-haven status of US
Treasury securities become less desirable. Under these conditions,
municipal bond ratios should quickly revert to more normal historic
percentages, certainly well below their presently attractive levels.
Portfolio Strategy
We continued to maintain a constructive strategy during the six-
month period ended October 31, 1998. We believed that the robust
economic growth seen in late 1997 and the first quarter of 1998
would be tempered by deteriorating Asian and Latin American
economies and an absence of inflation. Consequently, we expected tax-
exempt bond yields to trade in a relatively narrow range with a bias
toward lower bond yields as 1998 progressed. We maintained a fully
invested position in order to seek to enhance total return.
Looking ahead, we expect to remain fully invested over the coming
months with little change to the Fund's present structure. Our
outlook calls for a substantial slowdown in the growth of the
economy in the coming year as consumption growth slows along with
capital spending and a further trade drag. We believe that the
Federal Reserve Board will respond with an easier monetary policy,
which is likely to cause interest rates on intermediate-term and
long-term municipal bonds to fall further.
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
December 7, 1998
MuniYield Insured Fund, Inc.
October 31, 1998
PROXY RESULTS
During the six-month period ended October 31, 1998, MuniYield
Insured Fund, Inc. Common Stock shareholders voted on the following
proposals. The proposals were approved at a shareholders' meeting on
October 8, 1998. The description of each proposal and number of
shares voted are as follows:
<TABLE>
<CAPTION>
Shares Shares Withheld
Voted For From Voting
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors: Joe Grills 59,029,175 1,199,128
Robert S. Salomon Jr. 59,030,120 1,198,183
Stephen B. Swensrud 59,025,009 1,203,294
Arthur Zeikel 58,961,254 1,267,049
<CAPTION>
Shares Shares Voted Shares Voted
Voted For Against Abstain
<S> <C> <C> <C>
2. To ratify the selection of Ernst & Young LLP as the Fund's
independent auditors for the current fiscal year. 58,836,886 484,801 906,615
</TABLE>
During the six-month period ended October 31, 1998, MuniYield
Insured Fund, Inc. Preferred Stock shareholders voted on the
following proposals. The proposals were approved at a shareholders'
meeting on October 8, 1998. The description of each proposal and
number of shares voted are as follows:
<TABLE>
<CAPTION>
Shares Shares Withheld
Voted For From Voting
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors:
Joe Grills, Walter Mintz, Robert S.
Salomon Jr., Melvin R. Seiden,
Stephen B. Swensrud and Arthur Zeikel
as follows: Series A 2,079 0
Series B 1,542 16
Series C 2,070 0
Series D 1,906 127
Series E 2,900 289
Series F 2,286 38
Series G 2,067 125
<CAPTION>
Shares Shares Voted Shares Voted
Voted For Against Abstain
<S> <S> <C> <C> <C>
2. To ratify the selection of Ernst &
Young LLP as the Fund's independent
auditors for the current fiscal
year as follows: Series A 2,079 0 0
Series B 1,559 0 0
Series C 2,070 0 0
Series D 2,032 2 0
Series E 3,045 144 0
Series F 2,325 0 0
Series G 2,193 0 0
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1998
THE BENEFITS AND RISKS OF LEVERAGING
MuniYield Insured Fund, Inc. utilizes leveraging to seek to enhance
the yield and net asset value of its Common Stock. However, these
objectives cannot be achieved in all interest rate environments. To
leverage, the Fund issues Preferred Stock, which pays dividends at
prevailing short-term interest rates and invests the proceeds in
long-term municipal bonds. The interest earned on these investments
is paid to Common Stock shareholders in the form of dividends, and
the value of these portfolio holdings is reflected in the per share
net asset value of the Fund's Common Stock. However, in order to
benefit Common Stock shareholders, the yield curve must be
positively sloped; that is, short-term interest rates must be lower
than long-term interest rates. At the same time, a period of
generally declining interest rates will benefit Common Stock
shareholders. If either of these conditions change, then the risks
of leveraging will begin to outweigh the benefits.
To illustrate these concepts, assume a fund's Common Stock
capitalization of $100 million and the issuance of Preferred Stock
for an additional $50 million, creating a total value of $150
million available for investment in long-term municipal bonds. If
prevailing short-term interest rates are approximately 3% and long-
term interest rates are approximately 6%, the yield curve has a
strongly positive slope. The fund pays dividends on the $50 million
of Preferred Stock based on the lower short-term interest rates. At
the same time, the fund's total portfolio of $150 million earns the
income based on long-term interest rates. Of course, increases in
short-term interest rates would reduce (and even eliminate) the
dividends 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.
As a part of its investment strategy, the Fund may invest in certain
securities whose potential income return is inversely related to
changes in a floating interest rate ("inverse floaters"). In
general, interest rates on inverse floaters will decrease when short-
term interest rates increase and increase when short-term interest
rates decrease. Investments in inverse floaters may be characterized
as derivative securities and may subject the Fund to the risks of
reduced or eliminated interest payments and losses of invested
principal. In addition, inverse floaters have the effect of
providing investment leverage and, as a result, the market value of
such securities will generally be more volatile than that of fixed-
rate, tax-exempt securities. To the extent the Fund invests in
inverse floaters, the market value of the Fund's portfolio and the
net asset value of the Fund's shares may also be more volatile than
if the Fund did not invest in such securities.
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute substantially all of its
net investment income to its shareholders on a monthly basis.
However, in order to provide shareholders with a more consistent
yield to the current trading price of shares of Common Stock of the
Fund, the Fund may at times pay out less than the entire amount of
net investment income earned in any particular month and may at
times in any month pay out such accumulated but undistributed income
in addition to net investment income earned in that month. As a
result, the dividends paid by the Fund for any particular month may
be more or less than the amount of net investment income earned by
the Fund during such month. The Fund's current accumulated but
undistributed net investment income, if any, is disclosed in the
Statement of Assets, Liabilities and Capital, which comprises part
of the Financial Information included in this report.
MuniYield Insured Fund, Inc.
October 31, 1998
PORTFOLIO ABBREVIATIONS
To simplify the listings of MuniYield Insured Fund, Inc.'s portfolio
holdings in the Schedule of Investments, we have abbreviated the
names of many of the securities according to the list below and at
right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
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--0.5% AAA Aaa $ 6,000 Huntsville, Alabama, Health Care Authority, Health Care
Facilities Revenue Bonds, Series B, 6.625% due 6/01/2004 (d)(g) $ 6,907
Alaska--1.2% AAA Aaa 10,410 Alaska State Housing Finance Corporation, RITR, Series 2, 8.02%
due 12/01/2024 (d)(i)(j) 11,539
Valdez, Alaska, Marine Terminal Revenue Refunding Bonds
(Exxon Pipeline Company Project), VRDN (a):
A1+ P1 400 Series A, 3.70% due 12/01/2033 400
A1+ P1 400 Series B, 3.70% due 12/01/2033 400
A1+ VMIG1++ 4,900 Series C, 3.70% due 12/01/2033 4,900
Arizona--0.7% A1+ P1 2,900 Maricopa County, Arizona, Pollution Control Corporation, PCR,
Refunding (Arizona Public Service Company), VRDN, Series B,
3.70% due 5/01/2029 (a) 2,900
NR* NR* 5,000 Mohave County, Arizona, IDA, IDR (North Star Steel Company
Project), AMT, 6.70% due 3/01/2020 5,483
A1+ P1 2,100 Pinal County, Arizona, IDA, PCR (Magma Copper/Newmont
Mining Corp.), VRDN, 3.70% due 12/01/2009 (a) 2,100
California AAA Aaa 5,250 Anaheim, California, Public Financing Authority, Lease Revenue
- --21.8% Bonds (Public Improvements Project), Senior Series A, 6% due
9/01/2024 (e) 6,108
California HFA, Revenue Bonds, AMT:
AA- Aa 3,750 RIB, 9.061% due 8/01/2023 (j) 4,322
AAA Aaa 1,595 Series E, 7% due 8/01/2026 (d) 1,698
A A3 15,000 California Health Facilities Financing Authority Revenue Bonds
(Kaiser), Series A, 5.40% due 5/01/2028 15,296
California State, GO:
AAA Aaa 10,535 5.90% due 3/01/2005 (b)(g) 11,859
AAA Aaa 10,000 Refunding, 5.25% due 6/01/2021 (b) 10,242
AAA Aaa 15,000 Refunding, UT, 5% due 10/01/2014 (d) 15,406
California State Public Works Board, Lease Revenue Bonds:
A A2 12,755 (California State University), Series C, 5.40% due 10/01/2022 13,289
A Aaa 8,500 (Department of Corrections--Monterey County Soledad II),
Series A, 7% due 11/01/2004 (g) 10,119
A+ A 2,750 (Various California State University Projects), Series A,
6.375% due 10/01/2004 (g) 3,174
AAA Aaa 15,000 East Bay, California, Municipal Utility District, Water System
Revenue Bonds, 4.75% due 6/01/2028 (d) 14,446
AA Aa3 23,285 Los Angeles, California, Department of Water and Power, Water
Works Revenue Refunding Bonds, 4.50% due 10/15/2024 21,666
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1998
<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 Los Angeles, California, Harbor Department Revenue Bonds, AMT:
(concluded) AAA Aaa $ 4,000 RITR, Series 7, 8.645% due 11/01/2026 (d)(j) $ 4,936
AAA Aaa 6,330 Series B, 6.625% due 8/01/2019 (b) 6,987
AAA Aaa 8,725 Series B, 6.625% due 8/01/2025 (b) 9,630
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) 16,717
AAA Aaa 19,430 Los Angeles County, California, Public Works Financing
Authority, Lease Revenue Bonds (Multiple Capital Facilities
Project), Series V-B, 5.125% due 12/01/2029 (b) 19,634
AAA Aaa 5,000 Los Angeles County, California, Transportation Commission,
Sales Tax Revenue Refunding Bonds, Series B, 6.50% due
7/01/2015 (c) 5,423
AAA Aaa 2,190 Northern California Transmission Revenue Bonds (California--
Oregon Transmission Project), Series A, 6.50% due 5/01/2016 (d) 2,408
AAA Aaa 6,720 Port Oakland, California, Port Revenue Bonds, AMT, Series G,
5.50% due 11/01/2017 (d) 7,101
AAA Aaa 5,000 Roseville, California, Special Tax, Refunding (Community
Facilities District No. 1--Northwest), 4.75% due 9/01/2020 (e) 4,848
AAA Aaa 3,000 Sacramento, California, Municipal Utility District, Electric
Revenue Bonds, Series I, 6% due 1/01/2024 (d) 3,303
AAA Aaa 10,000 San Diego, California, Public Facilities Financing Authority,
Sewer Revenue Bonds, Series A, 5.25% due 5/15/2027 (c) 10,260
AAA Aaa 17,500 San Diego, California, Water Utility Fund, Net System Revenue
Bonds (Certificates of Undivided Interest), 4.75% due
8/01/2028 (c) 16,851
AAA Aaa 6,865 San Francisco, California, Bay Area Rapid Transit District, Sales
Tax Revenue Bonds, 5.50% due 7/01/2020 (c) 7,201
San Francisco, California, City and County Airports Commission,
International Airport Revenue Bonds, Second Series:
AAA Aaa 6,000 AMT, Issue 6, 6.60% due 5/01/2024 (b) 6,702
AAA Aaa 2,500 Issue 8B, 6.10% due 5/01/2004 (c)(g) 2,814
AAA Aaa 9,500 Issue 9B, 5.25% due 5/01/2020 (c) 9,695
AAA Aaa 13,770 Issue 21, 4.50% due 5/01/2026 (d) 12,805
AAA Aaa 5,000 San Francisco, California, City and County, COP (San Francisco
Courthouse Project), 5.875% due 4/01/2021 (e) 5,423
AAA Aaa 10,000 San Francisco, California, City and County Sewer Revenue Bonds,
Series A, 5.95% due 10/01/2025 (c) 10,869
San Jose, California, Redevelopment Agency, Tax Allocation
Refunding Bonds (Merged Area Redevelopment Project)(d):
AAA Aaa 6,895 5.60% due 8/01/2019 7,378
AAA Aaa 5,725 5.625% due 8/01/2025 6,133
AAA Aaa 2,000 Santa Clara County, California, Financing Authority, Lease
Revenue Bonds (VMC Facility Replacement Project), Series A,
6.75% due 11/15/2004 (b)(g) 2,357
Santa Rosa, California, Wastewater Revenue Refunding Bonds (c):
AAA Aaa 3,000 Series A, 5.25% due 9/01/2016 3,171
AAA Aaa 3,295 Series B, 6.125% due 9/01/2017 3,578
Colorado--0.9% AAA Aaa 10,000 E-470 Public Highway Authority, Colorado, Revenue Refunding
Bonds, Senior Series A, 4.75% due 9/01/2023 (d) 9,577
A1+ VMIG1++ 3,200 Moffat County, Colorado, PCR, Refunding (Pacificorp Projects),
VRDN, 3.75% due 5/01/2013 (a)(b) 3,200
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1998
<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>
Connecticut--1.2% AAA Aaa $ 9,695 Connecticut State, HFA (Housing Mortgage Finance Program),
Series B, 6.75% due 11/15/2023 (d) $10,508
Connecticut State Health and Educational Facilities Authority
Revenue Bonds (Nursing Home Program):
AA- A1 5,000 (AHF/Hartford), 7.125% due 11/01/2024 5,783
AA- A1 1,035 (AHF/Windsor Project), 7.125% due 11/01/2024 1,197
Delaware--0.3% AAA Aaa 3,525 Delaware Transportation Authority, Transportation System
Revenue Bonds, 7% due 7/01/2004 (c)(g) 4,132
District of AAA Aaa 20,100 Metropolitan Washington, District of Columbia, Virginia Airports
Columbia--1.5% Authority, General Airport Revenue Bonds, AMT, Series A, 6.625%
due 10/01/2019 (d) 22,232
Florida--2.2% AAA Aaa 20,750 Florida State Board of Education (Capital Outlay--Public
Education), Series B, 4.75% due 6/01/2023 (d) 19,963
AAA Aaa 11,800 Tallahassee, Florida, Energy System, Revenue Refunding Bonds,
Series A, 4.75% due 10/01/2026 (e) 11,307
Georgia--2.0% AAA Aaa 8,855 Douglasville--Douglas County, Georgia, Water and Sewer Authority,
Water and Sewer Revenue Bonds, 4.50% due 6/01/2023 (c) 8,244
AAA Aaa 10,000 Georgia Municipal Electric Authority, Power Revenue Bonds,
Series EE, 6.40% due 1/01/2023 (b) 11,149
AAA Aaa 6,500 Metropolitan Atlanta, Georgia, Rapid Transit Authority, Sales
Tax Revenue Bonds, Second Indenture, Series A, 6.90% due
7/01/2004 (d)(g) 7,585
AAA Aaa 2,000 Municipal Electric Authority of Georgia (Project One),
Sub-Series A, 6.50% due 1/01/2004 (b)(g) 2,274
Hawaii--1.7% Hawaii State Airports System Revenue Bonds, AMT, Second
Series (d):
AAA Aaa 6,000 7% due 7/01/2018 6,541
AAA Aaa 17,145 6.75% due 7/01/2021 18,582
Illinois--2.8% AAA Aaa 9,160 Chicago, Illinois, Midway Airport Revenue Bonds, AMT, Series A,
6.25% due 1/01/2024 (d) 10,099
AAA Aaa 3,870 Chicago, Illinois, O'Hare International Airport, Special
Facilities Revenue Bonds (International Terminal), AMT, 6.75%
due 1/01/2018 (d) 4,228
AAA Aaa 12,000 Chicago, Illinois, Public Building Commission, Building Revenue
Bonds, Series A, 6.50% due 1/01/2018 (d)(h) 12,408
AAA Aaa 6,000 Chicago, Illinois, Wastewater Transmission Revenue Bonds,
6.375% due 1/01/2005 (d)(g) 6,873
Illinois Health Facilities Authority Revenue Bonds:
A1+ VMIG1++ 3,200 Refunding (University of Chicago Hospital), VRDN, 3.70%
due 8/01/2026 (a)(d) 3,200
AAA Aaa 3,000 (Servantcor Project), Series A, 6.375% due 8/15/2006 (e)(g) 3,458
Indiana--1.8% AAA Aaa 3,150 Hammond, Indiana, Multi-School Building Corporation,
Refunding (First Mortgage), 5.75% due 1/15/2017 (d) 3,389
AAA Aaa 2,400 Indiana State Vocational Technical College, Building Facilities
Refunding Bonds (Student Fee), Series D, 6.50% due 7/01/2014 (b) 2,708
AAA Aaa 10,000 Indianapolis, Indiana, Economic Development Revenue Bonds
(Archdiocese of Indianapolis Educational Facilities Project),
5.50% due 7/01/2026 (d) 10,552
AAA Aaa 5,000 Indianapolis, Indiana, Gas Utility Revenue Bonds, Series A, 6.20%
due 6/01/2002 (c)(g) 5,504
AA NR* 3,000 Indianapolis, Indiana, Local Public Improvement Bond Bank,
Refunding, Series D, 6.75% due 2/01/2020 3,320
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1998
<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--0.1% AAA Aaa $ 1,725 Iowa Financing Authority, S/F Mortgage, Refunding, Series F,
6.35% due 7/01/2009 (b) $ 1,828
Kansas--1.9% AAA Aaa 20,250 Burlington, Kansas, PCR, Refunding (Kansas Gas and Electric
Company Project), 7% due 6/01/2031 (d) 22,114
AAA Aaa 5,000 Kansas State Turnpike Authority, Turnpike Revenue Refunding
Bonds, 5.25% due 9/01/2017 (b) 5,106
Louisiana--0.0% A1+ P1 400 East Baton Rouge Parish, Louisiana, PCR, Refunding (Exxon
Project), VRDN, 3.70% due 3/01/2022 (a) 400
Maryland--0.3% Maryland State Community Development Administration,
Department of Housing and Community Development:
NR* Aa 2,085 M/F Housing Revenue Bonds, Series C, 6.65% due 5/15/2025 2,245
NR* Aa2 1,985 S/F Program, AMT, Second Series, 6.55% due 4/01/2026 2,140
Massachusetts-- Massachusetts State Health and Educational Facilities Authority
3.7% Revenue Bonds:
AAA Aaa 5,000 (Massachusetts General Hospital), Series F, 6.25% due
7/01/2020 (b) 5,513
AAA Aaa 7,130 (New England Medical Center Hospitals), Series F, 6.625%
due 7/01/2025 (c) 7,860
AAA Aaa 10,000 (Northeastern University), Series E, 6.55% due 10/01/2022 (d) 11,087
AAA Aaa 26,500 Massachusetts State Turnpike Authority, Metropolitan Highway
System Revenue Bonds, Series A, 5% due 1/01/2037 (d) 25,837
AAA Aaa 3,250 Massachusetts State Turnpike Authority, Western Turnpike
Revenue Bonds, Series A, 5.55% due 1/01/2017 (d) 3,335
Michigan--3.2% AAA Aaa 2,750 Caledonia, Michigan, Community Schools, Refunding, UT, 6.625%
due 5/01/2014 (b) 3,032
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) 23,875
Monroe County, Michigan, PCR (Detroit Edison Company),
AMT (d):
AAA Aaa 5,000 Series CC, 6.55% due 6/01/2024 5,537
AAA Aaa 8,500 Series I-B, 6.55% due 9/01/2024 9,449
A1+ VMIG1++ 2,400 Royal Oak, Michigan, Hospital Finance Authority, Hospital
Revenue Bonds (William Beaumont Hospital), VRDN, Series L,
3.70% due 1/01/2027 (a) 2,400
A1+ VMIG1++ 2,200 University of Michigan, University Hospital Revenue Refunding
Bonds, VRDN, Series A, 3.75% due 12/01/2019 (a) 2,200
Minnesota--2.9% A- Baa1 4,500 Minneapolis and Saint Paul, Minnesota, Housing and
Redevelopment Authority, Health Care System Revenue Bonds
(Group Health Plan Incorporated Project), 6.90% due 10/15/2022 4,924
AAA Aaa 20,000 Minneapolis and Saint Paul, Minnesota, Metropolitan Airports
Commission, Airport Revenue Bonds, Series A, 5% due
1/01/2030 (b) 19,688
Minnesota State, HFA, S/F Mortgage, AMT:
AA+ Aa2 3,560 Series H, 6.50% due 1/01/2026 3,767
AA Aa2 2,680 Series L, 6.70% due 7/01/2020 2,864
AA+ NR* 10,000 Rochester, Minnesota, Health Care Facilities Revenue Bonds
(Mayo Foundation), Series A, 5.50% due 11/15/2027 10,416
Mississippi NR* P1 5,000 Jackson County, Mississippi, Port Facility Revenue Refunding
- --0.7% Bonds (Chevron USA, Incorporated Project), VRDN, 3.70% due
6/01/2023 (a) 5,000
AAA Aaa 3,930 Mississippi Hospital Equipment and Facilities Authority,
Revenue Refunding Bonds (Mississippi Baptist Medical Center),
6.50% due 5/01/2011 (d) 4,428
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1998
<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>
Missouri--0.6% AAA Aaa $ 7,000 Kansas City, Missouri, Airport Revenue Bonds (General
Improvement), Series B, 6.875% due 9/01/2004 (e)(g) $ 8,131
Nebraska--0.4% AAA Aaa 5,000 Nebraska Public Power District Revenue Bonds, Series A, 5.25%
due 1/01/2005 (d)(g) 5,383
Nevada--6.1% AAA Aaa 15,000 Clark County, Nevada, GO, School District, 6% due
6/15/2006 (c)(g) 17,012
AAA Aaa 5,000 Humboldt County, Nevada, PCR, Refunding (Sierra Pacific
Project), 6.55% due 10/01/2013 (b) 5,501
AAA Aaa 16,775 Nevada State, RITR, Series 36, 7.27% due 11/01/2025 (c)(j) 18,364
AAA Aaa 20,000 Nevada State, Refunding (Municipal Bond Bank Project
Nos. 65 and R-6), 4.75% due 5/15/2026 (d) 19,112
Washoe County, Nevada, Gas Facilities Revenue Bonds (Sierra
Pacific Power Company), AMT:
AAA Aaa 15,000 6.65% due 12/01/2017 (b) 16,518
AAA Aaa 5,000 6.55% due 9/01/2020 (d) 5,517
AAA Aaa 5,000 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra
Pacific Power Company), AMT, 6.65% due 6/01/2017 (d) 5,522
New Jersey--0.4% AAA Aaa 5,000 New Jersey State Housing and Mortgage Finance Agency Revenue
Bonds (Home Buyer), AMT, Series K, 6.375% due 10/01/2026 (d) 5,372
New Mexico--0.9% AAA Aaa 10,000 Farmington, New Mexico, PCR, Refunding (Southern California
Edison Company), Series A, 5.875% due 6/01/2023 (d) 10,780
NR* A 1,635 New Mexico Educational Assistance Foundation, Student Loan
Revenue Bonds, AMT, First Sub-Series A-2, 6.65% due 11/01/2025 1,754
New York--12.1% A1+ VMIG1++ 12,700 Long Island Power Authority, New York, Electric System Revenue
Bonds, VRDN, Sub-Series 5, 3.70% due 5/01/2033 (a) 12,700
AAA Aaa 7,000 Metropolitan Transportation Authority, New York, Commuter
Facilities Revenue Bonds, Series A, 6.10% due 7/01/2006 (c)(g) 8,055
BBB+ Baa1 10,980 Metropolitan Transportation Authority, New York, Transit
Facilities Service Contract, Refunding, Series 5, 7% due
7/01/2012 12,009
AAA Aaa 5,000 New York City, New York, Cultural Resource Trust Revenue Bonds
(American Museum of Natural History), Series A, 5.65% due
4/01/2027 (d) 5,332
AAA Aaa 6,180 New York City, New York, Educational Construction Fund
Revenue Bonds, Junior Sub-Lien, 5.50% due 4/01/2026 (b) 6,524
AAA Aaa 25,830 New York City, New York, Municipal Water Financing Authority,
Water and Sewer System Revenue Bonds, RITR, Series RI-97-6,
7.745% due 6/15/2026 (d)(j) 29,669
New York State Dormitory Authority Revenue Bonds:
AAA Aaa 10,000 (City University System), Consolidated Third Series 1, 5% due
7/01/2026 (c) 9,881
AAA Aaa 5,050 (Mental Health Services Facilities Improvement), Series F,
4.50% due 8/15/2028 (b) 4,653
AAA Aaa 4,000 (Mental Health Services Facilities Improvement), Series G,
4.50% due 8/15/2018 (b) 3,779
AAA Aaa 20,150 Refunding (New York and Presbyterian Hospitals), 4.75% due
8/01/2027 (b)(f) 19,237
AAA Aaa 7,000 Refunding (Pace University), 5.70% due 7/01/2022 (d) 7,564
A- A3 7,595 Refunding (State University Educational Facilities), Series B,
7% due 5/15/2016 8,079
AAA Aaa 10,000 (State University Educational Facilities), Series A, 4.75%
due 5/15/2025 (d) 9,592
AAA Aaa 6,000 New York State Energy Research and Development Authority,
Gas Facilities Revenue Bonds, RITR, Series 9, 7.27% due
1/01/2021 (d)(j) 6,643
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1998
<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 AAA Aaa $30,000 Port Authority of New York and New Jersey, Consolidated Revenue
(concluded) Refunding Bonds, 116th Series, 4.25% due 10/01/2026 (c) $ 26,715
A1+ VMIG1++ 4,400 Port Authority of New York and New Jersey, Special Obligation
Revenue Bonds (Versatile Structure Obligation), VRDN, Series 3,
3.70% due 6/01/2020 (a) 4,400
North Dakota--0.5% Grand Forks, North Dakota, Health Care Facilities Revenue
Bonds (d):
AAA Aaa 3,725 (Altru Health System Obligation Group), 5.60% due
8/15/2017 3,950
AAA Aaa 2,500 (United Hospital Obligation Group), 6.25% due 12/01/2024 2,797
Ohio--0.4% AAA Aaa 2,500 North Canton, Ohio, City School District Improvements, UT,
6.70% due 12/01/2004 (b)(g) 2,917
AAA Aaa 2,500 Ohio State Higher Educational Facilities Commission,
Mortgage Revenue Bonds (University of Dayton Project),
6.60% due 12/01/2017 (c) 2,825
Oklahoma--0.9% AAA Aaa 13,000 Oklahoma State Turnpike Authority, Turnpike Revenue Bonds,
Second Senior Series B, 5% due 1/01/2028 (c) 12,920
Oregon--1.2% A NR* 2,300 Benton County, Oregon, Hospital Facilities Authority, Revenue
Refunding Bonds (Samaritan Health Services Project), 5.125%
due 10/01/2028 2,264
AA Aa2 9,000 Oregon State, GO (Veterans' Welfare), Series 77, 5.30% due
10/01/2029 9,170
AAA Aaa 5,000 Port of Portland, Oregon, International Airport Revenue Bonds
(Portland International Airport), AMT, Series 11, 5.625% due
7/01/2026 (c) 5,241
Pennsylvania A1+ P1 400 Beaver County, Pennsylvania, IDA, PCR, Refunding (Duquesne
- --3.2% Light Company--Mansfield), VRDN, Series B, 3.05% due
8/01/2009 (a) 400
AAA Aaa 4,200 Lancaster, Pennsylvania, GO, Series A, 4.50% due 5/01/2028 (c) 3,860
AAA Aaa 16,000 Montgomery County, Pennsylvania, IDA, PCR, Refunding
(Philadelphia Electric Company), Series B, 6.70% due
12/01/2021 (d) 17,458
AA Aa 4,000 Pennsylvania HFA, RIB, AMT, 8.293% due 4/01/2025 (j) 4,415
Pennsylvania State Turnpike Commission, Oil Franchise Tax
Revenue Bonds (b):
AAA Aaa 8,500 Senior Series A, 4.75% due 12/01/2027 8,126
AAA Aaa 8,520 Sub-Series B, 4.75% due 12/01/2027 8,145
Philadelphia, Pennsylvania, Hospitals and Higher Education
Facilities Authority, Hospital Revenue Bonds (Children's
Hospital of Philadelphia Project), VRDN (a):
A1+ VMIG1++ 2,000 3.70% due 3/01/2027 2,000
A1+ VMIG1++ 1,450 Series A, 3.70% due 3/01/2027 1,450
South AAA Aaa 4,850 South Carolina State Public Service Authority, Revenue Refunding
Carolina--1.2% Bonds, Series B, 5.875% due 1/01/2023 (c) 5,260
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) 7,686
NR* NR* 4,200 Spartanburg County, South Carolina, Solid Waste Disposal Facilities
Revenue Bonds (BMW Project), AMT, 7.55% due 11/01/2024 4,833
Tennessee--0.7% 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) 4,158
A+ A1 4,900 Tennessee, HDA, Mortgage Finance, AMT, Series A, 6.90% due
7/01/2025 5,282
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Texas--5.9% AAA Aaa $ 3,200 Bexar, Texas, Metropolitan Water District, Waterworks System
Revenue Refunding Bonds, 6.35% due 5/01/2025 (d) $ 3,544
Brazos River Authority, Texas, PCR (Texas Utilities Electric
Company Project), AMT (b):
AAA Aaa 11,500 Refunding, 6.50% due 12/01/2027 12,682
AAA Aaa 3,800 Series A, 6.75% due 4/01/2022 4,171
AAA Aaa 7,000 Brazos River Authority, Texas, Revenue Refunding Bonds
(Houston Light and Power), Series A, 6.70% due 3/01/2017 (b) 7,684
AAA Aaa 5,575 Dallas, Texas, Special Tax Revenue Bonds, Series A, 4.75% due
8/15/2027 (b) 5,310
Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds:
A1+ NR* 12,700 (Methodist Hospital), VRDN, 3.70% due 12/01/2025 (a) 12,700
AAA Aaa 2,150 RITR, Series 12, 9.02% due 10/01/2004 (d)(g)(j) 2,726
A1+ NR* 1,400 Refunding (Methodist Hospital), VRDN, 3.70% due
12/01/2026 (a) 1,400
AAA Aaa 6,885 Houston, Texas, Airport System Revenue Bonds (Sub-Lien), AMT,
Series A, 6.75% due 7/01/2021 (c) 7,462
AAA Aaa 4,465 Houston, Texas, Water and Sewer System Revenue Bonds, Junior
Lien, Series A, 6.375% due 12/01/2022 (d) 4,937
Matagorda County, Texas, Navigation District No. 1, Revenue
Refunding Bonds (Houston Light and Power Company Project) (b):
AAA Aaa 11,795 Series A, 6.70% due 3/01/2027 12,947
A1+ VMIG1++ 8,100 VRDN, AMT, Series 1997, 3.80% due 11/01/2028 (a) 8,100
AAA Aaa 1,500 Sabine River Authority, Texas, PCR, Refunding (Texas Utilities
Electric Company Project), 6.55% due 10/01/2022 (c) 1,657
Utah--0.4% A1+ VMIG1++ 1,000 Emery County, Utah, PCR, Refunding (Pacificorp Projects), VRDN,
3.70% due 11/01/2024 (a)(b) 1,000
AAA Aaa 4,000 Salt Lake City, Utah, Airport Revenue Bonds, AMT, Series A,
6.125% due 12/01/2022 (c) 4,356
Virginia--2.3% AAA Aaa 5,540 Loudon County, Virginia, COP, 6.90% due 3/01/2019 (e) 6,294
AAA Aaa 6,900 Upper Occoquan, Virginia, Sewer Authority, Regional Sewer
Revenue Bonds, Series A, 4.75% due 7/01/2029 (d) 6,568
Virginia State, HDA, Commonwealth Mortgage:
AAA Aaa 9,000 AMT, Series A, Sub-Series A-4, 6.45% due 7/01/2028 (d) 9,653
AA+ Aa1 6,000 AMT, Series B, Sub-Series B-1, 6.375% due 7/01/2026 6,454
AA+ Aa1 3,500 Series J, Sub-Series J-2, 6.75% due 7/01/2017 3,766
Washington--11.1% Chelan County, Washington, Public Utility District No. 001,
Consolidated Revenue (Chelan Hydro), AMT:
AAA Aaa 4,750 (Division 1), Series A, 5.25% due 7/01/2033 (e) 4,728
AAA Aaa 6,595 Refunding, Series B, 6.35% due 7/01/2026 (d) 7,420
AAA NR* 12,000 King County, Washington, RIB, Series 47, 6.895% due
1/01/2034 (d)(j) 12,302
AAA Aaa 9,500 Port Seattle, Washington, Passenger Facilities Charge Revenue
Bonds, Series A, 5% due 12/01/2023 (d) 9,340
AAA Aaa 10,000 Port Seattle, Washington, Revenue Bonds, Series A, 5.50% due
10/01/2017 (c) 10,555
AAA Aaa 3,215 Seattle, Washington, Metropolitan Seattle Municipality, Sewer
Revenue Bonds, Series W, 6.25% due 1/01/2003 (d)(g) 3,571
AAA Aaa 12,500 Seattle, Washington, Water System Revenue Bonds, 5% due
10/01/2027 (c) 12,274
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) 5,272
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Washington AAA Aaa $ 7,875 Spokane County, Washington, Lease Revenue Refunding Bonds
(concluded) (Financing--Multi-Purpose Arena Project), AMT, Series A,
6.60% due 1/01/2014 (b) $ 8,583
AAA Aaa 6,000 Tacoma, Washington, Refuse Utility Revenue Bonds, 7% due
12/01/2004 (b)(g) 7,086
AAA Aaa 8,705 Tacoma, Washington, Solid Waste Utility Revenue Refunding
Bonds, Series B, 5.50% due 12/01/2019 (b) 9,192
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) 2,224
Washington State, GO:
AAA Aaa 14,860 Series C, 5% due 1/01/2022 (c) 14,658
AAA Aaa 18,000 UT, Series A, 4.50% due 7/01/2023 (e) 16,731
Washington State Health Care Facilities Authority Revenue Bonds:
A+ A1 8,300 (Children's Hospital and Medical Center), 6% due 10/01/2022 8,646
AAA Aaa 5,000 Refunding (Catholic Health Initiatives), Series A, 5.125%
due 12/01/2021 (d) 4,923
AAA Aaa 2,500 (Virginia Mason Obligation Group of Seattle), 6.30% due
2/15/2017 (d) 2,735
Washington State Public Power Supply System, Revenue
Refunding Bonds, Series A:
AA- Aaa 13,095 (Nuclear Project No. 1), 6.25% due 7/01/2017 (d) 14,293
AAA Aaa 4,800 (Nuclear Project No. 3), 5.25% due 7/01/2016 (e) 4,894
West AAA Aaa 4,425 Harrison County, West Virginia, County Commission, Solid
Virginia--0.3% Waste Disposal Revenue Bonds (Monongahela Power), AMT,
Series C, 6.75% due 8/01/2024 (b) 5,005
Wisconsin--2.0% AA Aa2 2,000 Wisconsin, Housing and EDA, Home Ownership Revenue
Refunding Bonds, AMT, Series B, 6.75% due 9/01/2025 2,137
Wisconsin Public Power Incorporated, Power Supply System
Revenue Bonds, Series A (d):
AAA Aaa 5,000 6% due 7/01/2015 5,542
AAA Aaa 13,685 5.75% due 7/01/2023 14,793
Wisconsin State Health and Educational Facilities Authority,
Revenue Refunding Bonds (Wheaton--Franciscan Services)(d):
AAA Aaa 3,955 6.50% due 8/15/2011 4,280
AAA Aaa 2,000 6% due 8/15/2015 2,130
Total Investments (Cost--$1,366,606)--102.0% 1,467,216
Liabilities in Excess of Other Assets--(2.0%) (28,397)
----------
Net Assets--100.0% $1,438,819
==========
<FN>
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at October 31, 1998.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)MBIA Insured.
(e)FSA Insured.
(f)FHA Insured.
(g)Prerefunded.
(h)Escrowed to maturity.
(i)GNMA/FNMA 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 October 31, 1998.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Ernst & Young LLP.
See Notes to Financial Statements.
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1998
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of October 31, 1998
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$1,366,606,017) (Note 1a) $1,467,215,867
Cash 199,161
Receivables:
Interest $ 23,883,519
Securities sold 9,527,298 33,410,817
--------------
Prepaid expenses and other assets 43,195
--------------
Total assets 1,500,869,040
--------------
Liabilities: Payables:
Securities purchased 60,228,649
Dividends to shareholders (Note 1f) 1,016,575
Investment adviser (Note 2) 634,927 61,880,151
--------------
Accrued expenses and other liabilities 169,580
--------------
Total liabilities 62,049,731
--------------
Net Assets: Net assets $1,438,819,309
==============
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 858,201,728
Undistributed investment income--net 14,140,334
Undistributed realized capital gains on investments--net 19,732,283
Unrealized appreciation on investments--net 100,609,850
--------------
Total--Equivalent to $16.28 net asset value per share of
Common Stock (market price--$16.00) 998,819,309
--------------
Total capital $1,438,819,309
==============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Year Ended October 31, 1998
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 79,133,877
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 7,101,999
Commission fees (Note 4) 1,151,204
Transfer agent fees 151,358
Accounting services (Note 2) 150,164
Professional fees 116,642
Custodian fees 86,595
Directors' fees and expenses 75,081
Listing fees 43,801
Printing and shareholder reports 39,814
Pricing fees 26,366
Other 51,055
--------------
Total expenses 8,994,079
--------------
Investment income--net 70,139,798
--------------
Realized & Realized gain on investments--net 33,595,958
Unrealized Change in unrealized appreciation on investments--net 4,414,381
Gain on --------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 108,150,137
(Notes 1b, ==============
1d & 3):
See Notes to Financial Statements.
</TABLE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 1998 1997
<S> <S> <C> <C>
Operations: Investment income--net $ 70,139,798 $ 67,509,823
Realized gain on investments--net 33,595,958 12,466,054
Change in unrealized appreciation on investments--net 4,414,381 21,056,912
-------------- --------------
Net increase in net assets resulting from operations 108,150,137 101,032,789
-------------- --------------
Dividends & Investment income--net:
Distributions to Common Stock (53,785,988) (51,886,380)
Shareholders Preferred Stock (12,641,142) (13,590,316)
(Note 1f): Realized gain on investments--net:
Common Stock (9,753,911) (6,926,993)
Preferred Stock (4,763,788) (1,762,542)
-------------- --------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (80,944,829) (74,166,231)
-------------- --------------
Capital Stock Proceeds from issuance of Common Stock resulting from
Transactions reorganization -- 243,897,323
(Notes 1e & 4): Offering costs from issuance of Common Stock resulting from
reorganization -- (622,402)
Proceeds from issuance of Preferred Stock resulting from
reorganization -- 120,000,000
-------------- --------------
Net increase in net assets derived from capital stock
transactions -- 363,274,921
-------------- --------------
Net Assets: Total increase in net assets 27,205,308 390,141,479
Beginning of year 1,411,614,001 1,021,472,522
-------------- --------------
End of year* $1,438,819,309 $1,411,614,001
============== ==============
<FN>
*Undistributed investment income--net (Note 1g) $ 14,140,334 $ 10,420,273
============== ==============
See Notes to Financial Statements.
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1998
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements.
For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 15.84 $ 15.52 $ 15.46 $ 13.85 $ 16.76
Operating -------- -------- -------- -------- --------
Performance: Investment income--net 1.15 1.15 1.18 1.20 1.20
Realized and unrealized gain (loss) on
investments--net .62 .54 .15 1.66 (2.66)
-------- -------- -------- -------- --------
Total from investment operations 1.77 1.69 1.33 2.86 (1.46)
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.88) (.92) (.91) (.92) (.98)
Realized gain on investments--net (.16) (.15) (.09) --++ (.26)
In excess of realized gain on
investments--net -- -- -- (.04) --
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Stock shareholders (1.04) (1.07) (1.00) (.96) (1.24)
-------- -------- -------- -------- --------
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 (.21) (.25) (.24) (.28) (.17)
Realized gain on investments--net (.08) (.04) (.03) --++ (.04)
In excess of realized gain on
investments--net -- -- -- (.01) --
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity (.29) (.29) (.27) (.29) (.21)
-------- -------- -------- -------- --------
Net asset value, end of year $ 16.28 $ 15.84 $ 15.52 $ 15.46 $ 13.85
======== ======== ======== ======== ========
Market price per share, end of year $ 16.00 $14.8125 $ 14.00 $ 13.625 $ 11.625
======== ======== ======== ======== ========
Total Investment Based on market price per share 15.55% 13.92% 10.30% 26.09% (20.23%)
Return:* ======== ======== ======== ======== ========
Based on net asset value per share 9.95% 9.89% 7.76% 20.09% (9.98%)
======== ======== ======== ======== ========
Ratios to Average Expenses .63% .63% .64% .65% .66%
Net Assets:** ======== ======== ======== ======== ========
Investment income--net 4.94% 5.17% 5.22% 5.55% 5.35%
======== ======== ======== ======== ========
Supplemental Net assets, net of Preferred Stock, end of
Data: year (in thousands) $998,819 $971,614 $701,473 $698,512 $625,630
======== ======== ======== ======== ========
Preferred Stock outstanding, end of year
(in thousands) $440,000 $440,000 $320,000 $320,000 $320,000
======== ======== ======== ======== ========
Portfolio turnover 112.78% 98.91% 100.49% 59.71% 45.71%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,270 $ 3,208 $ 3,192 $ 3,183 $ 2,955
======== ======== ======== ======== ========
Dividends Series A--Investment income--net $ 676 $ 808$ 832 $ 1,043 $ 1,184
Per Share on ======== ======== ======== ======== ========
Preferred Stock Series B--Investment income--net $ 737 $ 813 $ 835 $ 1,043 $ 1,090
Outstanding:++++++ ======== ======== ======== ======== ========
Series C--Investment income--net $ 673 $ 812 $ 841 $ 1,042 $ 1,278
======== ======== ======== ======== ========
Series D--Investment income--net $ 728 $ 789 $ 865 $ 950 $ 1,144
======== ======== ======== ======== ========
Series E--Investment income--net $ 726 $ 797 $ 842 $ 933 $ 1,282
======== ======== ======== ======== ========
Series F--Investment income--net $ 750 $ 706 -- -- --
======== ======== ======== ======== ========
Series G--Investment income--net $ 728 $ 675 -- -- --
======== ======== ======== ======== ========
<FN>
*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.
**Does 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 occured on December 1, 1994.
See Notes to Financial Statements.
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1998
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniYield Insured Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a non-diversified, closed-end
management investment company. The Fund determines and makes
available for publication the net asset value of its Common Stock on
a weekly basis. The Fund's Common Stock is listed on the New York
Stock Exchange under the symbol MYI. The following is a summary of
significant accounting policies followed by the Fund.
(a) Valuation of investments--Municipal bonds are traded primarily
in the over-the-counter markets and are valued at the most recent
bid price or yield equivalent as obtained by the Fund's pricing
service from dealers that make markets in such securities. Financial
futures contracts and options thereon, which are traded on
exchanges, are valued at their closing prices as of the close of
such exchanges. Options written or purchased are valued at the last
sale price in the case of exchange-traded options. In the case of
options traded in the over-the-counter market, valuation is the last
asked price (options written) or the last bid price (options
purchased). Securities with remaining maturities of sixty days or
less are valued at amortized cost, which approximates market value.
Securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or
under the direction of the Board of Directors of the Fund, including
valuations furnished by a pricing service retained by the Fund,
which may utilize a matrix system for valuations. The procedures of
the pricing service and its valuations are reviewed by the officers
of the Fund under the general supervision of the Board of Directors.
(b) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell
financial 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) Offering costs--Direct expenses relating to the issuance of
Common Stock resulting from the reorganization were charged to
capital.
MuniYield Insured Fund, Inc.
October 31, 1998
(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.
(g) Reclassification--Generally accepted accounting principles
require that certain components of net assets be adjusted to reflect
permanent differences between financial and tax reporting.
Accordingly, current year's permanent book/tax differences of $7,393
have been reclassified between undistributed net realized capital
gains and undistributed net investment income. These
reclassifications have no effect on net assets or net asset value
per share.
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, including proceeds from the
issuance of Preferred Stock.
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,
for the year ended October 31, 1998 were $1,548,670,676 and
$1,588,745,441, respectively.
Net realized gains for the year ended October 31, 1998 and net
unrealized gains as of October 31, 1998 were as follows:
Realized Unrealized
Gains Gains
Long-term investments $33,592,740 $100,609,850
Short-term investments 3,218 --
----------- ------------
Total $33,595,958 $100,609,850
=========== ============
As of October 31, 1998, net unrealized appreciation for Federal
income tax purposes aggregated $100,284,026, of which $101,673,490
related to appreciated securities and $1,389,464 related to
depreciated securities. The aggregate cost of investments at
October 31, 1998 for Federal income tax purposes was $1,366,931,841.
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
Shares issued and outstanding during the year ended October 31, 1998
remained constant and during the year ended October 31, 1997
increased by 16,163,797 pursuant to a plan of reorganization.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred
Stock of the Fund, with a par value of $.05 per share and a
liquidation preference of $25,000 per share, that entitle their
holders to receive cash dividends at an annual rate that may vary
for the successive dividend periods. The yields in effect at October
31, 1998 were as follows: Series A, 3.29%; Series B, 3.30%; Series
C, 3.29%; Series D, 3.35%; Series E, 3.25%; Series F, 3.35%; and
Series G, 3.25%.
Shares issued and outstanding during the year ended October 31, 1998
remained constant and during the year ended October 31, 1997
increased by 4,800 pursuant to a plan of reorganization.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from 0.25% to 0.375%,
calculated on the proceeds of each auction. For the year ended
October 31, 1998, Merrill Lynch, Pierce, Fenner & Smith Inc., an
affiliate of FAM, earned $471,572 as commissions.
5. Subsequent Event:
On November 5, 1998, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the amount
of $.082696 per share, payable on November 27, 1998, to shareholders
of record as of November 20, 1998.
MuniYield Insured Fund, Inc.
October 31, 1998
<AUDIT-REPORT>
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors,
MuniYield Insured Fund, Inc.
We have audited the accompanying statement of assets, liabilities
and capital of MuniYield Insured Fund, Inc., including the schedule
of investments, as of October 31, 1998, and the related statement of
operations for the year then ended and the statements of changes in
net assets and financial highlights for each of the two years in the
period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The
financial highlights for each of the three years in the period ended
October 31, 1996 of MuniYield Insured Fund, Inc. were audited by
other auditors whose report dated December 6, 1996, expressed an
unqualified opinion on such financial highlights.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements
and financial highlights. Our procedures included confirmation of
securities owned as of October 31, 1998 by correspondence with the
custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights
referred to above and audited by us present fairly, in all material
respects, the financial position of MuniYield Insured Fund, Inc. at
October 31, 1998, the results of its operations for the year then
ended, the changes in its net assets and financial highlights for
each of the two years in the period then ended, in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Princeton, New Jersey
December 1, 1998
</AUDIT-REPORT>
QUALITY PROFILE
The quality ratings of securities in the Fund as of October 31, 1998
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 85.4%
AA/Aa 7.2
A/A 2.9
BBB/Baa 0.8
NR (Not Rated) 0.7
Other++ 5.0
[FN]
++Temporary investments in short-term municipal securities.
MuniYield Insured Fund, Inc.
October 31, 1998
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by MuniYield
Insured Fund, Inc. during its taxable year ended October 31, 1998
qualify as tax-exempt interest dividends for Federal Income tax
purposes. Additionally, the following table summarizes the taxable
distributions paid by the Fund during the year:
<TABLE>
<CAPTION>
Payable Ordinary Long-Term
Date Income Capital Gains
<S> <S> <C> <C> <C>
Common Stock Shareholders 12/30/97 $ .039644 $ .119341*
Preferred Stock Shareholders: Series A 11/28/97 $29.80 $ 83.54*
12/26/97 $ 6.64 $ 26.39*
10/01/98 -- $104.74**
10/29/98 $15.71 $ 85.28**
Series B 11/28/97 $29.47 $ 82.63*
12/26/97 $ 7.18 $ 27.98*
10/01/98 -- $104.74**
Series C 11/28/97 $29.47 $ 82.63*
12/26/97 $ 7.14 $ 27.85*
10/01/98 -- $104.74**
10/29/98 $17.19 $ 84.36**
Series D 11/20/97 $27.50 $ 77.12*
12/18/97 $ 8.10 $ 30.31*
10/22/98 -- $101.49**
Series E 11/28/97 $ 8.15 $ 22.86*
12/04/97 $ 6.04 $ 17.28*
12/11/97 $ 6.69 $ 19.52*
12/18/97 $ 6.92 $ 20.86*
12/26/97 $ 7.88 $ 25.14*
01/02/98 $ .28 $ 2.85*
10/08/98 -- $ 24.82**
10/15/98 -- $ 23.89**
10/22/98 -- $ 23.97**
10/29/98 -- $ 24.34**
Series F 11/12/97 $29.39 $ 82.40*
12/09/97 $ 2.46 $ 13.71*
10/13/98 -- $104.74**
Series G 11/25/97 $ 6.87 $ 19.28*
12/02/97 $ 6.54 $ 18.74*
12/09/97 $ 6.49 $ 19.05*
12/16/97 $ 6.24 $ 19.12*
12/23/97 $ 4.30 $ 15.67*
10/06/98 -- $ 29.14**
10/13/98 -- $ 25.66**
10/20/98 -- $ 24.34**
10/27/98 -- $ 24.71**
<FN>
*Of this distribution, 70.72% is subject to the 28% tax rate and
29.28% is subject to the 20% tax rate.
**The entire distribution is subject to the 20% tax rate.
Please retain this information for your records.
</TABLE>
