AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON July 14, 1999
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:
-----------------------------------------------------------------------------
(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:
-----------------------------------------------------------------------------
[ ] 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:
---------
1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
MUNIYIELD INSURED FUND, INC.
July 14, 1999
Dear Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
the Fund to be held at the offices of Merrill Lynch Asset Management, L.P., on
August 25, 1999, at 10:00 a.m.
At the meeting, in addition to electing Directors and ratifying auditors,
you are being asked to consider and approve an amendment to the Articles
Supplementary of the Fund. The Fund's Board believes all the proposals are in
the best interest of stockholders and recommends a vote "For" all the proposals.
Please read the entire proxy statement, which discusses these proposals in
greater detail.
Regardless of the number of shares you own, it is important that they be
represented and voted. Please take the time to read the enclosed proxy and sign,
date and mail the proxy card as soon as possible. Your prompt response will help
save the Fund expenses related to addditional solicitation.
If you have any questions regarding the enclosed proxy material or need
assistance in voting your shares, please contact our proxy solicitor, D. F. King
& Co., Inc. at 1-800-859-8508.
We appreciate the time and consideration that you can give this matter.
Sincerely,
BRADLEY J. LUCIDO
Secretary
<PAGE>
MUNIYIELD INSURED FUND, INC.
P.O. Box 9011
Princeton, New Jersey 08543-9011
----------------
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
----------------
August 25, 1999
TO THE STOCKHOLDERS OF MUNIYIELD INSURED FUND, INC.:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders (the
"Meeting") of MuniYield Insured Fund, Inc. (the "Fund") will be held at the
offices of Merrill Lynch Asset Management, L.P., 800 Scudders Mill Road,
Plainsboro, New Jersey, on Wednesday, August 25, 1999 at 10:00 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;
(3) To consider and act upon a proposal to approve an amendment to the
Articles Supplementary of the Fund; and
(4) 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 June 30, 1999 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 August 11, 1999, 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
BRADLEY J.LUCIDO
Secretary
Plainsboro, New Jersey
Dated: July 14, 1999
<PAGE>
PROXY STATEMENT
----------------
MUNIYIELD INSURED FUND, INC.
P.O. Box 9011
Princeton, New Jersey 08543-9011
----------------
1999 ANNUAL MEETING OF STOCKHOLDERS
----------------
August 25, 1999
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 1999 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 Wednesday, August 25, 1999 at 9:30 a.m. The approximate mailing date
of this Proxy Statement is July 14, 1999.
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, for the ratification of the selection of independent auditors to
serve for the Fund's current fiscal year and for the amendment to the Articles
Supplementary of the Fund. 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 June 30, 1999 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 61,945,880 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 five percent of the
outstanding AMPS.
The Board of Directors of the Fund knows of no business other than that
mentioned in Items 1, 2 and 3 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 such proxies of the holders of shares of AMPS, voting
separately as a class, in favor of the two (2) persons designated as
Directors to be elected by holders of AMPS; and
(2) All such proxies of the holders of shares of Common Stock and
AMPS, voting together as a single class, will be voted in favor of the five
(5) 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:
<TABLE>
<CAPTION>
Shares Beneficially
Owned At The
Record Date
-------------------
Principal Occupation During Past Director Common
Name and Address of Nominee Age Five Years and Public Directorships(1) Since Stock AMPS
- --------------------------- --- -------------------------------------- -------- -------- --------
<S> <C> <C> <C> <C>
Walter Mintz(1)(2) 70 Special Limited Partner of 1992 -0- -0-
1114 Avenue of the Americas Cumberland Associates
New York, New York 10036 (investment partnership) since
1982
Melvin R. Seiden(1)(2) 68 Director of Silbanc Properties, 1992 -0- -0-
780 Third Avenue Ltd. (real estate, investment
Suite 2502 and 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 Common Stock and AMPS, Voting Together as a Single
Class:
<TABLE>
<CAPTION>
Shares Beneficially
Owned At The
Record Date
-------------------
Principal Occupation During Past Director Common
Name and Address of Nominee Age Five Years and Public Directorships(1) Since Stock AMPS
- --------------------------- --- -------------------------------------- -------- -------- --------
<S> <C> <C> <C> <C>
Terry K. Glenn(1)* 58 Executive Vice President 1999 -0- -0-
P.O. Box 9011 of MLAM and Fund Asset
Princeton, New Jersey Management, L.P. ("FAM")
08543-9011 (which terms as used herein include
their corporate predecessors) since 1983;
Executive Vice President and
Director of Princeton Services,
Inc. ("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.
Joe Grills(1)(2) 64 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
since 1997; Director, Duke
Management Company since 1992 and
Vice Chairman since 1998; Director,
LaSalle Street Fund since 1995;
Director, Hotchkis and Wiley Mutual
Funds since
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially
Owned At The
Record Date
-------------------
Principal Occupation During Past Director Common
Name and Address of Nominee Age Five Years and Public Directorships(1) Since Stock AMPS
- --------------------------- --- -------------------------------------- -------- -------- --------
<S> <C> <C> <C> <C>
Joe Grills, cont'd 1996; Director, Kimco Realty
Corporation since 1997; Member of
the Investment Advisory Committee
of the Virginia Retirement System
since 1998; Director, Montpelier
Foundation since 1998.
Robert S. Salomon, Jr.(1)(2) 62 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) 66 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.
Arthur Zeikel(1)* 67 Chairman of FAM and MLAM 1992 -0- -0-
300 Woodland Avenue from 1997 to 1999; President of
Westfield, New Jersey 07090 FAM and MLAM from 1977 to
1997; Chairman of Princeton
Services, from 1997 to 1999
and Director thereof since 1993;
President of Princeton Services
from 1993 to 1997; Executive
Vice President of Merrill Lynch
& Co., Inc. ("ML & Co.") from
1990 to 1999.
</TABLE>
4
<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. See "Compensation of Directors" below.
(2) Member of the Audit Committee of the Board of Directors.
* Interested person, as defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act"), of the Fund.
Committee 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, 1998, 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, except as noted below, all of its officers,
directors, greater than ten percent beneficial owners and other persons subject
to Section 16 of the Exchange Act due to 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.
Interested Persons. The Fund considers Mr. Zeikel and Mr. Glenn to be
"interested persons" of the Fund within the meaning of Section 2(a)(19) of the
Investment Company Act due to the positions each holds or has held with FAM and
its affiliates and/or due to their ownership of securities issued by ML & Co.
Mr. Glenn is the President of the Fund.
Compensation of Directors. FAM, the Fund's 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 FAM (each a "non-interested Director") a fee of $4,000 per year
plus $1,000 per 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-interested
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 $75,081 for the fiscal year ended October 31,
1998.
5
<PAGE>
The following table sets forth for the fiscal year ended October 31, 1998
compensation paid by the Fund to the non-interested Directors and, for the
calendar year ended December 31, 1998, the aggregate compensation paid by all
investment companies advised by FAM and its affiliate, MLAM ("FAM/MLAM Advised
Funds"), to the non-interested Directors.
<TABLE>
<CAPTION>
Aggregate
Pension or Compensation
Retirement Benefits From Fund, Other
Compensation Accrued as Part FAM/MLAM Advised
Name of Director From Fund of Fund Expenses Funds Paid to Directors
- --------------- ------------ ------------------- -----------------------
<S> <C> <C> <C>
Joe Grills(1) $15,000 None $198,333
Walter Mintz(1) $15,000 None $178,583
Robert S. Salomon, Jr.(1) $15,000 None $178,583
Melvin R. Seiden(1) $15,000 None $178,583
Stephen B. Swensrud(1) $15,000 None $195,583
- --------
</TABLE>
(1) The Directors serve on the boards of other FAM/MLAM Advised Funds as
follows: Mr. Grills (24 registered investment companies consisting of 56
portfolios); Mr. Mintz (22 registered investment companies consisting of 43
portfolios); Mr. Salomon (22 registered investment companies consisting of
43 portfolios); Mr. Seiden (22 registered investment companies consisting of
43 portfolios); Mr. Swensrud (25 registered investment companies consisting
of 58 portfolios).
Officers of the Fund. The Board of Directors has elected six officers of
the Fund. The following sets forth information concerning each of these
officers:
<TABLE>
<CAPTION>
Name and Principal Occupation Office Age Officer Since
- ----------------------------- ------ --- -------------
<S> <C> <C> <C>
Terry K. Glenn President 58 1992*
Executive Vice President of FAM and MLAM since
1983; Executive Vice President and Director of
Princeton Services since 1993; President of PFD
since 1986 and Director thereof since 1991;
President of Princeton Administrators, L.P. since
1988.
Vincent R. Giordano Senior Vice President 54 1992
Senior Vice President of FAM and MLAM since
1984; Senior Vice President of Princeton
Services since 1993.
Kenneth A. Jacob Vice President 48 1992
First Vice President of MLAM since 1997; Vice
President of FAM and MLAM from 1984
to 1997; Vice President of FAM since 1984
William R. Bock Vice President 63 1997
Vice President of MLAM since 1989.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Occupation Office Age Officer Since
- ----------------------------- ------ --- -------------
<S> <C> <C> <C>
Donald C. Burke Vice President and Treasurer 39 1993
Senior Vice President and Treasurer of FAM and
MLAM since 1999; Senior Vice President and
Treasurer of Princeton Services since 1999; Vice
President of PFD since 1999; First Vice President
of MLAM from 1997 to 1999; Vice President
of MLAM from 1990 to 1997; Director of Taxation
of MLAM since 1990.
Bradley J.Lucido Secretary 33 1999
Vice President of MLAM since 1999; attorney
with MLAM since 1995; attorney in private
practice from 1991 to 1995.
</TABLE>
- ---------------
*Mr. Glenn was elected President of the Fund in 1999. Prior to that he served as
Executive Vice President.
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 of the Fund, and
Mr. Glenn, an officer and a Director 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. RATIFICATION OF THE 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"), independent auditors, to examine the financial statements of
the Fund for the current fiscal year. The Fund knows of no direct or indirect
financial interest of such firm in the Fund. 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 other investment companies for
which FAM acts as investment adviser. The fees received by E&Y from these other
entities are substantially greater, in the aggregate, than the 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 such other entities in its
evaluation of the independence of E&Y with respect to the Fund.
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.
ITEM 3. PROPOSED AMENDMENT TO ARTICLES SUPPLEMENTARY
At a meeting held April 13, 1999, the Board of Directors of the Fund
approved an amendment to Section 5(c) of the Articles Supplementary of the Fund.
The proposed amendment of Section 5(c) will affect issued and outstanding AMPS.
The Fund has five series of AMPS (A, B, C, D, and E), each created under
Articles Supplementary dated May 19, 1992. The proposed amendment is described
below and a form of amended
7
<PAGE>
Section 5(c) for the Fund is attached as Exhibit A to this Proxy Statement. The
Board of Directors of the Fund has declared the amendment advisable and has
directed that the proposed amendment be submitted to the stockholders of the
Fund for approval at the Meeting. The Board recommends that the stockholders of
the Fund approve the proposed amendment to the Fund's Articles Supplementary.
Currently, the Articles Supplementary of the Fund requires the approval of
a majority of the Fund's outstanding shares of AMPS in order to issue any
additional shares of AMPS or any other preferred stock. The proposed amendment
would delete this requirement and permit the Fund, upon Board approval, to issue
additional shares of preferred stock, including AMPS, without obtaining
stockholder approval, provided that such additional preferred stock does not
rank prior to the AMPS or any other outstanding preferred stock in the Fund's
capital structure.
The proposed amendment provides the Board and the Fund with greater
flexibility to adjust the Fund's leverage in response to market conditions. The
proposed amendment permits the Board members to authorize the Fund to issue
additional AMPS in order to maintain the Fund's targeted level of financial
leverage without the time delays and costs involved with seeking stockholder
approval each time the Fund wishes to issue additional AMPS.
The issuance of additional AMPS may provide holders of Common Stock with a
potentially higher yield. The use of leverage, however, involves certain risks
for holders of Common Stock, including higher volatility of both the net asset
value and the market value of the Common Stock. Leverage also creates the risk
that the investment return on the Fund's Common Stock will be reduced to the
extent the dividends paid on preferred stock and other expenses of the preferred
stock exceed the income earned by the Fund on its investments. If the Fund is
liquidated, preferred stockholders will be entitled to receive liquidating
distributions before any distribution is made to holders of Common Stock.
The fee paid to FAM, the Fund's investment adviser, for investment advisory
and management services is based on the Fund's average weekly net assets,
including assets acquired from the sale of preferred stock. Therefore, the fee
paid to FAM will increase as a result of any issuance of additional AMPS or
other preferred stock.
Any issuance of additional shares of preferred stock by the Fund must be in
compliance with the 200% asset coverage requirement of Section 18 of the
Investment Company Act. Also, the Fund currently anticipates that any additional
shares of preferred stock to be issued would also be AMPS and that any such AMPS
would be rated by nationally recognized statistical rating organizations
("NRSROs") as are all currently outstanding AMPS. These NRSROs, in rating the
additional AMPS, will impose their own asset coverage requirements on the
additional AMPS.
If additional AMPS or other shares of preferred stock are issued by the
Fund,except as indicated below and as otherwise required by applicable law,
holders of shares of any newly issued AMPS or other preferred stock will have
equal voting rights with outstanding Common Stock and AMPS (one vote per share)
and will vote together with holders of outstanding Common Stock and AMPS as a
single class.
In connection with the election of the Fund's Board members, holders of
shares of any newly issued AMPS or other preferred stock along with holders of
outstanding AMPS, voting together as a separate class, will be entitled to elect
two of the Fund's Board members, and the remaining Board members will be elected
8
<PAGE>
by the holders of Common Stock and AMPS, voting together as a single class. If
at any time dividends on shares of the Fund's preferred stock shall be unpaid in
an amount equal to two full years' dividends thereon. the holders of any newly
issued AMPS or other preferred stock and outstanding AMPS, voting together as a
separate class, will be entitled to elect a majority of the Fund's Board members
until all dividends in default have been paid or declared and set apart for
payment. Also, the affirmative vote of the holders of any newly issued AMPS or
other preferred stock and the outstanding AMPS, voting together as a separate
class, will be required to approve any plan of reorganization adversely
affecting such shares or any action requiring a vote of security holders under
Section 13(a) of the Investment Company Act, including any vote to convert the
Fund to an open-end investment company or to change the Fund's fundamental
investment policies.
Stockholders will not be entitled to appraisal rights under Maryland law.
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.
On August 27, 1996, defendants moved to transfer the action to the United
States Court for the District of New Jersey. By order dated June 10, 1997, the
District Court Judge granted defendants' motion. Plaintiff objected to the
District Court Judge's order and moved for reconsideration. 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
9
<PAGE>
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.
On February 4, 1999, defendants moved to dismiss plaintiffs' state law
claims for breach of fiduciary duty and deceit on the ground that they are
preempted by Section 36(b) of the Investment Company Act of 1940. On June 14,
1999, the Court granted defendants' motion and dismissed plaintiffs' state law
claims. At the same time, the Court granted plaintiffs permission to immediately
file an interlocutory appeal to the United States Court of Appeals for the Third
Circuit. On June 24, 1999, plaintiffs/petitioners sought leave from the Court of
Appeals to appeal dismissal of their state law claims. Defendants have opposed
the request on the grounds that the District Court's decision was correctly
decided and immediate review will not materially advance the ultimate
termination of the litigation. Plaintiffs' petition is under consideration by
the Court of Appeals.
Fact discovery is underway.
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 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.
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. The
Fund has retained D.F. King & Co., Inc. to assist in the solicitation of proxies
at a cost to the Fund of approximately $3,500, plus out-of-pocket expenses.
All shares represented by properly executed proxies, unless such proxies
have previously been revoked, will be voted at the Meeting in accordance with
the directions on the proxies; if no direction is indicated, the shares will be
voted "FOR" the Director nominees, "FOR" the ratification of E&Y as independent
auditors, and "FOR" the amendment to the Articles Supplementary.
With respect to Item 1, "Election of Directors," holders of AMPS, voting
separately as a class, are entitled to elect the two Directors designated above
and holders of Common Stock and AMPS, 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 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 a majority of the votes cast by the holders of
Common Stock and the AMPS represented at the Meeting and entitled to vote,
voting together as a single class.
10
<PAGE>
With respect to Item 2. "Ratification of the Selection of Independent
Auditors," assuming a quorum is present, approval will require the affirmative
vote of a majority of the votes cast by the holders of shares of Common Stock
and the AMPS represented present in person or by proxy at the Meeting and
entitled to vote, voting together as a single class.
With respect to Item 3, "Proposed Amendment to Articles Supplementary,"
assuming a quorum is present, approval of the amendment to the Fund's Articles
Supplementary will require the affirmative vote of (i) a majority of the
outstanding Common Stock and AMPS, voting together as a single class, and (ii) a
majority of the outstanding AMPS of all series of the Fund, voting together as a
single class.
Broker-dealer firms, including Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("MLPF&S'"), 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. With respect to Common
Stock, broker-dealer firms, including MLPF&S, will not be permitted to grant
voting authority without instructions with respect to amending the Articles
Supplementary (Item 3). Shares of AMPS held in "street name," however, may be
voted under certain conditions by broker-dealer firms with respect to Item 3 and
counted for purposes of establishing a quorum if no instructions are received
one business day before the Meeting, or, if adjourned, one business day before
the day to which the Meeting is adjourned. These conditions include, among
others, that (i) at least 30% of the AMPS outstanding have voted on Item 3, (ii)
less than 10% of the AMPS outstanding have voted against Item 3 and (iii)
holders of Common Stock have voted to approve Item 3. In such instances, the
broker-dealer firm will vote those shares of AMPS on Item 3 in the same
proportion as the votes cast by all holders of AMPS who have voted on Item 3.
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 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. MLPF&S has advised the Fund
that it intends to vote shares held in its name for which no instructions have
been received except as limited by agreement or applicable law, on Items 1 and 2
(with respect to Common Stock and AMPS) and 3 (with respect to AMPS only) in the
same proportion as the votes received from 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 not have an effect on the vote on Item 1
or Item 2. Abstentions and broker non-votes will have the same effect as a vote
against Item 3.
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, 1998 or its semi annual report for the six months
ended April 30, 1999 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: Bradley J.Lucido, Secretary, or to 1-800-456-4587 ext.
123.
11
<PAGE>
Stockholder Proposals
It is currently intended that the 2000 Annual Meeting of Stockholders of
the Fund will be held in August, 2000. If a stockholder intends to present a
proposal at the 2000 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 16, 2000.
By Order of the Board of Directors
BRADLEY J.LUCIDO
Secretary
Dated: July 14, 1999
12
<PAGE>
EXHIBIT A
PROPOSED AMENDMENT TO ARTICLES SUPPLEMENTARY OF:
MuniYield Insured Fund, Inc., Series A, B, C, D and E
Section 5(c) of the Articles Supplementary is revised to read, as
follows (the underlining indicates language added; brackets indicate language
deleted):
Right to Vote with Respect to Certain Other Matters. So long as any
shares of AMPS are outstanding, the Corporation shall not, without the
affirmative vote of the holders of a majority of the shares of Preferred Stock
Outstanding at the time, voting separately as one class: (i) authorize, create
or issue [, or increase the authorized or issued amount of,] any class or series
of stock ranking prior to the AMPS or [on a parity with] any other series of
-------- -----
Preferred Stock with respect to payment of dividends or the distribution of
assets on liquidation, [or increase the authorized amount of AMPS or any other
Preferred Stock,] or (ii) amend, alter or repeal the provisions of the Charter,
whether by merger, consolidation or otherwise, so as to adversely affect any of
the contract rights expressly set forth in the Charter of holders of shares of
AMPS or any other Preferred Stock. To the extent permitted under the 1940 Act,
in the event shares of more than one series of AMPS are outstanding, the
Corporation shall not approve any of the actions set forth in clause (i) or
(ii), which adversely affects the contract rights expressly set forth in the
Charter of a Holder of shares of a series of AMPS differently than those of a
Holder of shares of any other series of AMPS without the affirmative vote of the
holders of at least a majority of the shares of AMPS of each series adversely
affected and outstanding at such time (each such adversely affected series
voting separately as a class). The Corporation shall notify Moody's and S&P 10
Business Days prior to any such vote described in clause (i) or (ii). Unless a
higher percentage is provided for under the Charter, the affirmative vote of the
holders of a majority of the outstanding shares of Preferred Stock, including
AMPS, voting together as a single class, will be required to approve any plan of
reorganization (including bankruptcy proceedings) adversely affecting such
shares or any action requiring a vote of security holders under Section 13(a) of
the 1940 Act. The class vote of holders of shares of Preferred Stock, including
AMPS, described above will in each case be in addition to a separate vote of the
requisite percentage of shares of Common Stock and shares of Preferred Stock,
including AMPS, voting together as a single class necessary to authorize the
action in question.
A-1
<PAGE>
MUNIYIELD INSURED FUND, INC.
P.O. Box 9011
Princeton, New Jersey 08543-9011 COMMON STOCK
PROXY
This proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Terry K. Glenn, Donald C.Burke
and Bradley J. Lucido as proxies, each with the power to appoint his
substitute, and hereby authorizes each of them to represent and to vote,
as designated on the reverse hereof, all the Common Stock of MuniYield
Insured Fund, Inc. (the "Fund") held of record by the undersigned on June
30, 1999 at the Annual Meeting of Stockholders of the Fund to be held on
August 25, 1999 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, 2 AND 3.
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>
Please mark boxes: [ ] or [x] in blue or black ink.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
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 nominee's name in
the list below.)
Terry K. Glenn, 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. Proposal to approve an amendment to the Articles Supplementary of the Fund.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. 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, trustree or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
offer. If a partnership, please sign in partnership name by authroized person.
Dated:__________________________________, 1999
X
---------------------------------------------
Signature
X
---------------------------------------------
Signature, if held jointly
Sign, Date and Return the Proxy Card Promptly using the Enclosed Envelope.
</TABLE>
<PAGE>
MUNIYIELD INSURED FUND, INC.
P.O. Box 9011
Princeton, New Jersey 08543-9011 AUCTION MARKET
PROXY PREFERRED STOCK
This proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Terry K. Glenn, Donald C. Burke
and Bradley J. Lucido as proxies, each with the power to appoint his
substitute, and hereby authorizes each of them to represent and to vote,
as designated on the reverse hereof, all the Auction Market Preferred
Stock of MuniYield Insured Fund, Inc. (the "Fund") held of record by the
undersigned on June 30, 1999 at the Annual Meeting of Stockholders of the
Fund to be held on August 25, 1999 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, 2 AND 3.
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>
<TABLE>
<CAPTION>
Please mark boxes: [ ] or [x] in blue or black ink.
<S> <C> <C> <C>
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 nominee's name in
the list below.)
Walter Mintz, Melvin R. Seiden, Terry K. Glenn, Joe Grills, Robert S. Salomon, Jr., Stephen B.Swensrud and Arther
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. Proposal to approve an amendment to the Articles Supplementary of the Fund.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. 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 heron. When shares are held by joint
tenants, both should sign. When signing as attorney or as executor,
administrator, trustree or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
offer. If a partnership, please sign in partnership name by authroized person.
Dated:----------------------------------,1999
X
---------------------------------------------
Signature
X
---------------------------------------------
Signature, if held jointly
Sign, Date and Return the Proxy Card Promptly using the Enclosed Envelope.
</TABLE>
