MUNIYIELD
INSURED
FUND, INC.
FUND LOGO
Annual Report
October 31, 1999
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, 1999, the Common Stock of MuniYield
Insured Fund, Inc. earned $0.886 per share income dividends, which
included earned and unpaid dividends of $0.073. This represents a
net annualized yield of 6.50%, based on a month-end net asset value
of $13.64 per share. Over the same period, the total investment
return on the Fund's Common Stock was -8.42%, based on a change in
per share net asset value from $16.28 to $13.64, and assuming
reinvestment of $1.079 per share ordinary income dividends and
$0.263 per share capital gains distributions.
For the six-month period ended October 31, 1999, the total
investment return on the Fund's Common Stock was -9.12%, based on a
change in per share net asset value from $15.49 to $13.64, and
assuming reinvestment of $0.432 per share income dividends.
For the six-month period ended October 31, 1999, the Fund's Auction
Market Preferred Stock had an average yield of 3.56% for Series A,
3.62% for Series B, 3.56% for Series C, 3.45% for Series D, 3.28%
for Series E, 3.10% for Series F and 3.30% for Series G.
The Municipal Market Environment
The combination of steady strong domestic economic growth,
improvement in foreign economies (most notably in Japan) and
increasing investor concerns regarding potential increases in US
inflation put upward pressure on bond yields throughout the 12-month
period ended October 31, 1999. Continued strong US employment
growth, particularly the decline in the US unemployment rate to 4.2%
in early June, was among the reasons the Federal Reserve Board cited
for raising short-term interest rates in late June and again in late
August. US Treasury bond yields reacted by climbing above 6.375% by
late October. However, by October 31, 1999, economic indicators were
released suggesting that despite strong economic and employment
growth in the third fiscal quarter of 1999, inflationary pressures
have remained extremely well-contained. This resulted in a
significant rally in the US Treasury bond market, pushing US
Treasury bond yields downward to approximately 6.15% by October 31,
1999. During the last six months, yields on 30-year US Treasury
bonds increased more than 50 basis points (0.50%).
Long-term tax-exempt bond yields also rose during the six months
ended October 31, 1999. Until early May, the municipal bond market
was able to withstand much of the upward pressure on bond yields.
However, investor concerns of additional moves by the Federal
Reserve Board to moderate US economic growth and, more importantly,
the loss of the strong technical support that the tax-exempt market
enjoyed in early 1999 helped push municipal bond yields
significantly higher for the remainder of the period. The yields on
long-term tax-exempt revenue bonds rose almost 90 basis points to
6.18% by October 31, 1999, as measured by the Bond Buyer Revenue
Bond Index.
In recent months, the significant decline in new tax-exempt bond
issuance has remained a positive factor within the municipal bond
market, as it had been for much of the past year. During the last
six months, more than $110 billion in long-term municipal bonds was
issued, a decline of almost 20% compared to the same period a year
ago. During the past three months, $55 billion in municipal bonds
was underwritten, representing a decline of nearly 10% compared to
the corresponding period in 1998. Additionally, in June and July,
investors received more than $40 billion in coupon income and
proceeds from bond maturities and early bond redemptions. These
proceeds have generated considerable retail investor interest, which
has helped absorb the recent diminished supply.
MuniYield Insured Fund, Inc.
October 31, 1999
Although tax-exempt bond yields are at their highest level in over
two years and have attracted significant retail investor interest,
institutional demand has declined sharply. Long-term municipal
mutual funds have seen consistent outflows in recent months as the
yields of individual securities have risen faster than those of
larger, more diverse mutual funds. In addition, the demand from
property/casualty insurance companies has weakened as a result of
the losses, and anticipated losses, incurred as a result of the
series of damaging storms across much of the eastern United States.
Additionally, many institutional investors who were attracted to the
municipal bond market in recent years by historically attractive tax-
exempt bond yield ratios of over 90% have found other asset classes
even more attractive. Even with a reduced supply position, tax-
exempt issuers have been forced to repeatedly raise municipal bond
yields in the attempt to attract adequate demand.
The recent relative underperformance of the municipal bond market
has resulted in an opportunity for long-term investors to purchase
tax-exempt issues whose yields are nearly identical to taxable US
Treasury securities. At October 31, 1999, long-term uninsured
municipal revenue bond yields were 100% of comparable US Treasury
securities. In recent months, many taxable asset classes, such as
corporate bonds, mortgage-backed securities and US agency debt, have
all accelerated debt issuance. This acceleration was initiated
largely to avoid issuing securities at year-end and to minimize any
associated Year 2000 (Y2K) problems that may develop. However, this
increased issuance has also resulted in higher yield levels in the
various asset classes as lower bond prices became necessary to
attract sufficient investor demand. Going forward, it is believed
that the pace of non-US Government debt issuance is likely to slow
significantly. As the supply of this debt declines, we would expect
many institutional investors to return to the municipal bond market
and the attractive yield ratios available.
Looking ahead, it appears to us that long-term municipal bond yields
will remain under pressure, trading in a broad range centered near
current levels. Investors are likely to remain concerned about
future action by the Federal Reserve Board. Y2K considerations may
prohibit any further Federal Reserve Board moves through the end of
the year and the beginning of 2000. Any improvement in bond prices
will probably be contingent upon weakening in both US employment
growth and consumer spending. The 100 basis point rise in US
Treasury bond yields seen thus far this year may negatively affect
US economic growth. The US housing market will be among the first
sectors likely to be affected, as some declines have already been
evidenced in response to higher mortgage rates. We believe that it
is also unrealistic to expect double-digit returns in US equity
markets to continue indefinitely. Much of the US consumer's wealth
is tied to recent stock market appreciation. Any slowing in these
incredible growth rates is likely to reduce consumer spending. We
believe that these factors suggest that the worst of the recent
increase in bond yields has passed and stable, if not slightly
improving, bond prices may be expected.
Portfolio Strategy
During the fiscal year ended October 31, 1999, we held a neutral
investment strategy, since indicators pointed to a continuation of
both benign inflation and healthy domestic economic growth. These
favorable conditions led us to believe that long-term tax-exempt
bond yields would continue trading within a somewhat narrow range.
Therefore, we chose to focus on income-producing securities rather
than on those with the potential for capital gains. We believed that
coupon income could potentially be the more significant segment of
the Fund's annual total return performance if the tax-exempt bond
market performed as anticipated. Keeping shareholder income in mind,
the Fund remained fully invested for most of the past several
months, and we expect to maintain this position going forward.
Short-term tax-exempt yields exhibited considerable volatility
during the Fund's fiscal year. Interest rates paid to the Preferred
Stock shareholders traded below 3% in December 1998, reflecting
heightened investor demand at year-end. However, throughout fiscal
year ended October 31, 1999, leveraging generated a significant
incremental yield to the Fund's Common Stock shareholders. Because
we believe Federal Reserve Board policy is likely to remain stable
for the rest of the year, we expect short-term tax-exempt interest
rates to remain at, or slightly below, current levels. However,
should the spread between long-term interest rates and short-term
interest rates narrow, the benefits of the leverage will decline and
the yield on the Common Stock will decline. (For a complete
explanation of the benefits and risks of leveraging, see page 5 of
this report to shareholders.)
MuniYield Insured Fund, Inc.
October 31, 1999
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,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(William R. Bock)
William R. Bock
Vice President and Portfolio Manager
December 8, 1999
MuniYield Insured Fund, Inc.
October 31, 1999
<TABLE>
PROXY RESULTS
<CAPTION>
During the six-month period ended October 31, 1999, MuniYield
Insured Fund, Inc.'s Common Stock shareholders voted on the
following proposals. The proposals were approved at a shareholders'
meeting on September 28, 1999. The description of each proposal and
number of shares voted are as follows:
Shares Shares Withheld
Voted For From Voting
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors: Terry K. Glenn 59,609,959 1,439,525
Joe Grills 59,618,954 1,430,530
Robert S. Salomon Jr. 59,618,443 1,431,041
Stephen B. Swensrud 59,617,763 1,431,721
Arthur Zeikel 59,597,065 1,452,419
Shares Shares Voted Shares Voted
Voted For Against Abstain
2. To ratify the selection of Ernst & Young LLP as the Fund's independent
auditors for the current fiscal year. 59,417,960 592,488 1,038,036
3. To approve an amendment to the Articles Supplementary of the Fund. 31,782,245 2,453,776 1,892,231
<CAPTION>
During the six-month period ended October 31, 1999, MuniYield
Insured Fund, Inc.'s Preferred Stock shareholders voted on the
following proposals. The proposals were approved at a shareholders'
meeting on September 28, 1999. The description of each proposal and
number of shares voted are as follows:
Shares Shares Withheld
Voted For From Voting
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors: Terry K. Glenn 14,411 221
Joe Grills 14,411 221
Walter Mintz 14,397 245
Robert S. Salomon Jr. 14,411 221
Melvin R. Seiden 14,411 221
Stephen B. Swensrud 14,411 221
Arthur Zeikel 14,387 245
Shares Shares Voted Shares Voted
Voted For Against Abstain
2. To ratify the selection of Ernst & Young LLP as the Fund's independent
auditors for the current fiscal year. 14,425 11 196
3. To approve an amendment to the Articles Supplementary of the Fund. 11,804 2,435 393
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1999
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, income 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 these securities.
MuniYield Insured Fund, Inc.
October 31, 1999
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.
YEAR 2000 ISSUES (UNAUDITED)
Many computer systems were designed using only two digits to
designate years. These systems may not be able to distinguish the
Year 2000 from the Year 1900 (commonly known as the "Year 2000
Problem"). The Fund could be adversely affected if the computer
systems used by the Fund's management or other Fund service
providers do not properly address this problem before January 1,
2000. The Fund's management expects to have addressed this problem
before then, and does not anticipate that the services it provides
will be adversely affected. The Fund's other service providers have
told the Fund's management that they also expect to resolve the Year
2000 Problem, and the Fund's management will continue to monitor the
situation as the Year 2000 approaches. However, if the problem has
not been fully addressed, the Fund could be negatively affected. The
Year 2000 Problem could also have a negative impact on the
securities in which the Fund invests, and this could hurt the Fund's
investment returns.
MuniYield Insured Fund, Inc.
October 31, 1999
<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--1.2% AAA Aaa $16,850 Jefferson County, Alabama, Sewer Revenue Bonds, Capital
Improvement Warrants, Series A, 5.375% due 2/01/2036 (b) $ 15,017
Alaska--1.5% AAA Aaa 10,000 Alaska State Housing Finance Corporation Revenue Bonds,
RITR, Series 2, 8.12% due 6/01/2035 (j)(k) 9,763
NR* Aaa 10,410 Alaska State Housing Finance Corporation, Revenue Refunding
Bonds, RITR, Series 2, 7.72% due 12/01/2024 (c)(j)(k) 9,643
Arizona--0.4% NR* NR* 5,000 Mohave County, Arizona, IDA, IDR (North Star Steel Company
Project), AMT, 6.70% due 3/01/2020 5,156
California AAA Aaa 5,250 Anaheim, California, Public Financing Authority, Lease Revenue
- --20.0% Bonds (Public Improvements Project), Senior-Series A, 6% due
9/01/2024 (i) 5,380
California HFA, Revenue Bonds, AMT:
A+ Aa2 3,750 RIB, Series B-2, 8.879% due 8/01/2023 (c)(j) 4,017
AAA Aaa 1,595 Series E, 7% due 8/01/2026 (k) 1,661
NR* A2 10,000 California Health Facilities Finance Authority Revenue Bonds
(Cedars-Sinai Medical Center), Series A, 6.25% due 12/01/2034 9,857
California State, GO (a):
AAA NR* 10,535 5.90% due 3/01/2005 (d) 11,300
AAA Aaa 10,000 Refunding, 5.25% due 6/01/2021 9,166
California State, GO, Refunding:
AAA Aaa 9,000 5% due 2/01/2018 (k) 8,101
AAA Aaa 9,750 5% due 8/01/2024 (k) 8,500
AAA Aaa 12,360 4.75% due 2/01/2029 (b) 10,124
AAA Aaa 5,000 East Bay, California, Municipal Utilities District, Water System
Revenue Bonds, 4.75% due 6/01/2028 (k) 4,103
AAA NR* 7,500 Los Angeles, California, Department of Water and Power,
Electric Plant Revenue Bonds, RIB, Series 144, 7.47% due
6/15/2025 (i)(j) 6,580
Los Angeles, California, Harbor Department Revenue Bonds,
AMT:
NR* Aaa 4,000 RITR, Series RI-7, 8.345% due 11/01/2026 (j)(k) 4,160
AAA Aaa 6,330 Series B, 6.625% due 8/01/2019 (a) 6,668
AAA Aaa 8,725 Series B, 6.625% due 8/01/2025 (a) 9,191
AAA Aaa 15,000 Los Angeles County, California, Metropolitan Transportation
Authority, Sales Tax Revenue Bonds, Proposition A--First Tier,
Senior Series A, 6% due 7/01/2006 (d)(k) 16,277
</TABLE>
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
DATES Daily Adjustable Tax-Exempt Securities
EDA Economic Development Authority
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
TRAN Tax Revenue Anticipation Notes
VRDN Variable Rate Demand Notes
MuniYield Insured Fund, Inc.
October 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
California AAA Aaa $10,500 Los Angeles County, California, Metropolitan Transportation
(concluded) Authority, Sales Tax Revenue Refunding Bonds, Proposition C,
2nd Senior Series A, 5% due 7/01/2023 (a) $ 9,193
AAA Aaa 14,000 Los Angeles County, California, Public Works Financing
Authority, Lease Revenue Bonds (Multiple Capital Facilities
Project V), Series B, 5.125% due 12/01/2029 (a) 12,285
AAA Aaa 5,000 Los Angeles County, California, Transportation Commission,
Sales Tax Revenue Refunding Bonds, Series B, 6.50% due
7/01/2015 (b) 5,253
AA Aa2 20,000 Metropolitan Water District of Southern California, Waterworks
Revenue Refunding Bonds, Series A, 4.75% due 7/01/2022 16,684
AAA Aaa 2,190 Northern California Transmission Revenue Bonds (California--
Oregon Transmission Project), Series A, 6.50% due 5/01/2016 (k) 2,276
AAA Aaa 3,000 Sacramento, California, Municipal Utility District, Electric
Revenue Bonds, Series I, 6% due 1/01/2024 (k) 3,009
AAA Aaa 10,000 San Diego, California, Public Facilities Financing Authority,
Sewer Revenue Bonds, Series A, 5.25% due 5/15/2027 (b) 9,020
AAA Aaa 6,865 San Francisco, California, Bay Area Rapid Transit District,
Sales Tax Revenue Bonds, 5.50% due 7/01/2020 (b) 6,531
AAA Aaa 24,650 San Francisco, California, Bay Area Rapid Transit District,
Sales Tax Revenue Refunding Bonds, 5% due 7/01/2028 (a) 21,264
San Fransisco, California, City and County Airport Commission,
International Airport Revenue Bonds, Second Series:
AAA Aaa 6,000 AMT, Issue 6, 6.60% due 5/01/2024 (a) 6,300
AAA Aaa 9,500 Issue 9B, 5.25% due 5/01/2020 (b) 8,708
AAA Aaa 5,000 San Francisco, California, City and County, COP (San Francisco
Courthouse Project), 5.875% due 4/01/2021 (i) 4,967
AAA Aaa 10,000 San Francisco, California, City and County Sewer Revenue
Bonds, Series A, 5.95% due 10/01/2025 (b) 9,984
San Jose, California, Redevelopment Agency, Tax Allocation
Refunding Bonds (Merged Area Redevelopment Project) (k):
AAA Aaa 6,895 5.60% due 8/01/2019 6,656
AAA Aaa 5,725 5.625% due 8/01/2025 5,488
Santa Rosa, California, Wastewater Revenue Refunding
Bonds (b):
AAA Aaa 3,000 Series A, 5.25% due 9/01/2016 2,846
AAA Aaa 3,295 Series B, 6.125% due 9/01/2017 3,345
AAA Aaa 9,000 University of California, Revenue Refunding Bonds (Multiple
Purpose Projects), Series E, 5.125% due 9/01/2020 (k) 8,109
Colorado--2.0% AAA Aaa 28,500 Denver, Colorado, City and County Airport, Revenue Refunding
Bonds, Series E, 5.25% due 11/15/2023 (k) 25,530
Connecticut AAA Aaa 9,695 Connecticut State, HFA, Revenue Bonds (Housing Mortgage
- --1.0% Finance Program), Series B, 6.75% due 11/15/2023 (k) 10,203
A1+ VMIG1++ 2,200 Connecticut State Special Tax Obligation Revenue Bonds
(Transportation Infrastructure), VRDN, Second Lien, Series 1,
3.40% due 12/01/2010 (e) 2,200
District of A1+ VMIG1++ 16,100 District of Columbia, GO (General Fund Recovery), VRDN,
Columbia--2.9% Series B-2, 3.55% due 6/01/2003 (e) 16,100
AAA Aaa 20,100 Metropolitan Washington D.C. Airports Authority, Virginia
General Airport Revenue Bonds, AMT, Series A, 6.625% due
10/01/2019 (k) 20,957
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Florida--1.4% NR* VMIG1++ $ 2,000 Hillsborough County, Florida, IDA, PCR (Tampa Electric
Company Project), VRDN, 3.50% due 9/01/2025 (e) $ 2,000
NR* VMIG1++ 1,000 Jacksonville, Florida, Health Facilities Authority, Hospital
Revenue Refunding Bonds (Genesis Rehabilitation Hospital),
VRDN, 3.50% due 5/01/2021 (e) 1,000
A1+ VMIG1++ 15,550 Pinellas County, Florida, Health Facilities Authority, Revenue
Refunding Bonds (Pooled Hospital Loan Program), DATES,
3.50% due 12/01/2015 (a)(e) 15,550
Georgia--2.8% A1 VMIG1++ 14,000 Burke County, Georgia, Development Authority, PCR (Georgia
Power Company Plant-Vogtle Project), VRDN, Third Series,
3.50% due 7/01/2024 (e) 14,000
AAA Aaa 14,000 Fulton County, Georgia, Water and Sewer Revenue Bonds,
4.75% due 1/01/2028 (b) 11,358
AAA Aaa 10,000 Georgia Municipal Electric Authority, Power Revenue
Refunding Bonds, Series EE, 6.40% due 1/01/2023 (a) 10,223
Hawaii--1.9% Hawaii State Airports System Revenue Bonds, AMT, Second
Series (k):
AAA Aaa 6,000 7% due 7/01/2018 6,302
AAA Aaa 17,145 6.75% due 7/01/2021 17,911
Illinois--5.8% AAA Aaa 10,000 Chicago, Illinois, Board of Education, GO (Chicago School
Reform Project), Series A, 5.25% due 12/01/2027 (a) 8,779
AAA Aaa 9,160 Chicago, Illinois, Midway Airport Revenue Bonds, AMT, Series A,
6.25% due 1/01/2024 (k) 9,168
AAA Aaa 3,870 Chicago, Illinois, O'Hare International Airport, Special Facility
Revenue Bonds (International Terminal), AMT, 6.75% due
1/01/2018 (k) 4,080
AAA Aaa 12,000 Chicago, Illinois, Public Building Commission, Mortgage
Revenue Bonds, Series A, 6.50% due 1/01/2018 (h)(k) 12,051
AAA Aaa 10,000 Chicago, Illinois, Sales Tax Revenue Bonds, 5.375% due
1/01/2030 (b) 8,929
A1+ VMIG1++ 5,000 Illinois Health Facilities Authority, Revenue Refunding Bonds
(University of Chicago Hospitals), VRDN, 3.55% due
8/01/2026 (e)(k) 5,000
AAA Aaa 29,235 Metropolitan Pier and Exposition Authority, Illinois, Dedicated
State Tax Revenue Refunding Bonds (McCormick Plant
Expansion Project), 5.50% due 12/15/2024 (b) 26,922
Indiana--2.1% AAA Aaa 3,150 Hammond, Indiana, Multi-School Building Corporation, Revenue
Refunding Bonds, First Mortgage, 5.75% due 1/15/2017 (k) 3,076
AAA NR* 10,000 Indiana Health Facilities Financing Authority, Hospital Revenue
Bonds (Charity Obligation Group), 5.50% due 11/15/2024 (k) 9,210
AAA Aaa 2,400 Indiana State Vocational Technical College, Building Facilities
Revenue Refunding Bonds (Student Fee), Series D, 6.50% due
7/01/2014 (a) 2,564
AAA Aaa 10,000 Indianapolis, Indiana, Economic Development Revenue Bonds
(Archdiocese of Indianapolis), 5.50% due 7/01/2026 (k) 9,164
AA NR* 3,000 Indianapolis, Indiana, Local Public Improvement Bond Bank,
Revenue Refunding Bonds, Series D, 6.75% due 2/01/2020 3,169
Iowa--0.1% AAA Aaa 870 Iowa Finance Authority, S/F Mortgage Revenue Refunding Bonds,
Series F, 6.35% due 7/01/2009 (a)(f)(g) 888
Kansas--2.0% AAA Aaa 20,250 Burlington, Kansas, PCR, Refunding (Kansas Gas and Electric
Company Project), 7% due 6/01/2031 (k) 21,272
AAA Aaa 5,000 Kansas State Turnpike Authority, Turnpike Revenue Refunding
Bonds, 5.25% due 9/01/2017 (a) 4,623
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1999
<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>
Louisiana--0.4% AAA NR* $ 4,500 Saint Charles Parish, Louisiana, PCR (Shell Oil Company--
Norco Project), VRDN, AMT, 3.60% due 9/01/2023 (e) $ 4,500
Maryland--0.3% Maryland State Community Development Administration,
Department of Housing and Community Development, Revenue
Refunding Bonds:
NR* Aa3 2,085 M/F Housing, Series C, 6.65% due 5/15/2025 (c)(f)(g) 2,175
NR* Aa2 1,930 S/F Program, AMT, 2nd Series, 6.55% due 4/01/2026 1,981
Massachusetts-- Boston, Massachusetts, Water and Sewer Commission Revenue
5.3% Bonds, Senior Series D (b):
AAA Aaa 6,640 4.75% due 11/01/2022 5,532
AAA Aaa 11,500 5% due 11/01/2028 9,789
AAA Aaa 11,645 Massachusetts Bay Transportation Authority, Massachusetts,
General Transportation System, Revenue Refunding Bonds,
Series A, 4.75% due 3/01/2021 (k) 9,782
AAA Aaa 7,130 Massachusetts State Health and Educational Facilities
Authority Revenue Bonds (New England Medical Center
Hospitals), Series F, 6.625% due 7/01/2025 (b) 7,477
AAA Aaa 10,000 Massachusetts State Health and Educational Facilities Authority,
Revenue Refunding Bonds (Northeastern University),
Series E, 6.55% due 10/01/2022 (k) 10,421
AAA Aaa 23,500 Massachusetts State Turnpike Authority, Metropolitan Highway
System, Revenue Refunding Bonds, Senior Series A, 5% due
1/01/2037 (k) 19,572
AAA Aaa 7,200 Massachusetts State Water Resource Authority, Revenue
Refunding Bonds, Series D, 5% due 8/01/2024 (k) 6,194
Michigan--3.1% AAA Aaa 2,750 Caledonia, Michigan, Community Schools, GO, Refunding,
6.625% due 5/01/2014 (a) 2,919
AAA Aaa 21,750 Michigan State Strategic Fund, Limited Obligation Revenue
Refunding Bonds (Detroit Edison Company Pollution Project),
6.875% due 12/01/2021 (b) 22,938
Monroe County, Michigan, PCR (Detroit Edison Company
Project), AMT (k):
AAA Aaa 5,000 Series CC, 6.55% due 6/01/2024 5,186
AAA Aaa 8,500 Series I-B, 6.55% due 9/01/2024 8,828
Minnesota--0.9% BBB+ Baa1 4,500 Minneapolis and Saint Paul, Minnesota, Housing and Redevelop-
ment Authority, Health Care System, Revenue Refunding
Bonds (Group Health Plan Inc. Project), 6.90% due 10/15/2022 4,548
AA+ Aa2 2,190 Minnesota State, HFA, S/F Mortgage Revenue Bonds, AMT,
Series L, 6.70% due 7/01/2020 2,242
AA+ NR* 5,000 Rochester, Minnesota, Health Care Facilities Revenue Bonds
(Mayo Foundation), Series A, 5.50% due 11/15/2027 4,656
Missouri--0.6% AAA Aaa 7,000 Kansas City, Missouri, Airport Revenue Bonds, General
Improvement, Series B, 6.875% due 9/01/2004 (d)(i) 7,720
Nevada--5.6% AAA Aaa 5,000 Clark County, Nevada, Airport Revenue Bonds, Sub-Lien,
Series A, 6% due 7/01/2029 (k) 4,958
AAA Aaa 15,000 Clark County, Nevada, School District, GO, 6% due
6/15/2006 (b)(d) 16,058
AAA Aaa 5,000 Humboldt County, Nevada, PCR, Refunding (Sierra Pacific
Project), 6.55% due 10/01/2013 (a) 5,266
AAA Aaa 6,300 Nevada State, GO (Municipal Bond Bank Projects 66 & 67),
Series A, 5% due 5/15/2028 (b) 5,353
NR* Aaa 16,775 Nevada State, GO, RITR, Series 36, 6.97% due 11/01/2025 (b)(j) 14,456
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Nevada Washoe County, Nevada, Gas Facilities Revenue Bonds (Sierra
(concluded) Pacific Power Company), AMT:
AAA Aaa $15,000 6.65% due 12/01/2017 (a) $ 15,769
AAA Aaa 5,000 6.55% due 9/01/2020 (k) 5,214
AAA Aaa 5,000 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra
Pacific Power Company), AMT, 6.65% due 6/01/2017 (k) 5,264
New Mexico AAA Aaa 10,000 Farmington, New Mexico, PCR, Refunding (Southern California
- --0.9% Edison Company), Series A, 5.875% due 6/01/2023 (k) 9,818
NR* A 1,635 New Mexico Educational Assistance Foundation, Student Loan
Revenue Refunding Bonds (Student Loan Program), AMT,
First Sub-Series A-2, 6.65% due 11/01/2025 1,655
New York AAA Aaa 7,000 Metropolitan Transportation Authority, New York, Commuter
- --10.3% Facilities Revenue Bonds, Series A, 6.10% due 7/01/2006 (b)(d) 7,578
Metropolitan Transportation Authority, New York, Commuter
Facilities Revenue Refunding Bonds, Series B:
AAA Aaa 12,500 5.125% due 7/01/2024 (a) 10,985
AAA Aaa 14,435 4.75% due 7/01/2026 (b) 11,817
AAA Aaa 15,740 Metropolitan Transportation Authority, New York, Transportation
Facilities Revenue Refunding Bonds, Series B, 4.75% due
7/01/2026 (b) 12,886
AAA Aaa 6,850 Nassau Health Care Corporation, New York, Health System
Revenue Bonds, 5.75% due 8/01/2029 (i) 6,558
New York City, New York, City Municipal Water Finance
Authority, Water and Sewer System Revenue Bonds:
AAA Aaa 25,830 RITR, Series FR-5, 7.495% due 6/15/2026 (j)(k) 23,987
AAA Aaa 9,750 Series A, 5.75% due 6/15/2031 (b) 9,370
AAA Aaa 5,000 New York City, New York, City Transit Authority, Metropolitan
Transportation Authority, Triborough COP, Series A, 5.25% due
1/01/2029 (a) 4,442
AAA Aaa 5,000 New York City, New York, City Trust Cultural Resources Revenue
Bonds (American Museum of Natural History), Series A, 5.65%
due 4/01/2027 (k) 4,780
AAA Aaa 6,180 New York City, New York, Educational Construction Fund
Revenue Bonds, Junior Sub-Lien, 5.50% due 4/01/2026 (a) 5,742
New York State Dormitory Authority, Revenue Refunding Bonds:
AAA Aaa 10,000 (City University System Consolidated Third), Series 1,
5% due 7/01/2026 (b) 8,559
AAA Aaa 6,750 (Mental Health Services Facilities Improvement), Series D,
5% due 2/15/2023 (k) 5,803
AAA Aaa 7,000 (Pace University), 5.70% due 7/01/2022 (k) 6,746
NR* NR* 6,000 New York State Energy Research and Development Authority,
Gas Facilities Revenue Bonds, RITR, Series 9, 7.02% due
1/01/2021 (j)(k) 5,326
AAA NR* 5,000 New York State Thruway Authority, Service Contract Revenue
Bonds (Local Highway and Bridge Project), 5.625% due
4/01/2012 (k) 5,035
AAA Aaa 2,715 New York State Urban Development Corporation Revenue Bonds
(Correctional Facilities Service Contract), Series B, 4.75% due
1/01/2028 (a) 2,212
North AAA Aaa 2,500 Grand Forks, North Dakota, Health Care Facilities Revenue
Dakota--0.5% Bonds (United Hospital Obligated Group), 6.25% due
12/01/2024 (k) 2,513
AAA Aaa 3,725 Grand Forks, North Dakota, Health Care System Revenue
Bonds (Altru Health System Obligation Group), 5.60% due
8/15/2017 (k) 3,547
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1999
<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>
Ohio--0.6% AAA NR* $ 6,000 Ohio HFA, Mortgage Revenue Refunding Bonds (Residential),
AMT, Series C, 5.75% due 9/01/2030 (g) $ 5,581
AAA Aaa 2,500 Ohio State Higher Educational Facilities Commission,
Mortgage Revenue Bonds (University of Dayton Project),
6.60% due 12/01/2017 (b) 2,660
Oregon--0.3% AAA Aaa 3,500 Port of Portland, Oregon, Airport Revenue Bonds (Portland
International Airport), AMT, Series 11, 5.625% due 7/01/2026 (b) 3,252
Pennsylvania A1+ P1 400 Beaver County, Pennsylvania, IDA, PCR, Refunding (Duquesne--
- --1.8% Mansfield), VRDN, Series B, 3.40% due 8/01/2009 (e) 400
AAA Aaa 11,235 Pennsylvania State Turnpike Commission, Oil Franchise Tax
Revenue Refunding Bonds, Sub-Series B, 4.75% due
12/01/2027 (a) 9,156
Pittsburgh and Allegheny Counties, Pennsylvania, Public
Auditorium Revenue Bonds (a):
AAA Aaa 11,000 (Hotel Room), 5% due 2/01/2024 9,477
AAA Aaa 5,250 (Regional Asset District Sales Tax), 5% due 2/01/2024 4,523
South Carolina-- AAA Aaa 4,850 South Carolina State Public Service Authority, Revenue
1.3% Refunding Bonds, Series B, 5.875% due 1/01/2023 (b) 4,727
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 (i) 7,318
NR* NR* 4,200 Spartanburg County, South Carolina, Solid Waste Disposal
Facilities Revenue Bonds (BMW Project), AMT, 7.55% due
11/01/2024 4,565
Tennessee--0.7% AAA Aaa 3,820 Johnson City, Tennessee, Health and Educational Revenue
Refunding Bonds, 6.75% due 7/01/2016 (k) 4,019
A+ A1 4,900 Tennessee HDA, Mortgage Finance Revenue Bonds, AMT,
Series A, 6.90% due 7/01/2025 5,049
Texas--9.5% AAA Aaa 1,880 Bexar, Texas, Metropolitan Water District, Waterworks System
Revenue Refunding Bonds, 6.35% due 5/01/2025 (k) 1,913
AAA Aaa 11,500 Brazos River Authority, Texas, PCR, Refunding (Texas Utilities
Electric Company Project), AMT, 6.50% due 12/01/2027 (a) 11,819
AAA Aaa 3,800 Brazos River Authority, Texas, PCR (Texas Utilities Electric
Company Project), AMT, Series A, 6.75% due 4/01/2022 (a) 4,021
AAA Aaa 7,000 Brazos River Authority, Texas, Revenue Refunding Bonds
(Houston Light and Power), Series A, 6.70% due 3/01/2017 (a) 7,379
BBB- Baa1 7,500 Dallas-Fort Worth, Texas, International Airport Facilities
Improvement Corporation Revenue Bonds (American Airlines
Inc.), AMT, 6.375% due 5/01/2035 7,181
AA Aa1 1,000 Harris County, Texas, Certificates of Obligation, 4.50% due
10/01/2023 788
Harris County, Texas, Health Facilities Development
Corporation, Hospital Revenue Refunding Bonds (Methodist
Hospital), VRDN (e):
A1+ NR* 29,010 3.55% due 12/01/2025 29,010
A1+ NR* 2,550 3.55% due 12/01/2026 2,550
AAA Aaa 6,885 Houston, Texas, Airport System Revenue Bonds, AMT, Sub-Lien,
Series A, 6.75% due 7/01/2021 (b) 7,193
AAA Aaa 1,295 Houston, Texas, Water and Sewer System Revenue Bonds,
Series A, 6.375% due 12/01/2022 (k) 1,325
AAA Aaa 10,000 Houston, Texas, Water and Sewer System Revenue Refunding
Bonds, Series A, 4.75% due 12/01/2024 (i) 8,210
AAA Aaa 11,795 Matagorda County, Texas, Navigation District No. 1 Revenue
Refunding Bonds (Houston Light and Power Company),
Series A, 6.70% due 3/01/2027 (a) 12,433
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1999
<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 Sabine River Authority, Texas, PCR, Refunding (Texas Utilities
(concluded) Electric Company Project):
AAA Aaa $ 1,500 6.55% due 10/01/2022 (b) $ 1,540
A1+ NR* 200 VRDN, Series A, 3.50% due 3/01/2026 (a)(e) 200
SP1+ MIG1++ 7,000 Texas State, TRAN, Series A, 4.50% due 8/31/2000 7,039
AAA Aaa 20,000 Travis County, Texas, Health Facilities Development
Corporation, Revenue Refunding Bonds (Ascension Health
Credit), Series A, 5.875% due 11/15/2024 (a) 19,450
Utah--0.3% AAA Aaa 4,000 Salt Lake City, Utah, Airport Revenue Bonds, AMT, Series A,
6.125% due 12/01/2022 (b) 3,968
Virginia--0.8% AAA Aaa 5,540 Loudoun County, Virginia, COP, 6.90% due 3/01/2019 (i) 5,945
AA+ Aa1 4,330 Virginia State, HDA, Commonwealth Mortgage Revenue Bonds,
AMT, Series B, Sub-Series B-1, 6.375% due 7/01/2026 4,409
Washington AAA Aaa 6,595 Chelan County, Washington, Public Utility District No. 001,
- --11.5% Consolidated Revenue Refunding Bonds (Chelan Hydro),
AMT, Series B, 6.35% due 7/01/2026 (k) 6,659
King County, Washington, GO, Refunding (k):
AAA NR* 4,665 RIB, Series 47, 6.655% due 1/01/2034 (j) 3,471
AAA Aaa 3,000 Series B, 5.25% due 1/01/2034 2,616
AAA Aaa 7,500 Port Seattle, Washington, Revenue Bonds, Series A, 5.50%
due 10/01/2017 (b) 7,107
AAA Aaa 20,000 Seattle, Washington, Drain and Wastewater Utility Revenue
Bonds, 5.75% due 11/01/2029 (k) 19,068
AAA Aaa 9,250 Seattle, Washington, Municipal Light and Power Revenue
Bonds, 6% due 10/01/2024 (k) 9,097
Seattle, Washington, Water System Revenue Bonds (b):
AAA Aaa 10,000 5.25% due 3/01/2024 8,882
AAA Aaa 12,500 5% due 10/01/2027 10,549
AAA Aaa 10,000 Series B, 6% due 7/01/2029 9,944
AAA Aaa 5,000 Snohomish County, Washington, Public Utility District
Number 001, Electric Revenue Bonds (Generation System),
AMT, Series B, 5.80% due 1/01/2024 (k) 4,751
AAA Aaa 11,750 Snohomish County, Washington, Public Utility District
Number 001, Electric Revenue Refunding Bonds, 5.375%
due 12/01/2024 (i) 10,648
AAA Aaa 7,875 Spokane, Washington, Lease Revenue Refunding Bonds
(Financing-Multi-Purpose Arena Project), AMT, Series A,
6.60% due 1/01/2014 (a) 8,279
AAA Aaa 8,705 Tacoma, Washington, Solid Waste Utility Revenue Refunding
Bonds, Series B, 5.50% due 12/01/2019 (a) 8,123
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 (i) 2,082
AAA Aaa 14,860 Washington State, GO, Series C, 5% due 1/01/2022 (b) 12,870
Washington State Health Care Facilities Authority, Revenue
Refunding Bonds:
NR* Aaa 10,000 (Childrens Hospital and Regional Medical Center), 5% due
10/01/2028 (i) 8,269
AAA Aaa 2,500 (Virginia Mason Obligation Group--Seattle), 6.30% due
2/15/2017 (k) 2,515
AAA Aaa 13,095 Washington State Public Power Supply System, Revenue
Refunding Bonds (Nuclear Project Number 1), Series A,
6.25% due 7/01/2017 (k) 13,220
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
West AAA Aaa $ 4,425 Harrison County, West Virginia, County Commission for Solid
Virginia--0.4% Waste Disposal Revenue Bonds (Monongahela Power), AMT,
Series C, 6.75% due 8/01/2024 (a) $ 4,679
Wisconsin--1.9% AA Aa2 715 Wisconsin Housing and EDA, Home Ownership Revenue
Refunding Bonds, AMT, Series B, 6.75% due 9/01/2025 731
Wisconsin Public Power Inc., Power Supply System Revenue
Bonds, Series A (k):
AAA Aaa 5,000 6% due 7/01/2015 5,036
AAA Aaa 13,685 5.75% due 7/01/2023 13,071
Wisconsin State Health and Educational Facilities Authority
Revenue Refunding Bonds (Wheaton-Franciscan Services) (k):
AAA Aaa 3,955 6.50% due 8/15/2011 4,148
AAA Aaa 2,000 6% due 8/15/2015 1,994
Total Investments (Cost--$1,325,925)--102.1% 1,311,877
Liabilities in Excess of Other Assets--(2.1%) (26,933)
----------
Net Assets--100.0% $1,284,944
==========
<FN>
(a)AMBAC Insured.
(b)FGIC Insured.
(c)FHA Insured.
(d)Prerefunded.
(e)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, 1999.
(f)FNMA Collateralized.
(g)GNMA Collateralized.
(h)Escrowed to maturity.
(i)FSA Insured.
(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, 1999.
(k)MBIA Insured.
*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>
QUALITY PROFILE
The quality ratings of securities in the Fund as of October 31, 1999
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 87.8%
AA/Aa 3.2
A/A 1.3
BBB/Baa 0.9
NR (Not Rated) 1.2
Other++ 7.7
[FN]
++Temporary investments in short-term municipal securities.
MuniYield Insured Fund, Inc.
October 31, 1999
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of October 31, 1999
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$1,325,924,950) (Note 1a) $1,311,877,014
Cash 8,900
Receivables:
Interest $ 22,817,125
Securities sold 8,607,418 31,424,543
--------------
Prepaid expenses and other assets 41,614
--------------
Total assets 1,343,352,071
--------------
Liabilities: Payables:
Securities purchased 56,678,347
Dividends to shareholders (Note 1e) 1,002,043
Investment adviser (Note 2) 621,419 58,301,809
--------------
Accrued expenses 105,788
--------------
Total liabilities 58,407,597
--------------
Net Assets: Net assets $1,284,944,474
==============
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.10 per share (17,600
issued shares of AMPS* and outstanding at $25,000
per share liquidation preference) $ 440,000,000
Common Stock, par value $.10 per share (61,945,880
shares issued and outstanding) $ 6,194,588
Paid-in capital in excess of par 867,524,336
Undistributed investment income--net 15,104,305
Accumulated distributions in excess of realized capital
(gains--net Note 1e) (29,830,819)
Unrealized depreciation on investments--net (14,047,936)
--------------
Total--Equivalent to $13.64 net asset value per
share of Common Stock (market price--$12.875) 844,944,474
--------------
Total capital $1,284,944,474
==============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1999
<TABLE>
FINANCIAL INFORMATION (continued)
<CAPTION>
Statement of Operations
For the Year Ended
October 31, 1999
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 77,113,957
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 6,879,893
Commission fees (Note 4) 1,113,592
Transfer agent fees 258,552
Accounting services (Note 2) 141,244
Professional fees 103,216
Directors' fees and expenses 75,710
Custodian fees 66,888
Listing fees 52,561
Printing and shareholder reports 37,660
Pricing fees 21,542
Other 62,732
--------------
Total expenses 8,813,590
--------------
Investment income--net 68,300,367
--------------
Realized & Realized loss on investments--net (18,426,435)
Unrealized Loss on Change in unrealized appreciation/depreciation
Investments--Net on investments--net (114,657,786)
(Notes 1b, 1d & 3): --------------
Net Decrease in Net Assets Resulting from Operations $ (64,783,854)
==============
See Notes to Financial Statements.
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1999
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 1999 1998
<S> <S> <C> <C>
Operations: Investment income--net $ 68,300,367 $ 70,139,798
Realized gain (loss) on investments--net (18,426,435) 33,595,958
Change in unrealized appreciation/depreciation
on investments--net (114,657,786) 4,414,381
-------------- --------------
Net increase (decrease) in net assets resulting
from operations (64,783,854) 108,150,137
-------------- --------------
Dividends & Investment income--net:
Distributions to Common Stock (55,416,688) (53,785,988)
Shareholders Preferred Stock (11,920,330) (12,641,142)
(Note 1e): Realized gain on investments--net:
Common Stock (1,149,610) (9,753,911)
Preferred Stock (156,238) (4,763,788)
In excess of realized gain on investments--net:
Common Stock (26,261,163) --
Preferred Stock (3,569,034) --
-------------- --------------
Net decrease in net assets resulting from dividends
and distributions to shareholders (98,473,063) (80,944,829)
-------------- --------------
Capital Stock Value of shares issued to Common Stock shareholders in
Transactions reinvestment of dividends and distributions 9,382,082 --
(Note 4): -------------- --------------
Net Assets: Total increase (decrease) in net assets (153,874,835) 27,205,308
Beginning of year 1,438,819,309 1,411,614,001
-------------- --------------
End of year* $1,284,944,474 $1,438,819,309
============== ==============
<FN>
*Undistributed investment income--net (Note 1f) $ 15,104,305 $ 14,140,334
============== ==============
See Notes to Financial Statements.
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1999
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: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 16.28 $ 15.84 $ 15.52 $ 15.46 $ 13.85
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net 1.10 1.15 1.15 1.18 1.20
Realized and unrealized gain (loss)
on investments--net (2.14) .62 .54 .15 1.66
--------- --------- --------- --------- ---------
Total from investment operations (1.04) 1.77 1.69 1.33 2.86
--------- --------- --------- --------- ---------
Less dividends and distributions to
Common Stock shareholders:
Investment income--net (.90) (.88) (.92) (.91) (.92)
Realized gain on investments--net (.02) (.16) (.15) (.09) --++
In excess of realized gain on
investments--net (.43) -- -- -- (.04)
--------- --------- --------- --------- ---------
Total dividends and distributions to
Common Stock shareholders (1.35) (1.04) (1.07) (1.00) (.96)
--------- --------- --------- --------- ---------
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 (.19) (.21) (.25) (.24) (.28)
Realized gain on investments--net --++ (.08) (.04) (.03) --++
In excess of realized gain on
investments--net (.06) -- -- -- (.01)
--------- --------- --------- --------- ---------
Total effect of Preferred Stock activity (.25) (.29) (.29) (.27) (.29)
--------- --------- --------- --------- ---------
Net asset value, end of year $ 13.64 $ 16.28 $ 15.84 $ 15.52 $ 15.46
========= ========= ========= ========= =========
Market price per share, end of year $ 12.875 $ 16.00 $ 14.8125 $ 14.00 $ 13.625
========= ========= ========= ========= =========
Total Investment Based on market price per share (12.04%) 15.55% 13.92% 10.30% 26.09%
Return:* ========= ========= ========= ========= =========
Based on net asset value per share (8.42%) 9.95% 9.89% 7.76% 20.09%
========= ========= ========= ========= =========
Ratios Based on Total expenses** .94% .91% .95% 1.12% 1.17%
Average Net Assets ========= ========= ========= ========= =========
Of Common Stock: Total investment income--net** 7.26% 7.10% 7.70% 9.14% 9.92%
========= ========= ========= ========= =========
Amount of dividends to
Preferred Stock shareholders 1.27% 1.28% 1.55% 1.85% 2.31%
========= ========= ========= ========= =========
Investment income--net, to
Common Stock shareholders 5.99% 5.82% 6.15% 7.29% 7.61%
========= ========= ========= ========= =========
Ratios Based on Total expenses .64% .63% .63% .64% .65%
Total Average ========= ========= ========= ========= =========
Net Assets:++++** Total investment income--net 4.95% 4.94% 5.17% 5.22% 5.55%
========= ========= ========= ========= =========
Ratios Based on Dividends to Preferred Stock shareholders 2.72% 2.87% 3.09% 2.45% 2.89%
Average Net ========= ========= ========= ========= =========
Assets Of
Preferred Stock:
Supplemental Net assets, net of Preferred Stock,
Data: end of year (in thousands) $ 844,944 $ 998,819 $ 971,614 $ 701,473 $ 698,512
========= ========= ========= ========= =========
Preferred Stock outstanding, end of
year (in thousands) $ 440,000 $ 440,000 $ 440,000 $ 320,000 $ 320,000
========= ========= ========= ========= =========
Portfolio turnover 121.88% 112.78% 98.91% 100.49% 59.71%
========= ========= ========= ========= =========
Leverage: Asset coverage per $1,000 $ 2,920 $ 3,270 $ 3,208 $ 3,192 $ 3,183
========= ========= ========= ========= =========
Dividends Series A--Investment income--net $ 745 $ 676 $ 808 $ 832 $ 1,043
Per Share on ========= ========= ========= ========= =========
Preferred Stock Series B--Investment income--net $ 675 $ 737 $ 813 $ 835 $ 1,043
Outstanding: ========= ========= ========= ========= =========
Series C--Investment income--net $ 752 $ 673 $ 812 $ 841 $ 1,042
========= ========= ========= ========= =========
Series D--Investment income--net $ 637 $ 728 $ 789 $ 865 $ 950
========= ========= ========= ========= =========
Series E--Investment income--net $ 640 $ 726 $ 797 $ 842 $ 933
========= ========= ========= ========= =========
Series F--Investment income--net $ 664 $ 750 $ 706 -- --
========= ========= ========= ========= =========
Series G--Investment income--net $ 661 $ 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 charges.
**Do not reflect the effect of dividends to Preferred Stock
shareholders.
++Amount is less than $.01 per share.
++++Includes Common and Preferred Stock average net assets.
++++++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).
See Notes to Financial Statements.
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1999
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's financial statements are
prepared in accordance with generally accepted accounting
principles, which may require the use of management accruals and
estimates. 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.
MuniYield Insured Fund, Inc.
October 31, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
(e) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates. Distributions in excess of
realized capital gains are due primarily to differing tax treatments
for futures transactions.
(f) 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 $622
have been reclassified between accumulated distributions in excess
of 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 .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, 1999 were $1,595,468,238 and
$1,644,259,498, respectively.
Net realized gains (losses) for the year ended October 31, 1999 and
net unrealized losses as of October 31, 1999 were as follows:
Realized Unrealized
Gains (Losses) Losses
Long-term investments $(20,474,323) $(14,047,936)
Financial futures contracts 2,047,888 --
------------ ------------
Total $(18,426,435) $(14,047,936)
============ ============
As of October 31, 1999, net unrealized depreciation for Federal
income tax purposes aggregated $14,470,408, of which $25,012,892
related to appreciated securities and $39,483,300 related to
depreciated securities. The aggregate cost of investments at October
31, 1999 for Federal income tax purposes was $1,326,347,422.
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, 1999
increased by 594,744 as a result of dividend reinvestment and during
the year ended October 31, 1998 remained constant.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred
Stock of the Fund, with a par value of $.10 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, 1999 were as follows: Series A, 3.45%; Series B, 3.479%; Series
C, 3.44%; Series D, 3.375%; Series E, 3.40%; Series F, 3.444%; and
Series G, 3.25%.
Shares issued and outstanding during the years ended October 31,
1999 and October 31, 1998 remained constant.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from .25% to .375%,
calculated on the proceeds of each auction. For the year ended
October 31, 1999, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, an affiliate of FAM, earned $340,415 as commissions.
5. Capital Loss Carryforward:
At October 31, 1999, the Fund had a net capital loss carryforward of
approximately $24,114,000, all of which expires in 2007. This amount
will be available to offset like amounts of any future taxable
gains.
6. Subsequent Event:
On November 8, 1999, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the amount
of $.073000 per share, payable on November 29, 1999 to shareholders
of record as of November 22, 1999.
MuniYield Insured Fund, Inc.
October 31, 1999
<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, 1999, and the related statement of
operations for the year then ended, the statements of changes in net
assets for each of the two years in the period then ended and
financial highlights for each of the three 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 two 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, 1999 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, 1999, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for each of the
three years in the period then ended, in conformity with generally
accepted accounting principles.
(ERNST & YOUNG)
MetroPark, New Jersey
December 3, 1999
</AUDIT-REPORT>
MuniYield Insured Fund, Inc.
October 31, 1999
<TABLE>
IMPORTANT TAX INFORMATION (unaudited)
<CAPTION>
All of the net investment income distributions paid by MuniYield
Insured Fund, Inc. during its taxable year ended October 31, 1999
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:
Payable Ordinary Long-Term
Date Income Capital Gains*
<S> <S> <C> <C> <C>
Common Stock Shareholders 12/30/98 $.183267 $.263016
Preferred Stock Shareholders: Series A 11/27/98 $108.20 --
12/24/98 $ 8.51 $ .01
Series B 11/27/98 $ 63.49 $41.85
12/24/98 $ 59.37 $41.28
1/21/99 $ 21.37 $19.13
Series C 11/27/98 $108.20 --
12/28/98 $ 6.38 --
Series D 11/19/98 $ 61.75 $41.46
12/17/98 $ 57.67 $40.83
1/14/99 $ 23.01 $20.63
Series E 11/05/98 -- $23.97
11/12/98 $ 16.04 $ 8.69
11/19/98 $ 16.24 $ 8.88
11/27/98 $ 17.86 $ 9.88
12/03/98 $ 12.90 $ 7.23
12/10/98 $ 14.93 $ 8.48
12/17/98 $ 14.65 $ 8.45
12/24/98 $ 16.47 $ 9.69
12/31/98 $ 18.68 $11.37
1/07/99 $ 14.28 $10.21
Series F 11/10/98 $ 61.77 $41.45
12/08/98 $ 61.37 $43.29
1/05/99 $ 23.72 $21.29
Series G 11/03/98 -- $23.89
11/10/98 $ 16.51 $ 8.26
11/17/98 $ 16.66 $ 8.42
11/24/98 $ 16.64 $ 8.51
12/01/98 $ 15.28 $ 7.92
12/08/98 $ 15.17 $ 7.97
12/15/98 $ 15.38 $ 8.20
12/22/98 $ 15.25 $ 8.32
12/29/98 $ 15.79 $ 8.92
1/05/99 $ 15.89 $10.36
<FN>
*All of these distributions are subject to the 20% tax rate.
Please retain this information for your records.
</TABLE>
MuniYield Insured Fund, Inc.
October 31, 1999
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
Joe Grills, Director
Walter Mintz, Director
Robert S. Salomon Jr., Director
Melvin R. Seiden, Director
Stephen B. Swensrud, Director
Arthur Zeikel, Director
Vincent R. Giordano, Senior Vice President
William R. Bock, Vice President
Kenneth A. Jacob, Vice President
Donald C. Burke, Vice President and Treasurer
Bradley J. Lucido, 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:
The Bank of New York
100 Church Street
New York, NY 10286
NYSE Symbol
MYI
