MUNIYIELD
INSURED
FUND, INC.
FUND LOGO
Annual Report
October 31, 2000
MuniYield Insured Fund, Inc. seeks to provide shareholders with as
high a level of current income exempt from Federal income taxes as
is consistent with its investment policies and prudent investment
management by investing primarily in a portfolio of long-term,
investment-grade municipal obligations the interest on which, in the
opinion of bond counsel to the issuer, is exempt from Federal income
taxes.
This report, including the financial information herein, is
transmitted to shareholders of MuniYield Insured Fund, Inc. for
their information. It is not a prospectus. 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.
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 of 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 such securities.
MuniYield Insured Fund, Inc., October 31, 2000
DEAR SHAREHOLDER
For the year ended October 31, 2000, the Common Shares of MuniYield
Insured Fund earned $0.844 per share income dividends, which
included earned and unpaid dividends of $0.070. This represents a
net annualized yield of 5.96%, based on a month-end net asset value
of $14.16 per share. During the same period, the total investment
return on the Fund's Common Shares was +11.06%, based on a change in
per share net asset value from $13.64 to $14.16, and assuming
reinvestment of $0.847 per share income dividends.
For the six-month period ended October 31, 2000, the total
investment return on the Fund's Common Shares was +7.41%, based on a
change in per share net asset value from $13.62 to $14.16, and
assuming reinvestment of $0.420 per share income dividends.
For the six-month period ended October 31, 2000, the Fund's Auction
Market Preferred Shares had an average yield of 4.68% for Series A,
4.68% for Series B, 4.69% for Series C, 4.50% for Series D, 4.41%
for Series E, 3.90% for Series F and 4.06% for Series G.
The Municipal Market Environment
During the six months ended October 31, 2000, long-term US Treasury
bond yields generally drifted lower. A number of economic
indicators, particularly employment, new home sales and consumer
spending, have suggested that US economic growth, while still
strong, has moderated from 1999's robust levels. Preliminary
estimates for third-quarter 2000 US gross domestic product growth
were recently released at 2.7%, well below the first-quarter 2000
rate of 4.8% and the second-quarter 2000 rate of 5.6%. This decline
in economic growth suggests to some analysts that the Federal
Reserve Board has finished raising interest rates for its current
interest rate cycle. The Federal Reserve Board increased short-term
interest rates at its May meeting and has since kept monetary policy
steady at its subsequent meetings. Given the potential for stable
short-term interest rates in the coming months, investor emphasis
focused on the continuing US Treasury debt reduction program and
forecasts of sizeable Federal budgetary surpluses going forward.
Many investors have concluded that there will be a significant
future shortage of longer-dated maturity US Treasury securities. By
late August, US Treasury bond yields declined 30 basis points
(0.30%) to 5.66%, their lowest level in more than a year.
However, for the remainder of the period, bond yields were unable to
maintain their earlier gains. Rising oil prices were the major focus
behind the decline in bond prices, as many investors feared that
higher oil prices would result in increased inflationary pressures.
Additionally, US corporations issued large amounts of taxable debt
in order to take advantage of the current low interest rate
environment. During the last three months, US corporations issued
more than $100 billion in investment-grade securities, offering
yields in the 7.25% - 9% range. Many investors found these taxable
issues an attractive and more plentiful alternative to US Treasury
bonds. As the demand for US Treasury issues weakened, US bond yields
rose. Although US Treasury bond yields rose 5.78% by the end of
October 2000, overall they declined almost 20 basis points during
the last six months.
The six-month period ended October 31, 2000 was one of the few
periods in recent years in which the tax-exempt bond market
outperformed its taxable counterpart, the US Treasury bond market.
While municipal bond yields followed the similar seesaw pattern of
Treasury bond yields, tax-exempt bond price volatility was
significantly reduced. Municipal bond yields traded in a relatively
narrow range during much of October 2000. Overall investor demand
for municipal bonds remained strong, allowing tax-exempt bond
yields, as measured by the Bond Buyer Revenue Bond Index, to decline
30 basis points to end the period at 5.75%.
In the past three months, new long-term municipal bond issuance has
continued to decline, albeit at a slower rate than earlier this
year. During this period, more than $53 billion in new long-term
municipal bonds was issued, a decline of 3% compared to the same
three-month period in 1999. During the last six months, more than
$105 billion in tax-exempt bonds was underwritten, a decline of 8%
compared to the same six-month period in 1999. Just under $200
billion in new municipal securities was marketed during the past
year, a decline of more than 16% compared to the same 12-month
period in 1999.
The demand for municipal bonds came from a number of non-traditional
and conventional sources. Derivative/arbitrage programs and
insurance companies remained the dominant institutional buyers,
while individual retail purchases also remained strong. Traditional,
open-end tax-exempt mutual funds have continued to see significant
disintermediation. It was recently reported that thus far during the
2000 calendar year, long-term municipal bond mutual funds
experienced net cash outflows of more than $15 billion. Fortunately,
the combination of reduced new bond issuance and ongoing demand from
non-traditional sources has been able to more than offset the
decline in demand from tax-exempt mutual funds. This favorable
balance has fostered a significant decline in municipal bond yields
in recent months.
Currently, there is no reason to expect that the positive technical
position of the municipal bond market will significantly
deteriorate. The steeply positive yield curve and the relatively
high credit quality that the tax-exempt bond market offers should
continue to attract different classes of institutional buyers.
Strong state and local governmental financial conditions also
suggest that issuance should remain manageable into next year.
However, the results of the presidential election may affect the tax-
exempt bond market. Various tax and spending programs proposed by
both candidates have obvious implications for state and local
governments as well as corporate and individual taxpayers. Political
history has shown that the enactment of campaign promises, both
Republican and Democratic, has very often been a long, laborious
process. This suggests that during the next few months, US economic
factors will most likely have a greater effect on bond yields than
political considerations.
Portfolio Strategy
At the beginning of the six-month period ended October 31, 2000, we
continued to gradually restructure the Fund to have a more neutral
duration in an effort to temper portfolio volatility. In doing so,
our focus was to increase coupon income with the purchase of current
and premium-couponed issues in the 15-year - 20-year maturity range.
We initially maintained this position into the period, but because
of market appreciation the duration of the Fund was reduced below
what we considered neutral. Also, because of reduced new issuance,
we believed that it would be prudent to return duration to a
slightly higher level. We focused on maintaining and/or increasing
the amount of earned tax-exempt income, in part to offset the
heightened level of short-term interest rates experienced by our
leveraged portfolio. Despite the Fund's increased cost of borrowing,
the leveraging of the portfolio remains an important income-
generating vehicle for the Fund. (For a complete explanation of the
benefits and risks of leveraging, see page 1 of this report to
shareholders.)
Looking ahead, we anticipate that we will maintain our current fully
invested position in an effort to enhance shareholder income. We
believe that any increase in duration will likely generate
incremental yield to shareholders with limited associated increase
in price volatility.
In Conclusion
We thank you for your support of MuniYield Insured Fund, Inc., and
we look forward to serving your investment 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
November 30, 2000
MuniYield Insured Fund, Inc., October 31, 2000
<TABLE>
PROXY RESULTS
<CAPTION>
During the six-month period ended October 31, 2000, MuniYield
Insured Fund, Inc. Common Stock's shareholders voted on the
following proposals. The proposals were approved at a shareholders'
meeting on August 23, 2000. The description of each proposal and
number of shares voted are as follows:
Shares Voted Shares Withheld
For From Voting
<S> <S> <C> <C>
1. To elect the Fund's Directors: Terry K. Glenn 58,902,778 1,291,438
Joe Grills 58,887,869 1,306,347
Robert S. Salomon Jr. 58,903,745 1,290,471
Stephen B. Swensrud 58,887,091 1,307,125
Arthur Zeikel 58,880,056 1,314,160
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To ratify the selection of Ernst & Young LLP as the Fund's
independent auditors for the current fiscal year. 59,187,550 312,634 694,031
<CAPTION>
During the six-month period ended October 31, 2000, MuniYield
Insured Fund, Inc. Preferred Stock's (Series A - G)
shareholders voted on the following proposals. The proposals were
approved at a shareholders' meeting on August 23, 2000. The
description of each proposal and number of shares voted are as
follows:
Shares Voted Shares Withheld
For From Voting
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors: Terry K. Glenn 16,090 42
Joe Grills 16,090 42
Walter Mintz 16,090 42
Robert S. Salomon Jr. 16,090 42
Melvin R. Seiden 16,090 42
Stephen B. Swensrud 16,090 42
Arthur Zeikel 16,090 42
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To ratify the selection of Ernst & Young LLP as the Fund's
independent auditors for the current fiscal year. 15,795 43 292
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
Alabama--0.1% A1 VMIG1++ $ 1,300 Columbia, Alabama, IDB, PCR, Refunding (Alabama Power Company
Project), VRDN, Series A, 4.60% due 5/01/2022 (e) $ 1,300
Alaska--2.0% AAA Aaa 3,695 Alaska Energy Authority, Power Revenue Refunding
Bonds (Bradley Lake), Fourth Series, 6% due 7/01/2018 (g) 3,967
NR* NR* 10,000 Alaska State Housing Finance Corporation Revenue
Bonds, RITR, Series 2, 7.27% due 6/01/2035 (i)(k) 10,313
NR* Aaa 10,410 Alaska State Housing Finance Corporation, Revenue
Refunding Bonds, RITR, Series 2, 6.92% due 12/01/2024
(d)(f)(i)(k) 10,427
A1+ VMIG1++ 1,200 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds
(Exxon Pipeline Company Project), VRDN, Series A,
4.55% due 12/01/2033 (e) 1,200
Arizona--0.4% A1+ P1 300 Maricopa County, Arizona, Pollution Control Corporation,
PCR, Refunding (Arizona Public Service Company), VRDN, Series E,
4.60% due 5/01/2029 (e) 300
NR* NR* 5,000 Mohave County, Arizona, IDA, IDR (North Star Steel Company
Project), AMT, 6.70% due 3/01/2020 5,168
California--15.1% AA- Aa3 3,890 California HFA, M/F Housing III Revenue Refunding Bonds,
AMT, Series A, 5.375% due 8/01/2028 3,658
California HFA, Revenue Bonds, AMT:
A+ Aa2 3,750 RIB, Series B-2, 8.351% due 8/01/2023 (d)(k) 3,994
AAA Aaa 1,595 Series E, 7% due 8/01/2026 (i) 1,646
California State, GO, Refunding:
AA Aa2 10,000 5.50% due 3/01/2017 10,277
AA Aa2 10,000 5.50% due 9/01/2024 10,067
BBB+ Baa1 5,000 California Statewide Communities Development Authority,
COP (Catholic Healthcare West), 6.50% due 7/01/2020 5,041
</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 at right.
AMT Alternative Minimum Tax
(subject to)
COP Certificates of Participation
EDA Economic Development Authority
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
IDB Industrial Development Board
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
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
California AA Aa2 $ 10,000 Foothill-De Anza, California, Community College
(concluded) District, GO, 6% due 8/01/2030 $ 10,584
AA- Aa3 15,195 Long Beach, California, Harbor Revenue Bonds, AMT,
Series A, 5.25% due 5/15/2023 14,688
A+ Aa3 7,410 Los Angeles, California, Department of Water and Power,
Electric Plant Revenue Refunding Bonds, 6.125% due 2/15/2019 7,782
Los Angeles, California, Harbor Department
Revenue Bonds, AMT:
NR* Aaa 4,000 RITR, Series RI-7, 8.095% due 11/01/2026 (i)(k) 4,462
AAA Aaa 6,330 Series B, 6.625% due 8/01/2019 (a) 6,642
AAA Aaa 8,725 Series B, 6.625% due 8/01/2025 (a) 9,155
AAA Aaa 12,525 Los Angeles, California, Unified School District, GO,
Series A, 5.40% due 7/01/2022 (c) 12,552
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 (i)(j) 16,475
AAA Aaa 5,000 Los Angeles County, California, Transportation Commission,
Sales Tax Revenue Refunding Bonds, Series B, 6.50% due
7/01/2015 (c) 5,171
AAA Aaa 2,190 Northern California Transmission Revenue Bonds
(California--Oregon Transmission Project), Series A,
6.50% due 5/01/2016 (i) 2,298
NR* Aaa 6,000 Port Oakland, California, Trust Receipts, Revenue Bonds,
AMT, Class R, Series K, 7.341% due 11/01/2021 (c)(k) 6,318
AAA Aaa 3,000 Sacramento, California, Municipal Utility District,
Electric Revenue Bonds, Series I, 6% due 1/01/2024 (i) 3,098
AAA Aaa 20,000 San Francisco, California, Bay Area Rapid Transit District,
Sales Tax Revenue Refunding Bonds, 5% due 7/01/2028 (a) 18,774
AAA Aaa 6,000 San Francisco, California, City and County Airport
Commission, International Airport Revenue Bonds, AMT, Second
Series, Issue 6, 6.60% due 5/01/2024 (a) 6,430
San Francisco, California, City and County, COP:
AAA Aaa 6,000 (San Bruno Jail Number 3), 5.25% due 10/01/2026 (a) 5,859
AAA Aaa 5,000 (San Francisco Courthouse Project), 5.875% due 4/01/2021 (g) 5,168
AAA Aaa 10,000 San Francisco, California, City and County Sewer Revenue
Bonds, Series A, 5.95% due 10/01/2025 (c) 10,294
AAA Aaa 6,895 San Jose, California, Redevelopment Agency, Tax Allocation
Refunding Bonds (Merged Area Redevelopment Project),
5.60% due 8/01/2019 (i) 7,074
AAA Aaa 6,000 San Mateo County, California, Joint Powers Authority,
Lease Revenue Refunding Bonds (Capital Projects Program),
Series A, 4.75% due 7/15/2023 (g) 5,384
Santa Rosa, California, Wastewater Revenue
Refunding Bonds (c):
AAA Aaa 3,000 Series A, 5.25% due 9/01/2016 3,101
AAA Aaa 3,295 Series B, 6.125% due 9/01/2017 3,426
Colorado--0.6% NR* Aaa 1,000 Colorado Health Facilities Authority, Hospital Revenue
Refunding Bonds (Poudre Valley Health Care), Series A,
5.75% due 12/01/2023 (g) 1,006
A1+c VMIG1++ 7,050 Moffat County, Colorado, PCR, Refunding (Pacificorp
Projects), VRDN, 4.60% due 5/01/2013 (a)(e) 7,050
Connecticut--0.7% NR* VMIG1++ 300 Connecticut State Development Authority, Health Care
Revenue Refunding Bonds (Independent Living Project),
VRDN, 4.10% due 7/01/2015 (e) 300
AAA Aaa 7,695 Connecticut State, HFA, Revenue Bonds (Housing Mortgage
Finance Program), Series B, 6.75% due 11/15/2023 (i) 8,034
A1+ VMIG1++ 500 Connecticut State Health and Educational Facilities
Authority Revenue Bonds (Yale University), VRDN, Series T-1,
4.20% due 7/01/2029 (e) 500
District of AAA Aaa 21,100 Metropolitan Washington D.C., Airports Authority, Virginia
Columbia--1.7% General Airport Revenue Bonds, AMT, Series A, 6.625%
due 10/01/2019 (i) 22,039
Florida--0.3% NR* Aaa 3,500 Escambia County, Florida, Health Facilities Authority,
Health Facility Revenue Bonds (Florida Health Care
Facility Loan), 5.95% due 7/01/2020 (a) 3,639
A1+ VMIG1++ 150 Jacksonville, Florida, PCR, Refunding (Florida Power
and Light Co. Project), VRDN, 4.55% due 5/01/2029 (e) 150
Georgia--0.9% A1 VMIG1++ 1,000 Burke County, Georgia, Development Authority, PCR
(Georgia Power Company Plant-Vogtle Project), VRDN,
4.60% due 9/01/2026 (e) 1,000
AAA Aaa 10,000 Georgia Municipal Electric Authority, Power Revenue
Refunding Bonds, Series EE, 6.40% due 1/01/2023 (a) 10,469
Hawaii--2.0% Hawaii State Airports System Revenue Bonds, AMT,
Second Series (i):
AAA Aaa 6,000 7% due 7/01/2018 6,194
AAA Aaa 13,970 6.75% due 7/01/2021 14,397
AAA Aaa 5,110 Hawaii State, GO, Series CT, 5.875% due 9/01/2018 (g) 5,302
Illinois--6.8% AAA Aaa 20,000 Chicago, Illinois, Board of Education, GO (Chicago
School Reform Project), Series A, 5.25% due 12/01/2027 (a) 18,820
AAA Aaa 16,000 Chicago, Illinois, GO, Project and Refunding, 5.25%
due 1/01/2028 (c) 15,052
AAA Aaa 2,350 Chicago, Illinois, Midway Airport Revenue Bonds, AMT,
Series A, 6.25% due 1/01/2024 (i) 2,410
AAA Aaa 3,870 Chicago, Illinois, O'Hare International Airport,
Special Facility Revenue Bonds (International Terminal),
AMT, 6.75% due 1/01/2018 (i) 4,009
AAA Aaa 12,000 Chicago, Illinois, Public Building Commission, Mortgage
Revenue Bonds, Series A, 6.50% due 1/01/2018 (b)(i) 12,020
AAA Aaa 9,500 Chicago, Illinois, Skyway Toll Bridge Revenue Bonds,
5.50% due 1/01/2031 (a) 9,227
AAA Aaa 12,500 Cook County, Illinois, GO, Capital Improvement,
Series A, 5% due 11/15/2028 (c) 11,226
A1 VMIG1++ 7,520 Illinois Health Facilities Authority, Revenue Refunding
Bonds (University of Chicago Hospitals), VRDN, 4.60%
due 8/01/2026 (e)(i) 7,520
AAA Aa2 2,000 Illinois State Sales Tax Revenue Bonds, 6.125% due 6/15/2016 2,134
NR* Aaa 6,035 Mc Lean and Woodford Counties, Illinois, Community Unit,
School District Number 005, GO, Refunding, 6.375%
due 12/01/2016 (g) 6,613
Indiana--0.4% 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) 2,576
AA NR* 3,000 Indianapolis, Indiana, Local Public Improvement Bond
Bank Revenue Refunding Bonds, Series D, 6.75% due 2/01/2020 3,165
Iowa--0.0% AAA Aaa 310 Iowa Financing Authority, S/F Mortgage Revenue Refunding
Bonds, Series F, 6.35% due 7/01/2009 (a)(f) 315
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
Kansas--2.0% AAA Aaa $20,250 Burlington, Kansas, PCR, Refunding (Kansas Gas and
Electric Company Project), 7% due 6/01/2031 (i) $ 20,897
AAA Aaa 5,000 Kansas State Turnpike Authority, Turnpike Revenue
Refunding Bonds, 5.25% due 9/01/2017 (a) 4,917
Kentucky--1.5% NR* Aaa 4,715 Boone County, Kentucky, School District Finance
Corporation, School Building Revenue Bonds, Series B,
5.375% due 8/01/2020 (g) 4,622
NR* NR* 6,500 Kentucky Economic Development Finance Authority,
Health System Revenue Bonds (Norton Healthcare Inc.),
Series A, 6.50% due 10/01/2020 6,309
AAA Aaa 9,685 Louisville, Kentucky, Waterworks Board, Water System
Revenue Refunding Bonds (Louisville Water Company),
5.25% due 11/15/2022 (g) 9,318
Louisiana--0.6% AAA Aaa 7,500 Louisiana Local Government, Environmental Facilities,
Community Development Authority Revenue Bonds (Capital
Projects and Equipment Acquisition), Series A,
6.30% due 7/01/2030 (a) 8,290
Maryland--0.3% NR* Aa2 1,795 Maryland State Community Development Administration,
Department of Housing and Community Development Revenue
Refunding Bonds, S/F Program, AMT, 2nd Series,
6.55% due 4/01/2026 1,849
NR* Aa3 2,085 Maryland State Community Development Administration,
M/F Housing Revenue Refunding Bonds (Department of Housing
and Community Development), Series C, 6.65% due
5/15/2025 (d)(h) 2,164
Massachusetts-- AAA Aaa 6,640 Boston, Massachusetts, Water and Sewer Commission
5.4% Revenue Bonds, Senior Series D, 4.75% due 11/01/2022 (c) 5,817
AAA Aaa 5,000 Massachusetts Bay Transportation Authority Revenue Bonds
(Massachusetts General Transportation System),
Series A, 5% due 3/01/2023 (c) 4,650
AAA Aaa 7,500 Massachusetts State, HFA, Housing Development Revenue
Refunding Bonds, Series B, 5.40% due 12/01/2028 (i) 7,176
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 (c) 7,436
AAA Aaa 10,000 Massachusetts State Health and Educational Facilities
Authority, Revenue Refunding Bonds (Northeastern University),
Series E, 6.55% due 10/01/2022 (i) 10,497
AAA Aaa 23,815 Massachusetts State Turnpike Authority, Metropolitan
Highway System Revenue Refunding Bonds, Senior Series A,
5% due 1/01/2027 (i) 21,832
AAA Aaa 3,695 Massachusetts State Water Pollution Abatement Trust
Revenue Bonds (Pool Program Bonds), Series 6, 5.50%
due 8/01/2030 3,647
AAA Aaa 10,000 Route 3 North Transit Improvement Association,
Massachusetts, Lease Revenue Bonds, 5.75% due 6/15/2025 (i) 10,125
Michigan--3.0% AAA Aaa 2,750 Caledonia, Michigan, Community Schools, GO, Refunding,
6.625% due 5/01/2014 (a) 2,876
AAA Aaa 21,750 Michigan State Strategic Fund, Limited Obligation Revenue
Refunding Bonds (Detroit Edison Company Pollution
Project), 6.875% due 12/01/2021 (c) 22,607
Monroe County, Michigan, PCR (Detroit Edison Company
Project), AMT (i):
AAA Aaa 5,000 Series CC, 6.55% due 6/01/2024 5,258
AAA Aaa 8,500 Series I-B, 6.55% due 9/01/2024 8,963
Minnesota--1.8% BBB+ Baa1 4,500 Minneapolis and Saint Paul, Minnesota, Housing and
Redevelopment Authority, Health Care System Revenue Refunding
Bonds (Group Health Plan Inc. Project), 6.90% due 10/15/2022 4,517
Minneapolis and Saint Paul, Minnesota, Metropolitan
Airports Commission, Airports Revenue Bonds (c):
AAA Aaa 6,275 AMT, Series B, 6% due 1/01/2018 6,487
AAA Aaa 10,000 Series A, 5.90% due 1/01/2029 10,278
AA+ Aa1 2,090 Minnesota State, HFA, S/F Mortgage Revenue Bonds, AMT,
Series L, 6.70% due 7/01/2020 2,169
Missouri--0.6% AAA Aaa 7,000 Kansas City, Missouri, Airport Revenue Bonds, General
Improvement, Series B, 6.875% due 9/01/2004 (g)(j) 7,631
Nevada--6.7% AAA Aaa 7,975 Clark County, Nevada, Passenger Facilities Charge Revenue
Refunding Bonds (Las Vegas McCarran International), 4.75%
due 7/01/2022 (i) 7,048
Clark County, Neveda, School District, GO:
AAA Aaa 15,000 6% due 6/15/2006 (c)(j) 16,137
AAA Aaa 10,830 Series A, 5.50% due 6/15/2018 (i) 10,853
AAA Aaa 5,000 Humboldt County, Nevada, PCR, Refunding (Sierra Pacific
Project), 6.55% due 10/01/2013 (a) 5,223
AAA Aaa 3,000 Las Vegas New Convention and Visitors Authority Revenue
Bonds, 6% due 7/01/2019 (a) 3,125
AAA Aaa 20,375 Nevada State, Nevada Municipal Bond Bank, GO, Series A,
5.50% due 11/01/2025 (c) 19,968
Washoe County, Nevada, Gas Facilities Revenue Bonds
(Sierra Pacific Power Company), AMT:
AAA Aaa 15,000 6.65% due 12/01/2017 (a) 15,688
AAA Aaa 5,000 6.55% due 9/01/2020 (i) 5,230
AAA Aaa 5,000 Washoe County, Nevada, Water Facility Revenue Bonds
(Sierra Pacific Power Company), AMT, 6.65% due 6/01/2017 (i) 5,240
New Mexico--1.1% AAA Aaa 10,000 Farmington, New Mexico, PCR, Refunding (Southern California
Edison Company), Series A, 5.875% due 6/01/2023 (i) 10,109
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 1,684
AAA NR* 2,285 New Mexico Mortgage Finance Authority, S/F Mortgage
Revenue Bonds, AMT, Series C-2, 6.95% due 9/01/2031 (f) 2,535
New York--11.7% AAA Aaa 7,000 Metropolitan Transportation Authority, New York, Commuter
Facilities Revenue Bonds, Series A, 6.10% due 7/01/2006 (c)(j) 7,652
Metropolitan Transportation Authority, New York,
Commuter Facilities Revenue Refunding Bonds, Series B:
AAA Aaa 12,500 5.125% due 7/01/2024 (a) 11,664
AAA Aaa 14,435 4.75% due 7/01/2026 (c) 12,597
Metropolitan Transportation Authority, New York,
Dedicated Tax Fund Revenue Bonds, Series A:
AAA Aaa 2,000 4.75% due 4/01/2028 (c) 1,735
AAA Aaa 10,000 5% due 4/01/2029 (g) 9,085
AAA Aaa 10,000 Metropolitan Transportation Authority, New York, Transit
Facilities Revenue Bonds, Series A, 5.70% due 7/01/2017 (i) 10,253
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
New York AAA Aaa $15,740 Metropolitan Transportation Authority, New York,
(concluded) Transit Facilities Revenue Refunding Bonds, Series B,
4.75% due 7/01/2026 (c) $ 13,736
AAA Aaa 25,830 New York City, New York, City Municipal Water Finance
Authority, Water and Sewer System Revenue Bonds, RITR,
Series FR-6, 6.795% due 6/15/2026 (i)(k) 26,250
New York City, New York, GO:
NR* Aaa 5,920 RIB, Series 394, 7.44% due 8/01/2016 (i)(k) 6,521
A A2 5,500 Refunding, Series A, 6.50% due 5/15/2012 6,114
A1+ VMIG1++ 4,000 VRDN, Series B, 4.75% due 10/01/2022 (c)(e) 4,000
A1c VMIG1++ 4,800 VRDN, Series B, Sub-Series B-6, 4.55% due 8/15/2005 (e)(i) 4,800
New York State Dormitory Authority, Revenue
Refunding Bonds:
AAA Aaa 12,930 (City University System-Consolidated Third), Series 1,
5.25% due 7/01/2025 (c) 12,328
BBB+ Baa1 4,900 (Mount Sinai Health), Series A, 6.625% due 7/01/2019 5,176
AAA Aaa 5,100 (North Shore University Hospital--Forest Hills),
5% due 11/01/2023 (i) 4,640
NR* Aaa 4,000 New York State Mortgage Agency Revenue Bonds, AMT,
24th Series, 6.05% due 4/01/2020 4,070
NR* Aaa 9,175 Port Authority of New York and New Jersey, Special
Obligation Revenue Bonds (JFK International Air Terminal LLC),
RIB, AMT, Series 353, 7.89% due 12/01/2014 (i)(k) 11,217
Port Authority of New York and New Jersey, Special
Obligation Revenue Refunding Bonds (Versatile
Structure Obligation), VRDN (e):
A1+ VMIG1++ 1,100 Series 2, 4.50% due 5/01/2019 1,100
A1+ VMIG1++ 1,100 Series 5, 4.55% due 8/01/2024 1,100
North Dakota AAA Aaa 2,500 Grand Forks, North Dakota, Health Care Facilities
--0.7% Revenue Bonds (United Hospital Obligated Group),
6.25% due 12/01/2024 (i) 2,579
NR* Aa3 6,720 North Dakota State Housing Finance Agency, Home
Mortgage Revenue Refunding Bonds (Housing Finance Program),
AMT, Series A, 6.40% due 7/01/2020 6,964
Ohio--0.2% AAA Aaa 2,500 Ohio State Higher Educational Facilities Commission,
Mortgage Revenue Bonds (University of Dayton
Project), 6.60% due 12/01/2017 (c) 2,672
Oklahoma - 2.7% Oklahoma State Industries Authority, Revenue
Refunding Bonds (i):
AAA Aaa 12,000 (Health System--Obligation Group), Series A,
5.75% due 8/15/2029 11,949
A1+ VMIG1++ 23,500 (Integris Baptist), VRDN, Series B, 4.60% due
8/15/2029 (e) 23,500
Oregon--1.5% AA Aa2 3,535 Clackamas County, Oregon, School District Number 62,
Oregon City, GO, 5.50% due 6/15/2020 3,548
AAA Aaa 3,140 Oregon State Department of Administrative Services,
COP, Series A, 6.25% due 5/01/2017 (a) 3,396
NR* Aaa 7,500 Portland, Oregon, Sewer System Revenue Bonds, RIB,
Series 386, 6.79% due 8/01/2020 (c)(k) 8,161
Portland, Oregon, Urban Renewal and Redevelopment,
Tax Allocation Bonds (Oregon Convention Center),
Series A (a):
NR* Aaa 3,170 5.75% due 6/15/2016 3,311
NR* Aaa 1,000 5.75% due 6/15/2017 1,038
Pennsylvania AAA Aaa 12,000 Pennsylvania Intergovernmental Cooperative Authority,
--0.8% Special Tax Refunding Bonds (Philadelphia Funding Program),
4.75% due 6/15/2023 (c) 10,521
South Carolina-- AAA Aaa 10,000 Piedmont Municipal Power Agency, South Carolina,
1.5% Electric Revenue Refunding Bonds, Series A, 4.75%
due 1/01/2025 (i) 8,644
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 (g) 7,281
NR* NR* 4,200 Spartanburg County, South Carolina, Solid Waste Disposal
Facilities Revenue Bonds (BMW Project), AMT,
7.55% due 11/01/2024 4,446
Tennessee--2.2% AAA Aaa 5,000 Chattanooga, Tennessee, Industrial Development Board,
Lease Rent Revenue Bonds (Southside Redevelopment
Corporation), 5.625% due 10/01/2030 (a) 5,005
AAA Aaa 3,255 Johnson City, Tennessee, Health and Educational
Facilities Board, First Mortgage, Hospital Revenue Refunding
Bonds (Mountain States Health), Series A, 6.50% due
7/01/2014 (i) 3,638
Johnson City, Tennessee, Health and Educational Facilities
Board, Hospital Revenue Refunding Bonds (b)(i):
AAA Aaa 810 Series A, 6.75% due 7/01/2016 838
AAA Aaa 3,010 Series B, 6.75% due 7/01/2016 3,115
NR* VMIG1++ 8,100 Sevier County, Tennessee, Public Building Authority
Revenue Bonds (Local Government Public Improvement), VRDN,
Series IV-1, 4.65% due 6/01/2023 (e)(g) 8,100
AA A1 4,490 Tennessee HDA, Mortgage Finance Revenue Bonds, AMT,
Series A, 6.90% due 7/01/2025 4,642
Tennessee HDA, Revenue Bonds (Homeownership Program),
AMT, Series 2C:
AA Aa2 1,795 6.05% due 7/01/2012 1,871
AA Aa2 2,250 6.15% due 7/01/2014 2,330
Texas--9.0% AAA Aaa 1,880 Bexar, Texas, Metropolitan Water District, Waterworks
System Revenue Refunding Bonds, 6.35% due 5/01/2025 (i) 1,978
AAA Aaa 11,500 Brazos River Authority, Texas, PCR, Refunding (Texas
Utilities Electric Company Project), AMT, 6.50% due
12/01/2027 (a) 11,852
AAA Aaa 3,800 Brazos River Authority, Texas, PCR (Texas Utilities
Electric Company Project), AMT, Series A, 6.75% due
4/01/2022 (a) 3,957
AAA Aaa 7,000 Brazos River Authority, Texas, Revenue Refunding Bonds
(Houston Light and Power), Series A, 6.70% due 3/01/2017 (a) 7,290
Harris County, Texas, Health Facilities Development
Corporation, Hospital Revenue Refunding Bonds
(Methodist Hospital), VRDN (e):
A1+ NR* 500 4.60% due 12/01/2025 500
A1+ NR* 400 4.60% due 12/01/2026 400
AAA Aaa 6,885 Houston, Texas, Airport System Revenue Bonds, AMT,
Sub-Lien, Series A, 6.75% due 7/01/2021 (c) 7,095
Houston, Texas, Airport System Revenue Refunding Bonds,
Sub-Lien (g):
AAA Aaa 9,500 AMT, Series A, 5.70% due 7/01/2030 9,247
AAA Aaa 16,000 Series B, 5.50% due 7/01/2030 15,610
AAA Aaa 1,295 Houston, Texas, Water and Sewer System Revenue Bonds,
Series A, 6.375% due 12/01/2022 (i) 1,359
AAA Aaa 10,000 Houston, Texas, Water and Sewer System, Revenue
Refunding Bonds, Series A, 5% due 12/01/2028 (g) 9,036
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
Texas AAA Aaa $11,795 Matagorda County, Texas, Navigation District Number 1,
(concluded) Revenue Refunding Bonds (Houston Light and Power Company),
Series A, 6.70% due 3/01/2027 (a) $ 12,284
AAA Aaa 2,065 Pflugerville, Texas, Independent School District,
GO, 5.50% due 8/15/2026 2,020
Sabine River Authority, Texas, PCR, Refunding (Texas
Utilities Electric Company Project):
AAA Aaa 1,500 6.55% due 10/01/2022 (c) 1,559
A1+c VMIG1++ 12,650 VRDN, Series A, 4.60% due 3/01/2026 (a)(e) 12,650
AAAr Aaa 10,000 Travis County, Texas, Health Facilities Development
Corporation, Revenue Refunding Bonds, RITR, Series 4,
6.94% due 11/15/2024 (a)(k) 10,158
AAA Aaa 11,240 University of Houston, Texas, University Revenue Bonds,
5.50% due 2/15/2030 (i) 11,015
Utah--0.3% AAA Aaa 4,000 Salt Lake City, Utah, Airport Revenue Bonds, AMT,
Series A, 6.125% due 12/01/2022 (c) 4,083
Vermont--0.3% AAA Aaa 3,400 Vermont HFA, S/F Housing Revenue Bonds, AMT, Series 12B,
6.30% due 11/01/2019 (g) 3,511
Virginia--0.8% AAA Aaa 5,540 Loudoun County, Virginia, COP, 6.90% due 3/01/2019 (g) 5,949
AA+ Aa1 4,330 Virginia State, HDA, Commonwealth Mortgage Revenue
Bonds, AMT, Series B, Sub-Series B-1, 6.375% due 7/01/2026 4,460
Washington--13.5% AAA Aaa 15,000 Central Puget Sound, Washington, Regional Transit
Authority, Sales Tax and Motor Revenue Bonds,
4.75% due 2/01/2028 (c) 12,842
AAA Aaa 6,595 Chelan County, Washington, Public Utility District No. 001,
Consolidated Revenue Refunding Bonds (Chelan Hydro),
AMT, Series B, 6.35% due 7/01/2026 (i) 6,883
AA+ Aa1 10,550 Port Seattle, Washington, GO, AMT, Series B, 5.75% due
12/01/2025 10,453
Port Seattle, Washington, Revenue Bonds (i):
AAA Aaa 1,600 AMT, Series B, 6% due 2/01/2015 1,704
AAA Aaa 20,000 Series A, 5.50% due 2/01/2026 19,597
AAA Aaa 10,000 Radford Court Properties, Washington, Student Housing
Revenue Bonds, 5.75% due 6/01/2032 (i) 10,057
AAA Aaa 9,250 Seattle, Washington, Municipal Light and Power Revenue
Bonds, 6% due 10/01/2024 (i) 9,592
AAA Aaa 10,000 Seattle, Washington, Water System Revenue Bonds,
5.25% due 3/01/2024 (c) 9,497
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 (i) 5,002
AAA Aaa 11,750 Snohomish County, Washington, Public Utility District
Number 001, Electric Revenue Refunding Bonds, 5.375%
due 12/01/2024 (g) 11,327
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) 8,172
AAA Aaa 8,705 Tacoma, Washington, Solid Waste Utility Revenue Refunding
Bonds, Series B, 5.50% due 12/01/2019 (a) 8,613
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 (g) 2,114
Washington State, GO:
NR* Aaa 7,965 RIB, Series 390, 7.29% due 1/01/2017 (g)(k) 8,856
AAA Aaa 14,860 Series C, 5% due 1/01/2022 (c) 13,814
AAA Aaa 2,500 Washington State Health Care Facilities Authority,
Revenue Refunding Bonds (Virginia Mason Obligation Group--
Seattle), 6.30% due 2/15/2017 (i) 2,579
NR* Aaa 4,000 Washington State Housing Finance Commission Revenue
Bonds (S/F Program), AMT, Series 1A, 6.40% due 12/01/2019 (f) 4,136
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 (i) 13,495
AAA Aaa 20,000 Washington State, Various Purpose, GO, Series A,
5.625% due 7/01/2025 (i) 19,985
West Virginia AAA Aaa 4,425 Harrison County, West Virginia, County Commission
--0.4% for Solid Waste Disposal Revenue Bonds (Monongahela Power),
AMT, Series C, 6.75% due 8/01/2024 (a) 4,732
Wisconsin--2.6% AA Aa2 475 Wisconsin Housing and EDA, Home Ownership Revenue
Refunding Bonds, AMT, Series B, 6.75% due 9/01/2025 485
Wisconsin Public Power Inc., Power Supply System Revenue
Bonds, Series A (i):
AAA Aaa 5,000 6% due 7/01/2015 5,250
AAA Aaa 13,685 5.75% due 7/01/2023 13,793
Wisconsin State Health and Educational Facilities
Authority, Revenue Refunding Bonds (Wheaton-Franciscan
Services) (i):
AAA Aaa 3,955 6.50% due 8/15/2011 4,083
AAA Aaa 2,000 6% due 8/15/2015 2,031
AAA Aaa 8,800 Wisconsin State Transportation Revenue Bonds,
Series A, 5.50% due 7/01/2017 (c) 8,858
Total Investments (Cost--$1,300,507)--102.2% 1,345,982
Liabilities in Excess of Other Assets--(2.2%) (28,592)
-----------
Net Assets--100.0% $ 1,317,390
===========
(a)AMBAC Insured.
(b)Escrowed to maturity.
(c)FGIC Insured.
(d)FHA Insured.
(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, 2000.
(f)FNMA/GNMA Collateralized.
(g)FSA Insured.
(h)GNMA Collateralized.
(i)MBIA Insured.
(j)Prerefunded.
(k)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, 2000.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Ernst & Young llp.
See Notes to Financial Statements.
</TABLE>
MuniYield Insured Fund, Inc., October 31, 2000
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of October 31, 2000
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$1,300,506,885) $1,345,981,691
Cash 93,276
Receivables:
Interest $ 23,229,705
Securities sold 2,958,208 26,187,913
--------------
Prepaid expenses and other assets 81,595
--------------
Total assets 1,372,344,475
--------------
Liabilities: Payables:
Securities purchased 53,324,747
Dividends to shareholders 851,915
Investment adviser 536,947 54,713,609
--------------
Accrued expenses and other liabilities 241,163
--------------
Total liabilities 54,954,772
--------------
Net Assets: Net assets $1,317,389,703
==============
Capital: Capital Stock (200,000,000 shares authorized):
Preferred Stock, par value $.10 per share
(17,600 shares of AMPS* issued and outstanding at $25,000
per share liquidation preference) $ 440,000,000
Common Stock, par value $.10 per share (61,945,880
shares issued and outstanding) $ 6,194,588
Paid-in capital in excess of par 867,524,336
Undistributed investment income--net 12,016,476
Accumulated realized capital losses on investments--net (23,989,684)
Accumulated distributions in excess of realized
capital gains--net (29,830,819)
Unrealized appreciation on investments--net 45,474,806
--------------
Total--Equivalent to $14.16 net asset value per
share of Common Stock (market price--$12.75) 877,389,703
--------------
Total capital $1,317,389,703
==============
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Year Ended October 31, 2000
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 75,947,879
Income:
Expenses: Investment advisory fees $ 6,455,057
Commission fees 1,116,459
Transfer agent fees 237,647
Accounting services 148,364
Professional fees 123,362
Directors' fees and expenses 75,246
Custodian fees 66,056
Printing and shareholder reports 62,332
Listing fees 61,322
Pricing fees 21,797
Other 70,604
--------------
Total expenses 8,438,246
--------------
Investment income--net 67,509,633
--------------
Realized & Realized loss on investments--net (23,989,684)
Unrealized Change in unrealized appreciation/depreciation
Gain (Loss) on on investments--net 59,522,742
Investments--Net: --------------
Net Increase in Net Assets Resulting from Operations $ 103,042,691
==============
See Notes to Financial Statements.
</TABLE>
MuniYield Insured Fund, Inc., October 31, 2000
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Year Ended
October 31,
Increase (Decrease) in Net Assets: 2000 1999
<S> <S> <C> <C>
Operations: Investment income--net $ 67,509,633 $ 68,300,367
Realized loss on investments--net (23,989,684) (18,426,435)
Change in unrealized appreciation/depreciation
on investments--net 59,522,742 (114,657,786)
-------------- --------------
Net increase (decrease) in net assets resulting
from operations 103,042,691 (64,783,854)
-------------- --------------
Dividends & Investment income--net:
Distributions to: Common Stock (52,468,160) (55,416,688)
Shareholders: Preferred Stock (18,129,302) (11,920,330)
Realized gain on investments--net:
Common Stock -- (1,149,610)
Preferred Stock -- (156,238)
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 (70,597,462) (98,473,063)
-------------- --------------
Capital Stock Value of shares issued to Common Stock shareholders
Transactions: in reinvestment of dividends and distributions -- 9,382,082
-------------- --------------
Net Assets: Total increase (decrease) in net assets 32,445,229 (153,874,835)
Beginning of year 1,284,944,474 1,438,819,309
-------------- --------------
End of year* $1,317,389,703 $1,284,944,474
============== ==============
*Undistributed investment income--net $ 12,016,476 $ 15,104,305
============== ==============
See Notes to Financial Statements.
</TABLE>
<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: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 13.64 $ 16.28 $ 15.84 $ 15.52 $ 15.46
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net 1.09 1.10 1.15 1.15 1.18
Realized and unrealized gain (loss)
on investments--net .57 (2.14) .62 .54 .15
--------- --------- --------- --------- ---------
Total from investment operations 1.66 (1.04) 1.77 1.69 1.33
--------- --------- --------- --------- ---------
Less dividends and distributions
to Common Stock shareholders:
Investment income--net (.85) (.90) (.88) (.92) (.91)
Realized gain on investments--net -- (.02) (.16) (.15) (.09)
In excess of realized gain on
investments--net -- (.43) -- -- --
--------- --------- --------- --------- ---------
Total dividends and distributions to
Common Stock shareholders (.85) (1.35) (1.04) (1.07) (1.00)
--------- --------- --------- --------- ---------
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 (.29) (.19) (.21) (.25) (.24)
Realized gain on investments--net -- --++ (.08) (.04) (.03)
In excess of realized gain on
investments--net -- (.06) -- -- --
--------- --------- --------- --------- ---------
Total effect of Preferred Stock activity (.29) (.25) (.29) (.29) (.27)
--------- --------- --------- --------- ---------
Net asset value, end of year $ 14.16 $ 13.64 $ 16.28 $ 15.84 $ 15.52
========= ========= ========= ========= =========
Market price per share, end of year $ 12.75 $ 12.875 $ 16.00 $ 14.8125 $ 14.00
========= ========= ========= ========= =========
Total Investment Based on market price per share 5.94% (12.04%) 15.55% 13.92% 10.30%
Return:* ========= ========= ========= ========= =========
Based on net asset value per share 11.06% (8.42%) 9.95% 9.89% 7.76%
========= ========= ========= ========= =========
Ratios Based on Total expenses** .99% .94% .91% .95% 1.12%
Average Net ========= ========= ========= ========= =========
Assets of Total investment income--net** 7.92% 7.26% 7.10% 7.70% 9.14%
Common Stock: ========= ========= ========= ========= =========
Amount of dividends to
Preferred Stock shareholders 2.13% 1.27% 1.28% 1.55% 1.85%
========= ========= ========= ========= =========
Investment income--net, to
Common Stock shareholders 5.79% 5.99% 5.82% 6.15% 7.29%
========= ========= ========= ========= =========
Ratios Based on Total expenses .65% .64% .63% .63% .64%
Total Average Net ========= ========= ========= ========= =========
Assets:**++++ Total investment income--net 5.22% 4.95% 4.94% 5.17% 5.22%
========= ========= ========= ========= =========
Ratios Based on Dividends to Preferred
Average Net Stock shareholders 4.11% 2.72% 2.87% 3.09% 2.45%
Assets of ========= ========= ========= ========= =========
Preferred Stock:
Supplemental Net assets, net of Preferred Stock,
Data: end of year (in thousands) $ 877,390 $ 844,944 $ 998,819 $ 971,614 $ 701,473
========= ========= ========= ========= =========
Preferred Stock outstanding,
end of year (in thousands) $ 440,000 $ 440,000 $ 440,000 $ 440,000 $ 320,000
========= ========= ========= ========= =========
Portfolio turnover 107.11% 121.88% 112.78% 98.91% 100.49%
========= ========= ========= ========= =========
Leverage: Asset coverage per $1,000 $ 2,994 $ 2,920 $ 3,270 $ 3,208 $ 3,192
========= ========= ========= ========= =========
Dividends Series A--Investment income--net $ 1,051 $ 745 $ 676 $ 808 $ 832
Per Share on ========= ========= ========= ========= =========
Preferred Stock Series B--Investment income--net $ 1,051 $ 675 $ 737 $ 813 $ 835
Outstanding:++++++ ========= ========= ========= ========= =========
Series C--Investment income--net $ 1,063 $ 752 $ 673 $ 812 $ 841
========= ========= ========= ========= =========
Series D--Investment income--net $ 986 $ 637 $ 728 $ 789 $ 865
========= ========= ========= ========= =========
Series E--Investment income--net $ 1,048 $ 640 $ 726 $ 797 $ 842
========= ========= ========= ========= =========
Series F--Investment income--net $ 1,010 $ 664 $ 750 $ 706 --
========= ========= ========= ========= =========
Series G--Investment income--net $ 992 $ 661 $ 728 $ 675 --
========= ========= ========= ========= =========
*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, 2000
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 conformity with accounting principles generally accepted
in the United States of America, 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 investment strategies to increase or decrease the level of
risk to which the Fund is exposed more quickly and efficiently than
transactions in other types of instruments. Losses may arise due to
changes in the value of the contract or if the counterparty does not
perform under the contract.
* Financial futures contracts--The Fund may purchase or sell
financial futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities or
the intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at
a specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
* Options--The Fund is authorized to write covered call options and
purchase put options. When the Fund writes an option, an amount
equal to the premium received by the Fund is reflected as an asset
and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written.
When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired, or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates. Distributions in excess of
realized capital gains are due primarily to differing tax treatments
for futures transactions.
2. Investment Advisory Agreement and Transactions with
Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of .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.
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, 2000 were $1,325,510,848 and
$1,307,786,568, respectively.
Net realized losses for the year ended October 31, 2000 and net
unrealized gains as of October 31, 2000 were as follows:
Realized Unrealized
Losses Gains
Long-term investments $(18,945,628) $45,474,806
Financial futures contracts (5,044,056) --
------------ -----------
Total $(23,989,684) $45,474,806
============ ===========
As of October 31, 2000, net unrealized appreciation for Federal
income tax purposes aggregated $45,433,237, of which $47,947,159
related to appreciated securities and $2,513,922 related to
depreciated securities. The aggregate cost of investments at October
31, 2000 for Federal income tax purposes was $1,300,548,454.
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, 2000
remained constant and during the year ended October 31, 1999
increased by 594,744 as a result of dividend reinvestment.
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, 2000 were as follows: Series A, 4.20%; Series B, 4.15%; Series
C, 4.249%; Series D, 4.13%; Series E, 4.10%; Series F, 4.35%; and
Series G, 3.699%.
Shares issued and outstanding during the years ended October 31,
2000 and October 31, 1999 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, 2000, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, an affiliate of FAM, earned $474,036 as commissions.
5. Capital Loss Carryforward:
At October 31, 2000, the Fund had a net capital loss carry-forward
of approximately $48,420,000, of which $24,114,000 expires in 2007
and $24,306,000 expires in 2008. This amount will be available to
offset like amounts of any future taxable gains.
6. Subsequent Event:
On November 8, 2000, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the amount
of $.070000 per share, payable on November 29, 2000 to shareholders
of record as of November 20, 2000.
MuniYield Insured Fund, Inc., October 31, 2000
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, 2000, 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 four 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 the
year 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 auditing standards
generally accepted in the United States. 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, 2000 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, 2000, 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
four years in the period then ended, in conformity with accounting
principles generally accepted in the United States.
(Ernst & Young)
MetroPark, New Jersey
December 6, 2000
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by MuniYield
Insured Fund, Inc. during its taxable year ended October 31, 2000
qualify as tax-exempt interest dividends for Federal Income tax
purposes. Additionally, there were no long-term capital gains
distributions paid by the Fund during the year.
Please retain this information for your records.
MuniYield Insured Fund, Inc., October 31, 2000
QUALITY PROFILE (unaudited)
The quality ratings of securities in the Fund as of October 31, 2000
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 84.8%
AA/Aa 8.0
A/A 0.6
BBB/Baa 1.1
NR (Not Rated) 2.0
Other++ 5.7
++Temporary investments in short-term municipal securities.
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute all or a portion of its
net investment income to its shareholders on a monthly basis. 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.
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
100Church Street
New York, NY 10286
NYSE Symbol
MYI
