MUNIYIELD
MICHIGAN
INSURED
FUND, INC.
FUND LOGO
Semi-Annual Report
April 30, 1995
Officers and Directors
Arthur Zeikel, President and Director
Donald Cecil, Director
M. Colyer Crum, Director
Edward H. Meyer, Director
Jack B. Sunderland, Director
J. Thomas Touchton, Director
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
<PAGE>
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
NYSE Symbol
MIY
This report, including the financial information herein, is
transmitted to the shareholders of MuniYield Michigan 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.
MuniYield
Michigan
Insured Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
<PAGE>
MuniYield Michigan Insured Fund, Inc.
DEAR SHAREHOLDER
For the six months ended April 30, 1995, the Common Stock of
MuniYield Michigan Insured Fund, Inc. earned $0.431 per share income
dividends, which included earned and unpaid dividends of $0.070.
This represents a net annualized yield of 6.03%, based on a month-
end net asset value of $14.42 per share. Over the same period, the
total investment return on the Fund's Common Stock was +11.01%,
based on a change in per share net asset value from $13.70 to
$14.42, and assuming reinvestment of $0.437 per share income
dividends and $0.264 per share capital gains distributions.
The average yield of the Fund's Auction Market Preferred Stock for
the six months ended April 30, 1995 was 4.48%.
The Environment
During the six months ended April 30, 1995, the perception that the
US economy was overheating and inflationary pressures were
increasing gave way to a more benign economic outlook. With more
signs of slowing growth, investors now appear to be forecasting a
"soft landing" for the US economy. Although gross domestic product
was reported to have increased at a revised 5.1% rate during the
final quarter of 1994, declines in other indicators such as new home
sales and durable goods orders registered thus far in 1995 have led
investors to anticipate that the economy is losing enough momentum
to keep inflation under control and preclude further significant
monetary policy tightening by the Federal Reserve Board. A further
indication of a slowing economy was the reported decline in the
Index of Leading Economic Indicators for March.
As US stock and bond markets have risen on more positive economic
news, the value of the US dollar has reached new lows relative to
the yen and the Deutschemark. Persistent trade deficits and exports
of capital from the United States have kept the US currency in a
decade-long decline relative to the Japanese and German currencies.
Over the longer term, since the United States has the highest
productivity among industrialized nations and among the lowest labor
costs, demand for US dollar-denominated assets may improve. However,
a reduction of the still-widening US trade deficit may be necessary
before the US dollar appreciates substantially relative to the yen
and the Deutschemark.
The first months of 1995 have been very positive for the stock and
bond markets. Continued signs of a moderating expansion and well-
contained inflationary pressures would provide further assurance
that the peak in interest rates is behind us. On the other hand,
indications of reaccelerating growth and further significant
monetary policy tightening by the Federal Reserve Board would be a
decided negative for the US financial markets.
<PAGE>
The Municipal Market
During the six-month period ended April 30,1995, the tax-exempt bond
market gradually recouped much of the losses sustained during 1994.
Signs of a weakening domestic economy and ongoing moderate
inflationary pressures have fostered an environment of declining
interest rates. Since October 31,1994, A-rated, uninsured municipal
revenue bond yields, as measured by the Bond Buyer Revenue Bond
Index, have declined over 65 basis points (0.65%) to close the six-
month period ended April 30, 1995 at 6.29%. Tax-exempt bond yields
initially continued to climb in late 1994, reaching a high of 7.37%
in late November 1994. Municipal bond yields have since declined
over 100 basis points from their recent highs and are presently
lower than they were a year ago. US Treasury bond yields have
experienced similar declines over the last six months to end the
April period at 7.34%.
Much of the recent improvement in the tax-exempt bond market,
however, has occurred over the last three months. During this most
recent quarter, municipal bond yields have fallen approximately 50
basis points, while US Treasury bond yields declined only 35 basis
points. Tax-exempt bond yields declined more than their taxable
counterparts in recent months, largely in response to the
significant decline in new bond issuance in recent quarters. Over
the last six months, less than $60 billion in new long-term
municipal securities were underwritten, a decline of nearly 45%
versus the comparable period a year earlier. Issuance was
particularly low this past January and February, with monthly volume
of less than $8 billion. These levels are the lowest monthly totals
since the mid-1980s.
To compound the municipal market's already strong technical posture,
both institutional and individual investors have seen significant
cash inflows in recent months. These assets were derived from
regular coupon payments, bond maturities and the proceeds from early
bond calls and redemptions. It has been estimated that investors
received over $20 billion in principal redemptions and coupon income
in January 1995 alone. With monthly issuance in the $10 billion
range thus far this year, the current supply/demand imbalance has
dominated the municipal market and bond prices have risen
accordingly. The tax-exempt bond market's technical position is
likely to remain very strong throughout most of 1995. Investors are
expected to receive almost $40 billion in principal and coupon
payments on July 1, 1995. Investor proceeds from all sources have
been estimated to exceed $200 billion for all of 1995. Estimates of
total new bond issuance for 1995 have continued to be lowered with
most estimates now in the $125 billion range. Investors should find
it increasingly difficult to replace existing holdings as they
mature and to reinvest coupon income in such an environment.
The municipal bond market's outperformance thus far this year caused
the tax-exempt market to become temporarily expensive relative to
its taxable counterpart in late April. Investor concerns regarding
the international currency situation and the future impact of
proposed revisions to US taxation policies upon the tax advantage
inherent to municipal bonds have combined to cause tax-exempt bond
yields to increase marginally in recent weeks. Municipal bond yields
have risen approximately 15 basis points from their lows in mid-
April 1995. Long-term US Treasury bond yields have remained
essentially stable.
<PAGE>
Such an underperformance by the tax-exempt bond market is likely to
be limited in duration. The recent increase in tax-exempt bond
yields has already begun to attract institutional investors since
some municipal bonds yielding in excess of 85% of US Treasury bond
yields are again available. Also, concerns regarding the implication
for municipal bonds' tax advantage resulting from various proposed
tax law changes (for example, flat-tax, value-added tax or national
sales tax) are all likely to quickly recede as investors realize
that such, if any, changes are unlikely to be enacted before late
1996 at the earliest. Long-term investors will also recall 1986 when
similar tax proposals were made and tax-exempt bond yields initially
rose and then quickly fell. Investors are likely to view the current
situation as an opportunity to purchase very attractively priced tax-
advantaged products. This should cause municipal bond yields to
quickly return to their more historic relationship.
Portfolio Strategy
We continued to maintain the constructive outlook toward the
municipal bond market that we adopted toward the end of 1994. We
reduced cash reserves to below 5% of net assets both to seek to
allow the Fund to fully participate in the recent bond market rally
and to enhance the Fund's current dividend payout. However, we
continued to emphasize the purchase of larger-coupon, more defensive
issues rather than those securities which are more interest-rate
sensitive. The Fund remains well-positioned to respond to the
interest rate declines seen in recent months, and the Fund's per
share net asset value increased accordingly during the six months
ended April 30, 1995.
Looking forward, we have adopted a more neutral posture regarding
the direction of tax-exempt interest rates. The strong technical
structure within the Michigan municipal bond market keeps the Fund
from raising its cash reserves to the levels held throughout much of
1994. Over the past six months, approximately $1.8 billion in long-
term municipal securities were underwritten by Michigan munici-
palities. This represents a decline of nearly 50% versus the
comparable period a year ago. This relative scarcity of attractively
priced Michigan tax-exempt product will prevent us from raising
significant cash reserves in the near future. We will focus on
enhancing current income and preserving net asset value until the
direction of interest rates becomes clearer.
<PAGE>
Short-term tax-exempt bond interest rates rose into the 3.75%--4.25%
range over the past six months. The recent rise has largely been the
result of investor fears of inflationary pressures resulting from
the dramatic decline in the value of the US dollar and increases in
many crude raw materials. It is unclear whether the decline in the
US dollar or the rise in raw material prices, either separately or
in combination, will be adequate to rekindle inflation since wage
pressures remain weak and the economy has significantly weakened
since late 1994. It is very important to note that, despite the
recent rise in short-term interest rates, the municipal bond yield
curve remained steeply positive. Therefore, the leverage of the
Fund's Preferred Stock continued to impact the yield paid to the
Fund's Common Stock shareholder. However, should the spread between
short-term and long-term municipal yields narrow, the benefits of
the leverage will decline and, as a result, reduce the yield of the
Common Stock. (For a complete explanation of the benefits and risks
of leveraging, see the information provided below.)
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
June 1, 1995
<PAGE>
THE BENEFITS AND RISKS OF LEVERAGING
MuniYield Michigan 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.
<PAGE>
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 pick-up 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.
PORTFOLIO ABBREVIATIONS
To simplify the listings of MuniYield Michigan Insured Fund, Inc.'s
portfolio holdings in the Schedule of Investments, we have
abbreviated the names of some of the securities according to the
list at right.
AMT Alternative Minimum Tax (subject to)
CP Commercial Paper
GO General Obligation Bonds
PCR Pollution Control Revenue Bonds
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Michigan--95.1%
<S> <S> <C> <S> <C>
AAA Aaa $ 1,000 Bay City, Michigan, Electric Utility Revenue Bonds, 6.60% due 1/01/2012 (b) $ 1,046
AAA Aaa 5,000 Bay City, Michigan, School District Revenue Bonds, UT, 6.50% due 5/01/2008 (b) 5,249
AAA Aaa 1,000 Breckenridge, Michigan, Community School District Revenue Bonds, UT, 5.75% due
5/01/2023 (b) 949
AAA Aaa 3,785 Chippewa Valley, Michigan, School Refunding Bonds, UT, 5.125% due 5/01/2015 (c) 3,366
NR* P1 1,400 Delta County, Michigan, Economic Development Corp., Environmental Improvement
Revenue Bonds (Mead Escambia Paper), VRDN, Series C, 4.95% due 12/01/2023 (a) 1,400
<PAGE>
AAA Aaa 7,200 Detroit, Michigan, Sewage Disposal Revenue Bonds, 6.625% due 7/01/2021 (c) 7,472
A1 NR* 100 Detroit, Michigan, Tax Increment Finance Authority Revenue Bonds (Central
Industrial Park Project), VRDN, 4.55% due 10/01/2010 (a) 100
AAA Aaa 5,000 Detroit, Michigan, Water Supply Systems Revenue Refunding Bonds, 6.25% due
7/01/2012 (c) 5,055
AAA Aaa 1,000 Eastern Michigan University, Revenue Refunding Bonds, GO, 6.375% due 6/01/2014 (b) 1,016
AAA Aaa 4,500 Grand Ledge, Michigan, Public School District Revenue Bonds, UT, 6.60% due
5/01/2024 (d) 4,700
Grand Rapids, Michigan, Water Supply Systems Revenue Refunding Bonds (c):
AAA Aaa 3,000 6.25% due 1/01/2011 3,068
AAA Aaa 2,490 6.50% due 1/01/2015 2,575
AAA Aaa 17,600 Grand Traverse County, Michigan, Hospital Finance Authority, Hospital Revenue
Refunding Bonds (Munson Healthcare), Series A, 6.25% due 7/01/2022 (b) 17,598
AAA Aaa 1,000 Grandville, Michigan, Public School District, Revenue Refunding Bonds, UT, 6.60%
due 5/01/2015 (c) 1,050
AAA Aaa 1,500 Kalamazoo, Michigan, Hospital Finance Authority, Hospital Facility Revenue
Refunding Bonds (Borgess Medical Center), Series A, 6.25% due 6/01/2014 (c) 1,549
AAA Aaa 2,000 Kent, Michigan, Hospital Finance Authority, Michigan Hospital Facility, Revenue
Refunding Bonds (Butterworth Hospital) Series A, 7.25% due 1/15/2013 (d) 2,296
AAA Aaa 1,100 Marysville, Michigan Public School District Revenue Bonds, UT, 5.75% due
5/01/2022 (d) 1,045
Michigan Higher Education Student Loan Authority Revenue Bonds, VRDN, AMT (a)(b):
A1+ VMIG1++ 1,600 Refunding, Series XII-B, 4.65% due 10/01/2013 1,600
AAA VMIG1++ 400 Series XII-F, 4.65% due 10/01/2020 (b) 400
Michigan Municipal Bond Authority Revenue Bonds, Series A:
AAA Aaa 5,000 (Local Government Loan Program), 6.125% due 12/01/2018 (c) 4,893
AAA Aaa 1,035 Refunding (Local Government Loan Program), 6.50% due 5/01/2012 (b) 1,079
AAA Aaa 1,870 Refunding (Local Government Loan Program), 6.50% due 11/01/2012 (d) 1,949
AA Aa 2,950 (State Revolving Fund), 6.55% due 10/01/2013 3,059
AA Aa 2,000 (State Revolving Fund), 6.60% due 10/01/2018 2,058
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Michigan (concluded)
<S> <S> <C> <S> <C>
Michigan State Building Authority, Revenue Refunding Bonds, Series I:
AAA Aaa $ 3,000 5.20% due 10/01/2010 (b) $ 2,766
AA- A 1,500 6.75% due 10/01/2011 1,586
AAA Aaa 3,000 6.25% due 10/01/2020 (d) 3,008
AAA Aaa 1,100 Michigan State Hospital Finance Authority, Revenue Refunding Bonds (Sisters of
Mercy Health Corp.), Series M, 6.25% due 2/15/2022 (e) 1,093
Michigan State Strategic Fund, Limited Obligation Revenue Bonds, AMT:
NR* P1 2,100 (Dow Chemical Company Project), VRDN, 5.40% due 12/01/2014 (a) 2,100
A+ A1 7,250 (Ford Motor Company Project), Series A, 6.55% due 10/01/2022 7,285
A+ A1 2,500 (Waste Management Inc. Project), 6.625% due 12/01/2012 2,524
AAA Aaa 2,500 Michigan State Strategic Fund, Limited Obligation Revenue Refunding Bonds (Detroit
Edison Co. Project), Series CC, 6.95% due 9/01/2021 (c) 2,658
NR* P1 2,600 Michigan State Strategic Fund, PCR, Refunding (Consumers Power Project), VRDN,
Series A, 5% due 4/15/2018 (a) 2,600
AAA Aaa 7,500 Monroe County, Michigan, Economic Development Corporation, Limited Obligation
Revenue Refunding Bonds (Detroit Edison Co.), Series AA, 6.95% due 9/01/2022 (c) 8,396
Monroe County, Michigan, PCR (Detroit Edison Co. Project), AMT:
AAA Aaa 2,500 (Monroe & Fermi Plants), Series 1, 7.65% due 9/01/2020 (c) 2,742
AAA Aaa 4,500 Series CC, 6.55% due 6/01/2024 (d) 4,576
AAA Aaa 1,500 Series I, 7.30% due 9/01/2019 (b) 1,634
AAA Aaa 1,500 Series I-B, 6.55% due 9/01/2024 (d) 1,526
AAA Aaa 5,000 Plymouth-Canton, Michigan, Community School District, Revenue Refunding Bonds,
UT, 5.50% due 5/01/2017 (b) 4,639
AAA Aaa 5,925 Riverview, Michigan, Community School District Building Revenue Bonds, UT, 6.70%
due 5/01/2002 (c)(f) 6,496
Royal Oak, Michigan, Hospital Finance Authority, Hospital Revenue Bonds:
AA- Aa 3,000 Refunding (Beaumont Properties, Inc.), Series E, 6.625% due 1/01/2019 3,048
AA Aa 1,000 (William Beaumont Hospital), Series D, 6.75% due 1/01/2020 1,026
AAA Aaa 7,000 Saint Clair County, Michigan, Economic Development Corp., PCR, Refunding (Detroit
Edison Co.), Series AA, 6.40% due 8/01/2024 (b) 7,150
Western Michigan University, Revenue Refunding Bonds, Series A (c):
AAA Aaa 1,000 5.50% due 7/15/2016 932
AAA Aaa 1,000 5% due 7/15/2021 851
<PAGE>
AAA Aaa 5,500 Wyandotte, Michigan, Electric Revenue Refunding Bonds, 6.25% due 10/01/2017(d) 5,531
Total Investments (Cost--$144,639)--95.1% 148,739
Other Assets Less Liabilities--4.9% 7,611
--------
Net Assets--100.0% $156,350
========
<FN>
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at April 30, 1995.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)MBIA Insured.
(e)FSA Insured.
(f)Prerefunded.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of April 30, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$144,639,087)
(Note 1a) $148,738,610
Cash 144,742
Receivables:
Interest $ 5,132,618
Securities sold 2,628,060 7,760,678
------------
Deferred organization expenses (Note 1e) 23,206
Prepaid expenses and other assets 18,970
------------
Total assets 156,686,206
------------
<PAGE>
Liabilities: Payables:
Dividends to shareholders (Note 1f) 198,001
Investment adviser (Note 2) 60,779 258,780
------------
Accrued expenses and other liabilities 77,408
------------
Total liabilities 336,188
------------
Net Assets: Net assets $156,350,018
============
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.10 per share (2,000 shares of
AMPS* issued and outstanding at $25,000 per share liquidation
preference) $ 50,000,000
Common Stock, par value $.10 per share (7,374,470 shares
issued and outstanding) $ 737,447
Paid-in capital in excess of par 102,771,407
Undistributed investment income--net 911,733
Accumulated realized capital losses on investments--net (2,170,092)
Unrealized appreciation on investments--net 4,099,523
------------
Total--Equivalent to $14.42 net asset value per share of
Common Stock (market price--$13.625) 106,350,018
------------
Total capital $156,350,018
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months Ended April 30, 1995
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 4,710,725
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 374,586
Commission fees (Note 4) 69,185
Professional fees 42,616
Printing and shareholder reports 22,755
Transfer agent fees 20,573
Accounting services (Note 2) 19,398
Directors' fees and expenses 12,515
Listing fees 9,041
Custodian fees 6,580
Pricing fees 4,443
Amortization of organization expenses (Note 1e) 4,054
Other 11,837
------------
Total expenses 597,583
------------
Investment income--net 4,113,142
------------
Realized & Realized loss on investments--net (2,170,062)
Unrealized Gain Change in unrealized appreciation/depreciation on investments--net 9,628,631
(Loss) on ------------
Investments Net Increase in Net Assets Resulting from Operations $ 11,571,711
- --Net (Notes ============
1b, 1d & 3):
</TABLE>
<PAGE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: April 30, 1995 Oct. 31, 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 4,113,142 $ 8,305,690
Realized gain (loss) on investments--net (2,170,062) 2,392,886
Change in unrealized appreciation/depreciation on invest-
ments--net 9,628,631 (22,741,883)
------------ ------------
Net increase (decrease) in net assets resulting from operations 11,571,711 (12,043,307)
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (3,220,261) (6,701,446)
Shareholders Preferred Stock (655,580) (1,540,930)
(Note 1f): Realized gain on investments--net:
Common Stock (1,948,947) (604,972)
Preferred Stock (443,960) (122,510)
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (6,268,748) (8,969,858)
------------ ------------
Capital Stock Offering costs resulting from the issuance of Common Stock -- (9,200)
Transactions ------------ ------------
(Notes 1e & 4): Net decrease in net assets derived from capital stock
transactions -- (9,200)
------------ ------------
Net Assets: Total increase (decrease) in net assets 5,302,963 (21,022,365)
Beginning of period 151,047,055 172,069,420
------------ ------------
End of period* $156,350,018 $151,047,055
============ ============
<FN>
*Undistributed investment income--net $ 911,733 $ 674,432
============ ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<PAGE>
<TABLE>
Financial Highlights
<CAPTION>
For the For the
Six Period
The following per share data and ratios have been derived Months For the Oct. 30
from information provided in the financial statements. Ended Year Ended 1992++ to
April 30, October 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.70 $ 16.55 $ 14.14 $ 14.18
Operating -------- -------- -------- --------
Performance: Investment income--net .56 1.13 1.13 --
Realized and unrealized gain (loss) on invest-
ments--net 1.01 (2.76) 2.47 --
-------- -------- -------- --------
Total from investment operations 1.57 (1.63) 3.60 --
-------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.44) (.91) (.86) --
Realized gain on investments--net (.26) (.08) -- --
-------- -------- -------- --------
Total dividends and distributions to Common
Stock shareholders (.70) (.99) (.86) --
-------- -------- -------- --------
Capital charge resulting from issuance of
Common Stock -- -- -- (.04)
-------- -------- -------- --------
Effect of Preferred Stock activity:++++
Dividends and distributions to Preferred Stock
shareholders:
Investment income--net (.09) (.21) (.19) --
Realized gain on investments--net (.06) (.02) -- --
Capital charge resulting from issuance of
Preferred Stock -- -- (.14) --
-------- -------- -------- --------
Total effect of Preferred Stock activity (.15) (.23) (.33) --
-------- -------- -------- --------
Net asset value, end of period $ 14.42 $ 13.70 $ 16.55 $ 14.14
======== ======== ======== ========
Market price per share, end of period $ 13.625 $ 11.875 $ 16.625 $ 15.00
======== ======== ======== ========
Total Investment Based on market price per share 21.01%+++ (23.52%) 17.03% .00%+++
Return:** ======== ======== ======== ========
Based on net asset value per share 11.01%+++ (11.36%) 23.59% (.28%)+++
======== ======== ======== ========
Ratios to Expenses, net of reimbursement .80%* .78% .61% --%*
Average ======== ======== ======== ========
Net Assets:*** Expenses .80%* .78% .70% --%*
======== ======== ======== ========
Investment income--net 5.50%* 5.07% 5.24% --%*
======== ======== ======== ========
<PAGE>
Supplemental Net assets, net of Preferred Stock, end of
Data: period (in thousands) $106,350 $101,047 $122,069 $101,736
======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $ 50,000 $ 50,000 $ 50,000 $ --
======== ======== ======== ========
Portfolio turnover 24.16% 21.76% 12.73% .00%
======== ======== ======== ========
Dividends Per Investment income--net $ 328 $ 771 $ 695 $ --
Share on
Preferred Stock
Outstanding:++++++
<FN>
*Annualized.
**Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, may result
in substantially different returns. Total investment returns exclude
the effects of sales loads.
***Do not reflect the effect of dividends to Preferred Stock
shareholders.
++Commencement of Operations.
++++The Fund's Preferred Stock was issued on November 19, 1992.
++++++Dividends per share have been adjusted to reflect a two-for-
one stock split.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniYield Michigan Insured Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a non-diversified,
closed-end management investment company. These unaudited financial
statements reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the
interim period presented. All such adjustments are of a normal
recurring nature. 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 MIY. The following is a summary of
significant accounting policies followed by the Fund.
<PAGE>
(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, which are traded on exchanges, are valued
at their last sale price as of the close of such exchanges or,
lacking any sales, at the last available bid price. Securities with
remaining maturities of sixty days or less are valued at amortized
cost, which approximates market value. Securities 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.
(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 interest
rate 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.
<PAGE>
(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.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
(e) Deferred organization expenses and offering expenses--Deferred
organization expenses are amortized on a straight-line basis over a
five-year period. Direct expenses relating to the public offering of
the Common and Preferred Stock were charged to capital at the time
of issuance.
(f) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of 0.50% of
the Fund's average weekly net assets.
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, Merrill Lynch, Pierce, Fenner & Smith Inc.
("MLPF&S"), and/or ML & Co.
<PAGE>
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 1995 were $34,557,336 and
$38,910,845, respectively.
Net realized and unrealized gains (losses) as of April 30, 1995 were
as follows:
Realized Unrealized
Losses Gains
Long-term investments $ (351,237) $ 4,099,523
Financial futures contracts (1,818,825) --
----------- ------------
Total $(2,170,062) $ 4,099,523
=========== ============
As of April 30, 1995, net unrealized appreciation for Federal income
tax purposes aggregated $4,099,523, of which $4,356,549 related to
appreci-ated securities and $257,026 related to depreciated
securities. The aggregate cost of investments at April 30, 1995 for
Federal income tax purposes was $144,639,087.
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 holders of Common Stock.
Common Stock
For the six months ended April 30, 1995, shares issued and
outstanding remained constant at 7,374,470. At April 30, 1995,
total paid-in capital amounted to $103,508,854.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred
Stock of the Fund that entitle their holders to receive cash
dividends at an annual rate that may vary for the successive divi-
dend periods. The yield in effect at April 30, 1995 was 4.25%.
A two-for-one stock split occurred on December 1, 1994. As a result,
at April 30, 1995, there were 2,000 AMPS shares authorized, issued
and outstanding with a liquidation preference of $25,000 per share,
plus accumulated and unpaid dividends of $299,309.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from 0.25% to 0.375%
calculated on the proceeds of each auction. For the six months ended
April 30, 1995, MLPF&S, an affiliate of FAM, earned $49,710 as
commissions.
<PAGE>
5. Subsequent Event:
On May 9, 1995, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$0.069604 per share, payable on May 30, 1995 to shareholders of
record as of May 19, 1995.
PER SHARE INFORMATION
<TABLE>
Per Share Selected Quarterly Financial Data*
<CAPTION>
Dividends/Distributions
Net Realized Unrealized
Investment Gains Gains Net Investment Income Capital Gains
For the Quarter Income (Losses) (Losses) Common Preferred Common Preferred
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1993 to July 31, 1993 $.29 $ .01 $ .31 $.24 $.05 -- --
August 1, 1993 to October 31, 1993 .29 .05 .69 .25 .04 -- --
November 1, 1993 to January 31, 1994 .34 -- .18 .24 .05 $.08 $.02
February 1, 1994 to April 30, 1994 .23 .29 (2.22) .23 .05 -- --
May 1, 1994 to July 31, 1994 .28 -- .31 .22 .05 -- --
August 1, 1994 to October 31, 1994 .28 .03 (1.35) .22 .06 -- --
November 1, 1994 to January 31, 1995 .29 (.26) .96 .22 .03 .26 .06
February 1, 1995 to April 30, 1995 .27 (.03) .34 .22 .06 -- --
<CAPTION>
Net Asset Value Market Price**
For the Quarter High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
May 1, 1993 to July 31, 1993 $16.00 $15.42 $16.375 $15.25 474
August 1, 1993 to October 31, 1993 16.83 15.82 17.00 15.75 517
November 1, 1993 to January 31, 1994 16.65 15.99 16.75 15.125 537
February 1, 1994 to April 30, 1994 16.60 14.15 16.50 13.75 566
May 1, 1994 to July 31, 1994 15.28 14.35 15.00 14.25 323
August 1, 1994 to October 31, 1994 15.02 13.69 14.375 11.875 843
November 1, 1994 to January 31, 1995 14.10 12.68 13.375 10.625 1,479
February 1, 1995 to April 30, 1995 14.78 14.13 13.75 12.875 402
<FN>
*Calculations are based upon shares of Common Stock outstanding at
the end of each quarter.
**As reported in the consolidated transaction reporting system.
***In thousands.
</TABLE>
<PAGE>
