MUNIYIELD
MICHIGAN
INSURED
FUND, INC.
FUND LOGO
Semi-Annual Report
April 30, 1996
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
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Fred K. Stuebe, 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. Statements and other information
herein are as dated and are subject to change.
MuniYield Michigan
Insured Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MuniYield Michigan Insured Fund, Inc.
<PAGE>
TO OUR SHAREHOLDERS
For the six-month period ended April 30, 1996, the Common Stock of
MuniYield Michigan Insured Fund, Inc. earned $0.432 per share income
dividends, which included earned and unpaid dividends of $0.071.
This represents a net annualized yield of 5.86%, based on a month-
end per share net asset value of $14.78. Over the same period, the
total investment return on the Fund's Common Stock was +0.71%, based
on a change in per share net asset value from $15.13 to $14.78, and
assuming reinvestment of $0.434 per share income dividends.
For the six-month period ended April 30, 1996, the Fund's Auction
Market Preferred Stock had an average yield of 3.62%.
The Environment
Investor perceptions regarding the US economy changed over the
course of the six-month period ended April 30, 1996. As 1995 drew to
a close and 1996 began, it appeared that the US economy was losing
momentum. Lackluster retail sales, increases in initial unemployment
claims (along with weak job and income growth), and evidence of
slowing in the manufacturing sector all suggested that the rate of
economic growth was decelerating, with some forecasters even
suggesting the possibility of an imminent recession.
However, the consensus outlook for the rate of future economic
growth changed dramatically with the report of stronger-than-
expected employment data for February and March. As a result,
investors began to anticipate renewed economic growth. Long-term
interest rates rose, and the Federal Reserve Board left monetary
policy on hold. Adding to investor concerns was the report that the
Knight Ridder-Commodity Research Bureau Index was near an eight-year
high, largely because of an increase in agricultural prices and an
upward spike in the price of crude oil.
Investors are likely to continue to focus on the probable direction
of economic activity and Federal Reserve Board monetary policy in
the weeks ahead. At this time, inflationary pressures do not seem to
be building and the capital spending, housing and consumption
sectors are still relatively weak, which suggest that the economy is
not on the verge of overheating. Nevertheless, it is likely that
further indications of stronger economic activity in the weeks ahead
may add to investor concerns that accelerating economic activity
could lead to higher inflation and interest rates.
<PAGE>
The Municipal Market
During the six months ended April 30, 1996, tax-exempt bond yields
rose as investors became increasingly concerned that recent economic
growth would reignite inflationary pressures. Through early February
1996, municipal bond yields continued their earlier declines
supported by continued moderate economic growth and favorable
inflationary expectations. As measured by the Bond Buyer Revenue
Bond Index, yields on uninsured, A-rated municipal revenue bonds
declined an additional 30 basis points (0.30%) to 5.70% by early
February. As signs of emerging economic growth became more numerous,
particularly with the release of the strong March employment
figures, inflation fears increased and bond yields rose in response
for the remainder of the six-month period ended April 30, 1996. At
April 30, 1996, long-term municipal bond yields were approximately
6.30%, an increase of approximately 30 basis points over the last
six months. The rise in US Treasury bond yields was more
substantial. Over the last six months, yields on US Treasury
securities rose approximately 60 basis points to 6.90%. During the
April period, the municipal bond market reversed the trend seen
throughout much of 1995 and significantly outperformed the US
Treasury bond market.
The municipal bond market's recent outperformance was largely the
result of two principal factors. First, and perhaps more important,
much of the earlier concern regarding proposed changes in Federal
income tax codes and their effect on the tax treatment of tax-exempt
bond income has dissipated. As the negative revenue impact of the
various proposals, such as the flat tax, became apparent, the
likelihood of immediate reform quickly diminished. When the Kemp
Commission dealing with Federal income tax reform released its
findings early in 1996, the obvious need for reform was highlighted.
However, no specific recommendations of a flat tax, value-added tax
or any other reform were made. Consequently, fears of losing the
favored tax treatment of municipal bond income declined even
further. As a percentage of Treasury bond yields, tax-exempt bond
yield ratios quickly declined from 95% to approximately 90%. This
allowed the municipal bond market to maintain much of the gains made
since early 1995.
The second major factor leading to the municipal bond market's
recent improvement was the return of a more favorable technical
environment. Over the past six months, approximately $90 billion in
municipal securities were underwritten, an increase of approximately
45% versus the comparable period a year earlier. However, much of
this increase was biased by recent underwritings dedicated toward
refinancing. Like individual homeowners, municipal issuers sought to
refinance their existing higher-couponed debt as tax-exempt bond
yields declined from their highs in 1995. In recent months such
refinancings were estimated to represent at least 50% of total
issuance. However, the recent rise in tax-exempt interest rates
slowed the pace of such refinancings. Over the last three months
approximately $40 billion in long-term tax-exempt securities were
underwritten, an increase of 35% compared to the same period a year
ago. At current interest rate levels large amounts of refundings are
unlikely and the rate of new bond issuance should continue to
decline.
<PAGE>
Additionally, investors continue to receive significant amounts of
assets derived from coupon income, bond maturities, and proceeds
from early redemptions. In recent months investors received over $30
billion in such assets. These cash flows helped maintain individual
retail investor demand in recent months. Additionally, major
institutional investors, such as certain insurance companies whose
underwriting profits were cyclically high, demonstrated significant
ongoing interest in the tax-exempt bond market, particularly on
higher-quality securities. Individual and institutional investor
demand was strong enough during the six-month period ended April 30,
1996 to absorb the relative increase in bond issuance.
Looking ahead, we believe the municipal bond market is likely to
continue to outperform the US Treasury market. Investor demand
should remain adequate to absorb new bond issuance. It is also
unlikely that the rapid pace of issuance seen thus far in 1996 will
be maintained. The recent rise in yields made further bond
refinancings economically unfeasible. Since these refinancings were
the driving force of recent bond issuance, as the amount of these
refundings decline, overall issuance should decline. This should
allow the current demand/supply balance to be easily maintained in
upcoming months.
Additionally, as a percentage of US Treasury bond yields, long-term
municipal bond yields remain historically attractive. It is likely
that recent interest rate increases will have a negative impact on
economic growth, perhaps as early as late summer 1996. With long-
term mortgage rates above 8%, the domestic housing sector has
already indicated signs of slower growth. If other interest rate
sectors of the economy, such as the automobile industry, begin to
show similar adverse effects, taxable interest rates would be poised
to resume their decline. With long-term tax-exempt revenue bonds
yielding approximately 90% of their taxable counterparts, municipal
bond yields are poised to decline further.
Portfolio Strategy
Throughout most of the six-month period ended April 30, 1996, we
maintained the neutral investment strategy that we adopted toward
the end of 1995. While economic growth was stronger than expected,
and interest rates are correspondingly higher, we expect that growth
will prove short-lived and interest rates may return to lower levels
toward the end of 1996. The Fund remains well positioned to
participate in any market improvement. We expect to maintain the
Fund's cash reserves at low levels to seek to enhance the Fund's
current dividend yield. We used the recent rise in interest rates to
add higher-yielding securities to the Fund's portfolio. We expect to
view any period of volatility as an opportunity to add similar
issues to the Fund.
<PAGE>
Short-term tax-exempt interest rates traded in the 3.25%--4.00%
range throughout most of the six-month period ended April 30, 1996.
This scenario continued to provide a generous beneficial impact on
the yield to the Common Stock shareholders. However, should the
spread between short-term and long-term interest rates narrow, the
benefits of the leverage will decline and, as a result, reduce the
yield on the Fund's Common Stock. (For a complete explanation of the
benefits and risks of leveraging, see page 4 of this report to
shareholders.)
In Conclusion
We appreciate your ongoing interest in MuniYield Michigan Insured
Fund, Inc., and we look forward to assisting you with your financial
needs in the months and years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Fred K. Stuebe)
Fred K. Stuebe
Vice President and Portfolio Manager
<PAGE>
May 31, 1996
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.
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.
<PAGE>
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 many of the securities according to the
list at right.
AMT Alternative Minimum Tax (subject to)
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--98.2%
<S> <S> <C> <S> <C>
AAA Aaa $ 1,000 Bay City, Michigan, Electric Utility Revenue Bonds, 6.60% due 1/01/2012 (b) $ 1,058
AAA Aaa 5,000 Bay City, Michigan, School District Revenue Bonds, UT, 6.50% due 5/01/2008 (b) 5,333
AAA Aaa 1,750 Brighton, Michigan, Area School District, Revenue Refunding Bonds, UT,
Series II, 6% due 5/01/2020 (b) 1,764
AAA Aaa 1,250 Chelsea, Michigan, School District Revenue Bonds, UT, 5.875% due 5/01/2025 (c) 1,225
AAA Aaa 3,785 Chippewa Valley, Michigan, School Refunding Bonds, UT, 5.125% due 5/01/2015 (c) 3,465
AAA Aaa 1,525 Dearborn, Michigan, Economic Development Corp., Hospital Revenue Bonds
(Oakwood Obligation Group), Series A, 5.30% due 11/15/2006 (c) 1,530
AAA Aaa 1,000 Dearborn, Michigan, Municipal Building Authority Revenue Bonds, 5% due
6/01/2016 (b) 899
AAA Aaa 2,000 Dearborn, Michigan, Sewage Disposal Revenue Bonds, Series A, 5.125% due
4/01/2016 (d) 1,828
<PAGE>
Detroit, Michigan, Sewage Disposal Revenue Bonds (c):
AAA Aaa 7,200 6.625% due 7/01/2001 (f) 7,946
AAA Aaa 1,000 Refunding, Series A, 5.10% due 7/01/2004 1,007
Detroit, Michigan, Water Supply System Revenue Bonds:
AAA Aaa 5,000 Refunding, 6.25% due 7/01/2012 (c) 5,184
AAA Aaa 4,900 Second Lien, Series A, 5.50% due 7/01/2025 (d) 4,615
AAA Aaa 1,000 Eastern Michigan University, GO, Revenue Refunding Bonds, 6.375% due 6/01/2014 (b) 1,043
AAA Aaa 4,500 Grand Ledge, Michigan, Public Schools District Revenue Bonds, UT, 6.60% due
5/01/2004 (d)(f) 5,040
Grand Rapids, Michigan, Water Supply System, Revenue Refunding Bonds (c):
AAA Aaa 3,000 6.25% due 1/01/2011 3,104
AAA Aaa 3,490 6.50% due 1/01/2015 3,696
AAA Aaa 5,000 Grand Traverse County, Michigan, Hospital Finance Authority, Hospital Revenue
Refunding Bonds (Munson Healthcare), Series A, 6.25% due 7/01/2022 (b) 5,089
AAA Aaa 1,000 Grandville, Michigan, Public Schools District, Revenue Refunding Bonds, UT,
6.60% due 5/01/2015 (c) 1,062
AAA Aaa 2,500 Greenville, Michigan, Public Schools Building, GO, UT, 5.75% due 5/01/2024 (d) 2,442
AAA Aaa 1,300 Gull Lake, Michigan, Community School District, GO, UT, 6.80% due 5/01/2001 (c)(f) 1,442
AAA Aa 1,500 Kent County, Michigan, Airport Facility Revenue Bonds (Kent County International
Airport), AMT, 6.10% due 1/01/2025 1,478
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) 2,348
AAA Aaa 4,000 Lakeshore, Michigan, Public Schools District (Berrien County), UT, 5.70% due
5/01/2022 (d) 3,869
AAA Aaa 1,000 Leslie, Michigan, Public Schools Building and Site Revenue Refunding Bonds
(Ingham and Jackson Counties), UT, 6% due 5/01/2015 (b) 1,011
Michigan Higher Education Student Loan Authority Revenue Bonds, VRDN, AMT (a)(b):
A1 VMIG1++ 100 Series XII-D, 4.20% due 10/01/2015 100
AAA VMIG1++ 400 Series XII-F, 4.20% due 10/01/2020 400
Michigan Municipal Bond Authority Revenue Bonds, Series A:
AAA Aaa 5,000 (Local Government Loan Program), 6.125% due 12/01/2018 (c) 5,091
AAA Aaa 1,035 Refunding (Local Government Loan Program), 6.50% due 5/01/2012 (b) 1,106
AAA Aaa 1,870 Refunding (Local Government Loan Program), 6.50% due 11/01/2012 (d) 2,005
AA Aa 2,950 (State Revolving Fund), 6.55% due 10/01/2013 3,110
AA Aa 2,000 (State Revolving Fund), 6.60% due 10/01/2018 2,081
</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:
AA- A1 $ 1,500 6.75% due 10/01/2011 $ 1,603
AAA Aaa 3,000 6.25% due 10/01/2020 (d) 3,071
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) 1,126
Michigan State Strategic Fund, Limited Obligation Revenue Bonds:
A+ A1 7,250 (Ford Motor Co. Project), AMT, Series A, 6.55% due 10/01/2022 7,438
AAA Aaa 2,500 Refunding (Detroit Edison Co. Project), Series CC, 6.95% due 9/01/2021 (c) 2,696
A+ A1 2,500 (Waste Management Inc. Project), AMT, 6.625% due 12/01/2012 2,649
NR* P1 500 Michigan State Strategic Fund, PCR, Refunding (Consumers Power Project), VRDN,
Series A, 4.10% due 4/15/2018 (a) 500
AAA Aaa 2,500 Michigan State Trunk Line, Series A, 5.80% due 11/15/2024 (c) 2,442
AAA Aaa 7,500 Monroe County, Michigan, Economic Development Corp., Limited Obligation Revenue
Refunding Bonds (Detroit Edison Co. Project), Series AA, 6.95% due 9/01/2022 (c) 8,567
Monroe County, Michigan, PCR (Detroit Edison Co. Project), AMT:
AAA Aaa 2,500 (Monroe and Fermi Plants), Series 1, 7.65% due 9/01/2020 (c) 2,749
AAA Aaa 4,500 Series CC, 6.55% due 6/01/2024 (d) 4,643
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) 1,548
AAA Aaa 5,000 Plymouth-Canton, Michigan, Community School District, Revenue Refunding Bonds,
UT, 5.50% due 5/01/2017 (b) 4,732
AAA Aaa 5,925 Riverview, Michigan, Community School District Building Revenue Bonds, UT, 6.70%
due 5/01/2002 (c)(f) 6,585
Royal Oak, Michigan, Hospital Finance Authority Revenue Bonds:
AA- Aa 3,000 Refunding (Beaumont Properties, Inc.), Series E, 6.625% due 1/01/2019 3,119
AA Aa 1,000 (William Beaumont Hospital), Series D, 6.75% due 1/01/2020 1,042
<PAGE>
AAA Aaa 7,000 Saint Clair County, Michigan, Economic Development Corp., PCR, Refunding
(Detroit Edison Co. Project), Series AA, 6.40% due 8/01/2024 (b) 7,299
NR* VMIG1++ 600 University of Michigan, University Hospital, Revenue Refunding Bonds, VRDN,
Series A, 4% due 12/01/2019 (a) 600
AAA Aaa 1,660 Western Michigan School District, Revenue Refunding Bonds, UT, 5.50% due
5/01/2020 (d) 1,577
AAA Aaa 3,470 Western Michigan University, General Revenue Bonds, 6.125% due 11/15/2022 (c) 3,524
AAA Aaa 5,500 Wyandotte, Michigan, Electric Revenue Refunding Bonds, 6.25% due 10/01/2017 (d) 5,644
Total Investments (Cost--$149,271)--98.2% 156,159
Other Assets Less Liabilities--1.8% 2,853
--------
Net Assets--100.0% $159,012
========
<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, 1996.
(b)AMBACInsured.
(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, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$149,271,490) (Note 1a) $156,159,385
Cash 85,099
Interest receivable 3,091,292
Deferred organization expenses (Note 1e) 15,471
Prepaid expenses and other assets 8,011
------------
Total assets 159,359,258
------------
<PAGE>
Liabilities: Payables:
Dividends to shareholders (Note 1f) $ 227,405
Investment adviser (Note 2) 69,854 297,259
------------
Accrued expenses and other liabilities 49,988
------------
Total liabilities 347,247
------------
Net Assets: Net assets $159,012,011
============
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 940,403
Accumulated realized capital losses on investments--net (Note 5) (2,325,141)
Unrealized appreciation on investments--net 6,887,895
------------
Total--Equivalent to $14.78 net asset value per share of Common
Stock (market price--$13.875) 109,012,011
------------
Total capital $159,012,011
============
<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, 1996
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 4,698,711
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 406,204
Commission fees (Note 4) 62,326
Professional fees 38,701
Accounting services (Note 2) 23,638
Transfer agent fees 20,570
Printing and shareholder reports 18,225
Directors' fees and expenses 11,091
Listing fees 8,189
Custodian fees 4,481
Amortization of organization expenses (Note 1e) 3,800
Pricing fees 2,969
Other 10,460
------------
Total expenses 610,654
Investment income--net 4,088,057
------------
Realized & Realized loss on investments--net (69,525)
Unrealized Loss on Change in unrealized appreciation on investments--net (2,504,934)
Investments--Net ------------
(Notes 1b, 1d & 3): Net Increase in Net Assets Resulting from Operations $ 1,513,598
============
</TABLE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: April 30, 1996 Oct. 31, 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 4,088,057 $ 8,297,303
Realized loss on investments--net (69,525) (2,255,586)
Change in unrealized appreciation/depreciation on investments--net (2,504,934) 14,921,938
------------ ------------
Net increase in net assets resulting from operations 1,513,598 20,963,655
------------ ------------
<PAGE>
Dividends & Investment income--net:
Distributions to Common Stock (3,198,765) (6,346,344)
Shareholders Preferred Stock (903,060) (1,671,220)
(Note 1f): Realized gain on investments--net:
Common Stock -- (1,948,948)
Preferred Stock -- (443,960)
------------ ------------
Net decrease in net assets resulting from dividends and distributions
to shareholders (4,101,825) (10,410,472)
------------ ------------
Net Assets: Total increase (decrease) in net assets (2,588,227) 10,553,183
Beginning of period 161,600,238 151,047,055
------------ ------------
End of period* $159,012,011 $161,600,238
============ ============
*Undistributed investment income--net $ 940,403 $ 954,171
============ ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
For the For the
Six Period
The following per share data and ratios have been derived Months Oct. 30,
from information provided in the financial statements. Ended For the Year Ended 1992++ to
April 30, October 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 15.13 $ 13.70 $ 16.55 $ 14.14 $ 14.18
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .55 1.13 1.13 1.13 --
Realized and unrealized gain (loss) on
investments--net (.35) 1.71 (2.76) 2.47 --
-------- -------- -------- -------- --------
Total from investment operations .20 2.84 (1.63) 3.60 --
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.43) (.86) (.91) (.86) --
Realized gain on investments--net -- (.26) (.08) -- --
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Stock shareholders (.43) (1.12) (.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 (.12) (.23) (.21) (.19) --
Realized gain on investments--net -- (.06) (.02) -- --
Capital charge resulting from issuance of
Preferred Stock -- -- -- (.14) --
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity (.12) (.29) (.23) (.33) --
-------- -------- -------- -------- --------
Net asset value, end of period $ 14.78 $ 15.13 $ 13.70 $ 16.55 $ 14.14
======== ======== ======== ======== ========
Market price per share, end of period $ 13.875 $ 13.50 $ 11.875 $ 16.625 $ 15.00
======== ======== ======== ======== ========
<PAGE>
Total Investment Based on market price per share 5.95%+++ 23.73% (23.52%) 17.03% .00%+++
Return:** ======== ======== ======== ======== ========
Based on net asset value per share .71%+++ 20.20% (11.36%) 23.59% (.28%)+++
======== ======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement .75%* .78% .78% .61% --
Net Assets:*** ======== ======== ======== ======== ========
Expenses .75%* .78% .78% .70% --
======== ======== ======== ======== ========
Investment income--net 5.02%* 5.44% 5.07% 5.24% --
======== ======== ======== ======== ========
Supplemental Net assets, net of Preferred Stock, end of
Data: period (in thousands) $109,012 $111,600 $101,047 $122,069 $101,736
======== ======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $ 50,000 $ 50,000 $ 50,000 $ 50,000 --
======== ======== ======== ======== ========
Portfolio turnover 9.43% 41.11% 21.76% 12.73% .00%
======== ======== ======== ======== ========
<PAGE>
Leverage: Asset coverage per $1,000 $ 3,180 $ 3,232 $ 3,021 $ 3,441 --
======== ======== ======== ======== ========
Dividends Per Share Investment income--net $ 452 $ 836 $ 771 $ 695 --
On Preferred Stock ======== ======== ======== ======== ========
Outstanding:++++++
<FN>
+++Aggregate total investment return.
*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 that occurred on December 1, 1994.
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.
(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, 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.
<PAGE>
(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.
(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.
<PAGE>
(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) Deferred organization expenses--Deferred organization expenses
are amortized on a straight-line basis over a five-year period.
(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.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 1996 were $14,948,854 and
$15,282,792 respectively.
Net realized and unrealized gains (losses) as of April 30, 1996 were
as follows:
Realized Unrealized
Gains (Losses) Gains
Long-term investments $ 240,731 $ 6,887,895
Financial futures contracts (310,256) --
----------- -----------
Total $ (69,525) $ 6,887,895
=========== ===========
<PAGE>
As of April 30, 1996, net unrealized appreciation for Federal income
tax purposes aggregated $6,887,895, of which $7,227,893 related to
appreciated securities and $339,998 related to depreciated
securities. The aggregate cost of investments at April 30, 1996 for
Federal income tax purposes was $149,271,490.
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, 1996, shares issued and
outstanding remained constant at 7,374,470. At April 30, 1996, 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
dividend periods. The yield in effect at April 30, 1996 was 3.875%.
As of April 30, 1996, there were 2,000 AMPS shares authorized,
issued and outstanding with a liquidation preference of $25,000 per
share.
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, 1996, MLPF&S, an affiliate of FAM, earned $53,956 as
commissions.
5. Capital Loss Carryforward:
At October 31, 1995, the Fund had a net capital loss carryforward of
approximately $125,000, all of which expires in 2003. This amount
will be available to offset like amounts of any future taxable
gains.
6. Subsequent Event:
On May 10, 1996, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$0.071145 per share, payable on May 30, 1996 to shareholders of
record as of May 21, 1996.
<PAGE>
