MUNIYIELD
MICHIGAN
INSURED
FUND, INC.
FUND LOGO
Annual Report
October 31, 2000
MuniYield Michigan Insured Fund, Inc. seeks to provide shareholders
with as high a level of current income exempt from Federal and
Michigan income taxes as is consistent with its investment policies
and prudent investment management by investing primarily in a
portfolio of long-term municipal obligations the interest on which,
in the opinion of bond counsel to the issuer, is exempt from Federal
and Michigan income taxes.
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. 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 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
Printed on post-consumer recycled paper
MUNIYIELD MICHIGAN INSURED FUND, INC.
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 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 Michigan Insured Fund, Inc., October 31, 2000
DEAR SHAREHOLDER
For the year ended October 31, 2000, the Common Stock of MuniYield
Michigan Insured Fund, Inc. earned $0.790 per share income
dividends, which included earned and unpaid dividends of $0.065.
This represents a net annualized yield of 5.45%, based on a month-
end net asset value of $14.48 per share. Over the same period, the
total investment return on the Fund's Common Stock was +11.19%,
based on a change in per share net asset value from $13.91 to
$14.48, and assuming reinvestment of $0.795 per share income
dividends.
For the six-month period ended October 31, 2000, the total
investment return on the Fund's Common Stock was +7.69%, based on a
change in per share net asset value from $13.89 to $14.48, and
assuming reinvestment of $0.391 per share income dividends.
For the six-month period ended October 31, 2000, the Fund's Auction
Market Preferred Stock had an average yield of 4.30% for Series A,
3.95% for Series B and 4.25% for Series C.
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. Over 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 over the next few months US economic
factors will most likely have a greater effect on bond yields than
political considerations.
Portfolio Strategy
During the six months ended October 31, 2000, the reduction in
overall bond issuance and declining bond yields limited portfolio
activity. We attempted to maintain the market neutral position we
adopted late last year by adding some interest rate-sensitive issues
to the Fund. As tax-exempt bond yields declined in recent months,
the market value of many of the Fund's holdings appreciated to such
an extent that additional market gains were limited. Some of these
issues were sold both to capture recent gains to the Fund's net
asset value and prevent the Fund from developing an overtly
defensive structure. The purchase of the more aggressively
structured securities returned the Fund to a more neutral market
position.
The Fund remained fully invested throughout the six-month period
ended October 31, 2000. A strategy of maintaining significant cash
reserves remains undesirable as it reduces shareholder income and,
given recent and expected future declines in tax-exempt bond
issuance, becomes problematic to quickly reinvest. We do not expect
any additional tightening actions by the Federal Reserve Board.
Furthermore, recent signs of a moderating US economy suggests that a
significant and protracted increase in fixed-income bond yields is
unlikely before year-end. In such an environment, we expect to
remain fully invested and use any periods of volatility as
opportunities to seek to enhance the Fund's dividend yield.
The 125 basis point increase in short-term interest rates engineered
by the Federal Reserve Board during the past year resulted in an
increase in the Fund's borrowing cost into the 4%--4.125% range.
However, despite this increase, the tax-exempt yield curve remained
steeply positive, generating a material income benefit to the Fund's
Common Stock shareholders from leveraging of the Preferred Stock.
However, should the spread between short-term and long-term tax-
exempt 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 1 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 ahead.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Fred K. Stuebe)
Fred K. Stuebe
Vice President and
Portfolio Manager
December 6, 2000
MuniYield Michigan Insured Fund, Inc., October 31, 2000
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 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.
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 90.2%
AA/Aa 1.9
A/A 1.9
BBB/Baa 0.6
Other* 5.3
*Temporary investments in short-term municipal securities.
MuniYield Michigan Insured Fund, Inc., October 31, 2000
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)
DATES Daily Adjustable Tax-Exempt Securities
GO General Obligation Bonds
HDA Housing Development Authority
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
Michigan--99.6% Belding, Michigan, Area Schools, GO, Refunding (c):
AAA Aaa $ 785 6.05% due 5/01/2006 (f) $ 846
AAA Aaa 215 6.05% due 5/01/2021 223
AAA Aaa 1,625 Brighton Township, Michigan, Sanitation Sewage Drainage
District, GO, 5.25% due 10/01/2019 (e) 1,579
AAA Aaa 1,000 Caledonia, Michigan, Community Schools, GO, Refunding, 6.625%
due 5/01/2014 (b) 1,046
AAA Aaa 1,625 Central Michigan University Revenue Bonds, 5.50% due
4/01/2007 (c)(f) 1,714
Central Michigan University Revenue Refunding Bonds (c):
AAA Aaa 3,000 5% due 10/01/2023 2,747
AAA Aaa 2,500 5% due 10/01/2027 2,267
AAA Aaa 1,000 Central Montcalm, Michigan, Public Schools, GO, 5.90% due
5/01/2019 (d) 1,032
AAA Aaa 1,250 Chelsea, Michigan, School District, GO, 5.875% due
5/01/2005 (c)(f) 1,326
AAA Aaa 4,795 Clarkston, Michigan, Community Schools, GO, 5.25% due
5/01/2023 (d) 4,600
AAA Aaa 1,000 Coldwater, Michigan, Community Schools, GO, 6.30% due
5/01/2004 (d)(f) 1,074
AAA Aaa 1,000 Comstock Park, Michigan, Public Schools, GO, 5.75% due
5/01/2029 (c) 1,008
Decatur, Michigan, Public Schools, Van Burn-Cass Counties,
GO (e):
AAA Aaa 2,765 5% due 5/01/2024 2,521
AAA Aaa 1,360 5% due 5/01/2029 1,223
Delta County, Michigan, Economic Development Corporation,
Environmental Improvement Revenue Refunding Bonds
(Mead-Escanaba Paper), DATES (a):
NR* P1 4,800 Series D, 4.60% due 12/01/2023 4,800
NR* P1 7,400 Series E, 4.60% due 12/01/2023 7,400
AAA Aaa 3,500 Detroit, Michigan, City School District, GO, Series B, 5%
due 5/01/2021 (c) 3,238
AAA Aaa 2,705 Detroit, Michigan, GO, Series B, 6% due 4/01/2015 (d) 2,887
Detroit, Michigan, Sewage Disposal Revenue Bonds, Series A:
AAA Aaa 4,000 5% due 7/01/2022 (d) 3,701
AAA Aaa 1,000 5.75% due 7/01/2026 (c) 1,012
AAA Aaa 1,000 5% due 7/01/2027 (d) 912
Detroit, Michigan, Water Supply System Revenue Bonds,
Senior Lien, Series A:
AAA Aaa 6,320 5% due 7/01/2021 (d) 5,903
AAA Aaa 4,875 5.75% due 7/01/2026 (c) 4,935
AAA Aaa 6,700 5% due 7/01/2027 (d) 6,142
AAA Aaa 1,250 5.875% due 7/01/2029 (c) 1,279
AAA Aaa 5,000 Detroit, Michigan, Water Supply System Revenue Refunding
Bonds, 6.25% due 7/01/2012 (c)(f) 5,231
AAA Aaa 1,610 East Grand Rapids, Michigan, Public School District, GO,
5.75% due 5/01/2021 (e) 1,639
AAA Aaa 1,000 Eastern Michigan University, General Revenue Refunding Bonds,
6.375% due 6/01/2014 (b) 1,036
AAA Aaa 1,310 Eastern Michigan University Revenue Bonds, Series B, 5.625%
due 6/01/2030 (c) 1,310
AAA Aaa 1,995 Eaton Rapids, Michigan, Public Schools, GO, Refunding, 5%
due 5/01/2022 (d) 1,828
AAA Aaa 1,225 Elkton Pigeon Bay Port, Michigan, GO, 5.375% due 5/01/2025 1,184
AAA Aaa 4,000 Fenton, Michigan, Area Public Schools, GO, 5% due 5/01/2021 (c) 3,683
AAA Aaa 2,000 Ferris State University, Michigan, Revenue Refunding Bonds,
5% due 10/01/2023 (b) 1,837
AAA Aaa 1,000 Frankenmuth, Michigan, School District, GO, 5.75% due
5/01/2020 (c) 1,021
AAA Aaa 1,085 Freeland, Michigan, Community School District, GO (School
Building and Site), 5.25% due 5/01/2020 1,053
Grand Ledge, Michigan, Public Schools District, GO (d)(f):
AAA Aaa 1,000 6.45% due 5/01/2004 1,079
AAA Aaa 12,500 6.60% due 5/01/2004 13,551
Grand Rapids, Michigan, Water Supply Revenue Refunding Bonds (c):
AAA Aaa 3,000 6.25% due 1/01/2011 3,067
A1+ VMIG1++ 2,600 VRDN, 4.20% due 1/01/2020 (a) 2,600
AAA Aaa 3,110 Grand Traverse County, Michigan, Hospital Revenue Refunding
Bonds (Munson Healthcare), Series A, 6.25% due 7/01/2022 (b) 3,177
AAA Aaa 2,570 Grandville, Michigan, Public Schools District, GO, Refunding,
6.60% due 5/01/2005 (c)(f) 2,802
AAA Aaa 2,250 Greenville, Michigan, Public Schools, GO, 5.75% due
5/01/2004 (d)(f) 2,356
AAA Aaa 1,500 Greenville, Michigan, Public Schools, GO, Refunding, 5% due
5/01/2024 (e) 1,372
Hartland, Michigan, Consolidated School District, GO (c):
AAA Aaa 3,250 6% due 5/01/2015 3,451
AAA Aaa 3,575 6% due 5/01/2017 3,763
AAA Aaa 1,500 6% due 5/01/2020 1,567
NR* Aaa 3,000 Holt, Michigan, Public Schools, GO, Refunding, 5.125% due
5/01/2021 (d) 2,845
AAA Aaa 3,305 Jonesville, Michigan, Community Schools, GO, 5.75% due
5/01/2029 (c) 3,332
AAA Aaa 1,080 Kalamazoo, Michigan, Building Authority Revenue Bonds,
5.375% due 10/01/2019 (d) 1,062
AAA Aaa 1,180 Kalamazoo, Michigan, Hospital Finance Authority, Hospital
Facility Revenue Refunding and Improvement Bonds (Bronson
Methodist Hospital), Series A, 6.375% due 5/15/2017 (d)(f) 1,265
Kalamazoo, Michigan, Hospital Finance Authority, Hospital
Facility Revenue Refunding Bonds (Bronson Methodist Hospital)(d):
NR* Aaa 4,250 5.25% due 5/15/2018 4,096
NR* Aaa 6,850 5.50% due 5/15/2028 6,637
AAA Aaa 1,000 Kent County, Michigan, Airport Facility Revenue Bonds
(Kent County International Airport), AMT, 5% due 1/01/2028 (d) 881
AAA Aaa 4,660 Kent, Michigan, Hospital Finance Authority, Health Care
Revenue Bonds (Butterworth Health Systems), Series A, 5.625%
due 1/15/2006 (d)(f) 4,936
AAA Aaa 4,000 Kent, Michigan, Hospital Finance Authority, Hospital Revenue
Refunding Bonds (Butterworth Hospital), Series A, 7.25% due
1/15/2013 (d) 4,689
AAA Aaa 1,000 Leslie, Michigan, Public Schools, Ingham and Jackson Counties,
GO, Refunding, 6% due 5/01/2005 (b)(f) 1,066
AAA Aaa 5,235 Lincoln Park, Michigan, School District, GO, 7% due
5/01/2006 (c)(f) 5,878
AAA Aaa 1,450 Lincoln Park, Michigan, School District, GO, Refunding, 5%
due 5/01/2026 (c) 1,332
MuniYield Michigan Insured Fund, Inc., October 31, 2000
</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>
Michigan AAA Aaa $ 4,775 Livonia, Michigan, Public School District, GO (Building and
(continued) Site), 5.75% due 5/01/2022 (c) $ 4,852
AAA Aaa 1,900 Lowell, Michigan, Area Schools, GO, Refunding, 4.91%** due
5/01/2016 (c) 816
Michigan Higher Education Student Loan Authority, Student
Loan Revenue Bonds, AMT (b):
AAA NR* 2,500 Series XVII-B, 5.40% due 6/01/2018 2,372
NR* VMIG1++ 600 VRDN, Series XII-D, 4.35% due 10/01/2015 (a) 600
AAA Aaa 2,000 Michigan Municipal Bond Authority Revenue Bonds (State
Revolving Fund), Series A, 6.60% due 10/01/2002 (f) 2,117
Michigan Municipal Bond Authority, Revenue Refunding Bonds
(Local Government Loan Program), Series A:
AAA Aaa 1,035 6.50% due 5/01/2012 (b) 1,088
AAA Aaa 1,870 6.50% due 11/01/2012 (d) 1,966
AAA Aaa 1,000 6% due 12/01/2013 (c) 1,060
AAA Aaa 7,000 6.125% due 12/01/2018 (c) 7,286
Michigan State, HDA, Rental Housing Revenue Bonds (d):
AAA Aaa 5,000 AMT, Series A, 5.30% due 10/01/2037 4,496
AAA Aaa 6,500 Series B, 5.10% due 10/01/2019 5,994
AAA Aaa 3,885 Michigan State, HDA, Rental Housing Revenue Refunding Bonds,
Series A, 6.50% due 4/01/2023 (e) 4,027
Michigan State, HDA, Revenue Refunding Bonds (h):
AA+ NR* 1,125 AMT, Series B, 6.20% due 6/01/2027 1,146
AA+ NR* 2,690 Series C, 5.90% due 12/01/2015 2,763
Michigan State Hospital Finance Authority, Revenue Refunding
Bonds:
AAA Aaa 2,500 (Ascension Health Credit), Series A, 6.25% due 11/15/2014 (d) 2,665
AAA Aaa 2,715 (Ascension Health Credit), Series A, 5.75% due 11/15/2017 (d) 2,731
AAA Aaa 12,000 (Ascension Health Credit), Series A, 6.125% due 11/15/2023 (d) 12,312
AA Aa2 1,000 (Ascension Health Credit), Series A, 6.125% due 11/15/2026 1,009
AAA Aaa 3,800 (Detroit Medical Group), Series A, 5.25% due 8/15/2027 (b) 3,513
AAA Aaa 4,805 (Mercy Health Services), Series T, 6.50% due 8/15/2013 (d) 5,203
AAA Aaa 2,000 (Mercy Health Services), Series X, 6% due 8/15/2014 (d) 2,110
AAA Aaa 2,200 (Mercy Health Services), Series X, 5.75% due 8/15/2019 (d) 2,218
AAA Aaa 4,930 (Mercy Mount Clemens), Series A, 6% due 5/15/2014 (d) 5,212
NR* VMIG1++ 1,000 (Mount Clemens Hospital), VRDN, 4.40% due 8/15/2015 (a) 1,000
AAA Aaa 2,500 (Oakwood Obligation Group), Series A, 5% due 8/15/2026 (e) 2,229
AAA Aaa 3,000 (Saint John Hospital), Series A, 6.0% due 5/15/2013 (b)(i) 3,097
AAA Aaa 1,100 (Sisters of Mercy Health Corp.), Series M, 6.25% due
2/15/2022 (e) 1,146
AAA Aaa 1,460 (Sparrow Obligated Group), 6.50% due 11/15/2011 (d) 1,514
Michigan State Strategic Fund, Limited Obligation Revenue
Bonds, AMT:
A A1 5,000 (Ford Motor Company Project), Series A, 6.55% due 10/01/2022 5,094
BBB Ba1 2,500 (Waste Management Inc. Project), 6.625% due 12/01/2012 2,502
Michigan State Strategic Fund, Limited Obligation Revenue
Refunding Bonds (d):
AAA Aaa 7,250 (Detroit Edison Company), AMT, Series A, 5.55% due 9/01/2029 6,995
NR* Aaa 5,750 RIB, Series 382, 8.09% due 9/01/2025 (g) 6,427
Michigan State Strategic Fund, PCR, Refunding:
NR* VMIG1++ 2,000 (Consumers Power Project), VRDN, 4.60% due 4/15/2018 (a)(b) 2,000
A A2 2,500 (General Motors Corp.), 6.20% due 9/01/2020 2,560
AAA Aaa 2,800 Michigan State Trunk Line Revenue Refunding Bonds, Series A,
5% due 11/01/2026 (d) 2,547
AAA Aaa 2,435 Michigan State University Revenue Bonds, Series A, 5% due
2/15/2026 (b) 2,226
AAA Aaa 15,000 Monroe County, Michigan, Economic Development Corp., Limited
Obligation Revenue Refunding Bonds (Detroit Edison Co. Project),
Series AA, 6.95% due 9/01/2022 (c) 17,799
Monroe County, Michigan, PCR (Detroit Edison Company Project),
AMT (d):
AAA Aaa 9,000 Series CC, 6.55% due 6/01/2024 9,465
AAA Aaa 1,500 Series I-B, 6.55% due 9/01/2024 1,582
AAA Aaa 4,500 Northern Michigan University, Revenue Refunding Bonds, 5% due
12/01/2025 (d) 4,121
Northview, Michigan, Public Schools District, GO, Refunding (d):
AAA NR* 2,265 5.80% due 5/01/2006 (f) 2,413
AAA Aaa 235 5.80% due 5/01/2021 239
AAA Aaa 1,100 Norway Vulcan, Michigan, Area Schools, GO, 5.90% due 5/01/2025 (c) 1,132
AAA Aaa 2,600 Novi, Michigan, Community School District, GO, 6.125% due
5/01/2003 (c)(f) 2,748
AAA Aaa 1,870 Redford, Michigan, Unified School District, GO, 5.90% due
5/01/2006 (c)(f) 2,002
AAA Aaa 1,000 Reeths-Puffer Schools, Michigan, GO, Refunding, 6% due
5/01/2005 (c)(f) 1,066
AAA Aaa 5,925 Riverview, Michigan, Community School District, GO, 6.70%
due 5/01/2002 (c)(f) 6,205
AAA Aaa 2,060 Rochester, Michigan, Community School District, GO, Refunding,
Series I, 5.50% due 5/01/2008 2,161
AAA Aaa 4,000 Rockford, Michigan, Public Schools, GO, 5.25% due 5/01/2022 (c) 3,846
AAA Aaa 3,655 Romeo, Michigan, Community School District, GO (Building
and Site Bonds), 5.375% due 5/01/2020 (d) 3,579
A1 VMIG1++ 1,500 Royal Oak, Michigan, Hospital Finance Authority, Hospital
Revenue Bonds (William Beaumont Hospital), VRDN, Series J,
4.60% due 1/01/2003 (a) 1,500
AA Aa3 2,620 Royal Oak, Michigan, Hospital Finance Authority Revenue Bonds
(Beaumont Properties, Inc.), Series E, 6.625% due 1/01/2019 2,709
AAA Aaa 2,500 Saginaw, Michigan, Hospital Finance Authority, Revenue
Refunding Bonds (Covenant Medical Center), Series E, 5.625%
due 7/01/2013 (d) 2,574
NR* Aaa 7,400 Saint Clair County, Michigan, Ecomomic Revenue Refunding Bonds
(Detroit Edison Company), RIB, Series 282, 8.09% due
8/01/2024 (b)(g) 8,602
AAA Aaa 2,975 Tecumseh, Michigan, Public Schools, GO, 5% due 5/01/2021 (c) 2,739
AAA Aaa 1,000 Three Rivers, Michigan, Community Schools, GO, 6% due
5/01/2006 (d)(f) 1,075
AAA Aaa 3,725 Three Rivers, Michigan, Community Schools, GO, Refunding, 5%
due 5/01/2023 (e) 3,428
A1+ VMIG1++ 1,600 University of Michigan, University Hospital Revenue Refunding
Bonds, VRDN, Series A, 4.65% due 12/01/2019 (a) 1,600
AAA Aaa 1,250 Van Buren County, Michigan, GO, 5% due 5/01/2021 (b) 1,166
AAA Aaa 3,000 Warren, Michigan, Water and Sewer Revenue Bonds, 5.125% due
11/01/2023 (e) 2,791
AAA Aaa 1,500 Waterford, Michigan, School District, GO, 6.25% due
6/01/2004 (c)(f) 1,598
AAA Aaa 9,660 Wayne Charter County, Michigan, Airport Revenue Bonds (Detroit
Metropolitan Wayne County), AMT, Series A, 5.375% due
12/01/2015 (d) 9,498
Wayne State University, Michigan, University Revenue Refunding
Bonds (c):
AAA Aaa 1,600 5.25% due 11/15/2019 1,555
AAA Aaa 10,275 5.125% due 11/15/2029 9,592
MuniYield Michigan Insured Fund, Inc., October 31, 2000
</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>
Michigan AAA Aaa $ 2,405 West Branch-Rose City, Michigan, Area School District, GO,
(concluded) 5.50% due 5/01/2024 (c) $ 2,377
AAA Aaa 2,000 Western Michigan, University Revenue Bonds, Series B, 6.50%
due 7/15/2021 (b) 2,063
AAA Aaa 5,500 Wyandotte, Michigan, Electric Revenue Refunding Bonds, 6.25%
due 10/01/2017 (d) 5,688
AAA Aaa 1,300 Ypsilanti, Michigan, School District, GO, Refunding, 5.75%
due 5/01/2007 (c)(f) 1,380
AAA Aaa 2,040 Zeeland, Michigan, Public Schools, GO, 5.375% due 5/01/2025 (c) 1,979
Puerto NR* Aaa 1,270 Puerto Rico Electric Power Authority, Power Revenue Bonds,
Rico--0.3% Trust Receipts, Class R, Series 16 HH, 7.346% due 7/01/2013 (g) 1,431
Total Investments (Cost--$393,272)--99.9% 402,637
Other Assets Less Liabilities--0.1% 227
--------
Net Assets--100.0% $402,864
========
(a)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.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)MBIA Insured.
(e)FSA Insured.
(f)Prerefunded.
(g)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.
(h)FHA Insured.
(i)Escrowed to maturity.
*Not Rated.
**Represents a zero coupon bond; the interest rate shown is the
effective yield at the time of purchase by the Fund.
++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>
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of October 31, 2000
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$393,272,066) $402,637,485
Cash 54,948
Interest receivable 7,869,726
Prepaid expenses and other assets 29,859
------------
Total assets 410,592,018
------------
Liabilities: Payables:
Securities purchased $ 7,124,649
Dividends to shareholders 267,726
Investment adviser 164,124 7,556,499
------------
Accrued expenses and other liabilities 171,692
------------
Total liabilities 7,728,191
------------
Net Assets: Net assets $402,863,827
============
Capital: Capital Stock (200,000,000 shares authorized):
Preferred Stock, par value $.05 per share (5,600 shares of AMPS*
issued and outstanding at $25,000 per share liquidation
preference) $140,000,000
Common Stock, par value $.10 per share (18,155,932 shares
issued and outstanding) $ 1,815,593
Paid-in capital in excess of par 272,410,853
Undistributed investment income--net 1,516,558
Accumulated realized capital losses on investments--net (20,443,221)
Accumulated distributions in excess of realized capital gains
on investments--net (1,801,375)
Unrealized appreciation on investments--net 9,365,419
------------
Total--Equivalent to $14.48 net asset value per share of
Common Stock (market price--$11.9375) 262,863,827
------------
Total capital $402,863,827
============
* Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
MuniYield Michigan Insured Fund, Inc., October 31, 2000
<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 $ 17,975,311
Income:
Expenses: Investment advisory fees $ 1,562,745
Reorganization expenses 466,737
Commission fees 279,420
Accounting services 81,326
Transfer agent fees 75,776
Professional fees 73,038
Printing and shareholder reports 59,818
Directors' fees and expenses 32,432
Listing fees 26,459
Custodian fees 19,805
Pricing fees 11,544
Other 19,825
------------
Total expenses 2,708,925
------------
Investment income--net 15,266,386
------------
Realized & Realized loss on investments--net (5,852,407)
Unrealized Change in unrealized appreciation/depreciation on investments--net 18,083,066
Gain (Loss) on ------------
Investments--Net: Net Increase in Net Assets Resulting from Operations $ 27,497,045
============
See Notes to Financial Statements.
</TABLE>
<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 $ 15,266,386 $ 7,713,511
Realized loss on investments--net (5,852,407) (124,051)
Change in unrealized appreciation/depreciation on
investments--net 18,083,066 (13,181,186)
------------ ------------
Net increase (decrease) in net assets resulting from operations 27,497,045 (5,591,726)
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (10,714,943) (6,322,552)
Shareholders: Preferred Stock (4,435,180) (1,326,180)
In excess of realized gain on investments--net:
Common Stock -- (1,552,255)
Preferred Stock -- (249,120)
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (15,150,123) (9,450,107)
------------ ------------
Capital Stock Proceeds from issuance of Common Stock resulting from
Transactions: reorganization 147,153,267 --
Proceeds from issuance of Preferred Stock resulting
from reorganization 90,000,000 --
Value of shares issued to Common Stock Shareholders
in reinvestment of dividends and distributions -- 894,471
------------ ------------
Net increase in net assets derived from capital stock
transactions 237,153,267 894,471
------------ ------------
Net Assets: Total increase (decrease) in net assets 249,500,189 (14,147,362)
Beginning of year 153,363,638 167,511,000
------------ ------------
End of year* $402,863,827 $153,363,638
============ ============
*Undistributed investment income--net $ 1,516,558 $ 1,400,295
============ ============
See Notes to Financial Statements.
</TABLE>
MuniYield Michigan Insured Fund, Inc., October 31, 2000
<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 $ 13.91 $ 15.93 $ 15.51 $ 15.16 $ 15.13
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .99 1.04 1.07 1.09 1.11
Realized and unrealized gain (loss) on
investments--net .67 (1.79) .46 .33 .03
-------- -------- -------- -------- --------
Total from investment operations 1.66 (.75) 1.53 1.42 1.14
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.79) (.85) (.83) (.84) (.87)
In excess of realized gain on investments--net -- (.21) (.04) -- --
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Stock shareholders (.79) (1.06) (.87) (.84) (.87)
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:
Dividends and distributions to Preferred
Stock shareholders:
Investment income--net (.30) (.18) (.21) (.23) (.24)
In excess of realized gain on
investments--net -- (.03) (.03) -- --
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity (.30) (.21) (.24) (.23) (.24)
-------- -------- -------- -------- --------
Net asset value, end of year $ 14.48 $ 13.91 $ 15.93 $ 15.51 $ 15.16
======== ======== ======== ======== ========
Market price per share, end of year $11.9375 $12.1875 $ 15.875 $ 14.50 $ 14.25
======== ======== ======== ======== ========
Total Investment Based on market price per share 4.62% (17.47%) 16.03% 8.00% 12.14%
Return:* ======== ======== ======== ======== ========
Based on net asset value per share 11.19% (6.13%) 8.85% 8.58% 6.45%
======== ======== ======== ======== ========
Ratios Based on Total expenses, excluding reorganization
Average Net expenses** 1.10% 1.09% 1.06% 1.06% 1.09%
Assets of ======== ======== ======== ======== ========
Common Stock: Total expenses** 1.33% 1.09% 1.06% 1.06% 1.09%
======== ======== ======== ======== ========
Total investment income--net** 7.49% 6.85% 6.90% 7.09% 7.28%
======== ======== ======== ======== ========
Amount of dividends to Preferred Stock
shareholders 2.18% 1.18% 1.36% 1.48% 1.58%
======== ======== ======== ======== ========
Investment income--net, to Common Stock
shareholders 5.31% 5.67% 5.54% 5.61% 5.70%
======== ======== ======== ======== ========
Ratios Based on Total expenses, excluding reorganization
Total Average Net expenses .72% .76% .74% .74% .75%
Assets:**++ ======== ======== ======== ======== ========
Total expenses .86% .76% .74% .74% .75%
======== ======== ======== ======== ========
Total investment income--net 4.87% 4.75% 4.79% 4.96% 5.03%
======== ======== ======== ======== ========
Ratios Based on Dividends to Preferred Stock shareholders 4.06% 2.66% 3.13% 3.39% 3.53%
Average Net Assets of ======== ======== ======== ======== ========
Preferred Stock:
Supplemental Net assets, net of Preferred Stock, end
Data: of year (in thousands) $262,864 $103,364 $117,511 $114,392 $111,834
======== ======== ======== ======== ========
Preferred Stock outstanding, end of year
(in thousands) $140,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
======== ======== ======== ======== ========
Portfolio turnover 51.41% 42.71% 41.65% 16.68% 21.82%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 2,878 $ 3,067 $ 3,350 $ 3,288 $ 3,237
======== ======== ======== ======== ========
Dividends Per Series A--Investment income--net $ 1,023 $ 663 $ 782 $ 849 $ 882
Share On ======== ======== ======== ======== ========
Preferred Stock Series B--Investment income--net $ 653 -- -- -- --
Outstanding:++++ ======== ======== ======== ======== ========
Series C--Investment income--net $ 678 -- -- -- --
======== ======== ======== ======== ========
*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.
++Includes Common and Preferred Stock average net assets.
++++The Fund's Preferred Stock was issued on November 19, 1992
(Series A) and March 6, 2000 (Series B and Series C).
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. 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 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 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-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.
MuniYield Michigan Insured Fund, Inc., October 31, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
* 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 $147,127,270 and
$147,539,928, 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 $ (5,734,655) $ 9,365,419
Financial futures contracts (117,752) --
------------- ------------
Total $ (5,852,407) $ 9,365,419
============= ============
As of October 31, 2000, net unrealized appreciation for Federal
income tax purposes aggregated $9,365,419, of which $14,335,121
related to appreciated securities and $4,969,702 related to
depreciated securities. The aggregate cost of investments at October
31, 2000 for Federal income tax purposes was $393,272,066.
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
Shares issued and outstanding during the year ended October 31,
2000, increased by 10,724,298 as a result of issuance of Common
Stock from reorganization. Shares issued and outstanding during the
year ended October 31, 1999 increased by 57,164 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 $.05 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, 4.13%, Series B, 4.13% and
Series C, 4.13%.
Shares issued and outstanding during the year ended October 31,
2000, increased by 3,600 as a result of issuance of Preferred Stock
from reorganization. Shares issued and outstanding during the year
ended 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 $189,558 as commissions.
5. Capital Loss Carryforward:
At October 31, 2000, the Fund had a net capital loss carryforward of
approximately $18,795,000, of which $2,062,000 expires in 2001;
$3,063,000 expires in 2002; $746,000 expires in 2003; $1,458,000
expires in 2006; $3,975,000 expires in 2007 and $7,491,000 expires
in 2008. This amount will be available to offset like amounts of any
future taxable gains.
6. Acquisition of Other FAM-Managed Investment Companies:
On March 6, 2000, the Fund acquired all of the net assets of
MuniHoldings Michigan Insured Fund, Inc. and MuniVest Michigan
Insured Fund, Inc. pursuant to a plan of reorganization. The
acquisition was accomplished by a tax-free exchange of the following
capital shares:
Common Stock AMPS Shares
Shares Exchanged Exchanged
MuniHoldings Michigan
Insured Fund, Inc. 4,458,344 1,600
MuniVest Michigan Insured
Fund, Inc. 7,387,697 2,000
In exchange for these shares, the Fund issued 10,724,298 Common
Stock shares and 3,600 AMPS shares. As of that date, net assets of
the acquired funds, including unrealized depreciation and
accumulated net realized capital losses, were as follows:
Accumulated
Net Unrealized Net Realized
Assets Depreciation Capital Losses
MuniHoldings
Michigan Insured
Fund, Inc. $ 94,380,719 $8,690,297 $ 3,145,585
MuniVest Michigan
Insured Fund, Inc. $142,772,548 $ 723,461 $10,104,959
The aggregate net assets of the Fund immediately after the
acquisition amounted to $389,126,226.
7. 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 $.064625 per share, payable on November 29, 2000 to shareholders
of record as of November 20, 2000.
MuniYield Michigan Insured Fund, Inc., October 31, 2000
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors,
MuniYield Michigan Insured Fund, Inc.
We have audited the accompanying statement of assets, liabilities
and capital of MuniYield Michigan 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 years indicated
therein. 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.
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 present fairly, in all material respects, the
financial position of MuniYield Michigan 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
indicated years, in conformity with accounting principles generally
accepted in the United States.
Ernst & Young LLP
MetroPark, New Jersey
December 6, 2000
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by MuniYield
Michigan 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 capital gains
distributions paid by the Fund during the year.
Please retain this information for your records.
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
M. Colyer Crum, Director
Laurie Simon Hodrick, Director
Jack B. Sunderland, Director
Stephen B. Swensrud, Director
J. Thomas Touchton, Director
Fred G. Weiss, Director
Arthur Zeikel, Director
Vincent R. Giordano, Senior Vice President
Kenneth A. Jacob, Vice President
Fred K. Stuebe, Vice President
Donald C. Burke, Vice President and Treasurer
Alice A. Pellegrino, Secretary
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:
The Bank of New York
100 Church Street
New York, NY 10286
NYSE Symbol
MIY
