MUNIYIELD
MICHIGAN
INSURED
FUND, INC.
FUND LOGO
Semi-Annual Report
April 30, 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., April 30, 2000
DEAR SHAREHOLDER
For the six-month period ended April 30, 2000, the Common Stock of
MuniYield Michigan Insured Fund, Inc. earned $0.399 per share income
dividends, which included earned and unpaid dividends of $0.066.
This represents a net annualized yield of 5.77%, based on a month-
end per share net asset value of $13.89. Over the same period, the
total investment return on the Fund's Common Stock was +3.25%, based
on a change in per share net asset value from $13.91 to $13.89, and
assuming reinvestment of $0.404 per share income dividends.
For the six-month period ended April 30, 2000, the Fund's Auction
Market Preferred Stock had an average yield of 5.57% for Series A,
4.03% for Series B and 3.69% for Series C.
The Municipal Market Environment
Since October 1999 through mid-January 2000, fixed-income bond
yields rose steadily higher. US economic growth, in part intensified
by Year 2000 preparations, grew at a 7.3% rate in the fourth quarter
of 1999 and at a 4.2% annual rate for all of 1999. Initial estimates
for the first quarter of 2000 were reported at 5.4%. However,
despite these significant growth rates, no price measure indicator
has shown any considerable signs of future price pressures at the
consumer level, despite the lowest unemployment rates since January
1970. Given no signs of an economic slowdown, the Federal Reserve
Board continued to raise short-term interest rates in November 1999
and again in February and March 2000. In each instance, the Federal
Reserve Board cited both the continued growth of US employment and
the impressive strength of the US equity markets as reasons for
attempting to moderate US economic growth before inflationary price
increases are realized. By mid-January 2000, US Treasury bond yields
rose 60 basis points (0.60%) to 6.75%. Similarly, as measured by the
Bond Buyer Revenue Bond Index, long-term tax-exempt bond yields rose
approximately 20 basis points to 6.35%.
Since mid-January, fixed-income markets have largely ignored strong
economic fundamentals and concentrated on very positive technical
supply factors. Declining bond issuance, both current, and more
importantly, expected future issuance, helped push bond yields lower
from mid-January to mid-April 2000. In late January and early
February 2000, the US Treasury announced its intention to reduce the
number of issues to be auctioned in the quarterly Treasury note and
bond auctions. Furthermore, budgetary surpluses would allow the US
Treasury to repurchase outstanding, higher-couponed Treasury issues,
primarily in the 15-year and longer-term maturity sectors. Both
these actions would result in a significant reduction in the
outstanding supply of long-term US Treasury debt. Domestic and
international investors quickly began to accumulate what was
expected to become a scarce commodity and bond prices quickly rose.
By mid-April 2000, US Treasury bond yields had declined over 100
basis points to 5.67%. However, bond yields rose somewhat during the
last two weeks of the period as economic statistics were released,
indicating that the economic strength seen in late 1999 was
continuing into early 2000. The decline in long-term US Treasury
bond yields resulted in an inverted taxable yield curve as short-
term and intermediate-term interest rates have not fallen
proportionately since the Federal Reserve Board is expected to
continue to raise short-term interest rates. The current inversion
has had much more to do with debt reduction and Treasury buybacks
than with investor expectations of slower economic growth. Over the
last six months, long-term US Treasury bond yields have fallen
almost 20 basis points to close the six-month period ended April 30,
2000 at 5.96%.
Tax-exempt bond yields have also declined in recent months. The
decline has largely been in response to the rally in US Treasury
securities, as well as a continued positive technical supply
environment. States such as California and Maryland have announced
that their large current and anticipated future budget surpluses
will permit the cancellation or postponement of expected bond
issuance. Additionally, some issuers have also initiated tenders to
repurchase existing debt, reducing the supply of tax-exempt bonds in
the secondary market as well. Since their recent peak in January
2000, long-term municipal bond yields declined over 25 basis points
to finish the six-month period ended April 30, 2000 at 6.07%. During
the last six months, municipal bond yields declined just 10 basis
points overall.
The relative underperfomance of the municipal bond market in recent
months has been especially disappointing given the strong technical
position the tax-exempt bond market enjoyed. The issuance of long-
term tax-exempt securities has dramatically declined. Over the last
year, $203 billion in new long-term municipal securities was issued,
a decline of almost 25% compared to the same period a year earlier.
For the six months ended April 30, 2000, approximately $90 billion
in new tax-exempt bonds was underwritten, a decline of more than 25%
compared to the same period in 1999. Although investors received
over $30 billion in coupon payments, bond maturities, and the
proceeds from early bond redemptions, coupled with the highest
municipal bond yields in three years, overall investor demand has
diminished. Long-term municipal bond mutual funds have seen
consistent outflows in recent months as the yields of individual
securities have risen faster than those of larger, more diverse
mutual funds. Over the last four months, tax-exempt mutual funds
have had net redemptions of more than $8 billion. Also, the demand
from property and casualty insurance companies has weakened as a
result of the losses and anticipated losses incurred from a series
of damaging storms across much of the eastern United States.
Additionally, many institutional investors who have in recent years
been attracted to the municipal bond market by historically
attractive tax-exempt bond yield ratios of over 90% found other
asset classes even more attractive. Even with a favorable supply
position, tax-exempt municipal bond yields have underperformed their
taxable counterparts.
Any significantly lower municipal bond yields are still likely to
require weaker US employment growth and consumer spending. The
actions taken in recent months by the Federal Reserve Board should
eventually slow US economic growth. The recent declines in US home
sales are perhaps the first sign that consumer spending is being
slowed by higher interest rates. Until further signs develop, it is
likely that the municipal bond market's current favorable technical
position will dampen significant tax-exempt interest rate volatility
and provide a stable environment for eventual improvement in
municipal bond prices.
Portfolio Strategy
As the US economy remained far stronger than we anticipated in late
1999, we adopted a more neutral portfolio structure for the Fund. We
sold several interest rate-sensitive issues and replaced them with
higher-couponed issues in the 15-year maturity range. Given the
steepness of the tax-exempt yield curve, bonds in this maturity
range can capture approximately 95% of the yield available in the
entire municipal yield curve. Bonds with this structure are
significantly less sensitive to interest rate changes than bonds
maturing in 25 years--30 years, thereby still allowing the Fund to
maintain an attractive income dividend stream. However, reduced new
bond issuance in recent months has hampered our efforts to return
the Fund to a neutral stance.
MuniYield Michigan Insured Fund, Inc., April 30, 2000
For the majority of the six-months ended April 30, 2000, short-term
tax-exempt bond yields averaged approximately 3.75%, resulting in a
significant incremental yield paid to the Fund's Common Stock
shareholder. However, the combination of Federal income tax season
and an ongoing Federal Reserve Board tightening cycle has pushed
municipal short-term interest rates to above 4%. The steepness of
the tax-exempt bond yield curve still generates a positive yield
advantage from the leveraging of the Fund's Preferred Stock.
However, should the spread between long-term tax-exempt interest
rates and short-term tax-exempt interest rates narrow, the benefits
of the leverage will decline and the yield on the Fund's Common
Stock will decline. (For an explanation on 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
May 31, 2000
PROXY RESULTS
During the six-month period ended April 30, 2000, MuniYield Michigan
Insured Fund, Inc.'s Common Stock shareholders voted on the
following proposals. Proposals 1 and 2 were approved at a
shareholders' meeting on April 27, 2000. Proposal 3 was approved on
December 15, 1999. The description of each proposal and number of
shares voted are as follows:
<TABLE>
<CAPTION>
Shares Voted Shares Withheld
For From Voting
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors: Terry K. Glenn 4,864,529 99,061
Jack B. Sunderland 4,849,368 114,222
Stephen B. Swensrud 4,861,259 102,331
J. Thomas Touchton 4,864,629 98,961
Fred G. Weiss 4,858,940 104,650
Arthur Zeikel 4,853,501 110,089
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To ratify the selection of Ernst & Young LLP as the Fund's independent
auditors for the current fiscal year. 4,845,061 19,826 98,703
3. To approve the Agreement and Plan of Reorganization among the Fund,
MuniHoldings Michigan Insured Fund, Inc. and MuniVest Michigan
Insured Fund, Inc. 4,085,897 148,765 161,644
</TABLE>
During the six-month period ended April 30, 2000, MuniYield Michigan
Insured Fund, Inc.'s Common Stock shareholders voted on the
following proposals. Proposals 1 and 2 were approved at a
shareholders' meeting on April 27, 2000. Proposal 3 was approved on
December 15, 1999. The description of each proposal and number of
shares voted are as follows:
<TABLE>
<CAPTION>
Shares Voted Shares Withheld
For From Voting
<S> <C> <C>
1. To elect the Fund's Board of Directors: Terry K. Glenn, M. Colyer Crum,
Laurie Simon Hodrick, Jack B. Sunderland, Stephen B. Swensrud,
J. Thomas Touchton, Fred G. Weiss and Arthur Zeikel 1,051 0
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To ratify the selection of Ernst & Young LLP as the Fund's independent
auditors for the current fiscal year. 1,050 0 1
3. To approve the Agreement and Plan of Reorganization among the Fund,
MuniHoldings Michigan Insured Fund, Inc. and MuniVest Michigan
Insured Fund, Inc. 1,966 4 30
</TABLE>
MuniYield Michigan Insured Fund, Inc., April 30, 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
The quality ratings of securities in the Fund as of April 30, 2000
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 87.0%
AA/Aa 3.1
A/A 1.9
BBB/Baa 0.6
NR (Not Rated) 1.4
Other* 3.7
[FN]
*Temporary investments in short-term municipal securities.
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--97.7% AAA Aaa $ 2,500 Anchor Bay, Michigan, School District, GO (School Building and
Site), Series I, 6% due 5/01/2023 (c) $ 2,521
AAA Aaa 1,000 Avondale, Michigan, School District, GO, Refunding, 4.75% due
5/01/2022 (b) 838
Belding, Michigan, Area Schools, GO, Refunding (c):
AAA NR* 785 6.05% due 5/01/2006 (f) 830
AAA Aaa 215 6.05% due 5/01/2021 218
AAA Aaa 1,000 Caledonia, Michigan, Community Schools, GO, Refunding, 6.625%
due 5/01/2014 (b) 1,048
AAA Aaa 1,625 Central Michigan University Revenue Bonds, 5.50% due
4/01/2007 (c)(f) 1,673
Central Michigan University, Revenue Refunding Bonds (c):
AAA Aaa 3,000 5% due 10/01/2023 2,615
AAA Aaa 2,500 5% due 10/01/2027 2,155
AAA Aaa 1,250 Chelsea, Michigan, School District, GO, 5.875% due
5/01/2005 (c)(f) 1,306
AAA Aaa 4,795 Clarkston, Michigan, Community Schools, GO, 5.25% due
5/01/2023 (d) 4,366
AAA Aaa 1,000 Coldwater, Michigan, Community Schools, GO, 6.30% due
5/01/2004 (d)(f) 1,063
AAA Aaa 2,500 Comstock Park, Michigan, Public Schools, GO, 5.75% due
5/01/2029 (c) 2,441
Decatur, Michigan, Public Schools, Van Burn-Cass Counties,
GO (e):
AAA Aaa 2,765 5% due 5/01/2024 2,400
AAA Aaa 1,360 5% due 5/01/2029 1,164
NR* P1 3,500 Delta County, Michigan, Economic Development Corporation,
Environmental Improvement Revenue Refunding Bonds (Mead-
Escanaba Paper), DATES, Series D, 5.40% due 12/01/2023 (a) 3,500
AAA Aaa 3,500 Detroit, Michigan, City School District, GO, Series B, 5% due
5/01/2021 (c) 3,081
Detroit, Michigan, Sewage Disposal Revenue Bonds, Series A:
AAA Aaa 4,000 5% due 7/01/2022 (d) 3,504
AAA Aaa 1,000 5.75% due 7/01/2026 (c) 981
AAA Aaa 1,000 5% due 7/01/2027 (d) 863
Detroit, Michigan, Water Supply System Revenue Bonds, Senior
Lien, Series A:
AAA Aaa 6,320 5% due 7/01/2021 (d) 5,560
AAA Aaa 4,875 5.75% due 7/01/2026 (c) 4,784
AAA Aaa 6,700 5% due 7/01/2027 (d) 5,779
AAA Aaa 1,250 5.875% due 7/01/2029 (c) 1,239
AAA Aaa 5,000 Detroit, Michigan, Water Supply System, Revenue Refunding
Bonds, 6.25% due 7/01/2012 (c)(f) 5,235
</TABLE>
MuniYield Michigan Insured Fund, Inc., April 30, 2000
<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 NR* $ 1,610 East Grand Rapids, Michigan, Public School District, GO,
(continued) 5.75% due 5/01/2021 (e) $ 1,594
AAA Aaa 1,000 Eastern Michigan University, General Revenue Refunding Bonds,
6.375% due 6/01/2014 (b) 1,036
AAA Aaa 1,995 Eaton Rapids, Michigan, Public Schools, GO, Refunding, 5%
due 5/01/2022 (d) 1,746
AAA Aaa 4,000 Fenton, Michigan, Area Public Schools, GO, 5% due 5/01/2021 (c) 3,517
AAA Aaa 2,000 Ferris State University, Michigan, Revenue Refunding Bonds,
5% due 10/01/2023 (b) 1,743
Grand Ledge, Michigan, Public Schools District, GO (d)(f):
AAA Aaa 1,000 6.45% due 5/01/2004 1,069
AAA Aaa 12,500 6.60% due 5/01/2004 13,423
Grand Rapids, Michigan, Water Supply Revenue Refunding
Bonds (c):
AAA Aaa 3,000 6.25% due 1/01/2011 3,076
A1+ VMIG1++ 2,600 VRDN, 4.95% due 1/01/2020 (a) 2,600
Grand Traverse County, Michigan, Hospital Revenue Refunding
Bonds (Munson Healthcare), Series A (b):
AAA Aaa 4,000 6.25% due 7/01/2002 (f) 4,187
AAA Aaa 2,500 5.50% due 7/01/2018 2,373
AAA Aaa 3,110 6.25% due 7/01/2022 3,138
AAA Aaa 2,570 Grandville, Michigan, Public Schools District, GO, Refunding,
6.60% due 5/01/2005 (c)(f) 2,767
AAA Aaa 4,750 Greenville, Michigan, Public Schools, GO, 5.75% due 5/01/2004
(d)(f) 4,919
AAA Aaa 1,500 Greenville, Michigan, Public Schools, GO, Refunding, 5% due
5/01/2024 (e) 1,302
NR* Aaa 3,000 Holt, Michigan, Public Schools, GO, Refunding, 5.125% due
5/01/2021 (d) 2,696
AAA Aaa 3,305 Jonesville, Michigan, Community Schools, GO, 5.75% due
5/01/2029 (c) 3,228
AAA Aaa 1,080 Kalamazoo, Michigan, Building Authority Revenue Bonds, 5.375%
due 10/01/2019 (d) 1,022
Kalamazoo, Michigan, Hospital Finance Authority, Hospital
Facility Revenue Refunding and Improvement Bonds (Bronson
Methodist Hospital)(d):
AAA Aaa 2,935 5.75% due 5/15/2016 2,920
AAA Aaa 1,000 5.875% due 5/15/2026 975
AAA Aaa 1,180 Series A, 6.375% due 5/15/2017 1,246
Kalamazoo, Michigan, Hospital Finance Authority, Hospital
Facility Revenue Refunding Bonds (Bronson Methodist
Hospital)(d):
NR* Aaa 4,250 5.25% due 5/15/2018 3,888
NR* Aaa 6,950 RIB, Series 138, 5.59% due 5/15/2028 (g) 5,858
AAA Aaa 1,000 Kent County, Michigan, Airport Facility Revenue Bonds (Kent
County International Airport), AMT, 5% due 1/01/2028 (d) 836
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) 4,845
AAA Aaa 4,000 Kent, Michigan, Hospital Finance Authority, Hospital Revenue
Refunding Bonds (Butterworth Hospital), Series A, 7.25%
due 1/15/2013 (d) 4,580
AAA Aaa 2,500 Lakeshore, Michigan, Public Schools, GO, 5.70% due 5/01/2022 (d) 2,442
AAA Aaa 1,000 Leslie, Michigan, Public Schools, Ingham and Jackson
Counties, GO, Refunding, 6% due 5/01/2005 (b)(f) 1,050
AAA Aaa 5,235 Lincoln Park, Michigan, School District, GO, 7% due
5/01/2006 (c)(f) 5,791
AAA Aaa 1,900 Lowell, Michigan, Area Schools, GO, Refunding, 4.91%** due
5/01/2016 (c) 747
Michigan Higher Education Student Loan Authority, Student
Loan Revenue Bonds, AMT (b):
AAA Aaa 2,000 Series XII-Q, 5.20% due 9/01/2010 1,899
AAA NR* 2,500 Series XVII-B, 5.40% due 6/01/2018 2,286
AAA VMIG1++ 600 VRDN, Series XII-D, 5.10% due 10/01/2015 (a) 600
AA+ Aa1 2,000 Michigan Municipal Bond Authority Revenue Bonds (State
Revolving Fund), Series A, 6.60% due 10/01/2002 (f) 2,115
Michigan Municipal Bond Authority, Revenue Refunding Bonds
(Local Government Loan Program), Series A:
AAA Aaa 1,035 6.50% due 5/01/2012 (b) 1,087
AAA Aaa 1,870 6.50% due 11/01/2012 (d) 1,963
AAA Aaa 1,000 6% due 12/01/2013 (c) 1,034
AAA Aaa 7,000 6.125% due 12/01/2018 (c) 7,146
AA+ Aa1 1,500 Michigan State, GO, 5% due 12/01/2005 1,499
AAA Aaa 6,500 Michigan State, HDA, Rental Housing Revenue Bonds, Series
B, 5.10% due 10/01/2019 (d) 5,848
AAA Aaa 3,885 Michigan State, HDA, Rental Housing Revenue Refunding Bonds,
Series A, 6.50% due 4/01/2023 (e) 4,008
Michigan State, HDA, Revenue Refunding Bonds (h):
AA+ NR* 1,125 AMT, Series B, 6.20% due 6/01/2027 1,128
AA+ NR* 2,690 Series C, 5.90% due 12/01/2015 2,729
Michigan State Hospital Finance Authority, Revenue
Refunding Bonds:
AAA Aaa 1,500 (Ascension Health Credit), Series A, 6.25% due
11/15/2014 (d) 1,572
AAA Aaa 2,715 (Ascension Health Credit), Series A, 5.75% due
11/15/2017 (d) 2,685
AAA Aaa 12,000 (Ascension Health Credit), Series A, 6.125% due
11/15/2023 (d) 12,050
AA Aa2 1,000 (Ascension Health Credit), Series A, 6.125% due
11/15/2026 984
AAA Aaa 4,000 (Detroit Medical Group), Series A, 5.25% due
8/15/2027 (b) 3,506
AAA Aaa 4,805 (Mercy Health Services), Series T, 6.50% due
8/15/2013 (d) 5,093
AAA Aaa 2,000 (Mercy Health Services), Series X, 6% due 8/15/2014 (d) 2,051
AAA Aaa 2,200 (Mercy Health Services), Series X, 5.75% due 8/15/2019 (d) 2,150
AAA Aaa 2,715 (Mercy Mount Clemens), Series A, 6% due 5/15/2014 (d) 2,777
NR* VMIG1++ 1,000 (Mount Clemens Hospital), VRDN, 5% due 8/15/2015 (a) 1,000
AAA Aaa 2,500 (Oakwood Obligation Group), Series A, 5% due 8/15/2026 (e) 2,107
AAA Aaa 3,000 (Saint John Hospital), Series A, 6.0% due 5/15/2013 (b)(i) 3,076
AAA Aaa 1,100 (Sisters of Mercy Health Corp.), Series M, 6.25%
due 2/15/2022 (e) 1,109
AAA Aaa 1,460 (Sparrow Obligated Group), 6.50% due 11/15/2011 (d) 1,517
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 5,049
BBB Ba1 2,500 (Waste Management Inc. Project),6.625% due 12/01/2012 2,412
Michigan State Strategic Fund, Limited Obligation
Revenue Refunding Bonds (Detroit Edison Company):
AAA Aaa 7,250 AMT, Series A, 5.55% due 9/01/2029 (d) 6,689
A1+ P1 400 VRDN, Series CC, 5.85% due 9/01/2030 (a) 400
A A2 2,500 Michigan State Strategic Fund, PCR, Refunding (General
Motors Corp.), 6.20% due 9/01/2020 2,506
AA Aa3 1,000 Michigan State Trunk Line Revenue Bonds, Series A, 5.25%
due 11/15/2002 1,009
</TABLE>
MuniYield Michigan Insured Fund, Inc., April 30, 2000
<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 Michigan State Trunk Line, Revenue Refunding Bonds, Series
(concluded) A (d):
AAA Aaa $ 2,750 4.75% due 11/01/2020 $ 2,330
AAA Aaa 2,800 5% due 11/01/2026 2,417
AAA Aaa 1,250 Michigan State Underground Storage, Tank Financial Assurance
Authority, Revenue Refunding Bonds, Series I, 5.50% due
5/01/2002 (b) 1,265
AAA Aaa 2,435 Michigan State University Revenue Bonds, Series A, 5% due
2/15/2026 (b) 2,097
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) 17,086
Monroe County, Michigan, PCR (Detroit Edison Company Project),
AMT (d):
AAA Aaa 9,000 Series CC, 6.55% due 6/01/2024 9,329
AAA Aaa 1,500 Series I-B, 6.55% due 9/01/2024 1,557
AAA Aaa 2,000 Montrose Township, Michigan, School District, GO, 5.60% due
5/01/2026 (d) 1,921
AAA Aaa 7,000 Northern Michigan University, Revenue Refunding Bonds, 5%
due 12/01/2025 (d) 6,065
Northview, Michigan, Public Schools District, GO, Refunding (d):
AAA NR* 2,265 5.80% due 5/01/2006 (f) 2,366
AAA Aaa 235 5.80% due 5/01/2021 233
AAA Aaa 2,600 Novi, Michigan, Community School District, GO, 6.125% due
5/01/2003 (c)(f) 2,730
AAA Aaa 1,870 Redford, Michigan, Unified School District, GO, 5.90% due
5/01/2006 (c)(f) 1,963
AAA Aaa 1,000 Reeths-Puffer Schools, Michigan, GO, Refunding, 6% due
5/01/2005 (c)(f) 1,050
AAA Aaa 5,925 Riverview, Michigan, Community School District, GO, 6.70%
due 5/01/2002 (c)(f) 6,219
AAA Aaa 4,000 Rockford, Michigan, Public Schools, GO, 5.25% due 5/01/2022 (c) 3,659
AA Aa3 2,620 Royal Oak, Michigan, Hospital Finance Authority Revenue
Bonds (Beaumont Properties, Inc.), Series E, 6.625% due
1/01/2019 2,679
AAA Aaa 2,500 Saginaw, Michigan, Hospital Finance Authority, Revenue
Refunding Bonds (Covenant Medical Center), Series E, 5.625%
due 7/01/2013 (d) 2,501
NR* Aaa 5,250 Saint Clair County, Michigan, Ecomomic Revenue Refunding
Bonds (Detroit Edison Company), RIB, Series 282, 7.37% due
8/01/2024 (b)(g) 5,744
AAA Aaa 5,250 Southgate, Michigan, Community School District, GO, 5% due
5/01/2025 (c) 4,544
AAA Aaa 2,975 Tecumseh, Michigan, Public Schools, GO, 5% due 5/01/2021 (c) 2,616
AAA Aaa 1,000 Three Rivers, Michigan, Community Schools, GO, 6% due
5/01/2006 (d)(f) 1,055
AAA Aaa 3,725 Three Rivers, Michigan, Community Schools, GO, Refunding,
5% due 5/01/2023 (e) 3,244
A1+ VMIG1++ 1,200 University of Michigan, University Hospital Revenue Bonds,
VRDN, Series A, 5.85% due 12/01/2027 (a) 1,200
A1+ VMIG1++ 1,700 University of Michigan, University Hospital Revenue
Refunding Bonds, VRDN, Series A, 5.85% due 12/01/2019 (a) 1,700
A1+ VMIG1++ 3,600 University of Michigan, University Revenue Bonds (Medical
Service Plan), VRDN, Series A, 5.85% due 12/01/2027 (a) 3,600
AAA Aaa 3,000 Warren, Michigan, Water and Sewer Revenue Bonds, 5.125% due
11/01/2023 (e) 2,669
AAA Aaa 1,500 Waterford, Michigan, School District, GO, 6.25% due
6/01/2004 (c)(f) 1,581
Wayne Charter County, Michigan, Airport Revenue Bonds,
AMT (d):
AAA Aaa 14,660 (Detroit Metropolitan Wayne County), Series A, 5.375%
due 12/01/2015 13,925
NR* NR* 6,235 RIB, Series 68, 5.265% due 12/01/2017 (g) 5,566
Wayne State University, Michigan, University Revenue
Refunding Bonds (c):
AAA Aaa 1,600 5.25% due 11/15/2019 1,482
AAA Aaa 10,275 5.125% due 11/15/2029 9,026
AAA Aaa 4,905 West Branch-Rose City, Michigan, GO, 5.50% due 5/01/2024 (c) 4,673
AAA Aaa 2,000 Western Michigan, University Revenue Bonds, Series B, 6.50%
due 7/15/2021 (b) 2,041
AAA Aaa 5,500 Wyandotte, Michigan, Electric Revenue Refunding Bonds, 6.25%
due 10/01/2017 (d) 5,623
AAA Aaa 1,300 Ypsilanti, Michigan, School District, GO, Refunding, 5.75%
due 5/01/2007 (c)(f) 1,348
AAA Aaa 1,500 Zeeland, Michigan, Public Schools, GO, 5.375% due 5/01/2025 (c) 1,388
Total Investments (Cost--$387,955)--97.7% 383,354
Other Assets Less Liabilities--2.3% 8,832
--------
Net Assets--100.0% $392,186
========
(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, 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 April 30, 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.
See Notes to Financial Statements.
</TABLE>
MuniYield Michigan Insured Fund, Inc., April 30, 2000
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of April 30, 2000
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$387,954,966) $383,354,176
Cash 1,054,208
Interest receivable 8,519,734
Prepaid expenses and other assets 8,826
------------
Total assets 392,936,944
------------
Liabilities: Payables:
Dividends to shareholders $ 227,046
Reorganization costs 215,111
Investment adviser 151,963
Offering costs 11,120 605,240
------------
Accrued expenses and other liabilities 146,198
------------
Total liabilities 751,438
------------
Net Assets: Net assets $392,185,506
============
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 272,405,292
Undistributed investment income--net 1,708,522
Accumulated realized capital losses on investments--net (17,341,736)
Accumulated distributions in excess of realized capital gains
on investments--net (1,801,375)
Unrealized depreciation on investments--net (4,600,790)
------------
Total--Equivalent to $13.89 net asset value per share of
Common Stock (market price--$11.5625) 252,185,506
------------
Total capital $392,185,506
============
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended April 30, 2000
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 6,608,813
Income:
Expenses: Investment advisory fees $ 564,441
Reorganization expenses 368,991
Commission fees 106,044
Transfer agent fees 41,240
Professional fees 30,334
Accounting services 25,827
Printing and shareholder reports 15,254
Directors' fees and expenses 12,749
Custodian fees 9,251
Listing fees 7,245
Pricing fees 4,285
Other 7,169
------------
Total expenses 1,192,830
------------
Investment income--net 5,415,983
------------
Realized & Realized loss on investments--net (2,756,485)
Unrealized Change in unrealized appreciation/depreciation on investments--net 4,116,859
Gain (Loss) on ------------
Investments Net Increase in Net Assets Resulting from Operations $ 6,776,357
--Net: ============
See Notes to Financial Statements.
</TABLE>
MuniYield Michigan Insured Fund, Inc., April 30, 2000
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 2000 1999
<S> <S> <C> <C>
Operations: Investment income--net $ 5,415,983 $ 7,713,511
Realized loss on investments--net (2,756,485) (124,051)
Change in unrealized appreciation/depreciation on
investments--net 4,116,859 (13,181,186)
------------ ------------
Net increase (decrease) in net assets resulting from
operations 6,776,357 (5,591,726)
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (3,611,200) (6,322,552)
Shareholders: Preferred Stock (1,496,556) (1,326,180)
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 (5,107,756) (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 238,821,868 (14,147,362)
Beginning of period 153,363,638 167,511,000
------------ ------------
End of period* $392,185,506 $153,363,638
============ ============
*Undistributed investment income--net $ 1,708,522 $ 1,400,295
============ ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
April 30, 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 period $ 13.91 $ 15.93 $ 15.51 $ 15.16 $ 15.13
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .43 1.04 1.07 1.09 1.11
Realized and unrealized gain (loss)
on investments--net .08 (1.79) .46 .33 .03
-------- -------- -------- -------- --------
Total from investment operations .51 (.75) 1.53 1.42 1.14
-------- -------- -------- -------- --------
Less dividends and distributions to
Common Stock shareholders:
Investment income--net (.40) (.85) (.83) (.84) (.87)
-------- -------- -------- -------- --------
In excess of realized gain on
investments--net -- (.21) (.04) -- --
-------- -------- -------- -------- --------
Total dividends and distributions to
Common Stock shareholders (.40) (1.06) (.87) (.84) (.87)
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:++++
Dividends and distributions to Preferred
Stock shareholders:
Investment income--net (.13) (.18) (.21) (.23) (.24)
Realized gain on investments--net -- -- -- -- --
In excess of realized gain on
investments--net -- (.03) (.03) -- --
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity (.13) (.21) (.24) (.23) (.24)
-------- -------- -------- -------- --------
Net asset value, end of period $ 13.89 $ 13.91 $ 15.93 $ 15.51 $ 15.16
======== ======== ======== ======== ========
Market price per share, end of period $11.5625 $12.1875 $ 15.875 $ 14.50 $ 14.25
======== ======== ======== ======== ========
Total Investment Based on market price per share (1.91%)+++(17.47%) 16.03% 8.00% 12.14%
Return:** ======== ======== ======== ======== ========
Based on net asset value per share 3.25%+++ (6.13%) 8.85% 8.58% 6.45%
======== ======== ======== ======== ========
Ratios Based on Total expenses, excluding reorganization
Average Net expenses*** 1.11%* 1.09% 1.06% 1.06% 1.09%
Assets of ======== ======== ======== ======== ========
Common Stock: Total expenses*** 1.29%* 1.09% 1.06% 1.06% 1.09%
======== ======== ======== ======== ========
Total investment income--net*** 7.60%* 6.85% 6.90% 7.09% 7.28%
======== ======== ======== ======== ========
Amount of dividends to Preferred Stock
shareholders 2.01%* 1.18% 1.36% 1.48% 1.58%
======== ======== ======== ======== ========
Investment income--net, to Common Stock
shareholders 5.59%* 5.67% 5.54% 5.61% 5.70%
======== ======== ======== ======== ========
Ratios Based on Total expenses, excluding reorganization
Total Average Net expenses .73%* .76% .74% .74% .75%
Assets:***++ ======== ======== ======== ======== ========
Total expenses .85%* .76% .74% .74% .75%
======== ======== ======== ======== ========
Total investment income--net 4.99%* 4.75% 4.79% 4.96% 5.03%
======== ======== ======== ======== ========
Ratios Based on Dividends to Preferred Stock shareholders 3.86%* 2.66% 3.13% 3.39% 3.53%
Average Net ======== ======== ======== ======== ========
Assets of
Preferred Stock:
Supplemental Net assets, net of Preferred Stock, end of
Data: period (in thousands) $252,186 $103,364 $117,511 $114,392 $ 11,834
======== ======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $140,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
======== ======== ======== ======== ========
Portfolio turnover 20.28% 42.71% 41.65% 16.68% 21.82%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 2,801 $ 3,067 $ 3,350 $ 3,288 $ 3,237
======== ======== ======== ======== ========
Dividends Series A--Investment income--net $ 480 $ 663 $ 782 $ 849 $ 882
Per Share ======== ======== ======== ======== ========
On Preferred Series B--Investment income--net $ 154 -- -- -- --
Stock ======== ======== ======== ======== ========
Outstanding: Series C--Investment income--net $ 142 -- -- -- --
======== ======== ======== ======== ========
*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 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).
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
MuniYield Michigan Insured Fund, Inc., April 30, 2000
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 accordance with accounting principles
generally accepted in the United States of America, which may
require the use of management accruals and estimates. 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 written or purchased are valued at the last
sale price in the case of exchange-traded options. In the case of
options traded in the over-the-counter market, valuation is the last
asked price (options written) or the last bid price (options
purchased). Securities with remaining maturities of sixty days or
less are valued at amortized cost, which approximates market value.
Securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or
under the direction of the Board of Directors of the Fund, including
valuations furnished by a pricing service retained by the Fund,
which may utilize a matrix system for valuations. The procedures of
the pricing service and its valuations are reviewed by the officers
of the Fund under the general supervision of the Board of Directors.
(b) Derivative financial instruments--The Fund may engage in various
portfolio investment strategies to increase or decrease the level of
risk to which the Fund is exposed more quickly and efficiently than
transactions in other types of instruments. Losses may arise due to
changes in the value of the contract or if the counterparty does not
perform under the contract.
* Financial futures contracts--The Fund may purchase or sell financial
futures contracts and options on such futures contracts for the
purpose of hedging the market risk on existing securities or the
intended purchase of securities. Futures contracts are contracts for
delayed delivery of securities at a specific future date and at a
specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
* Options--The Fund is authorized to write covered call options and
purchase put options. When the Fund writes an option, an amount
equal to the premium received by the Fund is reflected as an asset
and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written.
When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired, or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates. Distributions in excess of
realized capital gains are due primarily to differing tax treatments
for futures transactions.
2. Investment Advisory Agreement and Transactions with
Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of .50% of
the Fund's average weekly net assets, including proceeds from the
issuance of Preferred Stock.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 2000 were $55,384,296 and
$42,400,523 respectively.
Net realized losses for the six months ended April 30, 2000 and net
unrealized losses as of April 30, 2000 were as follows:
Realized Unrealized
Losses Losses
Long-term investments $ (2,634,207) $ (4,600,790)
Financial futures contracts (122,278) --
------------ ------------
Total $ (2,756,485) $ (4,600,790)
============ ============
As of April 30, 2000, net unrealized depreciation for Federal income
tax purposes aggregated $4,600,790, of which $8,399,027 related to
appreciated securities and $12,999,817 related to depreciated
securities. The aggregate cost of investments at April 30, 2000 for
Federal income tax purposes was $387,954,966.
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 six months ended April 30,
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 April
30, 2000 were as follows: Series A, 4.29%; Series B, 4.70%; and
Series C, 4.35%.
Shares issued and outstanding during the six months ended April 30,
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 six months ended
April 30, 2000, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
an affiliate of FAM, earned $68,811 as commissions.
5. Capital Loss Carryforward:
At October 31, 1999, the Fund had a net capital loss carryforward of
approximately $1,364,000, all of which expires in 2007. 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
MuniYield Michigan Insured Fund, Inc., April 30, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
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 May 5, 2000, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$.065796 per share, payable on May 30, 2000 to shareholders of
record as of May 16, 2000.
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
Donald Cecil and Edward H. Meyer, Directors of MuniYield Michigan
Insured Fund, Inc., have recently retired. The Fund's Board of
Directors wishes Mr. Cecil and Mr. Meyer well in their retirements.