MUNIYIELD
INSURED
FUND II, INC.
FUND LOGO
Semi-Annual Report
April 30, 1995
This report, including the financial information herein, is
transmitted to the shareholders of MuniYield Insured Fund II, Inc.
for their information. It is not a prospectus, circular or
representation intended for use in the purchase of shares of the
Fund or any securities mentioned in the report. Past performance
results shown in this report should not be considered a
representation of future performance. The Fund has leveraged its
Common Stock by issuing Preferred Stock to provide the Common Stock
shareholders with a potentially higher rate of return. Leverage
creates risks for Common Stock shareholders, including the
likelihood of greater volatility of net asset value and market price
of shares of the Common Stock, and the risk that fluctuations in the
short-term dividend rates of the Preferred Stock may affect the
yield to Common Stock shareholders.
<PAGE>
MuniYield Insured
Fund II, Inc.
Box 9011
Princeton, NJ
08543-9011
MuniYield Insured Fund II, Inc.
TO OUR SHAREHOLDERS
For the six months ended April 30, 1995, the Common Stock of
MuniYield Insured Fund II, Inc. earned $0.451 per share income
dividends, which included earned and unpaid dividends of $0.072.
This represents a net annualized yield of 6.30%, based on a month-
end net asset value of $14.45 per share. Over the same period, the
total investment return on the Fund's Common Stock was +11.97%,
based on a change in per share net asset value from $13.45 to
$14.45, and assuming reinvestment of $0.458 per share income
dividends and $0.070 per share capital gains distributions.
The average yields of the Fund's Auction Market Preferred Stock for
the six months ended April 30, 1995 were 3.87% for Series A and
3.75% for Series B.
The Environment
During the six months ended April 30, 1995, the perception that the
US economy was overheating and inflationary pressures were
increasing gave way to a more benign economic outlook. With more
signs of slowing growth, investors now appear to be forecasting a
"soft landing" for the US economy. Although gross domestic product
was reported to have increased at a revised 5.1% rate during the
final quarter of 1994, declines in other indicators such as new home
sales and durable goods orders registered thus far in 1995 have led
investors to anticipate that the economy is losing enough momentum
to keep inflation under control and preclude further significant
monetary policy tightening by the Federal Reserve Board. A further
indication of a slowing economy was the reported decline in the
Index of Leading Economic Indicators for March.
<PAGE>
As US stock and bond markets have risen on more positive economic
news, the value of the US dollar has reached new lows relative to
the yen and the Deutschemark. Persistent trade deficits and exports
of capital from the United States have kept the US currency in a
decade-long decline relative to the Japanese and German currencies.
Over the longer term, since the United States has the highest
productivity among industrialized nations and among the lowest labor
costs, demand for US dollar-denominated assets may improve. However,
a reduction of the still-widening US trade deficit may be necessary
before the US dollar appreciates substantially relative to the yen
and the Deutschemark.
The first months of 1995 have been very positive for the stock and
bond markets. Continued signs of a moderating expansion and well-
contained inflationary pressures would provide further assurance
that the peak in interest rates is behind us. On the other hand,
indications of reaccelerating growth and further significant
monetary policy tightening by the Federal Reserve Board would be a
decided negative for the US financial markets.
The Municipal Market
During the six-month period ended April 30, 1995, the tax-exempt
bond market gradually recouped much of the losses sustained during
1994. Signs of a weakening domestic economy and ongoing moderate
inflationary pressures have fostered an environment of declining
interest rates. Since October 31, 1994, A-rated, uninsured municipal
revenue bond yields, as measured by the Bond Buyer Revenue Bond
Index, have declined over 65 basis points (0.65%) to close the six-
month period ended April 30, 1995 at 6.29%. Tax-exempt bond yields
initially continued to climb in late 1994, reaching a high of 7.37%
in late November 1994. Municipal bond yields have since declined
over 100 basis points from their recent highs and are presently
lower than they were a year ago. US Treasury bond yields have
experienced similar declines over the last six months to end the
April period at 7.34%.
Much of the recent improvement in the tax-exempt bond market,
however, has occurred over the last three months. During this most
recent quarter, municipal bond yields have fallen approximately 50
basis points, while US Treasury bond yields declined only 35 basis
points. Tax-exempt bond yields declined more than their taxable
counterparts in recent months, largely in response to the
significant decline in new bond issuance in recent quarters. Over
the last six months, less than $60 billion in new long-term
municipal securities were underwritten, a decline of nearly 45%
versus the comparable period a year earlier. Issuance was
particularly low this past January and February, with monthly volume
of less than $8 billion. These levels are the lowest monthly totals
since the mid-1980s.
<PAGE>
To compound the municipal market's already strong technical posture,
both institutional and individual investors have seen significant
cash inflows in recent months. These assets were derived from
regular coupon payments, bond maturities and the proceeds from early
bond calls and redemptions. It has been estimated that investors
received over $20 billion in principal redemptions and coupon income
in January 1995 alone. With monthly issuance in the $10 billion
range thus far this year, the current supply/demand imbalance has
dominated the municipal market and bond prices have risen
accordingly. The tax-exempt bond market's technical position is
likely to remain very strong throughout most of 1995. Investors are
expected to receive almost $40 billion in principal and coupon
payments on July 1, 1995. Investor proceeds from all sources have
been estimated to exceed $200 billion for all of 1995. Estimates of
total new bond issuance for 1995 have continued to be lowered with
most estimates now in the $125 billion range. Investors should find
it increasingly difficult to replace existing holdings as they
mature and to reinvest coupon income in such an environment.
The municipal bond market's outperformance thus far this year caused
the tax-exempt market to become temporarily expensive relative to
its taxable counterpart in late April. Investor concerns regarding
the international currency situation and the future impact of
proposed revisions to US taxation policies upon the tax advantage
inherent to municipal bonds have combined to cause tax-exempt bond
yields to increase marginally in recent weeks. Municipal bond yields
have risen approximately 15 basis points from their lows in mid-
April 1995. Long-term US Treasury bond yields have remained
essentially stable.
Such an underperformance by the tax-exempt bond market is likely to
be limited in duration. The recent increase in tax-exempt bond
yields has already begun to attract institutional investors since
some municipal bonds yielding in excess of 85% of US Treasury bond
yields are again available. Also, concerns regarding the implication
for municipal bonds' tax advantage resulting from various proposed
tax law changes (for example, flat-tax, value-added tax or national
sales tax) are all likely to quickly recede as investors realize
that such, if any, changes are unlikely to be enacted before late
1996 at the earliest. Long-term investors will also recall 1986 when
similar tax proposals were made and tax-exempt bond yields initially
rose and then quickly fell. Investors are likely to view the current
situation as an opportunity to purchase very attractively priced tax-
advantaged products. This should cause municipal bond yields to
quickly return to their more historic relationship.
<PAGE>
Portfolio Strategy
During the six-month period ended April 30, 1995, we adopted a more
constructive posture toward the municipal bond market. From November
1994 to late December 1994, our investment strategy was more
defensive. We held the Fund's cash reserves at more than 6% to seek
to limit additional capital depreciation. We sold some of the Fund's
performance-oriented deeply discounted securities and replaced them
with less volatile current and premium coupon securities. By January
31, 1995, we had lowered the Fund's cash reserve position to below
3%. At that time, we believed that interest rates had stabilized and
the market would be subjected to minimum interest rate instability;
therefore we sought to increase the amount of income for our Common
Stock shareholders. We concentrated on the acquisition of high-
quality, current coupon income-oriented securities of high-tax
states that offered the best overall value in the municipal market.
This enabled us to participate fully in the continued improvement in
the tax-exempt bond market. Looking forward, we will continue to
concentrate on sustaining an attractive level of tax-exempt income
and total return by continuing to emphasize the Fund's present
coupon and high credit quality structure.
Short-term tax-exempt interest rates traded in the 3%--4.50% range
for most of the last six months. Traditional year-end financing
pressures briefly caused short-term interest rates to rise into the
4%--4.50% range. Cash equivalent securities quickly rallied once
these temporary pressures abated and yielded below 4% by mid-
January. Despite year-end pressures, the municipal yield curve
remained steeply positive. This generated a beneficial impact on the
yield paid to the Common Stock shareholder. However, should the
spread between short-term and long-term interest rates narrow, the
benefits of the leverage effect will diminish, and the yield on the
Fund's Common Stock will be reduced. (For a complete explanation of
the benefits and risks of leveraging, see the information provided
below.)
<PAGE>
In Conclusion
We appreciate your ongoing interest in MuniYield Insured Fund II,
Inc., and we look forward to assisting you with your financial needs
in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
June 2, 1995
THE BENEFITS AND RISKS OF LEVERAGING
MuniYield Insured Fund II, Inc. utilizes leveraging to seek to
enhance the yield and net asset value of its Common Stock. However,
these objectives cannot be achieved in all interest rate
environments. To leverage, the Fund issues Preferred Stock, which
pays dividends at prevailing short-term interest rates, and invests
the proceeds in long-term municipal bonds. The interest earned on
these investments is paid to Common Stock shareholders in the form
of dividends, and the value of these portfolio holdings is reflected
in the per share net asset value of the Fund's Common Stock.
However, in order to benefit Common Stock shareholders, the yield
curve must be positively sloped; that is, short-term interest rates
must be lower than long-term interest rates. At the same time, a
period of generally declining interest rates will benefit Common
Stock shareholders. If either of these conditions change, then the
risks of leveraging will begin to outweigh the benefits.
To illustrate these concepts, assume a fund's Common Stock
capitalization of $100 million and the issuance of Preferred Stock
for an additional $50 million, creating a total value of $150
million available for investment in long-term municipal bonds. If
prevailing short-term interest rates are approximately 3% and long-
term interest rates are approximately 6%, the yield curve has a
strongly positive slope. The fund pays dividends on the $50 million
of Preferred Stock based on the lower short-term interest rates. At
the same time, the fund's total portfolio of $150 million earns the
income based on long-term interest rates. Of course, increases in
short-term interest rates would reduce (and even eliminate) the
dividends on the Common Stock.
<PAGE>
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term
investments, and therefore the Common Stock shareholders are the
beneficiaries of the incremental yield. However, if short-term
interest rates rise, narrowing the differential between short-term
and long-term interest rates, the incremental yield pick-up on the
Common Stock will be reduced or eliminated completely. At the same
time, the market value of the fund's Common Stock (that is, its
price as listed on the New York Stock Exchange) may, as a result,
decline. Furthermore, if long-term interest rates rise, the Common
Stock's net asset value will reflect the full decline in the price
of the portfolio's investments, since the value of the fund's
Preferred Stock does not fluctuate. In addition to the decline in
net asset value, the market value of the fund's Common Stock may
also decline.
PORTFOLIO ABBREVIATIONS
To simplify the listings of MuniYield Insured Fund II, Inc.'s
portfolio holdings in the Schedule of Investments, we have
abbreviated the names of many of the securities according to the
list below and at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
CP Commercial Paper
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RAW Revenue Anticipation Warrants
RIB Residual Interest Bonds
S/F Single-Family
SAVRS Select Auction Variable Rate Securities
TAN Tax Anticipation Notes
TRAN Tax Revenue Anticipation Notes
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Alabama--0.7% AAA Aaa $ 2,500 Huntsville, Alabama, Health Care Authority, Health Care
Facilities Revenue Bonds, Series B, 6.625% due 6/01/2023 (d) $ 2,594
Arizona--1.1% SP-1 MIG2 2,500 Maricopa County, Arizona, CP, TAN, UT, 5% due 7/28/1995 2,503
NR* NR* 1,500 Mohave County, Arizona, IDA, IDR (North Star Steel Co.
Project), AMT, 6.70% due 3/01/2020 1,494
California-- AAA Aaa 3,000 Anaheim, California, Public Financing Authority Revenue
16.0% Bonds (Electric Utility--San Juan 4), 2nd Series, 5.75% due
10/01/2022 (c) 2,823
California State Public Works Board, Lease Revenue Bonds
(Various Universities of California Projects):
A- A 2,000 Refunding, Series A, 5.50% due 6/01/2021 1,764
AAA Aaa 5,000 Series A, 6.40% due 12/01/2016 (b) 5,107
A- A1 5,000 Series B, 5.50% due 6/01/2019 4,428
AAA Aaa 3,000 California State Various Purpose Bonds, 5.90% due 4/01/2023 (c) 2,885
AAA Aaa 1,750 California State, RAW, Series C, 5.75% due 4/25/1996 (c) 1,775
AAA Aaa 2,390 Fresno, California, Health Facilities, Revenue Refunding Bonds
(Holy Cross Health), Series A, 5.625% due 12/01/2018 (d) 2,207
AAA Aaa 3,330 Los Angeles, California, Harbor Department Revenue Bonds,
AMT, Series B, 6.625% due 8/01/2019 (b) 3,419
AAA Aaa 3,460 Los Angeles, California, Wastewater Systems, Revenue Refunding
Bonds, Series A, 5.80% due 6/01/2021 (d) 3,278
AAA Aaa 5,000 Los Angeles County, California, COP (Correctional Facilities
Project), 6.50% due 9/01/2013 (d) 5,137
AAA Aaa 5,000 Los Angeles County, California, Metropolitan Transportation
Authority, Sales Tax Revenue Refunding Bonds, Proposition A,
Series A, 5.625% due 7/01/2018 (d) 4,666
AAA Aaa 5,000 Los Angeles County, California, Transportation Commission,
Sales Tax Revenue Bonds, Proposition C, Second Senior, Series A,
6% due 7/01/2023 (d) 4,854
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
California Sacramento, California, Municipal Utility District, Electric
(concluded) Revenue Bonds (d):
AAA Aaa $ 3,500 Refunding, Series A, 5.75% due 8/15/2013 $ 3,351
AAA Aaa 3,000 Series I, 6% due 1/01/2024 2,912
AAA Aaa 2,000 San Francisco, California, City and County, Sewer Revenue
Refunding Bonds, 5.375% due 10/01/2022 (c) 1,779
AAA Aaa 2,000 Santa Clara County, California, Financing Authority, Lease
Revenue Bonds (VMC Facility Replacement Project), Series A,
6.75% due 11/15/2020 (b) 2,118
AAA Aaa 3,295 Santa Rosa, California, Wastewater Revenue Refunding Bonds,
Series B, 6.125% due 9/01/2017 (c) 3,249
AAA Aaa 2,000 Southern California Public Power Authority, Revenue Refunding
Bonds (Transmission Project), Sub-Series A, 5.25% due 7/01/2020 (d) 1,755
Colorado--0.8% A-1 Aa3 200 Colorado HFA, M/F Revenue Bonds (Central Park Coven &
Greenwood), VRDN, 4.75% due 5/01/1997 (a) 200
AAA Aaa 2,500 Garfield Pitkin and Eagle Counties, Colorado, School District
No. 1, UT, 6.60% due 12/15/2014 (d) 2,653
Connecticut-- AA- A1 1,035 Connecticut State Health and Educational Facilities Authority
2.6% Revenue Bonds (Nursing Home Program--AHF/Windsor Project),
7.125% due 11/01/2024 1,104
AAA Aaa 8,000 Connecticut State HFA, Revenue Bonds (Housing Mortgage Finance
Program), Series B, 6.75% due 11/15/2023 (d) 8,232
A1+ VMIG1++ 100 Connecticut State Special Assessment Unemployment
Compensation, Advanced Fund Revenue Bonds (Connecticut
Unemployment), VRDN, Series B, 4.70% due 11/01/2001 (a) 100
Florida--2.2% AAA Aaa 3,000 Florida State Department of Transportation (Right of Way),
5.875% due 7/01/2024 (d) 2,912
AAA Aaa 5,540 Orlando and Orange County Expressway Authority, Florida,
Revenue Refunding Bonds (Florida Expressway), Junior Lien,
Series A, 5.25% due 7/01/2019 (c) 4,942
<PAGE>
Georgia--3.2% AAA Aaa 4,700 Albany, Georgia, Sewer System Revenue Bonds, 6.70% due
7/01/2022 (d) 4,970
AAA Aaa 2,000 Chatam County, Georgia, School District Revenue Bonds, UT,
6.75% due 8/01/2018 (d) 2,124
A+ A3 2,000 Monroe County, Georgia, Development Authority, PCR, Refunding
(Oglethorpe Power Scherer), Series A, 6.80% due 1/01/2012 2,115
AAA Aaa 2,000 Municipal Electric Authority, Georgia, Project One, Sub-Series A,
6.50% due 1/01/2026 (b) 2,054
Hawaii--1.8% AAA Aaa 6,000 Hawaii State Airport System Revenue Bonds, AMT, Second Series,
7% due 7/01/2018 (d) 6,371
Illinois--12.0% AAA Aaa 3,870 Chicago, Illinois, O'Hare International Airport, Special
Facilities Revenue Bonds (International Terminal), AMT, 6.75%
due 1/01/2018 (d) 3,992
Chicago, Illinois, Wastewater Transmission Revenue Bonds:
AAA Aaa 10,375 6.35% due 1/01/2022 (c) 10,456
AAA Aaa 6,000 6.375% due 1/01/2024 (d) 6,026
Illinois Health Facilities Authority Revenue Bonds:
A- NR* 1,300 (Northern Illinois Medical Center Project), 5.875% due
9/01/2013 1,177
AAA Aaa 3,000 (Servantcor Project), Series A, 6.375% due 8/15/2021 (e) 2,983
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Illinois AAA Aaa $ 9,200 Metropolitan Pier and Exposition Authority, Illinois, Dedicated
(concluded) State Tax Revenue Bonds (McCormick Expansion Project),
Series A, 6.50% due 6/15/2027 (b) $ 9,321
Regional Transportation Authority, Illinois:
AAA Aaa 4,000 Series A, 7.20% due 11/01/2020 (b) 4,537
AAA Aaa 5,000 Series B, 5.85% due 6/01/2023 (c) 4,705
Indiana--1.6% AAA Aaa 2,400 Indiana State Vocational Technical College, Building
Facilities Refunding Bonds (Student Fee), Series D,
6.50% due 7/01/2014 (b) 2,463
A+ NR* 3,000 Indianapolis, Indiana, Local Public Improvement Bond Bank,
Refunding Bonds, Series D, 6.75% due 2/01/2020 3,075
<PAGE>
Iowa--1.2% AAA Aaa 4,200 Iowa Financing Authority, S/F, Mortgage Revenue Refunding
Bonds, Series F, 6.35% due 7/01/2009 (b) 4,362
Kansas--1.3% AAA Aaa 5,000 Kansas State Turnpike Authority, Revenue Refunding Bonds,
5.25% due 9/01/2017 (b) 4,541
Maryland--0.6% NR* Aa 2,085 Maryland State Community Development Administration,
M/F Housing Revenue Bonds (Department of Housing and
Community Development), Series C, 6.65% due 5/15/2025 2,119
Massachusetts Massachusetts State Health and Educational Facilities
- --4.3% Authority Revenue Bonds:
AAA Aaa 5,000 (Massachusetts General Hospital), Series F, 6.25% due
7/01/2020 (b) 5,007
AAA Aaa 10,000 (Northeastern University), Series E, 6.55% due 10/01/2022 (d) 10,362
Michigan--2.3% AAA Aaa 2,750 Caledonia, Michigan, Community Schools, Revenue Refunding
Bonds, UT, 6.625% due 5/01/2014 (b) 2,874
BBB Baa1 1,750 Michigan State, Hospital Financing Authority, Revenue Refunding
Bonds (Pontiac Osteopathic), Series A, 6% due 2/01/2024 1,406
NR* P1 200 Michigan State, Strategic Fund, PCR, Refunding (Consumers
Power Project), VRDN, Series A, 5% due 4/15/2018 (a) 200
AAA Aaa 3,500 Monroe County, Michigan, PCR (Detroit Edison Company--Coll
Project), AMT, Series I-B, 6.55% due 9/01/2024 (d) 3,560
Minnesota A- A 4,500 Minneapolis and St. Paul, Minnesota, Housing and Redevelopment
- --1.3% Authority, Health Care System Revenue Bonds (Group Health Plan
Incorporated Project), 6.90% due 10/15/2022 4,617
Mississippi AAA Aaa 3,930 Mississippi Hospital Equipment and Facilities Authority, Revenue
- --1.1% Refunding Bonds (Baptist Medical Center), 6.50% due 5/01/2011 (d) 4,050
Missouri--0.9% AAA Aaa 3,000 Kansas City, Missouri, Airport General Revenue Improvement
Bonds, Series B, 6.875% due 9/01/2014 (e) 3,229
Nevada--2.8% AAA Aaa 5,000 Washoe County, Nevada, Gas Facility Revenue Bonds (Sierra
Pacific Power), AMT, 6.55% due 9/01/2020 (d) 5,071
AAA Aaa 5,000 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra
Pacific Power), AMT, 6.65% due 6/01/2017 (d) 5,150
New Jersey-- AAA Aaa 4,500 New Jersey State Housing and Mortgage Finance Agency Revenue
1.3% Bonds (Home Buyer), AMT, Series K, 6.375% due 10/01/2026 (d) 4,526
New Mexico-- AAA Aaa 5,750 Gallup, New Mexico, PCR, Refunding (Plains Electric Generation),
1.7% 6.65% due 8/15/2017 (d) 5,996
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
New York--4.4% AAA Aaa $ 3,000 New York State Energy Research and Development Authority,
Facilities Revenue Bonds (Con Edison Company Inc.), AMT,
Series B, 6.375% due 12/01/2027 (d) $ 2,969
A1+ NR* 900 New York State Energy Research and Development Authority,
PCR (Niagara Power Corporation Project), VRDN, AMT, Series B,
5.40% due 7/01/2027 (a) 900
New York State Medical Care Facilities Finance Agency
Revenue Bonds (Mental Health Services Facility) (c):
AAA Aaa 5,685 Refunding, Series F, 5.25% due 2/15/2019 5,011
AAA Aaa 3,000 Series A, 5.25% due 8/15/2023 2,618
BBB Baa1 4,145 New York State Urban Development Corporation Revenue
Bonds (State Facilities), 7.50% due 4/01/2020 4,464
Ohio--0.7% AAA Aaa 2,500 North Canton, Ohio, City School District, UT, 6.70% due
12/01/2019 (b) 2,662
Pennsylvania AA Aa 8,000 Pennsylvania, HFA, Special Linked SAVRS and RIB, AMT, 6.199%
- --2.1% due 4/01/2025 7,584
South Carolina AAA Aaa 10,000 Piedmont, South Carolina, Municipal Power Agency, Electric
- --3.4% Revenue Refunding Bonds, 6.30% due 1/01/2022 (d) 10,013
AAA Aaa 2,000 South Carolina State Public Service Authority Revenue Bonds
(Santee Cooper), Series D, 6.50% due 7/01/2014 (b) 2,061
Tennessee--1.1% AAA Aaa 2,900 Metropolitan Government Nashville and Davidson County,
Tennessee, Water and Sewer Revenue Bonds, Special Linked
SAVRS and RIB, 5.933% due 1/01/2022 (b) 2,868
A+ A1 1,000 Tennessee, HDA, Mortgage Finance, AMT, Series A, 6.90%
due 7/01/2025 1,017
Texas--14.0% Brazos River Authority, Texas, Revenue Refunding Bonds (b):
AAA Aaa 7,000 (Coll--Houston Light & Power), Series A, 6.70% due 3/01/2017 7,337
AAA Aaa 11,500 PCR (Coll--Texas Utilities Electric Company Project), AMT,
6.50% due 12/01/2027 11,580
AAA Aaa 6,105 Brownsville, Texas, Utilities System Revenue Bonds, 6.50% due
9/01/2017 (b) 6,273
NR* NR* 5,700 Gulf Coast, Texas, IDA, Solid Waste Disposal Revenue Bonds
(CITGO Petroleum Corp. Project), VRDN, AMT, 5.10% due
4/01/2025 (a) 5,700
AAA Aaa 4,500 Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds (Hermann Hospital Project), 6.375%
due 10/01/2024 (d) 4,527
AAA Aaa 5,565 Houston, Texas, Water and Sewer System Revenue Bonds,
Junior Lien, Series A, 6.375% due 12/01/2022 (d) 5,654
NR* P1 550 Port Arthur, Texas, Navigational District, Industrial Development
Corporation, PCR (American Petrofina Incorporated), VRDN,
5% due 5/01/2003 (a) 550
AAA Aaa 1,500 Sabine River Authority, Texas, PCR, Refunding (Coll Texas
Utilities Electric Company Project), 6.55% due 10/01/2022 (c) 1,541
SP-1+ MIG1++ 6,300 Texas State, CP, TRAN, UT, 5% due 8/31/1995 6,316
<PAGE>
Virginia--1.7% Virginia State, HDA, Commonwealth Mortgage Bonds:
AAA Aaa 2,500 AMT, Series A, Sub-Series A-4, 6.45% due 7/01/2028 (d) 2,463
AA+ Aa1 3,500 Series J, Sub-Series J-2, 6.75% due 7/01/2017 3,579
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Washington-- AAA Aaa $ 2,500 Snohomish County, Washington, Public Utility District No. 001,
6.9% Electric Revenue Bonds (Generation System), AMT, Series B,
5.80% due 1/01/2024 (b) $ 2,280
AAA Aaa 11,000 Spokane County, Washington, Lease Revenue Refunding Financing
Bonds (Multi-Purpose Arena Project), AMT, Series A, 6.60% due
1/01/2014 (b) 11,335
AAA Aaa 2,500 Tacoma, Washington, Refuse Utility Revenue Bonds, 7% due
12/01/2019 (b) 2,745
AAA Aaa 2,500 Washington State, Health Care Facilities Authority Revenue
Bonds (Virginia Mason Obligation Group, Seattle), 6.30% due
2/15/2017 (d) 2,494
Washington State Public Power Supply Systems, Revenue
Refunding Bonds (d):
AAA Aaa 4,000 (Nuclear Project No. 1), Series A, 6.25% due 7/01/2017 3,952
AAA Aaa 1,500 (Nuclear Project No. 3), Series C, 7.50% due 7/01/2008 1,721
Wisconsin--1.6% AAA Aaa 6,000 Wisconsin State Health and Educational Facilities Authority,
Revenue Refunding Bonds (Meriter Hospital Incorporated),
Series A, 6% due 12/01/2022 (c) 5,709
Total Investments (Cost--$337,520)--96.7% 345,603
Other Assets Less Liabilities--3.3% 11,697
--------
Net Assets--100.0% $357,300
========
<PAGE>
<FN>
(a)The interest rate is subject to change periodically based on
prevailing market rates. The interest rate shown is the rate in
effect at April 30, 1995.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)MBIA Insured.
(e)Capital Guaranty.
++Highest short-term rating by Moody's Investors Service, Inc.
*Not Rated.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of April 30, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$337,520,483) (Note 1a) $345,603,082
Cash 86,735
Receivables:
Securities sold $ 12,013,849
Interest 6,542,081 18,555,930
------------
Deferred organization expenses (Note 1e) 22,434
Prepaid expenses and other assets 78,976
------------
Total assets 364,347,157
------------
Liabilities: Payables:
Securities purchased 6,371,389
Dividends to shareholders (Note 1f) 424,575
Investment adviser (Note 2) 138,950 6,934,914
------------
Accrued expenses and other liabilities 112,573
------------
Total liabilities 7,047,487
------------
Net Assets: Net assets $357,299,670
============
<PAGE>
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.10 per share (4,800 shares of
AMPS* issued and outstanding at $25,000 per share liquidation
preference) $120,000,000
Common Stock, par value $.10 per share (16,420,827 shares
issued and outstanding) $ 1,642,083
Paid-in capital in excess of par 228,565,325
Undistributed investment income--net 2,155,062
Accumulated realized capital losses on investments--net (3,145,399)
Unrealized appreciation on investments--net 8,082,599
------------
Total--Equivalent to $14.45 net asset value per share of
Common Stock (market price--$13.00) 237,299,670
------------
Total capital $357,299,670
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months Ended April 30, 1995
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 10,828,801
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 852,705
Commission fees (Note 4) 163,882
Professional fees 39,157
Transfer agent fees 35,021
Accounting services (Note 2) 22,261
Printing and shareholder reports 16,071
Listing fees 12,355
Directors' fees and expenses 11,182
Custodian fees 10,638
Pricing fees 6,663
Amortization of organization expenses (Note 1e) 3,718
Other 14,002
------------
Total expenses 1,187,655
------------
Investment income--net 9,641,146
------------
<PAGE>
Realized & Realized loss on investments--net (2,466,167)
Unrealized Gain Change in unrealized appreciation/depreciation on investments--net 20,221,161
(Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 27,396,140
(Notes 1b, ============
1d & 3):
</TABLE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: April 30, 1995 Oct. 31, 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 9,641,146 $ 19,372,697
Realized gain (loss) on investments--net (2,466,167) 686,231
Change in unrealized appreciation/depreciation on investments
--net 20,221,161 (48,661,875)
------------ ------------
Net increase (decrease) in net assets resulting from operations 27,396,140 (28,602,947)
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (7,523,728) (15,824,435)
Shareholders Preferred Stock (2,034,972) (2,951,808)
(Note 1f): Realized gain on investments--net:
Common Stock (1,157,438) (4,174,364)
Preferred Stock (208,020) (777,156)
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (10,924,158) (23,727,763)
------------ ------------
Capital Stock Value of shares issued to Common Stock shareholders in
Transactions reinvestment of dividends and distributions -- 491,846
(Notes 1e & 4): Offering costs resulting from the issuance of Preferred Stock -- 27,598
------------ ------------
Net increase in net assets derived from capital stock
transactions -- 519,444
------------ ------------
Net Assets: Total increase (decrease) in net assets 16,471,982 (51,811,266)
Beginning of period 340,827,688 392,638,954
------------ ------------
End of period* $357,299,670 $340,827,688
============ ============
<FN>
*Undistributed investment income--net $ 2,155,062 $ 2,072,616
============ ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<PAGE>
<TABLE>
Financial Highlights
<CAPTION>
For the
For the Period
The following per share data and ratios have been derived Six Months For the October 30,
from information provided in the financial statements. Ended Year Ended 1992++ to
April 30, October 31, October 31,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.45 $ 16.63 $ 14.15 $ 14.18
Operating -------- -------- -------- --------
Performance: Investment income--net .59 1.18 1.15 --
Realized and unrealized gain (loss) on investments--net 1.07 (2.92) 2.53 --
-------- -------- -------- --------
Total from investment operations 1.66 (1.74) 3.68 --
-------- -------- -------- --------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net (.46) (.96) (.88) --
Realized gain on investments--net (.07) (.25) -- --
-------- -------- -------- --------
Total dividends and distributions to Common Stock
shareholders (.53) (1.21) (.88) --
-------- -------- -------- --------
Capital charge resulting from issuance of Common Stock -- -- -- (.03)
-------- -------- -------- --------
Effect of Preferred Stock activity:++++
Dividends and distributions to Preferred Stock
shareholders:
Investment income--net (.12) (.18) (.18) --
Realized gain on investments--net (.01) (.05) -- --
Capital charge resulting from issuance of
Preferred Stock -- -- (.14) --
-------- -------- -------- --------
Total effect of Preferred Stock activity (.13) (.23) (.32) --
-------- -------- -------- --------
Net asset value, end of period $ 14.45 $ 13.45 $ 16.63 $ 14.15
======== ======== ======== ========
Market price per share, end of period $ 13.00 $ 11.375 $ 15.875 $ 15.00
======== ======== ======== ========
Total Based on market price per share 19.11%+++ (21.92%) 11.95% .00%+++
Investment ======== ======== ======== ========
Return:** Based on net asset value per share 11.97%+++ (11.87%) 24.32% (.21%)+++
======== ======== ======== ========
<PAGE>
Ratios to Expenses, net of reimbursement . .70%* .69% .54% --
Average ======== ======== ======== ========
Net Assets:*** Expenses .70%* .69% .65% --
======== ======== ======== ========
Investment income--net 5.67%* 5.24% 5.25% --
======== ======== ======== ========
Supplemental Net assets, net of Preferred Stock, end of period
Data: (in thousands) $237,300 $220,828 $272,639 $230,667
======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $120,000 $120,000 $120,000 --
======== ======== ======== ========
Portfolio turnover 30.36% 47.85% 38.69% --
======== ======== ======== ========
Dividends Per Series A--Investment income--net $ 433 $ 590 $ 592 --
Share on Series B--Investment income--net 415 640 640 --
Preferred Stock
Outstanding:++++++
<FN>
*Annualized.
**Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, may result
in substantially different returns. Total investment returns exclude
the effects of sales loads.
***Do not reflect the effect of dividends to Preferred Stock
shareholders.
++Commencement of Operations.
++++The Fund's Preferred Stock was issued on November 30, 1992.
++++++Dividends per share have been adjusted to reflect a two-for-
one stock split.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniYield Insured Fund II, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a non-diversified, closed-end
management investment company. These unaudited financial statements
reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the interim period
presented. All such adjustments are of a normal recurring nature.
The Fund determines and makes available for publication the net
asset value of its Common Stock on a weekly basis. The Fund's Common
Stock is listed on the New York Stock Exchange under the symbol MTI.
The following is a summary of significant accounting policies
followed by the Fund.
(a) Valuation of investments--Municipal bonds are traded primarily
in the over-the-counter markets and are valued at the most recent
bid price or yield equivalent as obtained by the Fund's pricing
service from dealers that make markets in such securities. Financial
futures contracts and options thereon, which are traded on
exchanges, are valued at their closing prices as of the close of
such exchanges. Options, which are traded on exchanges, are valued
at their last sale price as of the close of such exchanges or,
lacking any sales, at the last available bid price. Securities with
remaining maturities of sixty days or less are valued at amortized
cost, which approximates market value. Securities for which market
quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of
Directors of the Fund.
(b) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell interest
rate futures contracts and options on such futures contracts for the
purpose of hedging the market risk on existing securities or the
intended purchase of securities. Futures contracts are contracts for
delayed delivery of securities at a specific future date and at a
specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected.
Pursuant to the contract, the Fund agrees to receive from or pay to
the broker an amount of cash equal to the daily fluctuation in value
of the contract. Such receipts or payments are known as variation
margin and are recorded by the Fund as unrealized gains or losses.
When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the value of the contract at
the time it was opened and the value at the time it was closed.
<PAGE>
* 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 secu-rity transactions are
determined on the identified cost basis.
(e) Deferred organization expenses and offering expenses--Deferred
organization expenses are amortized on a straight-line basis over a
five-year period. Direct expenses relating to the public offering of
the Common and Preferred Stock were charged to capital at the time
of issuance.
(f) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of 0.50% of
the Fund's average weekly net assets.
Accounting services are provided to the Fund by FAM at cost.
<PAGE>
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, Merrill Lynch, Pierce, Fenner & Smith Inc.
("MLPF&S"), and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 1995 were $96,980,528 and
$106,104,955, respectively.
Net realized and unrealized gains (losses) as of April 30, 1995 were
as follows:
Realized
Gains Unrealized
(Losses) Gains
Long-term investments $ 412,821 $ 8,065,431
Short-term investments (969) 17,168
Financial futures contracts (2,878,019) --
----------- -----------
Total $(2,466,167) $ 8,082,599
=========== ===========
As of April 30, 1995, net unrealized appreciation for Federal income
tax purposes aggregated $8,082,599, of which $9,632,755 related to
appreciated securities and $1,550,156 related to depreciated
securities. The aggregate cost of April 30, 1995 for Federal income
tax purposes was $337,520,483.
4. Capital Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of capital stock,
including Preferred Stock, par value $.10 per share, all of which
were initially classified as Common Stock. The Board of Directors is
authorized, however, to reclassify any unissued shares of capital
stock without approval of holders of Common Stock.
Common Stock
For the six months ended April 30, 1995, shares issued and
outstanding remained constant at 16,420,827. At April 30, 1995,
total paid-in capital amounted to $230,207,408.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred
Stock of the Fund that entitle their holders to receive cash
dividends at an annual rate that may vary for the successive
dividend periods. The yields in effect at April 30, 1995 were as
follows: Series A, 4.18%; and Series B, 4.15%.
<PAGE>
A two-for-one stock split occurred on December 1, 1994. As a result,
at April 30, 1995, there were 4,800 AMPS shares authorized, issued
and outstanding with a liquidation preference of $25,000 per share,
plus accumulated and unpaid dividends of $189,431.
The Fund pays commissions to certain broker-dealers at the end of
each auction at the annual rate of ranging from 0.25% to 0.375%
calculated on the proceeds of each auction. For the six months ended
April 30, 1995, MLPF&S, an affiliate of FAM, earned $74,483 as
commissions.
5. Subsequent Event:
On May 9, 1995, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$0.071916 per share, payable on May 30, 1995 to shareholders of
record as of May 19, 1995.
PER SHARE INFORMATION
<TABLE>
Per Share Selected Quarterly Financial Data*
<CAPTION>
Dividends/Distributions
Net Realized Unrealized
Investment Gains Gains Net Investment Income Capital Gains
For the Quarter Income (Losses) (Losses) Common Preferred Common Preferred
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1993 to July 31, 1993 $.30 $ .15 $ .14 $.25 $.05 -- --
August 1, 1993 to October 31, 1993 .30 .07 .78 .25 .05 -- --
November 1, 1993 to January 31, 1994 .30 .18 (.12) .25 .01 $.25 $.05
February 1, 1994 to April 30, 1994 .28 .18 (2.13) .24 .05 -- --
May 1, 1994 to July 31, 1994 .29 (.10) .33 .23 .05 -- --
August 1, 1994 to October 31, 1994 .31 (.22) (1.04) .24 .07 -- --
November 1, 1994 to January 31, 1995 .30 (.11) .75 .24 .05 .07 .01
February 1, 1995 to April 30, 1995 .29 (.05) .48 .22 .07 -- --
<CAPTION>
Net Asset Value Market Price**
For the Quarter High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
May 1, 1993 to July 31, 1993 $16.01 $15.39 $15.75 $15.00 1,237
August 1, 1993 to October 31, 1993 16.95 15.80 16.50 15.25 2,677
November 1, 1993 to January 31, 1994 16.61 16.03 16.75 15.375 998
February 1, 1994 to April 30, 1994 16.38 13.87 16.125 12.75 1,791
May 1, 1994 to July 31, 1994 15.14 14.07 13.75 13.00 1,541
August 1, 1994 to October 31, 1994 14.74 13.45 13.375 11.375 2,080
November 1, 1994 to January 31, 1995 14.03 12.41 12.625 10.50 3,354
February 1, 1995 to April 30, 1995 14.82 14.05 13.25 12.875 1,247
<PAGE>
<FN>
*Calculations are based upon shares of Common Stock outstanding at
the end of each quarter.
**As reported in the consolidated transaction reporting system.
***In thousands.
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Donald Cecil, Director
M. Colyer Crum, Director
Edward H. Meyer, Director
Jack B. Sunderland, Director
J. Thomas Touchton, Director
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Transfer Agents
Common Stock:
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
NYSE Symbol
MTI
</TABLE>
