MUNIVEST
MICHIGAN
INSURED
FUND, INC.
Semi-Annual Report April 30, 1994
This report, including the financial information herein,
is transmitted to the shareholders of MuniVest Michigan
Insured Fund, Inc. for their information. It is not a
prospectus, circular or representation intended for use
in the purchase of shares of the Fund or any securities
mentioned in the report. Past performance results shown
in this report should not be considered a representation
of future performance. The Fund has leveraged its Common
Stock by issuing Preferred Stock to provide the Common
Stock shareholders with a potentially higher rate of
return. Leverage creates risks for Common Stock share-
holders, including the likelihood of greater volatility
of net asset value and market price 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.
MuniVest Michigan Insured Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
<PAGE>
MUNIVEST MICHIGAN INSURED FUND, INC.
The Benefits and
Risks of
Leveraging
MuniVest 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 hold-
ings is reflected in the per share net asset value of the Fund's
Common Stock. However, in order to benefit Common Stock share-
holders, 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 con-
ditions change, then the risks of leveraging will begin to out-
weigh the benefits.
To illustrate these concepts, assume a fund's Common Stock capital-
ization of $100 million and the issuance of Preferred Stock for
an additional $50 million, creating a total value of $150 mil-
lion 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 mil-
lion earns the income based on long-term interest rates.
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. At the same time, the market
value on the fund's Common Stock (that is, its price as listed on
the American Stock Exchange) may, as a result, decline. Furthermore,
if long-term interest rates rise, the Common Stock's net asset val-
ue will reflect the full decline in the price of the portfolio's
investments, since the value of the fund's Preferred Stock does
not fluctuate. In addition to the decline in net asset value, the
market value of the fund's Common Stock may also decline.
<PAGE>
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
Robert E. Putney, III, Assistant Secretary
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, New York 10286
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Custodian
The Bank of New York
110 Washington Street
New York, New York 10286
ASE Symbol
MVM
<PAGE>
DEAR SHAREHOLDER
For the six-month period ended April 30, 1994, the Common Stock
of MuniVest Michigan Insured Fund, Inc. earned $0.429 per share
income dividends, which included earned and unpaid dividends of
$0.067. This represents a net annualized yield of 6.73%, based on
a month-end net asset value of $12.85 per share. Over the same
period, the total investment return on the Fund's Common Stock
was -10.98%, based on a change in per share net asset value from
$14.89 to $12.85, and assuming reinvestment of $0.433 per share
income dividends paid. The average yield on the Fund's Auction
Market Preferred Stock for the six months ended April 30, 1994
was 2.20%.
The Environment
Inflationary expectations and investor sentiment changed for the
worse during the three-month period ended April 30, 1994. Follow-
ing stronger-than-expected economic results through year-end
1993, the Federal Reserve Board broke with tradition on Febru-
ary 4, 1994 and publicly announced a modest 25 basis point (0.25%)
increase in short-term interest rates. At the March 22 meeting
of the Federal Open Market Committee, the Federal Reserve Board
again raised the Federal Funds rate by 25 basis points, followed
by another 25 basis point increase on April 18.
Rather than view the Federal Reserve Board's first tightening
move as a preemptive strike against inflation, fixed-income in-
vestors focused on Chairman Greenspan's implicit promise of fur-
ther tightening should the rate of inflation accelerate, and
bond prices declined sharply. The setback in the bond market was
also reflected in greater stock market volatility. While the
second and third increases in the Federal Funds rate were less
of a surprise, investors remained concerned that interest rates
would trend upward sharply as the central bank aggressively at-
tempted to contain the inflationary pressures of an improving
economy. At the same time, highly leveraged investors were forced
to liquidate positions in the face of declining stock and bond
prices. Investor confidence was not restored with the announce-
ment of the surprisingly slow 2.6% gross domestic product
growth rate for the first calendar quarter of 1994. Instead,
investors focused on the higher-than-expected (but still mod-
erate) broad inflation measures and became concerned that
business activity was beginning to stagnate as inflationary
pressures were increasing.
<PAGE>
The Municipal Market
During the six months ended April 30, 1994, tax-exempt bond
yields exhibited considerable volatility as they rose to their
highest level in the past two years. As measured by the Bond
Buyer Revenue Bond Index, the yield on newly issued municipal
bonds maturing in 30 years rose over 90 basis points to 6.42% by
the end of April. Yields on seasoned municipal revenue bonds rose
by over 100 basis points in sympathy with the equally dramatic
increase in long-term US Treasury bond yields. By the end of
April, yields on US Treasury securities rose by over 95 basis
points to approximately 7.30%.
Long-term tax-exempt bond yields were essentially unchanged from
the end of October 1993 to the end of January 1994. However, on a
weekly basis, tax-exempt bond yields fluctuated by as much as 15
basis points as investors were unable to reconcile the rapid
economic growth seen late last year with continued low inflation.
Following the initial interest rate increase by the Federal
Reserve Board in early February, municipal bond prices began to
erode in concert with taxable bond prices as investors began to
sell securities in anticipation of further interest rate
increases. This fear led investors to withdraw from the tax-
exempt market. From early February to the end of March, total
assets of all tax-exempt bond funds declined by $14 billion to
$247 billion. This decline in investor demand, coupled with fears
that the robust economic recovery seen during the fourth quarter
of 1993 would continue well into 1994, helped push municipal bond
yields higher in February and March. Attracted by tax-exempt
yields in excess of 6.25%, investor demand returned in April,
allowing yields to decline approximately 15 basis points to end
the April period at approximately 6.40%.
The magnitude of the rise in tax-exempt yield experienced during
the past six months has not been seen since 1987 when municipal
bond rates rose 250 basis points between March and October of
that year. It is very important to note that the recent municipal
bond price declines were largely the result of consistent and
insistent selling pressures over the last two months. In 1987,
the tax-exempt bond market was much more volatile and, at times,
chaotic as investors sought to liquidate positions without
concern for fundamental value. For the most part, the recent
price deterioration has been orderly, and the municipal bond
market's liquidity and integrity has not been challenged or
jeopardized.
<PAGE>
To a large extent, the municipal bond market has continued to be
supported by its strong technical position. New-issue volume for
the last six months has been less than $105 billion. This rep-
resents a decline of approximately 20% versus the comparable
period a year ago. This decline was expected and has been dis-
cussed in previous shareholder reports. This reduced issuance
has minimized potential selling pressure in recent months since
institutional investors have been wary of selling appreciable
amounts of securities that they may be unable to replace later
this year at any price level. We expect this decline in issuance
to continue since we anticipate recent yield increases to sig-
nificantly impact future municipal bond issuance.
Despite recent price declines, tax-exempt securities remain among
the most attractive investment alternatives available. After the
recent yield increases, longer-term municipal securities yielded
approximately 90% of comparable US Treasury yields. Purchasers of
these municipal bonds also accrue substantial after-tax yield
advantages. To investors in the 39% marginal Federal income tax
bracket, the purchase of a municipal bond yielding 6.50% repre-
sents an after-tax equivalent of 10.65%. With prevailing esti-
mates of 1994 inflation at no more than 3%--4%, real after-
tax rates in excess of 6.50% easily compensate longer-term in-
vestors for much of the price volatility recently experienced.
Portfolio Strategy
We remain constructive on the municipal bond market and continue
to believe that tax-exempt bond yields will decline by late 1994
and into 1995. However, we expect the volatility the tax-exempt
bond market has exhibited in recent months to continue into mid-
year. This volatility led the Fund to become more defensive
during March and April. This defensive posture will be maintained
until either the Federal Reserve Board concludes its current
round of interest rate increases or until there are consistent
indications that recent yield increases have had a negative
impact on economic growth. It is likely that until either of
these two conditions are met, the financial market's current
uncertainty will continue and interest rates will remain
volatile.
<PAGE>
During the April period, we increased the Fund's cash reserve
position to approximately 10% of net assets. This defensive
position has two principal benefits. First, additional capital
depreciation in response to rising interest rates will be limited
to some degree. Second, this increased liquidity will enable the
Fund to more quickly respond to those attractive market oppor-
tunities recent periods of volatility have presented. These
episodes of market uncertainty have allowed the Fund to add
attractively priced higher-coupon, noncallable issues to its
holdings. These issues will enhance the Fund's level of tax-
exempt income in the coming years. Also, while we reduced the
Fund's position in more performance-oriented issues, the
Fund remains well-positioned to take advantage of interest
rate declines later this year.
Short-term tax-exempt rates continue to trade in the 2.25%--3.00%
range, despite the increases in short-term taxable rates by the
Federal Reserve Board in recent months. The demand for municipal
cash equivalents has been very strong for much of the past year
and is expected to remain strong. The leverage of the Fund's
Preferred Stock continues to have a positive impact on the yield
spread to the Common Stock shareholder. 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. Should the interest rate differential between
short-term and long-term interest rates narrow because of a rise
in short-term interest rates, the incremental yield "pick up"
on the Common Stock will be reduced. Furthermore, if long-term
interest rates rise, the Common Stock's net asset value will
reflect the full decline in the entire portfolio holdings, since
the value of the Fund's Preferred Stock does not fluctuate.
During the six-month period ended April 30, 1994, long-term
interest rates rose, reflected in the decline in the net asset
value of the Fund's Common Stock. For a complete explanation of
leveraging, see page 1 of this report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
June 1, 1994
<PAGE>
Portfolio
Abbreviations
To simplify the listings of MuniVest Michigan Insured Fund,
Inc.'s portfolio holdings in the Schedule of Investments, we have
abbreviated the names of some of the securities according to the
list at right.
AMT Alternative Minimum Tax (subject to)
CP Commercial Paper
PCR Pollution Control Revenue Bonds
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Michigan--98.2% AAA Aaa $ 2,350 Bloomingdale, Michigan, Public School District Number 16, Refunding
Bonds, UT, 5.625% due 5/01/2019 (c) $ 2,154
AAA Aaa 1,450 Breckenridge, Michigan, Community School District, UT, 5.75% due
5/01/2023 (b) 1,346
AAA Aaa 1,465 Central Michigan University, Revenue Refunding Bonds, 6% due 10/01/2013
(e) 1,440
AAA Aaa 2,000 Clarkston, Michigan, Community Schools, Refunding Bonds, UT, 5.90% due
5/01/2016 (c) 1,919
NR P1 400 Delta County, Michigan, Economic Development Corporation, Environmental
Improvement Revenue Refunding Bonds, CP, Series C, 2.75% due 12/01/2023 400
AAA Aaa 8,975 Detroit, Michigan, Sewage Disposal Revenue Bonds, Series A, 5.70% due
7/01/2013 (c) 8,504
A-1 NR 200 Detroit, Michigan, Tax Increment Finance Authority Revenue Bonds (In-
dustrial Park Project), VRDN, 3.50% due 10/01/2010 (a) 200
Detroit, Michigan, Water Supply Systems, Revenue Refunding Bonds (c):
AAA Aaa 2,500 4.75% due 7/01/2019 2,014
AAA Aaa 5,000 5% due 7/01/2023 4,137
BBB Baa1 4,750 Dickinson County, Michigan, Economic Development Corporation, Solid
Waste Disposal Revenue Refunding Bonds (Champion International), 6.55%
due 3/01/2007 4,701
<PAGE>
AAA Aaa 3,000 Grand Haven, Michigan, Electric Revenue Refunding Bonds, 5.25% due
7/01/2013 (e) 2,689
AAA Aaa 11,055 Grand Rapids, Michigan, Sanitary Sewer Systems, Improvement Revenue Bonds,
6% due 1/01/2022 (e) 10,622
Grand Rapids, Michigan, Water Supply Systems, Revenue Refunding Bonds (c):
AAA Aaa 2,500 5.75% due 1/01/2018 2,335
A1+ VMIG1 5,500 VRDN, 2.95% due 1/01/2020 (a) 5,500
Inkster, Michigan, School District, Refunding Bonds, UT (b):
AAA Aaa 1,665 5.50% due 5/01/2013 1,545
AAA Aaa 1,310 5.50% due 5/01/2019 1,182
AAA Aaa 1,785 Kalamazoo, Michigan, Hospital Finance Authority, Hospital Facility Revenue
Refunding Bonds (Borgess Medical Center), Series A, 6.25% due 6/01/2014 (c) 1,799
A-1 VMIG1 1,300 Michigan State Higher Education Student Loan Authority Revenue Bonds,
VRDN, AMT, Series XII-B, 3.55% due 10/01/2015 (a)(b) 1,300
Michigan State Hospital Finance Authority Revenue Bonds:
NR VMIG1 100 (Equipment Loan Program), VRDN, 3.20% due 11/01/1999 (a) 100
A- A 3,250 Refunding (Detroit Medical Center Obligation), Series A, 6.25% due
8/15/2013 3,116
AAA Aaa 5,000 Refunding (Henry Ford Health Systems), 6% due 9/01/2011 (b) 4,925
AAA Aaa 9,500 Refunding (Oakwood Obligation Group), Series A, 5.625% due 11/01/2018 (c) 8,694
AAA Aaa 7,500 Refunding (Oakwood Obligation Hospital Group), Series A, 5.50% due
11/01/2013 (c) 6,847
AAA Aaa 4,300 Refunding (St. John Hospital), Series A, 5.75% due 5/15/2016 (b) 4,020
Michigan State Housing Development Authority, Rental Housing Revenue Re-
funding Bonds, Series A (b):
AAA Aaa 7,000 5.875% due 10/01/2017 6,524
AAA Aaa 5,630 5.90% due 4/01/2023 5,151
Michigan State Municipal Bond Authority Revenue Bonds (Local Government
Loan Program):
AAA Aaa 2,000 6% due 12/01/2013 (c) 1,961
AAA Aaa 2,000 5.75% due 5/01/2014 (b) 1,889
AA- A1 2,000 Michigan State Public Power Agency, Revenue Refunding Bonds (Belle River
Project), Series A, 5.25% due 1/01/2018 1,734
Michigan State Strategic Fund, Limited Obligation Revenue Bonds:
NR P1 3,400 (Dow Chemical Company Project), VRDN, AMT, 3.30% due 12/01/2014 (a) 3,400
AAA Aaa 2,630 Refunding (Detroit Edison), Series BB, 7% due 5/01/2021 (b) 2,911
NR P1 900 Michigan State Strategic Fund, PCR, Refunding (Consumers Power Pro-
ject), VRDN, Series A, 3.05% due 4/15/2018 (a) 900
AAA Aaa 5,000 Michigan State Trunk Line Revenue Bonds, Series A, 5.75% due 11/15/2020 (c) 4,654
A-1 P1 2,200 Midland County, Michigan, Economic Development Corporation, Economic De-
velopment Limited Obligation Revenue Bonds (Dow Chemical Co. Project),
VRDN, AMT, Series A, 3.30% due 12/01/2023 (a) 2,200
<PAGE>
AAA Aaa 1,500 Monroe County, Michigan, Economic Development Corporation, Limited
Obligation Revenue Refunding Bonds (Detroit Edison Co.), Series AA, 6.95%
due 9/01/2022 (c) 1,653
AAA Aaa 4,500 Monroe County, Michigan, PCR (Detroit Edison Co. Project), AMT, Series CC,
6.55% due 6/01/2024 (e) 4,571
AAA Aaa 5,000 Plymouth-Canton, Michigan, Community School District, Refunding Bonds, UT,
5.50% due 5/01/2017 (b) 4,529
AAA Aaa 1,000 Saint Clair County, Michigan, Economic Development Corporation, PCR,
Refunding (Detroit-Edison Project), Series DD, 6.05% due 8/01/2024 (b) 960
NR VMIG1 100 University of Michigan, University Revenue Refunding Bonds, VRDN, Series A,
3% due 12/01/2019 (a) 100
AAA Aaa 1,500 Warren County, Michigan, Consolidated School District, Refunding Bonds, UT,
5.50% due 5/01/2021 (e) 1,349
AAA Aaa 5,000 Wayne State University, Michigan, Revenue Refunding Bonds, 5.65% due
11/15/2015 (b) 4,653
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Michigan Western Michigan University Revenue Bonds (c):
(concluded) AAA Aaa $ 5,250 6.125% due 11/15/2022 $ 5,142
AAA Aaa 2,800 Refunding, Series A, 5.50% due 7/15/2016 2,552
AAA Aaa 1,600 Refunding, Series A, 5% due 7/15/2021 1,334
AAA Aaa 2,230 Wyandotte, Michigan, City School District Refunding Bonds, UT, 5.625%
due 5/01/2013 (d) 2,093
Total Investments (Cost--$150,007)--98.2% 141,749
Other Assets Less Liabilities--1.8% 2,650
--------
Net Assets--100.0% $144,399
========
<FN>
(a) The interest rate is subject to change periodically based upon the prevailing
market rate. The interest rates shown are the rates in effect at April 30, 1994.
(b) AMBAC Insured.
(c) FGIC Insured.
(d) FSA Insured.
(e) MBIA Insured.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of April 30, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$150,006,640) (Note 1a) $141,748,847
Cash 55,404
Interest receivable 2,756,683
Deferred organization expenses (Note 1e) 28,723
Prepaid expenses and other assets 2,614
------------
Total assets 144,592,271
------------
Liabilities: Payables:
Investment adviser (Note 2) $ 55,187
Dividends to shareholders (Note 1g) 23,969 79,156
------------
Accrued expenses and other liabilities 114,377
------------
Total liabilities 193,533
------------
Net Assets: Net assets $144,398,738
============
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.10 per share (1,000 shares of AMPS*
issued and outstanding at $50,000 per share liquidation
preference) $ 50,000,000
Common Stock, par value $.10 per share (7,348,460 shares issued
and outstanding) $ 734,846
Paid-in capital in excess of par 102,313,650
Undistributed investment income--net 509,803
Accumulated realized capital losses--net (901,768)
Unrealized depreciation on investments--net (8,257,793)
------------
Total--Equivalent to $12.85 net asset value per share of Common
Stock (market price--$13.125) 94,398,738
------------
Total capital $144,398,738
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended April 30, 1994
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 4,269,646
Income (Note 1d):
Expenses: Investment advisory fees (Note 2) $ 382,969
Commission fees (Note 4) 61,595
Professional fees 33,033
Accounting services (Note 2) 25,875
Transfer agent fees 14,533
Directors' fees and expenses 10,494
Listing fees 9,196
Printing and shareholder reports 9,052
Custodian fees 3,408
Amortization of organization expenses (Note 1e) 3,156
Pricing fees 2,416
Other 7,555
------------
Total expenses 563,282
------------
Investment income--net 3,706,364
------------
Realized & Realized loss on investments--net (901,761)
Unrealized Loss on Change in unrealized appreciation/depreciation on investments--net (14,071,081)
Investments--Net ------------
(Notes 1d & 3): Net Decrease in Net Assets Resulting from Operations $(11,266,478)
============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the Period
Months Ended Apr. 30, 1993++ to
Increase (Decrease) in Net Assets: April 30, 1994 Oct. 31, 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 3,706,364 $ 3,391,364
Realized gain (loss) on investments--net (901,761) 3,705
Change in unrealized appreciation/depreciation on investments--net (14,071,081) 5,813,288
------------ ------------
Net increase (decrease) in net assets resulting from operations (11,266,478) 9,208,357
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (3,159,136) (2,363,749)
Shareholders Preferred Stock (554,680) (510,360)
(Note 1g): Realized gain on investments--net:
Common Stock (3,152) --
Preferred Stock (560) --
------------ ------------
Net decrease in net assets resulting from dividends and distrib-
utions to shareholders (3,717,528) (2,874,109)
------------ ------------
Common & Net proceeds from issuance of Common Stock -- 101,975,047
Preferred Stock Proceeds from issuance of Preferred Stock -- 50,000,000
Transactions Offering and underwriting costs resulting from the issuance
(Notes 1e & 4): of Preferred Stock -- (915,000)
Value of shares issued to Common Stock shareholders in reinvestment
of dividends 736,046 1,152,398
------------ ------------
Net increase in net assets derived from stock transactions 736,046 152,212,445
------------ ------------
Net Assets: Total increase (decrease) in net assets (14,247,960) 158,546,693
Beginning of period 158,646,698 100,005
------------ ------------
End of period* $144,398,738 $158,646,698
============ ============
<FN>
*Undistributed investment income--net $ 509,803 $ 517,255
============ ============
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. For the Six For the Period
Months Ended Apr. 30, 1993++ to
Increase (Decrease) in Net Asset Value: April 30, 1994 Oct. 31, 1993
<S> <S> <C> <C>
Per Share Net asset value, beginning of period $ 14.89 $ 14.18
Operating ------------ ------------
Performance: Investment income--net .51 .47
Realized and unrealized gain (loss) on investments--net (2.04) .80
------------ ------------
Total from investment operations (1.53) 1.27
------------ ------------
Less dividends to Common Stock shareholders:
Investment income--net (.43) (.33)
------------ ------------
Capital charge resulting from issuance of Common Stock -- (.03)
------------ ------------
Effect of Preferred Stock activity++++:
Dividends to Preferred Stock shareholders:
Investment income--net (.08) (.07)
------------ ------------
Capital charge resulting from issuance of Preferred Stock -- (.13)
------------ ------------
Total effect of Preferred Stock activity (.08) (.20)
------------ ------------
Net asset value, end of period $ 12.85 $ 14.89
============ ============
Market price per share, end of period $ 13.125 $ 15.125
============ ============
Total Investment Based on market price per share (10.49)%+++ 3.10%+++
Return:** ============ ============
Based on net asset value per share (10.98)%+++ 7.37%+++
============ ============
Ratios to Average Expenses, net of reimbursement .75%* .56%*
Net Assets:*** ============ ============
Expenses .75%* .78%*
============ ============
Investment income--net 4.93%* 4.67%*
============ ============
Supplemental Net assets, net of Preferred Stock, end of period (in thousands) $ 94,399 $ 108,647
Data: ============ ============
Preferred Stock outstanding, end of period (in thousands) $ 50,000 $ 50,000
============ ============
Portfolio turnover 22.44% 15.34%
============ ============
Dividends Per Investment income--net $ 555 $ 510
Share on Preferred
Stock Outstanding:
<PAGE>
<FN>
++Commencement of Operations.
++++The Fund's Preferred Stock was issued on June 1, 1993.
*Annualized.
**Total investment returns based on market value, which can
be significantly greater or lesser than the net asset value,
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.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniVest 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 Common Stock
is listed on the American Stock Exchange under the symbol MVM.
The following is a summary of significant accounting policies
followed by the Fund.
(a) Valuation of investments--Municipal bonds are traded pri-
marily 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, 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. Secur-
ities with remaining maturities of sixty days or less are val-
ued at amortized cost. 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.
<PAGE>
(b) 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.
(c) Income taxes--It is the Fund's policy to comply with the re-
quirements 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 trans-
actions 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 trans-
actions are determined on the identified cost basis.
(e) Deferred organization and offering expenses--Deferred organ-
ization expenses are amortized on a straight-line basis over a
five-year period. Direct expenses relating to the public offering
of the Fund's Common and Preferred Stock were charged to capital
at the time of issuance of the shares.
(f) Non-income producing investments--Written and purchased
options are non-income producing investments.
(g) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital
gains are recorded on the ex-dividend dates.
<PAGE>
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Fund Asset Management, L.P. ("FAM"). Effective January 1, 1994,
the investment advisory business of FAM was reorganized from a
corporation to a limited partnership. Both prior to and after the
reorganization, ultimate control of FAM was vested with Merrill
Lynch & Co., Inc. ("ML & Co."). The general partner of FAM is
Princeton Services, Inc., an indirect wholly-owned subsidiary of
ML & Co. The limited partners are ML & Co. and Merrill Lynch
Investment Management, Inc. ("MLIM"), which is also an indirect
wholly-owned subsidiary of ML & Co.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of 0.50%
of the Fund's average weekly net assets.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, MLIM, Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("MLPF&S"), and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term secur-
ities, for the six months ended April 30, 1994 were $32,729,300 and
$45,196,474, respectively.
Net realized and unrealized losses as of April 30, 1994 were as
follows:
Realized Unrealized
Losses Losses
Long-term investments $(901,761) $(8,257,793)
--------- -----------
Total $(901,761) $(8,257,793)
========= ===========
As of April 30, 1994, net unrealized depreciation for Federal in-
come tax purposes aggregated $8,257,793, of which $74,331 related
to appreciated securities and $8,332,124 related to depreciated
securities. The aggregate cost of investments at April 30, 1994
for Federal income tax purposes was $150,006,640.
<PAGE>
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, 1994, shares issued and out-
standing increased by 51,993 to 7,348,460 as a result of divi-
dend reinvestment. At October 31, 1993, total paid-in capital
amounted to $103,048,496.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred
Stock of the Fund that entitle their holders to receive cash
dividends at an annual rate that may vary for the successive
dividend periods. The yield in effect at April 30, 1994 was
2.50%.
In connection with the offering of AMPS, the Fund reclassified
1,000 shares of unissued capital stock as AMPS. For the six
months ended April 30, 1994, there was 1,000 AMPS authorized,
issued and outstanding with a liquidation preference of $50,000
per share, plus accumulated and unpaid dividends of $320. The
Fund pays commissions to certain broker-dealers at the end of
each auction at the annual rate of one-quarter of 1% calculated
in the proceeds of each auction. For the six months ended April 30,
1994, MLPF&S, an affiliate of MLIM, earned $62,553 as commissions.
5. Subsequent Event:
On May 6, 1994, the Fund's Board of Directors declared an ordin-
ary income dividend to Common Stock shareholders in the amount of
$.067088 per share, payable on May 27, 1994 to shareholders of re-
cord as of May 17, 1994.
<PAGE>
PER SHARE INFORMATION
<TABLE>
Per Share Selected
Quarterly Financial
Data*
<CAPTION>
Net Realized Unrealized Dividends/Distributions
Investment Gains Gains Net Investment Income Capital Gains
For the Period Income (Losses) (Losses) Common Preferred Common Preferred
<S> <C> <C> <C> <C> <C> <C> <C>
April 30, 1993++ to July 31, 1993 $.22 $(.02) $ .17 $.11 $.03 -- --
August 1, 1993 to October 31, 1993 .25 .02 .63 .22 .04 -- --
November 1, 1993 to January 31, 1994 .26 .02 .13 .21 .04 -- --
February 1, 1994 to April 30, 1994 .25 (.14) (2.05) .22 .04 -- --
<CAPTION>
Net Asset Value Market Price**
For the Period High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
April 30, 1993++ to July 31, 1993 $14.53 $14.07 $15.50 $15.00 196
August 1, 1993 to October 31, 1993 15.16 14.25 15.50 15.00 434
November 1, 1993 to January 31, 1994 14.94 14.30 15.00 13.25 507
February 1, 1994 to April 30, 1994 14.99 12.27 15.00 12.125 414
<FN>
++Commencement of Operations.
*Calculations are based upon Common Stock outstanding at the end of each period.
**As reported in the consolidated transaction reporting system.
***In thousands.
</TABLE>
