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
shareholders, 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
MUNIVEST
MICHIGAN
INSURED
FUND, INC.
FUND LOGO
Annual Report
October 31, 1994
<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
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.
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 New York Stock Exchange) may, as a
result, decline. Furthermore, if long-term interest rates rise,
the Common Stock's net asset value will reflect the full decline
in the price of the portfolio's investments, since the value of
the fund's Preferred Stock does not fluctuate. In addition to the
decline in net asset value, the market value of the fund's Common
Stock may also decline.
<PAGE>
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
90 Washington Street
New York, New York 10286
NYSE Symbol
MVM
DEAR SHAREHOLDER
For the year ended October 31, 1994, the Common Stock of MuniVest
Michigan Insured Fund, Inc. earned $0.833 per share income dividends,
which includes earned and unpaid dividends of $0.068. This represents
a net annualized yield of 7.06%, based on a month-end net asset value
of $11.83 per share. Over the same period, the total investment
return on the Fund's Common Stock was -15.25%, based on a change in
per share net asset value from $14.89 to $11.83, and assuming
reinvestment of $0.837 per share income dividends.
<PAGE>
For the six-month period ended October 31, 1994, the total
investment return on the Fund's Common Stock was -4.79%, based
on a change in per share net asset value from $12.85 to $11.83,
and assuming reinvestment of $0.404 per share income dividends.
The average yield of the Fund's Auction Market Preferred Stock
for the six months ended October 31, 1994 was 2.70%.
The Environment
As discussed in our last report to shareholders, the Federal
Reserve Board moved to counteract inflationary pressures by
tightening monetary policy. This trend continued during the May--
October period. Despite the series of preemptive strikes against
inflation by the central bank, concerns of increasing
inflationary pressures continued to prompt volatility in the US
capital markets during the period. In addition, the weakness of
the US dollar in foreign exchange markets prolonged stock and
bond market declines.
Ongoing strength in the manufacturing sector and better-than-
expected economic results continue to fuel speculation that the
Federal Reserve Board will continue to raise short-term interest
rates in the months ahead. However, although consumer spending is
increasing, it is doing so at a lower rate than has been the case
in recent economic recoveries. In the weeks ahead, investors will
continue to assess economic data and inflationary trends in order
to gauge whether further increases in short-term interest rates
are imminent. Continued indications of moderate and sustainable
levels of economic growth would be positive for the US capital
markets. At the same time, greater US dollar stability in foreign
exchange markets would help to dampen expectations of
significantly higher short-term interest rates.
The Municipal Market
The long-term tax-exempt market continued to erode throughout the
three months ended October 31, 1994. As measured by the Bond
Buyer Revenue Bond Index, yields on A-rated municipal revenue
bonds maturing in 30 years rose by almost 50 basis points (0.50%)
to 6.95% during the October 1994 quarter. This represents the
highest level in tax-exempt bond yields in over two years.
US Treasury bonds suffered even greater declines during the quarter
as Treasury bond yields rose approximately 60 basis points to end
the quarter at 8.00%.
<PAGE>
The tax-exempt bond market reacted negatively throughout the
October quarter to indications that, despite a series of interest
rate increases by the Federal Reserve Board, the strength of the
domestic economy seen in recent quarters has not yet been
significantly reduced. While inflationary pressures have remained
well contained, additional Federal Reserve Board actions have
been expected both to ensure that domestic economic growth is
eventually confined to current levels and to assure nervous
financial markets of its anti-inflationary intentions.
Fortunately, while the demand for tax-exempt bonds has declined
somewhat in recent months, new bond issuance has remained greatly
reduced. During the quarter ended October 31, 1994, only $32
billion in long-term tax-exempt securities were issued, a decline
of over 50% versus the October 31, 1993 quarter. Similarly, for
the six months ended October 31, 1994, only $75 billion in
municipal securities were underwritten, a decline of over 50%
versus the comparable period a year earlier. This reduction in
issuance in recent quarters has allowed the municipal bond market
to react to both the decline in investor demand and the rise in
fixed-income yields in a more orderly fashion than in similar
situations in the past, particularly during 1987.
Long-term tax-exempt revenue bonds currently yield approximately
7%, or almost 11.5% on an after-tax equivalent basis, to an
investor in the 39.6% Federal income tax bracket. As inflation
has only marginally increased in the past year, real tax-exempt
interest rates have risen dramatically. The Federal Reserve Board
appears committed to maintaining inflation at or below its
current levels. Indeed, most forecasts expect inflation to remain
in its present range of 3%--4% throughout 1995 and, potentially,
for the remainder of the 1990s. Real after-tax equivalent
interest rates exceeding 7% represent historically attractive
municipal investments for long-term investors.
Federal Reserve Board actions taken thus far have yet to fully
impact US domestic growth and expected additional actions should
promote only a modest economic expansion within a benign
inflationary context beginning sometime early in 1995. Within
such an environment, it is unlikely that tax-exempt interest rates
will remain at their current attractive levels. Tax-exempt bond
issuance is unlikely to return to the historic high levels seen
in 1992 and 1993, while investor demand should return as markets
stabilize. As we have discussed in earlier reports, the total number
of tax-exempt bonds outstanding is scheduled to decline dramatically
in 1994 and 1995 as a result of both regular bond maturities and
early redemptions. Investors seeking tax-advantaged issues are
likely to find it very difficult to obtain currently available
tax-exempt yields as the current supply/demand balance is unlikely
to be maintained in the coming quarters.
<PAGE>
Portfolio Strategy
During the six-month period ended October 31, 1994, we maintained
the defensive posture we had adopted for the Fund earlier in the
year. Throughout most of the last six months, we essentially
maintained cash reserves in the 7.5%--10% range and purchased
more defensive, higher-couponed issues whenever we were able to
sell more aggressively structured securities. This strategy has
been difficult to implement as the appropriate defensive issues
have remained scarce. Issuance by Michigan municipalities totaled
only $1 billion during the last six months, a decrease of over
70% versus issuance of one year ago. This relative scarcity of
Michigan paper has only exacerbated the difficulty in finding
higher-couponed Michigan issues. However, the Fund remains well
structured to recapture much of the capital appreciation lost
earlier this year should municipal bond prices rise as expected
in 1995. Additionally, in recent weeks we reduced the Fund's cash
position to the 5%--7.5% range as the supply of historically
attractive issues has temporarily increased. These issues bear
coupons in the 6.75%--7.25% range and provide relatively limited
price volatility in response to changes in interest rate levels.
Short-term tax-exempt interest rates traded in a range between
2.75%--3.375% over the last six months, despite the series of
taxable short-term interest rate increases engineered by the
Federal Reserve Board. The demand for tax-exempt cash equivalents
has been very strong for most of this year and is expected to
remain so in the coming quarters. The tax-exempt yield curve has
remained very positive throughout this year. Consequently, the
leverage of the Fund's Preferred Stock has continued to have a
very positive 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
will decline and, as a result, reduce the yield of the Fund's
Common Stock. (For a complete explanation of the benefits and
risks of leveraging, see page 1 of this report to shareholders.)
In Conclusion
We appreciate your interest in MuniVest Michigan Insured Fund,
Inc., and we look forward to assisting you with your financial
needs in the months and years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
November 28, 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)
<C> <C> <C> <S> <C>
Michigan--95.2%
AAA Aaa $ 1,450 Breckenridge, Michigan, Community School District, UT, 5.75% due 5/01/2023 (b) $ 1,258
AAA Aaa 1,465 Central Michigan University, Revenue Refunding Bonds, 6% due 10/01/2013 (e) 1,377
AAA Aaa 2,000 Clarkston, Michigan, Community Schools, Refunding Bonds, UT, 5.90% due 5/01/2016 (c) 1,811
NR* P1 1,900 Delta County, Michigan, Economic Development Corporation, Environmental Improvement
Revenue Refunding Bonds (Mead Escambia Paper), CP, Series C, 3.60% due 12/01/2023 1,900
AAA Aaa 3,975 Detroit, Michigan, Sewage Disposal Revenue Refunding Bonds, Series A, 5.70%
due 7/01/2013 (c) 3,527
A1 NR* 200 Detroit, Michigan, Tax Increment Finance Authority Revenue Bonds (Industrial Park
Project), VRDN, 3.51% due 10/01/2010 (a) 200
Detroit, Michigan, Water Supply Systems, Revenue Refunding Bonds (c):
AAA Aaa 1,000 6.50% due 7/01/2015 978
AAA Aaa 5,000 5% due 7/01/2023 3,809
BBB Baa1 4,750 Dickinson County, Michigan, Economic Development Corporation, Solid Waste Disposal
Revenue Refunding Bonds (Champion International), 6.55% due 3/01/2007 4,597
AAA Aaa 3,000 Grand Haven, Michigan, Electric Revenue Refunding Bonds, 5.25% due 7/01/2013 (e) 2,537
<PAGE>
Grand Ledge, Michigan, Public School Revenue Bonds (e):
AAA Aaa 1,750 6.45% due 5/01/2014 1,703
AAA Aaa 6,500 6.60% due 5/01/2024 6,376
AAA Aaa 10,000 Grand Rapids, Michigan, Sanitary Sewer Systems, Improvement Revenue Bonds,
6% due 1/01/2022 (e) 8,991
Grand Rapids, Michigan, Water Supply Systems, Revenue Refunding Bonds (c):
AAA Aaa 1,000 6.50% due 1/01/2015 981
A1+ VMIG1 200 VRDN, 3.70% due 1/01/2020 (a) 200
Inkster, Michigan, School District, Refunding Bonds, UT (b):
AAA Aaa 1,665 5.50% due 5/01/2013 1,453
AAA Aaa 1,310 5.50% due 5/01/2019 1,107
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) 1,689
A1 VMIG1 1,300 Michigan State Higher Education Student Loan Authority Revenue Bonds, VRDN, AMT,
Series XII-D, 3.40% due 10/01/2015 (a) (b) 1,300
Michigan State Hospital Finance Authority Revenue Bonds:
NR* VMIG1 100 (Hospital Equipment Loan Program), VRDN, 3.35% due 11/01/1999 (a) 100
A1 VMIG1 900 (Hospital Equipment Loan Program), VRDN, 3.30% due 6/01/2001 (a) 900
A- A 3,250 Refunding (Detroit Medical Center Obligation), Series A, 6.25% due 8/15/2013 2,968
AAA Aaa 5,000 Refunding (Henry Ford Health Systems), 6% due 9/01/2011 (b) 4,707
AAA Aaa 5,000 Refunding (Oakwood Obligation Hospital Group), Series A, 5.50% due 11/01/2013 (c) 4,303
AAA Aaa 5,000 Refunding (Oakwood Obligation Hospital Group), Series A, 5.625% due 11/01/2018 (c) 4,268
AAA Aaa 4,300 Refunding (Saint John Hospital), Series A, 5.75% due 5/15/2016 (b) 3,771
Michigan State Housing Development Authority, Rental Housing Revenue Refunding
Bonds, Series A:
AAA Aaa 7,000 5.875% due 10/01/2017 (b) 6,238
AAA Aaa 2,630 5.90% due 4/01/2023 (b) 2,319
AAA Aaa 5,000 6.50% due 4/01/2023 (d) 4,681
Michigan State Municipal Bond Authority Revenue Bonds (Local Government Loan Program):
AAA Aaa 1,425 (Marquette Building), Series D, 6.75% due 5/01/2021 (b) 1,430
AAA Aaa 5,000 Series A, 6% due 12/01/2013 (c) 4,697
AAA Aaa 2,000 Series A, 5.75% due 5/01/2014 (b) 1,781
AAA Aaa 4,000 Series A, 6.125 due 12/01/2018 (c) 3,745
Michigan State Strategic Fund, Limited Obligation Revenue Bonds:
NR* P1 800 (Dow Chemical Company Project), VRDN, AMT, 3.80% due 12/01/2014 (a) 800
A1+ Aa3 1,200 Refunding (Consumers Power Project), VRDN, Series A, 3.60% due 6/15/2010 (a) 1,200
AAA Aaa 3,630 Refunding (Detroit Edison), Series BB, 7% due 5/01/2021 (b) 3,750
NR* P1 700 Michigan State Strategic Fund, PCR, Refunding (Consumers Power Project), VRDN,
Series A, 3.50% due 4/15/2018 (a) 700
<PAGE>
A1 P1 1,500 Midland County, Michigan, Economic Development Corporation, Economic Development
Limited Obligation Revenue Bonds (Dow Chemical Co. Project), VRDN, AMT, Series A,
3.80% due 12/01/2023 (a) 1,500
AAA Aaa 6,500 Monroe County, Michigan, Economic Development Corporation, Limited Obligation Revenue
Refunding Bonds (Detroit Edison Co.), Series AA, 6.95% due 9/01/2022 (c) 6,678
AAA Aaa 4,500 Monroe County, Michigan, PCR (Detroit Edison Co. Project), AMT, Series CC, 6.55%
due 6/01/2024 (e) 4,346
AAA Aaa 2,600 Novi, Michigan, Community School District Revenue Bonds, UT, 6.125% due 5/01/2013 (c) 2,466
AA Aa 2,750 Royal Oak, Michigan, Hospital Finance Authority, Hospital Revenue Bonds (William
Beaumont Hospital), Series D, 6.75% due 1/01/2020 2,694
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) 903
NR* VMIG1 400 University of Michigan, University Revenue Refunding Bonds, VRDN, Series A, 3.55%
due 12/01/2019 (a) 400
AAA Aaa 1,500 Warren County, Michigan, Consolidated School District, Refunding Bonds, UT, 5.50%
due 5/01/2021 (e) 1,259
AAA Aaa 5,000 Wayne State University, Michigan, Revenue Refunding Bonds, 5.65% due 11/15/2015 (b) 4,371
Western Michigan University Revenue Bonds (c):
AAA Aaa 5,250 6.125% due 11/15/2022 4,802
AAA Aaa 1,600 Refunding, Series A, 5% due 7/15/2021 1,244
AAA Aaa 2,230 Wyandotte, Michigan, City School District Refunding Bonds, UT, 5.625% due
5/01/2013 (d) 1,973
Total Investments (Cost--$142,862)--95.2% 130,788
Other Assets Less Liabilities--4.8% 6,525
--------
Net Assets--100.0% $137,313
========
<FN>
*Not Rated.
(a)The interest rate is subject to change periodically based upon the prevailing
market rate. The interest rate shown is the rate in effect at October 31, 1994.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)FSA Insured.
(e)MBIA Insured.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of October 31, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$142,861,573) (Note 1a) $130,788,328
Cash 25,941
Receivables:
Securities sold $ 16,862,243
Interest 2,770,550 19,632,793
------------
Deferred organization expenses (Note 1e) 18,982
Prepaid expenses and other assets 3,989
------------
Total assets 150,470,033
------------
Liabilities: Payables:
Securities purchased 12,831,309
Dividends to shareholders (Note 1g) 180,205
Investment adviser (Note 2) 55,816 13,067,330
------------
Accrued expenses and other liabilities 89,898
------------
Total liabilities 13,157,228
------------
Net Assets: Net assets $137,312,805
============
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 (7,379,969 shares issued and
outstanding) $ 737,997
Paid-in capital in excess of par 102,717,369
Undistributed investment income--net 504,494
Accumulated realized capital losses--net (Note 5) (4,573,810)
Unrealized depreciation on investments--net (12,073,245)
------------
Total--Equivalent to $11.83 net asset value per share of Common Stock
(market price--$10.25) 87,312,805
------------
Total capital $137,312,805
============
<FN>
*Auction Market Preferred Stock.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Year Ended October 31, 1994
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 8,471,292
Income (Note 1d):
Expenses: Investment advisory fees (Note 2) $ 745,028
Commission fees (Note 4) 126,360
Accounting services (Note 2) 61,207
Professional fees 53,909
Printing and shareholder reports 35,153
Transfer agent fees 34,912
Directors' fees and expenses 21,247
Listing fees 18,674
Custodian fees 6,687
Pricing fees 5,748
Amortization of organization expenses (Note 1e) 5,434
Other 3,878
------------
Total expenses 1,118,237
------------
Investment income--net 7,353,055
------------
Realized & Realized loss on investments--net (4,573,803)
Unrealized Change in unrealized appreciation/depreciation on investments--net (17,886,533)
Loss on ------------
Investments--Net Net Decrease in Net Assets Resulting from Operations $(15,107,281)
(Notes 1d & 3): ============
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the For the Period
Year Ended April 30, 1993++
Increase (Decrease) in Net Assets: Oct. 31, 1994 to Oct. 31, 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 7,353,055 $ 3,391,364
Realized gain (loss) on investments--net (4,573,803) 3,705
Change in unrealized appreciation/depreciation on investments--net (17,886,533) 5,813,288
------------ ------------
Net increase (decrease) in net assets resulting from operations (15,107,281) 9,208,357
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (6,136,596) (2,363,749)
Shareholders Preferred Stock (1,229,220) (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 distributions
to shareholders (7,369,528) (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 Value of shares issued to Common Stock shareholders in reinvestment
(Notes 1e & 4): of dividends 1,115,631 1,152,398
Offering and underwriting costs resulting from the issuance of Preferred Stock 27,285 (915,000)
------------ ------------
Net increase in net assets derived from stock transactions 1,142,916 152,212,445
------------ ------------
Net Assets: Total increase (decrease) in net assets (21,333,893) 158,546,693
Beginning of period 158,646,698 100,005
------------ ------------
End of period* $137,312,805 $158,646,698
============ ============
<FN>
*Undistributed investment income--net $ 504,494 $ 517,255
============ ============
<FN>
++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 For the Period
Year Ended April 30, 1993++
Increase (Decrease) in Net Asset Value: Oct. 31, 1994 to Oct. 31, 1993
<S> <S> <C> <C>
Per Share Net asset value, beginning of period $ 14.89 $ 14.18
Operating ------------ ------------
Performance: Investment income--net 1.01 .47
Realized and unrealized gain (loss) on investments--net (3.06) .80
------------ ------------
Total from investment operations (2.05) 1.27
------------ ------------
Less dividends to Common Stock shareholders:
Investment income--net (.84) (.33)
------------ ------------
Capital charge resulting from issuance of Common Stock -- (.03)
------------ ------------
Effect of Preferred Stock activity++++:
Dividends to Preferred Stock shareholders:
Investment income--net (.17) (.07)
Capital charge resulting from issuance of Preferred Stock -- (.13)
------------ ------------
Total effect of Preferred Stock activity (.17) (.20)
------------ ------------
Net asset value, end of period $ 11.83 $ 14.89
============ ============
Market price per share, end of period $ 10.25 $ 15.125
============ ============
Total Investment Based on market price per share (27.71%) 3.10%+++
Return:** ============ ============
Based on net asset value per share (15.25%) 7.37%+++
============ ============
Ratios to Average Expenses, net of reimbursement .76% .56%*
Net Assets:*** ============ ============
Expenses .76% .78%*
============ ============
Investment income--net 4.98% 4.67%*
============ ============
Supplemental Net assets, net of Preferred Stock, end of period (in thousands) $ 87,313 $ 108,647
Data: ============ ============
Preferred Stock outstanding, end of period (in thousands) $ 50,000 $ 50,000
============ ============
Portfolio turnover 49.03% 15.34%
============ ============
<PAGE>
Dividends Per Investment income--net $ 1,229 $ 510
Share on Preferred
Stock Outstanding:
<FN>
*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.
++Commencement of Operations.
++++The Fund's Preferred Stock was issued on June 1, 1993.
+++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 New York 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
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, 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.
<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
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) Deferred organization 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 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. ("PSI"), an indirect wholly-
owned subsidiary of ML & Co. The limited partners are ML & Co.
and Fund Asset Management, Inc. ("FAMI"), 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, FAMI, PSI, Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("MLPF&S"), and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended October 31, 1994 were $67,929,624 and
$78,772,631, respectively.
NOTES TO FINANCIAL STATEMENTS (concluded)
Net realized and unrealized gains (losses) as of October 31, 1994
were as follows:
Realized Unrealized
Gains (Losses) Losses
Long-term investments $(4,756,576) $(12,073,245)
Financial futures contracts 182,773 --
----------- ------------
Total $(4,573,803) $(12,073,245)
=========== ============
As of October 31, 1994, net unrealized depreciation for Federal
income tax purposes aggregated $12,073,245, of which $130 related
to appreciated securities and $12,073,375 related to depreciated
securities. The aggregate cost of investments at October 31, 1994
for Federal income tax purposes was $142,861,573.
<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 year ended October 31, 1994, shares issued and outstanding
increased by 83,502 to 7,379,969 as a result of dividend
reinvestment. At October 31, 1994, total paid-in capital amounted to
$103,455,366.
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 October 31, 1994 was
3.17%.
In connection with the offering of AMPS, the Fund reclassified
1,000 shares of unissued capital stock as AMPS. For the year
ended October 31, 1994, there was 1,000 AMPS authorized, issued
and outstanding with a liquidation preference of $50,000 per
share. Effective December 1, 1994, as a result of a two-for-one
stock split, there will be 2,000 AMPS shares with a liquidation
preference of $25,000 per share.
The Fund pays commissions to certain broker-dealers at the end of
each auction at the annual rate ranging from 0.25% to 0.375%,
calculated on the proceeds of each auction. For the year ended
October 31, 1994, MLPF&S, an affiliate of FAMI, earned $126,360
as commissions.
5. Capital Loss Carryforward:
At October 31, 1994, the Fund has a capital loss carryforward of
approximately $4,574,000, all of which expires in 2002. This amount
will be available to offset like amounts of any future taxable gains.
6. Subsequent Event:
On November 8, 1994, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the
amount of $.067728 per share, payable on November 29, 1994 to
shareholders of record as of November 18, 1994.
<PAGE>
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
MuniVest Michigan Insured Fund, Inc.:
We have audited the accompanying statement of assets, liabilities
and capital, including the schedule of investments, of MuniVest
Michigan Insured Fund, Inc. as of October 31, 1994, the related
statements of operations for the year ended and changes in net
assets for the year then ended and for the period April 30, 1993
(commencement of operations) to October 31, 1993, and the
financial highlights for the year then ended and for the period
April 30, 1993 (commencement of operations) to October 31, 1993.
These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and the financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned at October 31, 1994 by correspondence with the
custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
MuniVest Michigan Insured Fund, Inc. as of October 31, 1994, the
results of its operations, the changes in its net assets, and the
financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 5, 1994
</AUDIT-REPORT>
<PAGE>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid monthly by
MuniVest Michigan Insured Fund, Inc. during its taxable year
ended October 31, 1994, qualify as tax-exempt interest dividends
for Federal income tax purposes. Additionally, the following table
summarizes the per share capital gains distributions paid by the
Fund during the year:
Payable Short-Term Long-Term
Date Capital Gains Capital Gains
Common Shareholders 12/30/93 $0.000432 --
Preferred Shareholders 11/29/93 $0.56 --
Please retain this information for your records.
<TABLE>
PER SHARE INFORMATION (unaudited)
Per Share
Selected Quarterly
Financial Data*
<CAPTION>
Net Realized Unrealized Dividends/Distributions
Investment Gains Gains Net Investment Income
For the Period Income (Losses) (Losses) Common Preferred
<S> <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
May 1, 1994 to July 31, 1994 .25 (.15) .45 .21 .04
August 1, 1994 to October 31, 1994 .25 (.35) (.97) .20 .05
<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 15.04 14.30 15.00 13.25 507
February 1, 1994 to April 30, 1994 14.99 12.27 15.00 12.125 414
May 1, 1994 to July 31, 1994 13.52 12.48 13.375 12.25 300
August 1, 1994 to October 31, 1994 13.16 11.83 13.00 10.125 816
<FN>
*Calculations are based upon shares of Common Stock outstanding at the end of each period.
**As reported in the consolidated transaction reporting system.
***In thousands.
++Commencement of Operations.
</TABLE>
<PAGE>
