MUNIVEST
MICHIGAN
INSURED
FUND, INC.
FUND LOGO
Annual Report
October 31, 1996
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
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Fred K. Stuebe, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
<PAGE>
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
NYSE Symbol
MVM
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
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. Statements and other information
herein are as dated and are subject to change.
MuniVest Michigan
Insured Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
<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. Of course, increases in
short-term interest rates would reduce (and even eliminate) the
dividends on the Common Stock.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term
investments, and therefore the Common Stock shareholders are the
beneficiaries of the incremental yield. However, if short-term
interest rates rise, narrowing the differential between short-term
and long-term interest rates, the incremental yield pickup on the
Common Stock will be reduced or eliminated completely. At the same
time, the market value 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>
Important Tax
Information
(unaudited)
All of the net investment income distributions paid by MuniVest
Michigan Insured Fund, Inc. during its taxable year ended October
31, 1996 qualify as tax-exempt interest dividends for Federal income
tax purposes. Additionally, there were no capital gains distributed
by the Fund during the year.
Please retain this information for your records.
DEAR SHAREHOLDER
For the year ended October 31, 1996, the Common Stock of MuniVest
Michigan Insured Fund, Inc. earned $0.768 per share income
dividends, which included earned and unpaid dividends of $0.066.
This represents a net annualized yield of 5.63%, based on a month-
end net asset value of $13.65 per share. Over the same period, the
total investment return on the Fund's Common Stock was +6.32%, based
on an unchanged per share asset value of $13.65, and assuming
reinvestment of $0.766 per share income dividends.
For the six-month period ended October 31, 1996, the total
investment return on the Fund's Common Stock was +5.65%, based on a
change in per share net asset value from $13.32 to $13.65, and
assuming reinvestment of $0.378 per share income dividends.
For the six-month period ended October 31, 1996, the Fund's Auction
Market Preferred Stock had an average yield of 3.50%.
<PAGE>
The Municipal Market
Environment
Municipal bond yields generally moved lower during the six months
ended October 31, 1996. Long-term tax-exempt revenue bond yields, as
measured by the Bond Buyer Revenue Bond Index, declined
approximately 35 basis points (0.35%) to close the six-month period
ended October 31, 1996 at approximately 5.94%. The municipal bond
market exhibited considerable weekly yield volatility over the six
months ended October 31, 1996 with bond yields vacillating as much
as 20 basis points. This ongoing volatility was in response to
fluctuating evidence regarding the degree to which recent economic
growth would result in any significant increase in inflationary
pressures. Much of the evidence supporting stronger growth centered
around the strong employment growth seen in April and June with bond
yields rising in response. Other more recent economic indicators
have suggested that economic growth will not be excessive and
inflationary pressures will remain well-contained. This continued
benign inflationary environment has supported lower tax-exempt bond
yields in recent months. US Treasury bond yields have exhibited
similar, albeit greater, volatility during the six-month period
ended October 31, 1996, falling more than 20 basis points to end the
period at 6.64%. Over the past six months, tax-exempt bond yields
registered significantly greater declines than those shown by the US
Treasury bond. This relative outperformance by the municipal bond
market was largely the result of the strong technical support the
tax-exempt market has enjoyed throughout most of 1996. Perhaps most
significantly, the pace of new bond issuance has recently slowed.
Over the last year, approximately $180 billion in long-term
municipal securities was issued, an increase of over 25% versus the
same period a year ago. Much of this increase was the result of
issuers seeking to refinance their existing higher-couponed debt as
interest rates declined in 1995 and early 1996. As interest rates
rose, these financings became increasingly economically impractical
and issuance declined. Over the last six months, approximately $90
billion in long-term tax-exempt securities was underwritten, an
increase of 5% versus the comparable period a year earlier. Only $41
billion in tax-exempt securities was issued in the last three
months, a 3% decline in issuance versus the October 31, 1995
quarter.
At the same time, investor demand remained consistently strong. With
nominal new-issue yields generally above 6%, retail investor
interest was steady. Additionally, investors received over $50
billion this June and July in assets derived from coupon income,
bond maturities, and proceeds from early redemptions. Annual new
bond issuance has declined in recent years and is expected to remain
below levels seen in the early 1990s. Consequently, as the higher-
couponed bonds issued in the early-to-mid 1980s were redeemed at
their first optional call date, the total number of outstanding tax-
exempt bonds has declined. This combination of a declining net
supply and significant amounts of assets helped maintain investor
demand in recent months.
<PAGE>
It is unlikely that the municipal bond market will continue to
significantly outperform US Treasury securities in the near future.
The tax-exempt bond market's recent performance has led to the yield
ratio between long-term taxable and tax-exempt securities falling
from in excess of 90% to approximately 85%. While still historically
very attractive, some institutional investors, particularly short-
term traders, began to view the tax-exempt bond market's recent
outperformance as an opportunity to sell a relatively expensive
asset. However, to the long-term investor, such a sale would
represent the loss of an attractively priced asset which may not be
easily replaced given the relative scarcity of municipal bonds under
present supply conditions.
Looking ahead, no clear consensus for the direction of interest
rates currently exists. Perhaps, the primary focus going forward
will be the extent to which the increase in interest rates seen thus
far in 1996 will negatively impact future economic growth. Should
growth slow in the interest rate-sensitive sectors of the economy,
like housing, auto, and consumer spending, as many economists assert
is likely, then bond yields are likely to decline. Under such a
scenario, the municipal bond market's performance is likely to
closely mirror that of the US Treasury bond market.
Portfolio Strategy
During the six months ended October 31, 1996, we continued to
maintain the neutral strategy we had adopted earlier this year. We
preferred income-oriented issues over more interest rate-sensitive
securities whenever possible. However, attractively priced, higher-
couponed, tax-exempt bonds continued to be scarce, making such
purchases difficult despite ongoing yield volatility. Consequently,
we chose to remain essentially fully invested during the six-month
period ended October 31, 1996. Until the near-term direction of tax-
exempt interest rates becomes clearer, we expect to maintain the
Fund's current strategy. Over the last 12 months, this strategy
greatly benefited the Fund's total return.
Short-term tax-exempt interest rates traded in a narrow range,
centering around 3.50% for most of the six-month period ended
October 31, 1996. Concerns over interest rate tightening by the
Federal Reserve Board have had little, if any, impact on short-term
municipal interest rates. Consequently, the leverage of the Common
Stock has continued to have a material beneficial impact on the
yield paid to the Common Stock shareholders. However, should the
spread between short-term and long-term interest rates narrow, the
benefits of the leverage will decline, and the yield on the Common
Stock will be reduced. (For a complete explanation of the benefits
and risks of leveraging, see page 1 of this report to shareholders.)
In Conclusion
We appreciate your ongoing interest in MuniVest Michigan Insured
Fund, Inc., and we look forward to assisting you with your financial
needs in the months and years ahead.
<PAGE>
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Fred K. Stuebe)
Fred K. Stuebe
Vice President and Portfolio Manager
November 27, 1996
PROXY RESULTS
<TABLE>
During the six-month period ended October 31, 1996, MuniVest
Michigan Insured Fund, Inc. Common Stock shareholders voted on the
following proposals. The proposals were approved at a special
shareholders' meeting on September 9, 1996. The description of each
proposal and number of shares voted are as follows:
<CAPTION>
Shares Voted Shares Voted
For Without Authority
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors: Edward H. Meyer 7,035,732 150,091
Jack B. Sunderland 7,036,932 148,891
J. Thomas Touchton 7,040,358 145,465
Arthur Zeikel 7,037,281 148,542
<PAGE>
Shares Voted Shares Voted Shares Voted
For Against Abstain
2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent auditors for the current fiscal year. 7,043,318 44,791 97,714
<CAPTION>
During the six-month period ended October 31, 1996, MuniVest
Michigan Insured Fund, Inc. Preferred Stock shareholders voted on
the following proposals. The proposals were approved at a special
shareholders' meeting on September 6, 1996. The description of each
proposal and number of shares voted are as follows:
Shares Voted Shares Voted
For Without Authority
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors: Donald Cecil 1,989 11
M. Colyer Crum 1,989 11
Edward H. Meyer 1,989 11
Jack B. Sunderland 1,989 11
J. Thomas Touchton 1,989 11
Arthur Zeikel 1,989 11
Shares Voted Shares Voted Shares Voted
For Against Abstain
2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent auditors for the current fiscal year. 1,992 8 0
</TABLE>
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)
DATES Daily Adjustable Tax-Exempt Securities
HDA Housing Development Authority
PCR Pollution Control Revenue Bonds
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>
Michigan--98.7% AAA Aaa $ 1,000 Belding, Michigan, Area Schools, Refunding, UT,
6.05% due 5/01/2021 (c) $ 1,024
AAA Aaa 1,000 Caledonia, Michigan, Community Schools, Refunding,
UT, 6.625% due 5/01/2014 (b) 1,094
AAA Aaa 2,500 Cedar Springs, Michigan, Public School District, UT,
5.875% due 5/01/2019 (e) 2,521
AAA Aaa 1,000 Coldwater, Michigan, Community Schools, UT, 6.30% due
5/01/2023 (e) 1,063
AAA Aaa 1,000 Dearborn, Michigan, Sewage Disposal System Revenue Bonds,
Series A, 5.125% due 4/01/2016 (e) 940
Delta County, Michigan, Economic Development Corp.,
Environmental Improvement Revenue Bonds (Mead Escambia
Paper) (a):
NR* P1 1,300 DATES, Series F, 3.60% due 12/01/2013 1,300
NR* P1 800 Refunding, VRDN, Series D, 3.60% due 12/01/2023 800
AAA Aaa 1,750 Detroit, Michigan, City School District, UT, 7.10% due
5/01/2001 (e)(f) 1,964
AAA Aaa 2,000 Detroit, Michigan, Distributable State Aid, 7.20% due
5/01/1999 (b)(f) 2,179
AAA Aaa 6,750 Detroit, Michigan, Sewage Disposal Revenue Bonds, 6.625% due
7/01/2001 (c)(f) 7,467
AAA Aaa 2,500 Detroit, Michigan, Water Supply System, Revenue Refunding
Bonds, 5% due 7/01/2023 (c) 2,261
BBB Baa1 4,750 Dickinson County, Michigan, Economic Development Corp.,
Solid Waste Disposal Revenue Refunding Bonds (Champion
International), 6.55% due 3/01/2007 4,950
AAA Aaa 2,435 Eaton Rapids, Michigan, Public Schools Building and
Site, UT, 5.50% due 5/01/2020 (e) 2,366
Grand Ledge, Michigan, Public Schools District, UT (e):
AAA Aaa 8,000 6.60% due 5/01/2004 (f) 9,030
AAA Aaa 1,000 6.45% due 5/01/2014 1,081
AAA Aaa 2,000 Refunding, 5.375% due 5/01/2024 1,918
<PAGE>
AAA Aaa 7,000 Grand Rapids, Michigan, Water Supply System, Revenue
Refunding Bonds, 6.50% due 1/01/2015 (c) 7,515
AAA Aaa 5,250 Grand Traverse County, Michigan, Hospital Finance Authority,
Hospital Revenue Refunding Bonds (Munson Healthcare),
Series A, 6.25% due 7/01/2022 (b) 5,470
AAA Aaa 1,570 Grandville, Michigan, Public Schools District, Refunding, UT,
6.60% due 5/01/2015 (c) 1,725
AAA Aaa 2,250 Greenville, Michigan, Public Schools Building, UT,
5.75% due 5/01/2019 (e) 2,244
Kalamazoo, Michigan, Hospital Finance Authority, Hospital
Facility Revenue Refunding and Improvement Bonds (Bronson
Methodist) (e):
AAA Aaa 1,435 5.75% due 5/15/2016 1,436
AAA Aaa 1,000 5.875% due 5/15/2026 1,006
AAA Aaa 1,180 Series A, 6.375% due 5/15/2017 1,249
AAA Aaa 2,000 Kalamazoo, Michigan, Hospital Finance Authority, Hospital
Facility Revenue Refunding Bonds (Borgess Medical Center),
Series A, 5.25% due 6/01/2017 (c) 1,894
AAA Aaa 2,660 Kent, Michigan, Hospital Finance Authority, Health Care
Revenue Bonds (Butterworth Health Systems), Series A, 5.625%
due 1/15/2026 (e) 2,609
AAA Aaa 2,000 Kent, Michigan, Hospital Finance Authority, Hospital Facility,
Revenue Refunding Bonds (Butterworth Hospital), Series A, 7.25%
due 1/15/2013 (e) 2,354
Lincoln Park, Michigan, School District, UT (c):
AAA Aaa 3,235 7% due 5/01/2020 3,690
AAA Aaa 1,000 5.90% due 5/01/2026 1,011
A1 VMIG1++ 500 Michigan Higher Education Student Loan Authority Revenue
Bonds, VRDN, AMT, Series XII-D, 3.60% due 10/01/2015 (a)(b) 500
</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>
Michigan AAA Aaa $ 1,425 Michigan Municipal Bond Authority Revenue Bonds (Local
(concluded) Government Loan Program--Marquette Building), Series D,
6.75% due 5/01/2021 (b) $ 1,556
<PAGE>
Michigan Municipal Bond Authority Revenue Bonds (Local
Government Loan Program), Series A (c):
AAA Aaa 1,000 6% due 12/01/2013 1,038
AAA Aaa 2,000 6.125% due 12/01/2018 2,061
AAA Aaa 3,000 Michigan State Building Authority, Facilities Program
Revenue Bonds, Series I, 6% due 10/01/2004 (b) 3,231
Michigan State, HDA, Rental Housing, Revenue Refunding
Bonds, Series A:
AAA Aaa 5,000 5.875% due 10/01/2017 (b) 5,024
AAA Aaa 5,000 6.50% due 4/01/2023 (d) 5,155
AAA Aaa 1,360 Michigan State Hospital Finance Authority, Revenue Bonds
(Saint John Hospital and Medical Center), Series A, 5.25%
due 5/15/2026 (b) 1,269
Michigan State Hospital Finance Authority, Revenue Refunding
Bonds:
AAA Aaa 3,000 (Saint John Hospital), Series A, 6% due 5/15/2013 (b) 3,085
AAA Aaa 1,460 (Sparrow Obligated Group), 6.50% due 11/15/2011 (e) 1,547
Michigan State Strategic Fund, Limited Obligation Revenue
Refunding Bonds (Detroit Edison Co. Project):
AAA Aaa 3,630 Series BB, 7% due 5/01/2021 (b) 4,369
AAA Aaa 5,000 Series CC, 6.95% due 9/01/2021 (c) 5,470
NR* P1 600 Michigan State Strategic Fund, PCR, Refunding (Consumers
Power Project), VRDN, Series A, 3.55% due 4/15/2018 (a) 600
AAA Aaa 6,500 Monroe County, Michigan, Economic Development Corp., Limited
Obligation Revenue Refunding Bonds (Detroit Edison Co.
Project), Series AA, 6.95% due 9/01/2022 (c) 7,812
Monroe County, Michigan, PCR (Detroit Edison Co. Project),
AMT:
AAA Aaa 2,500 Series 1, 7.65% due 9/01/2020 (c) 2,763
AAA Aaa 4,500 Series CC, 6.55% due 6/01/2024 (e) 4,820
AAA Aaa 1,500 Series I, 7.30% due 9/01/2019 (b) 1,646
AAA Aaa 2,500 Northview, Michigan, Public Schools District, Refunding, UT,
5.80% due 5/01/2021 (e) 2,506
AAA Aaa 2,600 Novi, Michigan, Community School District, UT, 6.125% due
5/01/2013 (c) 2,711
AAA Aaa 1,000 Reeths-Puffer, Michigan, School District, Refunding, UT,
6% due 5/01/2025 (c) 1,019
AA Aaa 2,750 Royal Oak, Michigan, Hospital Finance Authority, Hospital
Revenue Bonds (William Beaumont Hospital), Series D, 6.75%
due 1/01/2001 (f) 3,029
<PAGE>
AAA Aaa 2,400 Three Rivers, Michigan, Community Schools (Building and
Site), UT, 6% due 5/01/2023 (e) 2,448
AAA Aaa 1,990 Tri-County, Michigan, Area School District, Refunding, UT,
5.25% due 5/01/2020 (c) 1,863
A1+ VMIG1++ 800 University of Michigan, University Medical Service Plan
Revenue Bonds, VRDN, Series A, 3.60% due 12/01/2027 (a) 800
AAA Aaa 1,500 Waterford, Michigan, School District Revenue Bonds, UT, 6.25%
due 6/01/2012 (c) 1,585
AAA Aaa 1,450 Wayne Charter County, Michigan, Airport Revenue Bonds
(Detroit Metropolitan Airport), Sub-Lien, Series A, 6.50%
due 12/01/2001 (e)(f) 1,606
AAA Aaa 2,000 Western Michigan University, General Revenue Bonds, 6.125%
due 11/15/2022 (c) 2,046
AAA Aaa 2,000 Western Michigan University, Revenue Refunding Bonds,
Series B, 6.50% due 7/15/2021 (b) 2,150
AAA Aaa 1,000 Ypsilanti, Michigan, School District, Refunding, 5.375%
due 5/01/2026 (c) 936
Total Investments (Cost--$141,631)--98.7% 148,806
Other Assets Less Liabilities--1.3% 1,896
--------
Net Assets--100.0% $150,702
========
<FN>
(a)The interest rate is subject to change periodically
based upon prevailing market rates. The interest
rate shown is the rate in effect at October 31, 1996.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)FSA Insured.
(e)MBIA Insured.
(f)Prerefunded.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of October 31, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$141,630,895) (Note 1a) $148,806,084
Cash 5,107
Interest receivable 3,109,773
Deferred organization expenses (Note 1e) 5,392
Prepaid expenses and other assets 28,613
------------
Total assets 151,954,969
------------
Liabilities: Payables:
Securities purchased $ 936,280
Dividends to shareholders (Note 1f) 164,240
Investment adviser (Note 2) 63,621 1,164,141
------------
Accrued expenses and other liabilities 89,327
------------
Total liabilities 1,253,468
------------
Net Assets: Net assets $150,701,501
============
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.05 per share (2,000 shares of AMPS*
issued and outstanding at $25,000 per share liquidation $ 50,000,000
preference) Common Stock, par value $.10 per share (7,379,969
shares issued and outstanding) $ 737,997
Paid-in capital in excess of par 102,717,370
Undistributed investment income--net 491,298
Accumulated realized capital losses on investments--net (Note 5) (10,420,353)
Unrealized appreciation on investments--net 7,175,189
------------
Total--Equivalent to $13.65 net asset value per share of
Common Stock (market price--$12.375) 100,701,501
------------
Total capital $150,701,501
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Year Ended October 31, 1996
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 8,574,373
Income (Note 1d):
Expenses: Investment advisory fees (Note 2) $ 752,542
Commission fees (Note 4) 126,760
Professional fees 73,021
Accounting services (Note 2) 45,867
Printing and shareholder reports 45,304
Transfer agent fees 39,112
Directors' fees and expenses 23,146
Listing fees 13,715
Custodian fees 12,877
Pricing fees 7,498
Amortization of organization expenses (Note 1e) 3,627
Other 14,838
------------
Total expenses 1,158,307
------------
Investment income--net 7,416,066
------------
Realized & Realized loss on investments--net (1,201,355)
Unrealized Change in unrealized appreciation on investments--net 1,183,894
Gain (Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 7,398,605
(Notes 1b, 1d & 3): ============
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 1996 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 7,416,066 $ 7,513,797
Realized loss on investments--net (1,201,355) (4,645,187)
Change in unrealized appreciation/depreciation on
investments--net 1,183,894 18,064,540
------------ ------------
Net increase in net assets resulting from operations 7,398,605 20,933,150
------------ ------------
<PAGE>
Dividends to Investment income--net:
Shareholders Common Stock (5,654,230) (5,639,219)
(Note 1f): Preferred Stock (1,771,460) (1,878,150)
------------ ------------
Net decrease in net assets resulting from dividends to
shareholders (7,425,690) (7,517,369)
------------ ------------
Net Assets: Total increase (decrease) in net assets (27,085) 13,415,781
Beginning of year 150,728,586 137,312,805
------------ ------------
End of year* $150,701,501 $150,728,586
============ ============
<FN>
*Undistributed investment income--net $ 491,298 $ 500,922
============ ============
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
For the Period
The following per share data and ratios have been derived Apr. 30,
from information provided in the financial statements. 1993++ to
For the Year Ended October 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1994 1993
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.65 $ 11.83 $ 14.89 $ 14.18
Operating -------- -------- -------- --------
Performance: Investment income--net 1.01 1.01 1.01 .47
Realized and unrealized gain (loss) on
investments--net --+++++ 1.82 (3.06) .80
-------- -------- -------- --------
Total from investment operations 1.01 2.83 (2.05) 1.27
-------- -------- -------- --------
Less dividends to Common Stock shareholders:
Investment income--net (.77) (.76) (.84) (.33)
-------- -------- -------- --------
Capital charge resulting from issuance of
Common Stock -- -- -- (.03)
-------- -------- -------- --------
Effect of Preferred Stock activity:++++
Dividends to Preferred Stock shareholders:
Investment income--net (.24) (.25) (.17) (.07)
Capital charge resulting from issuance of
Preferred Stock -- -- -- (.13)
-------- -------- -------- --------
Total effect of Preferred Stock activity (.24) (.25) (.17) (.20)
-------- -------- -------- --------
Net asset value, end of period $ 13.65 $ 13.65 $ 11.83 $ 14.89
======== ======== ======== ========
Market price per share, end of period $ 12.375 $ 12.25 $ 10.25 $ 15.125
======== ======== ======== ========
<PAGE>
Total Investment Based on market price per share 7.40% 27.59% (27.71%) 3.10%+++
Return:** ======== ======== ======== ========
Based on net asset value per share 6.32% 23.18% (15.25%) 7.37%+++
======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement .77% .77% .76% .56%*
Net Assets:*** ======== ======== ======== ========
Expenses .77% .77% .76% .78%*
======== ======== ======== ========
Investment income--net 4.91% 5.21% 4.98% 4.67%*
======== ======== ======== ========
Supplemental Net assets, net of Preferred Stock, end of period
Data: (in thousands) $100,702 $100,729 $ 87,313 $108,647
======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $ 50,000 $ 50,000 $ 50,000 $ 50,000
======== ======== ======== ========
Portfolio turnover 47.10% 53.85% 49.03% 15.34%
======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,014 $ 3,015 $ 2,746 $ 3,173
======== ======== ======== ========
Dividends Per Investment income--net $ 886 $ 939 $ 615 $ 255
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, 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 June 1, 1993.
++++++Dividends per share have been adjusted to reflect a two-for-
one stock split that occurred on December 1, 1994.
+++Aggregate total investment return.
+++++Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
<PAGE>
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 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 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 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, including valuations furnished by a pricing
service retained by the Fund, which may utilize a matrix system for
valuations. The procedures of the pricing service and its valuations
are reviewed by the officers of the Fund under the general
supervision of the Board of Directors.
(b) Derivative financial instruments--The Fund may engage in various
portfolio 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 security transactions are
determined on the identified cost basis.
(e) Deferred organization expenses--Deferred organization ex-penses
are amortized on a straight-line basis over a five-year period.
(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.
<PAGE>
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, 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 year ended October 31, 1996 were $67,110,690 and
$67,757,980, respectively.
Net realized and unrealized gains (losses) as of October 31, 1996
were as follows:
Realized Unrealized
Losses Gains
Long-term investments $ (498,947) $ 7,175,189
Financial futures contracts (702,408) --
------------- -------------
Total $ (1,201,355) $ 7,175,189
============= =============
As of October 31, 1996, net unrealized appreciation for Federal
income tax purposes aggregated $7,175,189, of which $7,182,452
related to appreciated securities and $7,263 related to depreciated
securities. The aggregate cost of investments at October 31, 1996
for Federal income tax purposes was $141,630,895.
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, 1996, shares issued and outstanding
remained constant at 7,379,969. At October 31, 1996, total paid-in
capital amounted to $103,455,367.
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, 1996 was 3.30%.
<PAGE>
As of October 31, 1996, there were 2,000 AMPS authorized, issued and
outstanding with a liquidation preference of $25,000 per share.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from 0.25% to 0.375%,
calculated on the proceeds of each auction. For the year ended
October 31, 1996, MLPF&S, an affiliate of FAM, earned $109,408 as
commissions.
5. Capital Loss Carryforward:
At October 31, 1996, the Fund had a net capital loss carryforward of
approximately $8,383,000, of which $4,574,000 expires in 2002;
$3,063,000 expires in 2003 and $746,000 expires in 2004. This amount
will be available to offset like amounts of any future taxable
gains.
6. Subsequent Event:
On November 8, 1996, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the amount
of $.066154 per share, payable on November 27, 1996 to shareholders
of record as of November 18, 1996.
<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, 1996, the related
statements of operations for the year then ended and changes in net
assets for each of the years in the two-year period then ended, and
the financial highlights for each of the years in the three-year
period then ended and 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, 1996 by correspondence with the custodian and broker. 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.
<PAGE>
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, 1996, 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 3, 1996
