MUNIVEST
MICHIGAN
INSURED
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
April 30, 1999
<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 share holders 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.
As a part of its investment strategy, the Fund may invest in certain securities
whose potential income return is inversely related to changes in a floating
interest rate ("inverse floaters"). In general, income on inverse floaters will
decrease when short-term interest rates increase and increase when short-term
interest rates decrease. Investments in inverse floaters may be characterized as
derivative securities and may subject the Fund to the risks of reduced or
eliminated interest payments and losses of invested principal. In addition,
inverse floaters have the effect of providing investment leverage and, as a
result, the market value of such securities will generally be more volatile than
that of fixed-rate, tax-exempt securities. To the extent the Fund invests in
inverse floaters, the market value of the Fund's portfolio and the net asset
value of the Fund's shares may also be more volatile than if the Fund did not
invest in these securities.
<PAGE>
MuniVest Michigan Insured Fund, Inc., April 30, 1999
DEAR SHAREHOLDER
For the six months ended April 30, 1999, the Common Stock of MuniVest Michigan
Insured Fund, Inc. earned $0.371 per share income dividends, which included
earned and unpaid dividends of $0.060. This represents a net annualized yield of
5.24%, based on a month-end per share net asset value of $14.27. Over the same
period, the total investment return on the Fund's Common Stock was +1.37%, based
on a change in per share net asset value from $14.46 to $14.27, and assuming
reinvestment of $0.374 per share income dividends.
For the six months ended April 30, 1999, the Fund's Auction Market Preferred
Stock had an average yield of 3.02%.
The Municipal Market Environment
During the six months ended April 30, 1999, long-term bond yields generally
moved higher. From November 1998 through mid-January 1999, long-term bond yields
traded in a relatively narrow range. However, during February, a number of
economic indicators were released that suggested that economic growth in the
United States would likely remain strong throughout most of 1999. Consequently,
long-term US Treasury bond yields rose more than 60 basis points (0.60%) to
5.70% by early March. During the remainder of the six-month period, US Treasury
bond yields traded between 5.50% and 5.70% as the lack of inflationary pressures
offset much of the concerns generated by continued strong economic growth.
During most of the period, long-term, uninsured tax-exempt bond yields exhibited
far less volatility and were largely stable. Also, long-term municipal bond
yields rose just 5 basis points to 5.29% at the end of April 1999, as measured
by the Bond Buyer Revenue Bond Index.
In recent months, the tax-exempt market was better able to withstand much of the
upward pressure on bond yields because of its stronger technical position. While
the continued positive inflationary environment limited some of the recent
increases in taxable bond yields, a deteriorating supply/demand position helped
push taxable bond yields significantly higher than municipal bond yields. Much
of the US Treasury bond market's underperformance in recent months can be
attributed to the large amounts of taxable corporate issuance. Large taxable
corporate underwritings reduced the demand for US Government securities in
recent months, pushing US Treasury bond yields higher.
On the other hand, the tax-exempt bond market enjoyed only limited new-issue
supply. During the six months ended April 30, 1999, more than $123 billion in
new long-term tax-exempt securities was underwritten, a decline of 10% compared
to the same period a year ago. Municipalities issued less than $60 billion in
long-term tax-exempt securities during the three months ended April 30, 1999, a
decline of 25% compared to the April 30, 1998 quarter. More recently, the rate
of new tax-exempt issuance has declined even further. During April 1999, just
over $15 billion in long-term tax-exempt securities was marketed, a decline of
over 33% compared to April 1998 levels. As municipal bond yields fell and
stabilized in recent quarters, the ability of municipalities to refinance
existing higher-couponed debt declined. This led to a significant decrease in
refunding issuance and an overall drop in new municipal bond supply. When
coupled with ongoing, moderate retail and institutional demand, the tax-exempt
bond market was able to avoid much of the yield volatility exhibited by US
Treasury securities.
Looking ahead, the expected combination of moderate economic growth in the
United States and continued negligible inflation suggests a relatively stable
interest rate environment. However, in recent years, bond yields reached their
annual peaks in early May and declined for the remainder of the year. A
meaningful decline in fixed-income bond yields would require either evidence of
a significant slowdown in the US economy or the resumption of concerns regarding
renewed shocks to the world's economic system. Currently, neither condition
exists or seems likely in the immediate future. In our opinion, this suggests a
continuation of the narrow trading ranges seen in recent months.
Portfolio Strategy
During the last several months, we adopted a more neutral investment strategy,
since indicators pointed to a continuation of healthy domestic economic growth
and benign inflation. In addition, we believed that long-term tax-exempt bond
yields would continue to trade in a relatively narrow range, centered around
present levels. Consequently, we focused on income-producing securities rather
than those issues with the potential for capital gains. Should the tax-exempt
bond market perform as expected, coupon income will be the more important
component of the Fund's performance. MuniVest Michigan Insured Fund, Inc.
remained fully invested for most of the past several months. We expect to
maintain this position going forward in order to seek to enhance shareholder
income.
Short-term tax-exempt yields exhibited considerable volatility in recent months.
Interest rates paid to the Fund's Preferred Stock shareholders traded below 3%
in December 1998, reflecting heightened investor demand at year-end. Current
short-term interest rate levels reflect tax season-related pressures, which we
expect to abate soon. During the six-month period ended April 30, 1999,
leveraging generated a significant incremental yield to the Fund's Common Stock
shareholders. Because we believe that the Federal Reserve Board's monetary
policy is likely to remain in a narrow range for the remainder of the year, we
expect short-term tax-exempt interest rates to remain at, or slightly below,
current levels. 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 to 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 ongoing interest in MuniVest Michigan Insured Fund, Inc., and
we look forward to serving your investment needs in the months and years ahead.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ Fred K. Stuebe
Fred K. Stuebe
Vice President and
Portfolio Manager
June 2, 1999
- --------------------------------------------------------------------------------
After more than 20 years of service, Arthur Zeikel recently retired as Chairman
of Merrill Lynch Asset Management, L.P. (MLAM). Mr. Zeikel served as President
of MLAM from 1977 to 1997 and as Chairman since December 1997. Mr. Zeikel is one
of the country's most respected leaders in asset management and presided over
the growth of Merrill Lynch's asset management business. During his tenure,
client assets under management grew from $300 million to over $500 billion. Mr.
Zeikel will remain on MuniVest Michigan Insured Fund, Inc.'s Board of Directors.
We are pleased to announce that Terry K. Glenn has been elected President and
Director of the Fund. Mr. Glenn has held the position of Executive Vice
President of MLAM since 1983.
Mr. Zeikel's colleagues at MLAM join the Fund's Board of Directors in wishing
him well in his retirement from Merrill Lynch and are pleased that he will
continue as a member of the Fund's Board of Directors.
- --------------------------------------------------------------------------------
2 & 3
<PAGE>
MuniVest Michigan Insured Fund, Inc., April 30, 1999
PROXY RESULTS
During the six-month period ended April 30, 1999, MuniVest Michigan Insured
Fund, Inc.'s Common Stock shareholders voted on the following proposals.
Proposals 1 and 2 were approved at a shareholders' meeting on April 21, 1999.
The meeting was adjourned with respect to Proposal 3. The description of each
proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. To elect the Fund's Directors: Terry K. Glenn 6,974,264 120,687
Edward H. Meyer 6,972,332 122,619
Jack B. Sunderland 6,972,344 122,607
J. Thomas Touchton 6,974,264 120,687
Fred G. Weiss 6,968,413 126,538
Arthur Zeikel 6,968,425 126,526
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent auditors for the current fiscal year. 6,975,662 14,661 104,628
- -----------------------------------------------------------------------------------------------------------------------
3. To approve an amendment to the Articles Supplementary of the Fund. Adjourned Adjourned Adjourned
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
During the six-month period ended April 30, 1999, MuniVest Michigan Insured
Fund, Inc.'s Preferred Stock shareholders voted on the following proposals.
Proposals 1 and 2 were approved at a shareholders' meeting on April 21, 1999.
The meeting was adjourned with respect to Proposal 3. The description of each
proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. To elect the Fund's Board of Directors: Terry K. Glenn, Donald Cecil,
M. Colyer Crum, Edward H. Meyer, Jack B. Sunderland, J. Thomas Touchton,
Fred G. Weiss and Arthur Zeikel 1,936 0
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent auditors for the current fiscal year. 1,936 0 0
- -----------------------------------------------------------------------------------------------------------------------
3. To approve an amendment to the Articles Supplementary of the Fund. Adjourned Adjourned Adjourned
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
=================================================================================================================================
<S> <C> <C> <C> <C> <C>
Michigan--95.8% Belding, Michigan, Area Schools, GO, Refunding (c):
AAA NR* $ 785 6.05% due 5/01/2006 (f) $ 883
AAA Aaa 215 6.05% due 5/01/2021 232
--------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Caledonia, Michigan, Community Schools, GO, Refunding, 6.625%
due 5/01/2014 (b) 1,092
--------------------------------------------------------------------------------------------------------
AAA Aaa 1,625 Central Michigan University Revenue Bonds, 5.50% due
4/01/2007 (c)(f) 1,778
--------------------------------------------------------------------------------------------------------
AAA Aaa 1,500 Clarkston, Michigan, Community Schools, GO, 5.25% due
5/01/2023 (e) 1,509
--------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Coldwater, Michigan, Community Schools, GO, 6.30% due
5/01/2004 (e)(f) 1,124
--------------------------------------------------------------------------------------------------------
NR* P1 100 Delta County, Michigan, Economic Development Corporation,
Environmental Improvement Revenue Refunding Bonds
(Mead-Escanaba Paper), DATES, Series F, 4.20% due 12/01/2013 (a) 100
--------------------------------------------------------------------------------------------------------
AAA Aaa 3,500 Detroit, Michigan, Sewage Disposal Revenue Bonds, Series A, 5%
due 7/01/2027 (e) 3,402
--------------------------------------------------------------------------------------------------------
Detroit, Michigan, Water Supply System Revenue Bonds, Senior
Lien, Series A (e):
AAA Aaa 3,200 5% due 7/01/2021 3,133
AAA Aaa 3,150 5% due 7/01/2027 3,062
--------------------------------------------------------------------------------------------------------
AAA Aaa 5,250 Eastern Michigan University Revenue Bonds, 5.50% due 6/01/2027 (c) 5,467
--------------------------------------------------------------------------------------------------------
AAA Aaa 1,995 Eaton Rapids, Michigan, Public Schools, GO, Refunding, 5% due
5/01/2022 (e) 1,952
--------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 Fenton, Michigan, Area Public Schools, GO, 5% due 5/01/2021 (c) 1,958
--------------------------------------------------------------------------------------------------------
NR* Aaa 1,500 Fruitport, Michigan, Community Schools, GO, 5.30% due 5/01/2022 (c) 1,516
--------------------------------------------------------------------------------------------------------
Grand Ledge, Michigan, Public Schools District, GO (e)(f):
AAA Aaa 1,000 6.45% due 5/01/2004 1,131
AAA Aaa 8,000 6.60% due 5/01/2004 9,101
--------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Grand Ledge, Michigan, Public Schools District, GO, Refunding,
5.375% due 5/01/2024 (e) 1,019
--------------------------------------------------------------------------------------------------------
AAA VMIG1+ 400 Grand Rapids, Michigan, Water Supply Revenue Refunding Bonds,
VRDN, 4% due 1/01/2020 (a)(c) 400
--------------------------------------------------------------------------------------------------------
Grand Traverse County, Michigan, Hospital Revenue Refunding
Bonds (Munson Healthcare), Series A (b):
AAA NR* 3,805 6.25% due 7/01/2002 (f) 4,160
AAA Aaa 2,500 5.50% due 7/01/2018 2,582
AAA Aaa 1,445 6.25% due 7/01/2022 1,563
--------------------------------------------------------------------------------------------------------
</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 many
of the securities according to the list at right.
AMT Alternative Minimum Tax (subject to)
DATES Daily Adjustable Tax-Exempt Securities
GO General Obligation Bonds
HDA Housing Development Authority
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
VRDN Variable Rate Demand Notes
4 & 5
<PAGE>
MuniVest Michigan Insured Fund, Inc., April 30, 1999
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
=================================================================================================================================
<S> <C> <C> <C> <C> <C>
Michigan AAA Aaa $1,570 Grandville, Michigan, Public Schools District, GO, Refunding,
(concluded) 6.60% due 5/01/2005 (c)(f) $ 1,796
--------------------------------------------------------------------------------------------------------
AAA Aaa 2,250 Greenville, Michigan, Public Schools, GO, 5.75% due
5/01/2004 (e)(f) 2,455
--------------------------------------------------------------------------------------------------------
AAA Aaa 1,770 Holly, Michigan, Area School District, GO, Refunding, 5% due
5/01/2022 (c) 1,732
--------------------------------------------------------------------------------------------------------
Kalamazoo, Michigan, Hospital Finance Authority, Hospital
Facility Revenue Refunding and Improvement Bonds (Bronson
Methodist Hospital) (e):
AAA Aaa 1,435 5.75% due 5/15/2016 1,511
AAA Aaa 1,000 5.875% due 5/15/2026 1,065
AAA Aaa 1,180 Series A, 6.375% due 5/15/2017 1,313
--------------------------------------------------------------------------------------------------------
Kalamazoo, Michigan, Hospital Finance Authority, Hospital
Facility Revenue Refunding Bonds (Bronson Methodist
Hospital) (e):
NR* Aaa 2,500 5.25% due 5/15/2018 2,508
NR* Aaa 3,500 5.50% due 5/15/2028 3,635
--------------------------------------------------------------------------------------------------------
AAA Aaa 2,660 Kent, Michigan, Hospital Finance Authority, Health Care Revenue
Bonds (Butterworth Health Systems), Series A, 5.625% due
1/15/2006 (e)(f) 2,926
--------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 Kent, Michigan, Hospital Finance Authority, Hospital Revenue
Refunding Bonds (Butterworth Hospital), Series A, 7.25% due
1/15/2013 (e) 2,452
--------------------------------------------------------------------------------------------------------
AAA Aaa 3,235 Lincoln Park, Michigan, School District, GO, 7% due
5/01/2006 (c)(f) 3,823
--------------------------------------------------------------------------------------------------------
AAA Aaa 1,900 Lowell, Michigan, Area Schools, GO, Refunding, 4.91%** due
5/01/2016 (c) 806
--------------------------------------------------------------------------------------------------------
AAA VMIG1+ 500 Michigan Higher Education Student Loan Revenue Bonds, AMT, VRDN,
Series XII-D, 3.95% due 10/01/2015 (a)(b) 500
--------------------------------------------------------------------------------------------------------
AA+ Aa1 1,250 Michigan Municipal Bond Authority Revenue Bonds (Drinking Water
Revolving Fund), 4.75% due 10/01/2020 1,182
--------------------------------------------------------------------------------------------------------
Michigan Municipal Bond Authority, Revenue Refunding Bonds
(Local Government Loan Program), Series A (c):
AAA Aaa 1,000 6% due 12/01/2013 1,100
AAA Aaa 2,000 6.125% due 12/01/2018 2,213
--------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 Michigan State Building Authority, Revenue Refunding Bonds
(Facilities Program), Series I, 5.50% due 10/01/2006 (b) 2,167
--------------------------------------------------------------------------------------------------------
AAA Aaa 1,500 Michigan State, HDA, Rental Housing Revenue Bonds, Series B,
5.10% due 10/01/2019 (e) 1,496
--------------------------------------------------------------------------------------------------------
AAA Aaa 3,885 Michigan State, HDA, Rental Housing Revenue Refunding Bonds,
Series A, 6.50% due 4/01/2023 (d) 4,130
--------------------------------------------------------------------------------------------------------
BBB Baa2 1,000 Michigan State Hospital Finance Authority, Revenue Bonds
(Detroit Medical Center Obligation Group), Series A, 5.25% due
8/15/2028 903
--------------------------------------------------------------------------------------------------------
Michigan State Hospital Finance Authority, Revenue Refunding Bonds:
AAA Aaa 2,930 (Detroit Medical Group), Series A, 5.25% due 8/15/2027 (b) 2,900
AAA Aaa 2,305 (Mercy Health Services), Series T, 6.50% due 8/15/2013 (e) 2,611
AAA Aaa 3,000 (Saint John Hospital), Series A, 6% due 5/15/2013 (b) 3,237
AAA Aaa 1,460 (Sparrow Obligated Group), 6.50% due 11/15/2011 (e) 1,573
--------------------------------------------------------------------------------------------------------
NR* P1 4,400 Michigan State Strategic Fund, PCR, Refunding (Consumers Power
Project), VRDN, 4.20% due 4/15/2018 (a) 4,400
--------------------------------------------------------------------------------------------------------
AAA Aaa 4,000 Michigan State Trunk Line, Revenue Refunding Bonds, Series A,
4.75% due 11/01/2020 (e) 3,798
--------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Michigan State University Revenue Bonds, Series A, 5.125% due
2/15/2016 (b) 1,012
--------------------------------------------------------------------------------------------------------
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) 8,171
--------------------------------------------------------------------------------------------------------
AAA Aaa 4,500 Monroe County, Michigan, PCR (Detroit Edison Company), AMT,
Series CC, 6.55% due 6/01/2024 (e) 4,946
--------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 Montrose Township, Michigan, School District, GO, 5.60% due
5/01/2026 (e) 2,089
--------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 Northern Michigan University, Revenue Refunding Bonds, 5% due
12/01/2025 (e) 1,945
--------------------------------------------------------------------------------------------------------
Northview, Michigan, Public Schools District, GO, Refunding (e):
AAA NR* 2,265 5.80% due 5/01/2006 (f) 2,513
AAA Aaa 235 5.80% due 5/01/2021 250
--------------------------------------------------------------------------------------------------------
AAA Aaa 2,600 Novi, Michigan, Community School District, GO, 6.125% due
5/01/2003 (c)(f) 2,870
--------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Oakland University, Michigan, Revenue Bonds, 5.75% due
5/15/2026 (e) 1,068
--------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Reeths-Puffer Schools, Michigan, GO, Refunding, 6% due
5/01/2005 (c)(f) 1,113
--------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Three Rivers, Michigan, Community Schools, GO, 6% due
5/01/2006 (e)(f) 1,121
--------------------------------------------------------------------------------------------------------
A1+ VMIG1+ 3,500 University of Michigan, University Hospital Revenue Bonds, VRDN,
Series A, 4.15% due 12/01/2027 (a) 3,500
--------------------------------------------------------------------------------------------------------
A1+ VMIG1+ 1,500 University of Michigan, University Hospital Revenue Refunding
Bonds, VRDN, Series A, 4.15% due 12/01/2019 (a) 1,500
--------------------------------------------------------------------------------------------------------
A1+ VMIG1+ 600 University of Michigan, University Revenue Refunding Bonds
(Medical Service Plan), VRDN, Series A-1, 4.15% due 12/01/2021 (a) 600
--------------------------------------------------------------------------------------------------------
AAA Aaa 3,000 Warren, Michigan, Water and Sewer Revenue Bonds, 5.125% due
11/01/2023 (d) 2,975
--------------------------------------------------------------------------------------------------------
AAA Aaa 1,500 Waterford, Michigan, School District, GO, 6.25% due
6/01/2004 (c)(f) 1,673
--------------------------------------------------------------------------------------------------------
NR* NR* 2,500 Wayne Charter County, Michigan, Airport Revenue Bonds, AMT, RIB,
Series 68, 6.305% due 12/01/2017 (e)(g) 2,615
--------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 Western Michigan, University Revenue Bonds, Series B, 6.50% due
7/15/2021 (b) 2,147
--------------------------------------------------------------------------------------------------------
AAA Aaa 1,300 Ypsilanti, Michigan, School District, GO, Refunding, 5.75% due
5/01/2007 (c)(f) 1,436
=================================================================================================================================
Puerto Rico--2.4% NR* NR* 3,485 Puerto Rico, RITR, 6.42% due 7/01/2027 (g) 3,690
=================================================================================================================================
Total Investments (Cost--$143,941)--98.2% 152,630
Other Assets Less Liabilities--1.8% 2,757
--------
Net Assets--100.0% $155,387
========
=================================================================================================================================
</TABLE>
(a) The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at April 30, 1999.
(b) AMBAC Insured.
(c) FGIC Insured.
(d) FSA Insured.
(e) MBIA Insured.
(f) Prerefunded.
(g) The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rate shown is the
rate in effect at April 30, 1999.
* Not Rated.
** Represents a zero coupon bond; the interest rate shown is the
effective yield at time of purchase by the Fund.
+ Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
6 & 7
<PAGE>
MuniVest Michigan Insured Fund, Inc., April 30, 1999
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<TABLE>
<CAPTION>
As of April 30, 1999
================================================================================================================================
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$143,940,772) (Note 1a) .......... $152,630,065
Cash ..................................................................... 60,464
Interest receivable ...................................................... 2,925,584
Prepaid expenses and other assets ........................................ 10,760
------------
Total assets ............................................................. 155,626,873
------------
================================================================================================================================
Liabilities: Payables:
Dividends to shareholders (Note 1e) .................................... $ 138,861
Investment adviser (Note 2) ............................................ 68,340 207,201
------------
Accrued expenses and other liabilities ................................... 32,662
------------
Total liabilities ........................................................ 239,863
------------
================================================================================================================================
Net Assets: Net assets ............................................................... $155,387,010
============
================================================================================================================================
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 preference) .... $ 50,000,000
Common Stock, par value $.10 per share (7,387,697 shares issued
and outstanding) ....................................................... $ 738,770
Paid-in capital in excess of par ......................................... 102,828,343
Undistributed investment income--net ..................................... 490,613
Accumulated realized capital losses on investments--net (Note 5) ......... (7,360,009)
Unrealized appreciation on investments--net .............................. 8,689,293
------------
Total--Equivalent to $14.27 net asset value per share of Common Stock
(market price--$13.25) ................................................... 105,387,010
------------
Total capital ............................................................ $155,387,010
============
================================================================================================================================
</TABLE>
* Auction Market Preferred Stock.
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Six Months Ended April 30, 1999
===================================================================================================================
<S> <C> <C> <C>
Investment Interest and amortization of premium and discount earned .... $ 4,123,911
Income (Note 1d):
===================================================================================================================
Expenses: Investment advisory fees (Note 2) ........................... $ 390,011
Commission fees (Note 4) .................................... 68,104
Professional fees ........................................... 38,454
Accounting services (Note 2) ................................ 36,633
Transfer agent fees ......................................... 22,097
Directors' fees and expenses ................................ 14,705
Printing and shareholder reports ............................ 12,677
Listing fees ................................................ 8,698
Custodian fees .............................................. 6,534
Pricing fees ................................................ 5,138
Other ....................................................... 10,245
-----------
Total expenses .............................................. 613,296
-----------
Investment income--net ...................................... 3,510,615
-----------
===================================================================================================================
Realized & Unreal- Realized gain on investments--net ........................... 1,172,744
ized Gain (Loss) on Change in unrealized appreciation on investments--net ....... (2,610,369)
Investments--Net -----------
(Notes 1b, 1d & 3): Net Increase in Net Assets Resulting from Operations ........ $ 2,072,990
===========
===================================================================================================================
</TABLE>
See Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 1999 1998
===================================================================================================================================
<S> <C> <C> <C>
Operations: Investment income--net ......................................................... $ 3,510,615 $ 7,180,087
Realized gain on investments--net .............................................. 1,172,744 2,267,650
Change in unrealized appreciation on investments--net .......................... (2,610,369) 1,560,039
------------ ------------
Net increase in net assets resulting from operations ........................... 2,072,990 11,007,776
------------ ------------
===================================================================================================================================
Dividends to Investment income--net:
Shareholders Common Stock ................................................................. (2,766,375) (5,538,150)
(Note 1e): Preferred Stock .............................................................. (753,900) (1,671,160)
------------ ------------
Net decrease in net assets resulting from dividends to shareholders ............ (3,520,275) (7,209,310)
------------ ------------
===================================================================================================================================
Capital Stock Value of shares issued to Common Stock shareholders in reinvestment of
Transactions dividends ...................................................................... -- 111,746
(Note 4): ------------ ------------
===================================================================================================================================
Net Assets: Total increase (decrease) in net assets ........................................ (1,447,285) 3,910,212
Beginning of period ............................................................ 156,834,295 152,924,083
------------ ------------
End of period* ................................................................. $155,387,010 $156,834,295
============ ============
===================================================================================================================================
*Undistributed investment income--net ........................................... $ 490,613 $ 500,273
============ ============
===================================================================================================================================
</TABLE>
See Notes to Financial Statements.
8 & 9
<PAGE>
MuniVest Michigan Insured Fund, Inc., April 30, 1999
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
The following per share data and ratios have
been derived from information provided in the For the Six
financial statements. Months Ended For the Year Ended October 31,
April 30, -------------------------------------------
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ............... $ 14.46 $ 13.95 $ 13.65 $ 13.65 $ 11.83
Operating -------- -------- -------- -------- --------
Performance: Investment income--net ............................. .47 .98 1.01 1.01 1.01
Realized and unrealized gain (loss) on
investments--net ................................... (.19) .51 .30 --++ 1.82
-------- -------- -------- -------- --------
Total from investment operations ................... .28 1.49 1.31 1.01 2.83
-------- -------- -------- -------- --------
Less dividends to Common Stock shareholders:
Investment income--net ........................... (.37) (.75) (.78) (.77) (.76)
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:
Dividends to Preferred Stock shareholders:
Investment income--net ......................... (.10) (.23) (.23) (.24) (.25)
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity ........... (.10) (.23) (.23) (.24) (.25)
-------- -------- -------- -------- --------
Net asset value, end of period ..................... $ 14.27 $ 14.46 $ 13.95 $ 13.65 $ 13.65
======== ======== ======== ======== ========
Market price per share, end of period .............. $ 13.25 $ 14.625 $ 13.313 $ 12.375 $ 12.25
======== ======== ======== ======== ========
===================================================================================================================================
Total Investment Based on market price per share .................... (6.93%)+ 16.12% 14.32% 7.40% 27.59%
Return:** ======== ======== ======== ======== ========
Based on net asset value per share ................. 1.37%+ 9.56% 8.60% 6.32% 23.18%
======== ======== ======== ======== ========
===================================================================================================================================
Ratios to Average Expenses ........................................... .79%* .76% .75% .77% .77%
Net Assets:*** ======== ======== ======== ======== ========
Investment income--net ............................. 4.50%* 4.65% 4.89% 4.91% 5.21%
======== ======== ======== ======== ========
===================================================================================================================================
Supplemental Net assets, net of Preferred Stock, end of period
Data: (in thousands) ..................................... $105,387 $106,834 $102,924 $100,702 $100,729
======== ======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) ..................................... $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 50,000
======== ======== ======== ======== ========
Portfolio turnover ................................. 24.64% 48.30% 22.43% 47.10% 53.85%
======== ======== ======== ======== ========
===================================================================================================================================
Leverage: Asset coverage per $1,000 .......................... $ 3,108 $ 3,137 $ 3,058 $ 3,014 $ 3,015
======== ======== ======== ======== ========
===================================================================================================================================
Dividends Per Share Investment income--net ............................. $ 377 $ 836 $ 835 $ 886 $ 939
On Preferred Stock ======== ======== ======== ======== ========
Outstanding:
===================================================================================================================================
</TABLE>
* 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.
+ Aggregate total investment return.
++ Amount is less than $.01 per share.
See Notes to Financial Statements.
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 financial statements are prepared in accordance
with generally accepted accounting principles which may require the use of
management accruals and estimates. These unaudited financial statements reflect
all adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim period presented. All such adjustments
are of a normal recurring nature. The Fund determines and makes available for
publication the net asset value of its Common Stock on a weekly basis. The
Fund's Common Stock is listed on the New York Stock Exchange under the symbol
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 written or purchased are valued at the last
sale price in the case of exchange-traded options. In the case of options traded
in the over-counter-market, valuation is the last asked price (options written)
or the last bid price (options purchased). Securities with remaining maturities
of sixty days or less are valued at amortized cost, which approximates market
value. Securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Board of Directors of the Fund, including valuations furnished
by a pricing service retained by the Fund, which may utilize a matrix system for
valuations. The procedures of the pricing service and its valuations are
reviewed by the officers of the Fund under the general supervision of the Board
of Directors.
(b) Derivative financial instrument--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.
o Financial futures contracts--The Fund may purchase or sell financial futures
contracts and options on such futures contracts for the purpose of hedging the
market risk on existing securities or the intended purchase of securities.
Futures contracts are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a contract, the
Fund deposits and maintains as collateral such initial margin as required by the
exchange on which the transaction is effected. Pursuant to the contract, the
Fund agrees to receive from or pay to the broker an amount of cash equal to the
daily fluctuation in value of the contract. Such receipts or payments are known
as variation margin and are recorded by the Fund as unrealized gains or losses.
When the contract is closed, the Fund records a realized gain or loss equal to
the difference between the value of the contract at the time it was opened and
the value at the time it was closed.
10 & 11
<PAGE>
MuniVest Michigan Insured Fund, Inc., April 30, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
o Options--The Fund is authorized to write covered call options and purchase put
options. When the Fund writes an option, an amount equal to the premium received
by the Fund is reflected as an asset and an equivalent liability. The amount of
the liability is subsequently marked to market to reflect the current market
value of the option written.
When a security is purchased or sold through an exercise of an option, the
related premium paid (or received) is added to (or deducted from) the basis of
the security acquired or deducted from (or added to) the proceeds of the
security sold. When an option expires (or the Fund enters into a closing
transaction), the Fund realizes a gain or loss on the option to the extent of
the premiums received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(c) Income taxes--It is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no Federal income tax provision is required.
(d) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Interest income is recognized on the accrual basis. Discounts and market
premiums are amortized into interest income. Realized gains and losses on
security transactions are determined on the identified cost basis.
(e) Dividends and distributions--Dividends from net investment income are
declared and paid monthly. Distributions of capital gains are recorded on the
ex-dividend dates.
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, including
proceeds from the issuance of Preferred Stock.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or directors of
FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended April 30, 1999 were $35,941,837 and $37,090,593, respectively.
Net realized gains for the six months ended April 30, 1999 and net unrealized
gains as of April 30, 1999 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains Gains
- --------------------------------------------------------------------------------
Long-term investments ...................... $1,172,744 $8,689,293
---------- ----------
Total ...................................... $1,172,744 $8,689,293
========== ==========
- --------------------------------------------------------------------------------
As of April 30, 1999, net unrealized appreciation for Federal income tax
purposes aggregated $8,689,293, of which $9,131,965 related to appreciated
securities and $442,672 related to depreciated securities. The aggregate cost of
investments at April 30, 1999 for Federal income tax purposes was $143,940,772.
4. Capital Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of capital stock, including
Preferred Stock, par value $.10 per share, all of which were initially
classified as Common Stock. The Board of Directors is authorized, however, to
reclassify any unissued shares of capital stock without approval of holders of
Common Stock.
Common Stock
Shares issued and outstanding during the six months ended April 30, 1999
remained constant and the year ended October 31, 1998 increased by 7,728 as a
result of dividend reinvestment.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred Stock of the
Fund, with a par value of $.05 per share and a liquidation preference of $25,000
per share, that entitle their holders to receive cash dividends at an annual
rate that may vary for the successive dividend periods. The yield in effect at
April 30, 1999 was 3.35%.
Shares issued and outstanding during the six months ended April 30, 1999 and the
year ended October 31, 1998 remained constant.
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 six months ended April 30, 1999, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, an affiliate of FAM, earned $42,736 as commissions.
5. Capital Loss Carryforward:
At October 31, 1998, the Fund had a net capital loss carry forward of
approximately $5,871,000, of which $2,062,000 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 May 6, 1999, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.059603 per share,
payable on May 27, 1999 to shareholders of record as of May 21, 1999.
QUALITY PROFILE
The quality ratings of securities in the Fund as of April 30, 1999 were as
follows:
- --------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
- --------------------------------------------------------------------------------
AAA/Aaa ............................................................ 85.7%
AA/Aa .............................................................. 0.8
BBB/Baa ............................................................ 0.6
NR (Not Rated) ..................................................... 4.0
Other+ ............................................................. 7.1
- --------------------------------------------------------------------------------
+ Temporary investments in short-term municipal securities.
12 & 13
<PAGE>
MuniVest Michigan Insured Fund, Inc., April 30, 1999
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute substantially all of its net
investment income to its shareholders on a monthly basis. However, in order to
provide shareholders with a more consistent yield to the current trading price
of Common Stock of the Fund, the Fund may at times pay out less than the entire
amount of net investment income earned in any particular month and may at times
in any particular month pay out such accumulated but undistributed income in
addition to net investment income earned in that month. As a result, the
dividends paid by the Fund for any particular month may be more or less than the
amount of net investment income earned by the Fund during such month. The Fund's
current accumulated but undistributed net investment income, if any, is
disclosed in the Statement of Assets, Liabilities and Capital, which comprises
part of the financial information included in this report.
YEAR 2000 ISSUES
Many computer systems were designed using only two digits to designate years.
These systems may not be able to distinguish the Year 2000 from the Year 1900
(commonly known as the "Year 2000 Problem"). The Fund could be adversely
affected if the computer systems used by the Fund's management or other Fund
service providers do not properly address this problem before January 1, 2000.
The Fund's management expects to have addressed this problem before then, and
does not anticipate that the services it provides will be adversely affected.
The Fund's other service providers have told the Fund's management that they
also expect to resolve the Year 2000 Problem, and the Fund's management will
continue to monitor the situation as the Year 2000 approaches. However, if the
problem has not been fully addressed, the Fund could be negatively affected. The
Year 2000 Problem could also have a negative impact on the securities in which
the Fund invests and this could hurt the Fund's investment returns.
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
Donald Cecil, Director
M. Colyer Crum, Director
Edward H. Meyer, Director
Jack B. Sunderland, Director
J. Thomas Touchton, Director
Fred G. Weiss, Director
Arthur Zeikel, Director
Vincent R. Giordano, Senior Vice President
Kenneth A. Jacob, Vice President
Fred K. Stuebe, Vice President
Donald C. Burke, Vice President and Treasurer
Alice A. Pellegrino, Secretary
- --------------------------------------------------------------------------------
Gerald M. Richard, Treasurer of MuniVest Michigan Insured Fund, Inc. has
recently retired. His colleagues at Merrill Lynch Asset Management, L.P. join
the Fund's Board of Directors in wishing Mr. Richard well in his retirement.
- --------------------------------------------------------------------------------
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Stock:
IBJ Whitehall Bank &Trust Company
One State Street
New York, NY 10004
NYSE Symbol
MVM
14 & 15
<PAGE>
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 #16638--4/99
[RECYCLE LOGO] Printed on post-consumer recycled paper
