UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-06540
Name of Fund: MuniYield Insured Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, MuniYield Insured Fund, Inc., 800 Scudders Mill Road,
Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011, Princeton,
NJ, 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 10/31/05
Date of reporting period: 11/01/04 - 04/30/05
Item 1 - Report to Stockholders
MuniYield Insured Fund, Inc.
Semi-Annual Report
April 30, 2005
(BULL LOGO) Merrill Lynch Investment Managers
www.mlim.ml.com
Mercury Advisors
A Division of Merrill Lynch Investment Managers
www.mercury.ml.com
MuniYield Insured Fund, Inc. seeks to provide shareholders with as high a
level of current income exempt from federal income taxes as is consistent
with its investment policies and prudent investment management by
investing primarily in a portfolio of long-term, investment grade
municipal obligations the interest on which, in the opinion of bond
counsel to the issuer, is exempt from federal income taxes.
This report, including the financial information herein, is transmitted
to shareholders of MuniYield Insured Fund, Inc. for their information. It
is not a prospectus. Past performance results shown in this report should
not be considered a representation of future performance. The Fund has
leveraged its Common Stock and intends to remain leveraged 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.
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities is available
(1) without charge, upon request, by calling toll-free 1-800-MER-FUND
(1-800-637-3863); (2) at www.mutualfunds.ml.com; and (3) on the Securities
and Exchange Commission's Web site at http://www.sec.gov. Information
about how the Fund voted proxies relating to securities held in the Fund's
portfolio during the most recent 12-month period ended June 30 is available
(1) at www.mutualfunds.ml.com; and (2) on the Securities and Exchange
Commission's Web site at http://www.sec.gov.
MuniYield Insured Fund, Inc.
Box 9011
Princeton, NJ 08543-9011
(GO PAPERLESS LOGO)
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MuniYield Insured Fund, Inc.
The Benefits and Risks of Leveraging
MuniYield 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, net of dividends to Preferred Stock,
is paid to Common Stock shareholders in the form of dividends, and the
value of these portfolio holdings is reflected in the per share net asset
value of the Fund's Common Stock. However, in order to benefit Common
Stock shareholders, the yield curve must be positively sloped; that is,
short-term interest rates must be lower than long-term interest rates. At
the same time, a period of generally declining interest rates will benefit
Common Stock shareholders. If either of these conditions change, then the
risks of leveraging will begin to outweigh the benefits.
To illustrate these concepts, assume a fund's Common Stock capitalization
of $100 million and the issuance of Preferred Stock for an additional $50
million, creating a total value of $150 million available for investment
in long-term municipal bonds. If prevailing short-term interest rates are
approximately 3% and long-term interest rates are approximately 6%, the
yield curve has a strongly positive slope. The fund pays dividends on the
$50 million of Preferred Stock based on the lower short-term interest
rates. At the same time, the fund's total portfolio of $150 million earns
the income based on long-term interest rates.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term
investments, and therefore the Common Stock shareholders are the
beneficiaries of the incremental yield. However, if short-term interest
rates rise, narrowing the differential between short-term and long-term
interest rates, the incremental yield pickup on the Common Stock will be
reduced or eliminated completely. At the same time, the market value of
the fund's Common Stock (that is, its price as listed on the New York
Stock Exchange) may, as a result, decline. Furthermore, if long-term
interest rates rise, the Common Stock's net asset value will reflect the
full decline in the price of the portfolio's investments, since the value
of the fund's Preferred Stock does not fluctuate. In addition to the
decline in net asset value, the market value of the fund's Common Stock
may also decline.
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 float-ers"). 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
such securities. As of April 30, 2005, the percentage of the Fund's total
net assets invested in inverse floaters was 13.84%, before the deduction
of Preferred Stock.
Swap Agreements
The Fund may invest in swap agreements, which are over-the-counter
contracts in which one party agrees to make periodic payments based on the
change in market value of a specified bond, basket of bonds, or index in
return for periodic payments based on a fixed or variable interest rate or
the change in market value of a different bond, basket of bonds or index.
Swap agreements may be used to obtain exposure to a bond or market without
owning or taking physical custody of securities. Swap agreements involve
the risk that the party with whom the Fund has entered into the swap will
default on its obligation to pay the Fund and the risk that the Fund will
not be able to meet its obligations to pay the other party to the
agreement.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
A Letter From the President
Dear Shareholder
Financial markets faced a number of crosscurrents over the past several
months, but most major benchmarks managed to post positive returns for the
annual and semi-annual reporting periods ended April 30, 2005:
Total Returns as of April 30, 2005 6-month 12-month
U.S. equities (Standard & Poor's 500 Index) +3.28% + 6.34%
Small-cap U.S. equities (Russell 2000 Index) -0.15% + 4.71%
International equities (MSCI Europe Australasia Far East Index) +8.71% +14.95%
Fixed income (Lehman Brothers Aggregate Bond Index) +0.98% + 5.26%
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) +1.93% + 6.81%
High yield bonds (Credit Suisse First Boston High Yield Index) +0.65% + 6.92%
After expanding at an annualized rate of 4.4% in 2004, U.S. gross domestic
product growth for the first quarter of 2005 came in at an estimated 3.1%
(although that figure was later revised upward to 3.5%). Nevertheless, the
Federal Reserve Board continued increasing interest rates at a measured
pace to combat emergent inflation. The most recent hike came on May 3, and
brought the federal funds rate to 3%. Recently, signs of inflation have
taken the form of rising business costs and increasing consumer prices,
particularly in the areas of gasoline, healthcare, housing and education.
U.S. equities ended 2004 in a strong rally, but stumbled into negative
territory in 2005. The market weakness was largely fueled by the potential
for slowing economic and corporate earnings growth, renewed energy price
concerns and a lack of investor conviction. On the positive side, certain
sectors of the market have been performing well (particularly energy) and
corporate transactions, such as mergers and acquisitions, stock buy-backs
and dividend payouts, have all increased. International equities,
especially in Asia, have benefited from higher economic growth rates.
In the bond market, we witnessed a yield curve flattening trend over the
past several months as short-term yields increased and longer-term
interest rates remained more stable or fell. At the end of April 2005, the
two-year Treasury note yielded 3.66% and the 10-year Treasury note yielded
4.21%, a difference of 55 basis points (.55%). This compared to a spread
of 149 basis points six months earlier and 222 basis points 12 months ago.
Looking ahead, the environment is likely to be a challenging one for
investors. With this in mind, we encourage you to meet with your financial
advisor to review your goals and asset allocation and to rebalance your
portfolio, as necessary, to ensure it remains aligned with your objectives
and risk tolerance. As always, we thank you for trusting Merrill Lynch
Investment Managers with your investment assets, and we look forward to
serving you in the months and years ahead.
Sincerely,
(Robert C. Doll, Jr.)
Robert C. Doll, Jr.
President and Director
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
A Discussion With Your Fund's Portfolio Manager
We focused primarily on protecting the Fund's net asset value and
providing shareholders with above-average income.
Describe the recent market environment relative to municipal bonds.
Amid significant volatility, long-term bond yields moved lower over the
past six months as shorter-term interest rates increased. For all of 2004,
real gross domestic product (GDP) grew at an annualized rate of 4.4%, well
ahead of 2003's annual rate of 3%. An advanced estimate of first quarter
2005 GDP growth came in at an unexpectedly low 3.1%, although that figure
was later revised upward to 3.5%.
It appeared that continued economic improvements were generally disregarded
as investors focused on inflationary trends, currency-related demand for
long-term U.S. securities, and interest rate action on the part of the
Federal Reserve Board (the Fed). During the past six months, 30-year
Treasury bond yields declined 28 basis points (.28%) to 4.51%, while
10-year Treasury note yields rose 16 basis points to 4.21%. The Fed, in
the meantime, continued to raise short-term interest rates at each of its
meetings throughout the period, and most recently increased the federal
funds rate from 2.75% to 3% on May 3. As short-term interest rates rose
while longer-term interest rates fell, the yield curve continued to
flatten.
Tax-exempt bond yields exhibited a similar pattern during the period.
Yields on 30-year revenue bonds, as measured by the Bond Buyer Revenue Bond
Index, fell 14 basis points to 4.83%. According to Municipal Market Data,
yields on AAA-rated issues maturing in 30 years declined 23 basis points
to 4.37%, while AAA-rated bonds maturing in 10 years saw their yields rise
17 basis points to 3.57% during the six-month period.
Over the past six months, more than $186 billion in tax-exempt bonds was
underwritten, an increase of 7.5% versus the same period a year earlier.
Issuance so far in 2005 has been boosted by a 32% increase in refunding
issues as municipalities have sought to refinance existing higher-coupon
debt. These refunding issues have been heavily weighted in the 10-year -
20-year maturity range to lower the overall interest cost of the refunding
issue. This concentration has put pressure on intermediate tax-exempt bond
yields while supporting longer-term bond prices.
Investor demand for municipal product remained generally positive during
the period. Investment Company Institute statistics indicate that, year-to-
date through March 31, 2005, net new cash flows into long-term municipal
bond funds exceeded $1.3 billion. This represented a significant improvement
from the $516 million seen during the same period in 2004. However, AMG Data
Services reports that recent weekly figures for the month of April have
shown a modest reversal in the positive flows seen in the first three
months of the year.
How did the Fund perform during the period in light of the existing market
conditions?
For the six-month period ended April 30, 2005, the Common Stock of MuniYield
Insured Fund, Inc. had net annualized yields of 6.17% and 6.66%, based on
a period-end per share net asset value of $15.72 and a per share market
price of $14.56, respectively, and $.481 per share income dividends. Over
the same period, the total investment return on the Fund's Common Stock
was +4.34%, based on a change in per share net asset value from $15.59 to
$15.72, and assuming reinvestment of all distributions.
The Fund's total return, based on net asset value, exceeded the +2.67%
average return of the Lipper Insured Municipal Debt Funds (Leveraged)
category for the six-month period. (Funds in this Lipper category invest
primarily in municipal debt issues insured as to timely payment. These
funds can be leveraged via use of debt, preferred equity and/or reverse
repurchase agreements.)
The Fund's outperformance can be attributed to a few factors, including
security selection, favorable timing and our focus on the long end of the
municipal yield curve. As the yield curve flattened considerably over the
past six months, long-term bonds outperformed shorter-term issues, and our
focus on this sector of the curve enhanced Fund results.
For a description of the Fund's total investment return based on a change
in the per share market value of the Fund's Common Stock (as measured by
the trading price of the Fund's shares on the New York Stock Exchange),
and assuming reinvestment of dividends, please refer to the Financial
Highlights section of this report. As a closed-end fund, the Fund's shares
may trade in the secondary market at a premium or discount to the Fund's
net asset value. As a result, total investment returns based on changes in
the market value of the Fund's Common Stock can vary significantly from
total investment returns based on changes in the Fund's net asset value.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
What changes were made to the portfolio during the period?
During the past six months, we focused primarily on protecting the Fund's
net asset value and providing shareholders with above-average income. To
that end, we continued to emphasize purchases of premium-coupon bonds with
longer maturities, usually in the 20-year - 30-year range. Our observations
have revealed a "twisted" yield curve, with yields on longer bonds
decreasing and yields on shorter bonds - those with maturities of 20 years
and less - increasing. Given that bond prices move in the opposite direction
of yields, the result has been that bonds on the long end of the municipal
yield curve performed well while short-term bonds lagged. The long end also
experienced less volatility than the shorter end; therefore, moving further
out on the curve helped to dampen the Fund's price volatility.
Another strategy employed during the period was to adopt a more
"barbelled" structure for the portfolio. This involved purchasing bonds
with 10-year maturities to balance our emphasis on longer-term bonds. This
strategy was not effective, however, as the 10-year portion of the yield
curve suffered most as the yield curve continued to flatten. We eventually
replaced these holdings with additional longer-maturity premium bonds.
Finally, we added to the Fund's holdings in uninsured California general
obligation bonds at what we believed were relatively attractive yields
compared to the overall municipal market. This contributed to Fund
performance as California municipal bonds outperformed the broader market
during the period.
For the six-month period ended April 30, 2005, the Fund's Auction Market
Preferred Stock (AMPS) had average yields of 1.53% for Series A, 1.61% for
Series B, 1.83% for Series C, 1.89% for Series D, 1.76% for Series E,
1.64% for Series F, 1.79% for Series G, 1.84% for Series H and 1.85% for
Series I. At this point in the Fed's monetary tightening cycle, interest
rate increases are having a material impact on the Fund's borrowing costs.
The Fed raised the short-term interest rate target 100 basis points during
the six-month period. Still, the tax-exempt yield curve remained relatively
steep and continued to generate an income benefit to the holders of Common
Stock from the leveraging of Preferred Stock. However, should the spread
between short-term and long-term interest rates narrow, the benefits of
leveraging will decline and, as a result, reduce the yield on the Fund's
Common Stock. At the end of the period, the Fund's leverage amount, due
to AMPS, was 35.02% of total net assets. (For a more complete explanation
of the benefits and risks of leveraging, see page 2 of this report to
shareholders.)
How would you characterize the Fund's position at the close of the period?
We remain somewhat cautious in our outlook for the municipal market in the
months ahead. Inflationary data could prove troubling to the Fed, which at
its March meeting expressed greater concern about rising prices. Our view
is that the Fed will continue to steadily increase the federal funds rate
toward 3.5% - 3.75% by the end of the year. All else being equal, we
believe the municipal bond market is well positioned to outperform other
fixed income markets given an expected decrease in supply with no loss of
demand.
Against this backdrop, we intend to maintain our focus on premium-coupon
issues in the 20-year - 30-year maturity range. Given the dramatic
flattening of the yield curve over the past six months, we feel that this
maturity range provides the best current yields for the corresponding
level of duration risk. It is also our intention to concentrate future
purchases in the securities of high-tax states, such as New York, New
Jersey and California. Because of the relatively high state income taxes
imposed by these states, their securities typically meet with strong
retail demand. This creates a solid technical market for these securities,
leading to better liquidity. Importantly, these strategies will be pursued
while maintaining a focus on a high degree of credit quality.
William R. Bock
Vice President and Portfolio Manager
May 26, 2005
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
Proxy Results
During the six-month period ended April 30, 2005, MuniYield Insured Fund,
Inc.'s Common Stock shareholders voted on the following proposals.
Proposal 1 was approved at a shareholders' meeting on April 28, 2005. With
respect to Proposal 2, the proposal was adjourned until May 27, 2005, at
which time it passed. A description of the proposals and number of shares
voted were as follows:
Shares Voted Shares Withheld
For From Voting
1. To elect the Fund's Directors: Robert C. Doll, Jr. 38,040,025 883,467
Joe Grills 37,976,967 946,525
Herbert I. London 38,027,738 895,754
Roberta Cooper Ramo 38,008,496 914,996
Stephen B. Swensrud 37,974,974 948,518
Shares Voted Shares Voted Shares Voted
For Against Abstain
2. To approve an amendment to fundamental investment restrictions. 27,499,426 1,234,938 922,694
During the six-month period ended April 30, 2005, MuniYield Insured Fund,
Inc.'s Preferred Stock shareholders (Series A - I) voted on the following
proposals. Proposal 1 was approved at a shareholders' meeting on April 28,
2005. With respect to Proposal 2, the proposal was adjourned until May 27,
2005, at which time it passed. A description of the proposals and number
of shares voted were as follows:
Shares Voted Shares Withheld
For From Voting
1. To elect the Fund's Board of Directors: Robert C. Doll, Jr., James H. Bodurtha,
Joe Grills, Herbert I. London, Roberta Cooper Ramo, Robert S. Salomon, Jr.
and Stephen B. Swensrud 16,042 121
Shares Voted Shares Voted Shares Voted
For Against Abstain
2. To approve an amendment to fundamental investment restrictions. 21,655 734 339
Portfolio Information as of April 30, 2005
Percent of
Quality Ratings by Total
S&P/Moody's Investments
AAA/Aaa 85.3%
AA/Aa 0.2
A/A 10.4
BBB/Baa 1.5
NR (Not Rated) 2.1
Other* 0.5
*Includes portfolio holdings in variable rate demand notes.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
Schedule of Investments (In Thousands)
Face
State Amount Municipal Bonds Value
Alabama--0.5% $ 4,500 Jefferson County, Alabama, Limited Obligation School Warrants, Series A, 5.50%
due 1/01/2021 $ 4,932
Alaska--1.5% 3,695 Alaska Energy Authority, Power Revenue Refunding Bonds (Bradley Lake), Fourth
Series, 6% due 7/01/2018 (g) 4,400
11,280 Alaska State Housing Finance Corporation, Revenue Refunding Bonds, Series A, 5.875%
due 12/01/2024 (d)(i)(j) 11,668
California--35.2% 10,000 Alameda Corridor Transportation Authority, California, Capital Appreciation Revenue
Refunding Bonds, Subordinate Lien, Series A, 5.473%** due 10/01/2012 (a) 7,353
13,025 Alhambra, California, Unified School District, GO (Election of 2004), Series A, 5%
due 8/01/2029 (c) 13,785
5,000 Antioch, California, Public Finance Authority, Lease Revenue Refunding Bonds
(Municipal Facilities Project), Series A, 5.50% due 1/01/2032 (i) 5,411
10,000 California Infrastructure and Economic Development Bank, Bay Area Toll Bridges Revenue
Bonds, First Lien, Series A, 5% due 7/01/2025 (c) 10,617
California State Department of Water Resources, Power Supply Revenue Bonds, Series A:
5,750 5.125% due 5/01/2018 (i) 6,267
10,000 5.25% due 5/01/2020 (i) 10,906
3,675 5.375% due 5/01/2021 4,002
12,010 5.375% due 5/01/2022 (i) 13,310
California State, GO, DRIVERS (i)(k):
7,450 Series 556, 7.695% due 11/01/2011 8,835
6,450 Series 557, 7.695% due 4/01/2012 7,717
5,000 California State, GO, Refunding, RIB, Series 471x, 7.76% due 9/01/2024 (i)(k) 5,901
California State Public Works Board, Lease Revenue Bonds:
5,500 (Department of Corrections), Series C, 5.25% due 6/01/2028 5,827
3,755 (Department of General Services), Series D, 5.25% due 6/01/2028 3,978
5,250 (Department of Mental Health--Coalinga State Hospital), Series A, 5.125% due 6/01/2029 5,472
12,000 California State, Various Purpose, GO, 5.25% due 11/01/2029 12,770
32,000 California State, Various Purpose, GO, Refunding, 5% due 6/01/2034 33,108
7,740 California Statewide Communities Development Authority, Health Facility Revenue Bonds
(Memorial Health Services), Series A, 6% due 10/01/2023 8,788
4,205 California Statewide Communities Development Authority, Water Revenue Bonds (Pooled
Financing Program), Series C, 5.25% due 10/01/2034 (g) 4,485
3,905 Clovis, California, Public Financing Authority, Wastewater Revenue Bonds, 5% due
8/01/2035 (i) 4,096
7,500 Desert Sands, California, Unified School District, GO (Election of 2001), 5% due
6/01/2029 (g) 7,897
5,800 Fairfield-Suisun, California, Unified School District, GO (Election of 2002), 5.50%
due 8/01/2028 (i) 6,429
5,015 Gavilan, California, Joint Community College District, GO, DRIVERS, Series 587-Z,
7.695% due 8/01/2012 (a)(k) 6,103
Golden State Tobacco Securitization Corporation of California, Tobacco Settlement
Revenue Bonds:
6,000 DRIVERS, Series 726, 7.945% due 12/01/2010 (c)(k) 7,171
13,500 RIB, Series 920X, 7.76% due 6/01/2033 (c)(k) 16,001
1,500 Series B, 5.50% due 6/01/2033 1,615
2,500 Series B, 5.50% due 6/01/2043 2,661
12,155 Huntington Beach, California, Union High School District, GO (Election of 2004), 5%
due 8/01/2029 (g) 12,808
1,000 Long Beach, California, Harbor Revenue Refunding Bonds, AMT, Series B, 5.20% due
5/15/2027 (i) 1,059
5,000 Los Angeles, California, Harbor Department Revenue Bonds, RITR, AMT, Series RI-7,
9.015% due 11/01/2026 (i)(k) 5,551
Los Angeles, California, Unified School District, GO:
6,265 DRIVERS, Series 261, 7.499% due 7/01/2022 (c)(k) 7,253
28,800 Series A, 5% due 1/01/2028 (i) 30,256
12,775 Los Angeles, California, Water and Power Revenue Bonds (Power System), Series B, 5%
due 7/01/2035 (g) 13,296
Portfolio Abbreviations
To simplify the listings of MuniYield 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)
COP Certificates of Participation
DRIVERS Derivative Inverse Tax-Exempt Receipts
EDA Economic Development Authority
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
VRDN Variable Rate Demand Notes
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
Schedule of Investments (continued) (In Thousands)
Face
State Amount Municipal Bonds Value
California $ 4,650 Madera, California, Unified School District, Capital Appreciation, GO (Election
(concluded) of 2002), 5.23%** due 8/01/2029 (c) $ 1,369
Napa Valley, California, Community College District, Capital Appreciation, GO
(Election of 2002), Series B (i):
5,000 5.279%** due 8/01/2027 1,659
11,725 5.222%** due 8/01/2028 3,693
4,730 Port of Oakland, California, DRIVERS, AMT, Series 839Z, 7.155% due 11/01/2010 (c)(k) 5,295
145 Port of Oakland, California, Revenue Bonds, AMT, Series K, 5.75% due 11/01/2021 (c) 157
7,000 Port of Oakland, California, Trust Receipts, Revenue Bonds, AMT, Class R, Series K,
8.183% due 11/01/2021 (c)(k) 8,141
10,000 Riverside County, California, Public Financing Authority, Tax Allocation Revenue Bonds
(Redevelopment Projects), 5% due 10/01/2035 (e) 10,365
15,000 Sacramento County, California, Sanitation District Financing Authority Revenue Bonds,
Series A, 5% due 12/01/2035 (a) 15,805
25,000 San Diego County, California, Water Authority, Water Revenue Bonds, COP, Series A, 5%
due 5/01/2031 (g) 26,328
8,310 Stockton, California, Public Financing Authority, Lease Revenue Bonds (Parking &
Capital Projects), 5.25% due 9/01/2034 (c) 8,911
District of 15,000 Metropolitan Washington Airports Authority, D.C., Airport System Revenue Refunding
Columbia--1.4% Bonds, AMT, Series A, 5% due 10/01/2035 (i) 15,393
Florida--1.7% 3,500 Escambia County, Florida, Health Facilities Authority, Health Facility Revenue Bonds
(Florida Health Care Facility Loan), 5.95% due 7/01/2020 (a) 3,545
5,375 Miami-Dade County, Florida, Aviation Revenue Bonds, RIB, AMT, Series 1054-X, 7.45% due
10/01/2025 (c)(k) 6,038
1,000 Miami-Dade County, Florida, Aviation Revenue Refunding Bonds (Miami International
Airport), AMT, 5.375% due 10/01/2027 (c) 1,058
Orange County, Florida, Health Facilities Authority, Hospital Revenue Bonds:
5,000 (Adventist Health System), 5.625% due 11/15/2032 5,329
2,000 (Orlando Regional Healthcare), 5.75% due 12/01/2032 2,135
Georgia--4.6% Atlanta, Georgia, Airport General Revenue Refunding Bonds (g):
26,500 AMT, Series A, 5.125% due 1/01/2030 27,604
12,500 Series B, 5.25% due 1/01/2033 13,372
Monroe County, Georgia, Development Authority, PCR, Refunding (Oglethorpe Power
Corporation--Scherer), VRDN (a)(h):
3,400 Series A, 2.98% due 1/01/2020 3,400
1,700 Series B, 2.98% due 1/01/2020 1,700
2,100 Rockdale County, Georgia, Water and Sewer Authority, Revenue Bonds, 5% due 7/01/2029 (g) 2,224
Hawaii--0.2% 2,000 Hawaii State, GO, Series CX, 5.50% due 2/01/2021 (g) 2,196
Illinois--7.8% Chicago, Illinois, O'Hare International Airport Revenue Bonds, AMT:
13,115 DRIVERS, Series 368, 8.654% due 7/01/2011 (i)(k) 16,495
8,600 DRIVERS, Series 369, 10.378% due 7/01/2011 (e)(k) 10,710
16,685 Third Lien, Series B-2, 5.25% due 1/01/2027 (i) 17,538
Chicago, Illinois, O'Hare International Airport, Revenue Refunding Bonds, AMT:
8,200 DRIVERS, Series 653-Z, 7.654% due 1/01/2012 (g)(k) 8,966
1,500 Third Lien, Series C-2, 5.25% due 1/01/2034 (e) 1,568
10,000 Illinois State, GO, First Series, 5.50% due 4/01/2016 (g) 11,077
2,000 Illinois State Sales Tax Revenue Bonds, 6.125% due 6/15/2016 2,255
6,035 McLean and Woodford Counties, Illinois, Community Unit, School District Number 005, GO,
Refunding, 6.375% due 12/01/2016 (g) 7,026
4,800 Metropolitan Pier and Exposition Authority, Illinois, Dedicated State Tax Revenue
Refunding Bonds (McCormick Place Expansion Project), Series B, 5.75% due 6/15/2023 (i) 5,413
1,000 Regional Transportation Authority, Illinois, Revenue Bonds, Series C, 7.75% due
6/01/2020 (c) 1,405
Indiana--4.8% 2,250 Indiana Health Facilities Financing Authority, Hospital Revenue Bonds (Deaconess
Hospital Obligated Group), Series A, 5.375% due 3/01/2034 (a) 2,419
Indiana Transportation Finance Authority, Highway Revenue Bonds, Series A (c):
3,000 5.25% due 6/01/2026 3,232
14,000 5.25% due 6/01/2028 15,103
20,000 5.25% due 6/01/2029 21,544
8,000 Indianapolis, Indiana, Local Public Improvement Bond Bank Revenue Bonds (Waterworks
Project), Series A, 5.125% due 7/01/2027 (i) 8,417
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
Schedule of Investments (continued) (In Thousands)
Face
State Amount Municipal Bonds Value
Kansas--0.9% $ 8,500 Burlington, Kansas, PCR, Refunding (Kansas Gas and Electric Company Project),
Series A, 5.30% due 6/01/2031 (i) $ 9,132
Louisiana--1.9% 3,750 Louisiana Local Government, Environmental Facilities, Community Development
Authority Revenue Bonds (Capital Projects and Equipment Acquisition), Series A,
6.30% due 7/01/2030 (a) 4,117
15,000 Louisiana Public Facilities Authority, Revenue Refunding Bonds (Baton Rouge General
Medical Center Project), 5.25% due 7/01/2033 (d)(i) 15,941
Massachusetts--4.9% 2,500 Massachusetts State, HFA, Housing Development Revenue Refunding Bonds, Series B, 5.40%
due 12/01/2028 (i) 2,575
7,550 Massachusetts State Port Authority Revenue Bonds, Series A, 5% due 7/01/2033 (i) 7,881
Massachusetts State Special Obligation Dedicated Tax Revenue Bonds (c):
8,460 5.25% due 1/01/2025 9,151
6,160 5.25% due 1/01/2028 6,644
10,000 5.75% due 1/01/2032 11,295
10,000 5% due 1/01/2034 10,472
Massachusetts State Water Resource Authority, General Revenue Refunding Bonds,
Series A (i):
1,500 5% due 8/01/2028 1,599
2,020 5% due 8/01/2029 2,147
Michigan--4.2% 9,360 Clarkston, Michigan, Community Schools, GO, 5.25% due 5/01/2029 (g) 10,016
6,500 Michigan State Hospital Finance Authority, Revenue Refunding Bonds, 5% due 11/15/2036 (i) 6,767
Michigan State Strategic Fund, Limited Obligation Revenue Refunding Bonds, DRIVERS,
AMT (e)(k):
2,500 Series 857Z, 7.712% due 3/01/2010 2,842
4,000 Series 858Z, 7.413% due 12/01/2011 4,570
20,000 Wayne County, Michigan, Airport Authority Revenue Bonds (Detroit Metropolitan Wayne
County Airport), AMT, 5% due 12/01/2029 (i) 20,562
Minnesota--1.2% 1,250 Chaska, Minnesota, Electric Revenue Refunding Bonds (Generating Facilities), Series A,
5.25% due 10/01/2025 1,337
10,000 Minneapolis and Saint Paul, Minnesota, Metropolitan Airports Commission, Airport
Revenue Bonds, Series A, 5.90% due 1/01/2029 (c) 11,028
Missouri--0.3% 210 Missouri State Housing Development Commission, S/F Mortgage Revenue Bonds (Homeowner
Loan), AMT, Series C-1, 7.15% due 3/01/2032 (l) 218
2,800 Saint Louis, Missouri, Airport Revenue Bonds (Airport Development Program), Series A,
5.625% due 7/01/2019 (i) 3,109
Nevada--10.7% 25,000 Clark County, Nevada, Airport System Subordinate Lien Revenue Bonds, Series A-2, 5%
due 7/01/2030 (c) 26,025
Clark County, Nevada, IDR (Southwest Gas Corporation Project), AMT:
12,675 Series A, 5.25% due 7/01/2034 (a) 13,273
12,000 Series D, 5.25% due 3/01/2038 (c) 12,465
6,000 Henderson, Nevada, Health Care Facilities Revenue Bonds (Catholic Healthcare West),
Series A, 5.625% due 7/01/2024 6,409
5,000 Humboldt County, Nevada, PCR, Refunding (Sierra Pacific Project), 6.55% due 10/01/2013 (a) 5,250
20,375 Nevada State, Nevada Municipal Bond Bank, GO, Series A, 5.50% due 11/01/2025 (c) 20,799
3,130 Reno, Nevada, Capital Improvement Revenue Bonds, 5.50% due 6/01/2019 (c) 3,474
Washoe County, Nevada, Gas Facilities Revenue Bonds (Sierra Pacific Power Company), AMT:
15,000 6.65% due 12/01/2017 (a) 15,120
5,000 6.55% due 9/01/2020 (i) 5,092
5,000 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra Pacific Power Company),
AMT, 6.65% due 6/01/2017 (i) 5,197
New Jersey--6.6% 16,000 Garden State Preservation Trust of New Jersey, Open Space and Farmland Preservation
Revenue Bonds, Series A, 5.75% due 11/01/2028 (g) 19,183
New Jersey EDA, Cigarette Tax Revenue Bonds:
3,060 5.75% due 6/15/2029 3,280
2,610 5.50% due 6/15/2031 2,726
14,135 5.75% due 6/15/2034 15,096
14,830 New Jersey EDA, Revenue Bonds, DRIVERS, Series 785-Z, 7.196% due 7/01/2012 (i)(k) 17,173
New Jersey EDA, School Facilities Construction Revenue Bonds, Series I:
5,500 5.25% due 9/01/2028 5,881
3,250 5.25% due 9/01/2029 3,475
Newark, New Jersey, Housing Authority, Port Authority-Port Newark Marine Terminal
Additional Rent-Backed Revenue Bonds (City of Newark Redevelopment Projects) (i):
1,500 5.50% due 1/01/2027 1,656
1,380 5.50% due 1/01/2028 1,521
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
Schedule of Investments (continued) (In Thousands)
Face
State Amount Municipal Bonds Value
New Mexico--0.2% $ 1,605 New Mexico Educational Assistance Foundation, Student Loan Revenue Refunding Bonds
(Student Loan Program), AMT, First Sub-Series A-2, 6.65% due 11/01/2025 $ 1,612
755 New Mexico Mortgage Finance Authority, S/F Mortgage Revenue Bonds, AMT, Series C-2,
6.95% due 9/01/2031 (l) 766
New York--20.8% 10,250 Long Island Power Authority, New York, Electric System Revenue Bonds, Series A, 5.10%
due 9/01/2029 10,728
12,500 Metropolitan Transportation Authority, New York, Commuter Facilities Revenue Refunding
Bonds, Series B, 5.125% due 7/01/2024 (a)(b) 13,144
17,250 Metropolitan Transportation Authority, New York, Revenue Bonds, Series A, 5% due
11/15/2033 (a) 18,190
75,000 New York City, New York, City Municipal Water Finance Authority, Water and Sewer
System, Revenue Refunding Bonds, Series B, 5% due 6/15/2036 (g) 78,671
New York City, New York, GO:
13,840 Series B, 5.875% due 8/01/2016 (i) 15,603
10,000 Series J, 5.25% due 5/15/2024 10,698
1,000 Series J, 5.25% due 5/15/2025 1,074
20,000 Series M, 5% due 4/01/2030 20,760
6,000 Sub-Series C-1, 5.25% due 8/15/2026 6,433
22,500 New York City, New York, Sales Tax Asset Receivable Corporation Revenue Bonds, Series A,
5% due 10/15/2032 (a) 23,767
19,500 Port Authority of New York and New Jersey, Consolidated Revenue Bonds, AMT, One Hundred
Thirty-Seventh Series, 5.125% due 7/15/2030 (g) 20,549
North 6,500 Raleigh-Durham, North Carolina, Airport Authority, Airport Revenue Bonds, Series A,
Carolina--1.0% 5% due 5/01/2030 (a) 6,822
3,820 University of North Carolina at Charlotte, COP (Student Housing Project), 5% due
3/01/2031 (a) 4,021
Ohio--0.2% 1,500 Franklin County, Ohio, Hospital Improvement Revenue Bonds (Children's Hospital Project),
5.50% due 5/01/2028 (a) 1,638
Oklahoma--0.8% 7,500 Oklahoma State IDR, Refunding, DRIVERS, Series 455, 8.184% due 2/15/2008 (i)(k) 8,919
Oregon--3.3% 8,185 Multnomah-Clackamas Counties, Oregon, Gresham-Barlo School District Number 10JT, GO,
5.50% due 6/15/2011 (f)(g) 9,067
8,445 Oregon State Department of Administrative Services, COP, Series A, 5% due 5/01/2030 (g) 8,863
Portland, Oregon, Sewer System Revenue Bonds, Series A (c):
5,000 5.75% due 8/01/2019 5,570
10,000 5.75% due 8/01/2020 11,056
Pennsylvania--4.2% 7,800 Pennsylvania State Turnpike Commission, Turnpike Revenue Bonds, DRIVERS, Series 460-Z,
7.695% due 6/01/2012 (a)(k) 9,514
Philadelphia, Pennsylvania, School District, GO (c):
5,175 Series B, 5.625% due 8/01/2012 (f) 5,916
12,115 Series D, 5.125% due 6/01/2034 12,760
6,000 Series D, 5.25% due 6/01/2034 6,416
3,500 Philadelphia, Pennsylvania, Water and Wastewater Revenue Bonds, Series A, 5% due
7/01/2035 (g) 3,668
5,000 Sayre, Pennsylvania, Health Care Facilities Authority, Revenue Bonds (Guthrie
Healthcare System), Series B, 7.125% due 12/01/2031 5,907
South 1,435 South Carolina Housing Finance and Development Authority, Mortgage Revenue Refunding
Carolina--2.3% Bonds, AMT, Series A-2, 6.35% due 7/01/2019 (g) 1,471
18,030 South Carolina Transportation Infrastructure Bank Revenue Bonds, Series A, 5% due
10/01/2029 (a) 18,793
4,200 Spartanburg County, South Carolina, Solid Waste Disposal Facilities Revenue Bonds
(BMW Project), AMT, 7.55% due 11/01/2024 4,373
Tennessee--1.7% 1,500 Sevier County, Tennessee, Public Building Authority, Local Government Public Improvement
Revenue Bonds, VRDN, Series IV-B11, 3.01% due 6/01/2025 (g)(h) 1,500
Sevier County, Tennessee, Public Building Authority Revenue Bonds, Local Government
Public Improvement IV, VRDN (h):
1,200 Series B-6, 3.01% due 6/01/2020 (g) 1,200
1,400 Series E-1, 3.01% due 6/01/2030 (a) 1,400
1,300 Series E-4, 3.01% due 6/01/2020 (a) 1,300
1,400 Sevier County, Tennessee, Public Building Authority Revenue Bonds, Local Government
Public Improvement, VRDN, Series IV-1, 3.01% due 6/01/2023 (g)(h) 1,400
Tennessee HDA, Revenue Bonds (Homeownership Program), AMT, Series 2B:
1,795 6.05% due 7/01/2012 1,834
2,250 6.15% due 7/01/2014 2,280
Tennessee HDA, Revenue Refunding Bonds (Homeownership Program), AMT, Series A (g):
3,800 5.25% due 7/01/2022 3,950
2,695 5.35% due 1/01/2026 2,793
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
Schedule of Investments (continued) (In Thousands)
Face
State Amount Municipal Bonds Value
Texas--12.2% $ 8,000 Bell County, Texas, Health Facilities Development Corporation, Hospital Revenue
Bonds (Scott & White Memorial Hospital), VRDN, Series 2001-2, 2.98% due
8/15/2031 (h)(i) $ 8,000
1,880 Bexar, Texas, Metropolitan Water District, Waterworks System Revenue Refunding
Bonds, 6.35% due 5/01/2025 (i) 1,922
10,500 Dallas-Fort Worth, Texas, International Airport Revenue Bonds, DRIVERS, AMT,
Series 353, 7.654% due 5/01/2011 (i)(k) 11,909
7,500 Dallas-Fort Worth, Texas, International Airport Revenue Refunding Bonds, DRIVERS, AMT,
Series 336Z, 9.639% due 11/01/2026 (c)(k) 8,589
Harris County, Houston, Texas, Sports Authority, Revenue Refunding Bonds, Senior Lien,
Series G (i):
1,665 5.75% due 11/15/2019 1,852
3,500 5.75% due 11/15/2020 3,864
10,000 5.25% due 11/15/2030 10,531
Houston, Texas, Airport System Revenue Refunding Bonds (g):
15,000 RIB, Series 845X, 7.73% due 7/01/2030 (k) 17,329
9,500 Sub-Lien, AMT, Series A, 5.70% due 7/01/2030 9,535
11,075 North Central Texas, Health Facility Development Corporation Revenue Bonds (Methodist
Hospitals--Dallas), VRDN, Series B, 3.05% due 10/01/2015 (h)(i) 11,075
4,835 Texas State Department of Housing and Community Affairs, S/F Mortgage Revenue Bonds,
AMT, Series A, 5.45% due 9/01/2023 (i)(l) 5,055
10,000 Texas State Turnpike Authority, Central Texas Turnpike System Revenue Bonds, First Tier,
Series A, 5.50% due 8/15/2039 (a) 11,000
4,000 Texas Technical University, Financing System Revenue Bonds, Seventh Series, 5.50% due
8/15/2019 (i) 4,419
10,000 Travis County, Texas, Health Facilities Development Corporation, Revenue Refunding Bonds,
RITR, Series 4, 8.374% due 11/15/2024 (a)(k) 12,428
11,240 University of Houston, Texas, University Revenue Bonds, 5.50% due 2/15/2030 (i) 12,080
Vermont--0.1% 900 Vermont HFA, S/F Housing Revenue Bonds, AMT, Series 12B, 6.30% due 11/01/2019 (g) 910
Virginia--0.3% 2,500 Halifax County, Virginia, IDA, Exempt Facility Revenue Refunding Bonds (Old Dominion
Electric Cooperative Project), AMT, 5.625% due 6/01/2028 (a) 2,742
Washington--17.6% Bellevue, Washington, GO, Refunding (i):
2,545 5.25% due 12/01/2026 2,738
2,455 5.25% due 12/01/2027 2,644
2,850 5.25% due 12/01/2028 3,067
3,000 5.25% due 12/01/2029 3,224
17,600 5% due 12/01/2034 18,348
16,150 Central Puget Sound Regional Transportation Authority, Washington, Sales and Use Tax
Revenue Bonds, Series A, 5% due 11/01/2030 (a) 16,910
3,030 Chelan County, Washington, Public Utility District Number 001, Consolidated Revenue
Bonds (Chelan Hydro System), AMT, Series A, 5.45% due 7/01/2037 (a) 3,198
Chelan County, Washington, Public Utility District Number 001, Consolidated Revenue
Refunding Bonds (Chelan Hydro System), AMT (i):
6,595 Series B, 6.35% due 7/01/2026 7,152
6,000 Series C, 5.65% due 7/01/2032 6,454
10,000 Energy Northwest, Washington, Electric Revenue Refunding Bonds (Project Number 1),
Series B, 6% due 7/01/2017 (i) 11,443
12,385 King County, Washington, Sewer, GO, 5% due 1/01/2030 (c) 12,935
3,500 Port Seattle, Washington, Revenue Bonds, Series A, 5.50% due 2/01/2026 (i) 3,779
19,565 Port Seattle, Washington, Revenue Refunding Bonds, Series B, AMT, 5.20% due 7/01/2029 (i) 20,467
10,000 Radford Court Properties, Washington, Student Housing Revenue Bonds, 5.75% due
6/01/2032 (i) 11,035
1,720 Seattle, Washington, Drain and Wastewater Utility Revenue Bonds, 5.75% due 11/01/2029 (i) 1,892
2,000 Seattle, Washington, Water System Revenue Bonds, Series B, 6% due 7/01/2029 (c) 2,206
Skagit County, Washington, Public Hospital District, GO, Series A (i):
4,945 5.25% due 12/01/2025 5,341
5,450 5.25% due 12/01/2026 5,864
7,250 Tacoma, Washington, Solid Waste Utility Revenue Refunding Bonds, Series B, 5.50% due
12/01/2019 (a) 7,729
2,000 University of Washington, University Revenue Bonds (Student Facilities Fee), 5.75%
due 6/01/2025 (g) 2,207
Washington State, GO:
10,000 DRIVERS, Series 438Z, 7.935% due 1/01/2009 (i)(k) 11,767
15,930 Series B, 6% due 1/01/2010 (f)(g) 17,939
7,000 Washington State Health Care Facilities Authority Revenue Bonds (Providence Health
System), Series A, 5.25% due 10/01/2021 (i) 7,487
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
Schedule of Investments (concluded) (In Thousands)
Face
State Amount Municipal Bonds Value
West $ 5,925 Harrison County, West Virginia, County Commission for Solid Waste Disposal Revenue
Virginia--0.6% Bonds (Monongahela Power), AMT, Series C, 6.75% due 8/01/2024 (a) $ 6,062
Wisconsin--0.3% 3,395 Wisconsin State Health and Educational Facilities Authority Revenue Bonds
(Synergyhealth Inc.), 6% due 11/15/2032 3,608
Puerto Rico--1.1% 11,000 Puerto Rico Public Buildings Authority, Government Facilities, Revenue Refunding
Bonds, Series I, 5.25% due 7/01/2029 11,793
Total Investments (Cost--$1,551,067*)--155.1% 1,640,066
Liabilities in Excess of Other Assets--(1.2%) (12,317)
Preferred Stock, at Redemption Value--(53.9%) (570,060)
----------
Net Assets Applicable to Common Stock--100.0% $1,057,689
==========
* The cost and unrealized appreciation (depreciation) of investments as
of April 30, 2005, as computed for federal income tax purposes,
were as follows:
(in Thousands)
Aggregate cost $ 1,551,039
==============
Gross unrealized appreciation $ 89,307
Gross unrealized depreciation (280)
--------------
Net unrealized appreciation $ 89,027
==============
** Represents a zero coupon bond; the interest rate shown reflects
the effective yield at the time of purchase by the Fund.
(a) AMBAC Insured.
(b) Escrowed to maturity.
(c) FGIC Insured.
(d) FHA Insured.
(e) XL Capital Insured.
(f) Prerefunded.
(g) FSA Insured.
(h) Security may have a maturity of more than one year at time of
issuance, but has variable rate and demand features which qualify
it as a short-term security. The rate disclosed is that currently in effect.
This rate changes periodically based upon prevailing market rates.
(i) MBIA Insured.
(j) FNMA Collateralized.
(k) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(l) FNMA/GNMA Collateralized.
Investments in companies considered to be an affiliate of the Fund
(such companies are defined as "Affiliated Companies" in Section
2(a)(3) of the Investment Company Act of 1940) were as follows:
(in Thousands)
Net Dividend
Affiliate Activity Income
Merrill Lynch Institutional
Tax-Exempt Fund (131) --++
++ Amount is less than $1,000.
Forward interest rate swaps outstanding as of April 30, 2005 were
as follows:
(in Thousands)
Notional Unrealized
Amount Depreciation
Receive a variable rate equal to
a 7-Day Bond Market Association
Municipal Swap Index Rate and
pay a fixed rate equal to 3.76%
Broker, Morgan Stanley
Capital Services, Inc.
Expires June 2015 $ 26,600 $ (341)
Receive a variable rate based on
3-month USD LIBOR and pay a
fixed rate equal to 5.066%
Broker, Morgan Stanley
Capital Services, Inc.
Expires July 2015 $ 70,000 (2,320)
Receive a variable rate equal to
a 7-day Bond Market Association
Municipal Swap Index Rate and
pay a fixed rate equal to 3.702%
Broker, JPMorgan Chase Bank
Expires July 2015 $226,000 (1,464)
Receive a variable rate equal to
a 7-Day Bond Market Association
Municipal Swap Index Rate and
pay a fixed rate equal to 3.971%
Broker, JPMorgan Chase Bank
Expires August 2026 $ 15,555 (45)
----------
Total $ (4,170)
==========
See Notes to Financial Statements.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
Statement of Net Assets
As of April 30, 2005
Assets
Investments in unaffiliated securities, at value (cost--$1,551,067,210) $ 1,640,066,125
Cash 11,220,857
Receivables:
Interest $ 27,478,963
Securities sold 14,257,838 41,736,801
---------------
Prepaid expenses 24,607
---------------
Total assets 1,693,048,390
---------------
Liabilities
Unrealized depreciation on forward interest rate swaps 4,170,328
Payables:
Securities purchased 59,554,346
Dividends to Common Stock shareholders 642,247
Investment adviser 620,527
Other affiliates 17,000 60,834,120
---------------
Accrued expenses and other liabilities 295,283
---------------
Total liabilities 65,299,731
---------------
Preferred Stock
Preferred Stock, at redemption value, par value $.10 per share (2,200 Series A
Shares, 2,200 Series B Shares, 2,200 Series C Shares, 2,200 Series D Shares,
4,000 Series E Shares, 2,400 Series F Shares, 2,400 Series G Shares, 2,600
Series H Shares and 2,600 Series I Shares of AMPS* authorized, issued and
outstanding at $25,000 per share liquidation preference) 570,059,998
---------------
Net Assets Applicable to Common Stock
Net assets applicable to Common Stock $ 1,057,688,661
===============
Analysis of Net Assets Applicable to Common Stock
Common Stock, par value $.10 per share (67,303,125 shares issued and outstanding) $ 6,730,313
Paid-in capital in excess of par 942,966,033
Undistributed investment income--net $ 12,184,296
Undistributed unrealized capital gains--net 10,979,432
Unrealized appreciation--net 84,828,587
---------------
Total accumulated earnings--net 107,992,315
---------------
Total--Equivalent to $15.72 net asset value per share of Common Stock
(market price--$14.56) $ 1,057,688,661
===============
* Auction Market Preferred Stock.
See Notes to Financial Statements.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
Statement of Operations
For the Six Months Ended April 30, 2005
Investment Income
Interest $ 40,524,739
Dividends from affiliates 378
---------------
Total income 40,525,117
---------------
Expenses
Investment advisory fees $ 4,038,067
Commission fees 714,778
Accounting services 192,343
Transfer agent fees 82,407
Custodian fees 38,325
Professional fees 34,778
Directors' fees and expenses 24,241
Listing fees 23,566
Printing and shareholder reports 21,257
Pricing fees 19,195
Other 39,025
---------------
Total expenses before reimbursement 5,227,982
Reimbursement of expenses (52)
---------------
Total expenses after reimbursement 5,227,930
---------------
Investment income--net 35,297,187
---------------
Realized & Unrealized Gain (Loss)--Net
Realized gain on:
Investments--net 14,955,404
Forward interest rate swaps--net 699,635 15,655,039
---------------
Change in unrealized appreciation/depreciation on:
Investments--net (907,624)
Forward interest rate swaps--net (3,325,062) (4,232,686)
--------------- ---------------
Total realized and unrealized gain--net 11,422,353
---------------
Dividends & Distributions to Preferred Stock Shareholders
Investment income--net (4,990,636)
Realized gain--net (69,550)
---------------
Total dividends and distributions to Preferred Stock shareholders (5,060,186)
---------------
Net Increase in Net Assets Resulting from Operations $ 41,659,354
===============
See Notes to Financial Statements.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 2005 2004
Operations
Investment income--net $ 35,297,187 $ 66,691,762
Realized gain--net 15,655,039 9,024,316
Change in unrealized appreciation/depreciation--net (4,232,686) 11,955,004
Dividends and distributions to Preferred Stock shareholders (5,060,186) (5,014,754)
--------------- ---------------
Net increase in net assets resulting from operations 41,659,354 82,656,328
--------------- ---------------
Dividends & Distributions to Common Stock Shareholders
Investment income--net (32,440,105) (61,673,831)
Realized gains--net (953,820) --
--------------- ---------------
Net decrease in net assets resulting from dividends and distributions to
Common Stock shareholders (33,393,925) (61,673,831)
--------------- ---------------
Common Stock Transactions
Offering and underwriting costs resulting from issuance of Preferred Stock -- (1,509,721)
Proceeds from issuance of Common Stock resulting from reorganization -- 76,288,852
--------------- ---------------
Net increase in net assets resulting from Common Stock transactions -- 74,779,131
--------------- ---------------
Net Assets Applicable to Common Stock
Total increase in net assets applicable to Common Stock 8,265,429 95,761,628
Beginning of period 1,049,423,232 953,661,604
--------------- ---------------
End of period* $ 1,057,688,661 $ 1,049,423,232
=============== ===============
* Undistributed investment income--net $ 12,184,296 $ 14,317,850
=============== ===============
See Notes to Financial Statements.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
Financial Highlights
For the Six
Months Ended
The following per share data and ratios have been derived April 30, For the Year Ended October 31,
from information provided in the financial statements. 2005 2004 2003 2002 2001
Per Share Operating Performance
Net asset value, beginning of period $ 15.59 $ 15.36 $ 15.15 $ 15.18 $ 14.16
---------- ---------- ---------- ---------- ----------
Investment income--net .52+++ 1.04+++ 1.08+++ 1.07 1.08
Realized and unrealized gain (loss)--net .17 .25 .16 (.04) 1.05
Less dividends and distributions to Preferred
Stock shareholders:
Investment income--net (.07) (.07) (.08) (.11) (.23)
Realized gain--net --++ -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total from investment operations .62 1.22 1.16 .92 1.90
---------- ---------- ---------- ---------- ----------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.48) (.97) (.95) (.95) (.88)
Realized gain--net (.01) -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions to Common Stock
shareholders (.49) (.97) (.95) (.95) (.88)
---------- ---------- ---------- ---------- ----------
Offering costs resulting from the issuance of
Preferred Stock -- (.02) -- -- --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 15.72 $ 15.59 $ 15.36 $ 15.15 $ 15.18
========== ========== ========== ========== ==========
Market price per share, end of period $ 14.56 $ 14.57 $ 14.51 $ 14.31 $ 15.06
========== ========== ========== ========== ==========
Total Investment Return**
Based on net asset value per share 4.34%+++++ 8.52% 8.18% 6.52% 13.89%
========== ========== ========== ========== ==========
Based on market price per share 3.40%+++++ 7.36% 8.19% 1.42% 25.49%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Common Stock
Total expenses, net of reimbursement*** 1.00%* .95% .94% .97% .98%
========== ========== ========== ========== ==========
Total expenses*** 1.00%* .95% .95% .97% .98%
========== ========== ========== ========== ==========
Total investment income--net*** 6.74%* 6.77% 6.99% 7.16% 7.34%
========== ========== ========== ========== ==========
Amount of dividends to Preferred Stock shareholders .95%* .51% .49% .73% 1.59%
========== ========== ========== ========== ==========
Investment income--net, to Common Stock
shareholders 5.79%* 6.26% 6.50% 6.43% 5.75%
========== ========== ========== ========== ==========
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
Financial Highlights (concluded)
For the Six
Months Ended
The following per share data and ratios have been derived April 30, For the Year Ended October 31,
from information provided in the financial statements. 2005 2004 2003 2002 2001
Ratios Based on Average Net Assets of Preferred Stock
Dividends to Preferred Stock shareholders 1.76%* 1.08% 1.06% 1.53% 3.30%
========== ========== ========== ========== ==========
Supplemental Data
Net assets applicable to Common Stock, end of
period (in thousands) $1,057,689 $1,049,423 $ 953,662 $ 940,852 $ 940,359
========== ========== ========== ========== ==========
Preferred Stock outstanding, end of period
(in thousands) $ 570,000 $ 570,000 $ 440,000 $ 440,000 $ 440,000
========== ========== ========== ========== ==========
Portfolio turnover 63.25% 144.40% 114.05% 97.34% 99.00%
========== ========== ========== ========== ==========
Leverage
Asset coverage per $1,000 $ 2,856 $ 2,841 $ 3,167 $ 3,138 $ 3,137
========== ========== ========== ========== ==========
Dividends Per Share on Preferred Stock Outstanding
Series A--Investment income--net $ 191 $ 272 $ 270 $ 364 $ 833
========== ========== ========== ========== ==========
Series B--Investment income--net $ 200 $ 283 $ 273 $ 364 $ 842
========== ========== ========== ========== ==========
Series C--Investment income--net $ 228 $ 251 $ 268 $ 360 $ 849
========== ========== ========== ========== ==========
Series D--Investment income--net $ 236 $ 264 $ 247 $ 348 $ 825
========== ========== ========== ========== ==========
Series E--Investment income--net $ 220 $ 259 $ 240 $ 352 $ 790
========== ========== ========== ========== ==========
Series F--Investment income--net $ 204 $ 271 $ 274 $ 359 $ 860
========== ========== ========== ========== ==========
Series G--Investment income--net $ 224 $ 269 $ 304 $ 545 $ 799
========== ========== ========== ========== ==========
Series H++++--Investment income--net $ 230 $ 63 -- -- --
========== ========== ========== ========== ==========
Series I++++--Investment income--net $ 230 $ 65 -- -- --
========== ========== ========== ========== ==========
* 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 charges.
*** Do not reflect the effect of dividends to Preferred Stock shareholders.
++ Amount is less than $(.01) per share.
++++ Series H and Series I were issued on August 23, 2004.
+++ Based on average shares outstanding.
+++++ Aggregate total investment return.
See Notes to Financial Statements.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
Notes to Financial Statements
1. Significant Accounting Policies:
MuniYield Insured Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a non-diversified, closed-
end management investment company. The Fund's financial statements are
prepared in conformity with U.S. generally accepted accounting principles,
which may require the use of management accruals and estimates. Actual
results may differ from these estimates. These unaudited financial
statements reflect all adjustments, which are, in the opinion of management,
necessary to present a fair statement of the results for the interim
period. 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 daily basis. The Fund's Common Stock is listed on the
New York Stock Exchange under the symbol MYI. 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 ("OTC") markets and are valued at the last available bid
price in the OTC market or on the basis of values as obtained by a pricing
service. Pricing services use valuation matrixes that incorporate both
dealer-supplied valuations and valuation models. The procedures of the
pricing service and its valuations are reviewed by the officers of the
Fund under the general direction of the Board of Directors. Such valuations
and procedures are reviewed periodically by the Board of Directors of the
Fund. 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 OTC market, valuation is the last asked price (options written) or the
last bid price (options purchased). Swap agreements are valued by quoted
fair values received daily by the Fund's pricing service. Short-term
investments with a remaining maturity of 60 days or less are valued at
amortized cost, which approximates market value, under which method the
investment is valued at cost and any premium or discount is amortized on
a straight line basis to maturity. Investments in open-end investment
companies are valued at their net asset value each business day. Securities
and other 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.
(b) Derivative financial instruments--The Fund may engage in various
portfolio investment strategies both to increase the return of the Fund
and to hedge, or protect, its exposure to interest rate movements and
movements in the securities 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 financial
futures contracts and options on such futures contracts. 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.
* Options--The Fund may 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.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
Notes to Financial Statements (continued)
* Forward interest rate swaps--The Fund may enter into forward interest
rate swaps. In a forward interest rate swap, the Fund and the counterparty
agree to make periodic net payments on a specified notional contract amount,
commencing on a specified future effective date, unless terminated earlier.
When the agreement is closed, the Fund records a realized gain or loss in
an amount equal to the value of the agreement.
(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).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend
dates. Interest income is recognized on the accrual basis. The Fund
amortizes all premiums and discounts on debt securities.
(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.
(f) Offering costs--Direct expenses relating to the public offering of the
Fund's Preferred Stock were charged to capital at the time of issuance of
the stock.
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 .50% of the Fund's average weekly net
assets, including proceeds from the issuance of Preferred Stock. The
Investment Adviser has agreed to reimburse its management fee by the
amount of the management fees the Fund pays to FAM indirectly through its
investment in the Merrill Lynch Institutional Tax-Exempt Fund. For the
six months ended April 30, 2005, FAM reimbursed the Fund in the amount
of $52.
In addition, Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"),
an affiliate of FAM, received $17,100 in commissions on the execution of
portfolio security transactions for the Fund for the six months ended
April 30, 2005.
For the six months ended April 30, 2005, the Fund reimbursed FAM $17,363
for certain accounting services.
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, 2005 were $1,002,613,151 and $1,014,741,139,
respectively.
4. Capital Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of 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 the
holders of Common Stock.
Common Stock
Shares issued and outstanding during the six months ended April 30, 2005
remained constant and for the year ended October 31, 2004 increased by
5,204,029 as a result of issuance of Common Stock from reorganization.
Preferred Stock
Auction Market Preferred Stock are redeemable shares of Preferred Stock of
the Fund, with a par value of $.10 per share and a liquidation preference
of $25,000 per share, plus accrued and unpaid dividends, that entitle
their holders to receive cash dividends at an annual rate that may vary
for the successive dividend periods. The yields in effect at April 30,
2005 were as follows: Series A, 2.25%; Series B, 2.45%; Series C, 2.41%;
Series D, 2.65%; Series E, 2.63%; Series F, 2.40%; Series G, 2.45%;
Series H, 2.80%; and Series I, 2.55%.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
Notes to Financial Statements (concluded)
Shares issued and outstanding for the six months ended April 30, 2005
remained constant. Shares issued and outstanding for the year ended
October 31, 2004 increased by 5,200 shares from the issuance of two
additional series of Preferred Stock.
The Fund pays commissions to certain broker-dealers at the end of each
auction at an annual rate ranging from .25% to .375%, calculated on the
proceeds of each auction. For the six months ended April 30, 2005, MLPF&S
earned $410,056 as commissions.
5. Subsequent Event:
The Fund paid a tax-exempt income dividend to holders of Common Stock in
the amount of $.080000 per share on May 27, 2005 to shareholders of record
on May 13, 2005.
Dividend Policy
The Fund's dividend policy is to distribute all or a portion of its net
investment income to its shareholders on a monthly basis. In order to
provide shareholders with a more stable level of dividend distributions,
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 Net Assets, which comprises part of the financial
information included in this report.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
Officers and Directors
Robert C. Doll, Jr., President and Director
James H. Bodurtha, Director
Joe Grills, Director
Herbert I. London, Director
Roberta Cooper Ramo, Director
Robert S. Salomon, Jr., Director
Stephen B. Swensrud, Director
Kenneth A. Jacob, Senior Vice President
John M. Loffredo, Senior Vice President
William R. Bock, Vice President
Donald C. Burke, Vice President and Treasurer
Jeffrey Hiller, Chief Compliance Officer
Alice A. Pellegrino, Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agents
Common Stock:
EquiServe
P.O. Box 43010
Providence, RI 02940-3010
Preferred Stock:
The Bank of New York
101 Barclay Street - 7 West
New York, NY 10286
NYSE Symbol
MYI
Effective January 1, 2005, Terry K. Glenn retired as President and
Director of MuniYield Insured Fund, Inc. The Fund's Board of Directors
wishes Mr. Glenn well in his retirement.
Effective January 1, 2005, Robert C. Doll, Jr. became President and
Director of the Fund.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission ("SEC") for the first and third
quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are
available on the SEC's Web site at http://www.sec.gov. The Fund's Forms
N-Q may also be reviewed and copied at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the Public Reference Room
may be obtained by calling 1-800-SEC-0330.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
Electronic Delivery
The Fund offers electronic delivery of communications to its shareholders.
In order to receive this service, you must register your account and
provide us with e-mail information. To sign up for this service, simply
access this Web site at http://www.icsdelivery.com/live and follow the
instructions. When you visit this site, you will obtain a personal
identification number (PIN). You will need this PIN should you wish to
update your e-mail address, choose to discontinue this service and/or make
any other changes to the service. This service is not available for
certain retirement accounts at this time.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2005
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this semi-
annual report
Item 4 - Principal Accountant Fees and Services - Not Applicable to this
semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable to this
semi-annual report
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable to this semi-
annual report
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
Not Applicable to this semi-annual report
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - Not
Applicable
Item 11 - Controls and Procedures
11(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others
particularly during the period in which this report is being
prepared. The registrant's certifying officers have determined
that the registrant's disclosure controls and procedures are
effective based on our evaluation of these controls and procedures
as of a date within 90 days prior to the filing date of this
report.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act
(17 CFR 270.30a-3(d)) that occurred during the last fiscal half-
year of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - Not Applicable to this semi-annual report
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
MuniYield Insured Fund, Inc.
By: /s/ Robert C. Doll, Jr.
-------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
MuniYield Insured Fund, Inc.
Date: June 20, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the dates indicated.
By: /s/ Robert C. Doll, Jr.
-------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
MuniYield Insured Fund, Inc.
Date: June 20, 2005
By: /s/ Donald C. Burke
-------------------------------
Donald C. Burke,
Chief Financial Officer of
MuniYield Insured Fund, Inc.
Date: June 20, 2005