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 811-6540
Name of Fund: MuniYield Insured Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Terry K. Glenn, President,
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: 10/31/04
Date of reporting period: 11/01/03 - 04/30/04
Item 1 - Report to Stockholders
(BULL LOGO)
Merrill Lynch Investment Managers
www.mlim.ml.com
MuniYield Insured Fund, Inc.
Semi-Annual Report
April 30, 2004
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) on www.mutualfunds.ml.com;
and (3) on the Securities and Exchange Commission's website at
http://www.sec.gov.
MuniYield Insured Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
(GO PAPERLESS LOGO)
It's Fast, Convenient, & Timely!
To sign up today, go to www.icsdelivery.com/live.
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. Of course, increases in
short-term interest rates would reduce (and even eliminate) the
dividends of the Common Stock.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term
investments, and therefore the Common Stock shareholders are the
beneficiaries of the incremental yield. However, if short-term
interest rates rise, narrowing the differential between short-term
and long-term interest rates, the incremental yield pickup on the
Common Stock will be reduced or eliminated completely. At the same
time, the market value 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 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 such securities. As of April 30, 2004,
the percentage of the Fund's total net assets invested in inverse
floaters was 14.10%.
Swap Agreements
The Fund may also 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.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2004
A Letter From the President
Dear Shareholder
For the six-month and 12-month periods ended April 30, 2004, the
Lehman Brothers Municipal Bond Index posted returns of +1.19% and
+2.68%, respectively. Its taxable counterpart, the Lehman Brothers
Aggregate Bond Index, had returns of +1.25% and +1.82% for the same
periods. Amid considerable month-to-month volatility, tax-exempt
bond yields rose over the past year, although not to the same extent
as 10-year U.S. Treasury yields. In all, tax-exempt securities
continued to be an attractive fixed income investment alternative.
As of April month-end, the Federal Reserve Board maintained its
accommodative policy stance, although a better-than-expected
employment report for the month of March prompted speculation that
an interest rate increase could come sooner than many had expected.
On April 2, 2004, the good news on the employment front - previously
the one dim spot in an otherwise bright economic picture - helped
prompt the yield on the 10-year Treasury bond to spike nearly 25
basis points (.25%), from 3.91% to 4.15%. Market watchers continue
to monitor the economic data and Federal Reserve Board language for
indications of interest rate direction. If economic growth maintains
its recent pace and employment figures continue to improve, many
believe it is just a matter of time before interest rates move
upward.
Equity markets, in the meantime, gleaned support from the improving
economic environment and provided attractive returns. For the
six-month and 12-month periods ended April 30, 2004, the Standard &
Poor's 500 Index returned +6.27% and +22.88%, respectively.
Significant fiscal and monetary stimulus in 2003, including low
interest rates and tax cuts, has opened the door to consumer
spending, capital spending, increases in exports and long-awaited
job growth. As expected, these developments have led the way to
improvements in corporate earnings - a positive for stock markets.
The events and efforts of the past year leave us with a much
stronger economy today. Of course, markets will always fluctuate,
and there are many uncertainties - not the least of which are
geopolitical in nature - which can translate into negative market
movements. Keeping this in mind, we encourage you to revisit your
portfolio and your asset allocation strategy to ensure you are well
positioned to take advantage of the opportunities that lie ahead.
Importantly, your financial advisor can help you develop a strategy
most suitable for your circumstances through all types of market and
economic cycles.
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,
(Terry K. Glenn)
Terry K. Glenn
President and Director
MUNIYIELD INSURED FUND, INC., APRIL 30, 2004
A Discussion With Your Fund's Portfolio Manager
We continued to focus on premium-coupon bonds with longer
maturities, usually in the 20-year - 30-year range, where we found
the best opportunity to enhance yield while seeking to preserve the
Fund's net asset value.
Describe the recent market environment relative to municipal bonds.
For much of the six-month period, a positive economic backdrop
helped bond prices to move higher as yields, which typically move
opposite of prices, declined. In early April, however, a
surprisingly strong monthly employment report triggered fears that
the long-accommodative Federal Reserve Board might raise interest
rates sooner than many had expected. As a result, bond yields rose
(prices fell) sharply for the remainder of the period. At the end of
April, long-term U.S. Treasury bond yields had climbed to 5.13%,
representing an increase of approximately 15 basis points (.15%)
over the past six months. Ten-year U.S. Treasury note yields stood
at 4.30% as of period-end, an increase of more than 20 basis points.
Tax-exempt bond yields generally mimicked the movement of their
taxable counterparts, although volatility in the municipal market
was more subdued. Long-term revenue bond yields, as measured by the
Bond Buyer Revenue Bond Index, rose just four basis points over the
past six months. For the same period, yields on Aaa-rated issues
maturing in 30 years rose approximately 10 basis points to 4.93%
while yields on 10-year, Aaa-rated issues increased more than 16
basis points to nearly 4%, according to Municipal Market Data. The
more marked increase in 10-year bond yields may be attributed to
the fact that recent issuance has been heavily concentrated in the
10-year - 20-year range. The resulting supply imbalance prompted
higher intermediate bond yields (and lower prices). Longer-maturity
and lower-rated issues continued to benefit from more favorable
supply/demand factors and, therefore, have seen less price
depreciation. For the six-month period as a whole, municipal bond
supply declined approximately 5% compared to the same period a year
ago.
While investor enthusiasm for stocks has taken some attention away
from fixed income markets, overall demand for tax-exempt municipal
bonds has remained positive. Recent Federal Reserve Board statistics
showed that U.S. household holdings of municipal securities
increased by more than $25 billion during the fourth quarter of 2003
to approximately $680 billion. In addition, data from the Investment
Company Institute indicates that, in just the first three months of
2004, tax-exempt bond funds have seen net new cash flows of almost
$640 million.
How did the Fund perform during the period in light of the existing
market conditions?
For the six-month period ended April 30, 2004, the Common Stock of
MuniYield Insured Fund, Inc. had net annualized yields of 6.41% and
7.00%, based on a period-end per share net asset value of $15.07 and
a per share market price of $13.81, respectively, and $.482 per
share income dividends. Over the same period, the total investment
return on the Fund's Common Stock was +1.35%, based on a change in
per share net asset value from $15.36 to $15.07, and assuming
reinvestment of $.480 per share ordinary income dividends.
For the six-month period ended April 30, 2004, the Fund's Auction
Market Preferred Stock (AMPS) had average yields of: .92% for Series
A; .93% for Series B; .87% for Series C; .96% for Series D; .94% for
Series E; .87% for Series F; and .98% for Series G.
The Fund's total return, based on net asset value, for the period
exceeded that of its comparable Lipper category of Insured Municipal
Debt Funds (Leveraged), which had a return of +1.01%. (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
also provided an above-average yield to shareholders relative to the
Lipper group average. Performance during the period reflects our
continued focus on enhancing the Fund's dividend yield and
preserving net asset value in a volatile interest rate environment.
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 included in 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 return based on changes in the Fund's net asset value.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2004
What changes were made to the portfolio during the period?
Throughout the past six months, we continued to focus on buying
premium-coupon bonds with longer maturities, usually in the
20-year - 30-year range. Our observations and research reveal
that the longer end of the yield curve has held firm, while the
10-year - 15-year sector has continued to be volatile. By taking
advantage of the steep yield curve, we generally have been able to
increase the Fund's yield while muting its price volatility.
We purchased uninsured California general obligation bonds and state-
appropriated bonds at what we believed were relatively attractive
yields compared to the overall municipal market. Our belief was that
conditions in the state would improve along with the strengthening
national economy, and California debt securities would benefit as a
result. Midway through the period, we took some profits and reduced
the duration of these bonds through the sale of some of the
longer-maturity issues. Ultimately, this move proved premature
as rates continued to decline. Later in the period, we were able
to take advantage of attractively priced insurance and insured
$25 million of the California-appropriated bonds. (State-
appropriated bonds are issued by an agency. The state legislature
must approve an appropriation in the state budget to pay for the
bonds. If the agency has a shortfall, the legislature would have to
approve the coverage of the shortfall. Because the state coverage is
not a certainty, these bonds tend to be a lower credit than general
obligation bonds.) The insurance increased the market value of these
bonds, and this had a positive impact on Fund performance.
Finally, late in the period, we increased the Fund's cash reserves
to 3% of assets. This action was designed to make the portfolio more
defensive and less sensitive to rising interest rates.
In terms of leverage, the Fund's borrowing costs remained around 1%
throughout most of the six-month period. These attractive funding
levels, in combination with the steep municipal yield curve,
continued to generate significant income to the Fund's Common Stock
shareholders. The Federal Reserve Board appears poised to begin
raising short-term interest rates, most likely later in 2004. The
increase, however, is expected to be gradual and should not have a
material impact on the positive advantage leverage has had on the
Fund's Common Stock yield. 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 31.99% of total 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 portfolio's position at the close of
the period?
The economy is showing signs of real growth - including job growth,
which until recently had been one of the last areas of weakness.
With preliminary signs of higher inflation on the horizon, the
market already has begun to anticipate a near-term change in the
Federal Reserve Board's interest rate policy. Given this scenario,
we are looking for further flattening of the yield curve and
significant underperformance in the 10-year - 15-year range.
Against this backdrop, we plan to adopt a more defensive market
posture. Specifically, we expect to focus on premium-coupon bonds
with 20-year - 27-year maturities as well as maintain the
portfolio's existing hedge position. These actions should moderate
the Fund's downside risk and, we believe, represent a prudent
investment strategy for the expected market environment. Finally, we
also plan to collapse the Fund's shorter-maturity derivative
holdings in an effort to provide the portfolio with additional
downside protection.
William R. Bock
Vice President and Portfolio Manager
May 17, 2004
MUNIYIELD INSURED FUND, INC., APRIL 30, 2004
Schedule of Investments (In Thousands)
S&P Moody's Face
State Ratings Ratings Amount Municipal Bonds Value
Alaska--1.0% AAA Aaa $ 3,695 Alaska Energy Authority, Power Revenue Refunding Bonds
(Bradley Lake), Fourth Series, 6% due 7/01/2018 (g) $ 4,241
AAA Aaa 5,145 Alaska State Housing Finance Corporation, Revenue Refunding
Bonds, RITR, Series 2, 10.28% due 12/01/2024 (d)(i)(k)(m) 5,389
California-- AAA Aaa 10,000 Alameda Corridor Transportation Authority, California, Capital
34.7% Appreciation Revenue Refunding Bonds, Subordinate Lien, Series A,
5.474%** due 10/01/2024 (a) 6,321
AAA Aaa 8,300 California Infrastructure and Economic Development Bank, Bay Area
Toll Bridges Revenue Bonds, First Lien, Series A, 5% due 7/01/2025 (c) 8,348
AAA Aaa 24,250 California Pollution Control Financing Authority, PCR, Refunding
(Pacific Gas & Electric), AMT, Series A, 5.35% due 12/01/2016 (i) 25,582
California State Department of Water Resources, Power Supply
Revenue Bonds, Series A:
AAA Aaa 10,000 5.25% due 5/01/2020 (i) 10,452
BBB+ A3 3,675 5.375% due 5/01/2021 3,786
AAA Aaa 10,010 5.375% due 5/01/2022 (i) 10,539
BBB Baa1 17,985 California State, GO, 5% due 2/01/2033 17,090
California State, GO, Refunding:
BBB Baa1 20,000 5.125% due 6/01/2031 19,415
NR* Aaa 5,000 RIB, Series 471X, 9.63% due 9/01/2024 (i)(k) 5,412
California State Public Works Board, Lease Revenue Bonds:
BBB- Baa2 5,500 (Department of Corrections), Series C, 5.25% due 6/01/2028 5,386
BBB- Baa2 2,255 (Department of General Services), Series D, 5.25% due 6/01/2028 2,208
BBB- Baa2 5,250 (Department of Mental Health--Coalinga State Hospital),
Series A, 5.125% due 6/01/2029 5,032
California State, Various Purpose, GO:
BBB Baa1 10,000 5.25% due 11/01/2029 9,848
BBB Baa1 5,000 5.50% due 4/01/2030 5,098
BBB Baa1 13,325 5.50% due 11/01/2033 13,612
BBB Baa1 5,000 5.25% due 4/01/2034 4,931
A A3 7,740 California Statewide Communities Development Authority, Health
Facility Revenue Bonds (Memorial Health Services), Series A, 6%
due 10/01/2023 8,194
AAA Aaa 5,235 Calleguas-Las Virgenes, California, Public Finance Authority
Revenue Bonds (Calleguas Municipal Water District Project), Series A,
5% due 7/01/2028 (i) 5,238
AAA Aaa 4,000 Garden Grove, California, Community Development Agency, Tax
Allocation Refunding Bonds (Garden Grove Community Project), 5%
due 10/01/2025 (a) 4,006
Golden State Tobacco Securitization Corporation of California,
Tobacco Settlement Revenue Bonds:
NR* Aaa 12,500 RIB, Series 920X, 9.66% due 6/01/2033 (c)(k) 13,421
NR* Baa3 3,000 Series A-2, 7.90% due 6/01/2042 3,189
BBB Baa3 2,200 Series A-3, 7.875% due 6/01/2042 2,335
BBB Baa3 12,100 Series A-4, 7.80% due 6/01/2042 12,783
BBB- Baa2 5,000 Series B, 5.625% due 6/01/2038 4,981
AAA NR* 11,245 Los Angeles, California, Community College District, DRIVERS,
Series 216, 9.655% due 8/01/2018 (i)(k) 13,182
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
DATES Daily Adjustable Tax-Exempt Securities
DRIVERS Derivative Inverse Tax-Exempt Receipts
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, 2004
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
State Ratings Ratings Amount Municipal Bonds Value
California AAA Aaa $16,110 Los Angeles, California, Community Redevelopment Agency, Community
(concluded) Redevelopment Financing Authority Revenue Bonds (Bunker Hill Project),
Series A, 5% due 12/01/2027 $ 16,065
AAA Aaa 4,000 Los Angeles, California, Harbor Department Revenue Bonds, RITR,
AMT, Series RI-7, 10.975% due 11/01/2026 (i)(k) 4,696
AAA NR* 6,265 Los Angeles, California, Unified School District, GO, DRIVERS,
Series 261, 9.454% due 7/01/2022 (c)(k) 6,981
Los Angeles, California, Water and Power Revenue Bonds (Power System),
Series B (g):
AAA Aaa 3,365 5% due 7/01/2023 3,412
AAA Aaa 6,000 5% due 7/01/2025 6,021
AAA Aaa 3,315 North Orange County, California, Community College District, GO,
Series A, 5% due 8/01/2023 (i) 3,369
AAA Aaa 9,465 Port Oakland, California, Revenue Refunding Bonds, AMT, Series L,
5.375% due 11/01/2027 (c) 9,667
NR* Aaa 6,000 Port Oakland, California, Trust Receipts, Revenue Bonds, AMT,
Class R, Series K, 10.06% due 11/01/2021 (c)(k) 6,767
AAA Aaa 445 Sacramento, California, Municipal Utility District, Electric Revenue
Bonds, Series I, 6% due 1/01/2024 (i) 455
AAA Aaa 1,280 San Diego, California, Unified School District, Election 1998, GO,
Series D, 5.25% due 7/01/2024 (c) 1,331
AAA Aaa 5,000 San Francisco, California, City and County, COP (San Francisco
Courthouse Project), 5.875% due 4/01/2021 (g) 5,259
AAA Aaa 7,660 San Francisco, California, City and County Public Utilities
Commission, Water Revenue Refunding Bonds, Series A, 5% due
11/01/2027 (i) 7,676
AAA Aaa 6,895 San Jose, California, Redevelopment Agency, Tax Allocation Refunding
Bonds (Merged Area Redevelopment Project), 5.60% due 8/01/2019 (i) 7,517
AAA Aaa 3,000 Santa Clara, California, Subordinated Electric Revenue Bonds,
Series A, 5% due 7/01/2025 (i) 3,011
AAA Aaa 3,750 University of California, General Revenue Refunding Bonds, Series A,
5% due 5/15/2024 (a) 3,793
AAA Aaa 9,000 University of California, Hospital Revenue Bonds (UCLA Medical
Center), Series A, 5.25% due 5/15/2030 (a) 9,188
AAA Aaa 8,720 University of California Revenue Bonds (Multiple Purpose Projects),
Series Q, 5% due 9/01/2024 (g) 8,823
Colorado--0.8% AA Baa2 3,410 Boulder County, Colorado, Hospital Development Revenue Bonds
(Longmont United Hospital Project), 6% due 12/01/2030 (f) 3,607
A1+ VMIG1++ 3,600 Moffat County, Colorado, PCR, Refunding (Pacificorp Projects),
VRDN, 1.07% due 5/01/2013 (a)(h) 3,600
Connecticut-- AAA Aaa 2,500 Connecticut State, GO, Series C, 5% due 4/01/2024 (c) 2,545
0.9% AAA Aaa 5,730 Connecticut State, HFA, Revenue Bonds (Housing Mortgage
Finance Program), AMT, Sub-Series A-2, 5.50% due 11/15/2022 5,952
District of AAA Aaa 13,000 Metropolitan Washington, D.C. Airports Authority, Airport System
Columbia--1.4% Revenue Bonds, AMT, Series B, 5% due 10/01/2027 (g) 12,751
Florida--7.2% NR* Aaa 3,500 Escambia County, Florida, Health Facilities Authority, Health
Facility Revenue Bonds (Florida Health Care Facility Loan), 5.95%
due 7/01/2020 (a) 3,651
AAA Aaa 3,270 Florida Municipal Loan Council Revenue Bonds, Series B, 5% due
12/01/2028 (i) 3,266
AAA Aaa 31,095 Miami-Dade County, Florida, Aviation Revenue Bonds (Miami
International Airport), AMT, Series A, 5% due 10/01/2030 (c) 30,512
AAA Aaa 10,750 Miami-Dade County, Florida, Aviation Revenue Refunding Bonds
(Miami International Airport), AMT, 5.375% due 10/01/2025 (c) 11,008
Orange County, Florida, Health Facilities Authority, Hospital
Revenue Bonds:
A A3 5,000 (Adventist Health System), 5.625% due 11/15/2032 5,155
A- A2 2,000 (Orlando Regional Healthcare), 5.75% due 12/01/2032 2,043
AAA Aaa 5,000 Palm Beach County, Florida, School Board COP, Series A, 5% due
8/01/2029 (c) 5,004
A1+ VMIG1++ 6,800 Pinellas County, Florida, Health Facilities Authority, Revenue
Refunding Bonds (Pooled Hospital Loan Program), DATES, 1.10% due
12/01/2015 (a)(h) 6,800
Georgia--1.3% A1+ VMIG1++ 4,550 Atlanta, Georgia, Water and Wastewater Revenue Bonds, VRDN,
Series C, 1.09% due 11/01/2041 (g)(h) 4,550
AAA Aaa 7,500 Gwinnett County, Georgia, Development Authority, COP (Gwinnett
County Public Schools Project), 5.25% due 1/01/2025 (i) 7,711
MUNIYIELD INSURED FUND, INC., APRIL 30, 2004
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
State Ratings Ratings Amount Municipal Bonds Value
Hawaii--2.6% Hawaii State, GO:
AAA Aaa $ 2,000 Series CX, 5.50% due 2/01/2021 (g) $ 2,138
AAA Aaa 9,000 Series DD, 5.25% due 5/01/2024 (i) 9,319
AAA Aaa 12,845 Honolulu, Hawaii, City and County GO, Refunding, Series A, 5.25%
due 3/01/2028 (i) 13,166
Illinois-- AAA Aaa 10,000 Chicago, Illinois, GO (City Colleges of Chicago Capital Improvement
9.6% Project), 5%** due 1/01/2030 (c) 2,356
AAA Aaa 2,350 Chicago, Illinois, Midway Airport Revenue Bonds, AMT, Series A,
6.25% due 1/01/2024 (i) 2,404
Chicago, Illinois, O'Hare International Airport Revenue Bonds, AMT:
AAA NR* 13,115 DRIVERS, Series 368, 9.57% due 7/01/2011 (i)(k) 15,377
AAA NR* 7,500 DRIVERS, Series 369, 9.57% due 7/01/2011 (e)(k) 8,674
AAA Aaa 13,000 Third Lien, Series B-2, 5.25% due 1/01/2027 (i) 13,087
AAA Aaa 16,400 Chicago, Illinois, O'Hare International Airport Revenue Refunding
Bonds, Third Lien, AMT, Series C-2, 5.25% due 1/01/2030 (g) 16,461
AAA Aaa 10,000 Illinois State, GO, First Series, 5.50% due 4/01/2016 (g) 10,857
AAA Aa3 2,000 Illinois State Sales Tax Revenue Bonds, 6.125% due 6/15/2016 2,276
NR* Aaa 6,035 Mc Lean and Woodford Counties, Illinois, Community Unit, School
District Number 005, GO, Refunding, 6.375% due 12/01/2016 (g) 7,042
Metropolitan Pier and Exposition Authority, Illinois, Dedicated
State Tax Revenue Bonds (McCormick Place Expansion), Series A (i):
AAA Aaa 10,000 5.10%** due 6/15/2031 2,143
AAA Aaa 30,000 5.04%** due 12/15/2031 6,249
AAA NR* 2,400 Metropolitan Pier and Exposition Authority, Illinois, Dedicated
State Tax Revenue Refunding Bonds, DRIVERS, Series 269, 10.117%
due 6/15/2023 (i)(k) 2,841
Indiana--2.0% AAA Aaa 11,805 Indiana Transportation Finance Authority, Highway Revenue Bonds,
Series A, 5% due 6/01/2024 (g) 11,864
AAA Aaa 7,000 Indianapolis, Indiana, Local Public Improvement Bond Bank Revenue
Bonds (Waterworks Project), Series A, 5.125% due 7/01/2027 (i) 7,073
Kansas--2.3% AAA Aaa 20,250 Burlington, Kansas, PCR, Refunding (Kansas Gas and Electric Company
Project), 7% due 6/01/2031 (i) 21,329
Louisiana-- AAA Aaa 2,250 Louisiana Local Government, Environmental Facilities, Community
0.3% Development Authority Revenue Bonds (Capital Projects and Equipment
Acquisition), Series A, 6.30% due 7/01/2030 (a) 2,602
Massachusetts-- AAA Aaa 10,000 Massachusetts State, Consolidated Loan, GO, Series B, 5.50% due
1.5% 3/01/2012 (g)(j) 11,137
AAA Aaa 2,500 Massachusetts State, HFA, Housing Development Revenue Refunding Bonds,
Series B, 5.40% due 12/01/2028 (i) 2,554
Michigan--2.5% A1+ VMIG1++ 4,500 Detroit, Michigan, Sewer Disposal Revenue Bonds, Senior Lien, VRDN,
Series B, 1.09% due 7/01/2033 (g)(h) 4,500
Michigan State Strategic Fund, Limited Obligation Revenue Refunding
Bonds (Detroit Edison Company Project), AMT (e):
AAA Aaa 8,000 Series A, 5.50% due 6/01/2030 8,240
AAA Aaa 5,000 Series C, 5.65% due 9/01/2029 5,172
AAA Aaa 5,000 Monroe County, Michigan, PCR (Detroit Edison Company Project), AMT,
Series CC, 6.55% due 6/01/2024 (i) 5,071
Minnesota--1.8% Minneapolis and Saint Paul, Minnesota, Metropolitan Airports
Commission, Airport Revenue Bonds (c):
AAA Aaa 10,000 Series A, 5.90% due 1/01/2029 10,931
AAA Aaa 2,500 Sub-Series C, 5.50% due 1/01/2016 2,721
AAA Aaa 2,500 Sub-Series C, 5.50% due 1/01/2017 2,719
AA+ Aa1 685 Minnesota State, HFA, S/F Mortgage Revenue Bonds, AMT, Series L,
6.70% due 7/01/2020 699
Missouri--1.4% AAA Aaa 10,250 Missouri State Health and Educational Facilities Authority Revenue
Bonds (SSM Health Care System), Series A, 5.25% due 6/01/2028 (a) 10,402
AAA Aaa 2,800 Saint Louis, Missouri, Airport Revenue Bonds (Airport Development
Program), Series A, 5.625% due 7/01/2019 (i) 3,040
MUNIYIELD INSURED FUND, INC., APRIL 30, 2004
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
State Ratings Ratings Amount Municipal Bonds Value
Nevada--10.0% Clark County, Nevada, School District, GO (j):
AAA Aaa $15,000 6% due 6/15/2006 (c) $ 16,422
AAA Aaa 10,830 Series A, 5.50% due 6/15/2010 (i) 12,147
BBB+ Baa1 6,000 Henderson, Nevada, Health Care Facilities Revenue Bonds
(Catholic Healthcare West), Series A, 5.625% due 7/01/2024 5,911
AAA Aaa 5,000 Humboldt County, Nevada, PCR, Refunding (Sierra Pacific Project),
6.55% due 10/01/2013 (a) 5,207
AAA Aaa 3,000 Las Vegas, Nevada, New Convention and Visitors Authority Revenue
Bonds, 6% due 7/01/2019 (a) 3,396
AAA Aaa 20,375 Nevada State, Nevada Municipal Bond Bank, GO, Series A, 5.50% due
11/01/2025 (c) 21,269
AAA Aaa 3,130 Reno, Nevada, Capital Improvement Revenue Bonds, 5.50% due
6/01/2019 (c) 3,377
Washoe County, Nevada, Gas Facilities Revenue Bonds (Sierra Pacific
Power Company), AMT:
AAA Aaa 15,000 6.65% due 12/01/2017 (a) 15,206
AAA Aaa 5,000 6.55% due 9/01/2020 (i) 5,138
AAA Aaa 5,000 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra Pacific
Power Company), AMT, 6.65% due 6/01/2017 (i) 5,258
New BBB+ Baa1 2,900 New Hampshire Health and Education Facilities Authority, Revenue
Hampshire--0.3% Refunding Bonds (Elliot Hospital), Series B, 5.60% due 10/01/2022 2,904
New Mexico-- NR* A2 1,635 New Mexico Educational Assistance Foundation, Student Loan Revenue
0.3% Refunding Bonds (Student Loan Program), AMT, First Sub-Series A-2,
6.65% due 11/01/2025 1,659
AAA NR* 1,120 New Mexico Mortgage Finance Authority, S/F Mortgage Revenue Bonds,
AMT, Series C-2, 6.95% due 9/01/2031 (l) 1,182
New York--8.1% AAA Aaa 12,500 Metropolitan Transportation Authority, New York, Commuter Facilities
Revenue Refunding Bonds, Series B, 5.125% due 7/01/2024 (a)(b) 12,841
AAA Aaa 8,740 Metropolitan Transportation Authority, New York, Transit Facilities
Revenue Refunding Bonds, Series B, 4.75% due 7/01/2026 (b)(c) 8,645
AAA Aaa 25,830 New York City, New York, City Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds, RITR, Series FR-6, 10.025%
due 6/15/2026 (i)(k) 29,799
NR* Aaa 5,920 New York City, New York, GO, RIB, Series 394, 10.352% due
8/01/2016 (i)(k) 7,416
AAA Aaa 9,000 Port Authority of New York and New Jersey, Consolidated Revenue
Refunding Bonds, One Hundred Thirty-Fifth Series, 5% due 9/15/2027 (e) 9,033
A A3 8,160 Suffolk County, New York, IDA, IDR (Keyspan--Port Jefferson), AMT,
5.25% due 6/01/2027 7,974
North AAA Aa1 11,980 Raleigh, North Carolina, Combined Enterprise System Revenue Bonds,
Carolina--1.3% 5% due 3/01/2031 12,016
North Dakota-- AAA Aaa 2,500 Grand Forks, North Dakota, Health Care Facilities Revenue Bonds
0.6% (United Hospital Obligated Group), 6.25% due 12/01/2024 (i) 2,606
NR* Aa2 3,250 North Dakota State Housing Finance Agency, Home Mortgage Revenue
Refunding Bonds (Housing Finance Program), AMT, Series A, 6.40% due
7/01/2020 3,436
Ohio--3.1% Cincinnati, Ohio, City School District, Classroom Facilities
Construction & Improvement, GO (g):
AAA Aaa 11,000 5% due 12/01/2024 11,116
AAA Aaa 8,300 5% due 12/01/2031 8,300
AAA Aaa 10,000 Franklin County, Ohio, Hospital Revenue Refunding Bonds (OhioHealth
Corporation), Series C, 5% due 5/15/2033 (i) 9,909
Oklahoma--2.7% Oklahoma State Industries Authority, Revenue Refunding Bonds (i):
AAA Aaa 15,000 (Health System--Obligation Group), Series A, 5.75% due 8/15/2029 15,868
A1+ VMIG1++ 9,560 (Integris Baptist), VRDN, Series B, 1.10% due 8/15/2029 (h) 9,560
Oregon--2.3% Multnomah-Clackamas Counties, Oregon, Gresham-Barlo School District
Number 10JT, GO (g):
AAA Aaa 2,625 5.50% due 6/15/2016 2,858
AAA Aaa 2,525 5.50% due 6/15/2017 2,744
AAA Aaa 3,035 5.50% due 6/15/2018 3,290
AAA Aaa 3,140 Oregon State Department of Administrative Services, COP, Series A,
6.25% due 5/01/2010 (a)(j) 3,673
NR* Aaa 7,500 Portland, Oregon, Sewer System Revenue Bonds, RIB, Series 386,
10.08% due 8/01/2020 (c)(k) 9,100
MUNIYIELD INSURED FUND, INC., APRIL 30, 2004
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
State Ratings Ratings Amount Municipal Bonds Value
Pennsylvania-- AAA Aaa $10,000 Pennsylvania State Public School Building Authority, School Lease
3.3% Revenue Bonds (The School District of Philadelphia Project), 5%
due 6/01/2033 (g) $ 9,939
AAA Aaa 10,000 Pennsylvania State Turnpike Commission, Oil Franchise Tax Revenue
Bonds, Sub Series B, 5% due 12/01/2031 (i) 10,000
AAA Aaa 5,175 Philadelphia, Pennsylvania, School District, GO, Series B, 5.625%
due 8/01/2021 (c) 5,565
A- NR* 5,000 Sayre, Pennsylvania, Health Care Facilities Authority Revenue Bonds
(Guthrie Health Issue), Series B, 1% due 12/01/2031 5,680
South AAA Aaa 2,500 Florence County, South Carolina, Hospital Revenue Refunding Bonds
Carolina--1.0% (McLeod Regional Medical Center Project), Series A, 5.25% due
11/01/2027 (g) 2,549
AAA A3 2,000 Richland-Lexington, South Carolina, Airport District, Airport Revenue
Refunding Bonds (Columbia Metropolitan Airport), AMT, 5.125% due
1/01/2025 (g) 1,908
NR* A1 4,200 Spartanburg County, South Carolina, Solid Waste Disposal Facilities
Revenue Bonds (BMW Project), AMT, 7.55% due 11/01/2024 4,498
Tennessee-- Sevier County, Tennessee, Public Building Authority Revenue Bonds,
1.8% Local Government Public Improvement IV-I, VRDN (a)(h):
NR* VMIG1++ 3,725 Series E-4, 1.09% due 6/01/2020 3,725
NR* VMIG1++ 2,000 Series E-5, 1.09% due 6/01/2020 2,000
Tennessee HDA, Revenue Bonds (Homeownership Program), AMT, Series 2C:
AA Aa2 1,795 6.05% due 7/01/2012 1,890
AA Aa2 2,250 6.15% due 7/01/2014 2,349
Tennessee HDA, Revenue Refunding Bonds (Homeownership Program), AMT,
Series A (g):
AAA Aaa 4,135 5.25% due 7/01/2022 4,236
AAA Aaa 2,930 5.35% due 1/01/2026 2,984
Texas--20.6% A- Aa3 9,000 Austin, Texas, Convention Center Revenue Bonds (Convention
Enterprises Inc.), Trust Certificates, Second Tier, Series B,
5.75% due 1/01/2032 9,179
A1+ VMIG1++ 31,600 Bell County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds (Scott & White Memorial Hospital), VRDN,
Series 2001-2, 1.07% due 8/15/2031 (h)(i) 31,600
AAA Aaa 1,880 Bexar, Texas, Metropolitan Water District, Waterworks System Revenue
Refunding Bonds, 6.35% due 5/01/2025 (i) 1,993
AAA NR* 10,000 Dallas-Fort Worth, Texas, International Airport Revenue Bonds,
DRIVERS, AMT, Series 353, 9.57% due 5/01/2011 (i)(k) 10,536
AAA NR* 6,750 Dallas-Fort Worth, Texas, International Airport Revenue Refunding
Bonds, DRIVERS, AMT, Series 336Z, 9.831% due 11/01/2026 (c)(k) 7,238
AAA Aaa 9,000 Fort Bend County, Texas, Toll Road Revenue Bonds, Subordinate Lien,
5% due 3/01/2030 (i) 8,935
Harris County, Houston, Texas, Sports Authority, Revenue Refunding
Bonds, Senior Lien, Series G (i):
AAA Aaa 1,665 5.75% due 11/15/2019 1,804
AAA Aaa 3,500 5.75% due 11/15/2020 3,772
AAA Aaa 10,000 5.25% due 11/15/2030 10,143
A1+ VMIG1++ 10,800 Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds (Texas Children's Hospital), VRDN, Series B-1,
1.07% due 10/01/2029 (h)(i) 10,800
Harris County, Texas, Toll Road Revenue Refunding Bonds,
Senior Lien (g):
AAA A1 9,000 5.375% due 8/15/2023 9,457
AAA A1 10,000 5% due 8/15/2030 9,970
Houston, Texas, Airport System Revenue Refunding Bonds (g):
NR* Aaa 15,000 RIB, Series 845X, 9.62% due 7/01/2030 (k) 16,058
AAA Aaa 9,500 Sub-Lien, AMT, Series A, 5.70% due 7/01/2030 9,608
Houston, Texas, Community College System, GO (a):
AAA Aaa 5,000 5% due 2/15/2025 5,007
AAA Aaa 3,000 5% due 2/15/2026 2,996
AAA Aaa 4,940 Texas State Department of Housing and Community Affairs, S/F Mortgage
Revenue Bonds, AMT, Series A, 5.45% due 9/01/2023 (i)(l) 5,062
AAA Aaa 9,500 Texas State Turnpike Authority, Central Texas Turnpike System
Revenue Bonds, First Tier, Series A, 5.50% due 8/15/2039 (a) 9,882
MUNIYIELD INSURED FUND, INC., APRIL 30, 2004
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
State Ratings Ratings Amount Municipal Bonds Value
Texas AAA Aaa $ 4,000 Texas Technical University, Financing System Revenue Bonds,
(concluded) Seventh Series, 5.50% due 8/15/2019 (i) $ 4,319
AAA Aaa 10,000 Travis County, Texas, Health Facilities Development Corporation,
Revenue Refunding Bonds, RITR, Series 4, 10.25% due 11/15/2024 (a)(k) 12,936
AAA Aaa 11,240 University of Houston, Texas, University Revenue Bonds, 5.50% due
2/15/2030 (i) 11,666
Utah--4.4% A1 VMIG1++ 29,300 Emery County, Utah, PCR, Refunding (Pacificorp Projects), VRDN,
1.10% due 11/01/2024 (a)(h) 29,300
AAA Aaa 11,525 Utah Transit Authority, Sales Tax Revenue Bonds, Series A, 5%
due 6/15/2032 (g) 11,464
Vermont--0.2% AAA Aaa 1,475 Vermont HFA, S/F Housing Revenue Bonds, AMT, Series 12B, 6.30%
due 11/01/2019 (g) 1,500
Virginia--0.3% AAA Aaa 2,500 Halifax County, Virginia, IDA, Exempt Facility Revenue Refunding
Bonds (Old Dominion Electric Cooperative Project), AMT, 5.625% due
6/01/2028 (a) 2,632
Washington-- AAA Aaa 3,030 Chelan County, Washington, Public Utility District Number 001,
18.7% Consolidated Revenue Bonds (Chelan Hydro System), AMT, Series A,
5.45% due 7/01/2037 (a) 3,090
Chelan County, Washington, Public Utility District Number 001,
Consolidated Revenue Refunding Bonds (Chelan Hydro), AMT (i):
AAA Aaa 6,595 Series B, 6.35% due 7/01/2026 7,308
AAA Aaa 6,000 Series C, 5.65% due 7/01/2032 6,249
Energy Northwest, Washington, Electric Revenue Refunding Bonds
(Project Number 1) (i):
AAA Aaa 10,000 Series A, 5.75% due 7/01/2017 10,980
AAA Aaa 10,000 Series B, 6% due 7/01/2017 11,234
AAA Aaa 8,000 Pierce County, Washington, School District Number 3 (Puyallup),
GO, 5% due 12/01/2023 (g) 8,075
Port Seattle, Washington, Revenue Bonds, Series A:
AAA Aaa 3,500 5.50% due 2/01/2026 (i) 3,631
AAA Aaa 3,450 Sub-Lien, 5% due 9/01/2024 (c) 3,459
Port Seattle, Washington, Revenue Refunding Bonds (i):
AAA Aaa 7,500 Series A, 5% due 7/01/2033 7,420
AAA Aaa 19,565 Series B, AMT, 5.20% due 7/01/2029 19,630
AAA Aaa 10,000 Radford Court Properties, Washington, Student Housing Revenue Bonds,
5.75% due 6/01/2032 (i) 10,684
AAA Aaa 10,045 Redmond, Washington, Community Properties Lease Revenue Bonds
(City Hall Project), 5% due 12/01/2035 (i) 9,858
AAA Aaa 9,250 Seattle, Washington, Municipal Light and Power Revenue Bonds, 6% due
10/01/2024 (i) 10,223
AAA Aaa 1,500 Snohomish County, Washington, Public Utility District Number 001,
Electric Revenue Bonds, 5.50% due 12/01/2023 (g) 1,579
AAA Aaa 7,500 Tacoma, Washington, Electric System Revenue Refunding Bonds, Series A,
5.75% due 1/01/2020 (g) 8,217
AAA Aaa 7,250 Tacoma, Washington, Solid Waste Utility Revenue Refunding Bonds,
Series B, 5.50% due 12/01/2019 (a) 7,802
Washington State, GO:
NR* Aaa 7,965 RIB, Series 390, 10.58% due 1/01/2017 (g)(k) 9,918
AAA Aaa 3,000 Series A, 5% due 7/01/2028 (c) 3,000
AAA Aaa 7,000 Washington State Health Care Facilities Authority Revenue Bonds
(Providence Health System), Series A, 5.25% due 10/01/2021 (i) 7,172
AAA Aaa 8,395 Washington State, Motor Vehicle Fuel Tax, GO, Series F, 5%** due
12/01/2018 (a) 4,004
AAA Aaa 20,000 Washington State, Various Purpose, GO, Series A, 5.625% due
7/01/2025 (i) 21,108
West AAA Aaa 4,425 Harrison County, West Virginia, County Commission for Solid Waste
Virginia--0.7% Disposal Revenue Bonds (Monongahela Power), AMT, Series C, 6.75%
due 8/01/2024 (a) 4,565
AAA Aaa 2,100 West Virginia State Water Development Authority, Water Development
Revenue Refunding Bonds (Loan Program), Series A-1, 5% due
11/01/2026 (a) 2,107
Wisconsin--1.5% AA- Aa3 2,500 Madison, Wisconsin IDR (Madison Gas & Electric Co.), Refunding, AMT,
Series A, 5.875% due 10/01/2034 2,594
AAA NR* 6,840 Wisconsin Public Power Inc., Power Supply System Revenue Bonds,
DRIVERS, Series 285, 10.114% due 7/01/2023 (i)(k) 8,216
BBB+ NR* 3,395 Wisconsin State Health and Educational Facilities Authority Revenue
Bonds (Synergyhealth Inc.), 6% due 11/15/2032 3,419
Total Municipal Bonds (Cost--$1,380,377)--152.5% 1,426,631
MUNIYIELD INSURED FUND, INC., APRIL 30, 2004
Schedule of Investments (concluded) (In Thousands)
Shares
Held Short-Term Securities Value
131 Merrill Lynch Institutional Tax-Exempt Fund++++ $ 131
Total Short-Term Securities (Cost--$131)--0.0% 131
Total Investments (Cost--$1,380,508)--152.5% 1,426,762
Liabilities in Excess of Other Assets--(5.5%) (51,113)
Preferred Stock, at Redemption Value--(47.0%) (440,012)
---------
Net Assets Applicable to Common Stock--100.0% $ 935,637
=========
*Not Rated.
**Represents a zero coupon or step bond; the interest rate shown
reflect the effective yield at the time of purchase by the Fund.
++Highest short-term rating by Moody's Investors Service, Inc.
++++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) are as
follows:
(in Thousands)
Net Dividend
Affiliate Activity Income
Merrill Lynch Institutional
Tax-Exempt Fund -- $1
(a)AMBAC Insured.
(b)Escrowed to maturity.
(c)FGIC Insured.
(d)FHA Insured.
(e)XL Capital Insured.
(f)Radian Insured.
(g)FSA Insured.
(h)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, 2004.
(i)MBIA Insured.
(j)Prerefunded.
(k)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, 2004.
(l)GNMA/FNMA Collateralized.
(m)FNMA Collateralized.
Forward interest rate swaps entered into as of April 30, 2004 were
as follows:
(in Thousands)
Notional Unrealized
Amount Appreciation
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate and
pay a fixed rate equal to 4.366%
Broker, J.P. Morgan Chase Bank
Expires July 2024 $153,000 $ 730
See Notes to Financial Statements.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2004
Statement of Net Assets
As of April 30, 2004
Assets
Investments in unaffiliated securities, at value
(identified cost--$1,380,376,883) $ 1,426,630,911
Investments in affiliated securities, at value (identified cost--$131,009) 131,009
Unrealized appreciation on forward interest rate swaps 729,963
Cash 67,895
Receivables:
Securities sold $ 25,246,219
Interest 24,612,683
Dividends from affiliates 3 49,858,905
---------------
Prepaid expenses and other assets 24,741
---------------
Total assets 1,477,443,424
---------------
Liabilities
Payables:
Securities purchased 100,333,773
Dividends to Common Stock shareholders 672,655
Investment adviser 666,756
Other affiliates 9,696 101,682,880
---------------
Accrued expenses 111,679
---------------
Total liabilities 101,794,559
---------------
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 and
2,400 Series G Shares of AMPS* issued and outstanding at $25,000 per share
liquidation preference) 440,011,736
---------------
Net Assets Applicable to Common Stock
Net assets applicable to Common Stock $ 935,637,129
===============
Analysis of Net Assets Applicable to Common Stock
Common Stock, par value $.10 per share (62,099,095 shares issued and
outstanding) $ 6,209,910
Paid-in capital in excess of par 869,788,780
Undistributed investment income--net $ 15,108,316
Accumulated realized capital losses on investments--net (2,453,868)
Unrealized appreciation on investments--net 46,983,991
---------------
Total accumulated earnings--net 59,638,439
---------------
Total--Equivalent to $15.07 net asset value per share of Common Stock
(market price--$13.81) $ 935,637,129
===============
*Auction Market Preferred Stock.
See Notes to Financial Statements.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2004
Statement of Operations
For the Six Months Ended April 30, 2004
Investment Income
Interest $ 37,074,562
Dividends from affiliates 551
---------------
Total income 37,075,113
---------------
Expenses
Investment advisory fees $ 3,515,844
Commission fees 557,849
Accounting services 179,327
Transfer agent fees 79,888
Professional fees 42,958
Custodian fees 34,183
Printing and shareholder reports 27,247
Listing fees 22,228
Directors' fees and expenses 21,069
Pricing fees 15,325
Other 36,193
---------------
Total expenses before reimbursement 4,532,111
Reimbursement of expenses (131)
---------------
Total expenses after reimbursement 4,531,980
---------------
Investment income--net 32,543,133
---------------
Realized & Unrealized Gain (Loss) on Investments--Net
Realized gain on investments--net 9,202,611
Change in unrealized appreciation on investments--net (27,929,902)
---------------
Total realized and unrealized loss on investments--net (18,727,291)
---------------
Dividends to Preferred Stock Shareholders
Investment income--net (2,032,752)
---------------
Net Increase in Net Assets Resulting from Operations $ 11,783,090
===============
See Notes to Financial Statements.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2004
Statements of Changes in Net Assets
For the For the
Six Months Year
Ended Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 2004 2003
Operations
Investment income--net $ 32,543,133 $ 66,913,994
Realized gain on investments--net 9,202,611 14,488,371
Change in unrealized appreciation on investments--net (27,929,902) (5,044,358)
Dividends and distributions to Preferred Stock shareholders (2,032,752) (4,678,286)
--------------- ---------------
Net increase in net assets resulting from operations 11,783,090 71,679,721
--------------- ---------------
Dividends to Common Stock Shareholders
Investment income--net (29,807,565) (58,869,942)
--------------- ---------------
Net decrease in net assets resulting from dividends to Common Stock
shareholders (29,807,565) (58,869,942)
--------------- ---------------
Net Assets Applicable to Common Stock
Total increase (decrease) in net assets applicable to Common Stock (18,024,475) 12,809,779
Beginning of period 953,661,604 940,851,825
--------------- ---------------
End of period* $ 935,637,129 $ 953,661,604
=============== ===============
*Undistributed investment income--net $ 15,108,316 $ 14,405,500
=============== ===============
See Notes to Financial Statements.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2004
Financial Highlights
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
April 30, For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 2004 2003 2002 2001++++ 2000++++
Per Share Operating Performance
Net asset value, beginning of period $ 15.36 $ 15.15 $ 15.18 $ 14.16 $ 13.64
---------- ---------- ---------- ---------- ----------
Investment income--net .52+++++ 1.08+++++ 1.07 1.08 1.09
Realized and unrealized gain (loss) on
investments--net (.30) .16 (.04) 1.05 .57
Dividends and distributions to Preferred
Stock shareholders:
Investment income--net (.03) (.08) (.11) (.23) (.29)
Realized gain on investments--net -- -- --++ -- --
---------- ---------- ---------- ---------- ----------
Total from investment operations .19 1.16 .92 1.90 1.37
---------- ---------- ---------- ---------- ----------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.48) (.95) (.95) (.88) (.85)
Realized gain on investments--net -- -- --++ -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions to Common
Stock shareholders (.48) (.95) (.95) (.88) (.85)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 15.07 $ 15.36 $ 15.15 $ 15.18 $ 14.16
========== ========== ========== ========== ==========
Market price per share, end of period $ 13.81 $ 14.51 $ 14.31 $ 15.06 $ 12.75
========== ========== ========== ========== ==========
Total Investment Return**
Based on market price per share (1.69%)+++ 8.19% 1.42% 25.49% 5.94%
========== ========== ========== ========== ==========
Based on net asset value per share 1.35%+++ 8.18% 6.52% 13.89% 11.06%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Common Stock
Total expenses, net of reimbursement*** .93%* .94% .97% .98% .99%
========== ========== ========== ========== ==========
Total expenses*** .93%* .95% .97% .98% .99%
========== ========== ========== ========== ==========
Total investment income--net*** 6.71%* 6.99% 7.16% 7.34% 7.92%
========== ========== ========== ========== ==========
Amount of dividends to Preferred Stock
shareholders .42%* .49% .73% 1.59% 2.13%
========== ========== ========== ========== ==========
Investment income--net, to Common Stock
shareholders 6.29%* 6.50% 6.43% 5.75% 5.79%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Common & Preferred Stock***
Total expenses, net of reimbursement .64%* .64% .66% .66% .65%
========== ========== ========== ========== ==========
Total expenses .64%* .65% .66% .66% .65%
========== ========== ========== ========== ==========
Total investment income--net 4.62%* 4.78% 4.86% 4.95% 5.22%
========== ========== ========== ========== ==========
MUNIYIELD INSURED FUND, INC., APRIL 30, 2004
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. 2004 2003 2002 2001++++ 2000++++
Ratios Based on Average Net Assets of Preferred Stock
Dividends to Preferred Stock shareholders .93%* 1.06% 1.53% 3.30% 4.11%
========== ========== ========== ========== ==========
Supplemental Data
Net assets applicable to Common Stock,
end of period (in thousands) $ 935,637 $ 953,662 $ 940,852 $ 940,359 $ 877,390
========== ========== ========== ========== ==========
Preferred Stock outstanding, end of period
(in thousands) $ 440,000 $ 440,000 $ 440,000 $ 440,000 $ 440,000
========== ========== ========== ========== ==========
Portfolio turnover 57.48% 114.05% 97.34% 99.00% 107.11%
========== ========== ========== ========== ==========
Leverage
Asset coverage per $1,000 $ 3,126 $ 3,167 $ 3,138 $ 3,137 $ 2,994
========== ========== ========== ========== ==========
Dividends Per Share on Preferred Stock Outstanding
Series A--Investment income--net $ 114 $ 270 $ 364 $ 833 $ 1,051
========== ========== ========== ========== ==========
Series B--Investment income--net $ 116 $ 273 $ 364 $ 842 $ 1,051
========== ========== ========== ========== ==========
Series C--Investment income--net $ 109 $ 268 $ 360 $ 849 $ 1,063
========== ========== ========== ========== ==========
Series D--Investment income--net $ 120 $ 247 $ 348 $ 825 $ 986
========== ========== ========== ========== ==========
Series E--Investment income--net $ 118 $ 240 $ 352 $ 790 $ 1,048
========== ========== ========== ========== ==========
Series F--Investment income--net $ 108 $ 274 $ 359 $ 860 $ 1,010
========== ========== ========== ========== ==========
Series G--Investment income--net $ 122 $ 304 $ 545 $ 799 $ 992
========== ========== ========== ========== ==========
*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.
++++Certain prior year amounts have been reclassified to conform to
current year presentation.
+++Aggregate total investment return.
+++++Based on average shares outstanding.
See Notes to Financial Statements.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2004
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 accounting principles
generally accepted in the United States of America, 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 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 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 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-the-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 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.
* 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.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2004
Notes to Financial Statements (continued)
(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.
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. For the six months ended April 30,
2004, FAM reimbursed the Fund in the amount of $131.
In addition, Merrill Lynch, Pierce, Fenner & Smith Incorporated
("MLPF&S"), an affiliate of FAM, received $1,140 in commissions on
the execution of portfolio security transactions for the Fund for
the six months ended April 30, 2004.
For the six months ended April 30, 2004, the Fund reimbursed FAM
$15,536 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, 2004 were $788,851,359 and
$775,779,410, respectively.
Net realized gains (losses) for the six months ended April 30, 2004
and net unrealized appreciation as of April 30, 2004 were as
follows:
Realized Unrealized
Gains (Losses) Appreciation
Long-term investments $ 12,183,929 $ 46,254,028
Forward interest rate swaps (2,981,318) 729,963
-------------- --------------
Total $ 9,202,611 $ 46,983,991
============== ==============
As of April 30, 2004, net unrealized appreciation for Federal income
tax purposes aggregated $46,288,274, of which $54,078,115 related to
appreciated securities and $7,789,841 related to depreciated
securities. The aggregate cost of investments at April 30, 2004 for
Federal income tax purposes was $1,380,473,646.
4. 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
without approval of the holders of Common Stock.
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, 2004 were as follows: Series A,
..91%; Series B, .90%; Series C, .90%; Series D, 1.04%; Series E,
1.02%; Series F, .95%; and Series G, 1.02%.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2004
Notes to Financial Statements (concluded)
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, 2004, MLPF&S earned $232,155 as commissions.
5. Capital Loss Carryforward:
On October 31, 2003, the Fund had a net capital loss carryforward
of $1,624,552, all of which expires in 2008. This amount will be
available to offset like amounts of any future taxable gains.
6. Subsequent Event:
The Fund paid a tax-exempt income dividend to holders of Common
Stock in the amount of $.081000 per share on May 27, 2004 to
shareholders of record on May 14, 2004.
7. Plan of Reorganization:
On May 19, 2004, MuniInsured Fund, Inc.'s shareholders approved a
plan of reorganization, subject to certain conditions, whereby the
Fund would acquire substantially all of the assets and liabilities
of MuniInsured Fund, Inc. in exchange for newly-issued shares of the
Fund. Both funds have a similar investment objective and are managed
by FAM.
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, 2004
Proxy Results
During the six-month period ended April 30, 2004, MuniYield Insured
Fund, Inc.'s Common Stock shareholders voted on the following
proposal. The proposal was approved at a shareholders' meeting on
April 27, 2004. A description of the proposal and number of shares
voted are as follows:
Shares Voted Shares Withheld
For From Voting
1. To elect the Fund's Directors: Joe Grills 58,794,683 1,483,650
Herbert I. London 58,801,471 1,476,872
Andre F. Perold 58,783,682 1,494,661
Roberta Cooper Ramo 58,787,285 1,491,058
Stephen B. Swensrud 58,778,878 1,499,465
During the six-month period ended April 30, 2004, MuniYield Insured
Fund, Inc.'s Preferred Stock shareholders (Series A - G) voted on
the following proposal. The proposal was approved at a shareholders'
meeting on April 27, 2004. A description of the proposal and number
of shares voted are as follows:
Shares Voted Shares Withheld
For From Voting
1. To elect the Fund's Board of Directors: James H. Bodurtha,
Joe Grills, Herbert I. London, Andre F. Perold,
Roberta Cooper Ramo, Robert S. Salomon, Jr., and
Stephen B. Swensrud 15,046 7
Quality Profile
The quality ratings of securities in the Fund as of April 30, 2004
were as follows:
Percent of
Total
S&P Rating/Moody's Rating Investments
AAA/Aaa 79.3%
AA/Aa 1.7
A/A 2.7
BBB/Baa 8.8
NR (Not Rated)* --
Other** 7.5
*Holdings are less than 0.1%.
**Temporary investments in short-term variable rate municipal
securities.
MUNIYIELD INSURED FUND, INC., APRIL 30, 2004
Officers and Directors
Terry K. Glenn, President and Director
James H. Bodurtha, Director
Joe Grills, Director
Herbert I. London, Director
Andre F. Perold, 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
Phillip S. Gillespie, 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
MUNIYIELD INSURED FUND, INC., APRIL 30, 2004
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 website
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, 2004
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 - Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers - Not Applicable
Item 9 - Submission of Matters to a Vote of Security Holders - Not
Applicable
Item 10 - Controls and Procedures
10(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.
10(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 11 - Exhibits attached hereto
11(a)(1) - Code of Ethics - Not Applicable to this semi-annual
report
11(a)(2) - Certifications - Attached hereto
11(a)(3) - Not Applicable
11(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/ Terry K. Glenn_______
Terry K. Glenn,
President of
MuniYield Insured Fund, Inc.
Date: June 18, 2004
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/ Terry K. Glenn________
Terry K. Glenn,
President of
MuniYield Insured Fund, Inc.
Date: June 18, 2004
By: _/s/ Donald C. Burke________
Donald C. Burke,
Chief Financial Officer of
MuniYield Insured Fund, Inc.
Date: June 18, 2004