UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
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 - 10/31/05
Item 1 - Report to Stockholders
MuniYield Insured Fund, Inc.
Annual Report
October 31, 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 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 October 31,
2005, the percentage of the Fund's total net assets invested in inverse
floaters was 12.66%, 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. OCTOBER 31, 2005
A Letter From the President
Dear Shareholder
As the financial markets continued to muddle their way through 2005, the
Federal Reserve Board (the Fed) advanced its monetary tightening campaign full
steam ahead. The 12th consecutive interest rate hike since June 2004 came on
November 1, bringing the target federal funds rate to 4%. The central bank is
clearly more focused on inflationary figures than on economic growth, which
has shown some signs of moderating. Despite rising short-term interest rates
and record-high energy prices, the major market indexes managed to post
positive results for the current reporting period:
Total Returns as of October 31, 2005 6-month 12-month
U.S. equities (Standard & Poor's 500 Index) + 5.27% + 8.72%
Small-cap U.S. equities (Russell 2000 Index) +12.25 +12.08
International equities (MSCI Europe Australasia Far East Index) + 8.63 +18.09
Fixed income (Lehman Brothers Aggregate Bond Index) + 0.15 + 1.13
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 0.59 + 2.54
High yield bonds (Credit Suisse First Boston High Yield Index) + 2.87 + 3.54
The headlines in recent months focused on Hurricanes Katrina and Rita and,
more recently, the nomination of Ben Bernanke to succeed Alan Greenspan as
Chairman of the Fed. While the hurricanes prompted a spike in energy prices
and short-term disruptions to production and spending, the longer-term
economic impact is likely to be tempered. In fact, the fiscal stimulus
associated with reconstruction efforts in the Gulf Coast region could add to
gross domestic product growth in 2006. Notably, the uncontroversial nomination
of Dr. Bernanke was well received by the markets.
The U.S. equity markets remained largely range bound in 2005. Up to this
point, strong corporate earnings reports and relatively low long-term bond
yields have worked in favor of equities. Looking ahead, high energy
prices, continued interest rate hikes, a potential consumer slowdown
and/or disappointing earnings pose the greatest risks to U.S. stocks.
Internationally, many markets have benefited from strong economic statistics,
trade surpluses and solid finances.
The bond market continued to be characterized by a flattening yield curve,
although long-term yields finally began to inch higher toward period end. The
10-year Treasury yield hit 4.57% on October 31, 2005, its highest level in
more than six months. Still, the difference between the two-year and 10-year
Treasury yield was just 17 basis points (.17%) at period end, compared to 149
basis points a year earlier.
Financial markets are likely to face continued crosscurrents in the months
ahead. Nevertheless, opportunities do exist and we encourage you to work with
your financial advisor to diversify your portfolio among a variety of asset
types. This can help to diffuse risk while also tapping into the potential
benefits of a broader range of investment alternatives. As always, we thank
you for trusting Merrill Lynch Investment Managers with your investment
assets.
Sincerely,
(Robert C. Doll, Jr.)
Robert C. Doll, Jr.
President and Director
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
A Discussion With Your Fund's Portfolio Manager
The Fund continued to provide shareholders with an above-average level of
income and recorded a total return for the fiscal year that outpaced its
comparable Lipper category average.
Describe the recent market environment relative to municipal bonds.
Over the past year, long-term bond yields were little changed. Initially, U.S.
Treasury prices rallied strongly, while their yields, which move in the
opposite direction, fell. However, in the final months of the period, bond
yields rose (prices fell) as investors worried that higher energy costs in the
wake of Hurricanes Katrina and Rita would pressure inflation upward. For its
part, the Federal Reserve Board (the Fed) continued to raise short-term
interest rates at each of its meetings, lifting the federal funds target rate
to 4% on November 1, 2005. As short-term interest rates moved higher in
concert with the Fed interest rate hikes and longer-term bond yields remained
steadier, the yield curve continued to flatten.
During the past 12 months, 30-year Treasury bond yields declined three basis
points to 4.76%, while 10-year Treasury note yields rose 52 basis points
(.52%) to 4.57%. Tax-exempt bond yields exhibited a similar pattern. According
to Municipal Market Data, the yield on AAA-rated issues maturing in 30 years
increased one basis point to 4.59%, while the yield on AAA-rated issues
maturing in 10 years rose 52 basis points to 3.92%.
Historically low nominal tax-exempt bond yields continued to encourage
municipalities to issue new debt and refund outstanding, higher-couponed
issues. During the past year, more than $394 billion in new long-term tax-
exempt bonds was issued, an 8.4% increase over the previous year's total of
$363 billion. During the first nine months of 2005, the volume of refunding
issues increased by more than 55% versus the same period one year ago.
Refunding issues were heavily weighted in the 10-year - 20-year maturity
range, putting pressure on intermediate tax-exempt bond yields while
supporting longer-term bond prices.
Investor demand for municipal product remained positive during most of the
period. The most current statistics from the Investment Company Institute
indicate that, year-to-date through September 2005, net new cash flows into
long-term municipal bond funds exceeded $6.7 billion - a significant
improvement from the $12.9 billion net outflow seen during the same period in
2004. Notably, throughout much of the past year, high yield tax-exempt bond
funds have been the principal target for these new cash inflows. During recent
months, these lower-rated and non-rated bond funds received an average of
$115 million per week. The need to invest these cash flows has led to strong
demand for lower-rated issues and a consequent narrowing of credit spreads.
Solid investor demand for tax-exempt issues generally helped municipal bond
performance approach that of taxable bonds in recent months and reverse some
of their prior underperformance. In addition, the ratio of tax-exempt bond
yields to taxable bond yields remains attractive and should continue to draw
both traditional and non-traditional investors to the municipal marketplace,
especially if municipal bond issuance remains manageable.
The communities shattered by Hurricanes Katrina and Rita will require
extensive reconstruction. It is too early to estimate the amount of tax-exempt
debt that may be required to finance these efforts or to assess the overall
impact on the municipal market. However, much of the rebuilding is likely to
be funded through federal loans and grants, and the reconstruction will likely
be spread over a number of years. Consequently, any new municipal bond
issuance prompted by the hurricanes is not likely to disrupt the tax-exempt
market in the near future.
How did the Fund perform during the fiscal year in light of the existing
market conditions?
For the 12-month period ended October 31, 2005, the Common Stock of MuniYield
Insured Fund, Inc. had net annualized yields of 6.20% and 6.44%, based on a
year-end per share net asset value of $15.27 and a per share market price of
$14.70, respectively, and $.946 per share income dividends. Over the same
period, the total investment return on the Fund's Common Stock was +4.54%,
based on a change in per share net asset value from $15.59 to $15.27, and
assuming reinvestment of all distributions.
The Fund's total return, based on net asset value, exceeded the +2.93% average
return of the Lipper Insured Municipal Debt Funds (Leveraged) category for the
12-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 positive 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 12
months, long-term bonds outperformed shorter-term issues, and our focus on
this sector of the curve enhanced Fund results.
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
For the six-month period ended October 31, 2005, the total investment return
on the Fund's Common Stock was +.20%, based on a change in per share net asset
value from $15.72 to $15.27, and assuming reinvestment of all distributions.
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.
What changes were made to the portfolio during the period?
We maintained our focus on seeking to protect the Fund's net asset value and
providing shareholders with an above-average level of income. We sought to
pick up additional yield for the portfolio by investing in longer-dated bonds.
Although the yield curve began to flatten considerably, the long end remained
fairly steep. This area of the curve also has been less subject to bouts of
volatility, allowing us the opportunity to add incremental yield while also
muting the Fund's price volatility.
We sold short-maturity prerefunded bonds to capture their market appreciation
and avoid the negative price amortization associated with shorter-maturity
issues. We used the proceeds from our sales to purchase premium-couponed
issues in the 25-year - 30-year maturity range. We also looked to buy bonds
issued by high-tax states that also impose a tax on out-of-state bonds.
Because of the relatively high 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 and
tradability. We participated in these transactions in such high-tax states as
Florida, New York, California, Arizona and North Carolina.
Importantly, the Fund was essentially fully invested throughout the period,
consistent with our goal of maintaining an attractive level of income.
For the six-month period ended October 31, 2005, the Fund's Auction Market
Preferred Stock (AMPS) had average yields of 2.29% for Series A, 2.24% for
Series B, 2.19% for Series C, 1.90% for Series D, 2.00% for Series E, 2.20%
for Series F, 2.10% for Series G, 2.10% for Series H and 2.14% for Series I.
The Fed's interest rate hikes are clearly having a material impact on the
Fund's borrowing costs. The Fed raised the short-term interest rate target 200
basis points during the 12-month period (and 25 basis points more on November
1). 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 35.67% of total net
assets, before the deduction of Preferred Stock. (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 believe the municipal yield curve will remain relatively steep when
compared to the U.S. Treasury yield curve, which should continue to provide
attractive opportunities on the long end. The Fed appears poised to continue
pushing short-term interest rates higher in its effort to keep inflation
contained.
Amid these conditions, we expect market volatility to increase given continued
hawkish commentary from the Fed and the potential for stronger economic
releases. We will look to this volatility for opportunities to purchase
attractively structured municipal issues. We continued to look for maturities
in the 25-year area and favor a neutral to slightly long portfolio duration,
which we believe offers the benefit of incremental yield. Ultimately, we
expect that above-average yields will overcome price depreciation and provide
for competitive Fund returns over time.
William R. Bock
Vice President and Portfolio Manager
November 14, 2005
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
Automatic Dividend Reinvestment Plan
How the Plan Works--The Fund offers a Dividend Reinvestment Plan (the "Plan")
under which income and capital gains dividends paid by the Fund are
automatically reinvested in additional shares of Common Stock of the Fund. The
Plan is administered on behalf of the shareholders by EquiServe Trust Company
N.A. (the "Plan Agent"). Under the Plan, whenever the Fund declares a
dividend, participants in the Plan will receive the equivalent in shares of
Common Stock of the Fund. The Plan Agent will acquire the shares for the
participant's account either (i) through receipt of additional unissued but
authorized shares of the Fund ("newly issued shares") or (ii) by purchase of
outstanding shares of Common Stock on the open market on the New York Stock
Exchange or elsewhere. If, on the dividend payment date, the Fund's net asset
value per share is equal to or less than the market price per share plus
estimated brokerage commissions (a condition often referred to as a "market
premium"), the Plan Agent will invest the dividend amount in newly issued
shares. If the Fund's net asset value per share is greater than the market
price per share (a condition often referred to as a "market discount"), the
Plan Agent will invest the dividend amount by purchasing on the open market
additional shares. If the Plan Agent is unable to invest the full dividend
amount in open market purchases, or if the market discount shifts to a market
premium during the purchase period, the Plan Agent will invest any uninvested
portion in newly issued shares. The shares acquired are credited to each
shareholder's account. The amount credited is determined by dividing the
dollar amount of the dividend by either (i) when the shares are newly issued,
the net asset value per share on the date the shares are issued or (ii) when
shares are purchased in the open market, the average purchase price per share.
Participation in the Plan--Participation in the Plan is automatic, that is, a
shareholder is automatically enrolled in the Plan when he or she purchases
shares of Common Stock of the Fund unless the shareholder specifically elects
not to participate in the Plan. Shareholders who elect not to participate will
receive all dividend distributions in cash. Shareholders who do not wish to
participate in the Plan, must advise the Plan Agent in writing (at the address
set forth below) that they elect not to participate in the Plan. Participation
in the Plan is completely voluntary and may be terminated or resumed at any
time without penalty by writing to the Plan Agent.
Benefits of the Plan--The Plan provides an easy, convenient way for
shareholders to make additional, regular investments in the Fund. The Plan
promotes a long-term strategy of investing at a lower cost. All shares acquired
pursuant to the Plan receive voting rights. In addition, if the market price
plus commissions of the Fund's shares is above the net asset value,
participants in the Plan will receive shares of the Fund for less than they
could otherwise purchase them and with a cash value greater than the value of
any cash distribution they would have received. However, there may not be
enough shares available in the market to make distributions in shares at prices
below the net asset value. Also, since the Fund does not redeem shares, the
price on resale may be more or less than the net asset value.
Plan Fees--There are no enrollment fees or brokerage fees for participating in
the Plan. The Plan Agent's service fees for handling the reinvestment of
distributions are paid for by the Fund. However, brokerage commissions may be
incurred when the Fund purchases shares on the open market and shareholders
will pay a pro rata share of any such commissions.
Tax Implications--The automatic reinvestment of dividends and distributions
will not relieve participants of any federal, state or local income tax that
may be payable (or required to be withheld) on such dividends. Therefore,
income and capital gains may still be realized even though shareholders do not
receive cash. The value of shares acquired pursuant to the Plan will generally
be excluded from gross income to the extent that the cash amount reinvested
would be excluded from gross income. If, when the Fund's shares are trading at
a market premium, the Fund issues shares pursuant to the Plan that have a
greater fair market value than the amount of cash reinvested, it is possible
that all or a portion of the discount from the market value (which may not
exceed 5% of the fair market value of the Fund's shares) could be viewed as a
taxable distribution. If the discount is viewed as a taxable distribution,
it is also possible that the taxable character of this discount would be
allocable to all the shareholders, including shareholders who do not
participate in the Plan. Thus, shareholders who do not participate in the Plan
might be required to report as ordinary income a portion of their distributions
equal to their allocable share of the discount.
Contact Information--All correspondence concerning the Plan, including any
questions about the Plan, should be directed to the Plan Agent at EquiServe
Trust Company N.A. (Computershare Investor Services), P.O. Box 43010,
Providence, RI 02940-3010, Telephone: 800-426-5523.
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
Portfolio Information as of October 31, 2005
Percent of
Quality Ratings by Total
S&P/Moody's Investments
AAA/Aaa 83.0%
AA/Aa 3.5
A/A 7.6
BBB/Baa 2.1
NR (Not Rated) 2.7
Other* 1.1
* Includes portfolio holdings in variable rate demand notes.
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. OCTOBER 31, 2005
Schedule of Investments (In Thousands)
Face
Amount Municipal Bonds Value
Alaska--0.4%
$ 3,695 Alaska Energy Authority, Power Revenue
Refunding Bonds (Bradley Lake), Fourth Series,
6% due 7/01/2018 (g) $ 4,272
Arizona--0.9%
9,000 Maricopa County, Arizona, Hospital Revenue
Refunding Bonds (Sun Health Corporation),
5% due 4/01/2035 8,846
California--34.1%
10,000 Alameda Corridor Transportation Authority,
California, Capital Appreciation Revenue
Refunding Bonds, Subordinate Lien, Series A,
5.40%* due 10/01/2012 (a) 7,401
5,000 Antioch, California, Public Finance Authority,
Lease Revenue Refunding Bonds (Municipal
Facilities Project), Series A, 5.50%
due 1/01/2032 (b) 5,354
10,000 California Infrastructure and Economic Development
Bank, Bay Area Toll Bridges Revenue Bonds,
First Lien, Series A, 5% due 7/01/2025 (c) 10,369
California State Department of Water Resources,
Power Supply Revenue Bonds, Series A:
5,750 5.125% due 5/01/2018 (b) 6,119
10,000 5.25% due 5/01/2020 (b) 10,736
3,675 5.375% due 5/01/2021 3,963
12,010 5.375% due 5/01/2022 (b) 13,014
California State, GO, DRIVERS (b)(k):
7,450 Series 556, 7.997% due 11/01/2011 8,597
6,450 Series 557, 7.997% due 4/01/2012 7,505
5,000 California State, GO, Refunding, RIB, Series 471x,
8.08% due 9/01/2024 (b)(k) 5,885
California State Public Works Board, Lease
Revenue Bonds:
5,500 (Department of Corrections), Series C,
5.25% due 6/01/2028 5,739
3,755 (Department of General Services), Series D,
5.25% due 6/01/2028 3,918
5,250 (Department of Mental Health--Coalinga
State Hospital), Series A, 5.125% due 6/01/2029 5,387
12,000 California State, Various Purpose, GO, 5.25%
due 11/01/2029 12,542
32,000 California State, Various Purpose, GO, Refunding,
5% due 6/01/2034 (d) 32,802
7,740 California Statewide Communities Development
Authority, Health Facility Revenue Bonds (Memorial
Health Services), Series A, 6% due 10/01/2023 8,490
4,205 California Statewide Communities Development
Authority, Water Revenue Bonds (Pooled Financing
Program), Series C, 5.25% due 10/01/2034 (g) 4,409
7,500 Desert Sands, California, Unified School District, GO
(Election of 2001), 5% due 6/01/2029 (g) 7,759
Face
Amount Municipal Bonds Value
California (concluded)
$ 5,800 Fairfield-Suisun, California, Unified School District,
GO (Election of 2002), 5.50% due 8/01/2028 (b) $ 6,320
5,015 Gavilan, California, Joint Community College District,
GO, DRIVERS, Series 587-Z, 7.987%
due 8/01/2012 (a)(k) 5,915
45,900 Golden State Tobacco Securitization Corporation of
California, Tobacco Settlement Revenue Refunding
Bonds, Series A, 5% due 6/01/2035 (c) 46,951
13,155 Huntington Beach, California, Union High
School District, GO (Election of 2004), 5%
due 8/01/2029 (g) 13,616
1,000 Long Beach, California, Harbor Revenue Refunding
Bonds, AMT, Series B, 5.20% due 5/15/2027 (b) 1,037
5,000 Los Angeles, California, Harbor Department Revenue
Bonds, RITR, AMT, Series RI-7, 9.325%
due 11/01/2026 (b)(k) 5,360
33,800 Los Angeles, California, Unified School District, GO,
Series A, 5% due 1/01/2028 (b) 35,043
12,775 Los Angeles, California, Water and Power Revenue
Bonds (Power System), Series B, 5%
due 7/01/2035 (g) 13,093
4,730 Port of Oakland, California, DRIVERS, AMT,
Series 839Z, 7.73% due 11/01/2010 (c)(k) 5,187
145 Port of Oakland, California, Revenue Bonds, AMT,
Series K, 5.75% due 11/01/2021 (c) 154
7,000 Port of Oakland, California, Trust Receipts, Revenue
Bonds, AMT, Class R, Series K, 8.431%
due 11/01/2021 (c)(k) 7,917
10,000 Riverside County, California, Public Financing
Authority, Tax Allocation Revenue Bonds
(Redevelopment Projects), 5% due 10/01/2035 (e) 10,194
10,000 Sacramento County, California, Sanitation District
Financing Authority, Revenue Bonds, Series A, 5%
due 12/01/2035 (a) 10,316
8,310 Stockton, California, Public Financing Authority,
Lease Revenue Bonds (Parking & Capital Projects),
5.25% due 9/01/2034 (c) 8,752
University of California, Limited Project Revenue Bonds,
Series B (g):
13,955 5% due 5/15/2023 14,555
5,800 5% due 5/15/2033 5,979
Colorado--0.5%
5,000 Moffat County, Colorado, PCR, Refunding
(PacifiCorp Projects), VRDN, 2.70%
due 5/01/2013 (a)(h) 5,000
District of Columbia--1.5%
15,000 Metropolitan Washington Airports Authority, D.C.,
Airport System Revenue Refunding Bonds, AMT,
Series A, 5% due 10/01/2035 (b) 15,150
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. OCTOBER 31, 2005
Schedule of Investments (continued) (In Thousands)
Face
Amount Municipal Bonds Value
Florida--6.6%
$ 4,000 Highlands County, Florida, Health Facilities Authority,
Hospital Revenue Refunding Bonds (Adventist
Health System), Series C, 5% due 11/15/2031 $ 4,012
6,015 Jacksonville, Florida, Excise Taxes Revenue Bonds,
Series A, 5% due 10/01/2032 (a) 6,207
5,375 Miami-Dade County, Florida, Aviation Revenue
Bonds, RIB, AMT, Series 1054-X, 7.74%
due 10/01/2025 (c)(k) 5,856
Miami-Dade County, Florida, Aviation Revenue
Refunding Bonds (Miami International Airport), AMT:
1,000 5.375% due 10/01/2027 (c) 1,041
14,800 Series A, 5% due 10/01/2030 (e) 14,926
10,000 Series A, 5% due 10/01/2035 (e) 10,034
7,830 Miami-Dade County, Florida, Public Facilities Revenue
Refunding Bonds (Jackson Health System), Series B,
5% due 6/01/2024 (b) 8,113
Orange County, Florida, Health Facilities Authority,
Hospital Revenue Bonds:
5,000 (Adventist Health System), 5.625%
due 11/15/2032 5,255
2,000 (Orlando Regional Healthcare), 5.75%
due 12/01/2032 2,103
10,000 Volusia County, Florida, Educational Facility Authority,
Educational Facilities Revenue Refunding Bonds
(Embry-Riddle Aeronautical University, Inc. Project),
5% due 10/15/2035 (j) 10,109
Georgia--4.3%
Atlanta, Georgia, Airport General Revenue Refunding
Bonds (g):
26,500 AMT, Series A, 5.125% due 1/01/2030 27,177
12,500 Series B, 5.25% due 1/01/2033 13,157
3,460 Atlanta, Georgia, Water and Wastewater Revenue
Bonds, VRDN, Series C, 2.72% due 11/01/2041 (g)(h) 3,460
Hawaii--0.2%
2,000 Hawaii State, GO, Series CX, 5.50% due 2/01/2021 (g) 2,168
Illinois--9.6%
Chicago, Illinois, O'Hare International Airport Revenue
Bonds, AMT:
13,115 DRIVERS, Series 368, 8.956% due 7/01/2011 (b)(k) 15,928
8,600 DRIVERS, Series 369, 8.956% due 7/01/2011 (e)(k) 10,358
16,685 Third Lien, Series B-2, 5.25% due 1/01/2027 (b) 17,266
Chicago, Illinois, O'Hare International Airport, Revenue
Refunding Bonds, AMT:
8,200 DRIVERS, Series 653-Z, 7.457%
due 1/01/2012 (g)(k) 8,715
1,500 Third Lien, Series C-2, 5.25% due 1/01/2034 (e) 1,543
5,000 Cook County, Illinois, Capital Improvement, GO,
Series B, 5% due 11/15/2029 (b) 5,143
Illinois State, GO:
12,600 5% due 4/01/2030 (a) 12,981
10,000 First Series, 5.50% due 4/01/2016 (g) 10,920
2,000 Illinois State Sales Tax Revenue Bonds, 6.125%
due 6/15/2016 2,214
6,035 McLean and Woodford Counties, Illinois, Community
Unit, School District Number 005, GO, Refunding,
6.375% due 12/01/2016 (g) 6,910
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 (b) 5,342
1,000 Regional Transportation Authority, Illinois, Revenue
Bonds, Series C, 7.75% due 6/01/2020 (c) 1,355
Face
Amount Municipal Bonds Value
Indiana--6.0%
$ 2,250 Indiana Health Facilities Financing Authority, Hospital
Revenue Bonds (Deaconess Hospital Obligated
Group), Series A, 5.375% due 3/01/2034 (a) $ 2,371
Indiana Transportation Finance Authority, Highway
Revenue Bonds, Series A (c):
3,000 5.25% due 6/01/2026 3,185
14,000 5.25% due 6/01/2028 14,832
20,000 5.25% due 6/01/2029 21,145
8,000 Indianapolis, Indiana, Local Public Improvement Bond
Bank Revenue Bonds (Waterworks Project), Series A,
5.125% due 7/01/2027 (b) 8,296
Indianapolis, Indiana, Local Public Improvement Bond
Bank, Revenue Refunding Bonds (Indianapolis
Airport Authority Project), AMT, Series B (b):
3,000 5.25% due 1/01/2027 3,102
2,000 5.25% due 1/01/2028 2,065
6,525 5.25% due 1/01/2030 6,722
Louisiana--3.4%
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) 4,074
6,615 Louisiana Public Facilities Authority, Hospital Revenue
Bonds (Franciscan Missionaries of Our Lady Health
System, Inc.), Series A, 5.25% due 8/15/2036 6,722
7,500 Louisiana Public Facilities Authority, Revenue
Refunding Bonds, DRIVERS, Series 1025, 7.477%
due 7/01/2012 (b)(k) 7,994
11,900 Louisiana State, Gas and Fuels Tax Revenue Bonds,
Series A, 5% due 5/01/2022 (c) 12,337
3,545 New Orleans, Louisiana, GO (Public Improvements),
5% due 10/01/2033 (b) 3,594
Massachusetts--5.1%
2,500 Massachusetts State, HFA, Housing Development
Revenue Refunding Bonds, Series B, 5.40%
due 12/01/2028 (b) 2,569
15,000 Massachusetts State, HFA, Rental Housing Mortgage
Revenue Bonds, AMT, Series A, 5.15%
due 7/01/2026 (g) 14,923
7,550 Massachusetts State Port Authority Revenue Bonds,
Series A, 5% due 7/01/2033 (b) 7,743
Massachusetts State Special Obligation Dedicated
Tax Revenue Bonds (c)(f):
14,620 5.25% due 1/01/2014 15,850
10,000 5.75% due 1/01/2014 11,186
Michigan--5.0%
9,360 Clarkston, Michigan, Community Schools, GO, 5.25%
due 5/01/2029 (g) 9,855
1,675 Eastern Michigan University Revenue Refunding Bonds,
VRDN, 2.73% due 6/01/2027 (c)(h) 1,675
10,000 Michigan State Building Authority, Revenue Refunding
Bonds (Facilities Program), Series II, 5%
due 10/15/2033 (a) 10,316
Michigan State Strategic Fund, Limited Obligation
Revenue Refunding Bonds, DRIVERS, AMT (e)(k):
2,500 Series 857Z, 8.257% due 3/01/2010 2,765
4,000 Series 858Z, 7.958% due 12/01/2011 4,437
1,645 Northern Michigan University Revenue Bonds, VRDN,
2.73% due 6/01/2031 (c)(h) 1,645
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
Schedule of Investments (continued) (In Thousands)
Face
Amount Municipal Bonds Value
Michigan (concluded)
$ 20,000 Wayne County, Michigan, Airport Authority Revenue
Bonds (Detroit Metropolitan Wayne County Airport),
AMT, 5% due 12/01/2029 (b) $ 20,364
Minnesota--1.3%
10,000 Minneapolis and Saint Paul, Minnesota, Metropolitan
Airports Commission, Airport Revenue Bonds,
Series A, 5.90% due 1/01/2010 (c)(f) 11,017
2,500 Minnesota State Municipal Power Agency, Electric
Revenue Bonds, 5% due 10/01/2030 2,523
Missouri--0.0%
180 Missouri State Housing Development Commission,
S/F Mortgage Revenue Bonds (Homeowner Loan),
AMT, Series C-1, 7.15% due 3/01/2032 (l) 189
Nevada--8.2%
25,000 Clark County, Nevada, Airport System Subordinate
Lien Revenue Bonds, Series A-2, 5%
due 7/01/2030 (c) 25,635
6,337 Clark County, Nevada, IDR, RIB, AMT, Series 1181,
7.52% due 7/01/2034 (a)(k) 6,714
12,000 Clark County, Nevada, IDR (Southwest Gas Corporation
Project), AMT, Series D, 5.25% due 3/01/2038 (c) 12,230
6,000 Henderson, Nevada, Health Care Facilities Revenue
Bonds (Catholic Healthcare West), Series A, 5.625%
due 7/01/2024 6,360
5,000 Humboldt County, Nevada, PCR, Refunding (Sierra
Pacific Project), 6.55% due 10/01/2013 (a) 5,180
3,130 Reno, Nevada, Capital Improvement Revenue Bonds,
5.50% due 6/01/2019 (c) 3,405
Washoe County, Nevada, Gas Facilities Revenue Bonds
(Sierra Pacific Power Company), AMT:
15,000 6.65% due 12/01/2017 (a) 15,114
5,000 6.55% due 9/01/2020 (b) 5,048
5,000 Washoe County, Nevada, Water Facility Revenue Bonds
(Sierra Pacific Power Company), AMT, 6.65%
due 6/01/2017 (b) 5,118
New Jersey--9.6%
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) 18,863
New Jersey EDA, Cigarette Tax Revenue Bonds:
3,060 5.75% due 6/15/2029 3,215
2,610 5.50% due 6/15/2031 2,684
14,135 5.75% due 6/15/2034 14,779
14,830 New Jersey EDA, Revenue Bonds, DRIVERS,
Series 785-Z, 7.514% due 7/01/2012 (b)(k) 16,672
3,250 New Jersey EDA, School Facilities Construction
Revenue Bonds, Series I, 5.25% due 9/01/2014 (f) 3,565
17,500 New Jersey Economic Development Authority, School
Facilities Construction Revenue Bonds, Series O,
5.125% due 3/01/2030 18,096
16,880 New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Bonds, Series D,
5% due 6/15/2019 (g) 17,775
Newark, New Jersey, Housing Authority, Port
Authority-Port Newark Marine Terminal Additional
Rent-Backed Revenue Bonds (City of Newark
Redevelopment Projects) (b):
1,500 5.50% due 1/01/2027 1,630
1,380 5.50% due 1/01/2028 1,497
Face
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 $ 1,625
605 New Mexico Mortgage Finance Authority, S/F
Mortgage Revenue Bonds, AMT, Series C-2,
6.95% due 9/01/2031 (l) 611
New York--21.1%
10,250 Long Island Power Authority, New York, Electric
System Revenue Bonds, Series A, 5.10%
due 9/01/2029 10,555
12,500 Metropolitan Transportation Authority, New York,
Commuter Facilities Revenue Refunding Bonds,
Series B, 5.125% due 7/01/2024 (a)(i) 12,985
65,000 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) 66,930
New York City, New York, GO:
1,880 Series B, 5.875% due 8/01/2016 (b) 2,077
10,000 Series J, 5.25% due 5/15/2024 10,505
1,000 Series J, 5.25% due 5/15/2025 1,054
20,000 Series M, 5% due 4/01/2030 20,342
5,500 Series O, 5% due 6/01/2030 5,594
2,500 Series O, 5% due 6/01/2033 2,541
6,000 Sub-Series C-1, 5.25% due 8/15/2026 6,323
2,000 New York City, New York, GO, Refunding, VRDN,
Series H, Sub-Series H-2, 2.74%
due 8/01/2014 (b)(h) 2,000
10,000 New York State Mortgage Agency Revenue Bonds,
AMT, Series 109, 4.90% due 10/01/2028 10,000
New York State Thruway Authority, General Revenue
Refunding Bonds, Series G (g):
10,000 5% due 1/01/2028 10,412
34,000 5% due 1/01/2030 35,319
19,500 Port Authority of New York and New Jersey,
Consolidated Revenue Bonds, AMT, 137th Series,
5.125% due 7/15/2030 (g) 20,238
North Carolina--0.3%
3,000 Wilmington, North Carolina, Water & Sewer System
Revenue Refunded, 5% due 6/01/2034 (g) 3,097
Oklahoma--0.8%
7,500 Oklahoma State IDR, Refunding, DRIVERS, Series 455,
8.487% due 2/15/2008 (b)(k) 8,663
Oregon--0.8%
8,000 Oregon State Department of Administrative Services,
COP, Series B, 5% due 11/01/2030 (c) 8,254
Pennsylvania--3.9%
7,800 Pennsylvania State Turnpike Commission, Turnpike
Revenue Bonds, DRIVERS, Series 460-Z, 7.987%
due 6/01/2012 (a)(k) 9,207
Philadelphia, Pennsylvania, School District, GO (c):
5,175 Series B, 5.625% due 8/01/2012 (f) 5,748
12,115 Series D, 5.125% due 6/01/2034 12,548
6,000 Series D, 5.25% due 6/01/2034 6,326
5,000 Sayre, Pennsylvania, Health Care Facilities Authority,
Revenue Bonds (Guthrie Healthcare System),
Series B, 7.125% due 12/01/2031 5,898
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
Schedule of Investments (continued) (In Thousands)
Face
Amount Municipal Bonds Value
South Carolina--1.9%
$ 1,325 South Carolina Housing Finance and Development
Authority, Mortgage Revenue Refunding Bonds,
AMT, Series A-2, 6.35% due 7/01/2019 (g) $ 1,405
18,030 South Carolina Transportation Infrastructure Bank
Revenue Bonds, Series A, 5% due 10/01/2029 (a) 18,517
Tennessee--1.0%
Tennessee HDA, Revenue Bonds (Homeownership
Program), AMT, Series 2C:
1,795 6.05% due 7/01/2012 1,815
2,250 6.15% due 7/01/2014 2,257
Tennessee HDA, Revenue Refunding Bonds
(Homeownership Program), AMT, Series A (g):
3,590 5.25% due 7/01/2022 3,696
2,545 5.35% due 1/01/2026 2,612
Texas--10.9%
1,880 Bexar, Texas, Metropolitan Water District, Waterworks
System Revenue Refunding Bonds, 6.35%
due 5/01/2025 (b) 1,922
10,500 Dallas-Fort Worth, Texas, International Airport
Revenue Bonds, DRIVERS, AMT, Series 353,
7.957% due 5/01/2011 (b)(k) 11,524
7,500 Dallas-Fort Worth, Texas, International Airport Revenue
Refunding Bonds, DRIVERS, AMT, Series 336Z,
8.207% due 11/01/2026 (c)(k) 8,321
Harris County, Houston, Texas, Sports Authority
Revenue Refunding Bonds, Senior Lien, Series G (b):
1,665 5.75% due 11/15/2019 1,818
3,500 5.75% due 11/15/2020 3,814
10,000 5.25% due 11/15/2030 10,344
4,100 Harris County, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds (Texas
Children's Hospital), VRDN, Series B-1, 2.73%
due 10/01/2029 (b)(h) 4,100
15,000 Houston, Texas, Airport System Revenue Refunding
Bonds, RIB, Series 845X, 8.04% due 7/01/2030 (g)(k) 17,002
11,080 Houston, Texas, Combined Utility System, First Lien
Revenue Refunding Bonds, 5% due 11/15/2035 (g) 11,397
4,825 Texas State Department of Housing and Community
Affairs, S/F Mortgage Revenue Bonds, AMT, Series A,
5.45% due 9/01/2023 (b)(l) 4,995
10,000 Texas State Transportation Commission, GO (Mobility
Fund), Series A, 5% due 4/01/2030 10,287
10,000 Texas State Turnpike Authority, Central Texas Turnpike
System Revenue Bonds, First Tier, Series A, 5.50%
due 8/15/2039 (a) 10,766
4,000 Texas Technical University, Financing System Revenue
Bonds, Seventh Series, 5.50% due 8/15/2019 (b) 4,340
11,240 University of Houston, Texas, University Revenue
Bonds, 5.50% due 2/15/2030 (b) 11,984
Vermont--0.1%
720 Vermont HFA, S/F Housing Revenue Bonds, AMT,
Series 12B, 6.30% due 11/01/2019 (g) 729
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) 2,697
Face
Amount Municipal Bonds Value
Washington--15.8%
Bellevue, Washington, GO, Refunding (b):
$ 2,545 5.25% due 12/01/2026 $ 2,702
2,455 5.25% due 12/01/2027 2,606
2,850 5.25% due 12/01/2028 3,019
3,000 5.25% due 12/01/2029 3,171
17,600 5% due 12/01/2034 18,012
16,150 Central Puget Sound Regional Transportation Authority,
Washington, Sales and Use Tax Revenue Bonds,
Series A, 5% due 11/01/2030 (a) 16,593
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) 3,136
Chelan County, Washington, Public Utility District
Number 001, Consolidated Revenue Refunding
Bonds (Chelan Hydro System), AMT (b):
6,595 Series B, 6.35% due 7/01/2026 7,007
6,000 Series C, 5.65% due 7/01/2032 6,387
10,000 Energy Northwest, Washington, Electric Revenue
Refunding Bonds (Project Number 1), Series B,
6% due 7/01/2017 (b) 11,265
5,000 King County, Washington, Sewer, GO, 5%
due 1/01/2030 (c) 5,140
3,500 Port of Seattle, Washington, Revenue Bonds,
Series A, 5.50% due 2/01/2026 (b) 3,734
9,783 Port of Seattle, Washington, Revenue Refunding
Bonds, RIB, AMT, Series 1169, 7.42%
due 7/01/2029 (b)(k) 10,268
10,000 Radford Court Properties, Washington, Student
Housing Revenue Bonds, 5.75% due 6/01/2032 (b) 10,889
1,720 Seattle, Washington, Drain and Wastewater Utility
Revenue Bonds, 5.75% due 11/01/2029 (b) 1,863
2,000 Seattle, Washington, Water System Revenue Bonds,
Series B, 6% due 7/01/2029 (c) 2,173
Skagit County, Washington, Public Hospital District,
GO, Series A (b):
4,945 5.25% due 12/01/2025 5,261
5,450 5.25% due 12/01/2026 5,785
7,250 Tacoma, Washington, Solid Waste Utility Revenue
Refunding Bonds, Series B, 5.50% due 12/01/2019 (a) 7,606
Washington State, GO:
10,000 DRIVERS, Series 438Z, 8.237%
due 1/01/2009 (b)(k) 11,493
15,930 Series B, 6% due 1/01/2010 (f)(g) 17,454
7,000 Washington State Health Care Facilities Authority
Revenue Bonds (Providence Health System), Series A,
5.25% due 10/01/2021 (b) 7,324
West Virginia--0.6%
5,925 Harrison County, West Virginia, County Commission for
Solid Waste Disposal Revenue Bonds (Monongahela
Power), AMT, Series C, 6.75% due 8/01/2024 (a) 6,000
Wisconsin--0.4%
3,395 Wisconsin State Health and Educational Facilities
Authority Revenue Bonds (Synergyhealth Inc.),
6% due 11/15/2032 3,599
Total Investments (Cost--$1,545,139**)--154.8% 1,590,696
Other Assets Less Liabilities--0.7% 7,560
Preferred Stock, at Redemption Value--(55.5%) (570,234)
-----------
Net Assets Applicable to Common Stock--100.0% $ 1,028,022
===========
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
Schedule of Investments (concluded) (In Thousands)
* Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
** The cost and unrealized appreciation (depreciation) of investments
as of October 31, 2005, as computed for federal income tax purposes,
were as follows:
Aggregate cost $ 1,545,316
===============
Gross unrealized appreciation $ 51,271
Gross unrealized depreciation (5,891)
---------------
Net unrealized appreciation $ 45,380
===============
(a) AMBAC Insured.
(b) MBIA Insured.
(c) FGIC Insured.
(d) CIFG 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 that 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) Escrowed to maturity.
(j) Radian Insured.
(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,
for purposes of Section 2(a)(3) of the Investment Company Act of 1940,
were as follows:
Net Dividend
Affiliate Activity Income
Merrill Lynch Institutional Tax-Exempt Fund $(131) $76
Forward interest rate swaps outstanding as of October 31, 2005
were as follows:
Notional Unrealized
Amount Appreciation
Receive a variable rate equal to a
7-Day Bond Market Association
Municipal Swap Index Rate and
pay a fixed rate equal to 3.808%.
Broker, JPMorgan Chase Bank
Expires January 2016 $ 50,000 $ 328
Receive a variable rate equal to a
7-Day Bond Market Association
Municipal Swap Index Rate and
pay a fixed rate equal to 3.852%.
Broker, JPMorgan Chase Bank
Expires January 2016 $226,000 762
Receive a variable rate equal to a
7-Day Bond Market Association
Municipal Swap Index Rate and
pay a fixed rate equal to 4.09%.
Broker, JPMorgan Chase Bank
Expires August 2026 $ 15,555 175
-------
Total $ 1,265
=======
See Notes to Financial Statements.
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
Statement of Net Assets
As of October 31, 2005
Assets
Investments in unaffiliated securities, at value (cost--$1,545,139,425) $ 1,590,695,861
Unrealized appreciation on forward interest rate swaps 1,265,357
Cash 586,766
Receivables:
Securities sold $ 61,939,182
Interest 25,545,484 87,484,666
---------------
Prepaid expenses and other assets 46,129
---------------
Total assets 1,680,078,779
---------------
Liabilities
Payables:
Securities purchased 80,431,689
Investment adviser 638,552
Dividends to Common Stock shareholders 603,684
Other affiliates 21,322 81,695,247
---------------
Accrued expenses 127,793
---------------
Total liabilities 81,823,040
---------------
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* issued and outstanding at $25,000 per share
liquidation preference) 570,234,024
---------------
Net Assets Applicable to Common Stock
Net assets applicable to Common Stock $ 1,028,021,715
===============
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 943,024,420
Undistributed investment income--net $ 9,013,346
Undistributed realized capital gains--net 22,431,843
Unrealized appreciation--net 46,821,793
---------------
Total accumulated earnings--net 78,266,982
---------------
Total--Equivalent to $15.27 net asset value per share of Common Stock
(market price--$14.70) $ 1,028,021,715
===============
* Auction Market Preferred Stock.
See Notes to Financial Statements.
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
Statement of Operations
For the Year Ended October 31, 2005
Investment Income
Interest and amortization of premium and discount earned $ 80,357,941
Dividends from affiliates 76,204
---------------
Total income 80,434,145
---------------
Expenses
Investment advisory fees $ 8,120,039
Commission fees 1,446,030
Accounting services 396,114
Transfer agent fees 221,233
Custodian fees 78,700
Professional fees 67,496
Directors' fees and expenses 52,565
Listing fees 47,864
Pricing fees 40,736
Printing and shareholder reports 35,933
Other 115,506
---------------
Total expenses before reimbursement 10,622,216
Reimbursement of expenses (6,773)
---------------
Total expenses after reimbursement 10,615,443
---------------
Investment income--net 69,818,702
---------------
Realized & Unrealized Gain (Loss)--Net
Realized gain (loss) on:
Investments--net 31,593,071
Forward interest rate swaps--net (3,173,573) 28,419,498
---------------
Change in unrealized appreciation/depreciation on:
Investments--net (44,350,103)
Forward interest rate swaps--net 2,110,623 (42,239,480)
--------------- ---------------
Total realized and unrealized loss--net (13,819,982)
---------------
Dividends & Distributions to Preferred Stock Shareholders
Investment income--net (11,038,000)
Realized gain--net (1,394,230)
---------------
Total dividends and distributions to Preferred Stock shareholders (12,432,230)
---------------
Net Increase in Net Assets Resulting from Operations $ 43,566,490
===============
See Notes to Financial Statements.
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
Statements of Changes in Net Assets
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 2005 2004
Operations
Investment income--net $ 69,818,702 $ 66,691,762
Realized gain--net 28,419,498 9,024,316
Change in unrealized appreciation/depreciation--net (42,239,480) 11,955,004
Dividends and distributions to Preferred Stock shareholders (12,432,230) (5,014,754)
--------------- ---------------
Net increase in net assets resulting from operations 43,566,490 82,656,328
--------------- ---------------
Dividends & Distributions to Common Stock Shareholders
Investment income--net (64,072,574) (61,673,831)
Realized gains--net (953,820) --
--------------- ---------------
Net decrease in net assets resulting from dividends and distributions to
Common Stock shareholders (65,026,394) (61,673,831)
--------------- ---------------
Stock Transactions
Offering and underwriting costs resulting from issuance of Preferred Stock -- (1,509,721)
Adjustment of offering costs resulting from issuance of Preferred Stock 58,387 --
Proceeds from issuance of Common Stock resulting from reorganization -- 76,288,852
--------------- ---------------
Net increase in net assets resulting from Stock transactions 58,387 74,779,131
--------------- ---------------
Net Assets Applicable to Common Stock
Total increase (decrease) in net assets applicable to Common Stock (21,401,517) 95,761,628
Beginning of year 1,049,423,232 953,661,604
--------------- ---------------
End of year* $ 1,028,021,715 $ 1,049,423,232
=============== ===============
* Undistributed investment income--net $ 9,013,346 $ 14,317,850
=============== ===============
See Notes to Financial Statements.
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
Financial Highlights
The following per share data and ratios have been derived 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 year $ 15.59 $ 15.36 $ 15.15 $ 15.18 $ 14.16
---------- ---------- ---------- ---------- ----------
Investment income--net 1.04+++ 1.04+++ 1.08+++ 1.07 1.08
Realized and unrealized gain (loss)--net (.22) .25 .16 (.04) 1.05
Dividends and distributions to Preferred Stock
shareholders:
Investment income--net (.16) (.07) (.08) (.11) (.23)
Realized gain--net (.02) -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total from investment operations .64 1.22 1.16 .92 1.90
---------- ---------- ---------- ---------- ----------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net (.95) (.97) (.95) (.95) (.88)
Realized gain--net (.01) -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions to Common Stock
shareholders (.96) (.97) (.95) (.95) (.88)
---------- ---------- ---------- ---------- ----------
Offering costs resulting from the issuance of
Preferred Stock -- (.02) -- -- --
---------- ---------- ---------- ---------- ----------
Adjustment of offering costs resulting from
the issuance of Preferred Stock --++++ -- -- -- --
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 15.27 $ 15.59 $ 15.36 $ 15.15 $ 15.18
========== ========== ========== ========== ==========
Market price per share, end of year $ 14.70 $ 14.57 $ 14.51 $ 14.31 $ 15.06
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 4.54% 8.52% 8.18% 6.52% 13.89%
========== ========== ========== ========== ==========
Based on market price per share 7.69% 7.36% 8.19% 1.42% 25.49%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Common Stock
Total expenses, net of reimbursement** 1.01% .95% .94% .97% .98%
========== ========== ========== ========== ==========
Total expenses** 1.01% .95% .95% .97% .98%
========== ========== ========== ========== ==========
Total investment income--net** 6.62% 6.77% 6.99% 7.16% 7.34%
========== ========== ========== ========== ==========
Amount of dividends to Preferred Stock shareholders 1.05% .51% .49% .73% 1.59%
========== ========== ========== ========== ==========
Investment income--net, to Common Stock
shareholders 5.57% 6.26% 6.50% 6.43% 5.75%
========== ========== ========== ========== ==========
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
Financial Highlights (concluded)
The following per share data and ratios have been derived 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 1.94% 1.08% 1.06% 1.53% 3.30%
========== ========== ========== ========== ==========
Supplemental Data
Net assets applicable to Common Stock,
end of year (in thousands) $1,028,022 $1,049,423 $ 953,662 $ 940,852 $ 940,359
========== ========== ========== ========== ==========
Preferred Stock outstanding, end of year
(in thousands) $ 570,000 $ 570,000 $ 440,000 $ 440,000 $ 440,000
========== ========== ========== ========== ==========
Portfolio turnover 123.85% 144.40% 114.05% 97.34% 99.00%
========== ========== ========== ========== ==========
Leverage
Asset coverage per $1,000 $ 2,804 $ 2,841 $ 3,167 $ 3,138 $ 3,137
========== ========== ========== ========== ==========
Dividends Per Share on Preferred Stock Outstanding
Series A--Investment income--net $ 478 $ 272 $ 270 $ 364 $ 833
========== ========== ========== ========== ==========
Series B--Investment income--net $ 481 $ 283 $ 273 $ 364 $ 842
========== ========== ========== ========== ==========
Series C--Investment income--net $ 502 $ 251 $ 268 $ 360 $ 849
========== ========== ========== ========== ==========
Series D--Investment income--net $ 474 $ 264 $ 247 $ 348 $ 825
========== ========== ========== ========== ==========
Series E--Investment income--net $ 471 $ 259 $ 240 $ 352 $ 790
========== ========== ========== ========== ==========
Series F--Investment income--net $ 481 $ 271 $ 274 $ 359 $ 860
========== ========== ========== ========== ==========
Series G--Investment income--net $ 487 $ 269 $ 304 $ 545 $ 799
========== ========== ========== ========== ==========
Series H+++++--Investment income--net $ 493 $ 63 -- -- --
========== ========== ========== ========== ==========
Series I+++++--Investment income--net $ 498 $ 65 -- -- --
========== ========== ========== ========== ==========
* 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.
++++ Amount is less than $.01 per share.
+++ Based on average shares outstanding.
+++++ Series H and Series I were issued on August 23, 2004.
See Notes to Financial Statements.
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 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. 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
shares are 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 based upon quoted fair values received daily by the
Fund from a 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.
* 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.
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
Notes to Financial Statements (continued)
(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. Any adjustments to estimates
of offering costs were recorded back to capital.
(g) Reclassification--U.S. generally accepted accounting principles require
that certain components of net assets be adjusted to reflect permanent
differences between financial and tax reporting. Accordingly, during the
current year, $12,632 has been reclassified between undistributed net
investment income and undistributed net realized capital gains as a result of
permanent differences attributable to amortization methods on fixed income
securities. This reclassification has no effect on net assets or net asset
values per share.
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 year ended October 31,
2005, FAM reimbursed the Fund in the amount of $6,773.
In addition, Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), an
affiliate of FAM, received $24,600 in commissions on the execution of portfolio
security transactions for the Fund for the year ended October 31, 2005.
For the year ended October 31, 2005, the Fund reimbursed FAM $42,180 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
year ended October 31, 2005 were $1,978,822,104 and $1,998,724,297,
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 year ended October 31, 2005 remained
constant and during 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 October 31, 2005 were as
follows: Series A, 2.55%; Series B, 2.578%; Series C, 2.659%; Series D,
2.599%; Series E, 2.55%; Series F, 2.68%; Series G, 2.50%; Series H, 2.70%;
and Series I, 2.70%.
Shares issued and outstanding during the year ended October 31, 2005 remained
constant. Shares issued and outstanding during 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 year ended October 31, 2005, MLPF&S earned $740,429 as
commissions.
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
Notes to Financial Statements (concluded)
5. Distributions to Shareholders:
The Fund paid a tax-exempt income dividend to holders of Common Stock in the
amount of $.075000 per share on November 29, 2005 to shareholders of record on
November 15, 2005.
The tax character of distributions paid during the fiscal years ended October
31, 2005 and October 31, 2004 was as follows:
10/31/2005 10/31/2004
Distributions paid from:
Tax-exempt income $ 75,110,574 $ 66,688,585
Ordinary income 239,427 --
Long-term capital gain 2,108,623 --
--------------- ---------------
Total distributions $ 77,458,624 $ 66,688,585
=============== ===============
As of October 31, 2005, the components of accumulated earnings on a tax basis
were as follows:
Undistributed tax-exempt income--net $ 8,982,254
Undistributed ordinary income--net 4,613,020
Undistributed long-term capital gains--net 21,056,808
---------------
Total undistributed earnings--net 34,652,082
Capital loss carryforward --
Unrealized gains--net 43,614,900*
---------------
Total accumulated earnings--net $ 78,266,982
===============
* The difference between book-basis and tax-basis net unrealized
gains is attributable primarily to the tax deferral of losses on wash
sales, the tax deferral of losses on straddles and the difference
between book and tax amortization methods for premiums and
discounts on fixed income securities.
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
of MuniYield Insured Fund, Inc.:
We have audited the accompanying statement of net assets of MuniYield Insured
Fund, Inc., including the schedule of investments, as of October 31, 2005, and
the related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended and
financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of material
misstatement. We were not engaged to perform an audit of the Fund's internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of October 31, 2005, by correspondence with
the custodian and brokers. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
MuniYield Insured Fund, Inc. as of October 31, 2005, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each
of the five years in the period then ended, in conformity with U.S. generally
accepted accounting principles.
(Ernst & Young LLP)
Philadelphia, Pennsylvania
December 9, 2005
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
Fund Certification
In May 2005, the Fund filed its Chief Executive Officer Certification for the
prior year with the New York Stock Exchange pursuant to Section 303A.12(a) of
the New York Stock Exchange Corporate Governance Listing Standards.
The Funds' Chief Executive Officer and Chief Financial Officer Certifications
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 were filed with the
Funds' Form N-CSR and are available on the Securities and Exchange
Commission's Web site at http://www.sec.gov.
Important Tax Information
All of the net investment income distributions paid by MuniYield Insured Fund,
Inc. during the taxable year ended October 31, 2005 qualify as tax-exempt
interest dividends for federal income tax purposes.
Additionally, the following table summarizes the taxable per share
distributions paid by the Fund during the year:
Payable Ordinary Long-Term
Date Income Capital Gains
Common Stock Shareholders 12/29/2004 $0.001250 $ 0.012922
Preferred Stock Shareholders:
Series A 12/16/2004 $0.38 $ 3.83
Series A 10/20/2005 None $73.43
Series B 12/23/2004 $0.39 $ 3.99
Series B 10/27/2005 None $76.09
Series C 12/30/2004 $0.35 $ 3.53
Series D 12/09/2004 $0.37 $ 3.72
Series D 10/13/2005 None $72.29
Series E 12/16/2004 $0.36 $ 3.65
Series E 10/13/2005 $3.02 $14.75
Series E 10/20/2005 $3.49 $14.22
Series E 10/27/2005 $3.35 $15.46
Series F 12/28/2004 $0.36 $ 3.63
Series G 12/14/2005 $0.37 $ 3.74
Series G 10/18/2005 $3.31 $16.25
Series G 10/25/2005 $3.65 $14.80
Series H 12/17/2004 $0.08 $ 0.78
Series H 10/14/2005 $3.31 $16.23
Series H 10/21/2005 $3.86 $15.68
Series H 10/28/2005 $3.42 $15.77
Series I 12/20/2004 $0.08 $ 0.80
Series I 10/17/2005 $2.66 $13.08
Series I 10/24/2005 $3.57 $14.51
Series I 10/31/2005 $3.28 $15.17
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
Disclosure of Investment Advisory Agreement
Activities of and Composition of the Board of Directors
All but one member of the Board of Directors is an independent director whose
only affiliation with Fund Asset Management, L.P. (the "Investment Adviser")
or other Merrill Lynch affiliates is as a director of the Fund and certain
other funds advised by the Investment Adviser or its affiliates. The Co-
chairmen of the Board are also independent directors. New director nominees
are chosen as nominees by a Nominating Committee comprised of independent
directors. All independent directors also are members of the Board's Audit
Committee and the independent directors meet in executive session at each in-
person Board meeting. The Board and the Audit Committee meet in person for at
least two days each quarter and conduct other in-person and telephone meetings
throughout the year, some of which are formal board meetings, and some of
which are informational meetings. The independent counsel to the independent
directors attends all in-person Board and Audit Committee meetings and other
meetings at the independent directors' request.
Investment Advisory Agreement--Matters Considered by the Board
Every year, the Board considers approval of the Fund's investment advisory
agreement (the "Investment Advisory Agreement"). The Board assesses the
nature, scope and quality of the services provided to the Fund by the
personnel of the Investment Adviser and its affiliates, including
administrative services, shareholder services, oversight of fund accounting,
marketing services and assistance in meeting legal and regulatory
requirements. The Board also receives and assesses information regarding the
services provided to the Fund by certain unaffiliated service providers.
At various times throughout the year, the Board also considers a range of
information in connection with its oversight of the services provided by the
Investment Adviser and its affiliates. Among the matters considered are:
(a) fees (in addition to management fees) paid to the Investment Adviser and
its affiliates by the Fund; (b) Fund operating expenses paid to third parties;
(c) the resources devoted to and compliance reports relating to the Fund's
investment objective, policies and restrictions, and its compliance with its
Code of Ethics and the Investment Adviser's compliance policies and
procedures; and (d) the nature, cost and character of non-investment
management services provided by the Investment Adviser and its affiliates.
The Board believes that the Investment Adviser is one of the most experienced
global asset management firms and considers the overall services provided by
the Investment Adviser to be of high quality. The Board also believes that the
Investment Adviser is financially sound and well managed and notes that the
Investment Adviser is affiliated with one of America's largest financial
firms. The Board works closely with the Investment Adviser in over-seeing the
Investment Adviser's efforts to achieve good performance. As part of this
effort, the Board discusses portfolio manager effectiveness and, when
performance is not satisfactory, discusses with the Investment Adviser taking
steps such as changing investment personnel.
Annual Consideration of Approval by the Board of Directors
In the period prior to the Board meeting to consider renewal of the Investment
Advisory Agreement, the Board requests and receives materials specifically
relating to the Fund's Investment Advisory Agreement. These materials include
(a) information compiled by Lipper Inc. ("Lipper") on the fees and expenses
and the investment performance of the Fund as compared to a comparable group
of funds as classified by Lipper; (b) information comparing the Fund's market
price with its net asset value per share; (c) a discussion by the Fund's
portfolio management team of investment strategies used by the Fund during its
most recent fiscal year; and (d) information on the profitability to the
Investment Adviser and its affiliates of the Investment Advisory Agreement and
other relationships with the Fund. The Board also considers other matters it
deems important to the approval process such as services related to the
valuation and pricing of Fund portfolio holdings, allocation of Fund portfolio
transactions, the Fund's portfolio turnover statistics, and direct and
indirect benefits to the Investment Adviser and its affiliates from their
relationship with the Fund.
Certain Specific Renewal Data
In connection with the most recent renewal of the Fund's Investment Advisory
Agreement which occurred in August 2005, the independent directors' and
Board's review included the following:
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
Services Provided by the Investment Adviser--The Board reviewed the nature,
extent and quality of services provided by the Investment Adviser, including
the investment advisory services and the resulting performance of the Fund.
The Board focused primarily on the Investment Adviser's investment advisory
services and the Fund's investment performance. The Board compared Fund
performance - both including and excluding the effects of the Fund's fees
and expenses - to the performance of a comparable group of funds, and the
performance of a relevant index or combination of indexes. While the Board
reviews performance data at least quarterly, consistent with the Investment
Adviser's investment goals, the Board attaches more importance to performance
over relatively long periods of time, typically three to five years. The Board
noted that the Fund's performance was outstanding. The Fund's performance
after fees and expenses ranked in the first quintile for each of the one-,
three- and five-year periods ended May 31, 2005. Considering these factors,
the Board concluded that the nature and quality of these services supported
the continuation of the Investment Advisory Agreement.
The Investment Adviser's Personnel and Investment Process--The Board reviews
at least annually the Fund's investment objectives and strategies. The Board
discusses with senior management of the Investment Adviser responsible for
investment operations and the senior management of the Investment Adviser's
municipal investing group the strategies being used to achieve the stated
objectives. Among other things, the Board considers the size, education and
experience of the Investment Adviser's investment staff, its use of
technology, and the Investment Adviser's approach to training and retaining
portfolio managers and other research, advisory and management personnel. The
Board also reviews the Investment Adviser's compensation policies and
practices with respect to the Fund's portfolio managers. The Board also
considered the experience of the Fund's portfolio manager and noted that Mr.
Bock has more than fifteen years of experience in portfolio management. The
Investment Adviser and its investment staff have extensive experience in
analyzing and managing the types of investments used by the Fund. The Board
concluded that the Fund benefits from that expertise.
Management Fees and Other Expenses--The Board reviews the Fund's contractual
management fee rate and actual management fee rate as a percentage of total
assets at common asset levels - the actual rate includes advisory and
administrative service fees and the effects of any fee waivers - compared to
the other funds in its Lipper category. It also compares the Fund's total
expenses to those of other comparable funds. The Fund's contractual management
fee rate and total expenses were lower than the median fees and expenses
charged by comparable funds as determined by Lipper, and the Fund's actual
management fee rate was slightly higher than the median management fee rate
charged by such comparable funds. The Board noted that one of these comparable
funds had a fee waiver in place that would decline over time, increasing the
fund's actual management fee. The Board has concluded that the Fund's
management fee and fee rate and overall expense ratio are reasonable compared
to those of other comparable funds.
Profitability--The Board considers the cost of the services provided to the
Fund by the Investment Adviser, and the Investment Adviser's and its
affiliates' profits in relation to the management and distribution of the
Fund and the MLIM/FAM-advised funds. As part of its analysis, the Board
reviewed the Investment Adviser's methodology in allocating its costs to the
management of the Fund and concluded that there was a reasonable basis for the
allocation. The Board also considered the federal court decisions discussing
an investment adviser's profitability and profitability levels considered to
be reasonable in those decisions. The Board believes the Investment Adviser's
profits are reasonable in relation to the nature and quality of services
provided.
Economies of Scale--The Board considered the extent to which economies of
scale might be realized as the assets of the Fund increase and whether there
should be changes in the management fee rate or structure in order to enable
the Fund to participate in these economies of scale. The Board considered
economies of scale to the extent applicable to the Fund's closed-end structure
and determined that the Fund currently appropriately benefits from any
economies of scale and no changes were currently necessary.
Conclusion
After the independent directors deliberated in executive session, the entire
Board, including all of the independent directors, approved the renewal of the
existing Investment Advisory Agreement, concluding that the advisory fee was
reasonable in relation to the services provided and that a contract renewal
was in the best interests of the shareholders.
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
Officers and Directors
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name, Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
Interested Director
Robert C. Doll, Jr.* President 2005 to President of the MLIM/FAM-advised funds since 131 Funds None
P.O. Box 9011 and present 2005; President of MLIM and FAM since 2001; 177 Portfolios
Princeton, Director Co-Head (Americas Region) thereof from 2000
NJ 08543-9011 to 2001 and Senior Vice President from 1999
Age: 51 to 2001; President and Director of Princeton
Services, Inc. ("Princeton Services") since
2001; President of Princeton Administrators, L.P.
("Princeton Administrators") since 2001; Chief
Investment Officer of OppenheimerFunds, Inc. in
1999 and Executive Vice President thereof from
1991 to 1999.
* Mr. Doll is a director, trustee or member of an advisory board of certain other
investment companies for which MLIM or FAM acts as investment adviser. Mr. Doll is
an "interested person," as described in the Investment Company Act, of the Fund
based on his current positions with MLIM, FAM, Princeton Services and Princeton
Administrators. Directors serve until their resignation, removal or death, or
until December 31 of the year in which they turn 72. As Fund President, Mr. Doll
serves at the pleasure of the Board of Directors.
Independent Directors*
James H. Bodurtha** Director 2002 to Director, The China Business Group, Inc. since 39 Funds None
P.O. Box 9095 present 1996 and Executive Vice President thereof from 59 Portfolios
Princeton, 1996 to 2003; Chairman of the Board, Berkshire
NJ 08543-9095 Holding Corporation since 1980; Partner, Squire,
Age: 61 Sanders & Dempsey from 1980 to 1993.
Kenneth A. Froot Director 2005 to Professor, Harvard University since 1992; 39 Funds None
P.O. Box 9095 present Professor, Massachusetts Institute of 59 Portfolios
Princeton, Technology from 1986 to 1992.
NJ 08543-9095
Age: 48
Joe Grills** Director 1994 to Member of the Committee of Investment of 39 Funds Kimco Realty
P.O. Box 9095 present Employee Benefit Assets of the Association of 59 Portfolios Corporation
Princeton, Financial Professionals ("CIEBA") since 1986;
NJ 08543-9095 Member of CIEBA's Executive Committee since
Age: 70 1988 and its Chairman from 1991 to 1992;
Assistant Treasurer of International Business
Machines Corporation ("IBM") and Chief
Investment Officer of IBM Retirement Funds from
1986 to 1993; Member of the Investment Advisory
Committee of the State of New York Common
Retirement Fund since 1989; Member of the
Investment Advisory Committee of the Howard
Hughes Medical Institute from 1997 to 2000;
Director, Duke University Management Company
from 1992 to 2004, Vice Chairman thereof from
1998 to 2004, and Director Emeritus thereof since
2004; Director, LaSalle Street Fund from 1995 to
2001; Director, Kimco Realty Corporation since 1997;
Member of the Investment Advisory Committee of
the Virginia Retirement System since 1998, Vice
Chairman thereof from 2002 to 2005, and
Chairman thereof since 2005; Director, Montpelier
Foundation since 1998 and its Vice Chairman since
2000; Member of the Investment Committee of the
Woodberry Forest School since 2000; Member of
the Investment Committee of the National Trust
for Historic Preservation since 2000.
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
Officers and Directors (continued)
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name, Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
Independent Directors* (concluded)
Herbert I. London Director 2002 to John M. Olin Professor of Humanities, New 39 Funds None
P.O. Box 9095 present York University since 1993 and Professor 59 Portfolios
Princeton, thereof since 1980; President, Hudson Institute
NJ 08543-9095 since 1997 and Trustee thereof since 1980;
Age: 66 Dean, Gallatin Division of New York University
from 1976 to 1993; Distinguished Fellow, Herman
Kahn Chair, Hudson Institute from 1984 to 1985;
Director, Damon Corp. from 1991 to 1995;
Overseer, Center for Naval Analyses from 1983
to 1993.
Roberta Cooper Ramo Director 2002 to Shareholder, Modrall, Sperling, Roehl, 39 Funds None
P.O. Box 9095 present Harris & Sisk, P.A. since 1993; President, 59 Portfolios
Princeton, American Bar Association from 1995 to 1996
NJ 08543-9095 and Member of the Board of Governors thereof
Age: 63 from 1994 to 1997; Shareholder, Poole, Kelly
and Ramo, Attorneys at Law P.C. from 1977 to
1993; Director of ECMC Group (service provider
to students, schools and lenders) since 2001;
Director, United New Mexico Bank (now Wells
Fargo) from 1983 to 1988; Director, First
National Bank of New Mexico (now Wells Fargo)
from 1975 to 1976; Vice President, American Law
Institute since 2004.
Robert S. Salomon, Jr. Director 1996 to Principal of STI Management (investment 39 Funds None
P.O. Box 9095 present adviser) since 1994; Chairman and CEO of 59 Portfolios
Princeton, Salomon Brothers Asset Management Inc.
NJ 08543-9095 from 1992 to 1995; Chairman of Salomon
Age: 68 Brothers Equity Mutual Funds from 1992 to
1995; regular columnist with Forbes Magazine
from 1992 to 2002; Director of Stock Research
and U.S. Equity Strategist at Salomon Brothers
Inc. from 1975 to 1991; Trustee, Commonfund
from 1980 to 2001.
Stephen B. Swensrud Director 1992 to Chairman of Fernwood Advisors, Inc. 40 Funds None
P.O. Box 9095 present (investment adviser) since 1996; Principal, 60 Portfolios
Princeton, Fernwood Associates (financial consultants)
NJ 08543-9095 since 1975; Chairman of R.P.P. Corporation
Age: 72 (manufacturing company) since 1978; Director
of International Mobile Communications,
Inc. (telecommunications) since 1998.
* Directors serve until their resignation, removal or death, or until December 31
of the year in which they turn 72.
** Chairman of the Board and the Audit Committee.
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 2005
Officers and Directors (concluded)
Position(s) Length of
Held with Time
Name, Address & Age Fund Served Principal Occupation(s) During Past 5 Years
Fund Officers*
Donald C. Burke Vice 1993 to First Vice President of MLIM and FAM since 1997 and Treasurer thereof since 1999;
P.O. Box 9011 President present Senior Vice President and Treasurer of Princeton Services since 1999 and Director
Princeton, and and since 2004; Vice President of FAM Distributors, Inc. ("FAMD") since 1999; Vice
NJ 08543-9011 Treasurer 1999 to President of MLIM and FAM from 1990 to 1997; Director of Taxation of MLIM from
Age: 45 present 1990 to 2001; Vice President, Treasurer and Secretary of the IQ Funds since 2004.
Kenneth A. Jacob Senior 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
P.O. Box 9011 Vice present Management) of MLIM from 1997 to 2000.
Princeton, President
NJ 08543-9011
Age: 54
John M. Loffredo Senior 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
P.O. Box 9011 Vice present Management) of MLIM from 1997 to 2000.
Princeton, President
NJ 08543-9011
Age: 41
William R. Bock Vice 1993 to Director (Municipal Tax-Exempt Fund Management) of MLIM since 2005;
P.O. Box 9011 President present Vice President of MLIM from 1989 to 2005.
Princeton,
NJ 08543-9011
Age: 69
Jeffrey Hiller Chief 2004 to Chief Compliance Officer of the MLIM/FAM-advised funds and First Vice President
P.O. Box 9011 Compliance present and Chief Compliance Officer of MLIM (Americas Region) since 2004; Chief
Princeton, Officer Compliance Officer of the IQ Funds since 2004; Global Director of Compliance at
NJ 08543-9011 Morgan Stanley Investment Management from 2002 to 2004; Managing Director
Age: 54 and Global Director of Compliance at Citigroup Asset Management from 2000 to
2002; Chief Compliance Officer at Soros Fund Management in 2000; Chief Compliance
Officer at Prudential Financial from 1995 to 2000; Senior Counsel in the
Commission's Division of Enforcement in Washington, D.C. from 1990 to 1995.
Alice A. Pellegrino Secretary 2004 to Director (Legal Advisory) of MLIM since 2002; Vice President of MLIM from 1999 to
P.O. Box 9011 present 2002; Attorney associated with MLIM since 1997; Secretary of MLIM, FAM, FAMD
Princeton, and Princeton Services since 2004.
NJ 08543-9011
Age: 45
* Officers of the Fund serve at the pleasure of the Board of Directors.
Custodian
State Street Bank and
Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agents
Common Stock:
EquiServe Trust Company N.A.
(c/o Computershare Investor
Services)
P.O. Box 43010
Providence, RI 02940-3010
1-800-426-5523
Preferred Stock:
The Bank of New York
101 Barclay Street - 7 West
New York, NY 10286
NYSE Symbol
MYI
MUNIYIELD INSURED FUND, INC. OCTOBER 31, 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.
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. OCTOBER 31, 2005
Item 2 - Code of Ethics - The registrant has adopted a code of ethics, as
of the end of the period covered by this report, that applies to
the registrant's principal executive officer, principal financial
officer and principal accounting officer, or persons performing
similar functions. A copy of the code of ethics is available
without charge upon request by calling toll-free 1-800-MER-FUND
(1-800-637-3863).
Item 3 - Audit Committee Financial Expert - The registrant's board of
directors has determined that (i) the registrant has the following
audit committee financial experts serving on its audit committee
and (ii) each audit committee financial expert is independent: (1)
Joe Grills, (2) Robert S. Salomon, Jr., and (3) Stephen B.
Swensrud.
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees - Fiscal Year Ending October 31, 2005 - $34,000
Fiscal Year Ending October 31, 2004 - $32,000
(b) Audit-Related Fees -
Fiscal Year Ending October 31, 2005 - $3,500
Fiscal Year Ending October 31, 2004 - $3,000
The nature of the services include assurance and related services
reasonably related to the performance of the audit of financial
statements not included in Audit Fees.
(c) Tax Fees - Fiscal Year Ending October 31, 2005 - $5,700
Fiscal Year Ending October 31, 2004 - $5,200
The nature of the services include tax compliance, tax advice and
tax planning.
(d) All Other Fees - Fiscal Year Ending October 31, 2005 - $0
Fiscal Year Ending October 31, 2004 - $0
(e)(1) The registrant's audit committee (the "Committee") has
adopted policies and procedures with regard to the pre-approval of
services. Audit, audit-related and tax compliance services
provided to the registrant on an annual basis require specific pre-
approval by the Committee. The Committee also must approve other
non-audit services provided to the registrant and those non-audit
services provided to the registrant's affiliated service providers
that relate directly to the operations and the financial reporting
of the registrant. Certain of these non-audit services that the
Committee believes are a) consistent with the SEC's auditor
independence rules and b) routine and recurring services that will
not impair the independence of the independent accountants may be
approved by the Committee without consideration on a specific case-
by-case basis ("general pre-approval"). However, such services
will only be deemed pre-approved provided that any individual
project does not exceed $5,000 attributable to the registrant or
$50,000 for all of the registrants the Committee oversees. Any
proposed services exceeding the pre-approved cost levels will
require specific pre-approval by the Committee, as will any other
services not subject to general pre-approval (e.g., unanticipated
but permissible services). The Committee is informed of each
service approved subject to general pre-approval at the next
regularly scheduled in-person board meeting.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ending October 31, 2005 - $9,200
Fiscal Year Ending October 31, 2004 - $8,200
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's investment adviser and any entity controlling,
controlled by, or under common control with the investment adviser
that provides ongoing services to the registrant that were not pre-
approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with maintaining the principal
accountant's independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $0, 0%
Item 5 - Audit Committee of Listed Registrants - The following individuals
are members of the registrant's separately-designated standing
audit committee established in accordance with Section 3(a)(58)(A)
of the Exchange Act (15 U.S.C. 78c(a)(58)(A)):
James H. Bodurtha
Kenneth A. Froot (as of June 1, 2005)
Joe Grills
Herbert I. London
Roberta Cooper Ramo
Robert S. Salomon, Jr.
Stephen B. Swensrud
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies -
Proxy Voting Policies and Procedures
Each Fund's Board of Directors/Trustees has delegated to Merrill
Lynch Investment Managers, L.P. and/or Fund Asset Management, L.P.
(the "Investment Adviser") authority to vote all proxies relating
to the Fund's portfolio securities. The Investment Adviser has
adopted policies and procedures ("Proxy Voting Procedures") with
respect to the voting of proxies related to the portfolio
securities held in the account of one or more of its clients,
including a Fund. Pursuant to these Proxy Voting Procedures, the
Investment Adviser's primary objective when voting proxies is to
make proxy voting decisions solely in the best interests of each
Fund and its shareholders, and to act in a manner that the
Investment Adviser believes is most likely to enhance the economic
value of the securities held by the Fund. The Proxy Voting
Procedures are designed to ensure that the Investment Adviser
considers the interests of its clients, including the Funds, and
not the interests of the Investment Adviser, when voting proxies
and that real (or perceived) material conflicts that may arise
between the Investment Adviser's interest and those of the
Investment Adviser's clients are properly addressed and resolved.
In order to implement the Proxy Voting Procedures, the Investment
Adviser has formed a Proxy Voting Committee (the "Committee"). The
Committee is comprised of the Investment Adviser's Chief Investment
Officer (the "CIO"), one or more other senior investment
professionals appointed by the CIO, portfolio managers and
investment analysts appointed by the CIO and any other personnel
the CIO deems appropriate. The Committee will also include two non-
voting representatives from the Investment Adviser's Legal
department appointed by the Investment Adviser's General Counsel.
The Committee's membership shall be limited to full-time employees
of the Investment Adviser. No person with any investment banking,
trading, retail brokerage or research responsibilities for the
Investment Adviser's affiliates may serve as a member of the
Committee or participate in its decision making (except to the
extent such person is asked by the Committee to present information
to the Committee, on the same basis as other interested
knowledgeable parties not affiliated with the Investment Adviser
might be asked to do so). The Committee determines how to vote the
proxies of all clients, including a Fund, that have delegated proxy
voting authority to the Investment Adviser and seeks to ensure that
all votes are consistent with the best interests of those clients
and are free from unwarranted and inappropriate influences. The
Committee establishes general proxy voting policies for the
Investment Adviser and is responsible for determining how those
policies are applied to specific proxy votes, in light of each
issuer's unique structure, management, strategic options and, in
certain circumstances, probable economic and other anticipated
consequences of alternate actions. In so doing, the Committee may
determine to vote a particular proxy in a manner contrary to its
generally stated policies. In addition, the Committee will be
responsible for ensuring that all reporting and recordkeeping
requirements related to proxy voting are fulfilled.
The Committee may determine that the subject matter of a recurring
proxy issue is not suitable for general voting policies and
requires a case-by-case determination. In such cases, the
Committee may elect not to adopt a specific voting policy
applicable to that issue. The Investment Adviser believes that
certain proxy voting issues require investment analysis - such as
approval of mergers and other significant corporate transactions -
akin to investment decisions, and are, therefore, not suitable for
general guidelines. The Committee may elect to adopt a common
position for the Investment Adviser on certain proxy votes that are
akin to investment decisions, or determine to permit the portfolio
manager to make individual decisions on how best to maximize
economic value for a Fund (similar to normal buy/sell investment
decisions made by such portfolio managers). While it is expected
that the Investment Adviser will generally seek to vote proxies
over which the Investment Adviser exercises voting authority in a
uniform manner for all the Investment Adviser's clients, the
Committee, in conjunction with a Fund's portfolio manager, may
determine that the Fund's specific circumstances require that its
proxies be voted differently.
To assist the Investment Adviser in voting proxies, the Committee
has retained Institutional Shareholder Services ("ISS"). ISS is an
independent adviser that specializes in providing a variety of
fiduciary-level proxy-related services to institutional investment
managers, plan sponsors, custodians, consultants, and other
institutional investors. The services provided to the Investment
Adviser by ISS include in-depth research, voting recommendations
(although the Investment Adviser is not obligated to follow such
recommendations), vote execution, and recordkeeping. ISS will also
assist the Fund in fulfilling its reporting and recordkeeping
obligations under the Investment Company Act.
The Investment Adviser's Proxy Voting Procedures also address
special circumstances that can arise in connection with proxy
voting. For instance, under the Proxy Voting Procedures, the
Investment Adviser generally will not seek to vote proxies related
to portfolio securities that are on loan, although it may do so
under certain circumstances. In addition, the Investment Adviser
will vote proxies related to securities of foreign issuers only on
a best efforts basis and may elect not to vote at all in certain
countries where the Committee determines that the costs associated
with voting generally outweigh the benefits. The Committee may at
any time override these general policies if it determines that such
action is in the best interests of a Fund.
From time to time, the Investment Adviser may be required to vote
proxies in respect of an issuer where an affiliate of the Investment
Adviser (each, an "Affiliate"), or a money management or other client of
the Investment Adviser (each, a "Client") is involved. The Proxy Voting
Procedures and the Investment Adviser's adherence to those procedures
are designed to address such conflicts of interest. The Committee
intends to strictly adhere to the Proxy Voting Procedures in all proxy
matters, including matters involving Affiliates and Clients. If,
however, an issue representing a non-routine matter that is material to
an Affiliate or a widely known Client is involved such that the
Committee does not reasonably believe it is able to follow its
guidelines (or if the particular proxy matter is not addressed by the
guidelines) and vote impartially, the Committee may, in its discretion
for the purposes of ensuring that an independent determination is
reached, retain an independent fiduciary to advise the Committee on how
to vote or to cast votes on behalf of the Investment Adviser's clients.
In the event that the Committee determines not to retain an independent
fiduciary, or it does not follow the advice of such an independent
fiduciary, the powers of the Committee shall pass to a subcommittee,
appointed by the CIO (with advice from the Secretary of the Committee),
consisting solely of Committee members selected by the CIO. The CIO
shall appoint to the subcommittee, where appropriate, only persons whose
job responsibilities do not include contact with the Client and whose
job evaluations would not be affected by the Investment Adviser's
relationship with the Client (or failure to retain such relationship).
The subcommittee shall determine whether and how to vote all proxies on
behalf of the Investment Adviser's clients or, if the proxy matter is,
in their judgment, akin to an investment decision, to defer to the
applicable portfolio managers, provided that, if the subcommittee
determines to alter the Investment Adviser's normal voting guidelines
or, on matters where the Investment Adviser's policy is case-by-case,
does not follow the voting recommendation of any proxy voting service or
other independent fiduciary that may be retained to provide research or
advice to the Investment Adviser on that matter, no proxies relating to
the Client may be voted unless the Secretary, or in the Secretary's
absence, the Assistant Secretary of the Committee concurs that the
subcommittee's determination is consistent with the Investment Adviser's
fiduciary duties
In addition to the general principles outlined above, the Investment
Adviser has adopted voting guidelines with respect to certain recurring
proxy issues that are not expected to involve unusual circumstances.
These policies are guidelines only, and the Investment Adviser may elect
to vote differently from the recommendation set forth in a voting
guideline if the Committee determines that it is in a Fund's best
interest to do so. In addition, the guidelines may be reviewed at any
time upon the request of a Committee member and may be amended or
deleted upon the vote of a majority of Committee members present at a
Committee meeting at which there is a quorum.
The Investment Adviser has adopted specific voting guidelines with
respect to the following proxy issues:
* Proposals related to the composition of the Board of Directors of issuers
other than investment companies. As a general matter, the Committee believes
that a company's Board of Directors (rather than shareholders) is most likely
to have access to important, nonpublic information regarding a company's
business and prospects, and is therefore best-positioned to set corporate
policy and oversee management. The Committee, therefore, believes that the
foundation of good corporate governance is the election of qualified,
independent corporate directors who are likely to diligently represent the
interests of shareholders and oversee management of the corporation in a
manner that will seek to maximize shareholder value over time. In individual
cases, the Committee may look at a nominee's history of representing
shareholder interests as a director of other companies or other factors, to
the extent the Committee deems relevant.
* Proposals related to the selection of an issuer's independent auditors. As
a general matter, the Committee believes that corporate auditors have a
responsibility to represent the interests of shareholders and provide an
independent view on the propriety of financial reporting decisions of
corporate management. While the Committee will generally defer to a
corporation's choice of auditor, in individual cases, the Committee may look
at an auditors' history of representing shareholder interests as auditor of
other companies, to the extent the Committee deems relevant.
* Proposals related to management compensation and employee benefits. As a
general matter, the Committee favors disclosure of an issuer's compensation
and benefit policies and opposes excessive compensation, but believes that
compensation matters are normally best determined by an issuer's board of
directors, rather than shareholders. Proposals to "micro-manage" an issuer's
compensation practices or to set arbitrary restrictions on compensation or
benefits will, therefore, generally not be supported.
* Proposals related to requests, principally from management, for approval of
amendments that would alter an issuer's capital structure. As a general
matter, the Committee will support requests that enhance the rights of common
shareholders and oppose requests that appear to be unreasonably dilutive.
* Proposals related to requests for approval of amendments to an issuer's
charter or by-laws. As a general matter, the Committee opposes poison pill
provisions.
* Routine proposals related to requests regarding the formalities of corporate
meetings.
* Proposals related to proxy issues associated solely with holdings of
investment company shares. As with other types of companies, the Committee
believes that a fund's Board of Directors (rather than its shareholders) is
best-positioned to set fund policy and oversee management. However, the
Committee opposes granting Boards of Directors authority over certain
matters, such as changes to a fund's investment objective, that the
Investment Company Act envisions will be approved directly by shareholders.
* Proposals related to limiting corporate conduct in some manner that relates
to the shareholder's environmental or social concerns. The Committee
generally believes that annual shareholder meetings are inappropriate
forums for discussion of larger social issues, and opposes shareholder
resolutions "micromanaging" corporate conduct or requesting release of
information that would not help a shareholder evaluate an investment in
the corporation as an economic matter. While the Committee is generally
supportive of proposals to require corporate disclosure of matters that
seem relevant and material to the economic interests of shareholders, the
Committee is generally not supportive of proposals to require disclosure of
corporate matters for other purposes.
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
as of October 31, 2005.
(a)(1) Mr. William R. Bock is primarily responsible for the
day-to-day management of the registrant's portfolio
("Portfolio Manager"). Mr. Bock is a Director of MLIM and
has been a portfolio manager at MLIM since 1989. He has
twelve years of experience investing in Municipal Bonds.
He has been the portfolio manager and a Vice President of
the Fund since 1993.
(a)(2) As of October 31, 2005:
(iii) Number of Other Accounts and
(ii) Number of Other Accounts Managed Assets for Which Advisory Fee is
and Assets by Account Type Performance-Based
Other Other
(i) Name of Registered Other Pooled Registered Other Pooled
Portfolio Investment Investment Other Investment Investment Other
Manager Companies Vehicles Accounts Companies Vehicles Accounts
William R.
Bock 3 0 0 0 0 0
$ 1,251,340,411 $ 0 $ 0 $ 0 $ 0 $ 0
(iv) Potential Material Conflicts of Interest
Real, potential or apparent conflicts of interest may arise when a
portfolio manager has day-to-day portfolio management responsibilities with
respect to more than one fund or account, including the following:
Certain investments may be appropriate for the Fund and also for other
clients advised by the Investment. Adviser and its affiliates, including other
client accounts managed by the Fund's portfolio management team. Investment
decisions for the Fund and other clients are made with a view to achieving
their respective investment objectives and after consideration of such factors
as their current holdings, availability of cash for investment and the size of
their investments generally. Frequently, a particular security may be bought
or sold for only one client or in different amounts and at different times for
more than one but less than all clients. Likewise, because clients of the
Investment Adviser and its affiliates may have differing investment strategies,
a particular security may be bought for one or more clients when one or more
other clients are selling the security. The investment results for the Fund may
differ from the results achieved by other clients of the Investment Adviser and
its affiliates and results among clients may differ. In addition, purchases or
sales of the same security may be made for two or more clients on the same day.
In such event, such transactions will be allocated among the clients in a
manner believed by the Investment Adviser and its affiliates to be equitable
to each. The Investment Adviser will not determine allocations based on whether
it receives a performance based fee from the client. In some cases, the
allocation procedure could have an adverse effect on the price or amount of
the securities purchased or sold by the Fund. Purchase and sale orders for
the Fund may be combined with those of other clients of the Investment Adviser
and its affiliates in the interest of achieving the most favorable net results
to the Fund.
To the extent that the Fund's portfolio management team has
responsibilities for managing accounts in addition to the Fund, a portfolio
manager will need to divide his time and attention among relevant accounts.
In some cases, a real, potential or apparent conflict may also arise
where (i) the Investment Adviser may have an incentive, such as a performance
based fee, in managing one account and not with respect to other accounts it
manages or (ii) where a member of the Fund's portfolio management team owns an
interest in one fund or account he or she manages and not another.
(a)(3) As of October 31, 2005:
Portfolio Manager Compensation
The Portfolio Manager Compensation Program of MLIM and its affiliates,
including the Investment Adviser, is critical to MLIM's ability to attract and
retain the most talented asset management professionals. This program ensures
that compensation is aligned with maximizing investment returns and it provides
a competitive pay opportunity for competitive performance.
Compensation Program
The elements of total compensation for MLIM and its affiliates portfolio
managers are a fixed base salary, annual performance-based cash and stock
compensation (cash and stock bonus) and other benefits. MLIM has balanced these
components of pay to provide portfolio managers with a powerful incentive to
achieve consistently superior investment performance. By design, portfolio
manager compensation levels fluctuate - both up and down - with the relative
investment performance of the portfolios that they manage.
Base Salary
Under the MLIM approach, like that of many asset management firms, base
salaries represent a relatively small portion of a portfolio manager's total
compensation. This approach serves to enhance the motivational value of the
performance-based (and therefore variable) compensation elements of the
compensation program.
Performance-Based Compensation
MLIM believes that the best interests of investors are served by
recruiting and retaining exceptional asset management talent and managing their
compensation within a consistent and disciplined framework that emphasizes
pay for performance in the context of an intensely competitive market for
talent. To that end, MLIM and its affiliates portfolio manager incentive
compensation is based on a formulaic compensation program. MLIM's formulaic
portfolio manager compensation program includes: investment performance
relative to a subset of general closed-end, insured, leveraged municipal debt
funds over 1-, 3- and 5-year performance periods and a measure of operational
efficiency. Portfolio managers are compensated based on the pre-tax performance
of the products they manage. If a portfolio manager's tenure is less than 5
years, performance periods will reflect time in position. Portfolio managers
are compensated based on products they manage. A discretionary element of
portfolio manager compensation may include consideration of: financial results,
expense control, profit margins, strategic planning and implementation, quality
of client service, market share, corporate reputation, capital allocation,
compliance and risk control, leadership, workforce diversity, supervision,
technology and innovation. MLIM and its affiliates also consider the extent to
which individuals exemplify and foster ML & Co.'s principles of client focus,
respect for the individual, teamwork, responsible citizenship and integrity.
All factors are considered collectively by MLIM management.
Cash Bonus
Performance-based compensation is distributed to portfolio managers in
a combination of cash and stock. Typically, the cash bonus, when combined
with base salary, represents more than 60% of total compensation for portfolio
managers.
Stock Bonus
A portion of the dollar value of the total annual performance-based
bonus is paid in restricted shares of ML & Co. stock. Paying a portion of annual
bonuses in stock puts compensation earned by a portfolio manager for a given
year "at risk" based on the company's ability to sustain and improve its
performance over future periods. The ultimate value of stock bonuses is
dependent on future ML & Co. stock price performance. As such, the stock bonus
aligns each portfolio manager's financial interests with those of the ML & Co.
shareholders and encourages a balance between short-term goals and long-term
strategic objectives. Management strongly believes that providing a significant
portion of competitive performance-based compensation in stock is in the best
interests of investors and shareholders. This approach ensures that portfolio
managers participate as shareholders in both the "downside risk" and "upside
opportunity" of the company's performance. Portfolio managers therefore have a
direct incentive to protect ML & Co.'s reputation for integrity.
Other Compensation Programs
Portfolio managers who meet relative investment performance and
financial management objectives during a performance year are eligible to
participate in a deferred cash program. Awards under this program are in the
form of deferred cash that may be benchmarked to a menu of MLIM mutual funds
(including their own fund) during a five-year vesting period. The deferred cash
program aligns the interests of participating portfolio managers with the
investment results of MLIM products and promotes continuity of successful
portfolio management teams.
Other Benefits
Portfolio managers are also eligible to participate in broad-based plans
offered generally to employees of ML & Co. and its affiliates, including broad-
based retirement, 401(k), health, and other employee benefit plans.
(a)(4) Beneficial Ownership of Securities. As of October 31,
2005, Mr. Bock does not beneficially own any stock issued by
the Fund.
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 second 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 - See Item 2
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: December 16, 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: December 16, 2005
By: /s/ Donald C. Burke
----------------------------
Donald C. Burke,
Chief Financial Officer of
MuniYield Insured Fund, Inc.
Date: December 16, 2005