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 811-6692 Name of Fund: MuniYield Michigan Insured Fund, Inc. Fund Address: P.O. Box 9011 Princeton, NJ 08543-9011 Name and address of agent for service: Terry K. Glenn, President, MuniYield Michigan 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: 04/30/03 Date of reporting period: 11/01/02 - 04/30/03 Item 1 - Attach shareholder report (BULL LOGO) Merrill Lynch Investment Managers Semi-Annual Report April 30, 2003 MuniYield Michigan Insured Fund, Inc. www.mlim.ml.com MuniYield Michigan Insured Fund, Inc. seeks to provide shareholders with as high a level of current income exempt from Federal and Michigan income taxes as is consistent with its investment policies and prudent investment management by investing primarily in a portfolio of long-term municipal obligations the interest on which, in the opinion of bond counsel to the issuer, is exempt from Federal and Michigan income taxes. This report, including the financial information herein, is transmitted to the shareholders of MuniYield Michigan 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 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. MuniYield Michigan Insured Fund, Inc. Box 9011 Princeton, NJ 08543-9011 Printed on post-consumer recycled paper MUNIYIELD MICHIGAN INSURED FUND, INC. The Benefits And Risks of Leveraging MuniYield Michigan Insured Fund, Inc. utilizes leveraging to seek to enhance the yield and net asset value of its Common Stock. However, these objectives cannot be achieved in all interest rate environments. To leverage, the Fund issues Preferred Stock, which pays dividends at prevailing short-term interest rates, and invests the proceeds in long-term municipal bonds. The interest earned on these investments is paid to Common Stock shareholders in the form of dividends, and the value of these portfolio holdings is reflected in the per share net asset value of the Fund's Common Stock. However, in order to benefit Common Stock shareholders, the yield curve must be positively sloped; that is, short-term interest rates must be lower than long-term interest rates. At the same time, a period of generally declining interest rates will benefit Common Stock shareholders. If either of these conditions change, then the risks of leveraging will begin to outweigh the benefits. To illustrate these concepts, assume a fund's Common Stock capitalization of $100 million and the issuance of Preferred Stock for an additional $50 million, creating a total value of $150 million available for investment in long-term municipal bonds. If prevailing short-term interest rates are approximately 3% and long-term interest rates are approximately 6%, the yield curve has a strongly positive slope. The fund pays dividends on the $50 million of Preferred Stock based on the lower short-term interest rates. At the same time, the fund's total portfolio of $150 million earns the income based on long-term interest rates. Of course, increases in short-term interest rates would reduce (and even eliminate) the dividends on the Common Stock. In this case, the dividends paid to Preferred Stock shareholders are significantly lower than the income earned on the fund's long-term investments, and therefore the Common Stock shareholders are the beneficiaries of the incremental yield. However, if short-term interest rates rise, narrowing the differential between short-term and long-term interest rates, the incremental yield pickup on the Common Stock will be reduced or eliminated completely. At the same time, the market value 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. Swap Agreements The Fund may also invest in swap agreements, which are over-the- counter contracts in which one party agrees to make periodic payments based on the change in market value of a specified bond, basket of bonds, or index in return for periodic payments based on a fixed or variable interest rate or the change in market value of a different bond, basket of bonds or index. Swap agreements may be used to obtain exposure to a bond or market without owning or taking physical custody of securities. MuniYield Michigan Insured Fund, Inc., April 30, 2003 DEAR SHAREHOLDER For the six months ended April 30, 2003, the Common Stock of MuniYield Michigan Insured Fund, Inc. had a net annualized yield of 6.06%, based on a period-end per share net asset value of $16.20 and $.487 per share income dividends. Over the same period, the total investment return on the Fund's Common Stock was +6.43%, based on a change in per share net asset value from $15.74 to $16.20, and assuming reinvestment of $.485 per share ordinary income dividends. For the six-month period ended April 30, 2003, the Fund's Auction Market Preferred Stock had an average yield of 1.09% for Series A, 1.00% for Series B and 1.09% for Series C. For a description of the Fund's total investment return based on a change in the per share market value (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 the Financial Statements included in this report. As a closed-end fund, the Fund's shares may trade in the secondary market at a premium or discount to the Fund's net asset value. As a result, total investment returns based on changes in the Fund's market value can vary significantly from total investment return based on changes in the Fund's net asset value. The Municipal Market Environment During the six-month period ended April 30, 2003, amid considerable weekly and monthly volatility, long-term fixed income interest rates generally declined. Geopolitical tensions and volatile equity valuations continued to overshadow economic fundamentals as they have for most of the last 12 months. Reacting to the strong U.S. equity rally that began last October, fixed income bond yields remained under pressure in November 2002, as U.S. equity markets continued to strengthen. During November, the Standard & Poor's 500 (S&P 500) Index rose an additional 5.50%. Equity prices were supported by further signs of U.S. economic recovery, especially improving labor market activity. In late November, third-quarter 2002 U.S. gross domestic product growth was 4%, well above the second-quarter 2002 rate of 1.30%. Financial conditions were also strengthened by a larger-than-expected reduction in short-term interest rates by the Federal Reserve Board in early November. The Federal Funds target rate was lowered 50 basis points (0.50%) to 1.25%, its lowest level since the 1960s. This action by the Federal Reserve Board was largely viewed as being taken to bolster the sputtering U.S. economic recovery. Rebounding U.S. equity markets and the prospects for a more substantial U.S. economic recovery pushed long-term U.S. Treasury yield levels to 5.10% by late November. However, into early 2003, softer equity prices and renewed investor concerns about U.S. military action against Iraq and North Korea again pushed bond prices higher. Reacting to disappointing holiday sales and corporate managements' attempts to scale back analysts' expectation of future earnings, the S&P 500 Index declined more than 10% from December 2002 to February 2003. Fearing an eventual U.S./Iraq military confrontation in 2003, investors again sought the safety of U.S. Treasury obligations and the prices of fixed income issues rose. By the end of February 2003, U.S. Treasury bond yields had declined approximately 40 basis points to 4.67%. Bond yields continued to fall into early March. Once direct U.S. military action against Iraq began, bond yields quickly rose. Prior uncertainty surrounding the Iraqi situation was obviously removed and early U.S. military successes fostered the hope that the conflict would be quickly and positively concluded. Concurrently, the S&P 400 Index rose over 6% as investors, in part, sold fixed income issues to purchase equities in anticipation of a strong U.S. economic recovery once the Iraqi conflict was resolved. By mid-March, U.S. Treasury bond yields again rose to above 5%. However, as there was growing sentiment that hostilities may not be resolved in a matter of weeks, U.S. Treasury bond yields again declined to end the month at 4.81%. For the six months ended April 30, 2003, long-term U.S. Treasury bond yields ratcheted back to near 5% by mid-April, as U.S. equity markets continued to improve and the safe-haven premium U.S. Treasury issues had commanded prior to the beginning of the Iraqi conflict continued to be withdrawn. However, with the quick positive resolution of the Iraqi war, investors quickly resumed their focus on the fragile U.S. economic recovery. Business activity in the United States has remained sluggish, especially job creation. Investors have also been concerned that the recent SARS outbreak would have a material, negative impact on world economic conditions, especially in China and Japan. First quarter 2003 U.S. gross domestic product was released in late April initially estimating U.S. economic activity to be growing at 1.60%, well below many analysts' assessments. These factors, as well as the possibility that the Federal Reserve Board could again lower short-term interest rates to encourage more robust U.S. economic growth, pushed bond prices higher during the last two weeks of the period. By April 30, 2003, long-term U.S. Treasury bond yields had declined to almost 4.75%. Over the past six months, long-term U.S. bond yields fell more than 20 basis points. For the six months ended April 30, 2003, long-term tax-exempt bond yields also fell modestly. Yield volatility was reduced relative to that seen in U.S. Treasury issues, as municipal bond prices were much less sensitive to worldwide geopolitical pressures on a daily and weekly basis. Tax-exempt bond yields generally followed their taxable counterparts higher, responding to a more positive U.S. fixed income environment and continued slow economic growth. After rising approximately 10 basis points in November 2002 to 5.30%, municipal bond yields generally declined through February 2003. At February 28, 2003, long-term tax-exempt revenue bond yields, as measured by the Bond Buyer Revenue Bond Index, fell to approximately 5.05%. However, similar to U.S. Treasury bond yields, once military action began in Iraq, municipal bond yields rose sharply to nearly 5.20% before declining to approximately 5.10% by the end of April. Over the past six months, long-term tax-exempt bond yields fell approximately 11 basis points, slightly less than U.S. Treasury obligations. A number of factors have combined to generate consistently strong demand for municipal bonds throughout the six-month period ended April 30, 2003. Generally weak U.S. equity markets have supported continued positive demand for tax-exempt products as investors have sought the relative security of fixed income issues. Also, with tax- exempt money market rates near 1%, the demand for longer maturity municipal issues has increased as investors have opted to buy longer maturity issues rather than remain in cash reserves. Additionally, investors received approximately $30 billion in January 2003 from bond maturities, coupon income and proceeds from early redemptions. However, these positive demand factors were not totally able to offset the increase in tax-exempt new-issue supply, preventing more significant declines in tax-exempt bond yields. This modest underperformance has served to make municipal bonds a particularly attractive purchase relative to their taxable counterparts. Throughout most of the yield curve, municipal bonds have been able to be purchased at yields near or exceeding those of comparable Treasury issues. Compared to their recent historical averages of 82% - 88% of U.S. Treasury yields, municipal bond yield ratios in their current 95% - 105% range are likely to prove attractive to long-term investors. Declining U.S. equity markets and escalating geopolitical pressures have resulted in reduced economic activity and consumer confidence. It is important to note that, despite all the recent negative factors impeding the growth of U.S. businesses, the U.S. economy still grew at an approximate 2.50% rate for all of 2002, twice that of 2001. Similar expansion is expected for early 2003. Lower oil prices, reduced geopolitical uncertainties, increased Federal spending for defense, and a likely Federal tax cut are all factors which should promote stronger economic growth later this year. However, it is questionable to expect that business and investor confidence can be so quickly restored as to trigger dramatic, explosive U.S. economic growth and engender associated, large-scale interest rate increases. The resumption of solid economic growth is likely to be a gradual process accompanied by equally graduated increases in bond yields. Moderate economic growth, especially within a context of negligible inflationary pressures, should not greatly endanger the positive fixed income environments tax-exempt products currently enjoy. MuniYield Michigan Insured Fund, Inc., April 30, 2003 Specific to Michigan, the state maintains the highest possible credit ratings of Aaa and AAA from Moody's and Standard & Poor's, respectively (although with a negative outlook from both), and is rated AA+ by Fitch. Michigan ranks 33rd in debt per capita and 35th in debt as a percentage of personal income nationally. These ratios are quite low for a populous state and indicate flexibility in responding to economic downturns relative to other states. In line with the national economy, revenues have consistently fallen below state projections with even recent projections off by 15% compared to actual revenues. Accordingly, the state has resorted to drawing down on its Budget Stabilization Fund, from $1 billion in fiscal year 2001 to under $100 million to date, as well as revenue enhancements, such as the sale of state property and expenditure reductions, including delaying capital projects, in order to balance its current budget. For the first time in six years, Michigan will issue cash-flow notes in the amount of more than $1.2 billion during May 2003. The state's new governor, Jennifer Granholm, faces a projected $1.6 billion budget shortfall for fiscal year 2004. This fiscal deficit will likely be addressed by delaying scheduled state employees' pay raises and a hiring freeze, utilizing the Michigan Economic Development Corp. for revenue enhancement, further delaying state capital projects, and repealing business tax cuts. Portfolio Strategy Portfolio activity during the six-month period ended April 30, 2003 was limited and largely focused on adding higher-yielding, corporate- backed issues to the Fund's holdings. The resultant increase in dividend income allowed the Fund's dividend to be raised once thus far in 2003. Current general market municipal bond yields have not proven to be historically attractive long-term investments. Our strategy has been to purchase insured state general obligation bonds and their equivalents rather than unenhanced general obligation bonds since virtually no spread is evidenced. As Michigan's economy continues to weaken, we believe credit deterioration will lead to better relative performance of the insured bonds. This was another reason for our focus on lower-rated issues, which continue to trade at historically attractive yield spreads. When the U.S. economy recovers in the future, these higher-yielding issues are expected to retain more of their market value than higher-rated, general obligation issues. The overall credit quality of the Fund remained high. At April 30, 2003, over 85% of the Fund's assets were insured and rated AAA by at least one of the major rating agencies. We recently adopted a slightly more defensive market position than the one held in 2002. It is expected that a number of positive economic factors, such as those previously mentioned, will result in stronger U.S. economic activity later this year and into 2004. We also expect that increased Federal borrowing, both to replenish recent defense expenditures and offset reduced tax receipts, will put modest upward pressure on interest rates in the coming months. Upon signs of a material, sustainable economic recovery, a more defensive portfolio strategy will be adopted to preserve recent gains in the Fund's net asset value. Throughout the period, the Fund's borrowing costs remained in the 1% - 1.5% range, with interest rates presently near 1%. These attractive funding levels, in combination with a steep tax-exempt yield curve, continued to generate significant income benefits to the Fund's Common Stock shareholders. We do not expect any material reduction in the Fund's borrowing costs in 2003 as no additional easings by the Federal Reserve Board are anticipated. We expect the Fund's short-term borrowing costs to remain at current attractive levels for the coming months. However, should the spread between short-term and long-term interest rates narrow, the benefits of leverage will decline and, as a result, reduce the yield paid on the Fund's Common Stock. (For a more complete explanation of the risks and benefits of leveraging, see page 1 of this report to shareholders.) In Conclusion We appreciate your ongoing interest in the MuniYield Michigan Insured Fund, Inc., and we look forward to assisting you with your financial needs in the months and years to come. Sincerely, (Terry K. Glenn) Terry K. Glenn President and Director (Kenneth A. Jacob) Kenneth A. Jacob Senior Vice President (John M. Loffredo) John M. Loffredo Senior Vice President (Fred K. Stuebe) Fred K. Stuebe Vice President and Portfolio Manager May 20, 2003 PROXY RESULTS During the six-month period ended April 30, 2003, MuniYield Michigan Insured Fund, Inc.'s Common Stock shareholders voted on the following proposal. The proposal was approved at a shareholders' meeting on April 28, 2003. A description of the proposal and number of shares voted are as follows: Shares Voted Shares Withheld For From Voting 1. To elect the Fund's Directors: Terry K. Glenn 17,223,792 477,267 Donald W. Burton 17,219,476 481,583 Fred G. Weiss 17,218,482 482,577 During the six-month period ended April 30, 2003, MuniYield Michigan Insured Fund, Inc.'s Preferred Stock shareholders (Series A, B & C) voted on the following proposal. The proposal was approved at a shareholders' meeting on April 28, 2003. A description of the proposal and number of shares voted are as follows: Shares Voted Shares Withheld For From Voting 1. To elect the Fund's Directors: Terry K. Glenn, Donald W. Burton, M. Colyer Crum, Laurie Simon Hodrick and Fred G. Weiss 5,129 14 MuniYield Michigan Insured Fund, Inc., April 30, 2003 SCHEDULE OF INVESTMENTS (in Thousands) S&P Moody's Face STATE Ratings Ratings Amount Issue Value Michigan-- AAA Aaa $ 1,000 Allegan, Michigan, Public School District, GO, 5.75% due 137.1% 5/01/2030 (d) $ 1,120 Belding, Michigan, Area Schools, GO, Refunding (c): AAA Aaa 785 6.05% due 5/01/2006 (e) 893 AAA Aaa 215 6.05% due 5/01/2021 240 AAA Aaa 1,500 Carman-Ainsworth, Michigan, Community School, GO, 5.50% due 5/01/2020 (c) 1,645 AAA Aaa 1,625 Central Michigan University Revenue Bonds, 5.50% due 4/01/2007 (c)(e) 1,848 AAA Aaa 1,000 Central Montcalm, Michigan, Public Schools, GO, 5.90% due 5/01/2019 (b) 1,152 AAA Aaa 1,250 Chelsea, Michigan, School District, GO, 5.875% due 5/01/2005 (c)(e) 1,373 AAA Aaa 1,000 Comstock Park, Michigan, Public Schools, GO, 5.75% due 5/01/2029 (c) 1,119 Delta County, Michigan, Economic Development Corporation, Environmental Improvement Revenue Refunding Bonds (Mead Westvaco--Escanaba): BBB Baa2 1,500 AMT, Series B, 6.45% due 4/15/2023 1,516 BBB Baa2 2,000 Series A, 6.25% due 4/15/2027 2,020 Detroit, Michigan, City School District, GO, Series A: AAA Aaa 1,000 5.50% due 5/01/2018 (d) 1,112 AAA Aaa 2,300 (School Building and Site Improvement), 5.375% due 5/01/2024 (c) 2,466 Detroit, Michigan, GO (b): AAA Aaa 1,400 5.50% due 4/01/2018 1,530 AAA Aaa 1,325 5.50% due 4/01/2020 1,433 AAA Aaa 2,705 Series B, 6% due 4/01/2015 3,177 AAA Aaa 1,000 Detroit, Michigan, Sewer Disposal Revenue Bonds, Series A, 5.75% due 1/01/2010 (c)(e) 1,170 AAA Aaa 2,400 Detroit, Michigan, Sewer Disposal Revenue Refunding Bonds, Senior Lien, Series A, 5.125% due 7/01/2031 (c) 2,474 Detroit, Michigan, Water Supply System Revenue Bonds: AAA NR* 4,375 DRIVERS, Series 200, 9.84% due 7/01/2011 (c)(e)(g) 5,966 AAA Aaa 4,875 Senior Lien, Series A, 5.75% due 1/01/2010 (c)(e) 5,703 AAA Aaa 1,250 Senior Lien, Series A, 5.875% due 1/01/2010 (c)(e) 1,472 AAA Aaa 3,455 Senior Lien, Series A, 5% due 7/01/2026 (b) 3,560 AAA Aaa 2,400 Senior Lien, Series A, 5% due 7/01/2034 (b) 2,456 AAA Aaa 2,700 Series B, 5.25% due 7/01/2032 (b) 2,839 AAA Aaa 1,415 Detroit, Michigan, Water Supply System, Revenue Refunding Bonds, 6.25% due 7/01/2012 (c)(h) 1,488 BBB Baa2 3,900 Dickinson County, Michigan, Economic Development Corporation, Environmental Improvement Revenue Refunding Bonds (International Paper Company Project), Series A, 5.75% due 6/01/2016 4,049 BBB Baa2 2,500 Dickinson County, Michigan, Economic Development Corporation, PCR, Refunding (Champion International Corporation Project), 5.85% due 10/01/2018 2,542 NR* Baa3 3,100 Dickinson County, Michigan, Healthcare System, Hospital Revenue Refunding Bonds, 5.80% due 11/01/2024 3,023 AAA Aaa 1,610 East Grand Rapids, Michigan, Public School District, GO, 5.75% due 5/01/2009 (d)(e) 1,875 AAA Aaa 2,850 Eastern Michigan University, General Revenue Refunding Bonds, Series A, 5% due 6/01/2028 (c) 2,928 Eastern Michigan University Revenue Bonds, Series B (c): AAA Aaa 1,500 5.60% due 6/01/2025 1,648 AAA Aaa 1,310 5.625% due 6/01/2030 1,443 AAA Aaa 1,025 Eastern Michigan University, Revenue Refunding Bonds, 6% due 6/01/2020 (a) 1,186 NR* Baa2 615 Flint, Michigan, Hospital Building Authority, Revenue Refunding Bonds (Hurley Medical Center), Series A, 5.375% due 7/01/2020 549 AAA Aaa 1,000 Frankenmuth, Michigan, School District, GO, 5.75% due 5/01/2020 (c) 1,131 AAA Aaa 1,100 Grand Blanc, Michigan, Community Schools, GO, 5.625% due 5/01/2020 (c) 1,216 AAA Aaa 12,500 Grand Ledge, Michigan, Public Schools District, GO, 6.60% due 5/01/2004 (b)(e) 13,430 AAA Aaa 2,090 Grand Rapids, Michigan, Building Authority, GO, 5.375% due 8/01/2017 (a) 2,313 Grand Rapids, Michigan, Building Authority Revenue Bonds, Series A (a): AAA Aaa 1,100 5.50% due 10/01/2019 1,218 AAA Aaa 1,500 5.50% due 10/01/2020 1,650 AAA NR* 1,070 Grand Valley, Michigan, State University Revenue Bonds, 5.50% due 2/01/2018 (c) 1,206 AAA NR* 8,425 Greater Detroit, Michigan, Resource Recovery Authority Revenue Bonds, DRIVERS, Series 167, 10.827% due 12/13/2008 (a)(g) 11,393 Hartland, Michigan, Consolidated School District, GO (c)(e): AAA Aaa 3,250 6% due 5/01/2010 (i) 3,848 AAA Aaa 3,575 6% due 5/01/2010 4,233 AAA Aaa 2,500 6% due 5/01/2010 2,960 AAA Aaa 1,475 Haslett, Michigan, Public School District, Building and Site, GO, 5.625% due 5/01/2020 1,631 AAA Aaa 1,575 Jenison, Michigan, Public Schools, Building and Site, GO, 5.50% due 5/01/2019 (c) 1,741 AAA Aaa 3,305 Jonesville, Michigan, Community Schools, GO, 5.75% due 5/01/2029 (c) 3,700 NR* Aaa 6,850 Kalamazoo, Michigan, Hospital Finance Authority, Hospital Facility Revenue Refunding Bonds (Bronson Methodist Hospital), 5.50% due 5/15/2028 (b) 7,185 AAA Aaa 4,000 Kent, Michigan, Hospital Finance Authority, Hospital Revenue Refunding Bonds (Butterworth Hospital), Series A, 7.25% due 1/15/2013 (b) 4,944 Kent, Michigan, Hospital Finance Authority Revenue Bonds (Spectrum Health), Series A: AAA NR* 3,000 5.50% due 1/15/2031 (b) 3,175 AA Aa3 1,000 5.50% due 1/15/2031 1,026 AAA Aaa 1,000 Leslie, Michigan, Public Schools, Ingham and Jackson Counties, GO, Refunding, 6% due 5/01/2005 (a)(e) 1,101 AAA Aaa 5,235 Lincoln Park, Michigan, School District, GO, 7% due 5/01/2006 (c)(e) 6,099 AAA Aaa 4,775 Livonia, Michigan, Public School District, GO (Building and Site), 5.75% due 5/01/2022 (c) 5,368 BBB NR* 2,250 Michigan Higher Education Facilities Authority, Limited Obligation Revenue Refunding Bonds (Hope College), Series A, 5.90% due 4/01/2032 2,324 Portfolio Abbreviations To simplify the listings of MuniYield Michigan Insured Fund, Inc.'s portfolio holdings in the Schedule of Investments, we have abbreviated the names of many of the securities according to the list at right. AMT Alternative Minimum Tax (subject to) COP Certificates of Participation DRIVERS Derivative Inverse Tax-Exempt Receipts GO General Obligation Bonds HDA Housing Development Authority PCR Pollution Control Revenue Bonds RIB Residual Interest Bonds MuniYield Michigan Insured Fund, Inc., April 30, 2003 SCHEDULE OF INVESTMENTS (continued) (in Thousands) S&P Moody's Face STATE Ratings Ratings Amount Issue Value Michigan Michigan Higher Education Facilities Authority, Revenue (continued) Refunding Bonds (College for Creative Studies): NR* Baa2 $ 1,235 5.85% due 12/01/2022 $ 1,233 NR* Baa2 1,145 5.90% due 12/01/2027 1,136 AAA NR* 2,500 Michigan Higher Education Student Loan Authority, Student Loan Revenue Bonds, AMT, Series XVII-B, 5.40% due 6/01/2018 (a) 2,601 AAA NR* 1,065 Michigan Municipal Bond Authority Revenue Bonds (Local Government Loan Program), Group A, 5.50% due 11/01/2020 (a) 1,171 Michigan Municipal Bond Authority, Revenue Refunding Bonds (Local Government Loan Program), Series A: AAA Aaa 1,035 6.50% due 5/01/2012 (a) 1,060 AAA Aaa 1,870 6.50% due 11/01/2012 (b) 1,915 AAA Aaa 1,000 6% due 12/01/2013 (c) 1,088 AAA Aaa 7,000 6.125% due 12/01/2018 (c) 7,621 AA+ Aaa 7,000 Michigan State Building Authority Revenue Bonds, GO, RIB, Series 481, 9.353% due 4/15/2009 (b)(g) 9,167 Michigan State Building Authority, Revenue Refunding Bonds: AAA Aaa 2,500 (Facilities Program), Series I, 5.50% due 10/15/2018 (b) 2,763 NR* Aaa 11,140 RIB, Series 517X, 9.35% due 10/15/2010 (d)(g) 14,524 Michigan State, COP (a): AAA Aaa 3,000 5.40%** due 6/01/2022 1,185 AAA Aaa 3,000 5.50% due 6/01/2027 3,253 AAA Aaa 3,215 Michigan State, HDA, Rental Housing Revenue Bonds, AMT, Series A, 5.30% due 10/01/2037 (b) 3,276 Michigan State, HDA, Revenue Refunding Bonds (f): AA+ NR* 170 AMT, Series B, 6.20% due 6/01/2027 178 AA+ NR* 2,690 Series C, 5.90% due 12/01/2015 2,861 AAA Aaa 2,530 Michigan State Hospital Finance Authority, Hospital Revenue Bonds (Mid-Michigan Obligation Group), Series A, 5.50% due 4/15/2018 (a) 2,785 Michigan State Hospital Finance Authority, Hospital Revenue Refunding Bonds: A+ A2 2,200 (Crittenton Hospital), Series A, 5.625% due 3/01/2027 2,268 NR* Ba1 2,000 (Sinai Hospital), 6.625% due 1/01/2016 1,879 A A1 2,000 (Sparrow Obligation Group), 5.625% due 11/15/2031 2,042 BBB- Ba1 2,000 Michigan State Hospital Finance Authority Revenue Bonds (Detroit Medical Center), Series A, 5.25% due 8/15/2023 1,433 Michigan State Hospital Finance Authority, Revenue Refunding Bonds: AAA Aaa 12,000 (Ascension Health Credit), Series A, 6.125% due 11/15/2009 (b)(e) 14,478 AAA Aa2 1,500 (Ascension Health Credit), Series A, 6.125% due 11/15/2009 (e) 1,810 AAA Aaa 2,500 (Ascension Health Credit), Series A, 6.25% due 11/15/2009 (b)(e) 3,035 AAA Aaa 2,715 (Ascension Health Credit), Series A, 5.75% due 11/15/2009 (b)(e) 3,215 AAA Aaa 4,805 (Mercy Health Services), Series T, 6.50% due 8/15/2013 (b) 5,522 AAA Aaa 2,000 (Mercy Health Services), Series X, 6% due 8/15/2014 (b) 2,275 AAA Aaa 2,200 (Mercy Health Services), Series X, 5.75% due 8/15/2019 (b) 2,408 AAA Aaa 4,930 (Mercy Mount Clemens), Series A, 6% due 5/15/2014 (b) 5,595 AAA Aaa 3,000 (Saint John Hospital), Series A, 6% due 5/15/2013 (a)(h) 3,070 AA- Aa3 3,750 (Trinity Health Credit), Series C, 5.375% due 12/01/2030 3,836 AAA Aaa 6,400 (Trinity Health), Series A, 6% due 12/01/2027 (a) 7,163 Michigan State Strategic Fund, Limited Obligation Revenue Bonds, AMT: BBB Baa1 5,000 (Ford Motor Company Project), Series A, 6.55% due 10/01/2022 5,071 BBB Baa3 3,000 (WMX Technologies Inc. Project), 6% due 12/01/2013 3,046 Michigan State Strategic Fund, Limited Obligation Revenue Refunding Bonds: AAA Aaa 7,250 (Detroit Edison Company), AMT, Series A, 5.55% due 9/01/2029 (b) 7,586 AAA Aaa 6,000 (Detroit Edison Company Fund--Pollution), Series AA, 6.95% due 5/01/2011 (c) 7,451 A- A3 2,175 (Dow Chemical Company Project), AMT, 5.50% due 12/01/2028 2,190 NR* Aaa 5,750 RIB, Series 382, 11.10% due 9/01/2025 (b)(g) 7,133 BBB A3 2,500 Michigan State Strategic Fund, PCR, Refunding (General Motors Corp.), 6.20% due 9/01/2020 2,594 AAA Aaa 1,000 Michigan State Trunk Line Revenue Refunding Bonds, 5.25% due 10/01/2021 (d) 1,070 AAA Aaa 15,000 Monroe County, Michigan, Economic Development Corp., Limited Obligation Revenue Refunding Bonds (Detroit Edison Co. Project), Series AA, 6.95% due 9/01/2022 (c) 19,814 Monroe County, Michigan, PCR (Detroit Edison Company Project), AMT (b): AAA Aaa 9,000 Series CC, 6.55% due 6/01/2024 9,213 AAA Aaa 1,500 Series I-B, 6.55% due 9/01/2024 1,552 AAA Aaa 1,000 Montrose Township, Michigan, School District, GO, 6.20% due 5/01/2017 (b) 1,232 NR* Aaa 1,830 Muskegon Heights, Michigan, Water System Revenue Bonds, Series A, 5.625% due 11/01/2025 (b) 2,018 Northview, Michigan, Public School District, GO, Refunding (b): AAA NR* 2,265 5.80% due 5/01/2006 (e) 2,560 AAA Aaa 235 5.80% due 5/01/2021 260 AAA Aaa 1,100 Norway Vulcan, Michigan, Area Schools, GO, 5.90% due 5/01/2025 (c) 1,252 AAA Aaa 2,425 Oxford, Michigan, Area Community School District, GO, 5.50% due 5/01/2018 (d) 2,681 AAA Aaa 1,000 Plainwell, Michigan, Community Schools, School District, Building and Site, GO, 5.50% due 5/01/2020 (d) 1,101 A NR* 700 Pontiac, Michigan, Tax Increment Finance Authority, Tax Increment Revenue Refunding Bonds (Development Area 2), 5.625% due 6/01/2022 733 AAA Aaa 1,870 Redford, Michigan, Unified School District, GO, 5.90% due 5/01/2006 (c)(e) 2,119 AAA Aaa 1,000 Reeths-Puffer Schools, Michigan, GO, Refunding, 6% due 5/01/2005 (c)(e) 1,101 AAA Aaa 1,800 Rochester, Michigan, Community School District, GO, Series II, 5.50% due 5/01/2015 (c) 2,028 AAA Aaa 2,500 Saginaw, Michigan, Hospital Finance Authority, Revenue Refunding Bonds (Covenant Medical Center), Series E, 5.625% due 7/01/2013 (b) 2,762 NR* Aaa 8,900 Saint Clair County, Michigan, Economic Revenue Refunding Bonds (Detroit Edison Company), RIB, Series 282, 10.87% due 8/01/2024 (a)(g) 12,220 AAA Aaa 1,300 Southfield, Michigan, Library Building Authority, GO, 5.50% due 5/01/2018 (b) 1,447 AAA Aaa 2,090 Southgate, Michigan, Community School District, GO, Refunding, 4% due 5/01/2012 (b) 2,162 Sturgis, Michigan, Public School District, GO (School Building and Site): AAA Aaa 1,900 5.50% due 5/01/2021 2,086 AAA Aaa 2,545 5.625% due 5/01/2030 2,803 MuniYield Michigan Insured Fund, Inc., April 30, 2003 SCHEDULE OF INVESTMENTS (concluded) (in Thousands) S&P Moody's Face STATE Ratings Ratings Amount Issue Value Michigan AAA Aaa $ 1,000 Three Rivers, Michigan, Community Schools GO, 6% due 5/01/2006 (b)(e) $ 1,136 (concluded) AAA Aaa 1,100 Waverly, Michigan, Community School, GO, 5.50% due 5/01/2021 (c) 1,208 AAA Aaa 10,660 Wayne Charter County, Michigan, Airport Revenue Bonds (Detroit Metropolitan Wayne County), AMT, Series A, 5.375% due 12/01/2015 (b) 11,348 AAA Aaa 2,170 Wayne County, Michigan, COP, 5.625% due 5/01/2011 (a) 2,428 West Bloomfield, Michigan, School District, GO Refunding (c): AAA Aaa 1,710 5.50% due 5/01/2017 1,912 AAA Aaa 1,225 5.50% due 5/01/2018 1,361 AAA Aaa 2,405 West Branch-Rose City, Michigan, Area School District, GO, 5.50% due 5/01/2024 (c) 2,609 AAA Aaa 2,485 West Ottawa, Michigan, Public School District, GO, Refunding, Series B, 5.375% due 5/01/2017 (c) 2,763 AAA Aaa 1,300 Ypsilanti, Michigan, School District, GO, Refunding, 5.75% due 5/01/2007 (c)(e) 1,482 Puerto Rico-- A- A3 2,000 Children's Trust Fund, Puerto Rico, Tobacco Settlement Revenue 5.1% Bonds, 5.625% due 5/15/2043 1,621 A- A3 2,300 Children's Trust Fund, Puerto Rico, Tobacco Settlement Revenue Refunding Bonds, 5.50% due 5/15/2039 1,836 AAA Aaa 1,270 Puerto Rico Electric Power Authority, Power Revenue Bonds, Trust Receipts, Class R, Series 16 HH, 9.81% due 7/01/2013 (d)(g) 1,738 AAA Aaa 2,000 Puerto Rico Municipal Finance Agency Revenue Bonds, Series A, 5.25% due 8/01/2019 (d) 2,184 Puerto Rico Public Finance Corporation, Commonwealth Appropriation Revenue Bonds: AAA Aaa 1,000 Series A, 5.375% due 8/01/2024 (b) 1,076 BBB+ Baa3 2,900 Series E, 5.75% due 8/01/2030 3,180 BBB+ Baa3 1,000 Puerto Rico Public Finance Corporation Revenue Bonds, Commonwealth Appropriation, Series E, 5.70% due 8/01/2025 1,055 AAA Aaa 2,150 University of Puerto Rico, University Revenue Refunding Bonds, Series O, 5.375% due 6/01/2030 (b) 2,316 Total Municipal Bonds (Cost--$379,697)--142.2% 418,291 Shares Held Short-Term Securities 6,110 CMA Michigan Municipal Money Fund (j) 6,110 Total Short-Term Securities (Cost--$6,110)--2.1% 6,110 Total Investments (Cost--$385,807)--144.3% 424,401 Variation Margin on Financial Futures Contracts***--(0.1%) (178) Unrealized Depreciation on Forward Interest Rate Swaps****--(0.1%) (300) Other Assets Less Liabilities--3.5% 10,284 Preferred Stock, at Redemption Value--(47.6%) (140,009) --------- Net Assets Applicable to Common Stock--100.0% $ 294,198 ========= (a) AMBAC Insured. (b) MBIA Insured. (c) FGIC Insured. (d) FSA Insured. (e) Prerefunded. (f) FHA Insured. (g) The interest rate is subject to change periodically and inversely based upon prevailing market rates. The interest rate shown is the rate in effect at April 30, 2003. (h) Escrowed to maturity. (i) All or a portion of security held as collateral in connection with open financial futures contracts. (j) Investments in companies considered to be an affiliate of the Fund (such companies are defined as "Affliliated Companies" in Section 2(a)(3) of the Investment Company Act of 1940 are as follows: (in Thousands) Net Dividend Affiliate Activity Income CMA Michigan Municipal Money Fund 6,110 $21 *Not Rated. **Represents a zero coupon bond; the interest rate shown is the effective yield at the time of purchase by the Fund. ***Financial futures contracts sold as of April 30, 2003 were as follows: (in Thousands) Number of Expiration Contracts Issue Date Value 300 U.S. Treasury Notes June 2003 $ 34,538 ----------- Total Financial Futures Contracts Sold (Total Contract Price--$34,784) $ 34,538 =========== ****Forward interest rate swaps entered into as of April 30, 2003 were as follows: (in Thousands) Notional Unrealized Amount Depreciation Receive a variable rate equal to 7-Day Bond Market Association rate at quarterly reset date and pay a fixed rate equal to 3.704% $13,000 $(300) Broker, JP Morgan Chase Expires, June 25, 2013 See Notes to Financial Statements. MuniYield Michigan Insured Fund, Inc., April 30, 2003 STATEMENT OF NET ASSETS As of April 30, 2003 Assets: Investments, at value (identified cost--$385,806,651) $ 424,401,218 Cash 72,561 Receivables: Interest $ 8,042,473 Securities sold 2,563,487 Dividends 129 10,606,089 ------------- Prepaid expenses 20,881 ------------- Total assets 435,100,749 ------------- Liabilities: Unrealized depreciation on forward interest rate swaps 300,300 Payables: Dividends to Common Stock shareholders 200,389 Variation margin 178,125 Investment adviser 177,764 Other affiliates 3,304 559,582 ------------- Accrued expenses and other liabilities 33,588 ------------- Total liabilities 893,470 ------------- Preferred Stock: Preferred Stock, par value $.05 per share (2,000 Series A shares, 2,000 Series B shares and 1,600 Series C shares of AMPS* issued and outstanding at $25,000 per share liquidation preference) 140,009,200 ------------- Net Assets Net assets applicable to Common Stock $ 294,198,079 Applicable To Common Stock: Analysis of Common Stock, par value $.10 per share (18,155,932 shares issued Net Assets and outstanding) $ 1,815,593 Applicable to Paid-in capital in excess of par 268,391,966 Common Stock: Undistributed investment income--net $ 4,101,688 Accumulated realized capital losses on investments--net (18,651,529) Unrealized appreciation on investments--net 38,540,361 ------------- Total accumulated earnings--net 23,990,520 ------------- Total--Equivalent to $16.20 net asset value per share of Common Stock (market price--$14.85) $ 294,198,079 ============= *Auction Market Preferred Stock. See Notes to Financial Statements. STATEMENT OF OPERATIONS For the Six Months Ended April 30, 2003 Investment Interest $ 11,355,345 Income: Dividends 21,005 ------------- Total income 11,376,350 ------------- Expenses: Investment advisory fees $ 1,063,267 Commission fees 175,850 Accounting services 72,897 Professional fees 36,889 Transfer agent fees 31,209 Printing and shareholder reports 18,972 Listing fees 14,337 Custodian fees 13,288 Directors' fees and expenses 11,053 Pricing fees 10,233 Other 22,106 ------------- Total expenses before reimbursement 1,470,101 Reimbursement of expenses (18,204) ------------- Total expenses after reimbursement 1,451,897 ------------- Investment income--net 9,924,453 ------------- Realized & Realized gain on investments--net 238,829 Unrealized Change in unrealized appreciation on investments--net 7,764,953 Gain on ------------- Investments--Net: Total realized and unrealized gain on investments--net 8,003,782 ------------- Dividends to Investment income--net (735,392) Preferred Stock ------------- Shareholders: Net Increase in Net Assets Resulting from Operations $ 17,192,843 ============= See Notes to Financial Statements. MuniYield Michigan Insured Fund, Inc., April 30, 2003 STATEMENTS OF CHANGES IN NET ASSETS For the Six For the Months Ended Year Ended April 30, October 31, Increase (Decrease) in Net Assets: 2003 2002 Operations: Investment income--net $ 9,924,453 $ 20,056,086 Realized gain (loss) on investments--net 238,829 (1,708,542) Change in unrealized appreciation/depreciation on investments--net 7,764,953 (555,321) Dividends to Preferred Stock shareholders (735,392) (1,965,080) ------------- ------------- Net increase in net assets resulting from operations 17,192,843 15,827,143 ------------- ------------- Dividends to Investment income--net (8,796,549) (17,007,569) Common Stock ------------- ------------- Shareholders: Net decrease in net assets resulting from dividends to Common Stock shareholders (8,796,549) (17,007,569) ------------- ------------- Net Assets Total increase (decrease) in net assets applicable to Common Stock 8,396,294 (1,180,426) Applicable To Beginning of period 285,801,785 286,982,211 Common Stock: ------------- ------------- End of period* $ 294,198,079 $ 285,801,785 ============= ============= *Undistributed investment income--net $ 4,101,688 $ 3,709,176 ============= ============= See Notes to Financial Statements. FINANCIAL HIGHLIGHTS The following per share data and ratios For the have been derived from information Six Months provided in the financial statements. Ended April 30, For the Year Ended October 31, Increase (Decrease) in Net Asset Value: 2003 2002 2001 2000 1999 Per Share Net asset value, beginning of period $ 15.74 $ 15.81 $ 14.48 $ 13.91 $ 15.93 Operating --------- --------- --------- --------- --------- Performance:++++++ Investment income--net .55+++ 1.10+++ 1.08 .99 1.04 Realized and unrealized gain (loss) on investments--net .43 (.12) 1.30 .67 (1.79) Dividends and distributions to Preferred Stock shareholders: Investment income--net (.04) (.11) (.24) (.30) (.18) In excess of realized gain on investments--net -- -- -- -- (.03) --------- --------- --------- --------- --------- Total from investment operations .94 .87 2.14 1.36 (.96) --------- --------- --------- --------- --------- Less dividends and distributions to Common Stock shareholders: Investment income--net (.48) (.94) (.81) (.79) (.85) In excess of realized gain on investments--net -- -- -- -- (.21) --------- --------- --------- --------- --------- Capital charge resulting from issuance of Common Stock -- -- --++ -- -- --------- --------- --------- --------- --------- Total dividends and distributions to Common Stock shareholders (.48) (.94) (.81) (.79) (1.06) --------- --------- --------- --------- --------- Net asset value, end of period $ 16.20 $ 15.74 $ 15.81 $ 14.48 $ 13.91 ========= ========= ========= ========= ========= Market price per share, end of period $ 14.85 $ 13.95 $ 14.22 $ 11.9375 $ 12.1875 ========= ========= ========= ========= ========= Total Investment Based on market price per share 10.08%+++++ 4.77% 26.44% 4.62% (17.47%) Return:** ========= ========= ========= ========= ========= Based on net asset value per share 6.43%+++++ 6.33% 15.89% 11.19% (6.13%) ========= ========= ========= ========= ========= Ratios Based on Total expenses, net of reimbursement Average Net and excluding reorganization expenses*** 1.02%* 1.04% 1.05% 1.10% 1.09% Assets of ========= ========= ========= ========= ========= Common Stock: Total expenses, excluding reorganization expenses*** 1.03%* 1.04% 1.05% 1.10% 1.09% ========= ========= ========= ========= ========= Total expenses*** 1.03%* 1.04% 1.05% 1.33% 1.09% ========= ========= ========= ========= ========= Total investment income--net*** 6.94%* 7.10% 7.10% 7.49% 6.85% ========= ========= ========= ========= ========= Amount of dividends to Preferred Stock shareholders .51%* .70% 1.59% 2.18% 1.18% ========= ========= ========= ========= ========= Investment income--net, to Common Stock shareholders 6.43%* 6.40% 5.51% 5.31% 5.67% ========= ========= ========= ========= ========= Ratios Based on Total expenses, net of reimbursement Average Net and reorganization expenses .68%* .70% .70% .72% .76% Assets Of ========= ========= ========= ========= ========= Common & Total expenses, excluding Preferred reorganization expenses .69%* .70% .70% .72% .76% Stock:*** ========= ========= ========= ========= ========= Total expenses .69%* .70% .70% .86% .76% ========= ========= ========= ========= ========= Total investment income--net 4.67%* 4.75% 4.71% 4.87% 4.75% ========= ========= ========= ========= ========= Ratios Based on Dividends to Preferred Stock shareholders 1.06%* 1.40% 3.14% 4.06% 2.66% Average Net ========= ========= ========= ========= ========= Assets Of Preferred Stock: Supplemental Net assets applicable to Common Stock, Data: end of period (in thousands) $ 294,198 $ 285,802 $ 286,982 $ 262,864 $ 103,364 ========= ========= ========= ========= ========= Preferred Stock outstanding, end of period (in thousands) $ 140,000 $ 140,000 $ 140,000 $ 140,000 $ 50,000 ========= ========= ========= ========= ========= Portfolio turnover 10.68% 32.68% 68.17% 51.41% 42.71% ========= ========= ========= ========= ========= Leverage: Asset coverage per $1,000 $ 3,101 $ 3,041 $ 3,050 $ 2,878 $ 3,067 ========= ========= ========= ========= ========= Dividends Per Series A--Investment income--net $ 135 $ 354 $ 792 $ 1,023 $ 663 Share On ========= ========= ========= ========= ========= Preferred Stock Series B--Investment income--net $ 124 $ 362 $ 783 $ 653 -- Outstanding:++++ ========= ========= ========= ========= ========= Series C--Investment income--net $ 136 $ 333 $ 782 $ 678 -- ========= ========= ========= ========= ========= *Annualized. **Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Total investment returns exclude the effects of sales charges. ***Do not reflect the effect of dividends to Preferred Stock shareholders. ++Amount is less than $.01 per share. ++++The Fund's Preferred Stock was issued on November 19, 1992 (Series A) and March 6, 2000 (Series B and Series C). ++++++Certain prior year amounts have been reclassified to conform to current year presentation. +++Based on average shares outstanding. +++++Aggregate total investment return. See Notes to Financial Statements. MuniYield Michigan Insured Fund, Inc., April 30, 2003 NOTES TO FINANCIAL STATEMENTS 1. Significant Accounting Policies: MuniYield Michigan Insured Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a non-diversified, closed-end management investment company. The Fund's financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require the use of management accruals and estimates. These unaudited financial statements reflect all adjustments, which are, in the opinion of management, necessary to a fair statement of the results for the interim period presented. All such adjustments are of a normal, recurring nature. The Fund determines and makes available for publication the net asset value of its Common Stock on a weekly basis. The Fund's Common Stock is listed on the New York Stock Exchange under the symbol MIY. The following is a summary of significant accounting policies followed by the Fund. (a) Valuation of investments--Municipal bonds are traded primarily in the over-the-counter markets and are valued at the most recent bid price or yield equivalent as obtained by the Fund's pricing service from dealers that make markets in such securities. Financial futures contracts and options thereon, which are traded on exchanges, are valued at their closing prices as of the close of such exchanges. Options written or purchased are valued at the last sale price in the case of exchange-traded options. In the case of options traded in the over-counter-market, valuation is the last asked price (options written) or the last bid price (options purchased). Securities with remaining maturities of sixty days or less are valued at amortized cost, which approximates market value. Securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Board of Directors of the Fund, including valuations furnished by a pricing service retained by the Fund, which may utilize a matrix system for valuations. The procedures of the pricing service and its valuations are reviewed by the officers of the Fund under the general supervision of the Board of Directors. (b) Derivative financial 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 movement and movements in the securities market. 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 is authorized to write covered call options and purchase put options. When the Fund writes an option, an amount equal to the premium received by the Fund is reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market to reflect the current market value of the option written. When a security is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the security acquired, or deducted from (or added to) the proceeds of the security sold. When an option expires (or the Fund enters into a closing transaction), the Fund realizes a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction exceeds the premium paid or received). Written and purchased options are non-income producing investments. * Forward interest rate swaps--The Fund is authorized to enter into forward interest rate swaps. In a forward interest rate swap, the Fund and the counterparty agree to pay or receive interest on a specified notional contract amount, commencing on a specified future effective date, unless terminated earlier. The value of the agreement is determined by quoted fair values received daily by the Fund from the counterparty. When the agreement is closed, the Fund records a realized gain or loss in an amount equal to the value of the agreement. (c) Income taxes--It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no Federal income tax provision is required. (d) Security transactions and investment income--Security transactions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on security transactions are determined on the identified cost basis. Interest income is recognized on the accrual basis. Dividend income is recorded on the ex-dividend dates. The Fund amortizes all premiums and discounts on debt securities. (e) Dividends and distributions--Dividends from net investment income are declared and paid monthly. Distributions of capital gains are recorded on the ex-dividend dates. 2. Investment Advisory Agreement and Transactions with Affiliates: The Fund has entered into an Investment Advisory Agreement with Fund Asset Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc. ("PSI"), an indirect, wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the limited partner. FAM is responsible for the management of the Fund's portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Fund. For such services, the Fund pays a monthly fee at an annual rate of .50% of the Fund's average weekly net assets, including proceeds from the issuance of Preferred Stock. For the six months ended April 30, 2003, FAM reimbursed the Fund in the amount of $18,204. For the six months ended April 30, 2003, the Fund reimbursed MLIM $4,885 for certain accounting services. Certain officers and/or directors of the Fund are officers and/or directors of FAM, PSI, and/or ML & Co. 3. Investments: Purchases and sales of investments, excluding short-term securities, for the six months ended April 30, 2003 were $44,235,401 and $46,474,805, respectively. Net realized gains (losses) for the six months ended April 30, 2003 and net unrealized gains (losses) as of April 30, 2003 were as follows: Realized Unrealized Gains (Losses) Gains (Losses) Long-term investments $ 2,078,917 $ 38,594,567 Forward interest rate swaps -- (300,300) Financial futures contracts (1,840,088) 246,094 ------------ ------------ Total $ 238,829 $ 38,540,361 ============ ============ As of April 30, 2003, net unrealized appreciation for Federal income tax purposes aggregated $38,721,804, of which $39,720,381 related to appreciated securities and $998,577 related to depreciated securities. The aggregate cost of investments at April 30, 2003 for Federal income tax purposes was $385,679,414. 4. Stock Transactions: The Fund is authorized to issue 200,000,000 shares of stock, including Preferred Stock, par value $.10 per share, all of which were initially classified as Common Stock. The Board of Directors is authorized, however, to reclassify any unissued shares of stock without approval of holders of Common Stock. Common Stock Shares issued and outstanding during the six months ended April 30, 2003 and for the year ended October 31, 2002 remained constant. Preferred Stock Auction Market Preferred Stock ("AMPS") are shares of Preferred Stock of the Fund, with a par value of $.05 per share and a liquidation preference of $25,000 per share plus accrued and unpaid dividends, that entitle their holders to receive cash dividends at an annual rate that may vary for the successive dividend periods. The yields in effect at April 30, 2003 were as follows: Series A, 1.25%, Series B, 1.15% and Series C, 1.20%. Shares issued and outstanding during the six months ended April 30, 2003 and for the year ended October 31, 2002 remained constant. The Fund pays commissions to certain broker-dealers at the end of each auction at an annual rate ranging from .25% to .375%, calculated on the proceeds of each auction. For the six months ended April 30, 2003, Merrill Lynch, Pierce, Fenner & Smith Incorporated, an affiliate of FAM, earned $90,108 as commissions. 5. Capital Loss Carryforward: On October 31, 2002, the Fund had a net capital loss carryforward of $14,795,324, of which $746,473 expires in 2003; $1,458,638 expires in 2006; $3,974,932 expires in 2007; $7,490,629 expires in 2008 and $1,124,652 expires in 2010. This amount will be available to offset like amounts of any future taxable gains. 6. Subsequent Event: The Fund paid a tax-exempt income dividend to holders of Common Stock in the amount of $.082000 per share on May 29, 2003 to shareholders of record on May 16, 2003. MuniYield Michigan Insured Fund, Inc., April 30, 2003 QUALITY PROFILE The quality ratings of securities in the Fund as of April 30, 2003 were as follows: Percent of S&P Rating/Moody's Rating Total Investments AAA/Aaa 85.6% AA/Aa 1.9 A/A 3.1 BBB/Baa 7.6 BB/Ba 0.4 NR (Not Rated) 1.4 MANAGED 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 consistent yield to the current trading price of Common Stock of the Fund, the Fund may at times pay out less than the entire amount of net investment income earned in any particular month and may at times in any 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. OFFICERS AND DIRECTORS Terry K. Glenn, President and Director Donald W. Burton, Director M. Colyer Crum, Director Laurie Simon Hodrick, Director Fred G. Weiss, Director Kenneth A. Jacob, Senior Vice President John M. Loffredo, Senior Vice President Fred K. Stuebe, Vice President Donald C. Burke, Vice President and Treasurer Brian D. Stewart, Secretary J. Thomas Touchton, Director of MuniYield Michigan Insured Fund, Inc., has recently retired. The Fund's Board of Directors wishes Mr. Touchton well in his retirement. Custodian The Bank of New York 100 Church Street New York, NY 10286 Transfer Agents Common Stock: The Bank of New York 101 Barclay Street New York, NY 10286 Preferred Stock: The Bank of New York 100 Church Street New York, NY 10286 NYSE Symbol MIY Item 2 - Did registrant adopt 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, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party? If not, why not? Briefly describe any amendments or waivers that occurred during the period. State here if code of ethics/amendments/waivers are on website and give website address-. State here if fund will send code of ethics to shareholders without charge upon request--N/A (not answered until July 15, 2003 and only annually for funds) Item 3 - Did the registrant's board of directors determine that the registrant either: (i) has at least one audit committee financial expert serving on its audit committee; or (ii) does not have an audit committee financial expert serving on its audit committee? If yes, disclose name of financial expert and whether he/she is "independent," (fund may, but is not required, to disclose name/independence of more than one financial expert) If no, explain why not. -N/A (not answered until July 15, 2003 and only annually for funds) Item 4 - Disclose annually only (not answered until December 15, 2003) (a) Audit Fees - Disclose aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. N/A. (b) Audit-Related Fees - Disclose aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. N/A. (c) Tax Fees - Disclose aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. Registrants shall describe the nature of the services comprising the fees disclosed under this category. N/A. (d) All Other Fees - Disclose aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category. N/A. (e)(1) Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. N/A. (e)(2) Disclose the percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. N/A. (f) If greater than 50%, disclose the percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees. N/A. (g) Disclose the aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant. N/A. (h) Disclose whether the registrant's audit committee has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser (not including any subadviser whose role is primarily portfolio management and is subcontracted with or overseen by another 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. N/A. Item 5 - If the registrant is a listed issuer as defined in Rule 10A- 3 under the Exchange Act, state whether or not the registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. If the registrant has such a committee, however designated, identify each committee member. If the entire board of directors is acting as the registrant's audit committee in Section 3(a)(58)(B) of the Exchange Act, so state. If applicable, provide the disclosure required by Rule 10A-3(d) under the Exchange Act regarding an exemption from the listing standards for audit committees. (Listed issuers must be in compliance with the new listing rules by the earlier of their first annual shareholders meeting after January 2004, or October 31, 2004 (annual requirement)) Item 6 - Reserved Item 7 - For closed-end funds that contain voting securities in their portfolio, describe the policies and procedures that it uses to determine how to vote proxies relating to those portfolio securities. N/A (not answered until July 1, 2003) Item 8--Reserved Item 9(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. Item 9(b)--There were no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Item 10 - Exhibits 10(a) - Attach code of ethics or amendments/waivers, unless code of ethics or amendments/waivers is on website or offered to shareholders upon request without charge. N/A. 10(b) - Attach certifications pursuant to Section 302 of the Sarbanes-Oxley Act. 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 Michigan Insured Fund, Inc. By: _/s/ Terry K. Glenn_______ Terry K. Glenn, President of MuniYield Michigan Insured Fund, Inc. Date: June 23, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: _/s/ Terry K. Glenn________ Terry K. Glenn, President of MuniYield Michigan Insured Fund, Inc. Date: June 23, 2003 By: _/s/ Donald C. Burke________ Donald C. Burke, Chief Financial Officer of MuniYield Michigan Insured Fund, Inc. Date: June 23, 2003 Attached hereto as an exhibit are the certifications pursuant to Section 906 of the Sarbanes-Oxley Act.