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 811-07136
Name of Fund: MuniYield Pennsylvania Insured Fund
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 Pennsylvania Insured Fund, 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 Florida Insured Fund
MuniYield New Jersey Insured Fund, Inc.
MuniYield Pennsylvania Insured Fund
Annual Reports
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
These reports, including the financial information herein, are transmitted
to shareholders of MuniYield Florida Insured Fund, MuniYield New Jersey
Insured Fund, Inc. and MuniYield Pennsylvania Insured Fund for their
information. This is not a prospectus. Past performance results shown in these
reports should not be considered a representation of future performance. The
Funds have leveraged their Common Shares or Stock and intend to remain
leveraged by issuing Preferred Shares or Stock to provide the Common
Shareholders or Common Stock Shareholders with potentially higher rates of
return. Leverage creates risks for Common Shareholders or Common Stock
Shareholders, including the likelihood of greater volatility of net asset
value and market price of the Common Shares or Stock, and the risk that
fluctuations in the short-term dividend rates of the Preferred Shares or
Stock may affect the yield to Common Shareholders or 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 Funds use 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
Funds vote proxies relating to securities held in the Funds' portfolios
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 Florida Insured Fund
MuniYield New Jersey Insured Fund, Inc.
MuniYield Pennsylvania Insured Fund
Box 9011
Princeton, NJ 08543-9011
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MuniYield Florida Insured Fund
MuniYield New Jersey Insured Fund, Inc.
MuniYield Pennsylvania Insured Fund
The Benefits and Risks of Leveraging
The Funds utilize leveraging to seek to enhance the yield and net asset value
of their Common Shares or Common Stock. However, these objectives cannot be
achieved in all interest rate environments. To leverage, the Funds issue
Preferred Shares or 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 Shares or
Stock, is paid to Common Shareholders or 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 Shares or Stock. However, in
order to benefit Common Shareholders or 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 Shareholders or 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 Shares or Stock
capitalization of $100 million and the issuance of Preferred Shares or 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 Shares or 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 Shareholders or Common Stock
shareholders are significantly lower than the income earned on the fund's long-
term investments, and therefore the Common Shareholders or 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 Shares or
Stock will be reduced or eliminated completely. At the same time, the market
value of the fund's Common Shares or 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 Shares' or 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 Shares or Stock does not fluctuate. In
addition to the decline in net asset value, the market value of the fund's
Common Shares or Stock may also decline.
As a part of their investment strategy, the Funds 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 Funds 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 Funds invest in inverse floaters, the market value of each
Fund's portfolio and the net asset value of each Fund's shares may also be
more volatile than if the Funds did not invest in these securities. As of
October 31, 2005, the percentages of MuniYield Florida Insured Fund's,
MuniYield New Jersey Insured Fund, Inc.'s and MuniYield Pennsylvania Insured
Fund's total net assets invested in inverse floaters were 5.37%, 9.08% and
11.26%, respectively, before the deduction of Preferred Shares or Stock.
ANNUAL REPORTS 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/Trustee
ANNUAL REPORTS OCTOBER 31, 2005
A Discussion With Your Funds' Portfolio Managers
Throughout the year, we continued to focus on enhancing the income provided to
shareholders and, by period-end, the Funds had relatively neutral exposure to
interest rate risk.
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. By the end of June 2005, 30-year U.S. Treasury bond
yields had declined 60 basis points (.60%) to 4.19%. Bond prices improved in
response to several favorable factors, including moderating U.S. economic
growth, slowing growth in foreign economies, modest inflationary pressures and
strong demand for U.S. Treasury issues on the part of Asian governments.
During the final months of the period, however, bond yields rose (prices fell)
as investors worried that higher energy costs in the wake of Hurricanes
Katrina and Rita would pressure inflation upward. Stronger-than-expected third
quarter gross domestic product growth also added to inflationary concerns. 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 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.
MuniYield Florida Insured Fund
Describe conditions in the State of Florida.
Florida maintains credit ratings of AA1 from Moody's, AAA from Standard &
Poor's and AA+ from Fitch - all with stable trends. The favorable ratings are
based on the state's solid economic and financial performance, in addition to
moderate debt and a proactive government that responds to economic downturns
faster than other states. Florida's continued economic strength is bolstered
by robust population growth, which is attributed to the state's attractive
physical environment and favorable business climate. Although the growth in
population has put a strain on services such as education, transportation and
healthcare, it also has allowed the state to recover more quickly from sub par
economic trends.
ANNUAL REPORTS OCTOBER 31, 2005
Currently, Florida's revenues are higher than budgeted and expenditures remain
under control due to prudent fiscal oversight. The fiscal year 2005 budget was
brought into balance through tight expenditure controls, including outsourcing
work and requiring local governments to pick up costs historically incurred
by the state. To pay for these additional expenses, municipalities imposed
increases to property taxes and/or local sales taxes through voter initiatives.
Given the government's concerns over the high healthcare costs facing the
state, Governor Jeb Bush has proposed a partially private health insurance
plan. Florida continues to maintain solid fund balances with consistent
General Fund operations. In addition, the state has a working Capital Reserve
Fund and a Budget Stabilization Fund in excess of $2 billion.
How did the Fund perform during the fiscal year?
For the 12-month period ended October 31, 2005, the Common Shares of MuniYield
Florida Insured Fund had net annualized yields of 6.03% and 6.26%, based on a
year-end per share net asset value of $14.72 and a per share market price of
$14.18, respectively, and $.888 per share income dividends. Over the same
period, the total investment return on the Fund's Common Shares was +2.72%,
based on a change in per share net asset value from $15.22 to $14.72, and
assuming reinvestment of all distributions.
The Fund's return, based on net asset value, lagged the +3.81% average return
of the Lipper Florida Municipal Debt Funds category for the 12-month period.
(Funds in this Lipper category limit their investment to securities exempt
from taxation in Florida or a city in Florida. Notably, the Fund has more
limited investment parameters than many of its Lipper peers. Specifically, as
an insured product, we are limited in our ability to invest in lower-quality
issues. This placed the Fund at a competitive disadvantage as credit spreads
tightened significantly and lower-rated and non-rated credits outperformed
higher-quality issues.
Factors that had a positive influence on Fund performance included our yield
curve positioning. Essentially, we continued to focus on the longer end of the
curve, which significantly outperformed the short end as the yield curve
flattened and shorter-term bond prices suffered. Our large concentration in
bonds with 5.50% and higher coupons also was additive to Fund results as these
bonds outperformed those with lower coupons. Offsetting this was the
aforementioned underexposure to lower-quality issues and the underperformance
of prerefunded bonds and those with short calls, some of which we retained in
the portfolio for their attractive acquisition yields. Overall, however, the
Fund continued to provide a competitive yield and positive total return while
investing in a portfolio consisting primarily of high-quality, insured bonds.
For the six-month period ended October 31, 2005, the total investment return
on the Fund's Common Shares was -.08%, based on a change in per share net
asset value from $15.17 to $14.72, 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 Shares (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 Shares can vary significantly from total investment return
based on changes in the Fund's net asset value.
What changes were made to the portfolio during the period?
We continued to focus on increasing the income provided to shareholders and
muting the Fund's net asset value volatility. To that end, we sought to sell
some of the portfolio's prerefunded bonds in the five-year - 10-year maturity
range. In doing so, we were cognizant not to sell bonds that were booked at
higher yields than are available in the current market.
ANNUAL REPORTS OCTOBER 31, 2005
A Discussion With Your Funds' Portfolio Managers (continued)
In August, the Fund increased its use of leverage through the issuance of
$12 million in additional Auction Market Preferred Shares (AMPS). With the
proceeds, we generally focused on premium-coupon bonds in the 20-year - 25-year
maturity range whenever they became available. This is where we have been able
to capture higher yields with reduced volatility. Our efforts in this area have
been somewhat limited by a lack of new long-term bonds in the Florida municipal
market. Although new issuance increased 38% versus the previous 12-month
period, much of the supply in the market has come in the form of refinancings,
the majority of which offered maturities of only 15 years - 20 years and yields
below 5%. Importantly, we remained fully invested throughout the fiscal year in
order to augment the portfolio's yield.
For the six-month period ended October 31, 2005, the Fund's AMPS had average
yields of 2.45% for Series A and 2.43% for Series B. 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 Shares from the leveraging of
Preferred Shares. 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 Shares. At the end of the
period, the Fund's leverage amount, due to AMPS, was 36.66% of total net
assets, before the deduction of Preferred Shares. (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 would characterize the Fund's position as fairly neutral in terms of
interest rate risk. Currently, we favor bonds with 20-year - 25-year maturities
and prefer to structure coupons of 5.25%. Long-term bond yields, which had been
slow to react to the Fed's interest rate hikes, have started to inch upward. We
will look for an increase in long-term rates as an opportunity to pursue higher-
coupon bonds in the 20-year--30-year maturity range and will remain fully
invested to augment shareholders' income.
MuniYield New Jersey Insured Fund, Inc.
Describe conditions in the State of New Jersey.
New Jersey's fiscal year 2006 budget was passed on June 30, 2005. Shortly
after, Standard & Poor's (S&P) upgraded the state's credit rating to AA while
Moody's and Fitch affirmed the state's credit ratings of Aa3 and AA-,
respectively, all with stable outlooks. The S&P rating was based largely on
the state's improving revenue collections in fiscal year 2005 and a more
structurally balanced 2006 budget when compared to the amount of one-time
revenues used in the past several years. However, New Jersey's plan to use
$150 million of tobacco settlement refinancing proceeds to balance the 2006
budget was challenged in court. The lawsuit alleged that using the proceeds in
the budget was deficit funding and, therefore, was unconstitutional as ruled
by New Jersey's Supreme Court last year when the state used revenue from
securitizing motor vehicle surcharges and cigarette taxes to balance the
budget.
New Jersey's economy continued to show signs of recovery as revenues through
the first 10 months of fiscal year 2005 came in better than budget. The
largest revenue increase was in the income tax category, which rose by 31.7%
compared to the prior year. Accordingly, one of New Jersey's strongest credit
strengths is its high wealth levels. In fact, the U.S. Census Bureau reported
in August that New Jersey was the wealthiest state in the nation with a median
household income of $61,359. Connecticut placed second with a median household
income of $60,528. However, New Jersey's unemployment rate rose to 4.2% in the
month of August, up from 4.1% in July, 4% in June and 3.9% in May. Although
the state's unemployment rate has trended upward, it compared favorably to the
national rate of 4.9% in August.
How did the Fund perform during the fiscal year?
For the 12-month period ended October 31, 2005, the Common Stock of MuniYield
New Jersey Insured Fund, Inc. had net annualized yields of 6.01% and 6.18%,
based on a year-end per share net asset value of $15.07 and a per share market
price of $14.65, respectively, and $.906 per share income dividends. Over the
same period, the total investment return on the Fund's Common Stock was
+3.49%, based on a change in per share net asset value from $15.46 to $15.07,
and assuming reinvestment of all distributions.
ANNUAL REPORTS OCTOBER 31, 2005
The Fund's total return, based on net asset value, trailed the +4.88% average
return of the Lipper New Jersey Municipal Debt Funds category for the 12-month
period. (Funds in this Lipper category limit their investment to those
securities exempt from taxation in New Jersey or a city in New Jersey.)
Notably, the Fund was disadvantaged relative to many of its peers by its
conservative investment parameters. Specifically, the Fund is limited in its
ability to invest in lower-quality issues, which outperformed during the year
as credit spreads (versus higher-quality issues of comparable maturity)
tightened dramatically. Per its investment parameters, roughly 80% of the
portfolio is invested in AAA-rated, insured bonds.
Offsetting this was the positive influence of our yield curve positioning,
which was designed to take advantage of what we expected would be a flattening
trend, and the extension of the portfolio's duration to a more neutral
posture. We moved a portion of bonds in the 10-year - 15-year maturity range
further out on the curve to the 20-year - 25-year area. Our strategy paid off
as the yield curve flattened and longer-term bonds significantly outpaced
shorter-term issues.
For the six-month period ended October 31, 2005, the total investment return
on the Fund's Common Stock was -.30%, based on a change in per share net asset
value from $15.56 to $15.07, 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 may 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 continued to reallocate the portfolio's assets into longer-dated sectors of
the municipal yield curve in an effort to capitalize on our view that the
curve would flatten. New purchases were largely funded from the proceeds of
bond calls as well as outright sales of relatively short, prerefunded bonds
that had appreciated in value.
Over the fiscal year, municipal bond supply in the State of New Jersey was
roughly comparable to the same 12 months one year ago, at approximately
$15 billion in long-term issuance. Notably, new issuance slowed in the last
six months of the period. The past few months have seen a modest rise in
interest rates, making refinancing a less attractive proposition. However,
the slowdown in the new-issue calendar also reflects the fact that the state
pursued the bulk of its refunding opportunities earlier in the year. Pending
the outcome of the aforementioned legal challenge, new supply in the New Jersey
municipal market could come in the form of a large refinancing of tobacco
settlement bonds.
For the six-month period ended October 31, 2005, the Fund's Auction Market
Preferred Stock (AMPS) had an average yield of 2.20% for Series A and 2.08%
for Series B. 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 35.20% 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?
The Fund ended the period relatively neutral with respect to interest rate
risk, and with a high-quality credit profile. For the most part, it appears
that credit spreads have stabilized and, in some cases, widened - notably in
the tobacco sector. Thus, we maintain an underweight exposure to this sector
in anticipation of an increase in supply. We believe this should benefit the
Fund's performance relative to its Lipper peers.
ANNUAL REPORTS OCTOBER 31, 2005
A Discussion With Your Funds' Portfolio Managers (concluded)
MuniYield Pennsylvania Insured Fund
Describe conditions in the Commonwealth of Pennsylvania.
Pennsylvania continued to protect its credit ratings of Aa2, AA and AA from
Moody's, Standard & Poor's and Fitch, respectively, by maintaining
conservative budgeting practices, a relatively low debt burden and a
diversified service economy. Fiscal challenges in recent years were primarily
managed with the drawdown of the commonwealth's rainy-day reserves and state-
source tax increases. The recovery in the national economy also helped to
bolster revenue growth and stabilized Pennsylvania's finances at a
satisfactory level. General fund collections for fiscal year 2004-2005 are
projected to exceed the official budget estimates by 1.9%, or $442 million.
Year-over-year general fund revenues gained 6.5% as a result of strong growth
in personal income and corporate taxes. The enacted 2005-2006 budget increases
expenditures 3.6% over last year, for a budget of $24.6 billion.
Major gubernatorial initiatives that will impact Pennsylvania's finances over
the next several years include up to $2 billion in debt issuance to fund
economic stimulus programs ranging from venture capital guarantees, real
estate development and strengthening tourism and agricultural bases. The
commonwealth's share of K-12 education expenditures will increase with local
property tax reductions funded from slot machine tax revenues. Gaming revenues
of approximately $1 billion from the installation of 61,000 slot machines at 12
facilities are expected to be realized in 2007. In a somewhat controversial
move, Act 72 requires that school districts opt into the program by agreeing to
tax limits and increasing earned income taxes in exchange for state dollars to
lower property taxes.
Broad-based job growth continues to be a favorable trend in the commonwealth.
August 2005 employment was up 4,700 to 5,711,600, just under Pennsylvania's
all-time high of 5,719,300 in 2001. The manufacturing sector provided just
under 12% of employment and continues to show incremental contraction in
contrast to the leading professional and business services, leisure and
hospitality, and government sectors. Pennsylvania's unemployment rate was 5.0%
in August, down from 5.1% in July. Personal income growth of 1.4% just trailed
the U.S. average growth rate, ranking the Keystone State 34th in the second
quarter of 2005, but overall reflected a wealth level on par with the nation.
How did the Fund perform during the fiscal year?
For the 12-month period ended October 31, 2005, the Common Shares of MuniYield
Pennsylvania Insured Fund had net annualized yields of 6.09% and 6.36%, based
on a year-end per share net asset value of $15.57 and a per share market price
of $14.91, respectively, and $.948 per share income dividends. Over the same
period, the total investment return on the Fund's Common Shares was +3.16%,
based on a change in per share net asset value from $16.04 to $15.57, and
assuming reinvestment of all distributions.
The Fund provided an above-average yield during the 12-month period although
its total return, based on net asset value, fell short of the +3.27% average
return of the Lipper Pennsylvania Municipal Debt Funds category. (Funds in
this Lipper category limit their investment to those securities exempt from
taxation in Pennsylvania or a city in Pennsylvania.)
Detracting from relative results was the Fund's conservative investment
parameters. Unlike many of its Lipper peers, the Fund is limited in its
ability to invest in lower-rated bonds, which outperformed the broader market
during the year. The Fund's above-average duration also hindered performance
somewhat. We had anticipated that Hurricanes Katrina and Rita would have a
negative impact on the economy, at least initially, therefore benefiting
credit markets (that is, increasing bond prices and decreasing yields). This
prompted us to increase our average duration. However, it appeared that the
markets and the Fed were more focused on rising energy costs and their
potential to increase inflationary pressures. This served to push rates higher
all along the yield curve.
Offsetting these negative factors was our focus on the long end of the
municipal yield curve. As the yield curve flattened considerably over the past
year, long-term bonds outperformed shorter-term issues, and our focus on this
segment of the curve benefited Fund performance.
For the six-month period ended October 31, 2005, the total investment return
on the Fund's Common Shares was -.31%, based on a change in per share net
asset value from $16.09 to $15.57, and assuming reinvestment of all
distributions.
ANNUAL REPORTS OCTOBER 31, 2005
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 Shares (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 Shares 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 protecting 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. For the most part, we favor bonds
with 25-year - 28-year maturities and with premium coupons.
Like the supply trends on the national level, issuance in Pennsylvania has
tended to fall within the intermediate maturity range, largely because much of
the new supply represents refunding issues. Overall, we expect that municipal
issuance will begin to slow as interest rates increase and municipalities feel
less compelled to refinance their debt. 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 Shares (AMPS) had an average yield of 2.40% for Series A, 2.46% for
Series B and 2.40% for Series C. 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 Shares from the leveraging of Preferred Shares. 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 Shares. At the end of the period, the Fund's leverage amount,
due to AMPS, was 36.33% of total net assets, before the deduction of Preferred
Shares. (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.
Robert D. Sneeden
Vice President and Portfolio Manager
MuniYield Florida Insured Fund
Theodore R. Jaeckel Jr., CFA
Vice President and Portfolio Manager
MuniYield New Jersey Insured Fund, Inc.
William R. Bock
Vice President and Portfolio Manager
MuniYield Pennsylvania Insured Fund
November 22, 2005
ANNUAL REPORTS OCTOBER 31, 2005
Automatic Dividend Reinvestment Plan
How the Plan Works--The Funds offer a Dividend Reinvestment Plan (the "Plan")
under which income and capital gains dividends paid by each Fund are
automatically reinvested in additional shares of Common Stock of each Fund.
The Plan is administered on behalf of the shareholders by The Bank of New York
for MuniYield Florida Insured Fund and MuniYield New Jersey Insured Fund, Inc.
and Equiserve Trust Company N.A. for MuniYield Pennsylvania Insured Fund
(individually, the "Plan Agent" or together, the "Plan Agents"). Under the
Plan, whenever the Funds declare a dividend, participants in the Plan will
receive the equivalent in shares of Common Stock of each Fund. The Plan Agents
will acquire the shares for the participant's account either (i) through
receipt of additional unissued but authorized shares of each 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, each 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 Agents will
invest the dividend amount in newly issued shares. If the Funds' net asset
value per share is greater than the market price per share (a condition often
referred to as a "market discount"), the Plan Agents will invest the dividend
amount by purchasing on the open market additional shares. If the Plan Agents
are 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 Agents 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 Funds 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 their 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 Funds. 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 each Fund's shares is above the net asset
value, participants in the Plan will receive shares of the Funds 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 each 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 Agents' service fees for handling the reinvestment of
distributions are paid for by the Funds. However, brokerage commissions may be
incurred when the Funds purchase 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 Funds' shares are trading at
a market premium, the Funds issue 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 each 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 The Bank
of New York, Church Street Station, P.O. Box 11258, New York, NY 10286-1258,
Telephone: 800-432-8224 for MuniYield Florida Insured Fund and MuniYield New
Jersey Insured Fund, Inc. and Equiserve Trust Company N.A. (c/o Computershare
Investors Services), P.O. Box 43010, Providence, RI 02940-3010, Telephone:
800-426-4523 for MuniYield Pennsylvania Insured Fund.
ANNUAL REPORTS OCTOBER 31, 2005
Portfolio Information
Quality Profiles as of October 31, 2005
Percent of
MuniYield Florida Insured Fund Total
By S&P/Moody's Rating Investments
AAA/Aaa 89.2%
AA/Aa 1.0
A/A 4.5
BBB/Baa 3.1
Other* 2.2
* Includes portfolio holdings in short-term investments and
variable rate demand notes.
Percent of
MuniYield New Jersey Insured Fund, Inc. Total
By S&P/Moody's Rating Investments
AAA/Aaa 82.7%
AA/Aa 4.5
A/A 3.5
BBB/Baa 9.1
Other* 0.2
* Includes portfolio holdings in short-term investments.
Percent of
MuniYield Pennsylvania Insured Fund Total
By S&P/Moody's Rating Investments
AAA/Aaa 80.2%
AA/Aa 4.4
A/A 2.5
BBB/Baa 8.4
NR (Not Rated) 3.0
Other* 1.5
* Includes portfolio holdings in short-term investments and
variable rate demand notes.
Swap Agreements
The Funds 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 each Fund has entered into a swap will default on its
obligation to pay the Fund and the risk that the Fund will not be able to
meet its obligation to pay the other party to the agreement.
Dividend Policy
The Funds' dividend policy is to distribute all or a portion of their net
investment income to their shareholders on a monthly basis. In order to
provide shareholders with a more stable level of dividend distributions, the
Funds 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 Funds for any particular month may be more or less than the amount of
net investment income earned by the Funds during such month. The Funds'
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 these reports.
ANNUAL REPORTS OCTOBER 31, 2005
Schedule of Investments (In Thousands)
MuniYield Florida Insured Fund
Face
Amount Municipal Bonds Value
District of Columbia--5.7%
$ 1,000 Metropolitan Washington Airports Authority, D.C.,
Airport System Revenue Bonds, AMT, Series A, 5.25%
due 10/01/2032 (c) $ 1,027
6,000 Metropolitan Washington Airports Authority, D.C.,
Airport System Revenue Refunding Bonds, AMT,
Series A, 5% due 10/01/2035 (h) 6,060
Florida--139.6%
1,300 Alachua County, Florida, School Board, COP, 5.25%
due 7/01/2029 (a) 1,382
700 Boynton Beach, Florida, Utility System Revenue
Refunding Bonds, 6.25% due 11/01/2020 (b)(c) 822
5,000 Dade County, Florida, Aviation Revenue Bonds,
AMT, Series B, 5.75% due 10/01/2012 (h) 5,110
1,000 Daytona Beach, Florida, Utility System Revenue
Refunding Bonds, Series B, 5% due 11/15/2027 (c) 1,031
2,110 First Florida Governmental Financing Commission
Revenue Bonds, 5.70% due 7/01/2017 (h) 2,210
1,000 Flagler County, Florida, Capital Improvement Revenue
Bonds, 5% due 10/01/2035 (h) 1,029
1,150 Florida HFA, Housing Revenue Bonds (Brittany
Rosemont Apartments), AMT, Series C-1, 6.75%
due 8/01/2014 (a) 1,173
625 Florida Housing Finance Corporation, Homeowner
Mortgage Revenue Refunding Bonds, AMT, Series 4,
6.25% due 7/01/2022 (f) 648
2,000 Florida State Board of Education, Capital Outlay, GO,
Public Education, Series B, 5% due 6/01/2031 (c) 2,056
6,190 Florida State Board of Education, Lottery Revenue
Bonds, Series A, 6% due 7/01/2015 (c) 6,898
1,000 Florida State Governmental Utility Authority, Utility
Revenue Bonds (Lehigh Utility System), 5.125%
due 10/01/2033 (a) 1,037
1,860 Florida State Turnpike Authority, Turnpike Revenue
Bonds (Department of Transportation), Series B, 5%
due 7/01/2030 1,899
3,700 Highlands County, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Adventist Health System),
Series A, 6% due 11/15/2031 3,962
Hillsborough County, Florida, School Board, COP (h):
6,000 5.375% due 7/01/2009 (i) 6,411
1,000 5% due 7/01/2029 1,031
Face
Amount Municipal Bonds Value
Florida (continued)
Jacksonville Electric Authority, Florida, Water and
Sewer System Revenue Bonds (h):
$ 2,000 Series A, 5.375% due 10/01/2030 $ 2,047
2,610 Series C, 5.25% due 10/01/2006 (i) 2,662
Jacksonville, Florida, Economic Development
Commission, Health Care Facilities Revenue
Bonds (Mayo Clinic--Jacksonville) (h):
1,000 Series A, 5.50% due 11/15/2036 1,075
750 Series B, 5.50% due 11/15/2036 806
1,140 Jacksonville, Florida, Economic Development
Commission, IDR (Metropolitan Parking Solutions
Project), 5.50% due 10/01/2030 (l) 1,193
1,455 Jacksonville, Florida, Guaranteed Entitlement Revenue
Refunding and Improvement Bonds, 5.25%
due 10/01/2032 (c) 1,526
Jacksonville, Florida, Port Authority, Seaport Revenue
Bonds, AMT (h):
1,025 5.625% due 11/01/2010 (i) 1,109
1,225 5.625% due 11/01/2026 1,302
2,000 Lakeland, Florida, Electric and Water Revenue
Refunding Bonds, Series A, 5% due 10/01/2028 (h) 2,046
1,000 Lee County, Florida, Airport Revenue Bonds, AMT,
Series A, 6% due 10/01/2029 (f) 1,088
1,285 Lee County, Florida, Capital Revenue Bonds, 5.25%
due 10/01/2023 (a) 1,381
85 Lee County, Florida, HFA, S/F Mortgage Revenue
Bonds (Multi-County Program), AMT, Series A,
Sub-Series 3, 7.45% due 9/01/2027 (d)(e)(g) 86
2,905 Lee County, Florida, Transportation Facilities Revenue
Bonds (Sanibel Bridges and Causeway), Series B, 5%
due 10/01/2035 (m) 2,978
1,000 Leesburg, Florida, Capital Improvement Revenue
Bonds, 5.25% due 10/01/2034 (c) 1,060
300 Marco Island, Florida, Utility System Revenue Bonds,
5.25% due 10/01/2021 (h) 323
1,000 Martin County, Florida, Utilities System Revenue Bonds,
5.125% due 10/01/2033 (a) 1,037
2,000 Miami Beach, Florida, Water and Sewer Revenue
Bonds, 5.75% due 9/01/2025 (a) 2,190
Miami-Dade County, Florida, Aviation Revenue Bonds,
ATM, Series A:
7,500 5% due 10/01/2033 (f) 7,578
5,000 (Miami International Airport), 6%
due 10/01/2024 (c) 5,451
Portfolio Abbreviations
To simplify the listings of portfolio holdings in the Schedules of
Investments, we have abbreviated the names of many of the securities
according to the list at right.
ACES (SM) Adjustable Convertible Extendable
Securities
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
DRIVERS Derivative Inverse Tax-Exempt Receipts
DATES Daily Adjustable Tax-Exempt Securities
EDA Economic Development Authority
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
VRDN Variable Rate Demand Notes
ANNUAL REPORTS OCTOBER 31, 2005
Schedule of Investments (continued) (In Thousands)
MuniYield Florida Insured Fund
Face
Amount Municipal Bonds Value
Florida (continued)
$ 1,120 Miami-Dade County, Florida, Aviation Revenue
Refunding Bonds (Miami International Airport),
AMT, Series A, 5% due 10/01/2038 (m) $ 1,121
2,000 Miami-Dade County, Florida, Educational Facilities
Authority Revenue Bonds (University of Miami),
Series A, 5.75% due 4/01/2029 (a) 2,177
Miami-Dade County, Florida, Expressway Authority,
Toll System Revenue Bonds, Series B (c):
1,000 5.25% due 7/01/2027 1,064
2,875 5% due 7/01/2033 2,956
Miami-Dade County, Florida, GO (Building Better
Communities Program) (c):
1,505 5% due 7/01/2030 1,559
1,000 5% due 7/01/2035 1,032
3,480 Miami-Dade County, Florida, Health Facilities
Authority, Hospital Revenue Refunding Bonds,
DRIVERS, Series 208, 8.237% due 8/15/2017 (a)(k) 4,068
1,655 Miami-Dade County, Florida, IDA, IDR (BAC Funding
Corporation Project), Series A, 5.375%
due 10/01/2030 (a) 1,753
2,000 Miami-Dade County, Florida, Public Facilities Revenue
Bonds (Jackson Health System), Series A, 5%
due 6/01/2029 (h) 2,060
2,000 Miami-Dade County, Florida, School Board COP,
Series A, 5.50% due 10/01/2009 (f)(i) 2,155
1,865 Miami-Dade County, Florida, Solid Waste System
Revenue Bonds, 5.25% due 10/01/2030 (h) 1,990
Miami-Dade County, Florida, Subordinate Special
Obligation Revenue Bonds, Series A (h):
4,375 5.186%** due 10/01/2031 1,133
5,735 5.203%** due 10/01/2033 1,331
4,765 Orange County, Florida, Educational Facilities Authority,
Educational Facilities Revenue Refunding Bonds
(Rollins College Project), 5.50% due 12/01/2032 (a) 5,116
Orange County, Florida, Health Facilities Authority,
Hospital Revenue Bonds:
600 (Adventist Health System), 6.25% due 11/15/2024 659
1,835 (Orlando Regional Healthcare), 6% due 12/01/2029 1,966
1,000 Orange County, Florida, Sales Tax Revenue Refunding
Bonds, Series A, 5.125% due 1/01/2023 (c) 1,055
6,500 Orange County, Florida, School Board, COP, Series A,
5.25% due 8/01/2023 (h) 6,858
5,330 Orange County, Florida, Tourist Development, Tax
Revenue Bonds, 5.50% due 10/01/2032 (a) 5,722
Orlando and Orange County, Florida, Expressway
Authority Revenue Bonds, Series B (a):
4,000 5% due 7/01/2030 4,118
5,015 5% due 7/01/2035 5,143
1,530 Osceola County, Florida, Infrastructure Sales Surplus
Tax Revenue Bonds, 5.25% due 10/01/2025 (a) 1,632
2,000 Osceola County, Florida, School Board, COP, Series A,
5.25% due 6/01/2027 (a) 2,109
Face
Amount Municipal Bonds Value
Florida (concluded)
$ 1,100 Osceola County, Florida, Tourist Development
Tax Revenue Bonds, Series A, 5.50%
due 10/01/2027 (c) $ 1,193
1,000 Palm Bay, Florida, Utility System Improvement
Revenue Bonds, Series A, 5% due 10/01/2025 (c) 1,045
1,500 Palm Beach County, Florida, Criminal Justice Facilities
Revenue Bonds, 7.20% due 6/01/2015 (c) 1,879
2,000 Palm Beach County, Florida, School Board, COP,
Refunding, Series D, 5.25% due 8/01/2021 (f) 2,131
5,000 Palm Beach County, Florida, School Board, COP,
Series A, 6% due 8/01/2010 (c)(i) 5,574
1,000 Palm Coast, Florida, Utility System Revenue Bonds,
5% due 10/01/2027 (h) 1,032
1,000 Pembroke Pines, Florida, Public Improvement Revenue
Bonds, Series A, 5% due 10/01/2034 (a) 1,031
2,000 Pinellas County, Florida, Health Facilities Authority,
Revenue Refunding Bonds (Pooled Hospital Loan
Program), VRDN, DATES, 2.69% due 12/01/2015 (a)(n) 2,000
1,000 Polk County, Florida, Utility System Revenue Bonds,
5.25% due 10/01/2022 (c) 1,076
1,000 Port St. Lucie, Florida, GO, 5% due 7/01/2032 (h) 1,033
1,055 Port St. Lucie, Florida, Utility Revenue Bonds, 5.25%
due 9/01/2024 (h) 1,132
1,400 Saint Johns County, Florida, Sales Tax Revenue Bonds,
GO, Series A, 5.25% due 10/01/2031 (a) 1,486
1,000 Saint Lucie, Florida, West Services District, Utility
Revenue Bonds, 5.25% due 10/01/2034 (h) 1,065
2,000 South Broward, Florida, Hospital District
Revenue Bonds, DRIVERS, Series 337, 8.237%
due 5/01/2032 (h)(k) 2,319
1,000 South Lake County, Florida, Hospital District
Revenue Bonds (South Lake Hospital Inc.), 5.80%
due 10/01/2034 1,036
1,240 Stuart, Florida, Public Utilities Revenue Refunding
and Improvement Bonds, 5.25% due 10/01/2024 (c) 1,331
University of Central Florida (UCF) Athletics
Association Inc., COP, Series A (c ):
2,280 5.25% due 10/01/2034 2,399
190 5% due 10/01/2035 194
Village Center Community Development District,
Florida, Recreational Revenue Bonds, Series A (h):
1,000 5% due 11/01/2032 1,025
1,640 5.375% due 11/01/2034 1,763
1,000 5.125% due 11/01/2036 1,041
Village Center Community Development District,
Florida, Utility Revenue Bonds (h):
2,585 5.25% due 10/01/2023 2,762
4,030 5.125% due 10/01/2028 4,204
1,570 Winter Haven, Florida, Utility System Revenue
Refunding and Improvement Bonds, 5%
due 10/01/2035 (h) 1,622
ANNUAL REPORTS OCTOBER 31, 2005
Schedule of Investments (concluded) (In Thousands)
MuniYield Florida Insured Fund
Face
Amount Municipal Bonds Value
Illinois--0.8%
$ 1,000 Chicago, Illinois, O'Hare International Airport,
General Airport Revenue Bonds, Third Lien, AMT,
Series D, 5% due 1/01/2034 (m) $ 1,007
New Jersey--1.7%
2,000 New Jersey EDA, Cigarette Tax Revenue Bonds,
5.50% due 6/15/2024 2,076
Puerto Rico--9.3%
2,990 Puerto Rico Commonwealth Highway and
Transportation Authority, Transportation Revenue
Refunding Bonds, Series K, 5% due 7/01/2040 2,999
1,970 Puerto Rico Electric Power Authority, Power Revenue
Bonds, Series II, 5.375% due 7/01/2019 (h) 2,153
1,000 Puerto Rico Public Buildings Authority, Government
Facilities, Revenue Refunding Bonds, Series I, 5%
due 7/01/2036 1,004
Face
Amount Municipal Bonds Value
Puerto Rico (concluded)
$ 1,145 Puerto Rico Public Finance Corporation,
Commonwealth Appropriation Revenue Bonds,
Series E, 5.70% due 2/01/2010 (i) $ 1,245
3,550 Puerto Rico Public Finance Corporation, Revenue
Refunding Bonds, RIB, Series 522X, 7.83%
due 8/01/2022 (h)(k) 4,163
Total Municipal Bonds
(Cost--$187,670)--157.1% 195,521
Shares
Held Short-Term Securities
2,600 Merrill Lynch Institutional Tax-Exempt Fund (j) 2,600
Total Short-Term Securities
(Cost--$2,600)--2.1% 2,600
Total Investments (Cost--$190,270*)--159.2% 198,121
Liabilities in Excess of Other Assets--(1.3%) (1,670)
Preferred Shares, at Redemption Value--(57.9%) (72,029)
----------
Net Assets Applicable to Common Shares--100.0% $ 124,422
==========
Forward interest rate swaps outstanding as of October 31, 2005
were as follows:
Notional Unrealized
Amount Appreciation
Pay a fixed rate of 3.779% and receive
a floating rate based on 1-week USD
Bond Market Association Rate
Broker, JPMorgan Chase Bank
Expires November 2015 $ 7,300 $ 51
Pay a fixed rate of 3.801% and receive
a floating rate based on 1-week USD
Bond Market Association Rate
Broker, JPMorgan Chase Bank
Expires January 2016 $ 7,300 52
Pay a fixed rate of 3.852% and receive
a floating rate based on 1-week USD
Bond Market Association Rate
Broker, JPMorgan Chase Bank
Expires January 2016 $15,000 51
-------
Total $ 154
=======
* 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 $ 190,204
===============
Gross unrealized appreciation $ 8,586
Gross unrealized depreciation (669)
---------------
Net unrealized appreciation $ 7,917
===============
** Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(a) AMBAC Insured.
(b) Escrowed to maturity.
(c) FGIC Insured.
(d) FHLMC Collateralized.
(e) FNMA Collateralized.
(f) FSA Insured.
(g) GNMA Collateralized.
(h) MBIA Insured.
(i) Prerefunded.
(j) 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 (2,319) $31
(k) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(l) ACA Insured.
(m) CIFG Insured.
(n) 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.
See Notes to Financial Statements.
ANNUAL REPORTS OCTOBER 31, 2005
Schedule of Investments (In Thousands)
MuniYield New Jersey Insured Fund, Inc.
Face
Amount Municipal Bonds Value
New Jersey--143.9%
$ 1,000 Delaware River and Bay Authority Revenue Bonds,
5% due 1/01/2033 (e) $ 1,030
Delaware River Joint Toll Bridge Commission,
Pennsylvania, Bridge Revenue Refunding Bonds:
1,875 5% due 7/01/2023 1,936
1,000 5% due 7/01/2028 1,021
2,500 Delaware River Port Authority of New Jersey and
Pennsylvania Revenue Bonds, RIB, Series 396, 9.003%
due 1/01/2019 (d)(i) 2,961
540 Essex County, New Jersey, Improvement Authority
Revenue Bonds, Series A, 5% due 10/01/2028 (c) 559
6,925 Garden State Preservation Trust of New Jersey, Capital
Appreciation Revenue Bonds, Series B, 5.12%**
due 11/01/2023 (d) 2,954
Garden State Preservation Trust of New Jersey, Open
Space and Farmland Preservation Revenue Bonds,
Series A (d):
2,605 5.80% due 11/01/2022 2,956
3,300 5.75% due 11/01/2028 3,890
2,000 Gloucester County, New Jersey, Improvement Authority,
Solid Waste Resource Recovery, Revenue Refunding
Bonds (Waste Management Inc. Project), Series A,
6.85% due 12/01/2029 2,203
1,000 Hudson County, New Jersey, COP, Refunding, 6.25%
due 12/01/2016 (e) 1,182
8,250 Hudson County, New Jersey, Improvement Authority,
Facility Lease Revenue Refunding Bonds (Hudson
County Lease Project), 5.375% due 10/01/2024 (c) 8,707
Jackson Township, New Jersey, School District, GO (c):
2,880 5% due 4/15/2017 3,031
5,200 5% due 4/15/2020 5,446
3,750 Jersey City, New Jersey, Sewer Authority, Sewer
Revenue Refunding Bonds, 6.25% due 1/01/2014 (a) 4,275
3,000 Middlesex County, New Jersey, COP, Refunding, 5%
due 8/01/2022 (e) 3,100
Monmouth County, New Jersey, Improvement Authority,
Governmental Loan Revenue Bonds (a):
735 5.20% due 12/01/2014 787
2,305 5.25% due 12/01/2015 2,468
Monmouth County, New Jersey, Improvement Authority,
Governmental Loan Revenue Refunding Bonds (a):
1,695 5% due 12/01/2017 1,788
1,520 5% due 12/01/2018 1,601
1,540 5% due 12/01/2019 1,621
New Jersey EDA, Cigarette Tax Revenue Bonds:
1,060 5.625% due 6/15/2019 1,123
785 5.75% due 6/15/2029 825
225 5.50% due 6/15/2031 231
465 5.75% due 6/15/2034 486
1,685 New Jersey EDA, EDR, Refunding (The Seeing Eye, Inc.
Project), 5% due 12/01/2024 (a) 1,766
Face
Amount Municipal Bonds Value
New Jersey (continued)
$ 1,000 New Jersey EDA, First Mortgage Revenue Bonds
(Fellowship Village), Series C, 5.50% due 1/01/2028 $ 995
1,700 New Jersey EDA, First Mortgage Revenue Refunding
Bonds (Fellowship Village), Series A, 5.50%
due 1/01/2018 1,714
New Jersey EDA, Motor Vehicle Surcharge Revenue
Bonds, Series A (e):
3,325 4.95%** due 7/01/2021 1,616
3,900 5% due 7/01/2029 4,047
8,500 5.25% due 7/01/2033 9,028
1,765 5% due 7/01/2034 1,824
New Jersey EDA, School Facilities Construction
Revenue Bonds:
3,390 Series F, 5% due 6/15/2013 (c)(h) 3,644
3,500 Series L, 5% due 3/01/2030 (d) 3,637
3,340 Series O, 5.25% due 3/01/2023 3,537
6,500 New Jersey EDA, School Facilities Construction,
Revenue Refunding Bonds, Series K, 5.25%
due 12/15/2017 (c) 7,103
2,000 New Jersey EDA, State Lease Revenue Bonds
(Liberty State Park Project), Series C, 5%
due 3/01/2027 (d) 2,080
5,070 New Jersey EDA, Water Facilities Revenue Bonds
(New Jersey--American Water Company, Inc.
Project), Series A, 6.875% due 11/01/2034 (c) 5,135
New Jersey Health Care Facilities Financing Authority
Revenue Bonds:
2,100 (RWJ Healthcare Corporation), Series B, 5%
due 2/01/2035 (f) 2,132
1,125 (Somerset Medical Center), 5.50% due 7/01/2033 1,134
4,000 (South Jersey Hospital), 6% due 7/01/2026 4,254
New Jersey Health Care Facilities Financing Authority,
Revenue Refunding Bonds:
615 (Atlantic City Medical Center), 6.25%
due 7/01/2017 685
1,315 (Atlantic City Medical Center), 5.75%
due 7/01/2025 1,394
2,425 (Holy Name Hospital), 6% due 7/01/2025 2,514
2,250 (Meridian Health System Obligation Group),
5.25% due 7/01/2019 (d) 2,387
New Jersey Sports and Exposition Authority, Luxury Tax
Revenue Refunding Bonds (Convention Center) (e):
2,000 5% due 9/01/2017 2,095
1,000 5.50% due 3/01/2022 1,132
3,200 New Jersey State Educational Facilities Authority,
Higher Education, Capital Improvement Revenue
Bonds, Series A, 5.125% due 9/01/2022 (a) 3,376
New Jersey State Educational Facilities Authority
Revenue Bonds (Rowan University), Series C (e):
1,315 5.125% due 7/01/2028 1,378
1,185 5% due 7/01/2034 1,224
ANNUAL REPORTS OCTOBER 31, 2005
Schedule of Investments (continued) (In Thousands)
MuniYield New Jersey Insured Fund, Inc.
Face
Amount Municipal Bonds Value
New Jersey (continued)
New Jersey State Educational Facilities Authority,
Revenue Refunding Bonds:
$ 3,185 (Montclair State University), Series L, 5%
due 7/01/2034 (e) $ 3,291
555 (Rowan University), Series C, 5%
due 7/01/2031 (c) 570
1,440 (William Paterson University), Series E, 5.375%
due 7/01/2017 (g) 1,557
1,725 (William Paterson University), Series E, 5%
due 7/01/2021 (g) 1,801
3,500 New Jersey State, GO, Refunding, Series H, 5.25%
due 7/01/2015 (d) 3,836
5,350 New Jersey State Higher Education Assistance Authority,
Student Loan Revenue Bonds, AMT, Series A, 5.30%
due 6/01/2017 (a) 5,457
4,425 New Jersey State Housing and Mortgage Finance
Agency, Capital Fund Program Revenue Bonds,
Series A, 4.70% due 11/01/2025 (d) 4,435
3,150 New Jersey State Housing and Mortgage Finance
Agency, Home Buyer Revenue Bonds, AMT, Series CC,
5.80% due 10/01/2020 (e) 3,283
2,780 New Jersey State Housing and Mortgage Finance
Agency, M/F Revenue Bonds, AMT, Series A, 4.90%
due 11/01/2035 (c) 2,763
New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Bonds (d):
1,500 Series A, 5% due 6/15/2008 (h) 1,566
3,545 Series D, 5% due 6/15/2019 3,733
3,600 New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Refunding Bonds,
Series B, 5.50% due 12/15/2021 (e) 4,071
3,005 New Jersey State Turnpike Authority, Turnpike Revenue
Bonds, Series B, 5.15%** due 1/01/2035 (a) 1,923
New Jersey State Turnpike Authority, Turnpike Revenue
Refunding Bonds:
2,500 Series A, 5.75% due 1/01/2010 (e)(h) 2,723
1,835 Series C-1, 4.50% due 1/01/2031 (a) 1,781
1,000 Port Authority of New Jersey and New York,
Consolidated Revenue Bonds, 93rd Series, 6.125%
due 6/01/2094 1,167
4,075 Port Authority of New Jersey and New York,
Revenue Bonds, Trust Receipts, AMT, Class R,
Series 10, 8.65% due 1/15/2017 (d)(i) 4,364
3,180 Port Authority of New Jersey and New York, Revenue
Refunding Bonds, DRIVERS, AMT, Series 153, 7.476%
due 9/15/2012 (c)(i) 3,336
4,100 Rahway Valley Sewerage Authority, New Jersey, Sewer
Revenue Bonds (Capital Appreciation), Series A,
4.74%** due 9/01/2026 (e) 1,470
2,200 South Jersey Port Corporation of New Jersey, Revenue
Refunding Bonds, 5% due 1/01/2023 2,257
Face
Amount Municipal Bonds Value
New Jersey (concluded)
$ 1,715 Tobacco Settlement Financing Corporation of
New Jersey, Asset-Backed Revenue Bonds, 7%
due 6/01/2041 $ 2,006
Union County, New Jersey, Utilities Authority, Senior
Lease Revenue Refunding Bonds (Ogden Martin
System of Union, Inc.), AMT, Series A (a):
1,590 5.375% due 6/01/2017 1,656
1,670 5.375% due 6/01/2018 1,740
University of Medicine and Dentistry, New Jersey,
Revenue Bonds, Series A (a):
570 5.50% due 12/01/2018 625
1,145 5.50% due 12/01/2019 1,256
1,130 5.50% due 12/01/2020 1,236
865 5.50% due 12/01/2021 946
Puerto Rico--12.7%
Puerto Rico Commonwealth Highway and
Transportation Authority, Transportation Revenue
Refunding Bonds:
1,500 Series J, 5% due 7/01/2029 (e) 1,560
1,380 Series K, 5% due 7/01/2045 1,378
Puerto Rico Electric Power Authority, Power
Revenue Bonds:
1,830 Series HH, 5.25% due 7/01/2029 (d) 1,951
2,000 Series RR, 5% due 7/01/2028 (b) 2,082
1,500 Puerto Rico Electric Power Authority, Power Revenue
Refunding Bonds, Series PP, 5% due 7/01/2025 (c) 1,570
2,110 Puerto Rico Industrial, Tourist, Educational, Medical
and Environmental Control Facilities Revenue Bonds
(Ascension Health), RIB, Series 377, 9.28%
due 11/15/2030 (i) 2,536
5,250 Puerto Rico Public Buildings Authority Revenue Bonds,
DRIVERS, Series 211, 7.508% due 7/01/2021 (e)(i) 5,763
Total Municipal Bonds
(Cost--$198,745)--156.6% 207,701
Shares
Held Short-Term Securities
515 CMA New Jersey Municipal Money Fund (j) $ 515
Total Short-Term Securities
(Cost--$515)--0.4% 515
Total Investments
(Cost--$199,260*)--157.0% 208,216
Liabilities in Excess of Other Assets--(1.6%) (2,094)
Preferred Stock, at Redemption Value--(55.4%) (73,500)
----------
Net Assets Applicable to
Common Stock--100.0% $ 132,622
==========
ANNUAL REPORTS OCTOBER 31, 2005
Schedule of Investments (concluded) (In Thousands)
MuniYield New Jersey Insured Fund, Inc.
Forward interest rate swaps outstanding as of October 31, 2005
were as follows:
Notional Unrealized
Amount Appreciation
Pay a fixed rate of 3.923% and receive
a floating rate based on 1-week USD
Bond Market Association Rate
Broker, JPMorgan Chase Bank
Expires November 2018 $ 1,520 $ 11
Pay a fixed rate of 4.09% and receive
a floating rate based on 1-week USD
Bond Market Association Rate
Broker, JPMorgan Chase Bank
Expires August 2026 $ 3,210 36
--------
Total $ 47
========
* 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 $ 199,008
===============
Gross unrealized appreciation $ 9,774
Gross unrealized depreciation (566)
---------------
Net unrealized appreciation $ 9,208
===============
** Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(a) AMBAC Insured.
(b) CIFG Insured.
(c) FGIC Insured.
(d) FSA Insured.
(e) MBIA Insured.
(f) Radian Insured.
(g) XL Capital Insured.
(h) Prerefunded.
(i) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(j) 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
CMA New Jersey Municipal Money Fund (2,013) $28
See Notes to Financial Statements.
ANNUAL REPORTS OCTOBER 31, 2005
Schedule of Investments (In Thousands)
MuniYield Pennsylvania Insured Fund
Face
Amount Municipal Bonds Value
Pennsylvania--136.3%
Abington, Pennsylvania, School District, GO,
Series A (e):
$ 3,085 5% due 4/01/2029 $ 3,200
3,285 5% due 4/01/2032 3,396
3,000 Allegheny County, Pennsylvania, Higher Education
Building Authority, University Revenue Bonds (Carnegie
Mellon University), 5.125% due 3/01/2032 3,090
2,000 Allegheny County, Pennsylvania, Hospital Development
Authority, Health Center Revenue Bonds (University
of Pittsburgh Medical Center Health System), Series B,
6% due 7/01/2026 (f) 2,392
5,000 Allegheny County, Pennsylvania, Sanitation Authority,
Sewer Revenue Refunding Bonds, Series A, 5%
due 12/01/2030 (f) 5,176
1,000 Bristol Borough, Pennsylvania, School District, GO,
5.25% due 3/01/2031 (e) 1,060
1,000 Chester County, Pennsylvania, School Authority, School
Lease Revenue Bonds (Intermediate Unit Project), 5%
due 4/01/2026 (a) 1,037
1,000 Dauphin County, Pennsylvania, GO, Series C, 5%
due 3/01/2024 (f) 1,039
5,500 Delaware County, Pennsylvania, IDA Revenue Bonds
(Pennsylvania Suburban Water Company Project), AMT,
Series A, 5.15% due 9/01/2032 (a) 5,621
4,770 Delaware County, Pennsylvania, IDA, Water Facilities
Revenue Refunding Bonds (Aqua Pennsylvania Inc.
Project), AMT, Series B, 5% due 11/01/2036 (c) 4,824
1,500 Delaware Valley, Pennsylvania, Regional Finance
Authority, Local Government Revenue Bonds, 5.75%
due 7/01/2032 1,686
4,000 Gettysburg, Pennsylvania, Municipal Authority, College
Revenue Refunding Bonds, 5% due 8/15/2023 (f) 4,155
4,000 Lancaster County, Pennsylvania, Hospital Authority
Revenue Bonds (Lancaster General Hospital Project),
5.50% due 3/15/2026 4,155
3,000 Lehigh County, Pennsylvania, General Purpose
Authority, Hospital Revenue Refunding Bonds (Saint
Lukes Hospital of Bethlehem), 5.375% due 8/15/2033 3,067
7,800 Lehigh County, Pennsylvania, IDA, PCR, Refunding
(Pennsylvania Power and Light Utilities Corporation
Project), Series A, 4.70% due 9/01/2029 (c) 7,744
3,500 Luzerne County, Pennsylvania, IDA, Water Facility
Revenue Refunding Bonds, RIB, AMT, Series 1170,
7.22% due 9/01/2034 (a)(h) 3,633
2,675 North Allegheny, Pennsylvania, School District, GO,
Series C, 5.25% due 5/01/2027 (e) 2,846
Face
Amount Municipal Bonds Value
Pennsylvania (continued)
$ 5,000 Northampton Borough, Pennsylvania, Municipal
Authority, Water Revenue Bonds, 5%
due 5/15/2034 (f) $ 5,147
6,000 Northumberland County, Pennsylvania, IDA,
Water Facilities Revenue Refunding Bonds
(Aqua Pennsylvania Inc. Project), AMT, 5.05%
due 10/01/2039 (c) 6,079
3,055 Pennsbury, Pennsylvania, School District, GO,
Refunding, 5.50% due 1/15/2020 (c) 3,328
1,200 Pennsylvania Economic Development Financing
Authority, Solid Waste Disposal Revenue Bonds
(Waste Management Inc. Project), AMT, Series A,
5.10% due 10/01/2027 1,202
710 Pennsylvania HFA, S/F Mortgage Revenue Refunding
Bonds, AMT, Series 60A, 5.85% due 10/01/2027 (d)(f) 728
3,000 Pennsylvania State Higher Educational Facilities
Authority Revenue Bonds (UPMC Health System),
Series A, 6% due 1/15/2022 3,252
3,900 Pennsylvania State Higher Educational Facilities
Authority, Revenue Refunding Bonds (The Trustees
of the University of Pennsylvania Project), Series C,
5% due 7/15/2038 4,018
7,000 Pennsylvania State, IDA, EDR, Refunding, 5.50%
due 7/01/2020 (a) 7,677
Pennsylvania State Public School Building Authority,
Revenue Bonds (Lehigh Career and Technical
Institute) (c):
3,585 5.125% due 10/01/2028 3,728
2,000 5.25% due 10/01/2032 2,103
Pennsylvania State Public School Building Authority,
School Lease Revenue Bonds (The School District of
Philadelphia Project) (e):
10,000 5.25% due 6/01/2025 10,659
10,300 5% due 6/01/2033 10,554
7,500 Pennsylvania State Public School Building Authority,
School Revenue Bonds, DRIVERS, Series 371, 7.487%
due 6/01/2011 (e)(h) 8,373
7,500 Pennsylvania State Turnpike Commission, Oil Franchise
Tax Revenue Bonds, DRIVERS, Series 366, 7.987%
due 6/01/2011 (f)(h) 8,911
1,700 Pennsylvania State Turnpike Commission, Oil Franchise
Tax Revenue Refunding Bonds, Series A, 5%
due 12/01/2023 (a) 1,768
3,900 Pennsylvania State Turnpike Commission, Turnpike
Revenue Bonds, DRIVERS, Series 460-Z, 7.987%
due 6/01/2012 (a)(h) 4,603
ANNUAL REPORTS OCTOBER 31, 2005
Schedule of Investments (continued) (In Thousands)
MuniYield Pennsylvania Insured Fund
Face
Amount Municipal Bonds Value
Pennsylvania (continued)
Philadelphia, Pennsylvania, Airport Revenue Bonds,
Series A, AMT (f):
$ 1,000 5% due 6/15/2025 $ 1,021
8,000 4.75% due 6/15/2035 7,650
Philadelphia, Pennsylvania, Authority for Industrial
Development, Airport Revenue Refunding Bonds
(Philadelphia Airport System Project), AMT, Series A (c):
4,000 5.50% due 7/01/2017 4,281
3,655 5.50% due 7/01/2018 3,899
Philadelphia, Pennsylvania, Authority for Industrial
Development, Lease Revenue Bonds:
9,125 (City of Philadelphia Project), Series A, 5.375%
due 2/15/2027 (f) 9,499
3,000 Series B, 5.50% due 10/01/2020 (e) 3,264
4,680 Series B, 5.50% due 10/01/2021 (e) 5,091
10,000 Philadelphia, Pennsylvania, Gas Works Revenue
Bonds, 1998 General Ordinance, 4th Series, 5%
due 8/01/2032 (e) 10,244
Philadelphia, Pennsylvania, Hospitals and Higher
Education Facilities Authority, Hospital Revenue
Refunding Bonds:
1,300 (Children's Hospital Project), VRDN, Series D,
2.70% due 7/01/2031 (f)(k) 1,300
3,000 (Presbyterian Medical Center), 6.65%
due 12/01/2019 (b) 3,607
3,000 Philadelphia, Pennsylvania, Housing Authority Revenue
Bonds (Capital Fund Program), Series A, 5.50%
due 12/01/2018 (e) 3,244
4,645 Philadelphia, Pennsylvania, Qualified Redevelopment
Authority Revenue Bonds, AMT, Series B, 5%
due 4/15/2027 (c) 4,715
1,750 Philadelphia, Pennsylvania, Redevelopment Authority
Revenue Bonds (Neighborhood Transformation),
Series A, 5.50% due 4/15/2022 (c) 1,895
Philadelphia, Pennsylvania, School District, GO (c):
5,000 RIB, Series 677, 8.29% due 8/01/2021 (h) 6,106
5,000 Series D, 5.125% due 6/01/2034 5,179
4,000 Series D, 5.25% due 6/01/2034 4,217
5,000 Philadelphia, Pennsylvania, Water and Wastewater
Revenue Bonds, Series A, 5% due 7/01/2028 (e) 5,178
1,525 Pittsburgh, Pennsylvania, Public Parking Authority,
Parking Revenue Bonds, 5.85% due 6/01/2010 (a)(i) 1,675
Pittsburgh, Pennsylvania, Water and Sewer Authority,
Water and Sewer System Revenue Bonds, First Lien:
6,000 5% due 9/01/2033 (f) 6,192
2,400 Series B, 5.255%** due 9/01/2030 (c) 684
Face
Amount Municipal Bonds Value
Pennsylvania (concluded)
Reading, Pennsylvania, School District, GO (c):
$ 10,425 Series B, 5.263%** due 1/15/2028 $ 3,400
3,145 Series B, 5.213%** due 1/15/2030 924
2,600 Sayre, Pennsylvania, Health Care Facilities Authority,
Revenue Refunding Bonds (Guthrie Healthcare System),
Series A, 5.875% due 12/01/2031 2,762
Southeastern Pennsylvania Transportation Authority,
Special Revenue Bonds (c):
4,500 5.375% due 3/01/2017 4,700
2,525 5.375% due 3/01/2022 2,632
Guam--1.4%
2,500 A.B. Won Guam International Airport Authority,
General Revenue Refunding Bonds, AMT, Series C,
5% due 10/01/2023 (f) 2,544
Puerto Rico--15.0%
10,000 Puerto Rico Commonwealth, Public Improvement, GO,
Series A, 5% due 7/01/2034 10,038
7,500 Puerto Rico Electric Power Authority, Power Revenue
Bonds, Series RR, 5% due 7/01/2027 (g) 7,839
Puerto Rico Public Buildings Authority, Government
Facilities Revenue Refunding Bonds, Series I:
2,500 5.50% due 7/01/2025 2,670
5,000 5.375% due 7/01/2034 5,218
1,000 Puerto Rico Public Finance Corporation,
Commonwealth Appropriation Revenue Bonds,
Series E, 5.50% due 8/01/2029 1,046
Total Municipal Bonds
(Cost--$263,289)--152.7% 272,965
Shares
Held Short-Term Securities
2,714 CMA Pennsylvania Municipal Money Fund (j) $ 2,714
Total Short-Term Securities
(Cost--$2,714)--1.5% 2,714
Total Investments
(Cost--$266,003*)--154.2% 275,679
Other Assets Less Liabilities--2.9% 5,134
Preferred Shares, at Redemption Value--(57.1%) (102,042)
----------
Net Assets Applicable to Common Shares--100.0% $ 178,771
==========
ANNUAL REPORTS OCTOBER 31, 2005
Schedule of Investments (concluded) (In Thousands)
MuniYield Pennsylvania Insured Fund
Forward interest rate swaps outstanding as of October 31, 2005
were as follows:
Notional Unrealized
Amount Appreciation
Pay a fixed rate of 4.796% and
receive a floating rate based on
3-month LIBOR.
Broker, JPMorgan Chase Bank
Expires November 2015 $ 36,000 $ 678
Pay a fixed rate of 3.808% and
receive a floating rate based on
1-week USD Bond Market
Association Rate.
Broker, JPMorgan Chase Bank
Expires January 2016 $ 14,000 92
-------
Total $ 770
=======
* 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 $ 265,922
===============
Gross unrealized appreciation $ 10,859
Gross unrealized depreciation (1,102)
---------------
Net unrealized appreciation $ 9,757
===============
** Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(a) AMBAC Insured.
(b) Escrowed to maturity.
(c) FGIC Insured.
(d) FHA Insured.
(e) FSA Insured.
(f) MBIA Insured.
(g) XL Capital Insured.
(h) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(i) Prerefunded.
(j) 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
CMA Pennsylvania Municipal Money Fund (1,425) $19
(k) 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.
See Notes to Financial Statements.
ANNUAL REPORTS OCTOBER 31, 2005
Statements of Net Assets
MuniYield MuniYield MuniYield
Florida New Jersey Pennsylvania
Insured Insured Insured
As of October 31, 2005 Fund Fund, Inc. Fund
Assets
Investments in unaffiliated securities, at value* $ 195,520,815 $ 207,701,167 $ 272,965,488
Investments in affiliated securities, at value** 2,600,000 515,186 2,713,938
Cash 63,171 89,397 79,152
Unrealized appreciation on forward interest rate swaps 154,152 46,507 770,452
Interest receivable 2,250,467 3,418,136 4,116,836
Receivable for securities sold 216,643 742,398 6,788,018
Dividends receivable from affiliates 183 30 152
Prepaid expenses 5,565 5,271 6,796
--------------- --------------- ---------------
Total assets 200,810,996 212,518,092 287,440,832
--------------- --------------- ---------------
Liabilities
Payable for securities purchased 4,207,115 6,152,609 6,333,047
Dividends payable to Common Stock/Shareholders 35,579 118,784 123,790
Payable to investment adviser 77,872 81,749 111,834
Payable to other affiliates 2,589 2,548 3,720
Accrued expenses and other liabilities 37,101 39,927 55,115
--------------- --------------- ---------------
Total liabilities 4,360,256 6,395,617 6,627,506
--------------- --------------- ---------------
Preferred Stock/Shares
Preferred Stock/Shares, at redemption value, of AMPS+++ at
$25,000 per share liquidation preference++*** 72,028,776 73,500,000 102,042,128
--------------- --------------- ---------------
Net Assets Applicable to Common Stock/Shares
Net assets applicable to Common Stock/Shares $ 124,421,964 $ 132,622,475 $ 178,771,198
=============== =============== ===============
Analysis of Net Assets Applicable to Common Stock/Shares
Undistributed investment income--net $ 1,135,801 $ 1,116,478 $ 1,164,541
Accumulated realized capital losses--net (3,113,027) (1,633,624) (3,940,128)
Unrealized appreciation--net 8,004,838 9,002,847 10,447,197
--------------- --------------- ---------------
Total accumulated earnings--net 6,027,612 8,485,701 7,671,610
--------------- --------------- ---------------
Common Stock/Shares, par value $.10 per share++++ 844,996 880,210 1,148,057
Paid-in capital in excess of par 117,549,356 123,256,564 169,951,531
--------------- --------------- ---------------
Net Assets $ 124,421,964 $ 132,622,475 $ 178,771,198
=============== =============== ===============
Net asset value per share of Common Stock/Shares $ 14.72 $ 15.07 $ 15.57
=============== =============== ===============
Market Price $ 14.18 $ 14.65 $ 14.91
=============== =============== ===============
* Identified cost on unaffiliated securities $ 187,670,129 $ 198,744,827 $ 263,288,743
=============== =============== ===============
** Identified cost on affiliated securities $ 2,600,000 $ 515,186 $ 2,713,938
=============== =============== ===============
*** Preferred Stock/Shares issued and outstanding:
Series A, par value of $.05 per share 2,400 2,240 1,600
=============== =============== ===============
Series B, par value of $.05 per share 480 -- 1,920
=============== =============== ===============
Series B, par value of $.10 per share -- 700 --
=============== =============== ===============
Series C, par value of $.05 per share -- -- 560
=============== =============== ===============
++ Preferred Stock/Shares authorized 1,000,000 2,940 1,000,000
=============== =============== ===============
++++ Common Stock/Shares issued and outstanding 8,449,963 8,802,099 11,480,567
=============== =============== ===============
+++ Auction Market Preferred Stock/Shares.
See Notes to Financial Statements.
ANNUAL REPORTS OCTOBER 31, 2005
Statements of Operations
MuniYield MuniYield MuniYield
Florida New Jersey Pennsylvania
Insured Insured Insured
For the Year Ended October 31, 2005 Fund Fund, Inc. Fund
Investment Income
Interest and amortization of premium and discount earned $ 9,787,345 $ 9,971,474 $ 14,121,955
Dividends from affiliates 31,163 28,196 18,608
--------------- --------------- ---------------
Total income 9,818,508 9,999,670 14,140,563
--------------- --------------- ---------------
Expenses
Investment advisory fees 993,988 1,046,187 1,424,890
Commission fees 180,365 189,952 256,091
Accounting services 88,463 91,978 111,843
Transfer agent fees 82,974 56,430 80,027
Professional fees 50,337 45,800 61,304
Printing and shareholder reports 25,550 28,443 30,468
Directors'/Trustees' fees and expenses 26,715 26,715 26,715
Listing fees 19,117 19,215 19,117
Pricing fees 15,898 19,869 12,608
Custodian fees 13,217 15,174 18,844
Other 34,708 41,055 47,885
--------------- --------------- ---------------
Total expenses before reimbursement 1,531,332 1,580,818 2,089,792
Reimbursement of expenses (3,088) (9,184) (5,929)
--------------- --------------- ---------------
Total expenses after reimbursement 1,528,244 1,571,634 2,083,863
--------------- --------------- ---------------
Investment income--net 8,290,264 8,428,036 12,056,700
--------------- --------------- ---------------
Realized and Unrealized Gain (Loss)--Net
Realized gain (loss) on:
Investments--net 1,909,384 2,584,792 5,581,564
Futures contracts and forward interest rate swaps--net (346,973) 144,333 (1,512,389)
--------------- --------------- ---------------
Total realized gain 1,562,411 2,729,125 4,069,175
--------------- --------------- ---------------
Change in unrealized appreciation/depreciation on:
Investments--net (5,185,860) (5,411,836) (9,562,568)
Futures contracts and forward interest rate swaps--net 407,941 263,260 1,441,852
--------------- --------------- ---------------
Total change in unrealized appreciation/depreciation (4,777,919) (5,148,576) (8,120,716)
--------------- --------------- ---------------
Total realized and unrealized loss--net (3,215,508) (2,419,451) (4,051,541)
--------------- --------------- ---------------
Dividends to Preferred Stock/Shareholders
Investment income--net (1,442,962) (1,395,905) (2,146,454)
--------------- --------------- ---------------
Net Increase in Net Assets Resulting from Operations $ 3,631,794 $ 4,612,680 $ 5,858,705
=============== =============== ===============
See Notes to Financial Statements.
ANNUAL REPORTS OCTOBER 31, 2005
Statements of Changes in Net Assets MuniYield Florida Insured Fund
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 2005 2004
Operations
Investment income--net $ 8,290,264 $ 8,303,172
Realized gain (loss)--net 1,562,411 (1,633,469)
Change in unrealized appreciation/depreciation--net (4,777,919) 3,344,665
Dividends to Preferred Shareholders (1,442,962) (612,024)
--------------- ---------------
Net increase in net assets resulting from operations 3,631,794 9,402,344
--------------- ---------------
Dividends to Common Shareholders
Investment income--net (7,564,939) (7,862,285)
--------------- ---------------
Net decrease in net assets resulting from dividends to Common Shareholders (7,564,939) (7,862,285)
--------------- ---------------
Share Transactions
Value of shares issued to Common Shareholders in reinvestment of dividends 144,662 --
Offering and underwriting costs resulting from the issuance of Preferred Shares (244,177) --
--------------- ---------------
Net decrease in net assets derived from Share transactions (99,515) --
--------------- ---------------
Net Assets Applicable to Common Shares
Total increase (decrease) in net assets applicable to Common Shares (4,032,660) 1,540,059
Beginning of year 128,454,624 126,914,565
--------------- ---------------
End of year* $ 124,421,964 $ 128,454,624
=============== ===============
* Undistributed investment income--net $ 1,135,801 $ 1,853,438
=============== ===============
See Notes to Financial Statements.
ANNUAL REPORTS OCTOBER 31, 2005
Statements of Changes in Net Assets MuniYield New Jersey Insured Fund, Inc.
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 2005 2004
Operations
Investment income--net $ 8,428,036 $ 9,010,629
Realized gain (loss)--net 2,729,125 (196,472)
Change in unrealized appreciation/depreciation--net (5,148,576) 2,083,358
Dividends to Preferred Stock shareholders (1,395,905) (560,277)
--------------- ---------------
Net increase in net assets resulting from operations 4,612,680 10,337,238
--------------- ---------------
Dividends to Common Stock Shareholders
Investment income--net (8,036,760) (8,192,082)
--------------- ---------------
Net decrease in net assets resulting from dividends to Common Stock shareholders (8,036,760) (8,192,082)
--------------- ---------------
Stock Transactions
Value of shares issued to Common Stock shareholders in reinvestment of dividends 675,155 289,289
Offering and underwriting costs resulting from the issuance of Preferred Stock -- (304,468)
Adjustment of offering costs resulting from the issuance of Preferred Stock 1,285 --
--------------- ---------------
Net increase (decrease) in net assets derived from Stock transactions 676,440 (15,179)
--------------- ---------------
Net Assets Applicable to Common Stock
Total increase (decrease) in net assets applicable to Common Stock (2,747,640) 2,129,977
Beginning of year 135,370,115 133,240,138
--------------- ---------------
End of year* $ 132,622,475 $ 135,370,115
=============== ===============
* Undistributed investment income--net $ 1,116,478 $ 2,121,107
=============== ===============
See Notes to Financial Statements.
ANNUAL REPORTS OCTOBER 31, 2005
Statements of Changes in Net Assets MuniYield Pennsylvania Insured Fund
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 2005 2004
Operations
Investment income--net $ 12,056,700 $ 12,376,868
Realized gain--net 4,069,175 1,895,759
Change in unrealized appreciation/depreciation--net (8,120,716) 3,646,173
Dividends to Preferred Shareholders (2,146,454) (914,080)
--------------- ---------------
Net increase in net assets resulting from operations 5,858,705 17,004,720
--------------- ---------------
Dividends to Common Shareholders
Investment income--net (10,967,433) (11,464,926)
--------------- ---------------
Net decrease in net assets resulting from dividends to Common Shareholders (10,967,433) (11,464,926)
--------------- ---------------
Share Transactions
Value of shares issued to Common Shareholders in reinvestment of dividends 269,585 --
Offering and underwriting costs resulting from the issuance of Preferred Shares (266,553) --
--------------- ---------------
Net increase in net assets derived from Share transactions 3,032 --
--------------- ---------------
Net Assets Applicable to Common Shares
Total increase (decrease) in net assets applicable to Common Shares (5,105,696) 5,539,794
Beginning of year 183,876,894 178,337,100
--------------- ---------------
End of year* $ 178,771,198 $ 183,876,894
=============== ===============
* Undistributed investment income--net $ 1,164,541 $ 2,201,956
=============== ===============
See Notes to Financial Statements.
ANNUAL REPORTS OCTOBER 31, 2005
Financial Highlights MuniYield Florida Insured Fund
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 $ 15.22 $ 15.04 $ 15.04 $ 14.94 $ 13.89
---------- ---------- ---------- ---------- ----------
Investment income--net .98+++ .98+++ 1.05+++ 1.04 1.00
Realized and unrealized gain (loss)--net (.38) .20 (.06) .06 1.06
Less dividends and distributions to Preferred
Shareholders:
Investment income--net (.17) (.07) (.07) (.10) (.23)
Realized gain--net -- -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total from investment operations .43 1.11 .92 1.00 1.83
---------- ---------- ---------- ---------- ----------
Less dividends and distributions to Common
Shareholders:
Investment income--net (.90) (.93) (.92) (.90) (.78)
Realized gain--net -- -- -- --++ --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions to Common Shareholders (.90) (.93) (.92) (.90) (.78)
---------- ---------- ---------- ---------- ----------
Offering and underwriting costs resulting from the
issuance of Preferred Shares (.03) -- -- -- --
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 14.72 $ 15.22 $ 15.04 $ 15.04 $ 14.94
========== ========== ========== ========== ==========
Market price per share, end of year $ 14.18 $ 14.98 $ 14.18 $ 14.30 $ 14.21
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 2.72% 7.98% 6.45% 7.22% 13.96%
========== ========== ========== ========== ==========
Based on market price per share .54% 12.73% 5.56% 7.19% 24.17%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Common Shares
Total expenses, net of reimbursement** 1.20% 1.09% 1.08% 1.11% 1.15%
========== ========== ========== ========== ==========
Total expenses** 1.20% 1.10% 1.08% 1.11% 1.15%
========== ========== ========== ========== ==========
Total investment income--net** 6.50% 6.54% 6.86% 7.02% 6.90%
========== ========== ========== ========== ==========
Amount of dividends to Preferred Shareholders 1.13% .48% .47% .67% 1.58%
========== ========== ========== ========== ==========
Investment income--net, to Common Shareholders 5.37% 6.06% 6.39% 6.35% 5.32%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Preferred Shares
Dividends to Preferred Shareholders 2.02% 1.02% 1.00% 1.39% 3.21%
========== ========== ========== ========== ==========
ANNUAL REPORTS OCTOBER 31, 2005
Financial Highlights (concluded) MuniYield Florida Insured Fund
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
Supplemental Data
Net assets applicable to Common Shares, end of year
(in thousands) $ 124,422 $ 128,455 $ 126,915 $ 126,947 $ 126,035
========== ========== ========== ========== ==========
Preferred Shares outstanding, end of year (in thousands) $ 72,000 $ 60,000 $ 60,000 $ 60,000 $ 60,000
========== ========== ========== ========== ==========
Portfolio turnover 51.33% 31.22% 47.21% 40.55% 78.48%
========== ========== ========== ========== ==========
Leverage
Asset coverage per $1,000 $ 2,728 $ 3,141 $ 3,115 $ 3,116 $ 3,101
========== ========== ========== ========== ==========
Dividends Per Share on Preferred Shares Outstanding
Series A--Investment income--net $ 505 $ 255 $ 251 $ 348 $ 803
========== ========== ========== ========== ==========
Series B++++--Investment income--net $ 482 -- -- -- --
========== ========== ========== ========== ==========
* 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.
** Does not reflect the effect of dividends to Preferred Shareholders.
++ Amount is less than $(.01) per share.
++++ Series B was issued on November 22, 2004.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
ANNUAL REPORTS OCTOBER 31, 2005
Financial Highlights MuniYield New Jersey Insured Fund, Inc.
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 $ 15.46 $ 15.25 $ 15.14 $ 15.17 $ 13.96
---------- ---------- ---------- ---------- ----------
Investment income--net .96+++ 1.03+++ 1.06+++ 1.07 1.04
Realized and unrealized gain (loss)--net (.27) .21 .06 (.06) 1.21
Less dividends and distributions to Preferred Stock
shareholders:
Investment income--net (.16) (.06) (.06) (.09) (.20)
Realized gain--net -- -- --++ --++ --
---------- ---------- ---------- ---------- ----------
Total from investment operations .53 1.18 1.06 .92 2.05
---------- ---------- ---------- ---------- ----------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net (.92) (.94) (.94) (.94) (.84)
Realized gain--net -- -- (.01) (.01) --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions to Common Stock
shareholders (.92) (.94) (.95) (.95) (.84)
---------- ---------- ---------- ---------- ----------
Offering and underwriting costs resulting from the
issuance of Preferred Stock -- (.03) -- -- --
---------- ---------- ---------- ---------- ----------
Adjustment of offering costs resulting from the
issuance of Preferred Stock --+++++ -- -- -- --
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 15.07 $ 15.46 $ 15.25 $ 15.14 $ 15.17
========== ========== ========== ========== ==========
Market price per share, end of year $ 14.65 $ 15.16 $ 14.39 $ 14.45 $ 15.04
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 3.49% 7.99% 7.24% 6.27% 15.04%
========== ========== ========== ========== ==========
Based on market price per share 2.60% 12.23% 6.02% 2.30% 19.04%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Common Stock
Total expenses, net of reimbursement** 1.16% 1.06% 1.03% 1.07% 1.11%
========== ========== ========== ========== ==========
Total expenses** 1.16% 1.07% 1.04% 1.07% 1.11%
========== ========== ========== ========== ==========
Total investment income--net** 6.21% 6.79% 6.89% 7.04% 7.01%
========== ========== ========== ========== ==========
Amount of dividends to Preferred Stock shareholders 1.03% .42% .38% .57% 1.33%
========== ========== ========== ========== ==========
Investment income--net, to Common Stock shareholders 5.18% 6.37% 6.51% 6.47% 5.68%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Preferred Stock
Dividends to Preferred Stock shareholders 1.90% .95% .91% 1.32% 3.01%
========== ========== ========== ========== ==========
ANNUAL REPORTS OCTOBER 31, 2005
Financial Highlights (concluded) MuniYield New Jersey Insured Fund, Inc.
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
Supplemental Data
Net assets applicable to Common Stock, end of year
(in thousands) $ 132,622 $ 135,370 $ 133,240 $ 132,146 $ 131,012
========== ========== ========== ========== ==========
Preferred Stock outstanding, end of year (in thousands) $ 73,500 $ 73,500 $ 56,000 $ 56,000 $ 56,000
========== ========== ========== ========== ==========
Portfolio turnover 37.31% 18.25% 24.70% 28.45% 57.25%
========== ========== ========== ========== ==========
Leverage
Asset coverage per $1,000 $ 2,804 $ 2,842 $ 3,379 $ 3,360 $ 3,340
========== ========== ========== ========== ==========
Dividends Per Share on Preferred Stock Outstanding
Series A--Investment income--net $ 492 $ 232 $ 228 $ 330 $ 753
========== ========== ========== ========== ==========
Series B++++--Investment income--net $ 420 $ 57 -- -- --
========== ========== ========== ========== ==========
* 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.
** Does not reflect the effect of dividends to Preferred Stock shareholders.
++ Amount is less than $(.01) per share.
++++ Series B was issued on August 25, 2004.
+++ Based on average shares outstanding.
+++++ Amount is less than $.01 per share.
See Notes to Financial Statements.
ANNUAL REPORTS OCTOBER 31, 2005
Financial Highlights MuniYield Pennsylvania Insured Fund
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 $ 16.04 $ 15.56 $ 15.34 $ 15.19 $ 14.16
---------- ---------- ---------- ---------- ----------
Investment income--net 1.05+++ 1.08+++ 1.11+++ 1.11 1.07
Realized and unrealized gain (loss)--net (.35) .48 .16 .13 1.03
Less dividends to Preferred Shareholders:
Investment income--net (.19) (.08) (.07) (.11) (.24)
---------- ---------- ---------- ---------- ----------
Total from investment operations .51 1.48 1.20 1.13 1.86
---------- ---------- ---------- ---------- ----------
Less dividends to Common Shareholders:
Investment income--net (.96) (1.00) (.98) (.98) (.83)
---------- ---------- ---------- ---------- ----------
Total dividends to Common Shareholders (.96) (1.00) (.98) (.98) (.83)
---------- ---------- ---------- ---------- ----------
Offering and underwriting costs resulting from the
issuance of Preferred Shares (.02) -- -- -- --
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 15.57 $ 16.04 $ 15.56 $ 15.34 $ 15.19
========== ========== ========== ========== ==========
Market price per share, end of year $ 14.91 $ 15.61 $ 14.81 $ 14.37 $ 14.96
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 3.16% 10.15% 8.33% 7.84% 14.02%
========== ========== ========== ========== ==========
Based on market price per share 1.51% 12.63% 10.07% 2.57% 35.32%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Common Shares
Total expenses, net of reimbursement** 1.13% 1.05% 1.07% 1.12% 1.16%
========== ========== ========== ========== ==========
Total expenses** 1.14% 1.07% 1.08% 1.12% 1.16%
========== ========== ========== ========== ==========
Total investment income--net** 6.56% 6.89% 7.08% 7.30% 7.28%
========== ========== ========== ========== ==========
Amount of dividends to Preferred Shareholders 1.17% .51% .47% .70% 1.62%
========== ========== ========== ========== ==========
Investment income--net, to Common Shareholders 5.39% 6.38% 6.61% 6.60% 5.66%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Preferred Shares
Dividends to Preferred Shareholders 2.12% 1.04% .95% 1.37% 3.11%
========== ========== ========== ========== ==========
ANNUAL REPORTS OCTOBER 31, 2005
Financial Highlights (concluded) MuniYield Pennsylvania Insured Fund
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
Supplemental Data
Net assets applicable to Common Shares, end of year
(in thousands) $ 178,771 $ 183,877 $ 178,337 $ 175,720 $ 173,665
========== ========== ========== ========== ==========
Preferred Shares outstanding, end of year (in thousands) $ 102,000 $ 88,000 $ 88,000 $ 88,000 $ 88,000
========== ========== ========== ========== ==========
Portfolio turnover 46.42% 50.00% 55.57% 51.37% 69.58%
========== ========== ========== ========== ==========
Leverage
Asset coverage per $1,000 $ 2,753 $ 3,090 $ 3,027 $ 2,997 $ 2,973
========== ========== ========== ========== ==========
Dividends Per Share on Preferred Shares Outstanding
Series A--Investment income--net $ 531 $ 254 $ 242 $ 338 $ 781
========== ========== ========== ========== ==========
Series B--Investment income--net $ 530 $ 261 $ 235 $ 346 $ 774
========== ========== ========== ========== ==========
Series C++--Investment income--net $ 501 -- -- -- --
========== ========== ========== ========== ==========
* 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.
** Does not reflect the effect of dividends to Preferred Shareholders.
++ Series C was issued on November 22, 2004.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
ANNUAL REPORTS OCTOBER 31, 2005
Notes to Financial Statements
1. Significant Accounting Policies:
MuniYield Florida Insured Fund, MuniYield New Jersey Insured Fund, Inc., and
MuniYield Pennsylvania Insured Fund (the "Funds" or individually as the
"Fund") are registered under the Investment Company Act of 1940, as amended,
as non-diversified, closed-end management investment companies. The Funds'
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 Funds determine
and make available for publication the net asset value of their Common
Stock/Shares on a daily basis. The Fund's Common Stock/ Shares are listed on
the New York Stock Exchange under the symbol MFT for MuniYield Florida Insured
Fund, MJI for MuniYield New Jersey Insured Fund, Inc., and MPA for MuniYield
Pennsylvania Insured Fund. The following is a summary of significant
accounting policies followed by the Funds.
(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 markets 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 Funds under the general
direction of the Board of Directors/Trustees. Such valuations and procedures
are reviewed periodically by the Board of Directors/Trustees of the Funds.
Financial futures contracts and options thereon, which are traded on exchanges,
are valued at their closing prices as of the close of such exchanges. Options
written or purchased are valued at the last sale price in the case of exchange-
traded options. In the case of options traded in the OTC market, valuation
is the last asked price (options written) or the last bid price (options
purchased). Swap agreements are valued by quoted fair values received daily
by the Funds' 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/Trustees of the Funds.
(b) Derivative financial instruments--Each 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--Each 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--Each Fund may purchase and write call and 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--Each 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.
ANNUAL REPORTS OCTOBER 31, 2005
Notes to Financial Statements (continued)
(c) Income taxes--It is each Fund's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
(d) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis. The Funds amortize 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 expenses--Direct expenses relating to the public offering of
certain Fund's Preferred Stock/Shares were charged to capital. Any adjustments
to estimates of offering costs were recorded back to capital.
(g) Reclassification for MuniYield Pennsylvania Insured Fund--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, $19,772 has been reclassified
between accumulated net realized capital losses and undistributed net
investment income 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:
Each 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 each Fund's portfolio and provides
the necessary personnel, facilities, equipment and certain other services
necessary to the operations of the Fund. For such services, each 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/Shares. For the year
ended October 31, 2005, the Investment Adviser agreed to reimburse its
management fee by the amount of management fees each Fund pays to FAM
indirectly through its investment described below:
Investment Reimbursement
MuniYield Florida Merrill Lynch Institutional
Insured Fund Tax-Exempt Fund $3,088
MuniYield New Jersey CMA New Jersey
Insured Fund, Inc. Municipal Money Fund $9,184
MuniYield Pennsylvania CMA Pennsylvania
Insured Fund Municipal Money Fund $5,929
For the year ended October 31, 2005, Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("MLPF&S"), an affiliate of FAM, received underwriting fees of
$120,000 relating to MuniYield Florida Insured Fund and $140,000 relating to
MuniYield Pennsylvania Insured Fund, in connection with the issuance of each
Fund's Preferred Shares.
For the year ended October 31, 2005, the Funds reimbursed FAM for certain
accounting services. Each Fund's reimbursement was as follows:
Reimbursement
MuniYield Florida Insured Fund $5,278
MuniYield New Jersey Insured Fund, Inc. $6,146
MuniYield Pennsylvania Insured Fund $7,387
Certain officers and/or directors/trustees of the Funds 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 as follows:
MuniYield MuniYield MuniYield
Florida New Jersey Pennsylvania
Insured Insured Insured
Fund Fund, Inc. Fund
Total Purchases $115,247,011 $83,478,648 $139,939,097
Total Sales $ 98,926,211 $77,335,811 $128,798,967
ANNUAL REPORTS OCTOBER 31, 2005
Notes to Financial Statements (continued)
4. Stock/Share Transactions:
MuniYield Florida Insured Fund and MuniYield Pennsylvania Insured Fund are
authorized to issue an unlimited number of common shares of beneficial
interest, par value $.10 per share together with 1,000,000 Preferred Shares of
beneficial interest, par value of $.05 per share. The Board of Trustees is
authorized, however, to reclassify any unissued shares of beneficial interest
without approval of the holders of Common Shares.
MuniYield New Jersey Insured Fund, Inc. 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 classify any unissued shares of stock without approval
of holders of Common Stock.
Common Stock/Shares
MuniYield Florida Insured Fund
Shares issued and outstanding during the year ended October 31, 2005 increased
by 9,507 as a result of dividend reinvestment and remained constant during the
year ended October 31, 2004.
MuniYield New Jersey Insured Fund, Inc.
Shares issued and outstanding during the years ended October 31, 2005 and
October 31, 2004 increased by 43,611 and 18,785, respectively, as a result of
dividend reinvestment.
MuniYield Pennsylvania Insured Fund
Shares issued and outstanding during the year ended October 31, 2005 increased
by 16,822 as a result of dividend reinvestment and remained constant during
the year ended October 31, 2004.
Preferred Stock/Shares
Auction Market Preferred Stock/Shares are redeemable Preferred Stock/Shares of
the Funds, with 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.
MuniYield Florida Insured Fund and MuniYield Pennsylvania Insured Fund have a
par value of $.05 per share. MuniYield New Jersey Insured Fund, Inc. has a par
value of $.05 per share for Series A Shares and $.10 per share for Series B
Shares. The yields in effect at October 31, 2005 were as follows:
MuniYield MuniYield MuniYield
Florida New Jersey Pennsylvania
Insured Insured Insured
Fund Fund, Inc. Fund
Series A 2.50% 2.65% 2.55%
Series B 2.55% 2.45% 2.45%
Series C -- -- 2.55%
MuniYield Florida Insured Fund
Shares issued and outstanding during the year ended October 31, 2005 increased
by 480 shares from the issuance of an additional series of Preferred Shares.
Shares issued and outstanding during the year ended October 31, 2004 remained
constant.
MuniYield New Jersey Insured Fund, Inc.
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 700 shares from the issuance of an additional series of Preferred
Stock.
MuniYield Pennsylvania Insured Fund
Shares issued and outstanding during the year ended October 31, 2005 increased
by 560 shares from the issuance of an additional series of Preferred Shares.
Shares issued and outstanding during the year ended October 31, 2004 remained
constant.
The Funds pay 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 commissions
as follows:
Commissions
MuniYield Florida Insured Fund $ 93,910
MuniYield New Jersey Insured Fund, Inc. $ 119,076
MuniYield Pennsylvania Insured Fund $ 160,938
ANNUAL REPORTS OCTOBER 31, 2005
Notes to Financial Statements (concluded)
5. Distribution to Shareholders:
Each Fund paid a tax-exempt income dividend to holders of Common Stock/Shares
on November 29, 2005 to stock/shareholders of record on November 15, 2005. The
amount of the tax-exempt income dividend was as follows:
Per Share
Amount
MuniYield Florida Insured Fund $.070000
MuniYield New Jersey Insured Fund, Inc. $.068000
MuniYield Pennsylvania Insured Fund $.075000
MuniYield Florida Insured Fund
The tax character of distributions paid during the fiscal years ended
October 31, 2004 and October 31, 2005 was as follows:
10/31/2005 10/31/2004
Distributions paid from:
Tax-exempt income $ 9,007,901 $ 8,474,309
--------------- ---------------
Total distributions $ 9,007,901 $ 8,474,309
=============== ===============
As of October 31, 2005, the components of accumulated earnings on a tax
basis were as follows:
Undistributed tax-exempt income--net $ 1,054,957
Undistributed long-term capital gains--net --
---------------
Total undistributed earnings--net 1,054,957
Capital loss carryforward (2,775,558)*
Unrealized gains--net 7,748,213**
---------------
Total accumulated earnings--net $ 6,027,612
===============
* On October 31, 2005, the Fund had a net capital loss carryforward
of $2,775,558, of which $693,833 expires in 2008 and $2,081,725
expires in 2012. These amounts will be available to offset like
amounts of any future taxable gains.
** 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 New Jersey Insured Fund, Inc.
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 $ 9,432,665 $ 8,752,359
--------------- ---------------
Total distributions $ 9,432,665 $ 8,752,359
=============== ===============
As of October 31, 2005, the components of accumulated earnings on a tax
basis were as follows:
Undistributed tax-exempt income--net $ 864,934
Undistributed long-term capital gains--net --
---------------
Total undistributed earnings--net 864,934
Capital loss carryforward (667,579)*
Unrealized gains--net 8,288,346**
---------------
Total accumulated earnings--net $ 8,485,701
===============
* On October 31, 2005, the Fund had a net capital loss carryforward
of $667,579, all of which expires in 2012. This amount will be
available to offset like amounts of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized
gains is attributable primarily to 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 Pennsylvania Insured Fund
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 $ 13,113,887 $ 12,291,777
Ordinary income -- 87,229
--------------- ---------------
Total distributions $ 13,113,887 $ 12,379,006
=============== ===============
As of October 31, 2005, the components of accumulated earnings on a
tax basis were as follows:
Undistributed tax-exempt income--net $ 1,084,172
Undistributed long-term capital gains--net --
---------------
Total undistributed earnings--net 1,084,172
Capital loss carryforward (3,277,078)*
Unrealized gains--net 9,864,516**
---------------
Total accumulated earnings--net $ 7,671,610
===============
* On October 31, 2005, the Fund had a net capital loss carryforward
of $3,277,078, all of which expires in 2008. This amount will be
available to offset like amounts of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized
gains is attributable primarily to the tax deferral of losses on
straddles and the difference between book and tax amortization
methods for premiums and discounts on fixed income securities.
ANNUAL REPORTS OCTOBER 31, 2005
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors/Trustees of
MuniYield Florida Insured Fund,
MuniYield New Jersey Insured Fund, Inc. and
MuniYield Pennsylvania Insured Fund:
We have audited the accompanying statements of net assets, including the
schedules of investments, of MuniYield Florida Insured Fund, MuniYield New
Jersey Insured Fund, Inc. and MuniYield Pennsylvania Insured Fund (the
"Funds"), as of October 31, 2005, and the related statements 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 the financial highlights for each
of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Funds' 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. The Funds are not required to have, nor were we engaged to
perform, audits of their 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 Funds'
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, 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; where replies were not
received from brokers, we performed other auditing procedures. 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 respective financial
positions of MuniYield Florida Insured Fund, MuniYield New Jersey Insured
Fund, Inc. and MuniYield Pennsylvania Insured Fund as of October 31, 2005, the
results of their operations for the year then ended, the changes in their 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.
Deloitte & Touche LLP
Princeton,New Jersey
December 19, 2005
Fund Certification (unaudited)
In May 2005, MuniYield Florida Insured Fund, MuniYield New Jersey Insured
Fund, Inc. and MuniYield Pennsylvania Insured Fund filed their 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 (unaudited)
All of the net investment income distributions paid by MuniYield Florida
Insured Fund, MuniYield New Jersey Insured Fund, Inc. and MuniYield
Pennsylvania Insured Fund during the taxable year ended October 31, 2005
qualify as tax-exempt interest dividends for federal income tax purposes.
ANNUAL REPORTS OCTOBER 31, 2005
Disclosure of Investment Advisory Agreement
Activities of and Composition of the Board of Directors (1)
All but one member of each Fund's 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
each Fund and as a director of certain other funds advised by the Investment
Adviser or its affiliates. The Chairman of the Boards is also an independent
director. New director nominees are chosen as nominees by a Nominating
Committee comprised of independent directors. All independent directors also
are members of each 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 Agreements--Matters Considered by the Board
Every year, each Board considers approval of each Fund's investment advisory
agreement (the "Investment Advisory Agreement"). Each Board assesses the
nature, scope and quality of the services provided to each 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. Each Board also receives and assesses information regarding
the services provided to the Fund by certain unaffiliated service providers.
At various times throughout the year, each 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 each Fund; (b) Fund operating expenses paid to third parties;
(c) the resources devoted to and compliance reports relating to each 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.
Each 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 generally of high quality. Each 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. Each Board works closely with the Investment Adviser in over-
seeing the Investment Adviser's efforts to achieve good performance. As part
of this effort, each 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 Approvals by the Board of Directors
In the period prior to the Board meeting to consider renewal of the Investment
Advisory Agreement, each Board requests and receives materials specifically
relating to the Fund's Investment Advisory Agreement. These materials are
prepared with respect to each Fund separately, and 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; (d) information on the profitability to the Investment
Adviser and its affiliates of the Investment Advisory Agreement and other
relationships with the Fund; and (e) information provided by the Investment
Adviser concerning investment advisory fees charged to other clients, such
as offshore funds under similar investment mandates and generally to
institutional clients. Each 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 brokerage fees, the
Fund's portfolio turnover statistics, and direct and indirect benefits to the
Investment Adviser and its affiliates from their relationship with the Fund.
(1) References to directors shall include trustees.
ANNUAL REPORTS OCTOBER 31, 2005
Disclosure of Investment Advisory Agreement (continued)
Certain Specific Renewal Data
In connection with the most recent renewal of each Fund's Investment Advisory
Agreement in May 2005, the independent directors' and Board's review included
the following:
Investment Adviser's Services and Fund Performance--Each Board reviewed the
nature, extent and quality of services provided by the Investment Adviser,
including the investment advisory services and the resulting performance of
each Fund. The Boards focused primarily on the Investment Adviser's investment
advisory services and each Fund's investment performance, having concluded
that the other services provided to each Fund by the Investment Adviser were
satisfactory. Each Board compared Fund performance - both including and
excluding the effects of each Fund's fees and expenses - to the performance of
a comparable group of mutual funds, and the performance of a relevant index or
combination of indexes. While each Board reviews performance data quarterly,
consistent with the Investment Adviser's investment goals, each Board attaches
primary importance to performance over relatively long periods of time,
typically three to five years. The Board noted that for the period ended March
31, 2005, MuniYield Florida Insured Fund's performance was in the second
quintile for the one-year period, and it ranked fourth out of five for the
three-year period, and third out of four for the five-year period. The Board
noted that the universe of comparable funds was very small. The Board noted
that for the five-year period ended August 31, 2003, MuniYield New Jersey
Insured Fund, Inc.'s performance was in the third quintile for the one-year
period, the fifth quintile for the three-year period, and the third quintile
for the five-year period. The Board noted that MuniYield Pennsylvania Insured
Fund's performance was in the first quintile for each of the one-, three- and
five-year periods ended August 31, 2003. Considering these factors, each Board
concluded that the Fund's performance supported the continuation of the
Investment Advisory Agreement.
The Investment Adviser's Personnel and Investment Process--Each Board reviews
at least annually the Fund's investment objectives and strategies. Each 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. Each
Board also reviews the Investment Adviser's compensation policies and
practices with respect to the Fund's portfolio managers. Each Board also
considered the experience of the Fund's portfolio manager. The Board of
MuniYield Florida Insured Fund noted that Mr. Sneeden has more than ten years
of experience in portfolio management. The Board of MuniYield New Jersey
Insured Fund, Inc. noted that Mr. Jaeckel has more than fifteen years of
experience in portfolio management. The Board of MuniYield Pennsylvania
Insured Fund 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 Funds. Each Board concluded that the Fund benefits from that expertise.
Management Fees and Other Expenses--Each 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. Each Board considered the
services provided to and the fees charged by the Investment Adviser to other
types of clients such as offshore funds, with similar investment mandates and
noted that the fees charged by the Investment Adviser in those cases typically
exceeded those being charged to the Fund. Each Board also noted that, as a
general matter, fees charged to institutional clients were lower than the fees
charged to the Fund, but believed that less extensive services were being
provided to such clients. In the case of MuniYield Florida Insured Fund, the
contractual management fee rate and total expenses are below the median of
fees and expenses charged by comparable funds as determined by Lipper, while
the actual management fee rate is slightly higher than the median fee charged
by comparable funds. In the case of MuniYield New Jersey Insured Fund, Inc.,
the contractual management fee rate is lower than the median fee charged by
comparable funds as determined by Lipper, while the actual management fee rate
and total expenses are higher than the median fees and expenses charged by
comparable funds. In the case of MuniYield Pennsylvania Insured Fund, the
contractual management fee rate is below the median of fees charged by
comparable funds as determined by Lipper, while the total expenses are equal
to, and the actual management fee rate is slightly higher than, the median
fees and expenses charged by comparable funds. Each 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.
ANNUAL REPORTS OCTOBER 31, 2005
Disclosure of Investment Advisory Agreement (concluded)
Profitability--Each 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, each 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. Each Board believes the Investment Adviser's profits are
reasonable in relation to the nature and quality of services provided. The
Boards also considered the federal court decisions discussing an investment
adviser's profitability and profitability levels considered to be reasonable
in those decisions.
Economies of Scale--Each 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. Each Board considered
economies of scale to the extent applicable to each Fund's closed-end
structure and determined that each Fund currently appropriately benefits
from any economies of scale and no changes were currently necessary.
Conclusion
After the independent directors deliberated in executive session, each 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.
Officers and Directors or Trustees
Number of
Portfolios in Other Public
Fund Complex Directorships
Position(s) Length of Overseen by Held by
Held with Time Director or Director or
Name, Address & Age Funds Served Principal Occupation(s) During Past 5 Years Trustee Trustee
Interested Director or Trustee
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 or Trustee 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 or Trustees 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 or Trustees.
ANNUAL REPORTS OCTOBER 31, 2005
Officers and Directors or Trustees (continued)
Number of
Portfolios in Other Public
Fund Complex Directorships
Position(s) Length of Overseen by Held by
Held with Time Director or Director or
Name, Address & Age Funds Served Principal Occupation(s) During Past 5 Years Trustee Trustee
Independent Directors or Trustees*
Donald W. Burton Director 2002 to General Partner of The Burton Partnership, 23 Funds Knology, Inc.
P.O. Box 9095 or Trustee present Limited Partnership (an investment partnership) 42 Portfolios (telecommuni-
Princeton, since 1979; Managing General Partner of The cations); and
NJ 08543-9095 South Atlantic Venture Funds since 1983; Symbion, Inc.
Age: 61 Member of the Investment Advisory Council (healthcare)
of the Florida State Board of Administration
since 2001.
LaurieSimon Hodrick Director 1999 to Professor of Finance and Economics, Graduate 23 Funds None
P.O. Box 9095 or Trustee present School of Business, Columbia University 42 Portfolios
Princeton, since 1998.
NJ 08543-9095
Age: 43
John Francis O'Brien Director 2005 to President and Chief Executive Officer of 23 Funds ABIOMED
P.O. Box 9095 or Trustee present Allmerica Financial Corporation (financial 42 Portfolios (medical device
Princeton, services holding company) from 1995 to 2002 manufacturer),
NJ 08543-9095 and Director from 1995 to 2003; President of Cabot
Age: 62 Allmerica Investment Management Co., Inc. Corporation
(investment adviser) from 1989 to 2002, Director (chemicals),
from 1989 to 2002 and Chairman of the Board from LKQ Corporation
1989 to 1990; President, Chief Executive Officer (auto parts
and Director of First Allmerica Financial Life manufacturing),
Insurance Company from 1989 to 2002 and Director and TJX Companies,
of various other Allmerica Financial companies Inc. (retailer)
until 2002; Director since 1989 and Member of
the Governance Nominating Committee since 2004;
Member of the Compensation Committee of ABIOMED
since 1989 and Member of the Audit Committee of
ABIOMED from 1990 to 2004; Director and
member of the Governance and Nomination
Committee of Cabot Corporation and Member
of the Audit Committee since 1990; Director
and Member of the Audit Committee and
Compensation Committee of LKQ Corporation
since 2003; Lead Director of TJX Companies,
Inc. since 1999; Trustee of the Woods Hole
Oceanographic Institute since 2003.
David H. Walsh Director 2003 to Consultant with Putnam Investments from 1993 23 Funds None
P.O. Box 9095 or Trustee present to 2003, and employed in various capacities 42 Portfolios
Princeton, therewith from 1973 to 1992; Director, The
NJ 08543-9095 National Audubon Society since 1998; Director,
Age: 64 The American Museum of Fly Fishing since 1997.
Fred G. Weiss** Director 1998 to Managing Director of FGW Associates since 23 Funds Watson
P.O. Box 9095 or Trustee present 1997; Vice President, Planning, Investment and 42 Portfolios Pharmaceuticals,
Princeton, Development of Warner Lambert Co. from 1979 Inc.
NJ 08543-9095 to 1997; Director of the Michael J. Fox (pharmaceutical
Age: 64 Foundation for Parkinson's Research since company)
2000; Director of BTG International PLC (a
global technology commercialization company)
since 2001.
* Directors or Trustees 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.
ANNUAL REPORTS OCTOBER 31, 2005
Officers and Directors or Trustees (concluded)
Position(s) Length of
Held with Time
Name, Address & Age Funds 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 (Municipal Tax-Exempt Fund Management) of MLIM since 2000;
P.O. Box 9011 Vice present Director of MLIM from 1997 to 2000.
Princeton, President
NJ 08543-9011
Age: 54
John M. Loffredo Senior 2002 to Managing Director (Municipal Tax-Exempt Fund Management) of MLIM since 2000;
P.O. Box 9011 Vice present Director of MLIM from 1997 to 2000.
Princeton, President
NJ 08543-9011
Age: 41
William R. Bock Vice 1997 (MPA) 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
Theodore R. Jaeckel, Jr. Vice 1997 (MJI) Managing Director (Municipal Tax-Exempt Fund Management) of MLIM since 2005;
P.O. Box 9011 President to present Director of MLIM from 1997 to 2005; Vice President of MLIM from 1991 to 1997.
Princeton,
NJ 08543-9011
Age: 46
Robert D. Sneeden Vice 2002 (MFT) Vice President (Municipal Tax-Exempt Fund Management) of MLIM since 1998;
P.O. Box 9011 President to present Assistant Vice President of MLIM from 1994 to 1998.
Princeton,
NJ 08543-9011
Age: 52
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 Funds serve at the pleasure of the Board of Directors or Trustees.
MuniYield Florida Insured Fund and
MuniYield New Jersey Insured Fund, Inc.
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agents
Common Shares or Stock:
The Bank of New York
101 Barclay Street - 11 East
New York, NY 10286
Preferred Shares or Stock:
The Bank of New York
101 Barclay Street - 7 West
New York, NY 10286
MuniYield Pennsylvania Insured Fund
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agents
Common Shares:
Equiserve Trust Company N.A.
(c/o Computershare
Investor Services)
P.O. Box 43010
Providence, RI 02940-3010
1-800-426-5523
Preferred Shares:
The Bank of New York
101 Barclay Street - 7 West
New York, NY 10286
ANNUAL REPORTS OCTOBER 31, 2005
Investment Objectives
NYSE Symbol MuniYield Florida Insured Fund seeks to provide shareholders with
MFT 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 and which enables shares of the Fund to
be exempt from Florida intangible personal property taxes.
NYSE Symbol MuniYield New Jersey Insured Fund, Inc. seeks to provide
MJI shareholders with as high a level of current income exempt from
federal income tax and New Jersey personal 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 income tax and
New Jersey personal income taxes.
NYSE Symbol MuniYield Pennsylvania Insured Fund seeks to provide shareholders
MPA with as high a level of current income exempt from federal and
Pennsylvania 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 Pennsylvania income taxes.
ANNUAL REPORTS OCTOBER 31, 2005
Availability of Quarterly Schedule of Investments
The Funds file their complete schedules 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 Funds' Forms N-Q are available on the
SEC's Web site at http://www.sec.gov. The Funds' 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 Funds offer electronic delivery of communications to their 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.
ANNUAL REPORTS 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)
Donald W. Burton, (2) M. Colyer Crum (retired as of December 31,
2004), (3) Laurie Simon Hodrick, (4) John F. O'Brien (as of
November 22, 2004), (5) David H. Walsh and (6) Fred G. Weiss.
The registrant's board of directors has determined that Laurie
Simon Hodrick and M. Colyer Crum qualify as financial experts
pursuant to Item 3(c)(4) of Form N-CSR.
Ms. Hodrick has a thorough understanding of generally accepted
accounting principals, financial statements, and internal controls
and procedures for financial reporting. Ms. Hodrick earned a Ph.D.
in economics and has taught courses in finance for over 15 years.
Her M.B.A.-level course centers around the evaluation and analysis
of firms' corporate financial statements. She has also taught in
financial analysts' training programs. Ms. Hodrick has also worked
with several prominent corporations in connection with the analysis
of financial forecasts and projections and analysis of the
financial statements of those companies, serving on the Financial
Advisory Council of one of these major corporations. She has also
served as the Treasurer and Finance Chair of a 501(c)(3)
organization. Ms. Hodrick has published a number of articles in
leading economic and financial journals and is the associate editor
of two leading finance journals.
M. Colyer Crum also possesses a thorough understanding of generally
accepted accounting principals, financial statements, and internal
controls and procedures for financial reporting through a
combination of education and experience. Professor Crum was a
professor of investment management at the Harvard Business School
for 25 years. The courses taught by Professor Crum place a heavy
emphasis on the analysis of underlying company financial statements
with respect to stock selection and the analysis of credit risk in
making loans. Professor Crum has also served on a number of boards
of directors and has served on the audit committees, and in some
cases chaired the audit committee, for several major corporations
and financial institutions. For two such organizations, Professor
Crum has performed extensive investment analysis of financial
statements in connection with investment management decisions.
From these experiences, he has gained significant experience with
the establishment of reserves and accounting policies, differences
between U.S. GAAP and Canadian GAAP and executive compensation
issues.
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees - Fiscal Year Ending October 31, 2005 - $26,000
Fiscal Year Ending October 31, 2004 - $25,000
(b) Audit-Related Fees -
Fiscal Year Ending October 31, 2005 - $19,400
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, and services rendered in
connection with the registration and issuance of a new series of
AMPS.
(c) Tax Fees - Fiscal Year Ending October 31, 2005 - $5,700
Fiscal Year Ending October 31, 2004 - $5,610
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 - $6,277,749
Fiscal Year Ending October 31, 2004 - $13,270,096
(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) - $1,227,000, 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)):
Donald W. Burton
M. Colyer Crum (retired as of December 31, 2004)
Laurie Simon Hodrick
John F. O'Brien (as of November 22, 2004)
David H. Walsh
Fred G. Weiss
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 1997.
(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
$ 2,568,590,927 $ 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, Pennsylvania 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 Pennsylvania Insured Fund
By: /s/ Robert C. Doll, Jr.
---------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
MuniYield Pennsylvania Insured Fund
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 Pennsylvania Insured Fund
Date: December 16, 2005
By: /s/ Donald C. Burke
---------------------------
Donald C. Burke,
Chief Financial Officer of
MuniYield Pennsylvania Insured Fund
Date: December 16, 2005