-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PkNZLPF8XUgaXHRjj5A3zoS7UZO1pJ5glEV+JGDQItDccWoY3h5tvHS/0MhDfxQt bh42rfQAclhxRS/OOPeoBg== 0000950168-98-002879.txt : 19980831 0000950168-98-002879.hdr.sgml : 19980831 ACCESSION NUMBER: 0000950168-98-002879 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981008 FILED AS OF DATE: 19980828 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MUNIYIELD INSURED FUND INC CENTRAL INDEX KEY: 0000883412 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: NJ FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 811-06540 FILM NUMBER: 98700254 BUSINESS ADDRESS: STREET 1: 800 SCUDDERS MILL ROAD CITY: PLAINSBORO STATE: NJ ZIP: 08530 BUSINESS PHONE: 6092822800 DEF 14A 1 MERRILL LYNCH MUNIYIELD INS. AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 28, 1998 SCHEDULE 14A (RULE 14A-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 MUNIYIELD INSURED FUND, INC. P.O. BOX 9011 PRINCETON, NEW JERSEY 08543-9011 ----------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) ----------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (4) and 0-11. (1) Title of each class of securities to which transaction applies: ----------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ----------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 ----------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ----------------------------------------------------------------------------- (5) Total fee paid: ----------------------------------------------------------------------------- [ ] Fee paid previously with preliminary materials. ----------------------------------------------------------------------------- [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ----------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ----------------------------------------------------------------------------- (3) Filing Party: ----------------------------------------------------------------------------- (4) Date Filed: ----------------------------------------------------------------------------- Notes: --------- 1 Set forth the amount on which the filing fee is calculated and state how it was determined. MUNIYIELD INSURED FUND, INC. P.O. BOX 9011 PRINCETON, NEW JERSEY 08543-9011 ---------------- NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS ---------------- OCTOBER 8, 1998 TO THE STOCKHOLDERS OF MUNIYIELD INSURED FUND, INC.: Notice is hereby given that the 1998 Annual Meeting of Stockholders (the "Meeting") of MuniYield Insured Fund, Inc. (the "Fund") will be held at the offices of Merrill Lynch Asset Management, 800 Scudders Mill Road, Plainsboro, New Jersey, on Thursday, October 8, 1998 at 9:30 a.m. for the following purposes: (1) To elect a Board of Directors to serve for the ensuing year; (2) To consider and act upon a proposal to ratify the selection of Ernst & Young LLP to serve as independent auditors of the Fund for its current fiscal year; and (3) To transact such other business as may properly come before the Meeting or any adjournment thereof. The Board of Directors has fixed the close of business on August 12, 1998 as the record date for the determination of stockholders entitled to notice of and to vote at the Meeting or any adjournment thereof. A complete list of the stockholders of the Fund entitled to vote at the Meeting will be available and open to the examination of any stockholder of the Fund for any purpose germane to the Meeting during ordinary business hours from and after September 24, 1998, at the office of the Fund, 800 Scudders Mill Road, Plainsboro, New Jersey. You are cordially invited to attend the Meeting. STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED FOR THIS PURPOSE. The enclosed proxy is being solicited on behalf of the Board of Directors of the Fund. By Order of the Board of Directors PATRICK D. SWEENEY SECRETARY Plainsboro, New Jersey Dated: August 28, 1998 PROXY STATEMENT ---------------- MUNIYIELD INSURED FUND, INC. P.O. BOX 9011 PRINCETON, NEW JERSEY 08543-9011 ---------------- 1998 ANNUAL MEETING OF STOCKHOLDERS ---------------- OCTOBER 8, 1998 INTRODUCTION This Proxy Statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors of MuniYield Insured Fund, Inc., a Maryland corporation (the "Fund"), to be voted at the 1998 Annual Meeting of Stockholders of the Fund (the "Meeting"), to be held at the offices of Merrill Lynch Asset Management, L.P. ("MLAM"), 800 Scudders Mill Road, Plainsboro, New Jersey, on Thursday, October 8, 1998 at 9:30 a.m. The approximate mailing date of this Proxy Statement is August 31, 1998. All properly executed proxies received prior to the Meeting will be voted at the Meeting in accordance with the instructions marked thereon or otherwise as provided therein. Unless instructions to the contrary are marked, proxies will be voted FOR the election of the Board of Directors to serve for the ensuing year, and FOR the ratification of the selection of independent auditors to serve for the Fund's current fiscal year. Any proxy may be revoked at any time prior to the exercise thereof by giving written notice to the Secretary of the Fund at the Fund's address indicated above or by voting in person at the Meeting. The Board of Directors has fixed the close of business on August 12, 1998 as the record date (the "Record Date") for the determination of stockholders entitled to notice of and to vote at the Meeting and at any adjournment thereof. Stockholders on the Record Date will be entitled to one vote for each share held, with no shares having cumulative voting rights. As of the Record Date, the Fund had outstanding 61,351,136 shares of common stock, par value $.10 per share ("Common Stock"), and 17,600 shares of auction market preferred stock, par value $.05 per share and liquidation preference of $25,000 per share plus an amount equal to accumulated but unpaid dividends thereon ("AMPS"). To the knowledge of the Fund, as of the Record Date, no person is the beneficial owner of more than five percent of the outstanding shares of Common Stock or AMPS. With respect to Item 1 Election of Directors, holders of AMPS, voting separately as a class, are entitled to elect the two Directors designated below to be elected by holders of AMPS, and holders of AMPS and Common Stock, voting together as a single class, are entitled to elect the remaining Directors. Assuming a quorum is present, (i) election of the two Directors to be elected by the holders of AMPS, voting separately as a class, will require the affirmative vote of a majority of the votes cast by the holders of AMPS represented at the Meeting and entitled to vote; (ii) election of the remaining Directors will require the affirmative vote of a majority of the votes cast by the holders of shares of Common Stock and AMPS represented at the Meeting and entitled to vote, voting together as a single class; and (iii) approval of Item 2. Selection of Independent Auditors will require the affirmative vote of a majority of the votes cast by the holders of Common Stock and AMPS represented at the Meeting and entitled to vote, voting together as a single class. The Board of Directors of the Fund knows of no business other than that mentioned in Items 1 and 2 of the Notice of Meeting that will be presented for consideration at the Meeting. If any other matter is properly presented, it is the intention of the persons named in the enclosed proxy to vote in accordance with their best judgment. ITEM 1. ELECTION OF DIRECTORS At the Meeting, the Board of Directors will be elected to serve until the next Annual Meeting of Stockholders and until their successors are elected and qualified. It is intended that all properly executed proxies will be voted (unless such authority has been withheld in the proxy) as follows: (1) All proxies of the holders of shares of AMPS, voting separately as a class, will be voted in favor of the two (2) persons designated as Directors to be elected by holders of AMPS; and (2) All proxies of the holders of shares of AMPS and Common Stock, voting together as a single class, will be voted in favor of the four (4) persons designated as Directors to be elected by holders of Common Stock and AMPS. The Board of Directors of the Fund knows of no reason why any of these nominees will be unable to serve, but in the event of any such unavailability, the proxies received will be voted for such substitute nominee or nominees as the Board of Directors may recommend. Certain information concerning the nominees, including their designated classes, is set forth as follows: TO BE ELECTED BY HOLDERS OF AMPS, VOTING SEPARATELY AS A CLASS:
SHARES BENEFICIALLY OWNED AT THE RECORD DATE --------------- PRINCIPAL OCCUPATIONS DURING PAST DIRECTOR COMMON NAME AND ADDRESS OF NOMINEE AGE FIVE YEARS AND PUBLIC DIRECTORSHIPS (1) SINCE STOCK AMPS - -------------------------------- ----- ----------------------------------------- ---------- ------- ----- Walter Mintz(1)(2) ............ 69 Special Limited Partner of 1992 -0- -0- 1114 Avenue of the Americas. Cumberland Associates New York, New York 10036 (investment partnership) since 1982. Melvin R. Seiden(1)(2) ......... 67 Director of Silbanc Properties, 1992 -0- -0- 780 Third Avenue Ltd. (real estate, investments and Suite 2502 consulting) since 1987; New York, New York 10017 Chairman and President of Seiden & de Cuevas, Inc. (private investment firm) from 1964 to 1987.
2 TO BE ELECTED BY HOLDERS OF AMPS AND COMMON STOCK, VOTING TOGETHER AS A SINGLE CLASS:
SHARES BENEFICIALLY OWNED AT THE RECORD DATE --------------- PRINCIPAL OCCUPATIONS DURING PAST DIRECTOR COMMON NAME AND ADDRESS OF NOMINEE AGE FIVE YEARS AND PUBLIC DIRECTORSHIPS (1) SINCE STOCK AMPS - -------------------------------------- ----- ----------------------------------------- ---------- ------- ----- Joe Grills(1)(2) ..................... 63 Member of the Committee of 1994 -0- -0- P.O. Box 98 Investment of Employee Benefit Rapidan, Virginia 22733 Assets of the Financial Executives Institute ("CIEBA") since 1986, Member of CIEBA's Executive Committee since 1988 and its Chairman from 1991 to 1992; Assistant Treasurer of International Business Machines Corporation ("IBM") and Chief Investment Officer of IBM Retirement Funds from 1986 until 1993; Member of the Investment Advisory Committees of the State of New York Common Retirement Fund and the Howard Hughes Medical Institute; Director, Duke Management Company since 1992 and Vice Chairman thereof since May 1998; Director, LaSalle Street Fund since 1995; Director of Hotchkis and Wiley Mutual Funds since 1996; Director Kimco Realty Corporation since 1997; Member of the Investment Advisory Committee of the Virginia Retirement System since 1998. Robert S. Salomon, Jr.(1)(2) ......... 61 Principal of STI Management 1996 -0- -0- 106 Dolphin Cove Quay (investment adviser) since 1994; Stamford, Connecticut 06902 Chairman and CEO of Salomon Brothers Asset Management from 1992 until 1995; Monthly columnist with the FORBES Magazine since 1992; Chairman of Salomon Brothers equity mutual funds from 1992 until 1995; Director of Stock Research and U.S. Equity Strategist at Salomon Brothers Inc from 1975 until 1991; Trustee, The Common Fund since 1980. Stephen B. Swensrud(1)(2) ............ 65 Chairman of Fernwood Advisors 1992 -0- -0- 24 Federal Street (investment adviser) since 1996; Suite 400 Principal of Fernwood Associates Boston, Massachusetts 02110 (financial consultant) since 1975.
3
SHARES BENEFICIALLY OWNED AT THE RECORD DATE --------------- PRINCIPAL OCCUPATIONS DURING PAST DIRECTOR COMMON NAME AND ADDRESS OF NOMINEE AGE FIVE YEARS AND PUBLIC DIRECTORSHIPS (1) SINCE STOCK AMPS - ----------------------------- ----- ----------------------------------------- ---------- ------- ----- Arthur Zeikel(1)(3) ......... 66 Chairman of Fund Asset 1992 -0- -0- P.O. Box 9011 Management, L.P. ("FAM") and Princeton, New Jersey MLAM (which terms as used 08543-9011 herein include their corporate predecessors) since 1997; President of FAM and MLAM from 1977 to 1997; Chairman of Princeton Services, Inc. ("Princeton Services") since 1997 and Director thereof since 1993; President of Princeton Services from 1993 to 1997; Executive Vice President of Merrill Lynch & Co., Inc. ("ML & Co.") since 1990.
- -------- (1) Each of the nominees is a director, trustee or member of an advisory board of certain other investment companies for which FAM or MLAM acts as investment adviser. (2) Member of the Audit Committee of the Board of Directors. (3) Interested person, as defined in the Investment Company Act of 1940, as amended (the "Investment Company Act"), of the Fund. COMMITTEES AND BOARD OF DIRECTORS' MEETINGS. The Board of Directors has a standing Audit Committee, which consists of the Directors who are not "interested persons" of the Fund within the meaning of the Investment Company Act. The principal purpose of the Audit Committee is to review the scope of the annual audit conducted by the Fund's independent auditors and the evaluation by such auditors of the accounting procedures followed by the Fund. The non-interested Directors have retained independent legal counsel to assist them in connection with these duties. The Board of Directors does not have a nominating committee. During the fiscal year ended October 31, 1997, the Board of Directors held four meetings and the Audit Committee held four meetings. Each of the Directors then in office attended at least 75% of the aggregate of the total number of meetings of the Board of Directors and, if a member, of the total number of meetings of the Audit Committee held during such period. COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934. Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the Fund's officers and directors and persons who own more than ten percent of a registered class of the Fund's equity securities, to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission ("SEC") and the New York Stock Exchange. Officers, directors and greater than ten percent stockholders are required by SEC regulations to furnish the Fund with copies of all Forms 3, 4 and 5 they file. Based solely on the Fund's review of the copies of such forms, and amendments thereto, furnished to it during or with respect to its most recent fiscal year, and written representations from certain reporting persons that they were not required to file Form 5 with respect to the most recent fiscal year, the Fund believes that all of its officers, directors, greater than ten percent beneficial owners and other persons subject to Section 16 of the Exchange Act because of the requirements of Section 30 of the Investment Company Act, (I.E., any advisory board member, investment adviser or affiliated person of the Fund's investment adviser), have complied with all filing requirements applicable to them with respect to transactions during the Fund's most recent fiscal year, 4 except that Michael J. Hennewinkel made a late Form 3 filing reporting his election as Senior Vice President of FAM, which report indicated that he owned no shares of the Fund. INTERESTED PERSONS. The Fund considers Mr. Zeikel to be an "interested person" of the Fund within the meaning of Section 2(a)(19) of the Investment Company Act as a result of the positions he holds with FAM and its affiliates. Mr. Zeikel is the President of the Fund and the Chairman of FAM and MLAM. COMPENSATION OF DIRECTORS. FAM, the investment adviser, pays all compensation of all officers of the Fund and all Directors of the Fund who are affiliated with ML & Co. or its subsidiaries. The Fund pays each Director not affiliated with the investment adviser (each a "non-affiliated Director") a fee of $4,000 per year plus $1,000 per regular meeting attended, together with such Director's actual out-of-pocket expenses relating to attendance at meetings. The Fund also pays each member of its Audit Committee, which consists of all the non-affiliated Directors, a fee of $4,000 per year plus $750 per meeting attended, together with such Director's out-of-pocket expenses relating to attendance at meetings. These fees and expenses aggregated $75,201 for the fiscal year ended October 31, 1997. The following table sets forth for the fiscal year ended October 31, 1997 compensation paid by the Fund to the non-affiliated Directors and, for the calendar year ended December 31, 1997, the aggregate compensation paid by all investment companies advised by FAM and its affiliate, MLAM ("FAM/MLAM Advised Funds"), to the non-affiliated Directors.
AGGREGATE COMPENSATION FROM FUND, OTHER PENSION OR FAM/MLAM ADVISED RETIREMENT BENEFITS FUNDS AND HOTCHKIS AND COMPENSATION ACCRUED AS PART WILEY FUNDS NAME OF DIRECTOR FROM FUND OF FUND EXPENSES PAID TO DIRECTORS - ----------------------------------- -------------- --------------------- ----------------------- Joe Grills(1) ..................... $15,000 None $171,500 Walter Mintz(1) ................... $15,000 None $159,500 Robert S. Salomon, Jr.(1) ......... $15,000 None $159,500 Melvin R. Seiden(1) ............... $15,000 None $159,500 Stephen B. Swensrud(1) ............ $15,000 None $175,500
- -------- (1) The Directors serve on the boards of FAM/MLAM Advised Funds and Hotchkis and Wiley Funds as follows: Mr. Grills (22 registered investment companies consisting of 55 portfolios); Mr. Mintz (20 registered investment companies consisting of 41 portfolios); Mr. Salomon (20 registered investment companies consisting of 41 portfolios); Mr. Seiden (20 registered investment companies consisting of 41 portfolios); Mr. Swensrud (23 registered investment companies consisting of 56 portfolios). 5 OFFICERS OF THE FUND. The Board of Directors has elected eight officers of the Fund. The following sets forth information concerning each of these officers:
OFFICER NAME AND PRINCIPAL OCCUPATION OFFICE AGE SINCE - ----------------------------------------------------------------- -------------------------- ----- -------- Arthur Zeikel ................................................... President 66 1992 Chairman of FAM and MLAM since 1997; President of FAM and MLAM from 1977 to 1997; Chairman of Princeton Services since 1997 and Director thereof since 1993; President of Princeton Services from 1993 to 1997; Executive Vice President of ML & Co. since 1990. Terry K. Glenn ............................................................... Executive Vice President 57 1992 Executive Vice President of FAM and MLAM since 1983; Executive Vice President and Director of Princeton Services since 1993; President of Princeton Funds Distributor, Inc. ("PFD") since 1986 and Director thereof since 1991; President of Princeton Administrators, L.P. since 1988. Vincent R. Giordano .......................................................... Senior Vice President 53 1992 Senior Vice President of FAM and MLAM since 1984; Senior Vice President of Princeton Services since 1993. Kenneth A. Jacob ............................................................. Vice President 47 1992 First Vice President of MLAM since 1997; Vice President of FAM and MLAM from 1984 to 1997. William R. Bock .............................................................. Vice President 62 1997 Vice President of MLAM since 1989. Donald C. Burke .............................................................. Vice President 38 1993 First Vice President of MLAM since 1997; Vice President of MLAM from 1990 to 1997; Director of Taxation of MLAM since 1990. Gerald M. Richard ............................................................ Treasurer 49 1992 Senior Vice President and Treasurer of FAM and MLAM since 1984; Senior Vice President and Treasurer of Princeton Services since 1993; Treasurer of PFD since 1984 and Vice President thereof since 1981. Patrick D. Sweeney ........................................................... Secretary 44 1997 First Vice President of MLAM since 1997; Vice President of MLAM from 1990 to 1997.
STOCK OWNERSHIP. At the Record Date, the Directors and officers of the Fund as a group (13 persons) owned an aggregate of less than 1% of the Common Stock of the Fund outstanding at such date and owned none of the AMPS outstanding at such date. At such date, Mr. Zeikel, a Director and Officer of the Fund, and the other officers of the Fund owned an aggregate of less than 1% of the outstanding shares of common stock of ML & Co. ITEM 2. SELECTION OF INDEPENDENT AUDITORS The Board of Directors of the Fund, including a majority of the Directors who are not interested persons of the Fund, has selected the firm of Ernst & Young LLP ("E&Y") to examine the financial statements of the Fund for the current fiscal year. The Fund knows of no direct or indirect financial interest of E&Y in the Fund. 6 Such appointment is subject to ratification or rejection by the stockholders of the Fund. Unless a contrary specification is made, the accompanying proxy will be voted in favor of ratifying the selection of such auditors. E&Y also acts as independent auditors for several other investment companies for which FAM or its affiliate, MLAM acts as investment adviser. The fees received by E&Y from these other entities are substantially greater, in the aggregate, than the total fees received by it from the Fund. The Board of Directors of the Fund considered the fact that E&Y has been retained as the independent auditors for the other entities described above in its evaluation of the independence of E&Y with respect to the Fund. Deloitte & Touche LLP ("D&T") served as the Fund's independent auditors from the commencement of the Fund's operations through the fiscal year ended October 31, 1996. In January 1997, the Fund acquired all of the assets and assumed all of the liabilities of MuniYield Insured Fund II, Inc. ("Insured II") in consideration for the issuance to Insured II of shares of the Fund's Common Stock and a newly-created series of AMPS (collectively, the "Reorganization"). In connection with the Reorganization, the Board of Directors determined to retain E&Y, the independent auditors for Insured II, as independent auditors for the Fund for the fiscal year ended October 31, 1997. The report of D&T on the Fund's financial statements did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope, or accounting principles. This change in accountants was recommended by the Audit Committee of the Board of Directors. During the Fund's two most recently completed fiscal years and for the period subsequent to the dismissal of D&T, there were no disagreements with D&T on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. Representatives of E&Y are expected to be present at the meeting and will have the opportunity to make a statement if they so desire and to respond to questions from stockholders. LEGAL PROCEEDINGS On June 21, 1996, a purported class action titled JACK GREEN, ET AL. V. FUND ASSET MANAGEMENT, L.P., ET AL. was filed in the United States District Court for the District of Massachusetts. Among the named defendants in the action are seven of the leveraged closed-end municipal bond funds (including the Fund) for which FAM serves as the investment adviser (two of these seven funds have merged since the commencement of the litigation). In addition to the named defendants, plaintiffs also purport to bring claims against a defendant class consisting of all other publicly traded, closed-end investment companies for which FAM serves as investment adviser and which, among other things, have issued AMPS. The named plaintiffs, who claim to be investors in the seven named funds, purport to bring the action on behalf of a class consisting of all holders of the common stock of the subject funds. Plaintiffs allege that FAM and other affiliated defendants received excessive compensation for managing the subject funds. Plaintiffs claim, among other things, that the registration statements, annual reports and other documents filed by the funds with the SEC were misleading because such documents allegedly failed to disclose that proceeds arising from the issuance of AMPS would be included in a fund's net assets for the purposes of calculating the investment advisory fee payable to FAM. In addition, plaintiffs allege that a conflict of interest existed because it would always be in the defendants' interest to keep the funds fully leveraged to maximize the advisory fees and collateral compensation notwithstanding adverse market conditions. Plaintiffs also allege an additional conflict of interest arising from the receipt by such affiliates of underwriting discounts, or other revenues in connection with the sale of the AMPS by the funds. The complaint asserts claims under Sections 8(e), 34(b), 36(a) and 36(b) of the Investment Company Act and the common law. Plaintiffs seek unspecified monetary damages as well as injunctive relief. 7 On August 27, 1996, defendants moved to transfer the action to the United States Court for the District of New Jersey. By order dated July 16, 1997, the District Court Judge ordered the case transferred to the District of New Jersey. On September 17, 1997, defendants moved to dismiss plaintiffs' complaint on the ground that, even if the allegations in the complaint were true, plaintiffs had failed to state a claim upon which relief could be granted. On February 23, 1998, the Court granted defendants' motion in substantial part and dismissed plaintiffs' claims under Sections 8(e), 34(b) and 36(a) of the Investment Company Act with prejudice, but declined to dismiss plaintiffs' claims under Section 36(b) and state law. Plaintiffs filed a First Amended Complaint on March 31, 1998, realleging their claims under Section 36(b) and state law. Defendants filed an Answer on April 30, 1998, denying the substantive allegations in the First Amended Complaint. The defendants believe that the plaintiffs' allegations are entirely without merit and intend to defend the action vigorously. FAM has agreed to indemnify the named defendant funds (including the Fund) for any liabilities or expenses that they may incur in connection with this litigation. ADDITIONAL INFORMATION The expenses of preparation, printing and mailing of the enclosed form of proxy and accompanying Notice and Proxy Statement will be borne by the Fund. The Fund will reimburse banks, brokers and others for their reasonable expenses in forwarding proxy solicitation material to the beneficial owners of the shares of the Fund. The Fund may also hire proxy solicitors at the expense of the Fund. In order to obtain the necessary quorum at the Meeting (I.E., a majority of the shares of each class of the Fund's securities entitled to vote at the Meeting, present in person or by proxy), supplementary solicitation may be made by mail, telephone, telegraph or personal interview by officers of the Fund. It is anticipated that the cost of such supplementary solicitation, if any, will be nominal. The Directors are to be elected by class vote, two Directors being elected by the holders of AMPS voting separately as a class and the remaining Directors by the holders of AMPS and Common Stock, voting together as a single class. Assuming a quorum is present, (1) the affirmative vote of a majority of the votes cast by the holders of AMPS, present in person or by proxy at the Meeting and entitled to vote, voting separately as a class, is required for the election of the two (2) persons designated as Directors to be elected by the holders of AMPS; (2) the affirmative vote of a majority of the votes cast by the holders of AMPS and Common Stock, present in person or by proxy at the Meeting and entitled to vote, voting together as a single class, is required for the election of the remaining Directors (Item 1); and (3) the proposal to ratify the selection of the Fund's independent auditors (Item 2) may be approved by the affirmative vote of a majority of the votes cast by the holders of Common Stock and AMPS, present in person or by proxy at the Meeting and entitled to vote, voting together as a single class. Broker-dealer firms, including Merrill Lynch, Pierce, Fenner & Smith Incorporated, holding Fund shares in "street name" for the benefit of their customers and clients will request the instructions of such customers and clients on how to vote their shares on each Item before the Meeting. The Fund understands that, under the rules of the New York Stock Exchange, such broker-dealer firms may, without instructions from their customers and clients, grant authority to the proxies designated to vote on the election of Directors (Item 1) and ratification of the selection of independent auditors (Item 2) if no instructions have been received prior to the date specified in the broker-dealer firm's request for voting instructions. Accordingly, the Fund will include shares held of record by broker-dealers as to which such authority has been granted in its tabulation of the total number of votes present 8 for purposes of determining whether the necessary quorum of stockholders exists. Proxies that are returned but that are marked "abstain" or on which a broker-dealer has declined to vote on any proposal ("broker non-votes") will be counted as present for the purposes of a quorum. Merrill Lynch has advised the Fund that except as limited by agreement or applicable law, it intends to exercise discretion over shares held in its name for which no instructions have been received by voting such shares in the same proportion as the votes received from the beneficial owners of those shares for which instructions have been received, whether or not held in nominee name. Abstentions and broker non-votes will not be counted as votes cast. Abstentions and broker non-votes, therefore, will have no effect on the vote on Item 1 or Item 2. ADDRESS OF INVESTMENT ADVISER The principal office of FAM is located at 800 Scudders Mill Road, Plainsboro, New Jersey 08536. ANNUAL REPORT DELIVERY The Fund will furnish, without charge, a copy of its annual report for the fiscal year ended October 31, 1997 or its semi annual report for the six months ended April 30, 1998 to any stockholder upon request. Such requests should be directed to MuniYield Insured Fund, Inc., P.O. Box 9011, Princeton, New Jersey 08543-9011, Attention: Patrick D. Sweeney, Secretary, or to 1-800-456-4587 ext. 123. STOCKHOLDER PROPOSALS It is currently intended that the 1999 Annual Meeting of Stockholders of the Fund will be held in August, 1999. If a stockholder intends to present a proposal at the 1999 Annual Meeting of Stockholders of the Fund and desires to have the proposal included in the Fund's proxy statement and form of proxy for that meeting, the stockholder must deliver the proposal to the offices of the Fund by March 2, 1999. By Order of the Board of Directors PATRICK D. SWEENEY SECRETARY Dated: August 28, 1998 9 ******************************************************************************** APPENDIX COMMON STOCK MUNIYIELD INSURED FUND, INC. P.0 BOX 9011 PRINCETON, NEW JERSEY 08543-9011 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Arthur Zeikel, Terry K. Glenn and Patrick D. Sweeney as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse hereof, all of the shares of Common Stock of MuniYield Insured Fund, Inc. (the "Fund") held of record by the undersigned on August 12, 1998 at the annual meeting of stockholders of the Fund to be held on October 8, 1998 or any adjournment thereof. This proxy when properly executed will be voted in the manner directed herein by the undersigned stockholder. If no direction is made, this proxy will be voted for Proposals 1 and 2. By signing and dating the reverse side of this card, you authorize the proxies to vote each proposal as marked, or if not marked, to vote "FOR" each proposal, and to use their discretion to vote for any other matter as may properly come before the meeting or any adjournment thereof. If you do not intend to personally attend the meeting, please complete and return this card at once in the enclosed envelope. (Continued and to be signed on the reverse side) 1. ELECTION OF DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY (except as marked to the contrary below) [ ] to vote for all nominees listed below [ ] (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEES'S NAME IN THE LIST BELOW.) Joe Grills, Robert S. Salomon, Jr., Stephen B. Swensrud and Arthur Zeikel 2. Proposal to ratify the selection of Ernst & Young LLP as the independent auditors of the Fund to serve for the current fiscal year. FOR [ ] AGAINST [ ] ABSTAIN [ ] 3. In the discretion of such proxies, upon such other business as may properly come before the meeting or any adjournment thereof. Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney or as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized persons. Dated ------------------------, 1998 X ------------------------------ Signature X ------------------------------ Signature, if held jointly PLEASE MARK BOXES [ ] OR [X] IN BLUE OR BLACK INK. SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. MUNIYIELD INSURED FUND, INC. AUCTION MARKET P.0 BOX 9011 PREFERRED STOCK PRINCETON, NEW JERSEY 08543-9011 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Arthur Zeikel, Terry K. Glenn and Patrick D. Sweeney as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse hereof, all of the shares of Auction Market Preferred Stock of MuniYield Insured Fund, Inc. (the "Fund") held of record by the undersigned on August 12, 1998 at the annual meeting of stockholders of the Fund to be held on October 8, 1998 or any adjournment thereof. This proxy when properly executed will be voted in the manner directed herein by the undersigned stockholder. If no direction is made, this proxy will be voted for Proposals 1 and 2. By signing and dating the reverse side of this card, you authorize the proxies to vote each proposal as marked, or if not marked, to vote "FOR" each proposal, and to use their discretion to vote for any other matter as may properly come before the meeting or any adjournment thereof. If you do not intend to personally attend the meeting, please complete and return this card at once in the enclosed envelope. (Continued and to be signed on the reverse side) 1. ELECTION OF DIRECTORS [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to (except as marked to the contrary below) vote for all nominees listed below (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.) Walter Mintz, Melvin R. Seiden, Joe Grills, Robert S. Salomon, Jr., Stephen B. Swensrud and Arthur Zeikel 2. Proposal to ratify the selection of Ernst & Young LLP as the independent auditors of the Fund to serve for the current fiscal year. FOR [ ] AGAINST [ ] ABSTAIN [ ] 3. In the discretion of such proxies, upon such other business as may properly come before the meeting or any adjournment thereof. Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney or as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized persons. Dated---------------------------- , 1998 -------------------------------------- Signature -------------------------------------- Signature, if held jointly PLEASE MARK BOXES [ ] OR [X] IN BLUE OR BLACK INK. SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. -----END PRIVACY-ENHANCED MESSAGE-----