MUNIHOLDINGS
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Annual Report
April 30, 1999
<PAGE>
MUNIHOLDINGS FUND, INC.
The Benefits and Risks of Leveraging
MuniHoldings Fund, Inc. has the ability to leverage to seek to enhance the yield
and net asset value of its Common Stock. However, these objectives cannot be
achieved in all interest rate environments. To leverage, the Fund issues
Preferred Stock, which pays dividends at prevailing short-term interest rates,
and invests the proceeds in long-term municipal bonds. The interest earned on
these investments is paid to Common Stock shareholders in the form of dividends,
and the value of these portfolio holdings is reflected in the per share net
asset value of the Fund's Common Stock. However, in order to benefit Common
Stock shareholders, the yield curve must be positively sloped; that is,
short-term interest rates must be lower than long-term interest rates. At the
same time, a period of generally declining interest rates will benefit Common
Stock shareholders. If either of these conditions change, then the risks of
leveraging will begin to outweigh the benefits.
To illustrate these concepts, assume a fund's Common Stock capitalization of
$100 million and the issuance of Preferred Stock for an additional $50 million,
creating a total value of $150 million available for investment in long-term
municipal bonds. If prevailing short-term interest rates are approximately 3%
and long-term interest rates are approximately 6%, the yield curve has a
strongly positive slope. The fund pays dividends on the $50 million of Preferred
Stock based on the lower short-term interest rates. At the same time, the fund's
total portfolio of $150 million earns the income based on long-term interest
rates. Of course, increases in short-term interest rates would reduce (and even
eliminate) the dividends on the Common Stock.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term investments,
and therefore the Common Stock shareholders are the beneficiaries of the
incremental yield. However, if short-term interest rates rise, narrowing the
differential between short-term and long-term interest rates, the incremental
yield pickup on the Common Stock will be reduced or eliminated completely. At
the same time, the market value on the fund's Common Stock (that is, its price
as listed on the New York Stock Exchange), may, as a result, decline.
Furthermore, if long-term interest rates rise, the Common Stock's net asset
value will reflect the full decline in the price of the portfolio's investments,
since the value of the fund's Preferred Stock does not fluctuate. In addition to
the decline in net asset value, the market value of the fund's Common Stock may
also decline.
As a part of its investment strategy, the Fund may invest in certain securities
whose potential income return is inversely related to changes in a floating
interest rate ("inverse floaters"). In general, income on inverse floaters will
decrease when short-term interest rates increase and increase when short-term
interest rates decrease. Investments in inverse floaters may be characterized as
derivative securities and may subject the Fund to the risks of reduced or
eliminated interest payments and losses of invested principal. In addition,
inverse floaters have the effect of providing investment leverage and, as a
result, the market value of such securities will generally be more volatile than
that of fixed-rate, tax-exempt securities. To the extent the Fund invests in
inverse floaters, the market value of the Fund's portfolio and the net asset
value of the Fund's shares may also be more volatile than if the Fund did not
invest in these securities.
<PAGE>
MuniHoldings Fund, Inc., April 30, 1999
DEAR SHAREHOLDER
For the year ended April 30, 1999, the Common Stock of MuniHoldings Fund, Inc.
earned $0.971 per share income dividends, which included earned and unpaid
dividends of $0.076. This represents a net annualized yield of 6.05%, based on a
month-end per share net asset value of $16.05. Over the same period, the total
investment return on the Fund's Common Stock was +8.73%, based on a change in
per share net asset value from $16.00 to $16.05, and assuming reinvestment of
$1.259 per share income dividends and $0.029 per share capital gains
distributions.
For the six-month period ended April 30, 1999, the total investment return on
the Fund's Common Stock was +2.01%, based on a change in per share net asset
value from $16.56 to $16.05, and assuming reinvestment of $0.795 per share
ordinary income dividends and $0.029 per share capital gains distributions.
For the six-month period ended April 30, 1999, the Fund's Auction Market
Preferred Stock had an average yield of 3.69% for Series A and 3.50% for Series
B.
The Municipal Market Environment
During the six months ended April 30, 1999, long-term bond yields generally
moved higher. From November 1998 through mid-January 1999, long-term bond yields
traded in a relatively narrow range. However, during February, a number of
economic indicators were released that suggested that economic growth in the
United States would likely remain strong throughout most of 1999. Consequently,
long-term US Treasury bond yields rose more than 60 basis points (0.60%) to
5.70% by early March. During the remainder of the six-month period, US Treasury
bond yields traded between 5.50% and 5.70% as the lack of inflationary pressures
offset much of the concerns generated by continued strong economic growth.
During most of the period, long-term, uninsured tax-exempt bond yields exhibited
far less volatility and were largely stable. Long-term municipal bond yields
rose just 5 basis points to 5.29% at the end of April 1999, as measured by the
Bond Buyer Revenue Bond Index.
In recent months, the tax-exempt market was better able to withstand much of the
upward pressure on bond yields because of its stronger technical position. While
the continued positive inflationary environment limited some of the recent
increases in taxable bond yields, a deteriorating supply/demand position helped
push taxable bond yields significantly higher than municipal bond yields. Much
of the US Treasury bond market's underperformance in recent months can be
attributed to the large amounts of taxable corporate issuance. Large taxable
corporate underwritings reduced the demand for US Government securities in
recent months, pushing US Treasury bond yields higher.
On the other hand, the tax-exempt bond market enjoyed only limited new-issue
supply. During the six months ended April 30, 1999, more than $123 billion in
new long-term tax-exempt securities was underwritten, a decline of 10% compared
to the same period a year ago. Municipalities issued less than $60 billion in
long-term tax-exempt securities during the three months ended April 30, 1999, a
decline of 25% compared to the April 30, 1998 quarter. More recently, the rate
of new tax-exempt issuance has declined even further. During April 1999, just
over $15 billion in long-term tax-exempt securities was marketed, a decline of
over 33% compared to April 1998 levels. As municipal bond yields fell and
stabilized in recent quarters, the ability of municipalities to refinance
existing higher-couponed debt declined. This led to a significant decrease in
refunding issuance and an overall drop in new municipal bond supply. When
coupled with ongoing, moderate retail and institutional demand, the tax-exempt
bond market was able to avoid much of the yield volatility exhibited by US
Treasury securities.
Looking ahead, the expected combination of moderate economic growth in the
United States and continued negligible inflation suggests a relatively stable
interest rate environment. However, in recent years, bond yields reached their
annual peaks in early May and declined for the remainder of the year. A
meaningful decline in fixed-income bond yields would require either evidence of
a significant slowdown in the US economy or the resumption of concerns regarding
renewed shocks to the world's economic system. Currently, neither condition
exists or seems likely in the immediate future. In our opinion, this suggests a
continuation of the narrow trading ranges seen in recent months.
Portfolio Strategy
During the last several months, we adopted a more neutral investment strategy,
since indicators pointed to a continuation of healthy domestic economic growth
and benign inflation. In addition, we believed that long-term tax-exempt bond
yields would continue to trade in a relatively narrow range, centered around
present levels. Consequently, we focused on income-producing securities rather
than those issues with the potential for capital gains. Should the tax-exempt
bond market perform as expected, coupon income will be the more important
component of the Fund's performance. MuniHoldings Fund, Inc. remained fully
invested for most of the past several months. We expect to maintain this
position going forward in order to seek to enhance shareholder income.
Short-term tax-exempt yields exhibited considerable volatility in recent months.
Interest rates paid to the Fund's Preferred Stock shareholders traded below 3%
in December 1998, reflecting heightened investor demand at year-end. Current
short-term interest rate levels reflect tax season-related pressures, which we
expect to abate soon. During the six-month period ended April 30, 1999,
leveraging generated a significant incremental yield to the Fund's Common Stock
shareholders. Because we believe that the Federal Reserve Board's monetary
policy is likely to remain in a narrow range for the remainder of the year, we
expect short-term tax-exempt interest rates to remain at, or slightly below,
current levels. However, should the spread between short-term and long-term
interest rates narrow, the benefits of the leverage will decline and, as a
result, reduce the yield to the Fund's Common Stock. (For a complete explanation
of the benefits and risks of leveraging, see page 1 of this report to
shareholders.)
In Conclusion
We appreciate your ongoing interest in MuniHoldings Fund, Inc., and we look
forward to serving your investment needs in the months and years ahead.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ Robert A. DiMella
Robert A. DiMella
Vice President and Portfolio Manager
/s/ John M. Loffredo
John M. Loffredo
Vice President and Portfolio Manager
June 2, 1999
================================================================================
After more than 20 years of service, Arthur Zeikel recently retired as Chairman
of Merrill Lynch Asset Management, L.P. (MLAM). Mr. Zeikel served as President
of MLAM from 1977 to 1997 and as Chairman since December 1997. Mr. Zeikel is one
of the country's most respected leaders in asset management and presided over
the growth of Merrill Lynch's asset management business. During his tenure,
client assets under management grew from $300 million to over $500 billion. Mr.
Zeikel will remain on MuniHoldings Fund, Inc.'s Board of Directors. We are
pleased to announce that Terry K. Glenn has been elected President and Director
of the Fund. Mr. Glenn has held the position of Executive Vice President of MLAM
since 1983.
Mr. Zeikel's colleagues at MLAM join the Fund's Board of Directors in wishing
him well in his retirement from Merrill Lynch and are pleased that he will
continue as a member of the Fund's Board of Directors.
================================================================================
2 & 3
<PAGE>
MuniHoldings Fund, Inc., April 30, 1999
PROXY RESULTS
During the six-month period ended April 30, 1999, MuniHoldings Fund, Inc.'s
Common Stock shareholders voted on the following proposals. The proposals were
approved at a shareholders' meeting on December 16, 1998. The description of
each proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. To elect the Fund's Directors: Ronald W. Forbes 13,460,200 149,541
Cynthia A. Montgomery 13,451,319 158,422
Kevin A. Ryan 13,455,700 154,041
Arthur Zeikel 13,452,576 157,165
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Ernst & Young LLP as the Fund's independent
auditors for the current fiscal year. 13,370,705 69,523 169,513
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
During the six-month period ended April 30, 1999, MuniHoldings Fund, Inc.'s
Preferred Stock shareholders voted on the following proposals. The proposals
were approved at a shareholders' meeting on December 16, 1998. The description
of each proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. To elect the Fund's Board of Directors: Ronald W. Forbes, Cynthia A.
Montgomery, Charles C. Reilly, Kevin A. Ryan, Richard R. West and Arthur
Zeikel as follows:
Series A 1,911 164
Series B 2,029 0
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Ernst & Young LLP as the Fund's independent
auditors for the current fiscal year as follows:
Series A 1,911 164 0
Series B 2,029 0 0
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
Alabama--3.2% BBB- Baa2 $ 3,250 Fairfield, Alabama, IDB, Environmental Improvement Revenue Refunding
Bonds (USX Corporation Projects), 5.45% due 9/01/2014 $ 3,250
AAA NR* 7,000 Jefferson County, Alabama, Sewer Revenue Bonds, RIB, Series 124, 6.39%
due 2/01/2036 (c)(h) 7,264
===================================================================================================================================
Arizona--3.8% B B2 5,000 Apache County, Arizona, IDA, PCR, Refunding (Tucson Electric Power Co.
Project), Series B, 5.875% due 3/01/2033 4,984
BB+ Ba1 3,500 Maricopa County, Arizona, Pollution Control Corporation, PCR, Refunding
(Public Service Company), Series A, 5.75% due 11/01/2022 3,502
NR* B1 3,000 Phoenix, Arizona, IDA, Airport Facility Revenue Refunding Bonds
(America West Airlines Inc.), AMT, 6.30% due 4/01/2023 3,127
NR* NR* 1,000 Show Low, Arizona, Improvement District No. 5, Special Assessment Bonds,
6.375% due 1/01/2015 1,056
===================================================================================================================================
Colorado--3.2% NR* Aa2 4,000 Colorado HFA, S/F Program, Revenue Refunding Bonds, AMT, Senior Series
B-2, 7% due 5/01/2026 4,438
AAA Aaa 6,000 Denver, Colorado, City and County Airport Revenue Refunding Bonds,
Series D, 5.50% due 11/15/2025 (g) 6,216
===================================================================================================================================
Connecticut--3.8% B+ Ba3 5,500 Connecticut State Development Authority, PCR, Refunding (Connecticut
Light & Power Company), Series A, 5.85% due 9/01/2028 5,543
AA Aa2 3,500 Connecticut State, HFA, Housing Mortgage Finance Program, Revenue
Refunding Bonds, Subseries D-1, 6% due 5/15/2027 3,702
BBB- Ba1 3,000 Connecticut State Health and Educational Facilities Authority Revenue
Refunding Bonds (University of Hartford), Series D, 6.80% due 7/01/2022 3,169
===================================================================================================================================
Florida--3.9% AAA Aaa 5,000 Charlotte County, Florida, Health Care Facilities Revenue Refunding
Bonds, RIB, 8.38% due 8/26/2027 (f)(h) 5,750
AAA Aaa 3,000 Florida State Turnpike Authority, Turnpike Revenue Bonds, Department of
Transportation, Series A, 4.50% due 7/01/2027 (c) 2,712
AAA Aaa 4,000 Lee County, Florida, Hospital Board of Directors, Hospital Revenue
Bonds, INFLOS, 6.6001% due 4/01/2001 (g)(h)(i) 4,281
===================================================================================================================================
</TABLE>
Portfolio Abbreviations
To simplify the listings of MuniHoldings Fund, Inc.'s portfolio holdings in the
Schedule of Investments, we have abbreviated the names of many of the securities
according to the list at right.
AMT Alternative Minimum Tax (subject to)
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue Bonds
INFLOS Inverse Floating Rate Municipal Bonds
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
UT Unlimited Tax
4 & 5
<PAGE>
MuniHoldings Fund, Inc., April 30, 1999
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
Illinois--7.9% NR* NR* $ 945 Beardstown, Illinois, IDR (Jefferson Smurfit Corp. Project), 8% due
10/01/2016 $ 1,073
AAA Aaa 7,500 Chicago, Illinois, Board of Education, GO (Chicago School Reform),
Series A, 5.25% due 12/01/2022 (a) 7,490
AAA Aaa 3,230 Illinois Development Finance Authority, PCR, Refunding (Illinois Power
Company Project), Series B, 5.40% due 3/01/2028 (g) 3,259
BBB NR* 5,000 Illinois Development Finance Authority, Revenue Refunding Bonds
(Community Rehab Providers), Series A, 6.05% due 7/01/2019 5,159
AAA Aaa 1,050 Illinois Health Facilities Authority Revenue Bonds (Highland Park
Hospital Project), Series A, 5.75% due 10/01/2026 (g) 1,105
Illinois Health Facilities Authority, Revenue Refunding Bonds, Series A:
AAA Aaa 1,710 (Advocate Healthcare), 5.875% due 8/15/2022 (g) 1,823
A A3 2,880 (Riverside Health System), 6% due 11/15/2015 3,069
NR* NR* 3,000 Round Lake Beach, Illinois, Tax Increment Revenue Refunding Bonds, 7.50%
due 12/01/2013 3,278
===================================================================================================================================
Indiana--2.4% NR* NR* 8,985 Allen County, Indiana, Redevelopment District Tax Increment Revenue Bonds
(General Motors Development Area), 7%** due 11/15/2013 3,650
NR* Aaa 3,930 Indiana State Housing Finance Authority, S/F Mortgage Revenue Refunding
Bonds, Series A-1, 6.25% due 1/01/2017 (d) 4,175
===================================================================================================================================
Kentucky--1.0% NR* NR* 3,150 Perry County, Kentucky, Solid Waste Disposal Revenue Bonds (TJ
International Project), AMT, 6.55% due 4/15/2027 3,368
===================================================================================================================================
Maryland--1.5% NR* NR* 4,550 Maryland State Energy Financing Administration, Limited Obligation
Revenue Bonds (Cogeneration--AES Warrior Run), AMT, 7.40% due 9/01/2019 4,906
===================================================================================================================================
Massachusetts--2.2% NR* Aaa 7,000 Massachusetts State, HFA, RITR, 6.37% due 12/01/2028 (g)(h) 7,304
===================================================================================================================================
Michigan--1.4% BB- NR* 2,730 Detroit, Michigan, Local Development Finance Authority, Sub-Tax
Increment, Tax Allocation Bonds, Series A, 5.50% due 5/01/2021 2,642
AAA Aaa 2,040 Michigan State, HDA, Rental Housing Revenue Refunding Bonds, Series A,
5.875% due 10/01/2017 (a) 2,134
===================================================================================================================================
Mississippi--3.1% BBB- Ba1 7,675 Claiborne County, Mississippi, PCR, Refunding (System Energy Resources
Inc. Project), 6.20% due 2/01/2026 7,831
NR* NR* 2,375 Mississippi Development Bank, Special Obligation Revenue Refunding Bonds
(Diamond Lakes Utilities), Series A, 6.25% due 12/01/2017 2,436
===================================================================================================================================
Missouri--0.2% NR* NR* 590 Missouri State Health and Educational Facilities Authority Revenue Bonds
(Southwest Baptist University Project), 9.50% due 10/01/2001 (b) 628
===================================================================================================================================
Nebraska--0.6% AAA NR* 1,980 Nebraska Investment Finance Authority, S/F Housing Revenue Bonds, AMT,
Series C, 6.30% due 9/01/2028 (e) 2,121
===================================================================================================================================
Nevada--4.2% Nevada Housing Division Revenue Bonds, S/F Mortgage:
NR* Aaa 4,280 AMT, Series B-1, 6.05% due 10/01/2018 4,511
NR* Aaa 2,785 AMT, Series B-1, 6.15% due 4/01/2029 2,935
NR* Aaa 1,840 AMT, Series D-2, 6.35% due 4/01/2028 (d) 1,954
NR* Aaa 4,205 Series D-1, 6.15% due 10/01/2017 (d) 4,472
===================================================================================================================================
New Hampshire--1.5% NR* Aa3 4,800 New Hampshire State Housing Finance Authority, S/F Mortgage Acquisition
Revenue Bonds, AMT, Series G, 6.30% due 1/01/2026 5,069
===================================================================================================================================
New Jersey--4.9% AA- Aa2 12,365 New Jersey Building Authority, State Building Revenue Refunding Bonds,
4.875% due 6/15/2008 12,750
BBB Baa2 3,425 New Jersey Health Care Facilities Financing Authority, Revenue Refunding
Bonds (Saint Elizabeth Hospital Obligation Group), 6% due 7/01/2020 3,554
===================================================================================================================================
New Mexico--4.1% Farmington, New Mexico, PCR, Refunding:
NR* Ba1 7,750 (Public Service Company Project), Series C, 5.80% due 4/01/2022 7,792
BB+ Ba1 2,000 (Public Service Company--San Juan Project) Series A, 6.30% due
12/01/2016 2,097
BB+ Ba1 2,500 (Public Service Company--San Juan Project), Series B, 6.30% due
12/01/2016 2,640
AAA Aaa 1,000 Los Alamos County, New Mexico, Utility System Revenue Refunding Bonds,
Series A, 6% due 7/01/2015 (f) 1,095
===================================================================================================================================
New York--17.2% Long Island Power Authority, New York, Electric System Revenue Bonds,
Series A:
AAA Aaa 7,945 5.125% due 12/01/2022 (f) 7,928
AAA Aaa 5,950 5.25% due 12/01/2026 (g) 6,035
A- Baa1 2,500 5.50% due 12/01/2029 2,567
New York City, New York, GO, UT:
A- A3 10,000 Refunding Bonds, Series F, 6% due 8/01/2016 10,865
A- A3 7,035 Series E, 6% due 8/01/2016 7,644
New York City, New York, Municipal Water Finance Authority, Water and
Sewer System Revenue Bonds, RITR (h):
A1 Aaa 1,065 Series 5, 7.095% due 6/15/2026 1,222
NR* Aaa 6,000 Series 11, 7.32% due 6/15/2026 6,937
A- A3 13,145 New York State Dormitory Authority, Revenue Refunding Bonds (Mental
Health Service Facilities), Series B, 5.50% due 8/15/2017 13,586
===================================================================================================================================
Ohio--1.6% NR* NR* 5,000 Ohio State, HFA Mortgage Revenue Bonds, RITR, AMT, Series 15, 6.12% due
9/01/2019 (f)(h) 5,131
===================================================================================================================================
Oklahoma--2.1% BBB NR* 985 Blaine County, Oklahoma, Industrial Authority, IDR (US Gypsum Co.
Project), 7.25% due 10/01/2010 1,084
BBB- Baa1 5,400 Tulsa, Oklahoma, Municipal Airport Trust, Revenue Refunding Bonds
(American Airlines Project), 6.25% due 6/01/2020 5,692
===================================================================================================================================
Oregon--2.2% Klamath Falls, Oregon, Electric Revenue Refunding Bonds (Klamath
Cogeneration Project), Senior Lien:
NR* NR* 4,000 5.875% due 1/01/2016 4,028
NR* NR* 2,000 6% due 1/01/2025 2,013
NR* NR* 1,300 Western Generation Agency, Oregon, Cogeneration Project Revenue Bonds
(Wauna Cogeneration Project), AMT, Series B, 7.40% due 1/01/2016 1,408
===================================================================================================================================
Pennsylvania--5.2% Beaver County, Pennsylvania, IDA, PCR, Refunding (Cleveland Electric
Project):
BB+ Ba1 1,600 7.625% due 5/01/2025 1,811
BB+ Ba1 1,500 Series A, 7.75% due 7/15/2025 1,712
NR* NR* 3,250 Pennsylvania Economic Development Financing Authority, Exempt Facilities
Revenue Bonds (National Gypsum Company), AMT, Series A, 6.25% due
11/01/2027 3,282
NR* NR* 4,970 Pennsylvania State Higher Educational Facilities Authority, College and
University Revenue Bonds (Eastern College), Series B, 8% due
10/15/2006 (i) 6,201
NR* NR* 4,000 Philadelphia, Pennsylvania, Authority for IDR, Refunding (Commercial
Development--Days Inn), Series B, 6.50% due 10/01/2027 4,255
===================================================================================================================================
</TABLE>
6 & 7
<PAGE>
MuniHoldings Fund, Inc., April 30, 1999
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
Tennessee--6.1% Hardeman County, Tennessee, Correctional Facilities Corporation Revenue
Bonds:
NR* NR* $ 680 7% due 8/01/2004 $ 731
NR* NR* 4,500 7.75% due 8/01/2017 5,032
NR* Aa2 3,400 Tennessee Educational Loan Revenue Bonds (Educational Funding South
Inc.), AMT, Senior Series B, 6.20% due 12/01/2021 3,606
A1+ Aa2 5,660 Tennessee Housing Development Agency (Homeowners Program), AMT, Series 3,
6% due 1/01/2028 5,954
A+ A1 4,750 Tennessee Housing Development Agency, Mortgage Finance Revenue Refunding
Bonds, Series A, 5.95% due 7/01/2028 4,943
===================================================================================================================================
Texas--4.2% NR* Aaa 4,000 Harris County, Texas, Health Facilities Development Corp., Hospital Revenue
Bonds, RITR, Series 12, 8.32% due 10/01/2024 (g)(h) 5,000
BB Ba1 5,000 Houston, Texas, Airport System Revenue Bonds (Special Facilities--
Continental Airlines), AMT, Series B, 6.125% due 7/15/2017 5,131
BB- Ba1 3,500 Lower Colorado River Authority, Texas, PCR (Samsung Austin
Semiconductor), AMT, 6.375% due 4/01/2027 3,677
===================================================================================================================================
Utah--3.3% AA Aa2 7,200 Salt Lake City, Utah, Hospital Revenue Refunding Bonds (IHC Hospitals
Inc.), 6.25% due 2/15/2023 7,710
NR* NR* 3,000 Tooele County, Utah, PCR, Refunding (Laidlaw Environmental), AMT, Series
A, 7.55% due 7/01/2027 3,279
===================================================================================================================================
Virginia--1.5% NR* NR* 3,250 Peninsula Ports Authority, Virginia, Revenue Refunding Bonds (Port
Facility--Zeigler Coal), 6.90% due 5/02/2022 3,250
Pocahontas Parkway Associates, Virginia, Toll Road Revenue Bonds, First
Tier, Sub-Series C:
NR* Ba1 5,600 6.25%** due 8/15/2028 913
NR* Ba1 5,700 6.25%** due 8/15/2029 873
===================================================================================================================================
Washington--1.4% AAA Aaa 4,380 Washington State Public Power Supply System, Revenue Refunding Bonds
(Nuclear Project Number 1), Series A, 6.25% due 7/01/2017 (g) 4,743
===================================================================================================================================
Wisconsin--0.9% AA Aa2 2,800 Wisconsin Housing and Economic Development Authority, Home Ownership
Revenue Refunding Bonds, AMT, Series B, 6.25% due 9/01/2027 2,977
===================================================================================================================================
Total Investments (Cost--$313,798)--98.6% 326,534
Other Assets Less Liabilities--1.4% 4,584
--------
Net Assets--100.0% $331,118
========
===================================================================================================================================
</TABLE>
(a) AMBAC Insured.
(b) Escrowed to Maturity.
(c) FGIC Insured.
(d) FHA Insured.
(e) FNMA/GNMA Collateralized.
(f) FSA Insured.
(g) MBIA Insured.
(h) The interest rate is subject to change periodically and inversely based
upon prevailing market rates. The interest rate shown is the rate in
effect at April 30, 1999.
(i) Prerefunded.
* Not Rated.
** Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase by the Fund.
Ratings of issues shown have not been audited by Ernst & Young LLP.
See Notes to Financial Statements.
Quality Profile
The quality ratings of securities in the Fund as of April 30, 1999 were as
follows:
- --------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
- --------------------------------------------------------------------------------
AAA/Aaa ............................................................ 30.9%
AA/Aa .............................................................. 14.0
A/A ................................................................ 12.9
BBB/Baa ............................................................ 9.0
BB/Ba .............................................................. 11.6
B/B ................................................................ 2.4
NR (Not Rated) ..................................................... 17.8
- --------------------------------------------------------------------------------
8 & 9
<PAGE>
MuniHoldings Fund, Inc., April 30, 1999
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<TABLE>
<CAPTION>
As of April 30, 1999
================================================================================================================================
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$313,797,579) (Note 1a) ............... $326,534,292
Interest receivable ........................................................... 4,939,505
Prepaid expenses .............................................................. 23,196
------------
Total assets .................................................................. 331,496,993
------------
================================================================================================================================
Liabilities: Payables:
Investment adviser (Note 2) ................................................. $ 159,716
Dividends to shareholders (Note 1f) ......................................... 99,691 259,407
------------
Accrued expenses and other liabilities ........................................ 119,763
------------
Total liabilities ............................................................. 379,170
------------
================================================================================================================================
Net Assets: Net assets .................................................................... $331,117,823
============
================================================================================================================================
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.10 per share (4,400 shares of AMPS* issued
and outstanding at $25,000 per share liquidation preference) ................ $110,000,000
Common Stock, par value $.10 per share (13,777,309 shares issued
and outstanding) ............................................................ $ 1,377,731
Paid-in capital in excess of par .............................................. 203,911,600
Undistributed investment income--net .......................................... 1,896,391
Undistributed realized capital gains on investments--net ...................... 1,195,388
Unrealized appreciation on investments--net ................................... 12,736,713
------------
Total--Equivalent to $16.05 net asset value per share of Common
Stock (market price--$15.25) .................................................. 221,117,823
------------
Total capital ................................................................. $331,117,823
============
================================================================================================================================
</TABLE>
* Auction Market Preferred Stock.
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended April 30, 1999
================================================================================================================================
<S> <C> <C> <C>
Investment Interest and amortization of premium and discount earned ...................... $ 19,415,926
Income (Note 1d):
================================================================================================================================
Expenses: Investment advisory fees (Note 2) ............................................. $ 1,849,310
Commission fees (Note 4) ...................................................... 281,732
Professional fees ............................................................. 82,817
Accounting services (Note 2) .................................................. 74,670
Transfer agent fees ........................................................... 36,307
Listing fees .................................................................. 30,354
Printing and shareholder reports .............................................. 22,340
Custodian fees ................................................................ 22,337
Directors' fees and expenses .................................................. 21,004
Pricing fees .................................................................. 14,287
Other ......................................................................... 15,918
------------
Total expenses ................................................................ 2,451,076
------------
Investment income--net 16,964,850
------------
================================================================================================================================
Realized & Realized gain on investments--net ............................................. 4,117,261
Unrealized Gain Change in unrealized appreciation on investments--net ......................... 1,322,257
on Investments-- ------------
Net (Notes 1b, Net Increase in Net Assets Resulting from Operations .......................... $ 22,404,368
1d & 3): ============
================================================================================================================================
</TABLE>
See Notes to Financial Statements.
10 & 11
<PAGE>
MuniHoldings Fund, Inc., April 30, 1999
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the For the Period
Year Ended May 2, 1997+ to
Increase (Decrease) in Net Assets: April 30, 1999 April 30, 1998
==============================================================================================================================
<S> <C> <C> <C>
Operations: Investment income--net ............................................... $ 16,964,850 $ 16,657,361
Realized gain on investments--net .................................... 4,117,261 2,728,135
Change in unrealized appreciation on investments--net ................ 1,322,257 11,414,456
------------ ------------
Net increase in net assets resulting from operations ................. 22,404,368 30,799,952
------------ ------------
==============================================================================================================================
Dividends & Investment income--net:
Distributions to Common Stock ...................................................... (13,279,497) (12,011,191)
Shareholders Preferred Stock ................................................... (2,857,580) (3,577,552)
(Note 1f): Realized gain on investments--net:
Common Stock ...................................................... (4,418,052) --
Preferred Stock ................................................... (1,231,956) --
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders ........................................ (21,787,085) (15,588,743)
------------ ------------
==============================================================================================================================
Capital Stock Proceeds from issuance of Common Stock ............................... -- 205,834,830
Transactions Proceeds from issuance of Preferred Stock ............................ -- 110,000,000
(Notes 1e & 4): Offering costs resulting from the issuance of Common Stock ........... -- (396,392)
Offering and underwriting costs resulting from the issuance of
Preferred Stock ...................................................... -- (1,032,440)
Values of shares issued to Common Stock shareholders in
reinvestment of dividends and distributions .......................... 783,328 --
------------ ------------
Net increase in net assets derived from capital stock transactions ... 783,328 314,405,998
------------ ------------
==============================================================================================================================
Net Assets: Total increase in net assets ......................................... 1,400,611 329,617,207
Beginning of period .................................................. 329,717,212 100,005
------------ ------------
End of period* ....................................................... $331,117,823 $329,717,212
============ ============
==============================================================================================================================
* Undistributed investment income--net ................................. $ 1,896,391 $ 1,068,618
============ ============
==============================================================================================================================
</TABLE>
+ Commencement of operations.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. For the For the Period
Year Ended May 2, 1997+ to
Increase (Decrease) in Net Asset Value: April 30, 1999 April 30, 1998
==============================================================================================================================
<S> <C> <C> <C>
Per Share Net asset value, beginning of period ................................. $ 16.00 $ 15.00
Operating ------------ ------------
Performance: Investment income--net ............................................... 1.24 1.21
Realized and unrealized gain on investments--net ..................... .40 1.03
------------ ------------
Total from investment operations ..................................... 1.64 2.24
------------ ------------
Less dividends to Common Stock shareholders:
Investment income--net ............................................ (.97) (.87)
Realized gain on investments--net ................................. (.32) --
------------ ------------
Total dividends and distributions to Common Stock shareholders ....... (1.29) (.87)
------------ ------------
Capital charge resulting from issuance of Common Stock ............... -- (.03)
------------ ------------
Effect of Preferred Stock activity:++
Dividends to Preferred Stock shareholders:
Investment income--net .......................................... (.21) (.26)
Realized gain on investments--net ............................... (.09) --
Capital charge resulting from issuance of Preferred Stock ......... -- (.08)
------------ ------------
Total effect of Preferred Stock activity ............................. (.30) (.34)
------------ ------------
Net asset value, end of period ....................................... $ 16.05 $ 16.00
============ ============
Market price per share, end of period ................................ $ 15.25 $ 14.75
============ ============
==============================================================================================================================
Total Investment Based on market price per share ...................................... 12.06% 4.01%++++
Return:** ============ ============
Based on net asset value per share ................................... 8.73% 12.83%++++
============ ============
==============================================================================================================================
Ratios Based on Expenses, net of reimbursement*** .................................... 1.09% .85%
Average Net Assets ============ ============
Of Common Stock: Total expenses*** .................................................... 1.09% 1.05%*
============ ============
Total investment income--net*** ...................................... 7.52% 7.77%*
============ ============
Amount of dividends to Preferred Stock shareholders .................. 1.27% 1.67%*
============ ============
Investment income--net, to Common Stock shareholders ................. 6.25% 6.10%*
============ ============
==============================================================================================================================
Ratios Based on Expenses, net of reimbursement ....................................... .73% .58%*
Total Average ============ ============
Net Assets:+++*** Total expenses ....................................................... .73% .72%*
============ ============
Total investment income--net ......................................... 5.05% 5.31%*
============ ============
==============================================================================================================================
Ratios Based on Dividends to Preferred Stock shareholders ............................ 2.58% 3.60%*
Average Net Assets ============ ============
Of Preferred Stock:
==============================================================================================================================
Supplemental Data: Net assets, net of Preferred Stock, end of period (in thousands) ..... $ 221,118 $ 219,717
============ ============
Preferred Stock outstanding, end of period (in thousands) ............ $ 110,000 $ 110,000
============ ============
Portfolio turnover ................................................... 66.07% 106.16%
============ ============
==============================================================================================================================
Leverage: Asset coverage per $1,000 ............................................ $ 3,010 $ 2,997
============ ============
==============================================================================================================================
Dividends Per Series A--Investment income--net ..................................... $ 657 $ 810
Share on Preferred ============ ============
Stock Outstanding: Series B--Investment income--net ..................................... $ 642 $ 816
============ ============
==============================================================================================================================
</TABLE>
* Annualized.
** Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, may result
in substantially different returns. Total investment returns exclude
the effects of sales loads.
*** Do not reflect the effect of dividends to Preferred Stock
shareholders.
+ Commencement of operations.
++ The Fund's Preferred Stock was issued on June 5, 1997.
+++ Includes Common and Preferred Stock average net assets.
++++ Aggregate total investment return.
See Notes to Financial Statements.
12 & 13
<PAGE>
MuniHoldings Fund, Inc., April 30, 1999
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniHoldings Fund, Inc. (the "Fund") is registered under the Investment Company
Act of 1940 as a non-diversified, closed-end management investment company. The
Fund's financial statements are prepared in accordance with generally accepted
accounting principles which may require the use of management accruals and
estimates. The Fund's Common Stock is listed on the New York Stock Exchange
under the symbol MHD. The following is a summary of significant accounting
policies followed by the Fund.
(a) Valuation of investments--Municipal bonds are traded primarily in the
over-the-counter markets and are valued at the most recent bid price or yield
equivalent as obtained by the Fund's pricing service from dealers that make
markets in such securities. Financial futures contracts and options thereon,
which are traded on exchanges, are valued at their closing prices as of the
close of such exchanges. Options written or purchased are valued at the last
sale price in the case of exchange-traded options. In the case of options traded
in the over-counter-market, valuation is the last asked price (options written)
or the last bid price (options purchased). Securities with remaining maturities
of sixty days or less are valued at amortized cost, which approximates market
value. Securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Board of Directors of the Fund, including valuations furnished
by a pricing service retained by the Fund, which may utilize a matrix system for
valuations. The procedures of the pricing service and its valuations are
reviewed by the officers of the Fund under the general supervision of the Board
of Directors.
(b) Derivative financial instruments--The Fund may engage in various portfolio
strategies to seek to increase its return by hedging its portfolio against
adverse movements in the debt markets. Losses may arise due to changes in the
value of the contract or if the counterparty does not perform under the
contract.
o Financial futures contracts--The Fund may purchase or sell financial futures
contracts and options on such futures contracts for the purpose of hedging the
market risk on existing securities or the intended purchase of securities.
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.
o Options--The Fund is authorized to write covered call options and purchase
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.
(c) Income taxes--It is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no Federal income tax provision is required.
(d) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Interest income is recognized on the accrual basis. Discounts and market
premiums are amortized into interest income. Realized gains and losses on
security transactions are determined on the identified cost basis.
(e) Offering expenses--Direct expenses relating to the public offering of the
Fund's Shares were charged to capital at the time of issuance of the shares.
(f) Dividends and distributions--Dividends from net investment income are
declared and paid monthly. Distributions of capital gains are recorded on the
ex-dividend dates.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML &
Co."), which is the limited partner.
FAM is responsible for the management of the Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. For such services, the Fund pays a monthly fee at
an annual rate of 0.55% of the Fund's average weekly net assets, including
proceeds from the issuance of Preferred Stock.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or directors of
FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended April 30, 1999 were $214,140,442 and $214,427,868, respectively.
Net realized gains for the year ended April 30, 1999 and net unrealized gains as
of April 30, 1999 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains Gains
- --------------------------------------------------------------------------------
Long-term investments ............................. $ 3,614,521 $12,736,713
Financial futures contracts ....................... 502,740 --
----------- -----------
Total ............................................. $ 4,117,261 $12,736,713
=========== ===========
- --------------------------------------------------------------------------------
As of April 30, 1999, net unrealized appreciation for Federal income tax
purposes aggregated $12,736,713, of which $13,071,350 related to appreciated
securities and $334,637 related to depreciated securities. The aggregate cost of
investments at April 30, 1999 for Federal income tax purposes was $313,797,579.
4. Capital Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of capital stock, including
Preferred Stock, par value $.10 per share, all of which were initially
classified as Common Stock. The Board of Directors is authorized, however, to
reclassify any unissued shares of capital stock without approval of holders of
Common Stock.
Common Stock
Shares issued and outstanding during the year ended April 30, 1999 increased by
48,320 as a result of dividend reinvestment and during the period May 2, 1997 to
April 30, 1998 increased by 13,722,322 as a result of shares sold.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred Stock of the
Fund, with a par value of $.10 per share and a liquidation preference of $25,000
per share, that entitle their holders to receive cash dividends at an annual
rate that may vary for the successive dividend periods. The yields in effect at
April 30, 1999 were as follows: Series A, 3.55% and Series B, 3.45%.
Shares issued and outstanding during the year ended April 30, 1999 remained
constant and during the period May 2, 1997 to April 30, 1998 shares increased by
4,400 as a result of the AMPS offering.
The Fund pays commissions to certain broker-dealers at the end of each auction
at an annual rate ranging from 0.25% to 0.375%, calculated on the proceeds of
each auction. For the year ended April 30, 1999, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, an affiliate of FAM, earned $110,323 as commissions.
5. Subsequent Event:
On May 6, 1999, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.076434 per share,
payable on May 27, 1999 to shareholders of record as of May 21, 1999.
14 & 15
<PAGE>
MuniHoldings Fund, Inc., April 30, 1999
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors,
MuniHoldings Fund, Inc.:
We have audited the accompanying statement of assets, liabilities and capital of
MuniHoldings Fund, Inc., including the schedule of investments, as of April 30,
1999, and the related statement of operations for the year then ended, the
statements of changes in net assets and financial highlights for the year then
ended and for the period from May 2, 1997 (commencement of operations) to April
30, 1998. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of April 30, 1999, by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
MuniHoldings Fund, Inc. as of April 30, 1999 and the results of its operations
for the year then ended, and the changes in its net assets and financial
highlights for the indicated periods in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
Princeton, New Jersey
May 28, 1999
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by MuniHoldings Fund, Inc.
during its taxable year ended April 30, 1999 qualify as tax-exempt interest
dividends for Federal income tax purposes.
Additionally, the following table summarizes the taxable distributions paid by
the Fund during the year:
- --------------------------------------------------------------------------------
Payable Ordinary Long-Term
Date Income Capital Gains*
- --------------------------------------------------------------------------------
Common Stock Shareholders 12/30/98 $.292460 $.029061
- --------------------------------------------------------------------------------
Preferred Stock Shareholders: Series A 10/07/98 $28.18 --
10/14/98 $25.96 --
10/21/98 $25.00 --
10/28/98 $26.99 --
11/04/98 $25.65 --
11/12/98 $28.58 --
11/18/98 $17.14 $4.31
11/25/98 $20.25 $5.15
12/02/98 $19.45 $5.08
12/09/98 $18.43 $5.00
12/16/98 $18.08 $5.26
12/23/98 $ 0.03 $0.42
------------------------------------------------
Series B 10/02/98 $27.07 --
10/09/98 $26.19 --
10/16/98 $25.40 --
10/23/98 $26.99 --
10/30/98 $25.79 --
11/06/98 $25.65 --
11/13/98 $19.87 $4.77
11/20/98 $19.49 $4.75
11/27/98 $19.95 $4.98
12/04/98 $18.58 $4.80
12/11/98 $18.69 $5.12
12/18/98 $ 1.95 $0.98
- --------------------------------------------------------------------------------
* The entire distribution is subject to the 20% tax rate.
Please retain this information for your records.
16 & 17
<PAGE>
MuniHoldings Fund, Inc., April 30, 1999
YEAR 2000 ISSUES (unaudited)
Many computer systems were designed using only two digits to designate years.
These systems may not be able to distinguish the Year 2000 from the Year 1900
(commonly known as the "Year 2000 Problem"). The Fund could be adversely
affected if the computer systems used by the Fund's management or other Fund
service providers do not properly address this problem before January 1, 2000.
The Fund's management expects to have addressed this problem before then, and
does not anticipate that the services it provides will be adversely affected.
The Fund's other service providers have told the Fund's management that they
also expect to resolve the Year 2000 Problem, and the Fund's management will
continue to monitor the situation as the Year 2000 approaches. However, if the
problem has not been fully addressed, the Fund could be negatively affected. The
Year 2000 Problem could also have a negative impact on the securities in which
the Fund invests and this could hurt the Fund's investment returns.
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute substantially all of its net
investment income to its shareholders on a monthly basis. However, in order to
provide shareholders with a more consistent yield to the current trading price
of shares of Common Stock of the Fund, the Fund may at times pay out less than
the entire amount of net investment income earned in any particular month and
may at times in any particular month pay out such accumulated but undistributed
income in addition to net investment income earned in that month. As a result,
the dividends paid by the Fund for any particular month may be more or less than
the amount of net investment income earned by the Fund during such month. The
Fund's current accumulated but undistributed net investment income, if any, is
disclosed in the Statement of Assets, Liabilities and Capital, which comprises
part of the financial information included in this report.
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Arthur Zeikel, Director
Vincent R. Giordano, Senior Vice President
Robert A. DiMella, Vice President
Kenneth A. Jacob, Vice President
John M. Loffredo, Vice President
Donald C. Burke, Vice President and Treasurer
William E. Zitelli, Secretary
- --------------------------------------------------------------------------------
Gerald M. Richard, Treasurer of MuniHoldings Fund, Inc. has recently retired.
His colleagues at Merrill Lynch Asset Management, L.P. join the Fund's Board of
Directors in wishing Mr. Richard well in his retirement.
- --------------------------------------------------------------------------------
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Stock:
IBJ Whitehall Bank & Trust Company
One State Street
New York, NY 10004
NYSE Symbol
MHD
18 & 19
<PAGE>
This report, including the financial information herein, is transmitted to the
shareholders of MuniHoldings Fund, Inc. for their information. It is not a
prospectus, circular or representation intended for use in the purchase of
shares of the Fund or any securities mentioned in the report. Past performance
results shown in this report should not be considered a representation of future
performance. The Fund has the ability to leverage its Common Stock by issuing
Preferred Stock to provide the Common Stock shareholders with a potentially
higher rate of return. Leverage creates risks for Common Stock shareholders,
including the likelihood of greater volatility of net asset value and market
price of shares of the Common Stock, and the risk that fluctuations in the
short-term dividend rates of the Preferred Stock may affect the yield to Common
Stock shareholders. Statements and other information herein are as dated and are
subject to change.
MuniHoldings Fund, Inc.
Box 9011
Princeton, NJ
08543-9011 #HOLD01--4/99
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