MUNIHOLDINGS
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Annual Report
April 30, 2000
<PAGE>
MUNIHOLDINGS FUND, INC.
The Benefits and
Risks of
Leveraging
MuniHoldings Fund, Inc. utilizes leveraging to seek to enhance the yield and net
asset value of its Common Stock. However, these objectives cannot be achieved in
all interest rate environments. To leverage, the Fund issues Preferred Stock,
which pays dividends at prevailing short-term interest rates, and invests the
proceeds in long-term municipal bonds. The interest earned on these investments
is paid to Common Stock shareholders in the form of dividends, and the value of
these portfolio holdings is reflected in the per share net asset value of the
Fund's Common Stock. However, in order to benefit Common Stock shareholders, the
yield curve must be positively sloped; that is, short-term interest rates must
be lower than long-term interest rates. At the same time, a period of generally
declining interest rates will benefit Common Stock shareholders. If either of
these conditions change, then the risks of leveraging will begin to outweigh the
benefits.
To illustrate these concepts, assume a fund's Common Stock capitalization of
$100 million and the issuance of Preferred Stock for an additional $50 million,
creating a total value of $150 million available for investment in long-term
municipal bonds. If prevailing short-term interest rates are approximately 3%
and long-term interest rates are approximately 6%, the yield curve has a
strongly positive slope. The fund pays dividends on the $50 million of Preferred
Stock based on the lower short-term interest rates. At the same time, the fund's
total portfolio of $150 million earns the income based on long-term interest
rates. Of course, increases in short-term interest rates would reduce (and even
eliminate) the dividends on the Common Stock.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term investments,
and therefore the Common Stock shareholders are the beneficiaries of the
incremental yield. However, if short-term interest rates rise, narrowing the
differential between short-term and long-term interest rates, the incremental
yield pickup on the Common Stock will be reduced or eliminated completely. At
the same time, the market value 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, 2000
DEAR SHAREHOLDER
For the year ended April 30, 2000, the Common Stock of MuniHoldings Fund, Inc.
earned $0.945 per share income dividends, which included earned and unpaid
dividends of $0.079. This represents a net annualized yield of 7.18%, based on a
month-end per share net asset value of $13.16. Over the same period, the total
investment return on the Fund's Common Stock was -10.89%, based on a change in
per share net asset value from $16.05 to $13.16, and assuming reinvestment of
$1.002 per share ordinary income dividends and $0.109 per share capital gains
distributions.
For the six-month period ended April 30, 2000, the total investment return on
the Fund's Common Stock was +0.19%, based on a change in per share net asset
value from $13.81 to $13.16, and assuming reinvestment of $0.535 per share
ordinary income dividends and $0.109 per share capital gains distributions.
For the six-month period ended April 30, 2000, the Fund's Auction Market
Preferred Stock had an average yield of 4.24% for Series A and 4.23% for Series
B.
The Municipal Market Environment
From October 1999 through mid-January 2000, fixed-income bond yields rose
steadily higher. US economic growth, in part intensified by Year 2000
preparations, grew at a 7.3% rate in the fourth quarter of 1999 and at a 4.2%
annual rate for all of 1999. Initial estimates for the first quarter of 2000
were reported at 5.4%. However, despite these significant growth rates, no price
measure indicator has shown any considerable signs of future price pressures at
the consumer level, despite the lowest unemployment rates since January 1970.
Given no signs of an economic slowdown, the Federal Reserve Board continued to
raise short-term interest rates in November 1999 and again in February and March
2000. In each instance, the Federal Reserve Board cited both the continued
growth of US employment and the impressive strength of the US equity markets as
reasons for attempting to moderate US economic growth before inflationary price
increases are realized. By mid-January 2000, US Treasury bond yields rose 60
basis points (0.60%) to 6.75%. Similarly, as measured by the Bond Buyer Revenue
Bond Index, long-term tax-exempt bond yields rose approximately 20 basis points
to 6.35%.
Since mid-January, fixed-income markets have largely ignored strong economic
fundamentals and concentrated on positive technical supply factors. Declining
bond issuance, both current, and more importantly, expected future issuance,
helped push bond yields lower from mid-January to mid-April 2000. In late
January and early February 2000, the US Treasury announced its intention to
reduce the number of issues to be auctioned in the quarterly Treasury note and
bond auctions. Furthermore, budgetary surpluses would allow the US Treasury to
repurchase outstanding, higher-couponed Treasury issues, primarily in the
15-year and longer-term maturity sectors. Both these actions would result in a
significant reduction in the outstanding supply of long-term US Treasury debt.
Domestic and international investors quickly began to accumulate what was
expected to become a scarce commodity and bond prices quickly rose.
By mid-April 2000, US Treasury bond yields had declined over 100 basis points to
5.67%. However, bond yields rose somewhat during the last two weeks of the
period as economic statistics were released, indicating that the economic
strength seen in late 1999 was continuing into early 2000. The decline in
long-term US Treasury bond yields resulted in an inverted taxable yield curve as
short-term and intermediate-term interest rates have not fallen proportionately
since the Federal Reserve Board is expected to continue to raise short-term
interest rates. The current inversion has had much more to do with debt
reduction and Treasury buybacks than with investor expectations of slower
economic growth. Over the last six months, long-term US Treasury bond yields
have fallen almost 20 basis points to close the six-month period ended April 30,
2000 at 5.96%.
Tax-exempt bond yields have also declined in recent months. The decline has
largely been in response to the rally in US Treasury securities, as well as a
continued positive technical supply environment. States such as California and
Maryland have announced that their large current and anticipated future budget
surpluses will permit the cancellation or postponement of expected bond
issuance. Additionally, some issuers have also initiated tenders to repurchase
existing debt, reducing the supply of tax-exempt bonds in the secondary market
as well. Since their recent peak in January 2000, long-term municipal bond
yields declined over 25 basis points to finish the six-month period ended April
30, 2000 at 6.07%. During the last six months, municipal bond yields declined
just 10 basis points overall.
The relative underperformance of the municipal bond market in recent months has
been especially disappointing given the strong technical position the tax-exempt
bond market enjoyed. The issuance of long-term tax-exempt securities has
dramatically declined. Over the last year, $203 billion in new long-term
municipal securities was issued, a decline of almost 25% compared to the same
period a year earlier. For the six months ended April 30, 2000, approximately
$90 billion in new tax-exempt bonds was underwritten, a decline of more than 25%
compared to the same period in 1999. Although investors received over $30
billion in coupon payments, bond maturities and the proceeds from early bond
redemptions, coupled with the highest municipal bond yields in three years,
overall investor demand has diminished. Long-term municipal bond mutual funds
have seen consistent outflows in recent months as the yields of individual
securities have risen faster than those of larger, more diverse mutual funds.
Over the last four months, tax-exempt mutual funds have had net redemptions of
more than $8 billion. Also, the demand from property and casualty insurance
companies has weakened as a result of the losses and anticipated losses incurred
from a series of damaging storms across much of the eastern United States.
Additionally, many institutional investors who have in recent years been
attracted to the municipal bond market by historically attractive tax-exempt
bond yield ratios of over 90% found other asset classes even more attractive.
Even with a favorable supply position, tax-exempt municipal bond yields have
underperformed their taxable counterparts.
Any significantly lower municipal bond yields are still likely to require weaker
US employment growth and consumer spending. The actions taken in recent months
by the Federal Reserve Board, as well as those expected in May and perhaps June
of 2000, should eventually slow US economic growth. The recent declines in US
home sales are perhaps the first sign that consumer spending is being slowed by
higher interest rates. Until further signs develop, it is likely that the
municipal bond market's current favorable technical position will dampen
significant tax-exempt interest rate volatility and provide a stable environment
for eventual improvement in municipal bond prices.
Portfolio Strategy
During the six months ended April 30, 2000, we maintained a fully invested
position and sought to enhance the level of tax-exempt income to our Common
Stock shareholders through the use of leveraging. (For a complete explanation of
the benefits and risks of leveraging, see page 1 of this report to
shareholders.) The fixed-income market was subject to above-average price
volatility resulting from continuously strong economic growth and uncertainty
surrounding the magnitude of future monetary tightenings by the Federal Reserve
Board. Our fully invested position, accentuated by our leveraged strategy,
subjected the Fund to a decrease in net asset valuation that accompanies such a
drastic rise and fall in interest rates, although we were able to achieve a very
competitive yield. During the period, our primary focus was on the purchase of
bonds in the
2 & 3
<PAGE>
MuniHoldings Fund, Inc., April 30, 2000
15-year -- 20-year maturity range, with premium coupons. This strategy allowed
us to invest in issues with attractive yields and less downside interest rate
risk on a going-forward basis.
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 to come.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Director
/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 5, 2000
PROXY RESULTS
During the six-month period ended April 30, 2000, MuniHoldings Fund, Inc.'s
Common Stock shareholders voted on the following proposals. The proposals were
approved at a shareholders' meeting on December 15, 1999. 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 Board of Directors: Terry K. Glenn 13,155,280 374,612
Ronald W. Forbes 13,160,541 369,351
Cynthia A. Montgomery 13,149,011 380,881
Kevin A. Ryan 13,159,241 370,651
Arthur Zeikel 13,153,380 376,512
--------------------------------------------------------------------------------------------------------------------------------
<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. 13,226,427 128,952 174,513
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
During the six-month period ended April 30, 2000, MuniHoldings Fund, Inc.'s
Preferred Stock shareholders voted on the following proposals. The proposals
were approved at a shareholders' meeting on December 15, 1999. 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: Terry K. Glenn, Ronald W. Forbes,
Cynthia A. Montgomery, Charles C. Reilly, Kevin A. Ryan, Richard R. West
and Arthur Zeikel as follows:
Series A 2,128 12
Series B 1,826 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 2,128 0 12
Series B 1,826 0 0
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4 & 5
<PAGE>
MuniHoldings Fund, Inc., April 30, 2000
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
Alabama--1.1% AAA Aaa $ 3,200 Jefferson County, Alabama, Sewer Revenue Bonds, Series D,
5.75% due 2/01/2022 (c) $ 3,157
==============================================================================================================================
Arizona--5.9% B+ Ba3 5,000 Apache County, Arizona, IDA, PCR, Refunding (Tucson Electric
Power Co. Project), Series B, 5.875% due 3/01/2033 4,177
A1+ P1 5,900 Maricopa County, Arizona, Pollution Control Corporation, PCR,
Refunding (Arizona Public Service Company), VRDN, Series E,
6.10% due 5/01/2029 (l) 5,900
NR* B1 3,000 Phoenix, Arizona, IDA, Airport Facility Revenue Refunding Bonds
(America West Airlines Inc. Project), AMT, 6.30% due 4/01/2023 2,641
NR* NR* 975 Show Low, Arizona, Improvement District No. 5, Special
Assessment Bonds, 6.375% due 1/01/2015 976
AAA Aaa 3,350 Tucson, Arizona, Airport Authority Incorporated Revenue
Refunding Bonds, 5.70% due 6/01/2013 (i) 3,373
==============================================================================================================================
California--2.0% AAA Aaa 1,000 Anaheim, California, Public Financing Authority, Lease Revenue
Bonds (Public Improvements Project), Series C, 6.20%** due
9/01/2024 (g) 230
BBB NR* 4,500 Contra Costa County, California, Public Financing Authority,
Tax Allocation Revenue Refunding Bonds (Pleasant Hill Bart Etc.
Redevelopment), 5.25% due 8/01/2028 3,832
Montebello, California, Unified School District, GO (c):
AAA Aaa 2,350 5.61%** due 8/01/2021 663
AAA Aaa 2,405 5.61%** due 8/01/2022 635
AAA Aaa 2,455 5.61%** due 8/01/2023 610
==============================================================================================================================
Colorado--7.4% Denver, Colorado, City and County Airport Revenue Refunding
Bonds (i):
NR* Aaa 22,235 RIB, Series 136, 5.57% due 11/15/2025 (k) 19,733
AAA Aaa 2,000 Series E, 5.50% due 11/15/2025 1,880
==============================================================================================================================
Connecticut--7.2% AAA Aaa 5,830 Bridgeport, Connecticut, GO, Refunding, Series A, 6% due
7/15/2012 (c) 6,116
NR* NR* 2,735 Connecticut State Development Authority, IDR (AFCO Cargo
BDL-LLC Project), AMT, 8% due 4/01/2030 2,723
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 3,016
AAA Aaa 8,970 Connecticut State Special Tax Obligation Revenue Bonds
(Transportation Infrastructure), Series A, 6% due
12/01/2017 (c) 9,246
==============================================================================================================================
District of
Columbia-- AAA Aaa 5,690 District of Columbia, University Revenue Refunding Bonds
2.7% (George Washington University), Series A, 5.75% due
9/15/2020 (i) 5,616
AAA Aaa 2,250 District of Columbia, Water and Sewer Authority, Public
Utility Revenue Refunding Bonds, 5.50% 10/01/2017 (g) 2,218
==============================================================================================================================
Georgia--2.8% AAA Aaa 8,000 Atlanta, Georgia, Airport Revenue Refunding Bonds, Series A,
5.875% due 1/01/2015 (c) 8,200
==============================================================================================================================
Illinois--3.5% NR* NR* 930 Beardstown, Illinois, IDR (Jefferson Smurfit Corp. Project),
8% due 10/01/2016 972
AAA Aaa 2,500 Illinois Development Finance Authority, PCR, Refunding
(Illinois Power Company Project), Series B, 5.40% due
3/01/2028 (i) 2,279
BBB NR* 5,000 Illinois Development Finance Authority, Revenue Refunding
Bonds (Community Rehab Providers), Series A, 6.05%
due 7/01/2019 4,371
Illinois Health Facilities Authority, Revenue Refunding Bonds:
AAA A3 2,880 (Riverside Health System), Series A, 6% due 11/15/2015 2,732
A1 VMIG1+ 100 (University of Chicago Hospitals), VRDN, 5.45% due
8/01/2026 (i)(l) 100
==============================================================================================================================
Indiana--2.1% NR* NR* 8,985 Allen County, Indiana, Redevelopment District Tax Increment
Revenue Bonds (General Motors Development Area), 7%**
due 11/15/2013 3,579
BBB- Baa2 2,880 Indiana State Development Finance Authority, Environmental
Revenue Refunding and Improvement Bonds (USX
Corporation Project), 6.15% due 7/15/2022 2,664
==============================================================================================================================
Kentucky--1.1% NR* NR* 3,150 Perry County, Kentucky, Solid Waste Disposal Revenue Bonds
(TJ International Project), AMT, 6.55% due 4/15/2027 3,064
==============================================================================================================================
Louisiana--0.0% A1+ VMIG1+ 100 Louisiana State Offshore Terminal Authority, Deepwater Port
Revenue Refunding Bonds (First Stage A-Loop Inc.), VRDN,
5.85% due 9/01/2008 (l) 100
==============================================================================================================================
Maryland--2.9% NR* NR* 1,875 Anne Arundel County, Maryland, Special Obligation Revenue
Bonds (Arundel Mills Project), 7.10% due 7/01/2029 1,853
NR* NR* 6,550 Maryland State Energy Financing Administration, Limited
Obligation Revenue Bonds (Cogeneration--AES Warrior Run), AMT,
7.40% due 9/01/2019 6,675
==============================================================================================================================
Michigan--0.7% AAA Aaa 2,040 Michigan State, HDA, Rental Housing Revenue Refunding Bonds,
Series A, 5.875% due 10/01/2017 (a) 2,000
A1 VMIG1+ 100 Royal Oak, Michigan, Hospital Finance Authority, Hospital
Revenue Bonds (William Beaumont Hospital), VRDN, Series J,
5.40% due 1/01/2003 (l) 100
==============================================================================================================================
Minnesota--3.4% AAA Aaa 5,000 Minnesota State, GO, Refunding, Various Purpose, 5% due
6/01/2014 4,757
Robbinsdale, Minnesota, Independent School District No. 281, GO:
NR* Aa1 2,410 5.50% due 2/01/2016 2,390
NR* Aa1 2,850 5.625% due 2/01/2019 2,822
==============================================================================================================================
Mississippi--4.5% BBB- Ba1 7,675 Claiborne County, Mississippi, PCR, Refunding (System Energy
Resources Inc. Project), 6.20% due 2/01/2026 7,014
BBB- Ba1 3,000 Mississippi Business Finance Corporation, Mississippi, PCR,
Refunding (System Energy Resources Inc. Project), 5.90%
due 5/01/2022 2,602
NR* NR* 3,625 Mississippi Development Bank, Special Obligation Revenue
Refunding Bonds (Diamond Lakes Utilities), Series A, 6.25%
due 12/01/2017 3,410
==============================================================================================================================
Missouri--0.1% NR* NR* 410 Missouri State Health and Educational Facilities Authority
Revenue Bonds (Southwest Baptist University Project), 9.50%
due 10/01/2001 (b) 418
==============================================================================================================================
Nebraska--0.7% AAA NR* 1,980 Nebraska Investment Finance Authority, S/F Housing Revenue
Bonds, AMT, Series C, 6.30% due 9/01/2028 (e)(f) 1,977
==============================================================================================================================
Nevada--2.6% Nevada Housing Division Revenue Bonds, S/F Mortgage, AMT:
AAA Aaa 3,460 Series B-1, 6.05% due 10/01/2018 3,407
AAA Aaa 2,295 Series B-1, 6.15% due 4/01/2029 2,258
AAA Aaa 1,840 Series D-2, 6.35% due 4/01/2028 (d) 1,847
==============================================================================================================================
</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)
EDA Economic Development Authority
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
6 & 7
<PAGE>
MuniHoldings Fund, Inc., April 30, 2000
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
New Hampshire-- NR* Aa3 $ 4,435 New Hampshire State Housing Finance Authority, S/F
1.5% Mortgage Acquisition, Revenue Bonds, AMT, Series G,
6.30% due 1/01/2026 $ 4,442
==============================================================================================================================
New Jersey--1.0% BBB- Baa3 3,425 New Jersey Health Care Facilities Financing Authority, Revenue
Refunding Bonds (Saint Elizabeth Hospital Obligation Group),
6% due 7/01/2020 2,807
==============================================================================================================================
New Mexico--1.0% BBB- Baa3 2,000 Farmington, New Mexico, PCR, Refunding (Public Service
Company--San Juan Project), Series A, 6.30% due 12/01/2016 1,940
AAA Aaa 1,000 Los Alamos County, New Mexico, Utility System Revenue Refunding
Bonds, Series A, 6% due 7/01/2015 (g) 1,032
==============================================================================================================================
New York--25.5% AAA Aaa 6,630 Long Island Power Authority, New York, Electric System Revenue
Refunding Bonds, Series A, 5.25% due 12/01/2026 (i) 5,957
AAA Aaa 4,000 Metropolitan Transportation Authority, New York, Dedicated Tax
Fund Revenue Bonds, Series A, 5.50% due 4/01/2016 (i) 3,937
New York City, New York, City Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds, RITR (k):
NR* Aaa 6,000 Series 11, 6.22% due 6/15/2026 (g) 5,896
A1 Aaa 1,065 Series FR-6, 5.945% due 6/15/2026 (i) 1,020
AA Aa3 10,000 New York City, New York, City Transitional Finance Authority,
Revenue Refunding Bonds, Future Tax Secured, Series C, 5.50%
due 11/01/2024 9,510
New York City, New York, GO, UT:
AAA Aaa 16,000 Refunding, Series G, 5.75% due 2/01/2014 (c) 16,198
AAA Aaa 10,000 Series F, 6% due 8/01/2016 (i) 10,261
BBB+ Baa1 10,000 New York State Dormitory Authority, Revenue Refunding Bonds
(Mount Sinai Health), Series A, 6.50% due 7/01/2025 9,829
AAA NR* 11,000 New York State Dormitory Authority, State University Educational
Facilities, Revenue Refunding Bonds (1989 Resources), 6% due
5/15/2012 (i) 11,579
==============================================================================================================================
Ohio--1.9% NR* Aaa 6,000 Ohio HFA, Residential Mortgage Revenue Refunding Bonds, AMT,
Series A-1, 5.30% due 9/01/2019 (g)(h) 5,535
==============================================================================================================================
Oklahoma--1.8% BBB- Baa1 5,400 Tulsa, Oklahoma, Municipal Airport Trust Revenue Refunding Bonds
(American Airlines Project), 6.25% due 6/01/2020 5,255
==============================================================================================================================
Oregon--0.5% NR* NR* 1,300 Western Generation Agency, Oregon, Cogeneration Project Revenue
Bonds (Wauna Cogeneration Project), AMT, Series B, 7.40%
due 1/01/2016 1,338
==============================================================================================================================
Pennsylvania--6.0% Beaver County, Pennsylvania, IDA, PCR, Refunding (Cleveland
Electric Project):
BB+ Ba1 1,600 7.625% due 5/01/2025 1,684
BB+ Ba1 1,500 Series A, 7.75% due 7/15/2025 1,591
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 2,954
AAA NR* 4,970 Pennsylvania State Higher Educational Facilities Authority,
College and University Revenue Bonds (Eastern College),
Series B, 8% due 10/15/2006 (j) 5,836
Philadelphia, Pennsylvania, Authority for IDR, Refunding,
Commercial Development:
NR* NR* 4,000 (Days Inn), Series B, 6.50% due 10/01/2027 3,794
NR* NR* 1,500 (Doubletree), Series A, 6.50% due 10/01/2027 1,423
==============================================================================================================================
Tennessee--4.4% Hardeman County, Tennessee, Correctional Facilities Corporation
Revenue Bonds:
NR* NR* 680 7% due 8/01/2004 694
NR* NR* 4,500 7.75% due 8/01/2017 4,600
NR* Aa2 3,400 Tennessee Educational Loan Revenue Bonds (Educational Funding
South Inc.), AMT, Senior Series B, 6.20% due 12/01/2021 3,424
AA A1 4,230 Tennessee Housing Development Agency, Mortgage Finance Revenue
Refunding Bonds, Series A, 5.95% due 7/01/2028 4,090
==============================================================================================================================
Texas--5.7% AAA Aaa 5,000 Brazos River Authority, Texas, Revenue Refunding Bonds
(Houston Industries Inc. Project), Series C, 5.125% due
5/01/2019 (a) 4,493
BBB- Baa1 2,500 Dallas-Fort Worth, Texas, International Airport Facilities,
Improvement Corporation Revenue Bonds (American Airlines Inc.),
AMT, 6.375% due 5/01/2035 2,375
BB Ba1 5,000 Houston, Texas, Airport System Revenue Bonds (Special
Facilities--Continental Airlines), AMT, Series B, 6.125%
due 7/15/2017 4,519
BB Baa3 3,500 Lower Colorado River Authority, Texas, PCR (Samsung Austin
Semiconductor), AMT, 6.375% due 4/01/2027 3,238
NR* NR* 2,000 North Central Texas, Health Facility Development Corporation,
Retirement Facility Revenue Bonds (Northwest Senior Housing),
Series A, 7.50% due 11/15/2029 1,907
==============================================================================================================================
Utah--0.2% NR* NR* 3,000 Tooele County, Utah, PCR, Refunding (Laidlaw Environmental), AMT,
Series A, 7.55% due 7/01/2027 450
==============================================================================================================================
Virginia--3.9% AAA Aaa 7,000 Fairfax County, Virginia, EDA, Resource Recovery Revenue Refunding
Bonds, AMT, Series A, 6.10% due 2/01/2011 (a) 7,409
NR* NR* 3,250 Peninsula Ports Authority, Virginia, Revenue Refunding Bonds (Port
Facility--Zeigler Coal), 6.90% due 5/02/2022 2,653
Pocahontas Parkway Associates Virginia, Toll Road Revenue Bonds,
First Tier, Sub-Series C:
NR* Ba1 5,600 6.25%** due 8/15/2028 651
NR* Ba1 5,700 6.25%** due 8/15/2029 614
==============================================================================================================================
Total Investments (Cost--$312,815)--104.1% 303,268
Liabilities in Excess of Other Assets--(4.1%) (11,944)
------------
Net Assets--100.0% $ 291,324
============
==============================================================================================================================
</TABLE>
(a) AMBAC Insured.
(b) Escrowed to maturity.
(c) FGIC Insured.
(d) FHA Insured.
(e) FHLMC Collateralized.
(f) FNMA/GNMA Collateralized.
(g) FSA Insured.
(h) GNMA Collateralized.
(i) MBIA Insured.
(j) Prerefunded.
(k) 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, 2000.
(l) The interest rate is subject to change periodically based upon prevailing
market rates. The interest rate shown is the rate in effect at April 30,
2000.
* Not Rated.
** Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase by the Fund.
+ Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Ernst & Young LLP.
See Notes to Financial Statements.
8 & 9
<PAGE>
MuniHoldings Fund, Inc., April 30, 2000
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<TABLE>
<CAPTION>
As of April 30, 2000
===================================================================================================================================
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$312,814,723) ........................... $ 303,268,086
Cash ............................................................................ 57,754
Receivables:
Interest ..................................................................... $ 4,820,838
Securities sold .............................................................. 2,998,237 7,819,075
-------------
Prepaid expenses ................................................................ 17,697
-------------
Total assets .................................................................... 311,162,612
-------------
===================================================================================================================================
Liabilities: Payables:
Securities purchased ......................................................... 19,562,183
Investment adviser ........................................................... 124,275
Dividends to shareholders .................................................... 120,210 19,806,668
-------------
Accrued expenses and other liabilities .......................................... 31,723
-------------
Total liabilities ............................................................... 19,838,391
-------------
===================================================================================================================================
Net Assets: Net assets ...................................................................... $ 291,324,221
=============
===================================================================================================================================
Capital: Capital Stock (200,000,000 shares authorized):
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 ............................................ 1,683,684
Accumulated realized capital losses on investments--net ......................... (13,239,478)
Accumulated distributions in excess of realized capital gains on investments--net (2,862,679)
Unrealized depreciation on investments--net ..................................... (9,546,637)
-------------
Total--Equivalent to $13.16 net asset value per share of Common Stock
(market price--$12.5625) ........................................................ 181,324,221
-------------
Total capital ................................................................... $ 291,324,221
=============
===================================================================================================================================
</TABLE>
* Auction Market Preferred Stock.
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended April 30, 2000
===================================================================================================================================
<S> <C> <C>
Investment Interest and amortization of premium and discount earned ........................ $ 18,636,529
Income:
===================================================================================================================================
Expenses: Investment advisory fees ........................................................ $ 1,674,112
Commission fees ................................................................. 279,092
Professional fees ............................................................... 93,769
Transfer agent fees ............................................................. 53,778
Accounting services ............................................................. 34,819
Custodian fees .................................................................. 24,896
Listing fees .................................................................... 24,302
Directors' fees and expenses .................................................... 19,563
Printing and shareholder reports ................................................ 18,322
Pricing fees .................................................................... 11,142
Other ........................................................................... 43,364
------------
Total expenses .................................................................. 2,277,159
------------
Investment income--net .......................................................... 16,359,370
------------
===================================================================================================================================
Realized & Realized loss on investments--net ............................................... (14,434,866)
Unrealized Change in unrealized appreciation/depreciation on investments--net............... (22,283,350)
Loss on ------------
Investments-- Net Decrease in Net Assets Resulting from Operations ............................ $(20,358,846)
Net: ============
===================================================================================================================================
</TABLE>
See Notes to Financial Statements.
10 & 11
<PAGE>
MuniHoldings Fund, Inc., April 30, 2000
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Year Ended April 30,
----------------------------
Increase (Decrease) in Net Assets: 2000 1999
==============================================================================================================================
<S> <C> <C> <C>
Operations: Investment income--net ................................................. $ 16,359,370 $ 16,964,850
Realized gain (loss) on investments--net ............................... (14,434,866) 4,117,261
Change in unrealized appreciation/depreciation on investments--net ..... (22,283,350) 1,322,257
------------- -------------
Net increase (decrease) in net assets resulting from operations ........ (20,358,846) 22,404,368
------------- -------------
==============================================================================================================================
Dividends & Investment income--net:
Distributions to Common Stock ....................................................... (12,979,741) (13,279,497)
Shareholders: Preferred Stock .................................................... (3,592,336) (2,857,580)
Realized gain on investments--net:
Common Stock ....................................................... -- (4,418,052)
Preferred Stock .................................................... -- (1,231,956)
In excess of realized gain on investments--net:
Common Stock ....................................................... (2,333,931) --
Preferred Stock .................................................... (528,748) --
------------- -------------
Net decrease in net assets resulting from dividends and distributions to
shareholders ........................................................... (19,434,756) (21,787,085)
------------- -------------
==============================================================================================================================
Capital Stock Values of shares issued to Common Stock shareholders in reinvestment
Transactions: of dividends and distributions ......................................... -- 783,328
------------- -------------
==============================================================================================================================
Net Assets: Total increase (decrease) in net assets ................................ (39,793,602) 1,400,611
Beginning of year ...................................................... 331,117,823 329,717,212
------------- -------------
End of year* ........................................................... $ 291,324,221 $ 331,117,823
============= =============
*Undistributed investment income--net .................................. $ 1,683,684 $ 1,896,391
============= =============
==============================================================================================================================
</TABLE>
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 Period
For the Year Ended April 30, May 2, 1997+
---------------------------- to
Increase (Decrease) in Net Asset Value: 2000 1999 April 30, 1998
=================================================================================================================================
<S> <C> <C> <C>
Per Share Net asset value, beginning of period ....................... $ 16.05 $ 16.00 $ 15.00
Operating ------------ ------------ -----------
Performance: Investment income--net ..................................... 1.18 1.24 1.21
Realized and unrealized gain (loss) on investments--net .... (2.66) .40 1.03
------------ ------------ -----------
Total from investment operations ........................... (1.48) 1.64 2.24
------------ ------------ -----------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net ................................. (.94) (.97) (.87)
Realized gain on investments--net ...................... -- (.32) --
In excess of realized gain on investments--net ......... (.17) -- --
------------ ------------ -----------
Total dividends and distributions to Common Stock
shareholders ........................................... (1.11) (1.29) (.87)
------------ ------------ -----------
Capital charge resulting from issuance of Common Stock ..... -- -- (.03)
------------ ------------ -----------
Effect of Preferred Stock activity:++
Dividends and distributions to Preferred Stock
shareholders:
Investment income--net ............................... (.26) (.21) (.26)
Realized gain on investments--net .................... -- (.09) --
In excess of realized gain on investments--net ....... (.04)
Capital charge resulting from issuance of Preferred
Stock ................................................ -- -- (.08)
------------ ------------ -----------
Total effect of Preferred Stock activity ................... (.30) (.30) (.34)
------------ ------------ -----------
Net asset value, end of period ............................. $ 13.16 $ 16.05 $ 16.00
============ ============ ===========
Market price per share, end of period ...................... $ 12.5625 $ 15.25 $ 14.75
============ ============ ===========
=================================================================================================================================
Total Investment Based on market price per share ............................ (10.47% ) 12.06% 4.01%TT
Return:** ============ ============ ===========
Based on net asset value per share ......................... (10.89% ) 8.73% 12.83%TT
============ ============ ===========
=================================================================================================================================
Ratios Based on Total expenses, net of reimbursement*** .................... 1.16% 1.20% 1.29%*
Average Net Assets ============ ============ ===========
Of Common Stock: Total expenses*** .......................................... 1.16% 1.09% 1.05%*
============ ============ ===========
Total investment income--net*** ............................ 8.34% 7.52% 7.77%*
============ ============ ===========
Amount of dividends to Preferred Stock shareholders ........ 1.83% 1.27% 1.67%*
============ ============ ===========
Investment income--net, to Common Stock shareholders ....... 6.51% 6.25% 6.10%*
============ ============ ===========
=================================================================================================================================
Ratios Based on Total expenses, net of reimbursement ....................... .74% .73% .58%*
Total Average ============ ============ ===========
Net Assets:***+++ Total expenses ............................................. .74% .73% .72%*
============ ============ ===========
Total investment income--net ............................... 5.35% 5.05% 5.31%*
============ ============ ===========
=================================================================================================================================
Ratios Based on Dividends to Preferred Stock shareholders .................. 3.27% 2.58% 3.60%*
Average Net Assets ============ ============ ===========
Of Preferred Stock:
=================================================================================================================================
Supplemental Data: Net assets, net of Preferred Stock, end of period
(in thousands).......................................... $ 181,324 $ 221,118 $ 219,717
============ ============ ===========
Preferred Stock outstanding, end of period (in thousands) .. $ 110,000 $ 110,000 $ 110,000
============ ============ ===========
Portfolio turnover ......................................... 137.69% 66.07% 106.16%
============ ============ ===========
=================================================================================================================================
Leverage: Asset coverage per $1,000 .................................. $ 2,648 $ 3,010 $ 2,997
============ ============ ===========
=================================================================================================================================
Dividends Per Series A--Investment income--net ........................... $ 820 $ 657 $ 810
Share on Preferred ============ ============ ===========
Stock Outstanding: Series B--Investment income--net ........................... $ 813 $ 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
charges. If applicable, the Fund's Investment Adviser voluntarily waived
a portion of its management fee. Without such waiver, the Fund's
performance would have been lower.
*** 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.
TT Aggregate total investment return.
See Notes to Financial Statements.
12 & 13
<PAGE>
MuniHoldings Fund, Inc., April 30, 2000
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 accounting
principles generally accepted in the United States of America, 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-the-counter market, valuation is the last asked price (options
written) or the last bid price (options purchased). Securities with remaining
maturities of sixty days or less are valued at amortized cost, which
approximates market value. Securities and assets for which market quotations are
not readily available are valued at fair value as determined in good faith by or
under the direction of the Board of Directors of the Fund, including valuations
furnished by a pricing service retained by the Fund, which may utilize a matrix
system for valuations. The procedures of the pricing service and its valuations
are reviewed by the officers of the Fund under the general supervision of the
Board of Directors.
(b) Derivative financial instruments--The Fund may engage in various portfolio
investment strategies to increase or decrease the level of risk to which the
Fund is exposed more quickly and efficiently than transactions in other types of
instruments. 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) Dividends and distributions--Dividends from net investment income are
declared and paid monthly. Distributions of capital gains are recorded on the
ex-dividend dates. Distributions in excess of realized capital gains are due
primarily to differing tax treatments for futures transactions and post-October
losses.
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 .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, 2000 were $414,415,430 and $406,483,891, respectively.
Net realized gains (losses) for the year ended April 30, 2000 and net unrealized
losses as of April 30, 2000 were as follows:
--------------------------------------------------------------------------------
Realized Unrealized
Gains (Losses) Losses
--------------------------------------------------------------------------------
Long-term investments .................. $(15,399,461) $ (9,546,637)
Financial futures contracts ............ 964,595 --
------------ ------------
Total .................................. $(14,434,866) $ (9,546,637)
============ ============
--------------------------------------------------------------------------------
As of April 30, 2000, net unrealized depreciation for Federal income tax
purposes aggregated $9,902,499, of which $2,285,296 related to appreciated
securities and $12,187,795 related to depreciated securities. The aggregate cost
of investments at April 30, 2000 for Federal income tax purposes was
$313,170,585.
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, 2000 remain
constant and during the year ended April 30, 1999 increased by 48,320 as a
result of dividend reinvestment.
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, 2000 were as follows: Series A, 4.50% and Series B, 4.70%.
Shares issued and outstanding during the years ended April 30, 2000 and April
30, 1999 remained constant.
The Fund pays commissions to certain broker-dealers at the end of each auction
at an annual rate ranging from .25% to .375%, calculated on the proceeds of each
auction. For the year ended April 30, 2000, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, an affiliate of FAM, earned $173,368 as commissions.
5. Capital Loss Carryforward:
At April 30, 2000, the Fund had a net capital loss carryforward of approximately
$6,831,000, all of which expires in 2008. This amount will be available to
offset like amounts of any future taxable gains.
6. Subsequent Event:
On May 5, 2000, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.078900 per share,
payable on May 30, 2000 to shareholders of record as of May 16, 2000.
14 & 15
<PAGE>
MuniHoldings Fund, Inc., April 30, 2000
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,
2000, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and financial highlights for each of the periods indicated therein. 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. 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, 2000, by correspondence with
the custodian and brokers. 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. at April 30, 2000, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the indicated periods
in conformity with accounting principles generally accepted in the United
States.
/s/ Ernst & Young LLP
MetroPark, New Jersey
May 26, 2000
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by MuniHoldings Fund, Inc.
during its taxable year ended April 30, 2000 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:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Payable Ordinary Long-Term
Date Income Capital Gains*
------------------------------------------------------------------------------------------------------------------------------------
Common Stock Shareholders 12/30/99 $.59981 $.109423
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred Stock Shareholders: Series A 11/17/99 $ 9.83 $ 16.68
11/24/99 $ 10.26 $ 17.75
12/01/99 $ 10.58 $ 18.94
12/08/99 $ 9.77 $ 18.58
12/15/99 $ 1.75 $ 5.01
------------------------------------------------------------------------------------
Series B 11/19/99 $ 9.55 $ 16.20
11/26/99 $ 10.40 $ 18.00
12/03/99 $ 10.20 $ 18.18
12/10/99 $ 9.55 $ 18.05
12/17/99 $ 3.21 $ 7.85
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* All of the distributions are subject to the 20% tax rate.
Please retain this information for your records.
16 & 17
<PAGE>
MuniHoldings Fund, Inc., April 30, 2000
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute all or a portion of its net
investment income to its shareholders on a monthly basis. In order to provide
shareholders with a more consistent yield to the current trading price of 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.
QUALITY PROFILE (unaudited)
The quality ratings of securities in the Fund as of April 30, 2000 were as
follows:
--------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
--------------------------------------------------------------------------------
AAA/Aaa ................................................ 55.6%
AA/Aa .................................................. 9.2
BBB/Baa ................................................ 16.8
BB/Ba .................................................. 4.6
B/B .................................................... 0.9
NR (Not Rated) ......................................... 14.9
Other+ ................................................. 2.1
--------------------------------------------------------------------------------
+ Temporary investment in short-term municipal securities.
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
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:
The Bank of New York
100 Church Street
New York, NY 10286
NYSE Symbol
MHD
18 & 19
<PAGE>
MuniHoldings Fund, Inc. seeks to provide shareholders with current income exempt
from Federal income taxes by investing primarily in a portfolio of long-term,
investment-grade municipal obligations the interest on which, in the opinion of
bond counsel to the issuer, is exempt from Federal income taxes.
This report, including the financial information herein, is transmitted to
shareholders of MuniHoldings Fund, Inc. for their information. It is not a
prospectus. Past performance results shown in this report should not be
considered a representation of future performance. The Fund has 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--4/00
[LOGO] Printed on post-consumer recycled paper
