MUNIHOLDINGS
FLORIDA INSURED
FUND
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
February 28, 1999
<PAGE>
MuniHoldings Florida Insured Fund
The Benefits and Risks of Leveraging
MuniHoldings Florida Insured Fund has the ability to leverage to seek to enhance
the yield and net asset value of its Common Shares. However, these objectives
cannot be achieved in all interest rate environments. To leverage, the Fund
issues Preferred Shares, which pay 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 Shareholders in the form of
dividends, and the value of these portfolio holdings is reflected in the per
share net asset value of the Fund's Common Shares. However, in order to benefit
Common Shareholders, the yield curve must be positively sloped; that is,
short-term interest rates must be lower than long-term interest rates. At the
same time, a period of generally declining interest rates will benefit Common
Shareholders. 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 Share capitalization of
$100 million and the issuance of Preferred Shares for an additional $50 million,
creating a total value of $150 million available for investment in long-term
municipal bonds. If prevailing short-term interest rates are approximately 3%
and long-term interest rates are approximately 6%, the yield curve has a
strongly positive slope. The fund pays dividends on the $50 million of Preferred
Shares 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 Shares.
In this case, the dividends paid to Preferred Share holders are significantly
lower than the income earned on the fund's long-term investments, and therefore
the Common Shareholders are the beneficiaries of the incremental yield. However,
if short-term interest rates rise, narrowing the differential between short-term
and long-term interest rates, the incremental yield pickup on the Common Shares
will be reduced or eliminated completely. At the same time, the market value of
the fund's Common Shares (that is, its price as listed on the New York Stock
Exchange) may, as a result, decline. Furthermore, if long-term interest rates
rise, the Common Shares' net asset value will reflect the full decline in the
price of the portfolio's investments, since the value of the fund's Preferred
Shares does not fluctuate. In addition to the decline in net asset value, the
market value of the fund's Common Shares 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 Florida Insured Fund, February 28, 1999
DEAR SHAREHOLDER
For the six months ended February 28, 1999, the Common Shares of MuniHoldings
Florida Insured Fund earned $0.460 per share income dividends, which included
earned and unpaid dividends of $0.063. This represents a net annualized yield of
5.98%, based on a month-end per share net asset value of $15.50. Over the same
period, the total investment return on the Fund's Common Shares was +1.76%,
based on a change in per share net asset value from $16.03 to $15.50, and
assuming reinvestment of $0.775 per share ordinary income dividends and $0.030
per share capital gains distributions.
For the six months ended February 28, 1999, the Fund's Preferred Shares had an
average yield of 4.12% for Series A and 4.27% for Series B.
The Municipal Market Environment
During most of the six months ended February 28, 1999, fixed-income investors
concentrated on the positive elements within the current economic framework. On
an annual basis, US economic growth remained modest, although it strengthened
somewhat in recent months. More important, continued weak foreign economic
growth has been seen as preventing US growth from overheating and generating
increased inflationary pressures. World commodity prices continued to decline to
their lowest level in over a decade, reinforcing the extremely positive
inflationary environment in the United States. Additionally, the Federal Reserve
Board lowered short-term interest rates in September, October and November.
These actions were taken both to ensure that US domestic economic growth would
not be negatively impacted by weak foreign demand and that US financial markets
would have adequate liquidity to offset deteriorating financial conditions in
Asia, Russia and Brazil. Despite considerable volatility, such positive factors
allowed long-term fixed-income interest rates to modestly decline into late
January 1999. During the six-month period ended February 28, 1999, US Treasury
bond yields declined almost 20 basis points (0.20%) to 5.09%, and long-term
tax-exempt revenue bond yields fell approximately 10 basis points to 5.17%, as
measured by the Bond Buyer Bond Revenue Index.
However, during February investors have developed a more negative bias toward
both the prospects for US economic growth and long-term bond yields. Economic
indicators released during February did not suggest that the US economy was
materially stronger in February than it had been in January or even in late
1998. Inflationary measures, such as the consumer price index and the gross
domestic product price deflator, have continued to suggest that domestic price
pressures are nearly non-existent. The consensus among economists was that
Federal Reserve Board Chairman Alan Greenspan's Humphrey Hawkins testimony
emphasized that the balance between moderate economic growth and low inflation
seen in recent quarters remains in place and that it was unlikely that the
Federal Reserve Board would lower or raise short-term interest rates during
1999. However, investors largely chose to ignore these interpretations and began
to anticipate that the Federal Reserve Board was likely to raise short-term
interest rates sometime during 1999. Subsequently, fixed-income bond yields rose
for the remainder of the month. In February, US Treasury bond yields rose almost
50 basis points to 5.57%, and long-term uninsured municipal revenue bond yields
rose less than 15 basis points to end the month at 5.29%. During the February
quarter, US Treasury bond yields rose 30 basis points, while long-term municipal
bond yields rose less than 5 basis points, as measured by the Bond Buyer Revenue
Index.
Throughout most of 1998, the municipal bond market's performance was impeded by
a significant increase in annual new-issue supply. However, in recent months,
the technical position of the tax-exempt market improved. This has led to the
outperformance by long-term municipal bonds seen thus far in 1999. Over the last
12 months, more than $275 billion in new long-term tax-exempt bonds was
underwritten, an increase of almost 16% compared to the same period a year ago.
As municipal bond yields declined in recent years, it has taken increasingly
lower bond yields to generate the cost savings necessary to refinance remaining
higher-couponed debt. Consequently, the rate of increases in municipal bond
issuance slowed dramatically in recent quarters. During the last six months,
over $120 billion in new tax-exempt bonds was issued, a decrease of
approximately 7% compared to the same period a year ago. During the quarter
ended February 28, 1999, less than $60 billion in new long-term municipal bonds
was underwritten, representing a decline of nearly 10% compared to the quarter
ended February 28, 1998.
The pace of tax-exempt issuance slowed further in 1999. Year-to-date issuance
was less than $33 billion, representing a decline of almost 25% compared to
January 1998's volume. Additionally, investors received over $40 billion in
coupon payments, maturities and proceeds from early redemptions in January and
February. Consequently, investor demand has been strong in recent months, easily
matching, if not at times exceeding, available supply. We will monitor this
situation closely in the coming months to determine if the supply pressures
exerted in 1998 are abating and fostering a more balanced supply/demand
environment for 1999. Such an environment should allow the tax-exempt market's
performance to more closely mirror that of its taxable counterpart.
Foreign investors have rarely been active investors in the tax-exempt bond
market since they are unable to benefit from the inherent tax advantage of
municipal securities. Consequently, the municipal bond market has not been able
to benefit from the strong "flight to quality" demand enjoyed by US Treasury
securities since late 1997. This inability has in large part resulted in
significantly smaller declines in municipal bond yields compared to US Treasury
securities. However, this has resulted in the opportunity to purchase tax-exempt
securities with yields very close to or, in some instances, exceeding those of
comparable US Treasury bonds. By February 28, 1999, long-term tax-exempt bond
yields were at 95% of US Treasury bond yields. Municipal bond yield ratios have
averaged approximately 92% for the last 12 months. During 1997, tax-exempt bond
yield ratios averaged 84%. It is likely that the combination of the annual
increase in new-issue volume and the "safe-haven" status of US Treasury
securities drove municipal bond yield ratios to their present attractive levels.
Should new volume decline and/or foreign financial markets regain stability in
1999, tax-exempt bond yield ratios could quickly return to their more historic
levels (85% - 88%).
Looking ahead, the expected combination of moderate economic growth in the
United States and continued negligible inflation suggests a relatively stable
interest rate environment into early 1999. However, it is likely that foreign
financial markets will again be a critical factor in determining US bond yields.
While some Pacific Rim economies are expected to improve somewhat in 1999, the
economies of Japan and much of Europe are unlikely to show much growth in the
coming months. Also, economic problems in Russia and Brazil remain unresolved
suggesting that additional shocks to the world's financial system are possible.
On the other hand, the continued robustness of the US economy has led to some
back up in interest rates. However, at present these factors suggest that there
is little immediate risk of sustained significant increases in long-term bond
yields.
Portfolio Strategy
During the six-month period ended February 28, 1999, we maintained our
constructive portfolio strategy for MuniHoldings Florida Insured Fund. We
believed that a continuation of current equity market turmoil would have a
negative impact on economic growth, thereby constricting global inflation and
forcing interest rates lower over the next several months. As this scenario came
to pass, economic turmoil increased in various parts of the world, including
Russia and Brazil. While the US economy performed much better than anticipated,
inflation remained quite benign. Beginning in late January 1999, we shifted the
Fund toward a more neutral position on interest rates. Consequently, we started
to reduce our exposure to the long end of the municipal curve and placed an
emphasis on municipal bonds in the 20-year sector as the yield differential
started to narrow considerably. Looking ahead, we believe this strategy would
enable the Fund to be less sensitive to any negative market movement should
interest rates start to rise.
In Conclusion
We appreciate your ongoing interest in MuniHoldings Florida Insured Fund, and we
look forward to assisting you with your financial needs in the months and years
ahead.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Trustee
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ Robert A. DiMella
Robert A. DiMella
Vice President and
Co-Portfolio Manager
/s/ Robert D. Sneeden
Robert D. Sneeden
Vice President and
Co-Portfolio Manager
March 31, 1999
2 & 3
<PAGE>
MuniHoldings Florida Insured Fund, February 28, 1999
PROXY RESULTS
During the six-month period ended February 28, 1999, MuniHoldings Florida
Insured Fund Common 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 Trustees: Ronald W. Forbes 10,486,080 193,565
Cynthia A. Montgomery 10,487,960 191,685
Kevin A. Ryan 10,484,413 195,232
Arthur Zeikel 10,484,413 195,232
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent auditors for the current fiscal year. 10,474,694 28,007 176,944
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
During the six-month period ended February 28, 1999, MuniHoldings Florida
Insured Fund Preferred (Series A and B) 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 Board of Trustees: Ronald W. Forbes, Cynthia A.
Montgomery, Charles C. Reilly, Kevin A. Ryan, Richard R. West and Arthur
Zeikel as follows:
Series A 2,013 0
Series B 1,681 0
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's independent
auditors for the current fiscal year as follows:
Series A 2,007 0 5
Series B 1,681 0 0
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
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 Florida Insured Fund's Board of Trustees. We
are pleased to announce that Terry K. Glenn has been elected President and
Trustee 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 Trustees 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 Trustees.
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
====================================================================================================================================
<C> <C> <C> <C> <S> <C>
Florida--96.7% AAA Aaa $ 1,500 Brevard County, Florida, School Board, COP, Series B, 5.50%
due 7/01/2021 (c) $ 1,564
------------------------------------------------------------------------------------------------------------
Broward County, Florida, HFA, M/F Housing Revenue Bonds
(Heron Pointe Apartments Project), AMT, Series A (d):
AAA Aaa 800 5.65% due 11/01/2022 828
AAA Aaa 1,250 5.70% due 11/01/2029 1,294
------------------------------------------------------------------------------------------------------------
AAA Aaa 1,650 Broward County, Florida, Professional Sports Facilities
Tax Revenue Bonds (Civic Arena Project), Series A, 5.625%
due 9/01/2028 (b) 1,735
------------------------------------------------------------------------------------------------------------
NR* Aaa 5,000 Clay County, Florida, HFA, Revenue Refunding Bonds, S/F Mortgage,
Multi-County, AMT, 5.45% due 4/01/2031 (e)(h) 5,054
------------------------------------------------------------------------------------------------------------
AAA Aaa 2,500 Cocoa, Florida, Water and Sewer Revenue Improvement Bonds, 5.75%
due 10/01/2007 (f)(i) 2,820
------------------------------------------------------------------------------------------------------------
NR* NR* 4,440 Collier County, Florida, IDA, IDR, Refunding (Southern States
Utilities), AMT, 6.50% due 10/01/2025 4,646
------------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 Dade County, Florida, Aviation Revenue Bonds (Miami International
Airport), AMT, Series B, 5.125% due 10/01/2022 (d) 1,985
------------------------------------------------------------------------------------------------------------
AAA Aaa 6,500 Dade County, Florida, Aviation Revenue Bonds, Series B, 5.60%
due 10/01/2026 (b) 6,845
------------------------------------------------------------------------------------------------------------
Dade County, Florida, HFA, M/F Mortgage Revenue Bonds (Golden Lakes
Apartments Project), AMT, Series A:
NR* NR* 1,335 5.95% due 11/01/2027 1,399
NR* NR* 1,445 6.05% due 11/01/2039 1,514
------------------------------------------------------------------------------------------------------------
Dade County, Florida, HFA, M/F Mortgage Revenue Bonds (Siesta Pointe
Apartments), AMT, Series A (d):
AAA Aaa 1,225 5.65% due 9/01/2017 1,268
AAA Aaa 1,700 5.70% due 9/01/2022 1,759
AAA Aaa 1,890 5.75% due 9/01/2029 1,956
------------------------------------------------------------------------------------------------------------
Dade County, Florida, Water and Sewer System Revenue Bonds (i):
AAA Aaa 1,885 5.375% due 10/01/2016 1,973
AAA Aaa 11,930 5.50% due 10/01/2025 12,444
AAA Aaa 5,000 5.25% due 10/01/2026 5,122
------------------------------------------------------------------------------------------------------------
NR* Aaa 2,300 Duval County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT,
5.30% due 4/01/2031 (e)(h) 2,325
------------------------------------------------------------------------------------------------------------
====================================================================================================================================
</TABLE>
Portfolio Abbreviations
To simplify the listings of MuniHoldings Florida Insured Fund's port folio
holdings in the Schedule of Investments, we have abbreviated the names of many
of the securities according to the list below and at right.
ACES(SM) Adjustable Convertible Extendable Securities
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
RITR Residual Interest Trust Receipts
S/F Single-Family
VRDN Variable Rate Demand Notes
4 & 5
<PAGE>
MuniHoldings Florida Insured Fund, February 28, 1999
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
====================================================================================================================================
<C> <C> <C> <C> <S> <C>
Florida Escambia County, Florida, HFA, S/F Mortgage Revenue Refunding
(concluded) Bonds, Multi-County Program, AMT (e)(h):
NR* Aaa $ 2,780 5.20% due 4/01/2032 (b) $ 2,771
NR* Aaa 2,500 Series C, 5.80% due 10/01/2019 2,589
------------------------------------------------------------------------------------------------------------
NR* Aaa 10,930 Florida HFA, RITR, Series 12, 8.32% due 7/01/2029 (g) 12,014
------------------------------------------------------------------------------------------------------------
AAA Aaa 1,675 Florida HFA, Revenue Bonds (Mar Lago Village Apartments Project),
AMT, Series F, 5.90% due 12/01/2027 (c) 1,766
------------------------------------------------------------------------------------------------------------
Florida Housing Finance Corporation Revenue Bonds (Homeowner
Mortgage), Series 1 (b):
AAA Aaa 2,090 5.10% due 1/01/2013 2,096
AAA Aaa 2,715 5.10% due 7/01/2013 2,723
------------------------------------------------------------------------------------------------------------
AAA Aaa 2,210 Florida Ports Financing Commission Revenue Bonds (State
Transportation Trust Fund), AMT, 5.375% due 6/01/2027 (b) 2,249
------------------------------------------------------------------------------------------------------------
AA+ Aa2 1,000 Florida State, GO, Department of Transportation (Right of Way),
5.50% due 7/01/2021 1,041
------------------------------------------------------------------------------------------------------------
Florida State Mid-Bay Bridge Authority Revenue Bonds, Series A (c):
AAA Aaa 3,400 5.45%** due 10/01/2022 999
AAA Aaa 5,000 5.45%** due 10/01/2023 1,391
------------------------------------------------------------------------------------------------------------
Florida State Turnpike Authority, Turnpike Revenue Bonds, Series A (d):
AAA Aaa 4,420 5% due 7/01/2019 4,420
AAA Aaa 4,645 5% due 7/01/2020 4,633
------------------------------------------------------------------------------------------------------------
AAA Aaa 1,500 Fort Myers, Florida, Improvement Revenue Refunding Bonds,
Series A, 5% due 12/01/2022 (c) 1,496
------------------------------------------------------------------------------------------------------------
A- Baa1 5,500 Highlands County, Florida, Health Facilities Authority Revenue Bonds
(Adventist Health Systems), 5.25% due 11/15/2028 5,331
------------------------------------------------------------------------------------------------------------
AAA Aaa 5,700 Hillsborough County, Florida, Aviation Authority, Revenue Refunding
Bonds (Tampa International Airport), Series B, 5.125%
due 10/01/2017 (c) 5,767
------------------------------------------------------------------------------------------------------------
AAA Aaa 3,000 Hillsborough County, Florida, Port District Special Revenue
Refunding Bonds (Tampa Port Authority), AMT, 6% due 6/01/2020 (d) 3,205
------------------------------------------------------------------------------------------------------------
NR* Aaa 11,015 Hillsborough County, Florida, School Board, COP, RITR, Series 31,
7.32% due 12/01/2028 (g) 11,702
------------------------------------------------------------------------------------------------------------
NR* Aaa 2,415 Homestead, Florida, Water and Wastewater Revenue Refunding Bonds,
5.25% due 10/01/2027 (c) 2,474
------------------------------------------------------------------------------------------------------------
AAA Aaa 1,660 Jacksonville, Florida, Capital Improvement Revenue Refunding Bonds
(Stadium Project), 4.75% due 10/01/2025 (c) 1,588
------------------------------------------------------------------------------------------------------------
AA- A1 2,000 Lakeland, Florida, Electric and Water Revenue Bonds,
5.50% due 10/01/2026 2,092
------------------------------------------------------------------------------------------------------------
AAA Aaa 5,540 Lakeland, Florida, Hospital System Revenue Refunding Bonds
(Lakeland Regional Medical Center), 5% due 11/15/2022 (b) 5,460
------------------------------------------------------------------------------------------------------------
Leon County, Florida, School Board, COP, Master Lease Program (b):
AAA Aaa 2,460 5.125% due 7/01/2017 2,503
AAA Aaa 1,000 5.125% due 7/01/2022 1,004
------------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Manatee County, Florida, School Board, COP,
6.125% due 7/01/2006 (b)(f) 1,149
------------------------------------------------------------------------------------------------------------
AAA Aaa 3,665 Martin County, Florida, Health Facilities Authority, Hospital
Revenue Bonds (Martin Memorial Medical Center Project),
Series A, 5.375% due 11/15/2024 (b) 3,753
------------------------------------------------------------------------------------------------------------
AAA Aaa 6,810 Miami-Dade County, Florida, Professional Sports Franchise
Facility Revenue Refunding Bonds, 5% due 10/01/2023 (b) 6,791
------------------------------------------------------------------------------------------------------------
NR* Aaa 5,000 Miami-Dade County, Florida, Public Service Tax Revenue Bonds
(UMSA Public Improvements), 5% due 10/01/2023 (d) 4,986
------------------------------------------------------------------------------------------------------------
Miami-Dade County, Florida, Special Obligation Revenue Bonds,
Sub-Series B (b):
AAA Aaa 15,000 5.66%** due 10/01/2033 2,297
AAA Aaa 10,885 5.66%** due 10/01/2034 1,575
AAA Aaa 16,340 5.61%** due 10/01/2035 2,235
AAA Aaa 5,000 5% due 10/01/2037 4,916
------------------------------------------------------------------------------------------------------------
AAA Aaa 4,000 North Broward, Florida, Hospital District Improvement Revenue
Refunding Bonds, 5.375% due 1/15/2024 (b) 4,091
------------------------------------------------------------------------------------------------------------
AAA Aaa 3,340 Okaloosa County, Florida, Gas District Revenue Refunding Bonds,
Gas Systems, Series A, 5.625% due 10/01/2023 (b) 3,549
------------------------------------------------------------------------------------------------------------
AAA NR* 1,000 Orange County, Florida, HFA, M/F Revenue Bonds (Metro Place
Apartments), AMT, Series A, 5.35% due 10/01/2023 (h) 1,013
------------------------------------------------------------------------------------------------------------
NR* Aaa 10,000 Orange County, Florida, School Board, COP, Refunding Bonds,
Series A, 5.375% due 8/01/2022 (b) 10,264
------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 Orange County, Florida, Tourist Development Tax Revenue
Refunding Bonds, 5.125% due 10/01/2021 (b) 5,031
------------------------------------------------------------------------------------------------------------
AAA Aaa 6,000 Orlando and Orange County Expressway Authority, Florida,
Expressway Revenue Refunding Bonds (Junior Lien),
5% due 7/01/2028 (i) 5,963
------------------------------------------------------------------------------------------------------------
NR* Aaa 1,500 Pinellas County, Florida, HFA, S/F Housing Revenue Bonds,
Multi-County Program, Series A-1, 5.30% due 9/01/2030 (e)(h) 1,516
------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 Port Saint Lucie, Florida, Utility Revenue Refunding and
Improvement Bonds, Series A, 5.125% due 9/01/2027 (b) 5,034
------------------------------------------------------------------------------------------------------------
AAA Aaa 7,095 Saint John's County, Florida, IDA, IDR (Golf Hall of Fame Project),
5.875% due 9/01/2023 (b) 7,631
------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 Sarasota County, Florida, Public Hospital Board, Revenue Refunding
Bonds (Sarasota Memorial Hospital), Series B,
5.25% due 7/01/2024 (b) 5,171
------------------------------------------------------------------------------------------------------------
AAA Aaa 2,750 South Miami, Florida, Health Facilities Authority, Hospital Revenue
Refunding Bonds (Baptist Health System Obligation Group),
5.50% due 10/01/2020 (b) 2,843
------------------------------------------------------------------------------------------------------------
AAA Aaa 10,000 St. Petersburg, Florida, Excise Tax Revenue Refunding Bonds,
5.15% due 10/01/2013 (i) 10,248
------------------------------------------------------------------------------------------------------------
AAA Aaa 1,800 Tampa Bay, Florida, Water Utility System Revenue Refunding Bonds,
Series A, 4.75% due 10/01/2027 (i) 1,719
------------------------------------------------------------------------------------------------------------
AAA Aaa 7,500 Tampa, Florida, Sports Authority Revenue Bonds, Sales Tax Payments
(Stadium Project), 5.25% due 1/01/2027 (b) 7,673
------------------------------------------------------------------------------------------------------------
Tampa, Florida, Utility Tax Improvement Revenue Bonds:
AAA NR* 3,300 5.13%** due 10/01/2016 (c) 1,379
AAA NR* 5,600 5% due 10/01/2019 (d) 5,600
------------------------------------------------------------------------------------------------------------
AAA Aaa 7,250 Tampa-Hillsborough County, Florida, Expressway Authority, Revenue
Refunding Bonds, 5% due 7/01/2027 (c) 7,206
------------------------------------------------------------------------------------------------------------
AAA Aaa 6,875 Village Center Community Development District, Florida, Recreational
Revenue Refunding Bonds, Series A, 5% due 11/01/2021 (b) 6,856
------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 Winter Haven, Florida, Utility System Revenue Refunding and
Improvement Bonds, 4.75% due 10/01/2028 (b) 4,771
------------------------------------------------------------------------------------------------------------
</TABLE>
6 & 7
<PAGE>
MuniHoldings Florida Insured Fund, February 28, 1999
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
====================================================================================================================================
<C> <C> <C> <C> <S> <C>
Illinois--3.2% AAA Aaa $ 6,825 Chicago, Illinois, Water Revenue Refunding Bonds,
5.25% due 11/01/2027 (i) $ 6,891
------------------------------------------------------------------------------------------------------------
A1+ VMIG1+ 1,900 Illinois Health Facilities Authority, Revenue Refunding Bonds
(University of Chicago Hospitals), VRDN, 3.25% due 8/01/2026 (a)(b) 1,900
====================================================================================================================================
Louisiana--1.6% NR* VMIG1+ 4,400 Louisiana State Offshore Term Authority, Deepwater Port Revenue
Refunding Bonds (Loop Inc.), ACES, 1st Stage, 3.20% due 9/01/2006 (a) 4,400
====================================================================================================================================
Nevada--1.8% AAA Aaa 4,900 Nevada State, GO (Municipal Bond Bank Projects 66 & 67), Series A,
5% due 5/15/2028 (i) 4,796
====================================================================================================================================
Texas--0.1% A1+ NR* 400 Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Refunding Bonds (Methodist Hospital), VRDN,
3.25% due 12/01/2025 (a) 400
====================================================================================================================================
Total Investments (Cost--$275,262)--103.4% 281,492
Liabilities in Excess of Other Assets--(3.4%) (9,364)
--------
Net Assets--100.0% $272,128
========
====================================================================================================================================
</TABLE>
(a) The interest rate is subject to change periodically based
upon prevailing market rates. The interest rate shown is
the rate in effect at February 28, 1999.
(b) MBIA Insured.
(c) AMBAC Insured.
(d) FSA Insured.
(e) GNMA Collateralized.
(f) Prerefunded.
(g) The interest rate is subject to change periodically and
inversely based upon prevailing market rates. The interest
rate shown is the rate in effect at February 28, 1999.
(h) FNMA Collateralized.
(i) FGIC Insured.
* Not Rated.
** Represents a zero coupon bond; the interest rate shown is
the effective yield at time of purchase by the Fund.
+ Highest short-term rating by Moody's Investors Service,
Inc.
See Notes to Financial Statements.
================================================================================
Quality Profile
The quality ratings of securities in the Fund as of February 28, 1999 were as
follows:
- --------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
- --------------------------------------------------------------------------------
AAA/Aaa .......................................................... 95.1%
AA/Aa ............................................................ 1.1
A/A .............................................................. 2.1
NR (Not Rated) ................................................... 2.8
Other+ ........................................................... 2.3
- --------------------------------------------------------------------------------
+ Temporary investments in short-term municipal securities.
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<TABLE>
<CAPTION>
As of February 28, 1999
====================================================================================================================================
<C> <S> <C> <C>
Assets: Investments, at value (identified cost--$275,261,803) (Note 1a).......... $281,492,185
Cash..................................................................... 845,749
Interest receivable...................................................... 4,180,057
Prepaid expenses and other assets........................................ 12,233
------------
Total assets............................................................. 286,530,224
------------
====================================================================================================================================
Liabilities: Payables:
Securities purchased................................................... $ 14,177,156
Investment adviser (Note 2)............................................ 106,604
Offering costs (Note 1e)............................................... 54,000
Dividends to shareholders (Note 1f).................................... 30,195 14,367,955
------------
Accrued expenses and other liabilities................................... 34,416
------------
Total liabilities........................................................ 14,402,371
------------
====================================================================================================================================
Net Assets: Net assets............................................................... $272,127,853
============
====================================================================================================================================
Capital: Capital Shares (unlimited number of shares of beneficial interest
authorized) (Note 4):
Preferred Shares, par value $.10 per share (4,190 shares of AMPS*
issued and outstanding at $25,000 per share liquidation preference).. $104,750,000
Common Shares, par value $.10 per share (10,798,052 shares issued and
outstanding) .......................................................... $ 1,079,805
Paid-in capital in excess of par......................................... 159,650,433
Undistributed investment income--net .................................... 1,079,856
Accumulated realized capital losses on investments--net ................. (662,623)
Unrealized appreciation on investments--net ............................. 6,230,382
------------
Total capital-- Equivalent to $15.50 net asset value of Common Share
(market price-- $15.4375) ............................................. 167,377,853
------------
Total capital............................................................ $272,127,853
============
====================================================================================================================================
</TABLE>
* Auction Market Preferred Shares.
See Notes to Financial Statements.
8 & 9
<PAGE>
MuniHoldings Florida Insured Fund, February 28, 1999
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Six Months Ended February 28, 1999
====================================================================================================================================
<C> <S> <C> <C>
Investment Interest and amortization of premium and discount earned........... $ 7,142,799
Income (Note 1d):
====================================================================================================================================
Expenses: Investment advisory fees (Note 2).................................. $ 753,140
Commission fees (Note 4)........................................... 126,858
Accounting services (Note 2)....................................... 48,629
Professional fees.................................................. 35,310
Transfer agent fees................................................ 18,183
Printing and shareholder reports................................... 11,841
Custodian fees..................................................... 10,138
Trustees' fees and expenses........................................ 8,768
Listing fees....................................................... 7,657
Pricing fees....................................................... 5,057
Other.............................................................. 12,531
------------
Total expenses before reimbursement................................ 1,038,112
Reimbursement of expenses (Note 2)................................. (56,711)
------------
Total expenses after reimbursement................................. 981,401
------------
Investment income--net ............................................ 6,161,398
------------
====================================================================================================================================
Realized & Realized gain on investments--net.................................. 1,405,993
Unrealized Change in unrealized appreciation on investments--net.............. (2,374,745)
Gain (Loss) ------------
On Investments Net Increase in Net Assets Resulting from Operations............... $ 5,192,646
- --Net (Notes ============
1b, 1d & 3):
====================================================================================================================================
</TABLE>
See Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six For the Period
Months Ended Sept. 26, 1997
Increase (Decrease) in Net Assets: Feb. 28, 1999 to Aug. 31, 1998
====================================================================================================================================
<C> <S> <C> <C>
Operations: Investment income--net............................................. $ 6,161,398 $ 11,552,061
Realized gain on investments--net.................................. 1,405,993 2,950,478
Change in unrealized appreciation on investments--net.............. (2,374,745) 8,605,127
------------ ------------
Net increase in net assets resulting from operations............... 5,192,646 23,107,666
------------ ------------
====================================================================================================================================
Dividends and Investment income--net:
Distributions to Common Shares ................................................... (5,020,343) (7,624,987)
Shareholders Preferred Shares................................................. (809,613) (3,178,660)
(Note 1f): Realized gain on investments--net:
Common Shares.................................................... (3,648,692) --
Preferred Shares................................................. (1,370,402) --
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders ..................................... (10,849,050) (10,803,647)
------------ ------------
====================================================================================================================================
Beneficial Net proceeds from issuance of Common Shares........................ -- 161,250,000
Interest Proceeds from issuance of Preferred Shares......................... -- 104,750,000
Transactions Value of shares issued to Common Shareholders in reinvestment of
(Notes 1e & 4): dividends and distributions ....................................... 518,200 127,870
Offering costs resulting from the issuance of Common Shares........ -- (340,658)
Offering and underwriting costs resulting from the issuance of
Preferred Shares .................................................. -- (925,179)
------------ ------------
Net increase in net assets derived from beneficial interest
transactions ...................................................... 518,200 264,862,033
------------ ------------
====================================================================================================================================
Net Assets: Total increase (decrease) in net assets............................ (5,138,204) 277,166,052
Beginning of period................................................ 277,266,057 100,005
------------ ------------
End of period*..................................................... $272,127,853 $277,266,057
============ ============
====================================================================================================================================
*Undistributed investment income--net.............................. $ 1,079,856 $ 748,414
============ ============
====================================================================================================================================
</TABLE>
+ Commencement of operations.
See Notes to Financial Statements.
10 & 11
<PAGE>
MuniHoldings Florida Insured Fund, February 28, 1999
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
The following per share data and ratios
have been derived from information provided
in the financial statements. For the Six For the Period
Months Ended Sept. 26, 1997+
Increase (Decrease) in Net Asset Value: Feb. 28, 1999 to Aug. 31, 1998
====================================================================================================================================
<C> <S> <C> <C>
Per Share Net asset value, beginning of period............................... $ 16.03 $ 15.00
Operating --------- ---------
Performance: Investment income--net............................................. .58 1.08
Realized and unrealized gain (loss) on investments--net............ (.09) 1.08
--------- ---------
Total from investment operations................................... .49 2.16
--------- ---------
Less dividends and distributions to Common Shareholders:
Investment income--net........................................... (.47) (.71)
Realized gain on investments--net................................ (.34) --
--------- ---------
Total dividends and distributions to Common Shareholders........... (.81) (.71)
--------- ---------
Capital charge resulting from issuance of Common Shares............ -- (.03)
--------- ---------
Effect of Preferred Share activity:++
Dividends and distributions to Preferred Shareholders:
Investment income--net......................................... (.08) (.30)
Realized gain on investments--net.............................. (.13) --
Capital charge resulting from issuance of Preferred Shares....... -- (.09)
--------- ---------
Total effect of Preferred Share activity........................... (.21) (.39)
--------- ---------
Net asset value, end of period..................................... $ 15.50 $ 16.03
========= =========
Market price per share, end of period.............................. $ 15.4375 $ 14.8125
========= =========
====================================================================================================================================
Total Investment Based on market price per share.................................... 9.68%+++ 3.47%+++
Return:** ========= =========
Based on net asset value per share................................. 1.76%+++ 11.97%+++
========= =========
====================================================================================================================================
Ratios to Average Expenses, net of reimbursement..................................... .72%* .54%*
Net Assets:*** ========= =========
Expenses........................................................... .76%* .75%*
========= =========
Investment income--net............................................. 4.50%* 4.70%*
========= =========
====================================================================================================================================
Supplemental Net assets, net of Preferred Shares, end of period (in thousands).. $ 167,378 $ 172,516
Data: ========= =========
Preferred Shares outstanding, end of period (in thousands)......... $ 104,750 $ 104,750
========= =========
Portfolio turnover................................................. 57.45% 101.89%
========= =========
====================================================================================================================================
Leverage: Asset coverage per $1,000.......................................... $ 2,598 $ 2,647
========= =========
====================================================================================================================================
Dividends Series A--Investment income--net................................... $ 187 $ 753
Per Share on ========= =========
Preferred Shares Series B--Investment income--net................................... $ 199 $ 764
Outstanding: ========= =========
====================================================================================================================================
</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
Shareholders.
+ Commencement of operations.
++ The Fund's Preferred Shares were issued on October
16, 1997.
+++ Aggregate total investment return.
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniHoldings Florida Insured Fund (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. These unaudited financial statements reflect
all adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim period presented. All such adjustments
are of a normal recurring nature. The Fund will determine and make available for
publication the net asset value of its Common Shares on a weekly basis. The
Fund's Common Shares are listed on the New York Stock Exchange under the symbol
MFL. 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 Trustees 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 Trustees.
(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
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
12 & 13
<PAGE>
MuniHoldings Florida Insured Fund, February 28, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
(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 Common and Preferred 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 port folio 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 Shares. For the six months ended
February 28, 1999, FAM earned fees of $753,140, of which $56,711 was voluntarily
waived.
During the period September 26, 1997 to August 31, 1998, Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("MLPF&S"), an affiliate of FAM, received
underwriting fees of $785,625 in connection with the issuance of the Fund's
Preferred Shares.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or trustees of the Fund are officers and/or directors of
FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended February 28, 1999 were $163,443,928 and $155,888,652, respectively.
Net realized gains for the six months ended February 28, 1999 and net unrealized
gains as of February 28, 1999 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains Gains
- --------------------------------------------------------------------------------
Long-term investments..................... $1,405,993 $6,230,382
---------- ----------
Total..................................... $1,405,993 $6,230,382
========== ==========
- --------------------------------------------------------------------------------
As of February 28, 1999, net unrealized appreciation for Federal income tax
purposes aggregated $6,230,382, all of which related to appreciated securities.
The aggregate cost of investments at February 28, 1999 for Federal income tax
purposes was $275,261,803.
4. Beneficial Interest Transactions:
The Fund is authorized to issue an unlimited number of shares of beneficial
interest, including Preferred Shares, par value $.10 per share, all of which
were initially classified as Common Shares. The Board of Trustees is authorized,
however, to reclassify any unissued shares of capital without approval of
holders of Common Shares.
Common Shares
Shares issued and outstanding for the six months ended February 28, 1999,
increased by 33,181 as a result of dividend reinvestment. Shares issued and
outstanding for the period September 26, 1997 to August 31, 1998, increased by
10,750,000 from shares sold and by 8,204 as a result of dividend reinvestment.
Preferred Shares
Auction Market Preferred Shares ("AMPS") are shares of Preferred Shares 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
February 28, 1999 were as follows: Series A, 3.16% and Series B, 3.00%.
Shares issued and outstanding during the six months ended February 28, 1999
remained constant and for the period ended September 26, 1997 to August 31, 1998
increased by 4,190 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 six months ended February 28, 1999, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, an affiliate of FAM, earned $128,369 as
commissions.
5. Subsequent Event:
On March 8, 1999, the Fund's Board of Trustees declared an ordinary income
dividend to Common Shareholders in the amount of $.063233 per share, payable on
March 30, 1999 to shareholders of record as of March 24, 1999.
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 the Fund's Common Shares, 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.
YEAR 2000 ISSUES
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.
14 & 15
<PAGE>
Officers and Trustees
Terry K. Glenn, President and Trustee
Ronald W. Forbes, Trustee
Cynthia A. Montgomery, Trustee
Charles C. Reilly, Trustee
Kevin A. Ryan, Trustee
Richard R. West, Trustee
Arthur Zeikel, Trustee
Vincent R. Giordano, Senior Vice President
Robert A. DiMella, Vice President
Kenneth A. Jacob, Vice President
Robert D. Sneeden, Vice President
Donald C. Burke, Vice President
and Treasurer
Patrick D. Sweeney, Secretary
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agents:
Common Shares:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Shares:
IBJ Whitehall Bank & Trust Company
One State Street
New York, NY 10004
NYSE Symbol
MFL
This report, including the financial information herein, is transmitted to the
shareholders of MuniHoldings Florida Insured Fund 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 Shares by issuing
Preferred Shares to provide the Common Share holders with a potentially higher
rate of return. Leverage creates risks for Common Shareholders, including the
likelihood of greater volatility of net asset value and market price of shares
of the Common Shares, and the risk that fluctuations in the short-term dividend
rates of the Preferred Shares may affect the yield to Common Shareholders.
Statements and other information herein are as dated and are subject to change.
MuniHoldings Florida Insured Fund
Box 9011
Princeton, NJ
08543-9011 #HOLDFL -- 2/99
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