MUNIHOLDINGS
FLORIDA INSURED
FUND
[GRAPHIC]
STRATEGIC
Performance
Semi-Annual Report
February 29, 2000
<PAGE>
MuniHoldings Florida Insured Fund
The Benefits and Risks of Leveraging
MuniHoldings Florida Insured Fund utilizes leveraging 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 Shareholders 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 29, 2000
DEAR SHAREHOLDER
For the six months ended February 29, 2000, the Common Stock of MuniHoldings
Florida Insured Fund earned $0.406 per share income dividends, which included
earned and unpaid dividends of $0.049. This represents a net annualized yield of
6.70%, based on a month-end per share net asset value of $12.56. Over the same
period, the total investment return on the Fund's Common Stock was -6.03%, based
on a change in per share net asset value from $13.84 to $12.56, and assuming
reinvestment of $0.426 per share income dividends.
For the six months ended February 29, 2000, the Fund's Preferred Stock had an
average yield as follows: Series A, 3.62%; Series B, 3.61%; Series C, 3.84%;
Series D, 4.15%; and Series E, 3.03%.
The Municipal Market Environment
Throughout most of the period ended February 29, 2000, US fixed-income interest
rates were under pressure as domestic economic growth remained robust and rising
commodity prices, especially oil, rekindled investor concerns regarding a
reemergence of inflationary pressures. US economic growth, in part intensified
by Year 2000 (Y2K) preparations, grew at a 6.9% rate in the fourth quarter of
1999 and at a 4.4% annual rate for all of 1999.
However, despite these significant growth rates, no price measure indicator has
shown any considerable signs of pressures at either the consumer level or from
labor, 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 August and November 1999 and again in early February 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. In this environment, long-term US Treasury bond yields rose almost
60 basis points (0.60%) by mid-January 2000 to 6.75%, their highest yield level
since June 1997.
However, in late January and early February 2000, the US Treasury announced that
it intended to use present and future surpluses to purchase existing high-coupon
debt, as well as to limit future issuance of longer maturity debt. While
complete details have not been released, we expect the reduced supply of
long-term US Treasury bonds to be significant and easily exceed demand on the
part of the world's financial institutions and governments. US Treasury bond
prices began rising as investors began hoarding what is expected to become a
scarce commodity. While US Treasury yields have remained high through the past
ten years, the yield on 30-year US Treasury bonds fell dramatically, by
declining more than 50 basis points to end the period at 6.14%.
The municipal bond market has also been under pressure throughout the entire
period. By mid-January 2000, yields on long-term, uninsured revenue bonds rose
more than 50 basis points to 6.35%, as measured by the Bond Buyer Revenue Bond
Index. While some states such as California and Maryland have announced that
their present and expected budget surpluses will allow for the cancellation
and/or postponement of expected bond issuance, the municipal bond market has
been unable to match the sort of price improvement that US Treasury bonds have
shown in recent weeks. Municipal bonds yields declined approximately 10 basis
points to 6.24% by February 29, 2000. During the last few months, long-term
tax-exempt bond yields rose more than 40 basis points to their highest level
since August 1995.
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 has enjoyed. The issuance of long-term tax-exempt securities has
dramatically declined. Over the last year, $212 billion in new long-term
municipal securities was issued, a decline of more than 20% compared to the same
period a year earlier. For the three months ended February 29, 2000, less than
$40 billion in new tax-exempt bonds was underwritten, a decline of more than 30%
compared to the February 28, 1999 quarter. Thus far in 2000, total bond issuance
volume is less than $20 billion, a decline of more than 40% compared to the
first two months of 1999.
Despite receiving more than $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 six months, tax-exempt mutual funds have had
net redemptions of approximately $9 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 reduced supply position, tax-exempt issuers
have been forced repeatedly to raise municipal bond yields in an attempt to
attract adequate demand.
However, the recent relative underperformance of the municipal bond market has
resulted in the opportunity for long-term investors to purchase tax-exempt
issues whose yields are in excess of taxable US Treasury securities. At February
29, 2000, long-term uninsured municipal revenue bond yields were 101.5% of
comparable US Treasury securities. In recent months, many taxable asset classes,
such as corporate bonds, mortgage-backed securities, and US Government agency
issues have all accelerated debt issuance. This acceleration occurred largely to
avoid issuing securities at year-end and thereby avoid any associated potential
Y2K problems. However, this increased issuance also resulted in higher yield
levels in the various asset classes as lower bond prices became necessary to
attract sufficient investor demand. Going forward, we believe that the pace of
non-US Government debt is likely to slow significantly. As the supply of this
debt declines, many institutional investors are likely to return to the
municipal bond market and the attractive yield ratios available. Furthermore,
with the potential scarcity of longer maturity debt, the attractiveness of the
US municipal bond market should be further enhanced.
Any significantly lower municipal bond yields are still likely to require weaker
US employment growth and consumer spending. The tightening actions taken in
recent months by the Federal Reserve Board, as well as those expected in March
and perhaps May 2000, should eventually slow US economic growth. The recent
decline in US home sales is 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 an eventual improvement in municipal bond prices.
Portfolio Strategy
During the six months ended February 29, 2000, our investment strategy focused
on seeking to enhance the Fund's level of tax-exempt income. We accomplished
this by selling our deep-discounted bonds and purchasing higher coupon bonds (6%
or higher) whenever they became available in the new-issue market. New-issue
supply was down 5% compared to the same period a year ago. While limited by the
availability of new issues, our strategy allowed us to achieve a high level of
tax-exempt income, while seeking to reduce the volatility of our portfolio.
In Conclusion
On February 7, 2000, the Fund acquired all of the net assets of MuniHoldings
Florida Insured Fund II, MuniHoldings Florida Insured Fund III and MuniHoldings
Florida Insured Fund IV pursuant to a plan of reorganization.
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 D. Sneeden
Robert D. Sneeden
Vice President and Portfolio Manager
March 27, 2000
2 & 3
<PAGE>
MuniHoldings Florida Insured Fund, February 29, 2000
PROXY RESULTS
During the six-month period ended February 29, 2000 MuniHoldings Florida Insured
Fund's Common 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 Voted Shares Voted
For Against Abstain
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization among the Fund,
MuniHoldings Florida Insured Fund II, MuniHoldings Florida Insured
Fund III and MuniHoldings Florida Insured Fund IV. 5,442,686 226,813 128,000
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Voted Shares Withheld
For From Voting
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To elect the Fund's Trustees: Terry K. Glenn 10,285,046 314,221
Ronald W. Forbes 10,290,106 309,161
Cynthia A. Montgomery 10,290,106 309,161
Kevin A. Ryan 10,287,213 312,054
Arthur Zeikel 10,282,946 316,321
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3. To ratify the selection of Deloitte & Touche llp as the Fund's
independent auditors for the current fiscal year. 10,328,032 147,492 123,743
- ------------------------------------------------------------------------------------------------------------------------
During the six-month period ended February 29, 2000, MuniHoldings Florida
Insured Fund's Preferred Shareholders (Series A and B) 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:
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization among the Fund,
MuniHoldings Florida Insured Fund II, MuniHoldings Florida Insured Fund III
and MuniHoldings Florida Insured Fund IV as follows:
Series A 1,876 181 38
Series B 2,045 0 50
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Voted Shares Withheld
For From Voting
- ------------------------------------------------------------------------------------------------------------------------
2. To elect the Fund's Board of Trustees: Terry K. Glenn, Ronald W. Forbes,
Cynthia A. Montgomery, Charles C. Reilly, Kevin A. Ryan, Richard R. West
and Arthur Zeikel as follows:
<S> <C> <C>
Series A 1,647 3
Series B 1,169 0
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
- ------------------------------------------------------------------------------------------------------------------------
3. To ratify the selection of Deloitte & Touche llp as the Fund's independent
auditors for the current fiscal year as follows:
<S> <C> <C>
Series A 1,495 141 14
Series B 1,124 32 13
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
5
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
===============================================================================================================================
<S> <C> <C> <C> <C> <C>
Florida - 98.9% AAA Aaa $ 4,895 Alachua County, Florida, Public Improvement Revenue
Refunding Bonds, 5% due 8/01/2014 (d) $ 4,556
---------------------------------------------------------------------------------------------------------
AAA Aaa 2,500 Broward County, Florida, Airport System Revenue Bonds
(Passenger Facility), Convertible Lien,
Series H-2, 4.75% due 10/01/2023 (c) 2,062
---------------------------------------------------------------------------------------------------------
AAA Aaa 20,300 Charlotte County, Florida, Health Care Facilities Revenue
Refunding Bonds, RIB, 6% due 8/26/2027 (d)(g) 20,108
---------------------------------------------------------------------------------------------------------
AAA NR* 8,000 Charlotte County, Florida, Utility Revenue Refunding Bonds,
5% due 10/01/2023 (i) 6,942
---------------------------------------------------------------------------------------------------------
Clay County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT (e):
NR* Aaa 2,005 6.55% due 3/01/2028 (j) 2,031
NR* Aaa 2,620 (Multi-County Program), 6.375% due 10/01/2026 (h) 2,638
---------------------------------------------------------------------------------------------------------
NR* NR* 4,740 Collier County, Florida, IDA, IDR, Refunding (Southern
States Utilities), AMT, 6.50% due 10/01/2025 4,502
---------------------------------------------------------------------------------------------------------
AAA Aaa 4,875 Dade County, Florida, Aviation Revenue Bonds, Series B,
5.60% due 10/01/2026 (b) 4,650
---------------------------------------------------------------------------------------------------------
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 1,202
NR* NR* 1,445 6.05% due 11/01/2039 1,297
---------------------------------------------------------------------------------------------------------
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 1,175
AAA Aaa 1,700 5.70% due 9/01/2022 1,602
---------------------------------------------------------------------------------------------------------
Dade County, Florida, Water and Sewer System Revenue Bonds (i):
AAA Aaa 22,500 5.25% due 10/01/2021 20,496
AAA Aaa 20,625 5.25% due 10/01/2026 18,456
---------------------------------------------------------------------------------------------------------
AAA Aaa 10,000 Duval County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT,
6.30% due 10/01/2029 (b)(e)(h) 9,989
---------------------------------------------------------------------------------------------------------
Escambia County, Florida, HFA, S/F Mortgage Revenue Refunding
Bonds (Multi-County Program), AMT, Series A:
NR* Aaa 1,425 5.30% due 10/01/2019 (e)(h) 1,294
NR* Aaa 13,445 6.375% due 10/01/2026 (b)(j) 13,578
===============================================================================================================================
</TABLE>
=====================
Portfolio
Abbreviations
=====================
To simplify the listings of MuniHoldings Florida Insured Fund's portfolio
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
DATES Daily Adjustable Tax-Exempt Securities
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
VRDN Variable Rate Demand Notes
<PAGE>
MuniHoldings Florida Insured Fund, February 29, 2000
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
===============================================================================================================================
<S> <C> <C> <C> <C> <C>
Florida AAA Aaa $ 4,000 Escambia County, Florida, Utilities Authority, Utility System
(continued) Revenue Bonds, 5.25% due 1/01/2024 (i) $ 3,608
----------------------------------------------------------------------------------------------------------
AAA Aaa 3,750 Florida HFA, Revenue Bonds (Willow Lake Apartments), AMT,
Series J-1, 5.35% due 7/01/2027 (c) 3,297
----------------------------------------------------------------------------------------------------------
NR* Aaa 17,425 Florida HFA, Revenue Refunding Bonds, AMT, RITR, Series 12,
7.319% due 7/01/2029 (b)(g) 16,373
----------------------------------------------------------------------------------------------------------
AAA Aaa 3,780 Florida HFA, S/F Mortgage Revenue Refunding Bonds, AMT,
Series A, 6.65% due 1/01/2024 (e)(h) 3,867
----------------------------------------------------------------------------------------------------------
Florida Housing Finance Corporation, Homeowner Mortgage
Revenue Refunding Bonds:
AAA Aaa 5,135 AMT, Series 2, 5.35% due 1/01/2021 (b) 4,659
AAA Aaa 5,000 Series 6, 5.75% due 7/01/2017 (d) 5,010
----------------------------------------------------------------------------------------------------------
Florida Municipal Loan Council Revenue Bonds (b):
AAA Aaa 5,665 5% due 4/01/2029 4,821
AAA Aaa 1,250 Series B, 5.75% due 11/01/2013 1,278
AAA Aaa 1,320 Series B, 5.75% due 11/01/2014 1,342
----------------------------------------------------------------------------------------------------------
AAA NR* 3,450 Florida State Board of Education, Capital Outlay, GO, RIB,
Series 190, 7.56% due 1/01/2015 (d)(g) 3,531
----------------------------------------------------------------------------------------------------------
Florida State Board of Education, GO, Public Education,
Capital Outlay, Series B (b):
AAA Aaa 3,000 5.75% due 6/01/2015 (m) 3,017
AAA Aaa 9,000 5.75% due 6/01/2017 9,018
----------------------------------------------------------------------------------------------------------
Florida State Governmental Utility Authority, Utility
Revenue Bonds (c):
NR* Aaa 6,205 (Barefoot Bay Utility System), 5% due 10/01/2029 5,275
NR* Aaa 4,600 (Golden Gate Utility System), 5% due 7/01/2029 3,912
NR* Aaa 5,000 (Poinciana Utility System), 5% due 10/01/2029 4,250
NR* Aaa 1,525 (Sarasota Utility System), 5% due 10/01/2029 1,296
----------------------------------------------------------------------------------------------------------
Florida State Turnpike Authority, Turnpike Revenue Bonds
(Department of Transportation), Series A (i):
AAA Aaa 11,250 5% due 7/01/2021 9,868
AAA Aaa 13,350 4.50% due 7/01/2027 10,463
AAA Aaa 25,000 6.25% due 7/01/2029 25,944
----------------------------------------------------------------------------------------------------------
AAA Aaa 3,575 Florida State Turnpike Authority, Turnpike Revenue
Refunding Bonds (Department of Transportation),
Series A, 5.25% due 7/01/2012 (i) 3,533
----------------------------------------------------------------------------------------------------------
AAA Aaa 1,500 Fort Myers, Florida, Improvement Revenue Refunding Bonds,
Series A, 5% due 12/01/2022 (c) 1,307
----------------------------------------------------------------------------------------------------------
AAA Aaa 3,825 Hillsborough County, Florida, Capital Improvement Revenue
Bonds (Warehouse and Sheriffs Facilities Project), 5% due
7/01/2028 (d) 3,262
----------------------------------------------------------------------------------------------------------
AAA Aaa 1,090 Hillsborough County, Florida, Court Facilities Revenue
Bonds, 5.40% due 5/01/2030 (c) 996
----------------------------------------------------------------------------------------------------------
AAA Aaa 27,000 Hillsborough County, Florida, School Board, COP, 6% due 7/01/2025 (b) 27,204
----------------------------------------------------------------------------------------------------------
Hillsborough County, Florida, School Board, COP, Refunding
(Master Lease Program), Series A (b):
AAA Aaa 25,730 5.375% due 7/01/2021 23,836
AAA Aaa 5,000 5.25% due 7/01/2022 4,507
AAA Aaa 2,500 5% due 7/01/2023 2,157
----------------------------------------------------------------------------------------------------------
NR* Aaa 2,705 Hillsborough County, Florida, Utility Revenue Refunding
Bonds, 6.20% due 12/01/2008 (l) 2,806
----------------------------------------------------------------------------------------------------------
NR* Aaa 2,415 Homestead, Florida, Water and Wastewater Revenue Refunding
Bonds, 5.25% due 10/01/2027 (c) 2,156
----------------------------------------------------------------------------------------------------------
NR* Aaa 10,000 Indian Trace, Community Development District, Florida, Water
Management, Special Benefit Assessment, 5% due 5/01/2027 (b) 8,558
----------------------------------------------------------------------------------------------------------
AAA Aaa 6,000 Jacksonville, Florida, Capital Improvement Revenue
Refunding Bonds (Stadium Project), 4.75% due 10/01/2025 (c) 4,930
----------------------------------------------------------------------------------------------------------
AAA NR* 12,990 Jacksonville, Florida, HFA, Hospital Revenue Refunding
Bonds, RIB, Series 49, 5.985% due 8/15/2027 (b)(g) 9,501
----------------------------------------------------------------------------------------------------------
AAA Aaa 9,900 Jacksonville, Florida, Health Facilities Authority, Hospital
Revenue Bonds (Charity Obligation Group), Series C, 5.375%
due 8/15/2029 (b) 8,936
----------------------------------------------------------------------------------------------------------
AAA Aaa 4,875 Jacksonville, Florida, Port Authority, Airport Revenue
Bonds, AMT, Series A, 6.25% due 10/01/2024 (i) 4,930
----------------------------------------------------------------------------------------------------------
AAA Aaa 7,390 Jacksonville, Florida, Sales Tax Revenue Refunding Bonds
(River City Renaissance Project), 5.125% due 10/01/2018 (i) 6,733
----------------------------------------------------------------------------------------------------------
AAA Aaa 1,900 Jupiter Island, Florida, Utility System Revenue Bonds
(South Martin Regional Utility), 5% due 10/01/2018 (b) 1,700
----------------------------------------------------------------------------------------------------------
AAA Aaa 4,850 Lake County, Florida, School Board, COP, 5% due 7/01/2023 (b) 4,185
----------------------------------------------------------------------------------------------------------
AAA Aaa 6,350 Lakeland, Florida, Electric and Water Revenue Refunding
Bonds, Series A, 5% due 10/01/2028 (b) 5,411
----------------------------------------------------------------------------------------------------------
NR* Aaa 970 Lee County, Florida, Housing Finance Authority, S/F Mortgage
Revenue Refunding Bonds, AMT, Series A-2, 6.30% due
3/01/2029 (e)(h)(k) 994
----------------------------------------------------------------------------------------------------------
Leon County, Florida, School Board, COP, Master Lease Program (b):
AAA Aaa 2,460 5.125% due 7/01/2017 2,250
AAA Aaa 1,000 5.125% due 7/01/2022 887
----------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Manatee County, Florida, School Board, COP, 6.125% due
7/01/2006 (b)(f) 1,071
----------------------------------------------------------------------------------------------------------
AAA Aaa 2,065 Martin County, Florida, Health Facilities Authority, Hospital
Revenue Bonds (Martin Memorial Medical Center Project),
Series A, 5.375% due 11/15/2024 (b) 1,887
----------------------------------------------------------------------------------------------------------
A1+ VMIG1+ 1,600 Martin County, Florida, PCR, Refunding (Florida Power and Light
Co. Project), VRDN, 3.80% due 9/01/2024 (a) 1,600
----------------------------------------------------------------------------------------------------------
AAA Aaa 7,250 Miami Beach, Florida, Parking Revenue Bonds, 5.125% due
9/01/2022 (d) 6,439
----------------------------------------------------------------------------------------------------------
AAA Aaa 17,425 Miami-Dade County, Florida, Educational Facilities Authority
Revenue Bonds, Series A, 6% due 4/01/2023 (c) 17,603
----------------------------------------------------------------------------------------------------------
AAA Aaa 15,780 Miami-Dade County, Florida, Expressway Authority, Toll System
Revenue Bonds, 6.375% due 7/01/2029 (i) 16,538
----------------------------------------------------------------------------------------------------------
NR* Aaa 6,705 Miami-Dade County, Florida, GO (Parks Program), 6% due 11/01/2024 (i) 6,766
----------------------------------------------------------------------------------------------------------
AAA Aaa 5,100 Miami-Dade County, Florida, IDA, IDR (Airis Miami II LLC Project),
AMT, 6% due 10/15/2019 (c) 5,107
----------------------------------------------------------------------------------------------------------
AAA Aaa 3,000 Miami-Dade County, Florida, Professional Sports Franchise Facility
Tax Revenue Refunding Bonds, 5% due 10/01/2023 (b) 2,603
----------------------------------------------------------------------------------------------------------
NR* Aaa 14,000 Miami-Dade County, Florida, Public Service Tax Revenue Bonds
(UMSA Public Improvements), 5% due 10/01/2023 (d) 12,149
----------------------------------------------------------------------------------------------------------
AAA Aaa 7,900 Miami-Dade County, Florida, School Board, COP, Refunding, Series C,
5% due 8/01/2025 (d) 6,757
----------------------------------------------------------------------------------------------------------
AAA Aaa 17,270 Miami-Dade County, Florida, Water and Sewer Revenue Bonds,
Series A, 5% due 10/01/2029 (i) 14,681
----------------------------------------------------------------------------------------------------------
NR* Aaa 8,750 Mirimar, Florida, Wastewater Improvement Assessment Revenue
Refunding Bonds, 5% due 10/01/2025 (b) 7,531
----------------------------------------------------------------------------------------------------------
AAA Aaa 4,000 North Broward, Florida, Hospital District Improvement Revenue
Refunding Bonds, 5.375% due 1/15/2024 (b) 3,661
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6 & 7
<PAGE>
MuniHoldings Florida Insured Fund, February 29, 2000
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
===============================================================================================================================
<S> <C> <C> <C> <C> <C>
Florida AAA Aaa $ 2,850 North Port, Florida, Utility Revenue Refunding Bonds, 5%
(concluded) due 10/01/2018 (i) $ 2,551
---------------------------------------------------------------------------------------------------------
AAA Aaa 1,750 North Springs, Florida, Improvement District, Water
Management, GO, Refunding, 5% due 5/01/2019 (b) 1,558
---------------------------------------------------------------------------------------------------------
AAA Aaa 2,950 Okeechobee, Florida, Utility Authority, Utility System Revenue
Refunding Bonds, Capital Improvements, 5% due 10/01/2019 (d) 2,622
---------------------------------------------------------------------------------------------------------
NR* Aaa 2,375 Orange County, Florida, HFA, M/F Housing Revenue Bonds,
Series A, 6.40% due 1/01/2031 (b) 2,420
---------------------------------------------------------------------------------------------------------
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) 880
---------------------------------------------------------------------------------------------------------
AAA Aaa 3,115 Orange County, Florida, Health Facilities Authority, Mortgage
Revenue Bonds (South Central Nursing Homes), Series A, 5.50%
due 7/01/2032 (d) 2,858
---------------------------------------------------------------------------------------------------------
NR* Aaa 7,650 Orange County, Florida, School Board, COP, Refunding Bonds,
Series A, 5.375% due 8/01/2022 (b) 7,056
---------------------------------------------------------------------------------------------------------
NR* Aaa 9,620 Orange County, Florida, School Board, COP, Series A, 5% due
8/01/2024 (b) 8,263
---------------------------------------------------------------------------------------------------------
Orange County, Florida, Tourist Development Tax Revenue
Refunding Bonds (b):
AAA Aaa 7,000 5% due 10/01/2017 6,323
AAA Aaa 15,585 5.125% due 10/01/2021 13,911
---------------------------------------------------------------------------------------------------------
Orlando and Orange County, Florida, Expressway Authority,
Expressway Revenue Refunding Bonds:
AAA Aaa 18,400 Junior Lien, 5% due 7/01/2021 (i) 16,140
AAA Aaa 10,000 Junior Lien, 5% due 7/01/2028 (i) 8,528
AAA Aaa 1,825 Senior Lien, 5.25% due 7/01/2012 (c) 1,796
---------------------------------------------------------------------------------------------------------
Osceola County, Florida, Sales Tax Revenue Bonds (d):
NR* Aaa 8,500 5% due 4/01/2019 7,568
NR* Aaa 3,000 5% due 4/01/2024 2,596
---------------------------------------------------------------------------------------------------------
AAA Aaa 3,750 Palm Bay, Florida, Utility Systems Capital Improvement
Revenue Bonds, 5% due 10/01/2028 (b) 3,195
---------------------------------------------------------------------------------------------------------
Palm Beach County, Florida, GO (Liquid Acquisition
Program), Series B (b):
AAA Aaa 4,655 5.75% due 8/01/2016 4,687
AAA Aaa 5,330 5.75% due 8/01/2018 5,324
---------------------------------------------------------------------------------------------------------
AAA Aaa 12,000 Palm Beach County, Florida, School Board, COP, Series A,
6.25% due 8/01/2025 (i) 12,426
---------------------------------------------------------------------------------------------------------
AAA NR* 1,000 Pasco County, Florida, Solid Waste Disposal and Resource Recovery
System Revenue Refunding Bonds, AMT, 6% due 4/01/2010 (c) 1,037
---------------------------------------------------------------------------------------------------------
Peace River/Manasota, Florida, Regional Water Supply Authority,
Revenue Refunding Bonds (Peace River Option Project), Series A (b):
AAA NR* 2,620 5.20% due 10/01/2018 2,400
AAA NR* 2,500 5% due 10/01/2028 2,130
---------------------------------------------------------------------------------------------------------
AAA NR* 5,920 Pinellas County, Florida, HFA, S/F Mortgage Revenue Bonds
(Multi-County Program), AMT, Series A, 6.70% due 2/01/2028 (e)(h) 6,047
---------------------------------------------------------------------------------------------------------
A1+ VMIG1+ 300 Pinellas County, Florida, Health Facilities Authority, Revenue
Refunding Bonds (Pooled Hospital Loan Program), DATES, 3.80%
due 12/01/2015 (a)(c) 300
---------------------------------------------------------------------------------------------------------
AAA Aaa 2,535 Pinellas County, Florida, Sewer Revenue Refunding Bonds, 5%
due 10/01/2024 (i) 2,191
---------------------------------------------------------------------------------------------------------
AAA Aaa 3,500 Polk County, Florida, School Board, COP, Series A, 5% due
1/01/2024 (d) 3,011
---------------------------------------------------------------------------------------------------------
NR* Aaa 4,055 Port Saint Lucie County, Florida, School Board, COP, 6.25%
due 7/01/2024 (d) 4,201
---------------------------------------------------------------------------------------------------------
AAA Aaa 4,250 Port Saint Lucie, Florida, Utility Revenue Refunding and Improvement
Bonds, Series A, 5.125% due 9/01/2027 (b) 3,709
---------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 Port Saint Lucie, Florida, West Services District, Utility Revenue
Refunding Bonds, Senior Lien, 6% due 10/01/2022 (b) 2,010
---------------------------------------------------------------------------------------------------------
AAA Aaa 7,095 Saint John's County, Florida, IDA, IDR (Golf Hall of Fame
Project), 5.875% due 9/01/2023 (b) 7,073
---------------------------------------------------------------------------------------------------------
AAA Aaa 3,750 Saint John's County, Florida, Sales Tax Revenue Refunding
Bonds, 5% due 10/01/2019 (i) 3,333
---------------------------------------------------------------------------------------------------------
AAA Aaa 800 Saint John's River Management District, Florida, Land Acquisition
Revenue Refunding Bonds, 5.125% due 7/01/2016 (d) 738
---------------------------------------------------------------------------------------------------------
NR* Aaa 9,205 Saint Petersburg, Florida, Public Utilities Revenue Bonds,
Series A, 5% due 10/01/2028 (d) 7,844
---------------------------------------------------------------------------------------------------------
AAA Aaa 9,000 Sarasota County, Florida, Public Hospital Board, Revenue Refunding
Bonds (Sarasota Memorial Hospital), Series B, 5.50% due 7/01/2028 (b) 8,419
---------------------------------------------------------------------------------------------------------
AAA Aaa 5,390 Seminole County, Florida, School Board, COP, Series A, 5%
due 7/01/2023 (b) 4,651
---------------------------------------------------------------------------------------------------------
Sunrise, Florida, Utility System Revenue Refunding Bonds (c):
AAA Aaa 6,000 5.20% due 10/01/2022 5,424
AAA Aaa 27,295 5% due 10/01/2028 23,461
---------------------------------------------------------------------------------------------------------
AAA Aaa 9,500 Sunrise Lakes, Florida, Phase 4 Recreation District, Refunding
Bonds, GO, 5.25% due 8/01/2024 (c) 8,559
---------------------------------------------------------------------------------------------------------
AAA Aaa 2,140 Tallahassee, Florida, Energy System Revenue Refunding
Bonds, Series A, 5% due 10/01/2028 (d) 1,823
---------------------------------------------------------------------------------------------------------
AAA Aaa 20,500 Tampa Bay, Florida, Water Utility System Revenue Bonds, 6%
due 10/01/2024 (i) 20,686
---------------------------------------------------------------------------------------------------------
AAA Aaa 18,850 Tampa, Florida, Sports Authority Revenue Bonds (Local Option
Sales Tax--Stadium Project), 5.25% due 1/01/2027 (b) 16,859
---------------------------------------------------------------------------------------------------------
AAA Aaa 7,500 Tampa, Florida, Sports Authority Revenue Bonds, Sales Tax Payments
(Stadium Project), 5.25% due 1/01/2027 (b) 6,708
---------------------------------------------------------------------------------------------------------
AAA NR* 5,600 Tampa, Florida, Utility Tax Improvement Revenue Bonds, 5%
due 10/01/2019 (d) 4,977
---------------------------------------------------------------------------------------------------------
Tampa-Hillsborough County, Florida, Expressway Authority, Revenue
Refunding Bonds (c):
AAA Aaa 3,115 5.125% due 7/01/2019 2,805
AAA Aaa 9,000 5% due 7/01/2027 7,699
---------------------------------------------------------------------------------------------------------
AAA Aaa 3,000 Volusia County, Florida, Educational Facility Authority, Educational
Facilities Revenue Bonds (Stetson University Inc. Project),
5.25% due 6/01/2029 (c) 2,669
================================================================================================================================
Georgia - 1.2% AAA Aaa 9,000 Georgia Municipal Electric Authority, Power Revenue Refunding Bonds,
Series EE, 6.40% due 1/01/2023 (c) 9,174
================================================================================================================================
Illinois - 0.2% A1 VMIG1+ 1,700 Illinois Health Facilities Authority, Revenue Refunding Bonds
(University of Chicago Hospitals), VRDN, 3.85% due 8/01/2026 (a)(b) 1,700
================================================================================================================================
Louisiana - 0.1% NR* VMIG1+ 600 Louisiana State Offshore Terminal Authority, Deepwater Port Revenue
Refunding Bonds (First Stage A-Loop Inc.), ACES, 3.80% due
9/01/2006 (a) 600
================================================================================================================================
Minnesota - 0.2% A1+ NR* 1,500 Beltrami County, Minnesota, Environmental Control Revenue Refunding
Bonds (Northwood Panelboard Co. Project), VRDN, 3.80% due
12/01/2021 (a) 1,500
================================================================================================================================
Pennsylvania - 0.1% A1+ VMIG1+ 400 Geisinger Authority, Pennsylvania, Health System Revenue Refunding
Bonds (Penn State--Geisinger Health), VRDN, Series B, 3.80%
due 8/15/2028 (a) 400
================================================================================================================================
</TABLE>
8 & 9
<PAGE>
MuniHoldings Florida Insured Fund, February 29, 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>
Puerto Rico - 1.3% AAA Aaa $ 1,000 Puerto Rico Commonwealth, GO, 4.875% due 7/01/2023 (b) $ 856
---------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Puerto Rico Commonwealth, Infrastructure Financing Authority,
Special Revenue Bonds, Series A, 5% due 7/01/2021 (c) 885
---------------------------------------------------------------------------------------------------------
AAA Aaa 3,410 Puerto Rico Public Buildings Authority, Guaranteed Public Education
and Health Facilities Revenue Refunding Bonds, 5.70% due
7/01/2016 (b) 3,419
---------------------------------------------------------------------------------------------------------
AAA Aaa 5,500 Puerto Rico Public Buildings Authority, Guaranteed Revenue Bonds
(Government Facilities), Series B, 5% due 7/01/2027 (c) 4,749
================================================================================================================================
Tennessee - 0.4% AAA Aaa 2,800 Metropolitan Government of Nashville and Davidson County, Tennessee,
Water and Sewer Revenue Refunding Bonds, 6.50% due 1/01/2009 (i) 3,045
================================================================================================================================
Texas - 1.7% A1+ NR* 5,900 Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Refunding Bonds (Methodist Hospital), VRDN,
3.80% due 12/01/2025 (a) 5,900
---------------------------------------------------------------------------------------------------------
AAA VMIG1+ 6,800 Sabine River Authority, Texas, PCR, Refunding (Texas Utilities
Electric Company Project), VRDN, Series A, 3.85% due
3/01/2026 (a)(c) 6,800
================================================================================================================================
Total Investments (Cost - $817,854) - 104.1% 783,073
Variation Margin on Financial Futures Contracts** - (0.1%) (500)
Liabilities in Excess of Other Assets - (4.0%) (30,137)
---------
Net Assets - 100.0% $ 752,436
=========
</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
29, 2000.
(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 29, 2000.
(h) FNMA Collateralized.
(i) FGIC Insured.
(j) FHA Insured.
(k) FHMLC Collateralized.
(l) Escrowed to maturity.
(m) All or a portion of security held as collateral in connection with open
financial futures contracts.
* Not Rated.
** Financial futures contracts sold as of February 29, 2000 were as follows:
- --------------------------------------------------------------------------------
(in Thousands)
- --------------------------------------------------------------------------------
Number of Expiration
Contracts Issue Date Value
- --------------------------------------------------------------------------------
800 US Treasury Bonds June 2000 $75,750
- --------------------------------------------------------------------------------
Total Financial Futures Contracts Sold
(Total Contract Price - $75,316) $75,750
=======
- --------------------------------------------------------------------------------
+ Highest short-term rating by Moody's Investors Service, Inc.
10
<PAGE>
11
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
================================================================================
<TABLE>
<CAPTION>
As of February 29, 2000
====================================================================================================================================
<S> <C> <C> <C>
Assets: Investments, at value (identified cost - $817,854,262) ........................ $783,073,386
Cash .......................................................................... 74,194
Receivables:
Interest $ 11,810,820
Securities sold ............................................................. 2,220,955 14,031,775
-------------
Prepaid expenses and other assets ............................................. 12,045
------------
Total assets .................................................................. 797,191,400
------------
====================================================================================================================================
Liabilities: Payables:
Securities purchased ........................................................ 42,881,409
Variation margin ............................................................ 500,000
Dividends to shareholders ................................................... 469,853
Reorganization costs ........................................................ 467,867
Investment adviser .......................................................... 221,583
Offering costs .............................................................. 13,976 44,554,688
-------------
Accrued expenses and other liabilities ........................................ 200,967
------------
Total liabilities ............................................................. 44,755,655
------------
====================================================================================================================================
Net Assets: Net assets .................................................................... $752,435,745
============
====================================================================================================================================
Capital: Capital Shares (unlimited number of shares authorized):
Preferred Shares, par value $.10 per share (13,130 shares of AMPS* issued
and outstanding at $25,000 per share liquidation preference) ................ $328,250,000
Common Shares, par value $.10 per share (33,780,979 shares issued and
outstanding)................................................................. $ 3,378,098
Paid-in capital in excess of par .............................................. 516,672,900
Undistributed investment income - net ......................................... 1,619,704
Accumulated realized capital losses on investments - net ...................... (62,269,706)
Unrealized depreciation on investments - net .................................. (35,215,251)
-------------
Total capital - Equivalent to $12.56 net asset value of Common Share (market
price - $11.625) ............................................................ 424,185,745
------------
Total capital ................................................................. $752,435,745
============
====================================================================================================================================
</TABLE>
* Auction Market Preferred Shares.
See Notes to Financial Statements.
<PAGE>
MuniHoldings Florida Insured Fund, February 29, 2000
STATEMENT OF OPERATIONS
================================================================================
<TABLE>
<CAPTION>
For the Six Months Ended February 29, 2000
=================================================================================================================================
<S> <C> <C> <C>
Investment Interest and amortization of premium and discount earned ....................... $ 8,883,785
Income:
=================================================================================================================================
Expenses: Investment advisory fees ....................................................... $ 847,719
Reorganization expenses ........................................................ 467,867
Commission fees ................................................................ 195,127
Accounting services ............................................................ 37,163
Professional fees .............................................................. 28,033
Transfer agent fees ............................................................ 27,723
Printing and shareholder reports ............................................... 18,101
Custodian fees ................................................................. 13,267
Listing fees ................................................................... 7,931
Trustees' fees and expenses .................................................... 6,636
Pricing fees ................................................................... 4,803
Other .......................................................................... 10,674
-------------
Total expenses before reimbursement ............................................ 1,665,044
Reimbursement of expenses ...................................................... (89,040)
-------------
Total expenses after reimbursement ............................................. 1,576,004
------------
Investment income--net ......................................................... 7,307,781
------------
=================================================================================================================================
Realized & Realized loss on investments--net .............................................. (14,888,718)
Unrealized Gain Change in unrealized depreciation on investments--net .......................... 7,695,321
(Loss) On ------------
Investments - Net Increase in Net Assets Resulting from Operations ........................... $ 114,384
Net: ============
=================================================================================================================================
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
13
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: Feb. 29, 2000 Aug. 31, 1999
====================================================================================================================================
<S> <C> <C> <C>
Operations: Investment income--net ........................................................ $ 7,307,781 $ 12,319,438
Realized loss on investments--net ............................................. (14,888,718) (1,856,838)
Change in unrealized appreciation/depreciation on investments--net ............ 7,695,321 (17,298,513)
------------- -------------
Net increase (decrease) in net assets resulting from operations ............... 114,384 (6,835,913)
------------- -------------
====================================================================================================================================
Dividends & Investment income--net:
Distributions to Common Shares ............................................................... (4,596,083) (9,261,991)
Shareholders: Preferred Shares ............................................................ (2,375,304) (2,522,551)
Realized gain on investments--net:
Common Shares ............................................................... -- (795,035)
Preferred Shares ............................................................ -- (298,605)
In excess of realized gain on investments--net:
Common Shares ............................................................... -- (2,853,657)
Preferred Shares ............................................................ -- (1,071,797)
------------- -------------
Net decrease in net assets resulting from dividends and distributions to
shareholders................................................................. (6,971,387) (16,803,636)
------------- -------------
====================================================================================================================================
Capital Share Proceeds from issuance of Common Shares resulting from reorganization ......... 281,648,040 --
Transactions: Proceeds from issuance of Preferred Shares resulting from reorganization ...... 223,500,000 --
Value of shares issued to Common Shareholders in reinvestment of dividends and
distributions............................................................... -- 518,200
------------- -------------
Net increase in net assets derived from capital share transactions ............ 505,148,040 518,200
------------- -------------
====================================================================================================================================
Net Assets: Total increase (decrease) in net assets ....................................... 498,291,037 (23,121,349)
Beginning of period ........................................................... 254,144,708 277,266,057
------------- -------------
End of period* ................................................................ $ 752,435,745 $ 254,144,708
============= =============
====================================================================================================================================
* Undistributed investment income - net ....................................... $ 1,619,704 $ 1,283,310
============= =============
====================================================================================================================================
</TABLE>
See Notes to Financial Statements.
<PAGE>
MuniHoldings Florida Insured Fund, February 29, 2000
FINANCIAL HIGHLIGHTS
================================================================================
The following per share data and ratios have been derived from information
provided in the financial statements.
<TABLE>
<CAPTION>
For the Six For the For the Period
Months Ended Year Ended Sept. 26, 1997+
Increase (Decrease) in Net Asset Value: Feb. 29, 2000 Aug. 31, 1999 to Aug. 31, 1998
====================================================================================================================================
<S> <C> <C> <C>
Per Share Net asset value, beginning of period ............................. $ 13.84 $ 16.03 $ 15.00
Operating --------- --------- ---------
Performance: Investment income--net ........................................... .53 1.14 1.08
Realized and unrealized gain (loss) on investments - net ......... (1.21) (1.77) 1.08
--------- --------- ---------
Total from investment operations ................................. (.68) (.63) 2.16
--------- --------- ---------
Less dividends and distributions to Common Shareholders:
Investment income--net ......................................... (.43) (.86) (.71)
Realized gain on investments--net .............................. -- (.07) --
In excess of realized gain on investments--net ................. -- (.27) --
--------- --------- ---------
Total dividends and distributions to Common Shareholders ......... (.43) (1.20) (.71)
--------- --------- ---------
Capital charge resulting from issuance of Common Shares .......... -- -- (.03)
--------- --------- ---------
Effect of Preferred Share activity:++
Dividends and distributions to Preferred Shareholders:
Investment income--net ....................................... (.17) (.23) (.30)
Realized gain on investments - net ........................... -- (.03) --
In excess of realized gain on investments--net ............... -- (.10) --
Capital charge resulting from issuance of Preferred Shares ..... -- -- (.09)
--------- --------- ---------
Total effect of Preferred Share activity ......................... (.17) (.36) (.39)
--------- --------- ---------
Net asset value, end of period ................................... $ 12.56 $ 13.84 $ 16.03
========= ========= =========
Market price per share, end of period ............................ $ 11.625 $ 12.75 $ 14.8125
========= ========= =========
====================================================================================================================================
Total Based on market price per share .................................. (5.59%)++ (6.80%) 3.47%++
Investment ========= ========= =========
Return:** Based on net asset value per share ............................... (6.03%)++ (6.51%) 11.97%++
========= ========= =========
====================================================================================================================================
Ratios Based Total expenses, net of reimbursement and excluding reorganization
on Average expenses*** .................................................... 1.26%* 1.18% .87%*
Net Assets ========= ========= =========
Of Common Total expenses, excluding reorganization expenses*** ............. 1.36%* 1.26% 1.20%*
Shares: ========= ========= =========
Total expenses*** ................................................ 1.52%* 1.26% 1.20%*
========= ========= =========
Total investment income--net*** .................................. 8.69%* 7.34% 7.51%*
========= ========= =========
Amount of dividends to Preferred Shareholders .................... 2.70%* 1.50% 2.07%*
========= ========= =========
Investment income--net, to Common Shareholders ................... 5.99%* 5.84% 5.44%*
========= ========= =========
====================================================================================================================================
Ratios Based on Total expenses, net of reimbursement and excluding reorganization
Total Average expenses ....................................................... .72%* .73% .54%*
Net ========= ========= =========
Assets:+++*** Total expenses, excluding reorganization expenses ................ .78%* .77% .75%*
========= ========= =========
Total expenses ................................................... .87%* .77% .75%*
========= ========= =========
Total investment income - net .................................... 4.95%* 4.51% 4.70%*
========= ========= =========
====================================================================================================================================
Ratios Based Dividends to Preferred Shareholders .............................. 3.58%* 2.39% 3.47%*
on Average ========= ========= =========
Net Assets
Of Preferred
Shares:
====================================================================================================================================
Supplemental Net assets, net of Preferred Shares, end of period (in thousands) . $ 424,186 $ 149,395 $ 172,516
Data: ========= ========= =========
Preferred Shares outstanding, end of period (in thousands) ........ $ 328,250 $ 104,750 $ 104,750
========= ========= =========
Portfolio turnover ................................................ 61.46% 120.70% 101.89%
========= ========= =========
====================================================================================================================================
Leverage: Asset coverage per $1,000 ......................................... $ 2,292 $ 2,426 $ 2,647
========= ========= =========
====================================================================================================================================
Dividends Per Series A--Investment income - net ................................. $ 451 $ 606 $ 753
Share On ========= ========= =========
Preferred Series B--Investment income - net ................................. $ 450 $ 598 $ 764
Shares ========= ========= =========
Outstanding: Series C--Investment income - net ................................. $ 58 -- --
========= ========= =========
Series D--Investment income - net ................................. $ 63 -- --
========= ========= =========
Series E--Investment income - net ................................. $ 46 -- --
========= ========= =========
====================================================================================================================================
</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.
*** Do not reflect the effect of dividends to Preferred Shareholders.
+ Commencement of operations.
++ The Fund's Preferred Shares were issued on October 16, 1997 (Series A and
Series B) and February 7, 2000 (Series C, Series D and Series E).
+++ Includes Common and Preferred Shares average net assets.
@@ Aggregate total investment return.
See notes to financial statments
14 & 15
<PAGE>
MuniHoldings Florida Insured Fund, February 29, 2000
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 (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. Distribution of capital gains are recorded on the
ex-dividend dates.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML &
Co."), which is the limited partner.
FAM is responsible for the management of the Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. For such services, the Fund pays a monthly fee at
an annual rate of .55% of the Fund's average weekly net assets, including
proceeds from the issuance of Preferred Shares. For the six months ended
February 29, 2000, FAM earned fees of $847,719, of which $89,040 was voluntarily
waived.
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 29, 2000 were $233,962,695 and $192,404,092, respectively.
Net realized losses for the six months ended February 29, 2000 and net
unrealized losses as of February 29, 2000 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Losses Losses
- --------------------------------------------------------------------------------
Long-term investments $(13,682,999) $(34,780,876)
Financial futures contracts (1,205,719) (434,375)
------------ ------------
Total $(14,888,718) $(35,215,251)
============ ============
- --------------------------------------------------------------------------------
As of February 29, 2000, net unrealized depreciation for Federal income tax
purposes aggregated $34,780,876, of which $1,565,734 related to appreciated
securities and $36,346,610 related to depreciated securities. The aggregate cost
of investments at February 29, 2000 for Federal income tax purposes was
$817,854,262.
4. Capital Share 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 29, 2000,
increased by 22,982,927 as a result of issuance of Common Shares from
reorganization. Shares issued and outstanding for the year ended August 31,
1999, increased by 33,181 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 29, 2000 were as follows: Series A, 3.75%, Series B, 3.75%, Series C,
3.95%, Series D, 3.85% and Series E, 3.75%.
Shares issued and outstanding during the six months ended February 29, 2000,
increased by 8,940 as a result of issuance of Preferred Shares from
reorganization. Shares issued and outstanding for the year ended August 31, 1999
remained constant.
16 & 17
<PAGE>
MuniHoldings Florida Insured Fund, February 29, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
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 six months ended February 29, 2000, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, an affiliate of FAM, earned $78,845 as commissions.
5. Acquisition of Other FAM-Managed Investment Companies: On February 7, 2000,
the Fund acquired all of the net assets of MuniHoldings Florida Insured Fund II,
MuniHoldings Florida Insured Fund III and MuniHoldings Florida Insured Fund IV
pursuant to a plan of reorganization. The acquisition was accomplished by a
tax-free exchange of the following capital shares:
- --------------------------------------------------------------------------------
Common AMPS
Shares Exchanged Exchanged
- --------------------------------------------------------------------------------
MuniHoldings Florida Insured
Fund II 8,840,687 3,440
MuniHoldings Florida Insured
Fund III 6,181,830 2,160
MuniHoldings Florida Insured
Fund IV 9,126,034 3,340
- --------------------------------------------------------------------------------
In exchange for these shares, the Fund issued 22,982,927 Common Shares and 8,940
AMPS. As of that date, net assets of the acquired funds, including unrealized
depreciation and accumulated net realized capital losses, were as follows:
- --------------------------------------------------------------------------------
Accumulated
Net Unrealized Net Realized
Assets Depreciation Capital Losses
- --------------------------------------------------------------------------------
MuniHoldings Florida
Insured Fund II $191,524,093 $(15,673,718) $(10,332,909)
MuniHoldings Florida
Insured Fund III 125,485,059 (7,454,639) (13,000,880)
MuniHoldings Florida
Insured Fund IV 188,138,887 (11,088,829) (20,121,745)
- --------------------------------------------------------------------------------
The aggregate net assets of the Fund immediately after the acquisition amounted
to $742,224,491.
6. Subsequent Event:
On March 7, 2000, the Fund's Board of Trustees declared an ordinary income
dividend to Common Shareholders in the amount of $.048993 per share, payable on
March 30, 2000 to shareholders of record as of March 17, 2000.
IMPORTANT TAX INFORMATION
On February 7, 2000, MuniHoldings Florida Insured Fund II, MuniHoldings Florida
Insured Fund III and MuniHoldings Florida Insured Fund IV (the "Funds") merged
into MuniHoldings Florida Insured Fund.
All of the net investment income distributions paid by the Funds during their
taxable periods ended February 7, 2000 qualify as tax-exempt interest dividends
for Federal income tax purposes. Additionally, there were no capital gains
distributions paid by the Funds during the period.
Please retain this information for your records.
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 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.
QUALITY PROFILE
The quality ratings of securities in the Fund as of February 29, 2000 were as
follows:
- --------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
- --------------------------------------------------------------------------------
AAA/Aaa 100.6%
NR (Not Rated) 1.0
Other+ 2.5
- --------------------------------------------------------------------------------
+ Temporary investments in short-term municipal securities.
18 & 19
<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
William E. Zitelli, 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:
The Bank of New York
100 Church Street
New York, NY 10286
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 Shareholders 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-2/00
[RECYCLE LOGO] Printed on post-consumer recycled paper
