MUNIHOLDINGS
FLORIDA INSURED
FUND
[GRAPHIC OMITTED]
STRATEGIC
Performance
Annual Report
August 31, 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 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, August 31, 1999
DEAR SHAREHOLDER
For the year ended August 31, 1999, the Common Shares of MuniHoldings Florida
Insured Fund earned $0.858 per share income dividends, which included earned and
unpaid dividends of $0.069. This represents a net annualized yield of 6.20%,
based on a month-end per share net asset value of $13.84. Over the same period,
the total investment return on the Fund's Common Shares was -6.51%, based on a
change in per share net asset value from $16.03 to $13.84, and assuming
reinvestment of $1.167 per share ordinary income dividends and $0.030 per share
capital gains distributions.
For the six months ended August 31, 1999, the total investment return on the
Fund's Common Shares was -8.13%, based on a change in per share net asset value
from $15.50 to $13.84, and assuming reinvestment of $0.393 per share income
dividends.
For the six months ended August 31, 1999, the Fund's Preferred Shares had an
average yield of 3.27% for Series A and 3.11% for Series B.
The Municipal Market Environment
During the six months ended August 31, 1999, long-term bond yields rose
significantly. Steady US economic growth combined with improvement in foreign
economies and inflation concerns put upward pressure on bond yields throughout
the period. Continued strong US employment growth, particularly the decline in
the US unemployment rate to 4.2% in early June, was among the reasons the
Federal Reserve Board cited for raising short-term interest rates in late June
and again in late August. US Treasury bond yields reacted by climbing above
6.25% by mid-August before improving somewhat to 6.06% by August 31, 1999.
During the last six months, yields on long-term US Treasury securities increased
approximately 50 basis points (0.50%).
Long-term tax-exempt bond yields also rose during the last six months. Until
early May, the municipal bond market had been able to withstand much of the
upward pressure on bond yields. However, investor concerns regarding ongoing US
economic strength and the fear of additional moves by the Federal Reserve Board
eventually pushed municipal bond yields higher throughout June, July and August.
During the period, yields on long-term tax-exempt revenue bonds rose almost 55
basis points to 5.83%, as measured by the Bond Buyer Revenue Bond Index.
While the tax-exempt market has slightly underperformed its taxable counterpart
in recent months, technical conditions are helping to support municipal bond
prices. During the last six months, more than $115 billion in long-term
municipal bonds was underwritten, a decrease of more than 20% compared to the
same period a year ago. During the past three months, almost $60 billion in
municipal bonds was underwritten. This quarterly issuance represents a decline
of approximately 20% compared to the same three-month period in 1998.
Recently, the supply of new municipal bonds slowed even further. Total issuance
in August 1999 of $14 billion was nearly 40% lower than August 1998 levels.
Additionally, in June and July, investors received more than $40 billion in
coupon income and proceeds from bond maturities and early bond redemptions.
These proceeds have generated significant retail investor interest, easily
absorbing the recent diminished supply.
The recent relative underperformance of the municipal bond market has generated
very attractive tax-exempt bond yield ratios, similar to those that were
available at the end of 1998. In December 1998, long-term, uninsured municipal
bond yields were higher than those of their taxable counterparts. Historically,
long-term tax-exempt bond yields have been approximately 82%-85% of long-term US
Treasury bond yields. Municipal bond yields rose at a faster rate in recent
months than US Treasury bond yields, causing the yield ratio to increase. At May
31, 1999, long-term municipal bond yields were approximately 92% of their
taxable counterparts. At August 31, 1999, long-term uninsured tax-exempt bond
yields were approximately 96% of US Treasury bonds. Current ratios, while lower
than those available at the end of 1998, still represent historically attractive
levels.
Looking ahead, it appears to us that long-term municipal bond yields will trade
in a relatively tight range near current levels. Strong US economic performance
is being balanced by nearly negligible inflation readings, as well as
improvements in productivity in both manufacturing and service industries. We
believe that future moves by the Federal Reserve Board have largely been
discounted by bond investors and are to a great extent reflected in present bond
yields.
Any improvement in bond prices is likely to be contingent upon weakening in both
US employment growth and consumer spending. The 100 basis point rise in US
Treasury bond yields seen thus far this year is likely to negatively affect US
economic growth. The US housing market will be among the first sectors likely to
be affected, as some declines have already been evidenced because of higher
mortgage rates. We believe it is also unrealistic to expect double-digit returns
in US equity markets to continue indefinitely. Much of the US consumer's wealth
is tied to recent stock market appreciation. Any slowing in these incredible
growth rates is likely to reduce consumer spending. We believe that these
factors suggest that the worst of the recent increase in bond yields has passed
and stable, if not slightly improving, bond prices may be expected.
Portfolio Strategy
We began the six-month period ended August 31, 1999 neutral on the interest rate
outlook. We looked to reduce our exposure to the long-term end of the municipal
yield curve in favor of municipal bonds in the 20-year sector as the yield
differential started to narrow considerably. This strategy worked well as
interest rates increased into early May. At this time, we adopted a more
constructive strategy, taking advantage of the higher yields available in the
tax-exempt market. However, this move proved to be premature since the
tax-exempt bond market came under additional pressure through the end of August,
negatively affecting Fund performance.
Looking ahead, we expect to maintain our constructive investment strategy.
Tax-exempt yields are approximately 96% of Treasury securities, well above their
historical average of 82%-85%, providing attractive buying opportunities.
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 D. Sneeden
Robert D. Sneeden
Vice President and
Portfolio Manager
October 1, 1999
2 & 3
<PAGE>
MuniHoldings Florida Insured Fund, August 31, 1999
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Colorado--0.6% A1+ VMIG1+ $ 1,400 Moffat County, Colorado, PCR, Refunding
(Pacificorp Projects), VRDN, 2.75%
due 5/01/2013 (a)(c) $ 1,400
====================================================================================================================================
Florida--83.6% AAA Aaa 1,500 Brevard County, Florida, School Board COP, Series
B, 5.50% due 7/01/2021 (c) 1,475
---------------------------------------------------------------------------------------------------------
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 785
AAA Aaa 1,250 5.70% due 11/01/2029 1,227
---------------------------------------------------------------------------------------------------------
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) 1,649
---------------------------------------------------------------------------------------------------------
AAA Aaa 2,500 Cocoa, Florida, Water and Sewer Revenue Improvement
Bonds, 5.75% due 10/01/2007 (f)(i) 2,687
---------------------------------------------------------------------------------------------------------
NR* NR* 4,440 Collier County, Florida, IDA, IDR, Refunding
(Southern States Utilities), AMT, 6.50% due 10/01/2025 4,514
---------------------------------------------------------------------------------------------------------
Dade County, Florida, Aviation Revenue Bonds
(Miami International Airport) (d):
AAA Aaa 2,000 AMT, Series B, 5.125% due 10/01/2022 1,836
AAA Aaa 6,000 Series C, 5.125% due 10/01/2027 5,551
---------------------------------------------------------------------------------------------------------
AAA Aaa 6,500 Dade County, Florida, Aviation Revenue Bonds,
Series B, 5.60% due 10/01/2026 (b) 6,473
---------------------------------------------------------------------------------------------------------
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 1,342
NR* NR* 1,445 6.05% due 11/01/2039 1,463
---------------------------------------------------------------------------------------------------------
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 1,230
AAA Aaa 1,700 5.70% due 9/01/2022 1,679
AAA Aaa 1,890 5.75% due 9/01/2029 1,856
---------------------------------------------------------------------------------------------------------
Dade County, Florida, Water and Sewer System Revenue
Bonds (i):
AAA Aaa 1,885 5.375% due 10/01/2016 1,867
AAA Aaa 10,125 5.25% due 10/01/2026 9,580
---------------------------------------------------------------------------------------------------------
NR* Aaa 2,300 Duval County, Florida, HFA, S/F Mortgage Revenue
Refunding Bonds, AMT, 5.30% due 4/01/2031 (e)(h)(j) 2,088
---------------------------------------------------------------------------------------------------------
Escambia County, Florida, HFA, S/F Mortgage Revenue
Refunding Bonds (Multi-County Program), AMT (e)(h):
NR* Aaa 2,780 5.20% due 4/01/2032 (b) 2,475
NR* Aaa 4,000 Series A, 5.35% due 4/01/2031 3,639
NR* Aaa 2,360 Series C, 5.80% due 10/01/2019 2,332
---------------------------------------------------------------------------------------------------------
AAA Aaa 4,000 Escambia County, Florida, Utilities Authority,
Utility System Revenue Bonds, 5.25% due 1/01/2024 (i) 3,795
---------------------------------------------------------------------------------------------------------
AAA Aaa 1,675 Florida HFA, Revenue Bonds (Mar Lago Village Apartments
Project), AMT, Series F, 5.90% due 12/01/2027 (c) 1,677
---------------------------------------------------------------------------------------------------------
NR* Aaa 10,930 Florida HFA, Revenue Refunding Bonds, RITR, AMT, Series
12, 8.07% due 7/01/2029 (b)(g) 11,122
---------------------------------------------------------------------------------------------------------
AAA Aaa 2,610 Florida Housing Finance Corporation, Homeowner Mortgage
Revenue Refunding Bonds, Series 1, 5.10% due 7/01/2013 (b) 2,468
---------------------------------------------------------------------------------------------------------
NR* Aaa 3,500 Florida Housing Finance Corporation, Housing Revenue
Bonds (Hampton Court Apartments), AMT, Series D-1, 5.55%
due 9/01/2025 (h) 3,406
---------------------------------------------------------------------------------------------------------
NR* Aaa 1,000 Florida State Governmental Utility Authority, Utility
Revenue Bonds (Golden Gate Utility System), 5% due
7/01/2029 (c) 900
---------------------------------------------------------------------------------------------------------
AAA Aaa 1,900 Florida State Mid-Bay Bridge Authority Revenue Bonds,
Series A, 5.45%** due 10/01/2023 (c) 467
---------------------------------------------------------------------------------------------------------
AAA Aaa 1,500 Fort Myers, Florida, Improvement Revenue Refunding Bonds,
Series A, 5% due 12/01/2022 (c) 1,373
---------------------------------------------------------------------------------------------------------
AAA Aaa 6,200 Hillsborough County, Florida, Aviation Authority, Revenue
Refunding Bonds (Tampa International Airport), Series B,
5.125% due 10/01/2017 (c) 5,895
---------------------------------------------------------------------------------------------------------
AAA Aaa 3,000 Hillsborough County, Florida, Port District Special
Revenue Refunding Bonds (Tampa Port Authority), AMT, 6%
due 6/01/2020 (d) 3,042
---------------------------------------------------------------------------------------------------------
NR* Aaa 11,015 Hillsborough County, Florida, School Board, COP, RITR,
Series 31, 7.07% due 7/01/2021 (b)(g) 10,285
---------------------------------------------------------------------------------------------------------
AAA Aaa 2,500 Hillsborough County, Florida, School Board, COP, Revenue
Refunding Bonds (Master Lease Program), Series A, 5% due
7/01/2023 (b) 2,276
---------------------------------------------------------------------------------------------------------
NR* Aaa 2,415 Homestead, Florida, Water and Wastewater Revenue
Refunding Bonds, 5.25% due 10/01/2027 (c) 2,283
---------------------------------------------------------------------------------------------------------
AAA NR* 5,000 Jacksonville, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Charity Obligation Group), Series
C, 5.375% due 8/15/2029 (b) 4,788
---------------------------------------------------------------------------------------------------------
NR* VMIG1+ 200 Jacksonville, Florida, Health Facilities Authority,
Hospital Revenue Refunding Bonds (Genesis Rehabilitation
Hospital), VRDN, 3.20% due 5/01/2021 (a) 200
---------------------------------------------------------------------------------------------------------
AA- A1 2,000 Lakeland, Florida, Electric and Water Revenue Bonds, 5.50%
due 10/01/2006 (f) 2,128
---------------------------------------------------------------------------------------------------------
Lakeland, Florida, Electric and Water Revenue Refunding
Bonds, Series A (b):
AAA Aaa 3,000 5% due 10/01/2018 2,807
AAA Aaa 4,650 5% due 10/01/2028 4,190
---------------------------------------------------------------------------------------------------------
AAA Aaa 2,500 Lee County, Florida, Water and Sewer Revenue Bonds, Series
A, 5% due 10/01/2029 (c) 2,249
---------------------------------------------------------------------------------------------------------
Leon County, Florida, School Board COP, Master Lease
Program (b):
AAA Aaa 2,460 5.125% due 7/01/2017 2,353
AAA Aaa 1,000 5.125% due 7/01/2022 931
---------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Manatee County, Florida, School Board COP, 6.125% due
7/01/2006 (b)(f) 1,101
---------------------------------------------------------------------------------------------------------
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) 3,521
---------------------------------------------------------------------------------------------------------
AAA Aaa 3,000 Miami-Dade County, Florida, Professional Sports
Franchise Facility Revenue Refunding Bonds, 5% due
10/01/2023 (b) 2,734
---------------------------------------------------------------------------------------------------------
</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.
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
PCR Pollution Control Revenue Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
VRDN Variable Rate Demand Notes
4 & 5
<PAGE>
MuniHoldings Florida Insured Fund, August 31, 1999
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Florida NR* Aaa $ 4,000 Miami-Dade County, Florida, Public Service Tax Revenue
(concluded) Bonds (UMSA Public Improvements), 5% due 10/01/2023 (d) $ 3,645
---------------------------------------------------------------------------------------------------------
Miami-Dade County, Florida, School Board, COP, Refunding:
AAA Aaa 1,000 Series A, 5% due 8/01/2026 (c) 903
AAA Aaa 2,000 Series C, 5% due 8/01/2025 (d) 1,809
---------------------------------------------------------------------------------------------------------
AAA Aaa 3,940 Miami-Dade County, Florida, Water and Sewer Revenue
Bonds, Series A, 5% due 10/01/2029 (i) 3,545
---------------------------------------------------------------------------------------------------------
NR* Aaa 5,750 Mirimar, Florida, Wastewater Improvement Assessment
Revenue Refunding Bonds, 5% due 10/01/2025 (b) 5,207
---------------------------------------------------------------------------------------------------------
AAA Aaa 4,000 North Broward, Florida, Hospital District Improvement
Revenue Refunding Bonds, 5.375% due 1/15/2024 (b) 3,845
---------------------------------------------------------------------------------------------------------
AAA Aaa 3,340 Okaloosa County, Florida, Gas District Revenue Refunding
Bonds, Gas Systems, Series A, 5.625% due 10/01/2023 (b) 3,341
---------------------------------------------------------------------------------------------------------
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) 951
---------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Orange County, Florida, Health Facilities Authority,
Mortgage Revenue Bonds (South Central Nursing), Series A,
5.40% due 7/01/2019 (d) 962
---------------------------------------------------------------------------------------------------------
NR* Aaa 10,000 Orange County, Florida, School Board, COP, Refunding
Bonds, Series A, 5.375% due 8/01/2022 (b) 9,698
---------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 Orange County, Florida, Tourist Development Tax Revenue
Refunding Bonds, 5.125% due 10/01/2021 (b) 4,670
---------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 Orlando and Orange County Expressway Authority, Florida,
Expressway Revenue Refunding Bonds, Junior Lien, 5% due
7/01/2028 (i) 4,520
---------------------------------------------------------------------------------------------------------
NR* Aaa 3,500 Osceola County, Florida, Sales Tax Revenue Bonds, 5%
due 4/01/2019 (d) 3,256
---------------------------------------------------------------------------------------------------------
NR* Aaa 1,600 Pinellas County, Florida, HFA, S/F Housing Revenue Bonds
(Multi-County Program), AMT, Series A-1, 5.30% due
9/01/2030 (e)(h) 1,454
---------------------------------------------------------------------------------------------------------
AAA Aaa 7,095 Saint John's County, Florida, IDA, IDR (Golf Hall of Fame
Project), 5.875% due 9/01/2023 (b) 7,201
---------------------------------------------------------------------------------------------------------
A1+ VMIG1+ 1,000 Saint Lucie County, Florida, PCR, Refunding (Florida Power
and Light Company Project), VRDN, 3.20% due 3/01/2027 (a) 1,000
---------------------------------------------------------------------------------------------------------
AAA Aaa 3,000 Saint Petersburg, Florida, Excise Tax Revenue Refunding
Bonds, 5.15% due 10/01/2013 (i) 2,953
---------------------------------------------------------------------------------------------------------
NR* Aaa 5,000 Saint Petersburg, Florida, Public Utilities Revenue Bonds,
Series A, 5% due 10/01/2028 (d) 4,505
---------------------------------------------------------------------------------------------------------
AAA Aaa 3,500 Sarasota County, Florida, Public Hospital Board, Revenue
Refunding Bonds (Sarasota Memorial Hospital), Series B,
5.25% due 7/01/2024 (b) 3,292
---------------------------------------------------------------------------------------------------------
AAA Aaa 8,000 Sunrise, Florida, Utility Systems Revenue Refunding Bonds,
5% due 10/01/2028 (c) 7,219
---------------------------------------------------------------------------------------------------------
AAA Aaa 7,250 Tampa-Hillsborough County, Florida, Expressway Authority
Revenue Refunding Bonds, 5% due 7/01/2027 (c) 6,602
====================================================================================================================================
Illinois--1.8% AAA Aaa 5,000 Chicago, Illinois, Water Revenue Refunding Bonds, 5.25%
due 11/01/2027 (i) 4,601
====================================================================================================================================
Massachusetts--3.3% AAA Aaa 4,800 Massachusetts State Turnpike Authority, Metropolitan
Highway System, Revenue Refunding Bonds, Sub-Series B,
5.25% due 1/01/2029 (b) 4,442
---------------------------------------------------------------------------------------------------------
AAA Aaa 4,500 Massachusetts State Water Resource Authority, Revenue
Refunding Bonds, Series D, 5% due 8/01/2024 (b) 4,034
====================================================================================================================================
New York--1.6% A1+ VMIG1+ 2,500 Long Island Power Authority, New York, Electric System
Revenue Bonds, VRDN, Sub-Series 7, 3.15% due
4/01/2025 (a)(b) 2,500
---------------------------------------------------------------------------------------------------------
A1+ VMIG1+ 1,600 New York State Thruway Authority, General Revenue Bonds,
VRDN, 3.10% due 1/01/2024 (a)(i) 1,600
====================================================================================================================================
North Carolina--0.3% A1+ NR* 700 Raleigh Durham, North Carolina, Airport Authority,
Special Facility Revenue Refunding Bonds (American
Airlines Inc.), VRDN, Series B, 3.20% due 11/01/2015 (a) 700
====================================================================================================================================
Texas--5.8% A1+ NR* 200 Harris County, Texas, Health Facilities Development
Corporation, Hospital Revenue Refunding Bonds (Methodist
Hospital), VRDN, 3.20% due 12/01/2025 (a) 200
---------------------------------------------------------------------------------------------------------
AAA Aaa 9,600 Houston, Texas, Water and Sewer System, Revenue Refunding
Bonds, Junior Lien, Series A, 5.25% due 12/01/2025 (i) 8,965
---------------------------------------------------------------------------------------------------------
AAA Aaa 4,000 Matagorda County, Texas, Navigation District Number 1,
Revenue Refunding Bonds (Reliant Energy Inc.), Series A,
5.25% due 6/01/2026 (c) 3,682
---------------------------------------------------------------------------------------------------------
AAA Aaa 2,120 North Harris, Texas, Montgomery Community College
District, GO, 5.25% due 2/15/2025 (c) 1,979
====================================================================================================================================
Total Investments (Cost--$255,113)--97.0% 246,420
Other Assets Less Liabilities--3.0% 7,725
--------
Net Assets--100.0% $254,145
========
====================================================================================================================================
</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 August 31,
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 August 31, 1999.
(h) FNMA Collateralized.
(i) FGIC Insured.
(j) FHA Insured.
* Not Rated.
** Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase by the Fund.
+ Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
================================================================================
Quality Profile
The quality ratings of securities in the Fund as of August 31, 1999 were as
follows:
- --------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
- --------------------------------------------------------------------------------
AAA/Aaa .................................................. 90.3%
AA/Aa .................................................... 0.8
NR (Not Rated) ........................................... 2.9
Other+ ................................................... 3.0
- --------------------------------------------------------------------------------
+ Temporary investments in short-term municipal securities.
6 & 7
<PAGE>
MuniHoldings Florida Insured Fund, August 31, 1999
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<TABLE>
<CAPTION>
As of June 30, 1999
====================================================================================================================================
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$255,113,434) (Note 1a) ................. $246,420,048
Cash ............................................................................ 92,922
Receivables:
Securities sold ............................................................... $ 4,516,611
Interest ...................................................................... 4,260,754 8,777,365
------------
Prepaid expenses and other assets ............................................... 12,045
------------
Total assets .................................................................... 255,302,380
------------
====================================================================================================================================
Liabilities: Payables:
Securities purchased .......................................................... 832,089
Investment adviser (Note 2) ................................................... 105,700
Dividends to shareholders (Note 1f) ........................................... 90,800
Offering costs (Note 1e) ...................................................... 52,060 1,080,649
------------
Accrued expenses and other liabilities .......................................... 77,023
------------
Total liabilities ............................................................... 1,157,672
------------
====================================================================================================================================
Net Assets: Net assets ...................................................................... $254,144,708
============
====================================================================================================================================
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 ............................................ 1,283,310
Accumulated distribution in excess of realized capital gains on
investments--net (Note 1f) .................................................... (3,925,454)
Unrealized depreciation on investments--net ..................................... (8,693,386)
------------
Total capital--Equivalent to $13.84 net asset value of Common Share
(market price--$12.75) ........................................................ 149,394,708
------------
Total capital ................................................................... $254,144,708
============
====================================================================================================================================
</TABLE>
* Auction Market Preferred Shares.
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended August 31, 1999
====================================================================================================================================
<S> <C> <C> <C>
Investment Interest and amortization of premium and discount earned ........................ $ 14,307,432
Income
(Note 1d):
====================================================================================================================================
Expenses: Investment advisory fees (Note 2) ............................................... $ 1,503,913
Commission fees (Note 4) ........................................................ 265,667
Accounting services (Note 2) .................................................... 84,433
Professional fees ............................................................... 68,994
Transfer agent fees ............................................................. 44,542
Listing fees .................................................................... 35,804
Printing and shareholder reports ................................................ 22,277
Custodian fees .................................................................. 21,557
Trustees' fees and expenses ..................................................... 18,438
Pricing fees .................................................................... 11,136
Other ........................................................................... 39,689
------------
Total expenses before reimbursement ............................................. 2,116,450
Reimbursement of expenses (Note 2) .............................................. (128,456)
------------
Total expenses after reimbursement .............................................. 1,987,994
------------
Investment income--net .......................................................... 12,319,438
------------
====================================================================================================================================
Realized & Realized loss on investments--net ............................................... (1,856,838)
Unrealized Gain Change in unrealized appreciation/depreciation on investments--net .............. (17,298,513)
(Loss) On ------------
Investments-- Net Decrease in Net Assets Resulting from Operations ............................ $ (6,835,913)
Net (Notes 1b, ============
1d & 3):
====================================================================================================================================
</TABLE>
See Notes to Financial Statements.
8 & 9
<PAGE>
MuniHoldings Florida Insured Fund, August 31, 1999
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the For the Period
Year Ended Sept. 26, 1997+
Increase (Decrease) in Net Assets: Aug. 31, 1999 to Aug. 31, 1998
==============================================================================================================================
<S> <C> <C> <C>
Operations: Investment income--net .................................................... $ 12,319,438 $ 11,552,061
Realized gain (loss) on investments--net .................................. (1,856,838) 2,950,478
Change in unrealized appreciation/depreciation on investments--net ........ (17,298,513) 8,605,127
------------ ------------
Net increase (decrease) in net assets resulting from operations ........... (6,835,913) 23,107,666
------------ ------------
==============================================================================================================================
Dividends & Investment income--net:
Distributions to Common Shares ........................................................... (9,261,991) (7,624,987)
Shareholders Preferred Shares ........................................................ (2,522,551) (3,178,660)
(Note 1f): 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 ......................................................... (16,803,636) (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 ................................... (23,121,349) 277,166,052
Beginning of period ....................................................... 277,266,057 100,005
------------ ------------
End of period* ............................................................ $254,144,708 $277,266,057
============ ============
==============================================================================================================================
* Undistributed investment income--net ...................................... $ 1,283,310 $ 748,414
============ ============
==============================================================================================================================
</TABLE>
+ Commencement of operations.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. For the For the Period
Year Ended Sept. 26, 1997+
Increase (Decrease) in Net Asset Value: Aug. 31, 1999 to Aug. 31, 1998
==============================================================================================================================
<S> <C> <C> <C>
Per Share Net asset value, beginning of period ...................................... $ 16.03 $ 15.00
Operating ------------ ------------
Performance: Investment income--net .................................................... 1.14 1.08
Realized and unrealized gain (loss) on investments--net ................... (1.77) 1.08
------------ ------------
Total from investment operations .......................................... (.63) 2.16
------------ ------------
Less dividends and distributions to Common Shareholders:
Investment income--net .................................................. (.86) (.71)
Realized gain on investments--net ....................................... (.07) --
In excess of realized gain on investments--net .......................... (.27) --
------------ ------------
Total dividends and distributions to Common Shareholders .................. (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 ................................................ (.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 .................................. (.36) (.39)
------------ ------------
Net asset value, end of period ............................................ $ 13.84 $ 16.03
============ ============
Market price per share, end of period ..................................... $ 12.75 $ 14.8125
============ ============
==============================================================================================================================
Total Investment Based on market price per share ........................................... (6.80%) 3.47%++++
Return:** ============ ============
Based on net asset value per share ........................................ (6.51%) 11.97%++++
============ ============
==============================================================================================================================
Ratios Based Expenses, net of reimbursement*** ......................................... 1.18% .87%*
on Average ============ ============
Net Assets Total expenses*** ......................................................... 1.26% 1.20%*
Of Common ============ ============
Shares: Total investment income--net*** ........................................... 7.34% 7.51%*
============ ============
Amount of dividends to Preferred Shareholders ............................. 1.50% 2.07%*
============ ============
Investment income--net, to Common Shareholders ............................ 5.84% 5.44%*
============ ============
==============================================================================================================================
Ratios Based on Total expenses, net of reimbursement ...................................... .73% .54%*
Average Net ============ ============
Assets:+++*** Total expenses ............................................................ .77% .75%*
============ ============
Total investment income--net .............................................. 4.51% 4.70%*
============ ============
==============================================================================================================================
Ratios Based on Dividends to Preferred Shareholders ....................................... 2.39% 3.47%*
Average Net ============ ============
Assets Of
Preferred
Shares:
==============================================================================================================================
Supplemental Net assets, net of Preferred Shares, end of period (in thousands) ......... $ 149,395 $ 172,516
Data: ============ ============
Preferred Shares outstanding, end of period (in thousands) ................ $ 104,750 $ 104,750
============ ============
Portfolio turnover ..................................................... 120.70% 101.89%
============ ============
==============================================================================================================================
Leverage: Asset coverage per $1,000 ................................................. $ 2,426 $ 2,647
============ ============
==============================================================================================================================
Dividends Per Series A--Investment income--net .......................................... $ 606 $ 753
Share on ============ ============
Preferred Series B--Investment income--net .......................................... $ 598 $ 764
Shares ============ ============
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
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.
+++ Includes Common and Preferred Shares average net assets.
++++ Aggregate total investment return.
See Notes to Financial Statements.
10 & 11
<PAGE>
MuniHoldings Florida Insured Fund, August 31, 1999
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-diversi-fied, closed-end management
investment company. The Fund's financial statements are prepared in accordance
with generally accepted accounting principles, which may require the use of
management accruals and estimates. The Fund 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. Distributions of capital gains are recorded on the
ex-dividend dates. Distributions in excess of realized capital gains are due
primarily to differing tax treatments for futures transactions and post-October
losses.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML &
Co."), which is the limited partner.
FAM is responsible for the management of the Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. For such services, the Fund pays a monthly fee at
an annual rate of .55% of the Fund's average weekly net assets, including
proceeds from the issuance of Preferred Shares. For the year ended August 31,
1999, FAM earned fees of $1,503,913, of which $128,456 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
year ended August 31, 1999 were $318,153,717 and $327,516,355, respectively.
Net realized gains (losses) for the year ended August 31, 1999 and net
unrealized losses as of August 31, 1999 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains (Losses) Losses
- --------------------------------------------------------------------------------
Long-term investments ...................... $(2,812,221) $(8,693,386)
Financial futures contracts ................ 955,383 --
----------- -----------
Total ...................................... $(1,856,838) $(8,693,386)
=========== ===========
- --------------------------------------------------------------------------------
As of August 31, 1999, net unrealized depreciation for Federal income tax
purposes aggregated $8,981,200, of which $518,771 related to appreciated
securities and $9,499,971 related to depreciated securities. The aggregate cost
of investments at August 31, 1999 for Federal income tax purposes was
$255,401,248.
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 year ended August 31, 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
August 31, 1999 were as follows: Series A, 3.26% and Series B, 3.20%.
Shares issued and outstanding during the year ended August 31, 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 .25% to .375%, calculated on the proceeds of each
auction. For the year ended August 31, 1999, MLPF&S, earned $188,808 as
commissions.
5. Reorganization Plan:
On September 9, 1999, the Fund's Board of Trustees approved a plan of
reorganization whereby the Fund would acquire substantially all of the assets
and liabilities of MuniHoldings Florida Insured Fund II, MuniHoldings Florida
Insured Fund III and MuniHoldings Florida Insured Fund IV in exchange for newly
issued shares of the Fund. The plan of reorganization is subject to shareholder
approval. MuniHoldings Florida Insured Fund II, MuniHoldings Florida Insured
Fund III and MuniHoldings Florida Insured Fund IV are registered,
non-diversified, closed-end management investment companies. All four entities
have a similar investment objective and are managed by FAM.
6. Subsequent Event:
On September 8, 1999, the Fund's Board of Trustees declared an ordinary income
dividend to Common Shareholders in the amount of $.068882 per share, payable on
September 29, 1999 to shareholders of record as of September 22, 1999.
12 & 13
<PAGE>
MuniHoldings Florida Insured Fund, August 31, 1999
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders
MuniHoldings Florida Insured Fund:
We have audited the accompanying statement of assets, liabilities and capital,
including the schedule of investments, of MuniHoldings Florida Insured Fund as
of August 31, 1999, the related statements of operations for the year then ended
and changes in net assets and the financial highlights for the year then ended
and for the period September 26, 1997 (commencement of operations) to August 31,
1998. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at August
31, 1999 by correspondence with the custodian and broker. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights present
fairly, in all material respects, the financial position of MuniHoldings Florida
Insured Fund as of August 31, 1999, the results of its operations, the changes
in its net assets, and the financial highlights for the respective stated
periods in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
October 7, 1999
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by MuniHoldings Florida
Insured Fund during its taxable period ended August 31, 1999 qualify as
tax-exempt interest dividends for Federal income tax purposes.
Additionally, the following table summarizes the per share taxable distributions
paid by the Fund during the year:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Payable Ordinary Long-Term
Date Income Capital Gains*
- -----------------------------------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
Common Shareholders 12/30/98 $.308621 $.030200
- -----------------------------------------------------------------------------------------------------------------------
Preferred Shareholders: Series A 10/14/98 $ 17.86 $ --
10/21/98 $ 27.97 $ --
10/28/98 $ 25.97 $ --
11/04/98 $ 24.60 $ --
11/12/98 $ 28.13 $ --
11/18/98 $ 19.50 $ 3.24
11/25/98 $ 21.99 $ 3.66
12/02/98 $ 21.03 $ 3.52
12/09/98 $ 21.01 $ 3.53
12/16/98 $ 20.33 $ 3.42
12/23/98 $ 24.04 $ 4.07
12/30/98 $ 20.22 $ 3.47
01/06/99 $ 20.18 $ 3.50
01/13/99 $ 2.43 $ 0.48
---------------------------------------------------------------------------
Series B 10/13/98 $ 29.93 $ --
10/19/98 $ 22.12 $ --
10/26/98 $ 28.58 $ --
11/02/98 $ 25.00 $ --
11/09/98 $ 25.00 $ --
11/16/98 $ 21.24 $ 3.61
11/23/98 $ 20.96 $ 3.58
11/30/98 $ 20.28 $ 3.47
12/07/98 $ 20.26 $ 3.48
12/14/98 $ 16.82 $ 2.90
12/21/98 $ 20.20 $ 3.48
12/28/98 $ 20.17 $ 3.52
01/04/99 $ 19.52 $ 3.44
01/11/99 $ 10.49 $ 1.93
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
* The entire distribution is subject to the 20% tax rate.
Please retain this information for your records.
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 undistrib uted 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
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:
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 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--8/99
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