MUNIHOLDINGS
FLORIDA INSURED
FUND V
FUND LOGO
Annual Report
May 31, 2000
MuniHoldings Florida Insured Fund V seeks to provide shareholders
with current income exempt from Federal income tax and the
opportunity to own shares whose value is exempt from Florida
intangible personal property tax by investing primarily in a
portfolio of long-term, investment-grade municipal obligations the
interest on which, in the opinion of bond counsel to the issuer, is
exempt from Federal income tax and which enable shares of the Fund
to be exempt from Florida intangible personal property tax.
This report, including the financial information herein, is
transmitted to shareholders of MuniHoldings Florida Insured Fund V
for their information. It is not a prospectus. Past performance
results shown in this report should not be considered a
representation of future performance. The Fund has leveraged 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 V
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MUNIHOLDINGS FLORIDA INSURED FUND V
The Benefits and
Risks of
Leveraging
MuniHoldings Florida Insured Fund V 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 American 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 net
asset value of the Fund's shares may also be more volatile than if
the Fund did not invest in these securities.
MuniHoldings Florida Insured Fund V, May 31, 2000
DEAR SHAREHOLDER
Since inception (July 23, 1999) through May 31, 2000, MuniHoldings
Florida Insured Fund V earned $0.714 per share income dividends,
which included earned and unpaid dividends of $0.069. This
represents a net annualized yield of 6.24%, based on a month-end net
asset value of $13.29 per share. Over the same period, the Fund's
total investment return was -6.77%, based on a change in per share
net asset value from $15.00 to $13.29, and assuming reinvestment of
$0.645 per share income dividends.
For the six-month period ended May 31, 2000, the total investment
return on the Fund's Common Shares was -0.13%, based on a change in
per share net asset value from $13.76 to $13.29, and assuming
reinvestment of $0.418 per share income dividends.
For the six-month period ended May 31, 2000, the Fund's Auction
Market Preferred Shares had an average yield of 4.00%.
The Municipal Market Environment
From November 1999 to mid-January 2000, fixed-income bond yields
rose steadily higher. US economic growth, in part intensified by
Year 2000 preparations, grew at a 7.3% rate in the fourth quarter
of 1999 and at a 4.2% annual rate for all of 1999. Initial estimates
for the first quarter of 2000 were reported at 5.4%. However,
despite these significant growth rates and the lowest unemployment
rates since January 1970, no price measure indicator has shown any
considerable signs of future price pressures at the consumer level.
Given no signs of an economic slowdown, the Federal Reserve Board
continued to raise short-term interest rates in February, March and
May 2000. The Federal Reserve Board cited both the continued growth
of US employment and the impressive strength of the US equity
markets as reasons for attempting to moderate US economic growth
before inflationary price increases are realized. By mid-January
2000, US Treasury bond yields rose 45 basis points (0.45%) to 6.75%.
Similarly, as measured by the Bond Buyer Revenue Bond Index, long-
term tax-exempt bond yields rose approximately 20 basis points to
6.35%.
Since mid-January, fixed-income markets have largely ignored strong
economic fundamentals and concentrated upon very positive technical
supply factors. Declining bond issuance, both current, and more
importantly, expected future issuance, helped push bond yields lower
from mid-January to mid-April 2000. In late January and early
February 2000, the US Treasury announced its intention to reduce the
number of issues to be auctioned in the quarterly Treasury note and
bond auctions. Furthermore, budgetary surpluses would allow the US
Treasury to repurchase outstanding, higher-couponed Treasury issues,
primarily in the 15-year and longer-term maturity sectors. Both
these actions would result in a significant reduction in the
outstanding supply of long-term US Treasury debt. Domestic and
international investors quickly began to accumulate what was
expected to become a scarce commodity and Government bond prices
quickly rose.
By mid-April 2000, US Treasury bond yields had declined over 100
basis points to 5.67%. However, bond yields rose somewhat during the
remainder of the period as economic statistics were released,
indicating that the economic strength seen in late 1999 was
continuing into early 2000. The decline in long-term US Treasury
yields resulted in an inverted taxable yield curve as short-term and
intermediate-term interest rates have not fallen proportionately
since the Federal Reserve Board is expected to continue to raise
short-term interest rates. The current inversion has had much more
to do with debt reduction and Treasury buybacks than with investor
expectations of slower economic growth. Over the last six months,
long-term US Treasury bond yields have fallen almost 30 basis points
to close the period ended May 31, 2000 at 6.00%.
Tax-exempt bond yields have also declined in recent months. The
decline has largely been in response to the rally in US Treasury
securities, as well as a continued positive technical supply
environment. States such as California and Maryland have announced
that their large current and anticipated future budget surpluses
will permit the cancellation or postponement of expected bond
issuance. Additionally, some issuers have also initiated tenders to
repurchase existing debt, reducing the supply of tax-exempt bonds in
the secondary market as well. Since their recent peak in January
2000, long-term municipal bond yields declined over 15 basis points
to finish the six-month period ended May 31, 2000 at 6.20%.
The relative underperformance of the municipal bond market in recent
months has been especially disappointing given the strong technical
position the tax-exempt bond market enjoyed. The issuance of long-
term tax-exempt securities has dramatically declined. Over the last
year, $205 billion in new long-term municipal securities was issued,
a decline of almost 20% compared to the same period a year earlier.
For the six months ended May 31, 2000, approximately $90 billion in
new tax-exempt bonds was underwritten, a decline of more than 25%
compared to the same period in 1999. Although investors received
over $30 billion in coupon payments, bond maturities and proceeds
from early bond redemptions in January and February and are expected
to receive a similar amount in June and July, and despite 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 five months, tax-exempt mutual
funds have had net redemptions of more than $11 billion. Also, the
demand from property and casualty insurance companies has weakened
as a result of the losses incurred from the series of damaging
storms across much of the eastern United States. Additionally, many
institutional investors who have in recent years been drawn to the
municipal bond market by historically attractive tax-exempt bond
yield ratios of over 90% found other asset classes even more
compelling. Even with a favorable supply position, tax-exempt
municipal bond yields have underperformed their taxable
counterparts.
Any significantly lower municipal bond yields are still likely to
require weaker US employment growth and consumer spending. The
actions taken in recent months by the Federal Reserve Board, as well
as those expected in June and perhaps August 2000, should eventually
slow US economic growth. The recent declines in US home sales are
perhaps the first sign that consumer spending is being slowed by
higher interest rates. Until further signs develop, it is likely
that the municipal bond market's current favorable technical
position will dampen significant tax-exempt interest rate volatility
and provide a stable environment for eventual improvement in
municipal bond prices.
Portfolio Strategy
During the six months ended May 31, 2000, we focused our strategy on
delivering an attractive level of tax-exempt income. During this
period, the net asset value volatility in the fixed-income market
was above average. We continued to emphasize purchasing higher-
couponed issues as they became available in the market and to sell
deep-discounted bonds in order to try to reduce the volatility
associated with the Fund. New-issue supply in Florida decreased over
25% as compared to the same period in 1999. We kept our cash
reserves low in order to maintain the Fund's high level of tax-
exempt income. Leveraging continued to benefit the Fund's Common
Shareholders because of the positive slope of the municipal bond
yield. However, should the spread between long-term and short-term
tax-exempt interest rates narrow, the benefits of the leverage will
decline and the yield on the Common Shares will decline. (For a
complete explanation of the benefits and risks of leveraging, see
page 1 of this report to shareholders.)
In Conclusion
We appreciate your investment in MuniHoldings Florida Insured Fund
V, and we look forward to assisting you with your financial needs in
the months and years ahead.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Robert D. Sneeden)
Robert D. Sneeden
Vice President and Portfolio Manager
June 29, 2000
MuniHoldings Florida Insured Fund V, May 31, 2000
Portfolio
Abbreviations
To simplify the listings of MuniHoldings Florida Insured Fund V'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
IDB Industrial Development Board
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
S/F Single-Family
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
Alabama--1.8% A1 VMIG1++ $ 1,500 Columbia, Alabama, IDB, PCR, Refunding (Alabama Power
Company Project), VRDN, Series E, 4.40% due 10/01/2022 (i) $ 1,500
Florida NR* Aaa 1,000 Bay County, Florida, School Board, COP, 5% due 7/01/2023 (a) 861
--92.3%
NR* Aaa 1,200 Brevard County, Florida, HFA, S/F Mortgage Revenue Bonds
(Multi-County Program), AMT, 6.30% due 3/01/2020 (d) 1,214
NR* Aaa 2,000 Cityplace Community Development District, Florida, Capital
Improvement Revenue Bonds, 5% due 5/01/2022 (g) 1,740
NR* Aaa 1,825 Clay County, Florida, HFA, S/F Mortgage Revenue Bonds,
AMT, 6.55% due 3/01/2028 (c)(f) 1,866
AAA Aaa 1,575 Dade County, Florida, Aviation Revenue Bonds, AMT, Series A,
5.75% due 10/01/2018 (g) 1,530
AAA NR* 2,000 Dade County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT,
6.70% due 4/01/2028 (d) 2,056
NR* Aaa 5,965 Dade County, Florida, Water and Sewer Revenue Bonds, RIB,
Series 155, 6.30% due 10/01/2025 (b)(h) 5,177
NR* Aaa 2,700 Duval County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT,
6.30% due 10/01/2029 (f)(g) 2,721
NR* Aaa 3,750 Escambia County, Florida, HFA, S/F Mortgage Revenue Refunding
Bonds (Multi-County Program), AMT, Series A, 6.30% due
10/01/2020 (c)(g) 3,793
NR* Baa1 2,900 Escambia County, Florida, PCR (Champion International
Corp. Project), AMT, 6.40% due 9/01/2030 2,755
AAA Aaa 3,225 Florida Housing Finance Corporation, Homeowner Mortgage
Revenue Refunding Bonds, AMT, Series 4, 6.25% due 7/01/2022 (e) 3,239
AAA Aaa 3,700 Florida State Board of Education, Lottery Revenue Bonds,
Series B, 6.25% due 7/01/2017 (b) 3,865
AAA Aaa 3,650 Florida State Turnpike Authority, Turnpike Revenue Bonds
(Department of Transportation), Series A, 6.25% due 7/01/2029 (b) 3,762
AAA Aaa 2,250 Hillsborough County, Florida, IDA, PCR, Refunding (Tampa
Electric Company Project), 6.25% due 12/01/2034 (g) 2,287
AAA Aaa 4,000 Hillsborough County, Florida, School Board, COP, 6% due
7/01/2025(g) 4,012
AAA Aaa 2,010 Jacksonville, Florida, Port Authority, Airport Revenue
Bonds, AMT, Series A, 6.25% due 10/01/2024 (b) 2,023
NR* Aaa 1,470 Lee County, Florida, HFA, S/F Mortgage Revenue Bonds (Multi-
County Program), Series A-1, 7.20% due 3/01/2033 (d) 1,576
AAA Aaa 2,000 Miami-Dade County, Florida, Educational Facilities Authority
Revenue Bonds, Series A, 6% due 4/01/2023 (a) 2,008
AAA Aaa 4,000 Miami-Dade County, Florida, Expressway Authority, Toll System
Revenue Bonds, 6.375% due 7/01/2029 (b) 4,159
AAA Aaa 3,810 Miami-Dade County, Florida, Professional Sports Franchise
Facility Tax Revenue Refunding Bonds, 5% due 10/01/2023 (g) 3,296
AA NR* 1,500 Orange County, Florida, HFA, S/F, Mortgage Revenue Bonds,
AMT, 6.85% due 10/01/2027 (d) 1,553
NR* Aaa 1,765 Orange County, Florida, School Board, COP, Refunding Bonds,
Series A, 5.375% due 8/01/2022 1,625
AAA Aaa 3,000 Orlando and Orange County, Florida, Expressway Authority,
Expressway Revenue Refunding Bonds, Junior Lien, 5% due
7/01/2021 (b) 2,618
AAA Aaa 2,205 Palm Beach County, Florida, School Board, COP, Series A,
6.25% due 8/01/2025 (b) 2,267
AAA Aaa 2,000 Pinellas County, Florida, Sewer Revenue Refunding Bonds,
5% due 10/01/2024 (b) 1,725
NR* Aaa 2,645 Pompano Beach, Florida, Water and Sewer Revenue Bonds, 6%
due 7/01/2020 (b) 2,663
AAA Aaa 2,135 Saint John's County, Florida, Sales Tax Revenue Refunding
Bonds, 5% due 10/01/2019 (b) 1,897
AAA Aaa 2,945 Seminole County, Florida, School Board, COP, Series A, 5%
due 7/01/2023 (g) 2,533
AAA Aaa 3,750 Tampa Bay, Florida, Water Utility System Revenue Bonds, 6%
due 10/01/2024 (b) 3,762
AAA Aaa 3,575 Tampa-Hillsborough County, Florida, Expressway Authority,
Revenue Refunding Bonds, 5% due 7/01/2022 (a) 3,109
Georgia--0.1% A1 VMIG1++ 100 Monroe County, Georgia, Development Authority, PCR, Refunding
(Georgia Power Company), VRDN, Second Series, 4.50% due
7/01/2025 (i) 100
Pennsylvania A1+ VMIG1++ 600 Geisinger Authority, Pennsylvania, Health System Revenue
--0.7% Refunding Bonds (Penn State-Geisinger Health), VRDN, Series B,
4.40% due 8/15/2028 (i) 600
Puerto Rico AAA Aaa 3,000 Puerto Rico Commonwealth, GO, Public Improvement, 6% due
--7.4% 7/01/2029 (g) 3,011
A Baa1 1,000 Puerto Rico Commonwealth Highway and Transportation Authority,
Transportation Revenue Bonds, Series B, 6% due 7/01/2026 988
AAA Aaa 2,500 Puerto Rico Public Buildings Authority Revenue Bonds (Government
Facilities), Series B, 5% due 7/01/2027 (a) 2,169
Texas--3.1% A1+ NR* 2,600 Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Refunding Bonds (Methodist Hospital), VRDN,
4.30% due 12/01/2025 (i) 2,600
Total Investments (Cost--$90,694)--105.4% 88,660
Liabilities in Excess of Other Assets--(5.4%) (4,508)
---------
Net Assets--100.0% $ 84,152
=========
(a)AMBAC Insured.
(b)FGIC Insured.
(c)FHA Insured.
(d)FNMA/GNMA Collateralized.
(e)FSA Insured.
(f)GNMA Collateralized.
(g)MBIA Insured.
(h)The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rate shown is the
rate in effect at May 31, 2000.
(i)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at May 31, 2000.
*Not Rated.
++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.
</TABLE>
MuniHoldings Florida Insured Fund V, May 31, 2000
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of May 31, 2000
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$90,693,633) $ 88,659,815
Cash 79,544
Interest receivable 1,481,430
-------------
Total assets 90,220,789
-------------
Liabilities: Payables:
Securities purchased $ 5,910,037
Dividends to shareholders 46,184
Investment adviser 20,600 5,976,821
-------------
Accrued expenses and other liabilities 92,043
-------------
Total liabilities 6,068,864
-------------
Net Assets: Net assets $ 84,151,925
=============
Capital: Capital Shares (unlimited number of shares authorized):
Preferred Shares, par value $.10 per share (1,400 shares of
AMPS* issued and outstanding at $25,000 per share liquidation
preference) $ 35,000,000
Common Shares, par value $.10 per share (3,698,102 shares
issued and outstanding) $ 369,810
Paid-in capital in excess of par 54,563,714
Undistributed investment income--net 311,715
Accumulated realized capital losses on investments--net (4,059,496)
Unrealized depreciation on investments--net (2,033,818)
-------------
Total--Equivalent to $13.29 net asset value per Common Share
(market price--$11.8125) 49,151,925
-------------
Total capital $ 84,151,925
=============
<FN>
*Auction Market Preferred Shares.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Period July 23, 1999++ to May 31, 2000
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 4,076,522
Income:
Expenses: Investment advisory fees $ 389,202
Commission fees 70,034
Accounting services 43,317
Professional fees 33,025
Transfer agent fees 22,284
Trustees' fees and expenses 18,498
Printing and shareholder reports 9,637
Listing fees 7,290
Custodian fees 4,840
Pricing fees 4,209
Other 8,683
-------------
Total expenses before reimbursement 611,019
Reimbursement of expenses (286,284)
-------------
Total expenses after reimbursement 324,735
-------------
Investment income--net 3,751,787
-------------
Realized & Realized loss on investments--net (4,059,496)
Unrealized Unrealized depreciation on investments--net (2,033,818)
Loss on -------------
Investments Net Decrease in Net Assets Resulting from Operations $ (2,341,527)
--Net: -------------
++Commencement of operations.
See Notes to Financial Statements.
</TABLE>
MuniHoldings Florida Insured Fund V, May 31, 2000
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
For the Period
July 23, 1999++ to
Increase (Decrease) in Net Assets: May 31, 2000
<S> <S> <C>
Operations: Investment income--net $ 3,751,787
Realized loss on investments--net (4,059,496)
Unrealized depreciation on investments--net (2,033,818)
-------------
Net decrease in net assets resulting from operations (2,341,527)
-------------
Dividends to Investment income--net:
Shareholders: Common Shares (2,383,525)
Preferred Shares (1,056,547)
-------------
Net decrease in net assets resulting from dividends to shareholders (3,440,072)
-------------
Capital Share Net proceeds from issuance of Common Shares 55,369,350
Transactions: Proceeds from issuance of Preferred Shares 35,000,000
Value of shares issued to Common Shareholders in reinvestment of dividends 2,047
Offering costs resulting from the issuance of Common Shares (134,648)
Offering and underwriting costs resulting from the issuance of Preferred
Shares (403,230)
-------------
Net increase in net assets derived from capital share transactions 89,833,519
-------------
Net Assets: Total increase in net assets 84,051,920
Beginning of period 100,005
-------------
End of period* $ 84,151,925
=============
*Undistributed investment income--net $ 311,715
=============
++Commencement of operations.
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have been derived For the Period
from information provided in the financial statements. July 23, 1999++ to
Increase (Decrease) in Net Asset Value: May 31, 2000
<S> <S> <C>
Per Share Net asset value, beginning of period $ 15.00
Operating ---------
Performance: Investment income--net 1.01
Realized and unrealized loss on investments--net (1.63)
---------
Total from investment operations (.62)
---------
Less dividends to Common Shareholders from investment income--net (.64)
---------
Capital charge resulting from issuance of Common Shares (.04)
---------
Effect of Preferred Share activity:++++
Dividends to Preferred Shareholders:
Investment income--net (.29)
Capital charge resulting from issuance of Preferred Shares (.12)
---------
Total effect of Preferred Share activity (.41)
---------
Net asset value, end of period $ 13.29
=========
Market price per share, end of period $ 11.8125
=========
Total Investment Based on market price per share (17.14%)+++
Return:** =========
Based on net asset value per share (6.77%)+++
=========
Ratios Based on Expenses, net of reimbursement*** .75%*
Average Net Assets =========
Of Common Shares: Total expenses*** 1.42%*
=========
Total investment income--net*** 8.70%*
=========
Amount of dividends to Preferred Shareholders 2.45%*
=========
Investment income--net, to Common Shareholders 6.25%*
=========
Ratios Based on Expenses, net of reimbursement .46%*
Total Average =========
Net Total expenses .86%*
Assets:***++++++ =========
Total investment income--net 5.29%*
=========
Ratios Based on Dividends to Preferred Shareholders 3.80%*
Average Net Assets =========
Of Preferred
Shares:
Supplemental Net assets, net of Preferred Shares, end of period (in thousands) $ 49,152
Data: =========
Preferred Shares outstanding, end of period (in thousands) $ 35,000
=========
Portfolio turnover 107.02%
=========
Leverage: Asset coverage per $1,000 $ 2,404
=========
Dividends Investment income--net $ 755
Per Share on =========
Preferred Shares
Outstanding:
*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. The Fund's Investment Adviser
voluntarily waived a portion of its management fees. Without such
waiver, the Fund's performance would have been lower.
***Do not reflect the effect of dividends to Preferred Shareholders.
++Commencement of operations.
++++The Fund's Preferred Shares were issued on August 16, 1999.
++++++Includes Common and Preferred Shares average net assets.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
MuniHoldings Florida Insured Fund V, May 31, 2000
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniHoldings Florida Insured Fund V (the "Fund") is registered under
the Investment Company Act of 1940 as a non-diversified, closed-end
management investment company. The Fund's financial statements are
prepared in accordance with accounting principles generally accepted
in the United States of America, which may require the use of
management accruals and estimates. Prior to commencement of
operations on July 23, 1999, the Fund had no operations other than
those relating to organizational matters and the sale of 6,667
shares of Common Shares on June 15, 1999 to Fund Asset Management,
L.P. ("FAM") for $100,005. The Fund determines and makes available
for publication the net asset value of its Common Shares on a weekly
basis. The Fund's Common Shares are listed on the American Stock
Exchange under the symbol FDM. 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 investment strategies to increase or decrease the level of
risk to which the Fund is exposed more quickly and efficiently than
transactions in other types of instruments. Losses may arise due to
changes in the value of the contract or if the counterparty does not
perform under the contract.
* 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.
* Options--The Fund is authorized to write covered call options and
purchase call and put options. When the Fund writes an option, an
amount equal to the premium received by the Fund is reflected as an
asset and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written. When a security is purchased or sold through an
exercise of an option, the related premium paid (or received) is
added to (or deducted from) the basis of the security acquired or
deducted from (or added to) the proceeds of the security sold. When
an option expires (or the Fund enters into a closing transaction),
the Fund realizes a gain or loss on the option to the extent of the
premiums received or paid (or gain or loss to the extent the cost of
the closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Offering expenses--Direct expenses relating to the public
offering of the Fund's Common and Preferred Shares were charged to
capital at the time of issuance of the shares.
(f) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and Transactions with
Affiliates:
The Fund has entered into an Investment Advisory Agreement with 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 period July 23, 1999 to May
31, 2000, FAM earned fees of $389,202, of which $257,555 was
voluntarily waived. In addition, FAM also reimbursed the Fund
$28,729 in additional expenses.
During the period July 23, 1999 to May 31, 2000, Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("MLPF&S"), an affiliate of FAM,
received underwriting fees of $262,500 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 period July 23, 1999 to May 31, 2000 were $170,800,189 and
$81,400,822, respectively.
Net realized losses for the period July 23, 1999 to May 31, 2000 and
net unrealized losses as of May 31, 2000 were as follows:
Realized Unrealized
Losses Losses
Long-term investments $ (4,059,496) $ (2,033,818)
------------ ------------
Total $ (4,059,496) $ (2,033,818)
============ ============
As of May 31, 2000, net unrealized depreciation for Federal income
tax purposes aggregated $2,033,818, of which $291,905 related to
appreciated securities and $2,325,723 related to depreciated
securities. The aggregate cost of investments at May 31, 2000 for
Federal income tax purposes was $90,693,633.
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 beneficial interest without approval of holders of Common
Shares.
Common Shares
Shares issued and outstanding during the period July 23, 1999 to May
31, 2000 increased by 3,691,290 from shares sold and by 145 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 yield in effect at May 31,
2000 was 4.39%.
In connection with the offering of AMPS, the Board of Trustees
reclassified 1,400 shares of unissued beneficial interest as AMPS.
Shares issued and outstanding during the period July 23,1999 to May
31, 2000 increased by 1,400 as a result of the AMPS offering.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from .25% to .375%,
calculated on the proceeds of each auction. For the period July 23,
1999 to May 31, 2000, MLPF&S an affiliate of FAM, earned $53,248 as
commissions.
5. Subsequent Event:
On June 7, 2000, the Fund's Board of Trustees declared an ordinary
income dividend to Common Shareholders in the amount of $.069352 per
share, payable on June 29, 2000 to shareholders of record as of June
19, 2000.
6. Capital Loss Carryforward:
At May 31, 2000, the Fund had a net capital loss carryforward of
approximately $1,275,000, all of which expires in 2008. This amount
will be available to offset like amounts of any future taxable
gains.
MuniHoldings Florida Insured Fund V, May 31, 2000
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders
MuniHoldings Florida Insured Fund V:
We have audited the accompanying statement of assets, liabilities
and capital, including the schedule of investments, of MuniHoldings
Florida Insured Fund V, as of May 31, 2000, the related statements
of operations and changes in net assets, and the financial
highlights for the period July 23, 1999 (commencement of operations)
to May 31, 2000. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial
highlights based on our audit.
We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned at May 31, 2000, by correspondence
with the custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides 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 V, as of May 31, 2000, the results
of its operations, the changes in its net assets, and the financial
highlights for the period July 23, 1999 (commencement of operations)
to May 31, 2000, in accordance with accounting principles generally
accepted in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
July 5, 2000
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
All of the investment income distributions paid by MuniHoldings
Florida Insured Fund V during its taxable period ended May 31, 2000
qualify as tax-exempt interest dividends for Federal income tax
purposes. Additionally, there were no capital gains distributions
paid by the Fund during the year.
Please retain this information for your records.
QUALITY PROFILE (unaudited)
The quality ratings of securities in the Fund as of
May 31, 2000 were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 95.2%
A/A 1.2
BBB/Baa 3.3
Other++ 5.7
++Temporary investments in short-term municipal securities.
MuniHoldings Florida Insured Fund V, May 31, 2000
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute all or a portion of its
net investment income to its shareholders on a monthly basis. In
order to provide shareholders with a more consistent yield to the
current trading price of 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.
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
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Transfer Agents
Common Shares:
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Preferred Shares:
The Bank of New York
100 Church Street
New York, NY 10286
AMEX Symbol
FDM
