MUNIYIELD
FLORIDA
INSURED FUND
[FUND LOGO]
STRATEGIC
Performance
Annual Report
October 31, 1997
This report, including the financial information herein, is transmitted
to the shareholders of MuniYield 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 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 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.
MuniYield Florida
Insured Fund, Inc.
Box 9011
Princeton, NJ
08543-9011 #16490 -- 10/97
[Recycle logo] Printed on post-consumer recycled paper
MuniYield Florida Insured Fund October 31, 1997
TO OUR SHAREHOLDERS
For the year ended October 31, 1997, the Common Shares of MuniYield
Florida Insured Fund earned $0.967 per share income dividends, which
included earned and unpaid dividends of $0.071. This represents a net
annualized yield of 6.24%, based on a month-end per share net asset
value of $15.50. Over the same period, the total investment return on
the Fund's Common Shares was +9.50%, based on a change in per share net
asset value from $15.25 to $15.50, and assuming reinvestment of $0.968
per share income dividends and $0.124 per share capital gains
distributions.
For the six-month period ended October 31, 1997, the total investment
return on the Fund's Common Shares was +8.24%, based on a change in per
share net asset value from $14.73 to $15.50, and assuming reinvestment of
$0.421 per share income dividends.
For the six-month period ended October 31, 1997, the Fund's Auction
Market Preferred Shares had an average yield of 3.73%.
The Municipal Market Environment
Long-term interest rates generally declined during the six-month period
ended October 31, 1997. The general financial environment has remained
one of solid economic growth tempered by few or no inflationary
pressures. While economic growth has been conducive to declining bond
yields, it has remained strong enough to suggest that the Federal
Reserve Board (FRB) might find it necessary to raise short-term interest
rates. This would be intended to slow economic growth and ensure that
any incipient inflationary pressures would be curtailed. There were
investor concerns that the FRB would be forced to raise interest rates
prior to year-end, thus preventing an even more dramatic decline in
interest rates. Long-term tax-exempt revenue bonds, as measured by the
Bond Buyer Revenue Bond Index, declined over 50 basis points (0.50%) to
end the six-month period ended October 31, 1997 at 5.60%.
Similarly, long-term US Treasury bond yields generally moved lower during
most of the six-month period ended October 31, 1997. However, the turmoil
in the world's equity markets during the last week in October has
resulted in a significant rally in the Treasury bond market. The US
Treasury bond market was the beneficiary of a flight to quality mainly
by foreign investors whose own domestic markets have continued to be
very volatile. Prior to the initial decline in Asian equity markets,
long-term US Treasury bond yields were essentially unchanged. By the end
of October, US Treasury bond yields declined 80 basis points to 6.15%,
their lowest level of 1997.
The tax-exempt bond market's continued underperformance as compared to
its taxable counterpart has been largely in response to its ongoing
weakening technical position. As municipal bond yields have declined,
municipalities have hurriedly rushed to refinance outstanding higher-
couponed debt with new issues financed at present low rates. During the
last six months, over $118 billion in new long-term tax-exempt issues
were underwritten, an increase of over 25% versus the comparable period
a year ago. As interest rates have continued to decline, these
refinancings have intensified municipal bond issuance. During the past
three months, approximately $60 billion in new long-term municipal
securities were underwritten, an increase of over 34% as compared to the
October 31, 1996 quarter.
The recent trend toward larger and larger bond issues has also
continued. However, issues of such magnitude usually must be
attractively priced to ensure adequate investor interest. Obviously, the
yields of other municipal bond issues are impacted by the
yield premiums such large issuers have been required to pay. Much of the
municipal bond market's recent underperformance can be traced to market
pressures that these large bond issuances have exerted.
In our opinion, the recent correction in world equity markets has
enhanced the near-term prospects for continued low, if not declining,
interest rates in the United States. It is likely that the recent
correction will result in slower US domestic growth in the coming
months. This decline is likely to be generated in part by reduced US
export growth. Additionally, some decline in consumer spending also can
be expected in response to reduced consumer confidence. Perhaps more
importantly, it is likely that barring a dramatic and unexpected
resurgence in domestic growth, the FRB may be unwilling to raise
interest rates until the full impact of the equity market's corrections
can be established.
All of these factors suggest that for at least the near term, interest
rates, including tax-exempt bond yields, are unlikely to rise by any
appreciable amount. It is probable that municipal bond yields will
remain under some pressure as a result of continued strong new-issue
supply. However, the recent pace of municipal bond issuance is likely to
be unsustainable. Continued increases in bond issuance will require
lower tax-exempt bond yields to generate the economic savings necessary
for additional municipal bond refinancing. With tax-exempt bond yields
at already attractive yield ratios relative to US Treasury bonds
(approximately 90% at the end of October), any further pressure on the
municipal market may represent an attractive investment opportunity.
Portfolio Strategy
At the beginning of 1997, our outlook was for higher interest rates.
Since the bond market had rallied in anticipation of a weakening economy
with no possibility of a FRB tightening, we perceived a risk of sudden
change in investor expectations. At this time, the Fund remained fully
invested as we purchased bonds less sensitive to interest rate
volatility, such as shorter duration bonds. This strategy proved
beneficial as economic data released during the fourth quarter of 1996
and the first quarter of 1997 showed significant signs of strength. As a
result, the FRB increased short-term interest rates 25 basis points and
pushed tax-exempt interest rates to 6% by the middle of April.
Anticipating further tightening, we remained cautious on the bond market
and concentrated on protecting the Fund's net asset value and
maintaining as high a level as possible of tax-exempt income.
Surprisingly, the bond market staged a significant rally during the
summer months, and long-term tax-exempt yields declined nearly 75 basis
points. In our opinion, this occurred as a result of the economy turning
decidedly weaker in the second quarter of 1997. Fortunately, higher-
coupon bonds, which we purchased for defensive measures, outperformed
aggressively structured bonds since they were now advance refunding
candidates. We maintained a defensive, fully invested posture for the
Fund for the remainder of the 12-month period ended October 31, 1997 as
the bond market remained in a narrow 25 basis point trading range.
Looking ahead, our outlook is for lower interest rates. The economic
expansion is now entering its seventh year with benign inflation. Equity
markets throughout the world have entered into a very volatile stage
triggered by the currency crisis in Southeast Asia. We believe a
continuation of equity market declines may have a negative impact on
economic growth, thereby constraining global inflation.
The yield on the Fund s Auction Market Preferred Shares has been trading
between 3.0% -- 3.75% during the past year. Leverage continues to
benefit the Fund's Common Shareholders by significantly augmenting their
yield. However, should the spread between short-term and long-term tax-
exempt interest rates narrow, the benefits of leverage will decline and,
as a result, reduce the yield to the Fund's Common Shares. (For a
complete explanation of the benefits and risks of leveraging, see page 4
of this report to shareholders.)
In Conclusion
We appreciate your ongoing interest in MuniYield Florida Insured Fund,
and we look forward to serving your investment needs in the months and
years to come.
Sincerely,
/S/ARTHUR ZEIKEL
Arthur Zeikel
President
/S/VINCENT R. GIORDANO
Vincent R. Giordano
Senior Vice President
/S/ROBERT A. DIMELLA
Robert A. DiMella
Vice President and Portfolio Manager
December 5, 1997
<TABLE>
<CAPTION>
PROXY RESULTS
During the six-month period ended October 31, 1997, MuniYield Florida Insured Fund Common Shareholders voted on the following
proposals. The proposals were approved at a shareholders' meeting on September 11, 1997. The description of each proposal and
number of shares voted are as follows:
Shares Shares Withheld
Voted For From Voting
<S> <C> <C> <C>
1. To elect the Fund's Board of Trustees: Edward H. Meyer 7,860,390 215,389
Jack B. Sunderland 7,863,690 212,089
J. Thomas Touchton 7,862,890 212,889
Arthur Zeikel 7,863,499 212,280
<CAPTION>
Shares Shares Voted Shares Voted
Voted For Against Abstain
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP
as the Fund's independent auditors for the current
fiscal year. 7,822,768 51,612 201,399
During the six-month period ended October 31, 1997, MuniYield Florida Insured Fund Preferred Shareholders voted on the following
proposals. The proposals were approved at a shareholders' meeting on September 11, 1997. The description of each proposal and
number of shares voted are as follows:
<CAPTION>
Shares Shares Withheld
Voted For From Voting
<S> <C> <C> <C>
1. To elect the Fund's Board of Trustees: Donald Cecil 2,269 0
M. Colyer Crum 2,269 0
Edward H. Meyer 2,269 0
Jack B. Sunderland 2,269 0
J. Thomas Touchton 2,269 0
Arthur Zeikel 2,269 0
<CAPTION>
Shares Shares Voted Shares Voted
Voted For Against Abstain
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP
as the Fund's independent auditors for the current
fiscal year. 2,269 0 0
</TABLE>
THE BENEFITS AND RISKS OF LEVERAGING
MuniYield Florida Insured Fund utilizes leveraging to seek to enhance
the yield and net asset value of its Common Shares. However, these
objectives cannot be achieved in all interest rate environments. To
leverage, the Fund issues Preferred Shares, which pay dividends at
prevailing short-term interest rates and invests the proceeds in long-
term municipal bonds. The interest earned on these investments is paid
to Common Shareholders in the form of dividends, and the value of these
portfolio holdings is reflected in the per share net asset value of the
Fund's Common Shares. However, in order to benefit Common Shareholders,
the yield curve must be positively sloped; that is, short-term interest
rates must be lower than long-term interest rates. At the same time, a
period of generally declining interest rates will benefit Common
Shareholders. If either of these conditions change, then the risks of
leveraging will begin to outweigh the benefits.
To illustrate these concepts, assume a fund's Common Share capitalization
of $100 million and the issuance of Preferred Shares for an additional
$50 million, creating a total value of $150 million available for
investment in long-term municipal bonds. If prevailing short-term
interest rates are approximately 3% and long-term interest rates are
approximately 6%, the yield curve has a strongly positive slope.
The fund pays dividends on the $50 million of Preferred Shares based
on the lower short-term interest rates. At the same time, the fund's
total portfolio of $150 million earns the income based on long-term
interest rates. Of course, increases in short-term interest rates would
reduce (and even eliminate) the dividends on the Common Shares.
In this case, the dividends paid to Preferred Shareholders are
significantly lower than the income earned on the fund's long-term
investments, and therefore the Common Shareholders are the beneficiaries
of the incremental yield. However, if short-term interest rates rise,
narrowing the differential between short-term and long-term interest
rates, the incremental yield pickup on the Common Shares will be reduced
or eliminated completely. At the same time, the market value of the
fund's Common Shares (that is, its price as listed on the New York
Stock Exchange) may, as a result, decline. Furthermore, if long-term
interest rates rise, the Common Shares' net asset value will reflect
the full decline in the price of the portfolio's investments, since the
value of the fund's Preferred Shares does not fluctuate. In addition to
the decline in net asset value, the market value of the fund's Common
Shares may also decline.
<TABLE>
<CAPTION>
MuniYield Florida Insured Fund October 31, 1997
SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <C>
Florida -- 98.8%
AAA Aaa $6,085 Auburndale, Florida, Water and Sewer Revenue Refunding Bonds, 5.25% due 12/01/2025 (a) $5,997
Boynton Beach, Florida, Utility System Revenue Refunding Bonds (b):
AAA Aaa 700 6.25% due 11/01/2020 (h) 778
AAA Aaa 3,375 6.25% due 11/01/2020 3,664
AAA Aaa 3,000 Brevard County, Florida, IDR (NUI Corporation Project), AMT, 6.40% due 10/01/2024 (a) 3,276
Citrus County, Florida, PCR, Refunding (Florida Power Corporation - Crystal River) (c):
AAA Aaa 2,100 Series A, 6.625% due 1/01/2027 2,284
AAA Aaa 5,750 Series B, 6.35% due 2/01/2022 6,247
Dade County, Florida, Aviation Revenue Bonds, AMT, Series B (c):
AAA Aaa 2,650 6.55% due 10/01/2013 2,888
AAA Aaa 12,715 6.60% due 10/01/2022 13,878
AAA Aaa 5,000 (Miami International Airport), 5.75% due 10/01/2012 5,230
AAA Aaa 2,000 Dade County, Florida, Educational Facilities Authority, Revenue Refunding Bonds
(University of Miami), Series A, 6% due 4/01/2008 (c) 2,209
AAA Aaa 4,500 Dade County, Florida, Health Facilities Authority, Hospital Revenue Bonds (Baptist
Hospital of Miami Project), Series A, 5.75% due 5/01/2021 (c)(h) 4,712
AAA Aaa 1,655 Dade County, Florida, School District Revenue Refunding Bonds, UT, 6% due 7/15/2006 (c) 1,827
AAA Aaa 14,000 Dade County, Florida, Seaport Revenue Bonds, UT, 6.50% due 10/01/2001 (a)(d) 15,307
Dade County, Florida, Special Obligation Refunding Bonds, Series B (a):
AAA Aaa 9,605 6.021%** due 10/01/2015 3,586
AAA Aaa 14,755 6.50%** due 10/01/2030 2,051
AAA Aaa 6,000 6.363%** due 10/01/2032 733
Dade County, Florida, Water and Sewer System Revenue Bonds (b):
AAA Aaa 2,000 5.25% due 10/01/2021 1,976
A1+ VMIG1+ 700 VRDN, 3.60% due 10/05/2022 (e) 700
AAA Aaa 5,000 Escambia County, Florida, HFA, S/F Mortgage Revenue Refunding Bonds (Multi-County
Program), AMT, 3.60% due 4/01/2028 (f)(g) 5,486
BBB Baa1 2,500 Escambia County, Florida, PCR (Champion International Corporation Project), AMT,
6.90% due 8/01/2022 2,773
AAA Aaa 3,000 First Florida Governmental Financing Commission Revenue Bonds, 5.70% due
7/01/2017 (c) 3,116
AAA Aaa 1,150 Florida HFA (Brittany Rosemont Apartments), AMT, Series C-1, 6.75% due 8/01/2014 (a) 1,245
NR* Aaa 1,760 Florida HFA, Home Ownership Revenue Bonds, AMT, Series G-1, 7.90% due 3/01/2022 (g) 1,871
Florida State Board of Education, Public Education Revenue Bonds (Capital Outlay):
AAA Aaa 2,000 Series A, 6.75% due 6/01/2001 (d) 2,190
AA+ Aa2 1,750 Series B, 5.875% due 6/01/2020 1,817
AA+ Aa2 2,650 Series B, 5.875% due 6/01/2024 2,750
AA+ Aa2 3,000 Refunding, Series A, 7.25% due 6/01/2023 3,258
AAA Aaa 1,790 Florida State Division Board of Finance, Department of General Services Revenue Bonds
(Department of Natural Resource Preservation), Series 2000-A, 6.75% due 7/01/2001 (a)(d) 1,979
AAA Aaa 5,000 Florida State Turnpike Authority, Turnpike Revenue Refunding Bonds, Series A, 5% due
7/01/2019 (b) 4,795
AAA Aaa 1,000 Hillsborough County, Florida, IDA, Revenue Bonds (Allegany Health System - J. Knox
Village), 6.375% due 12/01/2012 (c) 1,082
NR* Aaa 8,250 Indian Trace Community, Development District, Florida, Water Management (Special
Benefit Assessment), 5% due 5/01/2027 (c) 7,895
AAA Aaa 2,000 Jacksonville, Florida, Excise Taxes Revenue Refunding Bonds, 6.50% due 10/01/2013 (a) 2,200
AAA Aaa 2,000 Lakeland, Florida, Electric and Water Revenue Refunding Bonds (Junior Sub-Lien),
6.50% due 10/01/2006 (b) 2,288
AAA Aaa 3,000 Lakeland, Florida, Hospital System Revenue Refunding Bonds (Lakeland Regional Medical
Center), Series A, 5% due 11/15/2017 (c) 2,919
AAA NR* 2,490 Lee County, Florida, HFA, S/F Mortgage Revenue Bonds (Multi-County Program), AMT,
Series A, Sub-Series 3, 7.45% due 9/01/2027 (f)(g) 2,795
A- A3 5,000 Leesburg, Florida, Hospital Revenue Refunding Bonds (Leesburg Regional Medical Center
Project), Series A, 6.125% due 7/01/2012 5,255
AAA Aaa 1,000 Marion County, Florida, Hospital District, Revenue Refunding Bonds (Monroe Regional
Medical Center), 6.25% due 10/01/2012 (b) 1,083
AAA Aaa 6,545 Miami Beach, Florida Parking Revenue Bonds, 5.125% due 9/01/2022 (j) 6,379
AAA Aaa 2,500 Miami, Florida, Sanitation Sewer System, UT, 6.50% due 1/01/2015 (b) 2,726
AAA Aaa 2,515 North Miami Beach, Florida, UT, 6.30% due 2/01/2024 (b) 2,742
AAA Aaa 1,210 Okaloosa County, Florida, Gas District Revenue Bonds (Gas System), Series A, 5.20%
due 10/01/2017 (c) 1,206
Orange County, Florida, Tourist Development, Tax Revenue Bonds (a):
AAA Aaa 1,000 Refunding, Series A, 6.50% due 10/01/2010 1,100
AAA Aaa 7,815 Series B, 6.50% due 10/01/2002 (d) 8,729
AAA Aaa 1,500 Palm Beach County, Florida, Criminal Justice Facilities Revenue Bonds, 7.20% due
6/01/2015 (b) 1,867
AAA Aaa 2,000 Palm Beach County, Florida, Solid Waste Authority, Revenue Refunding and Improvement
Bonds, 6.25% due 12/01/2008 (c) 2,189
AAA Aaa 2,500 Pasco County, Florida, PCR, Refunding (Florida Power - Anclote), Series A, 6.35%
due 2/01/2022 (c) 2,716
AAA Aaa 8,285 Port Saint Lucie, Florida, Utility Revenue Refunding and Improvement Bonds, Series A,
5.125% due 9/01/2027 (c) 8,093
AAA Aaa 4,060 Saint Petersburg, Florida, Health Facilities Authority Revenue Bonds (Allegheny Health
System), Series A, 7% due 12/01/2015 (c) 4,496
AAA Aaa 4,920 Sarasota County, Florida, Utility System Revenue Bonds, 6.50% due 10/01/2004 (b)(d) 5,613
AAA Aaa 2,250 South Broward Hospital District, Florida, Revenue Bonds, RIB, Series C, 9.166% due
5/01/2001 (a)(d)(i) 2,703
AAA Aaa 2,275 South Florida Water Management District, Special Obligation Land Aquisition Bonds,
6% due 10/01/2015 (a) 2,404
Total Investments (Cost -- $175,881) -- 98.8% 187,103
Other Assets Less Liabilities -- 1.2% 2,302
--------
Net Assets -- 100.0% $189,405
========
(a) AMBAC Insured.
(b) FGIC Insured.
(c) MBIA Insured.
(d) Prerefunded.
(e) The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at October 31, 1997.
(f) FNMA Collateralized.
(g) GNMA Collateralized.
(h) Escrowed to Maturity.
(I) 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 October 31, 1997.
(j) FSA Insured.
* Not Rated.
** Represents a zero coupon bond; the interest rate shown is 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.
PORTFOLIO ABBREVIATIONS
To simplify the listings of MuniYield 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 at right.
AMT Alternative Minimum Tax (subject to)
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Developement Revenue Bonds
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
MuniYield Florida Insured Fund October 31, 1997
FINANCIAL INFORMATION
Statement of Assets, Liabilities and Capital as of October 31, 1997
<S> <C> <C> <C>
Assets: Investments, at value (identified cost -- $175,880,642) (Note 1a) $187,102,862
Cash 204,682
Interest receivable 2,378,698
Prepaid expenses and other assets 7,695
------------
Total assets 189,693,937
------------
Liabilities: Payables:
Dividends to shareholders (Note 1f) $115,514
Investment adviser (Note 2) 85,103 200,617
------------
Accrued expenses and other liabilities 88,328
------------
Total liabilities 288,945
------------
Net Assets: Net assets $189,404,992
============
Capital: Capital Shares (unlimited number of shares of beneficial interest
authorized) (Note 4):
Preferred Shares, par value $.05 per share (2,400 shares of AMPS*
issued and outstanding at $25,000 per share liquidation preference) $60,000,000
Common Shares, par value $.10 per share (8,350,463 shares issued
and outstanding) $835,046
Paid-in capital in excess of par 116,287,758
Undistributed investment income -- net 1,243,605
Accumulated distributions in excess of realized capital gains -- net
(Note 1f) (183,637)
Unrealized appreciation on investments -- net 11,222,220
------------
Total -- Equivalent to $15.50 net asset value per Common Share
(market price -- $15.00) 129,404,992
------------
Total capital $189,404,992
============
* Auction Market Preferred Shares.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
For the Year Ended
October 31, 1997
<S> <C> <C> <C>
Investment Income Interest and amortization of premium and discount earned $10,553,172
(Note 1d):
Expenses: Investment advisory fees (Note 2) $936,779
Commission fees (Note 4) 152,256
Professional fees 72,462
Accounting services (Note 2) 43,250
Transfer agent fees 37,159
Trustees' fees and expenses 22,642
Listing fees 16,170
Printing and shareholder reports 11,716
Custodian fees 11,558
Amortization of organization expenses (Note 1e) 7,863
Pricing fees 7,785
Other 14,590
-------------
Total expenses 1,334,230
-----------
Investment income -- net 9,218,942
-----------
Realized & Realized gain on investments -- net 1,513,100
Unrealized Gain on Change in unrealized appreciation on investments -- net 2,822,054
Investments -- Net -----------
(Notes 1b, 1d & 3): Net Increase in Net Assets Resulting from Operations $13,554,096
===========
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
For the Year Ended October 31,
-----------------------------
Increase (Decrease) in Net Assets: 1997 1996
<S> <C> <C> <C>
Operations: Investment income -- net $9,218,942 $9,080,033
Realized gain on investments -- net 1,513,100 2,594,504
Change in unrealized appreciation/depreciation on investments -- net 2,822,054 (1,157,546)
------------ ------------
Net increase in net assets resulting from operations 13,554,096 10,516,991
------------ ------------
Dividends & Investment income -- net:
Distributions to Common Shares (7,118,026) (7,047,040)
Shareholders Preferred Shares (1,789,728) (1,997,712)
(Note 1f): Realized gain on investments -- net:
Common Shares (1,857,429) (540,567)
Preferred Shares (523,706) (168,552)
In excess of realized gain on investments -- net:
Common Shares (140,870) --
Preferred Shares (39,718) --
------------ ------------
Net decrease in net assets resulting from dividends and distributions
to shareholders (11,469,477) (9,753,871)
------------ ------------
Net Assets: Total increase in net assets 2,084,619 763,120
Beginning of year 187,320,373 186,557,253
------------ ------------
End of year* $189,404,992 $187,320,373
============ ============
* Undistributed investment income -- net (Note 1g) $1,243,605 $929,368
============ ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
The following per share data and ratios have been derived For the Year Ended October 31,
from information provided in the financial statements ------------------------------------------------------
1997 1996 1995 1994 1993
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $15.25 $15.16 $13.70 $16.56 $14.14
Operating -------- -------- -------- -------- --------
Performance: Investment income -- net 1.10 1.08 1.12 1.13 1.12
Realized and unrealized gain (loss) on
investments -- net .52 .17 1.45 (2.70) 2.48
-------- -------- -------- -------- --------
Total from investment operations 1.62 1.25 2.57 (1.57) 3.60
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Shareholders:
Investment income -- net (.85) (.84) (.84) (.91) (.85)
Realized gain on investments -- net (.22) (.06) -- (.15) --
In excess of realized gain on investments -- net (.02) -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Shareholders (1.09) (.90) (.84) (1.06) (.85)
-------- -------- -------- -------- --------
Effect of Preferred Share activity++++:
Dividends and distributions to Preferred
Shareholders:
Investment income -- net (.21) (.24) (.27) (.20) (.19)
Realized gain on investments -- net (.07) (.02) -- (.03) --
In excess of realized gain on investments
-- net --++ -- -- -- --
Capital charge resulting from issuance of
Preferred Shares -- -- -- -- (.14)
-------- -------- -------- -------- --------
Total effect of Preferred Share activity (.28) (.26) (.27) (.23) (.33)
-------- -------- -------- -------- --------
Net asset value, end of year $15.50 $15.25 $15.16 $13.70 $16.56
======== ======== ======== ======== ========
Market price per share, end of year $15.00 $14.125 $13.50 $11.375 $16.875
======== ======== ======== ======== ========
Total Investment Based on market price per share 14.41% 11.48% 26.46% (27.46%) 18.78%
Return: * ======== ======== ======== ======== ========
Based on net asset value per share 9.50% 7.18% 17.91% (10.98%) 23.65%
======== ======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement .71% .73% .75% .75% .66%
Net Assets: ** ======== ======== ======== ======== ========
Expenses .71% .73% .75% .75% .72%
======== ======== ======== ======== ========
Investment income -- net 4.92% 4.88% 5.18% 4.99% 5.09%
======== ======== ======== ======== ========
Supplemental Net assets, net of Preferred Shares, end of year
Data: (in thousands) $129,405 $127,320 $126,557 $114,441 $137,908
======== ======== ======== ======== ========
Preferred Shares outstanding, end of year
(in thousands) $60,000 $60,000 $60,000 $60,000 $60,000
======== ======== ======== ======== ========
Portfolio turnover 73.79% 156.11% 107.90% 51.81% 18.51%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $3,157 $3,122 $3,109 $2,907 $3,298
======== ======== ======== ======== ========
Dividends Per Share Investment income -- net $746 $832 $925 $688 $662
On Preferred Shares ======== ======== ======== ======== ========
Outstanding:+
* Total investment returns based on market value,
which can be significantly greater or lesser
than the net asset value, may result in substantially
different returns. Total investment returns exclude
the effects of sales loads.
** Do not reflect the effect of dividends to Preferred
Shareholders.
+ Dividends per share have been adjusted to reflect a
two-for-one stock split that occurred on December 1, 1994.
++ Amount is less than $.01 per share.
++++ The Fund's Preferred Shares were issued on November 19, 1992.
See Notes to Financial Statements.
</TABLE>
MuniYield Florida Insured Fund October 31, 1997
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniYield Florida Insured Fund (the "Fund") is registered under the
Investment Company Act of 1940 as a non-diversified, closed-end
management investment company. The Fund 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 New York Stock
Exchange under the symbol MFT. 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, which are
traded on exchanges, are valued at their last sale price as of the
close of such exchanges or, lacking any sales, at the last available
bid price. Securities with remaining maturities of sixty days or less
are valued at amortized cost, which approximates market value. Securities
for which market quotations are not readily available are valued at their
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 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.
[bullet] Financial futures contracts -- The Fund may purchase or sell
interest rate 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.
[bullet] 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) Deferred organization expenses -- Deferred organization expenses are
amortized on a straight-line basis over a five-year period.
(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.
(g) Reclassification -- Generally accepted accounting principles require
that certain components of net assets be adjusted to reflect permanent
differences between financial and tax reporting. Accordingly, current
year's permanent book/tax differences of $3,049 have been reclassified
between accumulated distributions in excess of net realized capital
gains and undistributed net investment income. These reclassifications
have no effect on net assets or net asset value per share.
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 0.50% of the
Fund's average weekly net assets.
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 October 31, 1997 were $132,518,080 and $132,836,971,
respectively.
Net realized and unrealized gains (losses) as of October 31, 1997 were
as follows:
Realized Unrealized
Gains (Losses) Gains
Long-term investments $1,881,065 $11,222,220
Financial futures contracts (367,965) --
----------- -----------
Total $1,513,100 $11,222,220
=========== ===========
As of October 31, 1997, net unrealized appreciation for Federal income
tax purposes aggregated $11,222,220, all of which related to appreciated
securities. The aggregate cost of investments at October 31, 1997 for
Federal income tax purposes was $175,880,642.
4. Capital Share Transactions:
The Fund is authorized to issue an unlimited number of capital shares,
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 the holders of Common Shares.
Common Shares
Shares issued and outstanding during the years ended October 31, 1997
and October 31, 1996 remained constant.
Preferred Shares
Auction Market Preferred Shares ("AMPS") are Preferred Shares of the
Fund 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 October 31, 1997 was 3.569%.
As of October 31, 1997, there were 2,400 AMPS shares authorized, issued
and outstanding with a liquidation preference of $25,000 per share.
The Fund pays commissions to certain broker-dealers at the end of each
auction at an annual rate ranging from 0.25% to 0.375%, calculated on
the proceeds of each auction. For the year ended October 31, 1997,
Merrill Lynch, Pierce, Fenner & Smith Inc., an affiliate of FAM, earned
$72,725 as commissions.
5. Subsequent Event:
On November 6, 1997, the Fund's Board of Trustees declared an ordinary
income dividend to Common Shareholders in the amount of $.071073 per
share, payable on November 26, 1997 to shareholders of record as of
November 17, 1997.
MuniYield Florida Insured Fund October 31, 1997
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of MuniYield Florida Insured
Fund:
We have audited the accompanying statement of assets, liabilities and
capital, including the schedule of investments, of MuniYield Florida
Insured Fund as of October 31, 1997, the related statements of
operations for the year then ended and changes in net assets for each of
the years in the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended.
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 October 31, 1997 by
correspondence with the custodian. 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, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
MuniYield Florida Insured Fund as of October 31, 1997, the results of
its operations, the changes in its net assets, and the financial
highlights for the respective stated years in conformity with generally
accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 5, 1997
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by MuniYield Florida
Insured Fund during its taxable year ended October 31, 1997 qualify as
tax-exempt interest dividends for Federal income tax purposes.
Additionally, the following summarizes the per share capital gain
distributions paid by the Fund during the year:
Payable Short-Term Long-Term
Date Capital Gains Capital Gains
Common Shareholders 12/30/96 $0.115441 $0.123863
Preferred Shareholders 11/12/96 $11.97 $12.62
11/19/96 $11.41 $12.05
11/26/96 $10.70 $11.33
12/03/96 $12.86 $13.66
12/10/96 $11.62 $12.37
12/17/96 $12.93 $13.82
12/24/96 $11.94 $12.84
12/31/96 $ 4.72 $ 5.11
01/07/97 $15.56 $16.90
01/14/97 $ 9.54 $10.81
Please retain this information for your records.
MuniYield Florida Insured Fund October 31, 1997
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
Donald Cecil, Trustee
M. Colyer Crum, Trustee
Edward H. Meyer, Trustee
Jack B. Sunderland, Trustee
J. Thomas Touchton, Trustee
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Robert A. DiMella, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Patrick D. Sweeney, Secretary
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agents
Common Shares:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Shares:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
NYSE Symbol
MFT
