MUNIYIELD
FLORIDA
INSURED FUND
FUND LOGO
Annual Report
October 31, 1998
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
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MuniYield Florida Insured Fund
TO OUR SHAREHOLDERS
For the year ended October 31, 1998, the Common Shares of MuniYield
Florida Insured Fund earned $0.915 per share income dividends, which
included earned and unpaid dividends of $0.071. This represents a
net annualized yield of 5.79%, based on a month-end net asset value
of $15.79 per share. Over the same period, the total investment
return on the Fund's Common Shares was +8.76%, based on a change in
per share net asset value from $15.50 to $15.79, and assuming
reinvestment of $0.915 per share income dividends and $0.097 per
share capital gains distributions.
For the six months ended October 31, 1998, the total investment
return on the Fund's Common Shares was +6.09%, based on a change in
per share net asset value from $15.29 to $15.79, and assuming
reinvestment of $0.417 per share income dividends.
For the six-month period ended October 31, 1998, the Fund's Auction
Market Preferred Shares had an average yield of 3.58%.
The Municipal Market Environment
During the six months ended October 31, 1998, long-term bond yields
declined significantly. The near absence of any inflationary
pressures in the United States continued to support historic low
interest rates. Additionally, foreign economic factors have
continued to outweigh US domestic fundamentals, as they have for
much of 1998. The economic crisis that began in Asia over a year ago
has spread both to Russia and South America. However, economic
factors in these countries have begun to negatively impact US
growth. For example, employment in the US manufacturing sector
declined in recent months as a result of reduced demand for export
goods. Concern that the modest decline in US economic growth seen
thus far would spread and intensify led the Federal Reserve Board to
lower short-term interest rates in late September, in mid-October
and in mid-November. These actions were taken to offset the drag of
foreign economies on future US growth.
US Treasury bond yields continued to benefit from a strong "flight
to quality" as foreign investors were drawn to the relative safe
haven of US Government securities. Additionally, the sharp equity
market correction, which began at the end of August, triggered a
further flight into US Treasury securities. Long-term US Treasury
bond yields fell over 90 basis points (0.90%) to approximately 5% by
the end of September. This is the lowest level since the US Treasury
reintroduced 30-year maturity bond auctions in 1977.
By early October, worldwide investor confidence began to rise,
reducing the demand for the safety and liquidity of US Treasury
securities. Investor confidence was restored by the belief that
major world governments, as well as the International Monetary Fund,
would take the necessary action to support weak domestic economies
in Asia and Latin America. Additionally, rapid recovery in US and
world equity markets caused some investors to reallocate funds from
US debt instruments back to various world equity markets. US
Treasury security yields rose for the remainder of the month to end
October at 5.15%. During the six-month period ended October 31,
1998, long-term Treasury security yields declined approximately 80
basis points.
During the past 12 months, the tax-exempt bond market has contended
with significant new-issue supply pressures. Over the past year,
more than $277 billion in new long-term tax-exempt bonds were
underwritten, an increase of almost 30% compared to the same period
a year ago. During the most recent six-month period, approximately
$140 billion in new long-term municipal bonds were underwritten,
representing an increase of more than 15% over the same six-month
period last year. This increased supply, coupled with the high
returns the US equity market generated for much of 1998, was one of
the major reasons municipal bond yields declined less than their
taxable counterparts during the period.
MuniYield Florida Insured Fund
October 31, 1998
The continued increase in new bond issuance has required ever-lower
tax-exempt bond yields to generate the economic savings necessary
for additional municipal bond financings. Consequently, the pace of
new bond issuance has slowed in recent months. In fact, the trend
may be reversing. During the three months ended October 31, 1998,
just over $60 billion in new long-term municipal bonds were
underwritten, a decline of 4% compared to the same quarter a year
ago. During the month of October, there were less than $20 billion
in new municipal bond securities issued, a decline of over 10%
compared to October 1997. We will monitor this trend closely in the
coming months to determine if the supply pressures exerted thus far
in 1998 are abating and fostering a more balanced supply/demand
environment.
Throughout the six-month period ended October 31, 1998, municipal
bond yields followed a pattern that was similar to US Treasury
securities, although the yield declines were more muted. As measured
by the unmanaged Bond Buyer Revenue Bond Index, long-term, uninsured
tax-exempt revenue bond yields declined over 40 basis points to
5.09% by the end of September, their lowest level since the early
1970s. Municipal bond yields rose during October to end the period
at 5.24%. Over the past six months, long-term tax-exempt bond yields
declined almost 30 basis points.
Although municipal bond yields declined during the six-month period,
recent supply pressures and the absence of the safe haven status
enjoyed by US securities caused municipal bond yields to rise
relative to US Treasury bond yields. At October 31, 1998, long-term
tax-exempt bond yield spreads were attractive relative to US
Treasury securities of comparable maturities (over 100%), well in
excess of their historic range of 85%--88%. Tax-exempt bond yield
ratios have rarely exceeded 90% in the 1980s and 1990s.
Historically, yield spreads have been wider than these levels when
there have been potential changes in Federal tax codes that would
have adversely affected the tax-favored status of municipal bonds.
Currently, municipal bond investors find themselves in a unique
investment environment. Previous opportunities to purchase tax-
exempt bonds with yields exceeding that of comparable US Treasury
issues have been limited to relatively brief episodes and then
further limited to a few municipal credits undergoing specific
financial pressures. At present, almost the entire municipal bond
universe, across nearly all maturity and credit sectors, can be
purchased at yields greater than their taxable counterparts.
However, the current opportunity may quickly disappear should tax-
exempt bond supply pressures diminish or the safe-haven status of US
Treasury securities become less desirable. Under these conditions,
municipal bond ratios should quickly revert to more normal historic
percentages, certainly well below their presently attractive levels.
Portfolio Strategy
During the six-month period ended October 31, 1998, we maintained
our constructive investment strategy. The Asian equity market
turmoil created an increase in demand for US Treasury securities,
sending both taxable and tax-exempt bond yields lower. We believed a
continuation of equity market declines would have a negative impact
on economic growth, further constraining global inflation and
forcing interest rates lower. This proved to be true as turmoil
increased in various parts of the world, including Brazil and
Russia. Our constructive strategy enabled the Fund to fully
participate in the bond market rally and realize an attractive total
return.
We believe that interest rates are likely to continue to trend lower
in the months ahead. Global economic growth appears to be slowing
substantially. Central banks throughout the world, including the US
Federal Reserve Board, are trying to stimulate economic growth by
easing monetary policy. However, these actions are likely to have a
delayed impact. Consequently, our investment outlook will remain
constructive until there are signs that the economy has started
responding to the monetary stimulus.
MuniYield Florida Insured Fund
October 31, 1998
During the six-month period ended October 31, 1998, the yield on the
Fund's Auction Market Preferred Shares traded between 2.35% and
4.00%. Leverage continues to benefit the Common Shareholders by
significantly augmenting their yield. However, should the spread
between short-term and long-term tax-exempt 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 thank you for your support of MuniYield Florida Insured Fund, and
we look forward to serving your investment needs in the months and
years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(William R. Bock)
William R. Bock
Vice President and Portfolio Manager
December 7, 1998
We are pleased to announce that William R. Bock is responsible for
the day-to-day management of MuniYield Florida Insured Fund. Mr.
Bock has been employed by Merrill Lynch Asset Management, L.P. (an
affiliate of the Fund's investment adviser) since 1989 as Vice
President.
MuniYield Florida Insured Fund
October 31, 1998
PROXY RESULTS
During the six-month period ended October 31, 1998, MuniYield
Florida Insured Fund Common Shareholders voted on the following
proposals. The proposals were approved at a shareholders' meeting on
September 14, 1998. The description of each proposal and number of
shares voted are as follows:
<TABLE>
<CAPTION>
Shares Shares Withheld
Voted For From Voting
<S> <S> <C> <C>
1. To elect the Fund's Board of Trustees: Edward H. Meyer 7,945,373 160,244
Jack B. Sunderland 7,945,873 159,744
J. Thomas Touchton 7,947,373 158,244
Fred G. Weiss 7,947,373 158,244
Arthur Zeikel 7,943,573 162,044
<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. 8,001,180 21,903 82,534
</TABLE>
During the six-month period ended October 31, 1998, MuniYield
Florida Insured Fund Preferred Shareholders voted on the following
proposals. The proposals were approved at a shareholders' meeting on
September 14, 1998. The description of each proposal and number of
shares voted are as follows:
<TABLE>
<CAPTION>
Shares Shares Withheld
Voted For From Voting
<S> <S> <C> <C>
1. To elect the Fund's Board of Trustees: Donald Cecil 1,838 5
M. Colyer Crum 1,838 5
Edward H. Meyer 1,838 5
Jack B. Sunderland 1,838 5
J. Thomas Touchton 1,838 5
Fred G. Weiss 1,838 5
Arthur Zeikel 1,838 5
<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. 1,838 0 5
</TABLE>
MuniYield Florida Insured Fund
October 31, 1998
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 Shares
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, interest rates 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 such securities.
MuniYield Florida Insured Fund
October 31, 1998
PORTFOLIO ABBREVIATIONS
To simplify the listings of MuniYield Florida Insured Fund's
portfolio holdings in the Schedule of Invest-ments, 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
DATES Daily Adjustable Tax-Exempt Securities
HFA Housing Finance Authority
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Alaska--2.4%
<S> <S> <C> <S> <C>
A1+ P1 $ 4,600 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds (Exxon Pipeline
Co. Project), VRDN, Series C, 3.70% due 12/01/2033 (e) $ 4,600
Florida--101.1%
AAA Aaa 5,585 Auburndale, Florida, Water and Sewer Revenue Refunding Bonds, 5.25% due
12/01/2025 (a) 5,706
AAA Aaa 2,000 Bay Medical Center, Florida, Hospital Revenue Bonds (Bay Medical Center
Project), 5% due 10/01/2022 (a) 1,972
Boynton Beach, Florida, Utility System Revenue Bonds (b):
AAA Aaa 700 6.25% due 11/01/2020 (h) 826
AAA Aaa 3,375 Refunding, 6.25% due 11/01/2020 3,711
AAA Aaa 3,000 Brevard County, Florida, IDR (NUI Corporation Project), AMT, 6.40% due
10/01/2024 (a) 3,341
Citrus County, Florida, PCR, Refunding (Florida Power Corporation--Crystal
River) (c):
AAA Aaa 2,100 Series A, 6.625% due 1/01/2027 2,293
AAA Aaa 5,750 Series B, 6.35% due 2/01/2022 6,305
Dade County, Florida, Aviation Revenue Bonds, AMT, Series B (c):
AAA Aaa 2,650 6.55% due 10/01/2013 2,929
AAA Aaa 12,715 6.60% due 10/01/2022 14,052
AAA Aaa 5,000 (Miami International Airport), 5.75% due 10/01/2012 5,441
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) 4,975
AAA Aaa 5,000 Escambia County, Florida, HFA, S/F Mortgage Revenue Refunding Bonds (Multi-
County Program), AMT, 7% due 4/01/2028 (f)(g) 5,520
AAA Aaa 3,000 First Florida Governmental Financing Commission Revenue Bonds, 5.70% due
7/01/2017 (c) 3,241
AAA Aaa 1,150 Florida HFA (Brittany Rosemont Apartments), AMT, Series C-1, 6.75% due
8/01/2014 (a) 1,264
NR* Aaa 1,455 Florida HFA, Home Ownership Revenue Bonds, AMT, Series G-1, 7.90% due
3/01/2022 (g) 1,533
Florida State Board of Education, Public Education (Capital Outlay):
AA+ Aa2 3,000 Refunding, Series A, 7.25% due 6/01/2023 3,211
AA+ Aa2 1,750 Series B, 5.875% due 6/01/2020 1,884
AA+ Aa2 2,650 Series B, 5.875% due 6/01/2024 2,869
AAA Aaa 7,500 Series B, 4.50% due 6/01/2028 (c) 6,935
AAA Aaa 3,200 Florida State Department of General Services Revenue Bonds (Florida
Management Division--Pool Facilities), Series B, 4.50% due 9/01/2023 (i) 2,978
AAA Aaa 1,000 Hillsborough County, Florida, IDA, Revenue Bonds (Allegany Health System--
J. Knox Village), 6.375% due 12/01/2003 (c)(d) 1,088
</TABLE>
MuniYield Florida Insured Fund
October 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Florida (continued)
<S> <S> <C> <S> <C>
NR* Aaa $ 8,250 Indian Trace Community, Development District, Florida, Water Management
(Special Benefit Assessment), 5% due 5/01/2027 (c) $ 8,225
AAA Aaa 7,645 Jacksonville, Florida, Capital Improvement Revenue Refunding Bonds (Stadium
Project), 4.75% due 10/01/2025 (a) 7,331
AA Aa2 9,000 Jacksonville, Florida, Electric Authority Revenue Bonds, Series 3-A, 5.10%
due 10/01/2032 8,971
AAA Aaa 2,000 Jacksonville, Florida, Excise Taxes Revenue Refunding Bonds, 6.50% due
10/01/2013 (a) 2,214
NR* VMIG1++ 1,800 Jacksonville, Florida, Health Facilities Authority, Hospital Revenue
Refunding Bonds (Genesis Rehabilitation Hospital), VRDN, 3.75% due
5/01/2021 (e) 1,800
A1+ VMIG1++ 3,700 Jacksonville, Florida, PCR, Refunding (Florida Power and Light Co.
Project), VRDN, 3.70% due 5/01/2029 (e) 3,700
AAA NR* 2,345 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) 2,665
A- A3 5,000 Leesburg, Florida, Hospital Revenue Refunding Bonds (Leesburg Regional Medical
Center Project), Series A, 6.125% due 7/01/2012 5,375
AAA Aaa 3,000 Manatee County, Florida, School Board Refunding Bonds, COP, 4.875% due
7/01/2021 (c) 2,921
AAA Aaa 1,000 Marion County, Florida, Hospital District, Revenue Refunding Bonds (Monroe
Regional Medical Center), 6.25% due 10/01/2012 (b) 1,094
AAA Aaa 2,545 Miami Beach, Florida, Parking Revenue Bonds, 5.125% due 9/01/2022 (i) 2,554
Miami-Dade County, Florida, Special Obligation Bonds (c):
AAA Aaa 17,455 Refunding, Series A, 5.60%* * due 10/01/2024 4,435
AAA Aaa 5,000 Series B, 5% due 10/01/2037 4,949
AAA Aaa 2,515 North Miami Beach, Florida, UT, 6.30% due 2/01/2024 (b) 2,802
AAA Aaa 1,210 Okaloosa County, Florida, Gas District Revenue Bonds (Gas System), Series A,
5.20% due 10/01/2017 (c) 1,246
NR* Aaa 1,680 Orange County, Florida, School Board Refunding Bonds, COP, Series A, 5.375%
due 8/01/2017 (c) 1,748
Orange County, Florida, Tourist Development, Tax Revenue Bonds (a):
AAA Aaa 1,000 Refunding, Series A, 6.50% due 10/01/2010 1,109
AAA Aaa 4,815 Series B, 6.50% due 10/01/2002 (d) 5,394
AAA Aaa 1,500 Palm Beach County, Florida, Criminal Justice Facilities Revenue Bonds, 7.20%
due 6/01/2015 (b) 1,924
AAA Aaa 2,000 Palm Beach County, Florida, Solid Waste Authority, Revenue Refunding and
Improvement Bonds, 6.25% due 12/01/2002 (c)(d) 2,229
AAA Aaa 2,500 Pasco County, Florida, PCR, Refunding (Florida Power--Anclote), Series A,
6.35% due 2/01/2022 (c) 2,741
A1+ VMIG1++ 400 Pinellas County, Florida, Health Facilities Authority, Revenue Refunding
Bonds (Pooled Hospital Loan Program), DATES, 3.70% due 12/01/2015 (e) 400
A1+ VMIG1++ 2,300 Putnam County, Florida, Development Authority, PCR, Refunding (Florida Power &
Light Co. Project), VRDN, 3.70% due 9/01/2024 (e) 2,300
AAA Aaa 4,060 Saint Petersburg, Florida, Health Facilities Authority Revenue Bonds (Allegany
Health System), Series A, 7% due 12/01/2001 (c)(d) 4,528
AAA Aaa 5,000 Sarasota County, Florida, Public Hospital Board, Revenue Refunding Bonds
(Sarasota Memorial Hospital), Series B, 5.50% due 7/01/2028 (c) 5,392
AAA Aaa 4,920 Sarasota County, Florida, Utility System Revenue Bonds, 6.50% due
10/01/2004 (b)(d) 5,677
AAA Aaa 2,250 South Broward Hospital District, Florida, Revenue Bonds, RIB, Series C,
9.338% due 5/01/2001 (a)(d)(j) 2,652
</TABLE>
MuniYield Florida Insured Fund
October 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Florida (concluded)
<S> <S> <C> <S> <C>
AAA Aaa $ 2,275 South Florida Water Management District, Special Obligation Land Acquisition
Bonds, 6% due 10/01/2015 (a) $ 2,463
AAA Aaa 5,000 Tallahassee, Florida, Energy System, Revenue Refunding Bonds, Series A, 4.75%
due 10/01/2026 (i) 4,791
AAA Aaa 9,000 Tampa Bay, Florida, Water Utility System, Revenue Refunding Bonds, Series B,
4.75% due 10/01/2027 (b) 8,618
New York--0.6%
A1+ VMIG1++ 1,100 Long Island Power Authority, New York, Electric System Revenue Bonds, VRDN,
Sub-Series 5, 3.70% due 5/01/2033 (e) 1,100
Utah--0.5%
A1+ VMIG1++ 1,000 Emery County, Utah, PCR, Refunding (Pacificorp Projects), VRDN, 3.70% due
11/01/2024 (a)(e) 1,000
Puerto Rico--1.5%
A Baa1 3,000 Puerto Rico Commonwealth Highway and Transporation Authority, Transporation
Revenue Bonds, Series A, 5% due 7/01/2038 2,929
Total Investments (Cost--$193,198)--106.1% 203,951
Liabilities in Excess of Other Assets--(6.1%) (11,638)
--------
Net Assets--100.0% $192,313
========
<FN>
(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, 1998.
(f)FNMA Collateralized.
(g)GNMA Collateralized.
(h)Escrowed to maturity.
(i)FSA Insured.
(j)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, 1998.
*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.
See Notes to Financial Statements.
</TABLE>
QUALITY PROFILE
The quality ratings of securities in the Fund as of October 31, 1998
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 81.6%
AA/Aa 12.4
A/A 4.3
Other++ 7.8
[FN]
++Temporary investments in short-term municipal securities.
MuniYield Florida Insured Fund
October 31, 1998
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of October 31, 1998
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$193,197,913) (Note 1a) $203,951,406
Cash 66,934
Receivables:
Interest $ 2,228,385
Securities sold 1,120,818 3,349,203
------------
Prepaid expenses and other assets 7,323
------------
Total assets 207,374,866
------------
Liabilities: Payables:
Securities purchased 14,794,234
Dividends to shareholders (Note 1e) 106,587
Investment adviser (Note 2) 84,756 14,985,577
------------
Accrued expenses and other liabilities 76,335
------------
Total liabilities 15,061,912
------------
Net Assets: Net assets $192,312,954
============
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 (8,377,815 shares
issued and outstanding) $ 837,782
Paid-in capital in excess of par 116,707,746
Undistributed investment income--net 1,394,253
Undistributed realized capital gains on investments--net 2,619,680
Unrealized appreciation on investments--net 10,753,493
------------
Total--Equivalent to $15.79 net asset value per Common Share
(market price--$15.625) 132,312,954
------------
Total capital $192,312,954
============
<FN>
*Auction Market Preferred Shares.
See Notes to Financial Statements.
</TABLE>
MuniYield Florida Insured Fund
October 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Year Ended
October 31, 1998
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 10,402,482
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 951,732
Commission fees (Note 4) 152,232
Professional fees 75,693
Accounting services (Note 2) 49,352
Trustees' fees and expenses 26,127
Transfer agent fees 22,850
Printing and shareholder reports 22,188
Listing fees 16,187
Custodian fees 11,925
Pricing fees 8,964
Other 14,098
------------
Total expenses 1,351,348
------------
Investment income--net 9,051,134
------------
Realized & Realized gain on investments--net 4,616,775
Unrealized Gain Change in unrealized appreciation on investments--net (468,727)
(Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 13,199,182
(Notes 1b, ------------
1d & 3):
See Notes to Financial Statements.
</TABLE>
MuniYield Florida Insured Fund
October 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended
October 31,
Increase (Decrease) in Net Assets: 1998 1997
<S> <S> <C> <C>
Operations: Investment income--net $ 9,051,134 $ 9,218,942
Realized gain on investments--net 4,616,775 1,513,100
Change in unrealized appreciation/depreciation on investments--net (468,727) 2,822,054
------------ ------------
Net increase in net assets resulting from operations 13,199,182 13,554,096
------------ ------------
Dividends & Investment income--net:
Distributions to Common Shares (7,008,478) (7,118,026)
Shareholders Preferred Shares (1,895,496) (1,789,728)
(Note 1e): Realized gain on investments--net:
Common Shares (1,461,030) (1,857,429)
Preferred Shares (351,960) (523,706)
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 (10,716,964) (11,469,477)
------------ ------------
Beneficial Value of shares issued to Common Shareholders in reinvestment
Interest of dividends and distributions 425,744 --
Transactions ------------ ------------
(Note 4):
Net Assets: Total increase in net assets 2,907,962 2,084,619
Beginning of year 189,404,992 187,320,373
------------ ------------
End of year* $192,312,954 $189,404,992
============ ============
<FN>
*Undistributed investment income--net (Note 1f) $ 1,394,253 $ 1,243,605
============ ============
See Notes to Financial Statements.
</TABLE>
MuniYield Florida Insured Fund
October 31, 1998
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements.
For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 15.50 $ 15.25 $ 15.16 $ 13.70 $ 16.56
Operating -------- -------- -------- -------- --------
Performance: Investment income--net 1.09 1.10 1.08 1.12 1.13
Realized and unrealized gain (loss) on
investments--net .48 .52 .17 1.45 (2.70)
-------- -------- -------- -------- --------
Total from investment operations 1.57 1.62 1.25 2.57 (1.57)
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Shareholders:
Investment income--net (.84) (.85) (.84) (.84) (.91)
Realized gain on investments--net (.17) (.22) (.06) -- (.15)
In excess of realized gain on
investments--net -- (.02) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Shareholders (1.01) (1.09) (.90) (.84) (1.06)
-------- -------- -------- -------- --------
Effect of Preferred Share activity:
Dividends and distributions to Preferred
Shareholders:
Investment income--net (.23) (.21) (.24) (.27) (.20)
Realized gain on investments--net (.04) (.07) (.02) -- (.03)
In excess of realized gain on
investments--net -- --++ -- -- --
-------- -------- -------- -------- --------
Total effect of Preferred Share activity (.27) (.28) (.26) (.27) (.23)
-------- -------- -------- -------- --------
Net asset value, end of year $ 15.79 $ 15.50 $ 15.25 $ 15.16 $ 13.70
======== ======== ======== ======== ========
Market price per share, end of year $ 15.625 $ 15.00 $ 14.125 $ 13.50 $ 11.375
======== ======== ======== ======== ========
Total Investment Based on market price per share 11.21% 14.41% 11.48% 26.46% (27.46%)
Return:* ======== ======== ======== ======== ========
Based on net asset value per share 8.76% 9.50% 7.18% 17.91% (10.98%)
======== ======== ======== ======== ========
Ratios to Average Expenses .71% .71% .73% .75% .75%
Net Assets:** ======== ======== ======== ======== ========
Investment income--net 4.76% 4.92% 4.88% 5.18% 4.99%
======== ======== ======== ======== ========
Supplemental Net assets, net of Preferred Shares,
Data: end of year (in thousands) $132,313 $129,405 $127,320 $126,557 $114,441
======== ======== ======== ======== ========
Preferred Shares outstanding, end of
year (in thousands) $ 60,000 $ 60,000 $ 60,000 $ 60,000 $ 60,000
======== ======== ======== ======== ========
Portfolio turnover 62.35% 73.79% 156.11% 107.90% 51.81%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,205 $ 3,157 $ 3,122 $ 3,109 $ 2,907
======== ======== ======== ======== ========
Dividends Investment income--net $ 790 $ 746 $ 832 $ 925 $ 688
Per Share on ======== ======== ======== ======== ========
Preferred Shares
Outstanding:++++
<FN>
*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.
++Amount is less than $.01 per share.
++++Dividends per share have been adjusted to reflect a two-for-one
stock split that occurred on December 1, 1994.
See Notes to Financial Statements.
</TABLE>
MuniYield Florida Insured Fund
October 31, 1998
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 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 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.
* 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 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.
MuniYield Florida Insured Fund
October 31, 1998
(e) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
(f) 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 $468
have been reclassified between undistributed net realized capital
gains and undistributed net investment income and $3,020 has been
reclassified between paid-in capital in excess of par 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, including proceeds from the
issuance of 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 October 31, 1998 were $117,066,801 and
$118,858,371, respectively.
Net realized gains for the year ended October 31, 1998 and net
unrealized gains as of October 31, 1998 were as follows:
Realized Unrealized
Gains Gains
Long-term investments $4,616,775 $10,753,493
---------- -----------
Total $4,616,775 $10,753,493
========== ===========
As of October 31, 1998, net unrealized appreciation for Federal
income tax purposes aggregated $10,753,493, of which $11,099,498
related to appreciated securities and $346,005 related to
depreciated securities. The aggregate cost of investments at October
31, 1998 for Federal income tax purposes was $193,197,913.
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 beneficial interest without approval of the holders of
Common Shares.
Common Shares
Shares issued and outstanding during the year ended October 31, 1998
increased by 27,352 as a result of dividend reinvestment and during
the year ended October 31, 1997 remained constant.
Preferred Shares
Auction Market Preferred Shares ("AMPS") are Preferred Shares of the
Fund, with a par value of $.05 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 October 31, 1998
was 3.25%.
Shares issued and outstanding during the years ended October 31,
1998 and October 31, 1997 remained constant.
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, 1998, Merrill Lynch, Pierce, Fenner & Smith Inc., an
affiliate of FAM, earned $87,681 as commissions.
5. Subsequent Event:
On November 5, 1998, the Fund's Board of Trustees declared an
ordinary income dividend to Common Shareholders in the amount of
$.071351 per share, payable on November 27, 1998 to shareholders of
record as of November 20, 1998.
MuniYield Florida Insured Fund
October 31, 1998
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
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, 1998, the related statement
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, 1998 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 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, 1998, 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 10, 1998
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by MuniYield
Florida Insured Fund during its taxable year ended October 31, 1998
qualify as tax-exempt interest dividends for Federal Income tax
purposes. Additionally, the following table summarizes the per share
capital gains distributions paid by the Fund during the year:
<TABLE>
<CAPTION>
Payable Ordinary Long-Term
Date Income Capital Gains*
<S> <C> <C> <C>
Common Shareholders 12/30/97 $ .077561 $ .097299
Preferred Shareholders 11/18/97 $10.71 $13.22
11/25/97 $13.01 $16.08
12/02/97 $12.43 $15.48
12/09/97 $12.63 $15.84
12/16/97 $12.14 $15.38
12/23/97 $ 4.13 $ 5.60
<FN>
*Of this distribution, 73.16% is subject to the 28% tax rate and
26.84% is subject to the 20% tax rate.
Please retain this information for your records.
</TABLE>
MuniYield Florida Insured Fund
October 31, 1998
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 Common Shares of the Fund, 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 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
Arthur Zeikel, President and Trustee
Donald Cecil, Trustee
M. Colyer Crum, Trustee
Edward H. Meyer, Trustee
Jack B. Sunderland, Trustee
J. Thomas Touchton, Trustee
Fred G. Weiss, Trustee
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
William R. Bock, Vice President
Donald C. Burke, 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
