Blackrock Muniholdings Quality Fund DEF 14A Definitive proxy

MUNIHOLDINGS FUND, INC.
MUNIHOLDINGS INSURED FUND, INC.
P.O. Box 9011
Princeton, New Jersey 08543-9011

NOTICE OF 2002 ANNUAL MEETINGS OF STOCKHOLDERS

TO BE HELD ON AUGUST 22, 2002

TO THE STOCKHOLDERS OF
MUNIHOLDINGS FUND, INC.
MUNIHOLDINGS INSURED FUND, INC.:

NOTICE IS HEREBY GIVEN that the 2002 Annual Meeting of Stockholders (each, a “Meeting” and collectively, the “Meetings”) of each of MuniHoldings Fund, Inc. (“MuniHoldings”) and MuniHoldings Insured Fund, Inc. (“MuniHoldings Insured”) (each a “Fund” and, collectively, the “Funds”) will be held at the offices of Fund Asset Management, L.P., 800 Scudders Mill Road, Plainsboro, New Jersey, on Thursday, August 22, 2002 at 9:00 a.m. for stockholders of MuniHoldings and at 9:20 a.m. for stockholders of MuniHoldings Insured for the following purposes:

(1)

To elect a Board of Directors of each Fund to serve for the ensuing year; and

(2)

To transact such other business as may properly come before the Meeting or any adjournment thereof.

Each Fund’s Board of Directors has fixed the close of business on June 27, 2002 as the record date for the determination of stockholders entitled to notice of and to vote at the applicable Fund’s Meeting or any adjournment thereof.

A complete list of the stockholders of each Fund entitled to vote at its Meeting will be available and open to the examination of any stockholder of that Fund for any purpose germane to the Meeting during ordinary business hours from and after August 8, 2002, at the offices of the Funds, 800 Scudders Mill Road, Plainsboro, New Jersey 08536. You are cordially invited to attend the Meeting.Stockholders who do not expect to attend the Meeting in person are requested to complete, date and sign the enclosed form of proxy and return it promptly in the envelope provided for this purpose. If you have been provided with the opportunity on your proxy card or voting instruction form to provide voting instructions via telephone or the Internet, please take advantage of these prompt and efficient voting options. The enclosed proxy is being solicited on behalf of the Board of Directors of each Fund.

If you have any questions regarding the enclosed proxy material or need assistance in voting your shares, please contact our proxy solicitor, Georgeson Shareholder, at 1-800-645-4519.

	By Order of the Boards of Directors

	ALICE A. PELLEGRINO
	Secretary of MuniHoldings Fund, Inc. and MuniHoldings Insured Fund, Inc.

Plainsboro, New Jersey
Dated: July 22, 2002

COMBINED PROXY STATEMENT

MUNIHOLDINGS FUND, INC.
MUNIHOLDINGS INSURED FUND, INC.
P.O. Box 9011
Princeton, New Jersey 08543-9011

2002 ANNUAL MEETINGS OF STOCKHOLDERS

August 22, 2002

INTRODUCTION

This Combined Proxy Statement is furnished in connection with the solicitation of proxies on behalf of the Boards of Directors of MuniHoldings Fund, Inc. (“MuniHoldings”) and MuniHoldings Insured Fund, Inc. (“MuniHoldings Insured”) (each, a “Fund” and, collectively, the “Funds”) to be voted at the 2002 Annual Meetings of Stockholders of each Fund (each, a “Meeting” and collectively, the “Meetings”), to be held at the offices of Fund Asset Management, L.P. (“FAM”), 800 Scudders Mill Road, Plainsboro, New Jersey, on Thursday, August 22, 2002 at 9:00 a.m. for stockholders of MuniHoldings and 9:20 a.m. for the stockholders of MuniHoldings Insured. The approximate mailing date of this Combined Proxy Statement is July 22, 2002.

All properly executed proxies received prior to the Meetings will be voted at the Meetings in accordance with the instructions marked thereon or otherwise as provided therein. Unless instructions to the contrary are marked, such proxies will be voted for the election of the Board of Directors to serve for the ensuing year. Any proxy may be revoked at any time prior to the exercise thereof by giving written notice to the Secretary of the applicable Fund at that Fund’s address indicated above or by voting in person at the Meeting.

The Board of Directors of each Fund has fixed the close of business on June 27, 2002 as the record date (the “Record Date”) for the determination of stockholders entitled to notice of and to vote at the applicable Fund’s Meeting and at any adjournment thereof. Stockholders on the Record Date will be entitled to one vote for each share held, with no shares having cumulative voting rights. As of the Record Date, MuniHoldings had outstanding 13,795,227 shares of common stock, and MuniHoldings Insured had outstanding 12,867,541 shares of common stock (collectively, “Common Stock”). As of the Record Date, MuniHoldings had outstanding 4,400 shares and MuniHoldings Insured had 5,360 shares of auction market preferred stock, par value $.10 per share and liquidation preference of $25,000 per share plus an amount equal to accumulated but unpaid dividends thereon (collectively, “AMPS”). To the knowledge of each Fund, as of the Record Date, no person is the beneficial owner of more than five percent of its outstanding Common Stock or five percent of its outstanding AMPS. This Combined Proxy Statement is being provided to the holders of Common Stock and AMPS of each Fund.

The Board of Directors of each Fund knows of no business other than that mentioned in Item 1 of the Notice of Meeting that will be presented for consideration at the Meeting. If any other matter is properly presented, it is the intention of the persons named in the enclosed proxy to vote in accordance with their best judgment.

ITEM 1. ELECTION OF DIRECTORS

At the Meetings, the Board of Directors of each Fund will be elected to serve until the next Annual Meeting of Stockholders of that Fund and until their successors are elected and qualified. It is intended that all properly executed proxies will be voted (unless such authority has been withheld in the proxy) as follows:

(1)

All such proxies of the holders of shares of AMPS, voting separately as a class, in favor of the two (2) persons designated as Directors to be elected by holders of AMPS; and

(2)

All such proxies of the holders of shares of Common Stock and AMPS, voting together as a single class, in favor of the six (6) persons designated as Directors to be elected by holders of Common Stock and AMPS.

The Board of Directors of each Fund knows of no reason why any of these nominees will be unable to serve, but in the event of any such unavailability, the proxies received will be voted for such substitute nominee or nominees as the Boards of Directors may recommend.

Certain information concerning the nominees, including their designated classes, is set forth below:

Directors To Be Elected by Holders of AMPS, Voting Separately as a Class:

Name, Address* and Age of AMPS Nominees**		Position(s) Held with each Fund and Length of Time Served†		Principal Occupation(s) During Past Five Years		Number of FAM/MLIM- Advised Funds# and Portfolios Overseen		Public Directorships
Charles C. Reilly (71)		Director of each Fund since 1997		Self-employed financial consultant since 1990; President and Chief Investment Officer of Verus Capital, Inc. from 1979 to 1990; Senior Vice President of Arnhold and S. Bleichroeder, Inc. from 1973 to 1990; Adjunct Professor, Columbia University Graduate School of Business from 1990 to 1991; Adjunct Professor, Wharton School, University of Pennsylvania from 1989 to 1990; Partner, Small Cities Cable Television from 1986 to 1997.		45 registered investment companies consisting of 54 portfolios		None

(footnotes continued on next page)

Name, Address* and Age of AMPS Nominees**		Position(s) Held with each Fund and Length of Time Served†		Principal Occupation(s) During Past Five Years		Number of FAM/MLIM- Advised Funds# and Portfolios Overseen		Public Directorships
Richard R. West (64)		Director of each Fund since 1997		Professor of Finance since 1984, Dean from 1984 to 1993 and currently Dean Emeritus of New York University Leonard N. Stern School of Business Administration.		49 registered investment companies consisting of 62 portfolios		Bowne & Co., Inc. (financial printers); Vornado Realty Trust, Inc. (real estate holding company); Vornado Operating Company (real estate company) Alexander’s, Inc. (real estate company)

*		The addres of each nominee is P.O. Box 9011, Princeton, New Jersey 08543-9011.
**		Each of the nominees is a director, trustee or member of an advisory board of certain other investment companies for which FAM or its affiliate, Merrill Lynch Investment Managers, L.P. (“MLIM”), acts as an investment adviser and is a member of the audit committee of the funds for which he currently serves as a director or trustee and will be a member of each Fund’s Audit and Oversight Committee if elected a Director.

†

Each Director serves until his successor is elected and qualified, or until his earlier death or resignation, or removal as provided in the Funds’ respective by-laws or charters or by statute, or until December 31 of the year in which he turns 72.

The complex of funds advised by FAM and its affiliate, MLIM.

Directors to be Elected by Holders of Common Stock and AMPS, Voting Together as a Single Class:

Certain biographical and other information relating to the nominee who is an “interested person,” as defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”), of the Funds is set forth below:

	Name, Address and Age of Nominee		Position(s) Held with each Fund and Length of Time Served†		Principal Occupation(s) During Past Five Years		Number of FAM/MLIM- Advised Funds# and Portfolios Overseen		Public Directorships
Terry K. Glenn (61)*(1) P.O. Box 9011 Princeton, New Jersey 08543-9011			President** and Director of each Fund since 1999		Chairman (Americas Region) since 2000 and Executive Vice President since 1983 of FAM and Merrill Lynch Investment Managers, L.P. (“MLIM”) (which terms as used herein include their corporate predecessors); President of Merrill Lynch Mutual Funds since 1999; President of FAM Distributors, Inc. (“FAMD”) since 1986 and Director thereof since 1991; Executive Vice President and Director of Princeton Services, Inc. (“Princeton Services”) since 1993; President of Princeton Administrators, L.P. since 1988; Director of Financial Data Services, Inc. (“FDS”) since 1985.		115 registered investment companies consisting of 183 portfolios		None

(footnotes continued on next page)

†

Serves until his successor is elected and qualified, or until his earlier death or resignation, or removal as provided in the Funds’ respective by-laws or charters or by statute, or until December 31 of the year in which he turns 72.

Mr. Glenn is an “interested person,” as defined in the Investment Company Act, of each Fund based on his positions with FAM, MLIM, FAMD, Princeton Services and Princeton Administrators, L.P.

Elected by and serves at the pleasure of the Board of Directors.

(1)

Mr. Glenn was elected President of each Fund in 1999. Prior to that he served as Executive Vice President of each Fund.

The complex of funds advised by FAM and its affiliate, MLIM.

Certain biographical and other information relating to the nominees who are not “interested persons,” as defined in the Investment Company Act, of the Funds is set forth below:

	Name, Address* and Age of Nominees**	Position(s) Held with each Fund and Length of Time Served†	Principal Occupation(s) During Past Five Years	Number of FAM/MLIM- Advised Funds# and Portfolios Overseen	Public Directorships
Cynthia A. Montgomery (49)		Director of each Fund since 1997	Professor, Harvard Business School since 1989; Associate Professor, J.L. Kellogg Graduate School of Management, Northwestern University from 1985 to 1989; Associate Professor, Graduate School of Business Administration, the University of Michigan from 1979 to 1985.	45 registered investment companies consisting of 54 portfolios	UnumProvident Corporation (insurance products); Newell Rubbermaid Inc.

Ronald W. Forbes (61)		Director of each Fund since 1997	Professor Emeritus of Finance, School of Business, State University of New York at Albany since 2000 and Professor thereof from 1989 to 2000; International Consultant, Urban Institute, Washington, D.C. from 1995 to 1999.	45 registered investment companies consisting of 54 portfolios	None

Kevin A. Ryan (69)		Director of each Fund since 1997	Founder and currently Director Emeritus of the Boston University Center for the Advancement of Ethics and Character and Director thereof from 1989 to 1999; Professor from 1982 to 1999 and currently Professor Emeritus of Education of Boston University; formerly taught on the faculties of The University of Chicago, Stanford University and Ohio State University.	45 registered investment companies consisting of 54 portfolios	None

Roscoe S. Suddarth (66)		Director of each Fund since 2000	President, Middle East Institute, from 1995 to 2001; Foreign Service Officer, United States Foreign Service, from 1961 to 1995; Career Minister, from 1989 to 1995; Deputy Inspector General, U.S. Department of State, from 1991 to 1994; U.S. Ambassador to the Hashemite Kingdom of Jordan, from 1987 to 1990.	45 registered investment companies consisting of 54 portfolios	None

(footnotes continued on next page)

	Name, Address* and Age of Nominees**		Position(s) Held with each Fund and Length of Time Served†		Principal Occupation(s) During Past Five Years		Number of FAM/MLIM- Advised Funds# and Portfolios Overseen		Public Directorships
Edward D. Zinbarg (67)			Director of each Fund since 2000		Self-employed financial consultant since 1994; Executive Vice President of the Prudential Insurance Company of America from 1988 to 1994; Former Director of Prudential Reinsurance Company and former Trustee of the Prudential Foundation.		45 registered investment companies consisting of 54 portfolios		None

The address of each director listed above is P.O. Box 9011, Princeton, New Jersey 08543-9011.

Each of the nominees is a director, trustee or member of an advisory board of certain other investment companies for which FAM or its affiliate, MLIM, acts as an investment adviser and is a member of the audit committee of the funds for which he or she currently serves as a director or trustee and will be a member of each Fund’s Audit and Oversight Committee if elected a Director.

†

Each Director serves until his or her successor is elected and qualified, or until his or her earlier death or resignation, or removal as provided in the Funds’ respective by-laws or charters or by statute, or until December 31 of the year in which he or she turns 72.

The complex of funds advised by FAM and its affiliate, MLIM.

Audit Committee Report

The Board of Directors of each Fund has a standing Audit and Oversight Committee (the “Committee”), which consists of the Directors who are not “interested persons” of the Fund within the meaning of the Investment Company Act and who are “independent” as defined in the listing standards of the New York Stock Exchange. Currently, Messrs. Forbes, Reilly, Ryan, Suddarth, West and Zinbarg and Ms. Montgomery are members of the Committee. The principal responsibilities of the Committee are to: (i) recommend to the Board of Directors the selection, retention or termination of the Fund’s independent auditors; (ii) review with the independent auditors the scope, performance and anticipated cost of their audit; (iii) discuss with the independent auditors certain matters relating to the Fund’s financial statements, including any adjustment to such financial statements recommended by such independent auditors, or any other results of any audit; (iv) review on a periodic basis a formal written statement from the independent auditors with respect to their independence, discuss with the independent auditors any relationships or services disclosed in the statement that may impact the objectivity and independence of the Fund’s independent auditors and recommend that the Board of Directors take appropriate action in response to this statement to satisfy itself of the independent auditors’ independence; and (v) consider the comments of the independent auditors and management’s responses thereto with respect to the quality and adequacy of the Fund’s accounting and financial reporting policies and practices and internal controls.

Each Fund has adopted an Audit Committee Charter (the “Charter”) and most recently reviewed and reapproved the Charter on April 4, 2002. Each Fund’s Committee also has (a) received written disclosures and the letter required by Independence Standards Board Standard No. 1 from Ernst & Young LLP (“E&Y”), independent auditors for each Fund, and (b) discussed certain matters required to be discussed by Statements on Auditing Standards No. 61 with E&Y. Each Fund’s Committee has considered whether the provision of non-audit services by the Fund’s independent auditors is compatible with maintaining the independence of those auditors.

At its meeting held on June 11, 2002, each Fund’s Committee reviewed and discussed the audit of each Fund’s financial statements with Fund management and E&Y. Had any material concerns arisen during the course of the audit and the preparation of the audited financial statements mailed to stockholders and included in each Fund’s Annual Report to stockholders, the Committee would have been notified by Fund management or E&Y. The Committees received no such notifications. At the same meeting, each Committee recommended to the Board that each Fund’s audited financial statements for each Fund’s fiscal year ended April 30, 2002 be included in that Fund’s Annual Report to stockholders.

In addition to the above, each Fund’s Committee also reviews and nominates candidates to serve as non-interested Directors. The Committees generally will not consider nominees recommended by stockholders of a Fund. The non-interested Directors have retained independent legal counsel to assist them in connection with these duties.

Committee and Board of Directors Meetings

During each Fund’s last fiscal year ended April 30, 2002, the Boards of Directors held six meetings and the Committee held four meetings. Each of the Directors then in office attended at least 75% of the aggregate of the total number of meetings of the Board of Directors held during the fiscal year and, if a member, the total number of meetings of the Committee held during such period.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires the officers and Directors of each Fund and persons who own more than ten percent of a registered class of the Fund’s equity securities, to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission (the “SEC”) and the New York Stock Exchange. Officers, Directors and greater than ten percent stockholders are required by SEC regulations to furnish the Fund with copies of all Forms 3, 4 and 5 they file.

Based solely on each Fund’s review of the copies of such forms, and amendments thereto, furnished to it during or with respect to its most recent fiscal year, and written representations from certain reporting persons that they were not required to file Form 5 with respect to the most recent fiscal year, each Fund believes that all of its officers, Directors, greater than ten percent beneficial owners and other persons subject to Section 16 of the Exchange Act due to of the requirements of Section 30 of the Investment Company Act (i.e., any advisory board member, investment adviser or affiliated person of the Fund’s investment adviser) have complied with all filing requirements applicable to them with respect to transactions during the Fund’s most recent fiscal year except that Robert A. DiMella inadvertently made a late Form 5 filing reporting a change in beneficial ownership of MuniHoldings Common Stock.

Interested Persons

Each Fund considers Mr. Glenn to be an “interested person” of the Fund within the meaning of Section 2(a)(19) of the Investment Company Act based on his positions as Chairman (Americas Region) and Executive Vice President of FAM and MLIM, President of FAMD, Executive Vice President of Princeton Services, and President of Princeton Administrators, L.P.

Compensation of Directors

FAM, the investment adviser of each Fund, pays all compensation to all officers of each Fund and all Directors of each Fund who are affiliated with Merrill Lynch & Co., Inc. (“ML & Co.”) or its subsidiaries. Each Fund pays each Director not affiliated with FAM (each, a “non-interested Director”) an annual fee of $1,900 plus a fee of $150 for each in person Board meeting attended, together with such Director’s out-of-pocket expenses relating to attendance at such meetings. Each Fund also pays each member of its Committee, which consists of all the non-interested Directors, an annual fee of $1,900 plus a fee of $150 for each in person meeting attended, together with such Director’s out-of-pocket expenses relating to attendance at meetings. The Co-Chairmen of each Fund’s Committee receive an additional annual fee of $1,000.

The following table sets forth for the fiscal year ended April 30, 2002 compensation paid by each Fund to the non-interested Directors and, for the calendar year ended December 31, 2001, the aggregate compensation paid by all FAM/MLIM-Advised Funds to the non-interested Directors.

Name

Position
with
Fund

Compensation
from Fund

Pension or
Retirement Benefits
Accrued as Part of
Fund Expense

Estimated
Annual
Benefits upon
Retirement

Aggregate
Compensation
from Fund and
Other FAM/MLIM-
Advised Funds

Ronald W. Forbes*

Director