UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-8621
Name of Fund: MuniHoldings Florida Insured Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Terry K. Glenn, President, MuniHoldings
Florida Insured Fund, Inc., 800 Scudders Mill Road, Plainsboro, NJ
08536. Mailing address: P.O. Box 9011, Princeton, NJ 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 08/31/03
Date of reporting period: 09/01/02 - 08/31/03
Item 1 - Attach shareholder report
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MuniHoldings
Florida Insured Fund
Annual Report
August 31, 2003
[LOGO] Merrill Lynch Investment Managers
MuniHoldings Florida Insured Fund
The Benefits and Risks of Leveraging
MuniHoldings Florida Insured Fund utilizes leverage to seek to enhance the yield
and net asset value of its Common Shares. However, these objectives cannot be
achieved in all interest rate environments. To leverage, the Fund issues
Preferred Shares, which pay dividends at prevailing short-term interest rates,
and invests the proceeds in long-term municipal bonds. The interest earned on
these investments, net of dividends to Preferred Shares, is paid to Common
Shareholders in the form of dividends, and the value of these portfolio holdings
is reflected in the per share net asset value of the Fund's Common Shares.
However, in order to benefit Common Shareholders, the yield curve must be
positively sloped; that is, short-term interest rates must be lower than
long-term interest rates. At the same time, a period of generally declining
interest rates will benefit Common Shareholders. If either of these conditions
change, then the risks of leveraging will begin to outweigh the benefits.
To illustrate these concepts, assume a fund's Common Share capitalization of
$100 million and the issuance of Preferred Shares for an additional $50 million,
creating a total value of $150 million available for investment in long-term
municipal bonds. If prevailing short-term interest rates are approximately 3%
and long-term interest rates are approximately 6%, the yield curve has a
strongly positive slope. The fund pays dividends on the $50 million of Preferred
Shares based on the lower short-term interest rates. At the same time, the
fund's total portfolio of $150 million earns the income based on long-term
interest rates. Of course, increases in short-term interest rates would reduce
(and even eliminate) the dividends on the Common Shares.
In this case, the dividends paid to Preferred Shareholders are significantly
lower than the income earned on the fund's long-term investments, and therefore
the Common Shareholders are the beneficiaries of the incremental yield. However,
if short-term interest rates rise, narrowing the differential between short-term
and long-term interest rates, the incremental yield pickup on the Common Shares
will be reduced or eliminated completely. At the same time, the market value of
the fund's Common Shares (that is, its price as listed on the New York Stock
Exchange) may, as a result, decline. Furthermore, if long-term interest rates
rise, the Common Shares' net asset value will reflect the full decline in the
price of the portfolio's investments, since the value of the fund's Preferred
Shares does not fluctuate. In addition to the decline in net asset value, the
market value of the fund's Common Shares may also decline.
As a part of its investment strategy, the Fund may invest in certain securities
whose potential income return is inversely related to changes in a floating
interest rate ("inverse floaters"). In general, income on inverse floaters will
decrease when short-term interest rates increase and increase when short-term
interest rates decrease. Investments in inverse floaters may be characterized as
derivative securities and may subject the Fund to the risks of reduced or
eliminated interest payments and losses of invested principal. In addition,
inverse floaters have the effect of providing investment leverage and, as a
result, the market value of such securities will generally be more volatile than
that of fixed-rate, tax-exempt securities. To the extent the Fund invests in
inverse floaters, the market value of the Fund's portfolio and the net asset
value of the Fund's shares may also be more volatile than if the Fund did not
invest in these securities. As of August 31, 2003, the percentage of the Fund's
total net assets invested in inverse floaters was 6.49%.
Swap Agreements
The Fund may also invest in swap agreements, which are over-the-counter
contracts in which one party agrees to make periodic payments based on the
change in market value of a specified bond, basket of bonds, or index in return
for periodic payments based on a fixed or variable interest rate or the change
in market value of a different bond, basket of bonds or index. Swap agreements
may be used to obtain or reduce exposure to a bond or market without owning or
taking physical custody of securities.
2 MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003
A Letter From the President
Dear Shareholder
Now more than half behind us, 2003 has been a meaningful year in many respects.
Perhaps the most significant development was the conclusion of all-out war in
Iraq. Although not especially sensitive to geopolitical events, the municipal
market has not been exempt from the general market excitement we have seen since
fighting gave way to restructuring in Iraq.
Municipal bond yields rose and fell in response to war fears, equity market
uncertainty, sub par economic growth, unemployment and deflation. By the end of
August, long-term municipal revenue bond yields stood at 5.4%, as measured by
the Bond Buyer Revenue Bond Index. With many state deficits at record levels,
municipalities issued more than $390 billion in new long-term tax-exempt bonds
during the 12-month period ended August 31, 2003. The availability of bonds,
together with attractive yield ratios relative to U.S. Treasury issues, made
municipal bonds a popular fixed income investment alternative.
Against this backdrop, our portfolio managers continued to work diligently to
deliver on our commitment to provide superior performance within reasonable
expectations for risk and return. This included striving to outperform our peers
and the market indexes. With that said, remember also that the advice and
guidance of a skilled financial advisor can often mean the difference between
fruitful and fruitless investing. A financial professional can help you choose
those investments that will best serve you as you plan for your financial
future.
Finally, I am proud to premiere a new look to our shareholder communications.
Our portfolio manager commentaries have been trimmed and organized in such a way
that you can get the information you need at a glance, in plain language.
Today's markets are confusing enough. We want to help you put it all in
perspective. The report's new size also allows us certain mailing efficiencies.
Any cost savings in production or postage are passed on to the Fund and,
ultimately, to Fund shareholders.
We thank you for trusting Merrill Lynch Investment Managers with your investment
assets, and we look forward to serving you in the months and years ahead.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Trustee
MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003 3
[LOGO] Merrill Lynch Investment Managers
A Discussion With Your Fund's Portfolio Manager
The municipal market outperformed its taxable counterparts during the
fiscal year and remained an attractive fixed income investment alternative.
Discuss the recent market environment relative to municipal bonds.
During the past 12 months, long-term fixed income bond yields generally rose.
For the first eight months of the period, bond yields traded in a relatively
broad range. Volatile equity markets, concerns over the Iraq conflict and a sub
par economic recovery, particularly weak employment trends, all combined to
foster a generally benign fixed income environment. By the end of April 2003,
long-term U.S. Treasury bond yields had declined approximately 20 basis points
(.20%) to 4.77%. Weaker economic activity and continued reductions in short-term
interest rates by the Federal Reserve Board pushed bond yields even lower in May
and June to 4.17%. Bond yields rose dramatically in July and August in response
to stronger-than-expected domestic economic growth and a consensus that the
Federal Reserve Board had finished lowering interest rates to revive economic
activity. At the end of August 2003, long-term U.S. Treasury yields stood at
5.22%, an increase of approximately 30 basis points over the past year.
Long-term tax-exempt bond yields also rose over the 12 months, although to a
lesser extent than U.S. Treasury obligations. Yield volatility was lower than
that seen in U.S. Treasury issues, as municipal bond prices typically are less
sensitive to worldwide geopolitical pressures on a daily and weekly basis. By
the end of August, long-term municipal revenue bond yields, as measured by the
Bond Buyer Revenue Bond Index, stood at 5.40%, an increase of 15 basis points
during the past year. Over the 12-month period, the rise in tax-exempt bond
yields has been approximately half that seen in their taxable counterparts.
The municipal market's outperformance of the U.S. Treasury market during the
period has been especially impressive given the dramatic increase in new bond
issuance. During the past 12 months, municipalities have issued more than $390
billion in new securities, an increase of nearly 20% versus last year's
issuance. Recent semi-annual issuance has, in fact, exceeded the annual issuance
seen during much of the mid-1990s. Historically low interest rates over the past
year have been used by state and local governments as an opportunity to finance
existing infrastructure needs and refinance outstanding, higher-couponed issues.
Current estimates for 2003 municipal bond new issuance are approximately $350
billion, similar to 2002's record high issuance.
As an asset class, municipal bonds have remained an attractive investment
alternative, especially relative to U.S. Treasury issues. At the end of August
2003, long-term tax-exempt bond yields were 90% - 94% of comparable U.S.
Treasury issues, well in excess of their recent historic average of 85% - 88%.
Current yield ratios have made municipal securities attractive to both retail
and institutional investors. We expect the tax-exempt market's favorable
technical position to remain stable in the near term, therefore, an increase in
bond issuance during the remainder of 2003 is not likely to significantly impact
the municipal bond market's performance. Looking ahead, while many investors are
concerned about how economic growth might affect bond prices and yield, we
believe moderate economic growth, especially within a context of negligible
inflationary pressure, should not greatly endanger the positive fixed income
environments tax-exempt products have enjoyed.
How did the Fund perform during the fiscal year in light of the existing market
conditions?
For the year ended August 31, 2003, the Common Shares of MuniHoldings Florida
Insured Fund had a net annualized yield of 6.36%, based on a year-end per share
net asset value of $15.04 and $.956 per share income dividends. Over the same
period, the total investment return on the Fund's Common Shares was +4.17%,
based on a change in per share net asset value from $15.41 to $15.04, and
assuming reinvestment of $.955 per share ordinary income dividends.
For the six-month period ended August 31, 2003, the total investment return on
the Fund's Common Shares was -1.05%, based on a change in per share net asset
value from $15.70 to $15.04, and assuming reinvestment of $.480 per share
ordinary income dividends.
For the six-month period ended August 31, 2003, the Fund's Preferred Shares had
an average yield as follows: Series A, .99%; Series B, .96%; Series C, .91%;
Series D, .97%; and Series E, .99%.
4 MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003
For a description of the Fund's total investment return based on a change in the
per share market value (as measured by the trading price of the Fund's shares on
the New York Stock Exchange), and assuming reinvestment of dividends, please
refer to the Financial Highlights section of the Financial Statements included
in this report. As a closed-end fund, the Fund's shares may trade in the
secondary market at a premium or discount to the Fund's net asset value. As a
result, total investment returns based on changes in the Fund's market value can
vary significantly from total investment return based on changes in the Fund's
net asset value.
For the 12 months ended August 31, 2003, the Fund outperformed its Lipper
category of Florida Municipal Debt Funds, which had an average return of +3.40%.
What developments in the state of Florida impacted the Fund?
Overall, conditions in the state of Florida have been relatively favorable. The
state maintains solid credit ratings of Aa2, AA+ and AA, with a stable trend,
from Moody's, Standard & Poor's and Fitch, respectively. Florida continues to
attract new residents because of its climate, low cost of living and continued
job growth. These factors, along with a proactive state government, allow
Florida greater flexibility than many other states in responding to economic
downturns. Having said that, ongoing population increases have put some strain
on the state's social services programs, especially education, health care and
mass transit. While most state revenues have been below projections because of a
sluggish domestic economy, Florida General Fund revenues are projected to be up
by 1.6% in fiscal year 2003 and 2.6% in fiscal year 2004. The state has enacted
sizable budget cuts consisting of a hiring freeze, a rollback of tax breaks and
other expenditure reductions. These actions, in our opinion, affirm the state's
conservative fiscal nature.
The state has maintained a Budget Stabilization Fund of $959 million for fiscal
year 2003. However, Governor Jeb Bush is facing considerable financial pressure
from recently enacted voter-approved measures for increased spending on
education and a high-speed rail system. Because the cost could total up to $27
billion, the governor is expected to attempt to repeal these measures. The
state's fiscal year 2004 budget was recently passed by shifting increased costs
to local governments. In order to finance these additional costs, local
municipalities will have to increase property taxes or local sales taxes through
voter initiatives. As a result, the Fund's strategy has been to purchase insured
general obligation bonds and their equivalents to avoid price volatility
associated with any reduction in credit quality due to increased spending and/or
borrowing.
What changes were made to the portfolio during the period?
We maintained a neutral position in regard to interest rates throughout the
year, as we focused on seeking to reduce the Fund's volatility. We continued to
sell some of the Fund's 10-year - 15-year bonds and purchased larger-coupon
bonds maturing in 20 years - 30 years whenever they became available in the
market. These longer maturities are expected to enhance the Fund's income stream
and help preserve asset valuations during future periods of market volatility.
In terms of leverage, the Fund's borrowing costs remained below 1% during the
period. These attractive funding levels, in combination with a steep tax-exempt
yield curve, have generated a significant income benefit to the Fund's Common
Shareholders. Further declines in the Fund's borrowing costs would require
significant easing of monetary policy by the Federal Reserve Board. While such
action is not expected, neither is an increase in short-term interest rates. We
expect short-term borrowing costs to remain near current attractive levels for
the coming months. However, should the spread between short-term and long-term
interest rates narrow, the benefits of leverage will decline, and as a result,
reduce the yield on the Fund's Common Shares. (For a more complete explanation
of the benefits and risks of leveraging, see page 2 of this report to
shareholders.)
How would you characterize the Fund's position at the close of the period?
At the close of the period, the Fund remained in a neutral position. We believe
the municipal market will continue to be volatile over the next few months,
therefore, we intend to maintain our current stance.
Robert D. Sneeden
Vice President and Portfolio Manager
September 9, 2003
MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003 5
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (in Thousands)
S&P Moody's Face
State Ratings+ Ratings+ Amount Municipal Bonds Value
- -----------------------------------------------------------------------------------------------------------------------------------
Florida--152.0% AA NR* $ 5,670 Beacon Tradeport Community Development District, Florida, Special
Assessment Revenue Refunding Bonds (Commercial Project), Series A,
5.625% due 5/01/2032 (k) $ 5,831
-------------------------------------------------------------------------------------------------------------
Brevard County, Florida, HFA, S/F Mortgage Revenue Bonds,
AMT (d)(g):
NR* Aaa 3,510 6.80% due 3/01/2028 3,619
NR* Aaa 460 (Multi-County Program), 6.30% due 3/01/2020 484
-------------------------------------------------------------------------------------------------------------
NR* Aaa 1,310 Broward County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT,
6.70% due 2/01/2028 (d)(g) 1,345
-------------------------------------------------------------------------------------------------------------
Clay County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT (d):
NR* Aaa 2,170 6.55% due 3/01/2028 (i) 2,215
NR* Aaa 1,325 (Multi-County Program), 6.375% due 10/01/2026 (g) 1,389
-------------------------------------------------------------------------------------------------------------
AAA Aaa 1,320 Clay County, Florida, School Board, COP (Master Lease Program),
5.75% due 7/01/2022 (a) 1,420
-------------------------------------------------------------------------------------------------------------
NR* NR* 5,000 Collier County, Florida, IDA, IDR, Refunding (Southern States
Utilities), AMT, 6.50% due 10/01/2025 4,849
-------------------------------------------------------------------------------------------------------------
AAA NR* 11,350 Dade County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT, 6.70%
due 4/01/2028 (d)(g) 11,737
-------------------------------------------------------------------------------------------------------------
Dade County, Florida, Water and Sewer System Revenue Bonds (h):
AAA Aaa 20,575 5.25% due 10/01/2021 21,132
AAA Aaa 21,640 5.25% due 10/01/2026 21,959
-------------------------------------------------------------------------------------------------------------
NR* Aaa 6,300 Duval County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT,
6.30% due 10/01/2029 (a)(d)(g) 6,577
-------------------------------------------------------------------------------------------------------------
Escambia County, Florida, HFA, S/F Mortgage Revenue Refunding
Bonds (Multi-County Program), AMT, Series A (a)(d)(g)(i):
NR* Aaa 2,200 6.30% due 10/01/2020 2,315
NR* Aaa 8,000 6.375% due 10/01/2026 8,389
-------------------------------------------------------------------------------------------------------------
NR* Aaa 18,600 Escambia County, Florida, Health Facilities Authority, Health
Facility Revenue Bonds (Florida Health Care Facility Loan), 5.95%
due 7/01/2020 (b) 19,982
-------------------------------------------------------------------------------------------------------------
AAA Aaa 5,580 Escambia County, Florida, Health Facilities Authority, Revenue
Refunding Bonds (Ascension Health Credit), Series A-1, 5.75%
due 11/15/2009 (b)(j) 6,482
-------------------------------------------------------------------------------------------------------------
AAA Aaa 3,535 Florida HFA, Homeowner Mortgage Revenue Refunding Bonds, AMT,
Series 2, 5.75% due 7/01/2014 (a) 3,659
-------------------------------------------------------------------------------------------------------------
AAA Aaa 14,730 Florida HFA Revenue Refunding Bonds, AMT, RITR, Series 12, 10.52%
due 7/01/2029 (a)(f) 15,409
-------------------------------------------------------------------------------------------------------------
AAA Aaa 2,085 Florida HFA, S/F Mortgage Revenue Refunding Bonds, AMT, Series A,
6.65% due 1/01/2024 (d)(g) 2,154
-------------------------------------------------------------------------------------------------------------
AAA Aaa 2,355 Florida Housing Finance Corporation, Homeowner Mortgage Revenue
Refunding Bonds, AMT, Series 4, 6.25% due 7/01/2022 (c) 2,453
-------------------------------------------------------------------------------------------------------------
AAA Aaa 2,055 Florida Housing Finance Corporation, Housing Revenue Bonds
(Waverly Apartments), AMT, Series C-1, 6.30% due 7/01/2030 (c) 2,183
Portfolio Abbreviations
To simplify the listings of MuniHoldings Florida Insured Fund's portfolio
holdings in the Schedule of Investments, we have abbreviated the names of many
of the securities according to the list at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
DRIVERS Derivative Inverse Tax-Exempt Receipts
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
6 MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003
Schedule of Investments (continued) (in Thousands)
S&P Moody's Face
State Ratings+ Ratings+ Amount Municipal Bonds Value
- -----------------------------------------------------------------------------------------------------------------------------------
Florida Florida Municipal Loan Council Revenue Bonds, Series B (a):
(continued) AAA Aaa $ 1,285 5.375% due 11/01/2025 $ 1,311
AAA Aaa 4,150 5.375% due 11/01/2030 4,218
-------------------------------------------------------------------------------------------------------------
Florida State Board of Education, Capital Outlay, GO, Public
Education, Series C (h):
AAA Aaa 6,600 5.75% due 6/01/2023 7,092
AAA Aaa 1,000 5.75% due 6/01/2029 1,065
-------------------------------------------------------------------------------------------------------------
Florida State Board of Education, Capital Outlay, GO (c):
AAA Aaa 7,000 Public Education, Series E, 5.625% due 6/01/2029 7,342
AAA Aaa 6,900 Series A, 5.90% due 1/01/2005 (j) 7,392
-------------------------------------------------------------------------------------------------------------
AAA AAA 4,550 Florida State Board of Education, GO, Public Education, Refunding,
Series D, 5.75% due 6/01/2022 (c) 5,021
-------------------------------------------------------------------------------------------------------------
AAA Aaa 12,000 Florida State Board of Education, GO, Public Education, Series B,
5.75% due 6/01/2005 (a)(j) 13,037
-------------------------------------------------------------------------------------------------------------
AAA NR* 12,725 Florida State Board of Education, Lottery Revenue Bonds, DRIVERS,
Series 222, 11.34% due 7/01/2017 (f)(h) 16,483
-------------------------------------------------------------------------------------------------------------
Florida State Board of Regents, Housing Revenue Bonds (h):
AAA Aaa 1,000 (University of Central Florida), 5.25% due 10/01/2026 1,016
AAA Aaa 1,080 (University of Florida), 6% due 7/01/2018 1,216
-------------------------------------------------------------------------------------------------------------
AAA Aaa 7,165 Florida State Board of Regents, University Systems Improvement
Revenue Bonds, 5.25% due 7/01/2022 (a) 7,320
-------------------------------------------------------------------------------------------------------------
AAA Aaa 3,505 Florida State Department of General Services, Division Facilities
Management Revenue Bonds (Florida Facilities Pool), Series A, 6%
due 9/01/2025 (b) 3,833
-------------------------------------------------------------------------------------------------------------
AAA NR* 14,325 Florida State Turnpike Authority, Turnpike Revenue Bonds, DRIVERS,
Series 218, 11.34% due 7/01/2029 (f)(h) 17,315
-------------------------------------------------------------------------------------------------------------
Florida State Turnpike Authority, Turnpike Revenue Bonds
(Department of Transportation), Series A:
AAA Aa3 3,590 5.50% due 7/01/2016 (a) 3,878
AA- Aa3 2,835 5.75% due 7/01/2019 3,083
-------------------------------------------------------------------------------------------------------------
A A3 7,135 Highlands County, Florida, Health Facilities Authority Revenue
Bonds (Adventist Health System/Sunbelt Obligated Group), Series A,
6% due 11/15/2031 7,427
-------------------------------------------------------------------------------------------------------------
Hillsborough County, Florida, IDA, Hospital Revenue Refunding Bonds
(Tampa General Hospital Project), Series B:
NR* Baa1 1,000 5.25% due 10/01/2028 933
NR* Baa1 8,650 5.25% due 10/01/2034 8,012
-------------------------------------------------------------------------------------------------------------
AAA Aaa 4,500 Hillsborough County, Florida, IDA, PCR, Refunding (Tampa Electric
Company Project), 6.25% due 12/01/2034 (a) 4,828
-------------------------------------------------------------------------------------------------------------
Hillsborough County, Florida, School Board, COP (a):
AAA Aaa 33,400 6% due 7/01/2009 (j) 39,010
NR* Aaa 6,600 5.375% due 7/01/2026 6,798
-------------------------------------------------------------------------------------------------------------
AAA Aaa 1,300 Indian River County, Florida, Water and Sewer Revenue Refunding
Bonds, Series A, 5.25% due 9/01/2018 (h) 1,361
MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003 7
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (continued) (in Thousands)
S&P Moody's Face
State Ratings+ Ratings+ Amount Municipal Bonds Value
- -----------------------------------------------------------------------------------------------------------------------------------
Florida AAA NR* $ 2,415 Jacksonville, Florida, Electric Authority, Electric System Revenue
(continued) Refunding Bonds, Series 3-A, 6% due 10/01/2030 (a) $ 2,580
-------------------------------------------------------------------------------------------------------------
AAA Aaa 7,305 Jacksonville, Florida, Guaranteed Entitlement Revenue Refunding
and Improvement Bonds, 5.25% due 10/01/2032 (h) 7,399
-------------------------------------------------------------------------------------------------------------
Jacksonville, Florida, Port Authority, Airport Revenue Bonds, AMT,
Series A (h):
AAA Aaa 1,295 6.10% due 10/01/2018 1,407
AAA Aaa 8,385 6.25% due 10/01/2024 9,146
-------------------------------------------------------------------------------------------------------------
Jacksonville, Florida, Port Authority, Seaport Revenue Bonds, AMT:
NR* Aaa 1,130 5.625% due 11/01/2010 (j) 1,268
NR* Aaa 1,870 5.625% due 11/01/2026 (a) 1,920
-------------------------------------------------------------------------------------------------------------
Jacksonville, Florida, Sales Tax Revenue Bonds (b):
AAA Aaa 2,000 5.50% due 10/01/2016 2,168
AAA Aaa 3,800 5.50% due 10/01/2018 4,082
-------------------------------------------------------------------------------------------------------------
AAA Aaa 1,500 Jacksonville, Florida, Water and Sewer Revenue Bonds (United Water
Florida Project), AMT, 6.35% due 8/01/2025 (b) 1,631
-------------------------------------------------------------------------------------------------------------
AAA Aaa 5,900 Jea, Florida, Water and Sewer System Revenue Bonds, Sub-Series C,
5% due 10/01/2043 (a) 5,766
-------------------------------------------------------------------------------------------------------------
Lee County, Florida, Airport Revenue Bonds (c):
NR* Aaa 9,963 RIB, AMT, Series 811-X, 10.83% due 10/01/2029 (f) 11,304
AAA Aaa 1,000 Series B, 5.75% due 10/01/2033 1,063
-------------------------------------------------------------------------------------------------------------
Lee County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT (d)(g):
NR* Aaa 445 (Multi-County Program), Series A-1, 7.20% due 3/01/2033 475
NR* Aaa 2,000 Series A-6, 6.45% due 3/01/2031 (e) 2,151
-------------------------------------------------------------------------------------------------------------
NR* Aaa 1,855 Lee County, Florida, HFA, S/F Mortgage Revenue Refunding Bonds,
AMT, Series A-2, 6.30% due 3/01/2029 (d)(e)(g) 1,950
-------------------------------------------------------------------------------------------------------------
NR* Aaa 2,185 Manatee County, Florida, HFA, S/F Mortgage Revenue Refunding
Bonds, AMT, Sub-Series 1, 6.25% due 11/01/2028 (d) 2,303
-------------------------------------------------------------------------------------------------------------
AAA NR* 2,000 Miami Beach, Florida, Redevelopment Agency, Tax Increment Revenue
Bonds, City Center Tax Allocation (Historic Village), AMT, 5.875%
due 12/01/2022 (a) 2,105
-------------------------------------------------------------------------------------------------------------
Miami Beach, Florida, Stormwater Revenue Bonds (h):
AAA Aaa 1,630 5.75% due 9/01/2016 1,791
AAA Aaa 1,000 5.25% due 9/01/2020 1,038
AAA Aaa 4,400 5.25% due 9/01/2025 4,481
AAA Aaa 1,910 5.375% due 9/01/2030 1,953
-------------------------------------------------------------------------------------------------------------
Miami Beach, Florida, Water and Sewer Revenue Bonds (b):
AAA Aaa 2,690 5.625% due 9/01/2018 2,912
AAA Aaa 10,600 5.75% due 9/01/2025 11,348
-------------------------------------------------------------------------------------------------------------
Miami-Dade County, Florida, Aviation Revenue Bonds, AMT, Series A:
AAA Aaa 5,250 5.125% due 10/01/2035 (c) 5,119
AAA Aaa 1,000 (Miami International Airport), 5.45% due 10/01/2012 (h) 1,076
AAA Aaa 6,000 (Miami International Airport), 6% due 10/01/2024 (h) 6,581
AAA Aaa 10,000 (Miami International Airport), 6% due 10/01/2029 (h) 10,911
AAA Aaa 24,865 (Miami International Airport), 5% due 10/01/2033 (h) 24,002
8 MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003
Schedule of Investments (continued) (in Thousands)
S&P Moody's Face
State Ratings+ Ratings+ Amount Municipal Bonds Value
- -----------------------------------------------------------------------------------------------------------------------------------
Florida Miami-Dade County, Florida, Educational Facilities Authority
(continued) Revenue Bonds, Series A (b):
AAA Aaa $ 1,000 5.50% due 4/01/2019 $ 1,065
AAA Aaa 19,425 Series A, 6% due 4/01/2023 21,226
AAA Aaa 5,000 (University of Miami), 5.75% due 4/01/2029 5,316
-------------------------------------------------------------------------------------------------------------
AAA Aaa 10,180 Miami-Dade County, Florida, Expressway Authority, Toll System
Revenue Bonds, 6.375% due 7/01/2010 (h)(j) 12,094
-------------------------------------------------------------------------------------------------------------
NR* Aaa 12,000 Miami-Dade County, Florida, Expressway Authority, Toll System
Revenue Refunding Bonds, 5.125% due 7/01/2025 (h) 12,097
-------------------------------------------------------------------------------------------------------------
NR* Aaa 6,705 Miami-Dade County, Florida, GO (Parks Program), 6%
due 11/01/2024 (h) 7,342
-------------------------------------------------------------------------------------------------------------
AAA Aaa 2,185 Miami-Dade County, Florida, HFA, M/F Mortgage Revenue Bonds
(Marbrisa Apartments Project), AMT, Series 2A, 6% due 8/01/2026 (c) 2,275
-------------------------------------------------------------------------------------------------------------
AAA Aaa 5,605 Miami-Dade County, Florida, Health Facilities Authority, Hospital
Revenue Refunding Bonds (Miami Children's Hospital), Series A,
5.625% due 8/15/2014 (b) 6,189
-------------------------------------------------------------------------------------------------------------
Miami-Dade County, Florida, IDA, IDR (b):
AAA Aaa 5,100 (Airis Miami II LLC Project), AMT, 6% due 10/15/2019 5,483
AAA Aaa 3,280 (BAC Funding Corporation Project), Series A, 5.25%
due 10/01/2020 3,417
-------------------------------------------------------------------------------------------------------------
Miami-Dade County, Florida, Solid Waste System Revenue Bonds (c):
AAA Aaa 2,945 5.50% due 10/01/2015 3,207
AAA Aaa 3,105 5.50% due 10/01/2016 3,366
-------------------------------------------------------------------------------------------------------------
Nassau County, Florida, Public Improvement Revenue Refunding
Bonds (a):
AAA Aaa 1,035 5.75% due 5/01/2016 1,137
AAA Aaa 1,095 5.75% due 5/01/2017 1,199
AAA Aaa 1,155 5.75% due 5/01/2018 1,261
AAA Aaa 1,225 5.75% due 5/01/2019 1,333
-------------------------------------------------------------------------------------------------------------
NR* Aaa 400 Orange County, Florida, HFA, Homeowner Revenue Refunding Bonds, AMT,
Series B-1, 6.20% due 9/01/2029 (d)(g) 416
-------------------------------------------------------------------------------------------------------------
NR* Aaa 2,375 Orange County, Florida, HFA, M/F Housing Revenue Bonds, Series A,
6.40% due 1/01/2031 (a) 2,519
-------------------------------------------------------------------------------------------------------------
AAA NR* 4,125 Orange County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT, 6.85%
due 10/01/2027 (d)(g) 4,247
-------------------------------------------------------------------------------------------------------------
Orange County, Florida, Health Facilities Authority, Hospital
Revenue Bonds:
A A3 2,900 (Adventist Health System), 6.25% due 11/15/2024 3,060
A- A2 9,220 (Orlando Regional Healthcare), 6% due 12/01/2029 9,577
AAA Aaa 5,000 (Orlando Regional Healthcare), Series A, 6.25% due 10/01/2018 (a) 5,837
-------------------------------------------------------------------------------------------------------------
AAA Aaa 5,630 Orange County, Florida, Sales Tax Revenue Refunding Bonds,
Series B, 5% due 1/01/2025 (h) 5,622
-------------------------------------------------------------------------------------------------------------
NR* Aaa 1,300 Orange County, Florida, School Board COP, 5.50% due 8/01/2025 (b) 1,348
-------------------------------------------------------------------------------------------------------------
Orange County, Florida, Tourist Development, Tax Revenue Bonds (b):
AAA Aaa 5,710 5.375% due 10/01/2018 6,047
AAA Aaa 31,745 5.75% due 10/01/2025 34,020
AAA Aaa 2,000 5.50% due 10/01/2031 2,079
AAA Aaa 27,075 5.50% due 10/01/2032 28,073
MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003 9
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (continued) (in Thousands)
S&P Moody's Face
State Ratings+ Ratings+ Amount Municipal Bonds Value
- -----------------------------------------------------------------------------------------------------------------------------------
Florida Orlando and Orange County, Florida, Expressway Authority Revenue
(continued) Bonds:
AAA Aaa $ 250 Junior Lien, 6.50% due 7/01/2011 (h) $ 297
AAA Aaa 3,000 Series B, 5% due 7/01/2030 (b) 2,961
AAA Aaa 18,850 Series B, 5% due 7/01/2035 (b) 18,562
-------------------------------------------------------------------------------------------------------------
Osceola County, Florida, Infrastructure Sales Surplus Tax Revenue
Bonds (b):
NR* Aaa 3,155 5.375% due 10/01/2018 3,361
NR* Aaa 7,680 5.25% due 10/01/2025 7,824
-------------------------------------------------------------------------------------------------------------
Osceola County, Florida, Sales Tax Revenue Bonds (h):
NR* Aaa 2,065 5.625% due 6/01/2016 2,266
NR* Aaa 1,605 5.625% due 6/01/2017 1,754
NR* Aaa 1,075 5.625% due 6/01/2018 1,171
-------------------------------------------------------------------------------------------------------------
AAA Aaa 5,560 Osceola County, Tourist Development Tax Revenue Bonds, Series A,
5.50% due 10/01/2027 (h) 5,792
-------------------------------------------------------------------------------------------------------------
Palm Beach County, Florida, GO (Liquid Acquisition Program),
Series B (a):
AAA Aaa 4,605 5.75% due 8/01/2016 5,112
AAA Aaa 5,330 5.75% due 8/01/2018 5,853
-------------------------------------------------------------------------------------------------------------
NR* Aaa 655 Palm Beach County, Florida, HFA, S/F Homeowner Revenue Refunding
Bonds, AMT, Series A-1, 6.05% due 10/01/2020 (a)(d)(g) 681
-------------------------------------------------------------------------------------------------------------
Palm Beach County, Florida, Public Improvement Revenue Bonds
(Convention Center Project) (h):
AAA Aaa 2,665 5.625% due 11/01/2018 2,893
AAA Aaa 2,835 5.625% due 11/01/2019 3,065
-------------------------------------------------------------------------------------------------------------
AAA Aaa 6,115 Palm Beach County, Florida, School Board COP, Refunding, Series B,
5.375% due 8/01/2017 (b) 6,551
-------------------------------------------------------------------------------------------------------------
Palm Beach County, Florida, School Board COP, Series A:
AAA Aaa 5,070 6% due 8/01/2010 (h)(j) 5,916
AAA Aaa 13,205 6.25% due 8/01/2010 (h)(j) 15,610
AAA Aaa 4,235 5.50% due 8/01/2016 (b) 4,609
-------------------------------------------------------------------------------------------------------------
NR* Aaa 2,000 Pasco County, Florida, Sales Tax Revenue Bonds (Half-Cent), 5%
due 12/01/2033 (b) 1,972
-------------------------------------------------------------------------------------------------------------
AAA NR* 3,235 Pinellas County, Florida, HFA, S/F Mortgage Revenue Bonds
(Multi-County Program), AMT, Series A, 6.70% due 2/01/2028 (d)(g) 3,304
-------------------------------------------------------------------------------------------------------------
AAA Aaa 9,885 Polk County, Florida, School Board COP, Master Lease, Series A,
5.50% due 1/01/2025 (c) 10,279
-------------------------------------------------------------------------------------------------------------
NR* Aaa 5,600 Polk County, Florida, Utility System Revenue Bonds, 5% due
10/01/2029 (h) 5,535
-------------------------------------------------------------------------------------------------------------
NR* Aaa 9,645 Pompano Beach, Florida, Water and Sewer Revenue Bonds, 6% due
7/01/2020 (h) 10,713
-------------------------------------------------------------------------------------------------------------
Saint John's County, Florida, IDA, IDR, Refunding (Professional
Golf Project) (a):
AAA Aaa 1,275 5.50% due 9/01/2015 1,397
AAA Aaa 1,345 5.50% due 9/01/2016 1,467
AAA Aaa 1,420 5.50% due 9/01/2017 1,542
AAA Aaa 1,500 5.50% due 9/01/2018 1,621
-------------------------------------------------------------------------------------------------------------
NR* Aaa 4,055 Saint Lucie County, Florida, School Board, COP, 6.25% due
7/01/2010 (c)(j) 4,790
10 MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003
Schedule of Investments (continued) (in Thousands)
S&P Moody's Face
State Ratings+ Ratings+ Amount Municipal Bonds Value
- -----------------------------------------------------------------------------------------------------------------------------------
Florida Saint Lucie County, Florida, School Board COP, Refunding (c):
(concluded) NR* Aaa $ 1,270 Series A, 5.50% due 7/01/2015 $ 1,387
NR* Aaa 1,345 Series A, 5.50% due 7/01/2016 1,463
NR* Aaa 1,420 Series A, 5.50% due 7/01/2017 1,538
NR* Aaa 1,495 Series A, 5.50% due 7/01/2018 1,611
NR* Aaa 1,000 Series C, 5.50% due 7/01/2015 1,093
NR* Aaa 1,050 Series C, 5.50% due 7/01/2016 1,142
NR* Aaa 1,105 Series C, 5.50% due 7/01/2017 1,197
NR* Aaa 1,170 Series C, 5.50% due 7/01/2018 1,261
-------------------------------------------------------------------------------------------------------------
AAA Aaa 3,250 Saint Lucie, Florida, West Services District, Utility Revenue
Refunding Bonds, Senior Lien, 6% due 10/01/2022 (a) 3,592
-------------------------------------------------------------------------------------------------------------
A- A2 1,750 South Lake County, Florida, Hospital District Revenue Bonds (South
Lake Hospital Inc.), 5.80% due 10/01/2034 1,766
-------------------------------------------------------------------------------------------------------------
Sunrise, Florida, Utility System, Revenue Refunding Bonds (b):
AAA Aaa 7,000 5.50% due 10/01/2018 7,720
AAA Aaa 2,250 5.20% due 10/01/2022 2,329
-------------------------------------------------------------------------------------------------------------
AAA Aaa 2,430 Sunrise Lakes, Florida, Phase 4 Recreation District, Refunding
Bonds, GO, 5.25% due 8/01/2024 (b) 2,467
-------------------------------------------------------------------------------------------------------------
Tallahassee, Florida, Lease Revenue Bonds (Florida State
University Project), Series A (a):
AAA Aaa 2,800 5.25% due 8/01/2023 2,871
AAA Aaa 1,000 5.375% due 8/01/2026 1,026
-------------------------------------------------------------------------------------------------------------
AAA Aaa 30,335 Tampa Bay, Florida, Water Utility System Revenue Bonds, 6%
due 10/01/2011 (h)(j) 35,316
-------------------------------------------------------------------------------------------------------------
AAA Aaa 14,750 Tampa, Florida, Sports Authority Revenue Bonds (Local Option Sales
Tax--Stadium Project), 5.25% due 1/01/2027 (a) 14,948
-------------------------------------------------------------------------------------------------------------
AA Aa2 1,000 Tampa, Florida, Water and Sewer Revenue Refunding Bonds, Series A,
5% due 10/01/2026 992
-------------------------------------------------------------------------------------------------------------
AAA Aaa 3,835 Taylor County, Florida, Sales Tax Revenue Bonds, 6%
due 10/01/2025 (h) 4,169
- -----------------------------------------------------------------------------------------------------------------------------------
New Jersey--2.6% Tobacco Settlement Financing Corporation of New Jersey Revenue
Bonds:
BBB Baa2 2,360 6.75% due 6/01/2039 1,943
BBB Baa2 14,970 7% due 6/01/2041 12,731
- -----------------------------------------------------------------------------------------------------------------------------------
Puerto Rico--3.0% A- Baa1 3,000 Puerto Rico Commonwealth, GO, Public Improvement, 6% due
7/01/2005 (j) 3,272
-------------------------------------------------------------------------------------------------------------
A Baa1 10,125 Puerto Rico Commonwealth Highway and Transportation Authority,
Transportation Revenue Bonds, Series B, 6% due 7/01/2026 10,656
-------------------------------------------------------------------------------------------------------------
AAA Aaa 2,725 Puerto Rico Industrial, Tourist, Educational, Medical and
Environmental Control Facilities Revenue Bonds (University Plaza
Project), Series A, 5.625% due 7/01/2019 (a) 2,991
-------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost--$853,779)--157.6% 891,735
=============================================================================================================
MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003 11
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (concluded) (in Thousands)
Shares
Held Short-Term Securities Value
- -----------------------------------------------------------------------------------------------------------------------------------
10,235 Merrill Lynch Institutional Tax-Exempt Fund (l) $ 10,235
-------------------------------------------------------------------------------------------------------------
Total Short-Term Securities (Cost--$10,235)--1.8% 10,235
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investments (Cost--$864,014)--159.4% 901,970
Unrealized Appreciation on Forward Interest Rate Swaps**--0.0% 160
Other Assets Less Liabilities--4.8% 27,151
Preferred Shares at Redemption Value--(64.2%) (363,288)
---------
Net Assets Applicable to Common Shares--100.0% $ 565,993
=========
(a) MBIA Insured.
(b) AMBAC Insured.
(c) FSA Insured.
(d) GNMA Collateralized.
(e) FHLMC Collateralized.
(f) The interest rate is subject to change periodically and inversely based
upon prevailing market rates. The interest rate shown is the rate in
effect at August 31, 2003.
(g) FNMA Collateralized.
(h) FGIC Insured.
(i) FHA Insured.
(j) Prerefunded.
(k) Radian Insured.
(l) Investments in companies considered to be an affiliate of the Fund (such
companies are defined as "Affiliated Companies" in Section 2 (a)(3) of the
Investment Company Act of 1940) are as follows:
(in Thousands)
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
Merrill Lynch Institutional Tax-Exempt Fund 9,675 $109
--------------------------------------------------------------------------
* Not Rated.
** Forward interest rate swaps entered into as of August 31, 2003 were as
follows:
(in Thousands)
--------------------------------------------------------------------------
Unrealized
Notional Appreciation
Amount (Depreciation)
--------------------------------------------------------------------------
Receive a price return equal to 7-Day
Bond Market Association Municipal
Swap Index Rate and pay a fixed
rate equal to 4.332%
Broker, J.P. Morgan Chase Bank
Expires October 2023 43,500 $286
Receive a price return equal to 7-Day
Bond Market Association Municipal
Swap Index Rate and pay a fixed
rate equal to 4.425%
Broker, J.P. Morgan Chase Bank
Expires November 2023 48,000 $(126)
--------------------------------------------------------------------------
+ Ratings of issues shown are unaudited.
See Notes to Financial Statements.
Quality Profile (unaudited)
The quality ratings of securities in the Fund as of August 31, 2003 were as
follows:
- --------------------------------------------------------------------------------
Percent of
Total
S&P Rating/Moody's Rating Investments
- --------------------------------------------------------------------------------
AAA/Aaa ................................................. 90.6%
AA/Aa ................................................... 1.1
A/A ..................................................... 4.0
BBB/Baa ................................................. 2.6
NR (Not Rated) .......................................... 1.7
- --------------------------------------------------------------------------------
12 MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003
Statement of Net Assets
As of August 31, 2003
- -----------------------------------------------------------------------------------------------------------------------------
Assets
- -----------------------------------------------------------------------------------------------------------------------------
Investments, at value (identified cost--$864,013,826) ................... $ 901,970,359
Unrealized appreciation on forward interest rate swaps .................. 160,392
Cash .................................................................... 18,346
Receivables:
Interest ............................................................. $ 15,254,255
Securities sold ...................................................... 13,785,897
Dividends from affiliates ............................................ 205 29,040,357
------------
Prepaid expenses ........................................................ 11,956
-------------
Total assets ............................................................ 931,201,410
-------------
- -----------------------------------------------------------------------------------------------------------------------------
Liabilities
- -----------------------------------------------------------------------------------------------------------------------------
Payables:
Securities purchased ................................................. 1,326,732
Investment adviser ................................................... 372,545
Dividends to Common Shareholders ..................................... 136,304
Other affiliates ..................................................... 8,904 1,844,485
------------
Accrued expenses ........................................................ 76,009
-------------
Total liabilities ....................................................... 1,920,494
-------------
- -----------------------------------------------------------------------------------------------------------------------------
Preferred Shares
- -----------------------------------------------------------------------------------------------------------------------------
Preferred Shares, par value $.10 per share (2,095 Series A shares, 3,495
Series B shares, 3,440 Series C shares, 2,160 Series D shares and 3,340
Series E shares of AMPS* issued and outstanding at $25,000 per share
liquidation preference) ............................................... 363,287,939
-------------
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares
- -----------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Shares .................................. $ 565,992,977
=============
- -----------------------------------------------------------------------------------------------------------------------------
Analysis of Net Assets Applicable to Common Shares
- -----------------------------------------------------------------------------------------------------------------------------
Common Shares, par value $.10 per share (37,628,592 shares issued and
outstanding) ............................................................ $ 3,762,859
Paid-in capital in excess of par ........................................ 570,474,526
Undistributed investment income--net .................................... $ 9,324,544
Accumulated realized capital losses on investments--net ................. (55,685,877)
Unrealized appreciation on investments--net ............................. 38,116,925
------------
Total accumulated losses--net ........................................... (8,244,408)
-------------
Total--Equivalent to $15.04 net asset value of Common Share
(market price--$14.08) .................................................. $ 565,992,977
=============
* Auction Market Preferred Shares.
See Notes to Financial Statements.
MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003 13
[LOGO] Merrill Lynch Investment Managers
Statement of Operations
For the Year Ended August 31, 2003
- -----------------------------------------------------------------------------------------------------------------------------
Investment Income
- -----------------------------------------------------------------------------------------------------------------------------
Interest ................................................................ $ 49,587,886
Dividends from affiliates ............................................... 109,443
-------------
Total income ............................................................ 49,697,329
-------------
- -----------------------------------------------------------------------------------------------------------------------------
Expenses
- -----------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ................................................ $ 5,207,600
Commission fees ......................................................... 921,464
Accounting services ..................................................... 273,415
Transfer agent fees ..................................................... 92,144
Professional fees ....................................................... 67,298
Custodian fees .......................................................... 47,316
Printing and shareholder reports ........................................ 41,123
Trustees' fees and expenses ............................................. 37,348
Pricing fees ............................................................ 29,058
Listing fees ............................................................ 28,965
Other ................................................................... 65,277
------------
Total expenses before waiver and reimbursement .......................... 6,811,008
Waiver and reimbursement of expenses .................................... (398,861)
------------
Total expenses after waiver and reimbursement ........................... 6,412,147
-------------
Investment income--net .................................................. 43,285,182
-------------
- -----------------------------------------------------------------------------------------------------------------------------
Realized & Unrealized Gain (Loss) on Investments--Net
- -----------------------------------------------------------------------------------------------------------------------------
Realized gain on investments--net ....................................... 7,751,089
Change in unrealized appreciation on investments--net ................... (25,268,892)
-------------
Total realized and unrealized loss on investments--net .................. (17,517,803)
-------------
- -----------------------------------------------------------------------------------------------------------------------------
Dividends to Preferred Shareholders
- -----------------------------------------------------------------------------------------------------------------------------
Investment income--net .................................................. (3,842,377)
-------------
Net Increase in Net Assets Resulting from Operations .................... $ 21,925,002
=============
See Notes to Financial Statements.
14 MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003
Statements of Changes in Net Assets
For the Year Ended
August 31,
-----------------------------
Increase (Decrease) in Net Assets: 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------
Operations
- -----------------------------------------------------------------------------------------------------------------------------
Investment income--net .................................................. $ 43,285,182 $ 43,232,492
Realized gain (loss) on investments--net ................................ 7,751,089 (1,265,683)
Change in unrealized appreciation on investments--net ................... (25,268,892) 4,002,745
Dividends and distributions to Preferred Shareholders ................... (3,842,377) (5,450,131)
-----------------------------
Net increase in net assets resulting from operations .................... 21,925,002 40,519,423
-----------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Dividends & Distributions to Common Shareholders
- -----------------------------------------------------------------------------------------------------------------------------
Investment income--net .................................................. (35,935,305) (35,655,838)
Realized gain on investments--net ....................................... -- (110,854)
-----------------------------
Net decrease in net assets resulting from dividends and distributions
to Common Shareholders .................................................. (35,935,305) (35,766,692)
-----------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares
- -----------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets applicable to Common Shares ..... (14,010,303) 4,752,731
Beginning of year ....................................................... 580,003,280 575,250,549
-----------------------------
End of year* ............................................................ $565,992,977 $ 580,003,280
=============================
* Undistributed investment income--net ............................... $ 9,324,544 $ 5,817,044
=============================
See Notes to Financial Statements.
MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003 15
[LOGO] Merrill Lynch Investment Managers
Financial Highlights
The following per share data and ratios have been derived
from information provided in the financial statements. For the Year Ended August 31,
----------------------------------------------------
Increase (Decrease) in Net Asset Value: 2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Performance+
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ..................... $ 15.41 $ 15.29 $ 13.85 $ 13.84 $ 16.03
----------------------------------------------------
Investment income--net ................................. 1.15++ 1.14 1.02 .93 1.14
Realized and unrealized gain (loss) on investments--net (.46) .06 1.42 .08 (1.77)
Dividends and distributions to Preferred Shareholders:
Investment income--net .............................. (.10) (.13) (.22) (.21) (.23)
Realized gain on investments--net ................... -- --@ -- -- (.03)
In excess of realized gain on investments--net ...... -- -- -- -- (.10)
Capital write-off (charge) resulting from issuance of
Preferred Shares ....................................... -- -- --@ -- --
----------------------------------------------------
Total from investment operations ....................... .59 1.07 2.22 .80 (.99)
----------------------------------------------------
Less dividends and distributions to Common Shareholders:
Investment income--net .............................. (.96) (.95) (.78) (.79) (.86)
Realized gain on investments--net ................... -- --@ -- -- (.07)
In excess of realized gain on investments--net ...... -- -- -- -- (.27)
----------------------------------------------------
Total dividends and distributions to Common Shareholders (.96) (.95) (.78) (.79) (1.20)
----------------------------------------------------
Net asset value, end of year ........................... $ 15.04 $ 15.41 $ 15.29 $ 13.85 $ 13.84
====================================================
Market price per share, end of year .................... $ 14.08 $ 14.66 $ 14.04 $11.6875 $ 12.75
====================================================
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investment Return*
- ----------------------------------------------------------------------------------------------------------------------------------
Based on market price per share ........................ 2.51% 11.63% 27.82% (1.96%) (6.80%)
====================================================
Based on net asset value per share ..................... 4.17% 7.75% 17.47% 7.03% (6.51%)
====================================================
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios Based on Average Net Assets of Common Shares
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of waiver and reimbursement and
excluding reorganization expenses** .................... 1.10% 1.13% 1.14% 1.18% 1.18%
====================================================
Total expenses, excluding reorganization expenses** .... 1.17% 1.20% 1.23% 1.30% 1.26%
====================================================
Total expenses** ....................................... 1.17% 1.21% 1.26% 1.45% 1.26%
====================================================
Total investment income--net** ......................... 7.40% 7.71% 7.88% 8.65% 7.34%
====================================================
Amount of dividends to Preferred Shareholders .......... .65% .96% 2.31% 3.05% 1.50%
====================================================
Investment income--net, to Common Shareholders ......... 6.75% 6.75% 5.57% 5.60% 5.84%
====================================================
16 MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003
Financial Highlights (concluded)
The following per share data and ratios have been derived
from information provided in the financial statements. For the Year Ended August 31,
----------------------------------------------------
Increase (Decrease) in Net Asset Value: 2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios Based on Average Net Assets of Common & Preferred Shares**
- ----------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of waiver and reimbursement and
excluding reorganization expenses .................... .68% .69% .68% .67% .73%
====================================================
Total expenses, excluding reorganization expenses ...... .72% .73% .74% .74% .77%
====================================================
Total expenses ......................................... .72% .73% .75% .83% .77%
====================================================
Total investment income--net ........................... 4.57% 4.68% 4.71% 4.95% 4.51%
====================================================
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios Based on Average Net Assets of Preferred Shares
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends to Preferred Shareholders .................... 1.06% 1.49% 3.43% 4.08% 2.39%
====================================================
- ----------------------------------------------------------------------------------------------------------------------------------
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Shares, end of year
(in thousands) ......................................... $565,993 $580,003 $575,251 $467,961 $149,395
====================================================
Preferred Shares outstanding, end of year (in thousands) $363,250 $363,250 $363,250 $328,250 $104,750
====================================================
Portfolio turnover ..................................... 27.40% 13.89% 47.50% 105.22% 120.70%
====================================================
- ----------------------------------------------------------------------------------------------------------------------------------
Leverage
- ----------------------------------------------------------------------------------------------------------------------------------
Asset coverage per $1,000 .............................. $ 2,558 $ 2,597 $ 2,584 $ 2,426 $ 2,426
====================================================
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends Per Share on Preferred Shares Outstanding
- ----------------------------------------------------------------------------------------------------------------------------------
Series A--Investment income--net ....................... $ 252 $ 362 $ 885 $ 985 $ 606
====================================================
Series B--Investment income--net ....................... $ 267 $ 375 $ 754 $ 984 $ 598
====================================================
Series C--Investment income--net ....................... $ 252 $ 369 $ 889 $ 610 --
====================================================
Series D--Investment income--net ....................... $ 273 $ 368 $ 855 $ 595 --
====================================================
Series E--Investment income--net ....................... $ 276 $ 381 $ 850 $ 585 --
====================================================
* Total investment returns based on market value, which can be significantly
greater or lesser than the net asset value, may result in substantially
different returns. Total investment returns exclude the effects of sales
charges. The Fund's Investment Adviser waived a portion of its management
fee. Without such waiver, the Fund's performance would have been lower.
** Do not reflect the effect of dividends to Preferred Shareholders.
+ Certain prior years amounts have been reclassified to conform with current
year presentation.
++ Based on average shares outstanding.
@ Amount is less than $(.01) per share.
See Notes to Financial Statements.
MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003 17
[LOGO] Merrill Lynch Investment Managers
Notes to Financial Statements
1. Significant Accounting Policies:
MuniHoldings Florida Insured Fund, (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a non-diversified, closed-end
management investment company. The Fund's financial statements are prepared in
conformity with accounting principles generally accepted in the United States of
America, which may require the use of management accruals and estimates. 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 MFL. The following is a summary of
significant accounting policies followed by the Fund.
(a) Valuation of investments--Municipal bonds are traded primarily in the
over-the-counter markets and are valued at the most recent bid price on the
basis of 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). Forward interest rate swaps
are valued by quoted fair values received daily by the Fund from the
counterparty. Securities with remaining maturities of sixty days or less are
valued at amortized cost, which approximates market value. Securities and assets
for which market quotations are not readily available are valued at fair value
as determined in good faith by or under the direction of the Board of Trustees
of the Fund, including valuations furnished by a pricing service retained by the
Fund, which may utilize a matrix system for valuations. The procedures of the
pricing service and its valuations are reviewed by the officers of the Fund
under the general supervision of the Board of Trustees.
(b) Derivative financial instruments--The Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge, or
protect, its exposure to interest rate movement and movements in the securities
markets. Losses may arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
o Financial futures contracts--The Fund may purchase or sell financial
futures contracts and options on such futures contracts. Futures contracts
are contracts for delayed delivery of securities at a specific future date
and at a specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required by
the exchange on which the transaction is effected. Pursuant to the
contract, the Fund agrees to receive from or pay to the broker an amount
of cash equal to the daily fluctuation in value of the contract. Such
receipts or payments are known as variation margin and are recorded by the
Fund as unrealized gains or losses. When the contract is closed, the Fund
records a realized gain or loss equal to the difference between the value
of the contract at the time it was opened and the value at the time it was
closed.
o Options--The Fund is authorized to write covered call options and purchase
call and put options. When the Fund writes an option, an amount equal to
the premium received by the Fund is reflected as an asset and an
equivalent liability. The amount of the liability is subsequently marked
to market to reflect the current market value of the option written.
When a security is purchased or sold through an exercise of an option, the
related premium paid (or received) is added to (or deducted from) the
basis of the security acquired or deducted from (or added to) the proceeds
of the security sold. When an option expires (or the Fund enters into a
closing transaction), the Fund realizes a gain or loss on the option to
the extent of the premiums received or paid (or loss or gain to the extent
the cost of the closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
o Forward interest rate swaps--The Fund may enter into forward interest rate
swaps. In a forward interest rate swap, the Fund and the counterparty
agree to make periodic net payments on a specified notional contract
amount, commencing on a specified future effective date, unless terminated
earlier. When the agreement is closed, the Fund records a realized gain or
loss in an amount equal to the value of the agreement.
18 MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003
Notes to Financial Statements (continued)
(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).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis. The Fund amortizes all
premiums and discounts on debt securities.
(e) Dividends and distributions--Dividends from net investment income are
declared and paid monthly. Distribution of capital gains are recorded on the
ex-dividend dates.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect, wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML
& Co."), which is the limited partner.
FAM is responsible for the management of the Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. For such services, the Fund pays a monthly fee at
an annual rate of .55% of the Fund's average weekly net assets, including
proceeds from the issuance of Preferred Shares. For the year ended August 31,
2003, FAM earned fees of $5,207,600, of which $378,130 was waived. For the year
ended August 31, 2003, FAM reimbursed the Fund in the amount of $20,731.
For the year ended August 31, 2003, the Fund reimbursed FAM $23,120 for certain
accounting services.
Certain officers and/or trustees of the Fund are officers and/or directors of
FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended August 31, 2003 were $253,478,491 and $264,925,919, respectively.
Net realized gains (losses) for the year ended August 31, 2003 and net
unrealized gains as of August 31, 2003 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains (Losses) Gains
- --------------------------------------------------------------------------------
Long-term investments ................... $ 7,847,370 $37,956,533
Financial futures contracts ............. (1,755,710) --
Forward interest rate swaps ............. 1,659,429 160,392
-------------------------------
Total ................................... $ 7,751,089 $38,116,925
===============================
As of August 31, 2003, net unrealized appreciation for Federal income tax
purposes aggregated $36,988,636, of which $42,661,778 related to appreciated
securities and $5,673,142 related to depreciated securities. The aggregate cost
of investments at August 31, 2003 for Federal income tax purposes was
$864,981,723.
4. Share Transactions:
The Fund is authorized to issue an unlimited number of shares of beneficial
interest, including Preferred Shares, par value $.10 per share, all of which
were initially classified as Common Shares. The Board of Trustees is authorized,
however, to reclassify any unissued shares of beneficial interest without
approval of holders of Common Shares.
Preferred Shares
Auction Market Preferred Shares ("AMPS") are redeemable Preferred Shares of the
Fund, with a par value of $.10 per share and a liquidation preference of $25,000
per share plus accrued and unpaid dividends, that entitle their holders to
receive cash dividends at an annual rate that may vary for the successive
dividend periods for each series. The yields in effect at August 31, 2003 were
as follows: Series A, .84%; Series B, .85%; Series C, .80%; Series D, .71% and
Series E, .85%.
The Fund pays commissions to certain broker-dealers at the end of each auction
at an annual rate ranging from .25% to .375%, calculated on the proceeds of each
auction. For the year ended August 31, 2003, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, an affiliate of FAM, earned $492,295 as commissions.
MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003 19
[LOGO] Merrill Lynch Investment Managers
Notes to Financial Statements (concluded)
5. Distributions to Shareholders:
The Fund paid a tax-exempt income dividend to holders of Common Shares in the
amount of $.080000 per share on September 29, 2003 to shareholders of record on
September 16, 2003.
The tax character of distributions paid during the fiscal years ended August 31,
2003 and August 31, 2002 was as follows:
- --------------------------------------------------------------------------------
8/31/2003 8/31/2002
- --------------------------------------------------------------------------------
Distributions paid from:
Tax-exempt income .................... $39,777,682 $41,063,563
Ordinary income ...................... -- 153,260
-------------------------------
Total distributions .................... $39,777,682 $41,216,823
===============================
As of August 31, 2003, the components of accumulated losses on a tax basis were
as follows:
- -----------------------------------------------------------------------------
Undistributed tax-exempt income--net .................... $ 9,258,010
Undistributed long-term capital gains--net .............. --
------------
Total undistributed earnings--net ....................... 9,258,010
Capital loss carryforward ............................... (51,743,331)*
Unrealized gains--net ................................... 34,240,913**
------------
Total accumulated losses--net ........................... $ (8,244,408)
============
* On August 31, 2003, the Fund had a net capital loss carryforward of
$51,743,331, of which $25,345,146 expires in 2007, $9,834,324 expires in
2008, and $16,563,861 expires in 2009. This amount will be available to
offset like amounts of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on wash sales, the
tax deferral of losses on straddles, and the difference between book and
tax amortization methods for premiums and discounts on fixed income
securities.
20 MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003
Independent Auditors' Report
To the Shareholders and Board of Trustees of
MuniHoldings Florida Insured Fund:
We have audited the accompanying statement of net assets, including the schedule
of investments, of MuniHoldings Florida Insured Fund as of August 31, 2003, and
the related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of August 31, 2003, by correspondence with the custodian and
broker. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
MuniHoldings Florida Insured Fund as of August 31, 2003, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and its financial highlights for each of
the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
October 23, 2003
MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003 21
[LOGO] Merrill Lynch Investment Managers
Automatic Dividend Reinvestment Plan
The following description of the Fund's Automatic Dividend Reinvestment Plan
(the "Plan") is sent to you annually as required by Federal securities laws.
Pursuant to the Fund's Plan, unless a holder of Common Stock otherwise elects,
all dividend and capital gains distributions will be automatically reinvested by
The Bank of New York (the "Plan Agent"), as agent for shareholders in
administering the Plan, in additional shares of Common Stock of the Fund.
Holders of Common Stock who elect not to participate in the Plan will receive
all distributions in cash paid by check mailed directly to the shareholder of
record (or, if the shares are held in street or other nominee name then to such
nominee) by The Bank of New York, as dividend paying agent. Such participants
may elect not to participate in the Plan and to receive all distributions of
dividends and capital gains in cash by sending written instructions to The Bank
of New York, as dividend paying agent, at the address set forth below.
Participation in the Plan is completely voluntary and may be terminated or
resumed at any time without penalty by written notice if received by the Plan
Agent not less than ten days prior to any dividend record date; otherwise such
termination will be effective with respect to any subsequently declared dividend
or distribution.
Whenever the Fund declares an income dividend or capital gains distribution
(collectively referred to as "dividends") payable either in shares or in cash,
non-participants in the Plan will receive cash and participants in the Plan will
receive the equivalent in shares of Common Stock. The shares will be acquired by
the Plan Agent for the participant's account, depending upon the circumstances
described below, either (i) through receipt of additional unissued but
authorized shares of Common Stock from the Fund ("newly issued shares") or (ii)
by purchase of outstanding shares of Common Stock on the open market
("open-market purchases") on the New York Stock Exchange or elsewhere. If on the
payment date for the dividend, the net asset value per share of the Common Stock
is equal to or less than the market price per share of the Common Stock plus
estimated brokerage commissions (such conditions being referred to herein as
"market premium"), the Plan Agent will invest the dividend amount in newly
issued shares on behalf of the participant. The number of newly issued shares of
Common Stock to be credited to the participant's account will be determined by
dividing the dollar amount of the dividend by the net asset value per share on
the date the shares are issued, provided that the maximum discount from the then
current market price per share on the date of issuance may not exceed 5%. If on
the dividend payment date the net asset value per share is greater than the
market value (such condition being referred to herein as "market discount"), the
Plan Agent will invest the dividend amount in shares acquired on behalf of the
participant in open-market purchases.
In the event of a market discount on the dividend payment date, the Plan Agent
will have until the last business day before the next date on which the shares
trade on an "ex-dividend" basis or in no event more than 30 days after the
dividend payment date (the "last purchase date") to invest the dividend amount
in shares acquired in open-market purchases. It is contemplated that the Fund
will pay monthly income dividends. Therefore, the period during which
open-market purchases can be made will exist only from the payment date on the
dividend through the date before the next "ex-dividend" date, which typically
will be approximately ten days. If, before the Plan Agent has completed its
open-market purchases, the market price of a share of Common Stock exceeds the
net asset value per share, the average per share purchase price paid by the Plan
Agent may exceed the net asset value of the Fund's shares, resulting in the
acquisitions of fewer shares than if the dividend had been paid in newly issued
shares on the dividend payment date. Because of the foregoing difficulty with
respect to open-market purchases, the Plan provides that if the Plan Agent is
unable to invest the full dividend amount in open-market purchases during the
purchase period or if the market discount shifts to a market premium during the
purchase period, the Plan Agent will cease making open-market purchases and will
invest the uninvested portion of the dividend amount in newly issued shares at
the close of business on the last purchase date determined by dividing the
uninvested portion of the dividend by the net asset value per share.
22 MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003
Automatic Dividend Reinvestment Plan (concluded)
The Plan Agent maintains all shareholders' accounts in the Plan and furnishes
written confirmation of all transactions in the account, including information
needed by shareholders for tax records. Shares in the account of each Plan
participant will be held by the Plan Agent in non-certificated form in the name
of the participant, and each shareholder's proxy will include those shares
purchased or received pursuant to the Plan. The Plan Agent will forward all
proxy solicitation materials to participants and vote proxies for shares held
pursuant to the Plan in accordance with the instructions of the participants.
In the case of shareholders such as banks, brokers or nominees which hold shares
of others who are the beneficial owners, the Plan Agent will administer the Plan
on the basis of the number of shares certified from time to time by the record
shareholders as representing the total amount registered in the record
shareholder's name and held for the account of beneficial owners who are to
participate in the Plan.
There will be no brokerage charges with respect to shares issued directly by the
Fund as a result of dividends or capital gains distributions payable either in
shares or in cash. However, each participant will pay a pro rata share of
brokerage commissions incurred with respect to the Plan Agent's open-market
purchases in connection with the reinvestment of dividends.
The automatic reinvestment of dividends and distributions will not relieve
participants of any Federal, state or local income tax that may be payable (or
required to be withheld) on such dividends.
Shareholders participating in the Plan may receive benefits not available to
shareholders not participating in the Plan. If the market price plus commissions
of the Fund's shares is above the net asset value, participants in the Plan will
receive shares of the Fund at less than they could otherwise purchase them and
will have shares with a cash value greater than the value of any cash
distribution they would have received on their shares. If the market price plus
commissions is below the net asset value, participants will receive
distributions in shares with a net asset value greater than the value of any
cash distribution they would have received on their shares. However, there may
be insufficient shares available in the market to make distributions in shares
at prices below the net asset value. Also, since the Fund does not redeem
shares, the price on resale may be more or less than the net asset value.
The value of shares acquired pursuant to the Plan will generally be excluded
from gross income to the extent that the cash amount reinvested would be
excluded from gross income. If, when the Fund's shares are trading at a premium
over net asset value, the Fund issues shares pursuant to the Plan that have a
greater fair market value than the amount of cash reinvested, it is possible
that all or a portion of such discount (which may not exceed 5% of the fair
market value of the Fund's shares) could be viewed as a taxable distribution. If
the discount is viewed as a taxable distribution, it is also possible that the
taxable character of this discount would be allocable to all the shareholders,
including shareholders who do not participate in the Plan. Thus, shareholders
who do not participate in the Plan might be required to report as ordinary
income a portion of their distributions equal to their allocable share of the
discount.
Experience under the Plan may indicate that changes are desirable. Accordingly,
the Fund reserves the right to amend or terminate the Plan. There is no direct
service charge to participants in the Plan; however, the Fund reserves the right
to amend the Plan to include a service charge payable by the participants.
All correspondence concerning the Plan should be directed to the Plan Agent at
The Bank of New York, Church Street Station, P.O. Box 11258, New York, NY
10286-1258, Telephone: 800-432-8224.
MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003 23
[LOGO] Merrill Lynch Investment Managers
Officers and Trustees (unaudited)
Number of
Portfolios in Other Public
Position(s) Length Fund Complex Directorships
Held of Time Overseen by Held by
Name Address & Age with Fund Served Principal Occupation(s) During Past 5 Years Trustee Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Interested Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Terry K. P.O. Box 9011 President 1999 to President and Chairman of Merrill Lynch Invest- 122 Funds None
Glenn* Princeton, NJ and present ment Managers, L.P. ("MLIM")/Fund Asset 163 Portfolios
08543-9011 Trustee and Management, L.P. ("FAM")--Advised Funds since
Age: 62 1997 to 1999; Chairman (Americas Region) of MLIM from
present 2000 to 2002; Executive Vice President of MLIM
and FAM (which terms as used herein include
their corporate predecessors) from 1983 to 2002;
President of FAM Distributors, Inc. ("FAMD") from
1986 to 2002 and Director thereof from 1991 to
2002; Executive Vice President and Director of
Princeton Services, Inc. ("Princeton Services")
from 1993 to 2002; President of Princeton
Administrators, L.P. from 1989 to 2002; Director of
Financial Data Services, Inc. since 1985.
------------------------------------------------------------------------------------------------------------------------
* Mr. Glenn is a director, trustee or member of an advisory board of certain other investment companies for which FAM or
MLIM acts as investment adviser. Mr. Glenn is an "interested person" as described in the Investment Company Act, of
the Fund based on his former positions with FAM, MLIM, FAMD, Princeton Services and Princeton Administrators, L.P. The
Trustee's term is unlimited. Trustees serve until their resignation, removal or death, or until December 31 of the
year in which they turn 72. As Fund President, Mr. Glenn serves at the pleasure of the Board of Trustees.
- ------------------------------------------------------------------------------------------------------------------------------------
Independent Trustees*
- ------------------------------------------------------------------------------------------------------------------------------------
Ronald W. P.O. Box 9095 Trustee 1997 to Professor Emeritus of Finance, School of Business, 48 Funds None
Forbes Princeton, NJ present State University of New York at Albany since 2000 49 Portfolios
08543-9095 and Professor thereof from 1989 to 2000;
Age: 62 International Consultant at the Urban Institute
from 1995 to 1999.
- ------------------------------------------------------------------------------------------------------------------------------------
Cynthia A. P.O. Box 9095 Trustee 1997 to Professor, Harvard Business School since 1989. 48 Funds Unum
Montgomery Princeton, NJ present 49 Portfolios Provident
08543-9095 Corporation;
Age: 51 Newell
Rubbermaid,
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Charles C. P.O. Box 9095 Trustee 1997 to Self-employed financial consultant since 1990. 48 Funds None
Reilly Princeton, NJ present 49 Portfolios
08543-9095
Age: 72
- ------------------------------------------------------------------------------------------------------------------------------------
Kevin A. P.O. Box 9095 Trustee 1997 to Founder and Director Emeritus of The Boston 48 Funds None
Ryan Princeton, NJ present University Center for the Advancement of 49 Portfolios
08543-9095 Ethics and Character; Professor of Education
Age: 70 at Boston University from 1982 to 1999 and
Professor Emeritus thereof since 1999.
- ------------------------------------------------------------------------------------------------------------------------------------
Roscoe S. P.O. Box 9095 Trustee 2000 to President, Middle East Institute from 1995 to 48 Funds None
Suddarth Princeton, NJ present 2001; Foreign Service Officer, United States 49 Portfolios
08543-9095 Foreign Service from 1961 to 1995; Career
Age: 68 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.
- ------------------------------------------------------------------------------------------------------------------------------------
24 MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003
Officers and Trustees (unaudited) (concluded)
Number of
Portfolios in Other Public
Position(s) Length Fund Complex Directorships
Held of Time Overseen by Held by
Name Address & Age with Fund Served Principal Occupation(s) During Past 5 Years Trustee Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Independent Trustees* (concluded)
- ------------------------------------------------------------------------------------------------------------------------------------
Richard R. P.O. Box 9095 Trustee 1997 to Dean Emeritus of New York University, Leonard 48 Funds Bowne & Co.,
West Princeton, NJ present N. Stern School of Business Administration 49 Portfolios Inc.; Vornado
08543-9095 since 1994. Realty Trust;
Age: 65 Vornado
Operating
Company;
Alexander's,
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Edward D. P.O. Box 9095 Trustee 2000 to Executive Vice President of The Prudential 48 Funds None
Zinbarg Princeton, NJ present Insurance Company of America from 1988 to 1994; 49 Portfolios
08543-9095 Former Director of Prudential Reinsurance Company
Age: 68 and former Trustee of The Prudential Foundation;
Self-employed financial consultant since 1994.
------------------------------------------------------------------------------------------------------------------------
* The Trustee's term is unlimited. Trustees serve until their resignation, removal or death, or until December 31 of the
year in which they turn 72.
- ------------------------------------------------------------------------------------------------------------------------------------
Position(s) Length
Held of Time
Name Address & Age with Fund Served* Principal Occupation(s) During Past 5 Years
- ------------------------------------------------------------------------------------------------------------------------------------
Fund Officers
- ------------------------------------------------------------------------------------------------------------------------------------
Donald C. P.O. Box 9011 Vice 1997 to First Vice President of FAM and MLIM since 1997 and Treasurer thereof since
Burke Princeton, NJ President present 1999; Senior Vice President and Treasurer of Princeton Services since 1999; Vice
08543-9011 and and President of FAMD since 1999; Director of MLIM Taxation since 1990.
Age: 43 Treasurer 1999 to
present
- ------------------------------------------------------------------------------------------------------------------------------------
Kenneth A. P.O. Box 9011 Senior Vice 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
Jacob Princeton, NJ President present Management) of MLIM from 1997 to 2000.
08543-9011
Age: 52
- ------------------------------------------------------------------------------------------------------------------------------------
John M. P.O. Box 9011 Senior Vice 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
Loffredo Princeton, NJ President present Management) of MLIM from 1998 to 2000.
08543-9011
Age: 39
- ------------------------------------------------------------------------------------------------------------------------------------
Robert D. P.O. Box 9011 Vice 1999 to Vice President (Municipal Tax-Exempt Fund Management) of MLIM since 2000.
Sneeden Princeton, NJ President present
08543-9011
Age: 50
- ------------------------------------------------------------------------------------------------------------------------------------
Brian D. P.O. Box 9011 Secretary 2002 to Vice President (Legal Advisory) of MLIM since 2002; Attorney with Reed Smith
Stewart Princeton, NJ present from 2001 to 2002; Attorney with Saul Ewing from 1999 to 2001.
08543-9011
Age: 34
------------------------------------------------------------------------------------------------------------------------
* Officers of the Fund serve at the pleasure of the Board of Trustees.
- ------------------------------------------------------------------------------------------------------------------------------------
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agents
Common Shares:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Shares:
The Bank of New York
100 Church Street
New York, NY 10286
NYSE Symbol
MFL
MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003 25
[LOGO] Merrill Lynch Investment Managers
Important Tax Information (unaudited)
All of the net investment income distributions paid by MuniHoldings Florida
Insured Fund during the taxable year ended August 31, 2003 qualify as tax-exempt
interest dividends for Federal income tax purposes.
Please retain this information for your records.
Managed Dividend Policy
The Fund's dividend policy is to distribute all or a portion of its net
investment income to its shareholders on a monthly basis. In order to provide
shareholders with a more consistent yield to the current trading price of the
Fund's Common Shares, the Fund may at times pay out less than the entire amount
of net investment income earned in any particular month and may at times in any
particular month pay out such accumulated but undistributed income in addition
to net investment income earned in that month. As a result, the dividends paid
by the Fund for any particular month may be more or less than the amount of net
investment income earned by the Fund during such month. The Fund's current
accumulated but undistributed net investment income, if any, is disclosed in the
Statement of Net Assets, which comprises part of the financial information
included in this report.
26 MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003
Electronic Delivery
The Fund is now offering electronic delivery of communications to its
shareholders. In order to receive this service, you must register your account
and provide us with e-mail information. To sign up for this service, simply
access this website http://www.icsdelivery.com/live and follow the instructions.
When you visit this site, you will obtain a personal identification number
(PIN). You will need this PIN should you wish to update your e-mail address,
choose to discontinue this service and/or make any other changes to the service.
This service is not available for certain retirement accounts at this time.
MUNIHOLDINGS FLORIDA INSURED FUND AUGUST 31, 2003 27
[LOGO] Merrill Lynch Investment Managers www.mlim.ml.com
MuniHoldings Florida Insured Fund seeks to provide shareholders with current
income exempt from Federal income tax. The Fund also seeks to offer shareholders
the opportunity to own shares, the value of which is exempt from Florida
intangible personal property tax. The Fund seeks to achieve its investment
objective by investing primarily in a portfolio of long-term, investment-grade
municipal obligations, the interest on which, in the opinion of bond counsel to
the issuer, is exempt from Federal income taxes and which enables shares of the
Fund to be exempt from Florida intangible personal property tax.
This report, including the financial information herein, is transmitted to
shareholders of MuniHoldings Florida Insured Fund for their information. It is
not a prospectus. Past performance results shown in this report should not be
considered a representation of future performance. The Fund has leveraged its
Common Shares and intends to remain leveraged by issuing Preferred Shares to
provide the Common Shareholders with a potentially higher rate of return.
Leverage creates risks for Common Shareholders, including the likelihood of
greater volatility of net asset value and market price of shares of the Common
Shares, and the risk that fluctuations in the short-term dividend rates of the
Preferred Shares may affect the yield to Common Shareholders. Statements and
other information herein are as dated and are subject to change.
MuniHoldings Florida Insured Fund
Box 9011
Princeton, NJ 08543-9011
#HOLDFL -- 8/03
Item 2 - Did registrant adopt a code of ethics, as of the end of the period
covered by this report, that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party? If not, why not? Briefly describe any amendments or
waivers that occurred during the period. State here if code of
ethics/amendments/waivers are on website and give website address-.
State here if fund will send code of ethics to shareholders without
charge upon request--
The registrant has adopted a code of ethics, as of the end of the
period covered by this report, that applies to the registrant's
principal executive officer, principal financial officer and principal
accounting officer, or persons performing similar functions. A copy of
the code of ethics is available without charge upon request by calling
toll-free 1-800-MER-FUND (1-800-637-3863).
Item 3 - Did the registrant's board of directors determine that the registrant
either: (i) has at least one audit committee financial expert serving
on its audit committee; or (ii) does not have an audit committee
financial expert serving on its audit committee? If yes, disclose name
of financial expert and whether he/she is "independent," (fund may, but
is not required, to disclose name/independence of more than one
financial expert) If no, explain why not. -
The registrant's board of directors has determined that (i) the
registrant has the following audit committee financial experts serving
on its audit committee and (ii) each audit committee financial expert
is independent: (1) Ronald W. Forbes, (2) Richard R. West, and (3)
Edward D. Zinbarg.
Item 4 - Disclose annually only (not answered until December 15, 2003)
(a) Audit Fees - Disclose aggregate fees billed for each of the last
two fiscal years for professional services rendered by
the principal accountant for the audit of the
registrant's annual financial statements or services
that are normally provided by the accountant in
connection with statutory and regulatory filings or
engagements for those fiscal years. N/A.
(b) Audit-Related Fees - Disclose aggregate fees billed in each of the
last two fiscal years for assurance and
related services by the principal accountant
that are reasonably related to the performance
of the audit of the registrant's financial
statements and are not reported under
paragraph (a) of this Item. Registrants shall
describe the nature of the services comprising
the fees disclosed under this category. N/A.
(c) Tax Fees - Disclose aggregate fees billed in each of the last two
fiscal years for professional services rendered by the
principal accountant for tax compliance, tax advice, and
tax planning. Registrants shall describe the nature of
the services comprising the fees disclosed under this
category. N/A.
(d) All Other Fees - Disclose aggregate fees billed in each of the last
two fiscal years for products and services
provided by the principal accountant, other than
the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the
nature of the services comprising the fees
disclosed under this category. N/A.
(e)(1) Disclose the audit committee's pre-approval policies and
procedures described in paragraph (c)(7) of Rule 2-01 of
Regulation S-X. N/A.
(e)(2) Disclose the percentage of services described in each of
paragraphs (b) through (d) of this Item that were approved by
the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule
2-01 of Regulation S-X. N/A.
(f) If greater than 50%, disclose the percentage of hours expended on
the principal accountant's engagement to audit the registrant's
financial statements for the most recent fiscal year that were
attributed to work performed by persons other than the principal
accountant's full-time, permanent employees. N/A.
(g) Disclose the aggregate non-audit fees billed by the registrant's
accountant for services rendered to the registrant, and rendered to
the registrant's investment adviser (not including any sub-adviser
whose role is primarily portfolio management and is subcontracted
with or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant for each
of the last two fiscal years of the registrant. N/A.
(h) Disclose whether the registrant's audit committee has considered
whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser
whose role is primarily portfolio management and is subcontracted
with or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence. N/A.
Item 5 - If the registrant is a listed issuer as defined in Rule 10A-3 under the
Exchange Act, state whether or not the registrant has a
separately-designated standing audit committee established in
accordance with Section 3(a)(58)(A) of the Exchange Act. If the
registrant has such a committee, however designated, identify each
committee member. If the entire board of directors is acting as the
registrant's audit committee in Section 3(a)(58)(B) of the Exchange
Act, so state.
If applicable, provide the disclosure required by Rule 10A-3(d) under
the Exchange Act regarding an exemption from the listing standards for
audit committees. N/A
(Listed issuers must be in compliance with the new listing rules by the
earlier of their first annual shareholders meeting after January 2004,
or October 31, 2004 (annual requirement))
Item 6 - Reserved
Item 7 - For closed-end funds that contain voting securities in their portfolio,
describe the policies and procedures that it uses to determine how to
vote proxies relating to those portfolio securities.
Proxy Voting Policies and Procedures
Each Fund's Board of Directors/Trustees has delegated to Merrill Lynch
Investment Managers, L.P. and/or Fund Asset Management, L.P. (the
"Investment Adviser") authority to vote all proxies relating to the
Fund's portfolio securities. The Investment Adviser has adopted
policies and procedures ("Proxy Voting Procedures") with respect to the
voting of proxies related to the portfolio securities held in the
account of one or more of its clients, including a Fund. Pursuant to
these Proxy Voting Procedures, the Investment Adviser's primary
objective when voting proxies is to make proxy voting decisions solely
in the best interests of each Fund and its shareholders, and to act in
a manner that the Investment Adviser believes is most likely to enhance
the economic value of the securities held by the Fund. The Proxy Voting
Procedures are designed to ensure that the Investment Adviser considers
the interests of its clients, including the Funds, and not the
interests of the Investment Adviser, when voting proxies and that real
(or perceived) material conflicts that may arise between the Investment
Adviser's interest and those of the Investment Adviser's clients are
properly addressed and resolved.
In order to implement the Proxy Voting Procedures, the Investment
Adviser has formed a Proxy Voting Committee (the "Committee"). The
Committee is comprised of the Investment Adviser's Chief Investment
Officer (the "CIO"), one or more other senior investment professionals
appointed by the CIO, portfolio managers and investment analysts
appointed by the CIO and any other personnel the CIO deems appropriate.
The Committee will also include two non-voting representatives from the
Investment Adviser's Legal department appointed by the Investment
Adviser's General Counsel. The Committee's membership shall be limited
to full-time employees of the Investment Adviser. No person with any
investment banking, trading, retail brokerage or research
responsibilities for the Investment Adviser's affiliates may serve as a
member of the Committee or participate in its decision making (except
to the extent such person is asked by the Committee to present
information to the Committee, on the same basis as other interested
knowledgeable parties not affiliated with the Investment Adviser might
be asked to do so). The Committee determines how to vote the proxies of
all clients, including a Fund, that have delegated proxy voting
authority to the Investment Adviser and seeks to ensure that all votes
are consistent with the best interests of those clients and are free
from unwarranted and inappropriate influences. The Committee
establishes general proxy voting policies for the Investment Adviser
and is responsible for determining how those policies are applied to
specific proxy votes, in light of each issuer's unique structure,
management, strategic options and, in certain circumstances, probable
economic and other anticipated consequences of alternate actions. In so
doing, the Committee may determine to vote a particular proxy in a
manner contrary to its generally stated policies. In addition, the
Committee will be responsible for ensuring that all reporting and
recordkeeping requirements related to proxy voting are fulfilled.
The Committee may determine that the subject matter of a recurring
proxy issue is not suitable for general voting policies and requires a
case-by-case determination. In such cases, the Committee may elect not
to adopt a specific voting policy applicable to that issue. The
Investment Adviser believes that certain proxy voting issues require
investment analysis - such as approval of mergers and other significant
corporate transactions - akin to investment decisions, and are,
therefore, not suitable for general guidelines. The Committee may elect
to adopt a common position for the Investment Adviser on certain proxy
votes that are akin to investment decisions, or determine to permit the
portfolio manager to make individual decisions on how best to maximize
economic value for a Fund (similar to normal buy/sell investment
decisions made by such portfolio managers). While it is expected that
the Investment Adviser will generally seek to vote proxies over which
the Investment Adviser exercises voting authority in a uniform manner
for all the Investment Adviser's clients, the Committee, in conjunction
with a Fund's portfolio manager, may determine that the Fund's specific
circumstances require that its proxies be voted differently.
To assist the Investment Adviser in voting proxies, the Committee has
retained Institutional Shareholder Services ("ISS"). ISS is an
independent adviser that specializes in providing a variety of
fiduciary-level proxy-related services to institutional investment
managers, plan sponsors, custodians, consultants, and other
institutional investors. The services provided to the Investment
Adviser by ISS include in-depth research, voting recommendations
(although the Investment Adviser is not obligated to follow such
recommendations), vote execution, and recordkeeping. ISS will also
assist the Fund in fulfilling its reporting and recordkeeping
obligations under the Investment Company Act.
The Investment Adviser's Proxy Voting Procedures also address special
circumstances that can arise in connection with proxy voting. For
instance, under the Proxy Voting Procedures, the Investment Adviser
generally will not seek to vote proxies related to portfolio securities
that are on loan, although it may do so under certain circumstances. In
addition, the Investment Adviser will vote proxies related to
securities of foreign issuers only on a best efforts basis and may
elect not to vote at all in certain countries where the Committee
determines that the costs associated with voting generally outweigh the
benefits. The Committee may at any time override these general policies
if it determines that such action is in the best interests of a Fund.
From time to time, the Investment Adviser may be required to vote proxies in
respect of an issuer where an affiliate of the Investment Adviser (each, an
"Affiliate"), or a money management or other client of the Investment Adviser
(each, a "Client") is involved. The Proxy Voting Procedures and the Investment
Adviser's adherence to those procedures are designed to address such conflicts
of interest. The Committee intends to strictly adhere to the Proxy Voting
Procedures in all proxy matters, including matters involving Affiliates and
Clients. If, however, an issue representing a non-routine matter that is
material to an Affiliate or a widely known Client is involved such that the
Committee does not reasonably believe it is able to follow its guidelines (or if
the particular proxy matter is not addressed by the guidelines) and vote
impartially, the Committee may, in its discretion for the purposes of ensuring
that an independent determination is reached, retain an independent fiduciary to
advise the Committee on how to vote or to cast votes on behalf of the Investment
Adviser's clients.
In the event that the Committee determines not to retain an independent
fiduciary, or it does not follow the advice of such an independent
fiduciary, the powers of the Committee shall pass to a subcommittee,
appointed by the CIO (with advice from the Secretary of the Committee),
consisting solely of Committee members selected by the CIO. The CIO
shall appoint to the subcommittee, where appropriate, only persons
whose job responsibilities do not include contact with the Client and
whose job evaluations would not be affected by the Investment Adviser's
relationship with the Client (or failure to retain such relationship).
The subcommittee shall determine whether and how to vote all proxies on
behalf of the Investment Adviser's clients or, if the proxy matter is,
in their judgment, akin to an investment decision, to defer to the
applicable portfolio managers, provided that, if the subcommittee
determines to alter the Investment Adviser's normal voting guidelines
or, on matters where the Investment Adviser's policy is case-by-case,
does not follow the voting recommendation of any proxy voting service
or other independent fiduciary that may be retained to provide research
or advice to the Investment Adviser on that matter, no proxies relating
to the Client may be voted unless the Secretary, or in the Secretary's
absence, the Assistant Secretary of the Committee concurs that the
subcommittee's determination is consistent with the Investment
Adviser's fiduciary duties
In addition to the general principles outlined above, the Investment
Adviser has adopted voting guidelines with respect to certain recurring
proxy issues that are not expected to involve unusual circumstances.
These policies are guidelines only, and the Investment Adviser may
elect to vote differently from the recommendation set forth in a voting
guideline if the Committee determines that it is in a Fund's best
interest to do so. In addition, the guidelines may be reviewed at any
time upon the request of a Committee member and may be amended or
deleted upon the vote of a majority of Committee members present at a
Committee meeting at which there is a quorum.
The Investment Adviser has adopted specific voting guidelines with
respect to the following proxy issues:
o Proposals related to the composition of the Board of Directors of issuers
other than investment companies. As a general matter, the Committee
believes that a company's Board of Directors (rather than shareholders) is
most likely to have access to important, nonpublic information regarding a
company's business and prospects, and is therefore best-positioned to set
corporate policy and oversee management. The Committee, therefore,
believes that the foundation of good corporate governance is the election
of qualified, independent corporate directors who are likely to diligently
represent the interests of shareholders and oversee management of the
corporation in a manner that will seek to maximize shareholder value over
time. In individual cases, the Committee may look at a nominee's history
of representing shareholder interests as a director of other companies or
other factors, to the extent the Committee deems relevant.
o Proposals related to the selection of an issuer's independent auditors. As
a general matter, the Committee believes that corporate auditors have a
responsibility to represent the interests of shareholders and provide an
independent view on the propriety of financial reporting decisions of
corporate management. While the Committee will generally defer to a
corporation's choice of auditor, in individual cases, the Committee may
look at an auditors' history of representing shareholder interests as
auditor of other companies, to the extent the Committee deems relevant.
o Proposals related to management compensation and employee benefits. As a
general matter, the Committee favors disclosure of an issuer's
compensation and benefit policies and opposes excessive compensation, but
believes that compensation matters are normally best determined by an
issuer's board of directors, rather than shareholders. Proposals to
"micro-manage" an issuer's compensation practices or to set arbitrary
restrictions on compensation or benefits will, therefore, generally not be
supported.
o Proposals related to requests, principally from management, for approval
of amendments that would alter an issuer's capital structure. As a general
matter, the Committee will support requests that enhance the rights of
common shareholders and oppose requests that appear to be unreasonably
dilutive.
o Proposals related to requests for approval of amendments to an issuer's
charter or by-laws. As a general matter, the Committee opposes poison pill
provisions.
o Routine proposals related to requests regarding the formalities of
corporate meetings.
o Proposals related to proxy issues associated solely with holdings of
investment company shares. As with other types of companies, the Committee
believes that a fund's Board of Directors (rather than its shareholders)
is best-positioned to set fund policy and oversee management. However, the
Committee opposes granting Boards of Directors authority over certain
matters, such as changes to a fund's investment objective, that the
Investment Company Act envisions will be approved directly by
shareholders.
o Proposals related to limiting corporate conduct in some manner that
relates to the shareholder's environmental or social concerns. The
Committee generally believes that annual shareholder meetings are
inappropriate forums for discussion of larger social issues, and opposes
shareholder resolutions "micromanaging" corporate conduct or requesting
release of information that would not help a shareholder evaluate an
investment in the corporation as an economic matter. While the Committee
is generally supportive of proposals to require corporate disclosure of
matters that seem relevant and material to the economic interests of
shareholders, the Committee is generally not supportive of proposals to
require disclosure of corporate matters for other purposes.
Item 8 -- Reserved
Item 9(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others
particularly during the period in which this report is being
prepared. The registrant's certifying officers have determined that
the registrant's disclosure controls and procedures are effective
based on our evaluation of these controls and procedures as of a
date within 90 days prior to the filing date of this report.
Item 9(b) -- There were no significant changes in the registrant's internal
controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.
Item 10 - Exhibits
10(a) - Attach code of ethics or amendments/waivers, unless code of ethics or
amendments/waivers is on website or offered to shareholders upon request
without charge. N/A.
10(b) - Attach certifications pursuant to Section 302 of the Sarbanes-Oxley Act.
Attached hereto.
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MuniHoldings Florida Insured Fund, Inc.
By: /s/ Terry K. Glenn
--------------------------
Terry K. Glenn,
President of
MuniHoldings Florida Insured Fund, Inc.
Date: October 24, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by
the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
By: /s/ Terry K. Glenn
--------------------------
Terry K. Glenn,
President of
MuniHoldings Florida Insured Fund, Inc.
Date: October 24, 2003
By: /s/ Donald C. Burke
--------------------------
Donald C. Burke,
Chief Financial Officer of
MuniHoldings Florida Insured Fund, Inc.
Date: October 24, 2003
Attached hereto as a furnished exhibit are the certifications pursuant
to Section 906 of the Sarbanes-Oxley Act.