-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Wo//SOEdnCVq/CQhMXRCtVYxmCMH+mjUFsMGvbdnRNAAj40doLPk2/evOnnxxr+7 Z18LFBkgchw0rGYYW5GReg== 0000900092-01-500026.txt : 20010613 0000900092-01-500026.hdr.sgml : 20010613 ACCESSION NUMBER: 0000900092-01-500026 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010430 FILED AS OF DATE: 20010612 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MUNIYIELD FLORIDA INSURED FUND /NJ/ CENTRAL INDEX KEY: 0000891188 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: NJ FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07156 FILM NUMBER: 1658918 BUSINESS ADDRESS: STREET 1: 800 SCUDDERS MILL RD CITY: PLAINSBORO STATE: NJ ZIP: 08536 BUSINESS PHONE: 6092822800 MAIL ADDRESS: STREET 1: P O BOX 9011 CITY: PRINCETON STATE: NJ ZIP: 08543-9011 FORMER COMPANY: FORMER CONFORMED NAME: MUNIYIELD FLORIDA FUND II DATE OF NAME CHANGE: 19600201 FORMER COMPANY: FORMER CONFORMED NAME: MUNIYIELD FLORIDA INSURED FUND DATE OF NAME CHANGE: 19600201 N-30D 1 ml6637.txt MYFLINS6637 (BULL LOGO) Merrill Lynch Investment Managers Semi-Annual Report April 30, 2001 MuniYield Florida Insured Fund MuniYield Florida Insured Fund seeks to provide shareholders with as high a level of current income exempt from Federal income taxes as is consistent with its investment policies and prudent investment management by investing primarily in a portfolio of long-term 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 taxes. This report, including the financial information herein, is transmitted to shareholders of MuniYield 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 by issuing Preferred Shares to provide the Common Shareholders with a potentially higher rate of return. Leverage creates risks for Common Shareholders, including the likelihood of greater volatility of net asset value and market price of the Common Shares, and the risk that fluctuations in the short-term dividend rates of the Preferred Shares may affect the yield to Common Shareholders. Statements and other information herein are as dated and are subject to change. MuniYield Florida Insured Fund Box 9011 Princeton, NJ 08543-9011 Printed on post-consumer recycled paper www.mlim.ml.com MUNIYIELD FLORIDA INSURED FUND The Benefits and Risks of Leveraging MuniYield Florida Insured Fund utilizes leveraging to seek to enhance the yield and net asset value of its Common Shares. However, these objectives cannot be achieved in all interest rate environments. To leverage, the Fund issues Preferred Shares, which pay dividends at prevailing short-term interest rates and invests the proceeds in long-term municipal bonds. The interest earned on these investments is paid to Common Shareholders in the form of dividends, and the value of these portfolio holdings is reflected in the per share net asset value of the Fund's Common Shares. However, in order to benefit Common Shareholders, the yield curve must be positively sloped; that is, short-term interest rates must be lower than long-term interest rates. At the same time, a period of generally declining interest rates will benefit Common Shareholders. If either of these conditions change, then the risks of leveraging will begin to outweigh the benefits. To illustrate these concepts, assume a fund's Common Shares capitalization of $100 million and the issuance of Preferred Shares for an additional $50 million, creating a total value of $150 million available for investment in long-term municipal bonds. If prevailing short-term interest rates are approximately 3% and long- term interest rates are approximately 6%, the yield curve has a strongly positive slope. The fund pays dividends on the $50 million of Preferred Shares based on the lower short-term interest rates. At the same time, the fund's total portfolio of $150 million earns the income based on long-term interest rates. Of course, increases in short-term interest rates would reduce (and even eliminate) the dividends on the Common Shares. In this case, the dividends paid to Preferred Shareholders are significantly lower than the income earned on the fund's long-term investments, and therefore the Common Shareholders are the beneficiaries of the incremental yield. However, if short-term interest rates rise, narrowing the differential between short-term and long-term interest rates, the incremental yield pickup on the Common Shares will be reduced or eliminated completely. At the same time, the market value of the fund's Common Shares (that is, its price as listed on the New York Stock Exchange) may, as a result, decline. Furthermore, if long-term interest rates rise, the Common Shares' net asset value will reflect the full decline in the price of the portfolio's investments, since the value of the fund's Preferred Shares does not fluctuate. In addition to the decline in net asset value, the market value of the fund's Common Shares may also decline. As a part of its investment strategy, the Fund may invest in certain securities whose potential income return is inversely related to changes in a floating interest rate ("inverse floaters"). In general, 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 such securities. MuniYield Florida Insured Fund, April 30, 2001 DEAR SHAREHOLDER For the six months ended April 30, 2001, the Common Shares of MuniYield Florida Insured Fund earned $0.378 per share income dividends, which included earned and unpaid dividends of $0.065. This represents a net annualized yield of 5.37%, based on a month- end net asset value of $14.20 per share. Over the six-month period ended April 30, 2001, the total investment return on the Fund's Common Shares was +5.17%, based on a change in per share net asset value from $13.89 to $14.20, and assuming reinvestment of $0.376 per share income dividends. For the six-month period ended April 30, 2001, the Fund's Auction Market Preferred Shares had an average yield of 3.89%. The Municipal Market Environment During the six months ended April 30, 2001, the direction of long- term fixed-income bond yields was affected by the continued decline in US economic activity, volatile US equity markets, and most importantly, the reaction of the Federal Reserve Board to these factors. A preliminary estimate for the first quarter of 2001 gross national product growth was recently released at 2%, much higher than expected by most economic analysts. While this estimate is subject to revision in the coming months, its initial level denotes that US economic activity remains far below its growth potential. Additionally, inflationary pressures have remained well contained, largely in the 2% - 3% range. These factors combined to promote a very favorable financial environment for bonds, and when coupled with significant declines in US equity markets in late 2000, especially the NASDAQ, pushed US Treasury bond yields lower. By mid-December, the Federal Reserve Board announced that economic conditions warranted the cessation of the series of short-term interest rate increases. Given a supportive economic environment and, at least, a neutral Federal Reserve Board, investors were free again to focus on the ongoing US Treasury debt reduction programs and forecasts of sizable Federal budgetary surpluses going forward. Many analysts and investors concluded that there would be a significant future shortage of longer-maturing US Treasury securities. These factors combined to help push US Treasury bond yields significantly lower. In early January 2001, the Federal Reserve Board lowered short-term interest rates by 50 basis points (0.50%), citing declining consumer confidence and weakening industrial production and retail sales growth. Similar reasons were given for an additional 50 basis point reduction in short-term interest rates by the Federal Reserve Board at the end of January 2001. These interest rate cuts triggered a significant rebound in many US equity indexes, reducing the appeal of a large number of US fixed-income securities. Additionally, many investors, believing that the Federal Reserve Board's actions in January 2001 as well as those anticipated in the coming months would quickly restore US economic growth to earlier levels, sold US Treasury bonds to realize recent profits. At the end of January 2001, long-term US Treasury bonds yielded approximately 5.50%, a decline of more than 25 basis points since the end of October 2000. In response to weakening employment, a decline in business investments and profits, and fears of ongoing weak consumer spending, the Federal Reserve Board continued to lower short-term interest rates in March and April in an effort to foster higher US economic activity. Long-term taxable fixed-income interest rates responded by declining to recent historic lows. By late March 2001, long-term US Treasury bond yields declined an additional 25 basis points to 5.26%. However, in April, US equity markets, particularly the NASDAQ, rallied strongly on the expectation that the Federal Reserve Board would take steps to restore economic activity and corporate profitability. Throughout much of April many investors reallocated assets out of US Treasury securities into equities. Corporate bond issuance remained heavy, providing an additional investment alternative to US Treasury issues. Under these various pressures, US Treasury bond prices declined sharply and yields rose to 5.78% by the end of April. During the past six months, long-term US Treasury bond yields, although exhibiting considerable volatility, remained unchanged. By April 2001, the tax-exempt bond market also reacted to the Federal Reserve Board's actions and equity market volatility, but its reaction was muted in both intensity and degree. Throughout most of the past six months, long-term municipal bond yields traded in a range between 5.45% - 5.60%. In mid-March, the tax-exempt bond market rallied to 5.40%, following the Federal Reserve Board's most recent monetary easing. With tax-exempt bond yield ratios in excess of 95% relative to their US Treasury counterparts during most of the period, investor demand was particularly strong during periods of declining equity prices. Strong equity markets in April 2001, as well as the possibility that the Federal Reserve Board was close to the end of its interest rate reduction cycle, lowered much of the investor demand and long-term tax-exempt bond yields rose throughout April. As measured by the Bond Buyer Revenue Bond Index, long-term, uninsured tax-exempt bond yields rose to approximately 5.63% at the end of the period. Despite the price reversal in April, long-term municipal bond yields declined more than 10 basis points. The recent relative outperformance of the tax-exempt bond market was particularly impressive given the dramatic increase in long-term municipal bond issuance during April 2001. Historically low municipal bond yields continued to allow municipalities to refund outstanding, higher-couponed debt. Also, as yields rose in early April, tax-exempt issuers rushed to issue new financing, fearing higher yields in the coming months. During the past six months, more than $115 billion in long-term tax-exempt bonds was issued, an increase of over 25% compared to the same period a year ago. During the three-month period ended April 30, 2001, tax-exempt bond issuance was particularly heavy with more than $66 billion in long- term municipal bonds underwritten, an increase of over 40% compared to the same period ended April 30, 2000. More than $20 billion in municipal securities was issued in April 2001, a 20% increase compared to April 2000. Historically, April has been a period of weak demand for tax-exempt products as investors are often forced to liquidate bond positions to meet Federal and state tax payments. In April 2001, there was no appreciable selling by retail accounts. It has been noted that thus far in 2001, new net cash inflows into municipal bond mutual funds have exceeded $4 billion compared to net new cash outflows of nearly $9 billion for the same period a year ago. This suggests that the positive technical structure of the municipal market has remained intact. Also, the coming months of June and July tend to be periods of strong retail demand in response to the larger-coupon income payments and proceeds from bond maturities these months generate. Additionally, short-term tax-exempt interest rates are poised to move lower. Seasonal tax pressures have kept short-term municipal rates artificially high, although not as high as in recent years. We believe all of these factors should enhance the tax-exempt market's technical position in the coming months. Looking forward, the municipal market's direction appears uncertain. Should the US economy materially weaken into late summer, the Federal Reserve Board may be forced to ease monetary policy to a greater extent than investors currently expect. The prospect of two or three additional interest rate easings may push fixed-income bond yields, including municipal bond yields, lower. However, should the cumulative 200 basis point reduction in short-term interest rates by the Federal Reserve Board and the proposed Federal tax reform combine to quickly restore consumer confidence and economic activity, tax-exempt bond rates may not decline further. Given the strong technical position of the municipal market, we believe the tax-exempt market is poised to continue to outperform its taxable counterpart in the coming months. Portfolio Strategy During the six-month period ended April 30, 2001, we focused on enhancing the level of tax-exempt income and moderating net asset value volatility of the Fund. We concentrated on the acquisition of higher-couponed securities in the 15-year - 20-year maturity range and the sale of long duration bonds. As a result of the steepness of the municipal bond market's yield curve, these issues represented 90% - 95% of the yield available in the entire yield curve. This maturity sector also provided less interest rate sensitivity than bonds maturing in 25 years - 30 years. Looking ahead, we anticipate that we will maintain our current market neutral and fully invested positions in an effort to enhance shareholder income. Tax-exempt bond yields are expected to remain in a narrow range until it becomes clearer that the Federal Reserve Board actions are having an impact and the US economy displays signs of growth. At this time we do not foresee any significant changes to the Fund. If either the US economy or equity markets show any major weakness, we are prepared to adopt a more positive strategy in order to enhance portfolio appreciation. MuniYield Florida Insured Fund, April 30, 2001 Despite recent seasonal tax-related pressures on short-term interest rates, the Federal Reserve Board's 200 basis point decrease in short- term interest rates by April 30, 2001 has had a beneficial impact on the Fund's borrowing costs, which were in the 3.5% - 3.75% range. Short-term tax-exempt rates are expected to fall into the 3% range. This decline in borrowing costs can generate a significant income benefit to the Fund's Common Shareholders from the leveraging of the Preferred Shares. 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 complete explanation of the benefits and risks of leveraging, see page 1 of this report to shareholders.) In Conclusion We appreciate your continuing interest in MuniYield Florida Insured Fund, and we look forward to serving your investment needs in the months and years to come. Sincerely, (Terry K. Glenn) Terry K. Glenn President and Trustee (Vincent R. Giordano) Vincent R. Giordano Senior Vice President (William R. Bock) William R. Bock Vice President and Portfolio Manager May 23, 2001 PROXY RESULTS
During the six-month period ended April 30, 2001, MuniYield Florida Insured Fund's Common Shareholders voted on the following proposal. The proposal was approved at a shareholders' meeting on April 25, 2001. The description of the proposal and number of shares voted are as follows: Shares Voted Shares Withheld For From Voting 1. To elect the Fund's Trustees: Terry K. Glenn 5,331,130 61,268 Stephen B. Swensrud 5,331,130 61,268 J. Thomas Touchton 5,331,130 61,268 Fred G. Weiss 5,331,130 61,268 During the six-month period ended April 30, 2001, MuniYield Florida Insured Fund's Preferred Shareholders voted on the following proposal. The proposal was approved at a shareholders' meeting on April 25, 2001. The description of the proposal and number of shares voted are as follows: Shares Voted Shares Withheld For From Voting 1. To elect the Fund's Board of Trustees: Terry K. Glenn, M. Colyer Crum, Laurie Simon Hodrick, Stephen B. Swensrud, J. Thomas Touchton and Fred G. Weiss 2,121 0
SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face STATE Ratings Ratings Amount Issue Value Florida--91.6% NR* Aaa $ 2,375 Bay County, Florida, School Board, COP, 5% due 7/01/2023 (a) $ 2,242 Boynton Beach, Florida, Utility System Revenue Refunding Bonds (c): AAA Aaa 700 6.25% due 11/01/2020 (h) 784 AAA Aaa 3,375 6.25% due 11/01/2020 3,498 AAA Aaa 3,000 Brevard County, Florida, IDR (NUI Corporation Project), AMT, 6.40% due 10/01/2024 (a) 3,156 A1+ NR* 1,200 Capital Projects Finance Authority, Florida, Revenue Bonds (Florida Hospital Association- Capital Projects Loan), VRDN, Series A, 4.30% due 6/01/2028 (e)(g) 1,200 Citrus County, Florida, PCR, Refunding (Florida Power Company-Crystal River) (b): AAA Aaa 2,100 6.625% due 1/01/2027 2,177 AAA Aaa 5,750 Series B, 6.35% due 2/01/2022 5,942 NR* Aaa 4,500 Cityplace Community Development District, Florida, Capital Improvement Revenue Bonds, 5% due 5/01/2022 (b) 4,287 Dade County, Florida, Aviation Revenue Bonds, AMT, Series B (b): AAA Aaa 5,000 5.75% due 10/01/2012 5,240 AAA Aaa 2,650 6.55% due 10/01/2013 2,787 AAA Aaa 12,715 6.60% due 10/01/2022 13,367 AAA Aaa 4,500 Dade County, Florida, Health Facilities Authority, Hospital Revenue Bonds (Baptist Hospital of Miami Project), Series A, 5.75% due 5/01/2021 (b)(h) 4,753 A1+ VMIG1++ 300 Dade County, Florida, IDA, Exempt Facilities Revenue Refunding Bonds (Florida Power and Light Co.), VRDN, 4.50% due 6/01/2021 (g) 300 A1+ VMIG1++ 200 Dade County, Florida, Water and Sewer System Revenue Bonds, VRDN, 4.10% due 10/05/2022 (c)(g) 200 NR* Aaa 1,670 Duval County, Florida, HFA, S/F Mortgage Revenue Refunding Bonds, AMT, 6.20% due 4/01/2020 (b)(d)(i) 1,754 AAA Aaa 5,000 Escambia County, Florida, HFA, S/F Mortgage Revenue Refunding Bonds, AMT, 7% due 4/01/2028 (d)(i) 5,296 NR* Aaa 2,750 Escambia County, Florida, Health Facilities Authority, Health Facility Revenue Bonds, DRIVERS, Series 159, 7.414% due 7/01/2020 (a)(j) 3,088
Portfolio Abbreviations To simplify the listings of MuniYield Florida Insured Fund's portfolio holdings in the Schedule of Investments, we have abbreviated the names of many of the securities according to the list at right. AMT Alternative Minimum Tax subject to) 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 PCR Pollution Control Revenue Bonds S/F Single-Family VRDN Variable Rate Demand Notes MuniYield Florida Insured Fund, April 30, 2001 SCHEDULE OF INVESTMENTS (CONCLUDED) (in Thousands)
S&P Moody's Face STATE Ratings Ratings Amount Issue Value Florida AAA Aaa $ 3,000 First Florida Governmental Financing Commission (concluded) Revenue Bonds, 5.70% due 7/01/2017 (b) $ 3,113 AAA Aaa 1,150 Florida HFA, Housing Revenue Bonds (Brittany Rosemont Apartments), AMT, Series C-1, 6.75% due 8/01/2014 (a) 1,210 AAA Aaa 1,650 Florida Housing Finance Corporation, Homeowner Mortgage Revenue Refunding Bonds, AMT, Series 4, 6.25% due 7/01/2022 (e) 1,734 Florida State Board of Education, Capital Outlay, GO (Public Education): AA+ Aaa 2,650 Series B, 5.875% due 6/01/2005 (f) 2,878 AA+ Aa2 2,000 Series E, 5.50% due 6/01/2018 2,047 AAA Aaa 6,190 Florida State Board of Education, Lottery Revenue Bonds, Series A, 6% due 7/01/2015 (c) 6,761 AAA Aaa 2,200 Florida State Division of Bond Finance, Department of General Services Revenue Refunding Bonds (Environmental Protection), Series B, 6% due 7/01/2010 (a) 2,449 AAA Aaa 1,000 Hillsborough County, Florida, IDA, Revenue Refunding Bonds (Allegany Health System--J. Knox Village), 6.375% due 12/01/2003 (b)(f) 1,033 Hillsborough County, Florida, School Board, COP (b): NR* Aaa 6,000 5.375% due 7/01/2026 5,987 AAA Aaa 3,445 Refunding (Master Lease Program), Series A, 5.50% due 7/01/2010 3,699 NR* Aaa 7,250 Indian Trace, Community Development District, Florida, Water Management, Special Benefit Assessment, 5% due 5/01/2027 (b) 6,862 NR* VMIG1++ 200 Jacksonville, Florida, Health Facilities Authority, Hospital Revenue Refunding Bonds (Genesis Rehabilitation Hospital), VRDN, 4.50% due 5/01/2021 (g) 200 NR* Aaa 2,250 Jacksonville, Florida, Port Authority, Seaport Revenue Bonds, AMT, 5.625% due 11/01/2026 (b) 2,252 AAA NR* 1,470 Lee County, Florida, HFA, S/F Mortgage Revenue Bonds (Multi-County Program), AMT, Series A, Sub-Series 3, 7.45% due 9/01/2027 (d)(i)(k) 1,638 AAA Aaa 2,000 Miami Beach, Florida, Water and Sewer Revenue Bonds, 5.75% due 9/01/2025 (a) 2,086 AAA Aaa 5,000 Miami-Dade County, Florida, Aviation Revenue Bonds (Miami International Airport), AMT, Series A, 6% due 10/01/2024 (c) 5,295 AAA Aaa 2,000 Miami-Dade County, Florida, Educational Facilities Authority Revenue Bonds (University of Miami), Series A, 5.75% due 4/01/2029 (a) 2,074 AAA Aaa 3,130 Miami-Dade County, Florida, IDA, IDR (BAC Funding Corporation Project), Series A, 5.375% due 10/01/2030 (a) 3,123 AAA Aaa 2,000 Miami-Dade County, Florida, School Board COP, Series A, 5.50% due 10/01/2020 (e) 2,028 AAA Aaa 3,760 Miami-Dade County, Florida, Solid Waste System Revenue Bonds, 5% due 10/01/2020 (e) 3,593 AAA Aaa 2,515 North Miami Beach, Florida, GO, 6.30% due 2/01/2024 (c) 2,637 NR* Aaa 6,500 Orange County, Florida, School Board, COP, Series A, 5.25% due 8/01/2023 (b) 6,407 Orange County, Florida, Tourist Development, Tax Revenue Refunding Bonds, Series A (a): AAA Aaa 835 6.50% due 10/01/2010 885 AAA Aaa 165 6.50% due 10/01/2010 (h) 175 AAA Aaa 1,500 Palm Beach County, Florida, Criminal Justice Facilities Revenue Bonds, 7.20% due 6/01/2015 (c) 1,845 AAA Aaa 5,000 Palm Beach County, Florida, School Board, COP, Series A, 6% due 8/01/2018 (c) 5,389 AAA Aaa 2,500 Pasco County, Florida, PCR, Refunding (Florida Power--Anclote), 6.35% due 2/01/2022 (b) 2,621 AAA Aaa 2,500 Pinellas County, Florida, Housing Authority, Housing Revenue Bonds (Affordable Housing Program), 4.60% due 12/01/2010 (e) 2,502 A1+ VMIG1++ 3,100 Saint Lucie County, Florida, PCR, Refunding (Florida Power and Light Company Project), VRDN, 4.60% due 9/01/2028 (g) 3,100 AAA Aaa 6,600 Sarasota County, Florida, Public Hospital Board, Revenue Refunding Bonds (Sarasota Memorial Hospital), Series B, 5.50% due 7/01/2028 (b) 6,784 AAA Aaa 4,920 Sarasota County, Florida, Utility System Revenue Bonds, 6.50% due 10/01/2004 (c)(f) 5,455 AAA Aaa 2,275 South Florida Water Management District, Special Obligation Land Acquisition Revenue Bonds, 6% due 10/01/2015 (a) 2,366 AAA Aaa 5,000 Tallahassee, Florida, Energy System Revenue Refunding Bonds, Series A, 4.75% due 10/01/2026 (e) 4,463 Illinois--2.2% AAA Aaa 3,680 Regional Transportation Authority, Illinois, GO, Refunding, 5.75% due 6/01/2015 (e) 3,964 New York--0.3% A1+ VMIG1++ 100 Long Island Power Authority, New York, Electric System Revenue Bonds, VRDN, Sub-Series 5, 4.50% due 5/01/2033 (g) 100 A1+ VMIG1++ 500 New York City, New York, City Municipal Water Finance Authority, Water and Sewer System Revenue Refunding Bonds, VRDN, Series A, 4.35% due 6/15/2025 (c)(g) 500 Texas--3.8% A1+ VMIG1++ 300 Harris County, Texas, Industrial Development Corporation Revenue Refunding Bonds (Shell Oil Company Project), VRDN, 4.40% due 4/01/2027 (g) 300 AAA Aaa 6,000 Houston, Texas, Hotel Occupancy Tax and Special Revenue Bonds (Convention and Entertainment), Series B, 5.75% due 9/01/2012 (a) 6,440 Total Investments (Cost--$170,417)--97.9% 176,066 Other Assets Less Liabilities--2.1% 3,763 -------- Net Assets--100.0% $179,829 ======== (a)AMBAC Insured. (b)MBIA Insured. (c)FGIC Insured. (d)GNMA Collateralized. (e)FSA Insured. (f)Prerefunded. (g)The interest rate is subject to change periodically based upon prevailing market rates. The interest rate shown is the rate in effect at April 30, 2001. (h)Escrowed to maturity. (i)FNMA Collateralized. (j)The interest rate is subject to change periodically and inversely based upon prevailing market rates. The interest rate shown is the rate in effect at April 30, 2001. (k)FHLMC Collateralized. *Not Rated. ++Highest short-term rating by Moody's Investors Service, Inc. See Notes to Financial Statements.
MuniYield Florida Insured Fund, April 30, 2001 STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
As of April 30, 2001 Assets: Investments, at value (identified cost--$170,417,453) $176,066,260 Cash 24,875 Receivables: Securities sold $ 7,980,473 Interest 2,406,724 10,387,197 ------------ Prepaid expenses and other assets 15,006 ------------ Total assets 186,493,338 ------------ Liabilities: Payables: Securities purchased 6,509,578 Dividends to shareholders 80,674 Investment adviser 72,122 6,662,374 ------------ Accrued expenses 1,944 ------------ Total liabilities 6,664,318 ------------ Net Assets: Net assets $179,829,020 ============ Capital: Capital Shares (unlimited number of shares authorized): Preferred Shares, par value $.05 per share (2,400 shares of AMPS* issued and outstanding at $25,000 per share liquidation preference) $ 60,000,000 Common Shares, par value $.10 per share (8,437,358 shares issued and outstanding) $ 843,736 Paid-in capital in excess of par 117,604,963 Undistributed investment income--net 1,206,752 Accumulated realized capital losses on investments--net (1,083,036) Accumulated distributions in excess of realized apital gains on investments--net (4,392,202) Unrealized appreciation on investments--net 5,648,807 ------------ Total--Equivalent to $14.20 net asset value per Common Share market price--$13.09) 119,829,020 ------------ Total capital $179,829,020 ============ *Auction Market Preferred Shares. See Notes to Financial Statements.
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2001 Investment Interest and amortization of premium and discount earned $ 4,950,510 Income: Expenses: Investment advisory fees $ 450,573 Commission fees 71,860 Accounting services 41,320 Professional fees 36,814 Transfer agent fees 17,091 Printing and shareholder reports 15,787 Trustees' fees and expenses 14,053 Listing fees 10,619 Custodian fees 5,498 Pricing fees 3,043 Other 7,672 ------------ Total expenses 674,330 ------------ Investment income--net 4,276,180 ------------ Realized & Realized gain on investments--net 2,624,220 Unrealized Gain Change in unrealized appreciation on investments--net 54,951 On Investments-- ------------ Net: Net Increase in Net Assets Resulting from Operations $ 6,955,351 ============ See Notes to Financial Statements.
MuniYield Florida Insured Fund, April 30, 2001 STATEMENTS OF CHANGES IN NET ASSETS
For the Six For the Months Ended Year Ended April 30, October 31, Increase (Decrease) in Net Assets: 2001 2000 Operations: Investment income--net $ 4,276,180 $ 8,596,572 Realized gain (loss) on investments--net 2,624,220 (3,707,256) Change in unrealized appreciation/depreciation on investments--net 54,951 8,881,947 ------------ ------------ Net increase in net assets resulting from operations 6,955,351 13,771,263 ------------ ------------ Dividends to Investment income--net: Shareholders: Common Shares (3,169,071) (6,365,143) Preferred Shares (1,158,480) (2,423,928) ------------ ------------ Net decrease in net assets resulting from dividends to shareholders (4,327,551) (8,789,071) ------------ ------------ Net Assets: Total increase in net assets 2,627,800 4,982,192 Beginning of period 177,201,220 172,219,028 ------------ ------------ End of period* $179,829,020 $177,201,220 ============ ============ *Undistributed investment income--net $ 1,206,752 $ 1,258,123 ============ ============ See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
The following per share data and ratios have been derived For the Six from information provided in the financial statements. Months Ended April 30, For the Year Ended October 31, Increase (Decrease) in Net Asset Value: 2001 2000 1999 1998 1997 Per Share Net asset value, beginning of period $ 13.89 $ 13.30 $ 15.79 $ 15.50 $ 15.25 Operating --------- --------- --------- --------- --------- Performance: Investment income--net .51 1.02 1.01 1.09 1.10 Realized and unrealized gain (loss) on investments--net .32 .61 (1.96) .48 .52 --------- --------- --------- --------- --------- Total from investment operations .83 1.63 (.95) 1.57 1.62 --------- --------- --------- --------- --------- Less dividends and distributions to Common Shareholders: Investment income--net (.38) (.75) (.86) (.84) (.85) Realized gain on investments--net -- -- (.01) (.17) (.22) In excess of realized gain on investments--net -- -- (.41) -- (.02) --------- --------- --------- --------- --------- Total dividends and distributions to Common Shareholders (.38) (.75) (1.28) (1.01) (1.09) --------- --------- --------- --------- --------- Effect of Preferred Share activity: Dividends and distributions to Preferred Shareholders: Investment income--net (.14) (.29) (.15) (.23) (.21) Realized gain on investments--net -- -- --++ (.04) (.07) In excess of realized gain on investments--net -- -- (.11) -- --++ --------- --------- --------- --------- --------- Total effect of Preferred Share activity (.14) (.29) (.26) (.27) (.28) --------- --------- --------- --------- --------- Net asset value, end of period $ 14.20 $ 13.89 $ 13.30 $ 15.79 $ 15.50 ========= ========= ========= ========= ========= Market price per share, end of period $ 13.09 $ 12.125 $ 12.125 $ 15.625 $ 15.00 ========= ========= ========= ========= ========= Total Investment Based on market price per share 11.06%+++ 6.45% (15.43%) 11.21% 14.41% Return:** ========= ========= ========= ========= ========= Based on net asset value per share 5.17%+++ 11.17% (8.20%) 8.76% 9.50% ========= ========= ========= ========= ========= Ratios Based on Total expenses*** 1.12%* 1.14% 1.12% 1.04% 1.04% Average Net ========= ========= ========= ========= ========= Assets of Total investment income--net*** 7.09%* 7.55% 6.88% 6.94% 7.21% Common Shares: ========= ========= ========= ========= ========= Amount of dividends to Preferred Shareholders 1.92%* 2.13% 1.04% 1.45% 1.40% ========= ========= ========= ========= ========= Investment income--net, to Common Shareholders 5.17%* 5.42% 5.84% 5.49% 5.81% ========= ========= ========= ========= ========= Ratios Based on Total expenses .75%* .75% .75% .71% .71% Total Average Net ========= ========= ========= ========= ========= Assets:***++++ Total investment income--net 4.75%* 4.94% 4.64% 4.76% 4.92% ========= ========= ========= ========= ========= Ratios Based on Dividends to Preferred Shareholders 3.89%* 4.03% 2.16% 3.16% 2.98% Average Net ========= ========= ========= ========= ========= Assets of Preferred Shares: Supplemental Net assets, net of Preferred Shares, Data: end of period (in thousands) $ 119,829 $ 117,201 $ 112,219 $ 132,313 $ 129,405 ========= ========= ========= ========= ========= Preferred Shares outstanding, end of period (in thousands) $ 60,000 $ 60,000 $ 60,000 $ 60,000 $ 60,000 ========= ========= ========= ========= ========= Portfolio turnover 34.55% 40.41% 85.16% 62.35% 73.79% ========= ========= ========= ========= ========= Leverage: Asset coverage per $1,000 $ 2,997 $ 2,953 $ 2,870 $ 3,205 $ 3,157 ========= ========= ========= ========= ========= Dividends Investment income--net $ 483 $ 1,010 $ 538 $ 790 $ 746 Per Share ========= ========= ========= ========= ========= On Preferred Shares Outstanding: *Annualized. **Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Total investment returns exclude the effects of sales charges. ***Do not reflect the effect of dividends to Preferred Shareholders. ++Amount is less than $.01 per share. ++++Includes Common and Preferred Shares average net assets. +++Aggregate total investment return. See Notes to Financial Statements.
MuniYield Florida Insured Fund, April 30, 2001 NOTES TO FINANCIAL STATEMENTS 1. Significant Accounting Policies: MuniYield Florida Insured Fund (the "Fund") is registered under the Investment Company Act of 1940 as a non-diversified, closed-end management investment company. The Fund'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. These unaudited financial statements reflect all adjustments, which are, in the opinion of management, necessary to a fair statement of the results for the interim period presented. All such adjustments are of a normal, recurring nature. The Fund determines and makes available for publication the net asset value of its Common Shares on a weekly basis. The Fund's Common Shares are listed on the New York Stock Exchange under the symbol MFT. The following is a summary of significant accounting policies followed by the Fund. (a) Valuation of investments--Municipal bonds are traded primarily in the over-the-counter markets and are valued at the most recent bid price or yield equivalent as obtained by the Fund's pricing service from dealers that make markets in such securities. Financial futures contracts and options thereon, which are traded on exchanges, are valued at their closing prices as of the close of such exchanges. Options written or purchased are valued at the last sale price in the case of exchange-traded options. In the case of options traded in the over-the-counter market, valuation is the last asked price (options written) or the last bid price (options purchased). Securities with remaining maturities of sixty days or less are valued at amortized cost, which approximates market value. Securities and assets for which market quotations are not readily available are valued at their fair value as determined in good faith by or under the direction of the Board of Trustees of the Fund, including valuations furnished by a pricing service retained by the Fund, which may utilize a matrix system for valuations. The procedures of the pricing service and its valuations are reviewed by the officers of the Fund under general supervision of the Board of Trustees. (b) Derivative financial instruments--The Fund may engage in various portfolio investment strategies to increase or decrease the level of risk to which the Fund is exposed more quickly and efficiently than transactions in other types of instruments. Losses may arise due to changes in the value of the contract or if the counterparty does not perform under the contract. * Financial futures contracts--The Fund may purchase or sell financial futures contracts and options on such futures contracts for the purpose of hedging the market risk on existing securities or the intended purchase of securities. Futures contracts are contracts for delayed delivery of securities at a specific future date and at a specific price or yield. Upon entering into a contract, the Fund deposits and maintains as collateral such initial margin as required by the exchange on which the transaction is effected. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. * Options--The Fund is authorized to write covered call options and purchase put options. When the Fund writes an option, an amount equal to the premium received by the Fund is reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market to reflect the current market value of the option written. When a security is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the security acquired or deducted from (or added to) the proceeds of the security sold. When an option expires (or the Fund enters into a closing transaction), the Fund realizes a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction exceeds the premium paid or received). Written and purchased options are non-income producing investments. (c) Income taxes--It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no Federal income tax provision is required. (d) Security transactions and investment income--Security transactions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on security transactions are determined on the identified cost basis. Interest income is recognized on the accrual basis. The Fund will adopt the provisions to amortize all premiums and discounts on debt securities effective November 1, 2001, as now required under the new AICPA Audit and Accounting Guide for Investment Companies. The cumulative effect of this accounting change will have no impact on the total net assets of the Fund. The impact of this accounting change has not been determined, but will result in an adjustment to the cost of securities and a corresponding adjustment to net unrealized appreciation/depreciation, based on debt securities held as of October 31, 2001. (e) Dividends and distributions--Dividends from net investment income are declared and paid monthly. Distributions of capital gains are recorded on the ex-dividend dates. Distributions in excess of realized capital gains are due primarily to differing tax treatments for futures transactions. 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 .50% of the Fund's average weekly net assets, including proceeds from the issuance of Preferred Shares. Prior to January 1, 2001, FAM provided accounting services to the Fund at its cost and the Fund reimbursed FAM for these services. FAM continues to provide certain accounting services to the Fund. The Fund reimburses FAM at its cost for such services. For the six months ended April 30, 2001, the Fund reimbursed FAM an aggregate of $16,583 for the above-described services. The Fund entered into an agreement with State Street Bank and Trust Company ("State Street"), effective January 1, 2001, pursuant to which State Street provides certain accounting services to the Fund. The Fund pays a fee for these 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 six months ended April 30, 2001 were $60,017,375 and $65,732,963, respectively. Net realized gains for the six months ended April 30, 2001 and net unrealized gains on April 30, 2001 were as follows: Realized Unrealized Gains Gains Long-term investments $ 2,624,220 $ 5,648,807 ------------ ------------- Total $ 2,624,220 $ 5,648,807 ============ ============= As of April 30, 2001, net unrealized appreciation for Federal income tax purposes aggregated $5,648,807, of which $6,553,676 related to appreciated securities and $904,869 related to depreciated securities. The aggregate cost of investments at April 30, 2001 for Federal income tax purposes was $170,417,453. 4. Capital Share Transactions: The Fund is authorized to issue an unlimited number of shares of beneficial interest, including Preferred Shares, par value $.10 per share, all of which were initially classified as Common Shares. The Board of Trustees is authorized, however, to reclassify any unissued shares of beneficial interest without approval of the holders of Common Shares. Common Shares Shares issued and outstanding during the six months ended April 30, 2001 and during the year ended October 31, 2000 remained constant. Preferred Shares Auction Market Preferred Shares ("AMPS") are shares of Preferred Shares of the Fund, with a par value of $.05 per share and a liquidation preference of $25,000 per share, that entitle their holders to receive cash dividends at an annual rate that may vary for the successive dividend periods. The yield in effect at April 30, 2001 was 3.30%. Shares issued and outstanding during the six months ended April 30, 2001 and during the year ended October 31, 2000 remained constant. 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 six months ended April 30, 2001 Merrill Lynch, Pierce, Fenner & Smith Incorporated, an affiliate of FAM, earned $33,380 as commissions. 5. Capital Loss Carryforward: At October 31, 2000, the Fund had a net capital loss carryforward of approximately $6,779,000, of which $3,067,000 expires in 2007 and $3,712,000 expires in 2008. This amount will be available to offset like amounts of any future taxable gains. 6. Subsequent Event: On May 8, 2001, the Fund's Board of Trustees declared an ordinary income dividend to Common Shareholders in the amount of $.065000 per share, payable on May 30, 2001 to shareholders of record as of May 16, 2001. MuniYield Florida Insured Fund, April 30, 2001 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 Common Shares of the Fund, the Fund may at times pay out less than the entire amount of net investment income earned in any particular month and may at times in any month pay out such accumulated but undistributed income in addition to net investment income earned in that month. As a result, the dividends paid by the Fund for any particular month may be more or less than the amount of net investment income earned by the Fund during such month. The Fund's current accumulated but undistributed net investment income, if any, is disclosed in the Statement of Assets, Liabilities and Capital, which comprises part of the Financial Information included in this report. QUALITY PROFILE The quality ratings of securities in the Fund as of April 30, 2001 were as follows: Percent of S&P Rating/Moody's Rating Net Assets AAA/Aaa 93.5% AA/Aa 1.1 Other* 3.3 *Temporary investments in short-term municipal securities. OFFICERS AND TRUSTEES Terry K. Glenn, President and Trustee M. Colyer Crum, Trustee Laurie Simon Hodrick, Trustee Stephen B. Swensrud, Trustee J. Thomas Touchton, Trustee Fred G. Weiss, Trustee Vincent R. Giordano, Senior Vice President William R. Bock, Vice President Kenneth A. Jacob, Vice President Donald C. Burke, Vice President and Treasurer Alice A. Pellegrino, Secretary Jack B. Sunderland and Arthur Zeikel, Trustees of MuniYield Florida Insured Fund, have recently retired. The Fund's Board of Trustees wishes Messrs. Sunderland and Zeikel well in their retirements. Custodian The Bank of New York 90 Washington Street New York, NY 10286 Transfer Agents Common Shares: The Bank of New York 101 Barclay Street New York, NY 10286 Preferred Shares: The Bank of New York 100 Church Street New York, NY 10286 NYSE Symbol MFT -----END PRIVACY-ENHANCED MESSAGE-----