-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, P13jp3VR3eC62w66yFhpPam6OIJCzhQN+4cV5AQYauWbzycyH1HxhVwwNW9ndy7Z I4Jqaf3vqzXo0LBpx8tTAw== 0000900092-94-000562.txt : 19941221 0000900092-94-000562.hdr.sgml : 19941221 ACCESSION NUMBER: 0000900092-94-000562 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19941031 FILED AS OF DATE: 19941220 SROS: NYSE 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: 1940 Act SEC FILE NUMBER: 811-07156 FILM NUMBER: 94565368 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 ANNUAL REPORT MUNIYIELD FLORIDA INSURED FUND FUND LOGO Annual Report October 31, 1994 This report, including the financial information herein, is transmitted to the shareholders of MuniYield Florida Insured Fund for their information. It is not a prospectus, circular or representation intended for use in the purchase of shares of the Fund or any securities mentioned in the report. Past performance results shown in this report should not be considered a representation of future performance. The Fund has leveraged its Common Shares by issuing Preferred Shares to provide 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. MuniYield Florida Insured Fund Box 9011 Princeton, NJ 08543-9011 MuniYield Florida Insured Fund TO OUR SHAREHOLDERS For the year ended October 31, 1994, the Common Shares of MuniYield Florida Insured Fund earned $1.050 per share income dividends, which includes earned and unpaid dividends of $0.073. This represents a net annualized yield of 7.69%, based on a month-end net asset value of $13.70 per share. Over the same period, the total investment return on the Fund's Common Shares was -10.98%, based on a change in per share net asset value from $16.56 to $13.70, and assuming reinvestment of $1.060 per share income dividends. For the six-month period ended October 31, 1994, the total investment return on the Fund's Common Shares was -2.31%, based on a change in per share net asset value from $14.51 to $13.70, and assuming reinvestment of $0.445 per share income dividends. The average yield of the Fund's Auction Market Preferred Shares for the six months ended October 31, 1994 was 3.15%. The Environment As discussed in our last report to shareholders, the Federal Reserve Board moved to counteract inflationary pressures by tightening monetary policy. This trend continued during the May--October period. Despite the series of preemptive strikes against inflation by the central bank, concerns of increasing inflationary pressures continued to prompt volatility in the US capital markets during the period. In addition, the weakness of the US dollar in foreign exchange markets prolonged stock and bond market declines. Ongoing strength in the manufacturing sector and better-than- expected economic results continue to fuel speculation that the Federal Reserve Board will continue to raise short-term interest rates in the months ahead. However, although consumer spending is increasing, it is doing so at a lower rate than has been the case in recent economic recoveries. In the weeks ahead, investors will continue to assess economic data and inflationary trends in order to gauge whether further increases in short-term interest rates are imminent. Continued indications of moderate and sustainable levels of economic growth would be positive for the US capital markets. At the same time, greater US dollar stability in foreign exchange markets would help to dampen expectations of significantly higher short-term interest rates. The Municipal Market The long-term tax-exempt market continued to erode throughout the three months ended October 31, 1994. As measured by the Bond Buyer Revenue Bond Index, yields on A-rated municipal revenue bonds maturing in 30 years rose by almost 50 basis points (0.50%) to 6.95% during the October 31, 1994 quarter. This represents the highest level in tax-exempt bond yields in over two years. US Treasury bonds suffered even greater declines during the quarter as Treasury bond yields rose approximately 60 basis points to end the quarter at 8.00%. The tax-exempt bond market reacted negatively throughout the October quarter to indications that, despite a series of interest rate increases by the Federal Reserve Board, the strength of the domestic economy seen in recent quarters has not yet been significantly reduced. While inflationary pressures have remained well contained, additional Federal Reserve Board actions have been expected both to ensure that domestic economic growth is eventually confined to current levels and to assure nervous financial markets of its anti- inflationary intentions. Fortunately, while the demand for tax-exempt bonds has declined somewhat in recent months, new bond issuance has remained greatly reduced. During the quarter ended October 31, 1994, only $32 billion in long-term tax-exempt securities were issued, a decline of over 50% versus the October 31, 1993 quarter. Similarly, for the six months ended October 31, 1994, only $75 billion in municipal securities were underwritten, a decline of over 50% versus the comparable period a year earlier. This reduction in issuance in recent quarters has allowed the municipal bond market to react to both the decline in investor demand and the rise in fixed-income yields in a more orderly fashion than in similar situations in the past, particularly during 1987. Long-term tax-exempt revenue bonds currently yield approximately 7%, or almost 11.5% on an after-tax equivalent basis, to an investor in the 39.6% Federal income tax bracket. As inflation has only marginally increased in the past year, real tax-exempt interest rates have risen dramatically. The Federal Reserve Board appears committed to maintaining inflation at or below its current levels. Indeed, most forecasts expect inflation to remain in its present range of 3%--4% throughout 1995 and, potentially, for the remainder of the 1990s. Real after-tax equivalent interest rates exceeding 7% represent historically attractive municipal investments for long- term investors. Federal Reserve Board actions taken thus far have yet to fully impact US domestic growth and expected additional actions should promote only a modest economic expansion within a benign inflationary context beginning sometime early in 1995. Within such an environment, it is unlikely that tax-exempt interest rates will remain at their current attractive levels. Tax-exempt bond issuance is unlikely to return to the historic high levels seen in 1992 and 1993, while investor demand should return as markets stabilize. As we have discussed in earlier reports, the total number of tax-exempt bonds outstanding is scheduled to decline dramatically in 1994 and 1995 as a result of both regular bond maturities and early redemptions. Investors seeking tax-advantaged issues are likely to find it very difficult to obtain currently available tax-exempt yields as the current supply/demand balance is unlikely to be maintained in the coming quarters. Portfolio Strategy During the six-month period ended October 31, 1994, with the volatile municipal market, our strategy shifted to a more neutral posture on interest rates. We achieved this by selling deep discount bonds, which are more interest rate sensitive. We placed greater emphasis on current coupon bonds and premium bonds. We maintained this strategy throughout the past six months, enhancing the Fund's current yield while reducing its interest rate volatility. New issuance in the Florida market was down to little more than $3 billion, representing a decline of nearly 68% from the same time last year. Short-term tax-exempt interest rates traded in a range between 2.75%--3.375% for the last six months, despite the series of short-term interest rate increases engineered by the Federal Reserve Board. The demand for tax-exempt cash equivalents has been very strong for most of this year and is expected to remain so in the coming quarters. The tax-exempt yield curve remained very positive throughout this year, consequently the leverage of the Preferred Shares has continued to have a very positive impact on the yield paid to the Fund's Common Shareholder. However, should the spread between short- term and long-term interest rates narrow, the benefits of the leverage will decline and, as a result, reduce the yield of the Fund's Common Shares. (For a complete explanation of the benefits and risks of leveraging, see page 3 of this report to shareholders.) We appreciate your ongoing interest in MuniYield Florida Insured Fund, and we look forward to serving your investment needs and objectives in the months and years to come. Sincerely, (Arthur Zeikel) Arthur Zeikel President (Vincent R. Giordano) Vincent R. Giordano Vice President and Portfolio Manager December 5, 1994 THE BENEFITS AND RISKS OF LEVERAGING MuniYield Florida Insured Fund utilizes leveraging to seek to enhance the yield and net asset value of its Common Shares. However, these objectives cannot be achieved in all interest rate environments. To leverage, the Fund issues Preferred Shares, which pay dividends at prevailing short-term interest rates, and invests the proceeds in long-term municipal bonds. The interest earned on these investments is paid to Common Shareholders in the form of dividends, and the value of these portfolio holdings is reflected in the per share net asset value of the Fund's Common Shares. However, in order to benefit Common Shareholders, the yield curve must be positively sloped; that is, short-term interest rates must be lower than long-term interest rates. At the same time, a period of generally declining interest rates will benefit Common Shareholders. If either of these conditions change, then the risks of leveraging will begin to outweigh the benefits. To illustrate these concepts, assume a fund's Common Share capitalization of $100 million and the issuance of Preferred Shares for an additional $50 million, creating a total value of $150 million available for investment in long-term municipal bonds. If prevailing short-term interest rates are approximately 3% and long- term interest rates are approximately 6%, the yield curve has a strongly positive slope. The fund pays dividends on the $50 million of Preferred Shares based on the lower short-term interest rates. At the same time, the fund's total portfolio of $150 million earns the income based on long-term interest rates. 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 pick-up on the Common Shares will be reduced. 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 Share's 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. 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) DATES Daily Adjustable Tax-Exempt Securities HFA Housing Finance Authority IDA Industrial Development Authority IDR Industrial Development Revenue Bonds PCR Pollution Control Revenue Bonds RIB Residual Interest Bonds SAVRS Select Auction Variable Rate Securities S/F Single-Family UT Unlimited Tax VRDN Variable Rate Demand Notes SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face Value Ratings Ratings Amount Issue (Note 1a) Florida--102.1% AAA Aaa $ 5,750 Boynton Beach, Florida, Utility System Revenue Refunding Bonds, 6.25% due 11/01/2020 (b) $ 5,529 AAA Aaa 1,000 Brevard County, Florida, Health Facilities Authority, Hospital Revenue Bonds (Holmes Regional Medical Center Project), 5.75% due 10/01/2013 (d) 901 NR* Aaa 2,500 Broward County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT, 6.55% due 8/01/2019 (g)(h) 2,374 AAA Aaa 1,000 Broward County, Florida, Tourist Development Tax Split, Revenue Refunding Bonds (Convention Center), 5.625% due 10/01/2013 (a) 895 Citrus County, Florida, PCR, Refunding (Florida Power Corp.--Crystal River) (d): AAA Aaa 2,000 Series A, 6.625% due 1/01/2027 1,980 AAA Aaa 6,500 Series B, 6.35% due 2/01/2022 6,295 AAA Aaa 1,800 Clearwater, Florida, Water and Sewer Revenue Refunding Bonds, 6.50% due 12/01/2012 (d) 1,787 AAA Aaa 3,165 Coral Springs, Florida, Improvement District, Water and Sewer Revenue Bonds, UT, Series C, 7.60% due 12/01/1999 (d)(e) 3,519 Dade County, Florida, Aviation Revenue Bonds, AMT (d): AAA Aaa 1,750 Series B, 6.55% due 10/01/2013 1,731 AAA Aaa 8,750 Series B, 6.60% due 10/01/2022 8,585 AAA Aaa 4,085 Series C, 6.125% due 10/01/2020 3,821 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 (d)(i) 4,050 Dade County, Florida, Seaport Revenue Bonds, UT (a): AAA Aaa 7,435 6.25% due 10/01/2021 7,145 AAA Aaa 3,000 6.50% due 10/01/2026 2,960 AAA Aaa 1,250 Enterprise County, Florida, Development District, Water and Sewer Revenue Bonds, 6.125% due 5/01/2024 (d) 1,179 AAA Aaa 1,000 Escambia County, Florida, Utility Authority Revenue Bonds, Series A, 6.25% due 1/01/2015 (b) 972 AAA NR* 3,090 Florida HFA, Revenue Refunding Bonds (General Mortgage), Series A, 6.40% due 6/01/2024 2,892 Florida State Board of Education, Public Education Revenue Bonds (Capital Outlay): AA Aa 2,000 Series A, 6.75% due 6/01/2021 2,014 AA Aa 5,000 Series C, UT, 6.625% due 6/01/2022 4,996 AAA Aaa 5,800 Florida State Board of Finance, Department of General Service Revenue Bonds (Natural Resource and Preservation Department), Series 2000-A, 6.25% due 7/01/2013 (d) 5,668 AAA Aaa 7,145 Florida State Municipal Power Agency Revenue Bonds (Power Supply Project), 6.25% due 10/01/2002 (a)(e) 7,488
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
S&P Moody's Face Value Ratings Ratings Amount Issue (Note 1a) Florida (continued) AAA Aaa $ 5,000 Florida State Municipal Power Agency Revenue Bonds (Stanton II Project), 6.50% due 10/01/2002 (a)(e) $ 5,326 Florida State Turnpike Authority, Turnpike Revenue Bonds, Series A (b): AAA Aaa 2,230 6.35% due 7/01/2002 (e) 2,340 AAA Aaa 2,325 6.25% due 7/01/2009 2,312 AAA Aaa 2,000 6.30% due 7/01/2012 1,962 AAA Aaa 4,455 6.35% due 7/01/2022 4,341 AA Aa 4,800 Gainesville, Florida, Utility System Revenue Bonds, Series B, 6.50% due 10/01/2013 4,800 AAA Aaa 1,500 Hillsborough County, Florida, IDA, IDR (University Community Hospital), 6.50% due 8/15/2019 (d) 1,493 A1+ VMIG1 7,300 Hillsborough County, Florida, IDA, PCR, Refunding (Tampa Electric Company Project), VRDN, 3.55% due 5/15/2018 (f) 7,300 AAA Aaa 1,000 Hillsborough County, Florida, IDA, Revenue Bonds (Alleghany Health System--J. Knox Village), 6.375% due 12/01/2012 (d) 986 AA Aaa 1,000 Jacksonville, Florida, Electric Authority Revenue Bonds (Bulk Power Supply-- Scherer 4-1-A), 6.75% due 10/01/2000 (e) 1,076 AAA Aaa 3,250 Jacksonville, Florida, Excise Taxes Revenue Refunding Bonds, 6.50% due 10/01/2013 (a) 3,262 AAA Aaa 2,500 Jupiter, Florida, Sales Tax, Revenue Refunding Bonds, 6.375% due 9/01/2020 (a) 2,443 AAA Aaa 4,000 Kissimmee, Florida, Utility Authority Electric Systems, Revenue Refunding and Improvement Bonds, 5.25% due 10/01/2018 (b) 3,272 AAA Aaa 3,000 Marion County, Florida, Hospital District Revenue Refunding Bonds (Monroe Regional Medical Center), 6.25% due 10/01/2012 (b) 2,924 A1 VMIG1 4,200 Martin County, Florida, PCR, Refunding (Florida Power and Light Company Project), VRDN, 3.65% due 9/01/2024 (f) 4,200 AAA Aaa 2,515 North Miami Beach, Florida, UT, 6.30% due 2/01/2024 (b) 2,433 AAA Aaa 4,300 North Miami, Florida, Health Facilities Authority Revenue Bonds (Bon Secours Health Systems Project), 6% due 8/15/2027 (c) 3,928 AAA Aaa 5,000 North Port, Florida, Utility Revenue Bonds, 6.25% due 10/01/2022 (b) 4,802 AAA Aaa 5,300 Orange County, Florida, Capital Improvement Revenue Refunding Bonds, 6% due 10/01/2022 (a) 4,915 AAA Aaa 550 Orange County, Florida, Sales Tax Revenue Bonds, 6.125% due 1/01/2000 (b)(e) 575 Orange County, Florida, Tourist Development Tax Revenue Bonds: AAA Aaa 1,000 Refunding, Series A, 6.50% due 10/01/2010 (a) 1,004 AAA Aaa 7,815 Series B, 6.50% due 10/01/2019 (a) 7,748 AAA Aaa 300 Series B, 6% due 10/01/2024 (d) 278 AAA Aaa 3,550 Orange County, Florida, Water and Wastewater Revenue Refunding Bonds, 6.25% due 10/01/2017 (a) 3,432 AA- Aaa 1,440 Orlando, Florida, Utilities Commission, Water and Electric Revenue Bonds, Series A, 6.50% due 10/01/2001 (e) 1,533
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
S&P Moody's Face Value Ratings Ratings Amount Issue (Note 1a) Florida (concluded) AAA Aaa $ 4,785 Osceola County, Florida, Transportation Revenue Bonds (Osceola Parkway Project), 6.10% due 4/01/2017 (d) $ 4,544 AAA Aaa 2,000 Palm Beach County, Florida, Solid Waste Authority, Revenue and Refunding Improvement Bonds, 6.25% due 12/01/2008 (d) 1,993 NR* VMIG1 3,500 Palm Beach County, Florida, Water and Sewer Revenue Bonds, VRDN, 3.70% due 10/01/2011 (f) 3,500 A1 VMIG1 1,300 Pinellas County, Florida, Health Facilities Authority, Revenue Refunding Bonds (Pooled Hospital Loan Project), DATES, 3.70% due 12/01/2015 (f) 1,300 AAA Aaa 3,350 Reedy Creek, Florida, Improvement District, Florida Utility Revenue Bonds, Series 1991--1, 6.50% due 10/01/2001 (d)(e) 3,544 A1 VMIG1 1,790 Saint Lucie County, Florida, PCR, Refunding (Florida Power and Light Company Project), VRDN, 3.65% due 1/01/2026 (f) 1,790 AAA Aaa 4,500 South Broward, Florida, Hospital District Revenue Bonds, Linked SAVRS, RIB, 6.611% due 5/01/2021 (a)(j) 4,478 AAA Aaa 1,500 Tampa, Florida, Water and Sewer Revenue Refunding Bonds, Series A, 6% due 10/01/2017 (b) 1,408 Total Investments (Cost--$180,173)--102.1% 178,023 Liabilities in Excess of Other Assets--(2.1%) (3,582) -------- Net Assets--100.0% $174,441 ======== *Not Rated. (a)AMBAC Insured. (b)FGIC Insured. (c)FSA Insured. (d)MBIA Insured. (e)Prerefunded. (f)The interest rate is subject to change periodically based upon prevailing market rates. The interest rate shown is the rate in effect at October 31, 1994. (g)FNMA Collateralized. (h)GNMA Collateralized. (i)Escrowed to Maturity. (j)The interest rate is subject to change periodically and inversely based upon prevailing market rates. The interest rate shown is the rate in effect at October 31, 1994. The ratings of issues shown have not been audited by Deloitte & Touche LLP. See Notes to Financial Statements.
FINANCIAL INFORMATION Statement of Assets, Liabilities and Capital as of October 31, 1994
Assets: Investments, at value (identified cost--$180,172,601)(Note 1a) $178,023,386 Cash 53,984 Interest receivable 2,103,019 Deferred organization expense (Note 1e) 23,611 Prepaid expenses and other assets 72,768 ------------ Total assets 180,276,768 ------------ Liabilities: Payables: Securities purchased $ 5,403,744 Dividends to shareholders (Note 1g) 269,342 Investment adviser (Note 2) 75,190 5,748,276 ------------ Accrued expenses and other liabilities 87,984 ------------ Total liabilities 5,836,260 ------------ Net Assets: Net assets $174,440,508 ============ Capital: Capital Shares (unlimited number of shares of beneficial interest authorized) (Note 4) Preferred Shares, par value $.10 per share (1,200 shares of AMPS* issued and outstanding at $50,000 per share liquidation preference) $ 60,000,000 Common Shares, par value $.10 per share (8,350,463 shares issued and outstanding) $ 835,046 Paid-in capital in excess of par 116,287,758 Undistributed investment income--net 799,865 Accumulated realized capital losses--net (Note 5) (1,332,946) Unrealized depreciation on investments--net (2,149,215) ------------ Total--Equivalent to $13.70 net asset value per Common Share (market price--$11.375) 114,440,508 ------------ Total capital $174,440,508 ============ *Auction Market Preferred Shares. See Notes to Financial Statements.
FINANCIAL INFORMATION (continued) Statement of Operations
For the Year Ended October 31, 1994 Investment Interest and amortization of premium and discount earned $ 10,756,887 Income (Note 1d): Expenses: Investment advisory fees (Note 2) $ 935,020 Commission fees (Note 4) 205,624 Professional fees 71,838 Printing and shareholder reports 50,012 Transfer agent fees 36,103 Accounting services (Note 2) 25,616 Trustees' fees and expenses 22,415 Listing fees 16,453 Custodian fees 11,495 Amortization of organization expenses (Note 1e) 7,863 Pricing fees 7,665 Other 15,135 ------------ Total expenses 1,405,239 ------------ Investment income--net 9,351,648 ------------ Realized & Realized loss on investments--net (1,332,942) Unrealized Change in unrealized appreciation on investments--net (21,049,768) Loss on ------------ Investments Net Decrease in Net Assets Resulting from Operations $(13,031,062) - --Net (Notes ============ 1d & 3): See Notes to Financial Statements.
FINANCIAL INFORMATION (continued) Statements of Changes in Net Assets
For the Year Ended October 31, Increase (Decrease) in Net Assets: 1994 1993 Operations: Investment income--net $ 9,351,648 $ 9,303,756 Realized gain (loss) on investments--net (1,332,942) 1,551,783 Change in unrealized appreciation on investments--net (21,049,768) 18,900,553 ------------ ------------ Net increase (decrease) in net assets resulting from operations (13,031,062) 29,756,092 ------------ ------------ Dividends & Investment income--net: Distributions Common Shares (7,555,066) (7,060,303) to Shareholders Preferred Shares (1,651,536) (1,588,634) (Note 1g): Realized gain on investments--net: Common Shares (1,286,814) -- Preferred Shares (264,972) -- ------------ ------------ Net decrease in net assets resulting from dividends and distributions to shareholders (10,758,388) (8,648,937) ------------ ------------ Capital Share Proceeds from issuance of Preferred Shares -- 60,000,000 Transactions Value of shares issued to Common Shareholders in reinvestment of (Notes 1e & 4): dividends and distributions 332,295 1,765,503 Offering and underwriting costs resulting from issuance of Preferred Shares (10,500) (1,163,934) ------------ ------------ Net increase in net assets derived from capital share transactions 321,795 60,601,569 ------------ ------------ Net Assets: Total increase (decrease) in net assets (23,467,655) 81,708,724 Beginning of year 197,908,163 116,199,439 ------------ ------------ End of year* $174,440,508 $197,908,163 ============ ============ *Undistributed investment income--net $ 799,865 $ 654,819 ============ ============ See Notes to Financial Statements.
FINANCIAL INFORMATION (concluded) Financial Highlights
For the Period The following per share data and ratios have been derived October 30, from information provided in the financial statements. For the Year Ended 1992++ to October 31, October 31, Increase (Decrease) in Net Asset Value: 1994 1993 1992 Per Share Net asset value, beginning of period $ 16.56 $ 14.14 $ 14.18 Operating --------- --------- --------- Performance: Investment income--net 1.13 1.12 -- Realized and unrealized gain (loss) on investments--net (2.70) 2.48 -- --------- --------- --------- Total from investment operations (1.57) 3.60 -- --------- --------- --------- Less dividends and distributions to Common Shareholders: Investment income--net (.91) (.85) -- Realized gain on investments--net (.15) -- -- --------- --------- --------- Total dividends and distributions (1.06) (.85) -- --------- --------- --------- Capital charge resulting from issuance of Common Shares -- -- (.04) --------- --------- --------- Effect of Preferred Share activity++++: Dividends and distributions to Preferred Shareholders: Investment income--net (.20) (.19) -- Realized gain on investments--net (.03) -- -- Capital charge resulting from issuance of Preferred Shares -- (.14) -- --------- --------- --------- Total effect of Preferred Share activity (.23) (.33) -- --------- --------- --------- Net asset value, end of period $ 13.70 $ 16.56 $ 14.14 ========= ========= ========= Market price per share, end of period $ 11.375 $ 16.875 $ 15.00 ========= ========= ========= Total Investment Based on market price per share (27.46%) 18.78% 0.00%+++ Return:** ========= ========= ========= Based on net asset value per share (10.98%) 23.65% (0.28%)+++ ========= ========= ========= Ratios to Expenses, net of reimbursement .75% .66% --%* Average Net ========= ========= ========= Assets:*** Expenses .75% .72% --%* ========= ========= ========= Investment income--net 4.99% 5.09% --%* ========= ========= ========= Supplemental Net assets, net of Preferred Shares, end of period (in thousands) $ 114,441 $ 137,908 $ 116,199 Data: ========= ========= ========= Preferred Shares outstanding, at end of period (in thousands) $ 60,000 $ 60,000 $ -- ========= ========= ========= Portfolio turnover 51.81% 18.51% 0.00% ========= ========= ========= Dividends Per Investment income--net $ 1,376 $ 1,324 $ -- 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 loads. ***Do not reflect the effect of dividends to Preferred Shareholders. ++Commencement of Operations. ++++The Fund's Preferred Shares were issued on November 19, 1992. +++Aggregate total investment return. See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS 1. Significant Accounting Policies: MuniYield Florida Insured Fund (the "Fund") is registered under the Investment Company Act of 1940 as a non-diversified, closed-end management investment company. The Fund determines and makes available for publication the net asset value of its Common Shares on a weekly basis. The Fund's Common Shares are listed on the New York Stock Exchange under the symbol MFT. The following is a summary of significant accounting policies followed by the Fund. (a) Valuation of investments--Municipal bonds are traded primarily in the over-the-counter markets and are valued at the most recent bid price or yield equivalent as obtained by the Fund's pricing service from dealers that make markets in such securities. Finan- cial futures contracts, which are traded on exchanges, are valued at their closing prices as of the close of such exchanges. Options, which are traded on exchanges, are valued at their last sale price as of the close of such exchanges or, lacking any sales, at the last available bid price. Securities with remaining maturities of sixty days or less are valued at amortized cost, which approximates market value. Securities for which market quotations are not readily available are valued at their fair value as determined in good faith by or under the direction of the Board of Trustees of the Fund. (b) Financial futures contracts--The Fund may purchase or sell interest rate futures contracts and options on such futures contracts for the purpose of hedging the market risk on existing securities or the intended purchase of securities. Futures contracts are contracts for delayed delivery of securities at a specific future date and at a specific price or yield. Upon entering into a contract, the Fund deposits and maintains as collateral such initial margin as required by the exchange on which the transaction is effected. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. (c) Income taxes--It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no Federal income tax provision is required. (d) Security transactions and investment income--Security transactions are recorded on the dates the transactions are entered into (the trade dates). Interest income is recognized on the accrual basis. Discounts and market premiums are amortized into interest income. Realized gains and losses on security transactions are determined on the identified cost basis. (e) Deferred organization expenses and offering expenses--Deferred organization expenses are amortized on a straight-line basis over a five-year period. Direct expenses relating to the public offering of the Common and Preferred Shares were charged to capital at the time of issuance. (f) Non-income producing investments--Written and purchased options are non-income producing investments. (g) Dividends and distributions--Dividends from net investment income are declared and paid monthly. Distributions 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"). Effective January 1, 1994, the investment advisory business of FAM was reorganized from a corporation to a limited partnership. Both prior to and after the reorganization, ultimate control of FAM was vested with Merrill Lynch & Co., Inc. ("ML & Co."). The general partner of FAM is Princeton Services, Inc. ("PSI"), an indirect wholly-owned subsidiary of ML & Co. The limited partners are ML & Co. and Fund Asset Management, Inc. ("FAMI"), which is also an indirect wholly- owned subsidiary of ML & Co. FAM is responsible for the management of the Fund's portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Fund. For such services, the Fund pays a monthly fee at an annual rate of 0.50% of the Fund's average weekly net assets. NOTES TO FINANCIAL STATEMENTS (concluded) Accounting services are provided to the Fund by FAM at cost. Certain officers and/or trustees of the Fund are officers and/or directors of FAM, FAMI, PSI, Merrill Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S"), and/or ML & Co. 3. Investments: Purchases and sales of investments, excluding short-term securities, for the year ended October 31, 1994 were $90,799,617 and $107,321,729, respectively. Net realized and unrealized gains (losses) as of October 31, 1994 were as follows: Realized Gains Unrealized (Losses) Losses Long-term investments $(1,518,895) $(2,149,215) Financial futures contracts 185,953 -- ----------- ----------- Total $(1,332,942) $(2,149,215) =========== =========== As of October 31, 1994, net unrealized depreciation for Federal income tax purposes aggregated $2,149,215, of which $1,267,587 related to appreciated securities and $3,416,802 related to depreciated securities. The aggregate cost of investments at October 31, 1994 for Federal income tax purposes was $180,172,601. 4. Capital Share Transactions: The Fund is authorized to issue an unlimited number of capital shares, including Preferred Shares, par value $.10 per share, all of which were initially classified as Common Shares. The Board of Trustees is authorized, however, to reclassify any unissued shares of capital without approval of the holders of Common Shares. Common Shares For the year ended October 31, 1994, shares issued and outstanding increased by 21,369 to 8,350,463 as a result of dividend reinvestment. At October 31, 1994, total paid-in capital amounted to $117,122,804. Preferred Shares Auction Market Preferred Shares ("AMPS") are Preferred Shares of the Fund that entitle their holders to receive cash dividends at an annual rate that may vary for the successive dividend periods. The yield in effect at October 31, 1994 was 3.15%. For the year ended October 31, 1994, there were 1,200 AMPS shares authorized, issued and outstanding with a liquidation preference of $50,000 per share, plus accumulated and unpaid dividends of $160,044. Effective December 1, 1994, as a result of a two for one stock split, there will be 2,400 AMPS shares with a liquidation preference of $25,000 per share. The Fund pays commissions to certain broker-dealers at the end of each auction at an annual rate ranging from 0.25% to 0.375%, calculated on the proceeds of each auction. For the year ended October 31, 1994, MLPF&S, an affiliate of FAMI, earned $149,356 as commissions. 5. Capital Loss Carryforward: At October 31, 1994, the Fund had a capital loss carryforward of approximately $1,316,000, all of which expires in 2002. This amount will be available to offset like amounts of any future taxable gains. 6. Subsequent Event: On November 8, 1994, the Fund's Board of Trustees declared an ordinary income dividend to Common shareholders in the amount of $0.073254 per share, payable on November 29, 1994 to shareholders of record as of November 18, 1994. INDEPENDENT AUDITORS' REPORT The Board of Trustees and Shareholders of MuniYield Florida Insured Fund: We have audited the accompanying statement of assets, liabilities and capital, including the schedule of investments, of MuniYield Florida Insured Fund as of October 31, 1994, the related statements of operations for the year then ended and changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the two-year period then ended and the period October 30, 1992 (commencement of operations) to October 31, 1992. These financial statements and the financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and the financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned at October 31, 1994 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of MuniYield Florida Insured Fund as of October 31, 1994, the results of its operations, the changes in its net assets, and the financial highlights for the respective stated periods in conformity with generally accepted accounting principles. Deloitte & Touche LLP Princeton, New Jersey December 6, 1994 IMPORTANT TAX INFORMATION (unaudited) All of the net investment income distributions paid monthly by MuniYield Florida Insured Fund during its taxable year ended October 31, 1994 qualify as tax-exempt interest dividends for Federal income tax purposes. Additionally, the following table summarizes the per share capital gains distributions paid by the Fund during the year: Payable Short-Term Long-Term Date Capital Gains Capital Gains Common Stock Shareholders 12/30/93 $ 0.154293 -- Preferred Stock Shareholders 12/01/93 $183.71 -- 1/03/94 $ 37.10 -- Please retain this information for your records.
PER SHARE INFORMATION (unaudited) Per Share Selected Quarterly Financial Data*
Net Realized Unrealized Dividends/Distributions Investment Gains Gains Net Investment Income Capital Gains For the Period Income (Losses) (Losses) Common Preferred Common Preferred October 30, 1992++ to January 31, 1993 $.26 $ .05 $ .71 $.14 $.04 -- -- February 1, 1993 to April 30, 1993 .30 .05 .63 .24 .06 -- -- May 1, 1993 to July 31, 1993 .28 .10 .14 .23 .05 -- -- August 1, 1993 to October 31, 1993 .28 -- .80 .24 .04 -- -- November 1, 1993 to January 31, 1994 .29 .16 .02 .24 .03 $.15 $.03 February 1, 1994 to April 30, 1994 .27 .08 (2.13) .22 .05 -- -- May 1, 1994 to July 31, 1994 .28 (.06) .29 .23 .06 -- -- August 1, 1994 to October 31, 1994 .29 (.35) (.71) .22 .06 -- -- Net Asset Value Market Price** For the Period High Low High Low Volume*** October 30, 1992++ to January 31, 1993 $14.83 $14.14 $15.50 $14.375 494 February 1, 1993 to April 30, 1993 15.99 14.82 16.125 15.00 604 May 1, 1993 to July 31, 1993 16.00 15.44 15.375 14.875 776 August 1, 1993 to October 31, 1993 16.90 15.76 16.875 15.625 840 November 1, 1993 to January 31, 1994 16.57 15.99 16.75 15.75 662 February 1, 1994 to April 30, 1994 16.51 13.88 16.50 13.75 778 May 1, 1994 to July 31, 1994 15.23 14.14 14.50 13.25 748 August 1, 1994 to October 31, 1994 14.78 13.70 13.875 11.125 895 *Calculations are based upon Common Shares outstanding at the end of each period. **As reported in the consolidated transaction reporting system. ***In thousands. ++Commencement of Operations.
OFFICERS AND TRUSTEES Arthur Zeikel, President and Trustee Donald Cecil, Trustee M. Colyer Crum, Trustee Edward H. Meyer, Trustee Jack B. Sunderland, Trustee J. Thomas Touchton, Trustee Terry K. Glenn, Executive Vice President Donald C. Burke, Vice President Vincent R. Giordano, Vice President Kenneth A. Jacob, Vice President Gerald M. Richard, Treasurer Mark B. Goldfus, Secretary Custodian The Bank of New York 90 Washington Street New York, New York 10286 Transfer Agents Common Shares: The Bank of New York 101 Barclay Street New York, New York 10286 Preferred Shares: IBJ Schroder Bank & Trust Co. One State Street New York, New York 10004 NYSE Symbol MFT -----END PRIVACY-ENHANCED MESSAGE-----