-----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, H7u9xSzpkyShVCKA+hd7JfoBo9JwgQ6rfoUDp25FuvvhbEqjIKWVdMr3bvD4wNOa ZCyAXg6WJgPb/SQX5Uzivg== 0000900092-95-000349.txt : 19951214 0000900092-95-000349.hdr.sgml : 19951214 ACCESSION NUMBER: 0000900092-95-000349 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19951213 SROS: NONE 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: 95601291 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 ANUUAL REPORT MUNIYIELD FLORIDA INSURED FUND FUND LOGO Annual Report October 31, 1995 This report, including the financial information herein, is transmitted to the shareholders of MuniYield Florida Insured Fund for their information. It is not a prospectus, circular or representation intended for use in the purchase of shares of the Fund or any securities mentioned in the report. Past performance results shown in this report should not be considered a representation of future performance. The Fund has leveraged its Common Shares by issuing Preferred Shares to provide the Common Shareholders with a potentially higher rate of return. Leverage creates risks for Common Shareholders including the likelihood of greater volatility of net asset value and market price of 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. MuniYield Florida Insured Fund Box 9011 Princeton, NJ 08543-9011 MuniYield Florida Insured Fund TO OUR SHAREHOLDERS For the year ended October 31, 1995, the Common Shares of MuniYield Florida Insured Fund earned $0.841 per share income dividends, which included earned and unpaid dividends of $0.072. This represents a net annualized yield of 5.55%, based on a month-end net asset value of $15.16 per share. Over the same period, the total investment return on the Fund's Common Shares was +17.91%, based on a change in per share net asset value from $13.70 to $15.16 and assuming reinvestment of $0.842 per share income dividends. For the six-month period ended October 31, 1995, the total investment return on the Fund's Common Shares was +8.53%, based on a change in per share net asset value from $14.40 to $15.16, and assuming reinvestment of $0.411 per share income dividends. For the six-month period ended October 31, 1995, the Fund's Auction Market Preferred Shares had an average yield of 3.81%. The Environment After losing momentum through the second calendar quarter of 1995, it now appears that the US economic expansion has resumed. Gross domestic product (GDP) growth for the three months ended September 30 was reported to be 4.2%, higher than generally expected. September durable goods orders increased a surprisingly strong 3%, and existing home sales rose to a near-record level. At the same time, there is evidence that inflationary pressures remain subdued. Reflecting the trend of renewed economic growth--and continued good news on the inflation front--the Federal Reserve Board signaled no near-term shift in monetary policy following its September meeting. Thus, official interest rates may not be reduced further in the immediate future. Another significant development has been the strengthening of the US dollar relative to the yen and the Deutschemark. Improving interest rate differentials favoring the US currency, combined with coordinated central bank intervention and more positive investor sentiment, have helped to bolster the dollar in foreign exchange markets. Other factors that appear to be improving the US dollar's outlook in the near term are a pick-up in capital flows to the United States and the prospect of increased capital outflows from Japan. However, it remains to be seen if the US dollar's strengthening trend can continue without significant improvements in the US budget and trade deficits. In the weeks ahead, investor interest will continue to focus on US economic activity. Clear signs of a moderate, noninflationary expansion could further benefit the US stock and bond markets. In addition, should the current Federal budget deficit reduction efforts now underway in Washington prove successful, the implications would likely be positive for the US financial markets. The Municipal Market Tax-exempt bond yields continued to decline during the six-month period ended October 31, 1995. As measured by the Bond Buyer Revenue Bond Index, the yield on uninsured, long-term municipal revenue bonds fell 30 basis points (0.30%) to end the October period at approximately 6.00%. While tax-exempt bond yields have declined dramatically from their highs one year ago, municipal bond yields have exhibited considerable yield volatility on a weekly basis. In recent months, tax-exempt bond yields have fluctuated by as much as 20 basis points on a week-to-week basis. US Treasury bond yields have displayed similar volatility, but the extent of their decline has been greater. By the end of October, long-term US Treasury bond yields had declined almost 100 basis points to 6.33%. Proposed Federal tax restructuring continued to weigh heavily on the tax-exempt bond market. Thus far in 1995, US Treasury bond yields have declined approximately 150 basis points. Municipal bond yields have fallen approximately 95 basis points as the uncertainty surrounding any changes to the existing Federal income tax structure has prevented the municipal bond market from rallying as strongly as its taxable counterpart. A general view of a moderately expanding domestic economy, supported by a very favorable inflationary environment, allowed interest rates to significantly decline from their recent highs in November 1994. However, this decline was not a smooth downward curve. Conflicting economic indicators were released during recent months that have prevented a clear consensus regarding the near-term direction of interest rates from being reached. The resultant uncertainty has promoted more of a saw-toothed pattern as interest rate declines were repeatedly interrupted by indications of stronger-than-expected economic growth. As these concerns were overcome by subsequent weaker economic releases, interest rate declines have resumed. These periods of volatility are likely to continue for the remainder of 1995, or until proposed Federal budget deficit reduction packages are resolved and any resultant responses by the Federal Reserve Board have occurred. However, the municipal bond market's technical position remained supportive throughout recent quarters. Approximately $82 billion in long-term municipal securities was issued during the six months ended October 31, 1995. While this issuance is virtually identical to underwritings during the October 31,1994 quarter, tax-exempt bond issuance over the last 12 months remained approximately 25% below comparable 1994 levels. The municipal bond market should maintain this positive technical position well into 1996. Annual issuance for 1995 is now projected to be approximately $140 billion, significantly less than last year's already low level of $162 billion. Projected maturities and early redemptions for the remainder of 1995 and throughout 1996 will lead to a continued decline in the total outstanding municipal bond supply throughout 1996 and, perhaps, into 1998 should new bond issuance remain at historically low levels. Despite the municipal bond market's relative underperformance compared to the US Treasury market thus far in 1995, the extent of the tax-exempt bond market's rally was nonetheless quite impressive. Municipal bond yields have fallen 135 basis points from their highs reached in November 1994, and municipal bond prices rose accordingly. Most tax- exempt products recouped almost all of the losses incurred in 1994 and are well on their way to posting double-digit total returns for all of 1995. This relative underperformance so far in 1995 provided long-term investors with the rare opportunity to purchase tax- exempt securities at yield levels near those of taxable securities. Additionally, many of the factors that led to the relative underperformance of the tax-exempt bond market thus far in 1995, namely investor concern regarding Federal budget deficit reductions and proposed changes in the Federal income tax structure, are nearing resolution. The Federal budget reconciliation process has already begun and may be essentially completed by year-end. Recent public opinion polls suggest that the majority of American taxpayers prefer the existing Federal income tax system compared to proposed changes, such as the flat tax or national sales tax. In an upcoming election year, neither party is likely to advocate a clearly unpopular position, particularly one that can be expected to negatively impact the Federal budget deficit reduction program through reduced tax revenues. As these factors are resolved, we believe that much of the resistance that the municipal bond market met this year should dissipate. This should allow municipal bond yields to significantly decline from current levels in order to return to more normal historic yield relationships. Portfolio Strategy During the year ended October 31, 1995, the municipal bond market was extremely volatile. In the last six months of 1994, interest rates rose dramatically as investors feared a growing economy would ignite inflation. These concerns dissipated in early spring of 1995 with downward revisions to 1994 fourth quarter GDP and moderating concerns over inflation. In this environment, we took a cautious approach during 1994 by attempting to reduce the Fund's exposure to interest rate-sensitive issues. As the market improved in 1995 and we became more constructive for the longer-term outlook for bonds, we began to increase our interest rate exposure. Looking ahead, we continue to have a long-term constructive outlook for municipal bonds while recognizing that the current impasse over the Federal budget discussions may unsettle investors in the near term. We would view any significant backup in interest rates as a buying opportunity. During the last six months of the Fund's fiscal year, the Fund's Auction Market Preferred Shares' interest rates have ranged between 3.25%--4.00%, adding a positive benefit to Common Shareholders. As long as this positive yield spread exists, this benefit will continue to accrue to the Fund's Common Shareholders. However, should the yield spread between short-term and long-term interest rates narrow, the benefits of the leverage will decline and the yield paid to the Common Shareholder will diminish. (For a complete explanation of the benefits and risks of leveraging, see page 5 of this report to shareholders.) In addition, we may experience a temporary increase in short-term interest rates as we approach year-end, since investors in the short-term Florida market often shift their tax-exempt investments into taxable Treasury bills at this time. If this occurs, it is expected to be temporary, and the normal market conditions should resume after January 1. In Conclusion We appreciate your ongoing interest in MuniYield Florida Insured Fund, and we look forward to assisting you with your financial needs in the months and years ahead. Sincerely, (Arthur Zeikel) Arthur Zeikel President (Vincent R. Giordano) Vincent R. Giordano Vice President (Robert H. Moore III) Robert H. Moore III Portfolio Manager November 30, 1995 We are pleased to announce that Robert H. Moore III is responsible for the day-to-day management of MuniYield Florida Insured Fund. Mr. Moore has been employed by Merrill Lynch Asset Management, L.P. (an affiliate of the Fund's investment adviser) since 1994 as Vice President and Portfolio Manager. Prior thereto, he was employed by Society Asset Management as Vice President and Portfolio Man-ager from 1993 to 1994. From 1989 to 1993, he was Vice President and Portfolio Manager at Ameritrust Trust Department. PROXY RESULTS
During the six-month period ended October 31, 1995, MuniYield Florida Insured Fund Common Shareholders voted on the following proposals. The proposals were approved at a special shareholders' meeting on May 12, 1995. The description of each proposal and number of shares voted are as follows: Shares Shares Voted Voted For Without Authority 1. To elect the Fund's Board of Directors: Edward H. Meyer 7,865,722 179,870 Jack B. Sunderland 7,871,459 174,133 J. Thomas Touchton 7,873,359 172,233 Arthur Zeikel 7,871,359 174,233 Shares Shares Voted Shares Voted Voted For Against Abstain 2. To select Deloitte & Touche LLP as the Fund's independent auditors for the current fiscal year. 7,867,153 36,011 142,428 During the six-month period ended October 31, 1995, MuniYield Florida Insured Fund Preferred Shareholders voted on the following proposals. The proposals were approved at a special shareholders' meeting on May 12, 1995. The description of each proposal and number of shares voted are as follows: Shares Shares Voted Voted For Without Authority 1. To elect the Fund's Board of Directors: Donald Cecil 2,131 0 M. Colyer Crum 2,131 0 Edward H. Meyer 2,131 0 Jack B. Sunderland 2,131 0 J. Thomas Touchton 2,131 0 Arthur Zeikel 2,131 0 Shares Shares Voted Shares Voted Voted For Against Abstain 2. To select Deloitte & Touche LLP as the Fund's independent auditors for the current fiscal year. 2,131 0 0
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. 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 pick-up 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. 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 below and at right. AMT Alternative Minimum Tax (subject to) COP Certificates of Participation DATES Daily Adjustable Tax-Exempt Securities HFA Housing Finance Agency IDA Industrial Development Authority IDR Industrial Development Revenue Bonds PCR Pollution Control Revenue Bonds 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--102.3% AAA Aaa $ 2,500 Arcadia, Florida, Dedicated Pool, Local Government Revenue Refunding Bonds, 5.25% due 12/01/2015 (b) $ 2,389 AAA Aaa 3,000 Boynton Beach, Florida, Utility System Revenue Refunding Bonds, 6.25% due 11/01/2020 (b) 3,139 AAA Aaa 3,000 Brevard County, Florida, IDR (NUI Corporation Project), AMT, 6.40% due 10/01/2024 (a) 3,191 AAA Aaa 2,750 Charlotte County, Florida, Utility Revenue Refunding Bonds, 5.25% due 10/01/2021 (b) 2,601 Citrus County, Florida, PCR, Refunding (Florida Power Corp.-Crystal River) (d): AAA Aaa 2,000 Series A, 6.625% due 1/01/2027 2,151 AAA Aaa 6,500 Series B, 6.35% due 2/01/2022 6,833 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) 3,613 Dade County, Florida, Aviation Revenue Bonds, AMT, Series B (d): AAA Aaa 1,750 6.55% due 10/01/2013 1,865 AAA Aaa 8,750 6.60% due 10/01/2022 9,281 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)(h) 4,522 AA- VMIG1++ 5,000 Dade County, Florida, IDA, Exempt Facilities Revenue Refunding Bonds (Florida Power & Light Co. Project), VRDN, 3.90% due 6/01/2021 (f) 5,000 AAA Aaa 7,500 Dade County, Florida, Seaport Revenue Bonds, UT, 6.50% due 10/01/2026 (a) 8,015 AAA Aaa 5,000 Escambia County, Florida, HFA, S/F Mortgage Revenue Refunding Bonds (Multi- County Program), AMT, 7% due 4/01/2028 (g) 5,336 NR* Aaa 1,940 Florida HFA, Home Ownership Revenue Bonds, AMT, Series G-1, 7.90% due 3/01/2022 (h) 2,075 Florida HFA, Revenue Bonds (Brittany Rosemont Apartments), AMT (a): AAA Aaa 1,150 Series C-1, 6.75% due 8/01/2014 1,215 AAA Aaa 1,225 Series G-1, 6.15% due 7/01/2025 1,226 AAA Aaa 1,350 Series G-1, 6.25% due 7/01/2035 1,351 AAA Aaa 2,000 Florida Keys Aqueduct Authority, Water Revenue Refunding Bonds, 5.25% due 9/01/2021 (a) 1,892
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
S&P Moody's Face Value Ratings Ratings Amount Issue (Note 1a) Florida (continued) Florida State Board of Education, Public Education Revenue Bonds (Capital Outlay): AA Aa $ 3,000 Refunding, Series A, 7.25% due 6/01/2023 $ 3,355 AA Aa 2,000 Series A, 6.75% due 6/01/2001 (e) 2,241 AAA Aaa 7,600 Series C, 5.50% due 6/01/2023 (d) 7,452 AAA Aaa 1,790 Florida State Division, Board of Finance, Department of General Services Revenue Bonds (Department of Natural Resource Preservation), Series 2000-A, 6.75% due 7/01/2013 (a) 1,958 AAA Aaa 4,500 Florida State Municipal Power Agency, Revenue Refunding Bonds (Saint Lucie Project), 5.25% due 10/01/2021 (b) 4,251 AAA Aaa 5,100 Fort Pierce, Florida, Utilities Authority, Revenue Refunding Bonds, 5.25% due 10/01/2016 (a) 4,869 AA Aa 4,800 Gainesville, Florida, Utilities System Revenue Bonds, Series B, 6.50% due 10/01/2013 5,358 AAA Aaa 5,000 Hillsborough County, Florida, Criminal Justice Facilities, Revenue Refunding Bonds (Capital Improvement Program), 5.125% due 8/01/2014 (b) 4,737 AAA Aaa 1,000 Hillsborough County, Florida, IDA, Revenue Bonds (Allegany Health System-J. Knox Village), 6.375% due 12/01/2012 (d) 1,059 AAA Aaa 2,860 Indian River County, Florida, Water and Sewer Revenue Refunding Bonds, Series A, 5.25% due 9/01/2020 (b) 2,708 AAA Aaa 3,250 Jacksonville, Florida, Excise Taxes Revenue Refunding Bonds, 6.50% due 10/01/2013 (a) 3,503 AAA Aaa 10,750 Kissimmee, Florida, Utility Authority Electric System, Revenue Refunding and Improvement Bonds, 5.50% due 10/01/2015 (b) 10,596 AAA Aaa 1,920 Lee County, Florida, Capital Improvement and Transportation Facilities, Revenue Refunding Bonds, Series A, 5.55% due 10/01/2018 (d) 1,895 Lee County, Florida, Transportation Facilities Revenue Bonds (d): AAA Aaa 3,500 5.75% due 10/01/2022 3,509 AAA Aaa 10,650 5.75% due 10/01/2027 10,677 AAA Aaa 1,000 Marion County, Florida, Hospital District, Revenue Refunding Bonds (Monroe Regional Medical Center), 6.25% due 10/01/2012 (b) 1,052 A1+ VMIG1++ 1,100 Martin County, Florida, PCR, Refunding (Florida Power & Light Company Project), VRDN, 4% due 9/01/2024 (f) 1,100 AAA Aaa 2,515 North Miami Beach, Florida, UT, 6.30% due 2/01/2024 (b) 2,649 AAA Aaa 2,500 Okeechobee, Florida, Utility Authority, Utility System Acquisition and Improvement Revenue Refunding Bonds, 5.60% due 10/01/2025 (d) 2,478 AAA Aaa 1,650 Orange County, Florida, Sales Tax Revenue Bonds, Series B, 5.375% due 1/01/2024 (b) 1,586 Orange County, Florida, Tourist Development Tax Revenue Bonds (a): AAA Aaa 1,000 Refunding, Series A, 6.50% due 10/01/2010 1,093 AAA Aaa 7,815 Series B, 6.50% due 10/01/2019 8,399 AA- Aa 2,000 Orlando, Florida, Utilities Commission, Water and Electric Revenue Refunding Bonds, Sub-Series D, 6.75% due 10/01/2017 2,313 AAA Aaa 3,750 Osceola County, Florida, School Board COP, Series A, 5.25% due 6/01/2015 (a) 3,578 AAA Aaa 1,500 Palm Beach County, Florida, Criminal Justice Facilities Revenue Bonds, 7.20% due 6/01/2015 (b) 1,811 AAA Aaa 2,000 Palm Beach County, Florida, Solid Waste Authority, Revenue Refunding and Improvement Bonds, 6.25% due 12/01/2008 (d) 2,177 NR* VMIG1++ 200 Palm Beach County, Florida, Water and Sewer Revenue Bonds, VRDN, 4% due 10/01/2011 (f) 200
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
S&P Moody's Face Value Ratings Ratings Amount Issue (Note 1a) Florida (concluded) A1 VMIG1++ $ 2,550 Pinellas County, Florida, Health Facilities Authority, Revenue Refunding Bonds (Pooled Hospital Loan Program), DATES, 4% due 12/01/2015 (f) $ 2,550 AAA Aaa 3,550 Reedy Creek, Florida, Improvement District, Florida Utilities Revenue Bonds, Series 1991-1, 6.50% due 10/01/2001 (d)(e) 3,966 A1+ VMIG1++ 2,500 Saint Lucie County, Florida, PCR, Refunding (Florida Power & Lighting Co. Project), VRDN, 4% due 1/01/2026 (f) 2,500 AAA Aaa 3,000 Saint Petersburg, Florida, Excise Tax Revenue Refunding Bonds, 5% due 10/01/2016 (b) 2,787 AAA Aaa 3,000 Saint Petersburg, Florida, Health Facilities Authority, Hospital Revenue Bonds (Allegany Health System), Series A, 7% due 12/01/2015 (d) 3,329 AAA Aaa 2,905 Sarasota County, Florida, Utility System Revenue Bonds, 6.50% due 10/01/2022 (b) 3,116 AAA Aaa 4,500 South Broward Hospital District, Florida, Hospital Revenue Bonds, 6.611% due 5/13/2021 (a) 4,750 AAA Aaa 4,500 Vero Beach, Florida, Electric Revenue Refunding Bonds, Series A, 5.375% due 12/01/2021 (d) 4,332 AAA Aaa 1,300 Volusia County, Florida, School Board COP, Refunding (Florida Lease Program), 5.375% due 8/01/2011 (c) 1,283 Total Investments (Cost--$181,354)--102.3% 190,912 Liabilities in Excess of Other Assets--(2.3%) (4,355) -------- Net Assets--100.0% $186,557 ======== (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, 1995. (g)GNMA/FNMA Collateralized. (h)Escrowed to Maturity. *Not Rated. ++Highest short-term rating by Moody's Investors Service, Inc. Ratings of issues shown have not been audited by Deloitte & Touche LLP. See Notes to Financial Statements.
FINANCIAL INFORMATION Statement of Assets, Liabilities and Capital as of October 31, 1995 Assets: Investments, at value (identified cost--$181,354,040) (Note 1a) $190,911,752 Cash 89,320 Receivables: Securities sold $ 2,834,425 Interest receivable 2,004,565 4,838,990 ------------ Deferred organization expenses (Note 1e) 15,748 Prepaid expenses and other assets 6,753 ------------ Total assets 195,862,563 ------------ Liabilities: Payables: Securities purchased 9,073,995 Dividends to shareholders (Note 1f) 90,071 Investment adviser (Note 2) 81,391 9,245,457 ------------ Accrued expenses and other liabilities 59,853 ------------ Total liabilities 9,305,310 ------------ Net Assets: Net assets $186,557,253 ============ Capital: Capital Shares (unlimited number of shares of beneficial interest authorized) (Note 4): Preferred Shares, par value $.10 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 (8,350,463 shares issued and outstanding) $ 835,046 Paid-in capital in excess of par 116,287,758 Undistributed investment income--net 894,087 Accumulated realized capital losses on investments--net (1,017,350) Unrealized appreciation on investments--net 9,557,712 ------------ Total--Equivalent to $15.16 net asset value per Common Share (market price--$13.50) 126,557,253 ------------ Total capital $186,557,253 ============ *Auction Market Preferred Shares. See Notes to Financial Statements.
FINANCIAL INFORMATION (continued) Statement of Operations
For the Year Ended October 31, 1995 Investment Income Interest and amortization of premium and discount earned $ 10,680,200 (Note 1d): Expenses: Investment advisory fees (Note 2) $ 902,275 Commission fees (Note 4) 176,864 Professional fees 74,269 Printing and shareholder reports 41,326 Transfer agent fees 36,087 Accounting services (Note 2) 33,872 Trustees' fees and expenses 22,682 Listing fees 16,522 Custodian fees 13,231 Pricing fees 8,249 Amortization of organization expenses (Note 1e) 7,863 Other 12,784 ------------ Total expenses 1,346,024 ------------ Investment income--net 9,334,176 ------------ Realized & Unreal- Realized gain on investments--net 315,997 ized Gain on Change in unrealized appreciation/depreciation on investments--net 11,706,927 Investments--Net ------------ (Notes 1b, 1d Net Increase in Net Assets Resulting from Operations $ 21,357,100 & 3): ============
Statements of Changes in Net Assets
For the Year Ended Oct. 31, Increase (Decrease) in Net Assets: 1995 1994 Operations: Investment income--net $ 9,334,176 $ 9,351,648 Realized gain (loss) on investments--net 315,997 (1,332,942) Change in unrealized appreciation/depreciation on investments--net 11,706,927 (21,049,768) ------------ ------------ Net increase (decrease) in net assets resulting from operations 21,357,100 (13,031,062) ------------ ------------ Dividends & Investment income--net: Distributions to Common Shares (7,021,495) (7,555,066) Shareholders Preferred Shares (2,218,860) (1,651,536) (Note 1f): 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 (9,240,355) (10,758,388) ------------ ------------ Capital Share Value of shares issued to Common Shareholders in reinvestment Transactions of dividends and distributions -- 332,295 (Notes 1e & 4): Offering and underwriting costs resulting from the issuance of Preferred Shares -- (10,500) ------------ ------------ Net increase in net assets derived from capital share transactions -- 321,795 ------------ ------------ Net Assets: Total increase (decrease) in net assets 12,116,745 (23,467,655) Beginning of year 174,440,508 197,908,163 ------------ ------------ End of year* $186,557,253 $174,440,508 ============ ============ *Undistributed investment income--net (Note 1g) $ 894,087 $ 799,865 ============ ============ See Notes to Financial Statements.
FINANCIAL INFORMATION (concluded) Financial Highlights
For the Period The following per share data and ratios have been derived Oct. 30 from information provided in the financial statements. For the Year Ended 1992++ to October 31, Oct. 31, Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992 Per Share Net asset value, beginning of period $ 13.70 $ 16.56 $ 14.14 $ 14.18 Operating -------- -------- -------- -------- Performance: Investment income--net 1.12 1.13 1.12 -- Realized and unrealized gain (loss) on investments--net 1.45 (2.70) 2.48 -- -------- -------- -------- -------- Total from investment operations 2.57 (1.57) 3.60 -- -------- -------- -------- -------- Less dividends and distributions to Common Shareholders: Investment income--net (.84) (.91) (.85) -- Realized gain on investments--net -- (.15) -- -- -------- -------- -------- -------- Total dividends and distributions to Common Shareholders (.84) (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 (.27) (.20) (.19) -- Realized gain on investments--net -- (.03) -- -- Capital charge resulting from issuance of Preferred Shares -- -- (.14) -- -------- -------- -------- -------- Total effect of Preferred Share activity (.27) (.23) (.33) -- -------- -------- -------- -------- Net asset value, end of period $ 15.16 $ 13.70 $ 16.56 $ 14.14 ======== ======== ======== ======== Market price per share, end of period $ 13.50 $ 11.375 $ 16.875 $ 15.00 ======== ======== ======== ======== Total Investment Based on market price per share 26.46% (27.46%) 18.78% .00%+++ Return:** ======== ======== ======== ======== Based on net asset value per share 17.91% (10.98%) 23.65% (.28%)+++ ======== ======== ======== ======== Ratios to Expenses, net of reimbursement .75% .75% .66% --%* Average ======== ======== ======== ======== Net Assets:*** Expenses .75% .75% .72% --%* ======== ======== ======== ======== Investment income--net 5.18% 4.99% 5.09% --%* ======== ======== ======== ======== Supplemental Net assets, net of Preferred Shares, end Data: of period (in thousands) $126,557 $114,441 $137,908 $116,199 ======== ======== ======== ======== Preferred Shares outstanding, end of period (in thousands) $ 60,000 $ 60,000 $ 60,000 $ -- ======== ======== ======== ======== Portfolio turnover 107.90% 51.81% 18.51% .00% ======== ======== ======== ======== Dividends Per Investment income--net $ 925 $ 688 $ 662 $ -- 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. ++++++Dividends per share have been adjusted to reflect a two-for- one split. +++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. 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, 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, 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 of the Fund. (b) Derivative financial instrument--The Fund may engage in various portfolio strategies to seek to increase its return by hedging its portfolio against adverse movements in the debt markets. Losses may arise due to changes in the value of the contract or if the counterparty does not perform under the contract. * Financial futures contracts--The Fund may purchase or sell 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. * Options--The Fund is authorized to write covered call options and purchase put options. When the Fund writes an option, an amount equal to the premium received by the Fund is reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market to reflect the current market value of the option written. When a security is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the security acquired or deducted from (or added to) the proceeds of the security sold. When an option expires (or the Fund enters into a closing transaction), the Fund realizes a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction exceeds the premium paid or received). Written and purchased options are non-income producing investments. (c) Income taxes--It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no Federal income tax provision is required. (d) Security transactions and investment income--Security transactions are recorded on the dates the transactions are entered into (the trade dates). Interest income is recognized on the accrual basis. Discounts and market premiums are amortized into interest income. Realized gains and losses on security transactions are determined on the identified cost basis. (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) Dividends and distributions--Dividends from net investment income are declared and paid monthly. Distributions of capital gains are recorded on the ex-dividend dates. (g) Reclassification--Generally accepted accounting principles require that certain differences between accumulated net realized capital losses for financial reporting and tax purposes, if permanent, be reclassified to undistributed net investment income. Accordingly, current year's permanent book/tax differences of $401 have been reclassified from accumulated net realized capital losses to undistributed net investment income. These reclassifications have no effect on net assets or net asset value per share. 2. Investment Advisory Agreement and Transactions with Affiliates: The Fund has entered into an Investment Advisory Agreement with Fund Asset Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc. ("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the limited partner. FAM is responsible for the management of the Fund's portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Fund. For such services, the Fund pays a monthly fee at an annual rate of 0.50% of the Fund's average weekly net assets. Accounting services are provided to the Fund by FAM at cost. Certain officers and/or trustees of the Fund are officers and/or directors of FAM, PSI, 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, 1995 were $189,648,889 and $184,252,048, respectively. Net realized and unrealized gains (losses) as of October 31, 1995 were as follows: Realized Unrealized Gains (Losses) Gains Long-term investments $ 2,629,916 $ 9,557,712 Financial futures contracts (2,313,919) -- ------------ ------------ Total $ 315,997 $ 9,557,712 ============ ============ As of October 31, 1995, net unrealized appreciation for Federal income tax purposes aggregated $9,557,712, of which $9,570,306 related to appreciated securities and $12,594 related to depreciated securities. The aggregate cost of investments at October 31, 1995 for Federal income tax purposes was $181,354,040. 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, 1995, shares issued and outstanding remained constant at 8,350,463. At October 31, 1995, 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, 1995 was 3.84%. A two-for-one stock split occurred on December 1, 1994. As a result, as of October 31, 1995, there were 2,400 AMPS shares authorized, issued and outstanding with a liquidation preference of $25,000 per share, plus accumulated and unpaid dividends of $6,312. 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, 1995, MLPF&S, an affiliate of FAM, earned $89,565 as commissions. 5. Subsequent Event: On November 13, 1995, the Fund's Board of Trustees declared an ordinary income dividend to Common shareholders in the amount of $0.072398 per share, payable on November 29, 1995 to shareholders of record as of November 24, 1995. 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, 1995, 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 three-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, 1995 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, 1995, 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 November 30, 1995 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, 1995 qualify as tax-exempt interest dividends for Federal income tax purposes. Additionally, there were no capital gains distributed by the Fund during the year. Please retain this information for your records. PER SHARE INFORMATION (unaudited) Per Share Selected Quarterly Financial Data*
Dividends/Distributions Net Realized Unrealized Investment Gains Gains Net Investment Income Capital Gains For the Quarter Income (Losses) (Losses) Common Preferred Common Preferred 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 -- -- November 1, 1994 to January 31, 1995 .28 (.21) .76 .22 .04 -- -- February 1, 1995 to April 30, 1995 .27 .17 (.01) .21 .09 -- -- May 1, 1995 to July 31, 1995 .29 .21 -- .20 .07 -- -- August 1, 1995 to October 31, 1995 .28 (.13) .66 .21 .07 -- -- Net Asset Value Market Price** For the Quarter High Low High Low Volume*** 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 November 1, 1994 to January 31, 1995 14.26 12.55 13.375 10.375 1,736 February 1, 1995 to April 30, 1995 14.82 14.27 13.75 12.875 587 May 1, 1995 to July 31, 1995 15.50 14.37 14.00 12.875 678 August 1, 1995 to October 31, 1995 15.25 14.32 13.875 12.75 813 *Calculations are based upon Common Shares outstanding at the end of each quarter. **As reported in the consolidated transaction reporting system. ***In thousands.
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 Company One State Street New York, New York 10004 NYSE Symbol MFT -----END PRIVACY-ENHANCED MESSAGE-----