UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-07156
Name of Fund: MuniYield Florida Insured Fund
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Terry K. Glenn, President,
MuniYield Florida Insured Fund, 800 Scudders Mill Road,
Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011,
Princeton, NJ, 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 10/31/04
Date of reporting period: 11/01/03 - 10/31/04
Item 1 - Report to Stockholders
(BULL LOGO)
Merrill Lynch Investment Managers
www.mlim.ml.com
MuniYield Florida
Insured Fund
Annual Report
October 31, 2004
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,
investment-grade municipal obligations the interest on which, in the
opinion of bond counsel to the issuer, is exempt from federal income
taxes and which enables shares of the Fund to be exempt from Florida
intangible personal property 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 and
intends to remain leveraged by issuing Preferred Shares to provide
the Common Shareholders with a potentially higher rate of return.
Leverage creates risks for Common Shareholders, including the
likelihood of greater volatility of net asset value and market price
of 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.
A description of the policies and procedures that the Fund uses
to determine how to vote proxies relating to portfolio securities
is available (1) without charge, upon request, by calling toll-free
1-800-MER-FUND (1-800-637-3863); (2) at www.mutualfunds.ml.com;
and (3) on the Securites and Exchange Commission's Web site at
http://www.sec.gov. Information about how the Fund voted proxies
relating to securities held in the Fund's portfolio during the
most recent 12-month period ended June 30 is available (1) at
www.mutualfunds.ml.com; and (2) on the Securities and Exchange
Commission's Web site at http://www.sec.gov.
MuniYield Florida Insured Fund
Box 9011
Princeton, NJ 08543-9011
(GO PAPERLESS LOGO)
It's Fast, Convenient, & Timely!
To sign up today, go to www.icsdelivery.com/live.
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
pays dividends at prevailing short-term interest rates, and invests
the proceeds in long-term municipal bonds. The interest earned on
these investments, net of dividends to Preferred Shares, is paid to
Common Shareholders in the form of dividends, and the value of these
portfolio holdings is reflected in the per share net asset value of
the Fund's Common Shares. However, in order to benefit Common
Shareholders, the yield curve must be positively sloped; that is,
short-term interest rates must be lower than long-term interest
rates. At the same time, a period of generally declining interest
rates will benefit Common Shareholders. If either of these
conditions change, then the risks of leveraging will begin to
outweigh the benefits.
To illustrate these concepts, assume a fund's Common 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
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.
As a part of its investment strategy, the Fund may invest in certain
securities whose potential income return is inversely related to
changes in a floating interest rate ("inverse floaters"). In
general, income on inverse floaters will decrease when short-term
interest rates increase and increase when short-term interest rates
decrease. Investments in inverse floaters may be characterized as
derivative securities and may subject the Fund to the risks of
reduced or eliminated interest payments and losses of invested
principal. In addition, inverse floaters have the effect of
providing investment leverage and, as a result, the market value
of such securities will generally be more volatile than that of
fixed-rate, tax-exempt securities. To the extent the Fund invests in
inverse floaters, the market value of the Fund's portfolio and the
net asset value of the Fund's shares may also be more volatile than
if the Fund did not invest in these securities. As of October 31,
2004, the percentage of the Fund's total net assets invested in
inverse floaters was 11.30%, before the deduction of Preferred
Shares.
Swap Agreements
The Fund may also invest in swap agreements, which are over-the-
counter contracts in which one party agrees to make periodic
payments based on the change in market value of a specified bond,
basket of bonds, or index in return for periodic payments based on a
fixed or variable interest rate or the change in market value of a
different bond, basket of bonds or index. Swap agreements may be
used to obtain exposure to a bond or market without owning or taking
physical custody of securities. Swap agreements involve the risk
that the party with whom the Fund has entered into the swap will
default on its obligation to pay the Fund and the risk that the Fund
will not be able to meet its obligations to pay the other party to
the agreeement.
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
A Letter From the President
Dear Shareholder
As we ended the current reporting period, the financial markets were
facing a number of uncertainties. At the top of investors' minds
were questions about economic expansion, corporate earnings,
interest rates and inflation, politics, oil prices and terrorism.
After benefiting from aggressive monetary and fiscal policy
stimulus, some fear the U.S. economy has hit a "soft patch." In
fact, economic expansion has slowed somewhat in recent months, but
we believe it is easing into a pace of growth that is sustainable
and healthy. The favorable economic environment has served to
benefit American corporations, which have continued to post strong
earnings. Although the most impressive results were seen earlier in
the year, solid productivity, improved revenue growth and cost
discipline all point to a vital corporate sector.
In terms of inflation and interest rates, the Federal Reserve Board
(the Fed) has signaled its confidence in the economic recovery by
increasing the Federal Funds target rate four times in the past
several months, from 1% to 2% as of the November 10 Federal Open
Market Committee meeting. Inflation, for its part, has remained in
check. Investors and economists are focused on how quickly Fed
policy will move from here.
With the presidential election now behind us, any politically
provoked market angst should subside to some extent. The effect of
oil prices, however, is more difficult to predict. At around $50 per
barrel, the price of oil is clearly a concern. However, on an
inflation-adjusted basis and considering modern usage levels, the
situation is far from the crisis proportions we saw in the 1980s.
Finally, although terrorism and geopolitical tensions are realities
we are forced to live with today, history has shown us that the
financial effects of any single event tend to be short-lived.
Amid the uncertainty, the Lehman Brothers Municipal Bond Index
posted a 12-month return of +6.03% and a six-month return of
+4.79% as of October 31, 2004. Long-term bond yields were slightly
lower at October 31, 2004 than they were a year earlier. As always,
our investment professionals are closely monitoring the markets,
the economy and the overall environment in an effort to make
well-informed decisions for the portfolios they manage. For the
individual investor, the key during uncertain times is to remain
focused on the big picture. Investment success comes not from
reacting to short-term volatility, but from maintaining a long-term
perspective and adhering to the disciplines of asset allocation,
diversification and rebalancing. We encourage you to work with your
financial advisor to ensure these time-tested techniques are
incorporated into your investment plan.
We thank you for trusting Merrill Lynch Investment Managers with
your investment assets, and we look forward to serving you in the
months and years ahead.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Trustee
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
A Discussion With Your Fund's Portfolio Manager
The Fund provided a positive total return for the year as we
maintained our focus on increasing yield and protecting net asset
value in a volatile interest rate environment.
Describe the recent market environment relative to municipal bonds.
Over the past 12 months, amid considerable monthly volatility,
long-term U.S. Treasury bond yields generally moved lower - despite
an increase in short-term interest rates by the Federal Reserve
Board (the Fed). On October 31, 2004, the 30-year Treasury bond
yield stood at 4.79%, a decline of 34 basis points (.34%) from a
year earlier. The yield on the 10-year U.S. Treasury note was 4.02%,
a 27 basis point drop during the same 12-month period.
While tax-exempt bond yields followed the same pattern as their
taxable counterparts, volatility in the municipal market was more
subdued. Yields on long-term revenue bonds, as measured by the Bond
Buyer Revenue Bond Index, fell 27 basis points during the past 12
months. According to Municipal Market Data, yields on AAA-rated
issues maturing in 30 years declined 22 basis points to 4.60%, while
yields on 10-year AAA-rated issues dropped 28 basis points to 3.40%.
More than $360 billion in new long-term tax-exempt bonds was issued
in the past 12 months, a decline of approximately 6% compared to the
previous year. The declining supply amid favorable demand allowed
tax-exempt bond prices to perform in line with the taxable market.
Describe conditions in the State of Florida.
The state maintained solid credit ratings of Aa2 from Moody's,
AA+ from Standard & Poor's and AA from Fitch - all with a stable
outlook. This was based on an improving and diverse economy, solid
finances, moderate debt and a proactive government that responds to
economic downturns more quickly than other states.
Florida's attractive physical environment and favorable business
climate have served to bolster population growth. Although the
growth in population has put a strain on services such as education,
transportation and healthcare, it also has allowed the state to
recover quickly from sub-par economic trends.
Currently, the state's revenues are moderately higher than projected
and expenditures remain under control due to strong fiscal
oversight. The fiscal year 2005 budget was pressured by only modest
revenue increases, but was brought into balance through tight
expenditure controls, including outsourcing work and requiring local
governments to pick up costs historically incurred by the state.
To pay for these additional expenses, municipalities imposed
increases to property taxes and/or local sales taxes through voter
initiatives. Florida continues to maintain sound and solid fund
balances with consistent General Fund operations. In addition, the
state has a working Capital Reserve Fund and a Budget Stabilization
Fund in excess of $1.3 billion.
Florida faced a brutal hurricane season this past year, with
several parts of the state ravaged by storms. The state and its
municipalities continue to evaluate the damage to determine how it
could affect their upcoming budgets.
How did the Fund perform during the fiscal year in light of the
existing market conditions?
For the 12-month period ended October 31, 2004, the Common Shares of
MuniYield Florida Insured Fund had net annualized yields of 6.13%
and 6.23%, based on a year-end per share net asset value of $15.22
and a per share market price of $14.98, respectively, and $.933 per
share income dividends. Over the same period, the total investment
return on the Fund's Common Shares was +7.98%, based on a change in
per share net asset value from $15.04 to $15.22, and assuming
reinvestment of ordinary income dividends.
The Fund's return, based on net asset value, slightly lagged the
+8.17% average return of its comparable Lipper category of Florida
Municipal Debt Funds for the 12-month period ended October 31, 2004.
(Funds in this Lipper category limit their investment to securities
exempt from taxation in Florida [double tax-exempt] or a city in
Florida [triple tax-exempt]). As an insured product, the Fund was at
somewhat of a disadvantage relative to its Lipper peers that have
greater flexibility to invest in uninsured bonds. These credits
performed quite well over the past 12 months, and our relative
underexposure had a negative impact on performance.
The Fund's relative results also were hindered by several bonds
that had been pre-refunded in prior periods. This brought them
into the one-year to 10-year maturity range, a sector of the yield
curve that underperformed during the 12-month period. While our
overall strategy has been to favor issues with longer maturities,
we retained these credits in the portfolio for their attractive
yields. Our defensive market posture in a declining interest rate
environment also detracted from returns. Overall, however, the Fund
continued to provide a competitive yield and attractive total return
while investing in a portfolio consisting primarily of high-quality,
insured bonds.
For the six-month period ended October 31, 2004, the total
investment return on the Fund's Common Shares was +6.89%, based
on a change in per share net asset value from $14.72 to $15.22, and
assuming reinvestment of ordinary income dividends.
For a description of the Fund's total investment return based on a
change in the per share market value of the Fund's Common Shares (as
measured by the trading price of the Fund's shares on the New York
Stock Exchange), and assuming reinvestment of dividends, please
refer to the Financial Highlights section of this report. As a
closed-end fund, the Fund's shares may trade in the secondary market
at a premium or discount to the Fund's net asset value. As a result,
total investment returns based on changes in the market value of the
Fund's Common Shares can vary significantly from total investment
return based on changes in the Fund's net asset value.
What changes were made to the portfolio during the year?
Portfolio activity was fairly subdued over the past 12 months. We
continued to focus on increasing the income provided to shareholders
and muting the Fund's net asset value volatility. In general, we
sought to sell bonds in the 10-year to 15-year maturity range, as
this proved to be the most volatile part of the yield curve. With
the proceeds from the sales, we looked to purchase premium-coupon
bonds in the 20-year to 30-year maturity range. Efforts to
restructure the portfolio have been somewhat limited by a decline
in the issuance of Florida municipal debt. Year-to-date as of
October 31, new issuance was down nearly 40% compared to the same
period a year ago. We would expect supply to increase to some extent
as municipalities survey storm damage and issue debt to fund their
rebuilding and restoration efforts.
For the six-month period ended October 31, 2004, the Fund's Auction
Market Preferred Shares (AMPS) had an average yield of 1.16%. The
attractive funding levels, in combination with a steep tax-exempt
yield curve, continued to generate a significant income benefit to
the holders of Common Shares. While the Fed is likely to continue
raising short-term interest rates, the increases are expected to be
gradual and should not have an immediate material impact on the
positive advantage leverage has had on the Fund's Common 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. At the end of
the period, the Fund's leverage amount, due to AMPS, was 31.87% of
total net assets. (For a complete explanation of the benefits and
risks of leveraging, see page 2 of this report to shareholders.)
How would you characterize the portfolio's position at the close of
the period?
We maintained a slightly defensive market posture at the close of
the period in recognition of improving economic conditions. With the
Fed expected to continue its monetary tightening policy, long-term
market rates should eventually begin to follow short-term interest
rates higher. (In fact, the Fed increased its target interest rate
another 25 basis points shortly after the close of the reporting
period, on November 10.) Our defensive stance should ready the Fund
for relative strong performance under these circumstances.
In the meantime, we expect continued municipal market volatility in
the months ahead. As long as the municipal yield curve remains
steep, we will sell the intermediate part of the curve and use
periods of volatility to pursue higher-coupon bonds whenever they
are attractively priced.
Robert D. Sneeden
Vice President and Portfolio Manager
November 11, 2004
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
Dividend Policy (unaudited)
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 stable level of dividend
distributions, the Fund may at times pay out less than the entire
amount of net investment income earned in any particular month and
may at times in any particular month pay out such accumulated but
undistributed income in addition to net investment income earned in
that month. As a result, the dividends paid by the Fund for any
particular month may be more or less than the amount of net
investment income earned by the Fund during such month. The Fund's
current accumulated but undistributed net investment income, if any,
is disclosed in the Statement of Net Assets, which comprises part of
the financial information included in this report.
Quality Profile (unaudited)
The quality ratings of securities in the Fund as of October 31, 2004
were as follows:
Percent of
Total
S&P Rating/Moody's Rating Investments
AAA/Aaa 89.8%
AA/Aa 1.1
A/A 4.7
BBB/Baa 1.8
Other* 2.6
* Includes portfolio holdings in short-term investments.
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
Schedule of Investments (In Thousands)
S&P Moody's Face
Ratings++ Ratings++ Amount Municipal Bonds Value
Florida--124.2%
NR* Aaa $ 1,300 Alachua County, Florida, School Board, COP, 5.25% due 7/01/2029 (a) $ 1,383
AA NR* 165 Beacon Tradeport Community Development District, Florida, Special
Assessment Revenue Refunding Bonds (Commercial Project), Series A,
5.625% due 5/01/2032 (m) 178
AAA Aaa 700 Boynton Beach, Florida, Utility System Revenue Refunding Bonds,
6.25% due 11/01/2020 (c)(h) 857
AAA Aaa 3,000 Brevard County, Florida, IDR (NUI Corporation Project), AMT, 6.40%
due 10/01/2024 (a) 3,070
AAA Aaa 5,000 Dade County, Florida, Aviation Revenue Bonds, AMT, Series B, 5.75%
due 10/01/2012 (b) 5,248
NR* Aaa 1,000 Daytona Beach, Florida, Utility System Revenue Refunding Bonds,
Series B, 5% due 11/15/2027 (c) 1,033
AAA Aaa 1,000 Deltona, Florida, Utility System Revenue Bonds, 5.125% due
10/01/2027 (b) 1,049
AAA Aaa 1,625 Escambia County, Florida, HFA, S/F Mortgage Revenue Refunding
Bonds, AMT, 7% due 4/01/2028 (d)(e) 1,667
NR* Aaa 4,585 Escambia County, Florida, Health Facilities Authority, Health
Facility Revenue Bonds (Florida Health Care Facility Loan), 5.95%
due 7/01/2020 (a) 4,698
AAA Aaa 700 Escambia County, Florida, Health Facilities Authority Revenue
Refunding Bonds (Ascension Health Credit), Series A-1, 5.75% due
11/15/2009 (a)(k) 804
AAA Aaa 2,110 First Florida Governmental Fianancing Commission Revenue Bonds,
5.70% due 7/01/2017 (b) 2,315
AAA Aaa 1,250 Fishhawk Community Development District, Florida, Special Assessment
Revenue Refunding Bonds, 5.25% due 5/01/2018 (b) 1,393
AAA Aaa 1,150 Florida HFA, Housing Revenue Bonds (Brittany Rosemont Apartments),
AMT, Series C-1, 6.75% due 8/01/2014 (a) 1,178
AAA Aaa 785 Florida Housing Finance Corporation, Homeowner Mortgage Revenue
Refunding Bonds, AMT, Series 4, 6.25% due 7/01/2022 (f) 801
AAA Aaa 1,650 Florida State Board of Education, Capital Outlay, GO (Public
Education), Series B, 5.875% due 6/01/2005 (k) 1,707
AAA Aaa 6,190 Florida State Board of Education, Lottery Revenue Bonds, Series A,
6% due 7/01/2015 (c) 7,139
AAA Aaa 1,000 Florida State Governmental Utility Authority, Utility Revenue Bonds
(Lehigh Utility System), 5.125% due 10/01/2033 (a) 1,040
AA- Aa3 1,860 Florida State Turnpike Authority, Turnpike Revenue Bonds (Department
of Transportation), Series B, 5% due 7/01/2030 1,897
A A2 3,700 Highlands County, Florida, Health Facilities Authority, Hospital
Revenue Bonds (Adventist Health System), Series A, 6% due 11/15/2031 3,973
NR* Aaa 6,000 Hillsborough County, Florida, School Board, COP, 5.375% due
7/01/2026 (b) 6,436
AAA Aaa 2,615 Hillsborough County, Florida, School District, Sales Tax Revenue
Refunding Bonds, 5.375% due 10/01/2020 (a) 2,908
Jacksonville Electric Authority Florida, Water and Sewer System
Revenue Bonds (b):
AAA Aaa 2,000 Series A, 5.375% due 10/01/2030 2,099
AAA Aaa 2,610 Series C, 5.25% due 10/01/2037 2,716
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
EDA Economic Development Authority
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
RIB Residual Interest Bonds
S/F Single-Family
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
Ratings++ Ratings++ Amount Municipal Bonds Value
Florida (continued)
Jacksonville, Florida, Economic Development Commission, Health
Care Facilities Revenue Bonds (Mayo Clinic--Jacksonville) (b):
AAA Aaa $ 1,000 Series A, 5.50% due 11/15/2036 $ 1,081
AAA Aaa 750 Series B, 5.50% due 11/15/2036 810
AAA Aaa 1,455 Jacksonville, Florida, Guaranteed Entitlement Revenue Refunding
and Improvement Bonds, 5.25% due 10/01/2032 (c) 1,534
Jacksonville, Florida, Port Authority, Seaport Revenue Bonds,
AMT (b):
NR* Aaa 1,025 5.625% due 11/01/2010 (k) 1,159
NR* Aaa 1,225 5.625% due 11/01/2026 1,316
AAA Aaa 2,000 Lakeland, Florida, Electric and Water Revenue Refunding Bonds,
Series A, 5% due 10/01/2028 (b) 2,048
AAA Aaa 1,000 Lee County, Florida, Airport Revenue Bonds, AMT, Series A, 6%
due 10/01/2029 (f) 1,101
Lee County, Florida, Capital Revenue Bonds (a):
AAA Aaa 1,285 5.25% due 10/01/2023 1,391
AAA Aaa 1,355 5.25% due 10/01/2024 1,460
AAA NR* 275 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)(e)(i) 279
AAA Aaa 1,000 Leesburg, Florida, Capital Improvement Revenue Bonds, 5.25% due
10/01/2034 (c) 1,061
AAA Aaa 500 Marco Island, Florida, Utility System Revenue Bonds, 5.25% due
10/01/2021 (b) 547
NR* Aaa 1,000 Martin County, Florida, Utilities System Revenue Bonds, 5.125%
due 10/01/2033 (a) 1,040
AAA Aaa 2,000 Miami Beach, Florida, Water and Sewer Revenue Bonds, 5.75% due
9/01/2025 (a) 2,253
Miami-Dade County, Florida, Aviation Revenue Bonds (Miami
International Airport), AMT, Series A (c):
AAA Aaa 5,000 6% due 10/01/2024 5,596
AAA Aaa 1,140 5% due 10/01/2030 1,154
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) 2,237
AAA Aaa 1,000 Miami-Dade County, Florida, Expressway Authority, Toll System Revenue
Bonds, Series B, 5.25% due 7/01/2027 (c) 1,070
AAA NR* 3,480 Miami-Dade County, Florida, Health Facilities Authority, Hospital
Revenue Refunding Bonds, DRIVERS, Series 208, 9.87% due 8/15/2017 (a)(j) 4,321
AAA Aaa 1,655 Miami-Dade County, Florida, IDA, IDR (BAC Funding Corporation
Project), Series A, 5.375% due 10/01/2030 (a) 1,765
AAA Aaa 2,000 Miami-Dade County, Florida, School Board COP, Series A, 5.50% due
10/01/2009 (f)(k) 2,260
NR* Aaa 4,765 Orange County, Florida, Educational Facilities Authority, Educational
Facilities Revenue Refunding Bonds (Rollins College Project), 5.50%
due 12/01/2032 (a) 5,153
Orange County, Florida, Health Facilities Authority, Hospital
Revenue Bonds:
A A2 600 (Adventist Health System), 6.25% due 11/15/2024 665
A A2 1,835 (Orlando Regional Healthcare), 6% due 12/01/2029 1,975
Orange County, Florida, Sales Tax Revenue Refunding Bonds (c):
AAA Aaa 1,000 Series A, 5.125% due 1/01/2023 1,063
AAA Aaa 2,000 Series B, 5% due 1/01/2025 2,087
NR* Aaa 6,500 Orange County, Florida, School Board, COP, Series A, 5.25% due
8/01/2023 (b) 7,027
AAA Aaa 5,330 Orange County, Florida, Tourist Development, Tax Revenue Bonds,
5.50% due 10/01/2032 (a) 5,762
Orlando and Orange County, Florida, Expressway Authority Revenue
Bonds, Series B (a):
AAA Aaa 1,000 5% due 7/01/2030 1,030
AAA Aaa 5,015 5% due 7/01/2035 5,157
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
Ratings++ Ratings++ Amount Municipal Bonds Value
Florida (concluded)
NR* Aaa $ 1,530 Osceola County, Florida, Infrastructure Sales Surplus Tax Revenue
Bonds, 5.25% due 10/01/2025 (a) $ 1,637
NR* Aaa 2,000 Osceola County, Florida, School Board, COP, Series A, 5.25% due
6/01/2027 (a) 2,128
AAA Aaa 1,100 Osceola County, Florida, Tourist Development Tax Revenue Bonds,
Series A, 5.50% due 10/01/2027 (c) 1,193
AAA Aaa 1,500 Palm Beach County, Florida, Criminal Justice Facilities Revenue
Bonds, 7.20% due 6/01/2015 (c) 1,964
AAA Aaa 2,000 Palm Beach County, Florida, School Board, COP, Refunding, Series D,
5.25% due 8/01/2021 (f) 2,170
Palm Beach County, Florida, School Board, COP, Series A:
AAA Aaa 5,000 6% due 8/01/2010 (c)(k) 5,863
AAA Aaa 1,500 5.50% due 8/01/2022 (a) 1,659
NR* Aaa 1,000 Pembroke Pines, Florida, Public Improvement Revenue Bonds, Series A,
5% due 10/01/2034 (a) 1,032
NR* Aaa 1,000 Polk County, Florida, Utility System Revenue Bonds, 5.25% due
10/01/2022 (c) 1,088
NR* Aaa 1,055 Port St. Lucie, Florida, Utility Revenue Bonds, 5.25% due
9/01/2024 (b) 1,144
AAA Aaa 1,400 Saint Johns County, Florida, Sales Tax Revenue Bonds, GO, Series A,
5.25% due 10/01/2031 (a) 1,487
AAA Aaa 1,000 Saint Lucie, Florida, West Services District, Utility Revenue Bonds,
5.25% due 10/01/2034 (b) 1,066
AAA NR* 2,000 South Broward, Florida, Hospital District Revenue Bonds, DRIVERS,
Series 337, 9.143% due 5/01/2032 (b)(j) 2,352
A A2 1,000 South Lake County, Florida, Hospital District Revenue Bonds
(South Lake Hospital Inc.), 5.80% due 10/01/2034 1,029
AAA Aaa 1,240 Stuart, Florida, Public Utilities Revenue Refunding and Improvement
Bonds, 5.25% due 10/01/2024 (c) 1,336
AAA Aaa 1,480 University of Central Florida (UCF) Athletics Association Inc., COP,
Series A, 5.25% due 10/01/2034 (c) 1,570
Village Center Community Development District, Florida, Recreational
Revenue Bonds, Series A (b):
AAA Aaa 1,640 5.375% due 11/01/2034 1,763
AAA Aaa 1,000 5.125% due 11/01/2036 1,041
Village Center Community Development District, Florida, Utility
Revenue Bonds (b):
AAA Aaa 2,585 5.25% due 10/01/2023 2,797
AAA Aaa 4,000 5.125% due 10/01/2028 4,183
New Jersey--1.6%
BBB Baa2 2,000 New Jersey EDA, Cigarette Tax Revenue Bonds, 5.50% due 6/15/2024 2,045
Puerto Rico--14.9%
AAA NR* 7,500 Puerto Rico Commonwealth, GO, Refunding, DRIVERS, Series 232,
8.972% due 7/01/2017 (g)(j) 10,128
AAA Aaa 1,970 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series II,
5.375% due 7/01/2019 (b) 2,196
A- Baa1 1,000 Puerto Rico Public Buildings Authority, Government Facilities
Revenue Refunding Bonds, Series I, 5% due 7/01/2036 1,015
BBB+ Baa2 1,145 Puerto Rico Public Finance Corporation, Commonwealth Appropriation
Revenue Bonds, Series E, 5.70% due 2/01/2010 (k) 1,298
NR* Aaa 3,550 Puerto Rico Public Finance Corporation, Revenue Refunding Bonds,
RIB, Series 522X, 8.74% due 8/01/2022 (b)(j) 4,546
Total Municipal Bonds (Cost--$167,684)--140.7% 180,721
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
Schedule of Investments (concluded) (In Thousands)
Shares
Held Short-Term Securities Value
4,919 Merrill Lynch Institutional Tax-Exempt Fund (l) $ 4,919
Total Short-Term Securities (Cost--$4,919)--3.8% 4,919
Total Investments (Cost--$172,603**)--144.5% 185,640
Other Assets Less Liabilities--2.2% 2,828
Preferred Shares, at Redemption Value--(46.7%) (60,013)
---------
Net Assets Applicable to Common Shares--100.0% $ 128,455
=========
(a) AMBAC Insured.
(b) MBIA Insured.
(c) FGIC Insured.
(d) GNMA Collateralized.
(e) FNMA Collateralized.
(f) FSA Insured.
(g) XL Capital Insured.
(h) Escrowed to maturity.
(i) FHLMC 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 October 31, 2004.
(k) Prerefunded.
(l) Investments in companies considered to be an affiliate of the Fund
(such companies are defined as "Affiliated Companies" in Section
2(a)(3) of the Investment Company Act of 1940) were as follows:
(in Thousands)
Net Dividend
Affiliate Activity Income
Merrill Lynch Institutional
Tax-Exempt Fund (800) $36
(m) Radian Insured.
* Not Rated.
** The cost and unrealized appreciation/depreciation of investments as
of October 31, 2004, as computed for federal income tax purposes,
were as follows:
(in Thousands)
Aggregate cost $ 172,552
==============
Gross unrealized appreciation $ 13,303
Gross unrealized depreciation (215)
--------------
Net unrealized appreciation $ 13,088
==============
++ Ratings of issues shown are unaudited.
Forward interest rate swaps outstanding as of October 31, 2004
were as follows:
(in Thousands)
Notional Unrealized
Amount Depreciation
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate
and pay a fixed rate equal to
3.655% interest
Broker, J.P. Morgan Chase Bank
Expires November 2014 $ 7,300 $ (137)
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate
and pay a fixed rate equal to
3.581% interest
Broker, J.P. Morgan Chase Bank
Expires January 2015 $ 7,300 (70)
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate
and pay a fixed rate equal to
4.048% interest
Broker, J.P. Morgan Chase Bank
Expires January 2025 $10,000 (47)
-------
Total $ (254)
=======
See Notes to Financial Statements.
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
Statement of Net Assets
As of October 31, 2004
Assets
Investments in unaffiliated securities, at value (identified cost--$167,684,418) $ 180,720,964
Investments in affiliated securities, at value (identified cost--$4,918,831) 4,918,831
Cash 45,971
Receivables:
Interest $ 2,404,205
Securities sold 2,220,386
Dividends from affiliates 203 4,624,794
---------------
Prepaid expenses and other assets 18,266
---------------
Total assets 190,328,826
---------------
Liabilities
Unrealized depreciation on forward interest rate swaps 253,789
Payables:
Securities purchased 1,430,692
Investment adviser 88,504
Dividends to Common Shareholders 41,281
Other affiliates 1,301 1,561,778
---------------
Accrued expenses 45,411
---------------
Total liabilities 1,860,978
---------------
Preferred Shares
Preferred Shares, at redemption value, par value $.05 per share
(1,000,000 shares authorized, 2,400 Series A Shares of AMPS* issued and
outstanding at $25,000 per share liquidation preference) 60,013,224
---------------
Net Assets Applicable to Common Shares
Net assets applicable to Common Shares $ 128,454,624
===============
Analysis of Net Assets Applicable to Common Shares
Common Shares, par value $.10 per share (8,440,456 shares issued and
outstanding) $ 844,046
Paid-in capital in excess of par 117,649,821
Undistributed investment income--net $ 1,853,438
Accumulated realized capital losses--net (4,675,438)
Unrealized appreciation--net 12,782,757
---------------
Total accumulated earnings--net 9,960,757
---------------
Total--Equivalent to $15.22 net asset value per Common Share
(market price--$14.98) $ 128,454,624
===============
* Auction Market Preferred Shares.
See Notes to Financial Statements.
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
Statement of Operations
For the Year Ended October 31, 2004
Investment Income
Interest $ 9,650,953
Dividends from affiliates 35,526
---------------
Total income 9,686,479
---------------
Expenses
Investment advisory fees $ 931,679
Commission fees 152,232
Accounting services 82,861
Professional fees 49,941
Transfer agent fees 37,770
Printing and shareholder reports 31,680
Trustees' fees and expenses 26,667
Listing fees 20,800
Custodian fees 13,166
Pricing fees 11,078
Other 32,691
---------------
Total expenses before reimbursement 1,390,565
Reimbursement of expenses (7,258)
---------------
Total expenses after reimbursement 1,383,307
---------------
Investment income--net 8,303,172
---------------
Realized & Unrealized Gain (Loss)--Net
Realized loss on:
Investments--net (237,056)
Forward interest rate swaps--net (1,396,413) (1,633,469)
---------------
Change in unrealized appreciation/depreciation on:
Investments--net 3,469,314
Forward interest rate swaps--net (124,649) 3,344,665
--------------- ---------------
Total realized and unrealized gain--net 1,711,196
---------------
Dividends to Preferred Shareholders
Investment income--net (612,024)
---------------
Net Increase in Net Assets Resulting from Operations $ 9,402,344
===============
See Notes to Financial Statements.
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
Statements of Changes in Net Assets
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 2004 2003
Operations
Investment income--net $ 8,303,172 $ 8,840,171
Realized gain (loss)--net (1,633,469) 975,656
Change in unrealized appreciation/depreciation--net 3,344,665 (1,498,457)
Dividends to Preferred Shareholders (612,024) (601,728)
--------------- ---------------
Net increase in net assets resulting from operations 9,402,344 7,715,642
--------------- ---------------
Dividends to Common Shareholders
Investment income--net (7,862,285) (7,748,339)
--------------- ---------------
Net decrease in net assets resulting from dividends to Common Shareholders (7,862,285) (7,748,339)
--------------- ---------------
Net Assets Applicable to Common Shares
Total increase (decrease) in net assets applicable to Common Shares 1,540,059 (32,697)
Beginning of year 126,914,565 126,947,262
--------------- ---------------
End of year* $ 128,454,624 $ 126,914,565
=============== ===============
* Undistributed investment income--net $ 1,853,438 $ 2,024,870
=============== ===============
See Notes to Financial Statements.
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
Financial Highlights
The following per share data and ratios have been derived
from information provided in the financial statements.
For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 2004 2003 2002 2001 2000
Per Share Operating Performance
Net asset value, beginning of year $ 15.04 $ 15.04 $ 14.94 $ 13.89 $ 13.30
---------- ---------- ---------- ---------- ----------
Investment income--net .98+++ 1.05+++ 1.04 1.00 1.02
Realized and unrealized gain (loss)--net .20 (.06) .06 1.06 .61
Dividends and distributions to Preferred
Shareholders:
Investment income--net (.07) (.07) (.10) (.23) (.29)
Realized gain--net -- -- --++ -- --
---------- ---------- ---------- ---------- ----------
Total from investment operations 1.11 .92 1.00 1.83 1.34
---------- ---------- ---------- ---------- ----------
Less dividends and distributions to Common
Shareholders:
Investment income--net (.93) (.92) (.90) (.78) (.75)
Realized gain--net -- -- --++ -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions to Common
Shareholders (.93) (.92) (.90) (.78) (.75)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 15.22 $ 15.04 $ 15.04 $ 14.94 $ 13.89
========== ========== ========== ========== ==========
Market price per share, end of year $ 14.98 $ 14.18 $ 14.30 $ 14.21 $ 12.125
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share 7.98% 6.45% 7.22% 13.96% 11.17%
========== ========== ========== ========== ==========
Based on market price per share 12.73% 5.56% 7.19% 24.17% 6.45%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Common Shares
Total expenses, net of reimbursement** 1.09% 1.08% 1.11% 1.15% 1.14%
========== ========== ========== ========== ==========
Total expenses** 1.10% 1.08% 1.11% 1.15% 1.14%
========== ========== ========== ========== ==========
Total investment income--net** 6.54% 6.86% 7.02% 6.90% 7.55%
========== ========== ========== ========== ==========
Amount of dividends to Preferred Shareholders .48% .47% .67% 1.58% 2.13%
========== ========== ========== ========== ==========
Investment income--net, to Common Shareholders 6.06% 6.39% 6.35% 5.32% 5.42%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Common & Preferred Shares**
Total expenses, net of reimbursement .74% .74% .75% .77% .75%
========== ========== ========== ========== ==========
Total expenses .74% .74% .75% .77% .75%
========== ========== ========== ========== ==========
Total investment income--net 4.45% 4.67% 4.74% 4.63% 4.94%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Preferred Shares
Dividends to Preferred Shareholders 1.02% 1.00% 1.39% 3.21% 4.03%
========== ========== ========== ========== ==========
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
Financial Highlights (concluded)
The following per share data and ratios have been derived For the Year Ended October 31,
from information provided in the financial statements. 2004 2003 2002 2001 2000
Supplemental Data
Net assets applicable to Common Shares,
end of year (in thousands) $ 128,455 $ 126,915 $ 126,947 $ 126,035 $ 117,201
========== ========== ========== ========== ==========
Preferred Shares outstanding, end of year
(in thousands) $ 60,000 $ 60,000 $ 60,000 $ 60,000 $ 60,000
========== ========== ========== ========== ==========
Portfolio turnover 31.22% 47.21% 40.55% 78.48% 40.41%
========== ========== ========== ========== ==========
Leverage
Asset coverage per $1,000 $ 3,141 $ 3,115 $ 3,116 $ 3,101 $ 2,953
========== ========== ========== ========== ==========
Dividends Per Share on Preferred Shares Outstanding
Investment income--net $ 255 $ 251 $ 348 $ 803 $ 1,010
========== ========== ========== ========== ==========
* 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.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
Notes to Financial Statements
1. Significant Accounting Policies:
MuniYield Florida Insured Fund (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a non-diversified,
closed-end management investment company. The Fund's financial
statements are prepared in conformity with U.S. generally accepted
accounting principles, which may require the use of management
accruals and estimates. Actual results may differ from these
estimates. The Fund determines and makes available for publication
the net asset value of its Common Shares on a daily 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 last available
bid price in the over-the-counter market or on the basis of values
as obtained by a pricing service. Pricing services use valuation
matrixes that incorporate both dealer-supplied valuations and
valuation models. The procedures of the pricing service and its
valuations are reviewed by the officers of the Fund under the
general direction of the Board of Trustees. Such valuations and
procedures will be reviewed periodically by the Board of Trustees of
the Fund. 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). Swap agreements are valued by quoted fair
values received daily by the Fund's pricing service. Short-term
investments with a remaining maturity of 60 days or less are valued
at amortized cost, which approximates market value, under which
method the investment is valued at cost and any premium or discount
is amortized on a straight line basis to maturity. Investments in
open-end investment companies are valued at their net asset value
each business day. Securities and other assets for which market
quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of
Trustees of the Fund.
(b) Derivative financial instruments--The Fund may engage in various
portfolio investment strategies both to increase the return of the
Fund and to hedge, or protect, its exposure to interest rate
movements and movements in the securities markets. Losses may arise
due to changes in the value of the contract or if the counterparty
does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell
financial futures contracts and options on such futures contracts.
Futures contracts are contracts for delayed delivery of securities
at a specific future date and at a specific price or yield. Upon
entering into a contract, the Fund deposits and maintains as
collateral such initial margin as required by the exchange on which
the transaction is effected. Pursuant to the contract, the Fund
agrees to receive from or pay to the broker an amount of cash equal
to the daily fluctuation in value of the contract. Such receipts or
payments are known as variation margin and are recorded by the Fund
as unrealized gains or losses. When the contract is closed, the Fund
records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the
time it was closed.
* Options--The Fund may purchase and write call and put options.
When the Fund writes an option, an amount equal to the premium
received by the Fund is reflected as an asset and an equivalent
liability. The amount of the liability is subsequently marked-to-
market to reflect the current market value of the option written.
When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or 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.
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
Notes to Financial Statements (continued)
* Forward interest rate swaps--The Fund may enter into forward
interest rate swaps. In a forward interest rate swap, the Fund and
the counterparty agree to make periodic net payments on a specified
notional contract amount, commencing on a specified future effective
date, unless terminated earlier. When the agreement is closed, the
Fund records a realized gain or loss in an amount equal to the value
of the agreement.
(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. Divided
income is recorded on the ex-dividend dates. Interest income is
recognized on the accrual basis. The Fund amortizes all premiums and
discounts on debt securities.
(e) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
(f) Reclassifications--U.S. generally accepted accounting principles
require that certain components of net assets be adjusted to reflect
permanent differences between financial and tax reporting.
Accordingly, during the current year, $295 has been reclassified
between undistributed net investment income and accumulated net
realized capital losses as a result of permanent differences
attributable to the amortization methods for premiums and discounts
on fixed income securities. This reclassification has no effect on
net assets or net asset values 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 .50% of
the Fund's average weekly net assets, including proceeds from the
issuance of Preferred Shares. The Investment Adviser has agreed to
reimburse its management fee by the amount of management fees the
Fund pays to FAM indirectly through its investment in Merrill Lynch
Institutional Tax-Exempt Fund. For the year ended October 31, 2004,
FAM reimbursed the Fund in the amount of $7,258.
For the year ended October 31, 2004, the Fund reimbursed FAM $5,592
for certain accounting services.
Certain officers and/or trustees of the Fund are officers and/or
directors of FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended October 31, 2004 were $56,773,809 and
$58,715,261, respectively.
4. Share Transactions:
The Fund is authorized to issue an unlimited number of common shares
of beneficial interest, par value $.10 per share (the "Common
Shares"), together with 1,000,000 preferred shares of beneficial
interest, par value of $.05 per share (the "Preferred Shares"). The
Board of Trustees is authorized, however, to reclassify any unissued
shares of beneficial interest without approval of the holders of
Common Shares.
Preferred Shares
Auction Market Preferred Shares are redeemable Preferred Shares of
the Fund, with a par value of $.05 per share and a liquidation
preference of $25,000 per share plus accrued and unpaid dividends,
that entitle their holders to receive cash dividends at an annual
rate that may vary for the successive dividend periods. The yield in
effect at October 31, 2004 was 1.15%.
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
Notes to Financial Statements (concluded)
The Fund pays commissions to certain broker-dealers at the end
of each auction at an annual rate ranging from .25% to .375%,
calculated on the proceeds of each auction. For the year ended
October 31, 2004 Merrill Lynch, Pierce, Fenner & Smith Incorporated,
an affiliate of FAM, earned $64,602 as commissions.
5. Distribution to Shareholders:
The Fund paid a tax-exempt income dividend to holders of Common
Shares in the amount of $.078000 per share on November 29, 2004 to
shareholders of record on November 12, 2004.
The tax character of distributions paid during the fiscal years
ended October 31, 2004 and October 31, 2003 was as follows:
10/31/2004 10/31/2003
Distributions paid from:
Tax-exempt income $ 8,474,309 $ 8,350,067
--------------- ---------------
Total distributions $ 8,474,309 $ 8,350,067
=============== ===============
As of October 31, 2004, the components of accumulated earnings on a
tax basis were as follows:
Undistributed tax-exempt income--net $ 1,787,984
Undistributed long-term capital gains--net --
---------------
Total undistributed earnings--net 1,787,984
Capital loss carryforward (4,109,860)*
Unrealized gains--net 12,282,633**
---------------
Total accumulated earnings--net $ 9,960,757
===============
* On October 31, 2004, the Fund had a net capital loss carryforward
of $4,109,860, of which $2,028,135 expires in 2008 and $2,081,725
expires in 2012. This amount will be available to offset like
amounts of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized
gains is attributable primarily to the tax deferral of losses on
wash sales, the tax deferral of losses on straddles and the
difference between book and tax amortization methods for premiums
and discounts on fixed income securities.
6. Subsequent Event:
On November 22, 2004, the Fund issued 480 Series B Preferred Shares
for net proceeds of $11,880,000.
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees
of MuniYield Florida Insured Fund:
We have audited the accompanying statement of net assets, including
the schedule of investments, of MuniYield Florida Insured Fund, as
of October 31, 2004, and the related statement of operations for the
year then ended, the statements of changes in net assets for each of
the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of October 31, 2004, by
correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of MuniYield Florida Insured Fund as of October
31, 2004, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period
then ended, and its financial highlights for each of the five years
in the period then ended, in conformity with U.S. generally accepted
accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 14, 2004
Important Tax Information (unaudited)
All of the net investment income distributions paid by MuniYield
Florida Insured Fund during the taxable year ended October 31, 2004
qualify as tax-exempt interest dividends for federal income tax
purposes.
Please retain this information for your records.
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission ("SEC") for the first and third
quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are
available on the SEC's Web site at http://www.sec.gov. The Fund's
Forms N-Q may also be reviewed and copied at the SEC's Public
Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330.
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
Automatic Dividend Reinvestment Plan (unaudited)
The following description of the Fund's Automatic Dividend
Reinvestment Plan (the "Plan") is sent to you annually as required
by federal securities laws.
Pursuant to the Fund's Plan, unless a holder of Common Shares
otherwise elects, all dividend and capital gains distributions will
be automatically reinvested by The Bank of New York (the "Plan
Agent"), as agent for shareholders in administering the Plan, in
additional Common Shares of the Fund. Holders of Common Shares who
elect not to participate in the Plan will receive all distributions
in cash paid by check mailed directly to the shareholder of record
(or, if the shares are held in street or other nominee name then to
such nominee) by The Bank of New York, as dividend paying agent.
Such participants may elect not to participate in the Plan and to
receive all distributions of dividends and capital gains in cash by
sending written instructions to The Bank of New York, as dividend
paying agent, at the address set forth below. Participation in the
Plan is completely voluntary and may be terminated or resumed at any
time without penalty by written notice if received by the Plan Agent
not less than ten days prior to any dividend record date; otherwise
such termination will be effective with respect to any subsequently
declared dividend or distribution.
Whenever the Fund declares an income dividend or capital gains
distribution (collectively referred to as "dividends") payable
either in shares or in cash, non-participants in the Plan will
receive cash and participants in the Plan will receive the
equivalent in Common Shares. The shares will be acquired by the
Plan Agent for the participant's account, depending upon the
circumstances described below, either (i) through receipt of
additional unissued but authorized Common Shares from the Fund
("newly issued shares") or (ii) by purchase of outstanding Common
Shares on the open market ("open-market purchases") on the New York
Stock Exchange or elsewhere. If on the payment date for the
dividend, the net asset value per Common Share is equal to or less
than the market price per Common Share plus estimated brokerage
commissions (such conditions being referred to herein as "market
premium"), the Plan Agent will invest the dividend amount in newly
issued shares on behalf of the participant. The number of newly
issued Common Shares to be credited to the participant's account
will be determined by dividing the dollar amount of the dividend by
the net asset value per share on the date the shares are issued,
provided that the maximum discount from the then current market
price per share on the date of issuance may not exceed 5%. If, on
the dividend payment date, the net asset value per share is greater
than the market value (such condition being referred to herein as
"market discount"), the Plan Agent will invest the dividend amount
in shares acquired on behalf of the participant in open-market
purchases.
In the event of a market discount on the dividend payment date, the
Plan Agent will have until the last business day before the next
date on which the shares trade on an "ex-dividend" basis or in no
event more than 30 days after the dividend payment date (the "last
purchase date") to invest the dividend amount in shares acquired in
open-market purchases. It is contemplated that the Fund will pay
monthly income dividends. Therefore, the period during which open-
market purchases can be made will exist only from the payment date
on the dividend through the date before the next "ex-dividend" date,
which typically will be approximately ten days. If, before the Plan
Agent has completed its open-market purchases, the market price of a
Common Share exceeds the net asset value per share, the average per
share purchase price paid by the Plan Agent may exceed the net asset
value of the Fund's shares, resulting in the acquisitions of fewer
shares than if the dividend had been paid in newly issued shares on
the dividend payment date. Because of the foregoing difficulty with
respect to open-market purchases, the Plan provides that if the Plan
Agent is unable to invest the full dividend amount in open-market
purchases during the purchase period or if the market discount
shifts to a market premium during the purchase period, the Plan
Agent will cease making open-market purchases and will invest the
uninvested portion of the dividend amount in newly issued shares at
the close of business on the last purchase date determined by
dividing the uninvested portion of the dividend by the net asset
value per share.
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
The Plan Agent maintains all shareholders' accounts in the Plan and
furnishes written confirmation of all transactions in the account,
including information needed by shareholders for tax records. Shares
in the account of each Plan participant will be held by the Plan
Agent in non-certificated form in the name of the participant, and
each shareholder's proxy will include those shares purchased or
received pursuant to the Plan. The Plan Agent will forward all proxy
solicitation materials to participants and vote proxies for shares
held pursuant to the Plan in accordance with the instructions of the
participants.
In the case of shareholders such as banks, brokers or nominees
which hold shares of others who are the beneficial owners, the
Plan Agent will administer the Plan on the basis of the number of
shares certified from time to time by the record shareholders as
representing the total amount registered in the record shareholder's
name and held for the account of beneficial owners who are to
participate in the Plan.
There will be no brokerage charges with respect to shares issued
directly by the Fund as a result of dividends or capital gains
distributions payable either in shares or in cash. However, each
participant will pay a pro rata share of brokerage commissions
incurred with respect to the Plan Agent's open-market purchases in
connection with the reinvestment of dividends.
The automatic reinvestment of dividends and distributions will not
relieve participants of any federal, state or local income tax that
may be payable (or required to be withheld) on such dividends.
Shareholders participating in the Plan may receive benefits not
available to shareholders not participating in the Plan. If the
market price plus commissions of the Fund's shares is above the net
asset value, participants in the Plan will receive shares of the
Fund at less than they could otherwise purchase them and will have
shares with a cash value greater than the value of any cash
distribution they would have received on their shares. If the market
price plus commissions is below the net asset value, participants
will receive distributions in shares with a net asset value greater
than the value of any cash distribution they would have received on
their shares. However, there may be insufficient shares available in
the market to make distributions in shares at prices below the net
asset value. Also, since the Fund does not redeem shares, the price
on resale may be more or less than the net asset value.
The value of shares acquired pursuant to the Plan will generally be
excluded from gross income to the extent that the cash amount
reinvested would be excluded from gross income. If, when the Fund's
shares are trading at a premium over net asset value, the Fund
issues shares pursuant to the Plan that have a greater fair market
value than the amount of cash reinvested, it is possible that all or
a portion of such discount (which may not exceed 5% of the fair
market value of the Fund's shares) could be viewed as a taxable
distribution. If the discount is viewed as a taxable distribution,
it is also possible that the taxable character of this discount
would be allocable to all the shareholders, including shareholders
who do not participate in the Plan. Thus, shareholders who do not
participate in the Plan might be required to report as ordinary
income a portion of their distributions equal to their allocable
share of the discount.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the
Plan. There is no direct service charge to participants in the Plan;
however, the Fund reserves the right to amend the Plan to include a
service charge payable by the participants.
All correspondence concerning the Plan should be directed to the
Plan Agent at The Bank of New York, Church Street Station, P.O. Box
11258, New York, NY 10286-1258, Telephone: 800-432-8224.
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
Officers and Trustees (unaudited)
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name, Address & Age Fund Served Principal Occupation(s) During Past 5 Years Trustee Trustee
Interested Trustee
Terry K. Glenn* President 1999 to President of the Merrill Lynch Investment 124 Funds None
P.O. Box 9011 and present Managers, L.P. ("MLIM")/Fund Asset 157 Portfolios
Princeton, Trustee Management, L.P. ("FAM")-advised funds
NJ 08543-9011 since 1999; Chairman (Americas Region)
Age: 64 of MLIM from 2000 to 2002; Executive Vice
President of MLIM and FAM (which terms as
used herein include their corporate
predecessors) from 1983 to 2002; President
of FAM Distributors, Inc. ("FAMD") from
1986 to 2002 and Director thereof from 1991
to 2002; Executive Vice President and
Director of Princeton Services, Inc.
("Princeton Services") from 1993 to 2002;
President of Princeton Administrators, L.P.
from 1989 to 2002; Director of Financial
Data Services, Inc. since 1985.
* Mr. Glenn is a director, trustee or member of an advisory board of
certain other investment companies for which MLIM or FAM acts as
investment adviser. Mr. Glenn is an "interested person," as
described in the Investment Company Act, of the Fund based on his
present and former positions with MLIM, FAM, FAMD, Princeton
Services and Princeton Administrators, L.P. The Trustee's term is
unlimited. Trustees serve until their resignation, removal or death,
or until December 31 of the year in which they turn 72. As Fund
President, Mr. Glenn serves at the pleasure of the Board of
Trustees.
Independent Trustees*
Donald W. Burton Trustee 2002 to General Partner of The Burton Partnership, 23 Funds ITC DeltaCom,
P.O. Box 9095 present Limited Partnership (an Investment 36 Portfolios Inc.; ITC Holding
Princeton, Partnership) since 1979; Managing General Company, Inc.;
NJ 08543-9095 Partner of The South Atlantic Venture Funds Knology, Inc.;
Age: 60 since 1983; Member of the Investment Advisory MainBancorp
Committee of the Florida State Board of N.A.; PriCare,
Administration since 2001. Inc.; Symbion,
Inc.
M. Colyer Crum Trustee 1992 to James R. Williston Professor of Investment 24 Funds Cambridge
P.O. Box 9095 present Management Emeritus, Harvard Business 37 Portfolios Bancorp
Princeton, School since 1996; James R. Williston
NJ 08543-9095 Professor of Investment Management, Harvard
Age: 72 Business School from 1971 to 1996.
Laurie Simon Hodrick Trustee 1999 to Professor of Finance and Economics, Graduate 23 Funds None
P.O. Box 9095 present School of Business, Columbia University 36 Portfolios
Princeton, since 1998; Associate Professor of Finance
NJ 08543-9095 and Economics, Graduate School of Business,
Age: 42 Columbia University from 1996 to 1998.
David H. Walsh Trustee 2003 to Consultant with Putnam Investments since 23 Funds None
P.O. Box 9095 present 1998 and employed in various capacities 36 Portfolios
Princeton, therewith from 1973 to 1992; Director,
NJ 08543-9095 The National Audubon Society since 1998;
Age: 63 Director, The American Museum of Fly
Fishing since 1997.
Fred G. Weiss Trustee 1998 to Managing Director of FGW Advisors, Inc. 23 Funds Watson
P.O. Box 9095 present since 1997; Vice President, Planning, 36 Portfolios Pharmaceuticals
Princeton, Investment and Development of Warner Inc.
NJ 08543-9095 Lambert Co. from 1979 to 1997; Director
Age: 63 of the Michael J. Fox Foundation for
Parkinson's Research since 2000; Director of
BTG International PLC (a global technology
commercialization company) since 2001.
* The Trustee's term is unlimited. Trustees serve until their
resignation, removal or death, or until December 31 of the year in
which they turn 72.
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
Officers and Trustees (unaudited)(concluded)
Position(s) Length of
Held with Time
Name, Address & Age Fund Served Principal Occupation(s) During Past 5 Years
Fund Officers*
Donald C. Burke Vice 1993 to First Vice President of MLIM and FAM since 1997 and Treasurer thereof since
P.O. Box 9011 President present 1999; Senior Vice President and Treasurer of Princeton Services since 1999
Princeton, and and and Director since 2004; Vice President of FAMD since 1999; Vice President of
NJ 08543-9011 Treasurer 1999 to MLIM and FAM from 1990 to 1997; Director of MLIM Taxation since 1990.
Age: 44 present
Kenneth A. Jacob Senior 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
P.O. Box 9011 Vice present Management) of MLIMfrom 1997 to 2000.
Princeton, President
NJ 08543-9011
Age: 53
John M. Loffredo Senior 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
P.O. Box 9011 Vice present Management) of MLIM from 1998 to 2000.
Princeton, President
NJ 08543-9011
Age: 40
Robert D. Sneeden Vice 2002 to Vice President of MLIM since 2000.
P.O. Box 9011 President present
Princeton,
NJ 08543-9011
Age: 51
Jeffrey Hiller Chief 2004 to Chief Compliance Officer of the MLIM/FAM-advised funds and First Vice
P.O. Box 9011 Compliance present President and Chief Compliance Officer of MLIM since 2004; Global Director
Princeton, Officer of Compliance at Morgan Stanley Investment Management from 2002 to 2004;
NJ 08543-9011 Managing Director and Global Director of Compliance at Citigroup Asset
Age: 53 Management from 2000 to 2002; Chief Compliance Officer at Soros Fund
Management in 2000; Chief Compliance Officer at Prudential Financial from
1995 to 2000.
Alice A. Pellegrino Secretary 2004 to Director (Legal Advisory) of MLIM since 2002; Vice President of MLIM from
P.O. Box 9011 present 1999 to 2002; Attorney associated with MLIM since 1997.
Princeton,
NJ 08543-9011
Age: 44
* Officers of the Fund serve at the pleasure of the Board of Trustees.
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agents
Common Shares:
The Bank of New York
101 Barclay Street - 11 East
New York, NY 10286
Preferred Shares:
The Bank of New York
101 Barclay Street - 7 West
New York, NY 10286
NYSE Symbol
MFT
Electronic Delivery
The Fund offers electronic delivery of communications to its
shareholders. In order to receive this service, you must
register your account and provide us with e-mail information.
To sign up for this service, simply access this Web site
http://www.icsdelivery.com/live and follow the instructions.
When you visit this site, you will obtain a personal identification
number (PIN). You will need this PIN should you wish to update your
e-mail address, choose to discontinue this service and/or make any
other changes to the service. This service is not available for
certain retirement accounts at this time.
MUNIYIELD FLORIDA INSURED FUND, OCTOBER 31, 2004
Item 2 - Code of Ethics - The registrant has adopted a code of
ethics, as of the end of the period covered by this report, that
applies to the registrant's principal executive officer, principal
financial officer and principal accounting officer, or persons
performing similar functions. A copy of the code of ethics
is available without charge upon request by calling toll-free
1-800-MER-FUND (1-800-637-3863).
Item 3 - Audit Committee Financial Expert - The registrant's board
of directors has determined that (i) the registrant has the
following audit committee financial experts serving on its audit
committee and (ii) each audit committee financial expert is
independent: (1) Donald W. Burton, (2) M. Colyer Crum, (3)
Laurie Simon Hodrick, (4) David H. Walsh and (5) Fred G. Weiss.
The registrant's board of directors has determined that Laurie Simon
Hodrick and M. Colyer Crum qualify as financial experts pursuant to
Item 3(c)(4) of Form N-CSR.
Ms. Hodrick has a thorough understanding of generally accepted
accounting principals, financial statements, and internal controls
and procedures for financial reporting. Ms. Hodrick earned a Ph.D.
in economics and has taught courses in finance for over 15 years.
Her M.B.A.-level course centers around the evaluation and analysis
of firms' corporate financial statements. She has also taught in
financial analysts' training programs. Ms. Hodrick has also worked
with several prominent corporations in connection with the analysis
of financial forecasts and projections and analysis of the financial
statements of those companies, serving on the Financial Advisory
Council of one of these major corporations. She has also served
as the Treasurer and Finance Chair of a 501(c)(3) organization.
Ms. Hodrick has published a number of articles in leading economic
and financial journals and is the associate editor of two leading
finance journals.
M. Colyer Crum also possesses a thorough understanding of generally
accepted accounting principals, financial statements, and internal
controls and procedures for financial reporting through a
combination of education and experience. Professor Crum was a
professor of investment management at the Harvard Business School
for 25 years. The courses taught by Professor Crum place a heavy
emphasis on the analysis of underlying company financial statements
with respect to stock selection and the analysis of credit risk in
making loans. Professor Crum has also served on a number of boards
of directors and has served on the audit committees, and in some
cases chaired the audit committee, for several major corporations
and financial institutions. For two such organizations, Professor
Crum has performed extensive investment analysis of financial
statements in connection with investment management decisions. From
these experiences, he has gained significant experience with the
establishment of reserves and accounting policies, differences
between U.S. GAAP and Canadian GAAP and executive compensation
issues.
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees - Fiscal Year Ending October 31, 2004 - $24,000
Fiscal Year Ending October 31, 2003 - $24,000
(b) Audit-Related Fees -
Fiscal Year Ending October 31, 2004 - $3,000
Fiscal Year Ending October 31, 2003 - $5,600
The nature of the services include assurance and related services
reasonably related to the performance of the audit of financial
statements not included in Audit Fees.
(c) Tax Fees - Fiscal Year Ending October 31, 2004 - $5,610
Fiscal Year Ending October 31, 2003 - $4,800
The nature of the services include tax compliance, tax advice and
tax planning.
(d) All Other Fees - Fiscal Year Ending October 31, 2004 - $0
Fiscal Year Ending October 31, 2003 - $0
(e)(1) The registrant's audit committee (the "Committee") has
adopted policies and procedures with regard to the pre-approval of
services. Audit, audit-related and tax compliance services provided
to the registrant on an annual basis require specific pre-approval
by the Committee. The Committee also must approve other non-audit
services provided to the registrant and those non-audit services
provided to the registrant's affiliated service providers that
relate directly to the operations and the financial reporting of the
registrant. Certain of these non-audit services that the Committee
believes are a) consistent with the SEC's auditor independence rules
and b) routine and recurring services that will not impair the
independence of the independent accountants may be approved by the
Committee without consideration on a specific case-by-case basis
("general pre-approval"). However, such services will only be
deemed pre-approved provided that any individual project does not
exceed $5,000 attributable to the registrant or $50,000 for all of
the registrants the Committee oversees. Any proposed services
exceeding the pre-approved cost levels will require specific pre-
approval by the Committee, as will any other services not subject to
general pre-approval (e.g., unanticipated but permissible services).
The Committee is informed of each service approved subject to
general pre-approval at the next regularly scheduled in-person board
meeting.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ending October 31, 2004 - $13,270,096
Fiscal Year Ending October 31, 2003 - $18,737,552
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's investment adviser and any entity controlling,
controlled by, or under common control with the investment adviser
that provides ongoing services to the registrant that were not pre-
approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation
S-X is compatible with maintaining the principal accountant's
independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $945,000, 0%
Item 5 - Audit Committee of Listed Registrants - The following
individuals are members of the registrant's separately-designated
standing audit committee established in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)):
Donald W. Burton
M. Colyer Crum
Laurie Simon Hodrick
David H. Walsh
Fred G. Weiss
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for
Closed-End Management Investment Companies -
Proxy Voting Policies and Procedures
Each Fund's Board of Directors/Trustees has delegated to Merrill
Lynch Investment Managers, L.P. and/or Fund Asset Management, L.P.
(the "Investment Adviser") authority to vote all proxies relating to
the Fund's portfolio securities. The Investment Adviser has adopted
policies and procedures ("Proxy Voting Procedures") with respect to
the voting of proxies related to the portfolio securities held in
the account of one or more of its clients, including a Fund.
Pursuant to these Proxy Voting Procedures, the Investment Adviser's
primary objective when voting proxies is to make proxy voting
decisions solely in the best interests of each Fund and its
shareholders, and to act in a manner that the Investment Adviser
believes is most likely to enhance the economic value of the
securities held by the Fund. The Proxy Voting Procedures are
designed to ensure that that the Investment Adviser considers the
interests of its clients, including the Funds, and not the interests
of the Investment Adviser, when voting proxies and that real (or
perceived) material conflicts that may arise between the Investment
Adviser's interest and those of the Investment Adviser's clients are
properly addressed and resolved.
In order to implement the Proxy Voting Procedures, the Investment
Adviser has formed a Proxy Voting Committee (the "Committee"). The
Committee is comprised of the Investment Adviser's Chief Investment
Officer (the "CIO"), one or more other senior investment
professionals appointed by the CIO, portfolio managers and
investment analysts appointed by the CIO and any other personnel the
CIO deems appropriate. The Committee will also include two non-
voting representatives from the Investment Adviser's Legal
department appointed by the Investment Adviser's General Counsel.
The Committee's membership shall be limited to full-time employees
of the Investment Adviser. No person with any investment banking,
trading, retail brokerage or research responsibilities for the
Investment Adviser's affiliates may serve as a member of the
Committee or participate in its decision making (except to the
extent such person is asked by the Committee to present information
to the Committee, on the same basis as other interested
knowledgeable parties not affiliated with the Investment Adviser
might be asked to do so). The Committee determines how to vote the
proxies of all clients, including a Fund, that have delegated proxy
voting authority to the Investment Adviser and seeks to ensure that
all votes are consistent with the best interests of those clients
and are free from unwarranted and inappropriate influences. The
Committee establishes general proxy voting policies for the
Investment Adviser and is responsible for determining how those
policies are applied to specific proxy votes, in light of each
issuer's unique structure, management, strategic options and, in
certain circumstances, probable economic and other anticipated
consequences of alternate actions. In so doing, the Committee may
determine to vote a particular proxy in a manner contrary to its
generally stated policies. In addition, the Committee will be
responsible for ensuring that all reporting and recordkeeping
requirements related to proxy voting are fulfilled.
The Committee may determine that the subject matter of a recurring
proxy issue is not suitable for general voting policies and requires
a case-by-case determination. In such cases, the Committee may
elect not to adopt a specific voting policy applicable to that
issue. The Investment Adviser believes that certain proxy voting
issues require investment analysis - such as approval of mergers and
other significant corporate transactions - akin to investment
decisions, and are, therefore, not suitable for general guidelines.
The Committee may elect to adopt a common position for the
Investment Adviser on certain proxy votes that are akin to
investment decisions, or determine to permit the portfolio manager
to make individual decisions on how best to maximize economic value
for a Fund (similar to normal buy/sell investment decisions made by
such portfolio managers). While it is expected that the Investment
Adviser will generally seek to vote proxies over which the
Investment Adviser exercises voting authority in a uniform manner
for all the Investment Adviser's clients, the Committee, in
conjunction with a Fund's portfolio manager, may determine that the
Fund's specific circumstances require that its proxies be voted
differently.
To assist the Investment Adviser in voting proxies, the Committee
has retained Institutional Shareholder Services ("ISS"). ISS is an
independent adviser that specializes in providing a variety of
fiduciary-level proxy-related services to institutional investment
managers, plan sponsors, custodians, consultants, and other
institutional investors. The services provided to the Investment
Adviser by ISS include in-depth research, voting recommendations
(although the Investment Adviser is not obligated to follow such
recommendations), vote execution, and recordkeeping. ISS will also
assist the Fund in fulfilling its reporting and recordkeeping
obligations under the Investment Company Act.
The Investment Adviser's Proxy Voting Procedures also address
special circumstances that can arise in connection with proxy
voting. For instance, under the Proxy Voting Procedures, the
Investment Adviser generally will not seek to vote proxies related
to portfolio securities that are on loan, although it may do so
under certain circumstances. In addition, the Investment Adviser
will vote proxies related to securities of foreign issuers only on a
best efforts basis and may elect not to vote at all in certain
countries where the Committee determines that the costs associated
with voting generally outweigh the benefits. The Committee may at
any time override these general policies if it determines that such
action is in the best interests of a Fund.
From time to time, the Investment Adviser may be required to vote
proxies in respect of an issuer where an affiliate of the Investment
Adviser (each, an "Affiliate"), or a money management or other
client of the Investment Adviser (each, a "Client") is involved.
The Proxy Voting Procedures and the Investment Adviser's adherence
to those procedures are designed to address such conflicts of
interest. The Committee intends to strictly adhere to the Proxy
Voting Procedures in all proxy matters, including matters involving
Affiliates and Clients. If, however, an issue representing a non-
routine matter that is material to an Affiliate or a widely known
Client is involved such that the Committee does not reasonably
believe it is able to follow its guidelines (or if the particular
proxy matter is not addressed by the guidelines) and vote
impartially, the Committee may, in its discretion for the purposes
of ensuring that an independent determination is reached, retain an
independent fiduciary to advise the Committee on how to vote or to
cast votes on behalf of the Investment Adviser's clients.
In the event that the Committee determines not to retain an
independent fiduciary, or it does not follow the advice of such an
independent fiduciary, the powers of the Committee shall pass to a
subcommittee, appointed by the CIO (with advice from the Secretary
of the Committee), consisting solely of Committee members selected
by the CIO. The CIO shall appoint to the subcommittee, where
appropriate, only persons whose job responsibilities do not include
contact with the Client and whose job evaluations would not be
affected by the Investment Adviser's relationship with the Client
(or failure to retain such relationship). The subcommittee shall
determine whether and how to vote all proxies on behalf of the
Investment Adviser's clients or, if the proxy matter is, in their
judgment, akin to an investment decision, to defer to the applicable
portfolio managers, provided that, if the subcommittee determines to
alter the Investment Adviser's normal voting guidelines or, on
matters where the Investment Adviser's policy is case-by-case, does
not follow the voting recommendation of any proxy voting service or
other independent fiduciary that may be retained to provide research
or advice to the Investment Adviser on that matter, no proxies
relating to the Client may be voted unless the Secretary, or in the
Secretary's absence, the Assistant Secretary of the Committee
concurs that the subcommittee's determination is consistent with the
Investment Adviser's fiduciary duties
In addition to the general principles outlined above, the Investment
Adviser has adopted voting guidelines with respect to certain
recurring proxy issues that are not expected to involve unusual
circumstances. These policies are guidelines only, and the
Investment Adviser may elect to vote differently from the
recommendation set forth in a voting guideline if the Committee
determines that it is in a Fund's best interest to do so. In
addition, the guidelines may be reviewed at any time upon the
request of a Committee member and may be amended or deleted upon the
vote of a majority of Committee members present at a Committee
meeting at which there is a quorum.
The Investment Adviser has adopted specific voting guidelines with
respect to the following proxy issues:
* Proposals related to the composition of the Board of Directors of
issuers other than investment companies. As a general matter, the
Committee believes that a company's Board of Directors (rather than
shareholders) is most likely to have access to important, nonpublic
information regarding a company's business and prospects, and is
therefore best-positioned to set corporate policy and oversee
management. The Committee, therefore, believes that the foundation
of good corporate governance is the election of qualified,
independent corporate directors who are likely to diligently
represent the interests of shareholders and oversee management of
the corporation in a manner that will seek to maximize shareholder
value over time. In individual cases, the Committee may look at a
nominee's history of representing shareholder interests as a
director of other companies or other factors, to the extent the
Committee deems relevant.
* Proposals related to the selection of an issuer's independent
auditors. As a general matter, the Committee believes that
corporate auditors have a responsibility to represent the interests
of shareholders and provide an independent view on the propriety of
financial reporting decisions of corporate management. While the
Committee will generally defer to a corporation's choice of auditor,
in individual cases, the Committee may look at an auditors' history
of representing shareholder interests as auditor of other companies,
to the extent the Committee deems relevant.
* Proposals related to management compensation and employee
benefits. As a general matter, the Committee favors disclosure of
an issuer's compensation and benefit policies and opposes excessive
compensation, but believes that compensation matters are normally
best determined by an issuer's board of directors, rather than
shareholders. Proposals to "micro-manage" an issuer's compensation
practices or to set arbitrary restrictions on compensation or
benefits will, therefore, generally not be supported.
* Proposals related to requests, principally from management, for
approval of amendments that would alter an issuer's capital
structure. As a general matter, the Committee will support requests
that enhance the rights of common shareholders and oppose requests
that appear to be unreasonably dilutive.
* Proposals related to requests for approval of amendments to an
issuer's charter or by-laws. As a general matter, the Committee
opposes poison pill provisions.
* Routine proposals related to requests regarding the formalities of
corporate meetings.
* Proposals related to proxy issues associated solely with holdings
of investment company shares. As with other types of companies, the
Committee believes that a fund's Board of Directors (rather than its
shareholders) is best-positioned to set fund policy and oversee
management. However, the Committee opposes granting Boards of
Directors authority over certain matters, such as changes to a
fund's investment objective, that the Investment Company Act
envisions will be approved directly by shareholders.
* Proposals related to limiting corporate conduct in some manner
that relates to the shareholder's environmental or social concerns.
The Committee generally believes that annual shareholder meetings
are inappropriate forums for discussion of larger social issues, and
opposes shareholder resolutions "micromanaging" corporate conduct or
requesting release of information that would not help a shareholder
evaluate an investment in the corporation as an economic matter.
While the Committee is generally supportive of proposals to require
corporate disclosure of matters that seem relevant and material to
the economic interests of shareholders, the Committee is generally
not supportive of proposals to require disclosure of corporate
matters for other purposes.
Item 8 - Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers - Not Applicable
Item 9 - Submission of Matters to a Vote of Security Holders - Not
Applicable
Item 10 - Controls and Procedures
10(a) - The registrant's certifying officers have reasonably
designed such disclosure controls and procedures to ensure material
information relating to the registrant is made known to us by others
particularly during the period in which this report is being
prepared. The registrant's certifying officers have determined that
the registrant's disclosure controls and procedures are effective
based on our evaluation of these controls and procedures as of a
date within 90 days prior to the filing date of this report.
10(b) - There were no changes in the registrant's internal control
over financial reporting (as defined in Rule 30a-3(d) under the Act
(17 CFR 270.30a-3(d)) that occurred during the second fiscal half-
year of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 11 - Exhibits attached hereto
11(a)(1) - Code of Ethics - See Item 2
11(a)(2) - Certifications - Attached hereto
11(a)(3) - Not Applicable
11(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MuniYield Florida Insured Fund
By: _/s/ Terry K. Glenn_______
Terry K. Glenn,
President of
MuniYield Florida Insured Fund
Date: December 13, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By: _/s/ Terry K. Glenn________
Terry K. Glenn,
President of
MuniYield Florida Insured Fund
Date: December 13, 2004
By: _/s/ Donald C. Burke________
Donald C. Burke,
Chief Financial Officer of
MuniYield Florida Insured Fund
Date: December 13, 2004