UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-08215
Name of Fund: MuniHoldings Fund II, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, MuniHoldings Fund II, Inc., 800 Scudders Mill Road,
Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011, Princeton,
NJ, 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 07/31/06
Date of reporting period: 08/01/05 - 01/31/06
Item 1 - Report to Stockholders
MuniHoldings Fund II, Inc.
MuniHoldings New Jersey Insured Fund, Inc.
Semi-Annual Reports
January 31, 2006
(BULL LOGO) Merrill Lynch Investment Managers
www.mlim.ml.com
Mercury Advisors
A Division of Merrill Lynch Investment Managers
www.mercury.ml.com
These reports, including the financial information herein, are transmitted to
shareholders of MuniHoldings Fund II, Inc. and MuniHoldings New Jersey Insured
Fund, Inc. for their information. This is not a prospectus. Past performance
results shown in these reports should not be considered a representation of
future performance. The Funds have leveraged their Common Stock and intend to
remain leveraged by issuing Preferred Stock to provide the Common Stock
shareholders with a potentially higher rate of return. Leverage creates risks
for Common Stock shareholders, including the likelihood of greater volatility
of net asset value and market price of shares of the Common Stock, and the
risk that fluctuations in the short-term dividend rates of the Preferred Stock
may affect the yield to Common Stock shareholders. Statements and other
information herein are as dated and are subject to change.
A description of the policies and procedures that the Funds use to
determine how to vote proxies relating to portfolio securities is available
(1) without charge, upon request, by calling toll-free 1-800-637-3863; (2) at
www.mutualfunds.ml.com; and (3) on the Securities and Exchange Commission's
Web site at http://www.sec.gov. Information about how the Funds voted proxies
relating to securities held in the Funds' portfolios 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.
MuniHoldings Fund II, Inc.
MuniHoldings New Jersey Insured Fund, Inc.
Box 9011
Princeton, NJ 08543-9011
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MuniHoldings Fund II, Inc.
MuniHoldings New Jersey Insured Fund, Inc.
Announcement to Shareholders
On February 15, 2006, BlackRock, Inc. ("BlackRock") and Merrill Lynch & Co.,
Inc. ("Merrill Lynch") entered into an agreement to merge Merrill Lynch's
investment management business, Merrill Lynch Investment Managers, L.P. and
certain affiliates (including Fund Asset Management, L.P. and Merrill Lynch
Investment Managers International Limited), and BlackRock to create a new
independent company that will be one of the world's largest asset management
firms with nearly $1 trillion in assets under management (based on combined
assets under management as of December 31, 2005). The transaction is expected
to close in the third quarter of 2006, at which time the new company will
operate under the BlackRock name. As a result of the above transaction, the
combined company is expected to become the investment adviser of the Funds,
contingent upon the approval of the Funds' Board of Directors and Fund
shareholders.
Quality Profiles as of January 31, 2006
Percent of
MuniHoldings Fund II, Inc. Total
By S&P/Moody's Rating Investments
AAA/Aaa 31.8%
AA/Aa 7.7
A/A 14.8
BBB/Baa 19.8
BB/Ba 4.1
B/B 2.2
CCC/Caa 1.7
NR 16.2
Other* 1.7
* Includes portfolio holdings in short-term investments and
variable rate demand notes.
MuniHoldings New Jersey Percent of
Insured Fund, Inc. Total
By S&P/Moody's Rating Investments
AAA/Aaa 86.7%
AA/Aa 3.2
A/A 3.8
BBB/Baa 5.4
Other* 0.9
* Includes portfolio holdings in short-term investments.
SEMI-ANNUAL REPORTS JANUARY 31, 2006
A Letter From the President
Dear Shareholder
After "muddling through" most of 2005, the financial markets saw increased
volatility in January that resulted in a roller coaster of highs and lows for
stocks and a similar ride for bonds. In the end, the major market indexes
managed to post positive returns for the current reporting period:
Total Returns as of January 31, 2006 6-month 12-month
U.S. equities (Standard & Poor's 500 Index) + 4.68% +10.38%
Small cap U.S. equities (Russell 2000 Index) + 8.50 +18.89
International equities (MSCI Europe, Australasia, Far East Index) +18.31 +22.76
Fixed income (Lehman Brothers Aggregate Bond Index) + 0.84 + 1.80
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 1.33 + 2.83
High yield bonds (Credit Suisse High Yield Index) + 1.40 + 3.59
The Federal Reserve Board (the Fed) advanced its monetary tightening campaign
with eight quarter-point interest rate hikes in 2005 and another on January
31, 2006. This brought the federal funds rate to 4.5%. Notably, Ben Bernanke
replaced Alan Greenspan as Fed chairman in January, a month after the central
bank removed the critical word "measured" from the description of its interest
rate-hiking program. Still, most observers expect another rate increase in
March.
Stocks recorded their third straight year of positive performance in 2005
despite struggling amid rising interest rates, record-high oil prices and a
devastating hurricane season. U.S. equities found support in strong corporate
earnings, low core inflation and healthy company balance sheets. Strength in
the global economy and non-U.S. equity markets helped, as did robust dividend-
distribution, share-buyback and merger-and-acquisition activity. International
markets, in the meantime, continued to benefit from strong economic
statistics, trade surpluses and solid finances.
In the U.S. bond market, short-term interest rates continued to move higher as
longer-term rates advanced more moderately, resulting in a flattening yield
curve. We saw the curve invert temporarily at the end of December and again at
the end of January into early February, with the two-year Treasury note
offering a slightly higher yield than the 10-year note.
Looking ahead, the largest questions center on the Fed's future moves,
the consumer's ability (or inability) to continue spending, the direction
of the U.S. dollar following a year of appreciation and the potential for
continued strong economic and corporate earnings growth. As you consider
how these factors might impact your investments in 2006, we encourage you
to review your goals with your financial advisor and to make portfolio
changes, as needed. For additional insight and timely "food for thought"
for investors, we also invite you to visit Shareholder magazine at
www.mlim.ml.com/shareholdermagazine. As always, we thank you for
trusting Merrill Lynch Investment Managers with your investment assets,
and we look forward to continuing to serve your investment needs.
Sincerely,
(Robert C. Doll, Jr.)
Robert C. Doll, Jr.
President and Director
SEMI-ANNUAL REPORTS JANUARY 31, 2006
A Discussion With Your Funds' Portfolio Managers
We continued to position the Funds for a flattening municipal yield curve,
which generally benefited performance as longer-term bonds continued to
outperform shorter maturities.
Describe the recent market environment relative to municipal bonds.
During the six-month period, long-term bond yields generally rose as their
prices, which move in the opposite direction, fell. The decline in bond prices
came as commodity prices, especially oil and gold, remained elevated and
investors continued to focus on potential inflationary pressures. Recently, a
rise in national average hourly wage levels has led some economic analysts to
suggest that declines in the U.S. employment rate may result in escalating
wage inflation. These concerns, coupled with moderate economic activity
throughout the six-month period, helped push bond yields higher. At the end of
January, 30-year U.S. Treasury bond yields stood at 4.68% - 21 basis points
higher than six months ago.
The Federal Reserve Board (the Fed) continued to raise short-term interest
rates at each of its meetings during the period, lifting the federal funds
target rate to 4.5% on January 31. Given no indications that the monetary
tightening cycle would be curtailed in early 2006, the yield curve continued
to flatten, with short-term interest rates rising more than longer-term
interest rates. Over the past six months, 10-year U.S. Treasury note yields
rose 25 basis points (.25%) to 4.53% and two-year Treasury yields rose 52
basis points to 4.54%.
Tax-exempt bond yields generally mirrored the movement of their taxable
counterparts throughout most of the six-month period. According to Municipal
Market Data, the yield on AAA-rated issues maturing in 30 years increased 10
basis points to 4.45%, while the yield on AAA-rated issues maturing in 10
years rose 12 basis points to 3.78%. Notably, however, the municipal yield
curve remained steep compared to the Treasury curve.
Over the past six months, $181 billion in new long-term municipal bonds was
underwritten, an 8.8% increase compared to the same period a year ago.
Refunding issues were a prominent component of municipal volume in 2005 as
issuers took advantage of low bond yields and a flattening yield curve to
refinance their outstanding higher-couponed debt. In 2005, refunding activity
of $130.3 billion exceeded 2004 refunding volume by more than 47%. However,
January 2006 brought a dramatic reversal in this trend, with refunding
activity declining to approximately $3.5 billion, down more than 50% from
January 2005. It remains to be seen if this is the beginning of a sustained
decline in re-funding issuance. This is important, as analyst estimates for
new-issue supply in 2006, currently in the $340 billion - $370 billion range,
factor in only modest declines in refunding activity. Should January's trend
continue, new-issue supply in the coming months could be significantly lower.
Investor demand for municipal product remained strong in recent quarters.
According to information from the Investment Company Institute, long-term
tax-exempt bond funds received $5.04 billion in net new monies during 2005.
This represented a sharp reversal from the $13.67 billion outflow experienced
in 2004. Net new cash flows remained strong in the first month of 2006.
Recent statistics from AMG Data Services indicate that average weekly cash
inflows have risen to approximately $300 million, a significant improvement
from the weekly average of $65 million in December.
Looking ahead, the fundamentals for the tax-exempt bond market appear
favorable, and continued positive cash flows are anticipated. Given their
attractive yields relative to comparable U.S. Treasury bonds, and the
prospects for reduced annual issuance in 2006, we believe municipal bonds
could enjoy solid results in the coming months.
MuniHoldings Fund II, Inc.
How did the Fund perform during the period?
For the six-month period ended January 31, 2006, the Common Stock of
MuniHoldings Fund II, Inc. had net annualized yields of 6.31% and 6.33%, based
on a period-end per share net asset value of $14.84 and a per share market
price of $14.80, respectively, and $.472 per share income dividends. Over the
same period, the total investment return on the Fund's Common Stock was
+2.02%, based on a change in per share net asset value from $15.03 to $14.84,
and assuming reinvestment of all distributions.
The Fund's total return, based on net asset value, exceeded the +1.60% average
return of the Lipper General Municipal Debt Funds (Leveraged) category for the
six-month period. (Funds in this Lipper category invest primarily in municipal
debt issues rated in the top four credit-rating categories. These funds can be
leveraged via use of debt, preferred equity and/or reverse repurchase
agreements.)
SEMI-ANNUAL REPORTS JANUARY 31, 2006
The Fund's outperformance can be attributed to a modestly overweighted
exposure to spread product - lower-quality, higher-yielding municipal bonds,
which benefited as credit spreads narrowed during the period. The high yield
municipal market continued to perform well on the back of strong demand, as
investors, looking for better yields in a low interest rate environment,
poured cash into high yield mutual funds. The Fund benefited particularly from
issues in the special tax (land secured), senior living and toll road sectors,
all of which saw gains in an otherwise down market. The Fund also benefited
from price appreciation of its holdings issued by Mississippi's Systems Energy
Resources Inc., a subsidiary of Entergy Corporation, which was downgraded
after Hurricane Katrina struck the U.S. Gulf Coast region. Ironically, the
credit downgrade caused our bonds to appreciate because it made it less
probable that the securities' call feature would be exercised. Of final note,
the Fund's underweight stance in airline bonds was a positive. We had no
exposure to either Delta Airlines Inc. or Northwest Airlines, both of which
declared bankruptcy during the period, in part because of the impact of higher
fuel costs.
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 Stock (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 Stock may vary significantly from total investment returns
based on changes in the Fund's net asset value.
What changes were made to the portfolio during the period?
Portfolio activity concentrated on uncovering attractive relative value in the
municipal marketplace. Given the prospect of continued yield curve flattening,
we reduced our exposure to bonds with maturities of 10 years - 18 years while
adding to our holdings in bonds longer than 25 years. We also maintained our
strategy of purchasing bonds of issuers we believed were more likely to
defease their existing debt to help close their budget gaps. When bonds are
defeased, it typically means that the securities are retired at their first
call date, enabling the bonds to appreciate significantly. The State of
California and Commonwealth of Massachusetts are two issuers that have been
aggressive in implementing this strategy. Purchases during the period also
included higher coupon bonds with shorter call dates, which we believed
offered attractive relative yields and the potential for future
outperformance.
For the six months ended January 31, 2006, the average yield for the Fund's
Auction Market Preferred Stock (AMPS) was 2.69% for Series A and 2.66% for
Series B. At this point in the Fed's monetary tightening cycle, interest rate
increases are having an impact on the Fund's borrowing costs. The Fed raised
the short-term interest rate target 125 basis points during the six-month
period. Nevertheless, we were still able to borrow at a lower rate than where
we invest, and this has continued to generate an income benefit to the holders
of Common Stock. Of course, should the spread between short-term and long-term
interest rates narrow, the benefits of leveraging will decline and, as a
result, reduce the yield on the Fund's Common Stock. At the end of the period,
the Fund's leverage amount, due to AMPS, was 34.42% of total net assets,
before the deduction of Preferred Stock. (For a more complete explanation of
the benefits and risks of leveraging, see page 2 of this report to
shareholders.)
How would you characterize the Fund's position at the close of the period?
Relative to the broader municipal market, we maintained a neutral level of
interest rate risk but are positioned for the continued flattening of the
yield curve. Having reduced some of our more volatile corporate-backed bonds,
the Fund has a more neutral exposure to high yield spread product. With higher
interest rates and our outlook for slower economic activity, however, we will
be on the lookout for opportunities to slightly increase the Fund's duration.
SEMI-ANNUAL REPORTS JANUARY 31, 2006
A Discussion With Your Funds' Portfolio Managers (concluded)
MuniHoldings New Jersey Insured Fund, Inc.
Describe conditions in the State of New Jersey.
Issuance of long-term municipal bonds in New Jersey totaled approximately
$3.9 billion in the fourth quarter of 2005, a 2.8% decline compared to the
fourth quarter of 2004. For all of 2005, New Jersey municipal volume rose 7.1%
to just over $16 billion on a year-over-year basis, trailing the 13.8%
increase realized in the national municipal market.
New Jersey's economy continued to show signs of recovery, as revenues through
the first half of fiscal year 2006 (that is, the six months ended December 31,
2005), were reported to be favorable to budget. However, the fiscal year 2007
budget, at $28 billion, projects a shortfall of $5 billion - $6 billion. New
Jersey's financial challenges include the adequate funding of the public
pension system, replenishment of the Transportation Trust Fund and compliance
with court-mandated school construction spending. The pension system requires
a minimum $1 billion next year, and a state advisory panel has recommended an
infusion of $12 billion to fix that system. In the meantime, former Governor
Codey's Benefits Review Task Force released its report in December outlining
recommendations for reductions in pension and healthcare costs.
On the political front, New Jersey's November elections resulted in Democrats
retaining control over both the state Senate and Assembly. The Democrats'
gubernatorial candidate, Senator Jon Corzine, also claimed victory as the
state's 54th governor.
How did the Fund perform during the period?
For the six-month period ended January 31, 2006, the Common Stock of
MuniHoldings New Jersey Insured Fund, Inc. had net annualized yields of 5.91%
and 5.81%, based on a period-end per share net asset value of $15.24 and a per
share market price of $15.49, respectively, and $.454 per share income
dividends. Over the same period, the total investment return on the Fund's
Common Stock was +.56%, based on a change in per share net asset value from
$15.62 to $15.24, and assuming reinvestment of all distributions.
The Fund's total return, based on net asset value, trailed the +1.23% average
return of the Lipper New Jersey Municipal Debt Funds category for the six-
month period. (Funds in this Lipper category limit their investment to those
securities exempt from taxation in New Jersey or a city in New Jersey. The
Fund was disadvantaged relative to many of its Lipper peers by its
conservative investment parameters. Specifically, the Fund is limited in its
ability to invest in lower-quality issues, which continued to outperform as
credit spreads (versus higher-quality issues of comparable maturity) tightened
dramatically. Per its investment parameters, 86.7% of the portfolio is
invested in AAA-rated, insured bonds.
The key driver of performance during the period was our yield curve
positioning - specifically, our focus on longer-term bonds, which outperformed
shorter-term issues as the yield curve flattened. This did help performance
somewhat, although not enough to compensate for the larger dynamic in the
municipal market - that being the outperformance of lower-quality issues.
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 Stock (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 Stock may vary significantly from total investment returns
based on changes in the Fund's net asset value.
What changes were made to the portfolio during the period?
We saw an unprecedented increase in refinancing activity in 2005, prompted by
the low interest rate environment as well as a dramatic flattening of the
taxable yield curve, which makes the economics of refinancing that much more
appealing for municipal issuers. Thus, a number of the portfolio's more
seasoned issues were advance refunded, prompting our efforts to reallocate the
proceeds. In doing so, we were committed to maintaining a balance between the
income generated by our more seasoned, higher-couponed holdings and the total
return we were trying to achieve with our new investments.
SEMI-ANNUAL REPORTS JANUARY 31, 2006
In our restructuring efforts, we continued to position the Fund for a
flattening yield curve. For most of the period, this involved moving our
exposure further out toward the 20-year - 30-year maturity range. New
purchases in this area of the curve were funded through the sale of some of
those recently prerefunded holdings that had appreciated significantly in
value. When a security is advance refunded, it tends to exhibit risk
characteristics more reflective of a 5-year - 10-year bond, which is not
necessarily our preferred maturity range given the flattening trend. So, we
generally took opportunities to sell those bonds, particularly those with
lower relative yields, and reallocated the proceeds further out.
Toward the end of the period, given the degree of flattening that had been
realized in the municipal yield curve, we began to focus our investments more
in 15-year - 17-year maturity range. We found that we could capture 90% - 93%
of the yield available on the longest bonds (25 years - 30 years) without the
additional risk of extending that far. So, this is really a continuation of
our earlier flattening strategy, with purchases in the 15-year - 17-year range
and still with some concentration in prerefunded bonds for their higher
acquisition yields.
For the six-month period ended January 31, 2006, the Fund's Auction Market
Preferred Stock (AMPS) had average yields as follows: Series A, 2.40%; Series
B, 2.48%; Series C, 2.52%; Series D, 2.43%; and Series E, 2.30%. At this point
in the Fed's monetary tightening cycle, interest rate increases are having an
impact on the Fund's borrowing costs. The Fed raised the short-term interest
rate target 125 basis points during the six-month period. Nevertheless, we
were still able to borrow at a lower rate than where we invest, and this has
continued to generate an income benefit to the holders of Common Stock. Of
course, should the spread between short-term and long-term interest rates
narrow, the benefits of leveraging will decline and, as a result, reduce the
yield on the Fund's Common Stock. At the end of the period, the Fund's
leverage amount, due to AMPS, was 38.66% of total net assets, before the
deduction of Preferred Stock. (For a more complete explanation of the benefits
and risks of leveraging, see page 2 of this report to shareholders.)
How would you characterize the Fund's position at the close of the period?
The municipal bond market had rallied toward period-end. In light of that, we
chose to take a more conservative market posture, including a duration
somewhat shorter than that of our Lipper peers. We believe investors are
struggling to interpret the significance of changes in statements released by
the Fed as well as the uncertainty that accompanies the appointment of a new
Fed chairman. We expect, and the Fed has indicated, that monetary policy will
become increasingly "data dependent" now that the federal funds rate, at 4.5%,
is generally perceived to be in the "neutral" range. Under these circumstances,
we expect to maintain a duration fairly close to that of the Lipper average
(biased toward the short side), at least until rates rise to more attractive
levels.
Looking ahead, with the federal funds rate presently in the neutral range,
it appears we are fairly close to an inflection point, which could result
in a resteepening of the yield curve. To the extent that we do reach that
inflection point, we would likely reconsider our long-standing yield curve
flattening strategy, looking for opportunities to reduce some of the longer-
dated holdings that have outperformed and perhaps positioning the portfolio
for more of a steepening environment.
Robert A. DiMella, CFA
Vice President and Portfolio Manager
MuniHoldings Fund II, Inc.
Theodore R. Jaeckel Jr., CFA
Vice President and Portfolio Manager
MuniHoldings New Jersey Insured Fund, Inc.
February 28, 2006
SEMI-ANNUAL REPORTS JANUARY 31, 2006
The Benefits and Risks of Leveraging
The Funds utilize leveraging to seek to enhance the yield and net asset value
of their Common Stock. However, these objectives cannot be achieved in all
interest rate environments. To leverage, each Fund issues Preferred Stock,
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 Stock, is paid to Common Stock
shareholders in the form of dividends, and the value of these portfolio
holdings is reflected in the per share net asset value of each Fund's Common
Stock. However, in order to benefit Common Stock 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 Stock 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 Stock capitalization of
$100 million and the issuance of Preferred Stock 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 Stock 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 Stock.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term
investments, and therefore the Common Stock 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 Stock will be reduced or eliminated
completely. At the same time, the market value of the fund's Common Stock
(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
Stock'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 Stock does
not fluctuate. In addition to the decline in net asset value, the market value
of the fund's Common Stock may also decline.
As a part of its investment strategy, the Funds 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 Funds 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 Funds invest in inverse floaters, the market value of each
Fund's portfolio and the net asset value of each Fund's shares may also be
more volatile than if the Funds did not invest in these securities. As of
January 31, 2006, the percentages of MuniHoldings Fund II, Inc. and
MuniHoldings New Jersey Insured Fund, Inc.'s total net assets invested in
inverse floaters were 4.85% and 5.53%, respectively, before the deduction of
Preferred Stock.
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Schedule of Investments MuniHoldings Fund II, Inc.
(in Thousands)
Face
Amount Municipal Bonds Value
Alabama--2.2%
$ 3,450 Jefferson County, Alabama, Limited Obligation
School Warrants, Series A, 5% due 1/01/2024 $ 3,559
Arizona--5.3%
1,000 Arizona Health Facilities Authority Revenue Bonds
(Catholic Healthcare West), Series A, 6.625%
due 7/01/2020 1,112
1,500 Maricopa County, Arizona, IDA, Education Revenue
Bonds (Arizona Charter Schools Project 1),
Series A, 6.50% due 7/01/2012 1,525
2,800 Phoenix, Arizona, IDA, Airport Facility, Revenue
Refunding Bonds (America West Airlines Inc.
Project), AMT, 6.30% due 4/01/2023 2,274
1,000 Pima County, Arizona, IDA, Education Revenue
Bonds (Arizona Charter Schools Project), Series C,
6.75% due 7/01/2031 1,047
1,700 Pinal County, Arizona, COP, 5% due 12/01/2029 1,730
1,095 Show Low, Arizona, Improvement District No. 5,
Special Assessment Bonds, 6.375% due 1/01/2015 1,131
Arkansas--0.6%
1,000 University of Arkansas, University Construction
Revenue Bonds (UAMS Campus), Series B, 5%
due 11/01/2022 (d) 1,054
California--22.3%
2,000 Benicia, California, Unified School District, GO,
Refunding, Series A, 5.615%** due 8/01/2020 (b) 1,053
2,565 California Pollution Control Financing Authority, PCR,
Refunding, DRIVERS, AMT, Series 878Z, 7.345%
due 12/01/2009 (d)(e) 2,909
5,200 California State Public Works Board, Lease Revenue
Bonds (Department of Corrections), Series C,
5.25% due 6/01/2028 5,455
1,000 East Side Union High School District, California,
Santa Clara County, GO (Election of 2002),
Series D, 5% due 8/01/2020 (i) 1,065
Golden State Tobacco Securitization Corporation of
California, Tobacco Settlement Revenue Bonds:
870 Series A-3, 7.875% due 6/01/2042 1,046
1,330 Series B, 5.625% due 6/01/2013 (h) 1,488
6,030 Los Angeles, California, Unified School District, GO,
Series A, 5% due 1/01/2028 (d) 6,293
1,750 Poway, California, Unified School District, Special Tax
(Community Facilities District No. 6 Area),
Series A, 6.125% due 9/01/2033 1,819
San Marino, California, Unified School District, GO,
Series A (d):
1,820 5.50%** due 7/01/2017 1,116
1,945 5.55%** due 7/01/2018 1,136
2,070 5.60%** due 7/01/2019 1,153
Face
Amount Municipal Bonds Value
California (concluded)
$ 5,525 Sequoia, California, Unified High School District, GO,
Refunding, Series B, 5.50% due 7/01/2035 (c) $ 6,116
5,000 Tracy, California, Area Public Facilities Financing
Agency, Special Tax Refunding Bonds (Community
Facilities District No. 87-1), Series H, 5.875%
due 10/01/2019 (d) 5,235
2,440 William S. Hart Union High School District, California,
Capital Appreciation, GO (Election of 2001),
Series B, 4.70%** due 9/01/2023 (c) 1,088
Colorado--1.7%
1,845 Elk Valley, Colorado, Public Improvement Revenue
Bonds (Public Improvement Fee), Series A, 7.10%
due 9/01/2014 1,974
860 Plaza Metropolitan District No. 1, Colorado, Tax
Allocation Revenue Bonds (Public Improvement
Fees), 8.125% due 12/01/2025 856
Connecticut--0.9%
1,715 Bridgeport, Connecticut, Senior Living Facilities Revenue
Bonds (3030 Park Retirement Community Project), 7.25%
due 4/01/2035 1,452
Florida--7.9%
1,665 Ballantrae, Florida, Community Development District,
Capital Improvement Revenue Bonds, 6%
due 5/01/2035 1,727
1,000 Broward County, Florida, Airport Exempt Facility
Revenue Bonds (Learjet Inc. Project), AMT, 7.50%
due 11/01/2020 1,134
1,765 Miami-Dade County, Florida, Subordinate Special
Obligation Revenue Bonds, Series A, 5.24%**
due 10/01/2037 (d) 347
2,450 Midtown Miami, Florida, Community Development
District, Special Assessment Revenue Bonds,
Series A, 6.25% due 5/01/2037 2,595
2,400 Orange County, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Orlando Regional
Healthcare), 6% due 12/01/2012 (h) 2,726
1,515 Orlando, Florida, Greater Orlando Aviation Authority,
Airport Facilities Revenue Bonds (JetBlue Airways
Corp.), AMT, 6.50% due 11/15/2036 1,516
1,275 Preserve at Wilderness Lake, Florida, Community
Development District, Capital Improvement Bonds,
Series A, 5.90% due 5/01/2034 1,306
1,700 West Villages Improvement District, Florida, Special
Assessment Revenue Refunding Bonds (Unit of
Development No. 2), 5.80% due 5/01/2036 1,732
Portfolio Abbreviations
To simplify the listings of 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
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
S/F Single Family
VRDN Variable Rate Demand Notes
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Schedule of Investments (continued) MuniHoldings Fund II, Inc.
(in Thousands)
Face
Amount Municipal Bonds Value
Georgia--5.2%
$ 1,250 Atlanta, Georgia, Tax Allocation Bonds (Atlantic
Station Project), 7.90% due 12/01/2024 $ 1,352
2,500 Atlanta, Georgia, Water and Wastewater Revenue
Bonds, VRDN, Series C, 3.05% due 11/01/2041 (c)(j) 2,500
1,535 Brunswick & Glynn County, Georgia, Development
Authority, First Mortgage Revenue Bonds (Coastal
Community Retirement Corporation Project),
Series A, 7.25% due 1/01/2035 1,556
1,945 Fulton County, Georgia, Development Authority, PCR
(General Motors Corporation), Refunding, VRDN,
8% due 4/01/2010 (j) 1,945
1,250 Milledgeville-Baldwin County, Georgia, Development
Authority Revenue Bonds (Georgia College and
State University Foundation), 5.50% due 9/01/2024 1,323
Idaho--1.3%
2,000 Power County, Idaho, Industrial Development
Corporation, Solid Waste Disposal Revenue Bonds
(FMC Corporation Project), AMT, 6.45%
due 8/01/2032 2,097
Illinois--2.8%
1,000 Chicago, Illinois, O'Hare International Airport, Special
Facility Revenue Refunding Bonds (American
Airlines Inc. Project), 8.20% due 12/01/2024 967
1,000 Chicago, Illinois, Special Assessment Bonds (Lake
Shore East), 6.75% due 12/01/2032 1,082
2,000 Illinois HDA, Homeowner Mortgage Revenue Bonds,
AMT, Sub-Series C-2, 5.25% due 8/01/2022 2,058
500 Illinois State Finance Authority Revenue Bonds
(Landing At Plymouth Place Project), Series A,
6% due 5/15/2025 508
Louisiana--2.4%
2,500 Louisiana Public Facilities Authority, Hospital Revenue
Bonds (Franciscan Missionaries of Our Lady Health
System, Inc.), Series A, 5.25% due 8/15/2036 2,558
1,275 New Orleans, Louisiana, Financing Authority Revenue
Bonds (Xavier University of Louisiana Project),
5.30% due 6/01/2026 (d) 1,339
Maine--2.2%
3,455 Maine State Housing Authority, Mortgage Purchase
Revenue Refunding Bonds, Series B, 5.30%
due 11/15/2023 3,599
Maryland--5.3%
Baltimore, Maryland, Convention Center Hotel
Revenue Bonds:
5,410 Senior Series A, 5.25% due 9/01/2039 (i) 5,781
480 Sub-Series B, 5.875% due 9/01/2039 499
1,250 Maryland State Economic Development Corporation,
Student Housing Revenue Bonds (University of
Maryland College Park Project), 6.50%
due 6/01/2027 1,383
1,050 Maryland State Energy Financing Administration,
Limited Obligation Revenue Bonds (Cogeneration-
AES Warrior Run), AMT, 7.40% due 9/01/2019 1,064
Face
Amount Municipal Bonds Value
Massachusetts--4.6%
$ 1,000 Massachusetts Bay Transportation Authority, Special
Assessment Revenue Bonds, Series A, 5%
due 7/01/2034 $ 1,038
Massachusetts State Development Finance Agency
Revenue Bonds (Neville Communities Home),
Series A (f):
600 5.75% due 6/20/2022 667
1,500 6% due 6/20/2044 1,671
1,000 Massachusetts State, HFA, Housing Revenue Bonds
(Rental Mortgage), AMT, Series C, 5.625%
due 7/01/2040 (a) 1,025
3,115 Massachusetts State School Building Authority,
Dedicated Sales Tax Revenue Bonds, Series A,
5% due 8/15/2030 (c) 3,259
Michigan--2.4%
1,100 Flint, Michigan, Hospital Building Authority Revenue
Refunding Bonds (Hurley Medical Center), Series A,
6% due 7/01/2020 (k) 1,199
2,500 Michigan State Strategic Fund, Limited Obligation
Revenue Refunding Bonds, DRIVERS, AMT,
Series 857Z, 7.924% due 3/01/2010 (e)(i) 2,778
Minnesota--7.2%
1,680 Minneapolis, Minnesota, Community Development
Agency, Supported Development Revenue
Refunding Bonds (Common Bond), Series G-3,
5.35% due 12/01/2011 (h) 1,830
4,220 Minnesota State Municipal Power Agency, Electric
Revenue Bonds, 5.25% due 10/01/2021 4,513
Rockford, Minnesota, Independent School District
No. 883, GO (c):
2,870 5.60% due 2/01/2019 3,074
2,390 5.60% due 2/01/2020 2,560
Mississippi--1.5%
Mississippi Business Finance Corporation, Mississippi,
PCR, Refunding (System Energy Resources Inc.
Project):
2,000 5.875% due 4/01/2022 2,029
500 5.90% due 5/01/2022 508
Missouri--2.0%
Fenton, Missouri, Tax Increment Revenue Refunding
and Improvement Bonds (Gravois Bluffs):
215 6.75% due 10/01/2015 216
1,000 7% due 10/01/2021 1,069
1,000 Kansas City, Missouri, IDA, First Mortgage Health
Facilities Revenue Bonds (Bishop Spencer Place),
Series A, 6.50% due 1/01/2035 1,048
1,000 Missouri State Development Finance Board,
Infrastructure Facilities Revenue Refunding Bonds
(Branson), Series A, 5.50% due 12/01/2032 1,037
New Jersey--11.3%
New Jersey EDA, Cigarette Tax Revenue Bonds:
4,050 5.75% due 6/15/2029 4,272
1,890 5.50% due 6/15/2031 1,954
New Jersey EDA, Retirement Community Revenue
Bonds:
1,000 (Cedar Crest Village Inc. Facility), Series A, 7.25%
due 11/15/2031 1,083
2,000 (Seabrook Village Inc.), Series A, 8.125%
due 11/15/2023 2,262
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Schedule of Investments (continued) MuniHoldings Fund II, Inc.
(in Thousands)
Face
Amount Municipal Bonds Value
New Jersey (concluded)
$ 2,000 New Jersey EDA, Special Facility Revenue Bonds
(Continental Airlines Inc. Project), AMT, 6.625%
due 9/15/2012 $ 1,978
2,375 New Jersey Health Care Facilities Financing Authority
Revenue Bonds (South Jersey Hospital), 6%
due 7/01/2026 2,536
2,500 New Jersey State Turnpike Authority, Turnpike
Revenue Bonds, Series C, 5% due 1/01/2030 (c) 2,604
1,725 Tobacco Settlement Financing Corporation of New
Jersey, Asset-Backed Revenue Bonds, 7%
due 6/01/2041 1,970
New Mexico--2.2%
3,675 Farmington, New Mexico, PCR, Refunding (Public
Service Company-San Juan Project), Series A,
5.80% due 4/01/2022 3,728
New York--11.2%
1,000 Dutchess County, New York, IDA, Civic Facility
Revenue Refunding Bonds (Saint Francis Hospital),
Series A, 7.50% due 3/01/2029 1,091
415 New York City, New York, City IDA, Civic Facility
Revenue Bonds, Series C, 6.80% due 6/01/2028 447
4,500 New York City, New York, City Municipal Financing
Authority, Water and Sewer Systems Revenue Bonds,
Series B, 5% due 6/15/2036 4,669
New York City, New York, Sales Tax Asset Receivable
Corporation Revenue Bonds (a):
1,600 DRIVERS, Series 1133Z, 7.166%
due 10/15/2012 (e) 1,845
1,500 Series A, 5% due 10/15/2029 1,570
2,030 New York State Dormitory Authority Revenue Bonds
(School Districts Financing Program), Series D,
5.25% due 10/01/2023 (d) 2,188
40 Suffolk County, New York, IDA, Civic Facility Revenue
Bonds (Special Needs Facilities Pooled Program),
Series D-1, 5.50% due 7/01/2007 40
Tobacco Settlement Financing Corporation of New
York Revenue Bonds:
1,100 Series A-1, 5.50% due 6/01/2015 1,179
2,400 Series A-1, 5.50% due 6/01/2018 2,615
1,100 Series C-1, 5.50% due 6/01/2022 1,203
1,575 Westchester County, New York, IDA, Continuing Care
Retirement, Mortgage Revenue Bonds (Kendal on
Hudson Project), Series A, 6.50% due 1/01/2034 1,679
North Carolina--2.5%
805 Gaston County, North Carolina, Industrial Facilities
and Pollution Control Financing Authority, Revenue
Bonds (National Gypsum Company Project), AMT,
5.75% due 8/01/2035 843
2,000 North Carolina Eastern Municipal Power Agency,
Power System Revenue Bonds, Series D, 6.75%
due 1/01/2026 2,197
1,000 North Carolina Medical Care Commission, Health
Care Housing Revenue Bonds (The ARC of North
Carolina Projects), Series A, 5.80% due 10/01/2034 1,029
Face
Amount Municipal Bonds Value
Oklahoma--1.8%
$ 860 Norman, Oklahoma, Regional Hospital Authority,
Hospital Revenue Bonds, 5.375% due 9/01/2029 $ 864
1,120 Oklahoma State Housing Finance Agency, S/F
Mortgage Revenue Bonds (Homeownership
Loan Program), Series D-2, AMT, 6.25% due
9/01/2029 (f)(g) 1,122
1,075 Tulsa, Oklahoma, Municipal Airport Trust Revenue
Refunding Bonds (AMR Corporation), AMT,
Series A, 5.375% due 12/01/2035 1,062
Pennsylvania--6.0%
1,230 Bucks County, Pennsylvania, IDA, Retirement
Community Revenue Bonds (Ann's Choice Inc.),
Series A, 5.90% due 1/01/2027 1,241
2,090 Lehigh County, Pennsylvania, IDA, PCR, Refunding
(Pennsylvania Power and Light Utilities Corporation
Project), 4.75% due 2/15/2027 (b) 2,121
2,750 Pennsylvania Economic Development Financing
Authority, Exempt Facilities Revenue Bonds
(National Gypsum Company), AMT, Series A, 6.25%
due 11/01/2027 2,931
540 Philadelphia, Pennsylvania, Authority for IDR,
Commercial Development, 7.75% due 12/01/2017 546
2,630 Sayre, Pennsylvania, Health Care Facilities Authority,
Revenue Bonds (Guthrie Healthcare System),
Series B, 7.125% due 12/01/2031 3,112
Rhode Island--1.4%
2,190 Rhode Island State Health and Educational Building
Corporation, Hospital Financing Revenue Bonds
(Lifespan Obligation Group), 6.50% due 8/15/2032 2,402
South Carolina--3.3%
2,080 Medical University Hospital Authority, South Carolina,
Hospital Facilities Revenue Refunding Bonds,
Series A, 6.375% due 8/15/2012 (h) 2,410
2,000 South Carolina Jobs, EDA, Economic Development
Revenue Bonds (Westminster Presbyterian Center),
7.75% due 11/15/2010 (h) 2,363
650 South Carolina Jobs, EDA, Economic Development
Revenue Refunding Bonds (Westminster
Presbyterian Center), 5.375% due 11/15/2030 642
Tennessee--3.8%
2,200 Hardeman County, Tennessee, Correctional Facilities
Corporation Revenue Bonds, Series B, 7.375%
due 8/01/2017 2,258
3,450 Shelby County, Tennessee, Health, Educational and
Housing Facility Board, Hospital Revenue Refunding
Bonds (Methodist Healthcare) 6.50% due 9/01/2012 (h) 4,026
Texas--11.9%
2,665 Austin, Texas, Convention Center Revenue Bonds
(Convention Enterprises Inc.), First Tier, Series A,
6.70% due 1/01/2028 2,846
1,000 Brazos River Authority, Texas, PCR, Refunding (TXU
Energy Company LLC Project), Series B, 4.75%
due 5/01/2029 1,009
2,500 Brazos River, Texas, Harbor Navigation District,
Brazoria County Environmental Revenue Refunding
Bonds (Dow Chemical Company Project), AMT,
Series A-7, 6.625% due 5/15/2033 2,770
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Schedule of Investments (concluded) MuniHoldings Fund II, Inc.
(in Thousands)
Face
Amount Municipal Bonds Value
Texas (concluded)
Harris County, Texas, Revenue Refunding Bonds,
DRIVERS (c)(e):
$ 2,610 Series 1111, 7.155% due 8/15/2009 $ 2,820
1,755 Series 1172-Z, 8% due 8/15/2009 1,890
1,300 Houston, Texas, Health Facilities Development
Corporation, Retirement Facility Revenue Bonds
(Buckingham Senior Living Community), Series A,
7.125% due 2/15/2034 1,425
2,965 Matagorda County, Texas, Navigation District
No. 1, Revenue Refunding Bonds (Reliant
Energy Inc.), Series C, 8% due 5/01/2029 3,212
1,100 Port Corpus Christi, Texas, Individual Development
Corporation, Environmental Facilities Revenue
Bonds (Citgo Petroleum Corporation Project), AMT,
8.25% due 11/01/2031 1,159
2,495 Red River Authority, Texas, PCR, Refunding (Celanese
Project), Series A, 6.45% due 11/01/2030 2,660
Vermont--0.6%
1,000 Vermont Educational and Health Buildings Financing
Agency Revenue Bonds (Developmental and Mental
Health), Series A, 6.50% due 6/15/2032 1,048
Virginia--15.3%
575 Chesterfield County, Virginia, IDA, PCR, Refunding
(Virginia Electric and Power Company), Series B,
5.875% due 6/01/2017 627
425 Chesterfield County, Virginia, IDA, PCR (Virginia
Electric and Power Company), Series A, 5.875%
due 6/01/2017 463
5,000 Fairfax County, Virginia, EDA, Resource Recovery
Revenue Refunding Bonds, AMT, Series A, 6.10%
due 2/01/2011 (a) 5,489
Pocahontas Parkway Association, Virginia, Toll Road
Revenue Bonds:
3,885 Senior Series A, 5.50% due 8/15/2028 3,996
18,400 Senior Series B, 7.35%** due 8/15/2030 4,514
2,185 Tobacco Settlement Financing Corporation of
Virginia, Asset-Backed Revenue Bonds, 5.625%
due 6/01/2037 2,221
3,465 Virginia State, GO, Series A, 4.50% due 6/01/2025 3,491
Face
Amount Municipal Bonds Value
Virginia (concluded)
$ 1,095 Virginia State, HDA, Rental Housing Revenue Bonds,
AMT, Series B, 5.625% due 8/01/2011 $ 1,151
3,200 Virginia State, HDA, Revenue Bonds, AMT, Series D,
6% due 4/01/2024 3,352
Washington--0.6%
1,040 Seattle, Washington, Housing Authority Revenue
Bonds (Replacement Housing Project), 6.125%
due 12/01/2032 1,039
Wisconsin--0.9%
1,360 Wisconsin State Health and Educational Facilities
Authority Revenue Bonds (Synergyhealth Inc.), 6%
due 11/15/2032 1,453
Puerto Rico--2.7%
3,040 Puerto Rico Electric Power Authority, Power Revenue
Bonds, Series RR, 5% due 7/01/2027 (i) 3,194
1,550 Puerto Rico Industrial, Medical and Environmental
Pollution Control Facilities Financing Authority,
Special Facilities Revenue Bonds (American Airlines
Inc.), Series A, 6.45% due 12/01/2025 1,229
U.S. Virgin Islands--1.8%
2,680 Virgin Islands Government Refinery Facilities, Revenue
Refunding Bonds (Hovensa Coker Project), AMT,
6.50% due 7/01/2021 3,028
Total Municipal Bonds
(Cost--$243,564)--155.1% 257,069
Shares
Held Short-Term Securities
12 Merrill Lynch Institutional Tax-Exempt Fund (l) 12
Total Short-Term Securities
(Cost--$12)--0.0% 12
Total Investments (Cost--$243,576*)--155.1% 257,081
Liabilities in Excess of Other Assets--(2.6%) (4,275)
Preferred Stock, at Redemption Value--(52.5%) (87,032)
----------
Net Assets Applicable to Common Stock--100.0% $ 165,774
==========
* The cost and unrealized appreciation (depreciation) of investments as of
January 31, 2006, as computed for federal income tax purposes, were
as follows:
Aggregate cost $ 243,154
===============
Gross unrealized appreciation $ 15,095
Gross unrealized depreciation (1,168)
---------------
Net unrealized appreciation $ 13,927
===============
** Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(a) AMBAC Insured.
(b) FGIC Insured.
(c) FSA Insured.
(d) MBIA Insured.
(e) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(f) GNMA Collateralized.
(g) FNMA Collateralized.
(h) Prerefunded.
(i) XL Capital Insured.
(j) Security may have a maturity of more than one year at time of issuance,
but has variable rate and demand features that qualify it as a short-term
security. The rate disclosed is that currently in effect. This rate
changes periodically based upon prevailing market rates.
(k) ACA Insured.
(l) Investments in companies considered to be an affiliate of the Fund, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were
as follows:
Net Dividend
Affiliate Activity Income
Merrill Lynch Institutional Tax-Exempt Fund -- --++
++ Amount is less than $1,000.
See Notes to Financial Statements.
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Schedule of Investments MuniHoldings New Jersey Insured Fund, Inc.
(in Thousands)
Face
Amount Municipal Bonds Value
New Jersey--151.4%
$ 1,875 Atlantic Highlands, New Jersey, Highland Regional
Sewer Authority, Sewer Revenue Refunding Bonds,
5.50% due 1/01/2020 (d) $ 2,037
Camden County, New Jersey, Improvement Authority,
Lease Revenue Bonds (e)(f):
2,635 5.375% due 9/01/2010 2,842
1,540 5.50% due 9/01/2010 1,669
430 Carteret, New Jersey, Board of Education, COP, 6%
due 1/15/2010 (b)(e) 474
6,210 Casino Reinvestment Development Authority, New
Jersey, Parking Fee Revenue Bonds, Series A, 5.25%
due 10/01/2007 (e)(f) 6,410
2,500 Delaware River and Bay Authority, New Jersey, Revenue
Bonds, 5% due 1/01/2033 (b) 2,581
4,630 Delaware River Joint Toll Bridge Commission,
New Jersey and Pennsylvania, Bridge Revenue
Refunding Bonds, 5% due 7/01/2028 4,763
Delaware River Port Authority of New Jersey and
Pennsylvania, Revenue Bonds (f):
5,000 5.50% due 1/01/2012 5,348
6,000 5.625% due 1/01/2013 6,460
500 5.75% due 1/01/2015 539
4,865 6% due 1/01/2018 5,288
5,525 6% due 1/01/2019 6,005
2,425 (Port District Project), Series B, 5.625%
due 1/01/2026 2,589
7,895 East Orange, New Jersey, Board of Education, COP,
5.50% due 8/01/2012 (f) 8,678
1,000 East Orange, New Jersey, Water Utility, GO, Refunding,
5.70% due 6/15/2008 (a)(e) 1,061
4,000 Essex County, New Jersey, Improvement Authority,
Lease Revenue Bonds (Correctional Facility Project),
6% due 10/01/2010 (d)(e) 4,423
3,300 Essex County, New Jersey, Improvement Authority,
Lease Revenue Refunding Bonds (County Jail and
Youth House Project), 5.35% due 12/01/2024 (a) 3,413
4,400 Essex County, New Jersey, Improvement Authority
Revenue Bonds, Series A, 5% due 10/01/2028 (d) 4,576
2,705 Essex County, New Jersey, Improvement Authority,
Utility System Revenue Bonds (East Orange
Franchise), 6% due 7/01/2008 (b)(e) 2,887
Garden State Preservation Trust of New Jersey, Capital
Appreciation Revenue Bonds, Series B (f):
9,000 5.12%** due 11/01/2023 4,078
10,000 5.20%** due 11/01/2025 4,089
Face
Amount Municipal Bonds Value
New Jersey (continued)
Garden State Preservation Trust of New Jersey, Open
Space and Farmland Preservation Revenue Bonds,
Series A (f):
$ 1,960 5.80% due 11/01/2021 $ 2,260
2,730 5.80% due 11/01/2023 3,148
9,160 5.75% due 11/01/2028 11,030
Garden State Preservation Trust of New Jersey,
Open Space and Farmland Preservation, Revenue
Refunding Bonds, Series C (f):
5,000 5.25% due 11/01/2020 5,631
7,705 5.25% due 11/01/2021 8,687
2,230 Jersey City, New Jersey, GO, Series B, 5.25%
due 9/01/2023 (f) 2,405
5,250 Lafayette Yard, New Jersey, Community Development
Revenue Bonds (Hotel/Conference Center Project-
Trenton), 6% due 4/01/2010 (b)(e) 5,808
1,550 Middlesex County, New Jersey, COP, 5.25%
due 6/15/2023 (b) 1,632
1,375 Middlesex County, New Jersey, COP, Refunding,
5.50% due 8/01/2016 (b) 1,494
5,270 Middlesex County, New Jersey, Improvement
Authority, Lease Revenue Bonds (Educational
Services Commission Projects), 6%
due 7/15/2010 (e) 5,857
500 Middlesex County, New Jersey, Improvement
Authority Revenue Bonds (Senior Citizens Housing
Project), AMT, 5.50% due 9/01/2030 (a) 523
Monmouth County, New Jersey, Improvement
Authority Revenue Refunding Bonds (a):
1,540 5.35% due 12/01/2017 1,649
1,470 5.375% due 12/01/2018 1,576
New Jersey EDA, Cigarette Tax Revenue Bonds:
2,700 5.625% due 6/15/2019 2,861
2,000 5.75% due 6/15/2029 2,110
585 5.50% due 6/15/2031 605
1,180 5.75% due 6/15/2034 1,240
5,000 New Jersey EDA, Lease Revenue Bonds (University of
Medicine and Dentistry-International Center for
Public Health Project), 6% due 6/01/2032 (a) 5,458
New Jersey EDA, Motor Vehicle Surcharge Revenue
Bonds, Series A (b):
7,500 5.25% due 7/01/2026 8,461
11,105 5.25% due 7/01/2033 11,843
4,485 5% due 7/01/2034 4,650
New Jersey EDA, Natural Gas Facilities Revenue
Refunding Bonds, RIB, AMT (b)(j):
3,155 Series 161, 8.04% due 6/01/2032 3,388
9,460 Series 1202, 8.10% due 6/01/2032 10,160
1,000 New Jersey EDA, Parking Facility Revenue Bonds
(Elizabeth Development Company Project), 5.60%
due 10/15/2026 (d) 1,052
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Schedule of Investments (continued) MuniHoldings New Jersey Insured Fund, Inc.
(in Thousands)
Face
Amount Municipal Bonds Value
New Jersey (continued)
$ 4,580 New Jersey EDA, Revenue Bonds, DRIVERS,
Series 219, 8.646% due 5/01/2016 (f)(j) $ 5,303
New Jersey EDA, School Facilities Construction
Revenue Bonds:
9,000 Series L, 5% due 3/01/2030 (f) 9,352
8,420 Series O, 5.25% due 3/01/2023 9,003
2,500 New Jersey EDA, Solid Waste Disposal Facilities
Revenue Bonds (Waste Management Inc.), AMT,
Series A, 5.30% due 6/01/2015 2,628
New Jersey EDA, State Lease Revenue Bonds:
2,670 (Liberty State Park Project), Series C, 5%
due 3/01/2022 (f) 2,826
1,400 (Liberty State Park Project), Series C, 5%
due 3/01/2023 (f) 1,478
3,000 (State Office Buildings Projects), 6%
due 6/15/2010 (a)(e) 3,305
4,620 (State Office Buildings Projects), 6.25%
due 6/15/2010 (a)(e) 5,133
10,775 New Jersey Health Care Facilities Financing Authority,
Department of Human Services Revenue Bonds
(Greystone Park Psychiatric Hospital Project),
5% due 9/15/2023 (a) 11,312
New Jersey Health Care Facilities Financing Authority
Revenue Bonds:
2,315 (RWJ Healthcare Corporation), Series B, 5%
due 7/01/2025 (i) 2,394
3,015 (RWJ Healthcare Corporation), Series B, 5%
due 7/01/2035 (i) 3,083
2,820 (Society of the Valley Hospital), 5.375%
due 7/01/2025 (a) 2,990
2,135 (Somerset Medical Center), 5.50% due 7/01/2033 2,186
5,440 (South Jersey Hospital), 6% due 7/01/2026 5,809
New Jersey Health Care Facilities Financing Authority,
Revenue Refunding Bonds:
4,000 (AHS Hospital Corporation), Series A, 6%
due 7/01/2013 (a) 4,525
1,455 (Atlantic City Medical Center), 6.25%
due 7/01/2017 1,626
3,500 (Atlantic City Medical Center), 5.75%
due 7/01/2025 3,759
1,775 (Holy Name Hospital), 6% due 7/01/2025 1,839
1,000 (Meridian Health System Obligation Group),
5.375% due 7/01/2024 (f) 1,060
New Jersey Sports and Exposition Authority, Luxury
Tax Revenue Refunding Bonds (Convention
Center) (b):
2,000 5.50% due 3/01/2021 2,296
3,000 5.50% due 3/01/2022 3,453
Face
Amount Municipal Bonds Value
New Jersey (continued)
$ 2,400 New Jersey Sports and Exposition Authority, State
Contract Revenue Bonds, Series A, 6%
due 3/01/2013 (b) $ 2,618
7,500 New Jersey State Educational Facilities Authority,
Higher Education, Capital Improvement Revenue
Bonds, Series A, 5.125% due 9/01/2022 (a) 7,991
New Jersey State Educational Facilities Authority
Revenue Bonds:
18,325 (Capital Improvement Fund), Series A, 5.75%
due 9/01/2010 (e)(f) 20,051
3,615 (Rowan University), Series C, 5.125%
due 7/01/2028 (b) 3,816
3,260 (Rowan University), Series C, 5%
due 7/01/2034 (b) 3,382
New Jersey State Educational Facilities Authority,
Revenue Refunding Bonds:
7,510 (Montclair State University), Series L, 5%
due 7/01/2034 (b) 7,792
2,375 (Rowan University), Series C, 5.25%
due 7/01/2017 (d) 2,558
2,820 (Rowan University), Series C, 5.25%
due 7/01/2018 (d) 3,037
2,635 (Rowan University), Series C, 5.25%
due 7/01/2019 (d) 2,838
1,410 (Rowan University), Series C, 5%
due 7/01/2031 (d) 1,454
4,000 (University of Medicine and Dentistry), Series B,
5.25% due 12/01/2017 (a) 4,046
11,225 New Jersey State Housing and Mortgage Financing
Agency, Capital Fund Program Revenue Bonds,
Series A, 4.70% due 11/01/2025 (f) 11,342
New Jersey State Housing and Mortgage Finance
Agency, Home Buyer Revenue Bonds, AMT,
Series U (b):
1,000 5.60% due 10/01/2012 1,032
2,820 5.65% due 10/01/2013 2,908
3,000 5.75% due 4/01/2018 3,097
805 5.85% due 4/01/2029 828
5,000 New Jersey State Transit Corporation, COP (Federal
Transit Administration Grants), Series A, 6.125%
due 9/15/2009 (a)(e) 5,444
New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Bonds:
7,500 Series A, 6% due 6/15/2010 (e) 8,268
14,000 Series D, 5% due 6/15/2019 (f) 14,916
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Schedule of Investments (continued) MuniHoldings New Jersey Insured Fund, Inc.
(in Thousands)
Face
Amount Municipal Bonds Value
New Jersey (continued)
$ 9,165 New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Refunding Bonds,
Series B, 5.50% due 12/15/2021 (b) $ 10,546
7,615 New Jersey State Turnpike Authority, Turnpike Revenue
Bonds, Series B, 5.15%** due 1/01/2035 (a) 5,011
New Jersey State Turnpike Authority, Turnpike
Revenue Refunding Bonds:
910 Series C, 6.50% due 1/01/2016 (b) 1,066
4,355 Series C, 6.50% due 1/01/2016 (b)(g) 5,115
255 Series C, 6.50% due 1/01/2016 (b)(g) 300
4,665 Series C-1, 4.50% due 1/01/2031 (a) 4,589
North Bergen Township, New Jersey, Board of
Education, COP (f):
1,000 6% due 12/15/2010 (e) 1,119
3,260 6.25% due 12/15/2010 (e) 3,681
1,250 5% due 12/15/2018 1,315
3,035 Orange Township, New Jersey, Municipal Utility
and Lease, GO, Refunding, Series C, 5.10%
due 12/01/2017 (b) 3,186
Paterson, New Jersey, Public School District, COP (b):
1,980 6.125% due 11/01/2015 2,171
2,000 6.25% due 11/01/2019 2,203
4,750 Port Authority of New Jersey and New York,
Consolidated Revenue Refunding Bonds, AMT,
119th Series, 5.50% due 9/15/2019 (d) 4,850
Port Authority of New Jersey and New York, Special
Obligation Revenue Bonds, AMT (b):
2,375 DRIVERS, AMT, Series 192, 8.13%
due 12/01/2025 (j) 2,541
2,165 (JFK International Air Terminal LLC), RIB,
Series 157, 8.15% due 12/01/2022 (j) 2,397
13,500 (JFK International Air Terminal LLC), Series 6,
6.25% due 12/01/2011 14,960
1,500 (JFK International Air Terminal LLC), Series 6,
6.25% due 12/01/2015 1,709
9,600 Rahway Valley Sewerage Authority, New Jersey,
Sewer Revenue Bonds (Capital Appreciation),
Series A, 4.79%** due 9/01/2028 (b) 3,352
South Jersey Port Corporation of New Jersey,
Revenue Refunding Bonds:
3,750 4.50% due 1/01/2015 3,844
1,920 4.50% due 1/01/2016 1,951
1,500 5% due 1/01/2026 1,540
2,000 5.10% due 1/01/2033 2,051
4,755 Tobacco Settlement Financing Corporation of New
Jersey, Asset-Backed Revenue Bonds, 7%
due 6/01/2041 5,430
Face
Amount Municipal Bonds Value
New Jersey (concluded)
$ 4,325 Trenton, New Jersey, Parking Authority, Parking
Revenue Bonds, DRIVERS, Series 221, 8.859%
due 4/01/2010 (d)(e)(j) $ 5,202
2,000 University of Medicine and Dentistry of New Jersey,
COP, 5% due 6/15/2029 (b) 2,072
4,740 University of Medicine and Dentistry of New
Jersey, Revenue Bonds, Series A, 5.50%
due 12/01/2027 (a) 5,151
8,580 West Deptford Township, New Jersey, GO, 5.625%
due 9/01/2010 (d)(e) 9,343
3,615 West Orange, New Jersey, Board of Education, COP,
6% due 10/01/2009 (b)(e) 3,964
Puerto Rico--8.7%
Puerto Rico Commonwealth Highway and
Transportation Authority, Transportation Revenue
Refunding Bonds:
4,500 Series J, 5% due 7/01/2029 (b) 4,707
3,480 Series K, 5% due 7/01/2045 3,516
Puerto Rico Electric Power Authority, Power Revenue
Bonds:
10,000 Series HH, 5.25% due 7/01/2029 (f) 10,658
5,100 Series RR, 5% due 7/01/2028 (c) 5,342
Puerto Rico Industrial, Tourist, Educational, Medical
and Environmental Control Facilities Revenue
Bonds, Series A:
1,780 (Hospital Auxilio Mutuo Obligation Group),
6.25% due 7/01/2024 (b) 1,787
1,750 (Hospital de la Concepcion), 6.50%
due 11/15/2020 1,952
Total Municipal Bonds
(Cost--$490,660)--160.1% 515,137
Shares
Held Short-Term Securities
4,600 CMA New Jersey Municipal Money Fund (h) 4,600
Total Short-Term Securities
(Cost--$4,600)--1.4% 4,600
Total Investments (Cost--$495,260*)--161.5% 519,737
Other Assets Less Liabilities--1.6% 5,183
Preferred Stock, at Redemption Value--(63.1%) (203,064)
----------
Net Assets Applicable to Common Stock--100.0% $ 321,856
==========
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Schedule of Investments (concluded) MuniHoldings New Jersey Insured Fund, Inc.
(in Thousands)
* The cost and unrealized appreciation (depreciation) of investments, as of
January 31, 2006, as computed for federal income tax purposes, were
as follows:
Aggregate cost $ 495,208
===============
Gross unrealized appreciation $ 24,731
Gross unrealized depreciation (202)
---------------
Net unrealized appreciation $ 24,529
===============
** Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(a) AMBAC Insured.
(b) MBIA Insured.
(c) CIFG Insured.
(d) FGIC Insured.
(e) Prerefunded.
(f) FSA Insured.
(g) Escrowed to maturity.
(h) Investments in companies considered to be an affiliate of the Fund, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were
as follows:
Net Dividend
Affiliate Activity Income
CMA New Jersey Municipal Money Fund (1,532) $ 50
(i) Radian Insured.
(j) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
See Notes to Financial Statements.
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Statements of Net Assets
MuniHoldings
New Jersey
MuniHoldings Insured
As of January 31, 2006 Fund II, Inc. Fund, Inc.
Assets
Investments in unaffiliated securities, at value* $ 257,068,889 $ 515,137,072
Investments in affiliated securities, at value** 11,733 4,599,485
Cash 14,482 124,026
Interest receivable 3,470,762 5,384,152
Receivable for securities sold 415,453 --
Prepaid expenses 1,535 2,235
--------------- ---------------
Total assets 260,982,854 525,246,970
--------------- ---------------
Liabilities
Payable for securities purchased 8,015,581 --
Payable to investment adviser 110,659 215,269
Payable for other affiliates 2,667 6,760
Accrued expenses and other liabilities 48,057 104,387
--------------- ---------------
Total liabilities 8,176,964 326,416
--------------- ---------------
Preferred Stock
Preferred Stock, at redemption value, par value $.10 per share*** of
AMPS+++ at $25,000 per share liquidation preference 87,031,754 203,064,355
--------------- ---------------
Net Assets Applicable to Common Stock
Net assets applicable to Common Stock $ 165,774,136 $ 321,856,199
=============== ===============
Net Assets Consist of
Undistributed investment income--net $ 1,914,892 $ 3,028,190
Accumulated realized capital losses--net (15,985,866) (25,268,351)
Unrealized appreciation--net 13,504,735 24,476,700
--------------- ---------------
Total accumulated earnings (losses)--net (566,239) 2,236,539
--------------- ---------------
Common Stock, par value $.10 per share++ 1,116,863 2,112,064
Paid-in capital in excess of par 165,223,512 317,507,596
--------------- ---------------
Net Assets $ 165,774,136 $ 321,856,199
=============== ===============
Net asset value per share of Common Stock $ 14.84 $ 15.24
=============== ===============
Market price $ 14.80 $ 15.49
=============== ===============
* Identified cost on unaffiliated securities $ 243,564,154 $ 490,660,372
=============== ===============
** Identified cost on affiliated securities $ 11,733 $ 4,599,485
=============== ===============
*** Preferred Stock authorized, issued and outstanding:
Series A Shares 1,740 1,360
=============== ===============
Series B Shares 1,740 1,360
=============== ===============
Series C Shares -- 2,400
=============== ===============
Series D Shares -- 1,880
=============== ===============
Series E Shares -- 1,120
=============== ===============
++ Common Stock issued and outstanding 11,168,632 21,120,639
=============== ===============
+++ Auction Market Preferred Stock.
See Notes to Financial Statements.
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Statements of Operations
MuniHoldings
New Jersey
MuniHoldings Insured
For the Six Months Ended January 31, 2006 Fund II, Inc. Fund, Inc.
Investment Income
Interest and amortization of premium and discount earned $ 6,815,712 $ 12,771,421
Dividends from affiliates 154 49,672
--------------- ---------------
Total income 6,815,866 12,821,093
--------------- ---------------
Expenses
Investment advisory fees 700,665 1,459,725
Commission fees 112,225 259,691
Accounting services 52,184 89,237
Professional fees 28,180 29,384
Transfer agent fees 23,136 41,828
Directors' fees and expenses 16,261 16,096
Printing and shareholder reports 9,950 19,058
Listing fees 9,773 9,613
Pricing fees 9,363 11,184
Custodian fees 8,094 14,733
Other 19,162 24,257
--------------- ---------------
Total expenses before waiver and/or reimbursement 988,993 1,974,806
Waiver and/or reimbursement of expenses (11) (90,789)
--------------- ---------------
Total expenses after waiver and/or reimbursement 988,982 1,884,017
--------------- ---------------
Investment income--net 5,826,884 10,937,076
--------------- ---------------
Realized & Unrealized Gain (Loss)--Net
Realized gain (loss) on:
Investments--net 590,214 3,127,652
Futures contracts and forward interest rate swaps--net -- (58,975)
--------------- ---------------
Total realized gain--net 590,214 3,068,677
--------------- ---------------
Change in unrealized appreciation on:
Investments--net (1,947,364) (9,561,743)
Futures contracts and forward interest rate swaps--net -- (240,015)
--------------- ---------------
Total change in unrealized appreciation--net (1,947,364) (9,801,758)
--------------- ---------------
Total realized and unrealized loss--net (1,357,150) (6,733,081)
--------------- ---------------
Dividends to Preferred Shareholders
Investment income--net (1,173,681) (2,497,652)
--------------- ---------------
Net Increase in Net Assets Resulting from Operations $ 3,296,053 $ 1,706,343
=============== ===============
See Notes to Financial Statements.
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Statements of Changes in Net Assets MuniHoldings Fund II, Inc.
For the Six For the
Months Ended Year Ended
January 31, July 31,
Increase (Decrease) in Net Assets: 2006 2005
Operations
Investment income--net $ 5,826,884 $ 12,054,853
Realized gain--net 590,214 2,156,742
Change in unrealized appreciation--net (1,947,364) 10,744,979
Dividends to Preferred Stock shareholders (1,173,681) (1,593,265)
--------------- ---------------
Net increase in net assets resulting from operations 3,296,053 23,363,309
--------------- ---------------
Dividends to Common Stock Shareholders
Investment income--net (5,433,499) (11,625,476)
--------------- ---------------
Net decrease in net assets resulting from dividends to Common Stock shareholders (5,433,499) (11,625,476)
--------------- ---------------
Common Stock Transactions
Value of shares issued to Common Stock shareholders in reinvestment of dividends 323,132 267,353
--------------- ---------------
Net Assets Applicable to Common Stock
Total increase (decrease) in net assets applicable to Common Stock (1,814,314) 12,005,186
Beginning of period 167,588,450 155,583,264
--------------- ---------------
End of period* $ 165,774,136 $ 167,588,450
=============== ===============
* Undistributed investment income--net $ 1,914,892 $ 2,695,188
=============== ===============
See Notes to Financial Statements.
MuniHoldings New Jersey Insured Fund, Inc.
For the Six For the
Months Ended Year Ended
January 31, July 31,
Increase (Decrease) in Net Assets: 2006 2005
Operations
Investment income--net $ 10,937,076 $ 21,866,673
Realized gain--net 3,068,677 9,254,655
Change in unrealized appreciation--net (9,801,758) 4,642,719
Dividends to Preferred Stock shareholders (2,497,652) (3,321,072)
--------------- ---------------
Net increase in net assets resulting from operations 1,706,343 32,442,975
--------------- ---------------
Dividends to Common Stock Shareholders
Investment income--net (9,781,032) (19,944,606)
--------------- ---------------
Net decrease in net assets resulting from dividends to Common Stock shareholders (9,781,032) (19,944,606)
--------------- ---------------
Common Stock Transactions
Value of shares issued to Common Stock shareholders in reinvestment of dividends 1,078,080 183,190
--------------- ---------------
Net Assets Applicable to Common Stock
Total increase (decrease) in net assets applicable to Common Stock (6,996,609) 12,681,559
Beginning of period 328,852,808 316,171,249
--------------- ---------------
End of period* $ 321,856,199 $ 328,852,808
=============== ===============
* Undistributed investment income--net $ 3,028,190 $ 4,369,798
=============== ===============
See Notes to Financial Statements.
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Financial Highlights MuniHoldings Fund II, Inc.
For the Six
Months Ended
The following per share data and ratios have been derived January 31, For the Year Ended July 31,
from information provided in the financial statements. 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 15.03 $ 13.98 $ 13.46 $ 13.51 $ 13.42
---------- ---------- ---------- ---------- ----------
Investment income--net .52++ 1.08++ 1.15++ 1.16++ 1.10
Realized and unrealized gain (loss)--net (.11) 1.15 .50 (.15) (.04)
Less dividends to Preferred Stock shareholders from
investment income--net (.11) (.14) (.10) (.10) (.13)
---------- ---------- ---------- ---------- ----------
Total from investment operations .30 2.09 1.55 .91 .93
---------- ---------- ---------- ---------- ----------
Less dividends to Common Stock shareholders from
investment income--net (.49) (1.04) (1.03) (.96) (.84)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 14.84 $ 15.03 $ 13.98 $ 13.46 $ 13.51
========== ========== ========== ========== ==========
Market price per share, end of period $ 14.80 $ 15.25 $ 13.53 $ 13.16 $ 12.96
========== ========== ========== ========== ==========
Total Investment Return***
Based on net asset value per share 2.02%+++ 15.46% 11.88% 7.15% 7.56%
========== ========== ========== ========== ==========
Based on market price per share .28%+++ 21.04% 10.75% 9.21% 12.12%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Common Stock
Total expenses, net of reimbursement** 1.18%* 1.19% 1.21% 1.26% 1.29%
========== ========== ========== ========== ==========
Total expenses** 1.18%* 1.19% 1.22% 1.26% 1.29%
========== ========== ========== ========== ==========
Total investment income--net** 6.98%* 7.38% 8.13% 8.48% 8.27%
========== ========== ========== ========== ==========
Amount of dividends to Preferred Stock shareholders 1.41%* .98% .69% .74% .95%
========== ========== ========== ========== ==========
Investment income--net, to Common Stock
shareholders 5.57%* 6.40% 7.44% 7.74% 7.32%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Preferred Stock
Dividends to Preferred Stock shareholders 2.68%* 1.84% 1.23% 1.28% 1.60%
========== ========== ========== ========== ==========
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Financial Highlights (concluded) MuniHoldings Fund II, Inc.
For the Six
Months Ended
The following per share data and ratios have been derived January 31, For the Year Ended July 31,
from information provided in the financial statements. 2006 2005 2004 2003 2002
Supplemental Data
Net assets applicable to Common Stock,
end of period (in thousands) $ 165,774 $ 167,588 $ 155,583 $ 149,262 $ 149,633
========== ========== ========== ========== ==========
Preferred Stock outstanding, end of period
(in thousands) $ 87,000 $ 87,000 $ 87,000 $ 87,000 $ 87,000
========== ========== ========== ========== ==========
Portfolio turnover 26.17% 45.11% 31.03% 44.03% 46.31%
========== ========== ========== ========== ==========
Leverage
Asset coverage per $1,000 $ 2,905 $ 2,926 $ 2,788 $ 2,716 $ 2,720
========== ========== ========== ========== ==========
Dividends Per Share on Preferred Stock Outstanding
Series A--Investment income--net $ 339 $ 445 $ 223 $ 279 $ 409
========== ========== ========== ========== ==========
Series B--Investment income--net $ 336 $ 471 $ 395 $ 363 $ 394
========== ========== ========== ========== ==========
* Annualized.
** Do not reflect the effect of dividends to Preferred Stock shareholders.
*** 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.
++ Based on average shares outstanding.
+++ Aggregate total investment return.
See Notes to Financial Statements.
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Financial Highlights MuniHoldings New Jersey Insured Fund, Inc.
For the Six
Months Ended
The following per share data and ratios have been derived January 31, For the Year Ended July 31,
from information provided in the financial statements. 2006 2005 2004 2003 2002
Per Share Operating Performance
Net asset value, beginning of period $ 15.62 $ 15.03 $ 14.46 $ 14.90 $ 14.54
---------- ---------- ---------- ---------- ----------
Investment income--net* .52 1.04 1.07 1.08 1.06
Realized and unrealized gain (loss)--net (.32) .66 .51 (.54) .31
Less dividends to Preferred Stock shareholders from
investment income--net (.12) (.16) (.08) (.09) (.15)
---------- ---------- ---------- ---------- ----------
Total from investment operations .08 1.54 1.50 .45 1.22
---------- ---------- ---------- ---------- ----------
Less dividends to Common Stock shareholders from
investment income--net (.46) (.95) (.93) (.89) (.86)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 15.24 $ 15.62 $ 15.03 $ 14.46 $ 14.90
========== ========== ========== ========== ==========
Market price per share, end of period $ 15.49 $ 15.89 $ 14.17 $ 13.59 $ 14.24
========== ========== ========== ========== ==========
Total Investment Return***
Based on net asset value per share .56%++ 10.63% 10.90% 3.32% 9.16%
========== ========== ========== ========== ==========
Based on market price per share .47%++ 19.37% 11.24% 1.61% 20.01%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Common Stock
Total expenses, net of waiver and reimbursement
and excluding reorganization expenses** 1.16%+++ 1.14% 1.13% 1.15% 1.19%
========== ========== ========== ========== ==========
Total expenses, net of waiver and reimbursement** 1.16%+++ 1.14% 1.13% 1.15% 1.22%
========== ========== ========== ========== ==========
Total expenses** 1.21%+++ 1.20% 1.21% 1.23% 1.29%
========== ========== ========== ========== ==========
Total investment income--net** 6.71%+++ 6.69% 6.97% 7.05% 7.32%
========== ========== ========== ========== ==========
Amount of dividends to Preferred Stock shareholders 1.53%+++ 1.02% .54% .61% 1.00%
========== ========== ========== ========== ==========
Investment income--net, to Common Stock
shareholders 5.18%+++ 5.67% 6.43% 6.44% 6.32%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Preferred Stock
Dividends to Preferred Stock shareholders 2.44%+++ 1.64% .86% .97% 1.51%
========== ========== ========== ========== ==========
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Financial Highlights (concluded) MuniHoldings New Jersey Insured Fund, Inc.
For the Six
Months Ended
The following per share data and ratios have been derived January 31, For the Year Ended July 31,
from information provided in the financial statements. 2006 2005 2004 2003 2002
Supplemental Data
Net assets applicable to Common Stock,
end of period (in thousands) $ 321,856 $ 328,853 $ 316,171 $ 304,126 $ 313,515
========== ========== ========== ========== ==========
Preferred Stock outstanding, end of period
(in thousands) $ 203,000 $ 203,000 $ 203,000 $ 203,000 $ 203,000
========== ========== ========== ========== ==========
Portfolio turnover 12.24% 29.61% 8.53% 28.89% 20.05%
========== ========== ========== ========== ==========
Leverage
Asset coverage per $1,000 $ 2,585 $ 2,620 $ 2,557 $ 2,498 $ 2,544
========== ========== ========== ========== ==========
Dividends Per Share on Preferred Stock Outstanding
Series A--Investment income--net $ 302 $ 402 $ 206 $ 233 $ 356
========== ========== ========== ========== ==========
Series B--Investment income--net $ 312 $ 403 $ 210 $ 240 $ 381
========== ========== ========== ========== ==========
Series C--Investment income--net $ 317 $ 419 $ 235 $ 247 $ 389
========== ========== ========== ========== ==========
Series D--Investment income--net $ 306 $ 415 $ 210 $ 240 $ 363
========== ========== ========== ========== ==========
Series E--Investment income--net $ 290 $ 394 $ 197 $ 247 $ 393
========== ========== ========== ========== ==========
* Based on average shares outstanding.
** Do not reflect the effect of dividends to Preferred Stock shareholders.
*** 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.
++ Aggregate total investment return.
+++ Annualized.
See Notes to Financial Statements.
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Notes to Financial Statements
1. Significant Accounting Policies:
MuniHoldings Fund II, Inc. and MuniHoldings New Jersey Insured Fund, Inc. (the
"Funds" or individually as the "Fund") are registered under the Investment
Company Act of 1940, as amended, as non-diversified, closed-end management
investment companies. The Funds' 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. These unaudited financial statements reflect all
adjustments, which are, in the opinion of management, necessary to present a
fair statement of the results for the interim period. All such adjustments are
of a normal, recurring nature. The Funds determine and make available for
publication the net asset value of their Common Stock on a daily basis. The
Funds' Common Stock shares are listed on the New York Stock Exchange under the
symbols MUH and MUJ, respectively. The following is a summary of significant
accounting policies followed by the Funds.
(a) Valuation of investments--Municipal bonds are traded primarily in the over-
the-counter markets ("OTC") and are valued at the last available bid price in
the OTC 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 Funds under the general
direction of the Board of Directors. Such valuations and procedures are
reviewed periodically by the Board of Directors of the Funds. 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 OTC 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 Funds' 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 Directors of the Funds.
(b) Derivative financial instruments--Each 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--Each 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--Each Fund may write covered call options and purchase call and put
options. When the Fund writes an option, an amount equal to the premium
received by the Fund is reflected as an asset and an equivalent liability. The
amount of the liability is subsequently marked-to-market to reflect the
current market value of the option written. When a security is purchased or
sold through an exercise of an option, the related premium paid (or received)
is added to (or deducted from) the basis of the security acquired or deducted
from (or added to) the proceeds of the security sold. When an option expires
(or the Fund enters into a closing transaction), the Fund realizes a gain or
loss on the option to the extent of the premiums received or paid (or 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.
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Notes to Financial Statements (continued)
* Forward interest rate swaps--Each 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 each Fund's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
(d) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis. The Funds amortize 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.
2. Investment Advisory Agreement and Transactions with Affiliates:
Each 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 each Fund's portfolio and provides
the necessary personnel, facilities, equipment and certain other services
necessary to the operations of the Fund. For such services, each Fund pays a
monthly fee at an annual rate of .55% of the Fund's average weekly net assets,
including proceeds from the issuance of Preferred Stock for the six months
ended January 31, 2006. The Investment Adviser has agreed to reimburse its
management fee by the amount of management fees each Fund pays to FAM
indirectly through its investment described below:
Investment Reimbursement
MuniHoldings Fund II, Inc. Merrill Lynch
Institutional
Tax-Exempt Fund $ 11
MuniHoldings New Jersey CMA New Jersey
Insured Fund, Inc. Municipal Money Fund $10,890
In addition, for MuniHoldings New Jersey Insured Fund, Inc., the Investment
Adviser has agreed to reimburse its management fee based on the proceeds of
Preferred Stock that exceeds 35% of the Fund's total net assets. For the six
months ended January 31, 2006, FAM earned fees of $1,459,725, of which $79,899
was waived.
For the six months ended January 31, 2006, MuniHoldings Fund II, Inc. and
MuniHoldings New Jersey Insured Fund, Inc. reimbursed FAM $2,710 and $5,688,
respectively, for certain accounting services.
Certain officers and/or directors of the Fund are officers and/or directors of
FAM, PSI, and/or ML & Co.
In February 2006, ML & Co. and BlackRock, Inc. entered into an agreement to
merge ML & Co.'s investment management business, including FAM, with the
investment management business of BlackRock, Inc. The transaction is expected
to close in the third quarter of 2006.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
six months ended January 31, 2006 were as follows:
MuniHoldings
New Jersey
MuniHoldings Insured
Fund II, Inc. Fund, Inc.
Total Purchases $65,244,839 $65,045,972
Total Sales $64,974,551 $86,629,774
4. Stock Transactions:
Each Fund is authorized to issue 200,000,000 shares of stock, including
Preferred Stock, par value $.10 per share, all of which were initially
classified as Common Stock. The Board of Directors are authorized, however, to
reclassify any unissued shares of stock without approval of holders of Common
Stock.
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Notes to Financial Statements (concluded)
Common Stock
MuniHoldings Fund II, Inc.
Shares issued and outstanding during the six months ended January 31, 2006 and
the year ended July 31, 2005 increased by 21,687 and 18,116, respectively, as
a result of dividend reinvestment.
MuniHoldings New Jersey Insured Fund, Inc.
Shares issued and outstanding during the six months ended January 31, 2006 and
the year ended July 31, 2005 increased by 70,327 and 11,698, respectively, as
a result of dividend reinvestment.
Preferred Stock
Auction Market Preferred Stock are shares of Preferred Stock of the Funds,
with 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 yields in effect
at January 31, 2006 were as follows:
MuniHoldings
New Jersey
MuniHoldings Insured
Fund II, Inc. Fund, Inc.
Series A 2.95% 2.50%
Series B 3.00% 2.30%
Series C -- 2.50%
Series D -- 2.40%
Series E -- 2.60%
Each Fund pays commissions to certain broker-dealers at the end of each
auction at an annual rate ranging from .25% to .375%, calculated on the
proceeds of each auction. For the six months ended January 31, 2006, MLPF&S
earned commissions as follows:
Commissions
MuniHoldings Fund II, Inc. $ 53,815
MuniHoldings New Jersey Insured Fund, Inc. $ 137,740
5. Capital Loss Carryforward:
MuniHoldings Fund II, Inc.
On July 31, 2005, the Fund had a net capital loss carryforward of $16,576,080,
of which $3,589,486 expires in 2008, $12,107,981 expires in 2009, $689,205
expires in 2010 and $189,408 expires in 2011. This amount will be available to
offset like amounts of any future taxable gains.
MuniHoldings New Jersey Insured Fund, Inc.
On July 31, 2005, the Fund had a net capital loss carryforward of $27,784,060,
of which $750,299 expires in 2008, $26,797,867 expires in 2009 and $235,894
expires in 2011. This amount will be available to offset like amounts of any
future taxable gains.
6. Subsequent Event:
Each Fund paid a tax-exempt income dividend to holders of Common Stock in the
amounts of $.072000 per share and $.069000 per share relating to MuniHoldings
Fund II, Inc. and MuniHoldings New Jersey Insured Fund, Inc. respectively, on
February 27, 2006 to shareholders of record on February 14, 2006.
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Swap Agreements
The Funds may 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 each 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 agreement.
Dividend Policy
The Funds' dividend policy is to distribute all or a portion of its net
investment income to their shareholders on a monthly basis. In order to
provide shareholders with a more stable level of dividend distributions, the
Funds 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
Funds for any particular month may be more or less than the amount of net
investment income earned by the Funds during such month. The Funds' 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 these reports.
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Proxy Results MuniHoldings Fund II, Inc.
During the six-month period ended January 31, 2006, MuniHoldings Fund II,
Inc.'s Common Stock shareholders voted on the following proposal. The proposal
was approved at a shareholders' meeting on January 26, 2006. A description of
the proposal and number of shares voted were as follows:
Shares Voted Shares Withheld
For From Voting
1. To elect the Fund's Directors: Robert C. Doll, Jr. 10,700,663 224,090
Cynthia A. Montgomery 10,691,425 233,328
Jean Margo Reid 10,694,663 230,090
Roscoe S. Suddarth 10,690,913 233,840
Edward D. Zinbarg 10,676,913 247,840
During the six-month period ended January 31, 2006, MuniHoldings Fund II,
Inc.'s Preferred Stock (Series A & B) shareholders voted on the following
proposal. The proposal was approved at a shareholders' meeting on January 26,
2006. A description of the proposal and number of shares voted are as follows:
Shares Voted Shares Withheld
For From Voting
1. To elect the Fund's Board of Directors: Robert C. Doll, Jr. 3,204 18
Ronald W. Forbes 3,204 18
Cynthia A. Montgomery 3,204 18
Jean Margo Reid 3,204 18
Roscoe S. Suddarth 3,204 18
Richard R. West 3,199 23
Edward D. Zinbarg 3,204 18
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Proxy Results MuniHoldings New Jersey Insured Fund, Inc.
During the six-month period ended January 31, 2006, MuniHoldings New Jersey
Insured Fund, Inc.'s Common Stock shareholders voted on the following
proposal. The proposal was approved at a shareholders' meeting on January 26,
2006. A description of the proposal and number of shares voted were as
follows:
Shares Voted Shares Withheld
For From Voting
1. To elect the Fund's Directors: Robert C. Doll, Jr. 20,075,343 517,702
Cynthia A. Montgomery 20,099,743 493,302
Jean Margo Reid 20,072,778 520,267
Roscoe S. Suddarth 20,073,950 519,095
Edward D. Zinbarg 20,069,085 523,960
During the six-month period ended January 31, 2006, MuniHoldings New Jersey
Insured Fund, Inc.'s Preferred Stock (Series A - E) shareholders voted on the
following proposal. The proposal was approved at a shareholders' meeting on
January 26, 2006. A description of the proposal and number of shares voted
were as follows:
Shares Voted Shares Withheld
For From Voting
1. To elect the Fund's Board of Directors: Robert C. Doll, Jr.,
Ronald W. Forbes, Cynthia A. Montgomery, Jean Margo Reid,
Roscoe S. Suddarth, Richard R. West and Edward D. Zinbarg 5,563 129
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Officers and Directors
Robert C. Doll, Jr., President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Jean Margo Reid, Director
Roscoe S. Suddarth, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Donald C. Burke, Vice President and Treasurer
Kenneth A. Jacob, Senior Vice President
John M. Loffredo, Senior Vice President
Robert A. DiMella, Vice President
Theodore R. Jaeckel Jr., Vice President
Jeffrey Hiller, Chief Compliance Officer
Alice A. Pellegrino, Secretary
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street--11 East
New York, NY 10286
Preferred Stock:
The Bank of New York
101 Barclay Street--7 West
New York, NY 10286
Investment Objectives
NYSE Symbol MuniHoldings Fund II, Inc. seeks to provide shareholders with
MUH current income exempt from federal income taxes by investing
primarily in a portfolio of long-term, investment grade municipal
obligations the interest on which, in the opinion of the bond
counsel to the issuer, is exempt from federal income taxes.
NYSE Symbol MuniHoldings New Jersey Insured Fund, Inc. seeks to provide
MUJ shareholders with current income exempt from federal income tax
and New Jersey personal income taxes by investing 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 tax and New Jersey personal income taxes.
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Availability of Quarterly Schedule of Investments
The Funds file their complete schedules 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 Funds' Forms N-Q are available on the
SEC's Web site at http://www.sec.gov. The Funds' 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.
Electronic Delivery
The Funds offer electronic delivery of communications to their 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 at 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.
SEMI-ANNUAL REPORTS JANUARY 31, 2006
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this semi-
annual report
Item 4 - Principal Accountant Fees and Services - Not Applicable to this
semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable to this
semi-annual report
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable to this semi-annual
report
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
Not Applicable to this semi-annual report
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - Not Applicable
Item 11 - Controls and Procedures
11(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.
11(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 last 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 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - Not Applicable to this semi-annual report
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(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.
MuniHoldings Fund II, Inc.
By: /s/ Robert C. Doll, Jr.
--------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
MuniHoldings Fund II, Inc.
Date: March 20, 2006
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/ Robert C. Doll, Jr.
--------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
MuniHoldings Fund II, Inc.
Date: March 20, 2006
By: /s/ Donald C. Burke
--------------------------
Donald C. Burke,
Chief Financial Officer of
MuniHoldings Fund II, Inc.
Date: March 20, 2006