MuniHoldings
New York Insured
Fund, Inc.
[FUND LOGO]
STRATEGIC
Performance
Semi-Annual Report
February 28, 1998
This report, including the financial information herein, is
transmitted to the shareholders of MuniHoldings New York Insured
Fund, Inc. for their information. It is not a prospectus, circular
or representation intended for use in the purchase of shares of the
Fund or any securities mentioned in the report. Past performance
results shown in this report should not be considered a
representation of future performance. The Fund has leveraged its
Common Stock 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.
MuniHoldings New York
Insured Fund, Inc.
Box 9011
Princeton, NJ
08543-9011 #HOLDNY -- 2/98
[RECYCLE LOGO]
Printed on post-consumer recycled paper
MUNIHOLDINGS NEW YORK INSURED FUND, INC.
The Benefits and
Risks of
Leveraging
MuniHoldings New York Insured Fund, Inc. has the ability to leverage
to seek to enhance the yield and net asset value of its Common
Stock. However, these objectives cannot be achieved in all interest
rate environments. To leverage, the 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 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 the 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 share-holders
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.
Managed Dividend
Policy
The Fund's dividend policy is to distribute substantially all of its
net investment income to its shareholders on a monthly basis.
However, in order to provide shareholders with a more consistent
yield to the current trading price of shares of Common Stock of the
Fund, the Fund may at times pay out less than the entire amount of
net investment income earned in any particular month and may at
times in any particular month pay out such accumulated but
undistributed income in addition to net investment income earned in
that month. As a result, the dividends paid by the Fund for any
particular month may be more or less than the amount of net
investment income earned by the Fund during such month. The Fund's
current accumulated but undistributed net investment income, if any,
is disclosed in the Statement of Assets, Liabilities and Capital,
which comprises part of the financial information included in this
report.
MuniHoldings New York Insured Fund, Inc., February 28, 1998
DEAR SHAREHOLDER
We are pleased to provide you with this first semi-annual report for
MuniHoldings New York Insured Fund, Inc. In this and future reports
to shareholders, we will highlight the Fund's performance, describe
the recent investment environment and outline investment activities.
The Fund seeks to provide shareholders with current income exempt
from Federal, New York State and New York City income taxes by
investing in a portfolio of long-term, investment grade municipal
obligations.
Since inception (September 19, 1997) through February 28, 1998, the
Common Stock of MuniHoldings New York Insured Fund, Inc. earned
$0.393 per share income dividends, which included earned and unpaid
dividends of $0.069. This represents a net annualized yield of
5.58%, based on a month-end per share net asset value of $15.76.
Over the same period, the total investment return on the Fund's
Common Stock was +7.28%, based on a change in per share net asset
value from $15.00 to $15.76, and assuming reinvestment of $0.324 per
share income dividends.
Since inception (September 19, 1997) through February 28, 1998, the
Fund's Preferred Stock had an average yield of 3.13% for Series A
and 3.17% for Series B.
The Municipal Market Environment
During the six months ended February 28, 1998, bond yields declined
to recent historic lows. Prior to late October, the ongoing positive
combination of moderate economic growth and low inflation had
allowed interest rates to gradually move lower. More recently,
however, the decline in interest rates was driven more by the
continued turmoil in Asian equity markets than by fundamental
concerns. A significant "flight to quality" has benefited the US
Treasury bond market, particularly longer-maturity US Treasury
bonds, as foreign investors have sought safe haven in the relative
stability of US financial markets. Over the six months ended
February 28, 1998, US Treasury bond yields declined approximately 70
basis points (0.70%) to 5.92%. Long-term municipal revenue bonds, as
measured by the Bond Buyer Revenue Bond Index, declined over 30
basis points to end the February period at 5.36%. Tax-exempt bond
yields have not been at these levels since the mid-1970s.
Without the ability to benefit from the tax advantage inherent in
municipal bonds, foreign investors have not participated to any
significant extent in the tax-exempt market. Consequently, municipal
bond yields have not declined as dramatically as have taxable US
Treasury securities. The increase in new municipal bond issuance
over the past six months has also prevented the tax-exempt bond
market from more closely mirroring the yield declines exhibited by
its taxable counterpart. Over the last six months, over $125 billion
in new long-term municipal bonds were underwritten, an increase of
over 35% compared to the same six-month period one year ago. As
interest rates have continued to decline in recent months, new tax-
exempt bond issuance has remained strong. Over $60 billion in new
long-term municipal securities were issued during the last three
months, an increase of over 40% compared to the same three-month
period ended February 28, 1997. During the past month, over $20
billion in new long-term municipal securities were underwritten,
representing an increase of over 50% compared to the February 1997
level and the largest February issuance ever.
In our opinion, the recent correction in world equity markets has
enhanced the near-term prospects for continued low, if not
declining, interest rates in the United States. It is likely that
the recent correction will result in slower US domestic growth in
the coming months. This decline should be generated in part by
reduced US export growth. Going forward, Asian consumer demand for
US products is likely to decline in response to diminished Asian
economic growth. Perhaps more important, it is likely that, barring
a dramatic and unexpected resurgence in domestic growth and
inflation, the Federal Reserve Board will be unwilling to raise
interest rates until the full impact of the recent Asian market
turmoil can be established.
All of these factors suggest that over the near term, interest
rates, including tax-exempt bond yields, are unlikely to rise by any
appreciable amount. It is probable that municipal bond yields will
remain under some relative pressure because of continued strong new-
issue supply. However, the recent pace of municipal bond issuance is
likely to be unsustainable. Continued increases in bond issuance
will require lower and lower tax-exempt bond yields to generate the
economic savings necessary for additional municipal bond
refinancings. Preliminary estimates of 1998 total municipal bond
issuance are presently in the $200 billion--$225 billion range.
These estimates suggest that recent supply pressures are likely to
abate somewhat next year, or at least exert only minimal technical
pressure during 1998. Additionally, municipal bond investors
received approximately $30 billion in January and February coupon
payments, bond maturities and proceeds from early redemptions, which
should serve to intensify investor demand in the near future. With
tax-exempt bond yields at already attractive yield ratios relative
to US Treasury bonds (approximately 90% at the end of February
1998), any further pressure on the municipal market may well
represent an attractive investment opportunity.
Portfolio Strategy
Since inception, we managed the Fund with the intent of sustaining
an appealing level of tax-exempt income while simultaneously
achieving an above average total return. During the period, we
maintained an aggressive portfolio strategy that allowed the Fund to
take full advantage of the historic decline in interest rates and
perform extremely well. Although some market volatility is expected,
we plan to maintain the Fund's aggressive strategy. We anticipate
that inflation will remain modest and that slower economic growth
will emerge prior to the end of 1998. Looking ahead, we will seek to
take advantage of any market setbacks in an effort to improve the
call structure of the Fund and to further extend its duration.
In Conclusion
We appreciate your ongoing interest in MuniHoldings New York Insured
Fund, Inc., and we look forward to assisting you with your financial
needs in the months and years ahead.
Sincerely,
/S/ARTHUR ZEIKEL
Arthur Zeikel
President
/S/VINCENT R. GIORDANO
Vincent R. Giordano
Senior Vice President
/S/ROBERTO ROFFO
Roberto Roffo
Vice President and Portfolio Manager
April 2, 1998
Portfolio Insurance
MuniHoldings New York Insured Fund, Inc. seeks to provide its
shareholders with the benefits of an insured municipal bond
portfolio. Previously, the Fund generally achieved this objective by
limiting at least 80% of portfolio investments to municipal bonds
insured under policies obtained by the issuer or another party,
including the Fund itself, and issued by insurance carriers with
claims paying ability ratings of AAA or its equivalent from at least
two nationally recognized rating agencies, such as Standard & Poor's
Ratings Services, Moody's Investors Service, Inc., or Fitch IBCA,
Inc. In order to increase the Fund's flexibility to obtain
appropriate investments, the Fund has modified its practice with
respect to the ratings criteria it applies to the carriers that
provide insurance for the municipal bonds in its portfolio.
Currently, the Fund may also invest in municipal bonds insured by,
or may itself purchase an insurance policy for all or a portion of
its municipal bond portfolio from, an insurance carrier with a
claims paying ability rating of AAA or its equivalent from at least
one of such nationally recognized rating agencies. There can be no
assurance that insurance of the kind described above will continue
to be available to the Fund, and the Fund has reserved its right to
modify its criteria for portfolio insurance, or discontinue its
policy of maintaining an insured portfolio if such insurance is no
longer available or if the cost of such insurance outweighs its
benefits to the Fund. Although we periodically review the financial
condition of each insurer, there can be no assurance that the
insurers will be able to honor their obligations under the
circumstances of any claim thereunder.
<TABLE>
<CAPTION>
MuniHoldings New York Insured Fund, Inc., February 28, 1998
SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <C> <C>
New York -- 95.0% Albany County, New York, Airport Authority,
Airport Revenue Bonds, AMT (b):
AAA Aaa $1,500 5.375% due 12/15/2017 $1,524
AAA Aaa 1,500 5.50% due 12/15/2019 1,543
AAA Aaa 1,000 Buffalo, New York, Municipal Water Finance
Authority, Water System Revenue Bonds, 5% due
7/01/2025 (e) 975
Metropolitan Transportation Authority, New York,
Commuter Facilities Revenue Bonds:
AAA Aaa 3,000 (Grand Central Terminal), Series 1, 5.70% due
7/01/2024 (b) 3,150
AAA Aaa 5,400 Series A, 5.75% due 7/01/2021 (d) 5,742
AAA Aaa 7,695 Series A, 5.625% due 7/01/2027 (d) 8,053
AAA Aaa 1,000 Series B, 5% due 7/01/2020 (c) 978
AAA Aaa 2,625 Series E, 5% due 7/01/2021 (c) 2,565
AAA Aaa 11,500 Metropolitan Transportation Authority, New York,
Dedicated Tax Fund, Series A, 5.25% due 4/01/2026
(d) 11,538
AAA Aaa 1,000 Metropolitan Transportation Authority, New York,
Transportation Facilities Revenue Bonds, Series
C-1, 5.50% due 7/01/2022 (d) 1,036
AAA Aaa 2,385 Monroe Woodbury, New York, Central School District
No. 1, UT, 5.625% due 5/15/2023 (d) 2,492
AAA Aaa 10,500 New York City, New York, Educational Construction
Fund Revenue Bonds, Junior Sub-Lien, 5.50% due
4/01/2026 (c) 10,844
New York City, New York, GO, UT:
BBB+ A3 5,820 Series C, 5.375% due 11/15/2027 5,807
A1+ VMIG1+ 500 VRDN, Series B, Sub-Series B-4, 3.65% due
8/15/2023 (a)(d) 500
AAA Aaa 1,830 New York City, New York, IDA, Civic Facilities
Revenue Bonds (Rockefeller Foundation Project),
5.375% due 7/01/2023 1,854
A A 5,000 New York City, New York, IDA, Special Facility
Revenue Bonds (Terminal One Group Association
Project), AMT, 6.125% due 1/01/2024 5,298
New York City, New York, Municipal Water Finance
Authority, Water and Sewer System Revenue Bonds:
AAA Aaa 3,400 Refunding, Series C, 5% due 6/15/2021 (e) 3,322
A- A2 12,000 Series B, 5.75% due 6/15/2029 12,677
AAA Aaa 6,500 Series B, 5.125% due 6/15/2030 (e) 6,374
AA Aa3 10,000 New York City, New York, Transitional Finance
Authority Revenue Bonds (Future Tax Secured),
Series A, 5% due 8/15/2027 9,671
New York State Dormitory Authority Revenue Bonds:
AAA Aaa 3,350 (Consolidated City University System), Series 1,
5.125% due 7/01/2027 (d) 3,307
A1+ VMIG1+ 100 (Cornell University), VRDN, Series B, 3.65% due
7/01/2025 (a) 100
AAA Aaa 10,000 (Frances Schervier Home), 5.50% due 7/01/2027 (b) 10,314
AAA Aaa 6,000 (Mental Health Services Facilities), Series B,
5.375% due 2/15/2026 (b) 6, 076
AAA Aaa 5,320 (Millard Fillmore Hospital), 5.375% due 2/01/2032
(c)(f) 5,385
AAA Aaa 2,000 (Niagara Nursing Home), 5.60% due 8/01/2037 (d)(f) 2,079
AAA Aaa 10,780 Refunding (United Hospital Health Services --
Mortgage Hospital), 5.375% due 8/01/2027 (c)(f) 10,936
AAA Aaa 5,000 (Saint Barnabas Hospital), 5.45% due 8/01/2035
(c)(f) 5,103
AAA Aaa 6,000 New York State Energy Research and Development
Authority, Facilities Revenue Refunding Bonds
(Consolidated Edison Company of New York), Series
A, 6.10% due 8/15/2020 (c) 6,562
AAA Aaa 2,500 New York State Energy Research and Development
Authority, Gas Facilities Revenue Bonds, RITR,
Series 9, 7.875% due 1/01/2021 (d)(g) 2,687
AAA Aaa 2,305 New York State Energy Research and Development
Authority, PCR (New York State Electric and Gas
Corporation Project), AMT, Series A, 6.15% due
7/01/2026 (d) 2,503
AAA Aaa 1,285 New York State Energy Research and Development
Authority, Solid Waste Disposal Revenue Bonds
(New York State Electric and Gas Company Project),
AMT, Series A, 5.70% due 12/01/2028 (d) 1,335
BBB Baa2 1,235 New York State Environmental Facilities
Corporation, Solid Waste Disposal Revenue Bonds
(Occidental Petroleum Corporation), AMT,
Sub-Series A, 5.70% due 9/01/2028 1,260
New York State, HFA, Revenue Bonds, Series A:
AAA Aaa 2,000 (Fulton Manor), 6.10% due 11/15/2025 (c)(f) 2,163
AAA Aaa 1,800 Refunding (Housing Mortgage Project), 6.10% due
11/01/2015 (b) 1,949
AAA Aaa 3,000 Refunding (Housing Mortgage Project), 6.125% due
11/01/2020 (b) 3,242
New York State Local Government Assistance
Corporation:
AAA Aaa 2,800 Refunding, Series B, 5.50% due 4/01/2021 (c) 2,869
AAA Aaa 3,000 Refunding, Series C, 5% due 4/01/2021 (d) 2,924
AAA Aaa 6,510 Series O, 5% due 4/01/2023 (c) 6,337
AAA Aaa 1,000 New York State Medical Care Facilities Finance
Agency Revenue Bonds (Mental Health Services
Facilities), Series A, 6% due 2/15/2025 (d) 1,075
New York State Mortgage Agency, Homeowner Mortgage
Revenue Bonds:
NR* Aa2 1,000 AMT, Series 58, 6.40% due 4/01/2027 1,085
AAA Aaa 2,140 AMT, Series 67, 5.70% due 10/01/2017 (d) 2,247
NR* Aa2 6,000 AMT, Series 67, 5.80% due 10/01/2028 6,256
NR* Aa2 2,500 Refunding, AMT, Series 54, 6.20% due 10/01/2026 2,674
NR* Aa2 1,000 Refunding, Series 61, 5.80% due 10/01/2017 1,050
NR* Aa2 1,500 Series 59, 6.25% due 4/01/2027 1,618
AAA VMIG1+ 600 New York State Thruway Authority, General Revenue
Bonds, VRDN, 3.65% due 1/01/2024 (a)(e) 600
AAA Aaa 10,000 New York State Urban Development Corporation,
Revenue Bonds (Correctional Capital Facilities),
Series 6, 5.375% due 1/01/2025 (c) 10,171
Port Authority of New York and New Jersey, Special
Obligation Revenue Bonds, AMT, Series 6:
AAA Aaa 9,980 (JFK International Air Terminal Project), 3rd
Installment, 5.75% due 12/01/2022 (d) 10,575
A1+ VMIG1+ 100 (Versatile Structure Obligation), VRDN, 3.55% due
12/01/2017 (a) 100
AAA Aaa 7,090 Suffolk County, New York, Water Authority,
Waterworks Revenue Bonds, Series A, 5% due
6/01/2022 (c) 6,924
AAA Aaa 11,000 Syracuse, New York, Housing Authority, Mortgage
Revenue Bonds (Loretto Rest), Series A, 5.70% due
8/01/2027 (c)(f) 11,665
A+ Aa3 8,000 Triborough Bridge and Tunnel Authority, New York,
General Purpose Revenue Bonds, Series A, 5% due
1/01/2024 7,751
------------
Total Investments (Cost -- $229,288) -- 95.0% 236,865
Other Assets Less Liabilities -- 5.0% 12,397
------------
Net Assets -- 100.0% $249,262
============
(a) The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the interest
rate in effect at February 28, 1998.
(b) FSA Insured.
(c) AMBAC Insured.
(d) MBIA Insured.
(e) FGIC Insured.
(f) FHA Insured.
(g) The interest rate is subject to change periodically and inversely based upon prevailing market
rates. The interest rate shown is the interest rate in effect at February 28, 1998.
* Not Rated.
+ Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
Quality Profile
The quality ratings of securities in the Fund as of February 28, 1998
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets*
AAA/Aaa 72.4%
AA/Aa 12.1
A/A 7.2
BBB/Baa 2.8
Other+ 0.5
+ Temporary investments in short-term municipal securities.
* Total may not equal 100%.
Portfolio
Abbreviations
To simplify the listings of MuniHoldings New York Insured Fund, Inc.'s
portfolio holdings in the Schedule of Investments, we have abbreviated
the names of many of the securities according to the list at right.
AMT Alternative Minimum Tax (subject to)
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
PCR Pollution Control Revenue Bonds
RITR Residual Interest Trust Receipts
UT Unlimited Tax
VRDN Variable Rate Demand Notes
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
As of February 28, 1998
<S> <C> <C> <C>
Assets: Investments, at value (identified cost -- $229,288,376) (Note 1a) $236,865,225
Receivables:
Securities sold $9,783,470
Interest 3,017,267 12,800,737
------------
Deferred organization expenses (Note 1e) 13,449
------------
Total assets 249,679,411
------------
Liabilities: Payables:
Investment adviser (Note 2) 63,443
Dividends to shareholders (Note 1f) 52,555 115,998
------------
Accrued expenses and other liabilities 301,857
------------
Total liabilities 417,855
------------
Net Assets: Net assets $249,261,556
============
Capital: Capital Stock (200,000,000 shares authorized)(Note 4):
Preferred Stock, par value $.10 per share (3,800 shares of AMPS*
issued and outstanding at $25,000 per share liquidation preference) $95,000,000
Common Stock, par value $.10 per share (9,787,106 shares issued and
outstanding) $978,710
Paid-in capital in excess of par 144,677,715
Undistributed investment income -- net 732,752
Undistributed realized capital gains on investments -- net 295,530
Unrealized appreciation on investments -- net 7,576,849
------------
Total -- Equivalent to $15.76 net asset value per share of Common Stock
(market price -- $15.50) 154,261,556
------------
Total capital $249,261,556
============
* Auction Market Preferred Shares.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Period September 19, 1997+ to February 28, 1998
<S> <C> <C> <C>
Investment Interest and amortization of premium and discount earned $5,539,627
Income (Note 1d):
Expenses: Investment advisory fees (Note 2) $578,512
Commission fees (Note 4) 102,386
Accounting services (Note 2) 23,188
Professional fees 21,440
Directors' fees and expenses 10,106
Transfer agent fees 9,529
Listing fees 7,691
Custodian fees 6,019
Printing and shareholder reports 3,691
Pricing fees 3,288
Amortization of organization expenses (Note 1e) 1,469
Other 7,985
------------
Total expenses before reimbursement 775,304
Reimbursement of expenses (Note 2) (482,244)
------------
Total expenses after reimbursement 293,060
------------
Investment income -- net 5,246,567
------------
Realized & Realized gain on investments -- net 295,530
Unrealized Gain on Unrealized appreciation on investments -- net 7,576,849
Investments -- Net ------------
(Notes 1b, 1d & 3): Net Increase in Net Assets Resulting from Operations $13,118,946
============
+ Commencement of operations.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
For the Period
Sept. 19, 1997+
Increase (Decrease) in Net Assets: to Feb. 28, 1998
<S> <C> <C>
Operations: Investment income -- net $5,246,567
Realized gain on investments -- net 295,530
Unrealized appreciation on investments -- net 7,576,849
------------
Net increase in net assets resulting from operations 13,118,946
------------
Dividends to Investment income -- net:
Shareholders Common Stock (3,169,014)
(Note 1f): Preferred Stock (1,344,801)
------------
Net decrease in net assets resulting from dividends to shareholders (4,513,815)
------------
Capital Stock Proceeds from issuance of Common Stock 146,625,000
Transactions Proceeds from issuance of Preferred Stock 95,000,000
(Notes 1e & 4): Value of shares issued to Common Stock Shareholders in reinvestment of dividends 85,052
Offering and underwriting costs resulting from the issuance of Common Stock (262,948)
Offering and underwriting costs resulting from the issuance of Preferred Stock (890,684)
------------
Net increase in net assets derived from capital stock transactions 240,556,420
------------
Net Assets: Total increase in net assets 249,161,551
Beginning of period 100,005
------------
End of period* $249,261,556
============
* Undistributed investment income -- net $732,752
============
+ Commencement of operations.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
The following per share data and ratios have been derived
from information provided in the financial statements. For the Period
Sept. 19, 1997+
to Feb. 28, 1998
Increase (Decrease) in Net Asset Value:
<S> <C> <C>
Per Share Net asset value, beginning of period $15.00
Operating ------------
Performance: Investment income -- net .42
Realized and unrealized gain on investments -- net .92
------------
Total from investment operations 1.34
------------
Less dividends to Common Stock shareholders:
Investment income -- net (.32)
------------
Capital charge resulting from issuance of Common Stock (.03)
------------
Effect of Preferred Stock activity:++
Dividends to Preferred Stock shareholders:
Investment income -- net (.14)
Capital charge resulting from issuance of Preferred Stock (.09)
------------
Total effect of Preferred Stock activity (.23)
------------
Net asset value, end of period $15.76
============
Market price per share, end of period $15.50
============
Total Investment Based on market price per share 5.51%++++
Return:** ============
Based on net asset value per share 7.28%++++
============
Ratios to Average Expenses, net of reimbursement .28%*
Net Assets:*** ============
Expenses .74%*
============
Investment income -- net 4.99%*
============
Supplemental Net assets, net of Preferred Stock, end of period (in thousands) $154,262
Data: ============
Preferred Stock outstanding, end of period (in thousands) $95,000
============
Portfolio turnover 35.57%
============
Leverage: Asset coverage per $1,000 $2,624
============
Dividends Series A -- Investment income -- net $351
Per Share on ============
Preferred Stock Series B -- Investment income -- net $357
Outstanding: ============
* Annualized.
** Total investment returns based on market value, which can be significantly
greater or lesser than the net asset value, may result in substantially
different returns. Total investment returns exclude the effects of sales loads.
*** Do not reflect the effect of dividends to Preferred Stock shareholders.
+ Commencement of operations.
++ The Fund's Preferred Stock was issued on October 7, 1997.
++++ Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniHoldings New York Insured Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a non-diversified,
closed-end management investment company. These unaudited financial
statements reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the
interim period presented. All such adjustments are of a normal
recurring nature. Prior to commencement of operations on September
19, 1997, the Fund had no operations other than those relating to
organizational matters and the sale of 6,667 shares of Common Stock
on September 16, 1997 to Fund Asset Management, L.P. ("FAM") for
$100,005. The Fund determines and makes available for publication
the net asset value of its Common Stock on a weekly basis. The
Fund's Common Stock is listed on the New York Stock Exchange under
the symbol MHN. The following is a summary of significant accounting
policies followed by the Fund.
(a) Valuation of investments -- Municipal bonds are traded primarily
in the over-the-counter markets and are valued at the most recent
bid price or yield equivalent as obtained by the Fund's pricing
service from dealers that make markets in such securities. Financial
futures contracts and options thereon, which are traded on
exchanges, are valued at their closing prices as of the close of
such exchanges. Options, which are traded on exchanges, are valued
at their last sale price as of the close of such exchanges or,
lacking any sales, at the last available bid price. Securities with
remaining maturities of sixty days or less are valued at amortized
cost, which approximates market value. Securities for which market
quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of
Directors of the Fund, including valuations furnished by a pricing
service retained by the Fund, which may utilize a matrix system for
valuations. The procedures of the pricing service and its valuations
are reviewed by the officers of the Fund under the general
supervision of the Board of Directors.
(b) Derivative financial instruments -- The Fund may engage in
various portfolio strategies to seek to increase its return by
hedging its portfolio against adverse movements in the debt markets.
Losses may arise due to changes in the value of the contract or if
the counterparty does not perform under the contract.
[bullet] Financial futures contracts -- The Fund may purchase or
sell financial futures contracts and options on such futures
contracts for the purpose of hedging the market risk on existing
securities or the intended purchase of securities. Futures contracts
are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a
contract, the Fund deposits and maintains as collateral such initial
margin as required by the exchange on which the transaction is
effected. Pursuant to the contract, the Fund agrees to receive from
or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are
known as variation margin and are recorded by the Fund as unrealized
gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed.
[bullet] Options -- The Fund is authorized to 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.
(c) Income taxes -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income -- Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Deferred organization and offering expenses -- Deferred
organization expenses are amortized on a straight-line basis over a
five-year period. Direct expenses relating to the public offering of
the Fund's Common and Preferred Stock were charged to capital at the
time of issuance of the shares.
(f) Dividends and distributions -- Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with FAM.
The general partner of FAM is Princeton Services, Inc. ("PSI"), an
indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML &
Co."), which is the limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of 0.55% of
the Fund's average weekly net assets. For the period ended February
28, 1998, FAM earned fees of $578,512, of which $482,244 was
reimbursed.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the period September 19, 1997 to February 28, 1998 were
$253,127,811 and $73,091,406, respectively.
Net realized gains for the period September 19, 1997 to February 28,
1998 and net unrealized gains as of February 28, 1998 were as
follows:
Realized Unrealized
Gains Gains
Long-term investments $295,530 $7,576,849
------------ ------------
Total $295,530 $7,576,849
============ ============
As of February 28, 1998, net unrealized appreciation for Federal
income tax purposes aggregated $7,576,849, all of which related to
appreciated securities. The aggregate cost of investments at
February 28, 1998 for Federal income tax purposes was $229,288,376.
4. Capital Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of capital stock,
including Preferred Stock, par value $.10 per share, all of which
were initially classified as Common Stock. The Board of Directors is
authorized, however, to reclassify any unissued shares of capital
stock without approval of holders of Common Stock.
Common Stock
Shares issued and outstanding during the period September 19, 1997
to February 28, 1998, increased by 9,520,000 from shares sold and by
260,439 as a result of dividend reinvestment.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred
Stock of the Fund 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 February 28, 1998 were as
follows: Series A, 3.42% and Series B, 3.375%.
As of February 28, 1998, there were 3,800 AMPS shares authorized,
issued and outstanding, with a liquidation preference of $25,000 per
share.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from 0.25% to 0.375%,
calculated on the proceeds of each auction. For the period September
19, 1997 to February 28, 1998, Merrill Lynch, Pierce, Fenner & Smith
Inc., an affiliate of FAM, earned $86,498 as commissions.
5. Subsequent Event:
On March 9, 1998, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$.068889 per share, payable on March 30, 1998 to shareholders of
record as of March 23, 1998.
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Roberto Roffo, Vice President
Gerald M. Richard, Treasurer
Patrick D. Sweeney, Secretary
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
NYSE Symbol
MHN
