MUNIHOLDINGS
NEW YORK INSURED
FUND, INC.
STRATEGIC
Performance
[GRAPHIC OMITTED]
Semi-Annual Report
February 29, 2000
<PAGE>
MuniHoldings New York Insured Fund, Inc.
The Benefits and
Risks of
Leveraging
MuniHoldings New York Insured Fund, Inc. utilizes leveraging 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 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 on 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 Fund may invest in certain
securities whose potential income return is inversely related to changes in a
floating interest rate ("inverse floaters"). In general, income on inverse
floaters will decrease when short-term interest rates increase and increase
when short-term interest rates decrease. Investments in inverse floaters may
be characterized as derivative securities and may subject the Fund to the
risks of reduced or eliminated interest payments and losses of invested
principal. In addition, inverse floaters have the effect of providing
investment leverage and, as a result, the market value of such securities will
generally be more volatile than that of fixed-rate, tax-exempt securities. To
the extent the Fund invests in inverse floaters, the market value of the
Fund's portfolio and the net asset value of the Fund's shares may also be more
volatile than if the Fund did not invest in these securities.
<PAGE>
MuniHoldings New York Insured Fund, Inc., February 29, 2000
DEAR SHAREHOLDER
For the six months ended February 29, 2000, the Common Stock of MuniHoldings New
York Insured Fund, Inc. earned $0.417 per share income dividends, which included
earned and unpaid dividends of $0.069. This represents a net annualized yield of
6.32%, based on a month-end per share net asset value of $12.86. Over the same
period, the total investment return on the Fund's Common Stock was -6.03%, based
on a change in per share net asset value from $14.16 to $12.86, and assuming
reinvestment of $0.423 per share income dividends.
For the six months ended February 29, 2000, the Fund's Preferred Stock had an
average yield of 3.55% for Series A and 3.49% for Series B.
The Municipal Market Environment
Throughout most of the period ended February 29, 2000, US fixed-income interest
rates were under pressure as domestic economic growth remained robust and rising
commodity prices, especially oil, rekindled investor concerns regarding a
reemergence of inflationary pressures. US economic growth, in part intensified
by Year 2000 (Y2K) preparations, grew at a 6.9% rate in the fourth quarter of
1999 and at a 4.4% annual rate for all of 1999.
However, despite these significant growth rates, no price measure indicator has
shown any considerable signs of pressures at either the consumer level or from
labor, despite the lowest unemployment rates since January 1970. Given no signs
of an economic slowdown, the Federal Reserve Board continued to raise short-term
interest rates in August and November 1999 and again in early February 2000. In
each instance, the Federal Reserve Board cited both the continued growth of US
employment and the impressive strength of the US equity markets as reasons for
attempting to moderate US economic growth before inflationary price increases
are realized. In this environment, long-term US Treasury bond yields rose almost
60 basis points (0.60%) by mid-January 2000 to 6.75%, their highest yield level
since June 1997.
However, in late January and early February 2000, the US Treasury announced that
it intended to use present and future surpluses to purchase existing high-coupon
debt, as well as to limit future issuance of longer maturity debt. While
complete details have not been released, we expect the reduced supply of
long-term US Treasury bonds to be significant and easily exceed demand on the
part of the world's financial institutions and governments. US Treasury bond
prices began rising as investors began hoarding what is expected to become a
scarce commodity. While US Treasury yields have remained high through the past
ten years, the yield on 30-year US Treasury bonds fell dramatically, by
declining more than 50 basis points to end the period at 6.14%.
The municipal bond market has also been under pressure throughout the entire
period. By mid-January 2000, yields on long-term, uninsured revenue bonds rose
more than 50 basis points to 6.35%, as measured by the Bond Buyer Revenue Bond
Index. While some states such as California and Maryland have announced that
their present and expected budget surpluses will allow for the cancellation
and/or postponement of expected bond issuance, the municipal bond market has
been unable to match the sort of price improvement that US Treasury bonds have
shown in recent weeks. Municipal bonds yields declined approximately 10 basis
points to 6.24% by February 29, 2000. During the last few months, long-term
tax-exempt bond yields rose more than 40 basis points to their highest level
since August 1995.
The relative underperformance of the municipal bond market in recent months has
been especially disappointing given the strong technical position the tax-exempt
bond market has enjoyed. The issuance of long-term tax-exempt securities has
dramatically declined. Over the last year, $212 billion in new long-term
municipal securities was issued, a decline of more than 20% compared to the same
period a year earlier. For the three months ended February 29, 2000, less than
$40 billion in new tax-exempt bonds was underwritten, a decline of more than 30%
compared to the February 28, 1999 quarter. Thus far in 2000, total bond issuance
volume is less than $20 billion, a decline of more than 40% compared to the
first two months of 1999.
Despite receiving more than $30 billion in coupon payments, bond maturities and
the proceeds from early bond redemptions coupled with the highest municipal bond
yields in three years, overall investor demand has diminished. Long-term
municipal bond mutual funds have seen consistent outflows in recent months as
the yields of individual securities have risen faster than those of larger, more
diverse mutual funds. Over the last six months, tax-exempt mutual funds have had
net redemptions of approximately $9 billion. Also, the demand from property and
casualty insurance companies has weakened as a result of the losses and
anticipated losses incurred from a series of damaging storms across much of the
eastern United States. Additionally, many institutional investors who have in
recent years been attracted to the municipal bond market by historically
attractive tax-exempt bond yield ratios of over 90%, found other asset classes
even more attractive. Even with a reduced supply position, tax-exempt issuers
have been forced repeatedly to raise municipal bond yields in an attempt to
attract adequate demand.
However, the recent relative underperformance of the municipal bond market has
resulted in the opportunity for long-term investors to purchase tax-exempt
issues whose yields are in excess of taxable US Treasury securities. At February
29, 2000, long-term uninsured municipal revenue bond yields were 101.5% of
comparable US Treasury securities. In recent months, many taxable asset classes,
such as corporate bonds, mortgage-backed securities, and US Government agency
issues have all accelerated debt issuance. This acceleration occurred largely to
avoid issuing securities at year-end and thereby avoid any associated potential
Y2K problems. However, this increased issuance also resulted in higher yield
levels in the various asset classes as lower bond prices became necessary to
attract sufficient investor demand. Going forward, we believe that the pace of
non-US Government debt is likely to slow significantly. As the supply of this
debt declines, many institutional investors are likely to return to the
municipal bond market and the attractive yield ratios available. Furthermore,
with the potential scarcity of longer maturity debt, the attractiveness of the
US municipal bond market should be further enhanced.
Any significantly lower municipal bond yields are still likely to require weaker
US employment growth and consumer spending. The tightening actions taken in
recent months by the Federal Reserve Board, as well as those expected in March
and perhaps May 2000, should eventually slow US economic growth. The recent
decline in US home sales is perhaps the first sign that consumer spending is
being slowed by higher interest rates. Until further signs develop, it is likely
that the municipal bond market's current favorable technical position will
dampen significant tax-exempt interest rate volatility and provide a stable
environment for an eventual improvement in municipal bond prices.
Portfolio Strategy
During the six months ended February 29, 2000, our investment strategy focused
on seeking to enhance the Fund's level of tax-exempt income. We accomplished
this by selling our deep-discounted bonds and purchasing higher coupon bonds (6%
or higher) whenever they became available in the new-issue market. New-issue
supply was down 20% compared to the same period a year ago. While limited by the
availability of new issues, our strategy allowed us to achieve a high level of
tax-exempt income, while seeking to reduce the volatility of our portfolio.
In Conclusion
On January 20, 2000, shareholders of the Fund approved a plan of reorganization
whereby the Fund would acquire substantially all of the assets and liabilities
of MuniHoldings New York Fund, Inc., MuniHoldings New York Insured Fund II, Inc.
and MuniHoldings New York Insured Fund III, Inc. in exchange for newly issued
shares of the Fund. The plan of reorganization was consummated on March 6, 2000.
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/ Terry K. Glenn
Terry K. Glenn
President and Director
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ Roberto Roffo
Roberto Roffo
Vice President and
Portfolio Manager
March 27, 2000
2 & 3
<PAGE>
MuniHoldings New York Insured Fund, Inc., February 29, 2000
PROXY RESULTS
During the six-month period ended February 29, 2000, MuniHoldings New York
Insured Fund, Inc.'s Common Stock shareholders voted on the following proposals.
Proposal 1 was approved at a shareholders' meeting on January 20, 2000.
Proposals 2 and 3 were approved at a shareholders' meeting on December 15, 1999.
The description of each proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization
among the Fund, MuniHoldings New York Fund, Inc.,
MuniHoldings New York Insured Fund II, Inc., and
MuniHoldings New York Insured Fund III, Inc. 4,915,555 192,051 159,131
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Voted Shares Withheld
For From Voting
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To elect the Fund's Directors: Terry K. Glenn 9,454,372 263,405
Ronald W. Forbes 9,451,972 265,805
Cynthia A. Montgomery 9,454,372 263,405
Kevin A. Ryan 9,444,032 273,745
Arthur Zeikel 9,435,515 282,262
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3. To ratify the selection of Deloitte & Touche LLP as
the Fund's independent auditors for the current fiscal
year. 9,327,352 255,851 134,574
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
During the six-month period ended February 29, 2000, MuniHoldings New York
Insured Fund, Inc.'s Preferred Stock (Series A and B) shareholders voted on the
following proposals. Proposal 1 was approved at a shareholders' meeting on
January 20, 2000. Proposals 2 and 3 were approved at a shareholders' meeting on
December 15, 1999. The description of each proposal and number of shares voted
are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. To approve the Agreement and Plan of Reorganization
among the Fund, MuniHoldings New York Fund, Inc.,
MuniHoldings New York Insured Fund II, Inc., and
MuniHoldings New York Insured Fund III, Inc. as
follows:
Series A 1,666 30 160
Series B 1,818 0 82
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Voted Shares Withheld
For From Voting
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To elect the Fund's Board of Directors: Ronald W.
Forbes, Cynthia A. Montgomery, Charles C. Reilly,
Kevin A. Ryan, Richard R. West and Arthur Zeikel as
follows:
Series A 1,055 6
Series B 1,155 7
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3. To ratify the selection of Deloitte & Touche LLP as
the Fund's independent auditors for the current fiscal
year as follows:
Series A 1,055 4 2
Series B 1,155 0 7
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
======================================================================================================================
<S> <C> <C> <C> <C> <C>
New York - 103.4%
Albany County, New York, Airport Authority,
Airport Revenue Bonds, AMT (d):
AAA Aaa $ 1,500 5.375% due 12/15/2017 $ 1,392
AAA Aaa 1,500 5.50% due 12/15/2019 1,394
---------------------------------------------------------------------------------------------
AAA Aaa 4,850 Battery Park, New York, City Authority Revenue
Bonds, Junior Lien, Series A, 5.50% due 11/01/2026 (a) 4,468
---------------------------------------------------------------------------------------------
Buffalo, New York, GO (d):
AAA Aaa 920 School, Series E, 6% due 12/01/2013 (i) 954
AAA Aaa 1,000 Series D, 6% due 12/01/2013 1,037
AAA Aaa 1,000 Series D, 6% due 12/01/2014 1,029
---------------------------------------------------------------------------------------------
A1+ VMIG1+ 1,100 Long Island Power Authority, New York, Electric
System Revenue Bonds, VRDN, Sub-Series 5, 3.75%
due 5/01/2033 (h) 1,100
---------------------------------------------------------------------------------------------
AAA Aaa 1,700 Long Island Power Authority, New York, Electric
System Revenue Refunding Bonds, Series A, 5.125%
due 12/01/2022 (d) 1,494
---------------------------------------------------------------------------------------------
Metropolitan Transportation Authority, New York,
Commuter Facilities Revenue Bonds:
AAA Aaa 3,000 (Grand Central Terminal), Series 1, 5.70%
due 7/01/2024 (d) 2,871
AAA Aaa 7,695 Series A, 5.625% due 7/01/2027 (e) 7,235
---------------------------------------------------------------------------------------------
Metropolitan Transportation Authority, New York,
Commuter Facilities Revenue Refunding Bonds (a):
AAA Aaa 1,000 Series B, 5% due 7/01/2020 869
AAA Aaa 2,625 Series E, 5% due 7/01/2021 2,269
---------------------------------------------------------------------------------------------
</TABLE>
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
VRDN Variable Rate Demand Notes
4 & 5
<PAGE>
MuniHoldings New York Insured Fund, Inc., February 29, 2000
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
=====================================================================================================================
<S> <C> <C> <C> <C> <C>
New York
(continued) AAA Aaa $ 6,210 Metropolitan Transportation Authority,
New York, Dedicated Tax Fund Revenue Bonds,
Series A, 5% due 4/01/2029 (d) $ 5,240
--------------------------------------------------------------------------------------------
AAA Aaa 1,000 Metropolitan Transportation Authority, New York,
Transit Facilities Revenue Bonds, Series C-1, 5.50%
due 7/01/2022 (e) 932
--------------------------------------------------------------------------------------------
AAA Aaa 2,385 Monroe-Woodbury, New York, Central School District,
GO, 5.625% due 5/15/2023 (e) 2,285
--------------------------------------------------------------------------------------------
AAA Aaa 3,000 Nassau County, New York, IDA, Civic Facility Revenue
Refunding Bonds (Hofstra University Project), 5%
due 7/01/2023 (e) 2,582
--------------------------------------------------------------------------------------------
AAA Aaa 2,700 Nassau Health Care Corporation, New York, Health System
Revenue Bonds, 5.75% due 8/01/2029 (d) 2,589
--------------------------------------------------------------------------------------------
AAA Aaa 10,500 New York City, New York, Educational Construction Fund
Revenue Bonds, Junior Sub-Lien, 5.50% due 4/01/2026 (a) 9,682
--------------------------------------------------------------------------------------------
New York City, New York, GO (e):
AAA Aaa 5,820 Series C, 5.375% due 11/15/2027 5,252
AAA Aaa 7,500 Series J, 5.50% due 5/15/2015 7,318
--------------------------------------------------------------------------------------------
AAA Aaa 1,830 New York City, New York, IDA, Civic Facilities
Revenue Bonds (Rockefeller Foundation Project), 5.375%
due 7/01/2023 1,698
--------------------------------------------------------------------------------------------
A A3 5,000 New York City, New York, IDA, Special Facilities Revenue
Bonds (Terminal One Group Association Project), AMT,
6.125% due 1/01/2024 4,910
--------------------------------------------------------------------------------------------
NR* A1 9,000 New York City, New York, Municipal Water Finance
Authority, Water and Sewer System Revenue Bonds, RITR,
Series 21, 6.67% due 6/15/2029 (g) 8,073
--------------------------------------------------------------------------------------------
New York City, New York, Municipal Water Finance
Authority, Water and Sewer System Revenue Refunding
Bonds, Series A:
AAA Aaa 4,000 5.375% due 6/15/2026 (d) 3,612
A1+ VMIG1+ 500 VRDN, 3.90% due 6/15/2025 (b)(h) 500
--------------------------------------------------------------------------------------------
New York City, New York, Transitional Finance Authority
Revenue Bonds, Future Tax Secured, Series C:
AA Aa3 2,700 5.25% due 5/01/2015 2,543
NR* VMIG1+ 250 VRDN, 3.10% due 5/01/2028 (h) 250
--------------------------------------------------------------------------------------------
New York State Dormitory Authority Revenue Bonds:
AAA NR* 10,000 (City University System--Consolidated Second
Generation), Series A, 6.125% due 7/01/2013 (a) 10,465
AAA Aaa 1,200 (Cooper Union of Advance Science), 6.25% due
7/01/2029 (e) 1,228
AAA Aaa 10,000 (Frances Schervier Project), 5.50% due 7/01/2027 (d) 9,175
AAA Aaa 6,000 (Mental Health Services Facilities), Series B, 5.375%
due 2/15/2026 (d) 5,408
AAA Aaa 5,000 (Saint Barnabas Hospital), 5.45% due 8/01/2035 (a)(c) 4,458
--------------------------------------------------------------------------------------------
New York State Dormitory Authority, Revenue Refunding
Bonds:
AAA NR* 9,080 (Hospital Mortgage--United Health Services Hospitals),
5.375% due 8/01/2027 (a)(c) 8,201
AAA Aaa 4,550 (Mental Health Program), Series B, 5.50% due
8/15/2017 (e) 4,358
AAA Aaa 5,320 (Millard Fillmore Hospital Project), 5.375% due
2/01/2032 (a)(c) 4,712
AAA Aaa 3,460 (North Shore University Hospital), 5.25% due
11/01/2019 (e) 3,096
--------------------------------------------------------------------------------------------
New York State Energy Research and Development Authority,
Facilities Revenue Refunding Bonds
AAA Aaa 7,500 (Consolidated Edison Co. of New York), Series A, 6.10%
due 8/15/2020 (a) 7,567
--------------------------------------------------------------------------------------------
New York State Energy Research and Development Authority,
Gas Facilities Revenue Bonds
AAA Aaa 5,000 (Brooklyn Union Gas Company Project), Series A, 5.50% due
1/01/2021 (e) 4,682
--------------------------------------------------------------------------------------------
New York State Energy Research and Development Authority,
PCR, AMT:
AAA NR* 2,305 (New York State Electric and Gas Co. Project),
Series A, 6.15% due 7/01/2026 (e) 2,310
A1+ NR* 700 (Niagara Mohawk Power Corporation Project), VRDN,
Series B, 3.95% due 7/01/2027 (h) 700
--------------------------------------------------------------------------------------------
AAA Aaa 1,285 New York State Energy Research and Development Authority,
Solid Waste Disposal Revenue Bonds (New York State
Electric and Gas Co. Project), AMT, Series A, 5.70% due
12/01/2028 (e) 1,203
--------------------------------------------------------------------------------------------
AAA Aaa 4,400 New York State Environmental Facilities Corporation,
Water Facilities Revenue Refunding Bonds (Spring Valley
Water Company), Series B, 6.15% due 8/01/2024 (a) 4,437
--------------------------------------------------------------------------------------------
AAA Aaa 3,410 New York State, GO, Refunding, Series D, 5% due
7/15/2015 (a) 3,106
--------------------------------------------------------------------------------------------
AAA Aaa 2,000 New York State, HFA, Revenue Refunding Bonds
(Fulton Manor), Series A, 6.10% due 11/15/2025 (a)(c) 1,979
--------------------------------------------------------------------------------------------
New York State, HFA, Revenue Refunding Bonds, Housing
Mortgage Project, Series A (d):
AAA Aaa 1,740 6.10% due 11/01/2015 1,759
AAA Aaa 2,990 6.125% due 11/01/2020 2,978
--------------------------------------------------------------------------------------------
AAA Aaa 2,800 New York State Local Government Assistance Corporation,
Revenue Refunding Bonds, Series B, 5.50% due
4/01/2021 (a) 2,621
--------------------------------------------------------------------------------------------
AAA Aaa 1,000 New York State Medical Care Facilities Finance Agency
Revenue Bonds (Mental Health Services), Series A, 6%
due 2/15/2005 (e)(f) 1,055
--------------------------------------------------------------------------------------------
AAA Aaa 3,000 New York State Mortgage Agency Revenue Bonds, Homeowner
Mortgage, Series 89, 6% due 10/01/2017 (e) 3,004
--------------------------------------------------------------------------------------------
New York State Mortgage Agency, Revenue Refunding Bonds,
Homeowner Mortgage:
AAA Aaa 2,500 AMT, Series 54, 6.20% due 10/01/2026 (e) 2,523
NR* Aa1 940 AMT, Series 58, 6.40% due 4/01/2027 955
AAA Aaa 2,140 AMT, Series 67, 5.70% due 10/01/2017 (e) 2,081
AAA Aaa 5,990 AMT, Series 67, 5.80% due 10/01/2028 (e) 5,690
AAA Aaa 1,500 Series 59, 6.25% due 4/01/2027 (e) 1,518
NR* Aa1 1,000 Series 61, 5.80% due 10/01/2017 983
--------------------------------------------------------------------------------------------
AAA NR* 3,500 New York State Thruway Authority, Service Contract
Revenue Bonds (Local Highway and Bridge), 5.75% due
4/01/2015 (e) 3,503
--------------------------------------------------------------------------------------------
New York State Urban Development Corporation Revenue
Bonds:
AAA Aaa 7,950 (Correctional Capital Facilities), Series 5, 5.50%
due 1/01/2025 (e) 7,305
AAA Aaa 10,000 (Correctional Capital Facilities), Series 6, 5.375%
due 1/01/2025 (a) 9,066
AAA Aaa 2,500 (Correctional Facilities Service Contract), Series C,
6% due 1/01/2029 (a) 2,496
--------------------------------------------------------------------------------------------
AAA NR* 1,775 Niagara, New York, Frontier Authority, Airport Revenue
Bonds (Buffalo Niagara International Airport), AMT,
5% due 4/01/2028 (b) 1,472
--------------------------------------------------------------------------------------------
AAA Aaa 9,980 Port Authority of New York and New Jersey, Special
Obligation Revenue Bonds (JFK International Air Terminal
Project), AMT, Series 6, 5.75% due 12/01/2022 (e) 9,647
--------------------------------------------------------------------------------------------
NR* VMIG1+ 1,050 Port Authority of New York and New Jersey, Special
Obligation Revenue Refunding Bonds (Versatile Structure
Obligation), VRDN, AMT, Series 6, 3.85% due 12/01/2017 (h) 1,050
--------------------------------------------------------------------------------------------
</TABLE>
6 & 7
<PAGE>
MuniHoldings New York Insured Fund, Inc., February 29, 2000
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
======================================================================================================================
<S> <C> <C> <C> <C> <C>
New York
(concluded) AAA Aaa $ 7,090 Suffolk County, New York, Water Authority, Waterworks
Revenue Bonds, Series A, 5% due 6/01/2022 (a) $ 6,093
--------------------------------------------------------------------------------------------
AAA Aaa 2,250 Yonkers, New York, GO, Series C, 5% due 6/01/2019 (b) 1,974
======================================================================================================================
Total Investments (Cost -- $242,011) -- 103.4% 228,436
Variation Margin on Financial Futures Contracts** -- (0.1%) (147)
Liabilities in Excess of Other Assets -- (3.3%) (7,467)
--------
Net Assets -- 100.0% $220,822
========
======================================================================================================================
</TABLE>
(a) AMBAC Insured.
(b) FGIC Insured.
(c) FHA Insured.
(d) FSA Insured.
(e) MBIA Insured.
(f) Prerefunded.
(g) The interest rate is subject to change periodically and inversely based upon
prevailing market rates. The interest rate shown is the rate in effect at
February 29, 2000.
(h) The interest rate is subject to change periodically based upon prevailing
market rates. The interest rate shown is the rate in effect at February 29,
2000.
(i) All or a portion of security held as collateral in connection with open
financial futures contracts.
+ Highest short-term rating by Moody's Investors Service, Inc.
* Not Rated.
** Financial futures contracts sold as of February 29, 2000 were as follows:
- --------------------------------------------------------------------------------
(in Thousands)
- --------------------------------------------------------------------------------
Number of Expiration
Contracts Issue Date Value
- --------------------------------------------------------------------------------
235 US Treasury Bonds June 2000 $22,251
- --------------------------------------------------------------------------------
Total Financial Futures Contracts Sold
(Total Contract Price -- $22,119) $22,251
=======
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<TABLE>
<CAPTION>
As of February 29, 2000
============================================================================================================================
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$242,011,488)................. $228,436,273
Cash.................................................................. 9,578
Interest receivable................................................... 3,103,583
Prepaid expenses and other assets..................................... 57,562
------------
Total assets.......................................................... 231,606,996
------------
============================================================================================================================
Liabilities: Payables:
Securities purchased................................................ $ 10,415,400
Variation margin.................................................... 146,875
Dividends to shareholders .......................................... 81,154
Investment adviser.................................................. 69,667
Offering costs...................................................... 21,433 10,734,529
-------------
Accrued expenses...................................................... 50,017
------------
Total liabilities..................................................... 10,784,546
------------
============================================================================================================================
Net Assets: Net Assets............................................................ $220,822,450
============
============================================================================================================================
Capital: Capital Stock (200,000,000 shares authorized):
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.................................. 959,059
Accumulated realized capital losses on investments--net............... (5,948,369)
Accumulated distributions in excess of realized capital gains
on investments--net................................................... (1,137,262)
Unrealized depreciation on investments--net........................... (13,707,403)
-------------
Total--Equivalent to $12.86 net asset value per share of
Common Stock (market price--$12.0625)................................. 125,822,450
------------
Total capital......................................................... $220,822,450
============
============================================================================================================================
</TABLE>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Six Months Ended February 29, 2000
============================================================================================================================
<C> <S> <C> <C>
Investment Interest and amortization of premium and discount earned.............. $ 6,458,131
Income:
============================================================================================================================
Expenses: Investment advisory fees.............................................. $ 616,042
Commission fees ...................................................... 110,580
Professional fees..................................................... 33,552
Transfer agent fees................................................... 23,419
Accounting services .................................................. 22,282
Printing and shareholder reports...................................... 13,473
Directors' fees and expenses.......................................... 8,960
Listing fees.......................................................... 7,417
Custodian fees........................................................ 6,074
Pricing fees.......................................................... 4,355
Other................................................................. 12,576
-------------
Total expenses before reimbursement................................... 858,730
Reimbursement of expenses............................................. (52,340)
-------------
Total expenses after reimbursement.................................... 806,390
------------
Investment income--net ............................................... 5,651,741
------------
============================================================================================================================
Realized & Realized loss on investments--net..................................... (5,948,369)
Unrealized Change in unrealized depreciation on investments--net................. (6,669,201)
Loss on ------------
Investments-- Net Decrease in Net Assets Resulting from Operations.................. $ (6,965,829)
Net: ============
============================================================================================================================
</TABLE>
See Notes to Financial Statements.
8 & 9
<PAGE>
MuniHoldings New York Insured Fund, Inc., February 29, 2000
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the For the
Six Months Year
Ended Ended
Increase (Decrease) in Net Assets: Feb. 29, 2000 Aug. 31, 1999
===================================================================================================================================
<S> <C> <C>
Operations: Investment income--net ...................................................... $ 5,651,741 $ 11,418,008
Realized loss on investments--net ........................................... (5,948,369) (193,650)
Change in unrealized appreciation/depreciation on investments--net .......... (6,669,201) (17,042,859)
------------- -------------
Net decrease in net assets resulting from operations ........................ (6,965,829) (5,818,501)
------------- -------------
===================================================================================================================================
Dividends & Investment income--net:
Distributions to Common Stock ............................................................ (4,139,388) (8,442,641)
Shareholders: Preferred Stock ......................................................... (1,667,364) (2,635,794)
Realized gain on investments--net:
Common Stock ............................................................ -- (501,319)
Preferred Stock ......................................................... -- (190,003)
In excess of realized gain on investments--net:
Common Stock ............................................................ -- (824,696)
Preferred Stock ......................................................... -- (312,566)
------------- -------------
Net decrease in net assets resulting from dividends and
distributions to shareholders ........................................... (5,806,752) (12,907,019)
------------- -------------
===================================================================================================================================
Net Assets: Total decrease in net assets ................................................ (12,772,581) (18,725,520)
Beginning of period ......................................................... 233,595,031 252,320,551
------------- -------------
End of period* .............................................................. $ 220,822,450 $ 233,595,031
============= =============
===================================================================================================================================
*Undistributed investment income--net ........................................ $ 959,059 $ 1,114,070
============= =============
===================================================================================================================================
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
The following per share data and ratios have been derived For the For the For the
from information provided in the financial statements. Six Months Year Period
Ended Ended Sept. 19, 1997+
Increase (Decrease) in Net Asset Value: Feb. 29, 2000 Aug. 31, 1999 to Aug. 31, 1998
===================================================================================================================================
<C> <S> <C> <C> <C>
Per Share Net asset value, beginning of period.............................. $ 14.16 $ 16.07 $ 15.00
Operating -------- -------- --------
Performance: Investment income--net............................................ .58 1.16 1.13
Realized and unrealized gain (loss) on investments--net........... (1.29) (1.75) 1.11
-------- -------- --------
Total from investment operations.................................. (.71) (.59) 2.24
-------- -------- --------
Less dividends and distributions to Common Stock shareholders:
Investment income--net.......................................... (.42) (.86) (.75)
Realized gain on investments--net............................... -- (.05) --
In excess of realized capital gains on investments--net......... -- (.09) --
-------- -------- --------
Total dividends and distributions to Common Stock shareholders.... (.42) (1.00) (.75)
-------- -------- --------
Capital charge resulting from issuance of Common Stock............ -- -- (.03)
-------- -------- --------
Effect of Preferred Stock activity:++
Dividends and distributions to Preferred Stock shareholders:
Investment income--net........................................ (.17) (.27) (.30)
Realized gain on investments--net............................. -- (.02) --
In excess of realized capital gains on investments--net....... (.03) --
Capital charge resulting from issuance of Preferred Stock......... -- -- (.09)
-------- -------- --------
Total effect of Preferred Stock activity.......................... (.17) (.32) (.39)
-------- -------- --------
Net asset value, end of period.................................... $ 12.86 $ 14.16 $ 16.07
======== ======== ========
Market price per share, end of period............................. $12.0625 $ 14.00 $15.3125
======== ======== ========
===================================================================================================================================
Total Investment Based on market price per share................................... (10.85%)& (2.37%) 7.21%&
Return:** ======== ======== ========
Based on net asset value per share................................ (6.03%)& (5.91%) 12.52%&
======== ======== ========
===================================================================================================================================
Ratios Based on Total expenses, net of reimbursement***........................... 1.25%* 1.13% .80%*
Average Net Assets ======== ======== ========
of Common Stock: Total expenses***................................................. 1.33%* 1.19% 1.19%*
======== ======== ========
Total investment income--net***................................... 8.74%* 7.43% 7.65%*
======== ======== ========
Amount of dividends to Preferred Stock shareholders............... 2.58%* 1.71% 2.06%*
======== ======== ========
Investment income--net, to Common Stock shareholders.............. 6.16%* 5.72% 5.59%*
======== ======== ========
===================================================================================================================================
Ratios Based on Total expenses, net of reimbursement.............................. .72%* .70% .50%*
Total Average ======== ======== ========
Net Total expenses.................................................... .77%* .74% .75%*
Assets:+++*** ======== ======== ========
Total investment income--net...................................... 5.05%* 4.59% 4.81%*
======== ======== ========
===================================================================================================================================
Ratios Based on Dividends to Preferred Stock shareholders......................... 3.52%* 2.77% 3.48%*
Average Net ======== ======== ========
Assets of
Preferred
Stock:
===================================================================================================================================
Supplemental Net assets, net of Preferred Stock, end of period (in thousands).. $125,822 $138,595 $157,321
Data: ======== ======== ========
Preferred Stock outstanding, end of period (in thousands)......... $ 95,000 $ 95,000 $ 95,000
======== ======== ========
Portfolio turnover................................................ 31.68% 34.48% 52.91%
======== ======== ========
===================================================================================================================================
Leverage: Asset coverage per $1,000......................................... $ 2,324 $ 2,459 $ 2,656
======== ======== ========
===================================================================================================================================
Dividends Series A--Investment income--net.................................. $ 442 $ 703 $ 796
Per Share on ======== ======== ========
Preferred Stock Series B--Investment income--net.................................. $ 435 $ 684 $ 769
Outstanding: ======== ======== ========
===================================================================================================================================
</TABLE>
* 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
charges.
*** 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.
+++ Includes Common and Preferred Stock average net assets.
& Aggregate total investment return.
See Notes to Financial Statements.
10 & 11
<PAGE>
MuniHoldings New York Insured Fund, Inc., February 29, 2000
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. The Fund's financial statements are prepared
in accordance with generally accepted accounting principles, which may require
the use of management accruals and estimates. 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 written or purchased are valued at the last
sale price in the case of exchange-traded options. In the case of options traded
in the over-the-counter market, valuation is the last asked price (options
written) or the last bid price (options purchased). Securities with remaining
maturities of sixty days or less are valued at amortized cost, which
approximates market value. Securities and 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 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.
o 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.
o 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) Offering expenses -- 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. Distributions in excess of realized capital gains are due
primarily to differing tax treatments for futures transactions and post-October
losses.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML &
Co."), which is the limited partner.
FAM is responsible for the management of the Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. For such services, the Fund pays a monthly fee at
an annual rate of .55% of the Fund's average weekly net assets, including
proceeds from the issuance of Preferred Stock. For the six months ended February
29, 2000, FAM earned fees of $616,042, of which $52,340 was voluntarily waived.
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 six
months ended February 29, 2000 were $77,502,144 and $68,723,854, respectively.
Net realized losses for the six months ended February 29, 2000 and net
unrealized losses as of February 29, 2000 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Losses Losses
- --------------------------------------------------------------------------------
Long-term investments............................. $(4,957,228) $(13,575,215)
Financial futures contracts....................... (991,141) (132,188)
----------- ------------
Total............................................. $(5,948,369) $(13,707,403)
=========== ============
- --------------------------------------------------------------------------------
As of February 29, 2000, net unrealized depreciation for Federal income tax
purposes aggregated $13,575,215, of which $558,620 related to appreciated
securities and $14,133,835 related to depreciated securities. The aggregate cost
of investments at February 29, 2000 for Federal income tax purposes was
$242,011,488.
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 six months ended February 29, 2000 and
the year ended August 31, 1999 remained constant.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred Stock of the
Fund, with a par value of $.10 per share and a liquidation preference of $25,000
per share, 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 29, 2000 were as follows: Series A, 2.00% and Series B, 3.75%.
Shares issued and outstanding during the six months ended February 29, 2000 and
the year ended August 31, 1999 remained constant.
The Fund pays commissions to certain broker-dealers at the end of each auction
at an annual rate ranging from .25% to .375%, calculated on the proceeds of each
auction. For the six months ended February 29, 2000, Merrill Lynch, Pierce,
12 & 13
<PAGE>
MuniHoldings New York Insured Fund, Inc., February 29, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
Fenner & Smith Incorporated, an affiliate of FAM, earned $62,649 as commissions.
5. Reorganization Plan:
On January 20, 2000, shareholders of the Fund approved a plan of reorganization
whereby the Fund would acquire substantially all of the assets and liabilities
of MuniHoldings New York Fund, Inc., MuniHoldings New York Insured Fund II, Inc.
and MuniHoldings New York Insured Fund III, Inc. in exchange for newly issued
shares of the Fund. The plan of reorganization was consummated on March 6, 2000.
These Funds are registered, non-diversified, closed-end management investment
companies. All four entities have a similar investment objective and are managed
by FAM.
IMPORTANT TAX INFORMATION
On March 6, 2000, MuniHoldings New York Fund, Inc., MuniHoldings New York
Insured Fund II, Inc. and MuniHoldings New York Insured Fund III, Inc. (the
"Funds") merged into MuniHoldings New York Insured Fund, Inc.
All of the net investment income distributions paid by the Funds during their
taxable periods ended March 6, 2000 qualify as tax-exempt interest dividends for
Federal income tax purposes. Additionally, there were no capital gains
distributions paid by the Funds during the period.
Please retain this information for your records.
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute all or a portion of its net
investment income to its shareholders on a monthly basis. In order to provide
shareholders with a more 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.
QUALITY PROFILE
The quality ratings of securities in the Fund as of February 29, 2000 were as
follows:
- --------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
- --------------------------------------------------------------------------------
AAA/Aaa........................................................ 93.9%
AA/Aa.......................................................... 2.0
A/A............................................................ 5.9
Other*......................................................... 1.6
- --------------------------------------------------------------------------------
* Temporary investments in short-term municipal securities.
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Arthur Zeikel, Director
Vincent R. Giordano, Senior Vice President
Robert A. DiMella, Vice President
Kenneth A. Jacob, Vice President
Robert D. Sneeden, Vice President
Donald C. Burke, Vice President and Treasurer
William E. Zitelli, 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:
The Bank of New York
100 Church Street
New York, NY 10286
NYSE Symbol
MHN
14 & 15
<PAGE>
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. 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. Past performance
results shown in this report should not be considered a representation of future
performance. 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--2/00
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