MUNIHOLDINGS
NEW YORK INSURED
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Annual Report
August 31, 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., August 31, 2000
DEAR SHAREHOLDER
For the year ended August 31, 2000, the Common Stock of MuniHoldings New York
Insured Fund, Inc. earned $0.800 per share in income dividends, which included
earned and unpaid dividends of $0.067. This represents a net annualized yield of
5.64%, based on a month-end per share net asset value of $14.19. During the same
period, the total investment return on the Fund's Common Stock was +7.14%, based
on a change in per share net asset value from $14.16 to $14.19, and assuming
reinvestment of $0.808 per share income dividends.
For the six months ended August 31, 2000, the total investment return on the
Fund's Common Stock was +14.02%, based on a change in per share net asset value
from $12.86 to $14.19, and assuming reinvestment of $0.385 per share income
dividends.
For the six-month period ended August 31, 2000, the Fund's Auction Market
Preferred Stock had average yields as follows: Series A, 3.55%; Series B, 3.76%;
Series C, 4.10%; Series D, 4.04%; and Series E, 3.92%.
The Municipal Market Environment
During the six months ended August 31, 2000, US domestic economic growth
remained robust. After growing at a 4.2% annual rate in 1999, US domestic
economic growth expanded at a 4.8% rate during the first quarter of 2000 and at
a 5.2% rate during the second quarter. However, despite these significant growth
rates and the lowest unemployment rates since 1970, few price measure indicators
have shown any meaningful signs of future price pressures at the consumer level.
With few signs of any economic slowdown, the Federal Reserve Board continued to
raise short-term interest rates in February, March and May 2000. The Federal
Reserve Board cited both the continued growth of US employment and the continued
strength of US equity markets as reasons for attempting to moderate US economic
growth before inflationary price pressures can occur.
However, since then fixed-income markets have largely ignored strong economic
fundamentals and concentrated upon very positive technical supply factors.
Declining bond issuance--both current, and more importantly, expected future
issuance--helped push bond yields lower into mid-April 2000. In late January and
early February 2000, the US Treasury announced its intention to reduce the
amounts to be auctioned in the quarterly Treasury note and bond auctions.
Furthermore, budgetary surpluses allowed the US Treasury to repurchase
outstanding, higher-couponed Treasury issues, primarily in the 15-year and
longer maturity sector. Both these actions resulted in significant reduction in
the outstanding supply of longer-dated maturity US Treasury debt. Domestic and
international investors soon began to accumulate what was expected to become a
scarce commodity and bond prices quickly rose.
By mid-April 2000, US Treasury bond yields had declined nearly 50 basis points
(0.50%) to 5.67%. During the remainder of the period, US Treasury bond prices
were volatile as strong economic reports and investors' concerns of additional
moves by the Federal Reserve Board occasionally overshadowed the positive
technical position of the long-term Treasury bond market. By mid-June, long-term
US Treasury bond yields rose to more than 6.00%.
Recently, a number of economic indicators have begun to suggest that the actions
taken by the Federal Reserve Board in 1999 and early 2000 have started to affect
US economic growth. Both new home sales and consumer spending have slowed,
suggesting that economic growth may subside into a 4%-4.5% range by late 2000.
In our opinion, this range of growth was targeted by the Federal Reserve Board
as being sustainable, given current productivity measures, without endangering
the present benign inflationary environment.
By June, investor focus returned to the dwindling supply of long-term US
Treasury securities and bond prices generally rose for the remainder of the
period. The decline in long-term US Treasury bond yields resulted in an inverted
yield curve as short-term and intermediate-term interest rates did not fall
proportionately to long-term interest rates as the Federal Reserve Board was
expected to continue to raise short-term interest rates. The current inversion
has had as much to do with debt reduction and Treasury buybacks as with investor
expectations of slower economic growth.
Tax exempt bond yields have also declined in recent months. The decline has
largely been in response to the rally in U.S. Treasury securities, as well as a
continued positive technical supply environment. States such as California and
Maryland have announced that their large current and anticipated future budget
surpluses will permit the cancellation or postponement of expected bond
issuance. Additionally, some issuers have also initiated tenders to repurchase
existing debt, reducing the supply of tax exempt bonds in the secondary market
as well. Given the decline in available long-term Treasury securities, some
investors who need longer maturity investment vehicles have begun to consider
long-term municipal bonds as potential substitutes. This has further
strengthened the overall positive technical position of the tax-exempt market.
During the last six months, long-term revenue bond yields have declined more
than 50 basis points to 5.72%, their lowest level since late August 1999, as
measured by the Bond Buyer Revenue Bond Index.
August 2000 was one of the few months in recent years in which the tax-exempt
bond market outperformed its taxable counterpart. This has largely been a
reflection of the continuing reduction in new municipal bond issuance and a
moderate increase in investor demand. During the last six months, approximately
$100 billion in long-term tax-exempt bonds was issued, a decline of almost 15%
compared to the same period in 1999. During the last three months, more than $50
billion in new long-term municipal bonds was underwritten, a decline of nearly
10% compared to the same three-month period in 1999.
Recently, investor demand has been stronger, particularly among individual
retail investors. Investors received more than $45 billion in coupon payments,
bond maturities and the proceeds from early redemptions during June and July.
Traditional institutional investors, such as mutual funds, have not played a
major role during recent months as fund flows, although slowing, remained
negative. However, non-traditional buyers, hedge funds and arbitrageurs have
noticeably increased their activity as may be expected when tax-exempt bond
yield ratios exceed 100% of their taxable counterparts as they have in recent
weeks. Property/casualty insurers, after being unprofitable for a number of
years, have also begun to return to the tax-exempt bond market.
However, tax-exempt bond yields have generally declined throughout most of this
year. Much of the resulting price appreciation has been triggered by the
significant improvement in the long-term US Treasury market. While the technical
position of the municipal bond market has been very positive this year, it was
also positive for most of 1999 when tax-exempt bond yields rose dramatically.
From that perspective, it may be too early to become overly positive about the
extent to which the municipal bond market can continue to improve. The US
Treasury bond market demonstrated on a number of occasions this year that its
positive technical backdrop can quickly be subordinated by resurgent domestic
economic growth.
Portfolio Strategy
During the six months ended August 31, 2000, we managed the Fund with the intent
of sustaining an appealing level of tax-exempt income for shareholders. Our
strategy was to remain invested in the highest-yielding bonds that could be
purchased, without sacrificing the credit quality of the Fund, and maintain a
slightly longer duration than the Fund's peer group. Therefore, we purchased
discount bonds in the 15-year-20-year sector and sold par bonds in the
20-year-30-year maturity range. These efforts generated a substantial pickup in
yield because of the underperformance of discount bonds during the prior six
months. Our strategy proved successful as yields declined about 50 basis points.
Looking forward, we believe interest rates will trend sideways until there is a
substantial slowdown in the economy. However, we anticipate that there may also
be some volatility because of the increase in energy prices. In our opinion,
this inflation scare could present an opportunity to extend the duration of the
Fund in preparation for a significant decline in yields when the economy slows
enough for the Federal Reserve Board to stop raising short-term interest rates.
2 & 3
<PAGE>
MuniHoldings New York Insured Fund, Inc., August 31, 2000
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/ Terry K. Glenn
Terry K. Glenn
President and Director
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ Robert A. DiMella
Robert A. DiMella
Vice President and Portfolio Manager
/s/ Roberto Roffo
Roberto Roffo
Vice President and Portfolio Manager
October 2, 2000
We are pleased to announce that Robert A. DiMella is responsible for the
day-to-day management of MuniHoldings New York Insured Fund, Inc. Mr. DiMella
has been employed by Merrill Lynch Investment Managers, L.P. since 1993 and is
Vice President and Portfolio Manager.
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
====================================================================================================================================
<C> <C> <C> <C> <S> <C>
New York--98.9% Albany County, New York, Airport Authority, Airport Revenue Bonds (f):
AAA Aaa $ 1,500 AMT, 5.375% due 12/15/2017 $ 1,474
AAA Aaa 1,500 AMT, 5.50% due 12/15/2019 1,477
AAA Aaa 4,165 Series B, 4.75% due 12/15/2018 3,794
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Albany, New York, Municipal Water Finance Authority, Water and
Sewer System Revenue Refunding Bonds, Series A, 6.375% due 12/01/2017 (c) 1,098
-----------------------------------------------------------------------------------------------------------------
NR* Aaa 3,000 Allegany County, New York, IDA, Civic Facilities Revenue
Refunding Bonds (Alfred University), 5% due 8/01/2028 (h) 2,741
-----------------------------------------------------------------------------------------------------------------
Appleridge Retirement Community Inc., New York, Mortgage
Revenue Bonds (Appleridge Project) (g):
NR* Aaa 1,150 5.70% due 9/01/2031 1,140
NR* Aaa 1,250 5.75% due 9/01/2041 1,246
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 13,850 Battery Park, New York, City Authority Revenue Bonds,
Junior-Lien, Series A, 5.50% due 11/01/2026 (a) 13,641
-----------------------------------------------------------------------------------------------------------------
Buffalo, New York, GO (f):
AAA Aaa 1,000 Series D, 6% due 12/01/2013 1,084
AAA Aaa 1,000 Series D, 6% due 12/01/2014 1,078
AAA Aaa 1,035 Series E, 6% due 12/01/2015 1,109
AAA Aaa 1,165 Series E, 6% due 12/01/2017 1,240
AAA Aaa 1,310 Series E, 6% due 12/01/2019 1,385
AAA Aaa 920 Series E, School, 6% due 12/01/2013 997
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 Buffalo, New York, Municipal Water Finance Authority, Water
System Revenue Bonds, 5% due 7/01/2025 (c) 1,835
-----------------------------------------------------------------------------------------------------------------
Erie County, New York, GO, Public Improvement, Series A (c):
AAA Aaa 1,025 5.75% due 10/01/2013 1,093
AAA Aaa 1,450 5.75% due 10/01/2014 1,538
-----------------------------------------------------------------------------------------------------------------
A1+ VMIG1@ 11,290 Long Island Power Authority, New York, Electric System Revenue
Bonds, VRDN, Sub-Series 5, 4.30% due 5/01/2033 (j) 11,290
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 7,700 Long Island Power Authority, New York, Electric System Revenue
Refunding Bonds, Series A, 5.125% due 12/01/2022 (f) 7,265
-----------------------------------------------------------------------------------------------------------------
Metropolitan Transportation Authority, New York, Commuter
Facilities Revenue Bonds:
AAA Aaa 3,000 (Grand Central Terminal), Series 1, 5.70% due 7/01/2024 (f) 3,017
AAA Aaa 7,695 Series A, 5.625% due 7/01/2027 (h) 7,700
-----------------------------------------------------------------------------------------------------------------
Metropolitan Transportation Authority, New York, Commuter
Facilities Revenue Refunding Bonds:
AAA Aaa 1,000 Series B, 5% due 7/01/2020 (a) 938
AAA Aaa 1,000 Series D, 5.125% due 7/01/2022 (h) 944
AAA Aaa 2,625 Series E, 5% due 7/01/2021 (a) 2,445
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 3,750 Metropolitan Transportation Authority, New York, Dedicated Tax
Fund Revenue Bonds, Series A, 6.25% due 4/01/2013 (h) 4,195
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Metropolitan Transportation Authority, New York, Transit
Facilities Revenue Bonds, Series C-1, 5.50% due 7/01/2022 (h) 991
-----------------------------------------------------------------------------------------------------------------
Metropolitan Transportation Authority, New York, Transit
Facilities Revenue Refunding Bonds:
AAA Aaa 5,000 Series A, 4.75% due 7/01/2021 (h) 4,481
AAA Aaa 4,000 Series C, 4.75% due 7/01/2016 (f) 3,721
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 2,385 Monroe Woodbury, New York, Central School District, GO, 5.625%
due 5/15/2023 (h) 2,399
-----------------------------------------------------------------------------------------------------------------
Nassau County, New York, GO, Series B (a):
AAA Aaa 6,000 5.25% due 6/01/2023 5,746
AAA Aaa 3,000 5.25% due 6/01/2024 2,867
-----------------------------------------------------------------------------------------------------------------
Nassau County, New York, IDA, Civic Facilities Revenue
Refunding Bonds (Hofstra University Project) (h):
AAA Aaa 5,690 5% due 7/01/2023 5,273
AAA Aaa 6,000 4.75% due 7/01/2028 5,243
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 4,900 Nassau Health Care Corporation, New York, Health System
Revenue Bonds, 5.75% due 8/01/2029 (f) 4,967
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 3,000 New York City, New York, City Health and Hospital Corporation,
Health System Revenue Refunding Bonds, Series A, 5.25% due 2/15/2017 (h) 2,951
-----------------------------------------------------------------------------------------------------------------
</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 below and at right.
AMT Alternative Minimum Tax (subject to)
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
VRDN Variable Rate Demand Notes
4 & 5
<PAGE>
MuniHoldings New York Insured Fund, Inc., August 31, 2000
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
====================================================================================================================================
<C> <C> <C> <C> <S> <C>
New York AAA Aaa $ 18,000 New York City, New York, City Municipal Water Finance
(continued) Authority, Water and Sewer System Revenue Bonds, Series B,
5.75% due 6/15/2029 (h) $ 18,212
-----------------------------------------------------------------------------------------------------------------
New York City, New York, City Municipal Water Finance
Authority, Water and Sewer System Revenue Refunding Bonds:
AAA Aaa 4,250 Series A, 5.50% due 6/15/2023 (c) 4,206
AAA Aaa 7,800 Series A, 5.50% due 6/15/2023 (h) 7,719
AAA Aaa 4,000 Series A, 5.375% due 6/15/2026 (f) 3,872
AAA Aaa 4,750 Series B, 5.25% due 6/15/2029 (c) 4,494
AAA Aaa 11,250 Series B, 6.50% due 6/15/2031 (h) 12,441
AAA Aaa 1,000 Series D, 4.75% due 6/15/2025 (c) 883
AAA Aaa 1,250 Series D, 4.75% due 6/15/2025 (h) 1,104
-----------------------------------------------------------------------------------------------------------------
AA Aa3 2,700 New York City, New York, City Transitional Finance Authority
Revenue Bonds, Future Tax Secured, Series C, 5.25% due 5/01/2015 2,704
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 10,500 New York City, New York, Educational Construction Fund Revenue
Bonds, Junior Sub-Lien, 5.50% due 4/01/2026 (a) 10,343
-----------------------------------------------------------------------------------------------------------------
New York City, New York, GO:
AAA Aaa 5,820 Series C, 5.375% due 11/15/2027 (h) 5,638
AAA Aaa 5,000 Series C, 5% due 8/15/2028 (f) 4,568
AAA NR* 1,850 Series I, 6.25% due 4/15/2027 (h) 1,953
A- A2 1,000 Series J, 5.50% due 2/15/2026 972
A1c VMIG1@ 4,900 VRDN, Series B, Sub-Series B-6, 4.15% due 8/15/2005 (h)(j) 4,900
NR* VMIG1@ 1,000 VRDN, Series B-2, Sub-Series B-5, 4.15% due 8/15/2009 (h)(j) 1,000
A1+ VMIG1@ 3,150 VRDN, Sub-Series A-4, 4.20% due 8/01/2021 (j) 3,150
A1+ VMIG1@ 1,300 VRDN, Sub-Series A-7, 4.30% due 8/01/2021 (j) 1,300
-----------------------------------------------------------------------------------------------------------------
New York City, New York, GO, Refunding:
AAA NR* 10,000 Series A, 6.25% due 5/15/2026 (f) 10,726
A- A2 5,000 Series H, 5.125% due 8/01/2025 4,607
A1+ VMIG1@ 1,500 VRDN, Sub-Series E-4, 4.30% due 8/01/2021 (j) 1,500
-----------------------------------------------------------------------------------------------------------------
A1+ NR* 300 New York City, New York, Housing Development Corporation, M/F
Rental Housing Revenue Bonds (Carnegie Park), VRDN, Series A,
4.10% due 11/15/2019 (e)(j) 300
-----------------------------------------------------------------------------------------------------------------
New York City, New York, IDA, Civic Facilities Revenue Bonds:
BBB NR* 1,000 (College of Aeronautics Project), 5.45% due 5/01/2018 945
A A3 5,635 (Nightingale--Bamford School Project), 5.85% due 1/15/2020 5,675
AAA Aaa 1,830 (Rockefeller Foundation Project), 5.375% due 7/01/2023 1,822
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 New York City, New York, IDA, Special Facilities Revenue Bonds
(Terminal One Group), AMT, 6.125% due 1/01/2024 (h) 5,184
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 New York State Dormitory Authority, Hospital Revenue Refunding
Bonds (Montefiore Medical Center), 5.50% due 8/01/2038 (a) 1,947
-----------------------------------------------------------------------------------------------------------------
New York State Dormitory Authority, Lease Revenue Bonds:
AAA Aaa 2,000 (Municipal Health Facilities Improvement Program), Series 1,
5% due 1/15/2019 1,894
AAA Aaa 7,650 (Municipal Health Facilities Improvement Program), Series 1,
4.75% due 1/15/2019 (f) 6,653
AAA Aaa 645 (Office Facilities Audit and Control), 5.50% due 4/01/2023 (h) 639
-----------------------------------------------------------------------------------------------------------------
New York State Dormitory Authority Revenue Bonds:
AAA Aaa 2,200 (853 Schools Program), Issue 2, Series D, 5% due 7/01/2018 (a) 2,095
AAA Aaa 1,340 (853 Schools Program), Issue 2, Series E, 5.75% due 7/01/2019 (a) 1,381
AAA Aaa 1,200 (Cooper Union of Advance Science), 6.25% due 7/01/2029 (h) 1,280
AAA Aaa 3,470 (Court Facilities Lease Program), Series A, 5.625% due 5/15/2013 (h) 3,554
AAA Aaa 7,550 (Court Facilities Lease Program), Series A, 5.25% due 5/15/2021 (h) 7,237
AAA Aaa 10,000 (Frances Schervier Project), 5.50% due 7/01/2027 (f) 9,773
AAA Aaa 2,325 (Gustavus Adolphus Children's School), Series B, 5.50% due 7/01/2018 (a) 2,342
AAA Aaa 6,750 (Interfaith Medical Center), Series D, 5.40% due 2/15/2028 (h) 6,443
AAA Aaa 4,500 (Library Facilities--Service Contract), 5.25% due 7/01/2019 (b) 4,374
AAA Aaa 10,000 (Mental Health Services Facilities Improvement), Series B, 5.375%
due 2/15/2026 (f) 9,683
AAA A3 5,485 (Mental Health Services Facilities Improvement), Series D, 5.125%
due 8/15/2027 (f) 5,113
AAA NR* 1,750 (Saint Agnes Hospital), 5.40% due 2/15/2025 (h) 1,679
AAA Aaa 10,000 (Saint Barnabas Hospital), 5.45% due 8/01/2035 (a)(d) 9,611
-----------------------------------------------------------------------------------------------------------------
New York State Dormitory Authority, Revenue Refunding Bonds:
AAA Aaa 5,000 (City University System), Series F, 5.50% due 7/01/2012 (c) 5,114
AAA NR* 3,250 (City University System--Consolidated), Series A, 5.625% due
7/01/2016 (f) 3,398
AAA Aaa 5,000 (City University System--Consolidated Third), Series 1, 5.25%
due 7/01/2025 (c) 4,773
AAA Aaa 1,500 (Fordham University), 5% due 7/01/2028 (h) 1,371
AAA Aaa 6,250 (Hospital for Special Surgery), 5% due 2/01/2028 (d)(h) 5,662
AAA NR* 11,080 (Hospital Mortgage--United Health Services Hospitals), 5.375%
due 8/01/2027 (a)(d) 10,711
NR* Aaa 3,465 (Ithaca College), 5% due 7/01/2026 (a) 3,178
AAA Aaa 4,550 (Mental Health Program), Series B, 5.50% due 8/15/2017 (h) 4,599
AAA Aaa 5,320 (Millard Fillmore Hospital Project), 5.375% due 2/01/2032 (a)(d) 5,075
BBB+ Baa1 15,880 (Mount Sinai Health System), Series A, 6.50% due 7/01/2017 17,028
AAA Aaa 8,000 (New York and Presbyterian Hospitals), 4.75% due 8/01/2027 (a)(d) 6,994
AAA Aaa 3,750 (New York Medical College), 4.75% due 7/01/2027 (h) 3,284
AAA Aaa 3,460 (North Shore University Hospital), 5.25% due 11/01/2019 (h) 3,358
AAA Aaa 3,000 (North Shore University Hospital), 5% due 11/01/2023 (h) 2,753
AAA Aaa 9,110 RITR, Class R, Series 2, 6.04% due 7/01/2011 (k) 11,033
AAA Aaa 1,425 (Rochester Institute of Technology), 5.25% due 7/01/2022 (h) 1,368
AAA Aaa 4,500 (State University Educational Facilities), Series A, 4.75%
due 5/15/2025 (h) 3,975
AAA Aaa 1,455 (University of Rochester), Series A, 5.125% due 7/01/2022 (h) 1,374
AAA Aaa 6,000 (University of Rochester), Series A, 5% due 7/01/2023 (h) 5,553
-----------------------------------------------------------------------------------------------------------------
A- Baa3 5,000 New York State Energy Research and Development Authority,
Electric Facilities Revenue Bonds (LILCO Project), AMT, Series
B, 5.30% due 11/01/2023 4,629
-----------------------------------------------------------------------------------------------------------------
New York State Energy Research and Development Authority,
Facilities Revenue Refunding Bonds (Consolidated Edison Company
of New York), Series A:
AAA Aaa 12,500 6.10% due 8/15/2020 (a) 13,051
AAA Aaa 3,500 6.10% due 8/15/2020 (h) 3,646
-----------------------------------------------------------------------------------------------------------------
A1+ NR* 1,200 New York State Energy Research and Development Authority, PCR
(Niagara Mohawk Power Corporation Project), AMT, VRDN, Series B, 4.40%
due 7/01/2027 (j) 1,200
-----------------------------------------------------------------------------------------------------------------
New York State Energy Research and Development Authority, PCR,
Refunding, Series A:
AAA Aaa 6,000 (Central Hudson Gas and Electric), 5.45% due 8/01/2027 (a) 5,879
AAA Aaa 8,350 (Niagara Mohawk Power Corporation Project), 5.15% due 11/01/2025 (a) 7,845
-----------------------------------------------------------------------------------------------------------------
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 (h) 1,278
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 3,000 New York State Environmental Facilities Corporation, Special
Obligation Revenue Refunding Bonds (Riverbank State Park),
5.125% due 4/01/2022 (a) 2,833
-----------------------------------------------------------------------------------------------------------------
</TABLE>
6 & 7
<PAGE>
MuniHoldings New York Insured Fund, Inc., August 31, 2000
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
====================================================================================================================================
<C> <C> <C> <C> <S> <C>
New York AAA Aaa $ 4,400 New York State Environmental Facilities Corporation, Water
(concluded) Facilities Revenue Refunding Bonds (Spring Valley Water Company),
Series B, 6.15% due 8/01/2024 $ 4,556
-----------------------------------------------------------------------------------------------------------------
New York State, HFA, Revenue Refunding Bonds, Series A:
AAA Aaa 2,000 (Fulton Manor), 6.10% due 11/15/2025 (a)(d) 2,020
AAA Aaa 1,740 (Housing Mortgage Project), 6.10% due 11/01/2015 (f) 1,795
AAA Aaa 2,990 (Housing Mortgage Project), 6.125% due 11/01/2020 (f) 3,060
-----------------------------------------------------------------------------------------------------------------
A1+ VMIG1@ 17,500 New York State Local Government Assistance Corporation, VRDN,
Series F, 4.05% due 4/01/2025 (j) 17,500
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 New York State Medical Care Facilities Finance Agency Revenue
Bonds (Mental Health Services), Series A, 6% due 2/15/2005 (h)(i) 1,081
-----------------------------------------------------------------------------------------------------------------
New York State Mortgage Agency, Homeowner Mortgage Revenue Bonds, AMT:
NR* Aa1 7,435 Series 69, 5.40% due 10/01/2019 7,167
NR* Aa1 9,125 Series 73-A, 5.30% due 10/01/2028 8,432
NR* Aa1 2,805 Series 84, 5.90% due 4/01/2022 2,814
-----------------------------------------------------------------------------------------------------------------
New York State Mortgage Agency, Homeowner Mortgage Revenue
Refunding Bonds:
AAA Aaa 2,500 AMT, Series 54, 6.20% due 10/01/2026 (h) 2,559
NR* Aa1 930 AMT, Series 58, 6.40% due 4/01/2027 964
AAA Aaa 2,140 AMT, Series 67, 5.70% due 10/01/2017 (h) 2,163
AAA Aaa 5,985 AMT, Series 67, 5.80% due 10/01/2028 6,014
AAA Aaa 1,500 Series 59, 6.25% due 4/01/2027 (h) 1,561
NR* Aa1 1,000 Series 61, 5.80% due 10/01/2017 1,016
-----------------------------------------------------------------------------------------------------------------
New York State Mortgage Agency Revenue Bonds, RIB (k):
NR* Aaa 3,000 Series 302, 7.44% due 10/01/2017 (h) 3,191
NR* Aaa 2,450 Series 303, 8.34% due 10/01/2014 2,640
-----------------------------------------------------------------------------------------------------------------
NR* Aa1 3,385 New York State Mortgage Agency, Revenue Refunding Bonds, AMT,
Series 82, 5.65% due 4/01/2030 3,318
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 New York State Thruway Authority, Highway and Bridge Trust
Fund Revenue Bonds, Series B-1, 5.75% due 4/01/2013 (c) 5,326
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 5,660 New York State Thruway Authority, Highway and Bridge Trust
Fund Revenue Refunding Bonds, Series B, 5% due 4/01/2017 (c) 5,444
-----------------------------------------------------------------------------------------------------------------
AAA NR* 5,500 New York State Thruway Authority, Local Highway and Bridge
Service Contract Revenue Refunding Bonds, 6% due 4/01/2012 5,930
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 New York State Thruway Authority, Service Contract Revenue
Refunding Bonds (Local Highway and Bridge), 5.75% due 4/01/2015 (h) 5,249
-----------------------------------------------------------------------------------------------------------------
New York State Urban Development Corporation Revenue Bonds:
AAA Aaa 5,500 (Community Enhancement Facilities), 5.125% due 4/01/2015 (a) 5,447
NR* Aaa 10,000 (Correctional Capital Facilities), Series 5, 5.50% due
1/01/2025 (h) 9,815
AAA Aaa 12,465 (Correctional Capital Facilities), Series 6, 5.375% due
1/01/2025 (a) 12,094
AAA Aaa 4,500 (Correctional Facilities Service Contract), Series B, 4.75%
due 1/01/2028 (a) 3,939
-----------------------------------------------------------------------------------------------------------------
Niagara, New York, Frontier Authority, Airport Revenue Bonds
(Buffalo Niagara International Airport), AMT (c):
AAA NR* 1,000 5% due 4/01/2018 933
AAA NR* 1,775 5% due 4/01/2028 1,587
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 1,700 Oneida County, New York, IDA, Civic Facilities Revenue Bonds
(Mohawk Valley), Series A, 5.20% due 2/01/2013 (f) 1,714
-----------------------------------------------------------------------------------------------------------------
AAA NR* 2,000 Otsego County, New York, IDA, Civic Facility Revenue Refunding
Bonds (Aurelia Osborn Fox Memorial Hospital), Series A, 5.35% due
10/01/2017 (f) 1,976
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 6,250 Port Authority of New York and New Jersey, Consolidated
Revenue Bonds, 116th Series, 4.375% due 10/01/2033 (c) 5,055
-----------------------------------------------------------------------------------------------------------------
Port Authority of New York and New Jersey, Special Obligation
Revenue Bonds (JFK International Airport Terminal Project), AMT,
Series 6 (h):
AAA Aaa 13,330 6.25% due 12/01/2015 14,775
AAA Aaa 9,980 5.75% due 12/01/2022 10,151
-----------------------------------------------------------------------------------------------------------------
NR* Aaa 5,000 Schenectady, New York, IDA, Civic Facility Revenue Bonds
(Union College Project), Series A, 5.45% due 12/01/2029 (a) 4,871
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 305 Suffolk County, New York, GO, Refunding, Public Improvement,
Series D, 4.75% due 11/01/2019 (c) 277
-----------------------------------------------------------------------------------------------------------------
AAAr Aaa 6,595 Suffolk County, New York, IDA, Solid Waste Disposal Facility
Revenue Refunding Bonds, RITR, AMT, Class R, Series 1, 6.008% due
10/01/2010 (k) 7,903
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 7,090 Suffolk County, New York, Water Authority, Waterworks Revenue
Bonds, Series A, 5% due 6/01/2022 (a) 6,575
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 6,000 Triborough Bridge and Tunnel Authority, New York, General
Purpose Revenue Bonds, Series B, 5.20% due 1/01/2027 (c) 5,663
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 3,500 Triborough Bridge and Tunnel Authority, New York, Special
Obligation Revenue Refunding Bonds, Series A, 4.75% due 1/01/2024 (h) 3,107
-----------------------------------------------------------------------------------------------------------------
AAA Aaa 2,250 Yonkers, New York, GO, Series C, 5% due 6/01/2019 (c) 2,129
====================================================================================================================================
Total Investments (Cost--$645,503)--98.9% 643,092
Other Assets Less Liabilities--1.1% 7,299
--------
Net As sets--100.0% $650,391
========
====================================================================================================================================
</TABLE>
(a) AMBAC Insured.
(b) CAPMAC Insured.
(c) FGIC Insured.
(d) FHA Insured.
(e) FNMA Collateralized.
(f) FSA Insured.
(g) GNMA Collateralized.
(h) MBIA Insured.
(i) Prerefunded.
(j) The interest rate is subject to change periodically based upon prevailing
market rates. The interest rate shown is the rate in effect at August 31,
2000.
(k) 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 August 31, 2000.
* Not Rated.
@ Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
Quality Profile
(unaudited)
The quality ratings of securities in the Fund as of August 31, 2000 were as
follows:
--------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
--------------------------------------------------------------------------------
AAA/Aaa.................................................................. 83.1%
AA/Aa.................................................................... 4.1
A/A...................................................................... 2.4
BBB/Baa.................................................................. 2.8
Other+................................................................... 6.5
--------------------------------------------------------------------------------
+ Temporary investments in short-term municipal securities.
8 & 9
<PAGE>
MuniHoldings New York Insured Fund, Inc., August 31, 2000
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<TABLE>
<CAPTION>
As of August 31, 2000
====================================================================================================================================
<C> <S> <C> <C>
Assets: Investments, at value (identified cost--$645,503,108) ............................. $ 643,092,088
Cash .............................................................................. 88,567
Interest receivable ............................................................... 8,016,273
Prepaid expenses and other assets ................................................. 34,604
-------------
Total assets ...................................................................... 651,231,532
=============
====================================================================================================================================
Liabilities: Payables:
Dividends to shareholders ....................................................... $ 386,066
Investment adviser .............................................................. 209,737
Offering costs .................................................................. 120,285 716,088
-------------
Accrued expenses and other liabilities ............................................ 124,267
-------------
Total liabilities ................................................................. 840,355
-------------
====================================================================================================================================
Net Assets: Net assets ........................................................................ $ 650,391,177
=============
====================================================================================================================================
Capital: Capital Stock (200,000,000 shares authorized):
Preferred Stock, par value $.10 per share (10,960 shares of AMPS* issued
and outstanding at $25,000 per share liquidation preference) .................... $ 274,000,000
Common Stock, par value $.10 per share (26,531,247 shares issued and outstanding) $ 2,653,125
Paid-in capital in excess of par .................................................. 413,685,678
Undistributed investment income--net .............................................. 1,944,232
Accumulated realized capital losses on investments--net ........................... (38,343,576)
Accumulated distributions in excess of realized capital gains on investments--net . (1,137,262)
Unrealized depreciation on investments--net ....................................... (2,411,020)
-------------
Total--Equivalent to $14.19 net asset value per share of Common Stock (market
price--$12.625) 376,391,177
-------------
Total capital ..................................................................... $ 650,391,177
=============
====================================================================================================================================
</TABLE>
* Auction Market Preferred Stock.
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended August 31, 2000
===========================================================================================================================
<C> <S> <C> <C>
Investment Interest and amortization of premium and discount earned ......... $ 23,827,448
Income:
===========================================================================================================================
Expenses: Investment advisory fees ......................................... $ 2,321,150
Commission fees .................................................. 472,902
Reorganization expenses .......................................... 408,233
Accounting services .............................................. 92,207
Transfer agent fees .............................................. 82,067
Professional fees ................................................ 23,733
Custodian fees ................................................... 23,613
Printing and shareholder reports ................................. 22,920
Listing fees ..................................................... 21,560
Directors' fees and expenses ..................................... 15,827
Pricing fees ..................................................... 6,793
Other ............................................................ 26,297
------------
Total expenses before reimbursement .............................. 3,517,302
Reimbursement of expenses ........................................ (292,159)
------------
Total expenses after reimbursement ............................... 3,225,143
------------
Investment income--net ........................................... 20,602,305
------------
===========================================================================================================================
Realized & Realized loss on investments--net ................................ (18,802,194)
Unrealized (Gain) Loss Change in unrealized appreciation/depreciation on investments--net 40,860,880
On Investments-- Net: ------------
Net Increase in Net Assets Resulting from Operations ............. $ 42,660,991
============
===========================================================================================================================
</TABLE>
See Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Year Ended
August 31,
------------------------------
Increase (Decrease) in Net Assets: 2000 1999
=============================================================================================================================
<C> <S> <C> <C>
Operations: Investment income--net ................................................ $ 20,602,305 $ 11,418,008
Realized loss on investments--net ..................................... (18,802,194) (193,650)
Change in unrealized appreciation/depreciation on investments--net .... 40,860,880 (17,042,859)
------------- -------------
Net increase (decrease) in net assets resulting from operations ....... 42,660,991 (5,818,501)
------------- -------------
=============================================================================================================================
Dividends & Investment income--net:
Distributions to Common Stock ........................................................ (13,207,063) (8,442,641)
Shareholders: Preferred Stock ..................................................... (6,955,753) (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 ....................................................... (20,162,816) (12,907,019)
------------- -------------
=============================================================================================================================
Capital Stock Proceeds from issuance of Common Stock resulting from reorganization .. 215,297,971 --
Transactions: Proceeds from issuance of Preferred Stock resulting from reorganization 179,000,000 --
------------- -------------
Net increase in net assets derived from capital stock transactions .... 394,297,971 --
------------- -------------
=============================================================================================================================
Net Assets: Total increase (decrease) in net assets ............................... 416,796,146 (18,725,520)
Beginning of year ..................................................... 233,595,031 252,320,551
------------- -------------
End of year* .......................................................... $ 650,391,177 $ 233,595,031
============= =============
=============================================================================================================================
*Undistributed investment income--net .................................. $ 1,944,232 $ 1,114,070
============= =============
=============================================================================================================================
</TABLE>
See Notes to Financial Statements.
10 & 11
<PAGE>
MuniHoldings New York Insured Fund, Inc., August 31, 2000
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
The following per share data and ratios have been derived For the Year Ended
from information provided in the financial statements. August 31, For the Period
---------------------- Sept. 19, 1997+
Increase (Decrease) in Net Asset Value: 2000 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 ............................................. 1.13 1.16 1.13
Realized and unrealized gain (loss) on investments--net ............ .08 (1.75) 1.11
--------- -------- --------
Total from investment operations ................................... 1.21 (.59) 2.24
--------- -------- --------
Less dividends and distributions to Common Stock shareholders:
Investment income--net ........................................... (.81) (.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 ..... (.81) (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 .......................................... (.37) (.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 ........................... (.37) (.32) (.39)
--------- -------- --------
Net asset value, end of period ..................................... $ 14.19 $ 14.16 $ 16.07
========= ======== ========
Market price per share, end of period .............................. $ 12.625 $ 14.00 $15.3125
========= ======== ========
====================================================================================================================================
Total Investment Based on market price per share .................................... (3.58%) (2.37%) 7.21%@
Return:** ========= ======== ========
Based on net asset value per share ................................. 7.14% (5.91%) 12.52%@
========= ======== ========
====================================================================================================================================
Ratios Based on Total expenses, net of reimbursement and excluding reorganization
Average Net Assets expenses*** ........................................................ 1.17% 1.13% .80%*
Of Common Stock: ========= ======== ========
Total expenses, net of reimbursement*** ............................ 1.34% 1.13% .80%*
========= ======== ========
Total expenses*** .................................................. 1.46% 1.19% 1.19%*
========= ======== ========
Total investment income--net*** .................................... 8.58% 7.43% 7.65%*
========= ======== ========
Amount of dividends to Preferred Stock shareholders ................ 2.90% 1.71% 2.06%*
========= ======== ========
Investment income--net, to Common Stock shareholders ............... 5.68% 5.72% 5.59%*
========= ======== ========
====================================================================================================================================
Ratios Based on Total expenses, net of reimbursement and excluding reorganization
Total Average Net expenses ........................................................... .67% .70% .50%*
Assets:***+++ ========= ======== ========
Total expenses, net of reimbursement ............................... .76% .70% .50%*
========= ======== ========
Total expenses ..................................................... .83% .74% .75%*
========= ======== ========
Total investment income--net ....................................... 4.87% 4.59% 4.81%*
========= ======== ========
====================================================================================================================================
Ratios Based on Dividends to Preferred Stock shareholders .......................... 3.80% 2.77% 3.48%*
Average Net Assets ========= ======== ========
Of Preferred Stock:
====================================================================================================================================
Supplemental Data: Net assets, net of Preferred Stock, end of period (in thousands) ... $ 376,391 $138,595 $157,321
========= ======== ========
Preferred Stock outstanding, end of period (in thousands) .......... $ 274,000 $ 95,000 $ 95,000
========= ======== ========
Portfolio turnover ................................................. 85.08% 34.48% 52.91%
========= ======== ========
====================================================================================================================================
Leverage: Asset coverage per $1,000 .......................................... $ 2,374 $ 2,459 $ 2,656
========= ======== ========
====================================================================================================================================
Dividends Series A--Investment income--net ................................... $ 890 $ 703 $ 796
Per Share on ========= ======== ========
Preferred Stock Series B--Investment income--net ................................... $ 909 $ 684 $ 769
Outstanding: ========= ======== ========
Series C--Investment income--net ................................... $ 503 -- --
========= ======== ========
Series D--Investment income--net ................................... $ 495 -- --
========= ======== ========
Series E--Investment income--net ................................... $ 481 -- --
========= ======== ========
====================================================================================================================================
</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. The Fund's investment adviser voluntarily waived a portion of its
management fee. Without such waiver, the Fund's performance would have
been lower.
*** 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 for Series A and
B and March 6, 2000 for Series C, D and E.
+++ Includes Common and Preferred Stock average net assets.
@ Aggregate total investment return.
See Notes to Financial Statements.
12 & 13
<PAGE>
MuniHoldings New York Insured Fund, Inc., August 31, 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. The Fund's financial statements are prepared in conformity
with accounting principles generally accepted in the United States of America,
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
investment strategies to increase or decrease the level of risk to which the
Fund is exposed more quickly and efficiently than transactions in other types of
instruments. 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) 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.
(f) Reclassification -- Generally accepted accounting principles require that
certain components of net assets be adjusted to reflect permanent differences
between financial and tax reporting. Accordingly, the current year's permanent
book/tax differences of $390,744 have been reclassified between paid-in capital
in excess of par and undistributed net investment income and $71 has been
reclassified between undistributed net investment income and accumulated net
realized capital losses. These reclassifications have no effect on net assets or
net asset value per share.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML &
Co."), which is the limited partner.
FAM is responsible for the management of the Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. For such services, the Fund pays a monthly fee at
an annual rate of .55% of the Fund's average weekly net assets, including
proceeds from the issuance of Preferred Stock. For the year ended August 31,
2000, FAM earned fees of $2,321,150, of which $292,159 was 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
year ended August 31, 2000 were $342,577,987 and $330,838,958, respectively.
Net realized losses for the year ended August 31, 2000 and net unrealized losses
as of August 31, 2000 were as follows:
--------------------------------------------------------------------------------
Realized Unrealized
Losses Losses
--------------------------------------------------------------------------------
Long-term investments .................. $(16,949,675) $ (2,411,020)
Financial futures contracts ............ (1,852,519) --
------------ ------------
Total .................................. $(18,802,194) $ (2,411,020)
============ ============
--------------------------------------------------------------------------------
As of August 31, 2000, net unrealized depreciation for Federal income tax
purposes aggregated $2,458,988, of which $11,315,269 related to appreciated
securities and $13,774,257 related to depreciated securities. The aggregate cost
of investments at August 31, 2000 for Federal income tax purposes was
$645,551,076.
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 year ended August 31, 2000 increased by
16,744,141 as a result of reorganization and during 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
14 & 15
<PAGE>
MuniHoldings New York Insured Fund, Inc., August 31, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
yields in effect at August 31, 2000 were as follows: Series A, 3.15%; Series B,
3.75%; Series C, 4.00%; Series D, 4.13%; and Series E, 3.50%.
Shares issued and outstanding during the year ended August 31, 2000 increased by
7,160 as a result of reorganization and during 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 year ended August 31, 2000, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, an affiliate of FAM, earned $223,808 as commissions.
5. Acquisition of Other FAM-Managed Investment Companies:
On March 6, 2000, the Fund acquired all of the net assets of MuniHoldings New
York Fund, Inc., MuniHoldings New York Insured Fund II, Inc. and MuniHoldings
New York Insured Fund III, Inc. pursuant to a plan of reorganization. The
acquisition was accomplished by a tax-free exchange of the following capital
shares:
--------------------------------------------------------------------------------
Common Stock AMPS Shares
Shares Exchanged Exchanged
--------------------------------------------------------------------------------
MuniHoldings New York Fund, Inc. ........... 7,585,803 3,040
MuniHoldings New York Insured
Fund II, Inc. .............................. 5,629,540 2,120
MuniHoldings New York Insured
Fund III, Inc. ............................. 5,035,985 2,000
--------------------------------------------------------------------------------
In exchange for these shares, the Fund issued 16,744,141 Common Stock shares and
7,160 AMPS shares. As of that date, net assets of the acquired funds, including
unrealized depreciation and accumulated net realized capital losses, were as
follows:
--------------------------------------------------------------------------------
Accumulated
Net Unrealized Net Realized
Assets Depreciation Capital Losses
--------------------------------------------------------------------------------
MuniHoldings New York
Fund, Inc. .................. $168,520,395 $11,453,958 $8,819,864
MuniHoldings New York
Insured Fund II, Inc. ....... $117,835,860 $12,602,994 $6,112,456
MuniHoldings New York
Insured Fund III, Inc. ...... $107,941,716 $12,176,747 $4,609,132
--------------------------------------------------------------------------------
The aggregate net assets of the Fund immediately after the acquisition amounted
to $615,141,565.
6. Capital Loss Carryforward:
At August 31, 2000, the Fund had a net capital loss carryforward of
approximately $15,261,000, of which $3,027,000 expires in 2006, $10,147,000
expires in 2007 and $2,087,000 expires in 2008. This amount will be available to
offset like amounts of any future taxable gains.
7. Subsequent Event:
On September 7, 2000, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.066725 per share,
payable on September 28, 2000 to shareholders of record as of September 18,
2000.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
MuniHoldings New York Insured Fund, Inc.:
We have audited the accompanying statement of assets, liabilities and capital,
including the schedule of investments, of MuniHoldings New York Insured Fund,
Inc., as of August 31, 2000, the related statements of operations for the year
then ended and changes in net assets for each of the years in the two-year
period then ended; and the financial highlights for each of the years in the
two-year period then ended and for the period September 19, 1997 (commencement
of operations) to August 31, 1998. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned at August 31, 2000 by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights present
fairly, in all material respects, the financial position of MuniHoldings New
York Insured Fund, Inc. as of August 31, 2000, the results of its operations,
the changes in its net assets, and the financial highlights for the respective
stated periods in conformity with accounting principles generally accepted in
the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
October 10, 2000
16 & 17
<PAGE>
MuniHoldings New York Insured Fund, Inc., August 31, 2000
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by MuniHoldings New York
Insured Fund, Inc. during its taxable year ended August 31, 2000 qualify as tax-
exempt interest dividends for Federal income tax purposes.
Additionally, there were no capital gains distributions paid by the Fund during
the year.
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.
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
Roscoe S. Suddarth, Director
Richard R. West, Director
Arthur Zeikel, Director
Edward D. Zinbarg, 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
Jodi M. Pinedo, 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
18 & 19
<PAGE>
MuniHoldings New York Insured Fund, Inc. seeks to provide shareholders with
current income exempt from Federal, New York State and New York City income
taxes by investing primarily in a portfolio of long-term, investment grade
municipal obligations, the interest on which, in the opinion of bond counsel to
the issuer, is exempt from Federal, New York State and New York City income
taxes.
This report, including the financial information herein, is transmitted to
shareholders of MuniHoldings New York Insured Fund, Inc. for their information.
It is not a prospectus. 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--8/00
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