MUNIHOLDINGS
NEW YORK
FUND, INC.
FUND LOGO
Annual Report
June 30, 1999
This report, including the financial information herein, is
transmitted to the shareholders of MuniHoldings New York Fund, Inc.
for their information. It is not a prospectus, circular or
representation intended for use in the purchase of shares of the
Fund or any securities mentioned in the report. Past performance
results shown in this report should not be considered a
representation of future performance. The Fund has leveraged its
Common Stock by issuing Preferred Stock to provide the Common Stock
shareholders with a potentially higher rate of return. Leverage
creates risks for Common Stock shareholders, including the
likelihood of greater volatility of net asset value and market price
of shares of the Common Stock, and the risk that fluctuations in the
short-term dividend rates of the Preferred Stock may affect the
yield to Common Stock shareholders. Statements and other information
herein are as dated and are subject to change.
MuniHoldings
New York
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MUNIHOLDINGS NEW YORK FUND, INC.
The Benefits and
Risks of
Leveraging
MuniHoldings New York Fund, Inc. has the ability to leverage to seek
to enhance the yield and net asset value of its Common Stock.
However, these objectives cannot be achieved in all interest rate
environments. To leverage, the Fund issues Preferred Stock, which
pays dividends at prevailing short-term interest rates, and invests
the proceeds in long-term municipal bonds. The interest earned on
these investments is paid to Common Stock shareholders in the form
of dividends, and the value of these portfolio holdings is reflected
in the per share net asset value of the Fund's Common Stock.
However, in order to benefit Common Stock shareholders, the yield
curve must be positively sloped; that is, short-term interest rates
must be lower than long-term interest rates. At the same time, a
period of generally declining interest rates will benefit Common
Stock shareholders. If either of these conditions change, then the
risks of leveraging will begin to outweigh the benefits.
To illustrate these concepts, assume a fund's Common Stock
capitalization of $100 million and the issuance of Preferred Stock
for an additional $50 million, creating a total value of $150
million available for investment in long-term municipal bonds. If
prevailing short-term interest rates are approximately 3% and long-
term interest rates are approximately 6%, the yield curve has a
strongly positive slope. The fund pays dividends on the $50 million
of Preferred Stock based on the lower short-term interest rates. At
the same time, the fund's total portfolio of $150 million earns the
income based on long-term interest rates. Of course, increases in
short-term interest rates would reduce (and even eliminate) the
dividends on the Common Stock.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term
investments, and therefore the Common Stock shareholders are the
beneficiaries of the incremental yield. However, if short-term
interest rates rise, narrowing the differential between short-term
and long-term interest rates, the incremental yield pickup on the
Common Stock will be reduced or eliminated completely. At the same
time, the market value of the fund's Common Stock (that is, its
price as listed on the New York Stock Exchange) may, as a result,
decline.Furthermore, if long-term interest rates rise, the Common
Stock's net asset value will reflect the full decline in the price
of the portfolio's investments, since the value of the fund's
Preferred Stock does not fluctuate. In addition to the decline in
net asset value, the market value of the fund's Common Stock may
also decline.
As a part of its investment strategy, the 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 net
asset value of the Fund's shares may also be more volatile than if
the Fund did not invest in these securities.
MuniHoldings New York Fund, Inc., June 30, 1999
DEAR SHAREHOLDER
For the year ended June 30, 1999, the Common Stock of MuniHoldings
New York Fund, Inc. earned $0.819 per share income dividends, which
included earned and unpaid dividends of $0.068. This represents a
net annualized yield of 5.79%, based on a month-end per share net
asset value of $14.14. Over the same period, the total investment
return on the Fund's Common Stock was -0.60%, based on a change in
per share net asset value from $15.08 to $14.14, and assuming
reinvestment of $0.865 per share ordinary income dividends and
$0.003 per share capital gains distributions.
For the six-month period ended June 30, 1999, the total investment
return on the Fund's Common Stock was -5.30%, based on a change in
per share net asset value from $15.35 to $14.14, and assuming
reinvestment of $0.403 per share income dividends.
For the six-month period ended June 30, 1999, the Fund's Auction
Market Preferred Stock had an average yield of 3.02% for Series A
and 3.14% for Series B.
The Municipal Market Environment
Long-term bond yields moved higher during the first six months of
1999. US Treasury bond yields rose throughout the period as the US
economy continued to exhibit considerable strength. An above-trend
inflationary report in May coupled with the May announcement by the
Federal Reserve Board that it was considering increasing short-term
interest rates in order to slow domestic economic growth also
contributed to pushing US Treasury bond yields to an 18-month high
of over 6.10%. The Federal Reserve Board's return to a neutral
policy after the expected increase in short-term interest rates of
25 basis points (0.25%) in late June allowed long-term US Treasury
bond yields to decline and close the six-month period ended June 30,
1999 at 5.96%. During the same period, the yield on long-term US
Treasury securities rose almost 90 basis points.
For much of early 1999, long-term tax-exempt bond yields remained
essentially unchanged. However, in May and June municipal bond
yields eventually followed taxable bond yields higher. As measured
by the Bond Buyer Revenue Bond Index, long-term tax-exempt revenue
bond yields rose more than 35 basis points to end the six-month
period at 5.61%, their highest level in 20 months.
The strong technical position that the tax-exempt bond market has
enjoyed in recent quarters has continued. Municipal investors are
expected to have received as much as $40 billion in June and early
July from coupon income, bond maturities and the proceeds from early
bond redemptions. The receipt of these assets has coincided with a
significant decline in new bond issuance. Over the last six months,
over $115 billion in new long-term tax-exempt bonds were issued, a
decline of 22% as compared to the first six months of 1998. During
the quarter ended June 30, 1999, less than $60 billion in securities
were issued by US municipalities, a decline of nearly 25% versus the
June 30, 1998 quarter. New-issue volume of $22 billion for the month
of June 1999 was 28% lower than June 1998's issuance and the lowest
June production since 1996. The combination of reduced issuance and
seasonally high reinvestment has produced a very positive
supply/demand function for the municipal bond market.
Prior to May 1999, this positive technical position had enabled the
tax-exempt bond market to outperform its taxable counterpart. This
resulted in a decline of the yield ratio between taxable and tax-
exempt bonds. At the end of 1998, long-term uninsured revenue bond
yields were in excess of 100% of US Treasury bond yields, far
greater than their recent historic range of 85%--88%. However, by
early May, tax-exempt revenue bond yield ratios had declined to
nearly 90%. Given the rapid rise in municipal bond yields in recent
weeks, this ratio has risen again to nearly 95%. The recent period
of volatility has created additional opportunities for long-term
investors to purchase tax-exempt bonds at historically attractive
yields relative to US Treasury securities.
While the Federal Reserve Board announced that it has no immediate
bias toward raising short-term interest rates, it is clear that
additional US economic growth will result in further action by the
Federal Reserve Board.
Portfolio Strategy
At the beginning of 1999, our investment strategy was constructive
as we looked for a continuation of the decline in long-term interest
rates. We believed the slow growth, low inflation economic
environment would continue to provide a positive backdrop for debt
securities. In addition, we expected that the tight technical
supply/demand environment for municipal bonds would cushion any
temporary downward movements in tax-exempt bond prices. Although the
domestic economy performed better than we had anticipated, inflation
continued to decline year-over-year. Interest rates declined for the
first half of the year, enabling the Fund to perform well. During
the six months ended June 30, 1999, we shifted to a slightly more
neutral posture to seek to maintain an attractive tax-exempt yield
while protecting the Fund's net asset value. Although municipal
bonds have outperformed their taxable counterparts, total return for
the Fund's Common Stock was negatively impacted by the increase in
interest rates that occurred during the months of May and June.
Looking forward, we expect to maintain a neutral posture for the
balance of 1999, focusing on seeking to enhance the yield to the
Fund's Common Stock shareholders. We believe the backup in long-term
interest rates has created an attractive buying opportunity. (For a
complete explanation of the benefits and risks of leveraging, see
page 1 of this report to shareholders.)
Because of the historically tight credit quality spreads, we
continue to favor overweighting the Fund's position in AAA-insured
securities. At June 30, 1999, 52.4% of the Fund's assets were rated
AAA by Standard & Poor's, an increase from 28% from a year ago.
In Conclusion
We appreciate your ongoing interest in MuniHoldings New York Fund,
Inc., and we look forward to assisting you with your financial needs
in the months and years ahead.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Robert A. DiMella)
Robert A. DiMella
Vice President and Portfolio Manager
(Robert D. Sneeden)
Robert D. Sneeden
Vice President and Portfolio Manager
August 12, 1999
We are pleased to announce that Robert D. Sneeden has become Co-
Portfolio Manager of MuniHoldings New York Fund, Inc. Mr. Sneeden
has been employed by Merrill Lynch Asset Management, L.P. (an
affiliate of the Fund's investment adviser) since 1994 as Portfolio
Manager.
MuniHoldings New York Fund, Inc., June 30, 1999
Portfolio
Abbreviations
To simplify the listings of MuniHoldings New York 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)
FLOATS Floating Rate Securities
GO General Obligation Bonds
IDA Industrial Development Authority
PCR Pollution Control Revenue Bonds
RITR Residual Interest Trust Receipts
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
New York-- NR* Aaa $ 5,000 Battery Park City Authority, New York, Revenue Bonds, RITR,
93.7% Series 25, 6.82% due 11/01/2026 (a)(f) $ 5,035
AAA Aaa 2,000 Buffalo, New York, Municipal Water Finance Authority, Water
System Revenue Bonds, 5% due 7/01/2025 (b) 1,868
A1+ VMIG1++ 100 Long Island Power Authority, New York, Electric System Revenue
Bonds, VRDN, Sub-Series 7, 3.95% due 4/01/2025 (d)(e) 100
Long Island Power Authority, New York, Electric System Revenue
Refunding Bonds, Series A:
AAA Aaa 7,000 5.25% due 12/01/2026 (d) 6,773
A- Baa1 3,150 5.50% due 12/01/2029 3,109
AAA Aaa 2,600 5.50% due 12/01/2029 (d) 2,619
Metropolitan Transportation Authority, New York, Commuter
Facilities Revenue Refunding Bonds:
AAA Aaa 2,000 Series B, 5% due 7/01/2017 (a) 1,906
AAA Aaa 1,000 Series D, 5.125% due 7/01/2022 (d) 956
AAA Aaa 14,710 Metropolitan Transportation Authority, New York, Dedicated Tax
Fund Revenue Bonds, Series A, 5% due 4/01/2029 (c) 13,678
AAA Aaa 2,690 Nassau County, New York, IDA, Civic Facility Revenue Refunding
Bonds (Hofstra University Project), 5% due 7/01/2023 (d) 2,536
A1+ VMIG1++ 100 New York City, New York, Cultural Resource Trust, Revenue Bonds
(Soloman R. Guggenheim Foundation), VRDN, Series B, 3.85% due
12/01/2015 (e) 100
New York City, New York, GO:
A- A3 5,000 Refunding, Series H, 5.125% due 8/01/2025 4,663
A- A3 2,000 Series J, 5.50% due 2/15/2026 1,975
AAA Aaa 7,500 Series J, 5.125% due 5/15/2029 (d) 7,110
A1+ VMIG1++ 1,290 VRDN, Series B-2, Sub-Series B-5, 3.95% due 8/15/2009 (d)(e) 1,290
New York City, New York, IDA, Civic Facilities Revenue Bonds:
BBB NR* 1,000 (College of Aeronautics Project), 5.45% due 5/01/2018 (h) 984
A A3 5,765 (Nightingale-Bamford School Project), 5.85% due 1/15/2020 5,896
A A2 6,750 New York City, New York, IDA, Special Facilities Revenue
Bonds (British Airways PLC Project), AMT, 5.25% due 12/01/2032 6,298
New York City, New York, Municipal Water Finance Authority,
Water and Sewer System Revenue Refunding Bonds:
AAA Aaa 7,250 Series A, 5.50% due 6/15/2023 (b) 7,268
A A1 4,750 Series B, 5.25% due 6/15/2029 4,536
A1+ VMIG1++ 1,350 VRDN, Series A, 3.90% due 6/15/2025 (b)(e) 1,350
AA Aa3 5,000 New York City, New York, Transitional Finance Authority
Revenue Bonds, Future Tax Secured, Series C, 5.50% due 5/01/2025 5,021
New York State Dormitory Authority Revenue Bonds:
AAA Aaa 2,200 (835 Schools Program), Issue 2, Series D, 5% due 7/01/2018 (a) 2,086
BBB+ A3 7,550 (Court Facilities Lease), Series A, 5.25% due 5/15/2021 7,191
AAA Aaa 4,500 (Library Facilities-Service Contract), 5.25% due 7/01/2019 (g) 4,397
A- A3 2,370 (Mental Health Services Facilities Improvement), Series B,
5.375% due 2/15/2026 2,309
AAA A3 5,485 (Mental Health Services Facilities Improvement), Series D,
5.125% due 8/15/2027 (c) 5,207
BBB+ Baa1 7,000 (Secured Hospital--Interfaith Medical Center), Series D,
5.40% due 2/15/2028 6,620
BBB+ Baa1 1,750 (Secured Hospital--Saint Agnes Hospital), Series A, 5.40%
due 2/15/2025 1,662
BBB+ Baa1 1,000 (Secured Hospital--Saint Clare's Hospital), Series B, 5.30%
due 2/15/2019 951
New York State Dormitory Authority Revenue Refunding Bonds:
NR* Aaa 2,920 (Culinary Institute of America), 5.375% due 7/01/2015 (d) 2,942
A- A3 2,000 (State University Educational Facilities), 5.125% due
5/15/2021 1,893
AAA Aaa 1,455 (University of Rochester), Series A, 5.125% due 7/01/2022 (d) 1,392
AAA Aaa 3,500 (University of Rochester), Series A, 5% due 7/01/2023 (d) 3,299
AA Aa3 4,000 (Vassar College), 5% due 7/01/2025 3,725
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 4,732
AAA NR* 2,000 New York State Energy Research and Development Authority, PCR
(New York State Electric and Gas Co. Project), AMT, Series A,
6.15% due 7/01/2026 (d) 2,099
New York State Energy Research and Development Authority, PCR,
Refunding (Niagara Mohawk Power Corporation Project), Series A:
AAA Aaa 2,000 5.15% due 11/01/2025 (a) 1,908
NR* P1 200 FLOATS, 3.90% due 3/01/2027 (e) 200
AAA Aaa 3,955 New York State, GO, Refunding, Series D, 5% due 7/15/2018 (a) 3,777
NR* Aaa 5,065 New York State Local Government Assistance Corporation, RITR,
Series 27, 6.82% due 4/01/2021 (f) 5,089
New York State Mortgage Agency Revenue Bonds:
NR* Aa2 7,435 (Homeowner Mortgage), AMT, Series 69, 5.40% due 10/01/2019 7,318
NR* Aa2 3,900 (Homeowner Mortgage), AMT, Series 69, 5.50% due 10/01/2028 3,811
NR* Aaa 4,900 Series 41-A, 6.45% due 10/01/2014 5,245
NR* Aaa 5,000 New York State Urban Development Corporation, Revenue
Refunding Bonds, RITR, Series 26, 6.82% due 1/01/2025 (f) 5,024
AAA NR* 1,000 Niagara, New York, Frontier Authority, Airport Revenue Bonds
(Buffalo Niagara International Airport), AMT, 5% due
4/01/2018 (b) 939
AAA Aaa 1,700 Oneida County, New York, IDA, Civic Facilitities Revenue
Bonds (Mohawk Valley), Series A, 5.20% due 2/01/2013 (c) 1,669
AAA Aaa 1,250 Yonkers, New York, GO, Series C, 5% due 6/01/2019 (b) 1,181
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Puerto A Baa1 $ 9,420 Puerto Rico Public Buildings Authority, Guaranteed Government
Rico--5.0% Facilities Revenue Bonds, Series B, 5.25% due 7/01/2021 $ 9,098
Total Investments (Cost--$186,349)--98.7% 180,835
Variation Margin on Financial Futures Contracts**--(0.1%) (214)
Other Assets Less Liabilities--1.4% 2,536
---------
Net Assets--100.0% $ 183,157
=========
<FN>
(a)AMBAC Insured.
(b)FGIC Insured.
(c)FSA Insured.
(d)MBIA Insured.
(e)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at June 30, 1999.
(f)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 June 30, 1999.
(g)CAPMAC Insured.
(h)All or a portion of security held as collateral in connection
with open financial futures contracts.
*Not Rated.
**Financial futures contracts sold as of June 30, 1999 were as
follows:
(in Thousands)
Number of Expiration Value
Contracts Issue Date (Notes 1a & 1b)
245 US Treasury Bonds September 1999 $ 28,397
---------
Total Financial Futures Contracts Sold
(Total Contract Price--$27,972) $ 28,397
=========
++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.
</TABLE>
QUALITY PROFILE
The quality ratings of securities in the Fund as of June 30, 1999
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 52.4%
AA/Aa 10.8
A/A 28.2
BBB/Baa 5.6
Other++ 1.7
[FN]
++Temporary investments in short-term municipal securities.
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of June 30, 1999
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$186,349,481) (Note 1a) $180,835,419
Cash 27,107
Receivables:
Securities sold $ 7,303,421
Interest 2,696,871 10,000,292
------------
Deferred organization expenses (Note 1e) 11,899
Prepaid expenses 11,655
------------
Total assets 190,886,372
------------
Liabilities: Payables:
Securities purchased 7,086,451
Variation margin (Note 1b) 214,375
Dividends to shareholders (Note 1f) 189,059
Investment adviser (Note 2) 75,900
Offering costs (Note 1e) 60,000 7,625,785
------------
Accrued expenses 103,563
------------
Total liabilities 7,729,348
------------
Net Assets: Net assets $183,157,024
============
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.10 per share (3,040 shares of
AMPS* issued and outstanding at $25,000 per share liquidation
preference) $ 76,000,000
Common Stock, par value $.10 per share (7,580,698 shares
issued and outstanding) $ 758,070
Paid-in capital in excess of par 111,975,013
Undistributed investment income--net 708,483
Accumulated realized capital losses on investments--net (345,636)
Unrealized depreciation on investments--net (5,938,906)
------------
Total--Equivalent to $14.14 net asset value per share of Common
Stock (market price--$13.25) 107,157,024
------------
Total capital $183,157,024
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
MuniHoldings New York Fund, Inc., June 30, 1999
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Year Ended June 30, 1999
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 9,985,755
Income
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 1,053,213
Commission fees (Note 4) 194,697
Professional fees 62,147
Accounting services (Note 2) 42,971
Transfer agent fees 41,665
Directors' fees and expenses 23,149
Printing and shareholder reports 22,766
Custodian fees 15,580
Listing fees 13,457
Pricing fees 7,595
Amortization of organization expenses (Note 1e) 3,248
Other 8,367
------------
Total expenses before reimbursement 1,488,855
Reimbursement of expenses (Note 2) (166,173)
------------
Total expenses after reimbursement 1,322,682
------------
Investment income--net 8,663,073
------------
Realized & Realized gain on investments--net 1,039,531
Unrealized Gain Change in unrealized appreciation/depreciation on investments--net (7,804,850)
(Loss) on ------------
Investments Net Increase in Net Assets Resulting from Operations $ 1,897,754
- --Net (Notes ============
1b, 1d & 3):
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the
For the Period
Year Ended Feb. 27, 1998++
June 30, to June 30,
Increase (Decrease) in Net Assets: 1999 1998
<S> <S> <C> <C>
Operations: Investment income--net $ 8,663,073 $ 2,967,254
Realized gain (loss) on investments--net 1,039,531 (827,645)
Change in unrealized appreciation/depreciation on
investments--net (7,804,850) 1,865,944
------------ ------------
Net increase in net assets resulting from operations 1,897,754 4,005,553
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (6,180,250) (1,644,233)
Shareholders Preferred Stock (2,290,033) (807,287)
(Note 1f): Realized gain on investments--net:
Common Stock (388,828) --
Preferred Stock (168,735) --
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (9,027,846) (2,451,520)
------------ ------------
Capital Stock Proceeds from issuance of Common Stock -- 113,250,000
Transactions Proceeds from issuance of Preferred Stock -- 76,000,000
(Notes 1e & 4): Value of shares issued to Common Stock Shareholders in
reinvestment of dividends and distributions 368,635 --
Offering costs resulting from the issuance of Common Stock -- (278,202)
Offering and underwriting costs resulting from the issuance of
Preferred Stock -- (707,355)
------------ ------------
Net increase in net assets derived from capital stock
transactions 368,635 188,264,443
------------ ------------
Net Assets: Total increase (decrease) in net assets (6,761,457) 189,818,476
Beginning of period 189,918,481 100,005
------------ ------------
End of period* $183,157,024 $189,918,481
============ ============
<FN>
*Undistributed investment income--net (Note 1g) $ 708,483 $ 515,734
============ ============
++Commencement of operations.
See Notes to Financial Statements.
</TABLE>
MuniHoldings New York Fund, Inc., June 30, 1999
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
For the
The following per share data and ratios have been derived For the Period
from information provided in the financial statements. Year Ended Feb. 27, 1998++
June 30, to June 30,
Increase (Decrease) in Net Asset Value: 1999 1998
<S> <S> <C> <C>
Per Share Net asset value, beginning of period $ 15.08 $ 15.00
Operating ------------ ------------
Performance: Investment income--net 1.14 .36
Realized and unrealized gain (loss) on investments--net (.89) .14
------------ ------------
Total from investment operations .25 .50
------------ ------------
Less dividends and distributions to Common Stock shareholders:
Investment income--net (.82) (.22)
Realized gain on investments--net (.05) --
------------ ------------
Total dividends and distributions to Common Stock shareholders (.87) (.22)
------------ ------------
Capital charge resulting from issuance of Common Stock -- (.04)
------------ ------------
Effect of Preferred Stock activity:++++
Dividends and distributions to Preferred Stock shareholders:
Investment income--net (.30) (.07)
Realized gain on investments--net (.02) --
Capital charge resulting from issuance of Preferred Stock -- (.09)
------------ ------------
Total effect of Preferred Stock activity (.32) (.16)
------------ ------------
Net asset value, end of period $ 14.14 $ 15.08
============ ============
Market price per share, end of period $ 13.25 $ 14.5625
============ ============
Total Investment Based on market price per share (3.55%) (1.47%)+++
Return:** ============ ============
Based on net asset value per share (0.60%) 2.03%+++
============ ============
Ratios Based on Total expenses, net of reimbursement*** 1.15% .43%*
Average Net ============ ============
Assets of Total expenses*** 1.29% 1.25%*
Common Stock: ============ ============
Total investment income--net*** 7.50% 8.42%*
============ ============
Amount of dividends to Preferred Stock shareholders 1.98% 2.29%*
============ ============
Investment income--net, to Common Stock shareholders 5.52% 6.13%*
============ ============
Ratios Based Total expenses, net of reimbursement .69% .26%*
on Total ============ ============
Average Net Total expenses .78% .77%*
Assets:++++++*** ============ ============
Total investment income--net 4.52% 5.22%*
============ ============
Ratios Based on Dividends to Preferred Stock shareholders 3.01% 3.73%*
Average Net ============ ============
Assets of
Preferred Stock:
Supplemental Net assets, net of Preferred Stock, end of period
Data: (in thousands) $ 107,157 $ 113,918
============ ============
Preferred Stock outstanding, end of period (in thousands) $ 76,000 $ 76,000
============ ============
Portfolio turnover 100.06% 28.25%
============ ============
Leverage: Asset coverage per $1,000 $ 2,410 $ 2,499
============ ============
Dividends Series A--Investment income--net $ 745 $ 286
Per Share on ============ ============
Preferred Stock Series B--Investment income--net $ 762 $ 245
Outstanding: ============ ============
<FN>
*Annualized.
**Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, may result
in substantially different returns. Total investment returns exclude
the effects of sales loads.
***Do not reflect the effect of dividends to Preferred Stock
shareholders.
++Commencement of operations.
++++The Fund's Preferred Stock was issued on March 19, 1998.
++++++Includes Common and Preferred Stock average net assets.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniHoldings New York 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 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 MUN. 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.
* 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.
MuniHoldings New York Fund, Inc., June 30, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
* Options--The Fund is authorized to write covered call options and
purchase call and put options. When the Fund writes an option, an
amount equal to the premium received by the Fund is reflected as an
asset and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written.
When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Deferred organization and offering expenses--Deferred
organization expenses are amortized on a straight-line basis over a
period not exceeding five years. In accordance with Statement of
Position 98-5, any unamortized organization expenses will be
expensed on July 1, 1999. This charge will not have any material
impact on the operations of the Fund. 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.
(g) Reclassification--Generally accepted accounting principles
require that certain components of net assets be adjusted to reflect
permanent differences between financial and tax reporting.
Accordingly, current year's permanent book/tax differences of $41
have been reclassified between accumulated net realized capital
losses and undistributed net investment income. 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 0.55% of
the Fund's average weekly net assets, including proceeds from the
issuance of Preferred Stock. For the year ended June 30, 1999, FAM
earned fees of $1,053,213, of which $166,173 was reimbursed.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended June 30, 1999 were $194,758,639 and $186,189,994,
respectively.
Net realized gains for the year ended June 30, 1999 and net
unrealized losses as of June 30, 1999 were as follows:
Realized Unrealized
Gains Losses
Long-term investments $ 588,309 $ (5,514,062)
Financial futures contracts 451,222 (424,844)
------------- -------------
Total $ 1,039,531 $ (5,938,906)
============= =============
As of June 30, 1999, net unrealized depreciation for Federal income
tax purposes aggregated $5,514,062, of which $70,699 related to
appreciated securities and $5,584,761 related to depreciated
securities. The aggregate cost of investments at June 30, 1999 for
Federal income tax purposes was $186,349,481.
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 June 30, 1999
increased by 24,031 as a result of dividend reinvestment and during
the period February 27, 1998 to June 30, 1998 increased by 7,550,000
as a result of the initial offering.
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 June
30, 1999 were as follows: Series A, 4% and Series B, 3.75%.
Shares issued and outstanding during the year ended June 30, 1999
remained constant and during the period February 27, 1998 to June
30, 1998 increased by 3,040 as a result of the AMPS offering.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from 0.25% to 0.375%,
calculated on the proceeds of each auction. For the year ended June
30, 1999, Merrill Lynch, Pierce, Fenner & Smith Incorporated, an
affiliate of FAM, earned $129,951 as commissions.
5. Subsequent Event:
On July 8, 1999, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$.067616 per share, payable on July 29, 1999 to shareholders of
record as of July 23, 1999.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
MuniHoldings New York Fund, Inc.:
We have audited the accompanying statement of assets, liabilities
and capital, including the schedule of investments, of MuniHoldings
New York Fund, Inc. as of June 30, 1999, the related statements of
operations for the year then ended, changes in net assets and the
financial highlights for the year then ended and for the period
February 27, 1998 (commencement of operations) to June 30, 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 generally accepted
auditing standards. 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 June 30,
1999 by correspondence with the custodian and brokers. 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, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
MuniHoldings New York Fund, Inc. as of June 30, 1999, the results of
its operations, the changes in its net assets, and the financial
highlights for the respective stated periods in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
August 13, 1999
</AUDIT-REPORT>
MuniHoldings New York Fund, Inc., June 30, 1999
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by MuniHoldings
New York Fund, Inc. during its taxable period ended June 30, 1999
qualify as tax-exempt interest dividends for Federal income tax
purposes.
Additionally, the following table summarizes the taxable
distributions paid by the Fund during the year:
<TABLE>
<CAPTION>
Payable Ordinary Long-Term
Date Income Capital Gains*
<S> <S> <C> <C> <C>
Common Stock Shareholders 12/30/98 $.047995 $.003460
Preferred Stock Shareholders: Series A 11/17/98 $ 25.30 $ 1.83
11/24/98 $ 24.37 $ 1.75
12/01/98 $ .69 $ .05
Series B 11/18/98 $ 23.51 $ 1.70
11/25/98 $ 25.32 $ 1.81
12/02/98 $ 4.35 $ .33
<FN>
*The entire distribution is subject to the 20% tax rate.
Please retain this information for your records.
</TABLE>
MANAGED DIVIDEND POLICY (unaudited)
The Fund's dividend policy is to distribute substantially all of its
net investment income to its shareholders on a monthly basis.
However, in order to provide shareholders with a more consistent
yield to the current trading price of 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.
YEAR 2000 ISSUES (unaudited)
Many computer systems were designed using only two digits to
designate years. These systems may not be able to distinguish the
Year 2000 from the Year 1900 (commonly known as the "Year 2000
Problem"). The Fund could be adversely affected if the computer
systems used by the Fund's management or other Fund service
providers do not properly address this problem before January 1,
2000. The Fund's management expects to have addressed this problem
before then, and does not anticipate that the services it provides
will be adversely affected. The Fund's other service providers have
told the Fund's management that they also expect to resolve the Year
2000 Problem, and the Fund's management will continue to monitor the
situation as the Year 2000 approaches. However, if the problem has
not been fully addressed, the Fund could be negatively affected. The
Year 2000 Problem could also have a negative impact on the
securities in which the Fund invests, and this could hurt the Fund's
investment returns.
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
James H. Bodurtha, Director
Herbert I. London, Director
Robert R. Martin, Director
Joseph L. May, Director
Andre F. Perold, Director
Arthur Zeikel, Director
Vincent R. Giordano, Senior Vice President
Kenneth A. Jacob, Vice President
Robert A. DiMella, Vice President
Robert D. Sneeden, Vice President
Donald C. Burke, Vice President and Treasurer
Alice A. Pellegrino, Secretary
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Stock:
IBJ Whitehall Bank &Trust Company
One State Street
New York, NY 10004
NYSE Symbol
MUN
After more than 20 years of service, Arthur Zeikel recently retired
as Chairman of Merrill Lynch Asset Management, L.P. (MLAM). Mr.
Zeikel served as President of MLAM from 1977 to 1997 and as Chairman
since December 1997. Mr. Zeikel is one of the country's most
respected leaders in asset management and presided over the growth
of Merrill Lynch's asset management business. During his tenure,
client assets under management grew from $300 million to over $500
billion. Mr. Zeikel will remain on MuniHoldings New York Fund,
Inc.'s Board of Directors. We are pleased to announce that Terry K.
Glenn has been elected President and Director of the Fund. Mr. Glenn
has held the position of Executive Vice President of MLAM since
1983.
Mr. Zeikel's colleagues at MLAM join the Fund's Board of Directors
in wishing him well in his retirement from Merrill Lynch and are
pleased that he will continue as a member of the Fund's Board of
Directors.
Gerald M. Richard, Treasurer and Philip M. Mandel, Secretary, of
MuniHoldings New York Fund, Inc. have recently retired. Their
colleagues at Merrill Lynch Asset Management, L.P. join the Fund's
Board of Directors in wishing Mr. Richard and Mr. Mandel well in
their retirements.
