MUNIHOLDINGS
NEW YORK
INSURED
FUND IV, INC.
FUND LOGO
Annual Report
May 31, 2000
MuniHoldings New York Insured Fund IV, Inc. seeks to provide
shareholders with current income exempt from Federal income tax and
New York State and New York City personal 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 income tax and New York State and
New York City personal income taxes.
This report, including the financial information herein, is
transmitted to shareholders of MuniHoldings New York Insured Fund
IV, 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 IV, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MUNIHOLDINGS NEW YORK INSURED FUND IV, INC.
The Benefits and
Risks of
Leveraging
MuniHoldings New York Insured Fund IV, 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 of the fund's Common Stock (that is, its
price as listed on the American 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.
MuniHoldings New York Insured Fund IV, Inc., May 31, 2000
DEAR SHAREHOLDER
Since inception (July 23, 1999) through May 31, 2000, MuniHoldings
New York Insured Fund IV, Inc. earned $0.717 per share income
dividends, which included earned and unpaid dividends of $0.066.
This represents a net annualized yield of 6.36%, based on a month-
end net asset value of $13.09 per share. Over the same period, the
Fund's total investment return was -8.00%, based on a change in per
share net asset value from $15.00 to $13.09, and assuming
reinvestment of $0.650 per share income dividends.
For the six-month period ended May 31, 2000, the total investment
return on the Fund's Common Stock was +0.38%, based on a change in
per share net asset value from $13.50 to $13.09, and assuming
reinvestment of $0.426 per share income dividends.
For the six-month period ended May 31, 2000, the Fund's Auction
Market Preferred Stock had an average yield of 4.14%.
The Municipal Market Environment
From November 1999 to mid-January 2000, fixed-income bond yields
rose steadily higher. US economic growth, in part intensified by
Year 2000 preparations, grew at a 7.3% rate in the fourth quarter of
1999 and at a 4.2% annual rate for all of 1999. Initial estimates
for the first quarter of 2000 were reported at 5.4%. However,
despite these significant growth rates and the lowest unemployment
rates since January 1970, no price measure indicator has shown any
considerable signs of future price pressures at the consumer level.
Given no signs of an economic slow-down, 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 impressive strength of the US equity
markets as reasons for attempting to moderate US economic growth
before inflationary price increases are realized. By mid-January
2000, US Treasury bond yields rose 45 basis points (0.45%) to 6.75%.
Similarly, as measured by the Bond Buyer Revenue Bond Index, long-
term tax-exempt bond yields rose approximately 20 basis points to
6.35%.
Since mid-January, 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
from mid-January to mid-April 2000. In late January and early
February 2000, the US Treasury announced its intention to reduce the
number of issues to be auctioned in the quarterly Treasury note and
bond auctions. Furthermore, budgetary surpluses would allow the US
Treasury to repurchase outstanding, higher-couponed Treasury issues,
primarily in the 15-year and longer-term maturity sectors. Both
these actions would result in a significant reduction in the
outstanding supply of long-term US Treasury debt. Domestic and
international investors quickly began to accumulate what was
expected to become a scarce commodity and Government bond prices
quickly rose.
By mid-April 2000, US Treasury bond yields had declined over 100
basis points to 5.67%. However, bond yields rose somewhat during the
remainder of the period as economic statistics were released,
indicating that the economic strength seen in late 1999 was
continuing into early 2000. The decline in long-term US Treasury
yields resulted in an inverted taxable yield curve as short-term and
intermediate-term interest rates have not fallen proportionately
since the Federal Reserve Board is expected to continue to raise
short-term interest rates. The current inversion has had much more
to do with debt reduction and Treasury buybacks than with investor
expectations of slower economic growth. Over the last six months,
long-term US Treasury bond yields have fallen almost 30 basis points
to close the six-month period ended May 31, 2000 at 6.00%.
Tax-exempt bond yields have also declined in recent months. The
decline has largely been in response to the rally in US 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. Since their recent peak in January
2000, long-term municipal bond yields declined over 15 basis points
to finish the six-month period ended May 31, 2000 at 6.20%.
The relative underperformance of the municipal bond market in recent
months has been especially disappointing given the strong technical
position the tax-exempt bond market enjoyed. The issuance of long-
term tax-exempt securities has dramatically declined. Over the last
year, $205 billion in new long-term municipal securities was issued,
a decline of almost 20% compared to the same period a year earlier.
For the six months ended May 31, 2000, approximately $90 billion of
new tax-exempt bonds was underwritten, a decline of more than 25%
compared to the same period in 1999. Although investors received
over $30 billion in coupon payments, bond maturities and proceeds
from early bond redemption in January and February, and are expected
to receive a similar amount in June and July, and despite the
highest municipal bond yields in three years, overall investor
demand has diminished. Long-term municipal bond mutual funds have
seen consistent outflows in recent months as the yields of
individual securities have risen faster than those of larger,
morediverse mutual funds. Over the last five months, tax-exempt
mutual funds have had net redemptions of more than $11 billion.
Also, the demand from property and casualty insurance companies has
weakened as a result of the losses incurred from the series of
damaging storms across much of the eastern United States.
Additionally, many institutional investors who have in recent years
been attracted to the municipal bond market by historically
attractive tax-exempt bond yield ratios of over 90% found other
asset classes even more attractive. Even with a favorable supply
position, tax-exempt municipal bond yields have underperformed their
taxable counterparts.
Any significantly lower municipal bond yields are still likely to
require weaker US employment growth and consumer spending. The
actions taken in recent months by the Federal Reserve Board, as well
as those expected in June and perhaps August 2000, should eventually
slow US economic growth. The recent declines in US home sales are
perhaps the first sign that consumer spending is being slowed by
higher interest rates. Until further signs develop, it is likely
that the municipal bond market's current favorable technical
position will dampen significant tax-exempt interest rate volatility
and provide a stable environment for eventual improvement in
municipal bond prices.
Portfolio Strategy
During the six-month period ended May 31, 2000, we focused our
strategy on delivering an attractive level of tax-exempt income.
During this period, the net asset value volatility in the fixed-
income market was above average. We continued to emphasize
purchasing higher-couponed issues as they became available in the
market and to sell deep-discounted bonds in order to try to reduce
the volatility associated with the Fund. We kept our cash reserves
low in order to maintain the Fund's high level of tax-exempt income.
Leveraging continued to benefit the Fund's Common Stock shareholders
because of the positive slope of the municipal bond yield curve.
However, should the spread between long-term and short-term tax-
exempt interest rates narrow, the benefits of the leverage will
MuniHoldings New York Insured Fund IV, Inc., May 31, 2000
decline and the yield on the Common Stock will decline. (For a
complete explanation of the benefits and risks of leveraging, see
page 1 of this report to shareholders.)
In Conclusion
We appreciate your investment in MuniHoldings New York Insured Fund
IV, 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
(Roberto Roffo)
Roberto Roffo
Vice President and Portfolio Manager
June 23, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S>
New York--98.2% NR* Aaa $ 2,500 Albany County, New York, Airport Authority, Airport
Revenue Bonds, RITR, AMT, Series RI-7, 7.12%
due 12/15/2023 (d)(f) $ 2,389
AA NR* 3,375 Albany, New York, IDA, Civic Facility Revenue Bonds
(The University Heights Association--Albany Law School),
Series A, 6.75% due 12/01/2029 3,565
AAA Aaa 4,500 Long Island Power Authority, New York, Electric
System Revenue Refunding Bonds, Series A, 5.50% due
12/01/2029 (e) 4,087
Metropolitan Transportation Authority, New York,
Commuter Facilities Revenue Bonds:
AAA Aaa 3,500 (Grand Central Terminal), Series 1, 5.70% due
7/01/2024 (d) 3,333
AAA Aaa 3,430 Series A, 5.50% due 7/01/2011 (e) 3,430
Metropolitan Transportation Authority, New York,
Dedicated Tax Fund Revenue Bonds, Series A:
AAA Aaa 3,000 4.75% due 4/01/2028 (b) 2,424
AAA Aaa 6,000 5% due 4/01/2029 (d) 5,073
AAA Aaa 1,310 Metropolitan Transportation Authority, New York,
Transit Facilities Revenue Refunding Bonds, Series A,
4.75% due 7/01/2024 (e) 1,074
Nassau County, New York, GO, Series B (a):
AAA Aaa 1,005 5.25% due 6/01/2023 898
AAA Aaa 2,800 5.25% due 6/01/2024 2,496
AAA Aaa 3,250 Nassau County, New York, IDA, Civic Facilities
Revenue Refunding Bonds (Hofstra University Project),
4.75% due 7/01/2028 (e) 2,624
New York City, New York, City Health and Hospital
Corporation, Health System Revenue Refunding Bonds,
Series A:
AAA Aaa 3,000 5.25% due 2/15/2017 (e) 2,764
AAA Aaa 2,500 5% due 2/15/2020 (a) 2,164
AA Aa2 510 New York City, New York, City Housing Development
Corporation, M/F Housing Revenue Bonds, AMT, Series C,
5.60% due 11/01/2019 472
New York City, New York, City Municipal Water Finance
Authority, Water and Sewer System Revenue Refunding Bonds:
AAA Aaa 4,600 Series A, 5.50% due 6/15/2023 (a) 4,288
AAA Aaa 1,500 Series F, 5.50% due 6/15/2023 (e) 1,398
New York City, New York, City Transitional Finance
Authority Revenue Bonds, Future Tax Secured:
AA Aa3 2,000 Series A, 5% due 8/15/2017 1,793
AAA Aaa 1,920 Series C, 5% due 5/01/2016 (b) 1,743
AAA Aaa 4,000 New York City, New York, City Trust Cultural
Resource Revenue Bonds (American Museum of Natural
History), Series A, 5.75% due 7/01/2029 (a) 3,852
AAA Aaa 3,000 New York City, New York, City Trust Cultural Resource
Trust, Revenue Refunding Bonds (Museum of Modern Art),
Series A, 5.50% due 1/01/2021 (a) 2,831
NR* VMIG1++ 1,250 New York City, New York, GO, VRDN, Series B-2,
Sub-Series B-5, 4.40% due 8/15/2009 (e)(g) 1,250
A1+ NR* 2,200 New York City, New York, Housing Development
Corporation, M/F Rental Housing Revenue Bonds
(Carnegie Park), VRDN, Series A, 4.15% due 11/15/2019 (g)(h) 2,200
NR* Aaa 885 New York City, New York, IDA, Civic Facility Revenue
Bonds (Anti-Defamation League Foundation), Series A,
5.50% due 6/01/2022 (e) 827
AAA Aaa 4,400 New York State Dormitory Authority, Hospital Revenue
Bonds (New York Hospital Medical Center), 5.55% due
8/15/2029 (a)(c) 4,043
New York State Dormitory Authority Revenue Bonds:
AAA Aaa 1,000 (Mental Health Services Facilities), Series B,
5.375% due 2/15/2026 (d) 903
AAA Aaa 2,000 (Mount Sinai School of Medicine), Series A,
5.15% due 7/01/2024 (e) 1,768
AAA Aaa 1,845 (Pace University), 6% due 7/01/2019 (e) 1,862
AAA Aaa 3,500 (Pace University), 6% due 7/01/2029 (e) 3,476
NR* Aaa 4,000 RIB, Series 156, 6.37% due 8/01/2029 (a)(c)(f) 3,262
</TABLE>
Portfolio
Abbreviations
To simplify the listings of MuniHoldings New York Insured Fund IV,
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)
DATES Daily Adjustable Tax-Exempt Securities
GO General Obligation Bonds
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
MuniHoldings New York Insured Fund IV, Inc., May 31, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <S> <S> <C>
New York New York State Dormitory Authority, Revenue
(concluded) Refunding Bonds (e):
AAA Aaa $ 4,300 (City University System), Third Generation
Resources, Series 1, 5.50% due 7/01/2024 $ 3,986
AAA Aaa 2,000 (Mental Health Services Facilities Improvement),
Series D, 4.75% due 2/15/2025 1,623
A- Baa3 4,500 New York State Energy Research and Development Authority,
Electric Facilities Revenue Bonds (LILCO Project),
AMT, Series B, 5.30% due 11/01/2023 3,894
A1+ NR* 400 New York State Energy Research and Development
Authority, PCR (Niagara Mohawk Power Corporation
Project), DATES, Series A, 4.45% due 7/01/2015 (g) 400
A1+ VMIG1++ 400 New York State Energy Research and Development
Authority, PCR, Refunding (New York Electric and Gas),
VRDN, Series B, 4.45% due 2/01/2029 (g) 400
NR* Aa1 2,000 New York State Mortgage Agency, Homeowner Mortgage
Revenue Bonds, AMT, Series 88, 6.25% due 4/01/2030 1,999
AAA NR* 2,100 New York State Mortgage Agency, Homeowner Mortgage Revenue
Refunding Bonds, Series 83, 5.55% due 10/01/2027 (e) 1,925
AAA Aaa 4,000 New York State Urban Development Corporation Revenue
Bonds (Correctional Facilities Service Contract),
Series B, 4.75% due 1/01/2028 (a) 3,236
AAA Aaa 2,500 New York State Urban Development Corporation,
Revenue Refunding Bonds (Correctional Facilities
Service Contract), 5% due 1/01/2019 (d) 2,207
Total Investments (Cost--$96,756)--98.2% 91,959
Other Assets Less Liabilities--1.8% 1,682
---------
Net Assets--100.0% $ 93,641
=========
(a)AMBAC Insured.
(b)FGIC Insured.
(c)FHA Insured.
(d)FSA Insured.
(e)MBIA Insured.
(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 May 31, 2000.
(g)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at May 31, 2000.
(h)FNMA Collateralized.
*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.
</TABLE>
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of May 31, 2000
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$96,756,392) $ 91,959,307
Cash 66,330
Interest receivable 1,829,959
------------
Total assets 93,855,596
------------
Liabilities: Payables:
Dividends to shareholders $ 100,556
Investment adviser 20,687 121,243
------------
Accrued expenses 93,286
------------
Total liabilities 214,529
------------
Net Assets: Net assets $ 93,641,067
============
Capital: Capital Stock (200,000,000 shares authorized):
Preferred Stock, par value $.10 per share (1,560 shares of AMPS*
issued and outstanding at $25,000
per share liquidation preference) $ 39,000,000
Common Stock, par value $.10 per share (4,174,097 shares
issued and outstanding) $ 417,410
Paid-in capital in excess of par 61,621,989
Undistributed investment income--net 312,320
Accumulated realized capital losses on investments--net (2,913,567)
Unrealized depreciation on investments--net (4,797,085)
------------
Total--Equivalent to $13.09 net asset value per share
of Common Stock (market price--$12.125) 54,641,067
------------
Total capital $ 93,641,067
============
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
MuniHoldings New York Insured Fund IV, Inc., May 31, 2000
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Period July 23, 1999++ to May 31, 2000
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 4,582,047
Income:
Expenses: Investment advisory fees $ 433,261
Commission fees 76,093
Accounting services 44,264
Professional fees 36,388
Transfer agent fees 22,861
Directors' fees and expenses 19,305
Printing and shareholder reports 12,215
Listing fees 7,290
Custodian fees 4,868
Pricing fees 4,422
Other 5,798
------------
Total expenses before reimbursement 666,765
Reimbursement of expenses (296,972)
------------
Total expenses after reimbursement 369,793
------------
Investment income--net 4,212,254
------------
Realized & Realized loss on investments--net (2,913,567)
Unrealized Loss on Unrealized depreciation on investments--net (4,797,085)
Investments--Net: ------------
Net Decrease in Net Assets Resulting from Operations $ (3,498,398)
============
++Commencement of operations.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
For the Period
July 23, 1999++ to
Increase (Decrease) in Net Assets: May 31, 2000
<S> <S> <C>
Operations: Investment income--net $ 4,212,254
Realized loss on investments--net (2,913,567)
Unrealized depreciation on investments--net (4,797,085)
------------
Net decrease in net assets resulting from operations (3,498,398)
------------
Dividends to Investment income--net:
Shareholders: Common Stock (2,714,486)
Preferred Stock (1,185,448)
------------
Net decrease in net assets resulting from dividends to shareholders (3,899,934)
------------
Capital Stock Proceeds from issuance of Common Stock 62,511,450
Transactions: Proceeds from issuance of Preferred Stock 39,000,000
Offering costs resulting from the issuance of Common Stock (137,714)
Offering and underwriting costs resulting from the issuance of Preferred Stock (434,342)
------------
Net increase in net assets derived from capital stock transactions 100,939,394
------------
Net Assets: Total increase in net assets 93,541,062
Beginning of period 100,005
------------
End of period* $ 93,641,067
============
*Undistributed investment income--net $ 312,320
============
++Commencement of operations.
See Notes to Financial Statements.
</TABLE>
MuniHoldings New York Insured Fund IV, Inc., May 31, 2000
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. For the Period
July 23, 1999++ to
Increase (Decrease) in Net Asset Value: May 31, 2000
<S> <S> <C>
Per Share Net asset value, beginning of period $ 15.00
Operating ---------
Performance: Investment income--net 1.00
Realized and unrealized loss on investments--net (1.83)
---------
Total from investment operations (.83)
---------
Less dividends to Common Stock shareholders from investment income--net (.65)
---------
Capital charge resulting from issuance of Common Stock (.04)
---------
Effect of Preferred Stock activity:++++
Dividends to Preferred Stock shareholders:
Investment income--net (.28)
Capital charge resulting from issuance of Preferred Stock (.11)
---------
Total effect of Preferred Stock activity (.39)
---------
Net asset value, end of period $ 13.09
=========
Market price per share, end of period $ 12.125
=========
Total Investment Based on market price per share (14.78%)+++
Return:** =========
Based on net asset value per share (8.00%)+++
=========
Ratios Based on Total expenses, net of reimbursement*** .77%*
Average Net Assets =========
of Common Stock: Total expenses*** 1.39%*
=========
Total investment income--net*** 8.78%*
=========
Amount of dividends to Preferred Stock shareholders 2.47%*
=========
Investment income--net, to Common Stock shareholders 6.31%*
=========
Ratios Based on Total expenses, net of reimbursement .47%*
Total Average Net =========
Assets:***++++++ Total expenses .84%*
=========
Total investment income--net 5.33%*
=========
Ratios Based on Dividends to Preferred Stock shareholders 3.83%*
Average Net Assets =========
of Preferred Stock:
Supplemental Net assets, net of Preferred Stock, end of period (in thousands) $ 54,641
Data: =========
Preferred Stock outstanding, end of period (in thousands) $ 39,000
=========
Portfolio turnover 62.00%
=========
Leverage: Asset coverage per $1,000 $ 2,401
=========
Dividends Per Share Investment income--net $ 760
on Preferred Stock =========
Outstanding:
*Annualized.
**Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, may result
in substantially different returns. Total investment returns exclude
the effects of sales 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 August 16, 1999.
++++++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 Insured Fund IV, 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 accounting
principles generally accepted in the United States of America, which
may require the use of management accruals and estimates. Prior to
commencement of operations on July 23, 1999, the Fund had no
operations other than those relating to organizational matters and
the sale of 6,667 shares of Common Stock on June 16, 1999 to Fund
Asset Management, L.P. ("FAM") for $100,005. The Fund determines and
makes available for publication the net asset value of its Common
Stock on a weekly basis. The Fund's Common Stock is listed on the
American Stock Exchange under the symbol MNW. 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.
* 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 Insured Fund IV, Inc., May 31, 2000
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) Offering expenses--Direct expenses relating to the public
offering of the Fund's Common and Preferred Stock were charged to
capital at the time of issuance of the shares.
(f) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and Transactions with
Affiliates:
The Fund has entered into an Investment Advisory Agreement with FAM.
The general partner of FAM is Princeton Services, Inc. ("PSI"), an
indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML &
Co."), which is the limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of .55% of
the Fund's average weekly net assets, including proceeds from the
issuance of Preferred Stock. For the period July 23, 1999 to May 31,
2000, FAM earned fees of $433,261, of which $280,931 was voluntarily
waived. In addition, FAM also reimbursed the Fund $16,041 in
additional expenses.
During the period July 23, 1999 to May 31, 2000, Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("MLPF&S"), an affiliate of FAM,
received underwriting fees of $292,500 in connection with the
issuance of the Fund's Preferred Stock.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the period July 23, 1999 to May 31, 2000 were $146,923,978 and
$51,679,167, respectively.
Net realized losses for the period July 23, 1999 to May 31, 2000 and
net unrealized losses as of May 31, 2000 were as follows:
Realized Unrealized
Losses Losses
Long-term investments $ (2,746,351) $(4,797,085)
Financial futures contracts (167,216) --
------------ -----------
Total $ (2,913,567) $(4,797,085)
============ ===========
As of May 31, 2000, net unrealized depreciation for Federal income
tax purposes aggregated $4,797,085, of which $107,257 related to
appreciated securities and $4,904,342 related to depreciated
securities. The aggregate cost of investments at May 31, 2000 for
Federal income tax purposes was $96,756,392.
4. Capital Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of capital stock,
including Preferred Stock, par value $.10 per share, all of which
were initially classified as Common Stock. The Board of Directors is
authorized, however, to reclassify any unissued shares of capital
stock without approval of holders of Common Stock.
Common Stock
Shares issued and outstanding during the period July 23, 1999 to May
31, 2000 increased by 4,167,430 from shares sold.
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 yield in effect at May 31,
2000 was 4.50%.
In connection with the offering of AMPS, the Board of Directors
reclassified 1,560 shares of unissued capital stock as AMPS. Shares
issued and outstanding during the period July 23, 1999 to May 31,
2000 increased by 1,560 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 .25% to .375%,
calculated on the proceeds of each auction. For the period July 23,
1999 to May 31, 2000, MLPF&S, an affiliate of FAM, earned $55,847 as
commissions.
5. Capital Loss Carryforward:
At May 31, 2000, the Fund had a net capital loss carryforward of
approximately $1,604,000, all of which expires in 2008. This amount
will be available to offset like amounts of any future taxable
gains.
6. Subsequent Event:
On June 7, 2000, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$.066264 per share, payable on June 29, 2000 to shareholders of
record as of June 19, 2000.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
MuniHoldings New York Insured Fund IV, Inc.:
We have audited the accompanying statement of assets, liabilities
and capital, including the schedule of investments, of MuniHoldings
New York Insured Fund IV, Inc., as of May 31, 2000, the related
statements of operations and changes in net assets, and the
financial highlights for the period July 23, 1999 (commencement of
operations) to May 31, 2000. These financial statements and
financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit 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 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 May 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 audit provides 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 IV, Inc., as of May 31, 2000, the
results of its operations, the changes in its net assets, and the
financial highlights for the respective stated period in accordance
with accounting principles generally accepted in the United States
of America.
Deloitte & Touche LLP
Princeton, New Jersey
June 30, 2000
</AUDIT-REPORT>
MuniHoldings New York Insured Fund IV, Inc., May 31, 2000
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by MuniHoldings
New York Insured Fund IV, Inc. during the taxable period ended May
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 period.
Please retain this information for your records.
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute all or a portion of its
net investment income to its shareholders on a monthly basis. In
order to provide shareholders with a more consistent yield to the
current trading price of shares of Common Stock of the Fund, the
Fund may at times pay out less than the entire amount of net
investment income earned in any particular month and may at times in
any particular month pay out such accumulated but undistributed
income in addition to net investment income earned in that month. As
a result, the dividends paid by the Fund for any particular month
may be more or less than the amount of net investment income earned
by the Fund during such month. The Fund's current accumulated but
undistributed net investment income, if any, is disclosed in the
Statement of Assets, Liabilities and Capital, which comprises part
of the financial information included in this report.
QUALITY PROFILE (unaudited)
The quality ratings of securities in the Fund as of May 31, 2000
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 81.1%
AA/Aa 8.4
A/A 4.2
Other++ 4.5
++Temporary investments in short-term municipal securities.
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
James H. Bodurtha, Director
Herbert I. London, Director
Joseph L. May, Director
Andre F. Perold, Director
Roberta Cooper Ramo, Director
Arthur Zeikel, Director
Vincent R. Giordano, Senior Vice President
Kenneth A. Jacob, Vice President
Robert A. DiMella, Vice President
Roberto Roffo, Vice President
Donald C. Burke, Vice President and Treasurer
Alice A. Pellegrino, Secretary
Robert R. Martin, Director of MuniHoldings New York Insured Fund IV,
Inc. has recently retired. The Fund's Board of Directors wishes Mr.
Martin well in his retirement.
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
AMEX Symbol
MNW
