MUNIYIELD
NEW YORK
INSURED
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Annual Report
October 31, 1998
<PAGE>
MuniYield New York Insured Fund, Inc.
TO OUR SHAREHOLDERS
For the year ended October 31, 1998, the Common Stock of MuniYield New York
Insured Fund, Inc. earned $0.947 per share income dividends, which included
earned and unpaid dividends of $0.081. This represents a net annualized yield of
5.82%, based on a month-end net asset value of $16.26 per share. Over the same
period, the total investment return on the Fund's Common Stock was +9.53%, based
on a change in per share net asset value from $15.89 to $16.26, and assuming
reinvestment of $0.945 per share income dividends and $0.141 per share capital
gains distributions.
For the six months ended October 31, 1998, the total investment return on the
Fund's Common Stock was +7.01%, based on a change in per share net asset value
from $15.62 to $16.26, and assuming reinvestment of $0.441 per share income
dividends.
For the six-month period ended October 31, 1998, the Fund's Auction Market
Preferred Stock had an average yield of 4.04% for Series A and 3.85% for Series
B.
The Municipal Market Environment
During the six months ended October 31, 1998, long-term bond yields declined
significantly. The near absence of any inflationary pressures in the United
States continued to support historic low interest rates. Additionally, foreign
economic factors have continued to outweigh US domestic fundamentals, as they
have for much of 1998. The economic crisis that began in Asia over a year ago
has spread both to Russia and South America. However, economic factors in these
countries have begun to negatively impact US growth. For example, employment in
the US manufacturing sector declined in recent months as a result of reduced
demand for export goods. Concern that the modest decline in US economic growth
seen thus far would spread and intensify led the Federal Reserve Board to lower
short-term interest rates in late September, in mid-October and in mid-November.
These actions were taken to offset the drag of foreign economies on future US
growth.
US Treasury bond yields continued to benefit from a strong "flight to quality"
as foreign investors were drawn to the relative safe haven of US Government
securities. Additionally, the sharp equity market correction, which began at the
end of August, triggered a further flight into US Treasury securities. Long-term
US Treasury bond yields fell over 90 basis points (0.90%) to approximately 5% by
the end of September. This is the lowest level since the US Treasury
reintroduced 30-year maturity bond auctions in 1977.
By early October, worldwide investor confidence began to rise, reducing the
demand for the safety and liquidity of US Treasury securities. Investor
confidence was restored by the belief that major world governments, as well as
the International Monetary Fund, would take the necessary action to support weak
domestic economies in Asia and Latin America. Additionally, rapid recovery in US
and world equity markets caused some investors to reallocate funds from US debt
instruments back to various world equity markets. US Treasury securities yields
rose for the remainder of the month to end October at 5.15%. During the
six-month period ended October 31, 1998, long-term Treasury security yields
declined approximately 80 basis points.
During the past 12 months, the tax-exempt bond market has contended with
significant new-issue supply pressures. Over the past year, more than $277
billion in new long-term tax-exempt bonds were under written, an increase of
almost 30% compared to the same period a year ago. During the most recent
six-month period, approximately $140 billion in new long-term municipal bonds
were underwritten, representing an increase of more than 15% over the same
six-month period last year. This increased supply, coupled with the high returns
the US equity market generated for much of 1998, was one of the major reasons
municipal bond yields declined less than their taxable counterparts during the
period.
The continued increase in new bond issuance has required ever-lower tax-exempt
bond yields to generate
1
<PAGE>
MuniYield New York Insured Fund, Inc. October 31, 1998
the economic savings necessary for additional municipal bond financings.
Consequently, the pace of new bond issuance has slowed in recent months. In
fact, the trend may be reversing. During the three months ended October 31,
1998, just over $60 billion in new long-term municipal bonds were underwritten,
a decline of 4% compared to the same quarter a year ago. During the month of
October, there were less than $20 billion in new municipal bond securities
issued, a decline of over 10% compared to October 1997. We will monitor this
trend closely in the coming months to determine if the supply pressures exerted
thus far in 1998 are abating and fostering a more balanced supply/demand
environment.
Throughout the six-month period ended October 31, 1998, municipal bond yields
followed a pattern that was similar to US Treasury securities, although the
yield declines were more muted. As measured by the unmanaged Bond Buyer Revenue
Bond Index, long-term, uninsured tax-exempt revenue bond yields declined over 40
basis points to 5.09% by the end of September, their lowest level since the
early 1970s. Municipal bond yields rose during October to end the period at
5.24%. Over the past six months, long-term tax-exempt bond yields declined
almost 30 basis points.
Although municipal bond yields declined during the six-month period, recent
supply pressures and the absence of the safe haven status enjoyed by US
securities caused municipal bond yields to rise relative to US Treasury bond
yields. At October 31, 1998, long-term tax-exempt bond yield spreads were
attractive relative to US Treasury securities of comparable maturities (over
100%), well in excess of their historic range of 85%-88%. Tax-exempt bond yield
ratios have rarely exceeded 90% in the 1980s and 1990s. Historically, yield
spreads have been wider than these levels when there have been potential changes
in Federal tax codes that would have adversely affected the tax-favored status
of municipal bonds.
Currently, municipal bond investors find themselves in a unique investment
environment. Previous opportunities to purchase tax-exempt bonds with yields
exceeding that of comparable US Treasury issues have been limited to relatively
brief episodes and then further limited to a few municipal credits undergoing
specific financial pressures. At present, almost the entire municipal bond
universe, across nearly all maturity and credit sectors, can be purchased at
yields greater than their taxable counterparts. However, the current opportunity
may quickly disappear should tax-exempt bond supply pressures diminish or the
safe-haven status of US Treasury securities become less desirable. Under these
conditions, municipal bond ratios should quickly revert to more normal historic
percentages, certainly well below their presently attractive levels.
Portfolio Strategy
In general, we have continuously managed MuniYield New York Insured Fund, Inc.
with a focus on seeking to enhance current income. As a result of this strategy,
during the six months ended October 31, 1998 the Fund had an above-industry
average yield, largely because it is one of the more mature leveraged
portfolios.
Recently, we have made an effort to balance the Fund's high-coupon structure by
adding performance-based positions that are more sensitive to interest rate
moves. We believe these additions offer greater total return potential if the
general level of interest rates resumes its decline later this year. The Fund's
portfolio includes a significant position in securities with call features that
may be exercised within the next three years-four years.
We have begun extending the portfolio's call protection in order to seek to
secure the Fund's income stream. A growing Federal budget surplus, a
corresponding reduction of Treasury bond issuance and a historically low level
of inflation led us to believe that interest rates will continue to trend lower.
Also, as the New York municipal calendar of new issuance subsides, the technical
position of the municipal market is likely to improve, possibly leading to
significant price appreciation. New York municipal bonds are currently at
historically attractive yield spreads relative to their taxable counterparts.
Therefore, we believe a more aggressive portfolio strategy is warranted.
However, we will not lower the credit quality of our investments. With the
inordinately tight credit quality spreads, we are underutilizing the Fund's
non-enhanced capacity, with more than 90% of the Fund's net assets insured and
rated AAA by at least one of the major rating agencies as of October 31, 1998.
2
<PAGE>
MuniYield New York Insured Fund, Inc. October 31, 1998
In Conclusion
We appreciate your ongoing interest in MuniYield New York Insured Fund, Inc.,
and we look forward to assisting you with your financial needs in the months and
years to come.
Sincerely,
/s/ Arthur Zeikel
Arthur Zeikel
President
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ Walter C. O'Connor
Walter C. O'Connor
Vice President and Portfolio Manager
December 2, 1998
PROXY RESULTS
During the six-month period ended October 31, 1998, MuniYield New York Insured
Fund, Inc. Common Stock shareholders voted on the following proposals. The
proposals were approved at a shareholders' meeting on September 24, 1998. The
description of each proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. To elect the Fund's Board of Directors: James H. Bodurtha 11,354,805 325,266
Herbert I. London 11,328,780 351,291
Robert R. Martin 11,351,259 328,812
Arthur Zeikel 11,353,016 327,055
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent auditors for the current fiscal year. 11,459,947 99,050 121,074
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
During the six-month period ended October 31, 1998, MuniYield New York Insured
Fund, Inc. Preferred Stock share holders (Series A and B) voted on the following
proposals. The proposals were approved at a shareholders' meeting on September
24, 1998. The description of each proposal and number of shares voted are as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. To elect the Fund's Board of Directors:
Series A:
James H. Bodurtha 1,650 8
Herbert I. London, Robert R. Martin, Joseph L. May, Andre F. Perold
and Arthur Zeikel 1,652 6
Series B:
James H. Bodurtha, Herbert I. London, Robert R. Martin, Joseph L. May,
Andre F. Perold and Arthur Zeikel 1,592 0
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's independent
auditors for the current fiscal year:
Series A 1,646 11 0
Series B 1,591 1 0
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
MuniYield New York Insured Fund, Inc. October 31, 1998
THE BENEFITS AND RISKS OF LEVERAGING
MuniYield 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 benefici aries of the
incremental yield. However, if short-term interest rates rise, narrowing the
differ ential 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, interest rates 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 such securities.
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute substantially all of its net
investment income to its share holders on a monthly basis. However, in order to
provide shareholders with a more consistent yield to the current trading price
of shares of Common Stock of the Fund, the Fund may at times pay out less than
the entire amount of net investment income earned in any particular month and
may at times in any 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.
4
<PAGE>
MuniYield New York Insured Fund, Inc. October 31, 1998
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- ----------------------------------------------------------------------------------------------------------------------------------
New York--99.6%
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AAA Aaa $ 6,095 Albany County, New York, Airport Authority, Airport Revenue Bonds, RITR, AMT,
Series RI-97-7, 8.17% due 12/15/2023 (d)(e) $ 7,199
==================================================================================================================================
AAA Aaa 8,200 Buffalo, New York and Fort Erie, Ontario, Canada, Public Bridge Authority, Toll Bridge
System Revenue Bonds, 5.75% due 1/01/2025 (b) 8,805
==================================================================================================================================
Long Island, New York, Power Authority, Electric System Revenue Refunding Bonds,
Series A:
AAA Aaa 10,000 5.25% due 12/01/2026 (a) 10,235
A- Baa1 4,400 5.50% due 12/01/2029 4,544
==================================================================================================================================
AAA Aaa 2,500 Metropolitan Transportation Authority, New York, Commuter Facilities Revenue Bonds,
Series C-1, 5.375% due 7/01/2027 (f) 2,591
==================================================================================================================================
AAA Aaa 11,000 Metropolitan Transportation Authority, New York, Transportation Facilities Revenue Bonds,
Series J, 6.50% due 7/01/2002 (f)(g) 12,243
==================================================================================================================================
AAA Aaa 3,000 Nassau County, New York, IDA, Civic Facility Revenue Refunding Bonds (Hofstra University
Project), 5% due 7/01/2023 (b) 2,966
==================================================================================================================================
A1+ VMIG1+ 2,325 New York City, New York, Cultural Resources Trust, Revenue Bonds (Carnegie Hall), VRDN,
2.70% due 12/01/2015 (c) 2,325
==================================================================================================================================
A1+ VMIG1+ 2,500 New York City, New York, GO, VRDN, UT, Series B, Sub-Series B-6, 3.70% due 8/15/2005 (b)(c) 2,500
==================================================================================================================================
New York City, New York, Municipal Water Finance Authority, Water and Sewer
System Revenue Bonds:
AAA Aaa 1,000 Refunding, Fiscal 1997-Series A, 5.375% due 6/15/2026 (e) 1,031
AAA Aaa 10,000 Series A, 4.75% due 6/15/2031 (f) 9,522
AAA Aaa 22,500 Series B, 5.75% due 6/15/2026 (b) 24,189
AAA Aaa 5,000 Series B, 5.50% due 6/15/2027 (b) 5,279
==================================================================================================================================
AAA Aaa 5,000 New York City, New York, Transitional Finance Authority Revenue Bonds (Future Tax
Secured), Series A, 5% due 8/15/2027 (b) 4,932
==================================================================================================================================
AAA Aaa 10,000 New York, New York, RITR, Series 33, 6.94% due 8/01/2027 (b)(d) 10,700
==================================================================================================================================
New York, New York, Refunding, GO, UT:
A- A3 3,870 Series B, 6.375% due 8/15/2012 4,321
AAA Aaa 5,000 Series G, 5% due 8/01/2006 (b) 5,292
==================================================================================================================================
</TABLE>
PORTFOLIO ABBREVIATIONS
To simplify the listings of MuniYield 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)
COP Certificates of Participation
DATES Daily Adjustable Tax-Exempt Securities
GO General Obligation Bonds
IDA Industrial Development Authority
PCR Pollution Control Revenue Bonds
RITR Residual Interest Trust Receipts
UT Unlimited Tax
VRDN Variable Rate Demand Notes
5
<PAGE>
MuniYield New York Insured Fund, Inc. October 31, 1998
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- ----------------------------------------------------------------------------------------------------------------------------------
New York (continued)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York State Dormitory Authority Revenue Bonds:
AAA Aaa $ 4,400 (City University System), Series C, 7.50% due 7/01/2010 (f) $ 5,639
AAA Aaa 2,365 (City University System), Third Resolution, Series 1, 6.25% due 7/01/2004 (a)(g) 2,684
AAA Aaa 4,000 (City University System), Third Resolution, Series 1, 6.25% due 7/01/2004 (a)(g) 4,540
A1+ VMIG1+ 1,200 (Cornell University), VRDN, Series B, 3.70% due 7/01/2025 (c) 1,200
AAA Aaa 2,000 (Ithaca College), 5.25% due 7/01/2026 (a) 2,044
AAA Aaa 2,000 (New School Social Research), 5.75% due 7/01/2026 (b) 2,177
AAA Aaa 4,980 Refunding (City University System), Series C, 7% due 7/01/2014 (f) 5,327
AAA Aaa 3,500 Refunding (City University System), Third Generation Resources, Series 2,
5% due 7/01/2023 (a) 3,461
AAA Aaa 4,250 Refunding (Hospital Mortgage--United Health Services Hospitals), 5.375%
due 8/01/2027 (a) 4,367
AAA Aaa 3,100 Refunding (Montefiore Medical Center), 5.25% due 2/01/2015 (a) 3,194
AAA Aaa 10,000 Refunding (North Shore University Hospital), 5.25% due 11/01/2019 (b) 10,242
AAA Aaa 6,000 Refunding (Siena College), 5.75% due 7/01/2026 (b) 6,530
AAA Aaa 5,850 Refunding (St. Joseph's Hospital Health Center), 5.25% due 7/01/2018 (b) 5,960
==================================================================================================================================
AAA Aaa 10,250 New York State Energy Research and Development Authority, Gas Facilities Revenue Bonds
(Brooklyn Union Gas Company), AMT, Series B, 6.75% due 2/01/2024 (b) 11,263
==================================================================================================================================
New York State Energy Research and Development Authority, PCR (Niagara Mohawk
Power Corp. Project), Series A (c):
A1+ NR* 4,300 DATES, 3.70% due 7/01/2015 4,300
A1+ NR* 3,700 VRDN, 3.75% due 12/01/2023 3,700
==================================================================================================================================
AAA Aaa 2,975 New York State Environmental Facilities Corporation, Special Obligation Revenue Refunding
Bonds (Riverbank State Park), 5.50% due 4/01/2016 (a) 3,162
==================================================================================================================================
A A2 7,715 New York State, GO, Series B, 5% due 3/01/2015 7,801
==================================================================================================================================
New York State Medical Care Facilities, Finance Agency Revenue Bonds:
AAA Aaa 2,790 (Health Center Project--Second Mortgage), Series A, 6.375% due 11/15/2019 (a) 3,200
AAA Aaa 1,000 (Long-Term Health Care Insured Program), Series D, 6.50% due 11/01/2015 (e) 1,105
AAA Aaa 1,865 (Long-Term Health Care), Series B, 6.45% due 11/01/2014 (e) 2,042
AAA Aaa 8,335 (Mental Health Services Facilities), Series A, 6.375% due 8/15/2017 (f) 9,099
AAA Aaa 1,000 (New York Hospital Mortgage), Series A, 6.75% due 2/15/2005 (a)(g)(h) 1,168
AAA Aaa 7,250 (New York Hospital Mortgage), Series A, 6.80% due 2/15/2005 (a)(g)(h) 8,485
AAA Aaa 10,000 Refunding (Hospital and Nursing Home), Series C, 6.375% due 8/15/2029 (b) 10,981
==================================================================================================================================
NR* Aaa 7,900 New York State Mortgage Agency Revenue Bonds, RITR, AMT, Series 24,
7.72% due 10/01/2028 (d) 8,837
==================================================================================================================================
New York State Thruway Authority, Highway and Bridge Trust Fund, Series B (f)(g):
AAA Aaa 8,000 6.25% due 4/01/2004 9,044
AAA Aaa 3,000 UT, 6% due 4/01/2004 3,355
==================================================================================================================================
AAA VMIG1+ 2,500 New York State Thruway Authority Revenue Bonds, VRDN, 3.70% due 1/01/2024 (c)(f) 2,500
==================================================================================================================================
Port Authority of New York and New Jersey, Consolidated Revenue Bonds (f):
AAA Aaa 5,000 116th Series, 4.25% due 10/01/2026 4,453
AAA Aaa 2,180 AMT, 97th Series, 6.50% due 7/15/2019 2,443
==================================================================================================================================
AAA Aaa 5,700 Syracuse, New York, COP (Syracuse Hancock International Airport), AMT,
6.50% due 1/01/2017 (f) 6,195
==================================================================================================================================
</TABLE>
6
<PAGE>
MuniYield New York Insured Fund, Inc. October 31, 1998
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- ----------------------------------------------------------------------------------------------------------------------------------
New York (concluded)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A1+ VMIG1+ $ 500 Syracuse, New York, IDA, Civic Facility Revenue Bonds,
Multi-Modal (Syracuse University Project), VRDN, 3.70% due 3/01/2023 (c) $ 500
==================================================================================================================================
AAA Aaa 4,000 Triborough Bridge and Tunnel Authority, New York, Special Obligation Revenue Refunding
Bonds, Series A, 4.75% due 1/01/2024 (b) 3,841
==================================================================================================================================
Total Investments (Cost--$267,022)--99.6% 283,513
Other Assets Less Liabilities--0.4% 1,069
--------
Net Assets--100.0% $284,582
========
==================================================================================================================================
</TABLE>
(a) AMBAC Insured.
(b) MBIA Insured.
(c) The interest rate is subject to change periodically based upon prevailing
market rates. The interest rate shown is the rate in effect at October 31,
1998.
(d) 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 October 31, 1998.
(e) FSA Insured.
(f) FGIC Insured.
(g) Prerefunded.
(h) FHA Insured.
+ Highest short-term rating by Moody's Investors Service, Inc.
* Not Rated.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
QUALITY PROFILE
The quality ratings of securities in the Fund as of October 31, 1998 were as
follows:
- --------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
- --------------------------------------------------------------------------------
AAA/Aaa............................................................. 87.8%
A/A................................................................. 5.8
Other*.............................................................. 6.0
- --------------------------------------------------------------------------------
* Temporary investments in short-term municipal securities.
7
<PAGE>
MuniYield New York Insured Fund, Inc. October 31, 1998
FINANCIAL INFORMATION
Statement of Assets, Liabilities and Capital as of October 31, 1998
<TABLE>
<CAPTION>
======================================================================================================================
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$267,022,066) (Note 1a) ........ $283,512,835
Cash ................................................................... 86,175
Receivables:
Interest ............................................................. $ 4,236,184
Securities sold ...................................................... 521,970 4,758,154
------------
Prepaid expenses and other assets ...................................... 14,053
------------
Total assets ........................................................... 288,371,217
------------
======================================================================================================================
Liabilities: Payables:
Securities purchased ................................................. 3,519,444
Investment adviser (Note 2) .......................................... 125,435
Dividends to shareholders (Note 1e) .................................. 50,734 3,695,613
------------
Accrued expenses and other liabilities ................................. 93,154
------------
Total liabilities ...................................................... 3,788,767
------------
======================================================================================================================
Net Assets: Net assets ............................................................. $284,582,450
============
======================================================================================================================
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.05 per share (3,400 shares of AMPS*
issued and outstanding at $25,000 per share liquidation preference) .. $ 85,000,000
Common Stock, par value $.10 per share (12,274,294 shares issued
and outstanding) ..................................................... $ 1,227,429
Paid-in capital in excess of par ....................................... 171,600,056
Undistributed investment income--net ................................... 3,010,351
Undistributed realized capital gains on investments--net ............... 7,253,845
Unrealized appreciation on investments--net ............................ 16,490,769
------------
Total--Equivalent to $16.26 net asset value per share of Common Stock
(market price--$16.3125) ............................................... 199,582,450
------------
Total capital .......................................................... $284,582,450
============
======================================================================================================================
</TABLE>
* Auction Market Preferred Stock.
See Notes to Financial Statements.
8
<PAGE>
MuniYield New York Insured Fund, Inc. October 31, 1998
FINANCIAL INFORMATION (continued)
Statement of Operations
<TABLE>
<CAPTION>
For the Year Ended
October 31, 1998
===============================================================================================================
<S> <C> <C> <C>
Investment Income Interest and amortization of premium and discount earned .. $ 15,635,016
(Note 1d):
===============================================================================================================
Expenses: Investment advisory fees (Note 2) ......................... $ 1,399,829
Commission fees (Note 4) .................................. 215,237
Professional fees ......................................... 73,296
Accounting services (Note 2) .............................. 54,413
Transfer agent fees ....................................... 31,764
Listing fees .............................................. 24,441
Directors' fees and expenses .............................. 23,033
Custodian fees ............................................ 21,413
Printing and shareholder reports .......................... 20,946
Pricing fees .............................................. 8,042
Other ..................................................... 25,943
------------
Total expenses ............................................ 1,898,357
------------
Investment income--net .................................... 13,736,659
------------
===============================================================================================================
Realized & Realized gain on investments--net ......................... 9,533,983
Unrealized Gain Change in unrealized appreciation on investments--net ..... (2,168,441)
(Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations ...... $ 21,102,201
(Notes 1b, 1d & 3): ============
===============================================================================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
MuniYield New York Insured Fund, Inc. October 31, 1998
FINANCIAL INFORMATION (continued)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Year Ended October 31,
------------------------------
Increase (Decrease) in Net Assets: 1998 1997
==============================================================================================================================
<S> <C> <C> <C>
Operations: Investment income--net ................................................. $ 13,736,659 $ 13,937,912
Realized gain on investments--net ...................................... 9,533,983 4,164,812
Change in unrealized appreciation on investments--net .................. (2,168,441) 1,553,036
------------- -------------
Net increase in net assets resulting from operations ................... 21,102,201 19,655,760
------------- -------------
==============================================================================================================================
Dividends & Investment income--net:
Distributions to Common Stock ......................................................... (10,960,993) (10,993,544)
Shareholders Preferred Stock ...................................................... (2,353,599) (2,826,998)
(Note 1e): Realized gain on investments--net:
Common Stock ......................................................... (2,282,779) (799,349)
Preferred Stock ...................................................... (986,221) (198,679)
------------- -------------
Net decrease in net assets resulting from dividends and distributions
to shareholders ........................................................ (16,583,592) (14,818,570)
------------- -------------
==============================================================================================================================
Capital Stock Value of shares issued to Common Stock shareholders in reinvestment
Transactions of dividends and distributions ......................................... 2,957,094 658,515
(Note 4): ------------- -------------
==============================================================================================================================
Net Assets: Total increase in net assets ........................................... 7,475,703 5,495,705
Beginning of year ...................................................... 277,106,747 271,611,042
------------- -------------
End of year* ........................................................... $ 284,582,450 $ 277,106,747
============= =============
==============================================================================================================================
*Undistributed investment income--net (Note 1f) ......................... $ 3,010,351 $ 2,576,708
============= =============
==============================================================================================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
MuniYield New York Insured Fund, Inc. October 31, 1998
FINANCIAL INFORMATION (concluded)
Financial Highlights
<TABLE>
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. For the Year Ended October 31,
------------------------------------------------------
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year .................. $ 15.89 $ 15.49 $ 15.64 $ 14.17 $ 16.85
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .............................. 1.12 1.15 1.15 1.19 1.20
Realized and unrealized gain (loss) on
investments--net .................................... .61 .48 (.03) 1.58 (2.67)
-------- -------- -------- -------- --------
Total from investment operations .................... 1.73 1.63 1.12 2.77 (1.47)
-------- -------- -------- -------- --------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net ............................ (.90) (.91) (.91) (.92) (.97)
Realized gain on investments--net ................. (.19) (.07) -- (.10) (.05)
In excess of realized gain on investments--net .... -- -- (.10) -- --
-------- -------- -------- -------- --------
Total dividends and distributions to
Common Stock shareholders ......................... (1.09) (.98) (1.01) (1.02) (1.02)
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:
Dividends and distributions to Preferred
Stock shareholders:
Investment income--net .......................... (.19) (.23) (.23) (.26) (.18)
Realized gain on investments--net ............... (.08) (.02) -- (.02) (.01)
In excess of realized gain on investments--net .. -- -- (.03) -- --
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity ............ (.27) (.25) (.26) (.28) (.19)
-------- -------- -------- -------- --------
Net asset value, end of year ........................ $ 16.26 $ 15.89 $ 15.49 $ 15.64 $ 14.17
======== ======== ======== ======== ========
Market price per share, end of year ................. $16.3125 $ 15.875 $ 14.875 $ 14.375 $ 12.25
======== ======== ======== ======== ========
=================================================================================================================================
Total Investment Based on market price per share ..................... 9.99% 13.79% 10.79% 26.40% (20.49%)
Return:* ======== ======== ======== ======== ========
Based on net asset value per share .................. 9.53% 9.37% 6.04% 18.89% (9.94%)
======== ======== ======== ======== ========
=================================================================================================================================
Ratios to Average Expenses ............................................ .68% .70% .70% .71% .70%
Net Assets:** ======== ======== ======== ======== ========
Investment income--net .............................. 4.91% 5.09% 5.11% 5.42% 5.28%
======== ======== ======== ======== ========
=================================================================================================================================
Supplemental Net assets, net of Preferred Stock, end of year
Data: (in thousands) ...................................... $199,582 $192,107 $186,611 $188,354 $170,670
======== ======== ======== ======== ========
Preferred Stock outstanding, end of year
(in thousands) ...................................... $ 85,000 $ 85,000 $ 85,000 $ 85,000 $ 85,000
======== ======== ======== ======== ========
Portfolio turnover .................................. 89.76% 81.73% 80.59% 88.17% 41.26%
======== ======== ======== ======== ========
=================================================================================================================================
Leverage: Asset coverage per $1,000 ........................... $ 3,348 $ 3,260 $ 3,195 $ 3,216 $ 3,008
======== ======== ======== ======== ========
=================================================================================================================================
Dividends Per Share Series A--Investment income--net .................... $ 695 $ 826 $ 819 $ 935 $ 673
On Preferred Stock ======== ======== ======== ======== ========
Outstanding:+ Series B--Investment income--net .................... $ 689 $ 837 $ 807 $ 904 $ 593
======== ======== ======== ======== ========
=================================================================================================================================
</TABLE>
* 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.
+ Dividends per share have been adjusted to reflect a two-for-one
stock split that occurred on December 1, 1994.
See Notes to Financial Statements.
11
<PAGE>
MuniYield New York Insured Fund, Inc. October 31, 1998
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniYield 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 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 MYN. 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 their fair value as determined in good faith
by or under the direction of the Board of Directors of the Fund, including val
uations furnished by a pricing service retained by the Fund, which may utilize a
matrix system for val uations. The procedures of the pricing service and its
valuations are reviewed by the officers of the Fund under the general
supervision of the Board of Directors.
(b) Derivative financial instruments--The Fund may engage in various portfolio
strategies to seek to increase its return by hedging its portfolio against
adverse movements in the debt markets. Losses may arise due to changes in the
value of the contract or if the counterparty does not perform under the
contract.
o Financial futures contracts--The Fund may purchase or sell financial futures
contracts and options on such futures contracts for the purpose of hedging the
market risk on existing securities or the intended purchase of securities.
Futures contracts are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a contract, the
Fund deposits and maintains as collateral such initial margin as required by the
exchange on which the transaction is effected. Pursuant to the contract, the
Fund agrees to receive from or pay to the broker an amount of cash equal to the
daily fluctuation in value of the contract. Such receipts or payments are known
as variation margin and are recorded by the Fund as unrealized gains or losses.
When the contract is closed, the Fund records a realized gain or loss equal to
the difference between the value of the contract at the time it was opened and
the value at the time it was closed.
o Options--The Fund is authorized to write covered call options and purchase 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
12
<PAGE>
monthly. Distributions of capital gains are recorded on the ex-dividend dates.
(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, current year's permanent
book/tax differences of $11,576 have been reclassified between undistributed net
realized capital gains 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 0.50% of the Fund's average weekly net assets, including
proceeds from the issuance of 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
year ended October 31, 1998 were $242,922,560 and $240,943,452, respectively.
Net realized gains for the year ended October 31, 1998 and net unrealized gains
as of October 31, 1998 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains Gains
- --------------------------------------------------------------------------------
Long-term investments ..................... $9,372,121 $16,490,769
Financial futures contracts ............... 161,862 --
---------- -----------
Total ..................................... $9,533,983 $16,490,769
========== ===========
- --------------------------------------------------------------------------------
As of October 31, 1998, net unrealized appreciation for Federal income tax
purposes aggregated $16,490,769, of which $16,905,881 related to appreciated
securities and $415,112 related to depreciated securities. The aggregate cost of
investments at October 31, 1998 for Federal income tax purposes was
$267,022,066.
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 the holders
of Common Stock.
Common Stock
Shares issued and outstanding during the years ended October 31, 1998 and
October 31, 1997 increased by 185,859 and 41,692, respectively, as a result of
dividend reinvestment.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred Stock of the
Fund, with a par value of $.05 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 suc ces sive dividend periods. The yields in effect
at October 31, 1998 were: Series A, 3.23% and Series B, 3.25%.
Shares issued and outstanding during the years ended October 31, 1998 and
October 31, 1997 remained constant.
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 October 31, 1998, Merrill Lynch, Pierce, Fenner
& Smith Inc., an affiliate of FAM, earned $85,619 as commissions.
5. Subsequent Event:
On November 5, 1998, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.080966 per share,
payable on November 27, 1998 to shareholders of record as of November 20, 1998.
13
<PAGE>
MuniYield New York Insured Fund, Inc. October 31, 1998
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of MuniYield New York Insured Fund,
Inc.:
We have audited the accompanying statement of assets, liabilities and capital,
including the schedule of investments, of MuniYield New York Insured Fund, Inc.
as of October 31, 1998, 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 five-year
period then ended. 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 gener ally 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 October
31, 1998 by correspondence with the custodian and broker. 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 MuniYield New York
Insured Fund, Inc. as of October 31, 1998, 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
December 4, 1998
14
<PAGE>
MuniYield New York Insured Fund, Inc. October 31, 1998
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by MuniYield New York
Insured Fund, Inc. during its taxable year ended October 31, 1998 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.
- --------------------------------------------------------------------------------
Payable Ordinary Long-Term
Date Income Capital Gains
- --------------------------------------------------------------------------------
Common Stock Shareholders 12/30/97 $.047634 $.140890*
- --------------------------------------------------------------------------------
Preferred Stock Shareholders: Series A 11/25/97 $29.26 $ 86.51*
12/23/97 $13.40 $ 39.66*
10/27/98 -- $ 126.62**
-------------------------------------------------
Series B 11/25/97 $ 8.00 $ 23.66*
12/02/97 $ 7.30 $ 21.62*
12/09/97 $ 7.36 $ 21.77*
12/16/97 $ 8.23 $ 24.34*
12/23/97 $ 7.77 $ 22.98*
12/30/97 $ 4.92 $ 14.54*
10/13/98 -- $ 28.09**
10/20/98 -- $ 27.13**
10/27/98 -- $ 27.13**
- --------------------------------------------------------------------------------
* Of this distribution, 12.40% is subject to the 28% tax rate and 87.60% is
subject to the 20% tax rate.
** The entire distribution is subject to the 20% tax rate.
Please retain this information for your records.
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
James H. Bodurtha, Director
Herbert I. London, Director
Robert R. Martin, Director
Joseph L. May, Director
Andre F. Perold, Director
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Walter C. O'Connor, Vice President
Gerald M. Richard, Treasurer
Philip M. Mandel, Secretary
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
NYSE Symbol
MYN
15
<PAGE>
This report, including the financial information herein, is transmitted to the
shareholders of MuniYield New York Insured Fund, Inc. for their information. It
is not a prospectus, circular or representation intended for use in the purchase
of shares of the Fund or any securities mentioned in the report. Past
performance results shown in this report should not be considered a
representation of future performance. The Fund has leveraged its Common Stock by
issuing Preferred Stock to provide the Common Stock shareholders with a
potentially higher rate of return. Leverage creates risks for Common Stock
shareholders, including the likelihood of greater volatility of net asset value
and market price of shares of the Common Stock, and the risk that fluctuations
in the short-term dividend rates of the Preferred Stock may affect the yield to
Common Stock shareholders. Statements and other information herein are as dated
and are subject to change.
MuniYield New York
Insured Fund, Inc.
Box 9011
Princeton, NJ
08543-9011 #16159--10/98
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