MUNIYIELD
NEW YORK
INSURED
FUND II, INC.
FUND LOGO
Annual Report
October 31, 1996
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
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
<PAGE>
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Transfer Agents
Common Stock:
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
NYSE Symbol
MYT
This report, including the financial information herein, is
transmitted to the shareholders of MuniYield New York Insured Fund
II, 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 II, Inc.
Box 9011
Princeton, NJ
08543-9011
<PAGE>
MuniYield New York Insured Fund II, Inc.
TO OUR SHAREHOLDERS
For the year ended October 31, 1996, the Common Stock of MuniYield
New York Insured Fund II, Inc. earned $0.816 per share income
dividends, which included earned and unpaid dividends of $0.069.
This represents a net annualized yield of 5.61%, based on a month-
end net asset value of $14.53 per share. Over the same period, the
total investment return on the Fund's Common Stock was +5.55%, based
on a change in per share net asset value from $14.63 to $14.53, and
assuming reinvestment of $0.816 per share income dividends.
For the six-month period ended October 31, 1996, the total
investment return on the Fund's Common Stock was +5.64%, based on a
change in per share net asset value from $14.18 to $14.53, and
assuming reinvestment of $0.405 per share income dividends.
For the six-month period ended October 31, 1996, the Fund's Auction
Market Preferred Stock had an average yield of 3.58%.
The Municipal Market Environment
Municipal bond yields generally moved lower during the six months
ended October 31, 1996. Long-term tax-exempt revenue bond yields, as
measured by the Bond Buyer Revenue Bond Index, declined
approximately 35 basis points (0.35%) to close the six-month period
ended October 31, 1996 at approximately 5.94%. The municipal bond
market exhibited considerable weekly yield volatility over the six
months ended October 31, 1996 with bond yields vacillating as much
as 20 basis points. This ongoing volatility was in response to
fluctuating evidence regarding the degree to which recent economic
growth would result in any significant increase in inflationary
pressures. Much of the evidence supporting stronger growth centered
around the strong employment growth seen in April and June with bond
yields rising in response. Other more recent economic indicators
have suggested that economic growth will not be excessive and
inflationary pressures will remain well-contained. This continued
benign inflationary environment has supported lower tax-exempt bond
yields in recent months. US Treasury bond yields have exhibited
similar, albeit greater, volatility during the six-month period
ended October 31, 1996, falling more than 20 basis points to end the
period at 6.64%. Over the past six months, tax-exempt bond yields
registered significantly greater declines than those shown by the US
Treasury bond. This relative outperformance by the municipal bond
market was largely the result of the strong technical support the
tax-exempt market has enjoyed throughout most of 1996. Perhaps most
significantly, the pace of new bond issuance has recently slowed.
<PAGE>
Over the last year, approximately $180 billion in long-term
municipal securities was issued, an increase of over 25% versus the
same period a year ago. Much of this increase was the result of
issuers seeking to refinance their existing higher-couponed debt as
interest rates declined in 1995 and early 1996. As interest rates
rose, these financings became increasingly economically impractical
and issuance declined. Over the last six months, approximately $90
billion in long-term tax-exempt securities was underwritten, an
increase of 5% versus the comparable period a year earlier. Only $41
billion in tax-exempt securities was issued in the last three
months, a 3% decline in issuance versus the October 31, 1995
quarter.
At the same time, investor demand remained consistently strong. With
nominal new-issue yields generally above 6%, retail investor
interest was steady. Additionally, investors received over $50
billion this June and July in assets derived from coupon income,
bond maturities, and proceeds from early redemptions. Annual new
bond issuance has declined in recent years and is expected to remain
below levels seen in the early 1990s. Consequently, as the higher-
couponed bonds issued in the early-to-mid 1980s were redeemed at
their first optional call date, the total number of outstanding tax-
exempt bonds has declined. This combination of a declining net
supply and significant amounts of assets helped maintain investor
demand in recent months.
It is unlikely that the municipal bond market will continue to
significantly outperform US Treasury securities in the near future.
The tax-exempt bond market's recent performance has led to the yield
ratio between long-term taxable and tax-exempt securities falling
from in excess of 90% to approximately 85%. While still historically
very attractive, some institutional investors, particularly short-
term traders, began to view the tax-exempt bond market's recent
outperformance as an opportunity to sell a relatively expensive
asset. However, to the long-term investor, such a sale would
represent the loss of an attractively priced asset which may not be
easily replaced given the relative scarcity of municipal bonds under
present supply conditions.
Looking ahead, no clear consensus for the direction of interest
rates currently exists. Perhaps, the primary focus going forward
will be the extent to which the increase in interest rates seen thus
far in 1996 will negatively impact future economic growth. Should
growth slow in the interest rate-sensitive sectors of the economy,
like housing, auto, and consumer spending, as many economists assert
is likely, then bond yields are likely to decline. Under such a
scenario, the municipal bond market's performance is likely to
closely mirror that of the US Treasury bond market.
<PAGE>
Portfolio Strategy
During the 12-month period ended October 31, 1996, our portfolio
strategy focused on seeking to provide current return while being
mindful of capital appreciation. In an effort to enhance the
additional benefit of increased yield to Common Stock shareholders,
we kept the Fund's Preferred Stock in the shortest possible maturity
range. (Refer to "The Benefits and Risks of Leveraging" on page 3.)
The Fund's performance was enhanced this year by early recognition
that interest rates in the beginning of 1996 were likely to head
higher. We maintained an above-average coupon structure, tempering
the negative reaction of net asset value to the ensuing interest
rate increases.
As the year progressed, we identified a fairly well-defined trading
range in the municipal market. We effectively managed the purchases
and sales of long-term revenue bonds in the Fund's holdings by
exploiting the upper and lower boundaries of this trading range. We
then concentrated larger percentages of the Fund's assets in
securities rated at least AA by one or more of the major rating
agencies, in response to the lack of yield differentials between
credit quality classes. We anticipate continuing this approach until
the point where deteriorating economic releases lead to a change in
an interest rate forecast that allows a more constructive trend for
bond prices.
In Conclusion
We appreciate your ongoing interest in MuniYield New York Insured
Fund II, Inc., and we look forward to assisting you with your
financial needs in the months and years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
<PAGE>
(Walter C. O'Connor)
Walter C. O'Connor
Portfolio Manager
November 25, 1996
THE BENEFITS AND RISKS OF LEVERAGING
MuniYield New York Insured Fund II, 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.
<PAGE>
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term
investments, and therefore the Common Stock shareholders are the
beneficiaries of the incremental yield. However, if short-term
interest rates rise, narrowing the differential between short-term
and long-term interest rates, the incremental yield pickup on the
Common Stock will be reduced or eliminated completely. At the same
time, the market value of the fund's Common Stock (that is, its
price as listed on the New York Stock Exchange) may, as a result,
decline. Furthermore, if long-term interest rates rise, the Common
Stock's net asset value will reflect the full decline in the price
of the portfolio's investments, since the value of the fund's
Preferred Stock does not fluctuate. In addition to the decline in
net asset value, the market value of the fund's Common Stock may
also decline.
PORTFOLIO ABBREVIATIONS
To simplify the listing of MuniYield New York Insured Fund II,
Inc.'s portfolio holdings in the Schedule of Investments, we have
abbreviated the names of many of the securities according to the
list at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
PCR Pollution Control Revenue Bonds
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
New York--98.5%
<S> <S> <C> <C> <C>
Battery Park City Authority, New York, Revenue Bonds:
AAA Aaa $ 3,305 Junior Series A, 5.50% due 11/01/2026 (d) $ 3,197
AAA Aaa 4,000 Refunding, Senior Series A, 5.25% due 11/01/2017 (c) 3,786
<PAGE>
Metropolitan Transportation Authority, New York, Commuter Facilities Revenue
Bonds (c):
AAA Aaa 11,500 Refunding, Series B, 6.25% due 7/01/2017 12,077
AAA Aaa 8,650 Refunding, Series B, 6.25% due 7/01/2022 9,029
AAA Aaa 1,400 Series A, 6.50% due 7/01/2024 1,525
AAA Aaa 5,000 Metropolitan Transportation Authority, New York, Transportation Facilities
Revenue Bonds, Series J, 6.50% due 7/01/2018 (b) 5,426
Monroe County, New York, GO, Public Improvement, UT (d):
AAA Aaa 1,850 6.15% due 6/01/2016 1,939
AAA Aaa 1,000 6.15% due 6/01/2017 1,040
AAA Aaa 3,250 Nassau County, New York, GO, UT, Series P, 6.50% due 11/01/2010 (b) 3,639
A1+ NR* 3,200 Nassau County, New York, IDA, Civic Facilities Revenue Bonds (Cold Spring
Harbor Laboratory Project), VRDN, 3.50% due 7/01/2019 (a) 3,200
AAA Aaa 1,100 New Rochelle, New York, GO, UT, Series B, 6.15% due 8/15/2018 (c) 1,140
A1+ VMIG1++ 1,200 New York City, New York, Cultural Resource Trust Revenue Bonds (Soloman R.
Guggenheim), VRDN, Series B, 3.40% due 12/01/2015 (a) 1,200
New York City, New York, GO, UT:
BBB+ Baa1 5,000 Refunding, Series B, 6.375% due 8/15/2012 5,091
BBB+ Baa1 10,000 Series F, 6.625% due 2/15/2014 10,365
AAA Aaa 2,660 Series J, 6% due 2/15/2005 (c) 2,833
New York City, New York, IDA, Civic Facilities Revenue Bonds:
A1+ NR* 1,200 (National Audobon Society), VRDN, 3.40% due 12/01/2014 (a) 1,200
AAA Aaa 5,000 (USTA National Tennis Center Project), 6.375% due 11/15/2014 (f) 5,346
New York City, New York, Municipal Water Finance Authority, Water and Sewer
System Revenue Bonds:
AAA Aaa 3,325 Refunding, Series A, 5.375% due 6/15/2026 (f) 3,185
AAA Aaa 3,270 Series A, 7.25% due 6/15/2000 (c)(g) 3,625
AAA Aaa 1,760 Series A, 7% due 6/15/2001 (b)(g) 1,960
AAA Aaa 4,000 Series B, 5.50% due 6/15/2019 (c) 3,879
New York State Dormitory Authority Revenue Bonds:
AAA Aaa 1,000 (City University), Third Generation Reserves, Series 2, 6.875% due 7/01/2014 (c) 1,117
AAA Aaa 1,050 (City University), Third Generation Reserves, Series 2, 6.25% due 7/01/2019 (c) 1,096
AAA Aaa 3,000 (City University System), Third Resolution, Series 1, 6.25% due 7/01/2016 (d) 3,178
AAA Aaa 3,640 (City University System), Third Resolution, Series 1, 6.25% due 7/01/2020 (d) 3,828
AAA Aaa 6,290 (City University System), Third Resolution, Series 1, 6.30% due 7/01/2024 (d) 6,634
A1+ VMIG1++ 1,500 (Cornell University), VRDN, Series B, 3.40% due 7/01/2025 (a) 1,500
AAA Aaa 3,500 (Mount Sinai School of Medicine), Series A, 5% due 7/01/2021 (c) 3,177
AAA Aaa 6,000 (Mount Sinai School of Medicine), Series A, 5.15% due 7/01/2024 (c) 5,670
AAA Aaa 1,750 Refunding (Mount Sinai School of Medicine), 6.75% due 7/01/2009 (c) 1,914
BBB+ Baa1 2,000 Refunding (State University Educational Facilities), Series B, 7% due 5/15/2016 2,140
AAA Aaa 1,050 (Saint John's University), 6.875% due 7/01/2011 (d) 1,167
<PAGE>
New York State Energy Research and Development Authority, Facilities Revenue
Bonds (Consolidated Edison Company Inc.), AMT, Series A:
AAA Aaa 4,450 6.75% due 1/15/2027 (c) 4,755
AAA Aaa 3,785 6.75% due 1/15/2027 (d) 4,028
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
New York (concluded)
<S> <S> <C> <C> <C>
AAA Aaa $ 10,000 New York State Energy Research and Development Authority, Gas Facilities Revenue
Bonds (Brooklyn Union Gas Company), AMT, Series A, 6.75% due 2/01/2024 (c) $ 10,835
New York State Energy Research and Development Authority, PCR, AMT (c):
NR* Aaa 4,000 (New York State Electric and Gas Corporation Project), Series A, 6.15%
due 7/01/2026 4,081
AAA Aaa 3,600 Refunding (Rochester Gas and Electric Project), Series B, 6.50% due 5/15/2032 3,822
AAA Aaa 1,325 New York State Environmental Facilities Corporation, Water Facilities Revenue
Bonds (New Rochelle Water Company Inc. Project), AMT, 6.40% due 12/01/2024 (d) 1,396
AAA Aaa 1,000 New York State, HFA, Housing Mortgage Project Revenue Refunding Bonds, Series A,
6.125% due 11/01/2020 (f) 1,021
New York State Local Government Assistance Corporation, VRDN (a):
A1+ VMIG1++ 5,500 Series F, 3.40% due 4/01/2025 5,500
A1+ VMIG1++ 2,100 Series G, 3.40% due 4/01/2025 2,100
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 (d) 2,954
AAA Aaa 2,330 (Mental Health), Series F, 6.50% due 8/15/2012 (f) 2,471
AAA Aaa 6,250 (New York Hospital Mortgage), Series A, 6.80% due 8/15/2024 (d)(e) 6,899
AAA Aaa 8,500 (New York Hospital Mortgage), Series A, 6.50% due 8/15/2029 (d)(e) 9,146
AAA Aaa 5,200 Refunding (Hospital and Nursing Home), Series C, 6.375% due 8/15/2029 (c) 5,512
AAA VMIG1++ 1,000 New York State Thruway Authority, General Revenue Bonds, VRDN, 3.55%
due 1/01/2024 (a)(b) 1,000
New York State Thruway Authority, Highway and Bridge Trust Fund:
AAA Aaa 2,000 Series A, 6.25% due 4/01/2004 (c) 2,187
AAA Aaa 8,000 UT, Series B, 6.25% due 4/01/2012 (b) 8,521
AAA Aaa 2,365 UT, Series B, 6% due 4/01/2014 (b) 2,433
AAA Aaa 8,675 New York State Urban Development Corporation, Revenue Refunding Bonds
(Correctional Facilities), 5.375% due 1/01/2012 (c) 8,577
<PAGE>
North Hempstead, New York, GO, Refunding, Series B, UT (b):
AAA Aaa 1,745 6.40% due 4/01/2013 1,939
AAA Aaa 555 6.40% due 4/01/2017 623
AA- A1 5,000 Port Authority of New York and New Jersey, Consolidated Revenue Bonds, 72nd
Series, 7.35% due 10/01/2002 (g) 5,743
Syracuse, New York, COP, Revenue Bonds (Syracuse Hancock International Airport),
AMT (b):
AAA Aaa 3,650 6.625% due 1/01/2012 3,899
AAA Aaa 3,120 6.50% due 1/01/2017 3,306
Triborough Bridge and Tunnel Authority, New York, Special Obligation Refunding
Bonds:
AAA Aaa 6,575 6.25% due 1/01/2012 (d) 6,914
AAA Aaa 2,000 Series B, 6.875% due 1/01/2015 (c) 2,191
Total Investments (Cost--$216,146)--98.5% 227,956
Other Assets Less Liabilities--1.5% 3,516
--------
Net Assets--100.0% $231,472
========
<FN>
(a)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, 1996.
(b)FGIC Insured.
(c)MBIA Insured.
(d)AMBAC Insured.
(e)FHA Insured.
(f)FSA Insured.
(g)Prerefunded.
*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>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of October 31, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$216,146,064) (Note 1a) $227,955,640
Cash 80,980
Receivables:
Interest $ 3,716,128
Securities sold 100,000 3,816,128
------------
Deferred organization expenses (Note 1e) 4,575
Prepaid expenses and other assets 16,821
------------
Total assets 231,874,144
------------
<PAGE>
Liabilities: Payables:
Dividends to shareholders (Note 1f) 304,722
Investment adviser (Note 2) 97,774 402,496
------------ ------------
Total liabilities 402,496
------------
Net Assets: Net assets $231,471,648
============
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.05 per share (2,800 shares of AMPS*
issued and outstanding at $25,000 per share liquidation preference) $ 70,000,000
Common Stock, par value $.10 per share (11,114,832 shares
issued and outstanding) $ 1,111,483
Paid-in capital in excess of par 154,792,338
Undistributed investment income--net 823,736
Accumulated realized capital losses on investments--net (Note 5) (7,065,485)
Unrealized appreciation on investments--net 11,809,576
------------
Total--Equivalent to $14.53 net asset value per share of Common
Stock (market price--$13.375) 161,471,648
------------
Total capital $231,471,648
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Year Ended
October 31, 1996
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 13,235,408
(Note 1d):
<PAGE>
Expenses: Investment advisory fees (Note 2) $ 1,156,506
Commission fees (Note 4) 177,492
Professional fees 76,623
Accounting services (Note 2) 58,046
Transfer agent fees 49,189
Printing and shareholder reports 37,036
Listing fees 24,635
Directors' fees and expenses 22,928
Custodian fees 12,143
Pricing fees 8,157
Amortization of organization expenses (Note 1e) 6,948
Other 15,977
------------
Total expenses 1,645,680
------------
Investment income--net 11,589,728
------------
Realized & Realized loss on investments--net (1,623,682)
Unrealized Gain Change in unrealized appreciation on investments--net 479,529
(Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 10,445,575
(Notes 1b, 1d & 3): ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended
October 31,
Increase (Decrease) in Net Assets: 1996 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 11,589,728 $ 11,832,196
Realized loss on investments--net (1,623,682) (3,600,834)
Change in unrealized appreciation on investments--net 479,529 20,296,119
------------ ------------
Net increase in net assets resulting from operations 10,445,575 28,527,481
------------ ------------
Dividends to Investment income--net:
Shareholders Common Stock (9,071,415) (9,302,093)
(Note 1f): Preferred Stock (2,557,268) (2,547,832)
------------ ------------
Net decrease in net assets resulting from dividends to
shareholders (11,628,683) (11,849,925)
------------ ------------
<PAGE>
Net Assets: Total increase (decrease) in net assets (1,183,108) 16,677,556
Beginning of year 232,654,755 215,977,199
------------ ------------
End of year* $231,471,647 $232,654,755
============ ============
<FN>
*Undistributed investment income--net $ 823,736 $ 862,691
============ ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL HIGHLIGHTS (concluded)
<TABLE>
Financial Highlights
<CAPTION>
For the
Period
The following per share data and ratios have been derived June 26,
from information provided in the financial statements. 1992++ to
For the Year Ended October 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 14.63 $ 13.13 $ 15.89 $ 13.43 $ 14.18
Operating -------- -------- -------- -------- --------
Performance: Investment income--net 1.04 1.07 1.07 1.11 .27
Realized and unrealized gain (loss) on
investments--net (.09) 1.50 (2.76) 2.46 (.66)
-------- -------- -------- -------- --------
Total from investment operations .95 2.57 (1.69) 3.57 (.39)
-------- -------- -------- -------- --------
Less dividends and distributions to
Common Stock shareholders:
Investment income--net (.82) (.84) (.87) (.91) (.18)
Realized gain on investments--net -- -- (.01) -- --
-------- -------- -------- -------- --------
Total dividends and distributions to
Common Stock shareholders (.82) (.84) (.88) (.91) (.18)
-------- -------- -------- -------- --------
Capital charge resulting from issuance
of Common Stock -- -- -- -- (.03)
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:++++
Dividends and distributions to Preferred Stock
shareholders:
Investment income--net (.23) (.23) (.19) (.20) (.02)
Realized gain on investments--net -- -- (.00)+++++ -- --
Capital charge resulting from issuance of
Preferred Stock -- -- -- -- (.13)
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity (.23) (.23) (.19) (.20) (.15)
-------- -------- -------- -------- --------
Net asset value, end of period $ 14.53 $ 14.63 $ 13.13 $ 15.89 $ 13.43
======== ======== ======== ======== ========
Market price per share, end of period $ 13.375 $ 13.25 $ 11.00 $ 15.25 $ 13.75
======== ======== ======== ======== ========
<PAGE>
Total Investment Based on market price per share 7.28% 28.61% (22.96%) 17.90% (7.17%)+++
Return:** ======== ======== ======== ======== ========
Based on net asset value per share 5.55% 18.96% (11.75%) 25.77% (4.09%)+++
======== ======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement .71% .74% .74% .62% .13%*
Net Assets:*** ======== ======== ======== ======== ========
Expenses .71% .74% .74% .70% .68%*
======== ======== ======== ======== ========
Investment income--net 5.00% 5.27% 5.09% 5.25% 5.05%*
======== ======== ======== ======== ========
Supplemental Net assets, net of Preferred Stock, end of
Data: period(in thousands) $161,472 $162,655 $145,977 $176,595 $146,633
======== ======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $ 70,000 $ 70,000 $ 70,000 $ 70,000 $ 70,000
======== ======== ======== ======== ========
Portfolio turnover 118.28% 110.76% 36.79% 3.33% 19.40%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,307 $ 3,324 $ 3,085 $ 3,523 $ 3,095
======== ======== ======== ======== ========
Dividends Investment income--net $ 913 $ 910 $ 759 $ 809 $ 92
Per Share ======== ======== ======== ======== ========
On Preferred Stock
Outstanding:++++++
<FN>
++Commencement of Operations.
++++The Fund's Preferred Stock was issued on September 16, 1992.
++++++Dividends per share have been adjusted to reflect a two-for-one
stock split that occurred on December 1, 1994.
+++Aggregate total investment return.
+++++Amount is less than $.01 per share.
*Annualized.
**Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value,
may result in substantially different returns. Total investment
returns exclude the effects of sales loads.
***Do not reflect the effect of dividends to Preferred Stock
shareholders.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniYield New York Insured Fund II, 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 MYT. 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, which are traded on exchanges, are valued
at their last sale price as of the close of such exchanges or,
lacking any sales, at the last available bid price. Securities with
remaining maturities of sixty days or less are valued at amortized
cost, which approximates market value. Securities 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 valuations furnished by a
pricing service retained by the Fund, which may utilize a matrix
system for valuations. The procedures of the pricing service and its
valuations are reviewed by the officers of the Fund under the
general supervision of the Board of Directors.
(b) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell
interest rate 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.
<PAGE>
* 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) Deferred organization expenses--Deferred organization expenses
are amortized on a straight-line basis over a five-year period.
(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.
NOTES TO FINANCIAL STATEMENTS (concluded)
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.
<PAGE>
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.
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, Merrill Lynch, Pierce, Fenner & Smith Inc.
("MLPF&S"), and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended October 31, 1996 were $254,676,996 and
$259,702,221, respectively.
Net realized and unrealized gains (losses) as of October 31, 1996
were as follows:
Realized Unrealized
Losses Gains
Long-term investments $ (665,388) $11,809,576
Financial futures contracts (958,294) --
----------- -----------
Total $(1,623,682) $11,809,576
=========== ===========
As of October 31, 1996, net unrealized appreciation for Federal
income tax purposes aggregated $11,809,576, all of which related to
appreciated securities. The aggregate cost of investments at October
31, 1996 for Federal income tax purposes was $216,146,064.
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
For the year ended October 31, 1996, shares issued and outstanding
remained constant at 11,114,832. At October 31, 1996, total paid-in
capital amounted to $155,903,821.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred
Stock of the Fund 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 October 31, 1996 was 3.25%.
<PAGE>
As of October 31, 1996, there were 2,800 AMPS shares authorized,
issued and outstanding with a liquidation preference of $25,000 per
share.
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, 1996, MLPF&S, an affiliate of FAM, earned $107,426 as
commissions.
5. Capital Loss Carryforward:
At October 31, 1996, the Fund had a net capital loss carryforward of
approximately $4,728,000, of which $1,841,000 expires in 2002,
$1,775,000 expires in 2003 and $1,112,000 expires in 2004. This
amount will be available to offset like amounts of any future
taxable gains.
6. Reorganization Plan:
On June 21, 1996, the Board of Directors approved a plan of
reorganization, subject to shareholder approval and certain other
conditions, whereby the Fund would acquire substantially all of the
assets and liabilities of MuniYield New York Insured Fund III, Inc.
and MuniVest New York Insured Fund, Inc. in exchange for newly
issued shares of the Fund. MuniYield New York Insured Fund III, Inc.
and MuniVest New York Insured Fund, Inc. are registered, non-
diversified, closed-end management investment companies. All three
entities have a similar investment objective and are managed by FAM.
7. Subsequent Event:
On November 8, 1996, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the amount
of $.069314 per share, payable on November 27, 1996 to shareholders
of record as of November 18, 1996.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
MuniYield New York Insured Fund II, Inc.:
We have audited the accompanying statement of assets, liabilities
and capital, including the schedule of investments, of MuniYield New
York Insured Fund II, Inc. as of October 31, 1996, 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 four-year
period then ended and the period June 26, 1992 (commencement of
operations) to October 31, 1992. 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.
<PAGE>
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at October
31, 1996 by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
MuniYield New York Insured Fund II, Inc. as of October 31, 1996, 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 3, 1996
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by MuniYield New
York Insured Fund II, Inc. during its taxable year ended October 31,
1996 qualify as tax-exempt interest dividends for Federal income tax
purposes. Additionally, there were no capital gains distributed by
the Fund during the year.
Please retain this information for your records.
