MUNIYIELD
NEW YORK
INSURED
FUND II, INC.
FUND LOGO
Semi-Annual Report
April 30, 1998
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
Printed on post-consumer recycled paper
MuniYield New York Insured Fund II, Inc.
TO OUR SHAREHOLDERS
For the six months ended April 30, 1998, the Common Stock of
MuniYield New York Insured Fund II, Inc. earned $0.426 per share
income dividends, which included earned and unpaid dividends of
$0.069. This represents a net annualized yield of 5.69%, based on a
month-end per share net asset value of $15.10. Over the same period,
the total investment return on the Fund's Common Stock was +2.37%,
based on a change in per share net asset value from $15.18 to
$15.10, and assuming reinvestment of $0.429 per share income
dividends.
The average yields for the Fund's Auction Market Preferred Stock for
the six months ended April 30, 1998 were as follows: Series A,
3.63%; Series B, 3.47%; Series C, 3.53%; and Series D, 3.39%.
The Municipal Market Environment
During the six months ended April 30, 1998, bond yields generally
moved lower, and by mid-January 1998 had declined to recent historic
lows. Long-term US Treasury bond yields declined 20 basis points
(0.20%) during the same period and stood at 5.95% by April 30, 1998.
Similarly, long-term uninsured tax-exempt bond yields, as measured
by the Bond Buyer Revenue Bond Index, fell approximately 35 basis
points to 5.25%, a level not seen since the mid-1970s. While low
inflation has supported lower interest rates, much of the decline in
bond yields in late 1997 and early 1998 was driven more by the
turmoil in Asian financial markets than by domestic economic
fundamentals. Weak economic conditions in Asia were expected to
negatively impact US growth through reduced export demand.
Additionally, inflation in the United States was also expected to
decline in response to lower prices on goods imported from Asian
manufacturers.
However, in recent months, many investors have become increasingly
concerned that most of the downturn in Asia, especially in Japan,
has already occurred and any future deterioration will not be severe
enough to constrain US economic growth and inflationary pressures.
These concerns served to push interest rates higher in the latter
part of the period, causing fixed-income yields to retrace much of
their earlier gains.
Thus far in 1998, the municipal bond market has experienced
unexpectedly strong supply pressures. These supply pressures have
prevented tax-exempt bond yields from declining as much as US
Treasury bond yields. Over the last six months, more than $135
billion in new tax-exempt bonds were underwritten, an increase of
over 40% compared to the same period a year ago. During the last
three months, municipalities issued more than $72 billion in new
securities, an increase of over 60% compared to the same three-month
period in 1997. Additionally, corporate issuers have also viewed
current interest rate levels as an opportunity to issue significant
amounts of taxable securities. Thus far in 1998, more than $100
billion in investment-grade corporate bonds have been underwritten,
an increase of over 60% relative to the comparable period a year
ago. This sizeable corporate bond issuance has tended to support
generally higher fixed-income yields and reduce the demand for tax-
exempt bonds.
However, the recent pace of new municipal bond issuance is unlikely
to be maintained. Continued increases in bond issuance will require
lower and lower tax-exempt bond yields to generate the economic
savings necessary for additional municipal bond refinancings.
Preliminary estimates for 1998 total municipal bond issuance are
presently in the $200 billion--$225 billion range. These estimates
suggest that recent supply pressures are likely to abate later in
the year. Municipal bond investors received approximately $30
billion earlier this year in coupon payments, bond maturities and
proceeds from early redemptions. The demand generated by these
assets has helped offset the increase in supply seen thus far this
year. Furthermore, looking ahead, June and July have also tended to
be periods of strong investor demand as seasonal factors are likely
to generate strong income flows similar to those seen earlier this
year.
MuniYield New York Insured Fund II, Inc.
April 30, 1998
It is also possible that at least some of the recent economic
strength seen in the United States will be reversed in the coming
months. A particularly mild winter has been partially responsible
for a strong housing sector, as well as other construction
industries. This recent strong trend may not be sustained and may
lead to weaker construction growth later this year. Additionally,
strong economic growth in 1997 and the increased use of electronic
tax filing have resulted in larger and earlier Federal and state
income tax refunds to many individuals. These refunds appear to have
supported strong consumer spending in recent months, but may be
borrowing against weaker spending later this year. In addition, the
continued impact of the Asian financial crisis on the US domestic
economy's future growth remains unclear. Barring a dramatic and
unexpected resurgence of domestic inflation, we do not believe that
the Federal Reserve Board will be willing to raise interest rates
until the full impact of the Asian situation can be established.
All these factors suggest that over the near term, tax-exempt as
well as taxable bond yields are unlikely to rise by any appreciable
amount. Recent supply pressures have caused municipal bond yield
ratios to rise relative to US Treasury bond yields. At April 30,
1998, long-term tax-exempt bond yields were at attractive yield
ratios relative to comparable US Treasury securities (over 90%), and
well in excess of their expected range of 85%--88%. Any further
pressure upon the municipal market may well represent a very
attractive investment opportunity.
Portfolio Strategy
For the six months ended April 30, 1998, we managed MuniYield New
York Insured Fund II, Inc. with the intent of sustaining an
appealing level of tax-exempt income while simultaneously seeking to
achieve an above-average total return. During the period, our
portfolio strategy was to maintain a fully invested position and to
use any dips in the market to aggressively restructure the Fund,
while using market rallies to sell more aggressively structured
bonds.
While the overall trend in interest rates for the six-month period
ended April 30, 1998 was down, market volatility created a trading
range. Interest rates fluctuated rapidly during the period as
opinions vacillated on inflation and whether the Federal Reserve
Board was going to raise interest rates. Overall, we believed that
inflation was not a problem and therefore positioned the Fund to
benefit from a decline in interest rates. As a result of this
strategy, the Fund had an above-average total return and yield
relative to comparable New York insured tax-exempt funds.
Looking ahead, we believe that interest rates will continue to
fluctuate until a sustained slowdown in the US economy drives them
lower. To that end, our strategy will concentrate on extending
duration on any market back-ups in order to seek to enhance the
total return of the Fund.
In Conclusion
We would like to welcome the shareholders from Taurus MuniNew York
Holdings, Inc. 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
(Roberto Roffo)
Roberto Roffo
Vice President and Portfolio Manager
June 1, 1998
MuniYield New York Insured Fund II, Inc.
April 30, 1998
PORTFOLIO INSURANCE
MuniYield New York Insured Fund II, Inc. seeks to provide its
shareholders with the benefits of an insured municipal bond
portfolio. Previously, the Fund generally achieved this objective by
limiting at least 80% of portfolio investments to municipal bonds
insured under policies obtained by the issuer or another party,
including the Fund itself, and issued by insurance carriers with
claims paying ability ratings of AAA or its equivalent from at least
two nationally recognized rating agencies, such as Standard & Poor's
Ratings Services, Moody's Investor Service, Inc., or Fitch IBCA,
Inc. In order to increase the Fund's flexibility to obtain
appropriate investments, the Fund has modified its practice with
respect to the ratings criteria it applies to the carriers that
provide insurance for the municipal bonds in its portfolio.
Currently, the Fund may also invest in municipal bonds insured by,
or may itself purchase an insurance policy for all or a portion of
its municipal bond portfolio from, an insurance carrier with a
claims paying ability rating of AAA or its equivalent from at least
one of such nationally recognized rating agencies. There can be no
assurance that insurance of the kind described above will continue
to be available to the Fund, and the Fund has reserved its right to
modify its criteria for portfolio insurance, or discontinue its
policy of maintaining an insured portfolio if such insurance is no
longer available or if the cost of such insurance outweighs the
benefits to the Fund. Although we periodically review the financial
condition of each insurer, there can be no assurance that the
insurers will be able to honor their obligations under the
circumstances of any claim thereunder.
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.
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.
MuniYield New York Insured Fund II, Inc.
April 30, 1998
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute substantially all of its
net investment income to its shareholders on a monthly basis.
However, in order to provide shareholders with a more consistent
yield to the current trading price of 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.
QUALITY PROFILE
The quality ratings of securities in the Fund as of April 30, 1998
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 72.7%
AA/Aa 6.3
A/A 4.5
BBB/Baa 4.0
NR (Not Rated) 5.8
Other++ 7.4
[FN]
++Temporary investments in short-term municipal securities.
PORTFOLIO ABBREVIATIONS
To simplify the listings 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 below and at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
GO General Obligation Bonds
HFA Housing Finance Agency
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RAN Revenue Anticipation Notes
RITR Residual Interest Trust Receipts
UT Unlimited Tax
VRDN Variable Rate Demand Notes
MuniYield New York Insured Fund II, Inc.
April 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
New York--100.7%
<S> <S> <C> <S> <C>
AAA Aaa $ 4,095 Albany County, New York, Airport Authority, Airport Revenue Bonds, RITR, AMT,
Series RI-97-7, 7.42% due 12/15/2023 (f)(h) $ 4,592
A A2 3,000 Allegany County, New York, Industrial Development Agency, Solid Waste
Disposal Facility Revenue Bonds (Atlantic Richfield Co. Facility), AMT,
6.625% due 9/01/2016 3,247
A A2 1,275 Battery Park City Authority, New York, Revenue Refunding Bonds, Junior
Series A, 5.80% due 11/01/2022 1,332
AAA Aaa 4,300 Buffalo, New York, Sewer Authority Revenue Bonds, Series F, 6% due 7/01/2013 (b) 4,763
Huntington, New York, Refunding, UT (d):
NR* Aaa 715 5.50% due 4/15/2010 758
NR* Aaa 485 5.50% due 4/15/2011 513
NR* Aaa 460 5.50% due 4/15/2012 484
NR* Aaa 455 5.50% due 4/15/2013 480
NR* Aaa 450 5.50% due 4/15/2014 473
NR* Aaa 450 5.50% due 4/15/2015 472
Metropolitan Transportation Authority, New York, Commuter Facilities
Revenue Bonds:
NR* Aaa 2,650 RITR, Series 20, 8.02% due 7/01/2017 (c)(h) 3,127
AAA Aaa 2,070 Series A, 6.375% due 7/01/2004 (c)(g) 2,310
AAA Aaa 15,000 Series A, 5% due 7/01/2023 (f) 14,297
AAA Aaa 7,100 Series E, 5% due 7/01/2021 (d) 6,781
AAA Aaa 2,100 Metropolitan Transportation Authority, New York, Dedicated Tax Fund, Series A,
4.75% due 4/01/2028 (b) 1,910
BBB+ Baa1 3,000 Metropolitan Transportation Authority, New York, Service Contract Revenue
Refunding Bonds (Transit Facility), Series 5, 7% due 7/01/2012 3,255
Metropolitan Transportation Authority, New York, Transportation Facilities
Revenue Bonds:
AAA Aaa 3,555 Refunding, Series A, 4.75% due 7/01/2021 (c) 3,256
AAA Aaa 5,325 Refunding, Series A, 4.75% due 7/01/2024 (c) 4,850
AAA Aaa 4,965 Refunding, Series B-2, 5% due 7/01/2020 (c) 4,778
AAA Aaa 2,400 Series A, 6.10% due 7/01/2021 (f) 2,575
AAA Aaa 2,500 Series C-1, 5.50% due 7/01/2022 (b) 2,533
AAA Aaa 5,000 Series O, 6.375% due 7/01/2004 (c)(g) 5,580
AAA Aaa 1,005 Mount Sinai, New York, Union Free School District, Refunding, GO, UT, 6.20%
due 2/15/2019 (d) 1,141
Municipal Assistance Corporation for City of Troy, New York, Series A (c):
AAA Aaa 1,850 5% due 1/15/2016 1,799
AAA Aaa 2,250 5% due 1/15/2022 2,148
Nassau County, New York, GO, UT, Series P (b)(g):
AAA Aaa 3,250 6.50% due 11/01/2004 3,702
AAA Aaa 3,685 6.50% due 11/01/2004 4,197
New York City, New York, Cultural Resource Trust Revenue Bonds:
AAA Aaa 3,000 Refunding (Museum of Modern Art), Series A, 5.50% due 1/01/2021 (d) 3,038
A1+ VMIG1++ 4,000 (Soloman R. Guggenheim), VRDN, Series B, 4% due 12/01/2015 (a) 4,000
New York City, New York, GO, UT:
AAA Aaa 2,000 (Fiscal 92), Series B, 7% due 2/01/2017 (d) 2,185
AAA Aaa 2,000 (Fiscal 92), Series B, 7% due 2/01/2018 (d) 2,185
AAA Aaa 10,000 Refunding, Series G, 4.468% due 8/01/2007 (c)(j) 6,512
BBB+ A3 1,375 Series B, 7.50% due 2/01/2002 (g) 1,540
BBB+ A3 3,625 Series B, 7.50% due 2/01/2006 4,009
A1+ VMIG1++ 600 VRDN, Series B, 4.25% due 10/01/2020 (a)(b) 600
A1+ VMIG1++ 500 VRDN, Series B, Sub-Series B-3, 4.10% due 8/15/2004 (a)(c) 500
</TABLE>
MuniYield New York Insured Fund II, Inc.
April 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
New York (continued)
<S> <S> <C> <S> <C>
New York City, New York, GO, UT (concluded):
A1+ VMIG1++ $ 2,700 VRDN, Series B, Sub-Series B-4, 4.10% due 8/15/2023 (a)(c) $ 2,700
A1+ VMIG1++ 900 VRDN, Series B, Sub-Series B-6, 4.10% due 8/15/2005 (a)(c) 900
A1 VMIG1++ 1,500 VRDN, Sub-Series A-4, 4.15% due 8/01/2022 (a) 1,500
A1+ VMIG1++ 3,900 VRDN, Sub-Series A-10, 4% due 8/01/2016 (a) 3,900
New York City, New York, Industrial Development Agency, Civic Facility
Revenue Bonds:
NR* Aaa 885 (Anti-Defamation League Foundation), Series A, 5.50% due 6/01/2022 (c) 897
AAA Aaa 12,500 (USTA National Tennis Center Project), 6.375% due 11/15/2014 (f) 13,734
New York City, New York, Industrial Development Agency, Special Facilities
Revenue Bonds, AMT:
BBB- Baa2 2,000 (1990 AMR/American Airlines Inc. Project), 7.75% due 7/01/2019 2,083
A A 7,485 RITR, Series RI-5, 7.395% due 1/01/2024 (h) 8,271
New York City, New York, Municipal Water Finance Authority, Water and Sewer
System Revenue Bonds:
NR* A2 13,000 RITR, Series 21, 6.87% due 6/15/2029 (h) 13,813
A- A2 1,290 Series A, 6.75% due 6/15/2017 1,379
AAA Aaa 2,000 Series A-1994, 7% due 6/15/2015 (b) 2,158
AAA Aaa 13,000 Series D, 4.75% due 6/15/2025 (c) 11,838
AAA Aaa 1,000 Series F, 5.50% due 6/15/2023 (c) 1,010
A1+ VMIG1++ 3,300 VRDN, Series 93-C, 4.10% due 6/15/2022 (a)(b) 3,300
A1+ VMIG1++ 1,800 VRDN, Series A, 4.10% due 6/15/2025 (a)(b) 1,800
SP1+ MIG1++ 900 New York City, New York, RAN, UT, Series A, 4.50% due 6/30/1998 901
New York City, New York, Transitional Finance Authority Revenue Bonds,
Series B:
AA Aa3 12,500 4.75% due 11/15/2023 11,365
AA Aa3 5,000 4.50% due 11/15/2027 4,306
New York State Dormitory Authority Revenue Bonds:
AAA Aaa 11,165 (City University), Third General Resources, Series 2, 6.875% due
7/01/2004 (c)(g) 12,794
AAA Aaa 3,000 (City University System), Third Resolution, Series 1, 6.25% due
7/01/2004 (d)(g) 3,339
AAA Aaa 3,640 (City University System), Third Resolution, Series 1, 6.25% due
7/01/2004 (d)(g) 4,052
AAA Aaa 6,290 (City University System), Third Resolution, Series 1, 6.30% due
7/01/2024 (d) 6,882
AAA Aaa 1,375 (Consolidated City University System), Second Generation, Series A,
5.75% due 7/01/2018 (f) 1,481
A1+ VMIG1++ 2,600 (Cornell University), VRDN, Series B, 4% due 7/01/2025 (a) 2,600
NR* Aaa 2,000 (Ithaca College), 5% due 7/01/2026 (d) 1,901
AAA Aaa 12,000 (Memorial Sloan Kettering Cancer Center), 5.50% due 7/01/2023 (c) 12,432
A- A3 2,340 (Mental Health Services Facilities Improvement), Series B, 6% due 8/15/2016 2,565
AAA Aaa 2,610 (Mental Health Services Facilities), Series A, 5% due 2/15/2023 (f) 2,489
AAA Aaa 5,685 (Mental Health Services Facilities), Series B, 5% due 2/15/2023 (f) 5,421
AAA Aaa 6,000 (Mount Sinai School of Medicine), Series A, 5.15% due 7/01/2024 (c) 5,911
AAA Aaa 1,105 (New School of Social Research), 5.75% due 7/01/2026 (c) 1,150
AAA Aaa 16,250 (New York University), Series A, 5.75% due 7/01/2027 (c) 17,531
AAA Aaa 1,250 Refunding (New York and Presbyterian Hospital), 4.75% due 8/01/2016 (d)(e) 1,160
AAA Aaa 30,400 Refunding (New York and Presbyterian Hospital), 4.75% due 8/01/2027 (d)(e) 27,800
AAA Aaa 5,000 Refunding (Rockefeller University), 4.75% due 7/01/2037 4,532
AAA Aaa 4,500 Refunding (State University Educational Facilities), Series A, 5.875%
due 5/15/2011 (b) 4,933
A- A3 1,500 Refunding (State University Educational Facilities), Series A, 5.50%
due 5/15/2019 1,544
A- A3 2,000 Refunding (State University Educational Facilities), Series A, 5.25%
due 5/15/2021 1,995
AAA Aaa 4,080 Refunding (University of Rochester), Series A, 5% due 7/01/2027 (c) 3,876
AAA Aaa 7,500 (Saint Barnabas Hospital), 5.45% due 8/01/2035 (d)(e) 7,540
AAA Aaa 1,050 (Saint John's University), 6.875% due 7/01/2011(d) 1,140
BBB+ Baa1 1,000 (State University Athletic Facilities), 7.25% due 7/01/2021 1,091
AAA Aaa 13,660 (State University Educational Facilities), Series A, 4.75% due 5/15/2025 (c) 12,477
AAA Aaa 2,000 (State University Educational Facilities), Series B, 5.75% due 5/15/2004 (b)(g) 2,140
</TABLE>
MuniYield New York Insured Fund II, Inc.
April 30, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
New York (continued)
<S> <S> <C> <S> <C>
New York State Energy Research and Development Authority, Facilities
Revenue Bonds:
AAA Aaa $ 2,000 (Consolidated Edison Company Inc.), AMT, Series A, 6.75% due 1/15/2027 (c) $ 2,117
AAA Aaa 3,785 (Consolidated Edison Company Inc.), AMT, Series A, 6.75% due 1/15/2027 (d) 4,003
AAA Aaa 4,200 RITR, Series 19, 7.72% due 8/15/2020 (h) 4,830
New York State Energy Research and Development Authority, Gas Facilities
Revenue Bonds (c):
AAA Aaa 12,000 (Brooklyn Union Gas Company), AMT, Series A, 6.75% due 2/01/2024 13,003
AAA Aaa 6,255 (Brooklyn Union Gas Company), AMT, Series B, 6.75% due 2/01/2024 6,779
AAA Aaa 14,355 RITR, Series 9, 6.52% due 1/01/2021 (h) 14,750
New York State Energy Research and Development Authority, PCR, AMT, Series B:
A1+ NR* 6,400 (Niagara Power Corporation Project), VRDN, 4.10% due 7/01/2027 (a) 6,400
AAA Aaa 3,600 Refunding (Rochester Gas and Electric Project), 6.50% due 5/15/2032 (c) 3,868
A- Aa 5,000 New York State Environmental Facilities Corporation, PCR, RITR, Series RI-1,
7.095% due 6/15/2014 (h) 5,675
AAA Aaa 4,000 New York State Environmental Facilities Corporation, Special Obligation Revenue
Refunding Bonds (Riverbank State Park), 5.125% due 4/01/2022 (d) 3,874
AAA Aaa 1,055 New York State, HFA, M/F Housing Revenue Bonds, AMT, Series A, 7.75% due
11/01/2020 (d) 1,134
NR* VMIG1++ 200 New York State, HFA, Revenue Bonds (East 84th Street), VRDN, AMT, Series A, 4%
due 11/01/2028 (a) 200
New York State Local Government Assistance Corporation:
NR* Aaa 6,575 RITR, Series 22, 7.52% due 4/01/2024 (d)(h) 7,446
AAA Aaa 13,965 Refunding, Series B, 4.875% due 4/01/2020 (c) 13,114
A+ Aaa 1,380 Series B, 6.25% due 4/01/2002 (g) 1,500
AAA Aaa 3,150 Series B, 4.581% due 4/01/2009 (c)(j) 1,855
New York State Medical Care Facilities Finance Agency Revenue Bonds:
BBB+ Baa 2,485 (Brookdale Hospital Medical Center), Series A, 6.85% due 2/15/2005 (g) 2,845
AAA Aaa 2,790 (Health Center Project--Second Mortgage), Series A, 6.375% due 11/15/2019 (d) 3,115
AAA Aaa 3,000 (Mental Health), Series E, 6.50% due 8/15/2015 (f) 3,301
AAA Aaa 4,330 (Mental Health), Series F, 6.50% due 8/15/2012 (f) 4,732
AAA Aaa 1,500 (Mental Health Services Facilities), Series A, 6% due 2/15/2025 (c) 1,585
AAA Aaa 12,250 (New York Hospital Mortgage), Series A, 6.50% due 2/15/2005 (d)(e)(g) 13,835
AAA Aaa 12,850 (New York Hospital Mortgage), Series A, 6.80% due 2/15/2005 (d)(e)(g) 14,732
AAA Aaa 5,200 Refunding (Hospital and Nursing Home), Series C, 6.375% due 8/15/2029 (c) 5,620
New York State Mortgage Agency, Homeowner Mortgage Revenue Bonds:
NR* Aa2 3,270 AMT, Series 44, 7.50% due 4/01/2026 3,551
NR* Aa2 5,750 AMT, Series HH-3, 7.95% due 4/01/2022 6,045
AAA Aaa 1,000 Series 43, 6.45% due 10/01/2017 (c) 1,081
NR* Aa2 1,100 Series EE-2, 7.50% due 4/01/2016 1,149
NR* NR* 4,000 New York State Mortgage Agency, Revenue Bonds, RITR, AMT, Series 24, 6.97% due
10/01/2028 (h) 4,190
AAA Aaa 11,000 New York State Thruway Authority, Highway and Bridge Trust Fund, UT, Series B,
6.25% due 4/01/2004 (b)(g) 12,208
New York State Urban Development Corporation, Revenue Bonds, Series A:
BBB+ Baa1 9,675 (Correctional Facility Service Contract), 5% due 1/01/2028 8,985
AAA Aaa 2,295 Refunding (Correctional Capital Facilities), 5.25% due 1/01/2014 (f) 2,342
AAA Aaa 1,000 Niagara Falls, New York, Water Treatment Plant, AMT, UT, 7.25% due 11/01/2010 (c) 1,205
AAA Aaa 1,260 North Country, New York, Development Authority, Solid Waste Management System
Revenue Refunding Bonds, 6% due 5/15/2015 (f) 1,382
</TABLE>
MuniYield New York Insured Fund II, Inc.
April 30, 1998
<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> <S> <C>
North Hempstead, New York, GO, UT, Refunding, Series B (b):
AAA Aaa $ 1,745 6.40% due 4/01/2013 $ 2,002
AAA Aaa 555 6.40% due 4/01/2017 639
AAA Aaa 1,080 Oneida County, New York, GO, UT, Refunding, 5.50% due 3/15/2009 (b) 1,144
Port Authority of New York and New Jersey, Consolidated Revenue Bonds:
AA- A1 3,000 71st Series, 6.50% due 1/15/2026 3,170
AAA Aaa 2,000 71st Series, 6.50% due 1/15/2026 (b) 2,116
AAA Aaa 3,200 104th Series, 3rd Installment, 4.75% due 1/15/2026 (d) 2,924
AAA Aaa 4,000 Port Authority of New York and New Jersey, RITR, AMT, 108th Series, 7.285%
due 1/15/2017 (f)(h) 4,445
Port Authority of New York and New Jersey, Special Obligation Revenue Bonds
(Versatile Structure Obligation), VRDN (a):
A1+ VMIG1++ 10,200 AMT, Series 6, 4.10% due 12/01/2017 10,200
A1+ VMIG1++ 300 Series 2, 4% due 5/01/2019 300
A1+ VMIG1++ 3,000 Series 5, 4.05% due 8/01/2024 3,000
Syracuse, New York, COP (Syracuse Hancock International Airport), AMT (b):
AAA Aaa 3,650 6.625% due 1/01/2012 3,931
AAA Aaa 3,120 6.50% due 1/01/2017 3,342
BBB+ Baa1 4,000 Triborough Bridge and Tunnel Authority, New York (Convention Center Project),
Series E, 7.25% due 1/01/2010 4,691
Triborough Bridge and Tunnel Authority, New York, General Purpose Revenue
Refunding Bonds:
A+ Aa3 1,000 Series B, 5% due 1/01/2020 968
AAA Aaa 2,000 Series Y, 6.125% due 1/01/2021 (i) 2,262
AAA Aaa 5,075 Triborough Bridge and Tunnel Authority, New York, Special Obligation Refunding
Bonds, 6.25% due 1/01/2012 (d) 5,415
Total Investments (Cost--$557,678)--100.7% 579,553
Liabilities in Excess of Other Assets--(0.7%) (4,081)
--------
Net Assets--100.0% $575,472
========
<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 April 30, 1998.
(b)FGIC Insured.
(c)MBIA Insured.
(d)AMBAC Insured.
(e)FHA Insured.
(f)FSA Insured.
(g)Prerefunded.
(h)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 April 30, 1998.
(i)CAPMAC Insured.
(j)Represents a zero coupon bond; the interest rate shown is the
effective yield at the time of purchase.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
MuniYield New York Insured Fund II, Inc.
April 30, 1998
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of April 30, 1998
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$557,678,018)
(Note 1a) $579,552,524
Cash 982,360
Receivables:
Securities sold $ 39,557,886
Interest 8,124,833 47,682,719
------------
Prepaid expenses and other assets 15,728
------------
Total assets 628,233,331
------------
Liabilities: Payables:
Securities purchased 51,682,096
Dividends to shareholders (Note 1f) 550,284
Investment adviser (Note 2) 240,274 52,472,654
------------
Accrued expenses and other liabilities 288,904
------------
Total liabilities 52,761,558
------------
Net Assets: Net assets $575,471,773
============
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.05 per share (6,960 shares
of AMPS* issued and outstanding at $25,000 per share
liquidation preference) $174,000,000
Common Stock, par value $.10 per share (26,592,191 shares
issued and outstanding) $ 2,659,219
Paid-in capital in excess of par 380,433,873
Undistributed investment income--net 1,896,915
Accumulated realized capital losses on investments--net (Note 5) (5,392,740)
Unrealized appreciation on investments--net 21,874,506
------------
Total--Equivalent to $15.10 net asset value per share of
Common Stock (market price--$14.9375) 401,471,773
------------
Total capital $575,471,773
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
MuniYield New York Insured Fund II, Inc.
April 30, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months Ended
April 30, 1998
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 14,252,455
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 1,282,107
Commission fees (Note 4) 191,079
Professional fees 42,900
Transfer agent fees 40,456
Accounting services (Note 2) 25,876
Custodian fees 15,520
Listing fees 12,193
Directors' fees and expenses 10,643
Pricing fees 10,505
Printing and shareholder reports 4,730
Other 3,832
------------
Total expenses 1,639,841
------------
Investment income--net 12,612,614
------------
Realized & Unreal- Realized gain on investments--net 12,641,470
ized Gain Change in unrealized appreciation on investments--net (16,711,829)
(Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 8,542,255
(Notes 1b, ============
1d & 3):
See Notes to Financial Statements.
</TABLE>
MuniYield New York Insured Fund II, Inc.
April 30, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: April 30, 1998 Oct. 31, 1997
<S> <S> <C> <C>
Operations: Investment income--net $ 12,612,614 $ 20,346,467
Realized gain on investments--net 12,641,470 5,879,051
Change in unrealized appreciation on investments--net (16,711,829) 9,153,298
------------ ------------
Net increase in net assets resulting from operations 8,542,255 35,378,816
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (9,696,351) (15,161,332)
Shareholders Preferred Stock (2,676,900) (4,351,319)
(Note 1f): Realized gain on investments--net:
Common Stock (66,383) --
Preferred Stock (18,055) --
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (12,457,689) (19,512,651)
------------ ------------
Capital Stock Proceeds from issuance of Common Stock resulting from
Transactions reorganization 83,897,738 144,780,654
(Notes 1e & 4): Offering costs from issuance of Common Stock resulting
from reorganization (262,206) (366,791)
Proceeds from issuance of Preferred Stock resulting from
reorganization 30,000,000 74,000,000
------------ ------------
Net increase in net assets derived from capital stock
transactions 113,635,532 218,413,863
------------ ------------
Net Assets: Total increase in net assets 109,720,098 234,280,028
Beginning of period 465,751,675 231,471,647
------------ ------------
End of period* $575,471,773 $465,751,675
============ ============
<FN>
*Undistributed investment income--net $ 1,896,915 $ 1,657,552
============ ============
See Notes to Financial Statements.
</TABLE>
MuniYield New York Insured Fund II, Inc.
April 30, 1998
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended For the Year Ended
April 30, October 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 15.18 $ 14.53 $ 14.63 $ 13.13 $ 15.89
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .55 1.08 1.04 1.07 1.07
Realized and unrealized gain (loss) on
investments--net. (.08) .66 (.09) 1.50 (2.76)
-------- -------- -------- -------- --------
Total from investment operations .47 1.74 .95 2.57 (1.69)
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.43) (.84) (.82) (.84) (.87)
Realized gain on investments--net --++ -- -- -- (.01)
-------- -------- -------- -------- --------
Total dividends and distributions to
Common Stock shareholders (.43) (.84) (.82) (.84) (.88)
-------- -------- -------- -------- --------
Capital charge resulting from issuance of
Common Stock (.01) (.02) -- -- --
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:++++
Dividends and distributions to Preferred
Stock shareholders:
Investment income--net (.11) (.23) (.23) (.23) (.19)
Realized gain on investments--net --++ -- -- -- --++
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity (.11) (.23) (.23) (.23) (.19)
-------- -------- -------- -------- --------
Net asset value, end of period $ 15.10 $ 15.18 $ 14.53 $ 14.63 $ 13.13
======== ======== ======== ======== ========
Market price per share, end of period $14.9375 $ 14.25 $ 13.375 $ 13.25 $ 11.00
======== ======== ======== ======== ========
Total Investment Based on market price per share 7.88%+++ 13.15% 7.28% 28.61% (22.96%)
Return:** ======== ======== ======== ======== ========
Based on net asset value per share 2.37%+++ 10.95% 5.55% 18.96% (11.75%)
======== ======== ======== ======== ========
Ratios to Average Expenses .64%* .68% .71% .74% .74%
Net Assets:*** ======== ======== ======== ======== ========
Investment income--net 4.92%* 5.04% 5.00% 5.27% 5.09%
======== ======== ======== ======== ========
Supplemental Net assets, net of Preferred Stock, end
Data: of period (in thousands) $401,472 $321,752 $161,472 $162,655 $145,977
======== ======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $174,000 $144,000 $ 70,000 $ 70,000 $ 70,000
======== ======== ======== ======== ========
Portfolio turnover 87.53% 121.49% 118.28% 110.76% 36.79%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,307 $ 3,234 $ 3,307 $ 3,324 $ 3,085
======== ======== ======== ======== ========
Dividends Series A--Investment income--net $ 442 $ 865 $ 913 $ 910 $ 759
Per Share ======== ======== ======== ======== ========
On Preferred Series B--Investment income--net $ 423 $ 643 -- -- --
Stock ======== ======== ======== ======== ========
Outstanding:++++++ Series C--Investment income--net $ 430 $ 667 -- -- --
======== ======== ======== ======== ========
Series D--Investment income--net $ 151 -- -- -- --
======== ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, may result
in substantially different returns. Total investment returns exclude
the effects of sales loads.
***Do not reflect the effect of dividends to Preferred Stock
shareholders.
++Amount is less than $.01 per share.
++++The Fund's Preferred Stock was issued on September 16, 1992
(Series A), January 27, 1997 (Series B and Series C) and February 9,
1998 (Series D).
++++++Dividends per share have been adjusted to reflect a two-for-
one stock split that occurred on December 1, 1994.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
MuniYield New York Insured Fund II, Inc.
April 30, 1998
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. These unaudited financial
statements reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the
interim period presented. All such adjustments are of a normal
recurring nature. 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
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.
* 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.
MuniYield New York Insured Fund II, Inc.
April 30, 1998
NOTES TO FINANCIAL STATEMENTS (concluded)
(e) Offering costs--Direct expenses relating to the issuance of
Common Stock resulting from reorganization were charged to capital.
(f) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with 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
and securities acquired through the reorganization, for the six
months ended April 30, 1998 were $430,415,306 and $436,463,842,
respectively.
Net realized gains for the six months ended April 30, 1998 and net
unrealized gains as of April 30, 1998 were as follows:
Realized Unrealized
Gains Gains
Long-term investments $12,641,470 $21,874,506
----------- -----------
Total $12,641,470 $21,874,506
=========== ===========
As of April 30, 1998, net unrealized appreciation for Federal income
tax purposes aggregated $21,874,506, of which $25,621,415 related to
appreciated securities and $3,746,909 related to depreciated
securities. The aggregate cost of investments at April 30, 1998 for
Federal income tax purposes was $557,678,018.
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 six months ended April 30,
1998 and the year ended October 31, 1997 increased by 5,397,154 and
10,080,205, respectively, pursuant to a plan of reorganization.
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 yields in effect at April 30, 1998 were as
follows: Series A, 3.69%; Series B, 4.15%; Series C, 3.519%; and
Series D, 3.90%.
AMPS shares during the six months ended April 30, 1998 and the year
ended October 31, 1997 increased by 2,960 and 1,200, respectively,
pursuant to a plan of reorganization. As of April 30, 1998, there
were 6,960 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 six months ended
April 30, 1998, Merrill Lynch, Pierce, Fenner & Smith Inc., an
affiliate of FAM, earned $88,706 as commissions.
MuniYield New York Insured Fund II, Inc.
April 30, 1998
5. Capital Loss Carryforward:
At October 31, 1997, the Fund had a net capital loss carryforward of
approximately $12,333,000, of which $833,000 expires in 2002,
$10,359,000 expires in 2003 and $1,141,000 expires in 2004. This
amount will be available to offset like amounts of any future
taxable gains.
6. Acquisition of Taurus MuniNew York
Holdings, Inc.:
On February 9, 1998, the Fund acquired all of the net assets of
Taurus MuniNew York Holdings, Inc. pursuant to a plan of
reorganization. The acquisition was accomplished by a tax-free
exchange of 6,782,117 Common Stock shares and 1,200 AMPS shares of
Taurus MuniNew York Holdings, Inc. for 5,397,154 Common Stock shares
and 1,200 AMPS shares of the Fund. Taurus MuniNew York Holdings,
Inc. net assets on that date of $113,898,593, including $9,119,231
of unrealized appreciation and $458,687 of accumulated net realized
capital losses were combined with those of the Fund. The aggregate
net assets of the Fund immediately after the acquisition amounted to
$587,371,200.
7. Subsequent Event:
On May 7, 1998, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$.068960 per share, payable on May 28, 1998 to shareholders of
record as of May 21, 1998.
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
Roberto Roffo, Vice President
Gerald M. Richard, Treasurer
Philip M. Mandel, Secretary
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
