MUNIYIELD
NEW YORK
INSURED
FUND II, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Annual Report
October 31, 1999
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MuniYield New York Insured Fund II, Inc.
DEAR SHAREHOLDER
For the year ended October 31, 1999, the Common Stock of MuniYield New York
Insured Fund II, Inc. earned $0.822 per share income dividends, which included
earned and unpaid dividends of $0.068. This represents a net annualized yield of
6.23%, based on a month-end per share net asset value of $13.20. Over the same
period, the total investment return on the Fund's Common Stock was -11.03%,
based on a change in per share net asset value from $15.82 to $13.20, and
assuming reinvestment of $0.824 per share ordinary income dividends and $0.112
per share capital gains distributions.
For the six-month period ended October 31, 1999, the total investment return on
the Fund's Common Stock was -11.89%, based on a change in per share net asset
value from $15.44 to $13.20, and assuming reinvestment of $0.406 per share
income dividends.
For the six-month period ended October 31, 1999, the Fund's Auction Market
Preferred Stock had an average yield as follows: Series A, 3.34%; Series B,
3.22%; Series C, 2.77%; and Series D, 3.38%.
The Municipal Market Environment
The combination of steady strong domestic economic growth, improvement in
foreign economies (most notably in Japan) and increasing investor concerns
regarding potential increases in US inflation put upward pressure on bond yields
throughout the six-month period ended October 31, 1999. Continued strong US
employment growth, particularly the decline in the US unemployment rate to 4.2%
in early June, was among the reasons the Federal Reserve Board cited for raising
short-term interest rates in late June and again in late August. US Treasury
bond yields reacted by climbing above 6.375% by late October. However, at
October month-end, economic indicators were released suggesting that, despite
strong economic and employment growth in the third quarter, inflationary
pressures have remained extremely well-contained. This resulted in a significant
rally in the US Treasury bond market, pushing US Treasury bond yields downward
to end the six-month period at approximately 6.15%. During the period, yields on
30-year US Treasury bonds increased over 50 basis points (0.50%).
Long-term tax-exempt bond yields also rose during the six months ended October
31, 1999. Until early May, the municipal bond market was able to withstand much
of the upward pressure on bond yields. However, investor concerns of additional
moves by the Federal Reserve Board to moderate US economic growth and, more
importantly, the loss of the strong technical support that the tax-exempt market
enjoyed in early 1999 helped push municipal bond yields significantly higher for
the remainder of the period. The yields on long-term tax-exempt revenue bonds
rose nearly 90 basis points to 6.18% by October 31, 1999, as measured by the
Bond Buyer Revenue Bond Index.
In recent months, the significant decline in new tax-exempt bond issuance has
remained a positive factor within the municipal bond market, as it had been for
much of the past year. During the last six months, more than $110 billion in
long-term municipal bonds was issued, a decline of nearly 20% compared to the
same period a year ago. During the past three months, $55 billion in municipal
bonds was underwritten, representing a decline of nearly 10% compared to the
corresponding period in 1998. Additionally, in June and July, investors received
more than $40 billion in coupon income and proceeds from bond maturities and
early bond redemptions. These proceeds have generated considerable retail
investor interest, which has helped absorb the recent diminished supply.
Although tax-exempt bond yields are at their highest level in over two years and
have attracted significant retail investor interest, institutional demand has
declined sharply. Long-term municipal mutual funds have seen consistent outflows
in recent months as the yields of individual securities have risen faster than
those of larger, more diverse mutual funds. In
1
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MuniYield New York Insured Fund II, Inc. October 31, 1999
addition, the demand from property/casualty insurance companies has weakened as
a result of the losses, and anticipated losses, incurred as a result of the
series of damaging storms across much of the eastern United States.
Additionally, many institutional investors who were attracted to the municipal
bond market in recent years by historically attractive tax-exempt bond yield
ratios of over 90% have found other asset classes even more attractive. Even
with a reduced supply position, tax-exempt issuers have been forced to
repeatedly raise municipal bond yields in the attempt to attract adequate
demand.
The recent relative underperformance of the municipal bond market has resulted
in an opportunity for long-term investors to purchase tax-exempt issues whose
yields are nearly identical with taxable US Treasury securities. At October 31,
1999, long-term uninsured municipal revenue bond yields were 100% of comparable
US Treasury securities. In recent months, many taxable asset classes, such as
corporate bonds, mortgage-backed securities and US agency debt, have all
accelerated debt issuance. This acceleration was initiated largely to avoid
issuing securities at year-end and to minimize any associated Year 2000 (Y2K)
problems that may develop. However, this increased issuance has also resulted in
higher yield levels in the various asset classes as lower bond prices became
necessary to attract sufficient investor demand. Going forward, it is believed
that the pace of non-US government debt issuance is likely to slow
significantly. As the supply of this debt declines, we would expect many
institutional investors to return to the municipal bond market and the
attractive yield ratios available.
Looking ahead, it appears to us that long-term tax-exempt bond yields will
remain under pressure, trading in a broad range centered near current levels.
Investors are likely to remain concerned about future action by the Federal
Reserve Board in November. Y2K considerations may prohibit any further Federal
Reserve Board moves through the end of the year and the beginning of 2000. Any
improvement in bond prices will probably be contingent upon weakening in both US
employment growth and consumer spending. The 100 basis point rise in US Treasury
bond yields seen thus far this year may negatively impact US economic growth.
The US housing market will be among the first sectors likely to be affected, as
some declines have already been evidenced in response to higher mortgage rates.
We believe that it is also unrealistic to expect double-digit returns in US
equity markets to continue indefinitely. Much of the US consumer's wealth is
tied to recent stock market appreciation. Any slowing in these incredible growth
rates is likely to reduce consumer spending. We believe that these factors
suggest that the worst of the recent increase in bond yields has passed and
stable, if not slightly improving, bond prices may be expected.
In Conclusion
On September 23, 1999, MuniYield New York Insured Fund II, Inc.'s Board of
Directors approved a plan of reorganization, subject to shareholder approval and
certain other conditions, whereby MuniYield New York Insured Fund, Inc. would
acquire substantially all of the assets and liabilities of the Fund in exchange
for newly issued shares of MuniYield New York Insured Fund, Inc. These Funds are
registered, non-diversified, closed-end management investment companies. Both
entities have similar investment objectives and are managed by Fund Asset
Management, L.P.
We appreciate your investment in MuniYield New York Insured Fund II, Inc.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Director
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ Roberto Roffo
Roberto Roffo
Vice President and Portfolio Manager
November 30, 1999
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MuniYield New York Insured Fund II, Inc. October 31, 1999
PROXY RESULTS
During the six-month period ended October 31, 1999, MuniYield New York Insured
Fund II, Inc.'s Common Stock shareholders voted on the following proposal.
Proposal 1 was not approved at a shareholders' meeting on June 23, 1999. A
description of the proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
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Shares Voted Shares Voted Shares Voted
For Against Abstain
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<S> <C> <C> <C>
1. To approve an amendment to the Articles Supplementary of the Fund. 13,157,298 819,432 948,446
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</TABLE>
During the six-month period ended October 31, 1999, MuniYield New York Insured
Fund II, Inc.'s Preferred Stock shareholders voted on the following proposal.
Proposal 1 was not approved at a shareholders' meeting on June 23, 1999. A
description of the proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
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Shares Voted Shares Voted Shares Voted
For Against Abstain
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<S> <C> <C> <C> <C>
1. To approve an amendment to the Articles Supplementary
of the Fund as follows:
Series A 839 42 12
Series B 344 24 13
Series C 329 47 2
Series D 124 21 30
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</TABLE>
3
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MuniYield New York Insured Fund II, Inc. October 31, 1999
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.
As a part of its investment strategy, the Fund may invest in certain securities
whose potential income return is inversely related to changes in a floating
interest rate ("inverse floaters"). In general, income on inverse floaters will
decrease when short-term interest rates increase and increase when short-term
interest rates decrease. Investments in inverse floaters may be characterized as
derivative securities and may subject the Fund to the risks of reduced or
eliminated interest payments and losses of invested principal. In addition,
inverse floaters have the effect of providing investment leverage and, as a
result, the market value of such securities will generally be more volatile than
that of fixed-rate, tax-exempt securities. To the extent the Fund invests in
inverse floaters, the market value of the Fund's portfolio and the net asset
value of the Fund's shares may also be more volatile than if the Fund did not
invest in these securities.
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 at right.
AMT Alternative Minimum Tax (subject to)
GO General Obligation Bonds
IDA Industrial Development Authority
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
VRDN Variable Rate Demand Notes
4
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MuniYield New York Insured Fund II, Inc. October 31, 1999
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
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<S> <C> <C> <C> <C>
New York -- 96.7%
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NR* Aaa $ 4,095 Albany County, New York, Airport Authority, Airport Revenue Bonds, RITR, AMT,
Series RI-7, 7.92% due 12/15/2023 (c)(f) $ 3,961
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NR* Aaa 1,250 Appleridge Retirement Community Inc., New York, Mortgage Revenue Bonds (Appleridge
Project), 5.75% due 9/01/2041 (l) 1,179
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A A2 1,275 Battery Park City Authority, New York, Revenue Refunding Bonds, Junior Series A,
5.80% due 11/01/2022 1,233
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Buffalo, New York, GO (General Improvement), Series A (a):
AAA Aaa 3,020 4.50% due 2/01/2007 2,881
AAA Aaa 1,555 4.50% due 2/01/2008 1,464
AAA Aaa 1,605 4.75% due 2/01/2009 1,524
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AAA Aaa 1,065 Buffalo, New York, GO, Refunding, Series C, 4.25% due 12/01/2007 (a) 987
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Buffalo, New York, GO (School), Series B (c):
AAA Aaa 1,160 4.50% due 2/01/2007 1,107
AAA Aaa 605 4.50% due 2/01/2008 569
AAA Aaa 635 4.75% due 2/01/2009 603
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AAA Aaa 1,995 Buffalo, New York, Municipal Water Finance Authority, Water System Revenue Refunding
Bonds, Series B, 5% due 7/01/2026 (b) 1,707
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AAA Aaa 4,300 Buffalo, New York, Sewer Authority, Revenue Refunding Bonds, Series F,
6% due 7/01/2013 (b) 4,488
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Huntington, New York, GO, Refunding (a):
NR* Aaa 715 5.50% due 4/15/2010 727
NR* Aaa 485 5.50% due 4/15/2011 490
NR* Aaa 460 5.50% due 4/15/2012 461
NR* Aaa 455 5.50% due 4/15/2013 453
NR* Aaa 450 5.50% due 4/15/2014 444
NR* Aaa 450 5.50% due 4/15/2015 440
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A1+ VMIG1+ 1,050 Long Island Power Authority, New York, Electric System Revenue Bonds, VRDN,
Sub-Series 5, 3.50% due 5/01/2033 (g) 1,050
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Long Island Power Authority, New York, Electric System Revenue Refunding Bonds (d):
AAA Aaa 2,300 4.625% due 4/01/2016 1,945
AAA Aaa 10,000 Series A, 5.50% due 12/01/2023 9,355
AAA Aaa 19,300 Series A, 5.50% due 12/01/2029 17,861
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AAA Aaa 2,070 Metropolitan Transportation Authority, New York, Commuter Facilities Revenue Bonds,
Series A, 6.375% due 7/01/2004 (d)(e) 2,245
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AAA Aaa 5,180 Metropolitan Transportation Authority, New York, Commuter Facilities Revenue Refunding
Bonds, Series B, 4.75% due 7/01/2026 (b) 4,241
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Metropolitan Transportation Authority, New York, Dedicated Tax Fund Revenue Bonds,
Series A:
AAA Aaa 4,500 5.25% due 4/01/2023 (c) 4,052
AAA Aaa 16,840 4.75% due 4/01/2028 (b) 13,710
AAA Aaa 15,100 5% due 4/01/2029 (c) 12,841
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Metropolitan Transportation Authority, New York, Transportation Facilities Revenue Bonds:
AAA Aaa 2,400 Series A, 6.10% due 7/01/2006 (c)(e) 2,604
AAA Aaa 2,500 Series C-1, 5.50% due 7/01/2022 (b) 2,346
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</TABLE>
5
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MuniYield New York Insured Fund II, Inc. October 31, 1999
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York (continued)
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Metropolitan Transportation Authority, New York, Transportation Facilities Revenue
Refunding Bonds:
AAA Aaa $ 4,555 Series A, 4.75% due 7/01/2021 (d) $ 3,821
AAA Aaa 10,000 Series A, 4.75% due 7/01/2024 (d) 8,255
AAA Aaa 350 Series B, 4.75% due 7/01/2026 (b) 287
AAA Aaa 7,000 Series C, 4.75% due 7/01/2016 (c) 6,013
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AAA Aaa 1,005 Mount Sinai, New York, Union Free School District, GO, Refunding, 6.20% due 2/15/2019 (a) 1,052
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AAA Aaa 4,205 Nassau County, New York, GO, Series B, 5.25% due 6/01/2024 (a) 3,723
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AAA Aaa 13,950 New York City, New York, City Health and Hospital Corporation, Revenue Refunding Bonds
(Health System), Series A, 5.125% due 2/15/2014 (a) 12,955
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AAA NR* 3,400 New York City, New York, City Housing Development Corporation, M/F Rental Housing
Revenue Bonds (West 43rd Street Development), VRDN, AMT, Series A, 3.375%
due 4/15/2029 (g)(k) 3,400
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New York City, New York, City Municipal Water Finance Authority, Water and Sewer System
Revenue Bonds:
NR* A1 11,000 RITR, Series 21, 7.37% due 6/15/2029 (f) 9,978
AAA Aaa 1,050 Series A, 5% due 6/15/2027 (b) 897
AAA Aaa 21,450 Series B, 5.75% due 6/15/2029 (d) 20,681
A1+ VMIG1+ 300 VRDN, Series C, 3.50% due 6/15/2023 (b)(g) 300
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New York City, New York, City Municipal Water Finance Authority, Water and Sewer System
Revenue Refunding Bonds:
AAA Aaa 2,000 Series B, 5.25% due 6/15/2029 (a) 1,776
AAA Aaa 1,000 Series D, 4.75% due 6/15/2025 (b) 823
AAA Aaa 1,750 Series D, 4.75% due 6/15/2025 (d) 1,440
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NewYork City, New York, City Transitional Finance Authority Revenue Bonds, Future
Tax Secured:
AA Aa3 3,000 Series A, 6% due 8/15/2029 2,983
AA Aa3 4,500 Series B, 5.125% due 11/01/2015 4,125
AA Aa3 10,000 Series B, 4.75% due 11/15/2023 8,254
AAA Aaa 1,250 Series B, 4.75% due 11/15/2023 (b) 1,036
AA Aa3 10,000 Series C, 5.50% due 5/01/2025 9,277
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New York City, New York, GO, Refunding, Series B (a):
AAA NR* 380 7% due 2/01/2002 (e) 406
AAA Aaa 2,000 7% due 2/01/2017 2,122
AAA NR* 1,620 7% due 2/01/2018 1,718
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AAA Aaa 1,500 New York City, New York, GO, Series H, 5% due 3/15/2029 (b) 1,270
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AAA Aaa 11,500 New York City, New York, IDA, Civic Facility Revenue Bonds (USTA National Tennis Center
Project), 6.375% due 11/15/2014 (c) 12,154
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NR* A 7,485 New York City, New York, IDA, Special Facilities Revenue Bonds, RITR, AMT, Series RI-6,
7.995% due 1/01/2024 (f) 7,455
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</TABLE>
6
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MuniYield New York Insured Fund II, Inc. October 31, 1999
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
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<S> <C> <C> <C> <C>
New York (continued)
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New York State Dormitory Authority, Lease Revenue Bonds (Municipal Health Facilities
Improvement Program):
AAA Aaa $ 1,900 Series 1, 4.75% due 1/15/2029 (c) $ 1,537
AAA Aaa 2,000 Series A, 4.75% due 5/15/2024 (a) 1,652
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New York State Dormitory Authority Revenue Bonds:
NR* Aaa 1,000 (Brooklyn Hospital Center), 5.10% due 2/01/2019 (a)(h) 874
AAA NR* 2,460 (Champlain Valley Physicians), 5% due 7/01/2017 (j) 2,148
AAA Aaa 10,500 (City University System Consolidation), Third Generation, Series 1, 5.375% due
7/01/2025 (a) 9,594
AAA Aaa 3,000 (City University System), Third Resolution, Series 1, 6.25% due 7/01/2004 (a)(e) 3,250
AAA Aaa 6,290 (City University), Third Generation Reserves, Series 1, 6.30% due 7/01/2004 (a)(e) 6,806
AAA Aaa 14,400 (Memorial Sloan Kettering Cancer Center), 5.50% due 7/01/2023 (d) 13,686
A- A3 2,340 (Mental Health Services Facilities Improvement), Series B, 6% due 8/15/2016 2,374
AAA Aaa 4,350 (Mental Health Services Facilities Improvement), Series F, 4.50% due 8/15/2028 (a) 3,367
AAA Aaa 4,000 (Mount Sinai School of Medicine), Series A, 5.15% due 7/01/2024 (d) 3,565
AAA Aaa 1,105 (New School Social Research), 5.75% due 7/01/2026 (d) 1,067
NR* Aaa 8,125 RIB, Series 1, 7.675% due 7/01/2027 (d)(f) 7,858
NR* Aaa 2,830 RIB, Series 156, 7.163% due 8/01/2029 (a)(f)(h) 2,316
AAA NR* 6,350 (State University Educational Facilities), GO, Series B, 4.75% due 5/15/2028 (c) 5,168
AAA Aaa 2,000 (State University Educational Facilities), Series B, 5.75% due 5/15/2004 (b)(e) 2,091
AAA Aaa 5,000 (State University Educational Facilities), Series B, 4.75% due 5/15/2028 (d) 4,069
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New York State Dormitory Authority, Revenue Refunding Bonds:
AAA Aaa 1,375 (Consolidated City University System), Second Generation, Series A, 5.75% due
7/01/2018 (c) 1,364
AAA Aaa 5,500 (Consolidated City University System), Series 1, 5.125% due 7/01/2027 (d) 4,788
AAA Aaa 2,875 (Hamilton College), 4.75% due 7/01/2018 (d) 2,443
AAA A3 3,880 (Mental Health Services Facilities Improvement), Series C, 5.125% due 8/15/2011 (d) 3,719
AAA A3 4,710 (Mental Health Services Facilities Improvement), Series C, 5.125% due 8/15/2012 (d) 4,462
AAA Aaa 8,000 (Mental Health Services Facilities Improvement), Series D, 4.75% due 2/15/2025 (d) 6,563
AAA Aaa 5,400 (New York and Presbyterian Hospitals), 4.75% due 8/01/2027 (a)(h) 4,387
AAA Aaa 4,000 (North Shore University Hospital), 5.25% due 11/01/2019 (d) 3,585
AAA NR* 4,435 RIB, Series 45, 6.675% due 7/01/2025 (d)(f) 3,515
A A3 1,500 (State University Educational Facilities), Series A, 5.50% due 5/15/2019 1,419
A A3 2,000 (State University Educational Facilities), Series A, 5.25% due 5/15/2021 1,802
AAA Aaa 24,910 (State University Educational Facilities), Series A, 4.75% due 5/15/2025 (d) 20,501
AAA Aaa 1,000 (Wyckoff Heights Medical Center), Series H, 5.125% due 2/15/2008 (d) 991
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NR* Aaa 4,200 New York State Energy Research and Development Authority, Facilities Revenue Refunding
Bonds, RITR, Series 19, 8.22% due 8/15/2020 (a)(f) 4,281
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NR* NR* 14,355 New York State Energy Research and Development Authority, Gas Facilities Revenue Bonds,
RITR, Series 9, 7.02% due 1/01/2021 (d)(f) 12,743
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AAA Aaa 3,500 New York State Energy Research and Development Authority, PCR, Refunding (Central
Hudson Gas and Electric), Series A, 5.45% due 8/01/2027 (a) 3,222
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NR* Aa1 5,000 New York State Environmental Facilities Corporation, PCR, Refunding, RITR, Series RI-1,
7.645% due 6/15/2014 (f) 5,100
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NR* Aaa 6,575 New York State Local Government Assistance Corporation, RITR, Series 22, 8.02%
due 4/01/2024 (a)(f) 6,582
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A1 VMIG1+ 6,700 New York State Local Government Assistance Corporation Revenue Bonds, VRDN, Series G,
3.35% due 4/01/2025 (g) 6,700
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</TABLE>
7
<PAGE>
MuniYield New York Insured Fund II, Inc. October 31, 1999
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York (continued)
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New York State Medical Care Facilities Finance Agency Revenue Bonds:
AAA Aaa $ 2,485 (Brookdale Hospital Medical Center), Series A, 6.85% due 2/15/2005 (e) $ 2,754
AAA Aaa 2,695 (Health Center Project -- Second Mortgage), Series A, 6.375% due 11/15/2019 (a) 2,780
AAA Aaa 1,475 (Mental Health Services), Series A, 6% due 2/15/2005 (d)(e) 1,578
AAA Aaa 25 (Mental Health Services), Series A, 6% due 2/15/2025 (d) 25
AAA NR* 2,945 (Mental Health Services), Series E, 6.50% due 8/15/2004 (c)(e) 3,221
AAA Aaa 55 (Mental Health Services), Series E, 6.50% due 8/15/2015 (c) 58
AAA Aaa 6,850 (New York Hospital Mortgage), Series A, 6.80% due 2/15/2005 (a)(e)(h) 7,592
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NewYork State Medical Care Facilities Finance Agency Revenue Refunding Bonds
(Hospital & Nursing Homes) (h):
AAA NR* 2,000 Series B, 6.25% due 2/15/2025 2,058
AAA Aaa 5,200 Series C, 6.375% due 8/15/2029 (d) 5,322
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NR* Aa2 3,270 New York State Mortgage Agency, Homeowner Mortgage Revenue Bonds, AMT, Series 44,
7.50% due 4/01/2026 3,444
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NR* Aa2 2,495 New York State Mortgage Agency, Homeowner Mortgage Revenue Refunding Bonds, AMT,
Series 67, 5.80% due 10/01/2028 2,405
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New York State Mortgage Agency, Revenue Refunding Bonds, AMT:
NR* NR* 2,000 RITR, Series 24, 7.47% due 10/01/2028 (f) 1,855
NR* Aa2 4,750 Series 82, 5.65% due 4/01/2030 4,425
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AA- Aa3 19,000 New York State Thruway Authority, Revenue Refunding Bonds, Series E, 5% due 1/01/2025 16,284
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 New York State Thruway Authority, Service Contract Revenue Bonds (Local Highway and
Bridges), Series A-2, 5.375% due 4/01/2016 (d) 1,882
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New York State Urban Development Corporation Revenue Bonds (Correctional Facilities
Service Contract) (a):
AAA Aaa 6,520 Series B, 4.75% due 1/01/2018 5,516
AAA Aaa 5,000 Series C, 6% due 1/01/2029 4,993
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AAA NR* 2,000 New York State Urban Development Corporation, Revenue Refunding Bonds (Correctional
Facilities), 5% due 1/01/2019 (c) 1,741
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AAA Aaa 1,000 Niagara Falls, New York (Water Treatment Plant), GO, AMT, 7.25% due 11/01/2010 (d) 1,147
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AAA Aaa 2,705 Niagara, New York, Frontier Authority, Airport Revenue Bonds (Buffalo Niagara
International Airport), Series B, 5.50% due 4/01/2019 (d) 2,533
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,260 North Country, New York, Development Authority, Solid Waste Management System,
Revenue Refunding Bonds, 6% due 5/15/2015 (c) 1,317
- ------------------------------------------------------------------------------------------------------------------------------------
North Hempstead, New York, GO, Refunding, Series B (b):
AAA Aaa 1,745 6.40% due 4/01/2013 1,894
AAA Aaa 555 6.40% due 4/01/2017 593
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,080 Oneida County, New York, GO, Refunding, 5.50% due 3/15/2009 (b) 1,100
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,665 Oneida County, New York, IDA, Civic Facilities Revenue Bonds (Mohawk Valley), Series A,
5.20% due 2/01/2013 (c) 1,565
- ------------------------------------------------------------------------------------------------------------------------------------
Port Authority of New York and New Jersey, Consolidated Revenue Bonds (b):
AAA Aaa 6,200 116th Series, 4.50% due 10/01/2018 5,158
AAA Aaa 10,000 116th Series, 4.375% due 10/01/2033 7,494
AAA Aaa 4,740 AMT, 117th Series, Second Installment, 4.75% due 11/15/2016 4,108
- ------------------------------------------------------------------------------------------------------------------------------------
NR* Aaa 4,000 Port Authority of New York and New Jersey, RITR, AMT, 108th Series, 7.585%
due 1/15/2017 (c)(f) 3,978
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 Port Authority of New York and New Jersey, Special Obligation Revenue Bonds
(JFK International Air Terminal Project), AMT, Series 6, 5.75% due 12/01/2025 (d) 4,830
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
MuniYield New York Insured Fund II, Inc. October 31, 1999
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New York (concluded)
- ------------------------------------------------------------------------------------------------------------------------------------
Port Authority of New York and New Jersey, Special Obligation Revenue Refunding Bonds
(Versatile Structure Obligation), VRDN (g):
A1+ VMIG1+ $ 200 Series 2, 3.45% due 5/01/2019 $ 200
A1+ VMIG1+ 2,150 Series 5, 3.45% due 8/01/2024 2,150
- ------------------------------------------------------------------------------------------------------------------------------------
Triborough Bridge and Tunnel Authority, New York, General Purpose Revenue
Refunding Bonds:
A+ Aa3 1,000 Series B, 5% due 1/01/2020 883
AAA Aaa 2,000 Series Y, 6.125% due 1/01/2021 (i) 2,069
- ------------------------------------------------------------------------------------------------------------------------------------
BBB+ Baa1 4,000 Triborough Bridge and Tunnel Authority, New York, Revenue Refunding Bonds (Convention
Center Project), Series E, 7.25% due 1/01/2010 4,457
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,265 Triborough Bridge and Tunnel Authority, New York, Special Obligation Revenue Refunding
Bonds, Series A, 5.125% due 1/01/2011 (d) 2,210
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments (Cost -- $536,517) -- 96.7% 508,377
Other Assets Less Liabilities -- 3.3% 17,575
--------
Net Assets -- 100.0% $525,952
========
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) AMBAC Insured.
(b) FGIC Insured.
(c) FSA Insured.
(d) MBIA Insured.
(e) Prerefunded.
(f) The interest rate is subject to change periodically and inversely based
upon prevailing market rates. The interest rate shown is the rate in
effect at October 31, 1999.
(g) 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,
1999.
(h) FHA Insured.
(i) CAPMAC Insured.
(j) Connie Lee Insured.
(k) FNMA Collateralized.
(l) GNMA Collateralized.
* Not Rated.
+ Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Ernst & Young LLP.
See Notes to Financial Statements.
QUALITY PROFILE
The quality ratings of securities in the Fund as of October 31, 1999 were as
follows:
- --------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
- --------------------------------------------------------------------------------
AAA/Aaa ........................................................... 74.9%
AA/Aa ............................................................. 10.9
A/A ............................................................... 4.6
BBB/Baa ........................................................... 0.9
NR (Not Rated) .................................................... 2.8
Other* ............................................................ 2.6
- --------------------------------------------------------------------------------
*Temporary investments in short-term municipal securities.
9
<PAGE>
MuniYield New York Insured Fund II, Inc. October 31, 1999
FINANCIAL INFORMATION
Statement of Assets, Liabilities and Capital as of October 31, 1999
<TABLE>
<S> <C> <C> <C>
Assets: Investments, at value (identified cost -- $536,516,591) (Note 1a) ................ $508,376,866
Cash.............................................................................. 1,282
Receivables:
Interest ....................................................................... $ 9,346,965
Securities sold................................................................. 9,033,044 18,380,009
------------
Prepaid expenses and other assets................................................. 17,851
------------
Total assets ..................................................................... 526,776,008
------------
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities: Payables:
Dividends to shareholders (Note 1f)............................................. 467,078
Investment adviser (Note 2)..................................................... 254,524 721,602
------------
Accrued expenses and other liabilities............................................ 102,111
------------
Total liabilities ................................................................ 823,713
------------
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets: Net assets........................................................................ $525,952,295
============
- -----------------------------------------------------------------------------------------------------------------------------------
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.10 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 (26,668,886 shares issued
and outstanding)................................................................ $ 2,666,889
Paid-in capital in excess of par.................................................. 381,622,645
Undistributed investment income -- net ........................................... 2,168,734
Accumulated realized capital losses on investments -- net (Note 5)................ (2,589,045)
Accumulated distributions in excess of realized capital gains on
investments -- net (Note 1f)...................................................... (3,777,203)
Unrealized depreciation on investments -- net..................................... (28,139,725)
------------
Total -- Equivalent to $13.20 net asset value per share of Common Stock
(market price -- $12.375)......................................................... 351,952,295
------------
Total capital..................................................................... $525,952,295
============
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
10
<PAGE>
MuniYield New York Insured Fund II, Inc. October 31, 1999
FINANCIAL INFORMATION (continued)
Statement of Operations
<TABLE>
<CAPTION>
For the Year Ended
October 31, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income Interest and amortization of premium and discount earned.................... $ 30,915,686
(Note 1d):
- -----------------------------------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fees (Note 2)........................................... $ 2,858,464
Commission fees (Note 4).................................................... 440,783
Transfer agent fees......................................................... 160,037
Professional fees........................................................... 111,660
Accounting services (Note 2)................................................ 93,543
Custodian fees.............................................................. 32,361
Listing fees................................................................ 32,340
Printing and shareholder reports............................................ 26,218
Directors' fees and expenses................................................ 23,031
Pricing fees................................................................ 17,922
Other....................................................................... 37,348
-----------
Total expenses ............................................................. 3,833,707
------------
Investment income -- net.................................................... 27,081,979
------------
- -----------------------------------------------------------------------------------------------------------------------------------
Realized & Realized loss on investments -- net ........................................ (231,639)
Unrealized Loss on Change in unrealized appreciation/depreciation on investments -- net ....... (66,058,930)
Investments -- Net ------------
(Notes 1b, 1d & 3): Net Decrease in Net Assets Resulting from Operations ....................... $(39,208,590)
============
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
MuniYield New York Insured Fund II, Inc. October 31, 1999
FINANCIAL INFORMATION (continued)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Year Ended October 31,
------------------------------
Increase (Decrease) in Net Assets: 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations: Investment income -- net ................................................... $ 27,081,979 $ 26,653,137
Realized gain (loss) on investments -- net ................................. (231,639) 15,690,747
Change in unrealized appreciation/depreciation on investments -- net ....... (66,058,930) (667,130)
------------ ------------
Net increase (decrease) in net assets resulting from operations ............ (39,208,590) 41,676,754
------------ ------------
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends & Investment income -- net:
Distributions to Common Stock ............................................................. (21,935,574) (20,787,847)
Shareholders Preferred Stock .......................................................... (4,980,565) (5,533,891)
(Note 1f): Realized gain on investments -- net:
Common Stock ............................................................. -- (66,383)
Preferred Stock .......................................................... -- (18,055)
In excess of realized gain on investments -- net:
Common Stock ............................................................. (2,992,978) --
Preferred Stock .......................................................... (784,225) --
------------ ------------
Net decrease in net assets resulting from dividends and distributions
to shareholders ............................................................ (30,693,342) (26,406,176)
------------ ------------
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Stock Proceeds from issuance of Common Stock resulting from reorganization ....... -- 83,897,738
Transactions Offering costs from issuance of Common Stock resulting from reorganization . -- (262,206)
(Notes 1e & 4): Proceeds from issuance of Preferred Stock resulting from reorganization .... -- 30,000,000
Value of shares issued to Common Stock shareholders in reinvestment of
dividends and distributions .............................................. 1,196,442 --
------------ ------------
Net increase in net assets derived from capital stock transactions ......... 1,196,442 113,635,532
------------ ------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets: Total increase (decrease) in net assets .................................... (68,705,490) 128,906,110
Beginning of year .......................................................... 594,657,785 465,751,675
------------ ------------
End of year* ............................................................... $525,952,295 $594,657,785
============ ============
- ------------------------------------------------------------------------------------------------------------------------------------
*Undistributed investment income -- net (Note 1g) ......................... $ 2,168,734 $ 2,000,229
============ ============
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
MuniYield New York Insured Fund II, Inc. October 31, 1999
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: 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year ............ $ 15.82 $ 15.18 $ 14.53 $ 14.63 $ 13.13
Operating -------- -------- -------- -------- --------
Performance: Investment income -- net ...................... 1.01 1.05 1.08 1.04 1.07
Realized and unrealized gain (loss)
on investments -- net........................ (2.48) .66 .66 (.09) 1.50
-------- -------- -------- -------- --------
Total from investment operations .............. (1.47) 1.71 1.74 .95 2.57
-------- -------- -------- -------- --------
Less dividends and distributions
to Common Stock shareholders:
Investment income -- net .................... (.82) (.84) (.84) (.82) (.84)
Realized gain on investments -- net ......... -- --+ -- -- --
In excess of realized gain on
investments -- net ......................... (.11) -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions to
Common Stock shareholders ..................... (.93) (.84) (.84) (.82) (.84)
-------- -------- -------- -------- --------
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 .................. (.19) (.22) (.23) (.23) (.23)
Realized gain on investments -- net ....... -- --+ -- -- --
In excess of realized gain
on investments -- net .................... (.03) -- -- -- --
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity ...... (.22) (.22) (.23) (.23) (.23)
-------- -------- -------- -------- --------
Net asset value, end of year .................. $ 13.20 $ 15.82 $ 15.18 $ 14.53 $ 14.63
======== ======== ======== ======== ========
Market price per share, end of year ........... $ 12.375 $15.4375 $ 14.25 $ 13.375 $ 13.25
======== ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on market price per share ............... (14.52%) 14.60% 13.15% 7.28% 28.61%
Return:* ======== ======== ======== ======== ========
Based on net asset value per share ............ (11.03%) 10.24% 10.95% 5.55% 18.96%
======== ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios Based on Total expenses** .............................. .96% .91% .99% 1.02% 1.08%
Average Net Assets ======== ======== ======== ======== ========
Of Common Stock: Total investment income -- net** .............. 6.78% 6.90% 7.38% 7.16% 7.68%
======== ======== ======== ======== ========
Amount of dividends to Preferred Stock
shareholders ................................ 1.25% 1.43% 1.58% 1.58% 1.65%
======== ======== ======== ======== ========
Investment income -- net, to Common
Stock shareholders .......................... 5.53% 5.47% 5.80% 5.58% 6.03%
======== ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios Based on Total expenses ................................ .67% .64% .68% .71% .74%
Total Average ======== ======== ======== ======== ========
Net Assets:++** Total investment income -- net ................ 4.73% 4.81% 5.07% 5.00% 5.27%
======== ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios Based on Dividends to Preferred Stock shareholders ..... 2.87% 3.34% 3.45% 3.65% 3.64%
Average Net Assets ======== ======== ======== ======== ========
Of Preferred Stock:
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, net of Preferred Stock, end of year
Data: (in thousands) ................................ $351,952 $420,658 $321,752 $161,472 $162,655
======== ======== ======== ======== ========
Preferred Stock outstanding, end of year
(in thousands) ................................ $174,000 $174,000 $144,000 $ 70,000 $ 70,000
======== ======== ======== ======== ========
Portfolio turnover ............................ 108.34% 136.43% 121.49% 118.28% 110.76%
======== ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
Leverage: Asset coverage per $1,000 ..................... $ 3,023 $ 3,418 $ 3,234 $ 3,307 $ 3,324
======== ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends Per Share Series A -- Investment income -- net .......... $ 729 $ 849 $ 865 $ 913 $ 910
On Preferred Stock ======== ======== ======== ======== ========
Outstanding: Series B -- Investment income -- net .......... $ 713 $ 825 $ 643 -- --
======== ======== ======== ======== ========
Series C -- Investment income -- net .......... $ 681 $ 785 $ 667 -- --
======== ======== ======== ======== ========
Series D -- Investment income -- net .......... $ 717 $ 628 -- -- --
======== ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
</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
charges.
** Do not reflect the effect of dividends to Preferred Stock
shareholders.
+ Amount is less than $.01 per share.
++ Includes Common and Preferred Stock average net assets.
+++ 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).
See Notes to Financial Statements.
13
<PAGE>
MuniYield New York Insured Fund II, Inc. October 31, 1999
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's financial statements are prepared in accordance
with generally accepted accounting principles, which may require the use of
management accruals and estimates. The Fund determines and makes available for
publication the net asset value of its Common Stock on a weekly basis. The
Fund's Common Stock is listed on the New York Stock Exchange under the symbol
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 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
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.
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.
14
<PAGE>
MuniYield New York Insured Fund II, Inc. October 31, 1999
NOTES TO FINANCIAL STATEMENTS (continued)
(d) Security transactions and investment income -- Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Interest income is recognized on the accrual basis. Discounts and market
premiums are amortized into interest income. Realized gains and losses on
security transactions are determined on the identified cost basis.
(e) Offering 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. Distributions in excess of realized capital gains are due
primarily to differing tax treatments for futures transactions.
(g) Reclassification -- Generally accepted accounting principles require that
certain components of net assets be adjusted to reflect permanent differences
between financial and tax reporting. Accordingly, current year's permanent
book/tax differences of $2,665 have been reclassified between accumulated
distributions in excess of 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 .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, 1999 were $593,018,047 and $605,986,960, respectively.
Net realized gains (losses) for the year ended October 31, 1999 and net
unrealized losses as of October 31, 1999 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains (Losses) Losses
- --------------------------------------------------------------------------------
Long-term investments ............... $ (1,793,847) $(28,139,725)
Financial futures contracts ......... 1,562,208 --
------------ ------------
Total ............................... $ (231,639) $(28,139,725)
============ ============
- --------------------------------------------------------------------------------
As of October 31, 1999, net unrealized depreciation for Federal income tax
purposes aggregated $29,194,911, of which $4,589,829 related to appreciated
securities and $33,784,740 related to depreciated securities. The aggregate cost
of investments at October 31, 1999 for Federal income tax purposes was
$537,571,777.
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 year ended October 31, 1999 increased
by 76,695 as a result of dividend reinvestment and during the year ended October
31, 1998 increased by 5,397,154 pursuant to a plan of reorganization.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred Stock of the
Fund, with a par value of
15
<PAGE>
MuniYield New York Insured Fund II, Inc. October 31, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
$.10 per share and a liquidation preference of $25,000 per share, that entitle
their holders to receive cash dividends at an annual rate that may vary for the
successive dividend periods. The yields in effect at October 31, 1999 were as
follows: Series A, 3.44%; Series B, 2.90%; Series C, 3.70%; and Series D, 3.40%.
Shares issued and outstanding during the year ended October 31, 1999 remained
constant and during the year ended October 31, 1998 increased by 1,200 pursuant
to a plan of reorganization.
The Fund pays commissions to certain broker-dealers at the end of each auction
at an annual rate ranging from .25% to .375%, calculated on the proceeds of each
auction. For the year ended October 31, 1999, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, an affiliate of FAM, earned $197,386 as commissions.
5. Capital Loss Carryforward:
At October 31, 1999, the Fund had a net capital loss carryforward of
approximately $3,772,000, all of which expires in 2007. This amount will be
available to offset like amounts of any future taxable gains.
6. Reorganization Plan:
On September 23, 1999, the Fund's Board of Directors approved a plan of
reorganization, subject to shareholder approval and certain other conditions,
whereby MuniYield New York Insured Fund, Inc. would acquire substantially all of
the assets and liabilities of the Fund in exchange for newly issued shares of
MuniYield New York Insured Fund, Inc. These Funds are registered,
non-diversified, closed-end management investment companies. Both entities have
similar investment objectives and are managed by FAM.
7. Subsequent Event:
On November 8, 1999, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.068000 per share,
payable on November 29, 1999 to shareholders of record as of November 22, 1999.
16
<PAGE>
MuniYield New York Insured Fund II, Inc. October 31, 1999
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors,
MuniYield New York Insured Fund II, Inc.
We have audited the accompanying statement of assets, liabilities and capital of
MuniYield New York Insured Fund II, Inc., including the schedule of investments,
as of October 31, 1999, and the related statement of operations for the year
then ended, the statements of changes in net assets for each of the two years in
the period then ended and financial highlights for each of the three years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for each of the two years in the period ended
October 31, 1996 of MuniYield New York Insured Fund II, Inc. were audited by
other auditors whose report, dated December 3, 1996, expressed an unqualified
opinion on such financial highlights.
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 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 and financial highlights. Our procedures included confirmation of
securities owned as of October 31, 1999 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, the financial statements and financial highlights referred to
above and audited by us present fairly, in all material respects, the financial
position of MuniYield New York Insured Fund II, Inc. at October 31, 1999, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended and the financial highlights
for each of the three years in the period then ended, in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
MetroPark, New Jersey
December 3, 1999
17
<PAGE>
MuniYield New York Insured Fund II, Inc. October 31, 1999
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, 1999 qualify as
tax-exempt interest dividends for Federal income tax purposes. Additionally, the
following table summarizes the taxable ordinary income distributions paid by the
Fund during the year:
- --------------------------------------------------------------------------------
Long-Term
Payable Ordinary Capital
Date Income Gains*
- --------------------------------------------------------------------------------
Common Stock Shareholders 12/30/98 $.000607 $.111944
- --------------------------------------------------------------------------------
Preferred Stock Shareholders: Series A 11/09/98 $.15 $26.17
11/16/98 $.13 $23.39
11/23/98 $.13 $26.09
11/30/98 $.13 $23.85
12/07/98 $.12 $20.98
------------------------------------------------
Series B 11/12/98 $.19 $33.20
11/18/98 $.15 $27.37
11/25/98 $.15 $30.60
12/02/98 $.13 $23.85
12/09/98 $.02 $ .11
------------------------------------------------
Series C 12/03/98 $.53 $98.96
12/31/98 $.07 $11.74
------------------------------------------------
Series D 11/25/98 $.48 $88.54
- --------------------------------------------------------------------------------
*All of the distributions are subject to the 20% tax rate.
Please retain this information for your records.
YEAR 2000 ISSUES (unaudited)
Many computer systems were designed using only two digits to designate years.
These systems may not be able to distinguish the Year 2000 from the Year 1900
(commonly known as the "Year 2000 Problem"). The Fund could be adversely
affected if the computer systems used by the Fund's management or other Fund
service providers do not properly address this problem before January 1, 2000.
The Fund's management expects to have addressed this problem before then, and
does not anticipate that the services it provides will be adversely affected.
The Fund's other service providers have told the Fund's management that they
also expect to resolve the Year 2000 Problem, and the Fund's management will
continue to monitor the situation as the Year 2000 approaches. However, if the
problem has not been fully addressed, the Fund could be negatively affected. The
Year 2000 Problem could also have a negative impact on the securities in which
the Fund invests and this could hurt the Fund's investment returns.
18
<PAGE>
MuniYield New York Insured Fund II, Inc. October 31, 1999
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.
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
James H. Bodurtha, Director
Herbert I. London, Director
Robert R. Martin, Director
Joseph L. May, Director
Andre F. Perold, Director
Arthur Zeikel, Director
Vincent R. Giordano, Senior Vice President
Kenneth A. Jacob, Vice President
Roberto Roffo, Vice President
Donald C. Burke, Vice President and Treasurer
Alice A. Pellegrino, 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:
The Bank of New York
100 Church Street
New York, NY 10286
NYSE Symbol
MYT
19
<PAGE>
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 #16350 -- 10/99
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