MUNIYIELD
NEW YORK
INSURED
FUND II, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
April 30, 1999
<PAGE>
MuniYield New York Insured Fund II, Inc.
TO OUR SHAREHOLDERS
For the six months ended April 30, 1999, the Common Stock of MuniYield New York
Insured Fund II, Inc. earned $0.416 per share income dividends, which included
earned and unpaid dividends of $0.068. This represents a net annualized yield of
5.43%, based on a month-end per share net asset value of $15.44. Over the same
period, the total investment return on the Fund's Common Stock was +0.98%, based
on a change in per share net asset value from $15.82 to $15.44, and assuming
reinvestment of $0.417 per share ordi nary income dividends and $0.112 per share
capital gains distributions.
For the six-month period ended April 30, 1999, the Fund's Auction Market
Preferred Stock had an average yield as follows: Series A, 3.49%; Series B,
3.18%; Series C, 4.07%; and Series D, 3.09%.
The Municipal Market Environment
During the six months ended April 30, 1999, long-term bond yields generally
moved higher. From November 1998 through mid-January 1999, long-term bond yields
traded in a relatively narrow range. However, during February, a number of
economic indicators were released that suggested that economic growth in the
United States would likely remain strong throughout most of 1999. Consequently,
long-term US Treasury bond yields rose more than 60 basis points (0.60%) to
5.70% by early March. During the remainder of the six-month period, US Treasury
bond yields traded between 5.50% and 5.70% as the lack of inflationary pressures
offset much of the concerns generated by continued strong economic growth.
During most of the period, long-term, uninsured tax-exempt bond yields exhibited
far less volatility and were largely stable. Also, long-term municipal bond
yields rose just 5 basis points to 5.29% at the end of April 1999, as measured
by the Bond Buyer Revenue Bond Index.
In recent months, the tax-exempt market was better able to withstand much of the
upward pressure on bond yields because of its stronger technical position. While
the continued positive inflationary environment limited some of the recent
increases in taxable bond yields, a deteriorating supply/demand position helped
push taxable bond yields significantly higher than municipal bond yields. Much
of the US Treasury bond market's underperformance in recent months can be
attributed to the large amounts of taxable corporate issuance. Large taxable
corporate underwritings reduced the demand for US Government securities in
recent months, pushing US Treasury bond yields higher.
On the other hand, the tax-exempt bond market enjoyed only limited new-issue
supply. During the six months ended April 30, 1999, more than $123 billion in
new long-term tax-exempt securities was underwritten, a decline of 10% compared
to the same period a year ago. Municipalities issued less than $60 billion in
long-term tax-exempt securities during the three months ended April 30, 1999, a
decline of 25% compared to the April 30, 1998 quarter. More recently, the rate
of new tax-exempt issuance has declined even further. During April 1999, just
over $15 billion in long-term tax-exempt securities was marketed, a decline of
over 33% compared to April 1998 levels. As municipal bond yields fell and
stabilized in recent quarters, the ability of municipalities to refinance
existing higher-couponed debt declined. This led to a significant decrease in
refunding issuance and an overall drop in new municipal bond supply. When
coupled with ongoing, moderate retail and insti tutional demand, the tax-exempt
bond market was able to avoid much of the yield volatility exhibited by US
Treasury securities.
Looking ahead, the expected combination of moderate economic growth in the
United States and continued negligible inflation suggests a relatively stable
interest rate environment. However, in recent years, bond yields reached their
annual peaks in early May and declined for the remainder of the year. A
meaningful decline in fixed-income bond yields would require either evidence of
a significant slowdown in the US economy or the resumption of concerns regarding
renewed shocks to the world's
1
<PAGE>
MuniYield New York Insured Fund II, Inc. April 30, 1999
economic system. Currently, neither condition exists or seems likely in the
immediate future. In our opinion, this suggests a continuation of the narrow
trading ranges seen in recent months.
Portfolio Strategy
For the six months ended April 30, 1999, we managed the Fund with the intention
of seeking to sustain an appealing level of tax-exempt income while
simultaneously providing an attractive total return. Throughout the period, our
strategy was to maintain a fully invested position using any market rallies to
sell aggressively structured bonds and buy larger coupon, defensively structured
bonds. Our goal was to increase the Fund's income and to seek to mute any
volatility in the Fund's net asset value.
Although the overall trend in interest rates was up for the six-month period,
the municipal market was relatively impervious to the backup in taxable interest
rates. The main reason for the outperformance of the municipal market was the
favorable supply/demand relationship and the attractive valuation of municipal
bonds relative to Treasury securities. Since these conditions still exist, we
believe that municipal bonds will continue to do well compared to Treasury
issues. We expect to stay fully invested with larger coupon bonds in an effort
to increase tax-exempt income until there is sufficient evidence that interest
rates have risen to a level not consistent with economic activity and the
current low level of inflation.
Short-term tax-exempt yields exhibited considerable volatility in recent months.
Interest rates paid to the Fund's Preferred Stock shareholders traded below 3%
in December 1998, reflecting heightened investor demand at year-end. Current
short-term interest rates reflect tax season-related pressures, which we expect
to abate soon. During the six-month period ended April 30, 1999, leveraging
generated a significant incremental yield to the Fund's Common Stock
shareholders. Because we believe that the Federal Reserve Board's monetary
policy is likely to remain in a narrow range for the remainder of the year, we
expect short-term tax-exempt interest rates to remain at, or slightly below,
current levels. However, should the spread between short-term and long-term
interest rates narrow, the benefits of the leverage will decline and, as a
result, reduce the yield to the Fund's Common Stock. (For a complete explanation
of the benefits and risks of leveraging, see page 4 of this report to
shareholders.)
In Conclusion
We appreciate your ongoing interest in MuniYield New York Insured Fund II, Inc.,
and we look forward to serving your investment needs in the months and years to
come.
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
June 4, 1999
================================================================================
After more than 20 years of service, Arthur Zeikel recently retired as Chairman
of Merrill Lynch Asset Management, L.P. (MLAM). Mr. Zeikel served as President
of MLAM from 1977 to 1997 and as Chairman since December 1997. Mr. Zeikel is one
of the country's most respected leaders in asset management and presided over
the growth of Merrill Lynch's asset management business. During his tenure,
client assets under management grew from $300 million to over $500 billion. Mr.
Zeikel will remain on MuniYield New York Insured Fund II, Inc.'s Board of
Directors. We are pleased to announce that Terry K. Glenn has been elected
President and Director of the Fund. Mr. Glenn has held the position of Executive
Vice President of MLAM since 1983.
Mr. Zeikel's colleagues at MLAM join the Fund's Board of Directors in wishing
him well in his retirement from Merrill Lynch and are pleased that he will
continue as a member of the Fund's Board of Directors.
================================================================================
2
<PAGE>
MuniYield New York Insured Fund II, Inc. April 30, 1999
PROXY RESULTS
During the six-month period ended April 30, 1999, MuniYield New York Insured
Fund II, Inc.'s Common Stock shareholders voted on the following proposals.
Proposals 1 and 2 were approved at a shareholders' meeting on April 21, 1999.
The meeting was adjourned with respect to Proposal 3. The description of each
proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. To elect the Fund's Directors: Terry K. Glenn 7,584,758 222,357
James H. Bodurtha 7,582,946 224,169
Herbert I. London 7,583,534 223,581
Robert R. Martin 7,583,141 223,974
Arthur Zeikel 7,583,538 223,577
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Ernst & Young LLP as the Fund's
independent auditors for the current fiscal year. 7,576,664 96,378 134,071
- -----------------------------------------------------------------------------------------------------------------
3. To approve an amendment to the Articles Supplementary of the Fund. Adjourned Adjourned Adjourned
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
During the six-month period ended April 30, 1999, MuniYield New York Insured
Fund II, Inc.'s Preferred Stock shareholders voted on the following proposals.
Proposals 1 and 2 were approved at a shareholders' meeting on April 21, 1999.
The meeting was adjourned with respect to Proposal 3. The description of each
proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. To elect the Fund's Board of Directors: Terry K. Glenn, James H. Bodurtha,
Herbert I. London, Robert R. Martin, Joseph L. May, Andre F. Perold and
Arthur Zeikel as follows:
Series A 2,656 7
Series B 1,849 12
Series C 958 9
Series D 1,165 34
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Ernst & Young LLP as the Fund's independent
auditors for the current fiscal year as follows:
Series A 2,640 7 16
Series B 1,861 1 0
Series C 966 0 2
Series D 1,113 86 0
- -----------------------------------------------------------------------------------------------------------------
3. To approve an amendment to the Articles Supplementary of the Fund as follows:
Series A Adjourned Adjourned Adjourned
Series B Adjourned Adjourned Adjourned
Series C Adjourned Adjourned Adjourned
Series D Adjourned Adjourned Adjourned
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
MuniYield New York Insured Fund II, Inc. April 30, 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
differ ential between short-term and long-term interest rates, the incremental
yield pickup on the Common Stock will be reduced or eliminated completely. At
the same time, the market value of the fund's Common Stock (that is, its price
as listed on the New York Stock Exchange) may, as a result, decline.
Furthermore, if long-term interest rates rise, the Common Stock's net asset
value will reflect the full decline in the price of the portfolio's investments,
since the value of the fund's Preferred Stock does not fluctuate. In addition to
the decline in net asset value, the market value of the fund's Common Stock may
also decline.
As a part of its investment strategy, the Fund may invest in certain securities
whose potential income return is inversely related to changes in a floating
interest rate ("inverse floaters"). In general, 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
der ivative 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.
4
<PAGE>
MuniYield New York Insured Fund II, Inc. April 30, 1999
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NEW YORK-98.4%
- ------------------------------------------------------------------------------------------------------------------
NR* Aaa $ 4,095 Albany County, New York, Airport Authority, Airport Revenue Bonds,
RITR, Series RI-97-7, 7.52% due 12/15/2023 (c)(f) $ 4,829
- ------------------------------------------------------------------------------------------------------------------
A A2 1,275 Battery Park City Authority, New York, Revenue Refunding Bonds,
Junior Series A, 5.80% due 11/01/2022 1,355
- ------------------------------------------------------------------------------------------------------------------
Buffalo, New York, GO (General Improvement), Series A (a):
AAA Aaa 3,020 4.50% due 2/01/2007 3,071
AAA Aaa 1,555 4.50% due 2/01/2008 1,579
AAA Aaa 1,605 4.75% due 2/01/2009 1,650
- ------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,065 Buffalo, New York, GO, Refunding, Series C, 4.25% due 12/01/2007 (a) 1,067
- ------------------------------------------------------------------------------------------------------------------
Buffalo, New York, GO (School), Series B (c):
AAA Aaa 1,160 4.50% due 2/01/2007 1,180
AAA Aaa 605 4.50% due 2/01/2008 614
AAA Aaa 635 4.75% due 2/01/2009 653
- ------------------------------------------------------------------------------------------------------------------
AAA Aaa 4,300 Buffalo, New York, Sewer Authority, Revenue Refunding Bonds, Series F,
6% due 7/01/2013 (b) 4,897
- ------------------------------------------------------------------------------------------------------------------
Huntington, New York, GO, Refunding (a):
NR* Aaa 715 5.50% due 4/15/2010 776
NR* Aaa 485 5.50% due 4/15/2011 526
NR* Aaa 460 5.50% due 4/15/2012 499
NR* Aaa 455 5.50% due 4/15/2013 494
NR* Aaa 450 5.50% due 4/15/2014 489
NR* Aaa 450 5.50% due 4/15/2015 489
- ------------------------------------------------------------------------------------------------------------------
Long Island Power Authority, New York, Electric System Revenue Bonds:
AAA Aaa 10,000 Series A, 5.50% due 12/01/2023 (d) 10,507
A- Baa1 5,000 Series A, 5.50% due 12/01/2029 5,134
AAA Aaa 14,300 Series A, 5.50% due 12/01/2029 (d) 14,747
A1+ VMIG1+ 2,600 VRDN, Sub-Series 5, 4.25% due 5/01/2033 (g) 2,600
A1+ VMIG1+ 2,800 VRDN, Sub-Series 7, 4.10% due 4/01/2025 (d)(g) 2,800
- ------------------------------------------------------------------------------------------------------------------
Metropolitan Transportation Authority, New York, Commuter Facilities
Revenue Bonds:
AAA Aaa 9,570 Series A, 6.375% due 7/01/2004 (d)(e) 10,805
AAA Aaa 15,770 Series C-1, 5.375% due 7/01/2027 (b) 16,248
- ------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,680 Metropolitan Transportation Authority, New York, Commuter Facilities
Revenue Refunding Bonds, Series B, 4.75% due 7/01/2026 (b) 1,580
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
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
DATES Daily Adjustable Tax-Exempt Securities
GO General Obligation Bonds
IDA Industrial Development Authority
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
VRDN Variable Rate Demand Notes
5
<PAGE>
MuniYield New York Insured Fund II, Inc. April 30, 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)
- ------------------------------------------------------------------------------------------------------------------
Metropolitan Transportation Authority, New York, Transit Facilities
Revenue Bonds:
AAA Aaa $ 2,000 Series A, 6.10% due 7/01/2006 (c)(e) $ 2,281
AAA Aaa 2,400 Series A, 6.10% due 7/01/2006 (c)(e) 2,738
AAA Aaa 2,500 Series C-1, 5.50% due 7/01/2022 (b) 2,618
AAA Aaa 20,000 Series O, 6.375% due 7/01/2004 (d)(e) 22,582
- ------------------------------------------------------------------------------------------------------------------
AAA Aaa 3,555 Metropolitan Transportation Authority, New York, Transit Facilities
Revenue Refunding Bonds, Series A, 4.75% due 7/01/2021 (d) 3,377
- ------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,005 Mount Sinai, New York, Union Free School District, GO, Refunding,
6.20% due 2/15/2019 (a) 1,169
- ------------------------------------------------------------------------------------------------------------------
Nassau County, New York, GO, Series P (b)(e):
AAA Aaa 3,250 6.50% due 11/01/2004 3,751
AAA Aaa 3,685 6.50% due 11/01/2004 4,253
- ------------------------------------------------------------------------------------------------------------------
AAA Aaa 3,000 New York City, New York, Cultural Resources Trust, Revenue
Refunding Bonds (Museum of Modern Art), Series A, 5.50% due 1/01/2021 (a) 3,139
- ------------------------------------------------------------------------------------------------------------------
New York City, New York, GO, Refunding:
AAA Aaa 2,000 Series B, 7% due 2/01/2017 (a) 2,183
AAA Aaa 2,000 Series B, 7% due 2/01/2018 (a) 2,183
AAA NR* 15,000 Series F, 5.375% due 8/01/2019 (d) 15,412
- ------------------------------------------------------------------------------------------------------------------
A1+ VMIG1+ 333 New York City, New York, GO, VRDN, Series B, Sub-Series B-5,
4.10% due 8/15/2022 (d)(g) 333
- ------------------------------------------------------------------------------------------------------------------
AAA Aaa 5,950 New York City, New York, Health and Hospital Corporation, Revenue
Refunding Bonds (Health System), Series A, 5.125% due 2/15/2014 (a) 6,116
- ------------------------------------------------------------------------------------------------------------------
New York City, New York, IDA, Civic Facility Revenue Bonds:
NR* Aaa 885 (Anti-Defamation League Foundation), Series A, 5.50% due 6/01/2022 (d) 928
AAA Aaa 12,500 (USTA National Tennis Center Project), 6.375% due 11/15/2014 (c) 13,958
- ------------------------------------------------------------------------------------------------------------------
NR* A 7,485 New York City, New York, IDA, Special Facilities Revenue Bonds,
RITR, Series RI-6, 7.545% due 1/01/2024 (f) 8,381
- ------------------------------------------------------------------------------------------------------------------
New York City, New York, Municipal Water Finance Authority, Water and
Sewer System Revenue Bonds:
NR* A1 11,000 RITR, Series 21, 6.97% due 6/15/2029 (f) 12,611
AA Aaa 1,050 Series A, 5% due 6/15/2027 (b) 1,024
- ------------------------------------------------------------------------------------------------------------------
New York City, New York, Municipal Water Finance Authority, Water and
Sewer System Revenue Refunding Bonds:
AAA Aaa 6,000 Series B, 5.25% due 6/15/2029 (a) 6,073
AAA NR* 15,000 Series B, 5.25% due 6/15/2029 (c) 15,183
AAA Aaa 1,750 Series D, 4.75% due 6/15/2025 (d) 1,648
AAA Aaa 1,500 Series F, 5.50% due 6/15/2023 (d) 1,553
- ------------------------------------------------------------------------------------------------------------------
New York City, New York, Transitional Finance Authority Revenue Bonds
(Future Tax Secured):
AA Aa3 7,650 Series B, 5.125% due 11/01/2015 7,806
AAA Aaa 1,250 Series B, 4.75% due 11/15/2023 (b) 1,181
AAA Aaa 10,000 Series B, 4.50% due 11/15/2027 (b) 9,020
NR* VMIG1+ 6,400 VRDN, Series C, 4.20% due 5/01/2028 (g) 6,400
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
MuniYield New York Insured Fund II, Inc. April 30, 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)
- ------------------------------------------------------------------------------------------------------------------
New York State Dormitory Authority Revenue Bonds:
NR* Aaa $ 1,000 (Brooklyn Hospital Center), 5.10% due 2/01/2019 (a)(h) $ 991
AAA NR* 2,460 (Champlain Valley Physicians), 5% due 7/01/2017(j) 2,454
AAA Aaa 6,290 (City University), Third Generation Reserves, Series 1, 6.30%
due 7/01/2004 (a)(e) 7,074
AAA Aaa 11,165 (City University), Third Generation Reserves, Series 2, 6.875%
due 7/01/2004 (d)(e) 12,911
AAA Aaa 3,000 (City University System), Third Resolution, Series 1, 6.25%
due 7/01/2004 (a)(e) 3,382
AAA Aaa 12,000 (Memorial Sloan Kettering Cancer Center), 5.50%
due 7/01/2023 (d) 12,835
A- A3 2,340 (Mental Health Services Facilities Improvement), Series B, 6%
due 8/15/2016 2,620
AAA Aaa 4,350 (Mental Health Services Facilities Improvement), Series F, 4.50%
due 8/15/2028 (a) 3,912
AAA Aaa 6,000 (Mount Sinai School of Medicine), Series A, 5.15%
due 7/01/2024 (d) 6,119
AAA Aaa 1,105 (New School of Social Research), 5.75% due 7/01/2026 (d) 1,190
AAA Aaa 2,000 (New York University), Series A, 5.75% due 7/01/2027 (d) 2,219
NR* Aaa 8,125 RIB, Series 1, 7.165% due 7/01/2027 (d)(f) 9,921
BBB- Baa1 1,000 (State University Athletic Facilities), 7.25% due 7/01/2001 (e) 1,092
AAA Aaa 2,000 (State University Educational Facilities), Series B, 5.75%
due 5/15/2004 (b)(e) 2,172
AAA Aaa 5,000 (State University Educational Facilities), Series B, 4.75%
due 5/15/2028 (d) 4,693
- ------------------------------------------------------------------------------------------------------------------
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) 1,517
AAA Aaa 2,875 (Hamilton College), 4.75% due 7/01/2018 (d) 2,766
AAA NR* 6,270 (Mental Health Services Facilities Improvement), Series C, 5.125%
due 2/15/2011 (d) 6,520
AAA NR* 4,480 (Mental Health Services Facilities Improvement), Series C, 5.125%
due 8/15/2011 (d) 4,659
AAA NR* 4,710 (Mental Health Services Facilities Improvement), Series C, 5.125%
due 8/15/2012 (d) 4,863
AAA Aaa 10,000 (Mental Health Services Facilities Improvement), Series D, 4.75%
due 2/15/2025 (d) 9,418
AAA Aaa 1,500 (New York and Presbyterian Hospitals), 4.75% due 8/01/2027 (a)(h) 1,409
AAA Aaa 4,500 (State University Educational Facilities), Series A, 5.875%
due 5/15/2011 (b) 5,048
A- A3 1,500 (State University Educational Facilities), Series A, 5.50%
due 5/15/2019 1,584
A- A3 2,000 (State University Educational Facilities), Series A, 5.25%
due 5/15/2021 2,045
AAA Aaa 16,160 (State University Educational Facilities), Series A, 4.75%
due 5/15/2025 (d) 15,216
AAA Aaa 1,000 (Wyckoff), Series H, 5.125% due 2/15/2008 (d) 1,054
- ------------------------------------------------------------------------------------------------------------------
NR* Aaa 4,200 New York State Energy Research and Development Authority,
Facilities Revenue Bonds, RITR, Series 19, 7.77% due 8/15/2020 (f) 5,019
- ------------------------------------------------------------------------------------------------------------------
New York State Energy Research and Development Authority,
Gas Facilities Revenue Bonds:
AAA Aaa 12,000 (Brooklyn Union Gas Company), AMT, Series A, 6.75% due 2/01/2024 (d) 13,060
AAA Aaa 6,255 (Brooklyn Union Gas Company), AMT, Series B, 6.75% due 2/01/2024 (d) 6,810
NR* NR* 14,355 RITR, Series 9, 6.57% due 1/01/2021 (f) 15,577
- ------------------------------------------------------------------------------------------------------------------
New York State Energy Research and Development Authority, PCR
(Niagara Mohawk Power Corporation Project) (g):
A1+ NR* 500 DATES, Series A, 4.20% due 7/01/2015 500
A1+ NR* 100 VRDN, AMT, Series B, 4.25% due 7/01/2027 100
- ------------------------------------------------------------------------------------------------------------------
AAA Aaa 3,600 New York State Energy Research and Development Authority,
PCR, Refunding (Rochester Gas and Electric Project), AMT,
Series B, 6.50% due 5/15/2032 (d) 3,894
- ------------------------------------------------------------------------------------------------------------------
NR* Aa1 5,000 New York State Environmental Facilities Corporation, PCR, RITR,
Series RI-1, 7.195% due 6/15/2014 (f) 5,795
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
MuniYield New York Insured Fund II, Inc. April 30, 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)
- ------------------------------------------------------------------------------------------------------------------
NR* Aaa $ 6,575 New York State Local Government Assistance Corporation, RITR, Series 22,
7.57% due 4/01/2024 (f) $ 7,739
- ------------------------------------------------------------------------------------------------------------------
New York State Medical Care Facilities, Finance Agency Revenue Bonds:
AAA Aaa 5,535 (Brookdale Hospital Medical Center), Series A, 6.85% due 2/15/2005 (e) 6,425
AAA Aaa 2,695 (Health Center Project--Second Mortgage), Series A, 6.375%
due 11/15/2019 (a) 3,070
AAA Aaa 1,475 (Mental Health Services), Series A, 6% due 2/15/2005 (d)(e) 1,648
AAA Aaa 25 (Mental Health Services), Series A, 6% due 2/15/2025 (d) 27
AAA NR* 2,945 (Mental Health Services), Series E, 6.50% due 8/15/2004 (c)(e) 3,356
AAA Aaa 55 (Mental Health Services), Series E, 6.50% due 8/15/2015 (c) 62
AAA Aaa 12,250 (New York Hospital Mortgage), Series A, 6.50% due 2/15/2005 (a)(e)(h) 13,999
AAA Aaa 12,850 (New York Hospital Mortgage), Series A, 6.80% due 2/15/2005 (a)(e)(h) 14,883
- ------------------------------------------------------------------------------------------------------------------
AAA Aaa 5,200 New York State Medical Care Facilities, Finance Agency Revenue
Refunding Bonds (Hospital and Nursing Home), Series C,
6.375% due 8/15/2029 (d)(h) 5,663
- ------------------------------------------------------------------------------------------------------------------
NR* Aa2 3,270 New York State Mortgage Agency, Homeowner Mortgage Revenue Bonds,
AMT, Series 44, 7.50% due 4/01/2026 3,552
- ------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 New York State Mortgage Agency, Homeowner Mortgage Revenue
Refunding Bonds, Series 43, 6.45% due 10/01/2017 (d)(h) 1,081
- ------------------------------------------------------------------------------------------------------------------
NR* NR* 2,000 New York State Mortgage Agency Revenue Bonds, RITR, AMT, Series 24,
7.07% due 10/01/2028 (f) 2,252
- ------------------------------------------------------------------------------------------------------------------
AAA Aaa 3,400 New York State Thruway Authority, General Revenue Bonds, Series C,
6% due 1/01/2005 (b)(e) 3,792
- ------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,775 New York State Thruway Authority, Highway and Bridge Trust Fund
Revenue Bonds, Series A, 5% due 4/01/2009 (b) 2,908
- ------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 New York State Thruway Authority, Service Contract Revenue Bonds
(Local Highway and Bridge), Series A-2, 5.375% due 4/01/2016 (d) 2,083
- ------------------------------------------------------------------------------------------------------------------
New York State Urban Development Corporation Revenue Bonds
(Correctional Facilities Service Contract), Series B (a):
AAA Aaa 6,520 4.75% due 1/01/2018 6,277
AAA Aaa 7,135 4.75% due 1/01/2028 6,699
- ------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Niagara Falls, New York, GO (Water Treatment Plant), AMT,
7.25% due 11/01/2010 (d) 1,227
- ------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,260 North Country, New York, Development Authority, Solid Waste
Management System, Revenue Refunding Bonds, 6% due 5/15/2015 (c) 1,419
- ------------------------------------------------------------------------------------------------------------------
North Hempstead, New York, GO, Refunding, Series B (b):
AAA Aaa 1,745 6.40% due 4/01/2013 2,059
AAA Aaa 555 6.40% due 4/01/2017 656
- ------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,080 Oneida County, New York, GO, Refunding, 5.50% due 3/15/2009 (b) 1,171
- ------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,665 Oneida County, New York, IDA, Civic Facilities Revenue Bonds
(Mohawk Valley), Series A, 5.20% due 2/01/2013 (c) 1,712
- ------------------------------------------------------------------------------------------------------------------
Port Authority of New York and New Jersey, Consolidated Revenue Bonds:
AAA Aaa 2,200 104th Series, 4.75% due 1/15/2026 (a) 2,082
AAA Aaa 6,200 116th Series, 4.50% due 10/01/2018 (b) 5,788
AAA Aaa 10,000 116th Series, 4.25% due 10/01/2026 (b) 8,712
AAA Aaa 4,740 AMT, 117th Series, Second Installment, 4.75% due 11/15/2016 (b) 4,586
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
MuniYield New York Insured Fund II, Inc. April 30, 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)
- ------------------------------------------------------------------------------------------------------------------
NR* Aaa $ 4,000 Port Authority of New York and New Jersey, RITR, AMT, 108th Series,
7.235% due 1/15/2017 (c)(f) $ 4,597
- ------------------------------------------------------------------------------------------------------------------
A1+ VMIG1+ 8,700 Port Authority of New York and New Jersey, Special Obligation
Revenue Refunding Bonds, Versatile Structure Obligation, VRDN,
Series 2, 4.20% due 5/01/2019 (g) 8,700
- ------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,500 Saint Lawrence County, New York, Industrial Development Civic
Facility Revenue Bonds (Saint Lawrence University Project),
Series A, 5.375% due 7/01/2018 (d) 2,571
- ------------------------------------------------------------------------------------------------------------------
Syracuse, New York, COP (Syracuse Hancock International Airport), AMT (b):
AAA Aaa 3,650 6.625% due 1/01/2012 3,943
AAA Aaa 3,120 6.50% due 1/01/2017 3,361
- ------------------------------------------------------------------------------------------------------------------
Triborough Bridge and Tunnel Authority, New York, General Purpose
Revenue Refunding Bonds:
A+ Aa3 1,000 Series B, 5% due 1/01/2020 997
AAA Aaa 2,000 Series Y, 6.125% due 1/01/2021 (i) 2,301
- ------------------------------------------------------------------------------------------------------------------
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 4,696
- ------------------------------------------------------------------------------------------------------------------
Triborough Bridge and Tunnel Authority, New York, Special
Obligation Revenue Refunding Bonds:
AAA Aaa 1,030 6.25% due 1/01/2012 (a) 1,101
AAA Aaa 2,265 Series A, 5.125% due 1/01/2011 (d) 2,373
- ------------------------------------------------------------------------------------------------------------------
Total Investments (Cost--$551,169)--98.4% 576,497
Other Assets Less Liabilities--1.6% 9,293
--------
Net Assets--100.0% $585,790
========
- ------------------------------------------------------------------------------------------------------------------
</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 April 30, 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 April 30,
1999.
(h) FHA Insured.
(i) CAPMAC Insured.
(j) Connie Lee Insured.
* Not Rated.
+ Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
QUALITY PROFILE
The quality ratings of securities in the Fund as of April 30, 1999 were as
follows:
- --------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
- --------------------------------------------------------------------------------
AAA/Aaa.............................................................. 81.9%
AA/Aa................................................................ 3.1
A/A.................................................................. 5.7
BBB/Baa.............................................................. 1.0
NR (Not Rated)....................................................... 3.0
Other+............................................................... 3.7
- --------------------------------------------------------------------------------
+ Temporary investments in short-term municipal securities.
9
<PAGE>
MuniYield New York Insured Fund II, Inc. April 30, 1999
FINANCIAL INFORMATION
Statement of Assets, Liabilities and Capital as of April 30, 1999
<TABLE>
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$551,168,935) (Note 1a).. $576,496,907
Cash ............................................................ 24,372
Interest receivable ............................................. 10,012,841
Prepaid expenses and other assets ............................... 57,051
------------
Total assets .................................................... 586,591,171
------------
- ---------------------------------------------------------------------------------------------------------------
Liabilities: Payables:
Dividends to shareholders (Note 1f) ........................... $ 502,502
Investment adviser (Note 2) ................................... 257,652 760,154
------------
Accrued expenses and other liabilities .......................... 41,006
------------
Total liabilities ............................................... 801,160
------------
- ---------------------------------------------------------------------------------------------------------------
Net Assets: Net assets ...................................................... $585,790,011
============
- ---------------------------------------------------------------------------------------------------------------
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 (26,668,886
shares issued and outstanding)................................. $ 2,666,889
Paid-in capital in excess of par................................. 381,622,646
Undistributed investment income--net ............................ 2,325,604
Accumulated realized capital losses on investments--net.......... (153,100)
Unrealized appreciation on investments--net...................... 25,327,972
------------
Total--Equivalent to $15.44 net asset value per share of Common
Stock (market price--$15.3125)................................... 411,790,011
------------
Total capital.................................................... $585,790,011
============
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
*Auction Market Preferred Stock.
Statement of Operations
<TABLE>
<CAPTION>
For the Six Months Ended
April 30, 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Interest and amortization of premium and discount earned......... $ 15,530,179
Income
(Note 1d):
- ---------------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fees (Note 2)................................ $ 1,473,593
Commission fees (Note 4)......................................... 211,241
Transfer agent fees.............................................. 65,815
Accounting services (Note 2)..................................... 59,474
Professional fees................................................ 38,592
Custodian fees................................................... 16,396
Listing fees..................................................... 15,492
Printing and shareholder reports................................. 12,651
Directors' fees and expenses..................................... 11,060
Pricing fees..................................................... 8,153
Other............................................................ 16,733
------------
Total expenses .................................................. 1,929,200
------------
Investment income--net........................................... 13,600,979
------------
- ---------------------------------------------------------------------------------------------------------------
Realized & Realized gain on investments--net ............................... 5,978,844
Unrealized Change in unrealized appreciation on investments--net ........... (12,591,233)
Gain (Loss) ------------
on Investment Net Increase in Net Assets Resulting from Operations ............ $ 6,988,590
- --Net (Notes ============
1b, 1d & 3):
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
MuniYield New York Insured Fund II, Inc. April 30, 1999
FINANCIAL INFORMATION (continued)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: April 30, 1999 Oct. 31, 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations: Investment income--net..................................... $ 13,600,979 $ 26,653,137
Realized gain on investments--net.......................... 5,978,844 15,690,747
Change in unrealized appreciation on investments--net...... (12,591,233) (667,130)
------------ ------------
Net increase in net assets resulting from operations....... 6,988,590 41,676,754
------------ ------------
- ---------------------------------------------------------------------------------------------------------------
Dividends & Investment income--net:
Distributions to Common Stock............................................. (11,096,459) (20,787,847)
Shareholders Preferred Stock.......................................... (2,179,145) (5,533,891)
(Note 1f): Realized gain on investments--net:
Common Stock............................................. (2,992,978) (66,383)
Preferred Stock.......................................... (784,225) (18,055)
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders.............................. (17,052,807) (26,406,176)
------------ ------------
- ---------------------------------------------------------------------------------------------------------------
Capital Stock Proceeds from issuance of Common Stock resulting
Transactions from reorganization ....................................... -- 83,897,738
(Notes 1e & 4): Offering costs from issuance of Common Stock
resulting from reorganization ............................. -- (262,206)
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............. 1,196,443 --
------------ ------------
Net increase in net assets derived from capital
stock transactions ........................................ 1,196,443 113,635,532
------------ ------------
- ---------------------------------------------------------------------------------------------------------------
Net Assets: Total increase (decrease) in net assets.................... (8,867,774) 128,906,110
Beginning of period........................................ 594,657,785 465,751,675
------------ ------------
End of period*............................................. $585,790,011 $594,657,785
============ ============
- ---------------------------------------------------------------------------------------------------------------
*Undistributed investment income--net....................... $ 2,325,604 $ 2,000,229
============ ============
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
MuniYield New York Insured Fund II, Inc. April 30, 1999
FINANCIAL INFORMATION (concluded)
Financial Highlights
<TABLE>
<CAPTION>
For the Six
The following per share data and ratios have been derived Months Ended For the Year Ended October 31,
from information provided in the financial statements. April 30, ---------------------------------------
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 period......... $ 15.82 $ 15.18 $ 14.53 $ 14.63 $ 13.13
Operating -------- -------- -------- -------- --------
Performance: Investment income--net....................... .51 1.05 1.08 1.04 1.07
Realized and unrealized gain (loss) on
investments--net............................. (.25) .66 .66 (.09) 1.50
-------- -------- -------- -------- --------
Total from investment operations............. .26 1.71 1.74 .95 2.57
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net...................... (.42) (.84) (.84) (.82) (.84)
Realized gain on investments--net........... (.11) --+ -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions to
Common Stock shareholders.................... (.53) (.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................... (.08) (.22) (.23) (.23) (.23)
Realized gain on investments--net........ (.03) --+ -- -- --
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity..... (.11) (.22) (.23) (.23) (.23)
-------- -------- -------- -------- --------
Net asset value, end of period............... $ 15.44 $ 15.82 $ 15.18 $ 14.53 $ 14.63
======== ======== ======== ======== ========
Market price per share, end of period........ $15.3125 $15.4375 $ 14.25 $ 13.375 $ 13.25
======== ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on market price per share.............. 2.63%# 14.60% 13.15% 7.28% 28.61%
Return:** ======== ======== ======== ======== ========
Based on net asset value per share........... .98%# 10.24% 10.95% 5.55% 18.96%
======== ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses..................................... .65%* .64% .68% .71% .74%
Net Assets:*** ======== ======== ======== ======== ========
Investment income--net....................... 4.61%* 4.81% 5.04% 5.00% 5.27%
======== ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, net of Preferred Stock, end of
Data: period (in thousands)........................ $411,790 $420,658 $321,752 $161,472 $162,655
======== ======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands)............................... $174,000 $174,000 $144,000 $ 70,000 $ 70,000
======== ======== ======== ======== ========
Portfolio turnover........................... 43.55% 136.43% 121.49% 118.28% 110.76%
======== ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------
Leverage: Asset coverage per $1,000................... $ 3,367 $ 3,418 $ 3,234 $ 3,307 $ 3,324
======== ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------
Dividends Per Share Series A--Investment income--net............. $ 313 $ 849 $ 865 $ 913 $ 910
On Preferred Stock ======== ======== ======== ======== ========
Outstanding: Series B--Investment income--net............. $ 312 $ 825 $ 643 -- --
======== ======== ======== ======== ========
Series C--Investment income--net............. $ 335 $ 785 $ 667 -- --
======== ======== ======== ======== ========
Series D--Investment income--net............. $ 296 $ 628 -- -- --
======== ======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* 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).
# Aggregate total investment return.
See Notes to Financial Statements.
12
<PAGE>
MuniYield New York Insured Fund II, Inc. April 30, 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. 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 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 sub sequently marked to market to reflect the current market
value of the option written.
When a security is purchased or sold through an exercise of an option, the
related premium paid (or received) is added to (or deducted from) the basis of
the security acquired or deducted from (or added to) the proceeds of the
security sold. When an option expires (or the Fund enters into a closing
transaction), the Fund realizes a gain or loss on the option to the extent of
the premiums received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(c) Income taxes--It is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no Federal income tax provision is required.
(d) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Interest income is recognized on the accrual basis. Discounts and market
premiums are amortized into interest income. Realized gains and losses on
security transactions are determined on the identified cost basis.
(e) Offering costs--Direct expenses relating to the issuance of Common Stock
resulting from reorganization were charged to capital.
13
<PAGE>
MuniYield New York Insured Fund II, Inc. April 30, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
(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, for the six
months ended April 30, 1999 were $245,808,461 and $259,873,073, respectively.
Net realized gains for the six months ended April 30, 1999 and net unrealized
gains as of April 30, 1999 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains Gains
- --------------------------------------------------------------------------------
Long-term investments ............... $ 5,978,844 $25,327,972
----------- -----------
Total................................ $ 5,978,844 $25,327,972
=========== ===========
- --------------------------------------------------------------------------------
As of April 30, 1999, net unrealized appreciation for Federal income tax
purposes aggregated $25,327,972, of which $26,755,159 related to appreciated
securities and $1,427,187 related to depreciated securities. The aggregate cost
of investments at April 30, 1999 for Federal income tax purposes was
$551,168,935.
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, 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 $.05 per share and a liquidation preference of $25,000
per share, that entitle their holders to receive cash dividends at an annual
rate that may vary for the successive dividend periods. The yields in effect at
April 30, 1999 were as follows: Series A, 3.40%; Series B, 3.50%; Series C,
3.07%; and Series D, 3.00%.
Shares issued and outstanding during the six months ended April 30, 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 0.25% to 0.375%, calculated on the proceeds of
each auction. For the six months ended April 30, 1999, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, an affiliate of FAM, earned $95,069 as commissions.
5. 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.'s
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.
6. Subsequent Event:
On May 6, 1999, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.068090 per share,
payable on May 27, 1999 to shareholders of record as of May 21, 1999.
14
<PAGE>
MuniYield New York Insured Fund II, Inc. April 30, 1999
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute substantially all of its net
investment income to its share holders on a monthly basis. However, in order to
provide shareholders with a more consistent yield to the current trading price
of shares of Common Stock of the Fund, the Fund may at times pay out less than
the entire amount of net investment income earned in any partic ular 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 partic ular 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.
YEAR 2000 ISSUES
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.
OFFICER 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
- --------------------------------------------------------------------------------
Gerald M. Richard, Treasurer and Philip M. Mandel, Secretary of MuniYield New
York Insured Fund II, Inc. have recently retired. Their colleagues at Merrill
Lynch Asset Management, L.P. join the Fund's Board of Directors in wishing Mr.
Richard and Mr. Mandel well in their retirements.
- --------------------------------------------------------------------------------
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 Whitehall Bank & Trust Company
One State Street
New York, NY 10004
NYSE Symbol
MYT
15
<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 pro spectus, 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--4/99
[RECYCLE LOGO] Printed on post-consumer recycled paper
