-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, O1R/7qI9AH3HApf31h6xbawpjoQaaNP2qQyWdD3Fi0sOj1OMXi3wytAr75r3LKLn RCsjrcw9QHxEBkjSnmCvog== 0000900092-94-000361.txt : 19940702 0000900092-94-000361.hdr.sgml : 19940702 ACCESSION NUMBER: 0000900092-94-000361 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940430 FILED AS OF DATE: 19940623 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MUNIYIELD NEW YORK INSURED FUND INC CENTRAL INDEX KEY: 0000882150 STANDARD INDUSTRIAL CLASSIFICATION: 0000 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-06500 FILM NUMBER: 94535384 BUSINESS ADDRESS: STREET 1: 800 SCUDDERS MILL RD CITY: PLAINSBORO STATE: NJ ZIP: 08536 BUSINESS PHONE: 6092822800 MAIL ADDRESS: STREET 1: PO BOX 9011 STREET 2: C/O MERRILL LYNCH ASSET MANAGEMENT CITY: PRINCETON STATE: NJ ZIP: 08543-9011 FORMER COMPANY: FORMER CONFORMED NAME: NEW YORK MUNIYIELD FUND INC DATE OF NAME CHANGE: 19600201 N-30D 1 SEMI-ANNUAL REPORT MuniYield New York Insured Fund, Inc. Semi-Annual Report April 30, 1994 This report, including the financial information herein, is transmitted to the shareholders of MuniYield New York Insured Fund, Inc. for their information. It is not a prospectus, circular or representation intended for use in the purchase of shares of the Fund or any securities mentioned in the report. Past performance results shown in this report should not be considered a represen- tation of future performance. The Fund has lever- aged 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. MuniYield New York Insured Fund, Inc. Box 9011 Princeton, NJ 08543-9011 MuniYield New York Insured Fund, Inc. TO OUR SHAREHOLDERS For the six-month period ended April 30, 1994, the Common Stock of MuniYield New York Insured Fund, Inc. earned $0.480 per share income dividends, which includes earned and unpaid dividends of $0.081. This represents a net annualized yield of 6.45%, based on a month-end per share net asset value of $15.00. Over the same period, the total investment return on the Fund's Common Stock was -7.94%, based on a change in per share net asset value from $16.85 to $15.00, and assuming reinvestment of $0.484 per share income dividends and $0.046 per share capital gains distributions. For the six-month period ended April 30, 1994, the Fund's Pre- ferred Stock had an average yield of 2.42% for Series A and 2.20% for Series B. The Environment Inflationary expectations and investor sentiment changed for the worse during the three-month period ended April 30, 1994. Following stronger-than-expected economic results through year- end 1993, the Federal Reserve Board broke with tradition on February 4, 1994 and publicly announced a modest 25 basis point (0.25%) increase in short-term interest rates. At the March 22 meeting of the Federal Open Market Committee, the Federal Reserve Board again raised the Federal Funds rate by 25 basis points, followed by another 25 basis point increase on April 18. Rather than view the Federal Reserve Board's first tightening move as a preemptive strike against inflation, fixed-income investors focused on Chairman Greenspan's implicit promise of further tightening should the rate of inflation accelerate, and bond prices declined sharply. The setback in the bond market was also reflected in greater stock market volatility. While the sec- ond and third increases in the Federal Funds rate were less of a surprise, investors remained concerned that interest rates would trend upward sharply as the central bank aggressively attempted to contain the inflationary pressures of an improving economy. At the same time, highly leveraged investors were forced to liquidate positions in the face of declining stock and bond prices. Investor confidence was not restored with the announce- ment of the surprisingly slow 2.6% gross domestic product growth rate for the first calendar quarter of 1994. Instead, investors focused on the higher-than-expected (but still moderate) broad inflation measures and became concerned that business activity was beginning to stagnate as inflationary pressures were in- creasing. The volatility in the US capital markets was mirrored in inter- national markets during the period. Political and economic developments, along with concerns of heightened global infla- tionary pressures, led to a sell-off in most capital markets, especially the emerging markets that had appreciated strongly in 1993. The Municipal Market During the six months ended April 30, 1994, tax-exempt bond yields exhibited considerable volatility as they rose to their highest level in the past two years. As measured by the Bond Buyer Revenue Bond Index, the yield on newly issued municipal bonds maturing in 30 years rose over 90 basis points to 6.42% by the end of April. Yields on seasoned municipal revenue bonds rose by over 100 basis points in sympathy with the equally drama- tic increase in long-term US Treasury bond yields. By the end of April, yields on US Treasury securities rose by over 95 basis points to approximately 7.30%. Long-term tax-exempt bond yields were essentially unchanged from the end of October 1993 to the end of January 1994. However, on a weekly basis, tax-exempt bond yields fluctuated by as much as 15 basis points as investors were unable to reconcile the rapid eco- nomic growth seen late last year with continued low inflation. Following the initial interest rate increase by the Federal Re- serve Board in early February, municipal bond prices began to erode in concert with taxable bond prices as investors began to sell securities in anticipation of further interest rate in- creases. This fear led investors to withdraw from the tax-exempt market. From early February to the end of March, total assets of all tax-exempt bond funds declined by $14 billion to $247 billion. This decline in investor demand, coupled with fears that the ro- bust economic recovery seen during the fourth quarter of 1993 would continue well into 1994, helped push municipal bond yields higher in February and March. Attracted by tax-exempt yields in excess of 6.25%, investor demand returned in April, allowing yields to decline approximately 15 basis points to end the April period at approximately 6.40%. A rise in tax-exempt bond yields the magnitude of that experienced over the past six months has not been seen since 1987 when muni- cipal bond rates rose 250 basis points between March and October of that year. It is very important to note that the recent muni- cipal bond price declines were largely the result of consistent and insistent selling pressures over the last two months. In 1987, the tax-exempt bond market was much more volatile and, at times, chaotic as investors sought to liquidate positions without con- cern for fundamental value. For the most part, the recent price deterioration has been orderly, and the municipal bond market's liquidity and integrity have not been challenged or jeopardized. To a large extent, the municipal bond market has continued to be supported by its strong technical position. New-issue volume for the last six months has been less than $105 billion. This rep- resents a decline of approximately 20% versus the comparable period a year ago. This decline was expected and has been dis- cussed in previous shareholder reports. This reduced issuance has minimized potential selling pressure in recent months since institutional investors have been wary of selling appreciable amounts of securities that they may be unable to replace later this year at any price level. We expect this decline in issuance to continue since we anticipate recent yield increases to sig- nificantly impact future municipal bond issuance. Just as higher mortgage rates slow home mortgage refinancings, the recent rise in bond yields will prevent bond refinancings from becoming the driving force in bond issuance in 1994 as they were in 1993. Despite recent price declines, tax-exempt securities remain among the most attractive investment alternatives available. After the recent yield increases, longer-term municipal securities yielded approximately 90% of comparable US Treasury yields. Purchasers of these municipal bonds also accrue substantial after-tax yield advantages. To investors in the 39% marginal Federal income tax bracket, the purchase of a municipal bond yielding 6.50% rep- resents an after-tax equivalent of 10.65%. With prevailing estimates of 1994 inflation at no more than 3%--4%, real after- tax rates in excess of 6.50% easily compensate longer-term in- vestors for much of the price volatility recently experienced. Portfolio Strategy During the six months ended April 30, 1994, the New York sector of the tax-exempt arena closely mirrored, and in some instances exceeded, the volatility witnessed in the municipal market in general. Faced with the same factors that weighed on the market as a whole, the relative performance of New York tax-exempt issues was further hindered by a significant increase in the volume of securities offered for sale by New York State, New York City and each of their respective political subdivisions. While national issuance during the period contracted by more than 19% as compared to the same period of last year, volume of New York tax-exempt securities increased by more than 45%, soaring to over $16 billion and representing the largest single-state issuer of debt in the nation. As such, while general market municipal bonds found a certain measure of support in the positive technical foundation underlying their trading, New York tax-exempt issues were forced to adjust at various points to levels which enabled both local and national investors to absorb the supply. Miti- gating these adjustments in yields was the adoption on the part of investors of a more positive outlook for the fundamental credit prospects within the State as both the national and regional economies continue to show signs of improvement. Portfolio decisions throughout the six months were guided by a decidedly conservative posture. While the Fund maintained an almost fully invested stance throughout the period, its struc- ture at the start of the period was less aggressive than general market fundamentals may have warranted. As the issuance witnessed during the period began and the forward outlook for interest rates in general became more uncertain, our trading activity sought to capitalize on the opportunities inherent in such an environment by drawing down the Fund's average portfolio matur- ity and shifting its focus toward the generation of tax-exempt income. Issues used to facilitate this objective were those deemed to possess strong qualities of protection from redemption prior to maturity and superior qualities of creditworthiness relative to the universe of New York tax-exempt bonds. In Conclusion We appreciate your ongoing interest in MuniYield New York In- sured Fund, Inc., and we look forward to assisting you with your financial needs in the months and years to come. Sincerely, (Arthur Zeikel) Arthur Zeikel President (Vincent R. Giordano) Vincent R. Giordano Vice President and Portfolio Manager June 1, 1994 THE BENEFITS AND RISKS OF LEVERAGING MuniYield New York Insured Fund, Inc. utilizes leveraging to seek to enhance the yield and net asset value of its Common Stock. However, these objectives cannot be achieved in all interest rate environments. To leverage, the Fund issues Preferred Stock, which pays dividends at prevailing short-term interest rates, and invests the proceeds in long-term municipal bonds. The interest earned on these investments is paid to Common Stock shareholders in the form of dividends, and the value of these portfolio holdings is reflected in the per share net asset value of the Fund's Common Stock. However, in order to benefit Common Stock shareholders, the yield curve must be positively sloped; that is, short-term interest rates must be lower than long-term interest rates. At the same time, a period of generally declining interest rates will benefit Common Stock shareholders. If either of these conditions change, then the risks of leveraging will begin to outweigh the benefits. To illustrate these concepts, assume a fund's Common Stock capitalization of $100 million and the issuance of Preferred Stock for an additional $50 million, creating a total value of $150 million available for investment in long-term municipal bonds. If prevailing short-term interest rates are approximately 3% and long-term interest rates are approximately 6%, the yield curve has a strongly positive slope. The fund pays dividends on the $50 million of Preferred Stock based on the lower short-term interest rates. At the same time, the fund's total portfolio of $150 million earns the income based on long-term interest rates. 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 pick-up on the Common Stock will be reduced. At the same time, the market value of the fund's Common Stock (that is, its price as listed on the New York Stock Exchange) may, as a result, decline. Furthermore, if long-term interest rates rise, the Common Stock's net asset value will reflect the full decline in the price of the portfolio's investments, since the value of the fund's Preferred Stock does not fluctuate. In addition to the decline in net asset value, the market value of the fund's Common Stock may also decline. Portfolio Abbreviations To simplify the listings of MuniYield New York Insured Fund, Inc.'s portfolio holdings in the Schedule of Investments, we have abbreviated the names of some of the securities according to the list at right. AMT Alternative Minimum Tax (subject to) COP Certificates of Participation GO General Obligation Bonds HFA Housing Finance Authority IDA Industrial Development Authority PCR Pollution Control Revenue Bonds UT Unlimited Tax VRDN Variable Rate Demand Notes SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face Value Ratings Ratings Amount Issue (Note 1a) New York--99.6% Babylon, New York, IDA, Resource Recovery Revenue Bonds (Ogden Martin Systems): BBB+ Baa1 $ 4,940 Series A, 8.50% due 1/01/2019 $ 5,394 BBB+ Baa1 1,000 Series B, 8.50% due 1/01/2019 1,092 Battery Park City Authority, New York, Revenue Refunding Bonds (Senior Lien): AA A1 3,000 Series A, 4.75% due 11/01/2019 2,390 AA A1 2,000 Series A, 5.70% due 11/01/2020 1,828 AAA Aaa 3,905 Broome County, New York, COP, Public Safety Facility, 5.25% due 4/01/2022 (d) 3,387 Clifton Park, New York, Water Authority, Water System Revenue Refunding Bonds (c): AAA Aaa 1,880 5% due 10/01/2018 1,592 AAA Aaa 2,230 5% due 10/01/2026 1,845 AAA Aaa 1,000 Metropolitan Transportation Authority, New York, Commuter Facilities Revenue Refunding Bonds, Series B, 6.25% due 7/01/2017 (d) 1,002 Metropolitan Transportation Authority, New York, Transportation Facilities Revenue Bonds, Series J (c): AAA Aaa 4,000 6.375% due 7/01/2010 4,110 AAA Aaa 25,620 6.50% due 7/01/2018 26,113 Monroe County, New York, GO: AAA Aaa 2,825 6.10% due 3/01/2010 (d) 2,867 AAA Aaa 2,175 6.10% due 3/01/2011 (d) 2,199 AAA Aaa 1,850 6.10% due 3/01/2012 (d) 1,864 AAA Aaa 1,000 UT, 5.10% due 6/01/2009 (b) 929
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
S&P Moody's Face Value Ratings Ratings Amount Issue (Note 1a) New York (continued) A1+ NR $ 500 Nassau County, New York, IDA, Civic Facilities Revenue Bonds (Cold Spring Harbor Laboratory Project), VRDN, 2.90% due 7/01/2019 (a) $ 500 AAA Aaa 2,995 New York City, New York, Educational Construction Revenue Bonds, Series A, 6.25% due 10/01/2003 (d) 3,172 New York City, New York, GO: A- Aaa 2,485 Refunding, Series A, UT, 8% due 8/15/2001 (e) 2,933 AAA Aaa 2,000 Refunding, Series A, UT, 5.75% due 8/01/2010 (c) 1,932 A- Baa1 15 Series A, UT, 8% due 8/15/2021 17 AAA Aaa 7,055 Series C, Subseries C-1, 6.625% due 8/01/2013 (d) 7,648 AAA Aaa 5,190 Series C, Subseries C-1, 6.625% due 8/01/2015 (b) 5,619 A- Baa1 2,500 Series C, Subseries C-1, 7.50% due 8/01/2021 2,718 AAA Aaa 4,360 Series C, Subseries C-1, UT, 6.625% due 8/01/2014 (d) 4,726 A- Baa1 1,000 Series D, Group C, UT, 8% due 8/01/2015 1,125 AAA Aaa 1,665 Series I, UT, 7.25% due 8/15/2015 (b) 1,819 New York City, New York, Municipal Water Finance Authority, Water and Sewer System Revenue Bonds: AAA Aaa 2,000 Refunding, Series A, 5.50% due 6/15/2011 (b) 1,875 AAA Aaa 2,000 Refunding, Series A, 5.75% due 6/15/2018 (c) 1,869 AAA Aaa 2,500 Series A, 6.75% due 6/15/2006 (b) 2,654 AAA Aaa 5,000 Series A, 7% due 6/15/2015 (b) 5,245 AAA Aaa 7,500 Series A, 7% due 6/15/2015 (c) 7,996 AAA Aaa 1,285 Series A, 7.25% due 6/15/2000 (d)(e) 1,445 AAA Aaa 2,000 Series A, 6.75% due 6/15/2016 (c) 2,067 AAA Aaa 1,000 Series C, 7% due 6/15/2001 (c)(e) 1,118 AAA VMIG1 600 VRDN, Series C, 2.75% due 6/15/2023 (a)(c) 600 New York State Dormitory Authority Revenue Bonds: AAA Aaa 3,000 (City University System), Series C, 7.50% due 7/01/2010 (c) 3,444 AAA Aaa 7,070 (City University System), Series C, 7% due 7/01/2014 (c) 7,549 BBB Baa1 1,750 (City University System), Series F, 5% due 7/01/2020 1,412 AAA Aaa 2,000 (Insured Colgate University), 5.625% due 7/01/2023 (c) 1,833 AAA Aaa 7,920 Refunding (New York University), Series A, 5% due 7/01/2009 (d) 7,219 BBB+ Baa1 5,215 Refunding, (University Educational Facilities), Series B, 7.375% due 5/15/2014 5,617 AAA Aaa 3,000 (University of Rochester), 6.50% due 7/01/2009 (d) 3,114 AAA Aaa 7,500 New York State Energy Research and Development Authority, Electric Facilities Revenue Bonds (Consolidated Edison Company, Inc.), AMT, Series A, 6.75% due l/15/2027 (d) 7,702 New York State Energy Research and Development Authority, Gas Facilities Revenue Bonds (Brooklyn Union Gas Company), AMT (d): AAA Aaa 3,000 Series A, 6.75% due 2/01/2024 3,125 AAA Aaa 11,535 Series B, 6.75% due 2/01/2024 12,017
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
S&P Moody's Face Value Ratings Ratings Amount Issue (Note 1a) New York (continued) AAA Aaa $ 5,000 New York State Energy Research and Development Authority, PCR, Refunding (Niagara Mohawk Corporation Project), Series A, 6.625% due 10/01/2013 (c) $ 5,171 AAA Aaa 5,000 New York State Energy Research and Development Authority, Solid Waste Disposal Revenue Bonds (New York State Electric & Gas Co. Project), Series A, AMT, 5.70% due 12/01/2028 (d) 4,515 A1+ NR 400 New York State Environmental Facilities Corporation, Resource Recovery Revenue Bonds (Huntington Project), VRDN, AMT, 2.80% due 11/01/2014 (a) 400 BBB Baa1 1,585 New York State, HFA, Service Contract Obligation Revenue Bonds, Series D, 5.375% due 3/15/2011 1,448 New York State Job Development Authority Revenue Bonds, VRDN, AMT (a): NR VMIG1 2,000 Series A-1 thru A-25, 2.95% due 3/01/2007 2,000 NR VMIG1 2,100 Series B-l thru B-9, 3.25% due 3/01/2003 2,100 New York State Local Government Assistance Corporation, Revenue Refunding Bonds: A A 4,040 Series E, 5.25% due 4/01/2016 3,548 A A 1,000 Series E, 5% due 4/01/2021 831 New York State Medical Care Facilities Finance Agency Revenue Bonds: AAA Aaa 8,335 (Mental Health Services), Series A, 6.375% due 8/15/2017 (c) 8,428 BBB+ Baa1 420 (Mental Health Services), Series A, 7.50% due 2/15/2021 456 AAA Aaa 1,230 (Mental Health Services), Series C, 7.30% due 8/15/2001 (e) 1,403 BBB+ Baa1 420 (Mental Health Services), Series C, 7.30% due 2/15/2021 453 AAA Aaa 10,000 Refunding (Hospital and Nursing Home), Series C, 6.375% due 8/15/2029 (d) 10,108 BBB Baa 5,000 (Security Hospital), Series A, 7.40% due 8/15/2021 5,367 NR Aa 4,220 New York State Mortgage Agency, Homeowner Mortgage Revenue Bonds, Series 29-A, 5.25% due 4/01/2015 3,638 AAA Aaa 5,000 New York State Power Authority, General Purpose and Revenue Refunding Bonds, Series Z, 6.50% due 1/01/2019 (b) 5,111 New York State Thruway Authority Revenue Bonds: AAA Aaa 4,000 Series A, 5.50% due 1/01/2023 (c) 3,602 AAA Aaa 3,000 Series B, 5% due 1/01/2014 (d) 2,609 BBB Baa1 3,950 New York State Thruway Authority, Service Contract Revenue Bonds (Local Highway and Bridge), 5.25% due 4/01/2013 3,440 AAA Aaa 6,100 New York State Urban Development Corporation, Revenue Refunding Bonds (Correctional Facilities), 5.25% due 1/01/2018 (b) 5,330 AAA Aaa 4,000 North Hempstead, New York, Solid Waste Management Authority, Revenue Refunding Bonds, Series B, 5% due 2/01/2012 (d) 3,531 Port Authority of New York and New Jersey, Consolidated Revenue Bonds: AAA Aaa 2,000 71st Series, 6.50% due 1/15/2026 (c) 2,037 AAA Aaa 2,000 73rd Series, AMT, 6.75% due 4/15/2026 (d) 2,062
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
S&P Moody's Face Value Ratings Ratings Amount Issue (Note 1a) New York (concluded) AAA Aaa $2,340 Suffolk County, New York, IDA, Southwest Sewer System Revenue Bonds, 4.75% due 2/01/2009 (c) $ 2,056 AAA Aaa 5,700 Syracuse, New York, COP (Syracuse Hancock International Airport), AMT, 6.50% due 1/01/2017 (c) 5,806 Triborough Bridge and Tunnel Authority, New York, Special Obligation Revenue Refunding Bonds: AAA Aaa 4,500 Series A, 6.625% due 1/01/2017 (d) 4,620 AAA Aaa 1,000 Series B, 6.875% due 1/01/2015 (b) 1,046 AAA Aaa 6,440 Series B, 6.875% due 1/01/2015 (c) 6,736 Total Investments (Cost--$261,141)--99.6% 264,574 Other Assets Less Liabilities--0.4% 1,157 -------- Net Assets--100.0% $265,731 ======== (a) The interest rate is subject to change periodically based upon prevailing market rates. The interest rate shown is the rate in effect at April 30, 1994. (b) AMBAC Insured. (c) FGIC Insured. (d) MBIA Insured. (e) Prerefunded. See Notes to Financial Statements.
FINANCIAL INFORMATION
Statement of Assets, Liabilities and Capital as of April 30, 1994 Assets: Investments, at value (identified cost--$261,140,513) (Note 1a) $264,573,850 Cash 78,051 Interest receivable 4,688,528 Deferred organization expenses 21,058 Prepaid expenses and other assets 28,091 ------------ Total assets 269,389,578 ------------ Liabilities: Payables: Securities purchased $ 2,925,714 Dividends to shareholders (Note 1g) 521,281 Investment adviser (Note 2) 105,356 3,552,351 ------------ Accrued expenses and other liabilities 105,733 ------------ Total liabilities 3,658,084 ------------ Net Assets: Net assets $265,731,494 ============ Capital: Capital Stock (200,000,000 shares authorized) (Note 4): Preferred Stock, par value $.10 per share (1,700 shares of AMPS* issued and outstanding at $50,000 per share liquidation preference) $ 85,000,000 Common Stock, par value $.10 per share (12,046,743 shares issued and outstanding) $ 1,204,674 Paid-in capital in excess of par 168,007,201 Undistributed investment income--net 2,070,154 Undistributed realized capital gains--net 6,016,128 Unrealized appreciation on investments--net 3,433,337 ------------ Total--Equivalent to $15.00 net asset value per share of Common Stock (market price--$14.625) 180,731,494 ------------ Total capital $265,731,494 ============ * Auction Market Preferred Stock. See Notes to Financial Statements.
FINANCIAL INFORMATION (continued) Statement of Operations
For the Six Months Ended April 30, 1994 Investment Income Interest and amortization of premium and discount earned $ 8,181,186 (Note 1d): Expenses: Investment advisory fees (Note 2) $ 699,207 Commission fees (Note 4) 106,992 Professional fees 40,732 Accounting services (Note 2) 33,761 Transfer agent fees 24,596 Printing and shareholder reports 15,220 Listing fees 12,688 Custodian fees 11,648 Directors' fees and expenses 11,419 Pricing fees 5,152 Amortization of organization expenses (Note 1e) 3,143 Other 13,720 ------------ Total expenses 978,278 ------------ Investment income--net 7,202,908 ------------ Realized & Realized gain on investments--net 6,016,131 Unrealized Gain Change in unrealized appreciation on investments--net (28,110,730) (Loss) on ------------ Investments--Net Net Decrease in Net Assets Resulting from Operations $(14,891,691) (Notes 1d & 3): ============ See Notes to Financial Statements.
FINANCIAL INFORMATION (continued) Statements of Changes in Net Assets
For the Six For the Year Months Ended Ended Increase (Decrease) in Net Assets: April 30, 1994 Oct. 31, 1993 Operations: Investment income--net $ 7,202,908 $ 14,765,970 Realized gain on investments--net 6,016,131 684,053 Change in unrealized appreciation/depreciation on investments--net (28,110,730) 27,491,003 ------------ ------------ Net increase (decrease) in net assets resulting from operations (14,891,691) 42,941,026 ------------ ------------ Dividends & Investment income--net: Distributions to Common Stock (5,832,419) (11,932,621) Shareholders Preferred Stock (886,252) (2,207,569) (Note 1g): Realized gain on investments--net: Common Stock (558,029) -- Preferred Stock (98,090) -- ------------ ------------ Net decrease in net assets resulting from dividends and distributions to shareholders (7,374,790) (14,140,190) ------------ ------------ Capital Stock Value of shares issued to Common Stock shareholders in reinvestment Transactions of dividends -- 2,610,375 (Notes 1e & 4): ------------ ------------ Net increase in net assets derived from stock capital transactions -- 2,610,375 ------------ ------------ Net Assets: Total increase (decrease) in net assets (22,266,481) 31,411,211 Beginning of period 287,997,975 256,586,764 ------------ ------------ End of period* $265,731,494 $287,997,975 ============ ============ * Undistributed investment income--net $ 2,070,154 $ 1,585,917 ============ ============ See Notes to Financial Statements.
FINANCIAL INFORMATION (concluded) Financial Highlights
For the For the Six Period The following per share data and ratios have been derived Months For the February 28, from information provided in the financial statements. Ended Year Ended 1992++ to April 30, October 31, October 31, Increase (Decrease) in Net Asset Value: 1994 1993 1992 Per Share Net asset value, beginning of period $ 16.85 $ 14.45 $ 14.18 Operating ---------- ---------- ---------- Performance: Investment income--net .60 1.23 .75 Realized and unrealized gain (loss) on investments--net (1.83) 2.34 .36 ---------- ---------- ---------- Total from investment operations (1.23) 3.57 1.11 ---------- ---------- ---------- Less dividends and distributions to Common Stock shareholders: Investment income--net (.48) (.99) (.55) Realized gain on investments--net (.05) -- -- ---------- ---------- ---------- Total dividends and distributions to Common Stock shareholders (.53) (.99) (.55) ---------- ---------- ---------- Capital charge resulting from issuance of Common Stock -- -- (.02) ---------- ---------- ---------- Effect of Preferred Stock activity++++: Dividends and distributions to Preferred Stock shareholders: Investment income--net (.08) (.18) (.12) Realized gain on investments--net (.01) -- -- Capital charge resulting from issuance of Preferred Stock -- -- (.15) ---------- ---------- ---------- Total effect of Preferred Stock activity (.09) (.18) (.27) ---------- ---------- ---------- Net asset value, end of period $ 15.00 $ 16.85 $ 14.45 ========== ========== ========== Market price per share, end of period $ 14.625 $ 16.50 $ 14.75 ========== ========== ========== Total Investment Based on market price per share (8.34%)+++ 19.04% 2.05%+++ Return:** ========== ========== ========== Based on net asset value per share (7.94%)+++ 24.09% 5.76%+++ ========== ========== ========== Ratios to Average Expenses, net of reimbursement .70%* .69% .54%* Net Assets:*** ========== ========== ========== Expenses .70%* .69% .71%* ========== ========== ========== Investment income--net 5.13%* 5.36% 5.56%* ========== ========== ========== Supplemental Net assets, net of Preferred Stock, end of period Data: (in thousands) $ 180,731 $ 202,998 $ 171,587 ========== ========== ========== Preferred Stock outstanding, end of period (in thousands) $ 85,000 $ 85,000 $ 85,000 ========== ========== ========== Portfolio turnover 30.45% 1.63% 18.10% ========== ========== ========== Dividends Per Series A--Investment income--net $ 544 $ 1,276 $ 884 Share on Preferred Series B--Investment income--net 488 1,301 851 Stock Outstanding: * Annualized. ** Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, 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. ++ Commencement of Operations. ++++ The Fund's Preferred Stock was issued on April 10, 1992. +++ Aggregate total investment return. See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS 1. Significant Accounting Policies: MuniYield New York Insured Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a non-diversified, closed-end management investment company. The Fund determines and makes available for publication the net asset value of its Common Stock on a weekly basis. The Fund's Common Stock is listed on the New York Stock Exchange under the symbol MYN. The following is a summary of significant accounting policies followed by the Fund. (a) Valuation of investments--Municipal bonds are traded primarily in the over-the-counter market 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, which are traded on exchanges, are valued at their closing prices as of the close of such exchanges. Options, which are traded on exchanges, are valued at their last sale price as of the close of such exchanges or, lacking any sales, at the last available bid price. Secur- ities with remaining maturities of sixty days or less are valued at amortized cost, which approximates market value. Securities for which market quotations are not readily available are valued at their fair value as determined in good faith by or under the direction of the Board of Directors of the Fund. (b) Financial futures contracts--The Fund may purchase or sell interest rate futures contracts and options on such futures contracts for the purpose of hedging the market risk on existing securities or the intended purchase of securities. Futures contracts are contracts for delayed delivery of securities at a specific future date and at a specific price or yield. Upon entering into a contract, the Fund deposits and maintains as collateral such initial margin as required by the exchange on which the transaction is effected. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. (c) Income taxes--It is the Fund's policy to comply with the re- quirements 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 trans- actions 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 trans- actions are determined on the identified cost basis. (e) Deferred organization expenses--Deferred organization expenses are amortized on a straight-line basis over a five-year period. (f) Non-income producing investments--Written and purchased options are non-income producing investments. (g) 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"). Effective January 1, 1994, the investment advisory business of FAM was reorganized from a corporation to a limited partnership. Both prior to and after the reorganization, ultimate control of FAM was vested with Merrill Lynch & Co., Inc. ("ML & Co."). The general partner of FAM is Princeton Services, Inc., an indirect wholly-owned subsidiary of ML & Co. The limited partners are ML & Co. and Merrill Lynch Investment Management, Inc. ("MLIM"), which is also an indirect wholly-owned subsidiary of ML & Co. FAM is responsible for the management of the Fund's portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Fund. For such services, the Fund pays a monthly fee at an annual rate of 0.50% of the Fund's average weekly net assets. Accounting services are provided to the Fund by FAM at cost. Certain officers and/or directors of the Fund are officers and/or directors of FAM, MLIM, Merrill Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S"), and/or ML & Co. 3. Investments: Purchases and sales of investments, excluding short-term securities, for the six months ended April 30, 1994 were $82,378,077 and $84,543,226, respectively. Net realized and unrealized gains as of April 30, 1994 were as follows: Realized Unrealized Gains Gains Long-term investments $ 6,016,131 $ 3,433,337 ----------- ----------- Total $ 6,016,131 $ 3,433,337 =========== =========== As of April 30, 1994, net unrealized appreciation for Federal income tax purposes aggregated $3,433,337, of which $8,638,287 related to appreciated securities and $5,204,950 related to depreciated securities. The aggregate cost of investments at April 30, 1994 for Federal income tax purposes was $261,140,513. 4. Capital Stock Transactions: The Fund is authorized to issue 200,000,000 shares of capital stock, including Preferred Stock, par value $.10 per share, all of which were initially classified as Common Stock. The Board of Directors is authorized, however, to reclassify any unissued shares of capital stock without approval of the holders of Common Stock. Common Stock For the six months ended April 30, 1994, shares issued and out- standing remained constant at 12,046,743. At April 30, 1994, total paid-in capital amounted to $169,211,875. Preferred Stock Auction Market Preferred Stock ("AMPS") are shares of Preferred Stock of the Fund that entitle their holders to receive cash dividends at an annual rate that may vary for the successive dividend periods. The yields in effect at April 30, 1994 were as follows: Series A, 2.60% and Series B, 2.45%. For the six months ended April 30, 1994, there were 1,700 AMPS shares authorized, issued and outstanding with a liquidation preference of $50,000 per share, plus accumulated and unpaid dividends of $76,133. The Fund pays commissions to certain broker-dealers at the end of each auction at the annual rate of one-quarter of 1% calculated on the proceeds of each auction. For the six months ended April 30, 1994, MLPF&S, an affiliate of MLIM, earned $89,844 as commis- sions. 5. Subsequent Event: On May 6, 1994, the Fund's Board of Directors declared an ordin- ary income dividend to Common Stock shareholders in the amount of $.080584 per shares, payable on May 27, 1994 to shareholders of record as of May 17, 1994. PER SHARE INFORMATION Per Share Selected Quarterly Financial Data*
Net Realized Unrealized Dividends/Distributions Investment Gains Gains Net Investment Income Capital Gains For the Quarter Income (Losses) (Losses) Common Preferred Common Preferred May 1, 1992 to July 31, 1992 $.31 $ .03 $ 1.27 $.30 $.07 -- -- August 1, 1992 to October 31, 1992 .29 (.01) (.98) .25 .04 -- -- November 1, 1992 to January 31, 1993 .30 -- .78 .25 .05 -- -- February 1, 1993 to April 30, 1993 .31 -- .67 .25 .04 -- -- May 1, 1993 to July 31, 1993 .31 -- .32 .24 .04 -- -- August 1, 1993 to October 31, 1993 .31 .06 .51 .25 .05 -- -- November 1, 1993 to January 31, 1994 .31 .45 (.20) .24 .04 $.05 $.01 February 1, 1994 to April 30, 1994 .29 .05 (2.13) .24 .04 -- -- Net Asset Value Market Price** For the Quarter High Low High Low Volume*** May 1, 1992 to July 31, 1992 $15.55 $14.20 $15.75 $14.875 762 August 1, 1992 to October 31, 1992 15.39 14.32 16.00 14.375 826 November 1, 1992 to January 31, 1993 15.23 14.45 15.625 14.25 861 February 1, 1993 to April 30, 1993 16.33 15.22 16.25 15.375 1,442 May 1, 1993 to July 31, 1993 16.48 15.94 16.50 15.375 1,019 August 1, 1993 to October 31, 1993 17.15 16.07 17.125 16.125 1,014 November 1, 1993 to January 31, 1994 17.07 16.38 16.75 15.25 870 February 1, 1994 to April 30, 1994 17.02 14.49 16.875 14.125 1,048 * Calculations are based upon shares of Common Stock outstanding at the end of each quarter. ** As reported in the consolidated transaction reporting system. *** In thousands.
Officers and Directors Arthur Zeikel, President and Director Kenneth S. Axelson, Director Herbert I. London, Director Robert R. Martin, Director Joseph L. May, Director Andre F. Perold, Director Terry K. Glenn, Executive Vice President Donald C. Burke, Vice President Vincent R. Giordano, Vice President Kenneth A. Jacob, Vice President Gerald M. Richard, Treasurer Mark B. Goldfus, Secretary Custodian The Bank of New York 110 Washington Street New York, New York 10286 Transfer Agents Common Stock: The Bank of New York 101 Barclay Street New York, New York 10286 Preferred Stock: IBJ Schroder Bank & Trust Company One State Street New York, New York 10004 NYSE Symbol MYN -----END PRIVACY-ENHANCED MESSAGE-----