MUNIHOLDINGS
NEW JERSEY
INSURED FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
January 31, 1999
<PAGE>
MuniHoldings New Jersey Insured Fund, Inc.
The Benefits and Risks of Leveraging
MuniHoldings New Jersey Insured Fund, Inc. has the ability to leverage to seek
to enhance the yield and net asset value of its Common Stock. However, these
objectives cannot be achieved in all interest rate environments. To leverage,
the Fund issues Preferred Stock, which pays dividends at prevailing short-term
interest rates, and invests the proceeds in long-term municipal bonds. The
interest earned on these investments is paid to Common Stock shareholders in the
form of dividends, and the value of these portfolio holdings is reflected in the
per share net asset value of the Fund's Common Stock. However, in order to
benefit Common Stock shareholders, the yield curve must be positively sloped;
that is, short-term interest rates must be lower than long-term interest rates.
At the same time, a period of generally declining interest rates will benefit
Common Stock shareholders. If either of these conditions change, then the risks
of leveraging will begin to outweigh the benefits.
To illustrate these concepts, assume a fund's Common Stock capitalization of
$100 million and the issuance of Preferred Stock for an additional $50 million,
creating a total value of $150 million available for investment in long-term
municipal bonds. If prevailing short-term interest rates are approximately 3%
and long-term interest rates are approximately 6%, the yield curve has a
strongly positive slope. The fund pays dividends on the $50 million of Preferred
Stock based on the lower short-term interest rates. At the same time, the fund's
total portfolio of $150 million earns the income based on long-term interest
rates. Of course, increases in short-term interest rates would reduce (and even
eliminate) the dividends on the Common Stock.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term investments,
and therefore the Common Stock shareholders are the beneficiaries of the
incremental yield. However, if short-term interest rates rise, narrowing the
differential between short-term and long-term interest rates, the incremental
yield pickup on the Common Stock will be reduced or eliminated completely. At
the same time, the market value of the fund's Common Stock (that is, its price
as listed on the New York Stock Exchange) may, as a result, decline.
Furthermore, if long-term interest rates rise, the Common Stock's net asset
value will reflect the full decline in the price of the portfolio's investments,
since the value of the fund's Preferred Stock does not fluctuate. In addition to
the decline in net asset value, the market value of the fund's Common Stock may
also decline.
As a part of its investment strategy, the Fund may invest in certain securities
whose potential income return is inversely related to changes in a floating
interest rate ("inverse floaters"). In general, income on inverse floaters will
decrease when short-term interest rates increase and increase when short-term
interest rates decrease. Investments in inverse floaters may be characterized as
derivative securities and may subject the Fund to the risks of reduced or
eliminated interest payments and losses of investment 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.
<PAGE>
MuniHoldings New Jersey Insured Fund, Inc., January 31, 1999
DEAR SHAREHOLDER
For the six-month period ended January 31, 1999, the Common Stock of
MuniHoldings New Jersey Insured Fund, Inc. earned $0.405 per share income
dividends, which included earned and unpaid dividends of $0.068. This represents
a net annualized yield of 5.17%, based on a month-end net asset value of $15.54
per share. Over the same period, the total investment return on the Fund's
Common Stock was +6.07%, based on a change in per share net asset value from
$15.09 to $15.54 and assuming reinvestment of $0.454 per share ordinary income
dividends.
For the six months ended January 31, 1999, the Fund's Auction Market Preferred
Stock had an average yield of 3.44% for Series A and 3.44% for Series B.
The Municipal Market Environment
During the six months ended January 31, 1999, long-term bond yields moved
significantly lower. US domestic economic growth remained moderate, with losses
in the manufacturing sector offset by strong growth in service-oriented
industries. Industrial commodity prices recently fell to their lowest level in
over a decade. This suggests that the current positive inflationary environment
is unlikely to be challenged in the near term. Additionally, the Federal Reserve
Board lowered short-term interest rates in September, October and November, in
part to ensure that US domestic economic growth would not be negatively impacted
by ongoing weak economic growth overseas. However, various external factors, as
well as increased volatility, contributed to the decline in bond yields as they
have for much of the past year. Episodes of foreign economic instability
generated a significant "flight to quality" rally in US Treasury securities, as
well as fostering lower tax-exempt bond yields as a result. Periods of strong
foreign equity market appreciation, particularly in Asia, have at times resulted
in higher US bond yields as foreign investors have sold US fixed-income
instruments to reinvest the proceeds in their own domestic equity markets.
Additionally, the continued distraction of President Clinton's impeachment trial
added to recent interest rate volatility. However, on balance, the favorable
fundamental economic scenario supported lower bond yields. During the six-month
period ended January 31, 1999, the yield on the US Treasury 30-year bond fell
over 60 basis points (0.60%) to 5.09%, and long-term municipal revenue bond
yields declined almost 20 basis points to 5.17%, as measured by the Bond Buyer
Revenue Bond Index.
Throughout most of 1998, the municipal bond market's performance was impeded by
a significant increase in new-issue supply. However, in recent months, the
technical position of the tax-exempt market improved. Over the last 12 months,
almost $285 billion in new long-term tax-exempt bonds was underwritten, an
increase of almost 30% compared to the same period a year ago. As municipal bond
yields declined in recent years, it has taken increasingly lower bond yields to
generate the cost savings necessary to refinance remaining higher-couponed debt.
Consequently, the rate of increases in municipal bond issuance slowed in recent
quarters. During the last six months, more than $125 billion in new tax-exempt
bonds was issued, an increase of approximately 5% compared to the same period a
year ago. During the January 31, 1999 quarter, $63 billion in new long-term
municipal bonds was underwritten, representing an increase of 5% compared to the
January 31, 1998 quarter.
The pace of tax-exempt issuance continued to slow in 1999. January's monthly
issuance was less than $15 billion, representing a decline of almost 25%
compared to January 1998's volume. Additionally, investors received more than
$22 billion in coupon payments, maturities and proceeds from early redemptions
in January. Investors can also expect to receive an additional $15 billion-$18
billion in February for reinvestment. Consequently, investor demand has been
strong in recent months, easily matching, if not at times exceeding, available
supply. We will monitor this trend closely in the coming months to determine if
the supply pressures exerted in 1998 are abating and fostering a more balanced
supply/demand environment for 1999. Such an environment should allow the
tax-exempt market's performance to more closely mirror that of its taxable
counterpart.
Foreign investors have rarely been active investors in the tax-exempt bond
market since they are unable to benefit from the inherent tax advantage of
municipal securities. Consequently, the municipal bond market has not been able
to benefit from the strong flight to quality demand enjoyed by US Treasury
securities since late 1997. This inability has in large part resulted in
significantly smaller declines in municipal bond yields compared to US Treasury
securities. However, this has resulted in the opportunity to purchase tax-exempt
securities with yields very close to or, in some instances, exceeding those of
comparable US Treasury bonds. By January 31, 1999, long-term tax-exempt bond
yields were at 102% of US Treasury securities of comparable maturities, nearly
matching the least expensive level of the past year. Municipal bond yield ratios
have averaged approximately 95% for the last six months and 92% for all of 1998.
During 1997, tax-exempt bond yield ratios averaged 84%. It is likely that the
combination of the increase in new-issue volume and the "safehaven" status of US
Treasury securities drove municipal bond yield ratios to their present
attractive levels. Should new volume decline and/or foreign financial markets
regain stability in 1999, tax-exempt bond yield ratios could quickly return to
their more historic levels (85%-88%).
Looking ahead, the expected combination of moderate economic growth in the
United States and continued negligible inflation suggests a relatively stable
interest rate environment into early 1999. However, it is likely that foreign
financial markets will again be a critical factor in determining US bond yields.
Economic problems in Russia and Brazil remain unresolved, suggesting that
additional shocks to the world's financial system are possible. On the other
hand, the continued robustness of the US economy has led to some back up in
interest rates. However, at present these factors indicate that there is little
immediate risk of sustained significant increases in long-term bond yields.
Portfolio Strategy
During the six months ended January 31, 1999, we maintained a constructive
investment strategy for MuniHoldings New Jersey Insured Fund, Inc. We believed
that a continuation of current equity market volatility would have a negative
impact on economic growth, thereby constricting global inflation and forcing
interest rates lower. This proved to be the case as turmoil increased in various
parts of the world, including Russia and Brazil. While the US economy had
performed much better than anticipated, inflation was quite benign. Our
constructive strategy helped the Fund realize attractive total returns by
enabling it to participate in the bond market rally.
Looking ahead, we expect to remain fully invested in order to seek to maintain a
high level of tax-exempt income. We expect new-issue supply in New Jersey to
remain moderate and demand for municipal bonds to remain quite strong.
In Conclusion
We appreciate your ongoing interest in MuniHoldings New Jersey Insured Fund,
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
Executive Vice President
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ Robert D. Sneeden
Robert D. Sneeden
Vice President and Portfolio Manager
March 5, 1999
2 & 3
<PAGE>
MuniHoldings New Jersey Insured Fund, Inc., January 31, 1999
PROXY RESULTS
During the six-month period ended January 31, 1999, MuniHoldings New Jersey
Insured Fund, Inc. Common Stock shareholders voted on the following proposals.
The proposals were approved at a shareholders' meeting on December 16, 1998. 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: Ronald W. Forbes 6,849,189 66,368
Cynthia A. Montgomery 6,843,740 71,817
Kevin A. Ryan 6,844,766 70,791
Arthur Zeikel 6,837,069 78,488
- ------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<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. 6,752,516 86,145 76,896
- ------------------------------------------------------------------------------------------
</TABLE>
During the six-month period ended January 31, 1999, MuniHoldings New Jersey
Insured Fund, Inc. Preferred Stock shareholders voted on the following
proposals. The proposals were approved at a shareholders' meeting on December
16, 1998. 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 Board of
Directors: Ronald W. Forbes, Cynthia
A. Montgomery, Charles C. Reilly,
Kevin A. Ryan, Richard R. West and
Arthur Zeikel as follows:
Series A 1,100 19
Series B 1,360 0
- ------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<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 1,119 0 0
Series B 1,360 0 0
- ------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- ------------------------------------------------------------------------------------------------------------
STATE
New Jersey--94.9%
- ------------------------------------------------------------------------------------------------------------
<C> <C> <C> <S> <C>
Bernards Township, New Jersey, School District, GO:
AA A1 $ 3,205 5.30% due 1/01/2022 $ 3,283
AA A1 3,370 5.30% due 1/01/2023 3,452
- ------------------------------------------------------------------------------------------------------------
AAA Aaa 3,350 Brick Township, New Jersey, Municipal Utilities Authority, Revenue
Refunding Bonds, 5% due 12/01/2016 (b) 3,426
- ------------------------------------------------------------------------------------------------------------
AAA Aaa 10,000 Delaware River and Bay Authority Revenue Bonds, 5.25% due 1/01/2026
(b) 10,236
- ------------------------------------------------------------------------------------------------------------
AAA Aaa 8,800 Delaware River Port Authority of Pennsylvania and New Jersey Revenue
Bonds (Port District Project), Series B, 5% due 1/01/2026 (e) 8,841
- ------------------------------------------------------------------------------------------------------------
AAA Aaa 2,845 East Orange, New Jersey, Board of Education, COP, 5.36%** due
8/01/2025 (d) 766
- ------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 Essex County, New Jersey, Improvement Authority, Lease Revenue
Refunding Bonds (County Jail and Youth House Project), 5.35% due
12/01/2024 (a) 5,182
- ------------------------------------------------------------------------------------------------------------
Freehold Township, New Jersey, Board of Education, GO (d):
AAA Aaa 1,455 5.40% due 7/15/2024 1,505
AAA Aaa 1,540 5.40% due 7/15/2025 1,593
- ------------------------------------------------------------------------------------------------------------
AAA Aaa 2,550 Hudson County, New Jersey, Improvement Authority, Lease Revenue
Refunding Bonds (Hudson County Lease Project), 5.40% due 10/01/2025 (b) 2,667
- ------------------------------------------------------------------------------------------------------------
Metuchen, New Jersey, School District, GO (b):
AAA Aaa 1,185 5.20% due 9/15/2023 1,209
AAA Aaa 1,245 5.20% due 9/15/2024 1,269
AAA Aaa 1,315 5.20% due 9/15/2025 1,340
AAA Aaa 1,385 5.20% due 9/15/2026 1,412
AAA Aaa 1,460 5.20% due 9/15/2027 1,488
- ------------------------------------------------------------------------------------------------------------
Middlesex County, New Jersey, COP (e):
AAA Aaa 4,855 5.25% due 6/15/2023 4,976
AAA Aaa 8,575 5.30% due 6/15/2029 8,848
- ------------------------------------------------------------------------------------------------------------
BBB- NR* 4,000 New Jersey EDA, First Mortgage Revenue Refunding Bonds (First
Mortgage--Fellowship Village), Series A, 5.50% due 1/01/2025 3,887
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Portfolio Abbreviations
To simplify the listings of MuniHoldings New Jersey Insured Fund, Inc.'s
portfolio holdings in the Schedule of Investments, we have abbreviated the names
of many of the securities according to the list at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
EDA Economic Development Authority
GO General Obligation Bonds
RITR Residual Interest Trust Receipts
VRDN Variable Rate Demand Notes
4 & 5
<PAGE>
MuniHoldings New Jersey Insured Fund, Inc., January 31, 1999
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- ------------------------------------------------------------------------------------------------------------
STATE
New Jersey (concluded)
- ------------------------------------------------------------------------------------------------------------
<C> <C> <C> <S> <C>
A1+ VMIG1+ $ 1,500 New Jersey EDA, Natural Gas Facilities Revenue Bonds (NUI
Corporation Project), VRDN, AMT, Series A, 2.80% due 6/01/2026 (a)(g) $ 1,500
- ------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 New Jersey EDA, Natural Gas Facilities Revenue Refunding Bonds (NUI
Corporation Projects), AMT, Series A, 5.70% due 6/01/2032 (e) 5,279
- ------------------------------------------------------------------------------------------------------------
AAA Aaa 3,300 New Jersey EDA, Revenue Refunding Bonds (Educational Testing
Service), Series A,4.75% due 5/15/2025 (e) 3,217
- ------------------------------------------------------------------------------------------------------------
New Jersey EDA, Water Facilities Revenue Bonds, RITR (f):
AAA Aaa 8,960 Series 34, 7.52% due 5/01/2032 9,469
AAA Aaa 7,400 Series 35, 7.47% due 2/01/2038 7,784
- ------------------------------------------------------------------------------------------------------------
AAA Aaa 1,600 New Jersey Environmental Infrastructure Trust Revenue Bonds, Series
A, 4.50% due 9/01/2018 1,539
- ------------------------------------------------------------------------------------------------------------
New Jersey Health Care Facilities Financing Authority, Revenue
Refunding Bonds:
AAA Aaa 3,270 (AHS Hospital Corporation), Series A, 5.375% due 7/01/2019 (a) 3,395
A- Baa1 3,000 (Capital Health System Obligation Group), 5.25% due 7/01/2017 2,996
AAA Aaa 1,710 (Cathedral Health Services), 5.20% due 8/01/2015 (c)(e) 1,771
AAA Aaa 2,750 (Cathedral Health Services), 5.25% due 8/01/2021 (c)(e) 2,808
BBB NR* 3,075 (Christian Health Care Center), Series A, 5.50% due 7/01/2018 3,080
AAA NR* 1,950 (Holy Name Hospital Issue), 5.25% due 7/01/2020 (a) 2,007
AAA Aaa 2,500 (Saint Barnabas Health Center), Series B, 5.25% due 7/01/2018 (e) 2,565
AAA Aaa 2,500 (Saint Barnabas Health Center), Series B, 4.75% due 7/01/2028 (e) 2,415
BBB Baa2 6,130 (Saint Elizabeth Hospital Obligation Group), 6% due 7/01/2027 6,420
AAA Aaa 1,570 (Shoreline Behavioral Health Center), 5.50% due 7/01/2017 (e) 1,657
AAA Aaa 3,270 (Shoreline Behavioral Health Center), 5.50% due 7/01/2027 (e) 3,434
AAA Aaa 3,700 (Virtua Health Issue), 4.50% due 7/01/2028 (d) 3,476
- ------------------------------------------------------------------------------------------------------------
AAA Aaa 2,200 New Jersey State Educational Facilities Authority Revenue Bonds (The
College of New Jersey), Series A, 5.125% due 7/01/2024 (e) 2,225
- ------------------------------------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority, Revenue Refunding
Bonds:
BBB Baa2 2,030 (Monmouth University), Series C, 5.75% due 7/01/2017 2,144
BBB Baa2 2,000 (Monmouth University), Series C, 5.80% due 7/01/2022 2,109
BBB Baa3 1,485 (St. Peter's College), Series B, 5.375% due 7/01/2012 1,551
AAA Aaa 2,850 (University of Medicine & Dentistry), Series B, 5.25% due
12/01/2021 (a) 2,921
- ------------------------------------------------------------------------------------------------------------
New Jersey State Housing and Mortgage Finance Agency Revenue Bonds
(Home Buyer), AMT (e):
AAA Aaa 4,195 Series K, 6.375% due 10/01/2026 4,507
AAA Aaa 2,000 Series U, 5.60% due 10/01/2012 2,112
AAA Aaa 2,820 Series U, 5.65% due 10/01/2013 2,977
AAA Aaa 5,000 Series U, 5.85% due 4/01/2029 5,280
- ------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 New Jersey State Transportation Trust Fund Authority Revenue Bonds,
Transportation System, Series A, 4.50% due 6/15/2019 (d) 4,781
- ------------------------------------------------------------------------------------------------------------
AAA NR* 1,200 North Hudson, New Jersey, Sewer Authority Revenue Bonds, 5.125% due
8/01/2022 (b) 1,214
- ------------------------------------------------------------------------------------------------------------
AAA Aaa 2,045 Perth Amboy, New Jersey, Refunding (Board of Education), GO, 5.25%
due 8/01/2019 (e) 2,119
- ------------------------------------------------------------------------------------------------------------
AA A1 3,500 Rutgers State University, New Jersey, Revenue Bonds, Series A, 5.20%
due 5/01/2027 3,569
- ------------------------------------------------------------------------------------------------------------
New York and New Jersey--3.6%
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Port Authority of New York and New Jersey, Consolidated Revenue
Bonds, Second Installment, AMT, 117th Series, 4.75% due 11/15/2017 (b) 984
- ------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 Port Authority of New York and New Jersey, Special Obligation
Revenue Bonds (JFK International Air Terminal Project), AMT, Series
6, 5.75% due 12/01/2025 (e) 5,309
- ------------------------------------------------------------------------------------------------------------
A1+ VMIG1+ 100 Port Authority of New York and New Jersey, Special Obligation
Revenue Refunding Bonds (Versatile Structure Obligation), VRDN,
Series 5, 2.75% due 8/01/2024 (g) 100
- ------------------------------------------------------------------------------------------------------------
Puerto Rico--0.6%
- ------------------------------------------------------------------------------------------------------------
AAA Aaa 1,095 Puerto Rico Public Buildings Authority Revenue Bonds (Guaranteed
Government Facilities), Series B, 5% due 7/01/2027 (a) 1,098
- ------------------------------------------------------------------------------------------------------------
Total Investments (Cost--$171,207)--99.1% 175,192
Other Assets Less Liabilities--0.9% 1,566
--------
Net Assets--100.0% $176,758
========
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(a) AMBAC Insured.
(b) FGIC Insured.
(c) FHA Insured.
(d) FSA Insured.
(e) MBIA Insured.
(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 January 31, 1999.
(g) The interest rate is subject to change periodically based upon prevailing
market rates. The interest rate shown is the rate in effect at January 31,
1999.
+ Highest short-term rating by Moody's Investors Service, Inc.
* Not Rated.
** Represents a zero coupon bond; the interest rate shown is the effective
yield at time of purchase by the Fund.
See Notes to Financial Statements.
Quality Profile
The quality ratings of securities in the Fund as of January 31, 1999 were as
follows:
- --------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
- --------------------------------------------------------------------------------
AAA/Aaa ...................... 79.8%
AA/Aa ........................ 5.8
A/A .......................... 1.7
BBB/Baa ...................... 10.9
Other+ ....................... 0.9
- --------------------------------------------------------------------------------
+ Temporary investments in short-term municipal securities.
6 & 7
<PAGE>
MuniHoldings New Jersey Insured Fund, Inc., January 31, 1999
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
As of January 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Assets: Investments, at value (identified cost--$171,207,182) (Note 1a) ....... $175,191,930
Cash .................................................................. 5,371
Receivables:
Interest ........................................................... $ 1,916,629
Securities sold .................................................... 15,000 1,931,629
-----------
Deferred organization expenses (Note 1e) .............................. 18,754
Prepaid expenses and other assets ..................................... 11,123
------------
Total assets .......................................................... 177,158,807
------------
- --------------------------------------------------------------------------------------------------------------------------
Liabilities: Payables:
Dividends to shareholders (Note 1f) ................................ 190,088
Offering costs (Note 1e) ........................................... 73,780
Investment adviser (Note 2) ........................................ 68,091 331,959
-----------
Accrued expenses and other liabilities ................................ 68,539
------------
Total liabilities ..................................................... 400,498
------------
- --------------------------------------------------------------------------------------------------------------------------
Net Assets: Net assets ............................................................ $176,758,309
============
- --------------------------------------------------------------------------------------------------------------------------
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.10 per share (2,720 shares of AMPS*
issued and outstanding at $25,000 per share liquidation preference) $ 68,000,000
Common Stock, par value $.10 per share (7,000,496 shares
issued and outstanding) ............................................ $ 700,050
Paid-in capital in excess of par ...................................... 103,388,100
Undistributed investment income--net .................................. 578,865
Undistributed realized capital gains on investments--net (Note 5) ..... 106,546
Unrealized appreciation on investments--net ........................... 3,984,748
-----------
Total--Equivalent to $15.54 net asset value per share of
Common Stock (market price--$14.875) .................................. 108,758,309
------------
Total capital ......................................................... $176,758,309
============
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Auction Market Preferred Stock.
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
For the Six Months Ended January 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Investment Income
(Note 1d): Interest and amortization of premium and discount earned .............. $ 4,576,685
- --------------------------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fees (Note 2) ..................................... $ 482,270
Commission fees (Note 4) .............................................. 87,095
Professional fees ..................................................... 38,266
Accounting services (Note 2) .......................................... 26,590
Transfer agent fees ................................................... 19,397
Printing and shareholder reports ...................................... 11,497
Directors' fees and expenses .......................................... 10,246
Custodian fees ........................................................ 6,594
Pricing fees .......................................................... 4,866
Listing fees .......................................................... 3,351
Amortization of organization expenses (Note 1e) ....................... 2,052
----------
Other ................................................................. 7,886
Total expenses before reimbursement ................................... 700,110
Reimbursement of expenses (Note 2) .................................... (44,865)
----------
Total expenses after reimbursement .................................... 655,245
-----------
Investment income--net ................................................ 3,921,440
-----------
- --------------------------------------------------------------------------------------------------------------------------
Realized & Realized gain on investments--net ..................................... 658,221
Unrealized Gain on Change in unrealized appreciation on investments--net ................. 2,856,084
Investments--Net -----------
(Notes 1b, 1d & 3): Net Increase in Net Assets Resulting from Operations .................. $ 7,435,745
===========
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8 & 9
<PAGE>
MuniHoldings New Jersey Insured Fund, Inc., January 31, 1999
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six For the Period
Months Ended Mar. 11, 1998+
Increase (Decrease) in Net Assets: Jan. 31, 1999 to July 31, 1998
- ------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Operations: Investment income--net ......................................... $ 3,921,440 $ 3,212,922
Realized gain (loss) on investments--net ....................... 658,221 (116,731)
Change in unrealized appreciation on investments--net .......... 2,856,084 1,128,664
------------ ------------
Net increase in net assets resulting from operations ........... 7,435,745 4,224,855
------------ ------------
- ----------------------------------------------------------------------------------------------------------------------
Dividends & Investment income--net:
Distributions to Common Stock ................................................ (2,869,768) (1,809,255)
Shareholders Preferred Stock ............................................. (1,036,429) (840,045)
(Note 1f): Realized gain on investments--net:
Common Stock ................................................ (303,990) --
Preferred Stock ............................................. (130,954) --
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders ............................... (4,341,141) (2,649,300)
------------ ------------
- ----------------------------------------------------------------------------------------------------------------------
Capital Stock Proceeds from issuance of Common Stock ......................... -- 104,025,000
Transactions Proceeds from issuance of Preferred Stock ...................... -- 68,000,000
(Notes 1e & 4): Value of shares issued to Common Stock shareholders in
reinvestment of dividends ................................... 696,570 228,035
Offering costs resulting from the issuance of Common Stock ..... -- (190,000)
Offering and underwriting costs resulting from the issuance
of Preferred Stock .......................................... -- (771,460)
------------ ------------
Net increase in net assets derived from capital stock
transactions ................................................ 696,570 171,291,575
------------ ------------
- ----------------------------------------------------------------------------------------------------------------------
Net Assets: Total increase in net assets ................................... 3,791,174 172,867,130
Beginning of period ............................................ 172,967,135 100,005
------------ ------------
End of period* ................................................. $176,758,309 $172,967,135
============ ============
- ----------------------------------------------------------------------------------------------------------------------
* Undistributed investment income--net ........................ $ 578,865 $ 563,622
============ ============
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Commencement of operations.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements For the Six For the Period
Months Ended Mar. 11, 1998+
Increase (Decrease) in Net Assets: Jan. 31, 1999 to July 31, 1998
- ------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Per Share Net asset value, beginning of period ........................... $ 15.09 $ 15.00
Operating ------------ ------------
Performance: Investment income--net ......................................... .56 .46
Realized and unrealized gain on investments--net ............... .51 .16
------------ ------------
Total from investment operations ............................... 1.07 .62
------------ ------------
Less dividends and distributions to Common Stock shareholders:
Investment income--net ....................................... (.41) (.26)
Realized gain on investments--net ............................ (.04) --
------------ ------------
Total dividends and distributions to Common Stock shareholders . (.45) (.26)
------------ ------------
Capital charge resulting from issuance of Common Stock ......... -- (.03)
------------ ------------
Effect of Preferred Stock activity:++
Dividends and distributions to Preferred Stock
shareholders:
Investment income--net ...................................... (.15) (.12)
Realized gain on investments--net ........................... (.02) --
Capital charge resulting from issuance of Preferred Stock ...... -- (.12)
------------ ------------
Total effect of Preferred Stock activity ....................... (.17) (.24)
------------ ------------
Net asset value, end of period ................................. $ 15.54 $ 15.09
============ ============
Market price per share, end of period .......................... $ 14.875 $ 15.375
============ ============
- -----------------------------------------------------------------------------------------------------------------------
Total Investment Based on market price per share ................................ (.35%)+++ 4.29%+++
Return:** ============ ============
Based on net asset value per share ............................. 6.07%+++ 2.35%+++
============ ============
- -----------------------------------------------------------------------------------------------------------------------
Ratios to Expenses, net of reimbursement ................................. .75%* .18%*
Average Net ============ ============
Assets:*** Expenses ....................................................... .80%* .76%*
============ ============
Investment income--net ......................................... 4.47%* 5.13%*
============ ============
- -----------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, net of Preferred Stock, end of period (in thousands) $ 108,758 $ 104,967
Data: ============ ============
Preferred Stock outstanding, end of period (in thousands) ...... $ 68,000 $ 68,000
============ ============
Portfolio turnover ............................................. 36.24% 32.46%
============ ============
- -----------------------------------------------------------------------------------------------------------------------
Leverage: Asset coverage per $1,000 ...................................... $ 2,599 $ 2,544
============ ============
- -----------------------------------------------------------------------------------------------------------------------
Dividends Per Share Series A--Investment income--net ............................... $ 381 $ 317
On Preferred Stock ============ ============
Outstanding: Series B--Investment income--net ............................... $ 381 $ 300
============ ============
- -----------------------------------------------------------------------------------------------------------------------
</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.
+ Commencement of operations.
++ The Fund's Preferred Stock was issued on March 30, 1998.
+++ Aggregate total investment return.
See Notes to Financial Statements.
10 & 11
<PAGE>
MuniHoldings New Jersey Insured Fund, Inc., January 31, 1999
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniHoldings New Jersey 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'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
MUJ. 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 for which market quotations are not
readily available are valued at 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
call and put options. When the Fund writes an option, an amount equal to the
premium received by the Fund is reflected as an asset and an equivalent
liability. The amount of the liability is subsequently marked to market to
reflect the current market value of the option written.
When a security is purchased or sold through an exercise of an option, the
related premium paid (or received) is added to (or deducted from) the basis of
the security acquired or deducted from (or added to) the proceeds of the
security sold. When an option expires (or the Fund enters into a closing
transaction), the Fund realizes a gain or loss on the option to the extent of
the premiums received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(c) Income taxes--It is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no Federal income tax provision is required.
(d) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Interest income is recognized on the accrual basis. Discounts and market
premiums are amortized into interest income. Realized gains and losses on
security transactions are determined on the identified cost basis.
(e) Deferred organization and offering expenses--Deferred organization expenses
are amortized on a straight-line basis over a period not exceeding five years.
In accordance with Statement of Position 98-5, any unamortized organization
expenses will be expensed on the first day of the next fiscal year beginning
after December 15, 1998. This charge will not have any material impact on the
operations of the Fund. Direct expenses relating to the public offering of the
Fund's Common and Preferred Stock were charged to capital at the time of
issuance of the shares.
(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 0.55% of the Fund's average weekly net assets. For the six
months ended January 31, 1999, FAM earned fees of $482,270, of which $44,865 was
voluntarily waived.
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 January 31, 1999 were $63,473,770 and $66,662,416, respectively.
Net realized gains for the six months ended January 31, 1999 and net unrealized
gains as of January 31, 1999 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains Gains
- --------------------------------------------------------------------------------
Long-term investments ............... $658,221 $ 3,984,748
-------- -----------
Total ............................... $658,221 $ 3,984,748
======== ===========
- --------------------------------------------------------------------------------
As of January 31, 1999, net unrealized appreciation for Federal income tax
purposes aggregated $3,984,748, of which $4,070,196 related to appreciated and
$85,448 related to depreciated securities. The aggregate cost of investments at
January 31, 1999 for Federal income tax purposes was $171,207,182.
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 holders of
Common Stock.
12 & 13
<PAGE>
MuniHoldings New Jersey Insured Fund, Inc., January 31, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
Common Stock
Shares issued and outstanding during the six months ended January 31, 1999
increased by 44,928 as a result of dividend reinvestment and during the period
March 11, 1998 to July 31, 1998 shares issued and outstanding increased by
6,935,000 as a result of the initial public offering and by 13,901 as a result
of dividend reinvestment.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred Stock of the
Fund, with a par value of $.10 per share and a liquidation preference of $25,000
per share, that entitle their holders to receive cash dividends at an annual
rate that may vary for the successive dividend periods. The yields in effect at
January 31, 1999 were Series A, 2.33% and Series B, 3.05%.
Shares issued and outstanding during the six months ended January 31, 1999
remained constant and during the period March 11, 1998 to July 31, 1998
increased by 2,720 as a result of the AMPS offering.
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 January 31, 1999, MLPF&S earned $59,397
as commissions.
5. Capital Loss Carryforward:
At July 31, 1998, the Fund had a net capital loss carryforward of approximately
$117,000, all of which expires in 2006. This amount will be available to offset
like amounts of any future taxable gains.
6. Subsequent Event:
On February 4, 1999, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.067933 per share,
payable on February 25, 1999 to shareholders of record as of February 19, 1999.
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.
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute substantially all of its net
investment income to its shareholders on a monthly basis. However, in order to
provide shareholders with a more consistent yield to the current trading price
of shares of Common Stock of the Fund, the Fund may at times pay out less than
the entire amount of net investment income earned in any particular month and
may at times in any particular month pay out such accumulated but undistributed
income in addition to net investment income earned in that month. As a result,
the dividends paid by the Fund for any particular month may be more or less than
the amount of net investment income earned by the Fund during such month. The
Fund's current accumulated but undistributed net investment income, if any, is
disclosed in the Statement of Assets, Liabilities and Capital, which comprises
part of the financial information included in this report.
14 & 15
<PAGE>
Officers and Directors
Arthur Zeikel, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Robert A. DiMella, Vice President
Kenneth A. Jacob, Vice President
Robert D. Sneeden, Vice President
Donald C. Burke, Vice President and Treasurer
Patrick D. Sweeney, Secretary
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Stock:
IBJ Whitehall Bank & Trust Company
One State Street
New York, NY 10004
NYSE Symbol
MUJ
This report, including the financial information herein, is transmitted to the
shareholders of MuniHoldings New Jersey 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
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.
MuniHoldings New Jersey
Insured Fund, Inc.
Box 9011
Princeton, NJ
08543-9011 HOLDNJ2--1/99
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