Annual Reports | Quarterly Filings | News | Prospectuses | Proxies | Mergers & Acquisitions | Initial Public Offerings

MUNIHOLDINGS NEW JERSEY INSURED FUND INC
N-14 8C, 2000-10-11

Previous: HARTFORD SERIES FUND INC, 485APOS, EX-99.I, 2000-10-11

Next: SAN DIEGO SOCCER DEVELOPMENT CORP, S-4, 2000-10-11

---

---

Pre-Effective Amendment No.		¨
Post-Effective Amendment No.		¨
(Check appropriate box or boxes)

Frank P. Bruno, Esq.		Michael J. Hennewinkel, Esq.
Brown & Wood LLP		Fund Asset Management, L.P.
One World Trade Center		800 Scudders Mill Road
New York, NY 10048-0557		Plainsboro, NJ 08536

---

---

Title of Securities Being Registered		Amount Being Registered (1)		Proposed Maximum Offering Price Per Unit (1)		Proposed Maximum Aggregate Offering Price (1)		Amount of Registration Fee (3)
Common Stock ($.10 par value)		3,563,853		$13.20		$47,042,860		$12,419
Auction Market Preferred Stock, Series E		1,120		$25,000(2)		$28,000,000		$7,392

---

(1)	Estimated solely for the purpose of calculating the filing fee.

(2)	Represents the liquidation preference of a share of auction market preferred stock after the reorganization.

(3)	Paid by wire transfer to the designated lockbox of the Securities and Exchange Commission in Pittsburgh, Pennsylvania.

---

---

(1)  To approve or disapprove an Agreement and Plan of Reorganization (the “Agreement and Plan”) contemplating (i) the acquisition of substantially all of the assets and the assumption of substantially all of the liabilities of New Jersey Insured IV by New Jersey Insured, in exchange solely for (A) newly-issued shares of common stock of New Jersey Insured (the “New Jersey Insured Common Stock”) having an aggregate net asset value equal to the aggregate net asset value of the common stock of New Jersey Insured IV (the “New Jersey Insured IV Common Stock”) and (B) shares of a newly-created series of Auction Market Preferred Stock (“AMPS”) of New Jersey Insured to be designated Series E (the “New Jersey Insured Series E AMPS”) having a relative liquidation preference and value equal to the relative liquidation preference and value of the AMPS of New Jersey Insured IV, designated Series A (the “New Jersey Insured IV AMPS”); (ii) the distribution by New Jersey Insured IV, on a proportionate basis, of (A) shares of New Jersey Insured Common Stock to the holders of New Jersey Insured IV Common Stock and (B) shares of New Jersey Insured Series E AMPS to the holders of New Jersey Insured IV AMPS. A vote in favor of this proposal also will constitute a vote in favor of the liquidation and dissolution of New Jersey Insured IV under the laws of the State of Maryland and the termination of the registration of New Jersey Insured IV under the Investment Company Act of 1940, as amended;

(2)  To elect a Board of Directors of each of New Jersey Insured and New Jersey Insured IV to serve for the ensuing year;

(3) To consider and act upon a proposal to ratify the selection of independent auditors of each Fund for its current fiscal year; and

(4) To transact such other business as properly may come before a Meeting or any adjournment thereof.

By Order of the Boards of Directors

JODI M. PINEDO

Secretary of MuniHoldings New Jersey

Insured Fund, Inc. and MuniHoldings

New Jersey Insured Fund IV, Inc.

1.

To approve or disapprove an Agreement and Plan of Reorganization between the funds;

2.

To elect a Board of Directors of each of New Jersey Insured and New Jersey Insured IV;

3.

To ratify the selection of the independent auditors of each of New Jersey Insured and New Jersey Insured IV; and

4.

To transact such other business as may properly come before a Meeting or adjournment thereof.

New Jersey Insured, which will be the surviving fund; and

New Jersey Insured IV.

		Page
INTRODUCTION		5
ITEM 1.    THE REORGANIZATION		7
SUMMARY		7
RISK FACTORS AND SPECIAL CONSIDERATIONS		16
New Jersey Municipal Bonds		16
Interest Rate And Credit Risk		16
Non-Diversification		16
Rating Categories		16
Private Activity Bonds		16
Portfolio Insurance		16
Leverage		17
Portfolio Management		18
Inverse Floating Obligations		18
Options and Futures Transactions		18
Antitakeover Provisions		18
Ratings Considerations		18
COMPARISON OF THE FUNDS		19
Financial Highlights		19
Investment Objective and Policies		22
Portfolio Insurance		24
Description of New Jersey Municipal Bonds and Municipal Bonds		26
Special Considerations Relating to New Jersey Municipal Bonds		27
Other Investment Policies		27
Information Regarding Options and Futures Transactions		28
Investment Restrictions		31
Rating Agency Guidelines		33
Portfolio Composition		34
Portfolio Transactions		35
Portfolio Turnover		35
Net Asset Value		36
Capital Stock		36
Management of the Funds		39
Code Of Ethics		40
Voting Rights		40
Stockholder Inquiries		41
Dividends and Distributions		41
Automatic Dividend Reinvestment Plan		43
Mutual Fund Investment Option		44
Liquidation Rights of Holders of AMPS		45
Tax Rules Applicable to the Funds and their Stockholders		45
AGREEMENT AND PLAN OF REORGANIZATION		50
General		50
Procedure		51
Terms of the Agreement and Plan of Reorganization		52
Potential Benefits to Holders of Common Stock of the Funds as a Result of the Reorganization		54
Surrender and Exchange of Stock Certificates		55
Tax Consequences of the Reorganization		56
Capitalization		58

ITEM 2.    ELECTION OF DIRECTORS				59
Committee and Board Meetings				61
Compliance with Section 16(a) of the Securities Exchange Act of 1934				61
Interested Persons				61
Compensation of Directors				61
Officers of the Funds				61
ITEM 3.    SELECTION OF INDEPENDENT AUDITORS				62
INFORMATION CONCERNING THE ANNUAL MEETINGS				62
Date, Time and Place of Meetings				62
Solicitation, Revocation and Use of Proxies				62
Record Date and Outstanding Shares				63
Security Ownership of Certain Beneficial Owners and Management				63
Voting Rights and Required Vote				63
Appraisal Rights				64
ADDITIONAL INFORMATION				64
CUSTODIAN				66
TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND REGISTRAR				66
LEGAL PROCEEDINGS				66
LEGAL OPINIONS				66
EXPERTS				66
STOCKHOLDER PROPOSALS				67
INDEX TO FINANCIAL STATEMENTS				F-1

EXHIBIT I		INFORMATION PERTAINING TO EACH FUND		I-1
EXHIBIT II		AGREEMENT AND PLAN OF REORGANIZATION		II-1
EXHIBIT III		ECONOMIC AND OTHER CONDITIONS IN NEW JERSEY		III-1
EXHIBIT IV		RATINGS OF MUNICIPAL BONDS AND COMMERCIAL PAPER		IV-1
EXHIBIT V		PORTFOLIO INSURANCE		V-1

		Item 1.		Item 2.				Item 3.
Title of Class		Approval of Agreement and Plan of Reorganization		Election of AMPS Directors		Election of Remaining Directors		Ratification of Selection of Independent Auditors
New Jersey Insured*
Series A AMPS		Yes		Yes		Yes		Yes
Series B AMPS		Yes		Yes		Yes		Yes
Series C AMPS		Yes		Yes		Yes		Yes
Series D AMPS		Yes		Yes		Yes		Yes
New Jersey Insured IV
Common Stock		Yes		No		Yes		Yes
Series A AMPS		Yes		Yes		Yes		Yes

*

Holders of New Jersey Insured Common Stock are not required to vote in connection with the approval of the Agreement and Plan of Reorganization and are not entitled to vote in connection with the election of the AMPS Directors. Holders of New Jersey Insured Common Stock will vote in connection with the election of the remaining Directors of New Jersey Insured and the ratification of the selection of independent auditors of New Jersey Insured and will receive a separate Proxy Statement and proxy with respect to such matters.

		Item 1.		Item 2.				Item 3.
Fund		Approval of Agreement and Plan of Reorganization		Election of AMPS Directors		Election of Remaining Directors		Ratification of the Selection of Independent Auditors
New Jersey Insured*		Affirmative vote of a majority of the votes entitled to be cast by the holders of New Jersey Insured AMPS, voting as a separate class		Affirmative vote of a plurality of the votes cast by the holders of New Jersey Insured AMPS, voting as a separate class		Affirmative vote of a plurality of the votes cast by the holders of New Jersey Insured Common Stock and the holders of New Jersey Insured AMPS, voting together as a single class		Affirmative vote of a majority of the votes cast by the holders of New Jersey Insured Common Stock and the holders of New Jersey Insured AMPS, voting together as a single class
New Jersey Insured IV		Affirmative vote of a majority of the votes entitled to be cast by the holders of New Jersey Insured IV Common Stock and the holders of New Jersey Insured IV AMPS, voting together as a single class		Affirmative vote of a plurality of the votes cast by the holders of New Jersey Insured IV AMPS, voting as a separate class		Affirmative vote of a plurality of the votes cast by the holders of New Jersey Insured IV Common Stock and the holders of New Jersey Insured IV AMPS, voting together as a single class		Affirmative vote of a majority of the votes cast by the holders of New Jersey Insured IV Common Stock and the holders of New Jersey Insured IV AMPS, voting together as a single class
		Affirmative vote of a majority of the votes entitled to be cast by the holders of New Jersey Insured IV AMPS, voting as a separate class

*	This Joint Proxy Statement and Prospectus is being used to solicit the vote of the holders of New Jersey Insured AMPS at the Meeting for New Jersey Insured. The vote of the holders of New Jersey Insured Common Stock on Items 2 and 3 is being solicited by a separate Proxy Statement.

		Actual						Pro Forma Combined Fund
		New Jersey Insured			New Jersey Insured IV
Common Stockholder Transaction Expenses:      Maximum Sales Load (as a percentage of the offering      price) imposed on purchases of Common Stock		None(b)			None(b)			None(c)
Dividend Reinvestment and Cash Purchase Plan Fees		None			None			None
Annual Expenses (as a percentage of net assets      attributable to Common Stock at June 30, 2000): (d)
Investment Advisory Fees(e)		0.97	%		0.92	%		0.96	%
Interest Payments on Borrowed Funds		None			None			None
Other Expenses		0.36	%		0.76	%		0.35	%
Total Annual Expenses(f)		1.33	%		1.68	%		1.31	%

(a)

No information is presented with respect to AMPS because neither Fund’s operating expenses are, and the expenses of the Reorganization will not be, borne by the holders of AMPS of either Fund. Generally, AMPS are sold at a fixed liquidation preference of $25,000 per share and investment return is set at an auction.

(b)	Shares of Common Stock purchased in the secondary market may be subject to brokerage commissions or other charges.

(c)	No sales load will be charged in connection with the issuance of shares as part of the Reorganization. Shares of Common Stock are not available for purchase from the Funds but may be purchased through a broker-dealer subject to individually negotiated commission rates.

(d)	The pro forma annual operating expenses for the Combined Fund are projections for a 12-month period.

(e)	Based on net assets of each Fund and the Combined Fund (each excluding assets attributable to AMPS) as of June 30, 2000. If assets attributable to AMPS are included, the Investment Advisory Fee for each Fund and the Combined Fund would be 0.55%.

(f)

Based on net assets (excluding assets attributable to AMPS) of each Fund and the Combined Fund as of June 30, 2000; excludes the waiver of a portion of the advisory fee and reimbursement of certain other expenses with respect to New Jersey Insured IV by FAM. Including such fee waivers and expense reimbursements, the Total Annual Expenses for New Jersey Insured IV would have been 1.26%. If assets attributable to AMPS are included, the Total Annual Expenses for New Jersey Insured, New Jersey Insured IV (excluding the advisory fee waiver and expense reimbursement) and the Combined Fund would have been 0.75%, 1.01% and 0.75%, respectively. If assets attributable to AMPS and the above described advisory fee waiver and expense reimbursement with respect to New Jersey Insured IV are included, the Total Annual Expenses for New Jersey Insured IV would have been 0.76%. It is not anticipated that FAM will waive its advisory fee or reimburse expenses with respect to New Jersey Insured IV on an ongoing basis or with respect to the Combined Fund after the Reorganization.

		1 Year		3 Years		5 Years		10 Years
An investor would pay the following expenses on a $1,000 investment      assuming (1) the operating expense ratio for each Fund set forth above      and (2) a 5% annual return throughout the period:
New Jersey Insured		$14		$42		$73		$160
New Jersey Insured IV		$17		$53		$91		$199
Combined Fund*		$13		$42		$72		$158

*	Assumes that the Reorganization had taken place on June 30, 2000.

New Jersey Insured

New Jersey Insured was incorporated under the laws of the State of Maryland on January 27, 1998 and commenced operations on March 11, 1998.   New Jersey Insured has outstanding Common Stock and four series of AMPS, designated Series A, Series B, Series C and Series D. As of June 30, 2000, New Jersey Insured had net assets (including assets attributable to New Jersey Insured AMPS) of $403,267,927.

New Jersey Insured IV

New Jersey Insured IV was incorporated under the laws of the State of Maryland on April 5, 1999 and commenced operations on July 23, 1999.   New Jersey Insured IV has outstanding Common Stock and one series of AMPS, designated Series A. As of June 30, 2000, New Jersey Insured IV had net assets (including assets attributable to New Jersey Insured IV AMPS) of $69,737,257.

Comparison of the Funds

Investment Objectives and Policies.    Each Fund is a non-diversified, leveraged, closed-end management investment company. The Funds have substantially similar investment objectives and policies. Each Fund seeks to provide its stockholders (including holders of AMPS) with current income exempt from Federal income tax and New Jersey personal income taxes. Each Fund seeks to achieve its investment objective by investing primarily in a portfolio of long-term

investment grade New Jersey Municipal Bonds. Under normal circumstances, at least 80% of each Fund’s assets will be invested in municipal obligations covered by insurance guaranteeing the timely payment of principal at maturity and interest when due. Each Fund intends to invest primarily in long-term New Jersey Municipal Bonds and other long-term municipal obligations exempt from Federal income taxes but not New Jersey personal income taxes (“Municipal Bonds”) with a maturity of more than ten years.

As of June 30, 2000, the weighted average maturity of the portfolio of New Jersey Insured and New Jersey Insured IV was 23.02 years and 20.96 years, respectively. The average maturity of each Fund’s portfolio securities, and therefore each Fund’s portfolio as a whole, will vary based upon FAM’s assessment of economic and market conditions. See “Comparison of the Funds —Investment Objective and Policies.”

Capital Stock.    As set forth above, each Fund has outstanding both Common Stock and AMPS. The New Jersey Insured Common Stock is traded on the NYSE. The New Jersey Insured IV Common Stock is traded on the AMEX. As of July 31, 2000, (i) the net asset value per share of New Jersey Insured Common Stock was $13.14 and the market price per share was $11.6875 and (ii) the net asset value per share of New Jersey Insured IV Common Stock was $14.21 and the market price per share was $13.00. The AMPS of each Fund have a liquidation preference of $25,000 per share and are sold principally at auctions. See “Comparison of the Funds—Capital Stock.”

Auctions generally have been held and will be held every seven days for each series of AMPS of each Fund unless the applicable Fund elects, subject to certain limitations, to have a special dividend period. In connection with the Reorganization, the dividend payment date and auction date for the New Jersey Insured Series E AMPS will be different than the dividend payment date and auction date for the New Jersey Insured IV AMPS. See “Comparison of the Funds—Capital Stock.” The following table provides information about the dividend rates for each series of AMPS of each Fund as of a recent auction date.

		Auction Date		Fund		Series		Dividend Rate
		August 14, 2000		New Jersey Insured		A		2.606	%
		August 17, 2000		New Jersey Insured		B		3.90	%
		August 15, 2000		New Jersey Insured		C		4.13	%
		August 16, 2000		New Jersey Insured		D		4.13	%
		August 17, 2000		New Jersey Insured IV		A		3.20	%

Advisory Fees.    The investment adviser for each Fund is FAM. FAM is an affiliate of Merrill Lynch Investment Managers, L.P. (“MLIM”) and both FAM and MLIM are owned and controlled by Merrill Lynch & Co., Inc. (“ML & Co.”). The principal business address of FAM is 800 Scudders Mill Road, Plainsboro, New Jersey 08536. FAM was organized as an investment adviser in 1977 and offers investment advisory services to more than 50 registered investment companies. FAM and its affiliates, including MLIM, act as investment adviser for over 100 registered investment companies and also offer portfolio management and portfolio analysis services to individuals and institutional accounts.

FAM is responsible for the management of each Fund’s investment portfolio and for providing administrative services to each Fund. Robert A. DiMella and Robert D. Sneeden serve as the portfolio managers for New Jersey Insured. Mr. DiMella and Roberto W. Roffo serve as the portfolio managers for New Jersey Insured IV. After the Reorganization Messrs. DiMella and Sneeden will serve as the portfolio managers of the Combined Fund.

Pursuant to separate investment advisory agreements between each Fund and FAM, each Fund pays FAM a monthly fee at the annual rate of 0.55% of such Fund’s average weekly net assets, including assets acquired from the sale of AMPS. In the past, FAM has voluntarily waived a portion of its advisory fee and reimbursed certain other expenses with respect to each Fund. FAM no longer does so with respect to New Jersey Insured. It is not anticipated that FAM will continue such advisory fee waivers or expense reimbursements with respect to New Jersey Insured IV on an ongoing basis or with respect to the Combined Fund after the Reorganization. Subsequent to the Reorganization, FAM will continue to receive compensation at the rate of 0.55% of the average weekly net assets, including assets acquired from the sale of AMPS, of the Combined Fund. See “Comparison of the Funds—Management of the Funds.”

Other Significant Fees.    The Bank of New York (“BONY”) is the custodian, transfer agent, dividend disbursing agent and registrar for the New Jersey Insured Common Stock. State Street Bank and Trust Company (“State Street”) is the custodian, transfer agent, dividend disbursing agent and registrar for the New Jersey Insured IV Common Stock. BONY is the transfer agent, dividend disbursing agent, registrar and auction agent for the AMPS of each Fund (in such capacity, the “Auction Agent”). BONY and State Street each receive fees for providing these services. The principal business addresses for BONY and State Street with respect to the above-described capacities are as follows: The Bank of New York, 90 Washington Street, New York, New York 10286 (for its custodial services) and 101 Barclay Street, New York, New York 10286 (for its transfer agency and auction agency services); and State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110 (for its transfer agency services) and One Heritage Drive, P2N, North Quincy, Massachusetts 02171 (for its custodial services). See “Comparison of the Funds—Management of the Funds.”

Overall Expense Ratio.    As set forth above, in the past, FAM has voluntarily waived a portion of its advisory fee and reimbursed certain other expenses with respect to each Fund. FAM no longer does so with respect to New Jersey Insured. It is not anticipated that FAM will continue such advisory fee waiver or expense reimbursement with respect to New Jersey Insured IV on an ongoing basis or with respect to the Combined Fund after the Reorganization.

The table below sets forth (i) the total annualized operating expense ratio for New Jersey Insured and New Jersey Insured IV (excluding the advisory fee waiver and expense reimbursement) based on their respective net assets (excluding assets attributable to AMPS) as of June 30, 2000 and (ii) the total annualized operating expense ratio for the Combined Fund (excluding any advisory fee waivers and expense reimbursements) based on the pro forma net assets (excluding assets attributable to AMPS) of the Combined Fund as of June 30, 2000.

				Net Assets (Excluding Assets Attributable to AMPS) as of June 30, 2000		Total Annualized Operating Expense Ratio
		New Jersey Insured		$228,267,927		1.33	%
		New Jersey Insured IV		$  41,737,257		1.68	%*
		Combined Fund		$270,005,184		1.31	%

*

Including such fee waiver and expense reimbursement, the total annualized operating expense ratio for New Jersey Insured IV was 1.26% .

The table below sets forth (i) the total annualized operating expense ratio for New Jersey Insured and New Jersey Insured IV (excluding the advisory fee waiver and expense reimbursement) based on their respective net assets (including assets attributable to AMPS) as of June 30, 2000 and (ii) the total annualized operating expense ratio for the Combined Fund (excluding any advisory fee waiver and expense reimbursement) based on the pro forma net assets (including assets attributable to AMPS) of the Combined Fund as of June 30, 2000.

				Net Assets (Including Assets Attributable to AMPS) as of June 30, 2000		Total Annualized Operating Expense Ratio
		New Jersey Insured		$403,267,927		0.75	%
		New Jersey Insured IV		$  69,737,257		1.01	%*
		Combined Fund		$473,005,184		0.75	%

*

Including such fee waiver and expense reimbursement, the total annualized operating expense ratio for New Jersey Insured IV was 0.76% .

Purchases and Sales of Common Stock and AMPS.    Purchase and sale procedures for the Common Stock of each Fund are identical. Investors typically purchase and sell shares of Common Stock of each Fund through a registered broker-dealer on the NYSE (with respect to New Jersey Insured) or on the AMEX (with respect to New Jersey Insured IV), thereby incurring a brokerage commission set by such broker-dealer. Alternatively, investors may purchase or sell shares of Common Stock of the Funds through privately negotiated transactions with existing stockholders.

Purchase and sale procedures for the AMPS of each Fund also are identical. Such AMPS generally are purchased and sold at separate auctions conducted on a regular basis by the Auction Agent. Unless otherwise permitted by the Funds, existing and potential holders of AMPS may only participate in auctions through their broker-dealers. Broker-dealers submit the orders of their respective customers who are existing and potential holders of AMPS to the Auction Agent. On or prior to each auction date for the AMPS (the business day next preceding the first day of each dividend period), each holder may submit orders to buy, sell or hold AMPS to its broker-dealer. Outside of these auctions, shares of AMPS may be purchased or sold through broker-dealers for the AMPS in a secondary trading market maintained by the broker-dealers. However, no assurance can be given that a secondary market will develop, or, if it does develop, that it will provide holders with a liquid trading market for the AMPS of either Fund.

Ratings of AMPS.    The AMPS of each Fund have been assigned a rating of AAA from Standard & Poor’s (“S&P”) and “aaa” from Moody’s Investors Service, Inc. (“Moody’s”). See “Comparison of the Funds—Rating Agency Guidelines.”

Portfolio Insurance.    Each Fund has a similar policy with respect to obtaining insurance for portfolio securities. Under normal circumstances, at least 80% of each Fund’s assets will be invested in municipal obligations either (i) insured under an insurance policy purchased by a Fund or (ii) insured under an insurance policy obtained by the issuer thereof or any other party. See “Comparison of the Funds—Investment Objectives and Policies—Portfolio Insurance.”

Ratings of Municipal Obligations.    Each Fund will invest only in municipal obligations that at the time of purchase are considered investment grade. See Exhibit IV—“Ratings of Municipal Bonds and Commercial Paper.”

Portfolio Transactions.    The portfolio transactions in which the Funds may engage are substantially similar, as are the procedures for such transactions. See “Comparison of the Funds—Portfolio Transactions.”

Dividends and Distributions.    The methods of dividend payment and distributions are substantially similar for each Fund, both with respect to the Common Stock and the AMPS of each Fund. See “Comparison of the Funds—Dividends and Distributions.”

Net Asset Value.    The net asset value per share of Common Stock of each Fund is determined as of the close of business (generally, 4:00 p.m., Eastern time) on the last business day of each week. For purposes of determining the net asset value of a share of Common Stock of each Fund, the value of the securities held by the Fund plus any cash or other assets (including interest accrued but not yet received) minus all liabilities (including accrued expenses) and the aggregate liquidation value of the outstanding shares of AMPS of the Fund is divided by the total number of shares of Common Stock of the Fund outstanding at such time. Expenses, including fees payable to FAM, are accrued daily. See “Comparison of the Funds—Net Asset Value.”

Voting Rights.    The corresponding voting rights of the holders of shares of each Fund’s Common Stock are substantially similar. The corresponding voting rights of the holders of shares of each Fund’s AMPS are also substantially similar. See “Comparison of the Funds—Capital Stock.”

Stockholder Services.    An automatic dividend reinvestment plan is available to holders of shares of each Fund’s Common Stock. These plans are similar for both Funds. See “Comparison of the Funds—Automatic Dividend Reinvestment Plan.” Other stockholder services, including the provision of annual and semi-annual reports, are the same for both Funds.

Title Of Class		Number of Shares Authorized		Number of Shares Held By Fund For Its Own Account		Number of Shares Outstanding Exclusive Of Amount Shown In Previous Column
New Jersey Insured
Common Stock		199,993,000		-0-		17,817,155
AMPS
Series A		1,360		-0-		1,360
Series B		1,360		-0-		1,360
Series C		2,400		-0-		2,400
Series D		1,880		-0-		1,880
New Jersey Insured IV
Common Stock		199,998,880		-0-		2,997,815
AMPS
Series A		1,120		-0-		1,120

Tax Considerations

The Funds have jointly requested a private letter ruling from the IRS with respect to the Reorganization to the effect that, among other things, neither Fund will recognize gain or loss on the transaction and the stockholders of New Jersey Insured IV will not recognize gain or loss on the exchange of their shares for New Jersey Insured Common Stock (except to the extent that a holder of New Jersey Insured IV Common Stock receives cash representing an interest in fractional shares of New Jersey Insured Common Stock as part of the Reorganization) or New Jersey Insured Series E AMPS. The consummation of the Reorganization is subject to the receipt of such ruling or of an opinion of counsel to the same effect. The Reorganization will not affect the status of New Jersey Insured as a regulated investment company (a “RIC”) under the Internal Revenue Code of 1986, as amended (the “Code”). New Jersey Insured IV will liquidate and dissolve under the laws of the State of Maryland as part of the Reorganization. See “Agreement and Plan of Reorganization—Tax Consequences of the Reorganization.”

·

if the Fund anticipates that its leveraged capital structure will result in a lower rate of return for any significant amount of time to holders of the Common Stock than the Fund can obtain if the Common Stock were not leveraged,

·

if the asset coverage for the AMPS declines below 200%, either as a result of a decline in the value of the Fund’s portfolio investments or as a result of the repurchase of Common Stock in tender offers, or otherwise, or

·

in order to maintain the asset coverage established by Moody’s and S&P in rating the AMPS.

		For the Year Ended July 31,						For the Period March 11, 1998† to July 31, 1998
		2000			1999
Increase (Decrease) in Net Asset Value:
Per Share Operating Performance:
Net asset value, beginning of period		$    14.47			$    15.09			$  15.00
Investment income—net		1.07			1.13			.46
Realized and unrealized gain (loss) on investments—net		(1.27	)		(.58	)		.16
Total from investment operations		(.20	)		.55			.62
Less dividends and distributions to Common Stock shareholders:
Investment income—net		(.78	)		(.81	)		(.26	)
Realized gain on investments—net		—			(.01	)		—
In excess of realized gain on investments—net		—			(.03	)		—
Total dividends and distributions to Common Stock shareholders		(.78	)		(.85	)		(.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		(.35	)		(.30	)		(.12	)
Realized gain on investments—net		—			(.02	)		—
Capital charge resulting from issuance of Preferred Stock		—			—			(.12	)
Total effect of Preferred Stock activity		(.35	)		(.32	)		(.24	)
Net asset value, end of period		$    13.14			$    14.47			$  15.09
Market price per share, end of period		$11.6875			$13.4375			$15.375
Total Investment Return:**
Based on market price per share		(7.13	%)		(7.44	%)		4.29	%#
Based on net asset value per share		(3.04	%)		1.56	%		2.35	%#
Ratios Based on Average Net Assets of Common Stock:
Total expenses, net of reimbursement and excluding reorganization expenses***		1.27	%		1.22	%		.29	%*
Total expenses, net of reimbursement***		1.55	%		1.22	%		.29	%*
Total expenses***		1.67	%		1.31	%		1.21	%*
Total investment income—net***		8.52	%		7.32	%		8.17	%*
Amount of dividends to Preferred Stock shareholders		2.96	%		1.93	%		2.14	%*
Investment income—net, to Common Stock shareholders		5.56	%		5.39	%		6.03	%*
Ratios Based on Total Average Net Assets:†††***
Total expenses, net of reimbursement and excluding reorganization expenses		.72	%		.75	%		.18	%*
Total expenses, net of reimbursement		.88	%		.75	%		.18	%*
Total expenses		.94	%		.80	%		.76	%*
Total investment income—net		4.81	%		4.48	%		5.13	%*

		For the Year Ended July 31,						For the Period March 11, 1998† to July 31, 1998
		2000			1999
Ratios Based on Average Net Assets of Preferred Stock:
Dividends to Preferred Stock shareholders		3.84	%		3.04	%		3.61	%*
Supplemental Data:
Net assets, net of Preferred Stock, end of period (in thousands)		$234,135			$101,300			$104,967
Preferred Stock outstanding, end of period (in thousands)		$175,000			$  68,000			$  68,000
Portfolio turnover		100.11	%		64.93	%		32.46	%
Leverage:
Asset coverage per $1,000		$    2,338			$    2,490			$    2,544
Dividends Per Share On Preferred Stock Outstanding
Series A Investment income—net		$      896			$      763			$      317
Series B Investment income—net		$      898			$      766			$      300
Series C Investment income—net		$      439			$      —			$      —
Series D Investment income—net		$      418			$      —			$      —

*	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 charges.

***	Does not reflect the effect of dividends to Preferred Stock shareholders.

†	Commencement of operations.

††	New Jersey Insured issued its Series A and Series B Preferred Stock on October 19, 1998. New Jersey Insured issued its Series C and Series D Preferred Stock on March 6, 2000.

†††	Includes Common Stock and Preferred Stock average net assets.

#	Aggregate total investment return.

		For the Period July 23, 1999† to May 31, 2000
Increase (Decrease) in Net Asset Value:
Per Share Operating Performance:
Net asset value, beginning of period		$  15.00
Investment income—net		.98
Realized and unrealized loss on investments—net		(1.66	)
Total from investment operations		(.68	)
Less dividends to Common Stock shareholders from investment income—net		(.63	)
Capital charge resulting from issuance of Common Stock		(.05	)
Effect of Preferred Stock activity:††
Dividends to Preferred Stock shareholders:
Investment income—net		(.28	)
Capital charge resulting from issuance of Preferred Stock		(.12	)
Total effect of Preferred Stock activity		(.40	)
Net asset value, end of period		$  13.24
Market price per share, end of period		$  11.75
Total Investment Return:**
Based on market price per share		(17.58	%)#
Based on net asset value per share		(7.12	%)#
Ratios Based On Average Net Assets of Common Stock:
Total expenses, net of reimbursement***		.89	%*
Total expenses***		1.49	%*
Total investment income—net***		8.41	%*
Amount of Dividends to Preferred Stock shareholders		2.55	%*
Investment income—net, to Common Stock shareholders		6.00	%*
Ratios Based on Total Average Net Assets:†††***
Expenses, net of reimbursement		.54	%*
Total expenses		.91	%*
Total investment income—net		5.14	%*
Ratios Based on Average Net Assets of Preferred Stock:
Dividends to Preferred Stock Shareholders		3.79	%*
Supplemental Data:
Net assets, net of Preferred Stock, end of period (in thousands)		$39,704
Preferred Stock outstanding, end of period (in thousands)		$28,000
Portfolio turnover		54.51	%
Leverage:
Asset coverage per $1,000		$  2,418
Dividends Per Share on Preferred Stock Outstanding:
Investment income—net		$    753

*	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 charges. FAM voluntarily waived a portion of its management fee. Without such waiver, the performance of New Jersey Insured IV would have been lower.

***	Do not reflect the effect of dividends to Preferred Stock Shareholders.

†	Commencement of operations.

††	New Jersey Insured IV issued its Preferred Stock on August 16, 1999.

†††	Includes Common Stock and Preferred Stock average net assets.

#	Aggregate total investment return.

		Market Price**				Net Asset Value				Premium (Discount) to Net Asset Value
Quarter/Period Ended*		High		Low		High		Low		High			Low
April 30, 1998†		15.1875		14.75		15.11		14.63		1.59			(1.67	)
July 31, 1998		15.6875		15.00		15.20		15.05		2.58			(4.99	)
October 31, 1998		16.125		15.375		16.06		15.41		2.29			(2.61	)
January 31, 1999		15.3125		14.625		15.54		15.24		5.05			(5.03	)
April 30, 1999		14.9375		14.50		15.46		15.31		(0.03	)		(6.03	)
July 31, 1999		13.625		13.25		14.63		14.47		(0.41	)		(9.42	)
October 31, 1999		13.4375		11.75		14.44		12.43		(2.58	)		(9.34	)
January 31, 2000		12.375		10.8125		13.34		11.97		(1.56	)		(12.77	)
April 30, 2000		12.5625		10.9375		13.05		11.95		(0.06	)		(10.50	)
July 31, 2000		11.8750		10.625		13.14		11.78		(7.19	)		(13.08	)
New Jersey Insured IV
		Market Price**				Net Asset Value				Premium (Discount) to Net Asset Value
Quarter/Period Ended*		High		Low		High		Low		High			Low
August 31, 1999††		15.375		15.00		14.93		14.37		6.99			0.80
November 30, 1999		15.125		11.50		14.60		13.40		3.59			(16.48	)
February 29, 2000		12.50		11.3125		13.83		12.92		(6.03	)		(18.02	)
May 31, 2000		12.25		11.25		14.08		12.98		(8.08	)		(18.06	)
August 31, 2000

*	Calculations are based upon shares of Common Stock outstanding at the end of each quarter.

**	As reported in the consolidated transaction operating system.

†	For the period March 11, 1998 to April 30, 1998.

††	For the period July 23, 1999 to August 31, 1999.

1.

Make investments for the purpose of exercising control or management.

2.

Purchase or sell real estate, commodities or commodity contracts; provided, that the Fund may invest in securities secured by real estate or interests therein or issued by companies that invest in real estate or interests therein, and the Fund may purchase and sell financial futures contracts and options thereon.

3.

Issue senior securities or borrow money except as permitted by Section 18 of the Investment Company Act.

4.

Underwrite securities of other issuers except insofar as the Fund may be deemed an underwriter under the Securities Act of 1933, as amended (the “Securities Act”), in selling portfolio securities.

5.

Make loans to other persons, except that the Fund may purchase New Jersey Municipal Bonds, Municipal Bonds and other debt securities and enter into repurchase agreements in accordance with its investment objective, policies and limitations.

6.

Invest more than 25% of its total assets (taken at market value at the time of each investment) in securities of issuers in a single industry; provided, that for purposes of this restriction, states, municipalities and their political subdivisions are not considered to be part of any industry.

a.  Purchase securities of other investment companies, except to the extent that such purchases are permitted by applicable law. Applicable law currently prohibits the Fund from purchasing the securities of other investment companies except if immediately thereafter not more than (i) 3% of the total outstanding voting stock of such company is owned by the Fund, (ii) 5% of the Fund’s total assets, taken at market value, would be invested in any one such company, (iii) 10% of the Fund’s total assets, taken at market value, would be invested in such securities, and (iv) the Fund, together with other investment companies having the same investment adviser and companies controlled by such companies, owns not more than 10% of the total outstanding stock of any one closed-end investment company.

b.  Mortgage, pledge, hypothecate or in any manner transfer, as security for indebtedness, any securities owned or held by the Fund except as may be necessary in connection with borrowings mentioned in investment restriction (3) above or except as may be necessary in connection with transactions in financial futures contracts and options thereon.

c.  Purchase any securities on margin, except that the Fund may obtain such short-term credit as may be necessary for the clearance of purchases and sales of portfolio securities (the deposit or payment by the Fund of initial or variation margin in connection with financial futures contracts and options thereon is not considered the purchase of a security on margin).

d.  Make short sales of securities or maintain a short position or invest in put, call, straddle or spread options, except that the Fund may write, purchase and sell options and futures on New Jersey Municipal Bonds, Municipal Bonds, U.S. Government obligations and related indices or otherwise in connection with bona fide hedging activities and may purchase and sell Call Rights to require mandatory tender for the purchase of related New Jersey Municipal Bonds and Municipal Bonds.

S&P*		Moody’s*		Number of Issues		Value (in thousands)		Percent
AAA		Aaa		102		$349,716		90.7	%
AA		Aa		4		15,632		4.0
A		A		1		6,069		1.6
BBB		Baa		5		14,242		3.7
		Total		112		$385,659		100.0	%

*

Ratings: Using the higher of S&P’s or Moody’s rating on the Fund’s municipal obligations. S&P’s rating categories may be modified further by a plus (+) or minus (-) in AA, A and BBB ratings. Moody’s rating categories may be modified further by a 1, 2 or 3 in Aa, A and Baa ratings. See Exhibit IV—“Ratings of Municipal Bonds and Commercial Paper.”

S&P*		Moody’s*		Number of Issues		Value (in thousands)		Percent
AAA		Aaa		30		$64,203		100	%
		Total		30		$64,203		100	%

*

Ratings: Using the higher of S&P’s or Moody’s rating on the Fund’s municipal obligations. S&P’s rating categories may be modified further by a plus (+) or minus (-) in AA, A and BBB ratings. Moody’s rating categories may be modified further by a 1, 2 or 3 in Aa, A and Baa ratings. See Exhibit IV—“Ratings of Municipal Bonds and Commercial Paper.”

		Year Ended					Period March 11, 1998† to July 31, 1998
New Jersey Insured		July 31, 2000		July 31, 1999
		100.11%		64.93	%		32.46	%
New Jersey Insured IV		Period July 23, 1999† to May 31, 2000
		54.51%

Auction Date		Fund		Series		Dividend Rate
August 14, 2000		New Jersey Insured		A		2.606%
August 17, 2000		New Jersey Insured		B		3.90%
August 15, 2000		New Jersey Insured		C		4.13%
August 16, 2000		New Jersey Insured		D		4.13%
August 17, 2000		New Jersey Insured IV		A		3.20%

·

a merger or consolidation or statutory share exchange of the Fund with any other corporation or entity,

·

a sale of all or substantially all of the Fund’s assets (other than in the regular course of the Fund’s investment activities), or

·

a liquidation or dissolution of the Fund,

		Net Assets (Excluding Assets Attributable to AMPS) as of June 30, 2000		Total Annualized Operating Expense Ratio
New Jersey Insured		$228,267,927		1.33	%
New Jersey Insured IV		$  41,737,257		1.68	%*
Combined Fund		$270,005,184		1.31	%

*	Including fee waiver and expense reimbursement, the total annualized operating expense ratio for New Jersey Insured IV was 1.26%.

		Net Assets (Including Assets Attributable to AMPS) as of June 30, 2000		Total Annualized Operating Expense Ratio
New Jersey Insured		$403,267,927		0.75	%
New Jersey Insured IV		$  69,737,257		1.01	%*
Combined Fund		$473,005,184		0.75	%

*	Including fee waiver and expense reimbursement, the total annualized operating expense ratio for New Jersey Insured IV was 0.76%.

If prior to Reorganization you held:		After the Reorganization, you will hold:
New Jersey Insured Common Stock		New Jersey Insured Common Stock
New Jersey Insured Series A AMPS		New Jersey Insured Series A AMPS
New Jersey Insured Series B AMPS		New Jersey Insured Series B AMPS
New Jersey Insured Series C AMPS		New Jersey Insured Series C AMPS
New Jersey Insured Series D AMPS		New Jersey Insured Series D AMPS
New Jersey Insured IV Common Stock		New Jersey Insured Common Stock
New Jersey Insured IV Series A AMPS		New Jersey Insured Series E AMPS

		New Jersey Insured		New Jersey Insured IV		Pro Forma Adjustment			Combined Fund as adjusted (a)
Net Assets:
Net Assets Attributable to Common Stock		$234,135,462		$ 42,601,512		$    (1,440,784	)		$275,296,190
Net Assets Attributable to AMPS		$175,000,000		$  28,000,000					$203,000,000
Shares Outstanding:
Common Stock		17,817,155		2,997,815		231,461			21,046,431	(b)
AMPS
Series A		1,360		1,120		(1,120	)		1,360
Series B		1,360		—					1,360
Series C		2,400		—					2,400
Series D		1,880		—					1,880
Series E		—		—		1,120			1,120	(b)
Net Asset Value Per Share:
Common Stock		$            13.14		$            14.21					$            13.08	(c)
AMPS		$          25,000		$          25,000					$          25,000

(a)

The adjusted balances are presented as if the Reorganization had been consummated on July 31, 2000 and are for informational purposes only. Assumes distribution of undistributed net investment income and accrual of estimated Reorganization expenses for New Jersey Insured IV of $82,424. No assurance can be given as to how many shares of New Jersey Insured Common Stock that stockholders of New Jersey Insured IV will receive on the Exchange Date, and the foregoing should not be relied upon to reflect the number of shares of New Jersey Insured Common Stock that actually will be received on or after such date.

(b)

Assumes the issuance of 3,229,276 shares of New Jersey Insured Common Stock and one newly-created series of AMPS consisting of 1,120 Series E shares, in exchange for the net assets of New Jersey Insured IV. The estimated number of shares issued was based on the net asset value of each Fund, net of distributions and estimated Reorganization expenses for New Jersey Insured IV, on July 31, 2000.

(c)	Net Asset Value Per Share of Common Stock net of Reorganization-related expenses and distribution of undistributed net investment income of $1,142,342 for New Jersey Insured and $298,442 for New Jersey Insured IV.

(1)  All proxies of the holders of shares of AMPS of each Fund, voting separately as a class, will be voted in favor of the two persons designated as Directors to be elected by the holders of shares of AMPS of that Fund;

(2)  All proxies of the holders of New Jersey Insured AMPS will be voted in favor of the seven persons designated as Directors to be elected by the holders of Common Stock and AMPS of that Fund. (The holders of New Jersey Insured AMPS vote together as a single class with the holders of New Jersey Insured Common Stock on the election of these seven Directors. The proxies of the holders of New Jersey Insured Common Stock are being solicited by a separate proxy statement.); and

(3)  All proxies of the holders of shares of Common Stock and AMPS of New Jersey Insured IV, voting together as a single class, will be voted in favor of the seven persons designated as Directors to be elected by the holders of shares of Common Stock and AMPS of that Fund.

Name and Address		Age		Principal Occupation During Past Five Years and Public Directorships(1)
Charles C. Reilly (1) (2) 9 Hampton Harbor Road Hampton Bays, New York 11946		69		Self-employed financial consultant since 1990; President and Chief Investment Officer of Verus Capital, Inc. from 1979 to 1990; Senior Vice President of Arnhold and S. Bleichroeder, Inc. from 1973 to 1990; Adjunct Professor, Columbia University Graduate School of Business from 1990 to 1991; Adjunct Professor, Wharton School, The University of Pennsylvania from 1989 to 1990; Partner, Small Cities Cable Television from 1986 to 1997.
Richard R. West (1) (2) Box 604 Genoa, Nevada 89411		62		Professor of Finance since 1984, Dean from 1984 to 1993, and currently Dean Emeritus of New York University, Leonard N. Stern School of Business Administration; Director of Bowne & Co., Inc., Vornado Realty Trust, Inc., Vornado Operating Company and Alexander’s Inc.

Name and Address		Age		Principal Occupation During Past Five Years and Public Directorships(1)
Terry K. Glenn (1)* P.O. Box 9011 Princeton, New Jersey 08543-9011		60		Executive Vice President of FAM and MLIM (the terms FAM and MLIM as used herein include their corporate predecessors) since 1983; Executive Vice President and Director of Princeton Services, Inc. (“Princeton Services”) since 1993; President of FAM Distributors, Inc. (“FAMD”) since 1986 and Director thereof since 1991; President of Princeton Administrators, L.P. since 1988.
Ronald W. Forbes (1) (2) 1400 Washington Avenue Albany, New York 12222		60		Professor of Finance, School of Business, State University of New York at Albany, since 1989; International Consultant, Urban Institute, Washington, D.C. from 1995 to 1999.
Cynthia A. Montgomery (1) (2) Harvard Business School Soldiers Field Road Boston, Massachusetts 02163		48		Professor, Harvard Business School since 1989; Associate Professor, J.L. Kellogg Graduate School of Management, Northwestern University from 1985 to 1989; Assistant Professor, Graduate School of Business Administration, The University of Michigan from 1979 to 1985; Director, UNUM Provident Corporation since 1990 and Director, NewellRubbermaid Company since 1995.
Kevin A. Ryan (1) (2) 127 Commonwealth Avenue Chestnut Hill, Massachusetts 02467		67		Founder and currently Director Emeritus of The Boston University Center for the Advancement of Ethics and Character and Director thereof until 1999; Professor from 1982 to 1999 and currently Professor Emeritus of Education at Boston University; formerly taught on the faculties of The University of Chicago, Stanford University and Ohio State University.
Roscoe S. Suddarth (1) (2) 1761 N Street, N.W. Washington, D.C. 20036		65		President, Middle East Institute, since 1995; Foreign Service Officer, United States Foreign Service, from 1961 to 1995; Career Minister, from 1989 to 1995; U.S. Ambassador to the Hashemite Kingdom of Jordan, from 1987 to 1990; Deputy Inspector General, U.S. Department of State, from 1991 to 1994.
Arthur Zeikel (1)* 300 Woodland Avenue Westfield, New Jersey 07090		68		Chairman of FAM and MLIM from 1997 to 1999; President of FAM and MLIM from 1977 to 1997; Chairman of Princeton Services from 1997 to 1999, Director thereof from 1993 to 1999 and President from 1993 to 1997; Executive Vice President of Merrill Lynch & Co., Inc. (“ML & Co.”) from 1990 to 1999.
Edward D. Zinbarg (1) (2) 5 Hardwell Road Short Hills, New Jersey 07078-2117		65		Self-employed financial consultant since 1994; Executive Vice President of The Prudential Insurance Company of America from 1988 to 1994; former Director of Prudential Reinsurance Company and former Trustee of the Prudential Foundation.

(1)	Each of the nominees is a director, trustee or member of an advisory board of one or more additional investment companies for which FAM, MLIM or their affiliates act as investment adviser. See “Compensation of Directors” below and “Information Pertaining to Officers and Directors” in Exhibit I.

(2)	Member of Audit Committee of the Board of Directors of each Fund.

*	Interested person, as defined in the Investment Company Act, of each Fund.

By Order of the Boards of Directors

JODI M. PINEDO

Secretary of MuniHoldings New Jersey Insured Fund, Inc., and MuniHoldings New Jersey Insured Fund IV, Inc.

INDEX TO FINANCIAL STATEMENTS

	Page
Audited Financial Statements for MuniHoldings New Jersey Insured Fund, Inc.
for the Fiscal Year Ended July 31, 2000	F-2
Audited Financial Statements for MuniHoldings New Jersey Insured Fund IV, Inc.
for the Period July 23, 1999 (commencement of operations) to May 31, 2000	F-18
Pro Forma Unaudited Financial Statements for the Combined Fund,
as of July 31, 2000	F-29

     Audited Financial Statements for
MuniHoldings New Jersey Insured Fund, Inc.
for the Fiscal Year Ended July 31, 2000

INDEPENDENT AUDITORS’ REPORT

To the Shareholders and Board of Directors,
MuniHoldings New Jersey Insured Fund, Inc.

We have audited the accompanying statement of assets, liabilities and capital of MuniHoldings New Jersey Insured Fund, Inc., including the schedule of investments, as of July 31, 2000, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of July 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of MuniHoldings New Jersey Insured Fund, Inc. at July 31, 2000 and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the indicated periods in conformity with accounting principles generally accepted in the United States.

MetroPark, New Jersey
August 26, 2000

 

					MuniHoldings New Jersey Insured Fund, Inc., July 31, 2000
SCHEDULE OF INVESTMENTS					(in Thousands)
	S&P	Moody’s	Face
STATE	Ratings	Ratings	Amount		Issue		Value
New Jersey — 94.0%	AAA	Aaa	$1,005		Atlantic City, New Jersey, Municipal Utilities Revenue Bonds, 5% due 6/01/2022 (a)		$937
					Bernards Township, New Jersey, School District, GO:
	AAA	A1	3,205			5.30% due 1/01/2022	3,101
	AAA	A1	2,870			5.30% due 1/01/2023	2,768
					Camden County, New Jersey, Improvement Authority, Lease Revenue Bonds (c):
	AAA	Aaa	1,540			5.50% due 9/01/2016	1,554
	AAA	Aaa	2,635			5.375% due 9/01/2019	2,596
	NR*	Aaa	430		Carteret, New Jersey, Board of Education, COP, 6% due 1/15/2024 (d)		448
	AAA	Aaa	6,510		Casino Reinvestment Development Authority, New Jersey, Parking Fee Revenue Bonds, Series A,
					5.25% due 10/01/2017 (c)		6,380

 

 

				Delaware River Port Authority of Pennsylvania and New Jersey Revenue Bonds:
AAA	Aaa	5,000		5.50% due 1/01/2012 (c)	5,167
AAA	Aaa	3,250		5.625% due 1/01/2013 (c)	3,366
AAA	Aaa	4,365		6% due 1/01/2018 (c)	4,582
AAA	Aaa	5,500		6% due 1/01/2019 (c)	5,770
AAA	Aaa	8,025		(Port District Project), Series B, 5% due 1/01/2026 (d)	7,386
NR*	Aaa	1,000		East Orange, New Jersey, Water Utility, GO, Refunding, 5.70% due 6/15/2022 (a)	1,012
NR*	Aaa	4,000		Essex County, New Jersey, Improvement Authority, Lease Revenue Bonds (Correctional Facility Project), 6% due 10/01/2025 (b)	4,179
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)	4,854
AAA	Aaa	2,705		Essex County, New Jersey, Improvement Authority, Utility System Revenue Bonds (East Orange Franchise), 6% due 7/01/2018 (d)	2,834
AAA	Aaa	1,015		Jersey City, New Jersey, GO, Refunding, Quality School, Series A, 5.375% due 9/01/2017	1,014
				Lafayette Yard, New Jersey, Community Development Revenue Bonds (Hotel/Conference Center Project — Trenton) (d):
NR*	Aaa	1,125		6.125% due 4/01/2016	1,207
NR*	Aaa	4,250		6% due 4/01/2029	4,437
AAA	Aaa	825		Lopatcong Township, New Jersey, Board of Education, GO, 5.70% due 7/15/2025 (c)	833
				Metuchen, New Jersey, School District, GO (b):
AAA	NR*	1,000		5.20% due 9/15/2024	953
AAA	NR*	1,190		5.20% due 9/15/2025	1,131
AAA	NR*	885		5.20% due 9/15/2026	839
				Middlesex County, New Jersey, COP (d):
AAA	Aaa	4,630		5.25% due 6/15/2023	4,445
AAA	Aaa	6,600		5.30% due 6/15/2029	6,309
AAA	Aaa	4,250		Middlesex County, New Jersey, COP, Refunding, 5% due 2/15/2019 (d)	4,000
AA+	Aaa	5,270		Middlesex County, New Jersey, Improvement Authority, Lease Revenue Bonds (Educational Services Commission Projects), 6% due 7/15/2025	5,520
NR*	Aaa	1,100		Montgomery Township, New Jersey, Board of Education, COP, 4.875% due 9/01/2023 (d)	992
				Moorestown Township, New Jersey, School District, GO (b):
AAA	Aaa	1,180		4.90% due 1/01/2021	1,083
AAA	Aaa	1,315		4.95% due 1/01/2023	1,209
AAA	Aaa	5,015		New Brunswick, New Jersey, Housing Authority, Lease Revenue Refunding Bonds, 4.625% due 7/01/2024 (b)	4,327
A1+	P1	100		New Jersey EDA, Economic Development Revenue Refunding Bonds (Stolthaven Project), VRDN, Series A, 4.05% due 1/15/2018 (f)	100

 

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
		RIB	Residual Interest Bonds

					MuniHoldings New Jersey Insured Fund, Inc., July 31, 2000
SCHEDULE OF INVESTMENTS (continued)							(in Thousands)
	S&P	Moody’s	Face
STATE	Ratings	Ratings	Amount		Issue				Value
New Jersey (continued)	BBB–	NR*	$   6,650		New Jersey EDA, First Mortgage Revenue Refunding Bonds (Fellowship Village), Series A, 5.50% due 1/01/2025				$  5,219
	AAA	Aaa	5,000		New Jersey EDA, Lease Revenue Bonds (University of Medicine and Dentistry — International
					Center for Public Health Project), 6% due 6/01/2032 (a)				5,194
					New Jersey EDA, Natural Gas Facilities Revenue Refunding Bonds:
	AAA	Aaa	6,075		(NUI Corporation Projects), AMT, Series A, 5.70% due 6/01/2032 (d)				5,969
	A1+c	VMIG1†	2,000		(New Jersey Natural Gas Co. Project), VRDN, AMT, Series A, 4.20% due 8/01/2030 (a)(f)				2,000
	A1+c	VMIG1†	2,100		(New Jersey Natural Gas Co. Project), VRDN, Series A, 3.70% due 1/01/2028 (a)(f)				2,100
	NR*	Aaa	7,210		RIB, AMT, Series 161, 6.94% due 6/01/2032 (d)(e)				6,959
	AAA	Aaa	6,155		New Jersey EDA, Revenue Bonds (Transportation Project), Sub-Lease, Series A, 6% due 5/01/2016 (c)				6,484
					New Jersey EDA, State Lease Revenue Bonds (State Office Buildings Projects) (a):
	AAA	Aaa	3,000		6% due 6/15/2015				3,188
	AAA	Aaa	4,620		6.25% due 6/15/2020				4,965
					New Jersey EDA, Water Facilities Revenue Bonds, AMT:
	AAA	Aaa	13,000		(American Water Company Inc.), Series A, 5.25% due 7/01/2038 (b)				11,926
	AAA	Aaa	14,800		(Middlesex Water Company Project), 5.35% due 2/01/2038				13,808
					New Jersey Health Care Facilities Financing Authority, Revenue Refunding Bonds:
	AAA	Aaa	6,750		(Atlantic Health Systems Hospital Corporation), Series A, 5% due 7/01/2027 (a)				6,091
	AAA	Aaa	2,750		(Barnert Hospital), 5% due 8/01/2025 (d)				2,502
	BBB	NR*	3,075		(Christian Health Care Center), Series A, 5.50% due 7/01/2018				2,545
	AAA	Aaa	2,875		(JFK Medical Center — Hartwyck), 5% due 7/01/2025 (d)				2,609
	AAA	Aaa	3,000		(Medical Center at Princeton Obligation Group), 5% due 7/01/2023 (a)				2,740
	AAA	Aaa	11,340		(Meridian Health System Obligation Group), 5.375% due 7/01/2024 (c)				10,904
	BBB–	Baa3	1,150		(Saint Elizabeth Hospital Obligation Group), 6% due 7/01/2027				966
	AAA	Aaa	5,255		(Virtua Health Issue), 4.50% due 7/01/2028 (c)				4,319
					New Jersey Sports and Exposition Authority, State Contract Revenue Bonds (d):
	AAA	Aaa	2,400		Series A, 6% due 3/01/2013				2,571
	A1+	VMIG1†	6,200		VRDN, Series C, 4% due 9/01/2024 (f)				6,200
					New Jersey State Educational Facilities Authority Revenue Bonds:
	AAA	Aaa	8,905		(Capital Improvement Fund), Series A, 5.75% due 9/01/2017 (c)				9,179
	AAA	Aaa	9,420		(Capital Improvement Fund), Series A, 5.75% due 9/01/2018 (c)				9,681
	AAA	Aaa	2,500		(New Jersey Institute of Teachers), Series 1995E, 5.375% due 7/01/2025 (d)				2,418
	AAA	Aaa	1,950		(University Medical Dentistry of New Jersey), Series C, 5.125% due 12/01/2029 (a)				1,815
					New Jersey State Educational Facilities Authority, Revenue Refunding Bonds:
	BBB	Baa2	2,030		(Monmouth University), Series C, 5.75% due 7/01/2017				2,008
	BBB	Baa2	2,000		(Monmouth University), Series C, 5.80% due 7/01/2022				1,949
	AAA	Aaa	2,730		(Ramapo College), Series G, 4.625% due 7/01/2028 (a)				2,324
	AAA	NR*	11,130		New Jersey State Higher Education Assistance Authority, Student Loan Revenue Bonds, AMT,
					Series A, 5.25% due 6/01/2018 (d)				10,645
	AAA	Aaa	2,200		New Jersey State Highway Authority, Garden State Parkway, General Revenue Refunding Bonds,
					5.75% due 1/01/2015 (b)				2,295

					New Jersey State Housing and Mortgage Finance Agency, Home Buyer Revenue Bonds (d):
	AAA	Aaa	6,195		AMT, Series K, 6.375% due 10/01/2026	6,315
	AAA	Aaa	2,000		AMT, Series M, 6.95% due 10/01/2022	2,101
	AAA	Aaa	2,000		AMT, Series M, 7% due 10/01/2026	2,106
	AAA	Aaa	1,000		AMT, Series U, 5.60% due 10/01/2012	1,024
	AAA	Aaa	2,820		AMT, Series U, 5.65% due 10/01/2013	2,878
	AAA	Aaa	3,000		AMT, Series U, 5.75% due 4/01/2018	3,021
	AAA	Aaa	2,320		AMT, Series U, 5.85% due 4/01/2029	2,321
	AAA	Aaa	3,000		Series L, 6.65% due 10/01/2014	3,132
					New Jersey State Housing and Mortgage Finance Agency, Home Buyer Revenue
					Refunding Bonds (d):
	AAA	Aaa	2,440		AMT, Series S, 5.95% due 10/01/2017	2,460
	AAA	Aaa	2,800		Series V, 5.25% due 4/01/2026	2,588
					New Jersey State Transit Corporation, COP (Federal Transit Administration Grants), Series A (a):
	AAA	Aaa	1,500		6% due 9/15/2013	1,603
	AAA	Aaa	5,000		6.125% due 9/15/2015	5,340
					New Jersey State Transportation Trust Fund Authority, Transportation System Revenue Bonds,
					Series A:
	AA	Aa2	2,740		6% due 6/15/2016	2,892
	AAA	Aaa	2,500		5% due 6/15/2018 (c)	2,361
	AAA	Aaa	1,500		4.50% due 6/15/2019 (c)	1,292
	AA	Aa2	7,500		6% due 6/15/2019	7,858
	AAA	Aaa	20,000		New Jersey State Turnpike Authority, Turnpike Revenue Refunding Bonds, Series A,
					5.75% due 1/01/2019 (d)	20,496
					North Bergen Township, New Jersey, Board of Education, COP (c):
	NR*	Aaa	1,250		5% due 12/15/2018	1,170
	NR*	Aaa	1,000		6% due 12/15/2019	1,047
	NR*	Aaa	1,580		6.25% due 12/15/2020	1,685
	NR*	Aaa	1,680		6.25% due 12/15/2021	1,785
	AAA	NR*	1,200		North Hudson, New Jersey, Sewer Authority Revenue Bonds, 5.125% due 8/01/2022 (b)	1,137
	NR*	Aaa	3,035		Orange Township, New Jersey, Municipal Utility and Lease, GO, Refunding, Series C,
					5.10% due 12/01/2017 (d)	2,923
					Paterson, New Jersey, Public School District, COP (d):
	NR*	Aaa	1,980		6.125% due 11/01/2015	2,128
	NR*	Aaa	2,000		6.25% due 11/01/2019	2,148
	NR*	Aaa	1,000		Plainfield, New Jersey, Municipal Utilities Authority, Sewer Revenue Bonds, Series A,
					4.75% due 12/15/2023 (c)	885
	NR*	Aaa	1,000		Plainfield, New Jersey, Municipal Utilities Authority, Solid Waste Revenue Bonds, Series A,
					4.75% due 12/15/2023 (c)	885
					Rancocas Valley, New Jersey, Regional High School District, GO:
	AAA	Aaa	955		5.30% due 2/01/2024 (b)	923
	AAA	Aaa	770		5.30% due 2/01/2026	741
	AA	A1	3,095		Rutgers State University, New Jersey, Revenue Bonds, Series A, 5.20% due 5/01/2027	2,911
					Salem County, New Jersey, Industrial Pollution Control Financing Authority, Revenue
					Refunding Bonds:
	AAA	Aaa	5,000		(Atlantic City Electric Company), 6.15% due 6/01/2029	5,250
	AAA	Aaa	2,300		(Public Service Electric & Gas), Series C, 5.55% due 11/01/2033 (d)	2,270

				MuniHoldings New Jersey Insured Fund, Inc., July 31, 2000
SCHEDULE OF INVESTMENTS (concluded)							(in Thousands)
		S&P	Moody’s	Face
STATE		Ratings	Ratings	Amount		Issue	Value
New Jersey (concluded)						South Jersey Transportation Authority, New Jersey, Transportation System Revenue
						Refunding Bonds (a):
		AAA	Aaa	$    4,000		5% due 11/01/2017	$    3,809
		AAA	Aaa	4,900		5.125% due 11/01/2022	4,641
		NR*	Aaa	8,650		Trenton, New Jersey, Parking Authority, Parking Revenue Bonds, 6.10% due 4/01/2026 (b)	9,098
						Union County, New Jersey, Utilities Authority, County Deficiency Revenue Refunding Bonds:
		AAA	Aaa	4,500		AMT, Series A-2, 5% due 6/15/2028 (a)	4,025
		AA+	Aaa	2,065		Series C-1, 5% due 6/15/2028	1,890
						Union County, New Jersey, Utilities Authority, Senior Lease Revenue Refunding Bonds
						(Ogden Martin System of Union), AMT, Series A (a):
		AAA	Aaa	2,305		5.375% due 6/01/2019	2,224
		AAA	Aaa	1,755		5.375% due 6/01/2020	1,688
		AAA	Aaa	3,050		5.35% due 6/01/2023	2,907
						Wall Township, New Jersey, School District, GO (c):
		AAA	Aaa	2,540		4.75% due 7/15/2022	2,257
		AAA	Aaa	1,685		4.75% due 7/15/2023	1,493
						West Orange, New Jersey, Board of Education, COP (d):
		NR*	Aaa	2,040		5.75% due 10/01/2014	2,138
		NR*	Aaa	3,590		6% due 10/01/2024	3,763
New York — 3.2%		AAA	Aaa	4,750		Port Authority of New York and New Jersey, Consolidated Revenue Refunding Bonds, AMT, 119th Series, 5.50% due 9/15/2019 (b)	4,662
		AAA	Aaa	4,750		Port Authority of New York and New Jersey, Special Obligation Revenue Bonds (JFK International Air Terminal Project), AMT, Series 6, 5.75% due 12/01/2025 (d)	4,764
						Port Authority of New York and New Jersey, Special Obligation Revenue Refunding Bonds
						(Versatile Structure Obligation), VRDN (f):
		A1+	VMIG1†	200		AMT, Series 4, 4.15% due 4/01/2024	200
		A1+	VMIG1†	2,600		AMT, Series 6, 4.15% due 12/01/2017	2,600
		A1+	VMIG1†	800		Series 5, 4.10% due 8/01/2024	800
Puerto Rico — 5.2%		AAA	Aaa	11,000		Puerto Rico Commonwealth, GO, Public Improvement, 6% due 7/01/2029 (d)	11,492
		A	Baa1	6,000		Puerto Rico Commonwealth Highway and Transportation Authority, Transportation Revenue Bonds, Series B, 6% due 7/01/2026	6,149
						Puerto Rico Industrial Tourist, Educational, Medical and Environmental Control Facilities Revenue Bonds, Series A:
		AAA	Aaa	1,780		(Hospital Auxilio Mutuo Obligation Group), 6.25% due 7/01/2024 (d)	1,848
		AA	Aa2	1,750		(Hospital de la Concepcion), 6.50% due 11/15/2020	1,902
		Total Investments (Cost — 425,493) — 102.4%					418,932
		Liabilities in Excess of Other Assets — (2.4%)					(9,797)
		Net Assets — 100.0%					$ 409,135

(a) AMBAC Insured.		(f) The interest rate is subject to change periodically based upon prevailing market rates.
(b) FGIC Insured.		The interest rate shown is the rate in effect at July 31, 2000.
(c) FSA Insured.		† Highest short-term rating by Moody’s Investors Service, Inc.
(d) MBIA Insured.		* Not Rated.
(e) 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 July 31, 2000.		Ratings of issues shown have not been audited by Ernst & YoungLLP.
See Notes to Financial Statements.

STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
	As of July 31, 2000
Assets:	Investments, at value (identified cost — 4 25,493,324)		418,932,264
	Cash		50,298
	Receivables:
	Securities sold	$6,255,674
	Interest	4,685,270	10,940,944
	Prepaid expenses		4,604
	Total assets		429,928,110
Liabilities:	Payables:
	Securities purchased	20,186,889
	Dividends to shareholders	254,174
	Investment adviser	152,028
	Offering costs	42,809
	Reorganization costs	41,419	20,677,319
	Accrued expenses		115,329
	Total liabilities		20,792,648
Net Assets:	Net assets		409,135,462
Capital:	Capital Stock (200,000,000 shares authorized):
	Preferred Stock, par value.10 per share (7,000 shares of AMPS*
	issued and outstanding at 25,000 per share liquidation preference)		175,000,000
	Common Stock, par value.10 per share (17,817,155 shares issued and outstanding)	1,781,716
	Paid-in capital in excess of par	272,213,540
	Undistributed investment income — net	1,142,342
	Accumulated realized capital losses on investments — net	(34,214,737)
	Accumulated distributions in excess of realized capital gains on investments — net	(226,339)
	Unrealized depreciation on investments — net	(6,561,060)
	Total — Equivalent to13.14 net asset value per share of Common Stock (market price —11.6875)		234,135,462
	Total capital		409,135,462
	* Auction Market Preferred Stock.
	See Notes to Financial Statements.

 

STATEMENT OF OPERATIONS

	For the Year Ended July 31, 2000
Investment	Interest and amortization of premium and discount earned		$14,575,794
Income:
Expenses:	Investment advisory fees	$1,405,167
	Reorganization expenses	410,392
	Commission fees	291,062
	Transfer agent fees	70,430
	Professional fees	66,208
	Accounting services	47,844
	Printing and shareholder reports	26,433
	Listing fees	23,478
	Custodian fees	23,305
	Directors' fees and expenses	21,303
	Organizational expenses	14,688
	Pricing fees	3,333
	Other	16,237
	Total expenses before reimbursement	2,419,880
	Reimbursement of expenses	(175,046)
	Total expenses after reimbursement		2,244,834
	Investment income — net		12,330,960
Realized & Unrealized	Realized loss on investments — net		(22,774,839)
Gain (Loss) on	Change in unrealized appreciation/depreciation on investments — net		23,363,613
Investments — Net:
	Net Increase in Net Assets Resulting from Operations		$12,919,734
	See Notes to Financial Statements.

STATEMENTS OF CHANGES IN NET ASSETS
		For the Year Ended
		July 31,
	Increase (Decrease) in Net Assets:	2000	1999
Operations:	Investment income — net	$12,330,960	$7,875,123
	Realized gain (loss) on investments — net	(22,774,839)	325,337
	Change in unrealized appreciation/depreciation on investments — net	23,363,613	(4,373,963)
	Net increase in net assets resulting from operations	12,919,734	3,826,497
Dividends &	Investment income — net:
Distributions to	Common Stock	(8,002,927)	(5,676,267)
Shareholders:	Preferred Stock	(4,279,115)	(2,078,554)
	Realized gain on investments — net:
	Common Stock	—	(77,651)
	Preferred Stock	—	(130,955)
	In excess of realized gain on investments to Common Stock shareholders — net	—	(226,339)
	Net decrease in net assets resulting from dividends and distributions to shareholders	(12,282,042)	(8,189,766)
Capital Stock	Proceeds from issuance of Common Stock resulting from reorganization	132,197,334	—
Transactions:	Proceeds from issuance of Preferred Stock resulting from reorganization	107,000,000	—
	Value of shares issued to Common Stock shareholders in reinvestment of dividends and distributions	—	696,570
	Net increase in net assets derived from capital stock transactions	239,197,334	696,570
Net Assets:	Total increase (decrease) in net assets	239,835,026	(3,666,699)
	Beginning of year	169,300,436	172,967,135
	End of year*	$409,135,462	$169,300,436
	* Undistributed investment income — net	$1,142,342	$683,924
	See Notes to Financial Statements.

			MuniHoldings New Jersey Insured Fund, Inc., July 31, 2000
FINANCIAL HIGHLIGHTS
			The following per share data and ratios have been derived from information provided in the financial statements.	For the Year Ended July 31,		For the Period March 11, 1998† to July 31, 1998
				2000	1999
			Increase (Decrease) in Net Asset Value:
Per Share Operating Performance:			Net asset value, beginning of period	$               14.47	$              15.09	$                   15.00
			Investment income — net	1.07	1.13	.46
			Realized and unrealized gain (loss) on investments — net	(1.27)	(.58)	.16
			Total from investment operations	(.20)	.55	.62
			Less dividends and distributions to Common Stock shareholders:
			Investment income — net	(.78)	(.81)	(.26)
			Realized gain on investments — net	—	(.01)	—
			In excess of realized gain on investments — net	—	(.03)	—
			Total dividends and distributions to Common Stock shareholders	(.78)	(.85)	(.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	(.35)	(.30)	(.12)
			Realized gain on investments — net	—	(.02)	—
			Capital charge resulting from issuance of Preferred Stock	—	—	(.12)
			Total effect of Preferred Stock activity	(.35)	(.32)	(.24)
			Net asset value, end of period	$               13.14	$               14.47	$                    15.09
			Market price per share, end of period	$           11.6875	$            13.4375		$                  15.375
Total Investment Return:**			Based on market price per share	(7.13%)	(7.44%)	4.29%‡
			Based on net asset value per share	(3.04%)	1.56%	2.35%‡
Ratios Based on Average Net Assets of Common Stock:			Total expenses, net of reimbursement and excluding reorganization expenses***	1.27%	1.22%	.29%*
			Total expenses, net of reimbursement***	1.55%	1.22%	.29%*
			Total expenses***	1.67%	1.31%	1.21%*
			Total investment income — net***	8.52%	7.32%	8.17%*
			Amount of dividends to Preferred Stock shareholders	2.96%	1.93%	2.14%*
			Investment income — net, to Common Stock shareholders	5.56%	5.39%	6.03%*
Ratios Based on			Total expenses, net of reimbursement and excluding reorganization expenses	.72%	.75%	.18%*
Total Average Net
Assets:***†††			Total expenses, net of reimbursement	.88%	.75%	.18%*
			Total expenses	.94%	.80%	.76%*
			Total investment income — net	4.81%	4.48%	5.13%*

Ratios Based on Average Net Assets of Preferred Stock:	Dividends to Preferred Stock shareholders		3.84%	3.04%	3.61%*
Supplemental Data:	Net assets, net of Preferred Stock, end of period (in thousands)		$234,135	$101,300	$104,967
	Preferred Stock outstanding, end of period (in thousands)		$175,000	$  68,000	$  68,000
	Portfolio turnover		100.11%	64.93%	32.46%
Leverage:	Asset coverage per $1,000		$    2,338	$    2,490	$    2,544
Dividends Per Share On Preferred Stock Outstanding:	Series A — Investment income — net		$       896	$       763	$       317
	Series B — Investment income — net		$       898	$       766	$       300
	Series C — Investment income — net		$       439	—	—
	Series D — Investment income — net		$       418	—	—

		*	Annualized.	†		Commencement of operations.
		**	Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Total investment returns exclude the effects of sales charges.	††		The Fund’s Preferred Stock was issued on October 19, 1998 for Series A and B and March 6, 2000 for Series C and D.
		***	Do not reflect the effect of dividends to Preferred Stock shareholders	†††		Includes Common and Preferred Stock average net assets.
				‡		Aggregate total investment return.
			See Notes to Financial Statements.

MuniHoldings New Jersey Insured Fund, Inc., July 31, 2000

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 accounting principles generally accepted in the United States of America, which may require the use of management accruals and estimates. The Fund determines and makes available for publication the net asset value of its Common Stock on a weekly basis. The Fund’s Common Stock is listed on the New York Stock Exchange under the symbol 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 investment strategies to increase or decrease the level of risk to which the Fund is exposed more quickly and efficiently than transactions in other types of instruments. Losses may arise due to changes in the value of the contract or if the counterparty does not perform under the contract.

• Financial futures contracts — The Fund may purchase or sell financial futures contracts and options on such futures contracts for the purpose of hedging the market risk on existing securities or the intended purchase of securities. Futures contracts are contracts for delayed delivery of securities at a specific future date and at a specific price or yield. Upon entering into a contract, the Fund deposits and maintains as collateral such initial margin as required by the exchange on which the transaction is effected. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.

• Options — The Fund is authorized to write covered call options and purchase 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) Organization expenses — In accordance with Statement of Position 98-5, unamortized organization expenses of $14,688 were expensed during the year ended July 31, 2000. This was considered to be a change in accounting principle and had no material impact on the operations of the Fund.

(f) Dividends and distributions — Dividends from net investment income are declared and paid monthly. Distributions of capital gains are recorded on the ex-dividend dates. Distributions in excess of realized capital gains are due primarily to differing tax treatments for futures transactions post-October losses.

(g) Reclassification — Generally accepted accounting principles require that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. Accordingly, current year’s permanent book/tax differences of $12 have been reclassified between undistributed net investment income and accumulated net realized capital losses and $409,512 has been reclassified between paid-in capital in excess of par and undistributed net investment income. These reclassifications have no effect on net assets or net asset value per share.

2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund Asset Management, L.P. (“FAM”). The general partner of FAM is Princeton Services, Inc. (“PSI”), an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. (“ML & Co.”), which is the limited partner.

FAM is responsible for the management of the Fund’s portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Fund. For such services, the Fund pays monthly fee at an annual rate of .55% of the Fund’s weekly net assets, including proceeds from the issuance of Preferred Stock. For the year ended July 31, 2000, FAM earned fees of $1,405,167, of which $175,046 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 year ended July 31, 2000 were $246,905,915 and $245,999,229, respectively.

Net realized losses for the year ended July 31, 2000 and net unrealized losses as of July 31, 2000 were as follows:

	Realized Losses		Unrealized Losses
Long-term investments	$(21,623,050)		$(6,561,060)
Financial futures contracts	(1,151,789)		—
Total	$(22,774,839)		$(6,561,060)

As of July 31, 2000, net unrealized depreciation for Federal income tax purposes aggregated $8,177,402, of which $5,204,074 related to appreciated securities and $13,381,476 related to depreciated securities. The aggregate cost of investments at July 31, 2000 for Federal income tax purposes was $427,109,666.

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.

Common Stock
Shares issued and outstanding during the year ended July 31, 2000 increased by 10,816,659 as a result of the reorganization

MuniHoldings New Jersey Insured Fund, Inc., July 31, 2000

NOTES TO FINANCIAL STATEMENTS (concluded)

and during the year ended July 31, 1999 increased by 44,928 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 July 31, 2000 were Series A, 2.75%; Series B, 2.99%; Series C, 4.14% and Series D, 4.10%.

Shares issued and outstanding during the year ended July 31, 2000 increased by 4,280 as a result of the reorganization and during the year ended July 31, 1999 remained constant.

The Fund pays commissions to certain broker-dealers at the end of each auction at an annual rate ranging from .25% to .375%, calculated on the proceeds of each auction. For the year ended July 31, 2000, Merrill Lynch, Pierce, Fenner & Smith Incorporated, an affiliate of FAM, earned $146,926 as commissions.

5. Acquisition of Other FAM-Managed Investment Companies:
On March 6, 2000, the Fund acquired all of the net assets of MuniHoldings New Jersey Insured Fund II, Inc. and MuniHoldings New Jersey Insured Fund III, Inc. pursuant to a plan of reorganization. The acquisition was accomplished by a tax-free exchange of the following capital shares:

	Common Stock Shares Exchanged	AMPS Shares Exchanged
Muni Holdings New Jersey Insured Fund II, Inc.	6,154,660	2,400
MuniHoldings New Jersey Insured Fund III, Inc.	5,297,667	1,880

 

In exchange for these shares, the Fund issued 10,816,659 Common Stock shares and 4,280 AMPS shares. As of that date, net assets of the acquired funds, including unrealized depreciation and accumulated net realized capital losses, were as follows:

---

	Net Assets		Accumulated Net Realized Capital Losses
		Unrealized Depreciation
MuniHoldings
New Jersey Insured Fund II, Inc.	$129,890,849	$14,709,462	$6,937,095
MuniHoldings New Jersey Insured Fund III, Inc.	$109,306,485	$11,969,912	$4,502,815

The aggregate net assets of the Fund immediately after the acquisition amounted to $392,754,800.

6. Capital Loss Carryforward:
At July 31, 2000, the Fund had a net capital loss carryforward of approximately $7,536,000, of which $523,000 expires in 2006, $6,464,000 expires in 2007 and $549,000 expires in 2008. This amount will be available to offset like amounts of any future taxable gains.

7. Subsequent Event:
On August 8, 2000, the Fund’s Board of Directors declared an ordinary income dividend to Common Stock shareholders in the amount of $.059895 per share, payable on August 30, 2000 to shareholders of record as of August 18, 2000.

[This page is intentionally left blank.]

     Audited Financial Statements for
MuniHoldings New Jersey Insured Fund IV, Inc.
for the Period July 23, 1999
(commencement of operations)
to May 31, 2000

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders
MuniHoldings New Jersey Insured Fund IV, Inc.:

We have audited the accompanying statement of assets, liabilities and capital, including the schedule of investments, of MuniHoldings New Jersey Insured Fund IV, Inc. as of May 31, 2000, the related statements of operations and changes in net assets, and the financial highlights for the period July 23, 1999 (commencement of operations) to May 31, 2000. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned at May 31, 2000 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of MuniHoldings New Jersey Insured Fund IV, Inc., as of May 31, 2000, the results of its operations, the changes in its net assets, and the financial highlights for the period July 23, 1999 (commencement of operations) to May 31, 2000 in accordance with accounting principles generally accepted in the United States of America.

_____________________
Princeton, New Jersey
July 5, 2000

						MuniHoldings New Jersey Insured Fund IV, Inc., May 31, 2000
SCHEDULE OF INVESTMENTS						(in thousands)
		S&P	Moody’s	Face
STATE		Ratings	Ratings	Amount		Issue	Value
New Jersey — 98.4%		NR*	Aaa	1,105		Bayonne, New Jersey, School, GO, Refunding, 5% due 5/01/2014 (c)	$ 1,034
						Delaware River Port Authority of Pennsylvania and New Jersey Revenue Bonds (c):
		AAA	Aaa	1,750		5.625% due 1/01/2013	1,756
		AAA	Aaa	500		5.75% due 1/01/2015	502
		AAA	Aaa	3,050		Essex County, New Jersey, Improvement Authority Revenue Bonds, Utility System (Orange Franchise), Series A, 5.75% due 7/01/2027 (d)	2,978
		NR*	Aaa	4,400		Essex County, New Jersey, Utilities Authority, Solid Waste Revenue Refunding Bonds, Series A, 4.80% due 4/01/2014 (c)	3,946
		AAA	NR*	1,400		Hudson County, New Jersey, Improvement Authority, Facility Lease Revenue Refunding Bonds (Hudson County Lease Project), 5.40% due 10/01/2025 (b)	1,298
						Jersey City, New Jersey, Quality Public Improvement, GO, Refunding, Series B (d):
		AAA	Aaa	1,500		5.375% due 9/01/2017	1,434
		AAA	Aaa	1,545		5.375% due 9/01/2018	1,466
		NR*	Aaa	1,000		Lafayette Yard, New Jersey, Community Development Revenue Bonds (Hotel/Conference Center Project-Trenton), 6% due 4/01/2029 (d)	1,001
		AAA	NR*	1,120		Metuchen, New Jersey, School District, GO, 5.20% due 9/15/2022 (b)	1,014
		AAA	Aaa	1,400		Moorestown Township, New Jersey, School District, GO, 5% due 1/01/2024 (b)	1,220
		AAA	Aaa	2,304		Mount Laurel Township, New Jersey, Board of Education, GO, 5.60% due 8/01/2019 (b)	2,238
		NR*	VMIG1†	900		New Jersey EDA, Dock Facility Revenue Bonds (Bayonne IMTT Project), VRDN, Series B, 4.25% due 12/01/2027 (f)	900
		BBB–	NR*	3,500		New Jersey EDA, First Mortgage Revenue Refunding Bonds (Fellowship Village), Series A, 5.50% due 1/01/2018	2,793
		NR*	Aaa	3,155		New Jersey EDA, Natural Gas Facilities Revenue Refunding Bonds, RIB, AMT, Series 161, 6.82% due 6/01/2032 (d)(e)	2,778
						New Jersey EDA, Parking Facility Revenue Bonds (Elizabeth Development Company Project) (b):
		AAA	Aaa	1,430		5.60% due 10/15/2019	1,381
		AAA	Aaa	1,000		5.60% due 10/15/2026	958
		AAA	Aaa	3,000		New Jersey EDA, Revenue Bonds (Transportation Project), Sub-Lease, Series A, 6% due 5/01/2016 (c)	3,062
						New Jersey EDA, Water Facilities Revenue Refunding Bonds:
		AAA	Aaa	850		(Middlesex Water Company Project), AMT, Series A, 5.25% due 2/01/2029 (d)	746
		NR*	VMIG1†	500		(United Water New Jersey Inc. Project), VRDN, Series B, 4.45% due 11/01/2025 (a)(f)	500
		AAA	Aaa	5,750		New Jersey Health Care Facilities Financing Authority, Revenue Refunding Bonds (Meridian Health System Obligation Group), 5.375% due 7/01/2024 (c)	5,247
		AAA	Aaa	2,000		New Jersey State Educational Facilities Authority Revenue Bonds (Princeton Theological), Series B, 5.90% due 7/01/2026	2,003
		AAA	Aaa	1,000		New Jersey State Highway Authority, Garden State Parkway, General Revenue Refunding Bonds, 5.75% due 1/01/2015 (b)	1,005
						New Jersey State Housing and Mortgage Finance Agency, Home Buyer Revenue Bonds, AMT (d):

 

	AAA	Aaa	4,000	Series K, 6.375% due 10/01/2026			4,025
	AAA	Aaa	5,000	Series M, 7% due 10/01/2026			5,222
	NR*	Aaa	2,165	Port Authority of New York and New Jersey, Special Obligation Revenue Bonds
				(JFK International Air Terminal LLC), RIB, AMT, Series 157, 6.92%
				due 12/01/2022 (d)(e)			1,986
				Port Authority of New York and New Jersey, Special Obligation Revenue Refunding
				Bonds (Versatile Structure Obligation), VRDN (f):
	A1+	VMIG1†	900	Series 2, 4.35% due 5/01/2019			900
	A1+	VMIG1†	700	Series 3, 4.40% due 6/01/2020			700
	AAA	Aaa	2,000	Salem County, New Jersey, Industrial Pollution Control Financing Authority,
				Revenue Refunding Bonds (Public Service Electric & Gas), Series C, 5.55%
				due 11/01/2033 (d)			1,876
	AAA	Aaa	3,035	South Jersey Transportation Authority, New Jersey, Transportation System
				Revenue Refunding Bonds, 5.125% due 11/01/2022 (a)			2,706
	AAA	NR*	3,000	Sparta Township, New Jersey, School District, GO, Refunding, 5% due 9/01/2026 (d)			2,595
				Stafford Township, New Jersey, GO, Refunding (b):
	NR*	Aaa	1,010	4.80% due 2/01/2021			859
	NR*	Aaa	1,070	4.80% due 2/01/2023			901
	NR*	Aaa	1,097	4.80% due 2/01/2024			921
				Wall Township, New Jersey, School District, GO (c):
	AAA	Aaa	2,235	4.50% due 7/15/2020			1,815
	AAA	Aaa	1,000	4.75% due 7/15/2023			834
	Total Investments (Cost — 70,406)—98.4%						66,600
	Other Assets Less Liabilities—1.6%						1,104
	Net Assets—100.0%						$67,704
	(a) AMBAC Insured.				(e) 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 May 31, 2000.
	(b) FGIC Insured.
	(c) FSA Insured.
	(d) MBIA Insured.				(f) The interest rate is subject to change periodically based upon prevailing market rates. The interest rate shown is the rate in effect at May 31, 2000.
					* Not Rated.
					† Highest short-term rating by Moody’s Investors Service, Inc.
	See Notes to Financial Statements.				Ratings of issues shown have not been audited by Deloitte & Touche LLP.
Portfolio Abbreviations					AMT	Alternative Minimum Tax (subject to)
	To simplify the listings of MuniHoldings New Jersey Insured Fund IV, 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.				EDA	Economic Development Authority
					GO	General Obligation Bonds
					RIB	Residual Interest Bonds
					VRDN	Variable Rate Demand Notes

. .

	MuniHoldings New Jersey Insured Fund IV, Inc., May 31, 2000
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
	As of May 31, 2000
Assets:	Investments, at value (identified cost — $70,406,259)				$	66,600,303
	Cash					71,081
	Interest receivable					1,269,419
	Total assets					67,940,803
Liabilities:	Payables:
		Dividends to shareholders	$	81,755
		Offering costs		31,451
		Investment adviser		11,935		125,141
	Accrued expenses and other liabilities					112,041
	Total liabilities					237,182
Net Assets:	Net assets				$	67,703,621
Capital:	Capital Stock (200,000,000 shares authorized):
		Preferred Stock, par value $.10 per share (1,120 shares of AMPS* issued and outstanding at $25,000 per share liquidation preference)			$	28,000,000
		Common Stock, par value $.10 per share (2,997,815 shares issued and outstanding)	$	299,781
	Paid-in capital in excess of par			44,160,707
	Undistributed investment income — net			211,709
	Accumulated realized capital losses on investments — net			(1,162,620	)
	Unrealized depreciation on investments — net			(3,805,956	)
	Total — Equivalent to $13.24 net asset value per share of Common Stock (market price — $11.75)					39,703,621
	Total capital				$	67,703,621
*	Auction Market Preferred Stock.
	See Notes to Financial Statements.

 

STATEMENT OF OPERATIONS
		For the Period July 23, 1999† to May 31, 2000
Investment Income:		Interest and amortization of premium and discount earned			$	3,253,726
Expenses:		Investment advisory fees	$	313,824
		Commission fees		60,099
		Professional fees		41,214
		Accounting services		38,426
		Transfer agent fees		20,272
		Directors’ fees and expenses		18,249
		Printing and shareholder reports		7,595
		Listing fees		7,165
		Custodian fees		3,849
		Pricing fees		3,519
		Other		8,143
		Total expenses before reimbursement		522,355
		Reimbursement of expenses		(210,584	)
		Total expenses after reimbursement				311,771
		Investment income — net				2,941,955
Realized &		Realized loss on investments — net				(1,162,620	)
Unrealized Loss on Investments — Net:		Unrealized depreciation on investments — net				(3,805,956	)
		Net Decrease in Net Assets Resulting from Operations			$	(2,026,621	)
	†	Commencement of operations.
		See Notes to Financial Statements.

 

	MuniHoldings New Jersey Insured Fund IV, Inc., May 31, 2000
				For the Period
STATEMENTS OF CHANGES IN NET ASSETS				July 23, 1999† to
	Increase (Decrease) in Net Assets:			May 31, 2000
Operations:	Investment income — net		$	2,941,955
	Realized loss on investments — net			(1,162,620	)
	Unrealized depreciation on investments — net			(3,805,956	)
	Net decrease in net assets resulting from operations			(2,026,621	)
Dividends to	Investment income — net:
Shareholders:		Common Stock		(1,886,942	)
		Preferred Stock		(843,304	)
	Net decrease in net assets resulting from dividends to shareholders			(2,730,246	)
Capital Stock	Proceeds from issuance of Common Stock			44,867,220
Transactions:	Proceeds from issuance of Preferred Stock			28,000,000
	Offering costs resulting from the issuance of Common Stock			(157,983	)
	Offering and underwriting costs resulting from the issuance of Preferred Stock			(348,754	)
	Net increase in net assets derived from capital stock transactions			72,360,483
Net Assets:	Total increase in net assets			67,603,616
	Beginning of period			100,005
	End of period*		$	67,703,621
*	Undistributed investment income — net		$	211,709
†	Commencement of operations.
	See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
	The following per share data and ratios have been derived from information provided in the financial statements.
				For the Period July 23, 1999† to
	Increase (Decrease) in Net Asset Value:			May 31, 2000
Per Share	Net asset value, beginning of period		$	15.00
Operating
Performance:	Investment income — net			.98
	Realized and unrealized loss on investments — net			(1.66	)
	Total from investment operations			(.68	)

F-24

 

	Less dividends to Common Stock shareholders from investment income — net		(.63	)
	Capital charge resulting from issuance of Common Stock		(.05	)
	Effect of Preferred Stock activity:††
	Dividends to Preferred Stock shareholders:
	Investment income— net		(.28	)
	Capital charge resulting from issuance of Preferred Stock		(.12	)
	Total effect of Preferred Stock activity		(.40	)
	Net asset value, end of period		$  13.24
	Market price per share, end of period		$  11.75
Total Investment	Based on market price per share		(17.58	%)‡
Return:**
	Based on net asset value per share		(7.12	%)‡
Ratios Based on	Total expenses, net of reimbursement***		.89	%*
Average Net Assets
Of Common Stocks:	Total expenses***		1.49	%*
	Total investment income — net***		8.41	%*
	Amount of dividends to Preferred Stock shareholders		2.55	%*
	Investment income — net, to Common Stock shareholders		6.00	%*
Ratios Based on	Total expenses, net of reimbursement		.54	%*
Total Average	Total expenses		.91	%*
Net Assets:***†††
	Total investments income —net		5.14	%*
Ratios Based on	Dividends to Preferred Stock shareholders		3.79	%*
Average Net Assets of
Preferred Stocks:
Supplemental	Net assets, net of Preferred Stock, end of period (in thousands)		$ 39,704
Data:
	Preferred Stock outstanding, end of period (in thousands)		$ 28,000
	Portfolio turnover		54.51	%
Leverage:	Asset coverage per1,000		$  2,418
Dividends Per Share on	Investment income— net		$     753
Preferred Stock
Outstanding:

 

* Annualized.	*** Do not reflect the effect of dividends to Preferred Stock shareholders.
** Total investment returns based on market value, which can be	† Commencement of operations.
significantly greater or lesser than the net asset value, may result in	†† The Fund's Preferred Stock was issued on August 16, 1999.
substantially different returns. Total investment returns exclude the	††† Includes Common and Preferred Stock average net assets.
effects of sales charges. The Fund's Investment Adviser voluntarily	‡ Aggregate total investment return.
waived a portion of its management fee. Without such waiver, the
Fund's performance would have been lower.

See Notes to Financial Statements.

MuniHoldings New Jersey Insured Fund IV, Inc., May 31, 2000

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies:

MuniHoldings New Jersey Insured Fund IV, 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 accounting principles generally accepted in the United States of America, which may require the use of management accruals and estimates. Prior to commencement of operations on July 23, 1999, the Fund had no operations other than those relating to organizational matters and the sale of 6,667 shares of Common Stock on June 15, 1999, to Fund Asset Management, L.P. ("FAM") for $100,005. 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 American Stock Exchange under the symbol MHJ. 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 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 general supervision of the Board of Directors.

(b) Derivative financial instruments — The Fund may engage in various portfolio investment strategies to increase or decrease the level of risk to which the Fund is exposed more quickly and efficiently than transactions in other types of instruments. Losses may arise due to changes in the value of the contract or if the counterparty does not perform under the contract.

• Financial futures contracts — The Fund may purchase or sell financial futures contracts and options on such futures contracts for the purpose of hedging the market risk on existing securities or the intended purchase of securities. Futures contracts are contracts for delayed delivery of securities at a specific future date and at a specific price or yield. Upon entering into a contract, the Fund deposits and maintains as collateral such initial margin as required by the exchange on which the transaction is effected. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.

• Options — the Fund is authorized to write covered call options and purchase put options. When the Fund writes an option, an amount equal to the premium received by the Fund is reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market to reflect the current market value of the option written. When a security is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the security acquired or deducted from (or added to) the proceeds of the security sold. When an option expires (or the Fund enters into a closing transaction), the Fund realizes a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction exceeds the premium paid or received).

Written and purchased options are non-income producing investments.

(c) Income taxes — It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no Federal income tax provision is required.

(d) Security transactions and investment income — Security transactions are recorded on the dates the transactions are entered into (the trade dates). Interest income is recognized on the accrual basis. Discounts and market premiums are amortized into interest income. Realized gains and losses on security transactions are determined in the identified cost basis.

(e) Offering expenses — 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 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 .55% of the Fund’s average weekly net assets including proceeds from the issuance of Preferred Stock. For the perod July 23, 1999 to May 31, 2000, FAM earned fees of $313,824, of which $196,142 was voluntarily waived. FAM also reimbursed the Fund additional expenses of $14,442.

During the period July 23, 1999 to May 31, 2000, Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S) received underwriting fees of $210,000 in connection with the issuance of the Fund’s 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 period July 23, 1999 to May 31, 2000 were $102,286,719 and $33,842,668, respectively.

Net realized losses for the period July 23, 1999 to May 31, 2000 and net unrealized losses as of May 31, 2000 were as follows:

	Realized Losses	Unrealized Losses
Long-term investments	$ (946,345)	$(3,805,956)
Financial futures contracts	(216,275)	—
Total	$(1,162,620)	$(3,805,956)

As of May 31, 2000, net unrealized depreciation for Federal income tax purposes aggregated $3,822,638, of which $16,923 related to appreciated securities and $3,839,561 related to depreciated securities. The aggregate cost of investments at May 31, 2000 for Federal income tax purposes was $70,422,941.

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.

Common Stock
Shares issued and outstanding during the period July 23, 1999 to May 31, 2000 increased by 2,991,148 from shares sold.

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 liquida tion preference of $25,000 per share, that entitle their holders to receive cash dividends at an annual rate that may vary for the suc- cessive dividend periods. The yield in effect at May 31, 2000 was 3.00%.

In connection with the offering of AMPS, the Board of Directors reclassified 1,120 shares of unissued capital stock as AMPS. Shares issued and outstanding during the period July 23, 1999 to May 31, 2000 increased by 1,120 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 .25% to .375%, calcu lated on the proceeds of each auction. For the period July 23, 1999 to May 31, 2000, MLPF&S, an affiliate of FAM, earned $43,295 as commissions.

5. Capital Loss Carryforward:
At May 31, 2000, the Fund had a net capital loss carryforward of approximately $388,000, all of which expires in 2008. This amount will be available to offset like amounts of any future taxable gains.

6. Subsequent Event:
On June 7, 2000 the Fund’s Board of Directors declared an ordinary income dividend to shareholders in the amount of$.065212 per share, payable on June 29, 2000 to shareholders of record as of June 19, 2000.

 

[This page is intentionally left blank.]

Pro Forma Unaudited Financial Statements for
the Combined Fund
as of July 31, 2000

---

New Jersey — 93.8%								Value
S&P Ratings		Moody’s Ratings		Face Amount				MuniHoldings New Jersey Insured Fund		MuniHoldings New Jersey Insured Fund IV		Pro Forma for Combined Fund
AAA		Aaa		$ 1,005		Atlantic City, New Jersey, Municipal Utilities Revenue Bonds, 5%     due 6/01/2022(a)		$    937		—		$    937
						Bernards Township, New Jersey, School District, GO:
AAA		A1		3,205		5.30% due 1/01/2022		3,101		—		3,101
AAA		A1		2,870		5.30% due 1/01/2023		2,768		—		2,768
						Camden County, New Jersey, Improvement Authority, Lease     Revenue Bonds(c):
AAA		Aaa		1,540		5.50% due 9/01/2016		1,554		—		1,554
AAA		Aaa		2,635		5.375% due 9/01/2019		2,596		—		2,596
NR*		Aaa		430		Carteret, New Jersey, Board of Education, COP, 6% due     1/15/2024(d)		448		—		448
AAA		Aaa		6,510		Casino Reinvestment Development Authority, New Jersey, Parking     Fee Revenue Bonds, Series A, 5.25% due 10/01/2017(c)		6,380		—		6,380
						Delaware River Port Authority of Pennsylvania and New Jersey     Revenue Bonds:
AAA		Aaa		5,000		5.50% due 1/01/2012(c)		5,167		—		5,167
AAA		Aaa		5,000		5.625% due 1/01/2013(c)		3,366		$1,813		5,179
AAA		Aaa		500		5.75% due 1/01/2015(c)		—		519		519
AAA		Aaa		4,365		6% due 1/01/2018(c)		4,582		—		4,582
AAA		Aaa		5,500		6% due 1/01/2019(c)		5,770		—		5,770
AAA		Aaa		8,025		(Port District Project), Series B, 5% due 1/01/2026(d)		7,386		—		7,386
NR*		Aaa		1,000		East Orange, New Jersey, Water Utility, GO, Refunding, 5.70% due     6/15/2022(a)		1,012		—		1,012
NR*		Aaa		4,000		Essex County, New Jersey, Improvement Authority, Lease Revenue     Bonds (Correctional Facility Project), 6% due 10/01/2025(b)		4,179		—		4,179
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)		4,854		—		4,854
						Essex County, New Jersey, Improvement Authority, Utility System     Revenue Bonds (East Orange Franchise)(d):
AAA		Aaa		2,705		6% due 7/01/2018		2,834		—		2,834
AAA		Aaa		3,050		Series A, 5.75% due 7/01/2027		—		3,084		3,084
AAA		NR*		1,400		Hudson County, New Jersey, Improvement Authority, Facility Lease     Revenue Refunding Bonds (Hudson County Lease Project),     5.40% due 10/01/2025(b)		—		1,366		1,366
NR*		Aaa		4,400		Essex County, New Jersey, Utilities Authority, Solid Waste Revenue     Refunding Bonds, Series A, 4.80% due 4/01/2014(c)		—		4,153		4,153
AAA		Aaa		1,015		Jersey City, New Jersey, GO, Refunding, Quality School, Series A,     5.375% due 9/01/2017		1,014		—		1,014
						Lafayette Yard, New Jersey, Community Development Revenue     Bonds (Hotel/Conference Center Project — Trenton)(d):
NR*		Aaa		1,125		6.125% due 4/01/2016		1,207		—		1,207
NR*		Aaa		5,250		6% due 4/01/2029		4,437		1,044		5,481
AAA		Aaa		825		Lopatcong Township, New Jersey, Board of Education, GO, 5.70%     due 7/15/2025(c)		833		—		833

---

New Jersey — (continued)								Value
S&P Ratings		Moody’s Ratings		Face Amount				MuniHoldings New Jersey Insured Fund		MuniHoldings New Jersey Insured Fund IV		Pro Forma for Combined Fund
						Metuchen, New Jersey, School District, GO(b):
AAA		NR*		$    1,120		5.20% due 9/15/2022		$   —		$1,073		$ 1,073
AAA		NR*		1,000		5.20% due 9/15/2024		953		—		953
AAA		NR*		1,190		5.20% due 9/15/2025		1,131		—		1,131
AAA		NR*		885		5.20% due 9/15/2026		839		—		839
						Middlesex County, New Jersey, COP(d):
AAA		Aaa		4,630		5.25% due 6/15/2023		4,445		—		4,445
AAA		Aaa		6,600		5.30% due 6/15/2029		6,309		—		6,309
AAA		Aaa		4,250		Middlesex County, New Jersey, COP, Refunding, 5% due     2/15/2019(d)		4,000		—		4,000
						Middlesex County, New Jersey, Improvement Authority, Lease     Revenue Bonds (Educational Services Commission Projects),
AA+		Aaa		3,970		5.70% due 7/15/2020		—		4,043		4,043
AA+		Aaa		5,270		6% due 7/15/2025		5,520		—		5,520
NR*		Aaa		1,100		Montgomery Township, New Jersey, Board of Education, COP,     4.875% due 9/01/2023(d)		992		—		992
						Moorestown Township, New Jersey, School District, GO(b):
AAA		Aaa		1,180		4.90% due 1/01/2021		1,083		—		1,083
AAA		Aaa		1,315		4.95% due 1/01/2023		1,209		—		1,209
AAA		Aaa		1,400		5% due 1/01/2024		—		1,298		1,298
AAA		Aaa		2,304		Mount Laurel Township, New Jersey, Board of Education, GO,     5.60% due 8/01/2019(b)		—		2,322		2,322
AAA		Aaa		5,015		New Brunswick, New Jersey, Housing Authority, Lease Revenue     Refunding Bonds, 4.625% due 7/01/2024(b)		4,327		—		4,327
A1+		P1		100		New Jersey EDA, Economic Development Revenue Refunding     Bonds (Stolthaven Project), VRDN, Series A, 4.05% due     1/15/2018(f)		100		—		100
BBB-		NR*		6,650		New Jersey EDA, First Mortgage Revenue Refunding Bonds     (Fellowship Village), Series A, 5.50% due 1/01/2025		5,219		—		5,219
AAA		Aaa		5,000		New Jersey EDA, Lease Revenue Bonds (University of Medicine and     Dentistry—International Center for Public Health Project), 6% due     6/01/2032(a)		5,194		—		5,194
						New Jersey EDA, Natural Gas Facilities Revenue Refunding     Bonds:
AAA		Aaa		6,075		(NUI Corporation Projects), AMT, Series A, 5.70% due     6/01/2032(d)		5,969		—		5,969
A1+c		VMIG1†		2,400		(New Jersey Natural Gas Co. Project), VRDN, AMT, Series A,     4.20% due 8/01/2030(a)(f)		2,000		400		2,400
A1+c		VMIG1†		2,100		(New Jersey Natural Gas Co. Project), VRDN, Series A, 3.70%     due 1/01/2028(a)(f)		2,100		—		2,100
NR*		Aaa		10,365		RIB, AMT, Series 161, 6.94% due 6/01/2032(d)(e)		6,959		3,045		10,004
						New Jersey EDA, Parking Facility Revenue Bonds (Elizabeth     Development Company Project)(b):
AAA		Aaa		1,430		5.60% due 10/15/2019		—		1,440		1,440
AAA		Aaa		1,000		5.60% due 10/15/2026		—		999		999
AAA		Aaa		9,155		New Jersey EDA Revenue Bonds (Transportation Project), Sub-     Lease, Series A, 6% due 5/01/2016(c)		6,484		3,160		9,644

---

New Jersey — (continued)								Value
S&P Ratings		Moody’s Ratings		Face Amount				MuniHoldings New Jersey Insured Fund		MuniHoldings New Jersey Insured Fund IV		Pro Forma for Combined Fund
						New Jersey EDA, State Lease Revenue Bonds (State Office Buildings     Projects)(a):
AAA		Aaa		$  3,000		6% due 6/15/2015		$  3,188		—		$  3,188
AAA		Aaa		4,620		6.25% due 6/15/2020		4,965		—		4,965
						New Jersey EDA, Water Facilities Revenue Bonds, AMT:
AAA		Aaa		13,000		(American Water Company Inc.), Series A, 5.25% due         7/01/2038(b)		11,926		—		11,926
AAA		Aaa		14,800		(Middlesex Water Company Project), 5.35% due 2/01/2038		13,808		—		13,808
AAA		Aaa		850		New Jersey EDA, Water Facilities Revenue Refunding Bonds     (Middlesex Water Company Project), AMT, Series A, 5.25% due     2/01/2029(d)		—		$  790		790
						New Jersey EDA, Water Facilities Revenue Refunding Bonds (United     Water of New Jersey Inc. Project), VRDN(a)(f):
AAA		VMIG1†		500		Series A, 4.05% due 11/01/2026		—		500		500
NR*		VMIG1†		500		Series B, 4.25% due 11/01/2025		—		500		500
A-1+		P-1		200		AMT, Series C, 4.30% due 11/01/2025		—		200		200
						New Jersey Health Care Facilities Financing Authority Revenue     Refunding Bonds:
AAA		Aaa		6,750		(Atlantic Health Systems Hospital Corporation ), Series A, 5% due         7/01/2027(a)		6,091		—		6,091
AAA		Aaa		2,750		(Barnert Hospital), 5% due 8/01/2025(d)		2,502		—		2,502
BBB		NR*		3,075		(Christian Heatlh Care Center), Series A, 5.50% due 7/01/2018		2,545		—		2,545
AAA		Aaa		2,875		(JFK Medicial Center—Hartwyck), 5% due 7/01/2025(d)		2,609		—		2,609
AAA		Aaa		3,000		(Medical Center at Princeton Obligation Group), 5% due         7/01/2023(a)		2,740		—		2,740
AAA		Aaa		17,090		(Meridian Health System Obligation Group), 5.375% due         7/01/2024(c)		10,904		5,529		16,433
BBB-		Baa3		1,150		(Saint Elizabeth Hospital Obligation Group), 6% due 7/01/2027		966		—		966
AAA		Aaa		5,255		(Virtua Health Issue), 4.50% due 7/01/2028(c)		4,319		—		4,319
						New Jersey Sports and Exposition Authority, State Contract Revenue     Bonds(d):
AAA		Aaa		2,400		Series A, 6% due 3/01/2013		2,571		—		2,571
A1+		VMIG1†		8,700		VRDN, Series C, 4% due 9/01/2024(f)		6,200		2,500		8,700
						New Jersey State Educational Facilities Authority Revenue Bonds:
AAA		Aaa		8,905		(Capital Improvement Fund), Series A, 5.75% due 9/01/2017(c)		9,179		—		9,179
AAA		Aaa		9,420		(Capital Improvement Fund), Series A, 5.75% due 9/01/2018(c)		9,681		—		9,681
AAA		Aaa		2,500		(New Jersey Institute of Teachers), Series 1995E, 5.375% due     7/01/2025(d)		2,418		—		2,418
AAA		Aaa		2,000		(Princeton Theological), Series B, 5.90% due 7/01/2026		—		2,054		2,054
AAA		Aaa		1,950		(University Medical Dentistry of New Jersey), Series C, 5.125% due         12/01/2029(a)		1,815		—		1,815
						New Jersey State Educational Facilities Authority Revenue Refunding     Bonds:
BBB		Baa2		2,030		(Monmouth University), Series C, 5.75% due 7/01/2017		2,008		—		2,008
BBB		Baa2		2,000		(Monmouth University), Series C, 5.80% due 7/01/2022		1,949		—		1,949
AAA		Aaa		2,730		(Ramapo College), Series G, 4.625% due 7/01/2028(a)		2,324		—		2,324

---

New Jersey — (continued)								Value
S&P Ratings		Moody’s Ratings		Face Amount				MuniHoldings New Jersey Insured Fund		MuniHoldings New Jersey Insured Fund IV		Pro Forma for Combined Fund
AAA		NR*		$11,130		New Jersey State Higher Education Assistance Authority, Student Loan     Revenue Bonds, AMT, Series A, 5.25% due 6/01/2018(d)		$10,645		—		$10,645
AAA		Aaa		3,200		New Jersey State Highway Authority, Garden State Parkway, General     Revenue Refunding Bonds, 5.75% due 1/01/2015(b)		2,295		$1,043		3,338
						New Jersey State Housing and Mortgage Finance Agency, Home Buyer     Revenue Bonds(d):
AAA		Aaa		6,195		AMT, Series K, 6.375% due 10/01/2026		6,315		—		6,315
AAA		Aaa		2,000		AMT, Series M, 6.95% due 10/01/2022		2,101		—		2,101
AAA		Aaa		2,000		AMT, Series M, 7% due 10/01/2026		2,106		—		2,106
AAA		Aaa		1,000		AMT, Series U, 5.60% due 10/01/2012		1,024		—		1,024
AAA		Aaa		2,820		AMT, Series U, 5.65% due 10/01/2013		2,878		—		2,878
AAA		Aaa		3,000		AMT, Series U, 5.75% due 4/01/2018		3,021		—		3,021
AAA		Aaa		2,320		AMT, Series U, 5.85% due 4/01/2029		2,321		—		2,321
AAA		Aaa		4,000		Series K, 6.375% due 10/01/2026		—		4,078		4,078
AAA		Aaa		3,000		Series L, 6.65% due 10/01/2014		3,132		—		3,132
AAA		Aaa		5,000		Series M, 7% due 10/01/2026		—		5,265		5,265
						New Jersey State Housing and Mortgage Finance Agency, Home Buyer     Revenue Refunding Bonds(d):
AAA		Aaa		2,440		AMT, Series S, 5.95% due 10/01/2017		2,460		—		2,460
AAA		Aaa		2,800		Series V, 5.25% due 4/01/2026		2,588		—		2,588
						New Jersey State Transit Corporation, COP (Federal Transit     Administration Grants), Series A(a):
AAA		Aaa		1,500		6% due 9/15/2013		1,603		—		1,603
AAA		Aaa		5,000		6.125% due 9/15/2015		5,340		—		5,340
						New Jersey State Transportation Trust Fund Authority, Transportation     System Revenue Bonds, Series A:
AA		Aa2		2,740		6% due 6/15/2016		2,892		—		2,892
AAA		Aaa		2,500		5% due 6/15/2018(c)		2,361		—		2,361
AAA		Aaa		1,500		4.50% due 6/15/2019(c)		1,292		—		1,292
AA		Aa2		7,500		6% due 6/15/2019		7,858		—		7,858
AAA		Aaa		20,000		New Jersey State Turnpike Authority, Turnpike Revenue Refunding     Bonds, Series A, 5.75% due 1/01/2019(d)		20,496		—		20,496
						North Bergen Township, New Jersey, Board of Education, COP(c):
NR*		Aaa		1,250		5% due 12/15/2018		1,170		—		1,170
NR*		Aaa		1,000		6% due 12/15/2019		1,047		—		1,047
NR*		Aaa		1,580		6.25% due 12/15/2020		1,685		—		1,685
NR*		Aaa		1,680		6.25% due 12/15/2021		1,785		—		1,785
AAA		NR*		1,200		North Hudson, New Jersey, Sewer Authority Revenue Bonds, 5.125%     due 8/01/2022(b)		1,137		—		1,137
NR*		Aaa		3,035		Orange Township, New Jersey, Municipal Utility and Lease, GO,     Refunding, Series C, 5.10% due 12/01/2017(d)		2,923		—		2,923
						Paterson, New Jersey, Public School District, COP(d):
NR*		Aaa		1,980		6.125% due 11/01/2015		2,128		—		2,128
NR*		Aaa		2,000		6.25% due 11/01/2019		2,148		—		2,148
NR*		Aaa		1,000		Plainfield, New Jersey, Municipal Utilities Authority, Sewer Revenue     Bonds, Series A, 4.75% due 12/15/2023(c)		885		—		885

---

New Jersey — (concluded)								Value
S&P Ratings		Moody’s Ratings		Face Amount				MuniHoldings New Jersey Insured Fund		MuniHoldings New Jersey Insured Fund IV		Pro Forma for Combined Fund
NR*		Aaa		$ 1,000		Plainfield, New Jersey, Municipal Utilities Authority, Solid Waste     Revenue Bonds, Series A, 4.75% due 12/15/2023(c)		$    885		—		$    885
						Rancocas Valley, New Jersey, Regional High School District, GO:
AAA		Aaa		955		5.30% due 2/01/2024(b)		923		—		923
AAA		Aaa		770		5.30% due 2/01/2026		741		—		741
AA		A1		3,095		Rutgers State University, New Jersey, Revenue Bonds, Series A, 5.20%     due 5/01/2027		2,911		—		2,911
						Salem County, New Jersey, Industrial Pollution Control Financing     Authority Revenue Refunding Bonds:
AAA		Aaa		5,000		(Atlantic City Electirc Company), 6.15% due 6/01/2029		5,250		—		5,250
AAA		Aaa		4,300		(Public Service Electric & Gas), Series C, 5.55% due 11/01/2033(d)		2,270		$1,973		4,243
						South Jersey Transportation Authority, New Jersey, Transportation     System Revenue Refunding Bonds(a):
AAA		Aaa		4,000		5% due 11/01/2017		3,809		—		3,809
AAA		Aaa		7,935		5.125% due 11/01/2022		4,641		2,875		7,516
AAA		NR*		3,000		Sparta Township, New Jersey, School District, GO, Refunding, 5% due     9/01/2026(d)		—		2,758		2,758
						Stafford Township, New Jersey, GO, Refunding(b):
NR*		Aaa		1,010		4.80% due 2/01/2021		—		911		911
NR*		Aaa		1,070		4.80% due 2/01/2023		—		957		957
NR*		Aaa		1,097		4.80% due 2/01/2024		—		978		978
NR*		Aaa		8,650		Trenton, New Jersey, Parking Authority, Parking Revenue Bonds,     6.10% due 4/01/2026(b)		9,098		—		9,098
						Union County, New Jersey, Utilities Authority, County Deficiency     Revenue Refunding Bonds:
AAA		Aaa		4,500		AMT, Series A-2, 5% due 6/15/2028(a)		4,025		—		4,025
AA+		Aaa		2,065		Series C-1, 5% due 6/15/2028		1,890		—		1,890
						Union County, New Jersey, Utilities Authority, Senior Lease Revenue     Refunding Bonds (Ogden Martin System of Union), AMT,     Series A(a):
AAA		Aaa		2,305		5.375% due 6/01/2019		2,224		—		2,224
AAA		Aaa		1,755		5.375% due 6/01/2020		1,688		—		1,688
AAA		Aaa		3,050		5.35% due 6/01/2023		2,907		—		2,907
						Wall Township, New Jersey, School District, GO(c):
AAA		Aaa		2,235		4.50% due 7/15/2020		—		1,927		1,927
AAA		Aaa		2,540		4.75% due 7/15/2022		2,257		—		2,257
AAA		Aaa		2,685		4.75% due 7/15/2023		1,493		886		2,379
						West Orange, New Jersey, Board of Education, COP(d):
NR*		Aaa		2,040		5.75% due 10/01/2014		2,138		—		2,138
NR*		Aaa		3,590		6% due 10/01/2024		3,763		—		3,763
New York — 3.6%
AAA		Aaa		4,750		Port Authority of New York and New Jersey, Consolidated Revenue     Refunding Bonds, AMT, 119th Series, 5.50% due 9/15/2019(b)		4,662		—		4,662
AAA		Aaa		6,250		Port Authority of New York and New Jersey, Special Obligation     Revenue Bonds (JFK International Air Terminal Project):
						AMT, Series 6, 5.75% due 12/01/2025(d)		4,764		1,645		6,409

---

New York — (concluded)								Value
S&P Ratings		Moody’s Ratings		Face Amount				MuniHoldings New Jersey Insured Fund			MuniHoldings New Jersey Insured Fund IV		Pro Forma for Combined Fund
NR*		Aaa		$ 2,165		RIB, AMT, Series 157, 6.99% due 12/01/2022(d)(e)		$   —			$  2,192		$ 2,192
						Port Authority of New York and New Jersey, Special Obligation     Revenue Refunding Bonds (Versatile Structure Obligation),     VRDN(f):
A1+		VMIG1†		200		AMT, Series 4, 4.15% due 4/01/2024		200			—		200
A1+		VMIG1†		2,600		AMT, Series 6, 4.15% due 12/01/2017		2,600			—		2,600
A1+		VMIG1†		400		Series 3, 4.10% due 6/01/2020		—			400		400
A1+		VMIG1†		800		Series 5, 4.10% due 8/01/2024		800			—		800
Puerto Rico — 4.5%
AAA		Aaa		11,000		Puerto Rico Commonwealth, GO, Public Improvement, 6% due     7/01/2029(d)		11,492			—		11,492
A		Baa1		6,000		Puerto Rico Commonwealth Highway and Transportation Authority,     Transportation Revenue Bonds, Series B, 6% due 7/01/2026		6,149			—		6,149
						Puerto Rico Industrial Tourist, Educational, Medical and     Environmental Control Facilities Revenue Bonds, Series A:
AAA		Aaa		1,780		(Hospital Auxilio Mutuo Obligation Group), 6.25% due     7/01/2024(d)		1,848			—		1,848
AA		Aa2		1,750		(Hospital de la Concepcion), 6.50% due 11/15/2020		1,902			—		1,902
Total Investments (Cost—$495,584) — 101.9%								418,932			69,720		488,652
Liabilities in Excess of other Assets — (1.9)%								(9,797	)		881		(10,356	)**
Net Assets — 100.0%								$409,135			$70,601		$478,296	**

(a)	Ambac Insured.

(b)	FGIC Insured.

(c)	FSA Insured.

(d)	MBIA Insured.

(e)	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 July 31, 2000.

(f)	The interest rate is subject to change periodically based upon prevailing market rates.

The interest rate shown is the rate in effect at July 31, 2000.

**	Amounts reflect Pro Forma adjustment to the Statement of Assets, Liabilities and Capital.

Ratings of issues shown have not been audited by                                                           .

See Notes to Financial Statements.

AMT		Alternative Minimum Tax (subject to)
COP		Certificates of Participation
EDA		Economic Development Authority
GO		General Obligation Bonds
RIB		Residual Interest Bonds
VRDN		Variable Rate Demand Notes

		MuniHoldings New Jersey Insured Fund			MuniHoldings New Jersey Insured Fund IV			Adjustments			Pro Forma for Combined Fund
Assets:
Investments, at value*		$418,932,264			$69,720,358						$488,652,622
Cash		50,298			31,567						81,865
Receivables:
Securities sold		6,255,674			—						6,255,674
Interest		4,685,270			1,016,437						5,701,707
Prepaid expenses and other assets		4,604			—						4,604
Total assets		429,928,110			70,768,362						500,696,472
Liabilities:
Payables:
Securities purchased		20,186,889			—						20,186,889
Dividends to shareholders		254,174			60,821			1,358,360			1,673,355
Investment adviser		152,028			15,306						167,334
Offering costs		42,809			62,801						105,610
Reorganization costs		41,419			—						41,419
Accrued expenses and other liabilities		115,329			27,922			82,424	(1)		225,675
Total liabilities		20,792,648			166,850			1,440,784			22,400,282
Net Assets:
Net Assets		$409,135,462			$70,601,512			$(1,440,784	)		$478,296,190
Capital
Capital Stock (200,000,000 shares authorized)
Preferred Stock, par value $.10 per share of AMPS** issued         and outstanding† at $25,000 per share liquidation         preference		$175,000,000			$28,000,000						$203,000,000
Common Stock par value $.10 per share issued and         outstanding††		1,781,716			299,782			23,146			2,104,644
Paid-in capital in excess of par		272,213,540			44,160,707			(105,570	)		316,268,677
Undistributed investment income — net		1,142,342			216,018			(1,358,360	)		—
Accumulated realized capital losses on investments — net		(34,214,737	)		(1,704,638	)					(35,919,375	)
Accumulated distributions in excess of realized capital gains on     investments — net		(226,339	)		—						(226,339	)
Unrealized depreciation on investments — net		(6,561,060	)		(370,357	)					(6,931,417	)
Total capital		$409,135,462			$70,601,512			$(1,440,784	)		$478,296,190
Net asset value per share of Common Stock		$            13.14			$          14.21						$            13.08
*   Identified Cost		$425,493,324			$70,090,715						$495,584,039
†   Shares issued and outstanding		7,000			1,120						8,120
††   Shares issued and outstanding		17,817,155			2,997,815			231,461			21,046,431
**   Auction Market Preferred Stock.
(1)  Reflects the charge for estimated Reorganization expenses of $82,424 attributable to Muniholdings New Jersey Insured Fund IV, Inc.         The estimated Reorganization expenses of $65,442 attributable to Muniholdings New Jersey Insured, Inc. will be paid by Fund Asset         Management, L.P.

		MuniHoldings New Jersey Insured Fund, Inc.			MuniHoldings New Jersey Insured Fund IV, Inc.			Adjustments(1)			Pro Forma for Combined Fund(2)
Investment Income:
Interest and amortization of premium and discount      earned		$14,575,794			$3,830,073						$18,405,867
Expenses:
Investment advisory fees		1,405,167			366,005						1,771,172
Reorganization expenses		410,392			—						410,392
Commission fees		291,062			68,751						359,813
Professional fees		66,208			49,219			$(49,219	)		66,208
Accounting services		47,844			48,438			(35,000	)		61,282
Transfer agent fees		70,430			23,621			(11,000	)		83,051
Directors’ fees and expenses		21,303			21,745			(21,745	)		21,303
Printing and shareholder reports		26,433			9,647			(4,000	)		32,080
Listing fees		23,478			9,426						32,904
Custodian fees		23,305			4,452			(1,000	)		26,757
Organization expense		14,688			—						14,688
Pricing fees		3,333			4,153			(1,000	)		6,486
Other		16,237			9,868			(7,500	)		18,605
Total expenses before reimbursement		2,419,880			615,325			(130,464	)		2,904,741
Reimbursement of expenses		(175,046	)		(227,376	)					(402,422	)
Total expenses after reimbursement		2,244,834			387,949			(130,464	)		2,502,319
Investment income — net		12,330,960			3,442,124			130,464			15,903,548
Realized & Unrealized Gains (Loss) on      Investments — Net
Realized gain (loss) on investments — net		(22,774,839	)		(1,685,271	)					(24,460,110	)
Change in unrealized appreciation/depreciation on      investments — net		23,363,613			(26,579	)					23,337,034
Net Increase in Net Assets Resulting from      Operations		$12,919,734			$1,730,274			$130,464			$14,780,472

(1)	Reflects the anticipated savings as a result of the Reorganization through fewer audits and consolidation of printing, accounting and other services.

(2)	This Pro Forma Combined Statement of Operations excludes non-recurring aggregate estimated Reorganization expenses of $147,866.

·

Financial futures contracts—The Fund may purchase or sell financial futures contracts and options on such futures contracts for the purpose of hedging the market risk on existing securities or the intended purchase of securities. Futures contracts are contracts for delayed delivery of securities at a specific future date and at a specific price or yield. Upon entering into a contract, the Fund deposits and maintains as collateral such initial margin as required by the exchange on which the transaction is effected. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.

·

Options—The Fund is authorized to write covered call options and purchase 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).

Fund		Defined Term Used in Exhibit I		Fiscal Year End		State of Organization		Meeting Time
MuniHoldings New Jersey Insured Fund, Inc.		New Jersey Insured		7/31		Maryland		12:00 noon
MuniHoldings New Jersey Insured Fund IV, Inc.		New Jersey Insured IV		5/31		Maryland		12:30 p.m.

		Shares of Capital Stock Outstanding as of the Record Date
Fund		Common Stock		AMPS
New Jersey Insured		17,817,155		7,000
New Jersey Insured IV		2,997,815		1,120

		Year in Which Each Director/Nominee Became a Member of the Board
Fund		Forbes		Glenn		Montgomery		Reilly		Ryan		West		Suddarth		Zeikel		Zinbarg
New Jersey Insured		1998		1999		1998		1998		1998		1998		2000		1998		2000
New Jersey Insured IV		1999		1999		1999		1999		1999		1999		2000		1999		2000

		Board						Audit Committee
Fund		# Meetings Held*		Annual Fee ($)		Per Meeting Fee ($)***		# Meetings Held*		Annual Fee ($)**		Per Meeting Fee ($)		Aggregate Fees and Expenses($)
New Jersey Insured				2,000		200				800		200
New Jersey Insured IV				2,000		200				800		200

*	Includes meetings held via teleconferencing equipment.

		Compensation From Each Fund ($)*
Fund		Forbes		Montgomery		Reilly		Ryan		Suddarth**		West		Zinbarg**
New Jersey Insured		3,600		3,600		4,600		3,600		667		3,600		667
New Jersey Insured IV		3,600		3,600		4,600		3,600		—		3,600		—

*	No pension or retirement benefits are accrued as part of Fund expenses.

**	Messrs. Suddarth and Zinbarg were elected Directors of the Funds on June 8, 2000.

Name of Director		Aggregate Compensation From FAM/MLIM Advised Funds Paid to Board members ($) (*)
Ronald W. Forbes		213,900
Cynthia A. Montgomery		213,900
Charles C. Reilly		400,025
Kevin A. Ryan		213,900
Roscoe S. Suddarth**		—
Richard R. West		388,775
Edward Zinbarg		140,875

*

The Directors serve on the boards of FAM/MLIM Advised Funds as follows: Mr. Forbes (51 registered investment companies consisting of 65 portfolios); Ms. Montgomery (51 registered investment companies consisting of 65 portfolios); Mr. Reilly (51 registered investment companies consisting of 65 portfolios); Mr. Ryan (51 registered investment companies consisting of 65 portfolios); Mr. Suddarth (42 registered investment companies consisting of 47 portfolios); Mr. West (62 registered investment companies consisting of 86 portfolios); and Mr. Zinbarg (42 registered investment companies consisting of 47 portfolios).

**	Mr. Suddarth was not a Director/Trustee of any FAM/MLIM Advised Funds as of December 31, 1999, but was elected a Director/Trustee of certain FAM/MLIM Advised Funds (including New Jersey Insured and New Jersey Insured IV) during 2000.

Name and Biography						Officer Since
		Age		Office		New Jersey Insured		New Jersey Insured IV
Terry K. Glenn* Executive Vice President of MLIM and FAM (the terms FAM and MLIM, as used herein, include their corporate predecessors) since 1983; Executive Vice President and Director of Princeton Services, Inc. (“Princeton Services”) since 1993; President of FAM Distributors, Inc. (“FAMD”) since 1986 and Director thereof since 1991; President of Princeton Administrators, L.P. since 1988.		60		President		1998		1999
Vincent R. Giordano Senior Vice President of FAM and MLIM since 1984; Portfolio Manager of FAM and MLIM since 1977; Senior Vice President of Princeton Services since 1993.		56		Senior Vice President		1998		1999
Kenneth A. Jacob First Vice President of MLIM since 1977; Vice President of MLIM from 1984 to 1997; Vice President of FAM since 1984.		49		Vice President		1998		1999
Donald C. Burke Senior Vice President and Treasurer of MLIM and FAM since 1999; Senior Vice President and Treasurer of Princeton Services since 1999; Vice President of PFD since 1999; First Vice President of MLIM from 1997 to 1999; Vice President of MLIM from 1990 to 1997; Director of Taxation of MLIM since 1990.		40		Vice President Treasurer		1998 1999		1999 1999
Robert A. DiMella, CFA Vice President of MLIM since 1997; Assistant Vice President of MLIM from 1995 to 1997; Assistant Portfolio Manager of MLIM from 1993 to 1995.		34		Vice President		1998		1999
Roberto W. Roffo Vice President of MLIM since 1996; Portfolio Manager with MLIM since 1992.		34		Vice President		—		1999
Robert D. Sneeden Assistant Vice President and Portfolio Manager of MLIM since 1994; Vice President of Lehman Brothers from 1990 to 1994.		47		Vice President		1998		—
Jodi M. Pinedo [                        ]		30		Secretary		2000		2000

*	Mr. Glenn was elected President of New Jersey Insured in 1999. Prior to that he served as Executive Vice President of New Jersey Insured.

(a)  New Jersey Insured is a corporation duly organized, validly existing and in good standing in conformity with the laws of the State of Maryland, and has the power to own all of its assets and to carry out this Agreement. New Jersey Insured has all necessary Federal, state and local authorizations to carry on its business as it is now being conducted and to carry out this Agreement.

(b)  New Jersey Insured is duly registered under the 1940 Act as a non-diversified, closed-end management investment company (File No. 811-08621), and such registration has not been revoked or rescinded and is in full force and effect. New Jersey Insured has elected and qualified for the special tax treatment afforded regulated investment companies (“RICs”) under Sections 851-855 of the Code at all times since its inception and intends to continue to so qualify until consummation of the Reorganization and thereafter.

(c)  New Jersey Insured IV has been furnished with New Jersey Insured’s Annual Report to Stockholders for the fiscal year ended July 31, 2000, and the audited financial statements appearing therein, having been examined by Ernst & Young LLP, independent public accountants, fairly present the financial position of New Jersey Insured as of the dates indicated, in conformity with generally accepted accounting principles applied on a consistent basis.

(d)  An unaudited statement of assets, liabilities and capital of New Jersey Insured and an unaudited schedule of investments of New Jersey Insured, each as of the Valuation Time (as defined in Section 3(d) of this Agreement), will be furnished to New Jersey Insured IV, at or prior to the Exchange Date for the purpose of determining the number of shares of New Jersey Insured Common Stock and New Jersey Insured Series E AMPS to be issued pursuant to Section 4 of this Agreement; each will fairly present the financial position of New Jersey Insured as of the Valuation Time in conformity with generally accepted accounting principles applied on a consistent basis.

(e)  New Jersey Insured has full power and authority to enter into and perform its obligations under this Agreement. The execution, delivery and performance of this Agreement has been duly authorized by all necessary action of its Board of Directors. Assuming due authorization, execution and delivery of this Agreement by New Jersey Insured IV, it constitutes a valid and binding contract enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, moratorium, fraudulent conveyance and similar laws relating to or affecting creditors’ rights generally and court decisions with respect thereto, and subject to applicable securities laws and judicial interpretation thereof.

(f)  There are no material legal, administrative or other proceedings pending or, to the knowledge of New Jersey Insured, threatened against it which assert liability on the part of New Jersey Insured or which materially affect its financial condition or its ability to consummate the Reorganization. New Jersey Insured is not charged with or, to the best of its knowledge, threatened with any violation or investigation of any possible violation of any provisions of any Federal, state or local law or regulation or administrative ruling relating to any aspect of its business.

(g)  New Jersey Insured is not obligated under any provision of its Articles of Incorporation, as amended and supplemented, or its by-laws, as amended, or a party to any contract or other commitment or obligation, and is not subject to any order or decree which would be violated by its execution of or performance under this Agreement, except insofar as the Funds have mutually agreed to amend such contract or other commitment or obligation to cure any potential violation as a condition precedent to the Reorganization.

(h)  There are no material contracts outstanding to which New Jersey Insured is a party that have not been disclosed in the N-14 Registration Statement (as defined in subsection (k) below) or will not otherwise be disclosed to New Jersey Insured IV prior to the Valuation Time.

(i)  New Jersey Insured has no known liabilities of a material amount, contingent or otherwise, other than those shown on its statements of assets, liabilities and capital referred to above, those incurred in the ordinary course of its business as an investment company since July 31, 2000; and those incurred in connection with the Reorganization. As of the Valuation Time, New Jersey Insured will advise New Jersey Insured IV in writing of all known liabilities, contingent or otherwise, whether or not incurred in the ordinary course of business, existing or accrued as of such time.

(j)  No consent, approval, authorization or order of any court or governmental authority is required for the consummation by New Jersey Insured of the Reorganization, except such as may be required under the Securities Act of 1933, as amended (the “1933 Act”), the Securities Exchange Act of 1934, as amended (the “1934 Act”) and the 1940 Act or state securities laws (which term as used herein shall include the laws of the District of Columbia and Puerto Rico).

(k)  The registration statement filed by New Jersey Insured on Form N-14, which includes the joint proxy statement of the Funds with respect to the transactions contemplated herein and the prospectus of New Jersey Insured relating to the New Jersey Insured Common Stock and New Jersey Insured Series E AMPS to be issued pursuant to this Agreement (the “Joint Proxy Statement and Prospectus”), and any supplement or amendment thereto or to the documents therein (as amended or supplemented, the “N-14 Registration Statement”), on its effective date, at the time of the stockholders’ meetings referred to in Section 6(a) of this Agreement and at the Exchange Date, insofar as it relates to New Jersey Insured (i) complied or will comply in all material respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and regulations promulgated thereunder and (ii) did not or will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and the Joint Proxy Statement and Prospectus included therein did not or will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this subsection only shall apply to statements in or omissions from the N-14 Registration Statement made in reliance upon and in conformity with information furnished by New Jersey Insured for use in the N-14 Registration Statement as provided in Section 6(e) of this Agreement.

(l)  New Jersey Insured is authorized to issue 200,000,000 shares of capital stock, of which 1,360 shares have been designated as Series A AMPS, 1,360 shares have been designated as Series B AMPS, 2,400 shares have been designated as Series C AMPS, and 1,880 shares have been designated as Series D AMPS (the Series A AMPS, the Series B AMPS, the Series C AMPS and the Series D AMPS of New Jersey Insured being collectively referred to herein as the “New Jersey Insured AMPS”), and 199,993,000 shares have been designated as common stock, par value $.10 per share; each outstanding share of which is fully paid and nonassessable and has full voting rights.

(m)  The shares of New Jersey Insured Common Stock and New Jersey Insured Series E AMPS to be issued to New Jersey Insured IV pursuant to this Agreement will have been duly authorized and, when issued and delivered pursuant to this Agreement, will be legally and validly issued and will be fully paid and nonassessable and will have full voting rights, and no stockholder of New Jersey Insured will have any preemptive right of subscription or purchase in respect thereof.

(n)  At or prior to the Exchange Date, the New Jersey Insured Common Stock to be transferred to New Jersey Insured IV for pro rata distribution to the stockholders of New Jersey Insured IV on the Exchange Date will be duly qualified for offering to the public in all states of the United States in which the sale of shares of New Jersey Insured IV presently are qualified, and there will be a sufficient number of such shares registered under the 1933 Act and, as may be necessary, with each pertinent state securities commission to permit the transfers contemplated by this Agreement to be consummated.

(o)  At or prior to the Exchange Date, the shares of New Jersey Insured Series E AMPS to be transferred to New Jersey Insured IV on the Exchange Date will be duly qualified for offering to the public in all states of the United States in which the sale of AMPS of New Jersey Insured IV presently are qualified, and there are a sufficient number of New Jersey Insured Series E AMPS registered under the 1933 Act and with each pertinent state securities commission to permit the transfers contemplated by this Agreement to be consummated.

(p) At or prior to the Exchange Date, New Jersey Insured will have obtained any and all regulatory, Director and stockholder approvals necessary to issue the New Jersey Insured Common Stock and New Jersey Insured Series E AMPS to New Jersey Insured IV.

(a)  New Jersey Insured IV is a corporation duly organized, validly existing and in good standing in conformity with the laws of the State of Maryland, and has the power to own all of its assets and to carry out this Agreement. New Jersey Insured IV has all necessary Federal, state and local authorizations to carry on its business as it is now being conducted and to carry out this Agreement.

(b)  New Jersey Insured IV is duly registered under the 1940 Act as a non-diversified, closed-end management investment company (File No. 811-09315), and such registration has not been revoked or rescinded and is in full force and effect. New Jersey Insured IV has elected and qualified for the special tax treatment afforded RICs under Sections 851-855 of the Code at all times since its inception, and intends to continue to so qualify through its taxable year ending upon liquidation.

(c)  As used in this Agreement, the term “New Jersey Insured IV Investments” shall mean (i) the investments of New Jersey Insured IV shown on the schedule of its investments as of the Valuation Time furnished to New Jersey Insured; and (ii) all other assets owned by New Jersey Insured IV or liabilities incurred as of the Valuation Time.

(d)  New Jersey Insured IV has full power and authority to enter into and perform its obligations under this Agreement. The execution, delivery and performance of this Agreement has been duly authorized by all necessary action of its Board of Directors. Assuming due authorization and delivery of this Agreement by New Jersey Insured, this Agreement constitutes a valid and binding contract enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, moratorium, fraudulent conveyance and similar laws relating to or affecting creditors’ rights generally and court decisions with respect thereto, and subject to applicable securities laws and judicial interpretation thereof.

(e)  New Jersey Insured has been furnished with New Jersey Insured IV’s Annual Report to Stockholders for the period ended May 31, 2000, and the audited financial statements appearing therein, having been examined by Deloitte & Touche LLP, independent public accountants, fairly present the financial position of New Jersey Insured IV as of the dates indicated, in conformity with generally accepted accounting principles applied on a consistent basis.

(f)  At or prior to the Exchange Date, New Jersey Insured IV will furnish its Semi-Annual Report to Stockholders for the period ended November 30, 2000 to New Jersey Insured, and the unaudited financial statements appearing therein will fairly present the financial position of New Jersey Insured IV as of the dates indicated, in conformity with generally accepted accounting principles applied on a consistent basis.

(g)  An unaudited statement of assets, liabilities and capital of New Jersey Insured IV and an unaudited schedule of investments of New Jersey Insured IV, each as of the Valuation Time, will be furnished to New Jersey Insured at or prior to the Exchange Date for the purpose of determining the number of shares of New Jersey Insured Common Stock and New Jersey Insured Series E AMPS to be issued to New Jersey Insured IV pursuant to Section 4 of this Agreement; each will fairly present the financial position of New Jersey Insured IV as of the Valuation Time in conformity with generally accepted accounting principles applied on a consistent basis.

(h)  There are no material legal, administrative or other proceedings pending or, to the knowledge of New Jersey Insured IV, threatened against it which assert liability on the part of New Jersey Insured IV or which materially affect its financial condition or its ability to consummate the Reorganization. New Jersey Insured IV is not charged with or, to the best of its knowledge, threatened with any violation or investigation of any possible violation of any provisions of any Federal, state or local law or regulation or administrative ruling relating to any aspect of its business.

(i)  There are no material contracts outstanding to which New Jersey Insured IV is a party that have not been disclosed in the N-14 Registration Statement or will not otherwise be disclosed to New Jersey Insured prior to the Valuation Time.

(j)  New Jersey Insured IV is not obligated under any provision of its Articles of Incorporation, as amended and supplemented, or its by-laws, as amended, or a party to any contract or other commitment or obligation, and is not subject to any order or decree which would be violated by its execution of or performance under this Agreement, except insofar as the Funds have mutually agreed to amend such contract or other commitment or obligation to cure any potential violation as a condition precedent to the Reorganization.

(k)  New Jersey Insured IV has no known liabilities of a material amount, contingent or otherwise, other than those shown on its statements of assets, liabilities and capital referred to above, those incurred in the ordinary course of its business as an investment company since May 31, 2000 and those incurred in connection with the Reorganization. As of the Valuation Time, New Jersey Insured IV will advise New Jersey Insured in writing of all known liabilities, contingent or otherwise, whether or not incurred in the ordinary course of business, existing or accrued as of such time.

(l) New Jersey Insured IV has filed, or has obtained extensions to file, all Federal, state and local tax returns which are required to be filed by it, and has paid or has obtained extensions to pay, all Federal, state and local taxes shown on said returns to be due and owing and all assessments received by it, up to and including the taxable year in which the Exchange Date occurs. All tax liabilities of New Jersey Insured IV have been adequately provided for on its books, and no tax deficiency or liability of New Jersey Insured IV has been asserted and no question with respect thereto has been raised by the Internal Revenue Service or by any state or local tax authority for taxes in excess of those already paid, up to and including the taxable year in which the Exchange Date occurs.

(m)  At both the Valuation Time and the Exchange Date, New Jersey Insured IV will have full right, power and authority to sell, assign, transfer and deliver the New Jersey Insured IV Investments. At the Exchange Date, subject only to the obligation to deliver the New Jersey Insured IV Investments as contemplated by this Agreement, New Jersey Insured IV will have good and marketable title to all of the New Jersey Insured IV Investments, and New Jersey Insured will acquire all of the New Jersey Insured IV Investments free and clear of any encumbrances, liens or security interests and without any restrictions upon the transfer thereof (except those imposed by the Federal or state securities laws and those imperfections of title or encumbrances as do not materially detract from the value or use of the New Jersey Insured IV Investments or materially affect title thereto).

(n)  No consent, approval, authorization or order of any court or governmental authority is required for the consummation by New Jersey Insured IV of the Reorganization, except such as may be required under the 1933 Act, the 1934 Act, the 1940 Act or state securities laws.

(o)  The N-14 Registration Statement, on its effective date, at the time of the stockholders’ meetings referred to in Section 6(a) of this Agreement and on the Exchange Date, insofar as it relates to New Jersey Insured IV (i) complied or will comply in all material respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and regulations promulgated thereunder, and (ii) did not or will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and the Joint Proxy Statement and Prospectus included therein did not or will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this subsection shall apply only to statements in or omissions from the N-14 Registration Statement made in reliance upon and in conformity with information furnished by New Jersey Insured IV for use in the N-14 Registration Statement as provided in Section 6(e) of this Agreement.

(p)  New Jersey Insured IV is authorized to issue 200,000,000 shares of capital stock, of which 1,560 shares have been designated as Series A AMPS, and 199,998,440 shares have been designated as common stock, par value $.10 per share; each outstanding share of which is fully paid and nonassessable and has full voting rights.

(q)  All of the issued and outstanding shares of New Jersey Insured IV Common Stock and New Jersey Insured IV AMPS were offered for sale and sold in conformity with all applicable Federal and state securities laws.

(r)  The books and records of New Jersey Insured IV made available to New Jersey Insured and/or its counsel are substantially true and correct and contain no material misstatements or omissions with respect to the operations of New Jersey Insured IV.

(s)  New Jersey Insured IV will not sell or otherwise dispose of any of the shares of New Jersey Insured Common Stock or New Jersey Insured Series E AMPS to be received in the Reorganization, except in distribution to the stockholders of New Jersey Insured IV, as provided in Section 3 of this Agreement.

4.	Issuance and Valuation of New Jersey Insured Common Stock and New Jersey Insured Series E AMPS in the Reorganization.

(a)  That this Agreement shall have been adopted, and the Reorganization shall have been approved, by the affirmative vote of (i) two-thirds of the members of the Board of Directors of New Jersey Insured IV; (ii) the holders of (a) a majority of the New Jersey Insured IV Common Stock, and New Jersey Insured IV AMPS, voting together as a single class, and (b) a majority of the New Jersey Insured IV AMPS, voting separately as a class, in each case issued and outstanding and entitled to vote thereon; (iii) a majority of the members of the Board of Directors of New Jersey Insured; and (iv) the holders of a majority of the outstanding New Jersey Insured Common Stock and New Jersey Insured AMPS, voting together as a single class issued and outstanding and entitled to vote thereon; and further that each Fund shall have delivered to each other Fund a copy of the resolution approving this Agreement adopted by such Fund’s Board of Directors, and a certificate setting forth the vote of such Fund’s stockholders obtained at the annual meeting of its stockholders, each certified by the Secretary of the appropriate Fund.

(b)   That New Jersey Insured IV shall have received from New Jersey Insured a statement of assets, liabilities and capital, with values determined as provided in Section 4 of this Agreement, together with a schedule of New Jersey Insured’s investments, all as of the Valuation Time, certified on New Jersey Insured’s behalf by its President (or any Vice President) and its Treasurer, and a certificate signed by New Jersey Insured’s President (or any Vice President) and its Treasurer, dated as of the Exchange Date, certifying that as of the Valuation Time and as of the Exchange Date there has been no material adverse change in New Jersey Insured’s financial position since the date of its most recent Annual or Semi-Annual Report, as applicable, other than changes in its portfolio securities since that date or changes in the market value of its portfolio securities.

(c)  That New Jersey Insured shall have furnished to New Jersey Insured IV a certificate signed by New Jersey Insured’s President (or any Vice President) and its Treasurer, dated as of the Exchange Date, certifying that, as of the Valuation Time and as of the Exchange Date all representations and warranties of New Jersey Insured made in this Agreement are true and correct in all material respects with the same effect as if made at and as of such dates, and that New Jersey Insured has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied at or prior to each of such dates.

(d)  That there shall not be any material litigation pending with respect to the matters contemplated by this Agreement.

(e)  That New Jersey Insured IV shall have received an opinion or opinions of Brown & Wood LLP, as counsel to the Funds, in form and substance satisfactory to New Jersey Insured IV and dated the Exchange Date, to the effect that (i) each Fund is a corporation duly organized, validly existing and in good standing in conformity with the laws of the State of Maryland; (ii) the shares of New Jersey Insured Common Stock and New Jersey Insured Series E AMPS to be issued pursuant to this Agreement are duly authorized and, upon delivery, will be validly issued and outstanding and fully paid and nonassessable by New Jersey Insured, and no stockholder of New Jersey Insured has any preemptive right to subscription or purchase in respect thereof (pursuant to the Articles of Incorporation of New Jersey Insured, as amended and supplemented, or the by-laws of New Jersey Insured or the state law of Maryland, or to the best of such counsel’s knowledge, otherwise); (iii) this Agreement has been duly authorized, executed and delivered by each Fund, and represents a valid and binding contract, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws pertaining to the enforcement of creditors’ rights generally and court decisions with respect thereto; provided, such counsel shall express no opinion with respect to the application of equitable principles in any proceeding, whether at law or in equity and provided further, that such counsel shall express no opinion whether the indemnification covenants contained in this Agreement are permitted by law; (iv) the execution and delivery of this Agreement does not, and the consummation of the Reorganization will not, violate any material provisions of Maryland law or the Articles of Incorporation, as amended and supplemented, the by-laws or any agreement (known to such counsel) to which any Fund is a party or by which any Fund is bound, except insofar as the parties have agreed to amend such provision as a condition precedent to the Reorganization; (v) New Jersey Insured IV has the power to sell, assign, transfer and deliver the assets and liabilities transferred by it hereunder and, upon consummation of the Reorganization in accordance with the terms of this Agreement, New Jersey Insured IV will have duly transferred such assets and liabilities in accordance with this Agreement; (vi) to the best of such counsel’s knowledge, no consent, approval, authorization or order of any United States federal court, Maryland state court or governmental authority is required for the consummation by the Funds of the Reorganization, except such as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act and the published rules and regulations of the Commission thereunder and under Maryland law and such as may be required under state securities laws; (vii) the N-14 Registration Statement has become effective under the 1933 Act, no stop order suspending the effectiveness of the N-14 Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the 1933 Act, and the N-14 Registration Statement as of its effective date, appears on its face to be appropriately responsive in all material respects to the requirements of the 1933 Act, the 1934 Act and the 1940 Act and the published rules and regulations of the Commission thereunder; (viii) the descriptions in the N-14 Registration Statement of statutes, legal and governmental proceedings and contracts and other documents are accurate and fairly present the information required to be shown; (ix) the information in the Joint Proxy Statement and Prospectus under “Comparison of the Funds—Tax Rules Applicable to the Funds and their Stockholders” and “Agreement and Plan of Reorganization—Tax Consequences of the Reorganization,” to the extent that it constitutes matters of law, summaries of legal matters or legal conclusions, has been reviewed by such counsel and is correct in all material respects as of the date of the Joint Proxy Statement and Prospectus; (x) such counsel does not know of any statutes, legal or governmental proceedings or contracts or other documents related to the Reorganization of a character required to be described in the N-14 Registration Statement which are not described therein or, if required to be filed, filed as required; (xi) no Fund, to the knowledge of such counsel, is required to qualify to do business as a foreign corporation in any jurisdiction except as may be required by state securities laws, and except where each has so qualified or the failure so to qualify would not have a material adverse effect on such Fund or its stockholders; (xii) such counsel does not have actual knowledge of any material suit, action or legal or administrative proceeding pending or threatened against any Fund, the unfavorable outcome of which would materially and adversely affect such Fund; (xiii) all corporate actions required to be taken by the Funds to authorize this Agreement and to effect the Reorganization have been duly authorized by all necessary corporate actions on the part of such Fund; and (xiv) such opinion is solely for the benefit of New Jersey Insured IV and its Directors and officers. Such opinion also shall state that (x) while such counsel cannot make any representation as to the accuracy or completeness of statements of fact in the N-14 Registration Statement, nothing has come to their attention that would lead them to believe that, on the respective effective dates of the N-14 Registration Statement, either (1) the N-14 Registration Statement contained any untrue statement of a material fact or omitted any material fact required to be stated therein or necessary to make the statements therein not misleading; or (2) the prospectus included in the N-14 Registration Statement contained any untrue statement of a material fact or omitted any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (y) such counsel does not express any opinion or belief as to the financial statements or other financial or statistical data relating to any Fund contained or incorporated by reference in the N-14 Registration Statement. In giving the opinion set forth above, Brown & Wood LLP may state that it is relying on certificates of officers of a Fund with regard to matters of fact and certain certificates and written statements of governmental officials with respect to the good standing of a Fund.

(f)  That New Jersey Insured IV shall have received either (a) a private letter ruling from the Internal Revenue Service or (b) an opinion of Brown & Wood LLP, to the effect that for Federal income tax purposes (i) the transfer by New Jersey Insured IV of substantially all of its assets to New Jersey Insured in exchange solely for shares of New Jersey Insured Common Stock and New Jersey Insured Series E AMPS as provided in this Agreement will constitute a reorganization within the meaning of Section 368(a)(1)(C) of the Code, and New Jersey Insured and New Jersey Insured IV will each be deemed to be a “party” to a reorganization within the meaning of Section 368(b); (ii) in accordance with Section 361(a) of the Code, no gain or loss will be recognized to New Jersey Insured IV as a result of the asset transfer solely in exchange for shares of New Jersey Insured Common Stock and New Jersey Insured Series E AMPS or on the distribution of New Jersey Insured Common Stock and New Jersey Insured Series E AMPS to holders of New Jersey Insured IV Common Stock or New Jersey Insured IV AMPS, as applicable, under Section 361(c)(1); (iii) under Section 1032 of the Code, no gain or loss will be recognized to New Jersey Insured on the receipt of assets of New Jersey Insured IV in exchange for its shares; (iv) in accordance with Section 354(a)(1) of the Code, no gain or loss will be recognized to the holders of New Jersey Insured IV Common Stock or New Jersey Insured IV AMPS on their receipt of shares of New Jersey Insured Common Stock and New Jersey Insured Series E AMPS, as applicable, in exchange for their shares of New Jersey Insured IV; (v) in accordance with Section 362(b) of the Code, the tax basis of New Jersey Insured IV’s assets in the hands of New Jersey Insured will be the same as the tax basis of such assets in the hands of New Jersey Insured IV immediately prior to the consummation of the Reorganization; (vi) in accordance with Section 358 of the Code, immediately after the Reorganization, the tax basis of the shares of New Jersey Insured Common Stock and New Jersey Insured Series E AMPS received in the Reorganization by the holders of New Jersey Insured IV Common Stock or New Jersey Insured IV AMPS will be equal, in the aggregate, to the tax basis of such New Jersey Insured IV shares surrendered in exchange; (vii) in accordance with Section 1223 of the Code, a stockholder’s holding period for the shares of New Jersey Insured will be determined by including the period for which such stockholder held New Jersey Insured IV shares exchanged therefor, provided, that such shares were held as a capital asset; (viii) in accordance with Section 1223 of the Code, New Jersey Insured’s holding period with respect to New Jersey Insured IV’s assets transferred will include the period for which New Jersey Insured IV held such assets; (ix) the payment of cash to holders New Jersey Insured IV Common Stock in lieu of fractional shares of New Jersey Insured Common Stock will be treated as though the fractional shares were distributed as part of the Reorganization and then redeemed, with the result that such stockholders will have short-term or long-term capital gain or loss to the extent that the cash distribution differs from the stockholder’s basis allocable to the New Jersey Insured fractional shares; and (x) the taxable year of New Jersey Insured IV will end on the effective date of the Reorganization and pursuant to Section 381(a) of the Code and regulations promulgated thereunder, New Jersey Insured will succeed to and take into account certain tax attributes of New Jersey Insured IV, such as earnings and profits, capital loss carryovers and method of accounting.

(g)  That the N-14 Registration Statement shall have become effective under the 1933 Act, and no stop order suspending such effectiveness shall have been instituted or, to the knowledge of New Jersey Insured, be contemplated by the Commission.

(h)  That New Jersey Insured IV shall have received from Ernst & Young LLP a letter dated within three days prior to the effective date of the N-14 Registration Statement, and a similar letter dated within five days prior to the Exchange Date, that it finds satisfactory in form and substance, to the effect that (i) they are independent public accountants with respect to New Jersey Insured within the meaning of the 1933 Act and the applicable published rules and regulations promulgated thereunder; (ii) in their opinion, the financial statements and supplementary information of New Jersey Insured included or incorporated by reference in the N-14 Registration Statement and reported on by them comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the published rules and regulations promulgated thereunder; (iii) on the basis of limited procedures agreed upon by the Funds and described in such letter (but not an examination in accordance with generally accepted auditing standards) consisting of a reading of any unaudited interim financial statements and unaudited supplementary information of New Jersey Insured included in the N-14 Registration Statement, and inquiries of certain officials of New Jersey Insured responsible for financial and accounting matters, nothing came to their attention that caused them to believe that (a) such unaudited financial statements and related unaudited supplementary information do not comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the published rules and regulations promulgated thereunder, (b) such unaudited financial statements are not fairly presented in conformity with generally accepted accounting principles, applied on a basis substantially consistent with that of the audited financial statements, or (c) such unaudited supplementary information is not fairly stated in all material respects in relation to the unaudited financial statements taken as a whole; and (iv) on the basis of limited procedures agreed upon by the Funds and described in such letter (but not an examination in accordance with generally accepted auditing standards), the information relating to New Jersey Insured appearing in the N-14 Registration Statement, which information is expressed in dollars (or percentages derived from such dollars) (with the exception of performance comparisons, if any), if any, has been obtained from the accounting records of New Jersey Insured or from schedules prepared by officials of New Jersey Insured having responsibility for financial and reporting matters and such information is in agreement with such records, schedules or computations made therefrom.

(i)  That the Commission shall not have issued an unfavorable advisory report under Section 25(b) of the 1940 Act, nor instituted or threatened to institute any proceeding seeking to enjoin consummation of the Reorganization under Section 25(c) of the 1940 Act, and no other legal, administrative or other proceeding shall be instituted or threatened which would materially affect the financial condition of New Jersey Insured or would prohibit the Reorganization.

(j)  That New Jersey Insured IV shall have received from the Commission such orders or interpretations as Brown & Wood LLP, as its counsel, deems reasonably necessary or desirable under the 1933 Act and the 1940 Act in connection with the Reorganization, provided, that such counsel shall have requested such orders as promptly as practicable, and all such orders shall be in full force and effect.

(a)  That this Agreement shall have been adopted, and the Reorganization shall have been approved, by the Board of Directors and the stockholders of each Fund as set forth in Section 8(a); and that New Jersey Insured IV shall have delivered to New Jersey Insured a copy of the resolution approving this Agreement adopted by its Board of Directors, and a certificate setting forth the vote of the stockholders of New Jersey Insured IV obtained, certified by its Secretary.

(b)  That New Jersey Insured IV shall have furnished to New Jersey Insured a statement of its assets, liabilities and capital, with values determined as provided in Section 4 of this Agreement, together with a schedule of investments with their respective dates of acquisition and tax costs, all as of the Valuation Time, certified on its behalf by its President (or any Vice President) and its Treasurer, and a certificate signed by its President (or any Vice President) and its Treasurer, dated as of the Exchange Date, certifying that as of the Valuation Time and as of the Exchange Date there has been no material adverse change in its financial position since the date of its most recent Annual Report or Semi-Annual Report, as applicable, other than changes in the New Jersey Insured IV Investments since that date or changes in the market value of the New Jersey Insured IV Investments.

(c)  That New Jersey Insured IV shall have furnished to New Jersey Insured a certificate signed by its President (or any Vice President) and its Treasurer, dated the Exchange Date, certifying that as of the Valuation Time and as of the Exchange Date all representations and warranties of New Jersey Insured IV made in this Agreement are true and correct in all material respects with the same effect as if made at and as of such dates and New Jersey Insured IV has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied at or prior to such dates.

(d)  That New Jersey Insured IV shall have delivered to New Jersey Insured a letter from Deloitte & Touche LLP, dated the Exchange Date, stating that the firm has performed a limited review of New Jersey Insured IV’s Federal, state and local income tax returns for the period ended May 31, 2000 (which returns originally were prepared and filed by New Jersey Insured IV), and that based on such limited review, nothing came to their attention which caused them to believe that such returns did not properly reflect, in all material respects, New Jersey Insured IV’s Federal, state and local income taxes for the period covered thereby; and that for the period from June 1, 2000 to and including the Exchange Date and for any taxable year of New Jersey Insured IV ending upon its liquidation, Deloitte & Touche LLP has performed a limited review to ascertain the amount of applicable Federal, state and local taxes, and has determined that either such amount has been paid or reserves have been established for payment of such amount, this review to be based on unaudited financial data; and that based on such limited review, nothing has come to their attention which caused them to believe that the taxes paid or reserves set aside for payment of such taxes were not adequate in all material respects for the satisfaction of Federal, state and local taxes for the period from June 1, 2000 to and including the Exchange Date and for any taxable year of New Jersey Insured IV, ending upon its liquidation, or that New Jersey Insured IV would not qualify as a regulated investment company for Federal income tax purposes for the tax years in question.

(e)  That there shall not be any material litigation pending with respect to the matters contemplated by this Agreement.

(f)  That New Jersey Insured shall have received an opinion of Brown & Wood LLP, as counsel to the Funds, in form and substance satisfactory to New Jersey Insured and dated the Exchange Date, with respect to the matters specified in Section 8(e) of this Agreement and such other matters as New Jersey Insured reasonably may deem necessary or desirable.

(g)  That New Jersey Insured shall have received a private letter ruling from the Internal Revenue Service or an opinion of Brown & Wood LLP with respect to the matters specified in Section 8(f) of this Agreement.

(h)  That New Jersey Insured shall have received from Deloitte & Touche LLP a letter dated within three days prior to the effective date of the N-14 Registration Statement and a similar letter dated within five days prior to the Exchange Date, in form and substance satisfactory to New Jersey Insured, to the effect that (i) they are independent public accountants with respect to New Jersey Insured IV within the meaning of the 1933 Act and the applicable published rules and regulations promulgated thereunder; (ii) in their opinion, the financial statements and supplementary information of New Jersey Insured IV included or incorporated by reference in the N-14 Registration Statement and reported on by them (if applicable) comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the published rules and regulations promulgated thereunder; (iii) on the basis of limited procedures agreed upon by the Funds and described in such letter (but not an examination in accordance with generally accepted auditing standards) consisting of a reading of any unaudited interim financial statements and unaudited supplementary information of New Jersey Insured IV included in the N-14 Registration Statement, and inquiries of certain New Jersey Insured IV officials responsible for financial and accounting matters, nothing came to their attention that caused them to believe that (a) such unaudited financial statements and related unaudited supplementary information do not comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the published rules and regulations promulgated thereunder, (b) such unaudited financial statements are not fairly presented in conformity with generally accepted accounting principles, or (c) such unaudited supplementary information is not fairly stated in all material respects in relation to the unaudited financial statements taken as a whole; and (iv) on the basis of limited procedures agreed upon by the Funds and described in such letter (but not an examination in accordance with generally accepted auditing standards), the information relating to New Jersey Insured IV appearing in the N-14 Registration Statement (which information, with the exception of any performance comparisons, is expressed in dollars or percentages derived from such dollars), if any, has been obtained from New Jersey Insured IV’s accounting records or from schedules prepared by New Jersey Insured IV officials having responsibility for financial and reporting matters, and such information is in agreement with such records, schedules or computations made therefrom.

(i)  That the New Jersey Insured IV Investments to be transferred to New Jersey Insured shall not include any assets or liabilities which New Jersey Insured, by reason of charter limitations or otherwise, may not properly acquire or assume.

(j)  That the N-14 Registration Statement shall have become effective under the 1933 Act and no stop order suspending such effectiveness shall have been instituted or, to the knowledge of New Jersey Insured IV, be contemplated by the Commission.

(k)  That the Commission shall not have issued an unfavorable advisory report under Section 25(b) of the 1940 Act, nor instituted or threatened to institute any proceeding seeking to enjoin consummation of the Reorganization under Section 25(c) of the 1940 Act, and no other legal, administrative or other proceeding shall be instituted or threatened which would materially affect the financial condition of New Jersey Insured IV or would prohibit the Reorganization.

(l)  That New Jersey Insured shall have received from the Commission such orders or interpretations as Brown & Wood LLP, as counsel to New Jersey Insured, deems reasonably necessary or desirable under the 1933 Act and the 1940 Act in connection with the Reorganization, provided, that such counsel shall have requested such orders as promptly as practicable, and all such orders shall be in full force and effect.

(m)  That all proceedings taken by New Jersey Insured IV and its counsel in connection with the Reorganization and all documents incidental thereto shall be satisfactory in form and substance to New Jersey Insured.

(n)  That prior to the Exchange Date, New Jersey Insured IV shall have declared a dividend or dividends which, together with all such previous dividends, shall have the effect of distributing to its stockholders all of its net investment company taxable income for the period to and including the Exchange Date, if any (computed without regard to any deduction for dividends paid), and all of its net capital gain, if any, realized to and including the Exchange Date. In this regard, the last dividend period for the New Jersey Insured IV AMPS may be shorter than the dividend period for such AMPS determined as set forth in the Articles Supplementary creating the New Jersey Insured IV AMPS.

THESE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFER UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT TO MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. (OR ITS STATUTORY SUCCESSOR), OR ITS PRINCIPAL UNDERWRITER UNLESS (I) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT OF 1933 OR (II) IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE FUND, SUCH REGISTRATION IS NOT REQUIRED.

Attest:          Secretary   Attest:          Secretary

MUNIHOLDINGS NEW JERSEY INSURED FUND , INC .          By:  Vice President   MUNIHOLDINGS NEW JERSEY INSURED FUND IV, INC .          By:  Vice President

Issuers rated Prime-1 (or supporting institutions) have a superior ability for repayment of short-term promissory obligations. Prime-1 repayment capacity will often be evidenced by the following characteristics: leading market positions in well established industries; high rates of return on funds employed; conservative capitalization structures with moderate reliance on debt and ample asset protection; broad margins, in earning coverage of fixed financial charges and high internal cash generation; and with established access to a range of financial markets and assured sources of alternate liquidity.

Issuers rated Prime-2 (or supporting institutions) have a strong ability for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained.

Issuers rated Prime-3 (or supporting institutions) have an acceptable ability for repayment of short-term promissory obligations. The effects of industry characteristics and market composition may be more pronounced. Variability in earnings and profitability may result in changes to the level of debt protection measurements and the requirement for relatively high financial leverage. Adequate alternate liquidity is maintained.

Issuers rated Not Prime do not fall within any of the Prime rating categories.

I. Likelihood of default-capacity and willingness of the obligor as to the timely payment of interest and repayment of principal in accordance with the terms of the obligation;

II. Nature of and provisions of the obligation;

III. Protection afforded to, and relative position of, the obligation in the event of bankruptcy, reorganization or other arrangement under the laws of bankruptcy and other laws affecting creditors’ rights.

AAA – Debt rated “AAA” has the highest rating assigned by Standard & Poor’s. Capacity of the obligor to meet its financial commitment on the obligation is extremely strong.

AA – Debt rated “AA” differs from the highest-rated issues only in small degree. The obligor’s capacity to meet its financial commitment on the obligation is very strong.

A – Debt rated “A” is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher-rated categories. However, the obligor’s capacity to meet its financial commitment on the obligation is still strong.

BBB – Debt rated “BBB” exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.

BB, B, CCC, CC, C – Debt rated “BB,” “B,” “ CCC,” “CC,” and “C” are regarded as having significant speculative characteristics. “BB” indicates the least degree of speculation and “C” the highest degree of speculation. While such debt will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major risk exposures to adverse conditions.

D – Debt rated “D” is in payment default. The “D” rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless Standard & Poor’s believes that such payments will be made during such grace period. The “D” rating also will be used upon the filing of a bankruptcy petition or the taking of similar action if payments on an obligation are jeopardized.

A-1 – This designation indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation.

A-2 – Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated “A-1.”

A-3 – Issues carrying this designation have adequate capacity for timely payment. They are, however, more vulnerable to the adverse effects of changes in circumstances than obligations carrying the higher designations.

B – Issues rated “B” are regarded as having only speculative capacity for timely payment.

C – This rating is assigned to short-term debt obligations with a doubtful capacity for payment.

D – Debt rated “D” is in payment default. The “D” rating category is used when interest payments or principal payments are not made on the date due, even if the applicable grace period has not expired unless Standard & Poor’s believes that such payments will be made during such grace period.

c – The “c” subscript is used to provide additional information to investors that the bank may terminate its obligation to purchase tendered bonds if the long-term credit rating of the issuer is below an investment-grade level and/or the issuer’s bonds are deemed taxable.

p – The letter “p” indicates that the rating is provisional. A provisional rating assumes the successful completion of the project financed by the debt being rated and indicates that payment of the debt service requirements is largely or entirely dependent upon the successful, timely completion of the project. This rating, however, while addressing credit quality subsequent to completion of the project, makes no comment on the likelihood of or the risk of default upon failure of such completion. The investor should exercise his own judgment with respect to such likelihood and risk.

Continuance of the ratings is contingent upon Standard & Poor’s receipt of an executed copy of the escrow agreement or closing documentation confirming investments and cash flows.

r – The “r” highlights derivative, hybrid, and certain other obligations that Standard & Poor’s believes may experience high volatility or high variability in expected returns as a result of noncredit risks. Examples of such obligations are securities with principal or interest return indexed to equities, commodities, or currencies; certain swaps and options; and interest-only and principal-only mortgage securities. The absence of an “r” symbol should not be taken as an indication that an obligation will exhibit no volatility or variability in total return.

SP-1

Strong capacity to pay principal and interest. An issue determined to possess a very strong capacity to pay debt service is given a plus (+) designation.

SP-2

Satisfactory capacity to pay principal and interest with some vulnerability to adverse financial and economic changes over the term of the notes.

SP-3

Speculative capacity to pay principal and interest.

F-1+

Exceptionally Strong Credit Quality.    Issues assigned this rating are regarded as having the strongest degree of assurance for timely payment.

F-1

Very Strong Credit Quality.    Issues assigned this rating reflect an assurance of timely payment only slightly less in degree than issues rated “F-l+”.

F-2

Good Credit Quality.    Issues assigned this rating have a satisfactory degree of assurance for timely payment, but the margin of safety is not as great as for issues assigned “F-1+” and “F-l” ratings.

F-3

Fair Credit Quality.    Issues assigned this rating have characteristics suggesting that the degree of assurance for timely payment is adequate; however, near-term adverse changes could cause these securities to be rated below investment grade.

F-S

Weak Credit Quality.    Issues assigned this rating have characteristics suggesting a minimal degree of assurance for timely payment and are vulnerable to near-term adverse changes in financial and economic conditions.

D

Default.    Issues assigned this rating are in actual or imminent payment default.

LOC

The symbol “LOC” indicates that the rating is based on a letter of credit issued by a commercial bank.

1		(a)		—		Articles of Incorporation of the Registrant, dated January 27, 1998. (a)
		(b)		—		Form of Articles Supplementary creating the Series A AMPS and the Series B AMPS. (c)
		(c)		—		Form of Articles Supplementary creating the Series C AMPS and the Series D AMPS. (e)
		(d)		—		Form of Articles Supplementary creating the Series E AMPS.*
2				—		By-Laws of the Registrant. (a)
3				—		Not Applicable.
4				—		Form of Agreement and Plan of Reorganization between the Registrant and MuniHoldings New Jersey Insured Fund IV, Inc. (included in Exhibit II to the Joint Proxy Statement and Prospectus contained in this Registration Statement)
5		(a)		—		Copies of instruments defining the rights of stockholders, including the relevant portions of the Articles of Incorporation and the By-Laws of the Registrant. (d)
		(b)		—		Form of specimen certificate for the Common Stock of the Registrant. (a)
		(c)		—		Form of specimen certificate for the AMPS of the Registrant. (b)
6				—		Form of Investment Advisory Agreement between Registrant and Fund Asset Management, L.P. (a)
7		(a)		—		Form of Purchase Agreement for the Common Stock. (a)
		(b)		—		Form of Purchase Agreement for the AMPS. (c)
		(c)		—		Form of Merrill Lynch Standard Dealer Agreement. (a)
8				—		Not applicable.
9				—		Custodian Contract between the Registrant and The Bank of New York. (b)

10				—		Not applicable.
11				—		Opinion of Brown & Wood LLP, counsel for the Registrant.*
12				—		Private Letter Ruling from the Internal Revenue Service.*
13		(a)		—		Form of Registrar, Transfer Agency and Service Agreement between the Registrant and The Bank of New York (now, the Bank of New York). (b)
		(b)		—		Form of Auction Agent Agreement between the Registrant and IBJ Whitehall Bank & Trust Company. (c)
		(c)		—		Form of Broker-Dealer Agreement. (c)
		(d)		—		Form of Letter of Representations. (c)
14		(a)		—		Consent of                                          , independent auditors for the Registrant.*
		(b)		—		Consent of                                                      , independent auditors for MuniHoldings New Jersey Insured Fund IV, Inc.*
15				—		Not applicable.
16				—		Power of Attorney (included on the signature page).

(a)	Incorporated by reference to the Registrant’s Registration Statement on Form N-2 relating to the Registrant’s Common Stock (File No. 333-45365) (the “Common Stock Registration Statement”), filed on January 30, 1998.

(b)	Incorporated by reference to Pre-Effective Amendment No. 1 to the Common Stock Registration Statement, filed on March 6, 1998.

(c)	Incorporated by reference to the Registrant’s Registration Statement on Form N-2 relating to the Registrant’s Auction Market Preferred Stock (File No. 333-46513) (the “AMPS Registration Statement”), filed on February 18, 1998.

(d)

Reference is made to Article V, Article VI (sections 2, 3, 4, 5 and 6), Article VII, Article VIII, Article X, Article XI, Article XII and Article XIII of the Registrant’s Articles of Incorporation, previously filed as Exhibit (1) to the Common Stock Registration Statement, and to Article II, Article III (sections 1, 2, 3, 5 and 17), Article VI, Article VII, Article XII, Article XIII and Article XIV of the Registrant’s By-Laws previously filed as Exhibit (2) to the Common Stock Registration Statement. Reference is also made to the Forms of Articles Supplementary filed as Exhibit 1(d) to the AMPS Registration Statement, as Exhibit 1(c) to the 1999 N-14 and as Exhibit 1(e) hereto.

(e)	Incorporated by reference to Exhibit 1(c) to Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form N-14 (File No. 333-87083) filed on November 4, 1999 (the “1999 N-14”).

		MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. (Registrant)
		/S /    TERRY K. GLENN By:                                                                                                                               (Terry K. Glenn, President)

Signatures		Title		Date
/S /    TERRY K. GLENN                                                                                                                (Terry K. Glenn)		President and Director (Principal Executive Officer)		October 11, 2000
/S /    DONALD C. BURKE                                                                                                                (Donald C. Burke)		Vice President and Treasurer (Principal Financial and Accounting Officer)		October 11, 2000
/S /    RONALD W. FORBES                                                                                                                (Ronald W. Forbes)		Director		October 11, 2000
/S /    CYNTHIA A. MONTGOMERY                                                                                                                (Cynthia A. Montgomery)		Director		October 11, 2000
/S /    CHARLES C. REILLY                                                                                                                (Charles C. Reilly)		Director		October 11, 2000
/S /    KEVIN A. RYAN                                                                                                                (Kevin A. Ryan)		Director		October 11, 2000
/S /    ROSCOE S. SUDDARTH                                                                                                                (Roscoe S. Suddarth)		Director		October 11, 2000
/S /     RICHARD R. WEST                                                                                                                (Richard R. West)		Director		October 11, 2000
/S /    ARTHUR ZEIKEL                                                                                                                (Arthur Zeikel)		Director		October 11, 2000
/S /    EDWARD D. ZINBARG                                                                                                                (Edward D. Zinbarg)		Director		October 11, 2000

[Proxy Card Front]

AUCTION MARKET
PREFERRED STOCK

MUNIHOLDINGS NEW JERSEY INSURED FUND, INC.

P.O. BOX 9011

PRINCETON, NEW JERSEY 08543-9011

 

P R O X Y

This proxy is solicited on behalf of the Board of Directors

 

      The undersigned hereby appoints Terry K. Glenn, Donald C. Burke and Jodi M. Pinedo as proxies, each with the power to appoint his or her substitute, as applicable and hereby authorizes each of them to represent and to vote, as designated on the reverse hereof, all of the shares of Auction Market Preferred Stock of MuniHoldings New Jersey Insured Fund, Inc. (the "Fund") held of record by the undersigned on October 30, 2000 at the Annual Meeting of  Stockholders of the Fund to be held on December 13, 2000, or any adjournment thereof.

      This proxy, when properly executed, will be voted in the manner herein directed by the undersigned stockholder. If no direction is made, this proxy will be voted “for” items 1, 2 and 3.

      By signing and dating the reverse side of this card, you authorize the proxies to vote the proposal as marked, or if not marked, to vote "FOR" the proposal, and to use their discretion to vote for any other matter as may properly come before the meeting or any adjournment thereof. If you do not intend to personally attend the meeting, please complete and return the card at once in the enclosed envelope.

(Continued and to be signed on the reverse side)

[Proxy Card Reverse]

		Please mark boxes /X/ or x in blue or black ink.
		1.		To consider and act upon a proposal to approve the Agreement and Plan of Reorganization between the Fund and MuniHoldings New Jersey Insured Fund IV, Inc.
				FOR   |   |	AGAINST   |   |	ABSTAIN   |   |
		2.		ELECTION OF DIRECTORS   |   |       FOR all nominees listed below              (except as marked to the contrary below)		|   |        WITHHOLD AUTHORITY              to vote for all nominees listed below
				(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a line through the nominee's name in the list below.)
				Ronald W. Forbes, Terry K. Glenn, Cynthia A. Montgomery,  Charles C. Reilly, Kevin A. Ryan, Roscoe S. Suddarth, Richard R. West, Arthur Zeikel, Edward D. Zinbarg
		3.		Proposal to ratify the selection of Ernst & Young LLP as the independent auditors of the Fund to serve for the current fiscal year.
				FOR   |   |	AGAINST   |   |	ABSTAIN   |   |
		4.		In the discretion of such proxies, upon such other business as properly may come before the meeting or any adjournment thereof.
				If the undersigned is a broker-dealer, it hereby instructs the proxies, pursuant to Rule 452 of the New York Stock Exchange, to vote any uninstructed Auction Market Preferred Stock in the same proportion as votes cast by holders of Auction Market Preferred Stock who have responded to this proxy solicitation.

	Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney or as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person.
		Dated:__________________________________ X_______________________________________                                  Signature X_______________________________________                            Signature, if held jointly

Sign, Date, and Return the Proxy Card Promptly Using the Enclosed Envelope.

[Proxy Card Front]

COMMON STOCK

 

MUNIHOLDINGS NEW JERSEY INSURED FUND IV, INC.

P.O. BOX 9011

PRINCETON, NEW JERSEY 08543-9011

P R O X Y

This proxy is solicited on behalf of the Board of Directors

 

      The undersigned hereby appoints Terry K. Glenn, Donald C. Burke and Jodi M. Pinedo as proxies, each with the power to appoint his or her substitute, as applicable, and hereby authorizes each of them to represent and to vote, as designated on the reverse hereof, all of the shares of Common Stock of MuniHoldings New Jersey Insured Fund IV, Inc. (the "Fund") held of record by the undersigned on October 30, 2000 at the Annual Meeting of Stockholders of the Fund to be held on December 13, 2000, or any adjournment thereof.

      This proxy,  when properly executed,  will be voted in the manner herein directed by the undersigned stockholder. If no direction is made, this proxy will be voted “for” items 1, 2 and 3.

      By signing and dating the reverse side of this card, you authorize the proxies to vote each proposal as marked, or if not marked, to vote "FOR" each proposal, and to use their discretion to vote for any other matter as may properly come before the meeting or any adjournment thereof. If you do not intend to personally attend the meeting, please complete and return the card at once in the enclosed envelope.

(Continued and to be signed on the reverse side)

[Proxy Card Reverse]

		Please mark boxes /X/ or x in blue or black ink.
		1.		To consider and act upon a proposal to approve the Agreement and Plan of Reorganization between the Fund and MuniHoldings New Jersey Insured Fund, Inc.
				FOR   |   |	AGAINST   |   |	ABSTAIN   |   |
		2.		ELECTION OF DIRECTORS   |   |       FOR all nominees listed below              (except as marked to the contrary below)		|   |        WITHHOLD AUTHORITY              to vote for all nominees listed below
				(Instruction: to withhold authority to vote for any individual nominee, strike a line through the nominee's name in the list below.)
				Ronald W. Forbes, Terry K. Glenn, Cynthia A. Montgomery, Kevin A. Ryan, Roscoe S. Suddarth, Arthur Zeikel, Edward D. Zinbarg
		3.		Proposal to ratify the selection of Deloitte & Touche LLP as the independent auditors of the Fund to serve for the current fiscal year.
				FOR   |   |	AGAINST   |   |	ABSTAIN   |   |
		4.		In the discretion of such proxies, upon such other business as properly may come before the meeting or any adjournment thereof.

	Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney or as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person.
		Dated:__________________________________ X_______________________________________                                  Signature X_______________________________________                            Signature, if held jointly

Sign, Date, and Return the Proxy Card Promptly Using the Enclosed Envelope.

 

[Proxy Card Front]

AUCTION MARKET
PREFERRED STOCK

MUNIHOLDINGS NEW JERSEY INSURED FUND IV, INC.

P.O. BOX 9011

PRINCETON, NEW JERSEY 08543-9011

 

P R O X Y

This proxy is solicited on behalf of the Board of Directors

 

      The undersigned hereby appoints Terry K. Glenn, Donald C. Burke and Jodi M. Pinedo as proxies, each with the power to appoint his or her substitute, as applicable, and hereby authorizes each of them to represent and to vote, as designated on the reverse hereof, all of the shares of Auction Market Preferred Stock of MuniHoldings New Jersey Insured Fund IV, Inc. (the "Fund") held of record by the undersigned on October 30, 2000 at the Annual Meeting of Stockholders of the Fund to be held on December 13, 2000, or any adjournment thereof.

      This proxy, when properly executed,  will be voted in the manner herein directed by the undersigned stockholder. If no direction is made, this proxy will be voted “for” Items 1, 2 and 3.

      By signing and dating the reverse side of this card, you authorize the proxies to vote each proposal as marked, or if not marked, to vote "FOR" each proposal, and to use their discretion to vote for any other matter as may properly come before the meeting or any adjournment thereof. If you do not intend to personally attend the meeting, please complete and return the card at once in the enclosed envelope.

(Continued and to be signed on the reverse side)

[Proxy Card Reverse]

		Please mark boxes /X/ or x in blue or black ink.
		1.		To consider and act upon a proposal to approve the Agreement and Plan of Reorganization between the Fund and MuniHoldings New Jersey Insured Fund, Inc.
				FOR   |   |	AGAINST   |   |	ABSTAIN   |   |
		2.		ELECTION OF DIRECTORS   |   |       FOR all nominees listed below              (except as marked to the contrary below)		|   |        WITHHOLD AUTHORITY              to vote for all nominees listed below
				(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a line through the nominee's name in the list below.)
				Ronald W. Forbes, Terry K. Glenn, Cynthia A. Montgomery, Charles C. Reilly, Kevin A. Ryan, Roscoe S. Suddarth, Richard R. West, Arthur Zeikel, Edward D. Zinbarg
		3.		Proposal to ratify the selection of Deloitte & Touche LLP as the independent auditors of the Fund to serve for the current fiscal year.
				FOR   |   |	AGAINST   |   |	ABSTAIN   |   |
		4.		In the discretion of such proxies, upon such other business as properly may come before the meeting or any adjournment thereof.
				If the undersigned is a broker-dealer, it hereby instructs the proxies, pursuant to Rule 452 of the New York Stock Exchange, to vote any uninstructed Auction Market Preferred Stock in the same proportion as votes cast by holders of Auction Market Preferred Stock who have responded to this proxy solicitation.

	Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney or as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person.
		Dated:__________________________________ X_______________________________________                                  Signature X_______________________________________                            Signature, if held jointly

Sign, Date, and Return the Proxy Card Promptly Using the Enclosed Envelope.