MUNIYIELD
NEW JERSEY
INSURED
FUND, INC.
[FUND LOGO]
STRATEGIC
Performance
Annual Report
October 31, 1997
This report, including the financial information herein, is transmitted
to the shareholders of MuniYield New Jersey Insured Fund, Inc. for
their information. It is not a prospectus, circular or representation
intended for use in the purchase of shares of the Fund or any
securities mentioned in the report. Past performance results shown in
this report should not be considered a representation of future
performance. The Fund has leveraged its Common Stock by issuing
Preferred Stock to provide the Common Stock shareholders with a
potentially higher rate of return. Leverage creates risks for Common
Stock shareholders, including the likelihood of greater volatility of
net asset value and market price of shares of the Common Stock, and
the risk that fluctuations in the short-term dividend rates of the
Preferred Stock may affect the yield to Common Stock shareholders.
Statements and other information herein are as dated and are subject
to change.
MuniYield New Jersey
Insured Fund, Inc.
Box 9011
Princeton, NJ
08543-9011 #16492 -- 10/97
[RECYCLE LOGO]
Printed on post-consumer recycled paper
MuniYield New Jersey Insured Fund, Inc.
TO OUR SHAREHOLDERS
For the year ended October 31, 1997, the Common Stock of MuniYield New
Jersey Insured Fund, Inc. earned $0.911 per share income dividends,
which included earned and unpaid dividends of $0.078. This represents
a net annualized yield of 5.88%, based on a month-end net asset value
of $15.49 per share. Over the same period, the total investment return
on the Fund's Common Stock was +8.87%, based on a change in per share
net asset value from $15.10 to $15.49, and assuming reinvestment of
$0.908 per share income dividends.
For the six months ended October 31, 1997, the total investment return
on the Fund's Common Stock was +7.10%, based on a change in per share
net asset value from $14.90 to $15.49, and assuming reinvestment of
$0.461 per share income dividends.
For the six-month period ended October 31, 1997, the Fund's Auction
Market Preferred Stock had an average yield of 3.28%.
The Municipal Market Environment
Long-term interest rates generally declined during the six-month
period ended October 31, 1997. The general financial environment has
remained one of solid economic growth tempered by few or no
inflationary pressures. While economic growth has been conducive to
declining bond yields, it has remained strong enough to suggest that
the Federal Reserve Board (FRB) might find it necessary to raise
short-term interest rates. This would be intended to slow economic
growth and ensure that any incipient inflationary pressures would be
curtailed. There were investor concerns that the FRB would be forced
to raise interest rates prior to year-end, thus preventing an even
more dramatic decline in interest rates. Long-term tax-exempt revenue
bonds, as measured by the Bond Buyer Revenue Bond Index, declined over
50 basis points (0.50%) to end the six-month period ended October 31,
1997 at 5.60%.
Similarly, long-term US Treasury bond yields generally moved lower
during most of the six-month period ended October 31, 1997. However,
the turmoil in the world's equity markets during the last week in
October has resulted in a significant rally in the Treasury bond
market. The US Treasury bond market was the beneficiary of a flight to
quality mainly by foreign investors whose own domestic markets have
continued to be very volatile. Prior to the initial decline in Asian
equity markets, long-term US Treasury bond yields were essentially
unchanged. By the end of October, US Treasury bond yields declined 80
basis points to 6.15%, their lowest level of 1997.
The tax-exempt bond market's continued underperformance as compared to
its taxable counterpart has been largely in response to its ongoing
weakening technical position. As municipal bond yields have declined,
municipalities have hurriedly rushed to refinance outstanding higher-
couponed debt with new issues financed at present low rates. During
the last six months, over $118 billion in new long-term tax-exempt
issues were underwritten, an increase of over 25% versus the
comparable period a year ago. As interest rates have continued to
decline, these refinancings have intensified municipal bond issuance.
During the past three months, approximately $60 billion in new long-
term municipal securities were underwritten, an increase of over 34%
as compared to the October 31, 1996 quarter.
The recent trend toward larger and larger bond issues has also
continued. However, issues of such magnitude usually must be
attractively priced to ensure adequate investor interest. Obviously,
the yields of other municipal bond issues are impacted by the yield
premiums such large issuers have been required to pay. Much of the
municipal bond market's recent underperformance can be traced to
market pressures that these large bond issuances have exerted.
In our opinion, the recent correction in world equity markets has
enhanced the near-term prospects for continued low, if not declining,
interest rates in the United States. It is likely that the recent
correction will result in slower US domestic growth in the coming
months. This decline is likely to be generated in part by reduced US
export growth. Additionally, some decline in consumer spending also
can be expected in response to reduced consumer confidence. Perhaps
more importantly, it is likely that barring a dramatic and unexpected
resurgence in domestic growth, the FRB may be unwilling to raise
interest rates until the full impact of the equity market's
corrections can be established.
All of these factors suggest that for at least the near term, interest
rates, including tax-exempt bond yields, are unlikely to rise by any
appreciable amount. It is probable that municipal bond yields will
remain under some pressure as a result of continued strong new-issue
supply. However, the recent pace of municipal bond issuance is likely
to be unsustainable. Continued increases in bond issuance will require
lower tax-exempt bond yields to generate the economic savings
necessary for additional municipal bond refinancing. With tax-exempt
bond yields at already attractive yield ratios relative to US Treasury
bonds (approximately 90% at the end of October), any further pressure
on the municipal market may represent an attractive investment
opportunity.
Portfolio Strategy
The Fund finished the 12-month period ended October 31,1997 with a
stable and competitive dividend stream and a large core position in
high-quality, income-oriented securities. We invested over 86% of the
Fund's net assets in securities backed by bond insurance and rated in
the top rating category by either Moody's Investors Service, Inc. or
Standard & Poor's Rating Services. Our investment strategy was divided
between seeking to improve average call protection and employing a
range-bound approach to interest rate fluctuations, which entails
reducing market exposure during periods of strength and utilizing
times of weakness as an opportunity to lock in attractive yields.
New-issue volume in New Jersey for the 12 months ended October 31,
1997 totaled $8.18 billion, representing a sharp jump from the $5.89
billion issued the prior year. Included in this total are the $2.75
billion Federally taxable bonds issued to eliminate the state pension
systems' unfunded obligations.
The New Jersey economy continued to exhibit signs of strength in line
with the growth evident on the national level. The unemployment rate
at the end of September 1997 was at 5.4%, sharply lower than the 6.2%
rate at the end of September 1996. Median family and household income
totals continued to exceed the national average by a significant
margin. In June, Governor Whitman signed a state budget for the fiscal
year starting July 1, 1997, which is a 5% increase over the previous
year's budget.
In our April shareholder report, we cited concern over FRB monetary
policy as justification for a more cautious investment outlook. Since
that time, the bond market was buffeted by shifting perceptions over
the sustainability of economic growth and the resurgence of inflation.
While the US economy consistently exhibited surprising strength and
durability at this late stage in the expansion, most inflationary
measures continue to demonstrate an economy operating without any
significant capacity constraints. These circumstances presented a
favorable backdrop for bonds and, as a result, we preferred to keep
the Fund fully invested. Recent evidence of continued solid economic
growth, accompanied by increasingly tight labor markets, suggest that
the need for a more restrictive monetary policy has risen. These
developments would usually cause us to become more cautious and
implement an investment strategy designed to preserve the gains
achieved thus far. However, the recent volatility in world equity
markets resulted in a flight to quality causing long-term interest
rates to decline to their lows of the year. Consequently, the risk of
a further monetary policy tightening has receded. In our view, until
the full impact of the world equity markets' correction can be
determined, our adoption of a more neutral positioning for the Fund
seems appropriate. We will continue to seek to provide and maintain an
attractive dividend.
In Conclusion
We appreciate your ongoing interest in MuniYield New Jersey Insured
Fund, Inc., and we look forward to assisting you with your financial
needs in the months and years ahead.
Sincerely,
/S/ARTHUR ZEIKEL
Arthur Zeikel
President
/S/VINCENT R. GIORDANO
Vincent R. Giordano
Senior Vice President
/S/THEODORE R. JAECKEL JR.
Theodore R. Jaeckel Jr.
Vice President and Portfolio Manager
December 8, 1997
We are pleased to announce that Theodore R. Jaeckel Jr. is responsible
for the day-to-day management of MuniYield New Jersey Insured Fund,
Inc. Mr. Jaeckel has been employed by Merrill Lynch Asset Management,
L.P. (an affiliate of the Fund's investment adviser) since 1991 as
Vice President and Portfolio Manager. Prior thereto, he was employed
by Chemical Bank as Vice President in their Tax-Exempt Bond Division.
THE BENEFITS AND RISKS OF LEVERAGING
MuniYield New Jersey Insured Fund, Inc. utilizes leveraging to seek to
enhance the yield and net asset value of its Common Stock. However,
these objectives cannot be achieved in all interest rate environments.
To leverage, the Fund issues Preferred Stock, which pays dividends at
prevailing short-term interest rates and invests the proceeds in long-
term municipal bonds. The interest earned on these investments is paid
to Common Stock shareholders in the form of dividends, and the value
of these portfolio holdings is reflected in the per share net asset
value of the Fund's Common Stock. However, in order to benefit Common
Stock shareholders, the yield curve must be positively sloped; that
is, short-term interest rates must be lower than long-term interest
rates. At the same time, a period of generally declining interest
rates will benefit Common Stock shareholders. If either of these
conditions change, then the risks of leveraging will begin to outweigh
the benefits.
To illustrate these concepts, assume a fund's Common Stock
capitalization of $100 million and the issuance of Preferred Stock for
an additional $50 million, creating a total value of $150 million
available for investment in long-term municipal bonds. If prevailing
short-term interest rates are approximately 3% and long-term interest
rates are approximately 6%, the yield curve has a strongly positive
slope. The fund pays dividends on the $50 million of Preferred Stock
based on the lower short-term interest rates. At the same time, the
fund's total portfolio of $150 million earns the income based on long-
term interest rates. Of course, increases in short-term interest rates
would reduce (and even eliminate) the dividends on the Common Stock.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term
investments, and therefore the Common Stock shareholders are the
beneficiaries of the incremental yield. However, if short-term
interest rates rise, narrowing the differential between short-term and
long-term interest rates, the incremental yield pickup on the Common
Stock will be reduced or eliminated completely. At the same time, the
market value of the fund's Common Stock (that is, its price as listed
on the New York Stock Exchange) may, as a result, decline.
Furthermore, if long-term interest rates rise, the Common Stock's net
asset value will reflect the full decline in the price of the
portfolio's investments, since the value of the fund's Preferred Stock
does not fluctuate. In addition to the decline in net asset value, the
market value of the fund's Common Stock may also decline.
<TABLE>
<CAPTION>
PROXY RESULTS
During the six-month period ended October 31, 1997, MuniYield New Jersey Insured Fund, Inc. Common Stock shareholders voted
on the following proposals. The proposals were approved at a shareholders' meeting on September 11, 1997. The description
of each proposal and number of shares voted are as follows:
Shares Shares Withheld
Voted For From Voting
<S> <C> <C> <C>
1. To elect the Fund's Board of Directors: Edward H. Meyer 8,011,416 156,561
Jack B. Sunderland 8,010,750 157,227
J. Thomas Touchton 8,012,949 155,028
Arthur Zeikel 8,010,093 157,884
<CAPTION>
Shares Shares Voted Shares Voted
Voted For Against Abstain
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the
Fund's independent auditors for the current fiscal year. 7,920,623 78,831 168,523
During the six-month period ended October 31, 1997, MuniYield New Jersey Insured Fund, Inc. Preferred Stock shareholders voted
on the following proposals. The proposals were approved at a special shareholders' meeting on September 11, 1997. The
description of each proposal and number of shares voted are as follows:
<CAPTION>
Shares Shares Withheld
Voted For From Voting
<S> <C> <C> <C>
1. To elect the Fund's Board of Directors: Donald Cecil 2,053 117
M. Colyer Crum 2,053 117
Edward H. Meyer 2,053 117
Jack B. Sunderland 2,053 117
J. Thomas Touchton 2,053 117
Arthur Zeikel 2,053 117
<CAPTION>
Shares Shares Voted Shares Voted
Voted For Against Abstain
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the
Fund's independent auditors for the current fiscal year. 2,144 26 0
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<TABLE>
<CAPTION>
MuniYield New Jersey Insured Fund, Inc. October 31, 1997
SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <C>
New Jersey -- 98.3%
AAA Aaa $4,600 Atlantic City, New Jersey, Board of Education, GO, UT, 6.15% due 12/01/2002 (d)(f) $5,070
AAA Aaa 2,000 Atlantic City, New Jersey, Board of Education, GO, UT, 6.15% due 12/01/2002 (d)(f) 2,204
AAA Aaa 6,000 Bergen County, New Jersey, Utilities Authority, Water PCR, Series A, 6.50% due
6/15/2002 (b)(f) 6,660
AA NR* 1,135 Bernards Township, New Jersey, School District, Refunding, UT, 5.30% due 1/01/2020 1,135
AAA Aaa 3,350 Brick Township, New Jersey, Municipal Utilities Authority, Revenue Refunding Bonds,
5% due 12/01/2016 (b) 3,250
AAA Aaa 4,875 Cape May County, New Jersey, Industrial Pollution Control Financing Authority Revenue
Bonds (Atlantic City Electric Company Project), AMT, Series A, 7.20% due 11/01/2029 (c) 5,562
AAA Aaa 3,010 Carteret, New Jersey, Board of Education, COP, GO, 6.75% due 10/15/2019 (c) 3,391
AAA Aaa 1,000 Delaware River Port Authority, Pennsylvania and New Jersey Revenue Bonds, Series 1995,
5.50% due 1/01/2026 (b) 1,008
Essex County, New Jersey, Improvement Authority Revenue Bonds:
AAA Aaa 2,800 (Irvington Township School District), 6.625% due 10/01/2002 (e)(f) 3,138
AAA Aaa 2,245 (Orange Township School District), UT, Series B, 6.95% due 7/01/2014 (c) 2,592
AAA Aaa 1,120 (Parking Facility), 6.20% due 7/01/2022 (c) 1,197
AAA Aaa 2,450 Highland Park, New Jersey, School District, GO, UT, 6.55% due 2/15/2005 (c)(f): 2,801
AAA Aaa 3,630 Hoboken, Union City, Weehawken, New Jersey, Sewer Authority, Revenue Refunding
Bonds, 6.20% due 8/01/2019 (c) 3,912
AAA Aaa 7,600 Hudson County, New Jersey, COP, Refunding (Correctional Facilities), 6.60% due
12/01/2021 (c) 8,291
AAA Aaa 4,750 Jersey City, New Jersey, Sewer Authority, Revenue Refunding Bonds, 6.25% due
1/01/2014 (d) 5,363
NR* NR* 5,750 Middlesex County, New Jersey, Pollution Control Financing Authority, Revenue Refunding
Bonds (Amerada Hess), 6.875% due 12/01/2022 6,274
AAA Aaa 1,735 Middlesex County, New Jersey, Utilities Authority, Sewer Revenue Refunding Bonds,
Series A, 5.25% due 12/01/2011 (b) 1,772
NR* VMIG1+ 700 New Jersey EDA, Dock Facilities Revenue Refunding Bonds (Bayonne/IMTT Project),
VRDN, Series A, 3.55% due 12/01/2027 (a) 700
NR* Aa1 600 New Jersey EDA, Economic Development Revenue Bonds (400 International Drive
Partners), VRDN, 3.45% due 9/01/2005 (a) 600
AAA Aaa 2,305 New Jersey EDA, Educational Testing Services Revenue Bonds, Series B, 6.125%
due 5/15/2015 (c) 2,453
AAA Aaa 4,500 New Jersey EDA, Natural Gas Facilities, Revenue Refunding Bonds (NUI Corp.), Series A,
6.35% due 10/01/2022 (d) 4,951
New Jersey EDA, Revenue Bonds (e):
AAA Aaa 2,000 (Clara Maass Health Systems), 5% due 7/01/2025 1,916
AAA Aaa 2,835 Refunding (RWJ Health Care Corporation), 6.50% due 7/01/2024 3,126
AAA Aaa 1,150 (State Contract Economic Recovery), Series A, 6% due 3/15/2021 1,221
New Jersey EDA, Revenue Bonds (Saint Barnabas Project) (c):
NR* Aaa 5,195 5.60%** due 7/01/2020 1,560
NR* Aaa 6,665 5.60%** due 7/01/2021 1,884
New Jersey Health Care Facilities Financing Authority Revenue Bonds:
AAA Aaa 1,495 (Bayshore Community Hospital), Series A, 6.50% due 7/01/2015 (c) 1,573
AAA Aaa 6,355 (Holy Name Hospital), Series B, 6.75% due 7/01/2000 (d)(f) 6,774
AAA Aaa 5,445 (Mercer Medical Center), 6.50% due 7/01/2021 (c) 5,875
AAA Aaa 2,000 Refunding (AHS Hospital Corporation), Series A, 5% due 7/01/2016 (d) 1,952
BBB Baa2 1,200 Refunding (Englewood Hospital and Medical Center), 6.70% due 7/01/2015 1,295
AAA Aaa 3,685 Refunding (Hackensack Medical Center), 6.625% due 7/01/2017 (b) 3,991
BBB+ NR* 3,500 Refunding (Holy Name Hospital), 6% due 7/01/2025 3,599
AAA Aaa 4,000 Refunding (JFK Health Systems Obligation Group), 6.70% due 7/01/2021 (b) 4,342
BBB Baa2 4,000 Refunding (Saint Elizabeth Hospital Obligation Group), 6% due 7/01/2027 4,117
New Jersey Sports and Exposition Authority, Luxury Tax Revenue Refunding Bonds
(Convention Center), Series A (c):
AAA Aaa 2,000 6.60% due 7/01/2015 2,206
AAA Aaa 8,630 6.25% due 7/01/2020 9,312
New Jersey State Educational Facilities Authority Revenue Bonds:
BBB Baa2 2,030 (Monmouth University), Series C, 5.75% due 7/01/2017 2,070
AAA Aaa 2,000 (Montclair State University), Series E, 6.50% due 7/01/2021 (d) 2,155
AAA Aaa 3,860 New Jersey State Housing and Mortgage Finance Agency, Home Buyer Revenue Bonds,
AMT, Series M, 7% due 10/01/2026 (c) 4,179
New Jersey State Housing and Mortgage Finance Agency, M/F Housing Revenue
Refunding Bonds:
AAA NR* 3,700 (Presidential Plaza), 7% due 5/01/2030 (g) 3,998
AAA Aaa 4,750 Series A, 6.05% due 11/01/2020 (d) 4,945
AAA Aaa 5,350 New Jersey State Transportation Corporation, COP (Raymond Plaza East, Incorporated),
6.50% due 10/01/2016 (e) 5,942
AAA Aaa 5,000 New Jersey Wastewater Treatment Trust, Loan Insured Revenue Bonds, Series B, 6.25%
due 5/01/2012 (c) 5,422
AAA Aaa 3,500 North Hudson, New Jersey, Sewer Authority Revenue Bonds, 5.125% due 8/01/2022 (b) 3,440
AAA Aaa 1,600 North Jersey District Water Supply Commission, Refunding (Wanaque North Project),
5.125% due 11/15/2017 (c) 1,575
AAA Aaa 3,490 Passaic Valley, New Jersey, Water Commission, Water Supply Revenue Bonds, Series A,
6.40% due 12/15/2002 (b)(f) 3,888
Port Authority of New York and New Jersey, Consolidated Revenue Bonds:
AA- A1 1,000 93rd Series, 6.125% due 6/01/2094 1,112
AAA Aaa 3,500 96th Series, AMT, 6.60% due 10/01/2023 (b) 3,819
AAA Aaa 4,000 Refunding, 97th Series, AMT, UT, 6.65% due 1/15/2023 (b) 4,375
AAA Aaa 4,000 Port Authority of New York and New Jersey, RITR, AMT, 108th Series, 7.635%
due 1/15/2017 (e)(h) 4,395
Port Authority of New York and New Jersey, Special Obligation Revenue Bonds
(Versatile Structure Obligation), VRDN (a):
A1 VMIG1+ 1,300 Refunding, Series 1R, AMT, 3.70% due 8/01/2028 1,300
A1+ VMIG1+ 990 Series 3, 3.65% due 6/01/2020 990
A1+ VMIG1+ 700 Series 5, 3.65% due 8/01/2024 700
AAA Aaa 1,180 South Brunswick Township, New Jersey, Board of Education, GO, UT, 6.40% due
8/01/2005 (b)(f) 1,329
--------
Total Investments (Cost -- $169,575) -- 98.3% 182,701
Other Assets Less Liabilities -- 1.7% 3,067
--------
Net Assets -- 100.0% $185,768
========
(a) The interest rate is subject to change periodically based upon prevailing market rates. The interest rate shown is the rate
in effect at October 31, 1997.
(b) FGIC Insured.
(c) MBIA Insured.
(d) AMBAC Insured.
(e) FSA Insured.
(f) Prerefunded.
(g) FHA Insured.
(h) The interest rate is subject to change periodically and inversely based upon prevailing market rates. The interest rate shown
is the rate in effect at October 31, 1997.
* Not Rated.
** Represents a zero coupon bond; the interest rate shown is the effective yield at the time of purchase by the Fund.
+ Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
PORTFOLIO ABBREVIATIONS
To simplify the listings of MuniYield 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 the right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
EDA Economic Development Authority
GO General Obligation Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RITR Residual Interest Trust Receipts
UT Unlimited Tax
VRDN Variable Rate Demand Notes
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL INFORMATION
Statement of Assets, Liabilities and Capital as of October 31, 1997
<S> <C> <C> <C>
Assets: Investments, at value (identified cost -- $169,575,431) (Note 1a) $182,700,600
Receivables:
Interest $3,385,728
Securities sold 10,000 3,395,728
------------
Prepaid expenses and other assets 5,799
------------
Total assets 186,102,127
------------
Liabilities: Payables:
Investment adviser (Note 2) 83,748
Dividends to shareholders (Note 1f) 34,899 118,647
------------
Accrued expenses and other liabilities 215,768
------------
Total liabilities 334,415
------------
Net Assets: Net assets $185,767,712
============
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.05 per share (2,240 shares of AMPS*
issued and outstanding at $25,000 per share liquidation preference) $56,000,000
Common Stock, par value $.10 per share (8,379,196 shares issued
and outstanding) $837,920
Paid-in capital in excess of par 117,046,671
Undistributed investment income -- net 925,300
Accumulated realized capital losses on investments -- net (2,167,348)
Unrealized appreciation on investments -- net 13,125,169
------------
Total -- Equivalent to $15.49 net asset value per share of Common Stock
(market price -- $15.8125) 129,767,712
------------
Total capital $185,767,712
============
* Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
For the Year Ended
October 31, 1997
<S> <C> <C> <C>
Investment Income Interest and amortization of premium and discount earned $10,703,572
(Note 1d):
Expenses: Investment advisory fees (Note 2) $918,104
Commission fees (Note 4) 141,971
Professional fees 68,169
Accounting services (Note 2) 57,617
Transfer agent fees 37,698
Directors' fees and expenses 22,590
Listing fees 16,264
Printing and shareholder reports 13,960
Custodian fees 10,531
Pricing fees 7,931
Amortization of organization expenses (Note 1e) 2,872
Other 15,524
-----------
Total expenses 1,313,231
-----------
Investment income -- net 9,390,341
-----------
Realized & Realized gain on investments -- net 608,732
Unrealized Gain on Change in unrealized appreciation on investments -- net 2,470,278
Investments -- Net -----------
(Notes 1b, 1d & 3): Net Increase in Net Assets Resulting from Operations $12,469,351
===========
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
For the Year Ended
October 31,
Increase (Decrease) in Net Assets: 1997 1996
<S> <C> <C> <C>
Operations: Investment income -- net $9,390,341 $9,263,389
Realized gain (loss) on investments -- net 608,732 (1,107,727)
Change in unrealized appreciation on investments -- net 2,470,278 898,090
-------------- --------------
Net increase in net assets resulting from operations 12,469,351 9,053,752
-------------- --------------
Dividends to Investment income -- net:
Shareholders Common Stock (7,549,301) (7,293,937)
(Note 1f): Preferred Stock (1,727,530) (1,926,086)
-------------- --------------
Net decrease in net assets resulting from dividends to shareholders (9,276,831) (9,220,023)
-------------- --------------
Capital Stock Value of shares issued to Common Stock shareholders in reinvestment
Transactions of dividends 1,627,040 475,113
(Note 4): -------------- --------------
Net increase in net assets derived from capital stock transactions 1,627,040 475,113
-------------- --------------
Net Assets: Total increase in net assets 4,819,560 308,842
Beginning of year 180,948,152 180,639,310
-------------- --------------
End of year* $185,767,712 $180,948,152
============== ==============
* Undistributed investment income -- net $925,300 $811,790
============== ==============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
The following per share data and ratios have been derived
from information provided in the financial statements. For the Year Ended October 31,
1997 1996 1995 1994 1993
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $15.10 $15.12 $13.60 $16.30 $14.14
Operating --------- --------- --------- --------- ---------
Performance: Investment income -- net 1.13 1.12 1.13 1.13 1.11
Realized and unrealized gain (loss) on
investments -- net .38 (.03) 1.52 (2.67) 2.21
--------- --------- --------- --------- ---------
Total from investment operations 1.51 1.09 2.65 (1.54) 3.32
--------- --------- --------- --------- ---------
Less dividends and distributions to Common
Stock shareholders:
Investment income -- net (.91) (.88) (.87) (.93) (.86)
Realized gain on investments -- net -- -- -- (.03) --
--------- --------- --------- --------- ---------
Total dividends and distributions to Common
Stock shareholders (.91) (.88) (.87) (.96) (.86)
--------- --------- --------- --------- ---------
Effect of Preferred Stock activity:
Dividends and distributions to Preferred
Stock shareholders:
Investment income -- net (.21) (.23) (.26) (.19) (.17)
Realized gain on investments -- net -- -- -- (.01) --
Capital charge resulting from issuance of
Preferred Stock -- -- -- -- (.13)
--------- --------- --------- --------- ---------
Total effect of Preferred Stock activity (.21) (.23) (.26) (.20) (.30)
--------- --------- --------- --------- ---------
Net asset value, end of year $15.49 $15.10 $15.12 $13.60 $16.30
========= ========= ========= ========= =========
Market price per share, end of year $15.8125 $14.750 $14.125 $11.25 $16.50
========= ========= ========= ========= =========
Total Investment Based on market price per share 13.77% 10.93% 33.88% (27.05%) 16.25%
Return:* ========= ========= ========= ========= =========
Based on net asset value per share 8.87% 6.09% 18.55% (10.73%) 21.83%
========= ========= ========= ========= =========
Ratios to Average Expenses, net of reimbursement .72% .72% .72% .75% .57%
Net Assets:** ========= ========= ========= ========= =========
Expenses .72% .72% .72% .75% .72%
========= ========= ========= ========= =========
Investment income -- net 5.12% 5.13% 5.36% 5.14% 5.19%
========= ========= ========= ========= =========
Supplemental Net assets, net of Preferred Stock,
Data: end of year (in thousands) $129,768 $124,948 $124,639 $112,110 $133,555
========= ========= ========= ========= =========
Preferred Stock outstanding, end of year
(in thousands) $56,000 $56,000 $56,000 $56,000 $56,000
========= ========= ========= ========= =========
Portfolio turnover 26.16% 37.08% 39.36% 21.47% 9.10%
========= ========= ========= ========= =========
Leverage: Asset coverage per $1,000 $3,317 $3,231 $3,226 $3,002 $3,385
========= ========= ========= ========= =========
Dividends Per Share Investment income -- net $771 $860 $956 $708 $599
On Preferred Stock ========= ========= ========= ========= =========
Outstanding:+
* Total investment returns based on market value, which can be significantly greater or lesser than
the net asset value, may result in substantially different returns. Total investment returns exclude
the effects of sales loads.
** Do not reflect the effect of dividends to Preferred Stock shareholders.
+ Dividends per share have been adjusted to reflect a two-for-one stock split that occurred on
December 1, 1994.
See Notes to Financial Statements.
</TABLE>
MuniYield New Jersey Insured Fund, Inc. October 31, 1997
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniYield 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 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 MJI. 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, which are traded on exchanges, are valued at their last sale
price as of the close of such exchanges or, lacking any sales, at the
last available bid price. 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 the general supervision of the Board of Directors.
(b) Derivative financial instruments -- The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
[bullet] Financial futures contracts -- The Fund may purchase or sell
interest rate futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities or
the intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at a
specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to the
contract, the Fund agrees to receive from or pay to the broker an
amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin and
are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal to
the difference between the value of the contract at the time it was
opened and the value at the time it was closed.
[bullet] 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 on the identified cost basis.
(e) Deferred organization expenses -- Deferred organization expenses
are amortized on a straight-line basis over a five-year period.
(f) Dividends and distributions -- Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned subsidiary
of Merrill Lynch & Co., Inc. ("ML & Co."), which is the limited
partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of 0.50% of
the Fund's average weekly net assets.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended October 31, 1997 were $46,421,783 and $52,211,051,
respectively.
Net realized and unrealized gains (losses) as of October 31, 1997 were
as follows:
Realized
Gains Unrealized
(Losses) Gains
Long-term investments $1,699,978 $13,125,169
Financial futures contracts (1,091,246) --
----------- -----------
Total $608,732 $13,125,169
=========== ===========
As of October 31, 1997, net unrealized appreciation for Federal income
tax purposes aggregated $13,125,169, all of which related to
appreciated securities. The aggregate cost of investments at October
31, 1997 for Federal income tax purposes was $169,575,431.
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 years ended October 31, 1997
and October 31, 1996 increased by 105,792 and 32,237, respectively, as
a result of dividend reinvestment.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred Stock
of the Fund that entitle their holders to receive cash dividends at an
annual rate that may vary for the successive dividend periods. The
yield in effect at October 31, 1997 was 3.25%.
As of October 31, 1997, there were 2,240 AMPS shares authorized,
issued and outstanding with a liquidation preference of $25,000 per
share.
The Fund pays commissions to certain brokerdealers at the end of each
auction at an annual rate ranging from 0.25% to 0.375%, calculated on
the proceeds of each auction. For the year ended October 31, 1997,
Merrill Lynch, Pierce, Fenner & Smith Inc., an affiliate of FAM,
earned $117,522 as commissions.
5. Subsequent Event:
On November 6, 1997, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the amount of
$.077734 per share, payable on November 26, 1997 to shareholders of
record as of November 17, 1997.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of MuniYield New Jersey
Insured Fund, Inc.:
We have audited the accompanying statement of assets, liabilities and
capital, including the schedule of investments, of MuniYield New
Jersey Insured Fund, Inc. as of October 31, 1997, the related
statements of operations for the year then ended, and changes in net
assets for each of the years in the two-year period then ended and the
financial highlights for each of the years in the five-year period
then ended. These financial statements and the financial highlights
are the responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and the 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 October 31, 1997 by
correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
MuniYield New Jersey Insured Fund, Inc. as of October 31, 1997, the
results of its operations, the changes in its net assets, and the
financial highlights for the respective stated periods in conformity
with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 8, 1997
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by MuniYield New
Jersey Insured Fund, Inc. during its taxable year ended October 31,
1997 qualify as tax-exempt interest dividends for Federal income tax
purposes. Additionally, there were no capital gains distributed by the
Fund during the year.
Please retain this information for your records.
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Donald Cecil, Director
M. Colyer Crum, Director
Edward H. Meyer, Director
Jack B. Sunderland, Director
J. Thomas Touchton, Director
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Theodore R. Jaeckel Jr., Vice President
Gerald M. Richard, Treasurer
Patrick D. Sweeney, Secretary
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
NYSE Symbol
MJI
