MUNIYIELD
NEW JERSEY
INSURED
FUND, INC.
FUND LOGO
Annual Report
October 31, 1998
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
Printed on post-consumer recycled paper
MuniYield New Jersey Insured Fund, Inc.
TO OUR SHAREHOLDERS
For the year ended October 31, 1998, the Common Stock of MuniYield
New Jersey Insured Fund, Inc. earned $0.882 per share income
dividends, which included earned and unpaid dividends of $0.083.
This represents a net annualized yield of 5.52%, based on a month-
end per share net asset value of $15.96. Over the same period, the
total investment return on the Fund's Common Stock was +9.07%, based
on a change in per share net asset value from $15.49 to $15.96, and
assuming reinvestment of $0.877 per share income dividends and
$0.019 per share capital gains distributions.
For the six-month period ended October 31, 1998, the total
investment return on the Fund's Common Stock was +6.44%, based on a
change in per share net asset value from $15.41 to $15.96, and
assuming reinvestment of $0.433 per share income dividends.
For the six-month period ended October 31, 1998, the Fund's Auction
Market Preferred Stock had an average yield of 3.59%.
The Municipal Market Environment
During the six months ended October 31, 1998, long-term bond yields
declined significantly. The near absence of any inflationary
pressures in the United States continued to support historic low
interest rates. Additionally, foreign economic factors have
continued to outweigh US domestic fundamentals, as they have for
much of 1998. The economic crisis that began in Asia over a year ago
has spread both to Russia and South America. However, economic
factors in these countries have begun to negatively impact US
growth. For example, employment in the US manufacturing sector
declined in recent months as a result of reduced demand for export
goods. Concern that the modest decline in US economic growth seen
thus far would spread and intensify led the Federal Reserve Board to
lower short-term interest rates in late September, in mid-October
and in mid-November. These actions were taken to offset the drag of
foreign economies on future US growth.
US Treasury bond yields continued to benefit from a strong "flight
to quality" as foreign investors were drawn to the relative safe
haven of US Government securities. Additionally, the sharp equity
market correction, which began at the end of August, triggered a
further flight into US Treasury securities. Long-term US Treasury
bond yields fell over 90 basis points (0.90%) to approximately 5% by
the end of September. This is the lowest level since the US Treasury
reintroduced 30-year maturity bond auctions in 1977.
By early October, worldwide investor confidence began to rise,
reducing the demand for the safety and liquidity of US Treasury
securities. Investor confidence was restored by the belief that
major world governments, as well as the International Monetary Fund,
would take the necessary action to support weak domestic economies
in Asia and Latin America. Additionally, rapid recovery in US and
world equity markets caused some investors to reallocate funds from
US debt instruments back to various world equity markets. US
Treasury security yields rose for the remainder of the month to end
October at 5.15%. During the six-month period ended October 31,
1998, long-term Treasury security yields declined approximately 80
basis points.
During the past 12 months, the tax-exempt bond market has contended
with significant new-issue supply pressures. Over the past year,
more than $277 billion in new long-term tax-exempt bonds were
underwritten, an increase of almost 30% compared to the same period
a year ago. During the most recent six-month period, approximately
$140 billion in new long-term municipal bonds were underwritten,
representing an increase of more than 15% over the same six-month
period last year. This increased supply, coupled with the high
returns the US equity market generated for much of 1998, was one of
the major reasons municipal bond yields declined less than their
taxable counterparts during the period.
The continued increase in new bond issuance has required ever-lower
tax-exempt bond yields to generate the economic savings necessary
for additional municipal bond financings. Consequently, the pace of
new bond issuance has slowed in recent months. In fact, the trend
may be reversing. During the three months ended October 31, 1998,
just over $60 billion in new long-term municipal bonds were
underwritten, a decline of 4% compared to the same quarter a year
ago. During the month of October, there were less than $20 billion
in new municipal bond securities issued, a decline of over 10%
compared to October 1997. We will monitor this trend closely in the
coming months to determine if the supply pressures exerted thus far
in 1998 are abating and fostering a more balanced supply/demand
environment.
MuniYield New Jersey Insured Fund, Inc.
October 31, 1998
Throughout the six-month period ended October 31, 1998, municipal
bond yields followed a pattern that was similar to US Treasury
securities, although the yield declines were more muted. As measured
by the unmanaged Bond Buyer Revenue Bond Index, long-term, uninsured
tax-exempt revenue bond yields declined over 40 basis points to
5.09% by the end of September, their lowest level since the early
1970s. Municipal bond yields rose during October to end the period
at 5.24%. Over the past six months, long-term tax-exempt bond yields
declined almost 30 basis points.
Although municipal bond yields declined during the six-month period,
recent supply pressures and the absence of the safe haven status
enjoyed by US securities caused municipal bond yields to rise
relative to US Treasury bond yields. At October 31, 1998, long-term
tax-exempt bond yield spreads were attractive relative to US
Treasury securities of comparable maturities (over 100%), well in
excess of their historic range of 85%--88%. Tax-exempt bond yield
ratios have rarely exceeded 90% in the 1980s and 1990s.
Historically, yield spreads have been wider than these levels when
there have been potential changes in Federal tax codes that would
have adversely affected the tax-favored status of municipal bonds.
Currently, municipal bond investors find themselves in a unique
investment environment. Previous opportunities to purchase tax-
exempt bonds with yields exceeding that of comparable US Treasury
issues have been limited to relatively brief episodes and then
further limited to a few municipal credits undergoing specific
financial pressures. At present, almost the entire municipal bond
universe, across nearly all maturity and credit sectors, can be
purchased at yields greater than their taxable counterparts.
However, the current opportunity may quickly disappear should tax-
exempt bond supply pressures diminish or the safe-haven status of US
Treasury securities become less desirable. Under these conditions,
municipal bond ratios should quickly revert to more normal historic
percentages, certainly well below their presently attractive levels.
Portfolio Strategy
As a result of our efforts to move from a neutral to a more
constructive market strategy, the Fund generated a competitive
return for the six months ended October 31, 1998. The shift in our
outlook evolved early in the period as the prospect of escalating
global economic and financial market turmoil set the stage for
sharply lower interest rates.
Much of the activity reflecting this shift centered around a
reduction in the Fund's exposure to bonds possessing minimal call
protection. Most of these securities were issued in a higher
interest rate environment and, consequently, we sold them at
substantial premiums to face value. We invested the proceeds from
these sales in high-quality issues that are well protected from
early redemption and are likely to perform well as interest rates
decline. Through these restructuring efforts, the Fund is better
positioned to withstand the probable onslaught of municipal bond
redemptions as issuers reap the benefits of refinancing outstanding
debt. We believe that this active approach to managing the Fund's
average call protection is likely to provide a more stable dividend
over time.
However, throughout the past six months, the technical constraints
of the New Jersey municipal market hampered our ability to carry out
our restructuring strategy in a timely manner. While new-issue
volume across the country rose more than 15% during the period as
compared to levels for the same six-month period a year ago, there
was a 25% decline in a similar measure of New Jersey issuance.
Furthermore, investor demand accelerated, thereby increasing
competition for an already shrinking supply of bonds.
Leverage continues to benefit the Fund's Common Stock shareholders,
as the Fund's cost of borrowing, as reflected by short-term tax-
exempt interest rates, remains well below the yields available on
long-term municipal bonds. In fact, borrowing costs actually
declined with the general move toward lower short-term interest
rates brought on by the recent shift toward easier monetary policy.
However, should the spread between short-term and long-term interest
rates narrow, the benefits of leverage will decline, and as a result
reduce the yield to the Fund's Common Stock. (For a complete
explanation of the benefits and risks of leveraging, see page 4 of
this report to shareholders.)
In Conclusion
We appreciate your ongoing interest in MuniYield New Jersey Insured
Fund, Inc., and we look forward to assisting you with your financial
needs in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Theodore R. Jaeckel Jr.)
Theodore R. Jaeckel Jr.
Vice President and Portfolio Manager
December 4, 1998
MuniYield New Jersey Insured Fund, Inc.
October 31, 1998
PROXY RESULTS
During the six-month period ended October 31, 1998, MuniYield New
Jersey Insured Fund, Inc. Common Stock shareholders voted on the
following proposals. The proposals were approved at a shareholders'
meeting on September 24, 1998. The description of each proposal and
number of shares voted are as follows:
<TABLE>
<CAPTION>
Shares Shares Withheld
Voted For From Voting
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors: Edward H. Meyer 8,050,732 229,227
Jack B. Sunderland 8,061,990 217,969
J. Thomas Touchton 8,064,590 215,369
Fred G. Weiss 8,067,824 212,135
Arthur Zeikel 8,061,378 218,581
<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. 8,049,328 115,262 115,369
</TABLE>
During the six-month period ended October 31, 1998, MuniYield New
Jersey Insured Fund, Inc. Preferred Stock shareholders voted on the
following proposals. The proposals were approved at a shareholders'
meeting on September 24, 1998. The description of each proposal and
number of shares voted are as follows:
<TABLE>
<CAPTION>
Shares Shares Withheld
Voted For From Voting
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors: Donald Cecil 1,975 155
M. Colyer Crum 1,975 155
Edwards H. Meyer 1,975 155
Jack B. Sunderland 1,975 155
J. Thomas Touchton 1,975 155
Fred G. Weiss 1,975 155
Arthur Zeikel 1,975 155
<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. 2,011 104 14
</TABLE>
MuniYield New Jersey Insured Fund, Inc.
October 31, 1998
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.
As a part of its investment strategy, the Fund may invest in certain
securities whose potential income return is inversely related to
changes in a floating interest rate ("inverse floaters"). In
general, interest rates on inverse floaters will decrease when short-
term interest rates increase and increase when short-term interest
rates decrease. Investments in inverse floaters may be characterized
as derivative securities and may subject the Fund to the risks of
reduced or eliminated interest payments and losses of invested
principal. In addition, inverse floaters have the effect of
providing investment leverage and, as a result, the market value of
such securities will generally be more volatile than that of fixed-
rate, tax-exempt securities. To the extent the Fund invests in
inverse floaters, the market value of the Fund's portfolio and the
net asset value of the Fund's shares may also be more volatile than
if the Fund did not invest in such securities.
MuniYield New Jersey Insured Fund, Inc.
October 31, 1998
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 below and at 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
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
New Jersey--100.7%
<S> <S> <C> <S> <C>
AAA Aaa $6,600 Atlantic City, New Jersey, Board of Education, GO, UT, 6.15% due
12/01/2002 (d)(f) $ 7,325
AAA Aaa 6,000 Bergen County, New Jersey, Utilities Authority, Water PCR, Series A,
6.50% due 6/15/2002 (b)(f) 6,674
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) 5,649
AAA Aaa 3,010 Carteret, New Jersey, Board of Education, COP, GO, 6.75% due 10/15/2019 (c) 3,432
East Orange, New Jersey, Board of Education, COP, GO (AGH Leasing Inc.)(e):
AAA Aaa 1,000 5.22%** due 8/01/2014 472
AAA Aaa 1,045 5.25%** due 2/01/2017 426
AAA Aaa 1,000 5.30%** due 2/01/2024 283
AAA Aaa 2,845 5.28%** due 8/01/2024 786
AAA Aaa 1,845 5.36%** due 8/01/2027 437
AAA Aaa 2,850 5.38%** due 2/01/2028 659
Essex County, New Jersey, Improvement Authority Revenue Bonds (f):
AAA Aaa 2,800 (Irvington Township School District), 6.625% due 10/01/2002 (e) 3,146
AAA Aaa 2,245 (Orange Township School District), UT, Series B, 6.95% due 7/01/2005 (c) 2,667
AAA Aaa 1,120 (Parking Facility), 6.20% due 7/01/2002 (c) 1,226
AAA Aaa 3,630 Hoboken, Union City, Weehawken, New Jersey, Sewer Authority, Revenue Refunding
Bonds, 6.20% due 8/01/2019 (c) 3,975
AAA Aaa 7,600 Hudson County, New Jersey, COP, Refunding (Correctional Facilities), 6.60% due
12/01/2021 (c) 8,302
AAA NR* 4,625 Hudson County, New Jersey, Improvement Authority Facility, Lease Revenue Bonds,
RIB, Series 34, 7.285% due 10/01/2024 (b)(g) 4,992
AAA Aaa 4,750 Jersey City, New Jersey, Sewer Authority, Revenue Refunding Bonds, 6.25% due
1/01/2014 (d) 5,565
Metuchen, New Jersey, School District, GO, UT (b):
AAA Aaa 1,010 5.15% due 9/15/2020 1,023
AAA Aaa 1,065 5.20% due 9/15/2021 1,081
NR* NR* 5,750 Middlesex County, New Jersey, Pollution Control Financing Authority, Revenue
Refunding Bonds (Amerada Hess), 6.875% due 12/01/2022 6,268
AAA Aaa 1,735 Middlesex County, New Jersey, Utilities Authority, Sewer Revenue Refunding Bonds,
Series A, 5.25% due 12/01/2011 (b) 1,851
</TABLE>
MuniYield New Jersey Insured Fund, Inc.
October 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
New Jersey (continued)
<S> <S> <C> <S> <C>
AAA Aaa $2,305 New Jersey EDA, Educational Testing Services Revenue Bonds, Series B, 6.125%
due 5/15/2015 (c) $ 2,564
New Jersey EDA, First Mortgage Revenue Refunding Bonds (Fellowship Village):
BBB- NR* 1,700 5.50% due 1/01/2018 1,715
AAA Aaa 2,000 4.75% due 5/15/2018 1,960
New Jersey EDA, Natural Gas Facilities Revenue Refunding Bonds (NUI Corp.),
Series A:
AAA Aaa 4,500 6.35% due 10/01/2022 (d) 5,060
AAA Aaa 1,975 AMT, 5.70% due 6/01/2032 (c) 2,089
New Jersey EDA, Revenue Bonds:
BBB- NR* 2,000 Refunding (First Mortgage--Fellowship Village), Series A, 5.50% due
1/01/2025 2,011
NR* Aaa 3,800 Refunding (Hillcrest Health Services System Project), 5.07%** due
1/01/2018 (d) 1,472
AAA Aaa 2,835 Refunding (RJW Health Care Corporation), 6.50% due 7/01/2024 (e) 3,190
AAA Aaa 1,150 (State Contract Economic Recovery), Series A, 6% due 3/15/2021 (e) 1,249
New Jersey EDA, Revenue Bonds (Saint Barnabas Project)(c):
NR* Aaa 5,195 5.60%** due 7/01/2020 1,767
NR* Aaa 6,665 5.60%** due 7/01/2021 2,151
New Jersey EDA, Water Facilities Revenue Bonds, AMT:
AAA Aaa 2,000 (American Water Co., Inc.), Series B, 5.375% due 5/01/2032 2,058
A1+ Aaa 1,600 Refunding (United Water of New Jersey, Inc. Project), VRDN, Series A,
3.65% due 11/02/2026 (a)(d) 1,600
AAA Aaa 2,500 New Jersey EDA, Water Facilities Revenue Bonds, RITR, AMT, Series 34,
6.92% due 5/01/2032 (g) 2,640
New Jersey Health Care Facilities Financing Authority Revenue Bonds:
AAA Aaa 6,355 (Holy Name Hospital), Series B, 6.75% due 7/01/2000 (d)(f) 6,693
AAA Aaa 5,445 (Mercer Medical Center), 6.50% due 7/01/2021 (c) 5,885
BBB Baa2 1,200 Refunding (Englewood Hospital and Medical Center), 6.70% due 7/01/2015 1,320
AAA Aaa 3,685 Refunding (Hackensack University Medical Center), 6.625% due 7/01/2001 (b)(f) 4,032
BBB+ NR* 3,500 Refunding (Holy Name Hospital), 6% due 7/01/2025 3,693
BBB Baa2 4,000 Refunding (Saint Elizabeth Hospital Obligation Group), 6% due 7/01/2027 4,241
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 2,210
AAA Aaa 8,630 6.25% due 7/01/2020 9,451
New Jersey State Educational Facilities Authority Revenue Bonds:
AA+ Aaa 1,990 (Institute of Advanced Study), Series G, 5% due 7/01/2018 2,000
AAA Aaa 2,465 Refunding (Seton Hall University Project), 5.25% due 7/01/2014 (d) 2,561
NR* Aaa 5,000 New Jersey State Higher Education Assistance Authority, Student Loan
Revenue Bonds, RIB, AMT, Series 18, 6.935% due 6/01/2017 (g) 5,086
New Jersey State Housing and Mortgage Finance Agency, Home Buyer Revenue
Bonds, AMT (c):
AAA Aaa 3,520 Series M, 7% due 10/01/2026 3,850
AAA Aaa 1,300 Series X, 5.35% due 4/01/2029 1,311
AAA Aaa 4,750 New Jersey State Housing and Mortgage Finance Agency, M/F Housing Revenue
Refunding Bonds, Series A, 6.05% due 11/01/2020 (d) 5,072
AAA Aaa 5,350 New Jersey State Transportation Corporation, COP (Raymond Plaza East,
Incorporated), 6.50% due 10/01/2016 (e) 6,236
AAA Aaa 1,000 New Jersey State Transportation Trust Fund Authority, Refunding (Transportation
System), Series A, 5% due 6/15/2015 (c) 1,014
</TABLE>
MuniYield New Jersey Insured Fund, Inc.
October 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (IN THOUSANDS)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
New Jersey (concluded)
<S> <S> <C> <S> <C>
AAA Aaa $3,490 Passaic Valley, New Jersey, Water Commission, Water Supply Revenue Bonds,
Series A, 6.40% due 12/15/2002 (b)(f) $ 3,909
AAA Aaa 1,115 Perth Amboy, New Jersey, Board of Education, Revenue Refunding Bonds, UT,
5.25% due 8/01/2011 (c) 1,191
Port Authority of New York and New Jersey, Consolidated Revenue Bonds:
AA- A1 1,000 93rd Series, 6.125% due 6/01/2094 1,173
AAA Aaa 2,535 104th Series, 3rd Installment, 4.75% due 1/15/2026 (d) 2,445
AAA Aaa 3,500 AMT, 96th Series, 6.60% due 10/01/2023 (b) 3,934
AAA Aaa 4,000 Refunding, AMT, UT, 97th Series, 6.65% due 1/15/2023 (b) 4,514
AAA Aaa 4,000 Port Authority of New York and New Jersey, RITR, AMT, 108th Series, 7.885%
due 1/15/2017 (e)(g) 4,693
Port Authority of New York and New Jersey, Special Obligation Revenue Bonds
(Versatile Structure Obligation), VRDN (a):
A1+ VMIG1++ 400 AMT, Series 6, 3.80% due 12/01/2017 400
A1+ VMIG1++ 1,200 Series 2, 3.70% due 5/01/2019 1,200
A1+ VMIG1++ 700 Series 3, 3.70% due 6/01/2020 700
A1+ VMIG1++ 1,400 Series 5, 3.70% due 8/01/2024 1,400
AAA Aaa 1,180 South Brunswick Township, New Jersey, Board of Education, GO, UT, 6.40% due
8/01/2005 (b)(f) 1,348
AAA Aaa 3,440 Union County, New Jersey, Utilities Authority, Solid Waste Revenue Refunding
Bonds, RIB, AMT, Series 38, 6.92% due 6/01/2020 (g) 3,651
Total Investments (Cost--$178,069)--100.7% 192,978
Liabilities in Excess of Other Assets--(0.7%) (1,400)
--------
Net Assets--100.0% $191,578
========
<FN>
(a)The interest rate is subject to change periodically based upon
the prevailing market rate. The interest rate shown is the rate in
effect at October 31, 1998.
(b)FGIC Insured.
(c)MBIA Insured.
(d)AMBAC Insured.
(e)FSA Insured.
(f)Prerefunded.
(g)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, 1998.
*Not Rated.
**Represents a zero coupon or step 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.
See Notes to Financial Statements.
</TABLE>
QUALITY PROFILE
The quality ratings of securities in the Fund as of October 31, 1998
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 87.3%
AA/Aa 0.6
BBB/Baa 6.8
NR(Not Rated) 3.3
Other++ 2.7
[FN]
++Temporary investments in short-term securities.
MuniYield New Jersey Insured Fund, Inc.
October 31, 1998
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of October 31, 1998
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$178,068,944) (Note 1a) $192,978,066
Cash 33,274
Interest receivable 3,245,465
Prepaid expenses and other assets 7,523
------------
Total assets 196,264,328
------------
Liabilities: Payables:
Securities purchased $ 4,438,238
Investment adviser (Note 2) 84,360
Distribution payable to shareholders (Note 1e) 57,187 4,579,785
------------
Accrued expenses and other liabilities 106,144
------------
Total liabilities 4,685,929
------------
Net Assets: Net assets $191,578,399
============
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 (8,493,902 shares
issued and outstanding) $ 849,390
Paid-in capital in excess of par 118,841,877
Undistributed investment income--net 1,163,601
Accumulated realized capital losses on investments--net (185,591)
Unrealized appreciation on investments--net 14,909,122
------------
Total--Equivalent to $15.96 net asset value per share of
Common Stock (market price--$16.75) 135,578,399
------------
Total capital $191,578,399
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
MuniYield New Jersey Insured Fund, Inc.
October 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Year Ended
October 31, 1998
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 10,677,835
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 940,227
Commission fees (Note 4) 141,994
Professional fees 78,087
Accounting services (Note 2) 65,044
Transfer agent fees 32,527
Directors' fees and expenses 26,119
Listing fees 16,536
Printing and shareholder reports 14,435
Custodian fees 12,061
Pricing fees 9,447
Other 12,406
------------
Total expenses 1,348,883
------------
Investment income--net 9,328,952
------------
Realized & Realized gain on investments--net 2,419,720
Unrealized Gain on Change in unrealized appreciation on investments--net 1,783,953
Investments--Net ------------
(Notes 1b, Net Increase in Net Assets Resulting from Operations $ 13,532,625
1d & 3): ============
See Notes to Financial Statements.
</TABLE>
MuniYield New Jersey Insured Fund, Inc.
October 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended
October 31,
Increase (Decrease) in Net Assets: 1998 1997
<S> <S> <C> <C>
Operations: Investment income--net $ 9,328,952 $ 9,390,341
Realized gain on investments--net 2,419,720 608,732
Change in unrealized appreciation on investments--net 1,783,953 2,470,278
------------ ------------
Net increase in net assets resulting from operations 13,532,625 12,469,351
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (7,378,943) (7,549,301)
Shareholders Preferred Stock (1,713,847) (1,727,530)
(Note 1e): Realized gain on investments--net:
Common Stock (173,351) --
Preferred Stock (262,640) --
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (9,528,781) (9,276,831)
------------ ------------
Capital Stock Value of shares issued to Common Stock shareholders in
Transactions reinvestment of dividends and distributions 1,806,843 1,627,040
(Note 4): ------------ ------------
Net Assets: Total increase in net assets 5,810,687 4,819,560
Beginning of year 185,767,712 180,948,152
------------ ------------
End of year* $191,578,399 $185,767,712
============ ============
<FN>
*Undistributed investment income--net (Note 1f) $ 1,163,601 $ 925,300
============ ============
See Notes to Financial Statements.
</TABLE>
MuniYield New Jersey Insured Fund, Inc.
October 31, 1998
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements.
For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 15.49 $ 15.10 $ 15.12 $ 13.60 $ 16.30
Operating -------- -------- -------- -------- --------
Performance: Investment income--net 1.11 1.13 1.12 1.13 1.13
Realized and unrealized gain (loss) on
investments--net .49 .38 (.03) 1.52 (2.67)
-------- -------- -------- -------- --------
Total from investment operations 1.60 1.51 1.09 2.65 (1.54)
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.88) (.91) (.88) (.87) (.93)
Realized gain on investments--net (.02) -- -- -- (.03)
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Stock shareholders (.90) (.91) (.88) (.87) (.96)
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:
Dividends and distributions to Preferred
Stock shareholders:
Investment income--net (.20) (.21) (.23) (.26) (.19)
Realized gain on investments--net (.03) -- -- -- (.01)
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity (.23) (.21) (.23) (.26) (.20)
-------- -------- -------- -------- --------
Net asset value, end of year $ 15.96 $ 15.49 $ 15.10 $ 15.12 $ 13.60
======== ======== ======== ======== ========
Market price per share, end of year $ 16.75 $15.8125 $ 14.75 $ 14.125 $ 11.25
======== ======== ======== ======== ========
Total Investment Based on market price per share 12.13% 13.77% 10.93% 33.88% (27.05%)
Return:* ======== ======== ======== ======== ========
Based on net asset value per share 9.07% 8.87% 6.09% 18.55% (10.73%)
======== ======== ======== ======== ========
Ratios to Average Expenses .72% .72% .72% .72% .75%
Net Assets:** ======== ======== ======== ======== ========
Investment income--net 4.96% 5.12% 5.13% 5.36% 5.14%
======== ======== ======== ======== ========
Supplemental Net assets, net of Preferred Stock, end of year
Data: (in thousands) $135,578 $129,768 $124,948 $124,639 $112,110
======== ======== ======== ======== ========
Preferred Stock outstanding, end of year
(in thousands) $ 56,000 $ 56,000 $ 56,000 $ 56,000 $ 56,000
======== ======== ======== ======== ========
Portfolio turnover 46.23% 26.16% 37.08% 39.36% 21.47%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,421 $ 3,317 $ 3,231 $ 3,226 $ 3,002
======== ======== ======== ======== ========
Dividends Investment income--net $ 765 $ 771 $ 860 $ 956 $ 708
Per Share on ======== ======== ======== ======== ========
Preferred Stock
Outstanding:++
<FN>
*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, 1998
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 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 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.
* 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 on the identified cost basis.
MuniYield New Jersey Insured Fund, Inc.
October 31, 1998
(e) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
(f) 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 $2,139
have been reclassified between accumulated net realized capital
losses and undistributed net investment income and $167 has been
reclassified between paid-in capital in excess of par and
accumulated net realized capital losses. 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 a monthly fee at an annual rate of 0.50% of
the Fund's average weekly net assets, including proceeds from the
issuance of Preferred Stock.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended October 31, 1998 were $89,946,018 and
$85,118,791, respectively.
Net realized gains for the year ended October 31, 1998 and net
unrealized gains as of October 31, 1998 were as follows:
Realized Unrealized
Gains Gains
Long-term investments $2,419,720 $14,909,122
---------- -----------
Total $2,419,720 $14,909,122
========== ===========
As of October 31, 1998, net unrealized appreciation for Federal
income tax purposes aggregated $14,909,122, of which $14,909,129
related to appreciated securities and $7 related to depreciated
securities. The aggregate cost of investments at October 31, 1998
for Federal income tax purposes was $178,068,944.
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 October 31, 1998
and the year ended October 31, 1997 increased by 114,706 and
105,792, respectively, 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 $.05 per share and a
liquidation preference of $25,000 per share, that entitle their
holders to receive cash dividends at an annual rate that may vary
for the successive dividend periods. The yield in effect at October
31, 1998 was 3.15%.
Shares issued and outstanding during the years ended October 31,
1998 and October 31, 1997 remained constant.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from 0.25% to 0.375%,
calculated on the proceeds of each auction. For the year ended
October 31, 1998, Merrill Lynch, Pierce, Fenner & Smith Inc., an
affiliate of FAM, earned $95,371 as commissions.
5. Subsequent Event:
On November 5, 1998, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the amount
of $.082901 per share, payable on November 27, 1998 to shareholders
of record as of November 20, 1998.
MuniYield New Jersey Insured Fund, Inc.
October 31, 1998
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
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, 1998, the related
statement 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, 1998 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, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
MuniYield New Jersey Insured Fund, Inc. at October 31, 1998, 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 4, 1998
</AUDIT-REPORT>
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,
1998 qualify as tax-exempt interest dividends for Federal Income tax
purposes. Additionally, the following table summarizes the taxable
distributions paid by the Fund during the year:
<TABLE>
<CAPTION>
Payable Ordinary Long-Term
Date Income Capital Gains
<S> <C> <C> <C>
Common Stock Shareholders 12/30/97 $ .001491 $ .019165*
Preferred Stock Shareholders: 11/24/97 $1.26 $16.18*
10/13/98 -- $31.95**
10/19/98 -- $23.28**
10/26/98 -- $19.05**
<FN>
*Of this distribution, 43.99% is subject to the 28% tax rate and
56.01% is subject to the 20% tax rate.
**The entire distribution is subject to the 20% tax rate.
Please retain this information for your records.
</TABLE>
MuniYield New Jersey Insured Fund, Inc.
October 31, 1998
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute substantially all of its
net investment income to its shareholders on a monthly basis.
However, in order to provide shareholders with a more consistent
yield to the current trading price of shares of Common Stock of the
Fund, the Fund may at times pay out less than the entire amount of
net investment income earned in any particular month and may at
times in any month pay out such accumulated but undistributed income
in addition to net investment income earned in that month. As a
result, the dividends paid by the Fund for any particular month may
be more or less than the amount of net investment income earned by
the Fund during such month. The Fund's current accumulated but
undistributed net investment income, if any, is disclosed in the
Statement of Assets, Liabilities and Capital, which comprises part
of the Financial Information included in this report.
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
Fred G. Weiss, 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
