MUNIYIELD
NEW JERSEY
INSURED
FUND, INC.
FUND LOGO
Annual Report
October 31, 1999
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, 1999, the Common Stock of MuniYield
New Jersey Insured Fund, Inc. earned $0.866 per share income
dividends, which included earned and unpaid dividends of $0.070.
This represents a net annualized yield of 6.43%, based on a month-
end per share net asset value of $13.48. Over the same period, the
total investment return on the Fund's Common Stock was -9.20%, based
on a change in per share net asset value from $15.96 to $13.48, and
assuming reinvestment of $0.911 per share ordinary income dividends
and $0.186 per share capital gains distributions.
For the six-month period ended October 31, 1999, the total
investment return on the Fund's Common Stock was -10.39%, based on a
change in per share net asset value from $15.51 to $13.48, and
assuming reinvestment of $0.427 per share income dividends.
For the six-month period ended October 31, 1999, the Fund's Auction
Market Preferred Stock had an average yield of 3.19%.
The Municipal Market Environment
The combination of steady strong domestic economic growth,
improvement in foreign economies (most notably in Japan) and
increasing investor concerns regarding potential increases in US
inflation put upward pressure on bond yields throughout the six-
month period ended October 31, 1999. Continued strong US employment
growth, particularly the decline in the US unemployment rate to 4.2%
in early June, was among the reasons the Federal Reserve Board cited
for raising short-term interest rates in late June and again in late
August. US Treasury bond yields reacted by climbing above 6.375% by
late October. However, at October month-end, economic indicators
were released suggesting that, despite strong economic and
employment growth in the third quarter, inflationary pressures have
remained extremely well-contained. This resulted in a significant
rally in the US Treasury bond market, pushing US Treasury bond
yields downward to end the six-month period at approximately 6.15%.
During the period, yields on 30-year US Treasury bonds increased
over 50 basis points (0.50%).
Long-term tax-exempt bond yields also rose during the six months
ended October 31, 1999. Until early May, the municipal bond market
was able to withstand much of the upward pressure on bond yields.
However, investor concerns of additional moves by the Federal
Reserve Board to moderate US economic growth and, more importantly,
the loss of the strong technical support that the tax-exempt market
enjoyed in early 1999 helped push municipal bond yields
significantly higher for the remainder of the period. The yields on
long-term tax-exempt revenue bonds rose nearly 90 basis points to
6.18% by October 31, 1999, as measured by the Bond Buyer Revenue
Bond Index.
In recent months, the significant decline in new tax-exempt bond
issuance has remained a positive factor within the municipal bond
market, as it had been for much of the past year. During the last
six months, more than $110 billion in long-term municipal bonds was
issued, a decline of nearly 20% compared to the same period a year
ago. During the past three months, $55 billion in municipal bonds
was underwritten, representing a decline of nearly 10% compared to
the corresponding period in 1998. Additionally, in June and July,
investors received more than $40 billion in coupon income and
proceeds from bond maturities and early bond redemptions. These
proceeds have generated considerable retail investor interest, which
has helped absorb the recent diminished supply.
Although tax-exempt bond yields are at their highest level in over
two years and have attracted significant retail investor interest,
institutional demand has declined sharply. Long-term municipal
mutual funds have seen consistent outflows in recent months as the
yields of individual securities have risen faster than those of
larger, more diverse mutual funds. In addition, the demand from
property/casualty insurance companies has weakened as a result of
the losses, and anticipated losses, incurred as a result of the
series of damaging storms across much of the eastern United States.
Additionally, many institutional investors who were attracted to the
municipal bond market in recent years by historically attractive tax-
exempt bond yield ratios of over 90% have found other asset classes
even more attractive. Even with a reduced supply position, tax-
exempt issuers have been forced to repeatedly raise municipal bond
yields in the attempt to attract adequate demand.
MuniYield New Jersey Insured Fund, Inc.
October 31, 1999
The recent relative underperformance of the municipal bond market
has resulted in an opportunity for long-term investors to purchase
tax-exempt issues whose yields are nearly identical with taxable US
Treasury securities. At October 31, 1999, long-term uninsured
municipal revenue bond yields were 100% of comparable US Treasury
securities. In recent months, many taxable asset classes, such as
corporate bonds, mortgage-backed securities and US agency debt, have
all accelerated debt issuance. This acceleration was initiated
largely to avoid issuing securities at year-end and to minimize any
associated Year 2000 (Y2K) problems that may develop. However, this
increased issuance has also resulted in higher yield levels in the
various asset classes as lower bond prices became necessary to
attract sufficient investor demand. Going forward, it is believed
that the pace of non-US government debt issuance is likely to slow
significantly. As the supply of this debt declines, we would expect
many institutional investors to return to the municipal bond market
and the attractive yield ratios available.
Looking ahead, it appears to us that long-term tax-exempt bond
yields will remain under pressure, trading in a broad range centered
near current levels. Investors are likely to remain concerned about
future action by the Federal Reserve Board in November. Y2K
considerations may prohibit any further Federal Reserve Board moves
through the end of the year and the beginning of 2000. Any
improvement in bond prices will probably be contingent upon
weakening in both US employment growth and consumer spending. The
100 basis point rise in US Treasury bond yields seen thus far this
year may negatively impact US economic growth. The US housing market
will be among the first sectors likely to be affected, as some
declines have already been evidenced in response to higher mortgage
rates. We believe that it is also unrealistic to expect double-digit
returns in US equity markets to continue indefinitely. Much of the
US consumer's wealth is tied to recent stock market appreciation.
Any slowing in these incredible growth rates is likely to reduce
consumer spending. We believe that these factors suggest that the
worst of the recent increase in bond yields has passed and stable,
if not slightly improving, bond prices may be expected.
Portfolio Strategy
The volatility that characterized the municipal market during the
six months ended October 31, 1999 is in sharp contrast to the
relative stability that typified the environment for the prior six
months. The degree and suddenness of the decline caught many
investors by surprise since few anticipated the extent to which tax-
exempt yields would climb relative to their taxable counterparts.
Much emphasis was placed on the favorable implications of a sharp
reduction in new-issue supply coupled with vigorous retail investor
demand. Instead, institutional selling proved to be the market's
undoing as both mutual funds and casualty insurers moved
aggressively to liquidate tax-exempt holdings. As a consequence,
yields on long-term municipal bonds once again approached 100% of
Treasury bond yields. For this reason, they represented one of the
more compelling values in the fixed-income marketplace.
Developments within the New Jersey municipal market mirrored those
of the overall marketplace, with the one exception being issuance.
In contrast to the 18% reduction nationwide, New Jersey issuance
increased by 22% compared to the same period one year ago. One large
issue accounted for most of the upsurge and had no significant
impact on relative trading values.
At the beginning of the six-month period, our investment outlook
called for a fairly stable interest rate environment. We reduced our
cash reserve position on the expectation that an income-oriented
approach would generate the most favorable return. While we achieved
modest success through the use of selective hedging strategies,
hindsight suggests that Fund performance would have benefited from a
more consistent and prolonged defensive strategy designed to
preserve unrealized gains from last year's market rally. More
recently, with long-term interest rates at their highest level in
over two years, our efforts have turned to seeking to limit tax
liabilities through a program designed to offset existing capital
gains with the realization of losses incurred in recent months.
MuniYield New Jersey Insured Fund, Inc.
October 31, 1999
Despite the volatility experienced on longer-dated maturities, our
cost of borrowing remained far more stable as short-term tax-exempt
interest rates fluctuated within a relatively narrow range. Since
this occurred in the midst of a restrictive monetary policy, the
resiliency of this incremental yield pick up remains one of the more
attractive aspects of MuniYield New Jersey Insured Fund, Inc.
However, should the spread between short-term and long-term tax-
exempt interest rates narrow, the benefits of the leverage will
decline and, as a result, reduce the yield on the Fund's Common
Stock. (For a complete explanation of the benefits and risks of
leverage, see page 4 of this report to shareholders.)
We are comfortable with the Fund's current position given the
absolute level of long-term interest rates as well as the inherent
value in the tax-exempt sector. Economic fundamentals point to a
modestly slower pace of economic growth with no solid evidence of a
broad-based pickup in inflation. Investors' increased level of
comfort with Federal Reserve Board policy combined with a favorable
seasonal outlook for municipal bonds suggest that a more
constructive outlook may soon be warranted.
In Conclusion
We appreciate your ongoing interest in MuniYield New Jersey Insured
Fund, Inc., and we look forward to serving your investment needs in
the months and years to come.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Theodore R. Jaeckel Jr.)
Theodore R. Jaeckel Jr.
Vice President and Portfolio Manager
December 2, 1999
<TABLE>
PROXY RESULTS
<CAPTION>
During the six-month period ended October 31, 1999, MuniYield New
Jersey Insured Fund, Inc.'s Common Stock shareholders voted
on the following proposal. Proposal 1 was approved at a
shareholders' meeting on May 27, 1999. A description of the proposal
and number of shares voted are as follows:
Shares Shares Voted Shares Voted
Voted For Against Abstain
<S> <C> <C> <C>
1. To approve an amendment to the Articles Supplementary of the Fund. 4,638,460 229,713 287,918
<CAPTION>
During the six-month period ended October 31, 1999, MuniYield New
Jersey Insured Fund, Inc.'s Preferred Stock shareholders voted on
the following proposal. Proposal 1 was approved at a shareholders'
meeting on May 27, 1999. A description of the proposal and number of
shares voted are as follows:
Shares Shares Voted Shares Voted
Voted For Against Abstain
<S> <C> <C> <C>
1. To approve an amendment to the Articles Supplementary of the Fund. 2,091 10 86
</TABLE>
MuniYield New Jersey Insured Fund, Inc.
October 31, 1999
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, income on inverse floaters will decrease when short-term
interest rates increase and increase when short-term interest rates
decrease. Investments in inverse floaters may be characterized as
derivative securities and may subject the Fund to the risks of
reduced or eliminated interest payments and losses of 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.
QUALITY PROFILE
The quality ratings of securities in the Fund as of October 31, 1999
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 88.3%
AA/Aa 4.4
BBB/Baa 5.6
Other++ 0.7
[FN]
++Temporary investments in short-term municipal securities.
MuniYield New Jersey Insured Fund, Inc.
October 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
New Jersey--93.6%
<S> <S> <C> <S> <C>
AAA Aaa $2,875 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 (d) $ 3,155
AAA Aaa 3,010 Carteret, New Jersey, Board of Education, COP, 6.75% due 10/15/2004 (d)(e) 3,338
AAA Aaa 1,000 Carteret, New Jersey, Board of Education, COP, Refunding Bonds, 4.75% due
4/15/2019 (d) 860
East Orange, New Jersey, Board of Education, COP (c):
AAA Aaa 1,000 5.22%** due 8/01/2014 426
AAA Aaa 1,045 5.25%** due 2/01/2017 375
AAA Aaa 1,000 5.30%** due 2/01/2024 232
AAA Aaa 2,845 5.28%** due 8/01/2024 641
AAA Aaa 1,845 5.36%** due 8/01/2027 345
AAA Aaa 2,850 5.38%** due 2/01/2028 517
AAA Aaa 1,120 Essex County, New Jersey, Improvement Authority, Parking Facility Revenue
Bonds, 6.20% due 7/01/2002 (d)(e) 1,181
AAA Aaa 3,630 Hoboken, Union City, Weehawken, New Jersey, Sewer Authority, Sewer Revenue
Refunding Bonds, 6.20% due 8/01/2019 (d) 3,704
AAA Aaa 7,600 Hudson County, New Jersey, COP, Refunding (Correctional Facilities), 6.60% due
12/01/2021 (d) 7,960
AAA NR* 4,625 Hudson County, New Jersey, Improvement Authority, Facility Lease Revenue Refunding
Bonds, RIB, Series 34, 7.005% due 10/01/2024 (b)(f) 3,983
AAA Aaa 4,750 Jersey City, New Jersey, Sewer Authority, Sewer Revenue Refunding Bonds, 6.25% due
1/01/2014 (a) 5,044
AAA Aaa 1,475 Monmouth County, New Jersey, Improvement Authority, Revenue Refunding Bonds (Pooled
Governmental Loan), 4.75% due 12/01/2014 (a) 1,319
A1+ P1 100 New Jersey EDA, Economic Development Revenue Refunding Bonds (Stolthaven Project),
VRDN, Series A, 3.45% due 1/15/2018 (g) 100
New Jersey EDA, First Mortgage Revenue Refunding Bonds (Fellowship Village),
Series A:
BBB- NR* 1,700 5.50% due 1/01/2018 1,504
BBB- NR* 2,000 5.50% due 1/01/2025 1,728
AAA Aaa 4,500 New Jersey EDA, Natural Gas Facilities Revenue Refunding Bonds (NUI Corporation
Project), Series A, 6.35% due 10/01/2022 (a) 4,632
AAA Aaa 2,305 New Jersey EDA, Revenue Bonds (Educational Testing Service), Series B, 6.125% due
5/15/2005 (d)(e) 2,490
New Jersey EDA, Revenue Bonds (Saint Barnabas Medical Center), Series A (d):
NR* Aaa 6,000 6.23%** due 7/01/2019 1,826
NR* Aaa 5,195 5.60%** due 7/01/2020 1,485
NR* Aaa 6,665 5.60%** due 7/01/2021 1,790
</TABLE>
PORTFOLIO ABBREVIATIONS
To simplify the listings of MuniYield New Jersey Insured Fund'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
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
VRDN Variable Rate Demand Notes
MuniYield New Jersey Insured Fund, Inc.
October 31, 1999
<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 $9,080 New Jersey EDA, Revenue Bonds (Transportation Project Sublease),
Series A, 5.875% due 5/01/2014 (c) $ 9,249
New Jersey EDA, Revenue Refunding Bonds:
AAA Aaa 4,000 (Educational Testing Service), Series A, 4.75% due 5/15/2018 (d) 3,457
NR* Aaa 3,800 (Hillcrest Health Service), 5.07%** due 1/01/2018 (a) 1,266
AAA Aaa 2,835 (RWJ Health Care Corporation), 6.50% due 7/01/2024 (c) 2,975
AAA Aaa 1,150 New Jersey EDA, State Contract Revenue Bonds (Economic Recovery),
Series A, 6% due 3/15/2021 (c) 1,158
New Jersey EDA, Water Facilities Revenue Bonds, AMT (b):
AAA Aaa 2,000 (American Water Company Inc.), Series B, 5.375% due 5/01/2032 1,819
AAA Aaa 2,500 RITR, Series 34, 6.62% due 5/01/2032 (f) 2,040
New Jersey Health Care Facilities Financing Authority, Revenue Refunding Bonds:
AAA Aaa 3,500 (Centrastate Medical Center Obligation Group), 4.50% due 7/01/2028 (a) 2,738
BBB- Baa2 1,200 (Englewood Hospital and Medical Center), 6.70% due 7/01/2015 1,206
AAA Aaa 4,000 (Hackensack University Medical Center), Series B, 5.20% due 1/01/2028 (d) 3,548
BBB+ NR* 1,800 (Holy Name Hospital), 6% due 7/01/2025 1,678
AAA Aaa 3,800 (Mercer Medical Center), 6.50% due 7/01/2021 (d) 3,933
AAA Aaa 2,500 (Meridian Health System Obligation Group), 5.25% due 7/01/2019 (c) 2,293
AAA Aaa 2,710 (Saint Barnabas Hospital), Series B, 5.09%** due 7/01/2019 (d) 820
AAA Aaa 1,110 (Saint Barnabas Hospital), Series B, 5.10%** due 7/01/2020 (d) 315
BBB Baa2 4,000 (Saint Elizabeth Hospital Obligation Group), 6% due 7/01/2027 3,610
AAA Aaa 2,000 New Jersey Sports and Exposition Authority, Convention Center, Luxury Tax Revenue
Bonds, Series A, 6.60% due 7/01/2002 (d)(e) 2,147
AAA Aaa 3,195 New Jersey Sports and Exposition Authority, Convention Center, Luxury Tax Revenue
Refunding Bonds, 5% due 9/01/2015 (d) 2,938
AA+ Aaa 1,990 New Jersey State Educational Facilities Authority Revenue Bonds (Institute of
Advanced Study), Series G, 5% due 7/01/2018 1,797
AAA Aaa 2,465 New Jersey State Educational Facilities Authority, Revenue Refunding Bonds
(Seton Hall University Project), 5.25% due 7/01/2014 (a) 2,365
AA+ Aa1 4,800 New Jersey State, GO, Refunding, Series F, 5.50% due 8/01/2011 4,900
NR* Aaa 5,000 New Jersey State Higher Education Assistance Authority, Student Loan Revenue Bonds,
RIB, AMT, Series 18, 6.775% due 6/01/2017 (a)(f) 4,376
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 (a) 4,756
AAA Aaa 3,520 New Jersey State Housing and Mortgage Finance Agency Revenue Bonds (Home Buyer),
AMT, Series M, 7% due 10/01/2026 (d) 3,734
AAA Aaa 5,350 New Jersey State Transit Corporation, COP, 6.50% due 10/01/2016 (c) 5,681
AAA Aaa 4,000 New Jersey State Transportation Trust Fund Authority, Transportation
System Revenue Bonds, Series A, 5% due 6/15/2018 (c) 3,588
AAA Aaa 1,000 New Jersey State Transportation Trust Fund Authority, Transportation System Revenue
Refunding Bonds, Series A, 5% due 6/15/2015 (d) 919
Ocean County, New Jersey, Utilities Authority, Wastewater Revenue Refunding
Bonds, GO:
NR* Aa2 500 5% due 1/01/2013 461
NR* Aa2 1,340 5% due 1/01/2018 1,165
</TABLE>
MuniYield New Jersey Insured Fund, Inc.
October 31, 1999
<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>
Port Authority of New York and New Jersey, Consolidated Revenue Bonds:
AA- A1 $1,000 93rd Series, 6.125% due 6/01/2094 $ 1,024
AAA Aaa 4,000 AMT, 97th Series, 6.65% due 1/15/2023 (b) 4,215
AAA Aaa 3,500 Port Authority of New York and New Jersey, Consolidated Revenue Refunding
Bonds, AMT, 96th Series, 6.60% due 10/01/2023 (b) 3,692
NR* Aaa 4,000 Port Authority of New York and New Jersey, RITR, AMT, 108th Series, 7.585% due
1/15/2017 (c)(f) 3,978
AAA Aaa 1,800 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) 1,739
A1+ VMIG1++ 1,100 Port Authority of New York and New Jersey, Special Obligation Revenue Refunding
Bonds(Versatile Structure Obligation), VRDN, Series 2, 3.45% due 5/01/2019 (g) 1,100
Rancocas Valley, New Jersey, Regional High School District, GO (b):
AAA Aaa 1,280 5.30% due 2/01/2027 1,169
AAA Aaa 1,398 5.30% due 2/01/2029 1,274
AAA Aaa 1,180 South Brunswick Township, New Jersey, Board of Education, GO, 6.40%
due 8/01/2005 (b)(e) 1,278
AAA Aaa 5,250 South Jersey Transportation Authority, New Jersey, Transportation System Revenue
Refunding Bonds, 5% due 11/01/2029 (a) 4,530
NR* Aaa 3,440 Union County, New Jersey, Utilities Authority, RITR, Series 38, 6.62%
due 6/01/2020 (f) 3,014
West Windsor-Plainsboro, New Jersey, Regional School District, GO,
Refunding (b):
AAA Aaa 2,500 4.75% due 9/15/2022 2,122
AAA Aaa 2,500 4.75% due 9/15/2023 2,112
Puerto Rico -- 5.4%
AAA Aaa 1,000 Puerto Rico Commonwealth, GO, Refunding, Public Improvement, 4.50%
due 7/01/2023 (a) 812
AAA Aaa 1,500 Puerto Rico Electric Power Authority, Power Revenue Refunding Bonds,
Series EE, 4.50% due 7/01/2018 (d) 1,261
AAA Aaa 5,000 Puerto Rico Public Buildings Authority Revenue Bonds (Government Facilities),
Series B, 5% due 7/01/2027 (a) 4,347
AAA NR* 3,300 Puerto Rico Public Financing Corporation Revenue Bonds (Commonwealth
Appropriation), Series A, 5% due 6/01/2026 (c) 2,876
Total Investments (Cost--$174,290)--99.0% 170,110
Other Assets Less Liabilities--1.0% 1,653
--------
Net Assets--100.0% $171,763
========
<FN>
(a)AMBAC Insured.
(b)FGIC Insured.
(c)FSA Insured.
(d)MBIA Insured.
(e)Prerefunded.
(f)The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rate shown is the
rate in effect at October 31, 1999.
(g)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at October 31, 1999.
*Not Rated.
**Represents a zero coupon bond; the interest rate shown reflects
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>
MuniYield New Jersey Insured Fund, Inc.
October 31, 1999
<TABLE>
FINANCIAL INFORMATION
<CAPTION>
Statement of Assets, Liabilities and Capital as of October 31, 1999
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$174,289,576) (Note 1a) $170,109,614
Cash 52,452
Receivables:
Securities sold $ 6,643,636
Interest 2,949,223 9,592,859
------------
Prepaid expenses and other assets 7,192
------------
Total assets 179,762,117
------------
Liabilities: Payables:
Securities purchased 7,645,513
Dividends to shareholders (Note 1e) 203,560
Investment adviser (Note 2) 83,375 7,932,448
------------
Accrued expenses and other liabilities 66,704
------------
Total liabilities 7,999,152
------------
Net Assets: Net assets $171,762,965
============
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 (8,586,560 shares issued
and outstanding) $ 858,656
Paid-in capital in excess of par 120,317,344
Undistributed investment income--net 1,192,717
Accumulated realized capital losses on investments--net (383,335)
Accumulated distributions in excess of realized capital gains on
investments--net (Note 1e) (2,042,455)
Unrealized depreciation on investments--net (4,179,962)
------------
Total--Equivalent to $13.48 net asset value per share of
Common Stock(market price--$12.625) 115,762,965
------------
Total capital $171,762,965
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
MuniYield New Jersey Insured Fund, Inc.
October 31, 1999
<TABLE>
FINANCIAL INFORMATION (continued)
<CAPTION>
Statement of Operations
For the Year Ended
October 31, 1999
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 10,496,373
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 925,796
Commission fees (Note 4) 141,971
Professional fees 66,312
Transfer agent fees 51,358
Accounting services (Note 2) 39,217
Directors' fees and expenses 27,417
Printing and shareholder reports 24,329
Listing fees 16,639
Custodian fees 11,645
Pricing fees 11,216
Other 16,571
------------
Total expenses 1,332,471
------------
Investment income--net 9,163,902
------------
Realized & Realized loss on investments--net (197,745)
Unrealized Loss on Change in unrealized appreciation/depreciation on investments--net (19,089,084)
Investments--Net ------------
(Notes 1b, 1d & 3):
Net Decrease in Net Assets Resulting from Operations $(10,122,927)
============
See Notes to Financial Statements.
</TABLE>
MuniYield New Jersey Insured Fund, Inc.
October 31, 1999
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended
October 31,
Increase (Decrease) in Net Assets: 1999 1998
<S> <S> <C> <C>
Operations: Investment income--net $ 9,163,902 $ 9,328,952
Realized gain (loss) on investments--net (197,745) 2,419,720
Change in unrealized appreciation/depreciation on investments--net (19,089,084) 1,783,953
------------ ------------
Net increase (decrease) in net assets resulting from operations (10,122,927) 13,532,625
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (7,530,812) (7,378,943)
Shareholders Preferred Stock (1,603,974) (1,713,847)
(Note 1e): Realized gain on investments--net:
Common Stock -- (173,351)
Preferred Stock -- (262,640)
In excess of realized gain on investments--net:
Common Stock (1,849,703) --
Preferred Stock (192,752) --
------------ ------------
Net decrease in net assets resulting from dividends
and distributions to shareholders (11,177,241) (9,528,781)
------------ ------------
Capital Stock Value of shares issued to Common Stock shareholders in
Transactions reinvestment of dividends and distributions 1,484,734 1,806,843
(Note 4): ------------ ------------
Net Assets: Total increase (decrease) in net assets (19,815,434) 5,810,687
Beginning of year 191,578,399 185,767,712
------------ ------------
End of year* $171,762,965 $191,578,399
============ ============
<FN>
*Undistributed investment income--net $ 1,192,717 $ 1,163,601
============ ============
See Notes to Financial Statements.
</TABLE>
MuniYield New Jersey Insured Fund, Inc.
October 31, 1999
<TABLE>
FINANCIAL INFORMATION (concluded)
<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,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 15.96 $ 15.49 $ 15.10 $ 15.12 $ 13.60
Operating -------- -------- -------- -------- --------
Performance: Investment income--net 1.07 1.11 1.13 1.12 1.13
Realized and unrealized gain (loss) on
investments--net (2.24) .49 .38 (.03) 1.52
-------- -------- -------- -------- --------
Total from investment operations (1.17) 1.60 1.51 1.09 2.65
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.88) (.88) (.91) (.88) (.87)
Realized gain on investments--net -- (.02) -- -- --
In excess of realized gain on investments--net (.22) -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Stock shareholders (1.10) (.90) (.91) (.88) (.87)
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:
Dividends and distributions to Preferred
Stock shareholders:
Investment income--net (.19) (.20) (.21) (.23) (.26)
Realized gain on investments--net -- (.03) -- -- --
In excess of realized gain on
investments--net (.02) -- -- -- --
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity (.21) (.23) (.21) (.23) (.26)
-------- -------- -------- -------- --------
Net asset value, end of year $ 13.48 $ 15.96 $ 15.49 $ 15.10 $ 15.12
======== ======== ======== ======== ========
Market price per share, end of year $ 12.625 $ 16.75 $15.8125 $ 14.75 $ 14.125
======== ======== ======== ======== ========
Total Investment Based on market price per share (18.97%) 12.13% 13.77% 10.93% 33.88%
Return:* ======== ======== ======== ======== ========
Based on net asset value per share (9.20%) 9.07% 8.87% 6.09% 18.55%
======== ======== ======== ======== ========
Ratios Based on Total expenses** 1.03% 1.03% 1.04% 1.04% 1.06%
Average Net Assets ======== ======== ======== ======== ========
Of Common Stock: Total investment income--net** 7.07% 7.10% 7.43% 7.46% 7.83%
======== ======== ======== ======== ========
Amount of dividends to
Preferred Stock shareholders 1.24% 1.30% 1.37% 1.55% 1.79%
======== ======== ======== ======== ========
Investment income--net, to Common Stock
shareholders 5.83% 5.80% 6.06% 5.91% 6.04%
======== ======== ======== ======== ========
Ratios Based on Total expenses .72% .72% .72% .72% .72%
Total Average ======== ======== ======== ======== ========
Net Assets:**++ Total investment income--net 4.94% 4.96% 5.12% 5.13% 5.36%
======== ======== ======== ======== ========
Ratios Based on Dividends to Preferred Stock shareholders 2.87% 3.06% 3.08% 3.44% 3.83%
Average Net ======== ======== ======== ======== ========
Assets Of
Preferred Stock:
Supplemental Net assets, net of Preferred Stock, end of
Data: year (in thousands) $115,763 $135,578 $129,768 $124,948 $124,639
======== ======== ======== ======== ========
Preferred Stock outstanding, end of year
(in thousands) $ 56,000 $ 56,000 $ 56,000 $ 56,000 $ 56,000
======== ======== ======== ======== ========
Portfolio turnover 61.80% 46.23% 26.16% 37.08% 39.36%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,067 $ 3,421 $ 3,317 $ 3,231 $ 3,226
======== ======== ======== ======== ========
Dividends Per Share Investment income--net $ 716 $ 765 $ 771 $ 860 $ 956
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 charges.
**Do not reflect the effect of dividends to Preferred Stock
shareholders.
++Includes Common and Preferred Stock average net assets.
See Notes to Financial Statements.
</TABLE>
MuniYield New Jersey Insured Fund, Inc.
October 31, 1999
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's financial
statements are prepared in accordance with generally accepted
accounting principles, 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 MJI. The following is a summary of signifi-
cant 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, 1999
(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. Distributions in excess of
realized capital gains are due primarily to differing tax treatments
for futures transactions.
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 .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, 1999 were $112,864,281 and
$112,857,119, respectively.
Net realized losses for the year ended October 31, 1999 and net
unrealized losses as of October 31, 1999 were as follows:
Realized Unrealized
Losses Losses
Long-term investments $ (197,745) $ (4,179,962)
---------- ------------
Total $ (197,745) $ (4,179,962)
========== ============
As of October 31, 1999, net unrealized depreciation for Federal
income tax purposes aggregated $4,834,463, of which $3,188,738
related to appreciated securities and $8,023,201 related to
depreciated securities. The aggregate cost of investments at October
31, 1999 for Federal income tax purposes was $174,944,077.
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,
1999 and October 31, 1998 increased by 92,658 and 114,706,
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, 1999 was 3.34%.
Shares issued and outstanding during the years ended October 31,
1999 and October 31, 1998 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
October 31, 1999, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, an affiliate of FAM, earned $66,238 as commissions.
5. Capital Loss Carryforward:
At October 31, 1999, the Fund had a net capital loss carryforward of
approximately $173,000, all of which expires in 2007. This amount
will be available to offset like amounts of any future taxable
gains.
6. Subsequent Event:
On November 8, 1999, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the amount
of $.070000 per share, payable on November 29, 1999 to shareholders
of record as of November 22, 1999.
MuniYield New Jersey Insured Fund, Inc.
October 31, 1999
<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, 1999, 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, 1999 by correspondence with the custodian and broker; where
replies were not received from brokers, we performed other auditing
procedures. 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, 1999, 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 6, 1999
<AUDIT-REPORT>
<TABLE>
IMPORTANT TAX INFORMATION (unaudited)
<CAPTION>
All of the net investment income distributions paid by MuniYield New
Jersey Insured Fund, Inc. during its taxable year ended October 31,
1999 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:
Payable Ordinary Long-Term
Date Income Capital Gains*
<S> <C> <C> <C>
Common Stock Shareholders 12/30/98 $.031296 $.186151
Preferred Stock Shareholders: 11/02/98 -- $25.53
11/09/98 -- $25.53
11/16/98 $12.55 $15.15
11/23/98 $11.09 $13.88
11/30/98 $ 3.12 $ 4.73
<FN>
*All of the distributions are subject to the 20% tax rate.
Please retain this information for your records.
</TABLE>
MuniYield New Jersey Insured Fund, Inc.
October 31, 1999
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.
YEAR 2000 ISSUES
Many computer systems were designed using only two digits to
designate years. These systems may not be able to distinguish the
Year 2000 from the Year 1900 (commonly known as the "Year 2000
Problem"). The Fund could be adversely affected if the computer
systems used by the Fund's management or other Fund service
providers do not properly address this problem before January 1,
2000. The Fund's management expects to have addressed this problem
before then, and does not anticipate that the services it provides
will be adversely affected. The Fund's other service providers have
told the Fund's management that they also expect to resolve the Year
2000 Problem, and the Fund's management will continue to monitor the
situation as the Year 2000 approaches. However, if the problem has
not been fully addressed, the Fund could be negatively affected. The
Year 2000 Problem could also have a negative impact on the
securities in which the Fund invests and this could hurt the Fund's
investment returns.
OFFICERS AND DIRECTORS
Terry K. Glenn, 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
Arthur Zeikel, Director
Vincent R. Giordano, Senior Vice President
Kenneth A. Jacob, Vice President
Theodore R. Jaeckel Jr., Vice President
Donald C. Burke, Vice President and Treasurer
Alice A. Pellegrino, 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:
The Bank of New York
100 Church Street
New York, NY 10286
NYSE Symbol
MJI
