MUNIYIELD
NEW JERSEY
INSURED
FUND, INC.
FUND LOGO
Semi-Annual Report
April 30, 2000
MuniYield New Jersey Insured Fund, Inc. seeks to provide
shareholders with as high a level of current income exempt from
Federal and New Jersey income taxes as is consistent with its
investment policies and prudent investment management by investing
primarily in a portfolio of long-term municipal obligations the
interest on which, in the opinion of bond counsel to the issuer, is
exempt from Federal and New Jersey income taxes.
This report, including the financial information here-in, is
transmitted to shareholders of MuniYield New Jersey Insured Fund,
Inc. for their information. It is not a prospectus. 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.
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 these securities.
MuniYield New Jersey Insured Fund, Inc., April 30, 2000
TO OUR SHAREHOLDERS
For the six-month period ended April 30, 2000, the Common Stock of
MuniYield New Jersey Insured Fund, Inc. earned $0.402 per share
income dividends, which included earned and unpaid dividends of
$0.067. This represents a net annualized yield of 6.05%, based on a
month-end per share net asset value of $13.35. Over the same period,
the total investment return on the Fund's Common Stock was +2.34%,
based on a change in per share net asset value from $13.48 to
$13.35, and assuming reinvestment of $0.405 per share income
dividends.
For the six-month period ended April 30, 2000, the Fund's Auction
Market Pre-ferred Stock had an average yield of 3.93%.
The Municipal Market Environment
Since October 1999 through mid-January 2000, fixed-income bond
yields rose steadily higher. US economic growth, in part intensified
by Year 2000 preparations, grew at a 7.3% rate in the fourth quarter
of 1999 and at a 4.2% annual rate for all of 1999. Initial estimates
for the first quarter of 2000 were reported at 5.4%. However,
despite these significant growth rates, no price measure indicator
has shown any considerable signs of future price pressures at the
consumer level, despite the lowest unemployment rates since January
1970. Given no signs of an economic slowdown, the Federal Reserve
Board continued to raise short-term interest rates in November 1999
and again in February and March 2000. In each instance, the Federal
Reserve Board cited both the continued growth of US employment and
the impressive strength of the US equity markets as reasons for
attempting to moderate US economic growth before inflationary price
increases are realized. By mid-January 2000, US Treasury bond yields
rose 60 basis points (0.60%) to 6.75%. Similarly, as measured by the
Bond Buyer Revenue Bond Index, long-term tax-exempt bond yields rose
approximately 20 basis points to 6.35%.
Since mid-January, fixed-income markets have largely ignored strong
economic fundamentals and concentrated on very positive technical
supply factors. Declining bond issuance, both current, and more
importantly, expected future issuance, helped push bond yields lower
from mid-January to mid-April 2000. In late January and early
February 2000, the US Treasury announced its intention to reduce the
number of issues to be auctioned in the quarterly Treasury note and
bond auctions. Furthermore, budgetary surpluses would allow the US
Treasury to repurchase outstanding, higher-couponed Treasury issues,
primarily in the 15-year and longer-term maturity sectors. Both
these actions would result in a significant reduction in the
outstanding supply of long-term US Treasury debt. Domestic and
international investors quickly began to accumulate what was
expected to become a scarce commodity and bond prices quickly rose.
By mid-April 2000, US Treasury bond yields had declined over 100
basis points to 5.67%. However, bond yields rose somewhat during the
last two weeks of the period as economic statistics were released,
indicating that the economic strength seen in late 1999 was
continuing into early 2000. The decline in long-term US Treasury
bond yields resulted in an inverted taxable yield curve as short-
term and intermediate-term interest rates have not fallen
proportionately since the Federal Reserve Board is expected to
continue to raise short-term interest rates. The current inversion
has had much more to do with debt reduction and Treasury buybacks
than with investor expectations of slower economic growth. Over the
last six months, long-term US Treasury bond yields have fallen
almost 20 basis points to close the six-month period ended April 30,
2000 at 5.96%.
Tax-exempt bond yields have also declined in recent months. The
decline has largely been in response to the rally in US Treasury
securities, as well as a continued positive technical supply
environment. States such as California and Maryland have announced
that their large current and anticipated future budget surpluses
will permit the cancellation or postponement of expected bond
issuance. Additionally, some issuers have also initiated tenders to
repurchase existing debt, reducing the supply of tax-exempt bonds in
the secondary market as well. Since their recent peak in January
2000, long-term municipal bond yields declined over 25 basis points
to finish the six-month period ended April 30, 2000 at 6.07%. During
the last six months, municipal bond yields declined just 10 basis
points overall.
The relative underperfomance of the municipal bond market in recent
months has been especially disappointing given the strong technical
position the tax-exempt bond market enjoyed. The issuance of long-
term tax-exempt securities has dramatically declined. Over the last
year, $203 billion in new long-term municipal securities was issued,
a decline of almost 25% compared to the same period a year earlier.
For the six months ended April 30, 2000, approximately $90 billion
in new tax-exempt bonds was underwritten, a decline of more than 25%
compared to the same period in 1999. Although investors received
over $30 billion in coupon payments, bond maturities and the
proceeds from early bond redemptions, coupled with the highest
municipal bond yields in three years, overall investor demand has
diminished. Long-term municipal bond 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. Over the last four months, tax-exempt mutual funds
have had net redemptions of more than $8 billion. Also, the demand
from property and casualty insurance companies has weakened as a
result of the losses and anticipated losses incurred from a series
of damaging storms across much of the eastern United States.
Additionally, many institutional investors who have in recent years
been attracted to the municipal bond market by historically
attractive tax-exempt bond yield ratios of over 90% found other
asset classes even more attractive. Even with a favorable supply
position, tax-exempt municipal bond yields have underperformed their
taxable counterparts.
Any significantly lower municipal bond yields are still likely to
require weaker US employment growth and consumer spending. The
actions taken in recent months by the Federal Reserve Board should
eventually slow US economic growth. The recent declines in US home
sales are perhaps the first sign that consumer spending is being
slowed by higher interest rates. Until further signs develop, it is
likely that the municipal bond market's current favorable technical
position will dampen significant tax-exempt interest rate volatility
and provide a stable environment for eventual improvement in
municipal bond prices.
Portfolio Strategy
As a result of significant volatility in the fixed-income market
during the six-month period ended April 30, 2000, we turned our
efforts toward reducing the Fund's sensitivity to interest rate
fluctuations. We sought to insulate the Fund from some of the market
volatility while still delivering an attractive and stable monthly
dividend income.
In order to do this, we kept our cash reserves to a minimum. By
keeping the Fund fully invested, we had to take other necessary
measures to achieve our investment goal. During recent months, we
began restructuring the Fund by shortening the average portfolio
maturity without significantly impacting the dividend stream. We
reduced many of the Fund's more interest rate-sensitive holdings.
Typically, these securities possess long maturity dates that were
issued in a lower interest rate environment and, consequently, trade
at steep discounts to their face value. The volatility inherent in
this structure rendered it unsuitable for our investment strategy
moving forward, and we reduced these holdings. We reinvested the
proceeds from these sales in bonds that are less prone to interest
rate volatility. By investing in bonds possessing maturities of 15
years--20 years, we may be able to avoid much of the volatility
inherent in longer-dated bonds while still capturing approximately
90% of their yield.
New Jersey finances remained healthy as vigorous economic growth
contributed to solid increases in personal income and sales tax
receipts. In addition, Governor Whitman proposed using a portion of
the state's budget surplus to retire debt. This proposal, along with
a prospective resolution of the state's long-term school financing
quandary, would suggest that an improving credit outlook may well be
warranted. During the six months ended April 30, 2000, long-term new-
issue supply within the state actually rose almost 15%, compared to
levels from a year ago and in contrast to the more than 25% decline
evident throughout the country. This disparity is largely
attributable to the $1.5 billion financing brought to market late in
the period on behalf of the New Jersey Turnpike Authority.
The Fund's cost of borrowing increased somewhat in recent months as
short-term tax-exempt interest rates rose along with the adjustment
evident in the taxable market. Long-term tax-exempt interest rates
have actually declined modestly, causing the municipal yield curve
to flatten. While this flattening has reduced the incremental yield
enhancement resulting from leveraging the Fund's Common Stock, it is
important to note that in contrast to the inverted shape of the US
Treasury yield curve, the municipal yield curve remained positively
sloped. (For a complete explanation of the benefits and risks of
leveraging, see page 1 of this report to shareholders.) Historical
analysis of the municipal yield curve demonstrates this resiliency
throughout a number of economic cycles. Furthermore, a portion of
the recent adjustment in short-term interest rates is attributable
to seasonal tax-related factors and, based on historical experience,
should be regarded as temporary. Nonetheless, it is likely that the
Fund's borrowing costs will remain under pressure while the Federal
Reserve Board pursues its current monetary policy.
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
June 6, 2000
MuniYield New Jersey Insured Fund, Inc., April 30, 2000
<TABLE>
PROXY RESULTS
<CAPTION>
During the six-month period ended April 30, 2000, MuniYield New
Jersey Insured Fund, Inc.'s Common Stock shareholders voted on the
following proposals. The proposals were approved at a shareholders'
meeting on April 27, 2000. The description of each proposal and
number of shares voted are as follows:
Shares Voted Shares Withheld
For From Voting
<S> <S> <C> <C> <C>
1. To elect the Fund's Board of Directors: Terry K. Glenn 5,207,317 125,408
Jack B. Sunderland 5,195,486 137,239
Stephen B. Swensrud 5,193,474 139,251
J. Thomas Touchton 5,198,104 134,621
Fred G. Weiss 5,205,259 127,466
Arthur Zeikel 5,196,245 136,480
Shares Voted Shares Voted Shares Voted
For Against Abstain
2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent auditors for the current fiscal year. 5,224,596 49,259 58,870
During the six-month period ended April 30, 2000, MuniYield New
Jersey Insured Fund, Inc.'s Preferred Stock shareholders voted on
the following proposals. The proposals were approved at a
shareholders' meeting on April 27, 2000. The description of each
proposal and number of shares voted are as follows:
Shares Voted Shares Withheld
For From Voting
1. To elect the Fund's Board of Directors: Terry K. Glenn,
M. Colyer Crum, Laurie Simon Hodrick, Jack B. Sunderland,
Stephen B. Swensrud, J. Thomas Touchton, Fred G. Weiss,
and Arthur Zeikel. 1,134 16
Shares Voted Shares Voted Shares Voted
For Against Abstain
2. To ratify the selection of Deloitte & Touche LLP as the
Fund's independent auditors for the current fiscal year: 1,149 0 1
</TABLE>
Portfolio
Abbreviations
To simplify the listings of MuniYield New Jersey Insured Fund,
Inc.'s portfolio holdings in the Schedule of Investments, we have
abbreviated the names of many of the securities according to the
list at 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
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
New Jersey AAA Aaa $ 2,875 Cape May County, New Jersey, Industrial Pollution Control
--93.8% Financing Authority Revenue Bonds (Atlantic City Electric
Company Project), AMT, Series A, 7.20% due 11/01/2029 (d) $ 3,113
AAA Aaa 3,010 Carteret, New Jersey, Board of Education, COP, 6.75% due
10/15/2004 (d)(e) 3,269
AAA Aaa 1,000 Carteret, New Jersey, Board of Education COP, Refunding Bonds,
4.75% due 4/15/2019 (d) 861
East Orange, New Jersey, Board of Education COP (c):
AAA Aaa 1,000 5.30%** due 2/01/2024 234
AAA Aaa 2,845 5.28%** due 8/01/2024 647
AAA Aaa 1,845 5.36%** due 8/01/2027 347
AAA Aaa 2,850 5.38%** due 2/01/2028 519
AAA Aaa 1,120 Essex County, New Jersey, Improvement Authority, Parking Facility
Revenue Bonds, 6.2% due 7/01/2002 (d)(e) 1,162
BBB NR* 2,000 Gloucester County, New Jersey, Improvement Authority, Solid
Waste Resource Recovery Revenue Refunding Bonds (Waste
Management Inc. Project), Series A, 6.85% due 12/01/2029 2,014
AAA Aaa 3,630 Hoboken, Union City, Weehawken, New Jersey, Sewer Authority,
Sewer Revenue Refunding Bonds, 6.20% due 8/01/2019 (d) 3,701
AAA Aaa 7,600 Hudson County, New Jersey, COP, Refunding (Correctional
Facilities), 6.60% due 12/01/2021 (d) 7,933
AAA NR* 4,625 Hudson County, New Jersey, Improvement Authority, Facility
Lease Revenue Refunding Bonds, RIB, Series 34, 5.465% due
10/01/2024 (b)(f) 4,069
AAA Aaa 4,750 Jersey City, New Jersey, Sewer Authority, Sewer Revenue
Refunding Bonds, 6.25% due 1/01/2014 (a) 5,151
AAA Aaa 1,475 Monmouth County, New Jersey, Improvement Authority, Revenue
Refunding Bonds (Pooled Governmental Loan), 4.75% due
12/01/2014 (a) 1,331
BBB- NR* 1,000 New Jersey EDA, First Mortgage Revenue Bonds (Fellowship
Village), Series C, 5.50% due 1/01/2028 768
New Jersey EDA, First Mortgage Revenue Refunding Bonds
(Fellowship Village), Series A:
BBB- NR* 1,700 5.50% due 1/01/2018 1,374
BBB- NR* 2,000 5.50% due 1/01/2025 1,546
New Jersey EDA, Natural Gas Facilities Revenue Refunding
Bonds (New Jersey Natural Gas Co. Project) (a):
AAA VMIG1++ 1,200 VRDN, AMT, Series A, 6.10% due 8/01/2030 (g) 1,200
AAA Aaa 4,500 Series A, 6.35% due 10/01/2022 4,653
</TABLE>
MuniYield New Jersey Insured Fund, Inc., April 30, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
New Jersey AAA Aaa $ 2,305 New Jersey EDA, Revenue Bonds (Educational Testing Service),
(concluded) Series B, 6.125% due 5/15/2005 (d)(e) $ 2,449
New Jersey EDA, Revenue Bonds (Saint Barnabas Medical Center),
Series A (d):
NR* Aaa 6,000 6.23%** due 7/01/2019 1,871
NR* Aaa 5,195 5.60%** due 7/01/2020 1,516
NR* Aaa 6,365 5.60%** due 7/01/2021 1,740
AAA Aaa 9,080 New Jersey EDA, Revenue Bonds (Transportation Project Sublease),
Series A, 5.875% due 5/01/2014 (c) 9,352
New Jersey EDA, Revenue Refunding Bonds:
AAA Aaa 4,000 (Educational Testing Service), Series A, 4.75% due 5/15/2018 (d) 3,465
NR* Aaa 3,800 (Hillcrest Health Service), 5.07%** due 1/01/2018 (a) 1,307
AAA Aaa 2,835 (RWJ Health Care Corporation), 6.50% due 7/01/2024 (c) 2,999
AAA Aaa 1,150 New Jersey EDA, State Contract Revenue Bonds (Economic Recovery),
Series A, 6% due 3/15/2021 (c) 1,161
AAA Aaa 5,000 New Jersey EDA, Water Facilities Revenue Bonds (New Jersey
American Water Company Inc.), AMT, Series B, 5.375% due
5/01/2032 (b) 4,529
New Jersey Health Care Facilities Financing Authority, Revenue
Refunding Bonds:
BBB- Baa3 1,200 (Englewood Hospital and Medical Center), 6.70% due 7/01/2015 1,126
AAA Aaa 4,000 (Hackensack University Medical Center), Series B, 5.20% due
1/01/2028 (d) 3,533
BBB+ NR* 1,800 (Holy Name Hospital), 6% due 7/01/2025 1,526
AAA Aaa 3,800 (Mercer Medical Center), 6.50% due 7/01/2021 (d) 3,867
AAA Aaa 2,500 (Meridian Health System Obligation Group), 5.25% due
7/01/2019 (c) 2,296
AAA Aaa 2,500 (Meridian Health System Obligation Group), 5.375% due
7/01/2024 (c) 2,305
AAA Aaa 2,710 (Saint Barnabas Hospital), Series B, 5.09%** due 7/01/2019 (d) 845
AAA Aaa 1,110 (Saint Barnabas Hospital), Series B, 5.10%** due 7/01/2020 (d) 324
BBB- Baa3 4,000 (Saint Elizabeth Hospital Obligation Group), 6% due 7/01/2027 3,160
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) 2,109
AAA Aaa 3,195 New Jersey Sports and Exposition Authority, Convention Center,
Luxury Tax Revenue Refunding Bonds, 5% due 9/01/2015 (d) 2,971
AA+ Aaa 1,990 New Jersey State Educational Facilities Authority Revenue
Bonds (Institute of Advanced Study), Series G, 5% due 7/01/2018 1,806
NR* Aaa 5,000 New Jersey State Higher Education Assistance Authority, Student
Loan Revenue Bonds, RIB, AMT, Series 18, 5.315% due
6/01/2017 (a)(f) 4,435
AAA Aaa 3,520 New Jersey State Housing and Mortgage Finance Agency, Home Buyer
Revenue Bonds, AMT, Series M, 7% due 10/01/2026 (d) 3,694
AAA Aaa 2,750 New Jersey State Housing and Mortgage Finance Agency,
M/F Housing Revenue Refunding Bonds, Series A, 6.05% due
11/01/2020 (a) 2,721
AAA Aaa 5,350 New Jersey State Transit Corporation, COP, 6.50% due
10/01/2016 (c) 5,710
AAA Aaa 6,500 New Jersey State Transportation Trust Fund Authority, Trans-
portation System Revenue Bonds, Series A, 5% due 6/15/2018 (c) 5,880
AAA Aaa 1,000 New Jersey State Transportation Trust Fund Authority, Trans-
portation System Revenue Refunding Bonds, Series A, 5% due
6/15/2015 (d) 931
AAA Aaa 3,700 New Jersey State Turnpike Authority, Turnpike Revenue Refunding
Bonds, Series A, 5.75% due 1/01/2019 (d) 3,708
Ocean County, New Jersey, Utilities Authority, Wastewater Revenue
Refunding Bonds, GO:
NR* Aa1 500 5% due 1/01/2013 471
NR* Aa1 1,340 5% due 1/01/2018 1,197
Port Authority of New York and New Jersey, Consolidated
Revenue Bonds:
AA- A1 1,000 93rd Series, 6.125% due 6/01/2094 1,042
AAA Aaa 4,000 AMT, 97th Series, 6.65% due 1/15/2023 (b) 4,164
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) 3,689
NR* Aaa 4,000 Port Authority of New York and New Jersey, RITR, AMT, 108th
Series, 6.285% due 1/15/2017 (c)(f) 4,056
A1+ VMIG1++ 400 Port Authority of New York and New Jersey, Special Obligation
Revenue Refunding Bonds (Versatile Structure Obligation),
VRDN, Series 3, 6.05% due 6/01/2020 (g) 400
AAA Aaa 1,398 Rancocas Valley, New Jersey, Regional High School District, GO,
5.30% due 2/01/2029 (b) 1,283
AAA Aaa 1,180 South Brunswick Township, New Jersey, Board of Education, GO,
6.40% due 8/01/2005 (b)(e) 1,255
AAA Aaa 5,250 South Jersey Transportation Authority, New Jersey, Transportation
System Revenue Refunding Bonds, 5% due 11/01/2029 (a) 4,541
Union County, New Jersey, Utilities Authority, Senior Lease
Revenue Refunding Bonds (Ogden Martin System of Union), AMT,
Series A (a):
AAA Aaa 1,590 5.375% due 6/01/2017 1,517
AAA Aaa 1,670 5.375% due 6/01/2018 1,582
AAA Aaa 1,765 5.375% due 6/01/2019 1,660
AAA Aaa 1,855 5.375% due 6/01/2020 1,737
West Windsor-Plainsboro, New Jersey, Regional School District,
GO, Refunding (b):
AAA Aaa 2,500 4.75% due 9/15/2022 2,123
AAA Aaa 2,500 4.75% due 9/15/2023 2,115
Pennsylvania--3.0% Delaware River Port Authority of Pennsylvania and New Jersey
Revenue Bonds (c):
AAA Aaa 2,500 6% due 1/01/2018 2,562
AAA Aaa 2,500 6% due 1/01/2019 2,555
Puerto AAA Aaa 5,000 Puerto Rico Public Buildings Authority Revenue Bonds (Government
Rico--2.6% Facilities), Series B, 5% due 7/01/2027 (a) 4,388
Total Investments (Cost--$173,183)--99.4% 169,565
Other Assets Less Liabilities--0.6% 1,057
--------
Net Assets--100.0% $170,622
========
(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 April 30, 2000.
(g)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at April 30, 2000.
*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.
See Notes to Financial Statements.
</TABLE>
MuniYield New Jersey Insured Fund, Inc., April 30, 2000
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of April 30, 2000
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$173,182,952) $169,564,763
Cash 2,540
Interest receivable 3,143,480
Prepaid expenses and other assets 7,155
------------
Total assets 172,717,938
------------
Liabilities: Payables:
Securities purchased $ 1,788,083
Dividends to shareholders 199,919
Investment adviser 66,348 2,054,350
------------
Accrued expenses and other liabilities 41,331
------------
Total liabilities 2,095,681
------------
Net Assets: Net assets $170,622,257
============
Capital: Capital Stock (200,000,000 shares authorized):
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 1,069,688
Accumulated realized capital losses on investments--net (1,962,787)
Accumulated distributions in excess of realized capital
gains on investments--net (2,042,455)
Unrealized depreciation on investments--net (3,618,189)
------------
Total--Equivalent to $13.35 net asset value per
Common Stock (market price--$12.25) 114,622,257
------------
Total capital $170,622,257
============
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended April 30, 2000
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 5,089,151
Income:
Expenses: Investment advisory fees $ 425,596
Commission fees 70,965
Professional fees 40,673
Accounting services 21,955
Transfer agent fees 21,400
Directors' fees and expenses 15,948
Listing fees 9,380
Printing and shareholder reports 9,104
Custodian fees 5,887
Pricing fees 5,003
Other 8,290
------------
Total expenses 634,201
------------
Investment income--net 4,454,950
------------
Realized & Realized loss on investments--net (1,579,452)
Unrealized Change in unrealized appreciation/depreciation on
Gain (Loss) on investments--net 561,773
Investments--Net: ------------
Net Increase in Net Assets Resulting from Operations $ 3,437,271
============
See Notes to Financial Statements.
</TABLE>
MuniYield New Jersey Insured Fund, Inc., April 30, 2000
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 2000 1999
<S> <S> <C> <C>
Operations: Investment income--net $ 4,454,950 $ 9,163,902
Realized loss on investments--net (1,579,452) (197,745)
Change in unrealized appreciation/depreciation
on investments--net 561,773 (19,089,084)
------------ ------------
Net increase (decrease) in net assets resulting
from operations 3,437,271 (10,122,927)
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (3,480,133) (7,530,812)
Shareholders: Preferred Stock (1,097,846) (1,603,974)
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 (4,577,979) (11,177,241)
------------ ------------
Capital Stock Value of shares issued to Common Stock shareholders
Transactions: in reinvestment of dividends and distributions -- 1,484,734
------------ ------------
Net Assets: Total decrease in net assets (1,140,708) (19,815,434)
Beginning of period 171,762,965 191,578,399
------------ ------------
End of period* $170,622,257 $171,762,965
============ ============
*Undistributed investment income--net $ 1,069,688 $ 1,192,717
============ ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
April 30, For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.48 $ 15.96 $ 15.49 $ 15.10 $ 15.12
Operating --------- -------- -------- -------- --------
Performance: Investment income--net .53 1.07 1.11 1.13 1.12
Realized and unrealized gain
(loss) on investments--net (.12) (2.24) .49 .38 (.03)
--------- -------- -------- -------- --------
Total from investment operations .41 (1.17) 1.60 1.51 1.09
--------- -------- -------- -------- --------
Less dividends and distributions to
Common Stock shareholders:
Investment income--net (.41) (.88) (.88) (.91) (.88)
Realized gain on investments--net -- -- (.02) -- --
In excess of realized gain on
investments--net -- (.22) -- -- --
--------- -------- -------- -------- --------
Total dividends and distributions to
Common Stock shareholders (.41) (1.10) (.90) (.91) (.88)
--------- -------- -------- -------- --------
Effect of Preferred Stock activity:
Dividends and distributions to
Preferred Stock shareholders:
Investment income--net (.13) (.19) (.20) (.21) (.23)
Realized gain on investments--net -- -- (.03) -- --
In excess of realized gain on
investments--net -- (.02) -- -- --
--------- -------- -------- -------- --------
Total effect of Preferred Stock activity (.13) (.21) (.23) (.21) (.23)
--------- -------- -------- -------- --------
Net asset value, end of period $ 13.35 $ 13.48 $ 15.96 $ 15.49 $ 15.10
========= ======== ======== ========= ========
Market price per share, end of period $ 12.25 $ 12.625 $ 16.75 $ 15.8125 $ 14.75
========= ======== ======== ========= ========
Total Investment Based on market price per share .27%++ (18.97%) 12.13% 13.77% 10.93%
Return:** ========= ======== ======== ========= ========
Based on net asset value per share 2.34%++ (9.20%) 9.07% 8.87% 6.09%
========= ======== ======== ========= ========
Ratios Based on Total expenses*** 1.10%* 1.03% 1.03% 1.04% 1.04%
Average Net Assets ========= ======== ======== ========= ========
of Common Stock: Total investment income--net*** 7.76%* 7.07% 7.10% 7.43% 7.46%
========= ======== ======== ========= ========
Amount of dividends to Preferred
Stock shareholders 1.91%* 1.24% 1.30% 1.37% 1.55%
========= ======== ======== ========= ========
Investment income--net, to Common
Stock shareholders 5.85%* 5.83% 5.80% 6.06% 5.91%
========= ======== ======== ========= ========
Ratios Based on Total expenses .74%* .72% .72% .72% .72%
Total Average Net ========= ======== ======== ========= ========
Assets:***++++ Total investment income--net 5.22%* 4.94% 4.96% 5.12% 5.13%
========= ======== ======== ========= ========
Ratios Based on Dividends to Preferred Stock shareholders 3.93%* 2.87% 3.06% 3.08% 3.44%
Average Net Assets ========= ======== ======== ========= ========
of Preferred Stock:
Supplemental Net assets, net of Preferred Stock,
Data: end of period (in thousands) $ 114,622 $115,763 $135,578 $ 129,768 $124,948
========= ======== ======== ========= ========
Preferred Stock outstanding,
end of period (in thousands) $ 56,000 $ 56,000 $ 56,000 $ 56,000 $ 56,000
========= ======== ======== ========= ========
Portfolio turnover 16.74% 61.80% 46.23% 26.16% 37.08%
========= ======== ======== ========= ========
Leverage: Asset coverage per $1,000 $ 3,047 $ 3,067 $ 3,421 $ 3,317 $ 3,231
========= ======== ======== ========= ========
Dividends Per Investment income--net $ 490 $ 716 $ 765 $ 771 $ 860
Share On Preferred ========= ======== ======== ========= ========
Stock Outstanding:
*Annualized.
**Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, may result
in substantially different returns. Total investment returns exclude
the effects of sales charges.
***Do not reflect the effect of dividends to Preferred Stock
shareholders.
++Aggregate total investment return.
++++Includes Common and Preferred Stock average net assets.
See Notes to Financial Statements.
</TABLE>
MuniYield New Jersey Insured Fund, Inc., April 30, 2000
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 accounting principles
generally accepted in the United States of America, which may
require the use of management accruals and estimates. These
unaudited financial statements reflect all adjustments, which are,
in the opinion of management, necessary to a fair statement of the
results for the interim period presented. All such adjustments are
of a normal recurring nature. The Fund determines and makes
available for publication the net asset value of its Common Stock on
a weekly basis. The Fund's Common Stock is listed on the New York
Stock Exchange under the symbol 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 investment strategies to increase or decrease the level of
risk to which the Fund is exposed more quickly and efficiently than
transactions in other types of instruments. Losses may arise due to
changes in the value of the contract or if the counterparty does not
perform under the contract.
* Financial futures contracts--The Fund may purchase or sell
financial futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities or
the intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at
a specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
* Options--The Fund is authorized to write covered call options and
purchase put options. When the Fund writes an option, an amount
equal to the premium received by the Fund is reflected as an asset
and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written. When a security is purchased or sold through an
exercise of an option, the related premium paid (or received) is
added to (or deducted from) the basis of the security acquired or
deducted from (or added to) the proceeds of the security sold. When
an option expires (or the Fund enters into a closing transaction),
the Fund realizes a gain or loss on the option to the extent of the
premiums received or paid (or gain or loss to the extent the cost of
the closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(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 and post-October losses.
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 six months ended April 30, 2000 were $28,012,440 and
$28,737,530, respectively.
Net realized losses for the six months ended April 30, 2000 and net
unrealized losses as of April 30, 2000 were as follows:
Realized Unrealized
Losses Losses
Long-term investments $ (1,035,367) $(3,618,189)
Financial futures contracts (544,085) --
------------ -----------
Total $ (1,579,452) $(3,618,189)
============ ===========
As of April 30, 2000, net unrealized depreciation for Federal income
tax purposes aggregated $3,618,189, of which $3,215,135 related to
appreciated securities and $6,833,324 related to depreciated
securities. The aggregate cost of investments at April 30, 2000 for
Federal income tax purposes was $173,182,952.
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 six months ended April 30,
2000 remained constant and during the year ended October 31, 1999
increased by 92,658 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 April
30, 2000 was 4.70%.
Shares issued and outstanding during the six months ended April 30,
2000 and during the year ended October 31, 1999 remained constant.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from .25% to .375%,
calculated on the proceeds of each auction. For the six months ended
April 30, 2000, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
an affiliate of FAM, earned $44,346 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 amounts of any future taxable gains.
6. Subsequent Event:
On May 5, 2000, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$.067100 per share, payable on May 30, 2000 to shareholders of
record as of May 16, 2000.
MuniYield New Jersey Insured Fund, Inc., April 30, 2000
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute all or a portion of its
net investment income to its shareholders on a monthly basis. 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.
QUALITY PROFILE
The quality ratings of securities in the Fund as of April 30, 2000
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 90.1%
AA/Aa 1.6
BBB/Baa 6.8
Other ++ 0.9
++Temporary investments in short-term municipal securities.
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
M. Colyer Crum, Director
Laurie Simon Hodrick, Director
Jack B. Sunderland, Director
Stephen Swensrud, 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
Donald Cecil and Edward H. Meyer, Directors of MuniYield New Jersey
Insured Fund, Inc. have recently retired. The Fund's Board of
Directors wishes Mr. Cecil and Mr. Meyer well in their retirements.
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
