[LOGO] Merrill Lynch Investment Managers
Semi-Annual Report
January 31, 2001
MuniHoldings
New Jersey
Insured Fund, Inc.
www.mlim.ml.com
MuniHoldings New Jersey Insured Fund, Inc.
The Benefits and Risks of Leveraging
MuniHoldings New Jersey Insured Fund, Inc. utilizes leverage 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 investment 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.
MuniHoldings New Jersey Insured Fund, Inc., January 31, 2001
TO OUR SHAREHOLDERS
For the six-month period ended January 31, 2001, the Common Stock of
MuniHoldings New Jersey Insured Fund, Inc. earned $0.358 per share income
dividends, which included earned and unpaid dividends of $0.060. This represents
a net annualized yield of 5.00%, based on a month-end net asset value of $14.20
per share. Over the same period, the total investment return on the Fund's
Common Stock was +11.32%, based on a change in per share net asset value from
$13.14 to $14.20, and assuming reinvestment of $0.357 per share income
dividends.
For the six months ended January 31, 2001, the Fund's Auction Market Preferred
Stock had an average yield as follows: Series A, 3.62%; Series B, 4.00%; Series
C, 3.87%; and Series D, 4.09%.
The Municipal Market Environment
During the six months ended January 31, 2001, long-term fixed-income bond yields
generally declined. The strength seen in the US economy in 1999 and early 2000
clearly has moderated in recent months. After growing at approximately 5% in the
first half of 2000, US gross domestic product (GDP) declined to 2.2% during the
third quarter of 2000. An initial estimate of fourth quarter 2000 GDP growth was
recently released at 1.4%. Additionally, over the past six months, inflationary
pressures have remained well contained, largely in the 2%-3% range. By early
September, US Treasury bond yields had declined more than 20 basis points
(0.20%) to 5.65% as a result of moderating economic growth and low inflation.
However, rising oil and natural gas prices, rekindled investors' inflationary
fears, and US Treasury bond yields quickly rose to nearly 6% at the end of
September 2000. During October and into mid-November, long-term bond yields
fluctuated in response to declining commodity prices and the considerable
uncertainty surrounding the presidential election. In December 2000, significant
declines in US equity markets, especially the NASDAQ, as well as another series
of weak economic indicators, combined to reestablish the decline in long-term US
Treasury bond yields. By mid-December, the Federal Reserve Board announced that
current economic conditions warranted the cessation of the series of short-term
interest rate increases they had initiated in February 2000. Given the favorable
economic environment and, at least, a neutral Federal Reserve Board, investors
were free again to focus upon the ongoing US Treasury debt reduction program and
forecasts of sizeable Federal budgetary surpluses going forward. Many analysts
and investors concluded that there would be a significant future shortage of
longer maturing US Treasury securities. These factors helped push US Treasury
bond yields lower. By the end of December, US Treasury bond yields declined to
5.45%, their lowest monthly closing level in almost two years.
Citing declining consumer confidence and weakening industrial production and
retail sales growth, the Federal Reserve Board lowered short-term interest rates
by 50 basis points twice during January 2001. This action triggered a
significant rebound in many US equity indexes, reducing the appeal of many US
fixed-income securities. Additionally, many investors sold US Treasury bonds to
realize recent profits believing that the Federal Reserve Board's actions in
January 2001, as well as those anticipated in the near future, would quickly
restore US economic growth to earlier levels. By the end of the six-month period
ended January 31, 2001, US Treasury bond yields declined overall by nearly 30
basis points to close the period at 5.50%.
Long-term tax-exempt bonds also responded well to the positive economic
environment that developed during the last six months. While municipal bond
yields followed a downward pattern similar to that of US Treasury bonds,
tax-exempt bond price volatility was significantly reduced. Municipal bond
yields traded in a relatively narrow range, generally declining steadily
throughout the last six months. Overall investor demand for municipal bonds has
remained very positive, allowing tax-exempt bond yields, as measured by the Bond
Buyer Revenue Bond Index, to decline more than 40 basis points to end the period
at 5.43%, their lowest monthly closing level in over 18 months.
New long-term tax-exempt issuance has continued to decline on an annual basis,
although declines in bond yields have triggered a recent increase in municipal
underwritings. Most of this recent increase in tax-exempt issuance was
underwritten in January 2001. Lower bond yields were responsible for the
significant increase in refunding activity. Local and state issuers used the
recent period of lower bond yields as an opportunity to refinance outstanding,
higher-couponed debt issues at lower rates. Historically, January monthly
underwritings are among the lowest monthly issuance of the year. Despite the
surge in January issuance, long-term tax-exempt bond yields were still able to
decline, underscoring the ongoing positive technical position the municipal
market has enjoyed in recent quarters.
The reduction in annual issuance has helped provide much of the technical
support within the tax-exempt bond market. The demand for municipal bonds came
from a number of non-traditional and conventional sources. Fortunately, the
combination of reduced annual bond issuance and ongoing demand from
non-traditional sources has been able to more than offset the decline in demand
from tax-exempt mutual funds. This favorable balance has fostered the
significant decline in municipal bond yields seen in recent months.
The outlook for the tax-exempt bond market in 2001 appears quite favorable. The
steeply positive yield curve and relatively high credit quality that the
municipal bond market offers should continue to attract retail and institutional
investors seeking both tax-exempt income and a ready substitute for relatively
scarce US Government securities. Strong state and local governmental financial
conditions also suggest that issuance should remain manageable in the coming
months. Additionally, while it appears likely that President Bush will keep his
campaign promise to lower Federal income tax rates in 2001, any legislation is
unlikely to be enacted before late summer. These factors suggest that the strong
technical position the municipal market has enjoyed is likely to continue. Given
the recent market performance by tax-exempt bonds over the past year, the strong
returns illustrate the excellent investment diversification municipal bonds can
provide to investors.
Portfolio Strategy
During the six months ended January 31, 2001, we continued to seek to reduce the
volatility of the Fund. With signs of a decline in US economic growth and
consumer confidence, there was a significant decrease in New Jersey municipal
bond interest rates beginning in November 2000 that continued through January
2001. As interest rates fell, we maintained our strategy of selling interest
rate-sensitive issues. With the proceeds, we purchased bonds with a maturity
range of 15 years-20 years. New-issue supply was down 15% compared to the same
six-month period a year ago, making Fund restructuring difficult. Going forward,
we expect to maintain the Fund's neutral position and keep the Fund fully
invested in an effort to enhance shareholder income.
In Conclusion
We appreciate your ongoing interest in MuniHoldings New Jersey Insured Fund,
Inc., and we look forward to serving your investment needs in the months and
years ahead.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Director
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ Robert D. Sneeden
Robert D. Sneeden
Vice President and Portfolio Manager
March 9, 2001
2 & 3
MuniHoldings New Jersey Insured Fund, Inc., January 31, 2001
PROXY RESULTS
During the six-month period ended January 31, 2001, MuniHoldings New Jersey
Insured Fund, Inc.'s Common Stock shareholders voted on the following proposals.
The proposals were approved at a shareholders' meeting on December 13, 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 16,760,173 895,645
Ronald W. Forbes 16,760,173 895,645
Cynthia A. Montgomery 16,746,893 908,925
Kevin A. Ryan 16,760,173 895,645
Roscoe S. Suddarth 16,760,173 895,645
Edward D. Zinbarg 16,745,113 910,705
------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
------------------------------------------------------------------------------------------------------------------------------------
2. To ratify the selection of Ernst & Young LLP as the Fund's independent
auditors for the current fiscal year. 16,943,376 237,302 475,140
------------------------------------------------------------------------------------------------------------------------------------
During the six-month period ended January 31, 2001, MuniHoldings New Jersey
Insured Fund, Inc.'s Preferred Stock (Series A-D) shareholders voted on the
following proposals. The proposals were approved at a shareholders' meeting on
January 17, 2001. The description of each proposal and number of shares voted
are as follows:
------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
------------------------------------------------------------------------------------------------------------------------------------
1. To approve the Agreement and Plan of Reorganization between the Fund and
MuniHoldings New Jersey Insured Fund IV, Inc. 6,522 218 92
------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
------------------------------------------------------------------------------------------------------------------------------------
2. To elect the Fund's Board of Directors: Terry K. Glenn 6,764 67
Ronald W. Forbes 6,764 67
Cynthia A. Montgomery 6,764 67
Kevin A. Ryan 6,764 67
Roscoe S. Suddarth 6,764 67
Edward D. Zinbarg 6,764 67
------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
------------------------------------------------------------------------------------------------------------------------------------
3. To ratify the selection of Ernst & Young LLP as the Fund's independent
auditors for the current fiscal year. 6,770 10 52
------------------------------------------------------------------------------------------------------------------------------------
During the six-month period ended January 31, 2001, MuniHoldings New Jersey
Insured Fund IV, Inc.'s Common Stock shareholders voted on the following
proposals. The proposals were approved at a shareholders' meeting on January 17,
2001. The description of each proposal and number of shares voted are as
follows:
------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
------------------------------------------------------------------------------------------------------------------------------------
1. To approve the Agreement and Plan of Reorganization between the Fund and
MuniHoldings New Jersey Insured Fund, Inc. 1,650,661 41,589 42,116
------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
------------------------------------------------------------------------------------------------------------------------------------
2. To elect the Fund's Board of Directors: Terry K. Glenn 2,938,499 49,235
Ronald W. Forbes 2,938,499 49,235
Cynthia A. Montgomery 2,937,359 50,376
Kevin A. Ryan 2,938,499 49,235
Roscoe S. Suddarth 2,938,499 49,235
Edward D. Zinbarg 2,938,499 49,235
------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
------------------------------------------------------------------------------------------------------------------------------------
3. To ratify the selection of Deloitte & Touche LLP as the Fund's independent
auditors for the current fiscal year. 2,893,832 38,787 55,115
------------------------------------------------------------------------------------------------------------------------------------
During the six-month period ended January 31, 2001, MuniHoldings New Jersey
Insured Fund IV, Inc.'s Preferred Stock shareholders voted on the following
proposals. The proposals were approved at a shareholders' meeting on January 17,
2001. The description of each proposal and number of shares voted are as
follows:
------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
------------------------------------------------------------------------------------------------------------------------------------
1. To approve the Agreement and Plan of Reorganization between the Fund and
MuniHoldings New Jersey Insured Fund, Inc. 1,097 0 0
------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
------------------------------------------------------------------------------------------------------------------------------------
2. To elect the Fund's Board of Directors: Terry K. Glenn 1,097 0
Ronald W. Forbes 1,097 0
Cynthia A. Montgomery 1,097 0
Kevin A. Ryan 1,097 0
Roscoe S. Suddarth 1,097 0
Edward D. Zinbarg 1,097 0
------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
------------------------------------------------------------------------------------------------------------------------------------
3. To ratify the selection of Deloitte & Touche LLP as the Fund's independent
auditors for the current fiscal year. 1,097 0 0
------------------------------------------------------------------------------------------------------------------------------------
4 & 5
MuniHoldings New Jersey Insured Fund, Inc., January 31, 2001
SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
====================================================================================================================================
Delaware--0.5% AAA Aaa $ 2,005 Delaware River and Bay Authority Revenue Bonds, Series A,
5.625% due 1/01/2018 (a) $ 2,131
====================================================================================================================================
New Jersey--83.2% Camden County, New Jersey, Improvement Authority, Lease Revenue Bonds (c):
AAA Aaa 1,540 5.50% due 9/01/2016 1,620
AAA Aaa 2,635 5.375% due 9/01/2019 2,703
---------------------------------------------------------------------------------------------------------------
NR* Aaa 430 Carteret, New Jersey, Board of Education, COP, 6% due 1/15/2024 (d) 469
---------------------------------------------------------------------------------------------------------------
AAA Aaa 6,260 Casino Reinvestment Development Authority, New Jersey, Parking Fee
Revenue Bonds, Series A, 5.25% due 10/01/2017 (c) 6,376
---------------------------------------------------------------------------------------------------------------
Delaware River Port Authority of Pennsylvania and
New Jersey Revenue Bonds (c):
AAA Aaa 5,000 5.50% due 1/01/2012 5,402
AAA Aaa 3,250 5.625% due 1/01/2013 3,523
AAA Aaa 4,365 6% due 1/01/2018 4,774
AAA Aaa 5,500 6% due 1/01/2019 6,016
---------------------------------------------------------------------------------------------------------------
AAA Aaa 7,895 East Orange, New Jersey, Board of Education, COP,
5.50% due 8/01/2012 (c) 8,635
---------------------------------------------------------------------------------------------------------------
NR* Aaa 1,000 East Orange, New Jersey, Water Utility, GO, Refunding,
5.70% due 6/15/2022 (a) 1,055
---------------------------------------------------------------------------------------------------------------
NR* Aaa 4,000 Essex County, New Jersey, Improvement Authority, Lease Revenue Bonds
(Correctional Facility Project), 6% due 10/01/2025 (b) 4,361
---------------------------------------------------------------------------------------------------------------
AAA Aaa 3,300 Essex County, New Jersey, Improvement Authority, Lease Revenue Refunding
Bonds (County Jail and Youth House Project), 5.35% due 12/01/2024 (a) 3,350
---------------------------------------------------------------------------------------------------------------
AAA Aaa 2,705 Essex County, New Jersey, Improvement Authority, Utility System Revenue
Bonds (East Orange Franchise), 6% due 7/01/2018 (d) 2,942
---------------------------------------------------------------------------------------------------------------
Ewing Township, New Jersey, School District, School GO (b):
NR* Aaa 1,805 5.30% due 8/01/2019 1,838
NR* Aaa 1,780 5.30% due 8/01/2020 1,810
---------------------------------------------------------------------------------------------------------------
AAA Aaa 765 Jersey City, New Jersey, GO, Refunding, Quality School, Series A,
5.375% due 9/01/2017 798
---------------------------------------------------------------------------------------------------------------
Lafayette Yard, New Jersey, Community Development Revenue Bonds
(Hotel/Conference Center Project--Trenton) (d):
NR* Aaa 1,125 6.125% due 4/01/2016 1,257
NR* Aaa 4,250 6% due 4/01/2029 4,632
---------------------------------------------------------------------------------------------------------------
AAA Aaa 825 Lopatcong Township, New Jersey, Board of Education, GO,
5.70% due 7/15/2025 (c) 872
---------------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Marlboro Township, New Jersey, Board of Education, GO,
5.25% due 7/15/2017 (c) 1,025
---------------------------------------------------------------------------------------------------------------
Middlesex County, New Jersey, COP (d):
AAA Aaa 3,030 5.25% due 6/15/2023 3,054
AAA Aaa 2,350 Refunding, 5% due 2/15/2019 2,340
---------------------------------------------------------------------------------------------------------------
AA+ Aaa 5,270 Middlesex County, New Jersey, Improvement Authority, Lease Revenue
Bonds (Educational Services Commission Projects), 6% due 7/15/2025 5,767
---------------------------------------------------------------------------------------------------------------
AAA Aaa 500 Middlesex County, New Jersey, Improvement Authority Revenue Bonds
(Senior Citizens Housing Project), AMT, 5.50% due 9/01/2030 (a) 511
---------------------------------------------------------------------------------------------------------------
Monmouth County, New Jersey, Improvement Authority,
Revenue Refunding Bonds (a):
AAA Aaa 1,540 5.35% due 12/01/2017 1,595
AAA Aaa 1,470 5.375% due 12/01/2018 1,519
---------------------------------------------------------------------------------------------------------------
AAA Aaa 4,395 New Brunswick, New Jersey, Housing Authority, Lease Revenue
Refunding Bonds, 4.625% due 7/01/2024 (b) 4,040
---------------------------------------------------------------------------------------------------------------
A1+ P1 100 New Jersey EDA, Economic Development Revenue Refunding Bonds
(Stolthaven Project), VRDN, Series A, 4.80% due 1/15/2018 (f) 100
---------------------------------------------------------------------------------------------------------------
BBB- NR* 4,625 New Jersey EDA, First Mortgage Revenue Refunding Bonds
(Fellowship Village), Series A, 5.50% due 1/01/2025 3,729
---------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 New Jersey EDA, Lease Revenue Bonds (University of Medicine
and Dentistry-International Center for Public Health Project),
6% due 6/01/2032 (a) 5,409
---------------------------------------------------------------------------------------------------------------
A1+c VMIG1+ 1,000 New Jersey EDA, Natural Gas Facilities Revenue Bonds
(New Jersey Natural Gas Co. Project),
VRDN, AMT, Series C, 4.20% due 4/01/2033 (a)(f) 1,000
---------------------------------------------------------------------------------------------------------------
New Jersey EDA, Natural Gas Facilities Revenue Refunding Bonds,
AMT, Series A:
AAA Aaa 18,920 (NUI Corporation Projects), 5.70% due 6/01/2032 (d) 19,675
A1+c VMIG1+ 3,300 (New Jersey Natural Gas Co. Project), VRDN,
4.85% due 8/01/2030 (a)(f) 3,300
---------------------------------------------------------------------------------------------------------------
AAA Aaa 6,155 New Jersey EDA, Revenue Bonds (Transportation Project),
Sub-Lease, Series A, 6% due 5/01/2016 (c) 6,697
---------------------------------------------------------------------------------------------------------------
New Jersey EDA, State Lease Revenue Bonds (State Office Buildings
Projects)(a):
AAA Aaa 3,000 6% due 6/15/2015 3,319
AAA Aaa 4,620 6.25% due 6/15/2020 5,146
---------------------------------------------------------------------------------------------------------------
New Jersey EDA, Water Facilities Revenue Bonds, AMT:
AAA Aaa 11,630 (American Water Company Inc.), Series A, 5.25% due 7/01/2038 (b) 11,498
AAA Aaa 14,800 (Middlesex Water Company Project), 5.35% due 2/01/2038 14,848
---------------------------------------------------------------------------------------------------------------
New Jersey EDA, Water Facilities Revenue Refunding Bonds
(United Water of New Jersey Inc. Project), VRDN (a)(f):
A1+c VMIG1+ 10,900 Series A, 4.80% due 11/01/2026 10,900
A1+c VMIG1+ 2,000 Series B, 4.95% due 11/01/2025 2,000
---------------------------------------------------------------------------------------------------------------
AAA Aaa 2,820 New Jersey Health Care Facilities Financing Authority Revenue Bonds
(Society of the Valley Hospital), 5.375% due 7/01/2025 (a) 2,856
---------------------------------------------------------------------------------------------------------------
New Jersey Health Care Facilities Financing Authority,
Revenue Refunding Bonds:
AAA Aaa 6,750 (Atlantic Health Systems Hospital Corporation), Series A,
5% due 7/01/2027 (a) 6,524
AAA Aaa 2,525 (Medical Center at Princeton Obligation Group), 5% due 7/01/2023 (a) 2,459
AAA Aaa 4,525 (Virtua Health Issue), 4.50% due 7/01/2028 (c) 4,015
---------------------------------------------------------------------------------------------------------------
AAA Aaa 2,400 New Jersey Sports and Exposition Authority, State Contract Revenue Bonds,
Series A, 6% due 3/01/2013 (d) 2,683
---------------------------------------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority Revenue Bonds
(Capital Improvement Fund), Series A (c):
AAA Aaa 8,905 5.75% due 9/01/2017 9,591
AAA Aaa 9,420 5.75% due 9/01/2018 10,116
---------------------------------------------------------------------------------------------------------------
Portfolio
Abbreviations
To simplify the listings of MuniHoldings New Jersey Insured Fund, Inc.'s
portfolio holdings in the Schedule of Investments, we have abbreviated the names
of many of the securities according to the list at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
EDA Economic Development Authority
GO General Obligation Bonds
RIB Residual Interest Bonds
VRDN Variable Rate Demand Notes
6 & 7
MuniHoldings New Jersey Insured Fund, Inc., January 31, 2001
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
====================================================================================================================================
New Jersey New Jersey State Educational Facilities Authority,
(concluded) Revenue Refunding Bonds:
BBB Baa2 $ 2,030 (Monmouth University), Series C, 5.75% due 7/01/2017 $ 2,100
BBB Baa2 1,900 (Monmouth University), Series C, 5.80% due 7/01/2022 1,950
AAA Aaa 1,910 (Ramapo College), Series G, 4.625% due 7/01/2028 (a) 1,734
---------------------------------------------------------------------------------------------------------------
New Jersey State Highway Authority, Garden State Parkway,
General Revenue Refunding Bonds:
AAA Aaa 2,200 5.75% due 1/01/2015 (b) 2,395
AA- A1 1,900 5.625% due 1/01/2030 1,988
---------------------------------------------------------------------------------------------------------------
New Jersey State Housing and Mortgage Finance Agency,
Home Buyer Revenue Bonds (d):
AAA Aaa 6,100 AMT, Series K, 6.375% due 10/01/2026 6,350
AAA Aaa 1,555 AMT, Series M, 6.95% due 10/01/2022 1,645
AAA Aaa 1,580 AMT, Series M, 7% due 10/01/2026 1,674
AAA Aaa 1,000 AMT, Series U, 5.60% due 10/01/2012 1,068
AAA Aaa 2,820 AMT, Series U, 5.65% due 10/01/2013 3,002
AAA Aaa 3,000 AMT, Series U, 5.75% due 4/01/2018 3,139
AAA Aaa 2,320 AMT, Series U, 5.85% due 4/01/2029 2,408
AAA Aaa 2,540 Series L, 6.65% due 10/01/2014 2,677
---------------------------------------------------------------------------------------------------------------
New Jersey State Housing and Mortgage Finance Agency,
Home Buyer Revenue Refunding Bonds, AMT, Series S (d):
AAA Aaa 2,440 5.95% due 10/01/2017 2,566
AAA Aaa 2,050 6.05% due 10/01/2028 2,134
---------------------------------------------------------------------------------------------------------------
New Jersey State Transit Corporation, COP (Federal Transit Administration
Grants), Series A (a):
AAA Aaa 1,500 6% due 9/15/2013 1,667
AAA Aaa 5,000 6.125% due 9/15/2015 5,545
---------------------------------------------------------------------------------------------------------------
New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Bonds, Series A:
AA Aa2 2,740 6% due 6/15/2016 3,007
AAA Aaa 2,500 5% due 6/15/2018 (c) 2,506
AAA Aaa 1,500 4.50% due 6/15/2019 (c) 1,395
AA Aa2 7,500 6% due 6/15/2019 8,208
---------------------------------------------------------------------------------------------------------------
AAA Aaa 20,000 New Jersey State Turnpike Authority, Turnpike Revenue Refunding Bonds,
Series A, 5.75% due 1/01/2019 (d) 21,349
---------------------------------------------------------------------------------------------------------------
North Bergen Township, New Jersey, Board of Education, COP (c):
NR* Aaa 1,250 5% due 12/15/2018 1,260
NR* Aaa 1,000 6% due 12/15/2019 1,107
NR* Aaa 1,580 6.25% due 12/15/2020 1,775
NR* Aaa 1,680 6.25% due 12/15/2021 1,883
---------------------------------------------------------------------------------------------------------------
NR* Aaa 3,035 Orange Township, New Jersey, Municipal Utility and Lease, GO, Refunding,
Series C, 5.10% due 12/01/2017 (d) 3,084
---------------------------------------------------------------------------------------------------------------
Paterson, New Jersey, Public School District, COP (d):
NR* Aaa 1,980 6.125% due 11/01/2015 2,212
NR* Aaa 2,000 6.25% due 11/01/2019 2,232
---------------------------------------------------------------------------------------------------------------
NR* Aaa 1,000 Plainfield, New Jersey, Municipal Utilities Authority, Sewer Revenue Bonds,
Series A, 4.75% due 12/15/2023 (c) 938
---------------------------------------------------------------------------------------------------------------
NR* Aaa 1,000 Plainfield, New Jersey, Municipal Utilities Authority, Solid Waste Revenue
Bonds, Series A, 4.75% due 12/15/2023 (c) 938
---------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 Salem County, New Jersey, Industrial Pollution Control Financing Authority
Revenue Refunding Bonds (Atlantic City Electric Company), 6.15% due 6/01/2029 5,407
---------------------------------------------------------------------------------------------------------------
South Jersey Transportation Authority, New Jersey, Transportation System
Revenue Refunding Bonds (a):
AAA Aaa 4,000 5% due 11/01/2017 4,033
AAA Aaa 3,400 5.125% due 11/01/2022 3,404
---------------------------------------------------------------------------------------------------------------
NR* Aaa 8,650 Trenton, New Jersey, Parking Authority, Parking Revenue Bonds,
6.10% due 4/01/2026 (b) 9,455
---------------------------------------------------------------------------------------------------------------
Wall Township, New Jersey, School District, GO (c):
AAA Aaa 2,540 4.75% due 7/15/2022 2,396
AAA Aaa 1,685 4.75% due 7/15/2023 1,585
---------------------------------------------------------------------------------------------------------------
West Deptford Township, New Jersey, GO (b):
NR* Aaa 4,170 5.625% due 9/01/2026 4,360
NR* Aaa 4,410 5.625% due 9/01/2027 4,608
NR* Aaa 3,615 5.625% due 9/01/2028 3,775
NR* Aaa 4,940 5.625% due 9/01/2029 5,157
---------------------------------------------------------------------------------------------------------------
West Orange, New Jersey, Board of Education, COP (d):
NR* Aaa 2,040 5.75% due 10/01/2014 2,227
NR* Aaa 3,590 6% due 10/01/2024 3,905
---------------------------------------------------------------------------------------------------------------
AAA Aaa 1,600 West Windsor-Plainsboro, New Jersey, Regional School District,
GO, 5.50% due 12/01/2013 (b) 1,696
====================================================================================================================================
New York--7.6% AAA Aaa 4,750 Port Authority of New York and New Jersey, Consolidated Revenue
Refunding Bonds, AMT, 119th Series, 5.50% due 9/15/2019 (b) 4,875
---------------------------------------------------------------------------------------------------------------
AAA NR* 7,500 Port Authority of New York and New Jersey Revenue Bonds,
AMT, 122nd Series, 5% due 7/15/2031 (d) 7,126
---------------------------------------------------------------------------------------------------------------
Port Authority of New York and New Jersey, Special Obligation
Revenue Bonds (JFK International Air Terminal Project),
AMT, Series 6 (d):
AAA Aaa 10,500 6.25% due 12/01/2011 12,139
AAA Aaa 4,750 5.75% due 12/01/2025 4,943
---------------------------------------------------------------------------------------------------------------
Port Authority of New York and New Jersey, Special Obligation
Revenue Refunding Bonds (Versatile Structure Obligation), VRDN (f):
A1+ VMIG1+ 200 AMT, Series 4, 4.90% due 4/01/2024 200
A1+ VMIG1+ 2,200 Series 2, 4.80% due 5/01/2019 2,200
A1+ VMIG1+ 1,400 Series 5, 4.85% due 8/01/2024 1,400
====================================================================================================================================
8 & 9
MuniHoldings New Jersey Insured Fund, Inc., January 31, 2001
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
S&P Moody's Face
Ratings Ratings Amount Issue Value
====================================================================================================================================
Puerto Rico--5.0% NR* Aaa $ 7,875 Puerto Rico Commonwealth, GO, RIB, Series 365,
7.64% due 7/01/2029 (d)(e) $ 8,746
---------------------------------------------------------------------------------------------------------------
A Baa1 6,000 Puerto Rico Commonwealth Highway and Transportation Authority,
Transportation Revenue Bonds, Series B, 6% due 7/01/2026 6,305
---------------------------------------------------------------------------------------------------------------
AAA Aaa 2,355 Puerto Rico Electric Power Authority, Power Revenue Bonds,
Series X, 5.50% due 7/01/2025 (d) 2,397
---------------------------------------------------------------------------------------------------------------
Puerto Rico Industrial Tourist, Educational, Medical
and Environmental Control Facilities Revenue Bonds, Series A:
AAA Aaa 1,780 (Hospital Auxilio Mutuo Obligation Group), 6.25% due 7/01/2024 (d) 1,897
AA Aa2 1,750 (Hospital de la Concepcion), 6.50% due 11/15/2020 1,959
------------------------------------------------------------------------------------------------------------------------------------
Total Investments (Cost--$398,457)--96.3% 412,411
Other Assets Less Liabilities--3.7% 15,636
--------
Net Assets--100.0% $428,047
========
====================================================================================================================================
(a) AMBAC Insured.
(b) FGIC Insured.
(c) FSA Insured.
(d) MBIA Insured.
(e) The interest rate is subject to change periodically and inversely based
upon prevailing market rates. The interest rate shown is the rate in
effect at January 31, 2001.
(f) The interest rate is subject to change periodically based upon prevailing
market rates. The interest rate shown is the rate in effect at January 31,
2001.
+ Highest short-term rating by Moody's Investors Service, Inc.
* Not Rated.
See Notes to Financial Statements.
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
As of January 31, 2001
=================================================================================================================================
Assets: Investments, at value (identified cost--$398,457,281) .............................. $412,410,924
Cash ............................................................................... 7,411,731
Receivables:
Securities sold .................................................................. $ 11,058,030
Interest ......................................................................... 4,898,601 15,956,631
------------
Prepaid expenses and other assets .................................................. 15,603
------------ ------------
Total assets ....................................................................... 435,794,889
------------ ------------
=================================================================================================================================
Liabilities: Payables:
Securities purchased ............................................................. 7,258,842
Dividends to shareholders ........................................................ 222,743
Investment adviser ............................................................... 168,692 7,650,277
------------
Accrued expenses ................................................................... 97,315
------------ ------------
Total liabilities .................................................................. 7,747,592
------------ ------------
=================================================================================================================================
Net Assets: Net assets ......................................................................... $428,047,297
============
=================================================================================================================================
Capital: Capital Stock (200,000,000 shares authorized):
Preferred Stock, par value $.10 per share (7,000 shares of AMPS*
issued and outstanding at $25,000 per share liquidation preference) .............. $175,000,000
Common Stock, par value $.10 per share (17,817,155 shares issued and outstanding) $ 1,781,716
Paid-in capital in excess of par ................................................... 272,256,348
Undistributed investment income--net ............................................... 1,124,831
Accumulated realized capital losses on investments--net ............................ (35,842,902)
Accumulated distributions in excess of realized capital gains on investments--net .. (226,339)
Unrealized appreciation on investments--net ........................................ 13,953,643
------------
Total--Equivalent to $14.20 net asset value per share of Common Stock
(market price--$12.95) ............................................................. 253,047,297
------------
Total capital ...................................................................... $428,047,297
============
=================================================================================================================================
* Auction Market Preferred Stock.
See Notes to Financial Statements.
10 & 11
MuniHoldings New Jersey Insured Fund, Inc., January 31, 2001
STATEMENT OF OPERATIONS
For the Six Months Ended January 31, 2001
====================================================================================================================================
Investment Interest and amortization of premium and discount earned ................ $ 11,225,269
Income:
====================================================================================================================================
Expenses: Investment advisory fees ................................................ $ 1,153,158
Commission fees ......................................................... 214,204
Accounting services ..................................................... 86,253
Professional fees ....................................................... 29,709
Transfer agent fees ..................................................... 25,292
Printing and shareholder reports ........................................ 16,963
Custodian fees .......................................................... 16,014
Directors' fees and expenses ............................................ 13,607
Listing fees ............................................................ 12,366
Pricing fees ............................................................ 8,703
Other ................................................................... 14,064
-----------
Total expenses before reimbursement ..................................... 1,590,333
Reimbursement of expenses ............................................... (158,295)
-----------
Total expenses after reimbursement ...................................... 1,432,038
------------
Investment income--net .................................................. 9,793,231
------------
====================================================================================================================================
Realized & Realized loss on investments--net ....................................... (1,628,165)
Unrealized Gain (Loss) Change in unrealized appreciation/depreciation on investments--net ...... 20,514,703
On Investments--Net: ------------
Net Increase in Net Assets Resulting from Operations .................... $ 28,679,769
=============
====================================================================================================================================
See Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS
For the Six For the
Months Ended Year Ended
January 31, July 31,
Increase (Decrease) in Net Assets: 2001 2000
==================================================================================================================================
Operations: Investment income--net ................................................... $ 9,793,231 $ 12,330,960
Realized loss on investments--net ........................................ (1,628,165) (22,774,839)
Change in unrealized appreciation/depreciation on investments--net ....... 20,514,703 23,363,613
------------ ------------
Net increase in net assets resulting from operations ..................... 28,679,769 12,919,734
------------ ------------
==================================================================================================================================
Dividends to Investment income--net:
Shareholders: Common Stock ........................................................... (6,363,468) (8,002,927)
Preferred Stock ........................................................ (3,447,274) (4,279,115)
------------ ------------
Net decrease in net assets resulting from dividends to shareholders ...... (9,810,742) (12,282,042)
------------ ------------
==================================================================================================================================
Capital Stock Proceeds from issuance of Common Stock resulting from reorganization ..... -- 132,197,334
Transactions: Proceeds from issuance of Preferred Stock resulting from reorganization .. -- 107,000,000
Offering costs resulting from issuance of Common Stock ................... (24,359) --
Offering and underwriting costs resulting from issuance of Preferred Stock 67,167 --
------------ ------------
Net increase in net assets derived from capital stock transactions ....... 42,808 239,197,334
------------ ------------
==================================================================================================================================
Net Assets: Total increase in net assets ............................................. 18,911,835 239,835,026
Beginning of period ...................................................... 409,135,462 169,300,436
------------ ------------
End of period* ........................................................... $428,047,297 $409,135,462
============ ============
==================================================================================================================================
* Undistributed investment income--net $ 1,124,831 $ 1,142,342
============ ============
==================================================================================================================================
See Notes to Financial Statements.
12 & 13
MuniHoldings New Jersey Insured Fund, Inc., January 31, 2001
FINANCIAL HIGHLIGHTS
For the For the Period
The following per share data and ratios have been derived For the Six Year Ended March 11,
from information provided in the financial statements. Months Ended July 31, 1998+
January 31, ---------------- to July 31,
Increase (Decrease) in Net Asset Value: 2001 2000 1999 1998
====================================================================================================================================
Per Share Net asset value, beginning of period ......................... $ 13.14 $ 14.47 $ 15.09 $ 15.00
Operating -------- -------- --------- --------
Performance: Investment income--net ....................................... .55 1.07 1.13 .46
Realized and unrealized gain (loss) on investments--net ...... 1.06 (1.27) (.58) .16
-------- -------- --------- --------
Total from investment operations ............................. 1.61 (.20) .55 .62
-------- -------- --------- --------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net ..................................... (.36) (.78) (.81) (.26)
Realized gain on investments--net .......................... -- -- (.01) --
In excess of realized gain on investments--net ............. -- -- (.03) --
-------- -------- --------- --------
Total dividends and distributions to Common Stock shareholders (.36) (.78) (.85) (.26)
-------- -------- --------- --------
Capital charge resulting from issuance of Common Stock ....... --@@ -- -- (.03)
-------- -------- --------- --------
Effect of Preferred Stock activity:
Dividends and distributions to Preferred Stock
shareholders:
Investment income--net ................................... (.19) (.35) (.30) (.12)
Realized gain on investments--net ........................ -- -- (.02) --
Capital charge resulting from issuance of Preferred Stock .... --@@ -- -- (.12)
-------- -------- --------- --------
Total effect of Preferred Stock activity ..................... (.19) (.35) (.32) (.24)
-------- -------- --------- --------
Net asset value, end of period ............................... $ 14.20 $ 13.14 $ 14.47 $ 15.09
======== ======== ========= ========
Market price per share, end of period ........................ $ 12.95 $11.6875 $ 13.4375 $ 15.375
======== ======== ========= ========
====================================================================================================================================
Total Investment Based on market price per share .............................. 14.14%@ (7.13%) (7.44%) 4.29%@
Return:** ======== ======== ========= ========
Based on net asset value per share ........................... 11.32%@ (3.04%) 1.56% 2.35%@
======== ======== ========= ========
====================================================================================================================================
Ratios Based on Total expenses, net of reimbursement and
Average Net excluding reorganization expenses*** ......................... 1.18%* 1.27% 1.22% .29%*
Assets of ======== ======== ========= ========
Common Stock: Total expenses, net of reimbursement*** ...................... 1.18%* 1.55% 1.22% .29%*
======== ======== ========= ========
Total expenses*** ............................................ 1.31%* 1.67% 1.31% 1.21%*
======== ======== ========= ========
Total investment income--net*** .............................. 8.06%* 8.52% 7.32% 8.17%*
======== ======== ========= ========
Amount of dividends to Preferred Stock shareholders .......... 2.84%* 2.96% 1.93% 2.14%*
======== ======== ========= ========
Investment income--net, to Common Stock shareholders ......... 5.23%* 5.56% 5.39% 6.03%*
======== ======== ========= ========
====================================================================================================================================
Ratios Based on Total expenses, net of reimbursement and
Total Average excluding reorganization expenses ............................ .68%* .72% .75% .18%*
Net Assets:+++*** ======== ======== ========= ========
Total expenses, net of reimbursement ......................... .68%* .88% .75% .18%*
======== ======== ========= ========
Total expenses ............................................... .76%* .94% .80% .76%*
======== ======== ========= ========
Total investment income--net ................................. 4.67%* 4.81% 4.48% 5.13%*
======== ======== ========= ========
====================================================================================================================================
Ratios Based on Dividends to Preferred Stock shareholders .................... 3.91%* 3.84% 3.04% 3.61%*
Average Net ======== ======== ========= ========
Assets of
Preferred Stock:
====================================================================================================================================
Supplemental Data: Net assets, net of Preferred Stock, end of period
(in thousands) ............................................... $253,047 $234,135 $ 101,300 $104,967
======== ======== ========= ========
Preferred Stock outstanding,end of period
(in thousands) ............................................... $175,000 $175,000 $ 68,000 $ 68,000
======== ======== ========= ========
Portfolio turnover ........................................... 24.96% 100.11% 64.93% 32.46%
======== ======== ========= ========
====================================================================================================================================
Leverage: Asset coverage per $1,000 .................................... $ 2,446 $ 2,338 $ 2,490 $ 2,544
======== ======== ========= ========
====================================================================================================================================
Dividends Per Series A--Investment income--net ............................. $ 456 $ 896 $ 763 $ 317
Share On ======== ======== ========== ========
Preferred Stock Series B--Investment income--net ............................. $ 505 $ 898 $ 766 $ 300
Outstanding:++ ======== ======== ========= ========
Series C--Investment income--net ............................. $ 488 $ 439 -- --
======== ======== ========= ========
Series D--Investment income--net ............................. $ 516 $ 418 -- --
======== ======== ========= ========
====================================================================================================================================
* Annualized.
** Total investment returns based on market value, which can be significantly
greater or lesser than the net asset value, may result in substantially
different returns. Total investment returns exclude the effects of sales
charges.
*** Do not reflect the effect of dividends to Preferred Stock shareholders.
+ Commencement of operations.
++ The Fund's Preferred Stock was issued on October 19, 1998 for Series A and
B and March 6, 2000 for Series C and D.
+++ Includes Common and Preferred Stock average net assets.
@ Aggregate total investment return.
@@ Amount is less than $.01 per share.
See Notes to Financial Statements.
14 & 15
MuniHoldings New Jersey Insured Fund, Inc., January 31, 2001
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniHoldings New Jersey Insured Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a non-diversified, closed-end management
investment company. The Fund's financial statements are prepared in conformity
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 MUJ. The following is a summary of significant
accounting policies followed by the Fund.
(a) Valuation of investments--Municipal bonds are traded primarily in the
over-the-counter markets and are valued at the most recent bid price or yield
equivalent as obtained by the Fund's pricing service from dealers that make
markets in such securities. Financial futures contracts and options thereon,
which are traded on exchanges, are valued at their closing prices as of the
close of such exchanges. Options written or purchased are valued at the last
sale price in the case of exchange-traded options. In the case of options traded
in the over-the-counter market, valuation is the last asked price (options
written) or the last bid price (options purchased). Securities with remaining
maturities of sixty days or less are valued at amortized cost, which
approximates market value. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the direction of the Board of Directors of the Fund, including valuations
furnished by a pricing service retained by the Fund, which may utilize a matrix
system for valuations. The procedures of the pricing service and its valuations
are reviewed by the officers of the Fund under the general supervision of the
Board of Directors.
(b) Derivative financial instruments--The Fund may engage in various portfolio
investment strategies to increase or decrease the level of risk to which the
Fund is exposed more quickly and efficiently than transactions in other types of
instruments. Losses may arise due to changes in the value of the contract or if
the counterparty does not perform under the contract.
o 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.
o Options--The Fund is authorized to write covered call options and purchase
call and put options. When the Fund writes an option, an amount equal to the
premium received by the Fund is reflected as an asset and an equivalent
liability. The amount of the liability is subsequently marked to market to
reflect the current market value of the option written.
When a security is purchased or sold through an exercise of an option, the
related premium paid (or received) is added to (or deducted from) the basis of
the security acquired or deducted from (or added to) the proceeds of the
security sold. When an option expires (or the Fund enters into a closing
transaction), the Fund realizes a gain or loss on the option to the extent of
the premiums received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(c) Income taxes--It is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no Federal income tax provision is required.
(d) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Interest income is recognized on the accrual basis. Discounts and market
premiums are amortized into interest income. Realized gains and losses on
security transactions are determined on the identified cost basis. The Fund will
adopt the provisions of the AICPA Audit and Accounting Guide for Investment
Companies, as revised, effective for fiscal years beginning after December 15,
2000. As required, the Fund will amortize premiums and discounts on debt
securities under a different method effective August 1, 2001. The cumulative
effect of this accounting change will have no impact on the total net assets of
the Fund. The impact of this accounting change has not been determined, but will
result in an adjustment to cost of securities and a corresponding adjustment in
net unrealized appreciation/depreciation, based on securities held as of July
31, 2001.
(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 .55% of the Fund's average weekly net assets, including
proceeds from the issuance of Preferred Stock. For the six months ended January
31, 2001, FAM earned fees of $1,153,158, of which $158,295 was waived.
Accounting services were provided to the Fund by FAM through December 31, 2000.
Up to this date, the Fund reimbursed FAM $70,495 for these services. As of
January 1, 2001, accounting services are provided for the Fund by State Street
Bank and Trust Company ("State Street") pursuant to an agreement between State
Street and the Fund. The Fund will pay the cost of these services. In addition,
the Fund will reimburse FAM for the cost of certain additional accounting
services.
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 January 31, 2001 were $100,480,168 and $132,754,246, respectively.
Net realized losses for the six months ended January 31, 2001 and net unrealized
gains as of January 31, 2001 were as follows:
--------------------------------------------------------------------------------
Realized Unrealized
Losses Gains
--------------------------------------------------------------------------------
Long-term investments ..................... $(1,628,165) $ 13,953,643
----------- ------------
Total ..................................... $(1,628,165) $ 13,953,643
=========== ============
--------------------------------------------------------------------------------
As of January 31, 2001, net unrealized appreciation for Federal income tax
purposes aggregated $13,953,643, of which $15,661,003 related to appreciated
securities and $1,707,360 related to depreciated securities. The aggregate cost
of investments at January 31, 2001 for Federal income tax purposes was
$398,457,281.
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
16 & 17
MuniHoldings New Jersey Insured Fund, Inc., January 31, 2001
NOTES TO FINANCIAL STATEMENTS (concluded)
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 January 31, 2001
remained constant and during the year ended July 31, 2000 increased by
10,816,659 as a result of reorganization.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred Stock of the
Fund, with a par value of $.10 per share and a liquidation preference of $25,000
per share, that entitle their holders to receive cash dividends at an annual
rate that may vary for the successive dividend periods. The yields in effect at
January 31, 2001 were Series A, 3.95%; Series B, 4.05%; Series C, 3.09% and
Series D, 3.50%.
Shares issued and outstanding during the six months ended January 31, 2001
remained constant and during the year ended July 31, 2000 increased by 4,280 as
a result of reorganization.
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 January 31, 2001, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, an affiliate of FAM, earned $102,992 as
commissions.
5. Capital Loss Carryforward:
At July 31, 2000, the Fund had a net capital loss carryforward of approximately
$7,536,000, of which $523,000 expires in 2006, $6,464,000 expires in 2007 and
$549,000 expires in 2008. This amount will be available to offset like amounts
of any future taxable gains.
6. Reorganization Plan:
On March 2, 2001, the Fund acquired all of the net assets of MuniHoldings New
Jersey Insured Fund IV, Inc. pursuant to a plan of reorganization approved by
the Board of Directors and shareholders.
7. Subsequent Event:
On February 7, 2001, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.060419 per share,
payable on February 23, 2001 to shareholders of record as of February 16, 2001.
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 particular 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 January 31, 2001 were as
follows:
-------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
-------------------------------------------------------
AAA/Aaa .................................. 84.6%
AA/Aa .................................... 3.5
A/A ...................................... 1.5
BBB/Baa .................................. 1.8
Other* ................................... 4.9
-------------------------------------------------------
* Temporary investments in short-term municipal securities.
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Roscoe S. Suddarth, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Vincent R. Giordano, Senior Vice President
Robert A. DiMella, Vice President
Kenneth A. Jacob, Vice President
Robert D. Sneeden, Vice President
Donald C. Burke, Vice President and Treasurer
Jodi M. Pinedo, Secretary
--------------------------------------------------------------------------------
Arthur Zeikel, Director of MuniHoldings New Jersey Insured Fund, Inc., has
recently retired. The Fund's Board of Directors wishes Mr. Zeikel well in his
retirement.
--------------------------------------------------------------------------------
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
MUJ
18 & 19
[LOGO] Merrill Lynch Investment Managers
[GRAPHIC]
MuniHoldings New Jersey Insured Fund, Inc. seeks to provide shareholders with
current income exempt from Federal income tax and New Jersey personal income
taxes by investing in a portfolio of long-term, investment-grade municipal
obligations the interest on which, in the opinion of bond counsel to the issuer,
is exempt from Federal income tax and New Jersey personal income taxes.
This report, including the financial information herein, is transmitted to
shareholders of MuniHoldings 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.
MuniHoldings New Jersey
Insured Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
[RECYCLE LOGO] Printed on post-consumer recycled paper #HOLDNJ2--1/01