UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-07138
Name of Fund: MuniYield New Jersey Insured Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Terry K. Glenn, President,
MuniYield New Jersey Insured Fund, Inc., 800 Scudders Mill
Road, Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011,
Princeton, NJ, 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 10/31/04
Date of reporting period: 11/01/03 - 10/31/04
Item 1 - Report to Stockholders
(BULL LOGO)
Merrill Lynch Investment Managers
www.mlim.ml.com
MuniYield New Jersey
Insured Fund, Inc.
Annual Report
October 31, 2004
MuniYield New Jersey Insured Fund, Inc. seeks to provide
shareholders with as high a level of current income exempt from
federal income tax and New Jersey personal 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 income tax and New
Jersey personal income taxes.
This report, including the financial information herein, 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 and intends to remain leveraged 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.
A description of the policies and procedures that the Fund uses
to determine how to vote proxies relating to portfolio securities
is available (1) without charge, upon request, by calling toll-free
1-800-MER-FUND (1-800-637-3863; (2) at www.mutualfunds.ml.com;
and (3) on the Securities and Exchange Commission's Web site at
http://www.sec.gov. Information about how the Fund voted proxies
relating to securities held in the Fund's portfolio during the
most recent 12-month period ended June 30 is available (1) at
www.mutualfunds.ml.com; and (2) on the Securities and Exchange
Commission's Web site at http://www.sec.gov.
MuniYield New Jersey Insured Fund, Inc.
Box 9011
Princeton, NJ 08543-9011
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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, net of dividends to Preferred Stock, 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. As
of October 31, 2004, the percentage of the Fund's total net assets
invested in inverse floaters was 12.48%, before the deduction of
Preferred Stock.
Swap Agreements
The Fund may also invest in swap agreements, which are over-the-
counter contracts in which one party agrees to make periodic
payments based on the change in market value of a specified bond,
basket of bonds, or index in return for periodic payments based on a
fixed or variable interest rate or the change in market value of a
different bond, basket of bonds or index. Swap agreements may be
used to obtain exposure to a bond or market without owning or taking
physical custody of securities. Swap agreements involve the risk
that the party with whom the Fund has entered into the swap will
default on its obligation to pay the Fund and the risk that the Fund
will not be able to meet its obligations to pay the other party to
the agreement.
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
A Letter From the President
Dear Shareholder
As we ended the current reporting period, the financial markets were
facing a number of uncertainties. At the top of investors' minds
were questions about economic expansion, corporate earnings,
interest rates and inflation, politics, oil prices and terrorism.
After benefiting from aggressive monetary and fiscal policy
stimulus, some fear the U.S. economy has hit a "soft patch." In
fact, economic expansion has slowed somewhat in recent months, but
we believe it is easing into a pace of growth that is sustainable
and healthy. The favorable economic environment has served to
benefit American corporations, which have continued to post strong
earnings. Although the most impressive results were seen earlier in
the year, solid productivity, improved revenue growth and cost
discipline all point to a vital corporate sector.
In terms of inflation and interest rates, the Federal Reserve Board
(the Fed) has signaled its confidence in the economic recovery by
increasing the Federal Funds target rate four times in the past
several months, from 1% to 2% as of the November 10 Federal Open
Market Committee meeting. Inflation, for its part, has remained in
check. Investors and economists are focused on how quickly Fed
policy will move from here.
With the presidential election now behind us, any politically
provoked market angst should subside to some extent. The effect of
oil prices, however, is more difficult to predict. At around $50 per
barrel, the price of oil is clearly a concern. However, on an
inflation-adjusted basis and considering modern usage levels, the
situation is far from the crisis proportions we saw in the 1980s.
Finally, although terrorism and geopolitical tensions are realities
we are forced to live with today, history has shown us that the
financial effects of any single event tend to be short-lived.
Amid the uncertainty, the Lehman Brothers Municipal Bond Index
posted a 12-month return of +6.03% and a six-month return of
+4.79% as of October 31, 2004. Long-term bond yields were slightly
lower at October 31, 2004 than they were a year earlier. As always,
our investment professionals are closely monitoring the markets,
the economy and the overall environment in an effort to make
well-informed decisions for the portfolios they manage. For the
individual investor, the key during uncertain times is to remain
focused on the big picture. Investment success comes not from
reacting to short-term volatility, but from maintaining a long-term
perspective and adhering to the disciplines of asset allocation,
diversification and rebalancing. We encourage you to work with your
financial advisor to ensure these time-tested techniques are
incorporated into your investment plan.
We thank you for trusting Merrill Lynch Investment Managers with
your investment assets, and we look forward to serving you in the
months and years ahead.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
A Discussion With Your Fund's Portfolio Manager
We increased the Fund's use of leverage and shifted to a more
constructive view on interest rates - two moves that benefited
performance in the second half of the fiscal year.
Describe the recent market environment relative to municipal bonds.
Over the past 12 months, amid considerable monthly volatility, long-
term U.S. Treasury bond yields generally moved lower - despite an
increase in short-term interest rates by the Federal Reserve Board
(the Fed). On October 31, 2004, the 30-year Treasury bond yield
stood at 4.79%, a decline of 34 basis points (.34%) from a year
earlier. The yield on the 10-year U.S. Treasury note was 4.02%,
a 27 basis point drop during the same 12-month period.
While tax-exempt bond yields followed the same pattern as their
taxable counterparts, volatility in the municipal market was more
subdued. Yields on long-term revenue bonds, as measured by the Bond
Buyer Revenue Bond Index, fell 27 basis points during the past 12
months. According to Municipal Market Data, yields on AAA-rated
issues maturing in 30 years declined 22 basis points to 4.60%, while
yields on 10-year AAA-rated issues dropped 28 basis points to 3.40%.
While more than $360 billion in new long-term tax-exempt bonds was
issued in the past 12 months, this represented a decline of
approximately 6% compared to the previous year. In New Jersey,
however, supply has actually increased in recent months.
Describe conditions in the state of New Jersey.
In general, New Jersey's economy continued to improve over the past
year, mirroring the broad-based recovery evident throughout much of
the country. The state's 2005 fiscal year began on July 1 with a
legal challenge to the state budget. The Republican-led lawsuit
concerned New Jersey's use of revenues obtained from the
securitization of motor vehicle fees and cigarette taxes to balance
the budget. The state Supreme Court ruled such use of "deficit
bonding" unconstitutional, but the court did allow the debt
financing to continue as planned, even as it was prohibited for use
in balancing future budgets. Shortly after the court's ruling in
late July, Moody's Investors Service, Standard & Poor's (S&P) and
Fitch all downgraded New Jersey's credit rating one notch to Aa3, AA-
and AA-, respectively. All three rating agencies maintained a stable
outlook on New Jersey's debt.
During August and September 2004, the state was active in the debt
market, participating in several revenue and refunding deals.
Through the New Jersey Economic Development Authority, the state
issued $807.5 million in bonds backed by motor vehicle surcharges.
This motor vehicle securitization was rated Baa1 by Moody's and A by
S&P. The state also refinanced $1.4 billion in debt issued for the
Transportation Trust Fund Authority; providing $88 million in near-
term debt-service savings.
In September, the state announced that revenue collections for the
first two months of the 2005 fiscal year were on budget. Collections
totaled more than $3.3 billion, representing a 0.4% increase over
projections. A month earlier, Governor James McGreevey had announced
his resignation, to be effective November 15. Senate President
Richard J. Codey will assume the role of acting governor through
January 2006.
How did the Fund perform during the fiscal year in light of the
existing market conditions?
For the 12-month period ended October 31, 2004, the Common Stock of
MuniYield New Jersey Insured Fund, Inc. had net annualized yields of
6.05% and 6.17%, based on a year-end per share net asset value of
$15.46 and a per share market price of $15.16, respectively, and
$.936 per share income dividends. Over the same period, the total
investment return on the Fund's Common Stock was +7.99%, based on a
change in per share net asset value from $15.25 to $15.46, and
assuming reinvestment of ordinary income dividends.
The Fund's total return, based on net asset value, trailed the
+9.41% average return of its comparable Lipper category of New
Jersey Municipal Debt Funds for the 12-month period. (Funds in this
Lipper category limit their investment to those securities exempt
from taxation in New Jersey [double tax exempt] or a city in New
Jersey [triple tax exempt].) The Fund's underperformance for the
year is attributed to a few factors. First, the portfolio was
positioned defensively in anticipation of rising interest rates and
a weak overall environment for fixed income securities. However, the
market fared much better than expected, and our defensive posture
served to hinder relative results. As the period progressed, we
shifted to a more constructive view, including a more neutral
duration profile relative to our peers. Second, the Fund employed a
lower degree of leverage than many of its peers. However, we issued
additional Preferred Stock in August 2004, bringing the portfolio's
leverage ratio in line with our peers. This issuance, along with the
extended duration (i.e., heightened interest rate sensitivity),
resulted in better relative performance during the second half of
the reporting period. Third, as an insured portfolio, the Fund's
relatively conservative investment parameters limit its ability to
invest in speculative-grade bonds - the market's best-performing
sector during the period. The uninsured Funds in the Lipper group
were able to take advantage of the outperformance of lower-grade
bonds.
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
For the six-month period ended October 31, 2004, the total
investment return on the Fund's Common Stock was +7.43%, based on a
change in per share net asset value from $14.86 to $15.46, and
assuming reinvestment of ordinary income dividends. The Fund's total
return for the six-month period slightly exceeded the +7.27% average
return of the Lipper category.
For a description of the Fund's total investment return based on a
change in the per share market value of the Fund's Common Stock (as
measured by the trading price of the Fund's shares on the New York
Stock Exchange), and assuming reinvestment of dividends, please
refer to the Financial Highlights section of this report. As a
closed-end fund, the Fund's shares may trade in the secondary market
at a premium or discount to the Fund's net asset value. As a result,
total investment returns based on changes in the market value of the
Fund's Common stock may vary significantly from total investment
returns based on changes in the Fund's net asset value.
What changes were made to the portfolio during the year?
Our efforts to reposition the portfolio focused on adding longer-
dated insured bonds, especially those with maturities in the 25-year
to 30-year range, and selling some of our holdings in the 15-year to
20-year range. In our view, the longer portion of the yield curve
offered the more attractive balance of risk and reward. In addition
to enabling us to pursue relative value, investing further out on
the curve also helped accomplish our goal of extending the
portfolio's duration. With the supply of New Jersey bonds rising
nearly 12% over the past six months compared to year-ago levels, we
had sufficient opportunity to accomplish our desired restructuring.
New Jersey bonds backed by the revenues of tobacco companies were
among the market's top performers during the past six months.
Recognizing the increasing litigation risk facing this sector, we
took advantage of the strong performance by selling some of our
tobacco-related holdings at a gain. Throughout the period, the Fund
maintained minimal cash reserves as well as overweightings in
general obligation and other tax-backed bond issues.
For the six-month period ended October 31, 2004, the Fund's Auction
Market Preferred Stock (AMPS) had an average yield of 1.01% for
Series A and 1.48% for Series B. It is important to note that, even
after the recent Fed interest rate increases, the Fund's borrowing
costs remained historically very low and continued to generate a
significant income benefit to the Fund's Common Stock shareholders.
While additional Fed interest rate hikes are anticipated, the
increases are not expected to be sizeable or protracted. Most
importantly, the spread between short-term and long-term tax-exempt
interest rates has remained historically wide - wider, in fact, than
it was at the end of October 2000. Of course, should the spread
narrow, the benefits of leverage will decline, and as a result,
reduce the yield on the Fund's Common Stock. At the end of the
period, the Fund's leverage amount, due to AMPS, was 35.19% of total
net assets. (For a more complete explanation of the benefits and
risks of leveraging, see page 2 of this report to shareholders.)
How would you characterize the Fund's position at the close of the
period?
As a consequence of our restructuring efforts and additional
issuance of Preferred Stock, the portfolio's duration has been
sufficiently extended to achieve a slightly more constructive
investment stance. Barring significant changes in our market
outlook, we expect to maintain this posture. However, should it
become apparent that accelerating economic growth is likely to fuel
rising inflationary expectations, we expect to pursue measures
designed to insulate the portfolio from what would likely be a more
adverse bond market environment.
Theodore R. Jaeckel Jr.
Vice President and Portfolio Manager
November 12, 2004
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
Quality Profile (unaudited)
The quality ratings of securities in the Fund as of October 31, 2004
were as follows:
Percent of
Total
S&P Rating/Moody's Rating Investments
AAA/Aaa 82.8%
AA/Aa 1.8
A/A 4.2
BBB/Baa 10.0
Other* 1.2
* Includes portfolio holdings in short-term investments.
Dividend Policy (unaudited)
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 stable level of dividend
distributions, 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 Net Assets, which comprises part of
the financial information included in this report.
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
Schedule of Investments (In Thousands)
S&P Moody's Face
Ratings++ Ratings++ Amount Municipal Bonds Value
New Jersey--139.1%
AAA Aaa $ 1,000 Delaware River and Bay Authority Revenue Bonds, 5% due
1/01/2033 (d) $ 1,032
Delaware River Joint Toll Bridge Commission of Pennsylvania and
New Jersey, Bridge Revenue Refunding Bonds:
A- A2 1,875 5% due 7/01/2023 1,955
A- A2 1,000 5% due 7/01/2028 1,020
Delaware River Port Authority of Pennsylvania and New Jersey
Revenue Bonds:
AAA Aaa 3,000 5.40% due 1/01/2016 (b) 3,172
NR* Aaa 2,500 RIB, Series 396, 9.933% due 1/01/2019 (c)(f) 3,170
NR* Aaa 540 Essex County, New Jersey, Improvement Authority Revenue Bonds,
Series A, 5% due 10/01/2028 (b) 559
AAA Aaa 6,925 Garden State Preservation Trust, New Jersey, Capital Appreciation
Revenue Bonds, Series B, 5.12%** due 11/01/2023 (c) 2,791
Garden State Preservation Trust, New Jersey, Open Space and Farmland
Preservation Revenue Bonds, Series A (c):
AAA Aa3 2,605 5.80% due 11/01/2022 2,897
AAA Aa3 3,300 5.75% due 11/01/2028 3,803
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 2,290
AAA Aaa 1,000 Hudson County, New Jersey, COP, Refunding, 6.25% due 12/01/2016 (d) 1,238
AAA Aaa 8,250 Hudson County, New Jersey, Improvement Authority, Facility Lease
Revenue Refunding Bonds (Hudson County Lease Project), 5.375% due
10/01/2024 (b) 8,987
Jackson Township, New Jersey, School District, GO (b):
AAA Aaa 2,880 5% due 4/15/2017 3,107
AAA Aaa 5,200 5% due 4/15/2020 5,539
AAA Aaa 3,750 Jersey City, New Jersey, Sewer Authority, Sewer Revenue Refunding
Bonds, 6.25% due 1/01/2014 (a) 4,533
AAA Aaa 3,000 Middlesex County, New Jersey, COP, Refunding, 5% due 8/01/2022 (d) 3,151
Monmouth County, New Jersey, Improvement Authority, Governmental
Loan Revenue Bonds (a):
AAA Aaa 735 5.20% due 12/01/2014 817
AAA Aaa 2,305 5.25% due 12/01/2015 2,570
Monmouth County, New Jersey, Improvement Authority, Governmental
Loan Revenue Refunding Bonds (a):
AAA Aaa 1,695 5% due 12/01/2017 1,846
AAA Aaa 1,520 5% due 12/01/2018 1,650
AAA Aaa 1,540 5% due 12/01/2019 1,662
New Jersey EDA, Cigarette Tax Revenue Bonds:
BBB Baa2 1,560 5.50% due 6/15/2016 1,697
BBB Baa2 1,060 5.625% due 6/15/2019 1,118
BBB Baa2 785 5.75% due 6/15/2029 805
BBB Baa2 225 5.50% due 6/15/2031 226
BBB Baa2 465 5.75% due 6/15/2034 477
BBB- NR* 1,000 New Jersey EDA, First Mortgage Revenue Bonds (Fellowship Village),
Series C, 5.50% due 1/01/2028 983
BBB- NR* 1,700 New Jersey EDA, First Mortgage Revenue Refunding Bonds (Fellowship
Village), Series A, 5.50% due 1/01/2018 1,729
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
DRIVERS Derivative Inverse Tax-Exempt Receipts
EDA Economic Development Authority
GO General Obligation Bonds
M/F Multi-Family
RIB Residual Interest Bonds
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
Ratings++ Ratings++ Amount Municipal Bonds Value
New Jersey (continued)
New Jersey EDA, Motor Vehicle Surcharge Revenue Bonds, Series A (d):
AAA Aaa $ 3,325 4.95%** due 7/01/2021 $ 1,510
AAA Aaa 3,900 5% due 7/01/2029 4,042
AAA Aaa 8,500 5.25% due 7/01/2033 9,029
NR* Aaa 3,000 New Jersey EDA, Natural Gas Facilities Revenue Refunding Bonds
(NUI Corporation), RIB, Series 371, 10.66% due 10/01/2022 (a)(f) 3,142
AAA Aaa 6,580 New Jersey EDA, Revenue Bonds (Transportation Project Sublease),
Series A, 5.875% due 5/01/2009 (c)(e) 7,494
New Jersey EDA, School Facilities Construction Revenue Bonds:
AAA Aaa 3,390 Series 2003F, 5% due 6/15/2024 (b) 3,564
A+ A1 1,265 Series I, 5% due 9/01/2027 1,296
NR* Aaa 2,535 New Jersey EDA, Water Facilities Revenue Bonds, RIB, AMT, Series 417,
11.68% due 11/01/2034 (b)(f) 2,656
AAA Aaa 2,515 New Jersey EDA, Water Facilities Revenue Refunding Bonds (American
Water), AMT, Series B, 5.125% due 4/01/2022 (a) 2,654
New Jersey Health Care Facilities Financing Authority Revenue Bonds:
NR* Baa2 1,125 (Somerset Medical Center), 5.50% due 7/01/2033 1,140
NR* Baa1 4,000 (South Jersey Hospital), 6% due 7/01/2026 4,235
New Jersey Health Care Facilities Financing Authority, Revenue
Refunding Bonds:
A A2 615 (Atlantic City Medical Center), 6.25% due 7/01/2017 702
A A2 1,315 (Atlantic City Medical Center), 5.75% due 7/01/2025 1,414
BBB+ NR* 2,425 (Holy Name Hospital), 6% due 7/01/2025 2,517
AAA Aaa 2,250 (Meridian Health System Obligation Group), 5.25% due 7/01/2019 (c) 2,477
New Jersey Sports and Exposition Authority, Luxury Tax Revenue
Refunding Bonds (Convention Center) (d):
AAA Aaa 2,000 5% due 9/01/2017 2,162
AAA Aaa 1,000 5.50% due 3/01/2022 1,162
AAA Aaa 3,200 New Jersey State Educational Facilities Authority, Higher Education,
Capital Improvement Revenue Bonds, Series A, 5.125% due 9/01/2022 (a) 3,413
New Jersey State Educational Facilities Authority Revenue Bonds
(Rowan University), Series C (d):
AAA Aaa 1,315 5.125% due 7/01/2028 1,384
AAA Aaa 1,185 5% due 7/01/2034 1,225
New Jersey State Educational Facilities Authority Revenue Refunding
Bonds:
AAA Aaa 3,185 (Montclair State University), Series L, 5% due 7/01/2034 (d) 3,293
AAA Aaa 555 (Rowan University), Series C, 5% due 7/01/2031 (b) 571
AAA Aaa 1,440 (William Paterson University), Series E, 5.375% due 7/01/2017 (g) 1,621
AAA Aaa 1,725 (William Paterson University), Series E, 5% due 7/01/2021 (g) 1,826
AAA Aaa 3,500 New Jersey State, GO, Refunding, Series H, 5.25% due 7/01/2015 (c) 4,018
AAA Aaa 6,500 New Jersey State Higher Education Assistance Authority, Student Loan
Revenue Bonds, AMT, Series A, 5.30% due 6/01/2017 (a) 6,803
AAA Aaa 3,150 New Jersey State Housing and Mortgage Finance Agency, Home Buyer
Revenue Bonds, AMT, Series CC, 5.80% due 10/01/2020 (d) 3,355
AAA Aaa 2,530 New Jersey State Housing and Mortgage Finance Agency, M/F Housing
Revenue Refunding Bonds, Series A, 6.05% due 11/01/2020 (a) 2,601
AAA Aaa 3,850 New Jersey State Transit Corporation, COP, 6.50% due 4/01/2007 (c)(e) 4,288
New Jersey State Transportation Trust Fund Authority, Transportation
System Revenue Bonds (e):
AAA Aaa 1,500 Series A, 5% due 6/15/2008 (c) 1,640
AAA Aaa 2,750 Series B, 5% due 6/15/2007 (a) 3,006
AAA Aaa 2,160 New Jersey State Transportation Trust Fund Authority, Transportation
System Revenue Refunding Bonds, Series B, 6% due 12/15/2011 (d)(e) 2,559
AAA Aaa 2,500 New Jersey State Turnpike Authority, Turnpike Revenue Refunding Bonds,
Series A, 5.75% due 1/01/2019 (d) 2,807
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
Ratings++ Ratings++ Amount Municipal Bonds Value
New Jersey (concluded)
AAA Aaa $ 1,095 Newark, New Jersey, Housing Authority, Port Authority-Port Newark
Marine Terminal Additional Rent-Backed Revenue Bonds (City of
Newark Redevelopment Projects), 5% due 1/01/2037 (d) $ 1,124
Port Authority of New York and New Jersey, Consolidated Revenue
Bonds:
AA- A1 1,000 93rd Series, 6.125% due 6/01/2094 1,168
AAA Aaa 4,000 AMT, 97th Series, 6.65% due 1/15/2023 (b) 4,078
NR* Aaa 4,075 Port Authority of New York and New Jersey, Revenue Bonds, Trust
Receipts, AMT, Class R, Series 10, 9.654% due 1/15/2017 (c)(f) 4,634
AAA Aaa 3,180 Port Authority of New York and New Jersey, Revenue Refunding Bonds,
DRIVERS, AMT, Series 153, 8.425% due 9/15/2012 (b)(f) 3,552
A- NR* 2,200 South Jersey, New Jersey, Revenue Refunding Bonds (Port Corporation),
5% due 1/01/2023 2,287
BBB Baa3 1,000 Tobacco Settlement Financing Corporation of New Jersey, Asset
Backed Revenue Refunding Bonds, 5.75% due 6/01/2032 928
Tobacco Settlement Financing Corporation of New Jersey Revenue Bonds:
BBB Baa3 870 6.75% due 6/01/2039 852
BBB Baa3 1,715 7% due 6/01/2041 1,713
Union County, New Jersey, Utilities Authority, Senior Lease Revenue
Refunding Bonds (Ogden Martin System of Union, Inc.), AMT, Series A (a):
AAA Aaa 1,590 5.375% due 6/01/2017 1,670
AAA Aaa 1,670 5.375% due 6/01/2018 1,749
University of Medicine and Dentistry, New Jersey, Revenue Bonds,
Series A (a):
AAA Aaa 570 5.50% due 12/01/2018 649
AAA Aaa 1,145 5.50% due 12/01/2019 1,299
AAA Aaa 1,130 5.50% due 12/01/2020 1,276
AAA Aaa 865 5.50% due 12/01/2021 973
Guam--1.0%
AAA Aaa 1,210 A.B. Won Guam International Airport Authority, General Revenue
Refunding Bonds, Series A, 5.25% due 10/01/2022 (d) 1,309
Puerto Rico--11.2%
AAA Aaa 1,020 Puerto Rico Commonwealth, GO, Refunding, 5.50% due 7/01/2013 (b) 1,188
AAA Aaa 1,500 Puerto Rico Commonwealth Highway and Transportation Authority,
Transportation Revenue Refunding Bonds, Series J, 5% due 7/01/2029 (d) 1,569
AAA Aaa 1,830 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series HH,
5.25% due 7/01/2029 (c) 1,940
AAA Aaa 1,500 Puerto Rico Electric Power Authority, Power Revenue Refunding Bonds,
Series PP, 5% due 7/01/2025 (b) 1,590
NR* Aa2 2,110 Puerto Rico Industrial Tourist Educational, Medical and Environmental
Control Facilities Revenue Bonds (Ascension Health), RIB, Series 377,
10.19% due 11/15/2030 (f) 2,649
AAA NR* 5,250 Puerto Rico Public Buildings Authority Revenue Bonds, DRIVERS,
Series 211, 8.472% due 7/01/2021 (d)(f) 6,268
Total Municipal Bonds (Cost--$190,526)--151.3% 204,895
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
Schedule of Investments (concluded) (In Thousands)
Shares
Held Short-Term Securities Value
2,528 CMA New Jersey Municipal Money Fund (h) $ 2,528
Total Short-Term Securities (Cost--$2,528)--1.9% 2,528
Total Investments (Cost--$193,054+++)--153.2% 207,423
Other Assets Less Liabilities--1.1% 1,464
Preferred Stock, at Redemption Value--(54.3%) (73,517)
----------
Net Assets Applicable to Common Stock--100.0% $ 135,370
==========
(a) AMBAC Insured.
(b) FGIC Insured.
(c) FSA Insured.
(d) MBIA Insured.
(e) Prerefunded.
(f) The interest rate is subject to change periodically and inversely based
upon prevailing market rates. The interest rate shown is the rate in
effect at October 31, 2004.
(g) XL Capital Insured.
(h) Investments in companies considered to be an affiliate of the Fund
(such companies are defined as "Affiliated Companies" in Section
2(a)(3) of the Investment Company Act of 1940) were as follows:
(in Thousands)
Net Dividend
Affiliate Activity Income
CMA New Jersey Municipal
Money Fund (4,575) $23
++ Ratings of issues shown are unaudited.
+++ The cost and unrealized appreciation/depreciation of investments as
of October 31, 2004, as computed for federal income tax purposes,
were as follows:
(in Thousands)
Aggregate cost $ 192,840
==============
Gross unrealized appreciation $ 14,973
Gross unrealized depreciation (390)
--------------
Net unrealized appreciation $ 14,583
==============
* Not Rated.
** Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase by the Fund.
Forward interest rate swaps outstanding as of October 31, 2004
were as follows:
(in Thousands)
Notional Unrealized
Amount Depreciation
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate
and pay a fixed rate equal to
4.366% interest
Broker, J. P. Morgan Chase Bank
Expires August 2026 $ 3,210 $ (155)
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate
and pay a fixed rate equal to
4.099% interest
Broker, J.P. Morgan Chase Bank
Expires November 2018 $ 1,520 (62)
---------
Total $ (217)
=========
See Notes to Financial Statements.
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
Statement of Net Assets
As of October 31, 2004
Assets
Investments in unaffiliated securities, at value (identified cost--$190,526,756) $ 204,894,932
Investments in affiliated securities, at value (identified cost--$2,527,691) 2,527,691
Cash 51,938
Receivables:
Securities sold $ 4,860,300
Interest 3,312,244
Dividends from affiliates 73 8,172,617
---------------
Prepaid expenses 4,174
---------------
Total assets 215,651,352
---------------
Liabilities
Unrealized depreciation on forward interest rate swaps 216,753
Payables:
Securities purchased 6,152,609
Dividends to Common Stock shareholders 140,530
Investment adviser 97,698
Other affiliates 1,328 6,392,165
---------------
Accrued expenses 155,676
---------------
Total liabilities 6,764,594
---------------
Preferred Stock
Preferred Stock, at redemption value, par value $.05 per share on
Series A Shares and $.10 per share on Series B Shares (2,240 Series A Shares
and 700 Series B Shares of AMPS* authorized, issued and outstanding at $25,000
per share liquidation preference) 73,516,643
---------------
Net Assets Applicable to Common Stock
Net assets applicable to Common Stock $ 135,370,115
===============
Analysis of Net Assets Applicable to Common Stock
Common Stock, par value $.10 per share (8,758,488 shares issued and
outstanding) $ 875,849
Paid-in capital in excess of par 122,584,485
Undistributed investment income--net $ 2,121,107
Accumulated realized capital losses--net (4,362,749)
Unrealized appreciation--net 14,151,423
---------------
Total accumulated earnings--net 11,909,781
---------------
Total--Equivalent to $15.46 net asset value per share of Common Stock
(market price--$15.16) $ 135,370,115
===============
* Auction Market Preferred Stock.
See Notes to Financial Statements.
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
Statement of Operations
For the Year Ended October 31, 2004
Investment Income
Interest $ 10,394,422
Dividends from affiliates 22,573
---------------
Total income 10,416,995
---------------
Expenses
Investment advisory fees $ 957,343
Commission fees 148,803
Accounting services 83,123
Professional fees 58,618
Printing and shareholder reports 39,099
Transfer agent fees 38,251
Directors' fees and expenses 26,667
Listing fees 20,849
Pricing fees 11,677
Custodian fees 11,352
Other 30,776
---------------
Total expenses before reimbursement 1,426,558
Reimbursement of expenses (20,192)
---------------
Total expenses after reimbursement 1,406,366
---------------
Investment income--net 9,010,629
---------------
Realized & Unrealized Gain (Loss)--Net
Realized gain (loss) on:
Investments--net 883,634
Forward interest rate swaps and futures contracts--net (1,080,106) (196,472)
---------------
Change in unrealized appreciation/depreciation on:
Investments--net 2,168,189
Forward interest rate swaps--net (84,831) 2,083,358
--------------- ---------------
Total realized and unrealized gain--net 1,886,886
---------------
Dividends to Preferred Stock Shareholders
Investment income--net (560,277)
---------------
Net Increase in Net Assets Resulting from Operations $ 10,337,238
===============
See Notes to Financial Statements.
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
Statements of Changes in Net Assets
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 2004 2003
Operations
Investment income--net $ 9,010,629 $ 9,256,714
Realized gain (loss)--net (196,472) 351,871
Change in unrealized appreciation/depreciation--net 2,083,358 3,424
Dividends and distributions to Preferred Stock shareholders (560,277) (514,304)
--------------- ---------------
Net increase in net assets resulting from operations 10,337,238 9,097,705
--------------- ---------------
Dividends & Distributions to Common Stock Shareholders
Investment income--net (8,192,082) (8,172,716)
Realized gain--net -- (46,866)
--------------- ---------------
Net decrease in net assets resulting from dividends and distributions
to Common Stock shareholders (8,192,082) (8,219,582)
--------------- ---------------
Common Stock Transactions
Value of shares issued to Common Stock shareholders in reinvestment of
dividends and distributions 289,289 216,321
Offering and underwriting costs resulting from issuance of Preferred Stock (304,468) --
--------------- ---------------
Net decrease in net assets resulting from Capital Stock transactions (15,179) 216,321
--------------- ---------------
Net Assets Applicable to Common Stock
Total increase in net assets applicable to Common Stock 2,129,977 1,094,444
Beginning of year 133,240,138 132,145,694
--------------- ---------------
End of year* $ 135,370,115 $ 133,240,138
=============== ===============
* Undistributed investment income--net $ 2,121,107 $ 1,862,709
=============== ===============
See Notes to Financial Statements.
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
Financial Highlights
The following per share data and ratios have been derived
from information provided in the financial statements.
For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 2004 2003 2002 2001 2000
Per Share Operating Performance
Net asset value, beginning of year $ 15.25 $ 15.14 $ 15.17 $ 13.96 $ 13.48
---------- ---------- ---------- ---------- ----------
Investment income--net 1.03+++ 1.06+++ 1.07 1.04 1.03
Realized and unrealized gain (loss)--net .21 .06 (.06) 1.21 .51
Dividends and distributions to Preferred
Stock shareholders:
Investment income--net (.06) (.06) (.09) (.20) (.25)
Realized gain--net -- --++ --++ -- --
---------- ---------- ---------- ---------- ----------
Total from investment operations 1.18 1.06 .92 2.05 1.29
---------- ---------- ---------- ---------- ----------
Less dividends and distributions to
Common Stock shareholders:
Investment income--net (.94) (.94) (.94) (.84) (.81)
Realized gain--net -- (.01) (.01) -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions to Common
Stock shareholders (.94) (.95) (.95) (.84) (.81)
---------- ---------- ---------- ---------- ----------
Offering and underwriting costs resulting from
the issuance of Preferred Stock (.03) -- -- -- --
========== ========== ========== ========== ==========
Net asset value, end of year $ 15.46 $ 15.25 $ 15.14 $ 15.17 $ 13.96
========== ========== ========== ========== ==========
Market price per share, end of year $ 15.16 $ 14.39 $ 14.45 $ 15.04 $ 13.375
========== ========== ========== ========== ==========
Total Investment Return*
Based on net asset value per share. 7.99% 7.24% 6.27% 15.04% 10.27%
========== ========== ========== ========== ==========
Based on market price per share 12.23% 6.02% 2.30% 19.04% 12.80%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Common Stock
Total expenses, net of reimbursement** 1.06% 1.03% 1.07% 1.11% 1.11%
========== ========== ========== ========== ==========
Total expenses** 1.07% 1.04% 1.07% 1.11% 1.11%
========== ========== ========== ========== ==========
Total investment income--net** 6.79% 6.89% 7.04% 7.01% 7.56%
========== ========== ========== ========== ==========
Amount of dividends to Preferred Stock
shareholders .42% .38% .57% 1.33% 1.86%
========== ========== ========== ========== ==========
Investment income--net, to Common Stock
shareholders 6.37% 6.51% 6.47% 5.68% 5.70%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Common & Preferred Stock**
Total expenses, net of reimbursement .73% .73% .75% .77% .75%
========== ========== ========== ========== ==========
Total expenses .74% .73% .75% .77% .75%
========== ========== ========== ========== ==========
Total investment income--net 4.70% 4.85% 4.93% 4.86% 5.10%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Preferred Stock
Dividends to Preferred Stock shareholders .95% .91% 1.32% 3.01% 3.85%
========== ========== ========== ========== ==========
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
Financial Highlights (concluded)
The following per share data and ratios have been derived For the Year Ended October 31,
from information provided in the financial statements. 2004 2003 2002 2001 2000
Supplemental Data
Net assets applicable to Common Stock,
end of year (in thousands) $ 135,370 $ 133,240 $ 132,146 $ 131,012 $ 119,885
========== ========== ========== ========== ==========
Preferred Stock outstanding, end of year
(in thousands) $ 73,500 $ 56,000 $ 56,000 $ 56,000 $ 56,000
========== ========== ========== ========== ==========
Portfolio turnover 18.25% 24.70% 28.45% 57.25% 50.65%
========== ========== ========== ========== ==========
Leverage
Asset coverage per $1,000 $ 2,842 $ 3,379 $ 3,360 $ 3,340 $ 3,141
========== ========== ========== ========== ==========
Dividends Per Share on Preferred Stock Outstanding
Series A--Investment income--net $ 232 $ 228 $ 330 $ 753 $ 966
========== ========== ========== ========== ==========
Series B--Investment income--net*** $ 57 -- -- -- --
========== ========== ========== ========== ==========
* 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.
*** Series B was issued on August 25, 2004.
++ Amount is less than $(.01) per share.
+++ Based on average shares outstanding.
See Notes to Financial Statements.
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
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 amended, as a non-
diversified, closed-end management investment company. The Fund's
financial statements are prepared in conformity with U.S. generally
accepted accounting principles, which may require the use of
management accruals and estimates. Actual results may differ from
these estimates. The Fund determines and makes available for
publication the net asset value of its Common Stock on a daily
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 last available
bid price in the over-the-counter market or on the basis of values
as obtained by a pricing service. Pricing services use valuation
matrixes that incorporate both dealer-supplied valuations and
valuation models. The procedures of the pricing service and its
valuations are reviewed by the officers of the Fund under the
direction of the Board of Directors. Such valuations and procedures
will be reviewed periodically by the Board of Directors of the Fund.
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). Swap agreements are valued by quoted fair values
received daily by the Fund's pricing service. Short-term investments
with a remaining maturity of 60 days or less are valued at amortized
cost, which approximates market value, under which method the
investment is valued at cost and any premium or discount is
amortized on a straight line basis to maturity. Investments in open-
end investment companies are valued at their net asset value each
business day. Securities and other 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.
(b) Derivative financial instruments--The Fund may engage in various
portfolio investment strategies both to increase the return of the
Fund and to hedge, or protect, its exposure to interest rate
movements and movements in the securities markets. Losses may arise
due to changes in the value of the contract or if the counterparty
does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell
financial futures contracts and options on such futures contracts.
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 may 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.
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
Notes to Financial Statements (continued)
* Forward interest rate swaps--The Fund may enter into forward
interest rate swaps. In a forward interest rate swap, the Fund and
the counterparty agree to make periodic net payments on a specified
notional contract amount, commencing on a specified future effective
date, unless terminated earlier. When the agreement is closed, the
Fund records a realized gain or loss in an amount equal to the value
of the agreement.
(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). Realized gains and losses on security
transactions are determined on the identified cost basis. Dividend
income is recorded on the ex-dividend dates. Interest income is
recognized on the accrual basis. The Fund amortizes all premiums and
discounts on debt securities.
(e) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
(f) Offering costs--Direct expenses relating to the public offering
of the Fund's Preferred Stock were charged to capital at the time of
issuance of the shares.
(g) Reclassification--U.S. generally accepted accounting principles
require that certain components of net assets be adjusted to reflect
permanent differences between financial and tax reporting.
Accordingly, during the current year, $128 has been reclassified
between accumulated net realized capital losses and undistributed
net investment income as a result of permanent differences
attributable to taxable ordinary dividends received for tax
purposes. This reclassification has no effect on net assets or net
asset values per share.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect, wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of .50% of
the Fund's average weekly net assets, including proceeds from the
issuance of Preferred Stock. The Investment Adviser has agreed to
reimburse its management fee by the amount of management fees the
Fund pays to FAM indirectly through its investment in CMA New Jersey
Municipal Money Fund. For the year ended October 31, 2004, FAM
reimbursed the Fund in the amount of $20,192.
For the year ended October 31, 2004, Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("MLPF&S"), an affiliate of FAM, received
underwriting fees of $175,000 in connection with the issuance of the
Fund's Preferred Stock.
For the year ended October 31, 2004, the Fund reimbursed FAM $5,385
for certain 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 year ended October 31, 2004 were $57,653,641 and
$34,351,393, respectively.
4. Capital Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of 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 stock
without approval of holders of Common Stock.
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
Notes to Financial Statements (concluded)
Common Stock
Shares issued and outstanding during the years ended October 31,
2004 and October 31, 2003 increased by 18,785 and 13,926,
respectively, as a result of dividend reinvestment.
Preferred Stock
Auction Market Preferred Stock are redeemable shares of Preferred
Stock of the Fund, with a par value of $.05 per share for Series A
and $.10 per share for Series B and a liquidation preference of
$25,000 per share, plus accrued and unpaid dividends, that entitle
their holders to receive cash dividends at an annual rate that may
vary for the successive dividend periods for each series. The yields
in effect at October 31, 2004 were as follows: Series A, 1.549% and
Series B, 1.45%.
Shares issued and outstanding for the year ended October 31, 2004
increased by 700 shares from the issuance of an additional series of
preferred stock. Shares issued and outstanding for the year ended
October 31, 2003 remained constant.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from .25% to .375%,
calculated on the proceeds of each auction. For the year ended
October 31, 2004, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, an affiliate of FAM, earned $91,803 as commissions.
5. Distributions to Shareholders:
The Fund paid a tax-exempt income dividend to holders of Common
Stock in the amount of $.078000 per share on November 29, 2004 to
shareholders of record on November 12, 2004.
The tax character of distributions paid during the fiscal years
ended October 31, 2004 and October 31, 2003 was as follows:
10/31/2004 10/31/2003
Distributions paid from:
Tax-exempt income $ 8,752,359 $ 8,682,898
Ordinary income -- $ 50,988
-------------- --------------
Total distributions $ 8,752,359 $ 8,733,886
============== ==============
As of October 31, 2004, the components of accumulated earnings on a
tax basis were as follows:
Undistributed tax-exempt income--net $ 1,906,151
Undistributed long-term capital gains--net --
--------------
Total undistributed earnings--net 1,906,151
Capital loss carryforward (2,731,893)*
Unrealized gains--net 12,735,523**
--------------
Total accumulated earnings--net $ 11,909,781
==============
* On October 31, 2004, the Fund had a net capital loss carryforward
of $2,731,893, of which $492,523 expires in 2008, $1,078,250
expires in 2010 and $1,161,120 expires in 2012. This amount will
be available to offset like amounts of any future taxable gains.
** The difference between book-basis and tax-basis net unrealized
gains is attributable primarily to the tax deferral of losses on
straddles and the difference between book and tax amortization
methods for premiums and discounts on fixed income securities.
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
of MuniYield New Jersey Insured Fund, Inc.:
We have audited the accompanying statement of net assets, including
the schedule of investments, of MuniYield New Jersey Insured Fund,
Inc. as of October 31, 2004, and the related statement of operations
for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of October 31, 2004, by
correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of MuniYield New Jersey Insured Fund, Inc. as of
October 31, 2004, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in
the period then ended, and its financial highlights for each of the
five years in the period then ended, in conformity with U.S.
generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 14, 2004
Important Tax Information (unaudited)
All of the net investment income distributions paid by MuniYield New
Jersey Insured Fund, Inc. during the taxable year ended October 31,
2004 qualify as tax-exempt interest dividends for federal income tax
purposes.
Please retain this information for your records.
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
Automatic Dividend Reinvestment Plan (unaudited)
The following description of the Fund's Automatic Dividend
Reinvestment Plan (the "Plan") is sent to you annually as required
by federal securities laws.
Pursuant to the Fund's Plan, unless a holder of Common Stock
otherwise elects, all dividend and capital gains distributions will
be automatically reinvested by The Bank of New York (the "Plan
Agent"), as agent for shareholders in administering the Plan, in
additional shares of Common Stock of the Fund. Holders of Common
Stock who elect not to participate in the Plan will receive all
distributions in cash paid by check mailed directly to the
shareholder of record (or, if the shares are held in street or
other nominee name then to such nominee) by The Bank of New York,
as dividend paying agent. Such participants may elect not to
participate in the Plan and to receive all distributions of
dividends and capital gains in cash by sending written instructions
to The Bank of New York, as dividend paying agent, at the address
set forth below. Participation in the Plan is completely voluntary
and may be terminated or resumed at any time without penalty by
written notice if received by the Plan Agent not less than ten days
prior to any dividend record date; otherwise such termination will
be effective with respect to any subsequently declared dividend or
distribution.
Whenever the Fund declares an income dividend or capital gains
distribution (collectively referred to as "dividends") payable
either in shares or in cash, non-participants in the Plan will
receive cash and participants in the Plan will receive the
equivalent in shares of Common Stock. The shares will be acquired by
the Plan Agent for the participant's account, depending upon the
circumstances described below, either (i) through receipt of
additional unissued but authorized shares of Common Stock from the
Fund ("newly issued shares") or (ii) by purchase of outstanding
shares of Common Stock on the open market ("open-market purchases")
on the New York Stock Exchange or elsewhere. If on the payment date
for the dividend, the net asset value per share of the Common Stock
is equal to or less than the market price per share of the Common
Stock plus estimated brokerage commissions (such conditions being
referred to herein as "market premium"), the Plan Agent will invest
the dividend amount in newly issued shares on behalf of the
participant. The number of newly issued shares of Common Stock to be
credited to the participant's account will be determined by dividing
the dollar amount of the dividend by the net asset value per share
on the date the shares are issued, provided that the maximum
discount from the then current market price per share on the date of
issuance may not exceed 5%. If, on the dividend payment date, the
net asset value per share is greater than the market value (such
condition being referred to herein as "market discount"), the Plan
Agent will invest the dividend amount in shares acquired on behalf
of the participant in open-market purchases.
In the event of a market discount on the dividend payment date, the
Plan Agent will have until the last business day before the next
date on which the shares trade on an "ex-dividend" basis or in no
event more than 30 days after the dividend payment date (the "last
purchase date") to invest the dividend amount in shares acquired in
open-market purchases. It is contemplated that the Fund will pay
monthly income dividends. Therefore, the period during which open-
market purchases can be made will exist only from the payment date
on the dividend through the date before the next "ex-dividend" date,
which typically will be approximately ten days. If, before the Plan
Agent has completed its open-market purchases, the market price of a
share of Common Stock exceeds the net asset value per share, the
average per share purchase price paid by the Plan Agent may exceed
the net asset value of the Fund's shares, resulting in the
acquisitions of fewer shares than if the dividend had been paid in
newly issued shares on the dividend payment date. Because of the
foregoing difficulty with respect to open-market purchases, the Plan
provides that if the Plan Agent is unable to invest the full
dividend amount in open-market purchases during the purchase period
or if the market discount shifts to a market premium during the
purchase period, the Plan Agent will cease making open-market
purchases and will invest the uninvested portion of the dividend
amount in newly issued shares at the close of business on the last
purchase date determined by dividing the uninvested portion of the
dividend by the net asset value per share.
The Plan Agent maintains all shareholders' accounts in the Plan and
furnishes written confirmation of all transactions in the account,
including information needed by shareholders for tax records. Shares
in the account of each Plan participant will be held by the Plan
Agent in non-certificated form in the name of the participant, and
each shareholder's proxy will include those shares purchased or
received pursuant to the Plan. The Plan Agent will forward all proxy
solicitation materials to participants and vote proxies for shares
held pursuant to the Plan in accordance with the instructions of the
participants.
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
In the case of shareholders such as banks, brokers or nominees which
hold shares of others who are the beneficial owners, the Plan Agent
will administer the Plan on the basis of the number of shares
certified from time to time by the record shareholders as
representing the total amount registered in the record shareholder's
name and held for the account of beneficial owners who are to
participate in the Plan.
There will be no brokerage charges with respect to shares issued
directly by the Fund as a result of dividends or capital gains
distributions payable either in shares or in cash. However, each
participant will pay a pro rata share of brokerage commissions
incurred with respect to the Plan Agent's open-market purchases in
connection with the reinvestment of dividends.
The automatic reinvestment of dividends and distributions will not
relieve participants of any federal, state or local income tax that
may be payable (or required to be withheld) on such dividends.
Shareholders participating in the Plan may receive benefits not
available to shareholders not participating in the Plan. If the
market price plus commissions of the Fund's shares is above the net
asset value, participants in the Plan will receive shares of the
Fund at less than they could otherwise purchase them and will have
shares with a cash value greater than the value of any cash
distribution they would have received on their shares. If the market
price plus commissions is below the net asset value, participants
will receive distributions in shares with a net asset value greater
than the value of any cash distribution they would have received on
their shares. However, there may be insufficient shares available in
the market to make distributions in shares at prices below the net
asset value. Also, since the Fund does not redeem shares, the price
on resale may be more or less than the net asset value.
The value of shares acquired pursuant to the Plan will generally be
excluded from gross income to the extent that the cash amount
reinvested would be excluded from gross income. If, when the Fund's
shares are trading at a premium over net asset value, the Fund
issues shares pursuant to the Plan that have a greater fair market
value than the amount of cash reinvested, it is possible that all or
a portion of such discount (which may not exceed 5% of the fair
market value of the Fund's shares) could be viewed as a taxable
distribution. If the discount is viewed as a taxable distribution,
it is also possible that the taxable character of this discount
would be allocable to all the shareholders, including shareholders
who do not participate in the Plan. Thus, shareholders who do not
participate in the Plan might be required to report as ordinary
income a portion of their distributions equal to their allocable
share of the discount.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the
Plan. There is no direct service charge to participants in the Plan;
however, the Fund reserves the right to amend the Plan to include a
service charge payable by the participants.
All correspondence concerning the Plan should be directed to the
Plan Agent at The Bank of New York, Church Street Station, P.O. Box
11258, New York, NY 10286-1258, Telephone: 800-432-8224.
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission ("SEC") for the first and third
quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are
available on the SEC's Web site at http://www.sec.gov. The Fund's
Forms N-Q may also be reviewed and copied at the SEC's Public
Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330.
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
Officers and Directors (unaudited)
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name, Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
Interested Director
Terry K. Glenn* President 1999 to President of the Merrill Lynch Investment 124 Funds None
P.O. Box 9011 and present Managers, L.P. ("MLIM")/Fund Asset 157 Portfolios
Princeton, Director Management, L.P. ("FAM")-advised funds
NJ 08543-9011 since 1999; Chairman (Americas Region) of
Age: 64 MLIM from 2000 to 2002; Executive Vice
President of MLIM and FAM (which terms as
used herein include their corporate
predecessors) from 1983 to 2002; President
of FAM Distributors, Inc. ("FAMD") from
1986 to 2002 and Director thereof from 1991
to 2002; Executive Vice President and
Director of Princeton Services, Inc.
("Princeton Services") from 1993 to 2002;
President of Princeton Administrators, L.P.
from 1989 to 2002; Director of Financial
Data Services, Inc. since 1985.
* Mr. Glenn is a director, trustee or member of an advisory board of
certain other investment companies for which MLIM or FAM acts as
investment adviser. Mr. Glenn is an "interested person," as
described in the Investment Company Act, of the Fund based on his
present and former positions with MLIM, FAM, FAMD, Princeton
Services and Princeton Administrators, L.P. The Director's term is
unlimited. Directors serve until their resignation, removal or
death, or until December 31 of the year in which they turn 72. As
Fund President, Mr. Glenn serves at the pleasure of the Board of
Directors.
Independent Directors*
Donald W. Burton Director 2002 to General Partner of The Burton Partnership, 23 Funds ITC DeltaCom,
P.O. Box 9095 present Limited Partnership (an Investment 36 Portfolios Inc.; ITC Holding
Princeton, Partnership) since 1979; Managing General Company, Inc.;
NJ 08543-9095 Partner of The South Atlantic Venture Knology, Inc.;
Age: 60 Funds since 1983; Member of the Investment MainBancorp
Advisory Committee of the Florida State N.A.; PriCare,
Board of Administration since 2001. Inc.; Symbion,
Inc.
M. Colyer Crum Director 1992 to James R. Williston Professor of Investment 24 Funds Cambridge
P.O. Box 9095 present Management Emeritus, Harvard Business 37 Portfolios Bancorp
Princeton, School since 1996; James R. Williston
NJ 08543-9095 Professor of Investment Management,
Age: 72 Harvard Business School from 1971 to 1996.
Laurie Simon Hodrick Director 1999 to Professor of Finance and Economics, Graduate 23 Funds None
P.O. Box 9095 present School of Business, Columbia University 36 Portfolios
Princeton, since 1998; Associate Professor of Finance
NJ 08543-9095 and Economics, Graduate School of Business,
Age: 42 Columbia University from 1996 to 1998.
David H. Walsh Director 2003 to Consultant with Putnam Investments since 23 Funds None
P.O. Box 9095 present 1998 and employed in various capacities 36 Portfolios
Princeton, therewith from 1973 to 1992; Director,
NJ 08543-9095 The National Audubon Society since 1998;
Age: 63 Director, The American Museum of Fly
Fishing since 1997.
Fred G. Weiss Director 1998 to Managing Director of FGW Advisors, Inc. 23 Funds Watson
P.O. Box 9095 present since 1997; Vice President, Planning, 36 Portfolios Pharmaceuticals,
Princeton, Investment and Development of Warner Inc.
NJ 08543-9095 Lambert Co. from 1979 to 1997; Director
Age: 63 of the Michael J. Fox Foundation for
Parkinson's Research since 2000; Director
of BTG International PLC (a global technology
commercialization company) since 2001.
* The Director's term is unlimited. Directors serve until their
resignation, removal or death, or until December 31 of the year in
which they turn 72.
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
Officers and Directors (unaudited)(concluded)
Position(s) Length of
Held with Time
Name, Address & Age Fund Served Principal Occupation(s) During Past 5 Years
Fund Officers*
Donald C. Burke Vice 1993 to First Vice President of MLIM and FAM since 1997 and Treasurer thereof since
P.O. Box 9011 President present 1999; Senior Vice President and Treasurer of Princeton Services since 1999 and
Princeton, and and Director since 2004; Vice President of FAMD since 1999; Vice President of MLIM
NJ 08543-9011 Treasurer 1999 to and FAM from 1990 to 1997; Director of MLIM Taxation since 1990.
Age: 44 present
Kenneth A. Jacob Senior 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
P.O. Box 9011 Vice present Management) of MLIMfrom 1997 to 2000.
Princeton, President
NJ 08543-9011
Age: 53
John M. Loffredo Senior 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
P.O. Box 9011 Vice present Management) of MLIM from 1998 to 2000.
Princeton, President
NJ 08543-9011
Age: 40
Theodore R. Jaeckel, Jr. Vice 1997 to Director (Municipal Tax-Exempt Fund Management) of MLIM since 2000; Vice
P.O. Box 9011 President present President of MLIM from 1994 to 2000.
Princeton,
NJ 08543-9011
Age: 45
Jeffrey Hiller Chief 2004 to Chief Compliance Officer of the MLIM/FAM-advised funds and First Vice President
P.O. Box 9011 Compliance present and Chief Compliance Officer of MLIM since 2004; Global Director of Compliance
Princeton, Officer at Morgan Stanley Investment Management from 2002 to 2004; Managing Director and
NJ 08543-9011 Global Director of Compliance at Citigroup Asset Management from 2000 to 2002;
Age: 53 Chief Compliance Officer at Soros Fund Management in 2000; Chief Compliance
Officer at Prudential Financial from 1995 to 2000.
Alice A. Pellegrino Secretary 2004 to Director (Legal Advisory) of MLIM since 2002; Vice President of MLIM from
P.O. Box 9011 present 1999 to 2002; Attorney associated with MLIM since 1997.
Princeton,
NJ 08543-9011
Age: 44
* Officers of the Fund serve at the pleasure of the Board of Directors.
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street--11 East
New York, NY 10286
Preferred Stock:
The Bank of New York
101 Barclay Street--7 West
New York, NY 10286
NYSE Symbol
MJI
Electronic Delivery
The Fund offers electronic delivery of communications to its
shareholders. In order to receive this service, you must
register your account and provide us with e-mail information.
To sign up for this service, simply access this website
http://www.icsdelivery.com/live and follow the instructions.
When you visit this site, you will obtain a personal identification
number (PIN). You will need this PIN should you wish to update your
e-mail address, choose to discontinue this service and/or make any
other changes to the service. This service is not available for
certain retirement accounts at this time.
MUNIYIELD NEW JERSEY INSURED FUND, INC., OCTOBER 31, 2004
Item 2 - Code of Ethics - The registrant has adopted a code of
ethics, as of the end of the period covered by this report, that
applies to the registrant's principal executive officer, principal
financial officer and principal accounting officer, or persons
performing similar functions. A copy of the code of ethics
is available without charge upon request by calling toll-free
1-800-MER-FUND (1-800-637-3863).
Item 3 - Audit Committee Financial Expert - The registrant's board
of directors has determined that (i) the registrant has the
following audit committee financial experts serving on its audit
committee and (ii) each audit committee financial expert is
independent: (1) Donald W. Burton, (2) M. Colyer Crum, (3)
Laurie Simon Hodrick, (4) David H. Walsh and (5) Fred G. Weiss.
The registrant's board of directors has determined that Laurie Simon
Hodrick and M. Colyer Crum qualify as financial experts pursuant to
Item 3(c)(4) of Form N-CSR.
Ms. Hodrick has a thorough understanding of generally accepted
accounting principals, financial statements, and internal controls
and procedures for financial reporting. Ms. Hodrick earned a Ph.D.
in economics and has taught courses in finance for over 15 years.
Her M.B.A.-level course centers around the evaluation and analysis
of firms' corporate financial statements. She has also taught in
financial analysts' training programs. Ms. Hodrick has also worked
with several prominent corporations in connection with the analysis
of financial forecasts and projections and analysis of the financial
statements of those companies, serving on the Financial Advisory
Council of one of these major corporations. She has also served
as the Treasurer and Finance Chair of a 501(c)(3) organization.
Ms. Hodrick has published a number of articles in leading economic
and financial journals and is the associate editor of two leading
finance journals.
M. Colyer Crum also possesses a thorough understanding of generally
accepted accounting principals, financial statements, and internal
controls and procedures for financial reporting through a
combination of education and experience. Professor Crum was a
professor of investment management at the Harvard Business School
for 25 years. The courses taught by Professor Crum place a heavy
emphasis on the analysis of underlying company financial statements
with respect to stock selection and the analysis of credit risk in
making loans. Professor Crum has also served on a number of boards
of directors and has served on the audit committees, and in some
cases chaired the audit committee, for several major corporations
and financial institutions. For two such organizations, Professor
Crum has performed extensive investment analysis of financial
statements in connection with investment management decisions. From
these experiences, he has gained significant experience with the
establishment of reserves and accounting policies, differences
between U.S. GAAP and Canadian GAAP and executive compensation
issues.
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees - Fiscal Year Ending October 31, 2004 - $24,000
Fiscal Year Ending October 31, 2003 - $24,000
(b) Audit-Related Fees -
Fiscal Year Ending October 31, 2004 - $3,000
Fiscal Year Ending October 31, 2003 - $5,600
The nature of the services include assurance and related services
reasonably related to the performance of the audit of financial
statements not included in Audit Fees.
(c) Tax Fees - Fiscal Year Ending October 31, 2004 - $5,610
Fiscal Year Ending October 31, 2003 - $4,800
The nature of the services include tax compliance, tax advice and
tax planning.
(d) All Other Fees - Fiscal Year Ending October 31, 2004 - $0
Fiscal Year Ending October 31, 2003 - $0
(e)(1) The registrant's audit committee (the "Committee") has
adopted policies and procedures with regard to the pre-approval of
services. Audit, audit-related and tax compliance services provided
to the registrant on an annual basis require specific pre-approval
by the Committee. The Committee also must approve other non-audit
services provided to the registrant and those non-audit services
provided to the registrant's affiliated service providers that
relate directly to the operations and the financial reporting of the
registrant. Certain of these non-audit services that the Committee
believes are a) consistent with the SEC's auditor independence rules
and b) routine and recurring services that will not impair the
independence of the independent accountants may be approved by the
Committee without consideration on a specific case-by-case basis
("general pre-approval"). However, such services will only be
deemed pre-approved provided that any individual project does not
exceed $5,000 attributable to the registrant or $50,000 for all of
the registrants the Committee oversees. Any proposed services
exceeding the pre-approved cost levels will require specific pre-
approval by the Committee, as will any other services not subject to
general pre-approval (e.g., unanticipated but permissible services).
The Committee is informed of each service approved subject to
general pre-approval at the next regularly scheduled in-person board
meeting.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ending October 31, 2004 - $13,270,096
Fiscal Year Ending October 31, 2003 - $18,737,552
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's investment adviser and any entity controlling,
controlled by, or under common control with the investment adviser
that provides ongoing services to the registrant that were not pre-
approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation
S-X is compatible with maintaining the principal accountant's
independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $945,000, 0%
Item 5 - Audit Committee of Listed Registrants - The following
individuals are members of the registrant's separately-designated
standing audit committee established in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)):
Donald W. Burton
M. Colyer Crum
Laurie Simon Hodrick
David H. Walsh
Fred G. Weiss
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for
Closed-End Management Investment Companies -
Proxy Voting Policies and Procedures
Each Fund's Board of Directors/Trustees has delegated to Merrill
Lynch Investment Managers, L.P. and/or Fund Asset Management, L.P.
(the "Investment Adviser") authority to vote all proxies relating to
the Fund's portfolio securities. The Investment Adviser has adopted
policies and procedures ("Proxy Voting Procedures") with respect to
the voting of proxies related to the portfolio securities held in
the account of one or more of its clients, including a Fund.
Pursuant to these Proxy Voting Procedures, the Investment Adviser's
primary objective when voting proxies is to make proxy voting
decisions solely in the best interests of each Fund and its
shareholders, and to act in a manner that the Investment Adviser
believes is most likely to enhance the economic value of the
securities held by the Fund. The Proxy Voting Procedures are
designed to ensure that that the Investment Adviser considers the
interests of its clients, including the Funds, and not the interests
of the Investment Adviser, when voting proxies and that real (or
perceived) material conflicts that may arise between the Investment
Adviser's interest and those of the Investment Adviser's clients are
properly addressed and resolved.
In order to implement the Proxy Voting Procedures, the Investment
Adviser has formed a Proxy Voting Committee (the "Committee"). The
Committee is comprised of the Investment Adviser's Chief Investment
Officer (the "CIO"), one or more other senior investment
professionals appointed by the CIO, portfolio managers and
investment analysts appointed by the CIO and any other personnel the
CIO deems appropriate. The Committee will also include two non-
voting representatives from the Investment Adviser's Legal
department appointed by the Investment Adviser's General Counsel.
The Committee's membership shall be limited to full-time employees
of the Investment Adviser. No person with any investment banking,
trading, retail brokerage or research responsibilities for the
Investment Adviser's affiliates may serve as a member of the
Committee or participate in its decision making (except to the
extent such person is asked by the Committee to present information
to the Committee, on the same basis as other interested
knowledgeable parties not affiliated with the Investment Adviser
might be asked to do so). The Committee determines how to vote the
proxies of all clients, including a Fund, that have delegated proxy
voting authority to the Investment Adviser and seeks to ensure that
all votes are consistent with the best interests of those clients
and are free from unwarranted and inappropriate influences. The
Committee establishes general proxy voting policies for the
Investment Adviser and is responsible for determining how those
policies are applied to specific proxy votes, in light of each
issuer's unique structure, management, strategic options and, in
certain circumstances, probable economic and other anticipated
consequences of alternate actions. In so doing, the Committee may
determine to vote a particular proxy in a manner contrary to its
generally stated policies. In addition, the Committee will be
responsible for ensuring that all reporting and recordkeeping
requirements related to proxy voting are fulfilled.
The Committee may determine that the subject matter of a recurring
proxy issue is not suitable for general voting policies and requires
a case-by-case determination. In such cases, the Committee may
elect not to adopt a specific voting policy applicable to that
issue. The Investment Adviser believes that certain proxy voting
issues require investment analysis - such as approval of mergers and
other significant corporate transactions - akin to investment
decisions, and are, therefore, not suitable for general guidelines.
The Committee may elect to adopt a common position for the
Investment Adviser on certain proxy votes that are akin to
investment decisions, or determine to permit the portfolio manager
to make individual decisions on how best to maximize economic value
for a Fund (similar to normal buy/sell investment decisions made by
such portfolio managers). While it is expected that the Investment
Adviser will generally seek to vote proxies over which the
Investment Adviser exercises voting authority in a uniform manner
for all the Investment Adviser's clients, the Committee, in
conjunction with a Fund's portfolio manager, may determine that the
Fund's specific circumstances require that its proxies be voted
differently.
To assist the Investment Adviser in voting proxies, the Committee
has retained Institutional Shareholder Services ("ISS"). ISS is an
independent adviser that specializes in providing a variety of
fiduciary-level proxy-related services to institutional investment
managers, plan sponsors, custodians, consultants, and other
institutional investors. The services provided to the Investment
Adviser by ISS include in-depth research, voting recommendations
(although the Investment Adviser is not obligated to follow such
recommendations), vote execution, and recordkeeping. ISS will also
assist the Fund in fulfilling its reporting and recordkeeping
obligations under the Investment Company Act.
The Investment Adviser's Proxy Voting Procedures also address
special circumstances that can arise in connection with proxy
voting. For instance, under the Proxy Voting Procedures, the
Investment Adviser generally will not seek to vote proxies related
to portfolio securities that are on loan, although it may do so
under certain circumstances. In addition, the Investment Adviser
will vote proxies related to securities of foreign issuers only on a
best efforts basis and may elect not to vote at all in certain
countries where the Committee determines that the costs associated
with voting generally outweigh the benefits. The Committee may at
any time override these general policies if it determines that such
action is in the best interests of a Fund.
From time to time, the Investment Adviser may be required to vote
proxies in respect of an issuer where an affiliate of the Investment
Adviser (each, an "Affiliate"), or a money management or other
client of the Investment Adviser (each, a "Client") is involved.
The Proxy Voting Procedures and the Investment Adviser's adherence
to those procedures are designed to address such conflicts of
interest. The Committee intends to strictly adhere to the Proxy
Voting Procedures in all proxy matters, including matters involving
Affiliates and Clients. If, however, an issue representing a non-
routine matter that is material to an Affiliate or a widely known
Client is involved such that the Committee does not reasonably
believe it is able to follow its guidelines (or if the particular
proxy matter is not addressed by the guidelines) and vote
impartially, the Committee may, in its discretion for the purposes
of ensuring that an independent determination is reached, retain an
independent fiduciary to advise the Committee on how to vote or to
cast votes on behalf of the Investment Adviser's clients.
In the event that the Committee determines not to retain an
independent fiduciary, or it does not follow the advice of such an
independent fiduciary, the powers of the Committee shall pass to a
subcommittee, appointed by the CIO (with advice from the Secretary
of the Committee), consisting solely of Committee members selected
by the CIO. The CIO shall appoint to the subcommittee, where
appropriate, only persons whose job responsibilities do not include
contact with the Client and whose job evaluations would not be
affected by the Investment Adviser's relationship with the Client
(or failure to retain such relationship). The subcommittee shall
determine whether and how to vote all proxies on behalf of the
Investment Adviser's clients or, if the proxy matter is, in their
judgment, akin to an investment decision, to defer to the applicable
portfolio managers, provided that, if the subcommittee determines to
alter the Investment Adviser's normal voting guidelines or, on
matters where the Investment Adviser's policy is case-by-case, does
not follow the voting recommendation of any proxy voting service or
other independent fiduciary that may be retained to provide research
or advice to the Investment Adviser on that matter, no proxies
relating to the Client may be voted unless the Secretary, or in the
Secretary's absence, the Assistant Secretary of the Committee
concurs that the subcommittee's determination is consistent with the
Investment Adviser's fiduciary duties
In addition to the general principles outlined above, the Investment
Adviser has adopted voting guidelines with respect to certain
recurring proxy issues that are not expected to involve unusual
circumstances. These policies are guidelines only, and the
Investment Adviser may elect to vote differently from the
recommendation set forth in a voting guideline if the Committee
determines that it is in a Fund's best interest to do so. In
addition, the guidelines may be reviewed at any time upon the
request of a Committee member and may be amended or deleted upon the
vote of a majority of Committee members present at a Committee
meeting at which there is a quorum.
The Investment Adviser has adopted specific voting guidelines with
respect to the following proxy issues:
* Proposals related to the composition of the Board of Directors of
issuers other than investment companies. As a general matter, the
Committee believes that a company's Board of Directors (rather than
shareholders) is most likely to have access to important, nonpublic
information regarding a company's business and prospects, and is
therefore best-positioned to set corporate policy and oversee
management. The Committee, therefore, believes that the foundation
of good corporate governance is the election of qualified,
independent corporate directors who are likely to diligently
represent the interests of shareholders and oversee management of
the corporation in a manner that will seek to maximize shareholder
value over time. In individual cases, the Committee may look at a
nominee's history of representing shareholder interests as a
director of other companies or other factors, to the extent the
Committee deems relevant.
* Proposals related to the selection of an issuer's independent
auditors. As a general matter, the Committee believes that
corporate auditors have a responsibility to represent the interests
of shareholders and provide an independent view on the propriety of
financial reporting decisions of corporate management. While the
Committee will generally defer to a corporation's choice of auditor,
in individual cases, the Committee may look at an auditors' history
of representing shareholder interests as auditor of other companies,
to the extent the Committee deems relevant.
* Proposals related to management compensation and employee
benefits. As a general matter, the Committee favors disclosure of
an issuer's compensation and benefit policies and opposes excessive
compensation, but believes that compensation matters are normally
best determined by an issuer's board of directors, rather than
shareholders. Proposals to "micro-manage" an issuer's compensation
practices or to set arbitrary restrictions on compensation or
benefits will, therefore, generally not be supported.
* Proposals related to requests, principally from management, for
approval of amendments that would alter an issuer's capital
structure. As a general matter, the Committee will support requests
that enhance the rights of common shareholders and oppose requests
that appear to be unreasonably dilutive.
* Proposals related to requests for approval of amendments to an
issuer's charter or by-laws. As a general matter, the Committee
opposes poison pill provisions.
* Routine proposals related to requests regarding the formalities of
corporate meetings.
* Proposals related to proxy issues associated solely with holdings
of investment company shares. As with other types of companies, the
Committee believes that a fund's Board of Directors (rather than its
shareholders) is best-positioned to set fund policy and oversee
management. However, the Committee opposes granting Boards of
Directors authority over certain matters, such as changes to a
fund's investment objective, that the Investment Company Act
envisions will be approved directly by shareholders.
* Proposals related to limiting corporate conduct in some manner
that relates to the shareholder's environmental or social concerns.
The Committee generally believes that annual shareholder meetings
are inappropriate forums for discussion of larger social issues, and
opposes shareholder resolutions "micromanaging" corporate conduct or
requesting release of information that would not help a shareholder
evaluate an investment in the corporation as an economic matter.
While the Committee is generally supportive of proposals to require
corporate disclosure of matters that seem relevant and material to
the economic interests of shareholders, the Committee is generally
not supportive of proposals to require disclosure of corporate
matters for other purposes.
Item 8 - Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers - Not Applicable
Item 9 - Submission of Matters to a Vote of Security Holders - Not
Applicable
Item 10 - Controls and Procedures
10(a) -The registrant's certifying officers have reasonably
designed such disclosure controls and procedures to ensure material
information relating to the registrant is made known to us by others
particularly during the period in which this report is being
prepared. The registrant's certifying officers have determined that
the registrant's disclosure controls and procedures are effective
based on our evaluation of these controls and procedures as of a
date within 90 days prior to the filing date of this report.
10(b) - There were no changes in the registrant's internal control
over financial reporting (as defined in Rule 30a-3(d) under the Act
(17 CFR 270.30a-3(d)) that occurred during the second fiscal half-
year of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 11 - Exhibits attached hereto
11(a)(1) - Code of Ethics - See Item 2
11(a)(2) - Certifications - Attached hereto
11(a)(3) - Not Applicable
11(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MuniYield New Jersey Insured Fund, Inc.
By: _/s/ Terry K. Glenn_______
Terry K. Glenn,
President of
MuniYield New Jersey Insured Fund, Inc.
Date: December 13, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By: _/s/ Terry K. Glenn________
Terry K. Glenn,
President of
MuniYield New Jersey Insured Fund, Inc.
Date: December 13, 2004
By: _/s/ Donald C. Burke________
Donald C. Burke,
Chief Financial Officer of
MuniYield New Jersey Insured Fund, Inc.
Date: December 13, 2004