UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-08621
Name of Fund: MuniHoldings New Jersey Insured Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, MuniHoldings 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: 07/31/05
Date of reporting period: 08/01/04 - 01/31/05
Item 1 - Report to Stockholders
[LOGO] Merrill Lynch Investment Managers www.mlim.ml.com
MuniHoldings New Jersey
Insured Fund, Inc.
Semi-Annual Report
January 31, 2005
[LOGO] Merrill Lynch Investment Managers
MuniHoldings New Jersey Insured Fund, Inc.
The Benefits and Risks of Leveraging
MuniHoldings New Jersey Insured Fund, Inc. utilizes leverage to seek to enhance
the yield and net asset value of its Common Stock. However, these objectives
cannot be achieved in all interest rate environments. To leverage, the Fund
issues Preferred Stock, which pays dividends at prevailing short-term interest
rates, and invests the proceeds in long-term municipal bonds. The interest
earned on these investments, 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 investment principal. In addition,
inverse floaters have the effect of providing investment leverage and, as a
result, the market value of such securities will generally be more volatile than
that of fixed rate, tax-exempt securities. To the extent the Fund invests in
inverse floaters, the market value of the Fund's portfolio and the net asset
value of the Fund's shares may also be more volatile than if the Fund did not
invest in these securities. As of January 31, 2005, the percentage of the Fund's
total net assets invested in inverse floaters was 3.75%, 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 or reduce 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.
2 MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005
A Letter From the President
Dear Shareholder
The U.S. equity market ended the current reporting period in positive territory,
although not without some suspense along the way. Fixed income markets also
performed well, with high yield bond investors enjoying some of the best
returns.
Total Returns as of January 31, 2005 6-month 12-month
===================================================================================
Equities (Standard & Poor's 500 Index) +8.16% +6.23%
-----------------------------------------------------------------------------------
Fixed income (Lehman Brothers Aggregate Bond Index) +3.81 +4.16
-----------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) +4.80 +4.86
-----------------------------------------------------------------------------------
High yield bonds (Credit Suisse First Boston High Yield Index) +7.85 +9.81
-----------------------------------------------------------------------------------
Over the past year, the U.S. economy transitioned from dependence on record
monetary and fiscal stimulus to a broad-based, high-productivity,
high-profit-margin growth engine. The year also marked the end of one of the
most aggressive Federal Reserve Board (Fed) policy periods in history as
deflation concerns, prevalent at the beginning of 2004, gave way to modest
inflation scares -- notably, food prices in the spring and energy prices in the
fall.
The Fed more than doubled the federal funds rate, increasing it from 1% to 2.25%
in five separate moves between June and December 2004. Yet, even as the Fed
raised its target short-term interest rate, long-term bond yields were little
changed year over year as buying interest on the part of foreign central banks
remained strong. The yield on the 10-year Treasury note stood at 4.14% on
January 31, 2005. Despite very strong earnings growth, stocks remained in a
narrow trading range for most of 2004, but rebounded nicely in the fourth
quarter as election uncertainties and energy price concerns dissipated. January,
the first month of the new year and the final month of the current reporting
period, was a challenging one for equities as reflected in the -2.44% return of
the S&P 500 Index for the month.
As we ended the current reporting period, the economy and earnings growth were
beginning to slow and the Fed appeared poised to continue moving interest rates
higher (and, in fact, raised the federal funds rate another 25 basis points on
February 2, 2005). Progress was being monitored on many fronts in Washington,
although concerns remained about the structural problems of debt and deficits,
as reflected by a significant decline in the U.S. dollar.
Looking ahead, the environment is likely to be a challenging one for investors.
At the start of the new year, we encourage you to meet with your financial
advisor to review your goals and asset allocation and to rebalance your
portfolio, as necessary, to ensure it remains aligned with your objectives and
risk tolerance. As always, 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,
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
President and Director
MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005 3
[LOGO] Merrill Lynch Investment Managers
A Discussion With Your Fund's Portfolio Manager
The Fund provided a competitive return for the period as we focused on
extending the portfolio's average maturity by investing in longer-dated,
high-quality bonds.
Discuss the recent market environment relative to municipal bonds.
Long-term bond yields exhibited significant declines over the past six months,
even as the Federal Reserve Board (the Fed) continued to raise short-term
interest rates. The associated rise in long-term bond prices, which move
opposite to yields, came as somewhat of a surprise given the generally positive
economic environment. Gross domestic product (GDP) in the United States grew at
a rate of 4% in the third quarter of 2004 and was recently estimated at a 3.1%
rate for the fourth quarter. During all of 2004, real GDP expanded at a rate of
4%, well above the 3% growth rate registered in 2003. Nevertheless, recent
improvements in domestic business activity have been offset by inflationary
measures remaining in the 1.5% - 2% range. The Fed's measured program of
interest rate increases, which brought the federal funds rate to 2.25% by
period-end, had limited market impact as monthly U.S. employment gains remained
modest. In addition, strong currency-related demand for U.S. Treasury issues
from many foreign governments has helped bolster fixed income bond prices. By
the end of January, long-term U.S. Treasury bond yields stood at 4.59%, a
decline of 70 basis points (.70%) over the past six months. The 10-year U.S.
Treasury note yield was 4.14% at period-end, representing a decline of 45 basis
points during the reporting period.
While tax-exempt bond yields followed the same pattern as their taxable
counterparts, yield volatility in the municipal market was generally more
subdued. Long-term revenue bond yields, as measured by the Bond Buyer Revenue
Bond Index, fell 44 basis points over the past six months. According to
Municipal Market Data, AAA-rated issues maturing in 30 years saw their yields
decline 59 basis points to 4.43% while yields on AAA-rated issues maturing in 10
years declined 47 basis points to 3.48%.
Long-term tax-exempt bond yield ratios (relative to their taxable counterparts)
have remained in the 89% - 96% range, at or above their recent historic average
of 85% - 88%. These attractive yield ratios should continue to draw both
traditional and non-traditional investors to the municipal market. The positive
technical position should allow the municipal market to continue to outperform
the taxable market in the coming months.
Describe conditions in the State of New Jersey.
New Jersey has remained active in the debt market, as evidenced by a dramatic
increase in new-issue volume during the six-month period. In October, the state
issued approximately $1.5 billion in cigarette tax revenue bonds through the New
Jersey Economic Development Authority, the same agency that earlier issued
$807.5 million in motor vehicle surcharge revenue bonds. Proceeds from these two
securitizations were used to close the gap in the fiscal year 2005 budget.
The state continues to refinance and restructure its debt in an effort to
achieve short-term savings. However, with a projected budget deficit of more
than $4 billion for fiscal year 2006, it is uncertain how the bulk of the gap
will be closed. It has been widely reported that personal income taxes will not
be raised. In all, New Jersey's projected budget deficit, measured as a
percentage of general fund revenues, is among the highest in the nation for the
second consecutive year.
On a positive note, New Jersey's economy began to show signs of recovery last
year and revenue collections in fiscal year 2004 were very favorable to budget.
In response, the state increased spending in 2005. For the first five months of
fiscal year 2005, however, revenue collections were slightly unfavorable to
budget by 1.9%.
How did the Fund perform during the period?
For the six-month period ended January 31, 2005, the Common Stock of
MuniHoldings New Jersey Insured Fund, Inc. had net annualized yields of 5.94%
and 6.19%, based on a period-end per share net asset value of $15.83 and a per
share market price of $15.20, respectively, and $.474 per share income
dividends. Over the same period, the total investment return on the Fund's
Common Stock was +8.71%, based on a change in per share net asset value from
$15.03 to $15.83, and assuming reinvestment of all distributions.
The Fund's total return, based on net asset value, was on par with the +8.69%
average return of the Lipper New Jersey Municipal Debt Funds category for the
six-month period. (Funds in this Lipper category limit their investment to those
securities exempt from taxation in the State of New Jersey.) Supporting the
Fund's positive performance was our strategy of extending the portfolio's
average maturity in an effort to capitalize on what we perceived to be value in
the longer-
4 MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005
dated part of the municipal yield curve. This was accomplished by reinvesting
proceeds further out on the curve as bonds were called from the portfolio.
Similarly, we sold prerefunded bonds with effective maturities of less than 10
years and reinvested in longer-dated issues. As the yield curve flattened during
the past six months, yields inside 10 years increased while yields beyond that
range declined. Under these conditions, our strategy of unloading shorter
maturities and putting the assets to work further out on the curve benefited
performance.
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 can 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 period?
We continued with our strategy of extending the Fund's average maturity as bonds
were called from the portfolio and compelling investment opportunities arose. In
one instance, a corporate-related holding with a fairly large coupon was called
by the issuer. This presented us with an opportunity to reallocate the proceeds
into longer-dated, higher-quality issues that came to market as New Jersey
municipal issuance increased dramatically. In fact, we saw $12 billion in new
long-term debt issued in the state over the past six months -- 130% more than
the same six-month period a year ago. Much of the new-issue volume was made up
of deficit financing as the state sought to close its fiscal year 2005 budget
gap. This presented us with sufficient opportunity to accomplish our
restructuring goals and made for some attractive opportunities given the
relative inexpensiveness of the New Jersey municipal market.
In terms of sector exposure, we increased the Fund's position in housing bonds,
an area where we had been underweighted. The active issuance gave us an
opportunity to establish more of a market weighting in this sector. Importantly,
all of our acquisitions during the period were high-quality insured issues that
fit well within the Fund's more conservative investment parameters.
For the six-month period ended January 31, 2005, the Fund's Auction Market
Preferred Stock (AMPS) had average yields as follows: Series A, 1.26%; Series B,
1.31%; Series C, 1.40%; Series D, 1.32%; and Series E, 1.28%. Although the Fed's
interest rate tightening program has resulted in increases in borrowing costs,
funding levels still remain quite favorable. This, in combination with continued
steepness at the long end of the municipal yield curve, continued to provide a
significant income benefit to the Fund's Common Stock shareholders from the
leveraging of Preferred Stock. However, should the spread between short-term and
long-term interest rates narrow, the benefits of leveraging 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 37.88% 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?
We maintained a relatively neutral posture with respect to interest rates, as we
expect rates to increase, but at a measured pace. (In fact, the Fed increased
its target interest rate another 25 basis points shortly after the close of the
period, on February 2.) The portfolio's duration is on par with that of its
peers, which we believe positions the Fund to provide competitive returns
whether presented with either a rising or a falling interest rate environment.
Theodore R. Jaeckel Jr., CFA
Vice President and Portfolio Manager
February 9, 2005
MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005 5
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (in Thousands)
Face
Amount Municipal Bonds Value
===================================================================================================================================
New Jersey--155.8%
-----------------------------------------------------------------------------------------------------------------------------------
$ 1,875 Atlantic Highlands, New Jersey, Highland Regional Sewer Authority, Sewer Revenue
Refunding Bonds, 5.50% due 1/01/2020 (b) $ 2,107
---------------------------------------------------------------------------------------------------------
Camden County, New Jersey, Improvement Authority, Lease Revenue Bonds (c):
1,540 5.50% due 9/01/2010 (e) 1,735
2,635 5.375% due 9/01/2019 2,913
---------------------------------------------------------------------------------------------------------
430 Carteret, New Jersey, Board of Education, COP, 6% due 1/15/2024 (d) 490
---------------------------------------------------------------------------------------------------------
6,210 Casino Reinvestment Development Authority, New Jersey, Parking Fee Revenue Bonds,
Series A, 5.25% due 10/01/2017 (c) 6,606
---------------------------------------------------------------------------------------------------------
Delaware River and Bay Authority Revenue Bonds:
2,500 5% due 1/01/2033 (d)(k) 2,611
2,005 Series A, 5.625% due 1/01/2018 (a) 2,240
---------------------------------------------------------------------------------------------------------
4,630 Delaware River Joint Toll Bridge Commission, New Jersey, Bridge Revenue Refunding
Bonds, 5% due 7/01/2028 4,804
---------------------------------------------------------------------------------------------------------
Delaware River Port Authority of Pennsylvania and New Jersey Revenue Bonds (c):
5,000 5.50% due 1/01/2012 5,536
6,000 5.625% due 1/01/2013 6,677
500 5.75% due 1/01/2015 558
4,865 6% due 1/01/2018 5,499
5,525 6% due 1/01/2019 6,245
2,425 (Port District Project), Series B, 5.625% due 1/01/2026 2,656
---------------------------------------------------------------------------------------------------------
7,895 East Orange, New Jersey, Board of Education, COP, 5.50% due 8/01/2012 (c) 9,031
---------------------------------------------------------------------------------------------------------
1,000 East Orange, New Jersey, Water Utility, GO, Refunding, 5.70% due 6/15/2022 (a) 1,099
---------------------------------------------------------------------------------------------------------
4,000 Essex County, New Jersey, Improvement Authority, Lease Revenue Bonds (Correctional
Facility Project), 6% due 10/01/2010 (b)(e) 4,616
---------------------------------------------------------------------------------------------------------
3,300 Essex County, New Jersey, Improvement Authority, Lease Revenue Refunding Bonds
(County Jail and Youth House Project), 5.35% due 12/01/2024 (a) 3,516
---------------------------------------------------------------------------------------------------------
4,400 Essex County, New Jersey, Improvement Authority Revenue Bonds, Series A, 5%
due 10/01/2028 (b) 4,617
---------------------------------------------------------------------------------------------------------
2,705 Essex County, New Jersey, Improvement Authority, Utility System Revenue Bonds
(East Orange Franchise), 6% due 7/01/2018 (d) 3,011
---------------------------------------------------------------------------------------------------------
Garden State Preservation Trust of New Jersey, Capital Appreciation Revenue Bonds,
Series B (c):
9,000 5.12%* due 11/01/2023 3,815
10,000 5.20%* due 11/01/2025 3,791
---------------------------------------------------------------------------------------------------------
Garden State Preservation Trust of New Jersey, Open Space and Farmland
Preservation Revenue Bonds, Series A (c):
1,960 5.80% due 11/01/2021 2,226
2,730 5.80% due 11/01/2023 3,084
9,160 5.75% due 11/01/2028 10,964
---------------------------------------------------------------------------------------------------------
765 Jersey City, New Jersey, GO, Refunding, Quality School, Series A, 5.375%
due 9/01/2017 (c) 848
---------------------------------------------------------------------------------------------------------
2,230 Jersey City, New Jersey, GO, Series B, 5.25% due 9/01/2023 (c) 2,459
---------------------------------------------------------------------------------------------------------
5,250 Lafayette Yard, New Jersey, Community Development Revenue Bonds (Hotel/Conference
Center Project--Trenton), 6% due 4/01/2010 (d)(e) 6,054
---------------------------------------------------------------------------------------------------------
1,550 Middlesex County, New Jersey, COP, 5.25% due 6/15/2023 (d) 1,686
---------------------------------------------------------------------------------------------------------
1,375 Middlesex County, New Jersey, COP, Refunding, 5.50% due 8/01/2016 (d) 1,543
---------------------------------------------------------------------------------------------------------
Portfolio Abbreviations
To simplify the listings of MuniHoldings New Jersey Insured 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
VRDN Variable Rate Demand Notes
6 MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
===================================================================================================================================
New Jersey (continued)
-----------------------------------------------------------------------------------------------------------------------------------
$ 5,270 Middlesex County, New Jersey, Improvement Authority, Lease Revenue Bonds
(Educational Services Commission Projects), 6% due 7/15/2010 (e) $ 6,099
---------------------------------------------------------------------------------------------------------
500 Middlesex County, New Jersey, Improvement Authority Revenue Bonds (Senior Citizens
Housing Project), AMT, 5.50% due 9/01/2030 (a) 529
---------------------------------------------------------------------------------------------------------
Monmouth County, New Jersey, Improvement Authority, Revenue Refunding Bonds (a):
1,540 5.35% due 12/01/2017 1,709
1,470 5.375% due 12/01/2018 1,633
---------------------------------------------------------------------------------------------------------
1,000 Monroe Township, New Jersey, Municipal Utilities Authority, Middlesex County
Revenue Refunding Bonds, 5.25% due 2/01/2016 (b) 1,100
---------------------------------------------------------------------------------------------------------
2,465 New Jersey Building Authority, State Building Revenue Refunding Bonds, Series B,
5.25% due 12/15/2016 (b) 2,827
---------------------------------------------------------------------------------------------------------
New Jersey EDA, Cigarette Tax Revenue Bonds:
2,700 5.625% due 6/15/2019 2,876
2,000 5.75% due 6/15/2029 2,123
585 5.50% due 6/15/2031 608
1,180 5.75% due 6/15/2034 1,245
---------------------------------------------------------------------------------------------------------
5,000 New Jersey EDA, Lease Revenue Bonds (University of Medicine and
Dentistry--International Center for Public Health Project), 6% due 6/01/2032 (a) 5,645
---------------------------------------------------------------------------------------------------------
New Jersey EDA, Motor Vehicle Surcharge Revenue Bonds, Series A (d):
7,500 5.25% due 7/01/2026 8,559
11,105 5.25% due 7/01/2033 11,994
4,485 5% due 7/01/2034 4,705
---------------------------------------------------------------------------------------------------------
New Jersey EDA, Natural Gas Facilities Revenue Refunding Bonds, AMT (d):
18,920 (NUI Corporation Projects), Series A, 5.70% due 6/01/2032 19,874
3,155 RIB, Series 161, 9.25% due 6/01/2032 (f) 3,474
---------------------------------------------------------------------------------------------------------
New Jersey EDA, Parking Facility Revenue Bonds (Elizabeth Development Company
Project) (b):
1,430 5.60% due 10/15/2019 1,566
1,000 5.60% due 10/15/2026 1,087
---------------------------------------------------------------------------------------------------------
4,580 New Jersey EDA Revenue Bonds, DRIVERS, Series 219, 9.875% due 5/01/2016 (c)(f) 5,746
---------------------------------------------------------------------------------------------------------
7,200 New Jersey EDA, School Facilities Construction Revenue Bonds, Series A, 5.25%
due 6/15/2011 (a)(e) 8,060
---------------------------------------------------------------------------------------------------------
4,490 New Jersey EDA, School Facilities Construction Revenue Refunding Bonds, Series K,
5.25% due 12/15/2015 (b) 5,109
---------------------------------------------------------------------------------------------------------
2,500 New Jersey EDA, Solid Waste Disposal Facilities Revenue Bonds (Waste Management
Inc.), AMT, Series A, 5.30% due 6/01/2015 2,664
---------------------------------------------------------------------------------------------------------
New Jersey EDA, State Lease Revenue Bonds (State Office Buildings Projects) (a)(e):
3,000 6% due 6/15/2010 3,442
4,620 6.25% due 6/15/2010 5,357
---------------------------------------------------------------------------------------------------------
New Jersey Health Care Facilities Financing Authority Revenue Bonds:
2,820 (Society of the Valley Hospital), 5.375% due 7/01/2025 (a) 3,056
2,135 (Somerset Medical Center), 5.50% due 7/01/2033 2,165
---------------------------------------------------------------------------------------------------------
New Jersey Health Care Facilities Financing Authority, Revenue Refunding Bonds:
4,000 (AHS Hospital Corporation), Series A, 6% due 7/01/2013 (a) 4,698
1,455 (Atlantic City Medical Center), 6.25% due 7/01/2017 1,674
3,500 (Atlantic City Medical Center), 5.75% due 7/01/2025 3,796
1,775 (Holy Name Hospital), 6% due 7/01/2025 1,855
1,000 (Meridian Health System Obligation Group), 5.375% due 7/01/2024 (c) 1,092
2,215 (Saint Clare's Hospital Inc.), Series A, 4.25% due 7/01/2017 (g) 2,230
5,440 (South Jersey Hospital), 6% due 7/01/2026 5,848
---------------------------------------------------------------------------------------------------------
New Jersey Sports and Exposition Authority, Luxury Tax Revenue Refunding Bonds
(Convention Center) (d):
2,000 5.50% due 3/01/2021 2,345
1,000 5.50% due 3/01/2022 1,175
---------------------------------------------------------------------------------------------------------
2,400 New Jersey Sports and Exposition Authority, State Contract Revenue Bonds,
Series A, 6% due 3/01/2013 (d) 2,723
---------------------------------------------------------------------------------------------------------
7,500 New Jersey State Educational Facilities Authority, Higher Education, Capital
Improvement Revenue Bonds, Series A, 5.125% due 9/01/2022 (a) 8,161
---------------------------------------------------------------------------------------------------------
MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005 7
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
===================================================================================================================================
New Jersey (continued)
-----------------------------------------------------------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority Revenue Bonds:
$ 8,905 (Capital Improvement Fund), Series A, 5.75% due 9/01/2017 (c) $ 10,048
9,420 (Capital Improvement Fund), Series A, 5.75% due 9/01/2018 (c) 10,629
3,615 (Rowan University), Series C, 5.125% due 7/01/2028 (d) 3,855
3,260 (Rowan University), Series C, 5% due 7/01/2034 (d) 3,420
---------------------------------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority, Revenue Refunding Bonds:
7,510 (Montclair State University), Series L, 5% due 7/01/2034 (d) 7,878
2,375 (Rowan University), Series C, 5.25% due 7/01/2017 (b) 2,635
2,820 (Rowan University), Series C, 5.25% due 7/01/2018 (b) 3,128
2,635 (Rowan University), Series C, 5.25% due 7/01/2019 (b) 2,920
1,410 (Rowan University), Series C, 5% due 7/01/2031 (b) 1,468
4,000 (University of Medicine and Dentistry), Series B, 5.25% due 12/01/2017 (a) 4,128
---------------------------------------------------------------------------------------------------------
7,185 New Jersey State, GO, Refunding, Series L, 5.25% due 7/15/2017 (a) 8,226
---------------------------------------------------------------------------------------------------------
New Jersey State Housing and Mortgage Finance Agency, Home Buyer Revenue Bonds,
AMT, Series U (d):
1,000 5.60% due 10/01/2012 1,046
2,820 5.65% due 10/01/2013 2,952
3,000 5.75% due 4/01/2018 3,147
805 5.85% due 4/01/2029 834
---------------------------------------------------------------------------------------------------------
1,265 New Jersey State Housing and Mortgage Finance Agency, Home Buyer Revenue Refunding
Bonds, AMT, Series S, 5.95% due 10/01/2017 (d) 1,321
---------------------------------------------------------------------------------------------------------
11,225 New Jersey State Housing and Mortgage Financing Agency, Capital Fund Program
Revenue Bonds, Series A, 4.70% due 11/01/2025 (c) 11,444
---------------------------------------------------------------------------------------------------------
New Jersey State Housing and Mortgage Financing Agency, M/F Revenue Bonds,
Series D (b):
1,720 4.50% due 11/01/2019 1,728
2,590 4.60% due 11/01/2025 2,601
---------------------------------------------------------------------------------------------------------
5,000 New Jersey State Transit Corporation, COP (Federal Transit Administration Grants),
Series A, 6.125% due 9/15/2009 (a)(e) 5,675
---------------------------------------------------------------------------------------------------------
7,500 New Jersey State Transportation Trust Fund Authority, Transportation System
Revenue Bonds, Series A, 6% due 6/15/2010 (e) 8,605
---------------------------------------------------------------------------------------------------------
New Jersey State Transportation Trust Fund Authority, Transportation System
Revenue Refunding Bonds, Series B (d):
7,410 5.50% due 12/15/2015 8,567
9,165 5.50% due 12/15/2021 10,753
---------------------------------------------------------------------------------------------------------
New Jersey State Turnpike Authority, Turnpike Revenue Bonds:
7,615 Series B, 5.15%* due 1/01/2035 (a) 4,745
5,900 VRDN, Series C-2, 1.82% due 1/01/2024 (c)(i) 5,900
---------------------------------------------------------------------------------------------------------
New Jersey State Turnpike Authority, Turnpike Revenue Refunding Bonds:
20,000 Series A, 5.75% due 1/01/2010 (d)(e) 22,574
1,165 Series C, 6.50% due 1/01/2016 (d) 1,420
4,355 Series C, 6.50% due 1/01/2016 (d)(h) 5,297
4,665 Series C-1, 4.50% due 1/01/2031 (a) 4,673
---------------------------------------------------------------------------------------------------------
2,000 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) 2,084
---------------------------------------------------------------------------------------------------------
North Bergen Township, New Jersey, Board of Education, COP (c):
1,250 5% due 12/15/2018 1,347
1,000 6% due 12/15/2019 1,161
1,580 6.25% due 12/15/2020 1,850
1,680 6.25% due 12/15/2021 1,967
---------------------------------------------------------------------------------------------------------
8 MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
===================================================================================================================================
New Jersey (concluded)
-----------------------------------------------------------------------------------------------------------------------------------
$ 3,035 Orange Township, New Jersey, Municipal Utility and Lease, GO, Refunding, Series C,
5.10% due 12/01/2017 (d) $ 3,283
---------------------------------------------------------------------------------------------------------
Paterson, New Jersey, Public School District, COP (d):
1,980 6.125% due 11/01/2015 2,273
2,000 6.25% due 11/01/2019 2,307
---------------------------------------------------------------------------------------------------------
4,750 Port Authority of New York and New Jersey, Consolidated Revenue Refunding Bonds,
AMT, 119th Series, 5.50% due 9/15/2019 (b) 4,972
---------------------------------------------------------------------------------------------------------
Port Authority of New York and New Jersey, Special Obligation Revenue Bonds,
AMT (d):
2,375 DRIVERS, Series 192, 9.35% due 12/01/2025 (f) 2,699
2,165 (JFK International Air Terminal LLC), RIB, Series 157, 9.35%
due 12/01/2022 (f) 2,540
13,500 (JFK International Air Terminal LLC), Series 6, 6.25% due 12/01/2011 15,462
1,500 (JFK International Air Terminal LLC), Series 6, 6.25% due 12/01/2015 1,744
---------------------------------------------------------------------------------------------------------
South Jersey Port Corporation of New Jersey, Revenue Refunding Bonds:
3,750 4.50% due 1/01/2015 3,915
1,920 4.50% due 1/01/2016 1,990
1,500 5% due 1/01/2026 1,563
2,000 5.10% due 1/01/2033 2,075
---------------------------------------------------------------------------------------------------------
3,215 Tobacco Settlement Financing Corporation of New Jersey, Asset-Backed Revenue
Refunding Bonds, 5.75% due 6/01/2032 3,120
---------------------------------------------------------------------------------------------------------
4,755 Tobacco Settlement Financing Corporation of New Jersey Revenue Bonds, 7%
due 6/01/2041 4,915
---------------------------------------------------------------------------------------------------------
4,325 Trenton, New Jersey, Parking Authority, Parking Revenue Bonds, DRIVERS,
Series 221, 10.76% due 4/01/2010 (b)(e)(f) 5,617
---------------------------------------------------------------------------------------------------------
4,740 University of Medicine and Dentistry, New Jersey, Revenue Bonds, Series A, 5.50%
due 12/01/2027 (a) 5,339
---------------------------------------------------------------------------------------------------------
University of Medicine and Dentistry of New Jersey, COP (d):
2,000 5% due 6/15/2029 2,094
4,735 5% due 6/15/2036 4,945
---------------------------------------------------------------------------------------------------------
8,580 West Deptford Township, New Jersey, GO, 5.625% due 9/01/2010 (b)(e) 9,720
---------------------------------------------------------------------------------------------------------
West Orange, New Jersey, Board of Education, COP (d)(e):
2,040 5.75% due 10/01/2009 2,315
3,615 6% due 10/01/2009 4,141
===================================================================================================================================
Puerto Rico--5.9%
-----------------------------------------------------------------------------------------------------------------------------------
4,500 Puerto Rico Commonwealth Highway and Transportation Authority, Transportation
Revenue Refunding Bonds, Series J, 5% due 7/01/2029 (d) 4,774
---------------------------------------------------------------------------------------------------------
10,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series HH, 5.25%
due 7/01/2029 (c) 10,857
---------------------------------------------------------------------------------------------------------
Puerto Rico Industrial Tourist, Educational, Medical and Environmental Control
Facilities Revenue Bonds, Series A:
1,780 (Hospital Auxilio Mutuo Obligation Group), 6.25% due 7/01/2024 (d) 1,834
1,750 (Hospital de la Concepcion), 6.50% due 11/15/2020 2,031
---------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost--$499,905)--161.7% 538,437
=========================================================================================================
MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005 9
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (concluded) (in Thousands)
Shares
Held Short-Term Investments Value
=========================================================================================================
12,262 CMA New Jersey Municipal Money Fund (j) $ 12,262
---------------------------------------------------------------------------------------------------------
Total Short-Term Investments (Cost--$12,262)--3.7% 12,262
=========================================================================================================
Total Investments (Cost--$512,167**)--165.4% 550,699
Liabilities in Excess of Other Assets--(4.4%) (14,711)
Preferred Stock, at Redemption Value--(61.0%) (203,021)
---------
Net Assets Applicable to Common Stock--100.0% $ 332,967
=========
* Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase by the Fund.
** The cost and unrealized appreciation (depreciation) of investments, as of
January 31, 2005, as computed for federal income tax purposes, were as
follows:
(in Thousands)
--------------------------------------------------------------------------
Aggregate cost ......................................... $512,127
========
Gross unrealized appreciation .......................... $ 38,572
Gross unrealized depreciation .......................... --
--------
Net unrealized appreciation ............................ $ 38,572
========
(a) AMBAC Insured.
(b) FGIC Insured.
(c) FSA Insured.
(d) MBIA Insured.
(e) Prerefunded.
(f) The rate disclosed is that currently in effect. The rate changes
periodically and inversely based upon prevailing market rates.
(g) Radian insured.
(h) Escrowed to maturity.
(i) Security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. The rate changes periodically based
upon prevailing market rates.
(j) 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 12,114 $ 18
--------------------------------------------------------------------------
(k) All or a portion of security held as collateral in connection with open
financial futures contracts.
Forward interest rate swaps outstanding as of January 31, 2005 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 of 3.837%
Broker, JPMorgan Chase Bank
Expires November 2018 $4,210 $ (66)
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate and pay
a fixed rate of 4.128%
Broker, JPMorgan Chase Bank
Expires August 2026 $8,905 (268)
--------------------------------------------------------------------------
Total $ (334)
======
Financial futures contracts sold as of January 31, 2005 were as follows:
(in Thousands)
--------------------------------------------------------------------------
Number of Expiration Face Unrealized
Contracts Issue Date Value Depreciation
--------------------------------------------------------------------------
805 10-Year
U.S. Treasury March
Notes 2005 $90,233 $(141)
--------------------------------------------------------------------------
See Notes to Financial Statements.
10 MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005
Statement of Net Assets
As of January 31, 2005
=============================================================================================================================
Assets
-----------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value (identified
cost--$499,905,365) .............................................. $ 538,436,467
Investments in affiliated securities, at value (identified
cost--$12,262,068) ............................................... 12,262,068
Cash .............................................................. 154,232
Receivables:
Interest ....................................................... $ 4,762,840
Dividends from affiliates ...................................... 403 4,763,243
-------------
Prepaid expenses .................................................. 2,209
-------------
Total assets ...................................................... 555,618,219
-------------
=============================================================================================================================
Liabilities
-----------------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward interest rate swaps ............ 334,387
Payables:
Securities purchased ........................................... 18,770,751
Investment adviser ............................................. 220,138
Dividends to Common Stock shareholders ......................... 197,359
Variation margin ............................................... 12,578
Other affiliates ............................................... 3,760 19,204,586
-------------
Accrued expenses and other liabilities ............................ 91,846
-------------
Total liabilities ................................................. 19,630,819
-------------
=============================================================================================================================
Preferred Stock
-----------------------------------------------------------------------------------------------------------------------------
Preferred Stock, at redemption value, par value $.10 per share
(1,360 Series A Shares, 1,360 Series B Shares, 2,400 Series C
Shares, 1,880 Series D Shares and 1,120 Series E Shares of AMPS*
authorized, issued and outstanding at $25,000 per share
liquidation preference) .......................................... 203,020,718
-------------
=============================================================================================================================
Net Assets Applicable to Common Stock
-----------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock ............................. $ 332,966,682
=============
=============================================================================================================================
Analysis of Net Assets Applicable to Common Stock
-----------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.10 per share (21,038,614 shares issued
and outstanding) ................................................. $ 2,103,861
Paid-in capital in excess of par .................................. 316,254,529
Undistributed investment income--net .............................. $ 5,604,938
Accumulated realized capital losses--net .......................... (29,052,216)
Unrealized appreciation--net ...................................... 38,055,570
-------------
Total accumulated earnings--net ................................... 14,608,292
-------------
Total--Equivalent to $15.83 net asset value per share of Common
Stock (market price--$15.20) ..................................... $ 332,966,682
=============
* Auction Market Preferred Stock.
See Notes to Financial Statements.
MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005 11
[LOGO] Merrill Lynch Investment Managers
Statement of Operations
For the Six Months Ended January 31, 2005
=============================================================================================================================
Investment Income
-----------------------------------------------------------------------------------------------------------------------------
Interest .......................................................... $ 12,999,207
Dividends from affiliates ......................................... 17,502
-------------
Total income ...................................................... 13,016,709
-------------
=============================================================================================================================
Expenses
-----------------------------------------------------------------------------------------------------------------------------
Investment advisory fees .......................................... $ 1,458,183
Commission fees ................................................... 257,622
Accounting services ............................................... 87,911
Transfer agent fees ............................................... 38,911
Professional fees ................................................. 27,504
Printing and shareholder reports .................................. 20,347
Directors' fees and expenses ...................................... 16,833
Custodian fees .................................................... 15,616
Pricing fees ...................................................... 11,128
Listing fees ...................................................... 10,629
Other ............................................................. 25,368
-------------
Total expenses before waiver and reimbursement .................... 1,970,052
Waiver and reimbursement of expenses .............................. (109,690)
-------------
Total expenses after waiver and reimbursement ..................... 1,860,362
-------------
Investment income--net ............................................ 11,156,347
-------------
=============================================================================================================================
Realized & Unrealized Gain (Loss)--Net
-----------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on:
Investments--net ............................................... 9,835,829
Futures contracts and forward interest rate swaps--net ......... (1,296,362) 8,539,467
-------------
Change in unrealized appreciation (depreciation) on:
Investments--net ............................................... 7,761,189
Futures contracts and forward interest rate swaps--net ......... 658,642 8,419,831
-------------------------------
Total realized and unrealized gain--net ........................... 16,959,298
-------------
=============================================================================================================================
Dividends to Preferred Stock Shareholders
-----------------------------------------------------------------------------------------------------------------------------
Investment income--net ............................................ (1,347,909)
-------------
Net Increase in Net Assets Resulting from Operations .............. $ 26,767,736
=============
See Notes to Financial Statements.
12 MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
January 31, July 31,
Increase (Decrease) in Net Assets: 2005 2004
=============================================================================================================================
Operations
-----------------------------------------------------------------------------------------------------------------------------
Investment income--net ............................................ $ 11,156,347 $ 22,408,048
Realized gain (loss)--net ......................................... 8,539,467 (597,531)
Change in unrealized appreciation (depreciation)--net ............. 8,419,831 11,546,144
Dividends to Preferred Stock shareholders ......................... (1,347,909) (1,745,502)
-------------------------------
Net increase in net assets resulting from operations .............. 26,767,736 31,611,159
-------------------------------
=============================================================================================================================
Dividends to Common Stock Shareholders
-----------------------------------------------------------------------------------------------------------------------------
Investment income--net ............................................ (9,972,303) (19,565,910)
-------------------------------
Net decrease in net assets resulting from dividends to Common Stock
shareholders ..................................................... (9,972,303) (19,565,910)
-------------------------------
=============================================================================================================================
Net Assets Applicable to Common Stock
-----------------------------------------------------------------------------------------------------------------------------
Total increase in net assets applicable to Common Stock ........... 16,795,433 12,045,249
Beginning of period ............................................... 316,171,249 304,126,000
-------------------------------
End of period* .................................................... $ 332,966,682 $ 316,171,249
===============================
* Undistributed investment income--net ......................... $ 5,604,938 $ 5,768,803
===============================
See Notes to Financial Statements.
MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005 13
[LOGO] Merrill Lynch Investment Managers
Financial Highlights
For the Six
Months Ended For the Year Ended July 31,
The following per share data and ratios have been derived January 31, -----------------------------------------------
from information provided in the financial statements. 2005 2004 2003 2002 2001
==============================================================================================================================
Per Share Operating Performance
------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period . $ 15.03 $ 14.46 $ 14.90 $ 14.54 $ 13.14
-------------------------------------------------------------
Investment income--net ............... .53+ 1.07+ 1.08+ 1.06+ 1.08
Realized and unrealized gain
(loss)--net ......................... .80 .51 (.54) .31 1.39
Less dividends to Preferred Stock
shareholders from investment
income--net ......................... (.06) (.08) (.09) (.15) (.34)
Capital write-off resulting from
issuance of Preferred Stock ......... -- -- -- -- --@
-------------------------------------------------------------
Total from investment operations ..... 1.27 1.50 .45 1.22 2.13
-------------------------------------------------------------
Less dividends to Common Stock
shareholders from investment
income--net ......................... (.47) (.93) (.89) (.86) (.73)
-------------------------------------------------------------
Capital write-off resulting from
issuance of Common Stock ............ -- -- -- -- --@
-------------------------------------------------------------
Net asset value, end of period ....... $ 15.83 $ 15.03 $ 14.46 $ 14.90 $ 14.54
=============================================================
Market price per share, end of period $ 15.20 $ 14.17 $ 13.59 $ 14.24 $ 12.64
=============================================================
==============================================================================================================================
Total Investment Return***
------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ... 8.71%@@ 10.90% 3.32% 9.16% 17.26%
=============================================================
Based on market price per share ...... 10.72%@@ 11.24% 1.61% 20.01% 14.60%
=============================================================
==============================================================================================================================
Ratios Based on Average Net Assets of Common Stock
------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of waiver and
reimbursement and excluding
reorganization expenses** ........... 1.14%* 1.13% 1.15% 1.19% 1.18%
=============================================================
Total expenses, net of waiver and
reimbursement** ..................... 1.14%* 1.13% 1.15% 1.22% 1.18%
=============================================================
Total expenses** ..................... 1.21%* 1.21% 1.23% 1.29% 1.29%
=============================================================
Total investment income--net** ....... 6.83%* 6.97% 7.05% 7.32% 7.72%
=============================================================
Amount of dividends to Preferred Stock
shareholders ........................ .83%* .54% .61% 1.00% 2.43%
=============================================================
Investment income--net, to Common Stock
shareholders ........................ 6.00%* 6.43% 6.44% 6.32% 5.29%
=============================================================
==============================================================================================================================
Ratios Based on Average Net Assets of Common & Preferred Stock**
------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of waiver and
reimbursement and excluding
reorganization expenses ............. .70%* .69% .71% .72% .69%
=============================================================
Total expenses, net of waiver and
reimbursement ....................... .70%* .69% .71% .73% .69%
=============================================================
Total expenses ....................... .74%* .74% .75% .78% .76%
=============================================================
Total investment income--net ......... 4.21%* 4.26% 4.32% 4.40% 4.53%
=============================================================
14 MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005
Financial Highlights (concluded)
For the Six
Months Ended For the Year Ended July 31,
The following per share data and ratios have been derived January 31, -----------------------------------------------
from information provided in the financial statements. 2005 2004 2003 2002 2001
==============================================================================================================================
Ratios Based on Average Net Assets of Preferred Stock
------------------------------------------------------------------------------------------------------------------------------
Dividends to Preferred Stock
shareholders ........................ 1.32%* .86% .97% 1.51% 3.46%
=============================================================
==============================================================================================================================
Supplemental Data
------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock,
end of period (in thousands) ........ $332,967 $316,171 $304,126 $313,515 $305,913
=============================================================
Preferred Stock outstanding, end of
period (in thousands) ............... $203,000 $203,000 $203,000 $203,000 $203,000
=============================================================
Portfolio turnover ................... 22.13% 8.53% 28.89% 20.05% 55.60%
=============================================================
==============================================================================================================================
Leverage
------------------------------------------------------------------------------------------------------------------------------
Asset coverage per $1,000 ............ $ 2,640 $ 2,557 $ 2,498 $ 2,544 $ 2,507
=============================================================
==============================================================================================================================
Dividends Per Share on Preferred Stock Outstanding
------------------------------------------------------------------------------------------------------------------------------
Series A--Investment income--net ..... $ 157 $ 206 $ 233 $ 356 $ 830
=============================================================
Series B--Investment income--net ..... $ 164 $ 210 $ 240 $ 381 $ 872
=============================================================
Series C--Investment income--net ..... $ 175 $ 235 $ 247 $ 389 $ 871
=============================================================
Series D--Investment income--net ..... $ 165 $ 210 $ 240 $ 363 $ 901
=============================================================
Series E--Investment income--net ..... $ 160 $ 197 $ 247 $ 393 $ 310
=============================================================
* Annualized.
** Do not reflect the effect of dividends to Preferred Stock shareholders.
*** 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. The Fund's Investment Adviser agreed to waive a portion of its
fee. Without such waiver, the Fund's performance would have been lower.
+ Based on average shares outstanding.
@ Amount is less than $(.01) per share.
@@ Aggregate total investment return.
See Notes to Financial Statements.
MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005 15
[LOGO] Merrill Lynch Investment Managers
Notes to Financial Statements
1. Significant Accounting Policies:
MuniHoldings New Jersey Insured Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as 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. These unaudited financial statements reflect all adjustments,
which are, in the opinion of management, necessary to present a fair statement
of the results for the interim period. All such adjustments are of a normal,
recurring nature. The Fund determines and makes available for publication the
net asset value of its Common Stock on a daily basis. The Fund's Common Stock is
listed on the New York Stock Exchange under the symbol MUJ. The following is a
summary of significant accounting policies followed by the Fund.
(a) Valuation of investments -- Municipal bonds are traded primarily in the
over-the-counter markets and are valued at the 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
general direction of the Board of Directors. Such valuations and procedures are
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.
o 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.
o Options -- The Fund may write covered call options and purchase call and
put options. When the Fund writes an option, an amount equal to the
premium received by the Fund is reflected as an asset and an equivalent
liability. The amount of the liability is subsequently marked-to-market to
reflect the current market value of the option written. When a security is
purchased or sold through an exercise of an option, the related premium
paid (or received) is added to (or deducted from) the basis of the
security acquired or deducted from (or added to) the proceeds of the
security sold. When an option expires (or the Fund enters into a closing
transaction), the Fund realizes a gain or loss on the option to the extent
of the premiums received or paid (or gain or loss to the extent the cost
of the closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
16 MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005
Notes to Financial Statements (continued)
o 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.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect, wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML
& Co."), which is the limited partner.
FAM is responsible for the management of the Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. For such services, the Fund pays a monthly fee at
an annual rate of .55% of the Fund's average daily net assets, including
proceeds from the issuance of Preferred Stock. The Investment Adviser 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 six months ended January 31, 2005, FAM earned fees of $1,458,183, of
which $101,773 was waived. For the six months ended January 31, 2005, FAM
reimbursed the Fund in the amount of $7,917.
For the six months ended January 31, 2005, the Fund reimbursed FAM $5,610 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 six
months ended January 31, 2005 were $117,805,737 and $131,997,993, respectively.
4. 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.
Preferred Stock
Auction Market Preferred Stock are shares of Preferred Stock of the Fund, with a
par value of $.10 per share and a liquidation preference of $25,000 per share,
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.
The yields in effect at January 31, 2005 were as follows: Series A, 1.15%;
Series B, 1.35%; Series C, 1.15%; Series D, 1.65%; and Series E, 1.40%.
The Fund pays commissions to certain broker-dealers at the end of each auction
at an annual rate ranging from .25% to .375%, calculated on the proceeds of each
auction. For the six months ended January 31, 2005, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, an affiliate of FAM, earned $131,266 as
commissions.
MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005 17
[LOGO] Merrill Lynch Investment Managers
Notes to Financial Statements (concluded)
5. Capital Loss Carryforward:
On July 31, 2004, the Fund had a net capital loss carryforward of $33,729,752,
of which $2,713,832 expires in 2006, $2,188,055 expires in 2007, $1,794,104
expires in 2008, $26,797,867 expires in 2009 and $235,894 expires in 2011. This
amount will be available to offset like amounts of any future taxable gains.
6. Subsequent Event:
The Fund paid a tax-exempt income dividend to holders of Common Stock in the
amount of $.079000 per share on February 25, 2005 to shareholders of record on
February 15, 2005.
Dividend Policy
The Fund's dividend policy is to distribute all or a portion of its net
investment income to its shareholders on a monthly basis. In order to provide
shareholders with a more 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.
18 MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005
Proxy Results
During the six-month period ended January 31, 2005, MuniHoldings New Jersey
Insured Fund, Inc.'s Common Stock shareholders voted on the following proposal.
The proposal was approved at a shareholders' meeting on January 27, 2005. A
description of the proposal and number of shares voted are as follows:
-------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
-------------------------------------------------------------------------------------------------------------
1. To elect the Fund's Directors: Robert C. Doll, Jr. 20,189,150 649,813
Cynthia A. Montgomery 20,261,569 577,394
Jean Margo Reid 20,260,869 578,094
Roscoe S. Suddarth 20,251,261 587,702
Edward D. Zinbarg 20,255,031 583,932
-------------------------------------------------------------------------------------------------------------
During the six-month period ended January 31, 2005, MuniHoldings New Jersey
Insured Fund, Inc.'s Preferred Stock (Series A - E) shareholders voted on the
following proposal. The proposal was approved at a shareholders' meeting on
January 27, 2005. A description of the proposal and number of shares voted are
as follows:
---------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
---------------------------------------------------------------------------------------------------------------
1. To elect the Fund's Board of Directors: Robert C. Doll, Jr. 7,950 101
Ronald W. Forbes 7,946 105
Cynthia A. Montgomery 7,950 101
Jean Margo Reid 7,950 101
Roscoe S. Suddarth 7,950 101
Richard R. West 7,950 101
Edward D. Zinbarg 7,950 101
---------------------------------------------------------------------------------------------------------------
MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005 19
[LOGO] Merrill Lynch Investment Managers
Quality Profile
The quality ratings of securities in the Fund as of January 31, 2005 were as
follows:
--------------------------------------------------------------------------------
Percent of
Total
S&P Rating/Moody's Rating Investments
--------------------------------------------------------------------------------
AAA/Aaa ............................................... 88.8%
AA/Aa ................................................. 0.4
A/A ................................................... 3.6
BBB/Baa ............................................... 5.0
Other* ................................................ 2.2
--------------------------------------------------------------------------------
* Includes portfolio holdings in short-term investments.
20 MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005
Officers and Directors
Robert C. Doll, Jr., President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Jean Margo Reid, Director
Roscoe S. Suddarth, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Kenneth A. Jacob, Senior Vice President
John M. Loffredo, Senior Vice President
Theodore R. Jaeckel Jr., Vice President
Donald C. Burke, Vice President and Treasurer
Jeffrey Hiller, Chief Compliance Officer
Alice A. Pellegrino, Secretary
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
MUJ
--------------------------------------------------------------------------------
Effective January 1, 2005, Terry K. Glenn, President and Director and Kevin A.
Ryan, Director of MuniHoldings New Jersey Insured Fund, Inc. retired. The Fund's
Board of Directors wishes Messrs. Glenn and Ryan well in their retirements.
Effective January 1, 2005, Robert C. Doll, Jr. became President and Director of
the Fund.
--------------------------------------------------------------------------------
MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005 21
[LOGO] Merrill Lynch Investment Managers
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.
22 MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005
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 Web
site at 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.
MUNIHOLDINGS NEW JERSEY INSURED FUND, INC. JANUARY 31, 2005 23
[LOGO] Merrill Lynch Investment Managers www.mlim.ml.com
MuniHoldings New Jersey Insured Fund, Inc. seeks to provide shareholders with
current income exempt from federal income tax and New Jersey personal income
taxes by investing in a portfolio of long-term, investment grade municipal
obligations the interest on which, in the opinion of bond counsel to the issuer,
is exempt from federal income tax and New Jersey personal income taxes.
This report, including the financial information herein, is transmitted to
shareholders of MuniHoldings New Jersey Insured Fund, Inc. for their
information. It is not a prospectus. Past performance results shown in this
report should not be considered a representation of future performance. The Fund
has leveraged its Common Stock 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.
MuniHoldings New Jersey Insured Fund, Inc.
Box 9011
Princeton, NJ 08543-9011
#HOLDNJ2 -- 1/05
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this semi-annual
report
Item 4 - Principal Accountant Fees and Services - Not Applicable to this
semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable to this
semi-annual report
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable to this semi-annual
report
Item 8 - Portfolio Managers of Closed-End Management Investment Companies - Not
Applicable to this semi-annual report
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - Not Applicable
Item 11 - Controls and Procedures
11(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.
11(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 last 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 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - Not Applicable to this semi-annual report
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(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.
MuniHoldings New Jersey Insured Fund, Inc.
By: /s/ Robert C. Doll, Jr.
---------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
MuniHoldings New Jersey Insured Fund, Inc.
Date: March 21, 2005
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/ Robert C. Doll, Jr.
---------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
MuniHoldings New Jersey Insured Fund, Inc.
Date: March 21, 2005
By: /s/ Donald C. Burke
---------------------------------
Donald C. Burke,
Chief Financial Officer of
MuniHoldings New Jersey Insured Fund, Inc.
Date: March 21, 2005