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 811-06570
Name of Fund: MuniYield New Jersey 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, MuniYield New Jersey 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: 11/30/06
Date of reporting period: 12/01/05 - 05/31/06
Item 1 - Report to Stockholders
Semi-Annual Report
May 31, 2006
MuniYield New Jersey
Fund, Inc.
MuniYield New Jersey Fund, Inc.
Announcement to Shareholders
On February 15, 2006, BlackRock, Inc. ("BlackRock") and Merrill Lynch & Co.,
Inc. ("Merrill Lynch") entered into an agreement to contribute Merrill Lynch's
investment management business, Merrill Lynch Investment Managers, L.P. and
certain affiliates (including Fund Asset Management, L.P. and Merrill Lynch
Investment Managers International Limited), to BlackRock to create a new
independent company ("New BlackRock") that will be one of the world's largest
asset management firms with approximately $1 trillion in assets under management
(based on combined assets under management as of March 31, 2006) (the
"Transaction"). The Transaction is expected to close in the third quarter of
2006, at which time the new company will operate under the BlackRock name. The
Fund's Board of Directors has approved a new investment advisory agreement with
BlackRock Advisors, Inc. or its successor on substantially the same terms and
for the same advisory fee as the current investment advisory agreement with the
Investment Adviser. If the new agreement is approved by the Fund's shareholders,
BlackRock Advisors, Inc. or its successor is expected to become the investment
adviser of the Fund upon the closing of the Transaction.
The Benefits and Risks of Leveraging
MuniYield New Jersey 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.
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 May 31, 2006, the percentage of the Fund's
total net assets invested in inverse floaters was 7.11%, before the deduction of
Preferred Stock.
2 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006
A Letter From the President
Dear Shareholder
You may be aware that changes are on the horizon at Merrill Lynch Investment
Managers ("MLIM"). Earlier this year, Merrill Lynch announced plans to combine
its investment advisory business, including MLIM, with another highly regarded
investment manager -- BlackRock, Inc. ("BlackRock").
At the completion of the transaction, which is expected at the end of the third
quarter of this year (subject to regulatory and shareholder approvals), the
resultant firm will be a top-10 investment manager worldwide with approximately
$1 trillion in assets under management.* The combined company will provide a
wider selection of high-quality investment solutions across a range of asset
classes and investment styles. MLIM and BlackRock possess complementary
capabilities that together create a well-rounded organization uniting some of
the finest money managers in the industry. At the same time, the firms share
similar values and beliefs -- they are focused on delivering excellence on
behalf of clients, and both make investment performance their single most
important mission. In short, the combination only reinforces our commitment to
shareholders.
Most of MLIM's investment products -- including mutual funds, separately managed
accounts, annuities and variable insurance funds -- eventually will carry the
"BlackRock" name. As a shareholder in one or more MLIM-advised mutual funds, you
recently were mailed a proxy package asking you to vote on proposed changes that
affect those funds. The proposals vary based on the funds in which you invest.
However, all shareholders are asked to vote on a new investment advisory
agreement with BlackRock Advisors, Inc. Your Fund's Board of Directors has
approved, and recommends that you approve, the new agreement. Your Fund's Board
also has approved, and recommends that you approve, a contingent subadvisory
agreement that will serve to ensure that management services can continue during
the course of completing the transaction.
It is important that you exercise your right as a mutual fund shareholder by
voting on the proposals that are presented to you in your funds' proxy
statements. Your participation -- via phone, mail, online or in person -- is
critical. (Refer to your proxy card for detailed voting procedures and
deadlines.) You should know that your vote on these proposals will not affect
your brokerage account or change your relationship with your financial advisor.
If you are a client of Merrill Lynch, you will remain a client of Merrill Lynch.
Should you have any questions or concerns, please do not hesitate to call
1.866.752.6486.
As always, we thank you for entrusting us with your investment assets, and we
look forward to continuing to serve your investment needs with even greater
strength and scale as the new BlackRock.
Sincerely,
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
President and Chief Investment Officer
Merrill Lynch Investment Managers
* $1.039 trillion in assets under management as of March 31, 2006.
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006 3
A Discussion With Your Fund's Portfolio Manager
We remained focused on our yield curve exposure as the key driver of Fund
performance and began to see value in the intermediate part of the curve as the
period came to an end.
Describe the recent market environment relative to municipal bonds.
Long-term bond yields rose sharply during the six-month period, with much of the
increase occurring during the latter three months. Bond prices, which move
opposite of yields, declined. The Federal Reserve Board (the Fed) raised
short-term interest rates at each of its meetings during the period, bringing
the federal funds rate to 5%.
The yield curve continued to flatten as short-term interest rates rose more than
longer-term interest rates. Over the past six months, 30-year U.S. Treasury bond
yields rose 52 basis points (.52%) to 5.21%, while 10-year U.S. Treasury note
yields rose 63 basis points to 5.12%, the highest level since May 2002. In the
municipal market, bond prices improved slightly or declined much less than their
taxable counterparts. As measured by Municipal Market Data, yields on AAA-rated
issues maturing in 30 years fell two basis points to 4.53%, while yields on
AAA-rated issues maturing in 10 years rose 15 basis points to 4.02%.
For the most part, the recent outperformance of the tax-exempt market has been
fostered by a dramatic decline in new bond issuance. After a record-setting year
for new issuance in 2005, municipal bond supply has declined so far in 2006.
Over the past six-month and three-month periods, new-issue volume declined 13.4%
and 11%, respectively, compared to the corresponding periods a year ago. This
largely reflects a significant decline in refunding activity, which had been
quite robust in 2005 as issuers took advantage of historically low bond yields
and a flattening yield curve to refinance their outstanding higher-couponed
debt. Lower annual issuance in 2006 would further solidify the tax-exempt
market's positive technical position.
The tax-exempt market has continued to enjoy strong investor demand. As reported
by the Investment Company Institute, during the first four months of 2006,
tax-exempt mutual funds experienced cash flows of over $5.9 billion,
significantly higher than the $689 million received during the same period in
2005. Recent statistics from AMG Data Services indicate that, thus far in 2006,
weekly cash flows into long-term municipal bond funds averaged over $275
million, up from the weekly average of $65 million in December 2005.
Describe conditions in the State of New Jersey.
Newly elected governor Jon Corzine started his term in January and immediately
faced the challenges of the fiscal year 2007 budget. The governor's $30.9
billion budget proposal reflected a $2.6 billion increase over the prior year's
budget, and an estimated $4.8 billion deficit. To address the deficit, the
governor's proposal does not restore last year's property tax rebate cuts nor
does it fully fund the state's statutory pension obligation. The budget also
keeps state aid to municipalities and school districts essentially flat for
another year and, therefore, local property taxes are likely to increase. On the
revenue side, the governor proposed $1.7 billion in enhancements, including a 1%
sales tax hike, a 35-cent per-pack increase in the cigarette tax, a 2.5%
surcharge on the corporate business tax and the introduction of a hospital
provider assessment fee. Surprisingly, no gasoline tax increase was included,
although a higher percentage of the existing tax is slated to be applied to the
ailing Transportation Trust Fund.
Although the proposed budget is in balance for fiscal year 2007, New Jersey
still faces a structural deficit heading into fiscal year 2008. From a credit
rating perspective, a positive in the governor's proposal is its reduced
reliance on one-time revenues to balance the budget.
How did the Fund perform during the period?
For the six-month period ended May 31, 2006, the Common Stock of MuniYield New
Jersey Fund, Inc. had net annualized yields of 4.96% and 5.22%, based on a
period-end per share net asset value of $15.28 and a per share market price of
$14.52, respectively, and $.378 per share income dividends. Over the same
period, the total investment return on the Fund's Common Stock was +2.01%, based
on a change in per share net asset value from $15.37 to $15.28, and assuming
reinvestment of all distributions.
The Fund's total return, based on net asset value, lagged the +2.37% 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 New Jersey or a city in New Jersey.) To some
degree, the Fund was disadvantaged relative to many of its peers by its
conservative investment parameters. Specifically, the Fund is precluded from
investing in non-investment grade issues, which outperformed during the
4 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006
period as credit spreads (versus higher-quality issues of comparable maturity)
tightened dramatically. Having said that, we are permitted to invest in
lower-quality investment grade issues, and to the extent that we did, their
strong performance benefited the portfolio. In particular, our positions in some
BBB-rated health care bonds performed quite well.
In terms of yield curve exposure, our focus on high-quality, longer-dated bonds
proved advantageous as the curve flattened and the long end outperformed.
Nevertheless, the Fund still had some exposure to the intermediate part of the
curve, which proved to be a laggard in the flattening environment. These issues
detracted most from total return performance, although they are retained for
their attractive yields.
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 period?
Portfolio activity was driven primarily by the need to reinvest the proceeds
from bonds that were called by their issuers prior to maturity. This is a
typical phenomenon in an environment where interest rates are low and credit
spreads are contracting, as issuers find it economical to refinance their
existing debt. As the portfolio's seasoned, higher-coupon holdings are called by
their issuers, and given the fact that the Fund is precluded from delving into
non-rated and non-investment grade paper, our reinvestment prospects in the
current environment have become less and less appealing.
Under these conditions, we generally invested in higher-quality paper and began
to shift our focus toward the intermediate part of the curve, generally the
10-year - 15-year range. Given the extent to which these maturities have lagged
and the fact that the Fed may be nearing an end in its tightening campaign, we
believe the intermediate sector presents compelling value. While new-issue
supply in New Jersey declined 30.5% over the six-month period, it generally has
not been difficult to find opportunities in this maturity range.
For the six-month period ended May 31, 2006, the Fund's Auction Market Preferred
Stock (AMPS) had an average yield of 2.92% for Series A, 2.86% for Series B and
2.87% for Series C. The Fed raised the short-term interest rate target 100 basis
points during the six-month period, and this continued to affect the Fund's
borrowing costs. We would expect additional increases in the cost of funds to be
more limited as the Fed nears a pause in its monetary tightening campaign.
Despite the interest rate increases during the period, the tax-exempt yield
curve maintained a positive slope, allowing us to borrow at a lower rate than
where we invest. This continued to generate an income benefit to the holders of
Common Stock 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
35.41% of total net assets, before the deduction of Preferred Stock. (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 neutral duration at the end of the period, assuming no major
bias in terms of interest rate direction. We believe the greatest opportunity to
enhance relative performance lies in our yield curve exposure. To that extent,
we intend to focus on the 10-year - 15-year part of the curve, reinvesting the
proceeds from bond calls in this area and also shifting out of 30-year paper and
toward this maturity range. Our strategy is based on our belief that the Fed is
closer to the end of its monetary tightening cycle. Because markets tend to
anticipate such events before they happen, we would rather adjust our strategy
earlier rather than later. Once the Fed does finally pause, we would expect the
relatively flat yield curve to begin to steepen, benefiting the long-struggling
intermediate sector.
Theodore R. Jaeckel Jr., CFA
Vice President and Portfolio Manager
June 8, 2006
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006 5
Portfolio Information as of May 31, 2006
Percent of
Quality Ratings by Total
S&P/Moody's Investments
--------------------------------------------------------------------------------
AAA/Aaa ........................................................ 61.6%
AA/Aa .......................................................... 11.2
A/A ............................................................ 8.1
BBB/Baa ........................................................ 15.8
B/B ............................................................ 0.6
NR (Not Rated) ................................................. 1.4
Other* ......................................................... 1.3
--------------------------------------------------------------------------------
* Includes portfolio holdings in short-term investments.
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 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.
Swap Agreements
The Fund may 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.
6 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006
Schedule of Investments (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================================
New Jersey--139.0%
-----------------------------------------------------------------------------------------------
$ 1,000 Burlington County, New Jersey, Bridge Commission
Revenue Bonds (Governmental Leasing Program),
5.25% due 8/15/2020 $ 1,057
-----------------------------------------------------------------------------------------------
1,500 Delaware River and Bay Authority Revenue Bonds, 5%
due 1/01/2033 (d) 1,539
-----------------------------------------------------------------------------------------------
Delaware River Joint Toll Bridge Commission,
Pennsylvania, Bridge Revenue Refunding Bonds:
2,010 5% due 7/01/2021 2,073
3,645 5% due 7/01/2028 3,719
-----------------------------------------------------------------------------------------------
3,930 Delaware River Port Authority of Pennsylvania and
New Jersey Revenue Bonds, RIB, Series 396, 8.243%
due 1/01/2019 (c)(h) 4,497
-----------------------------------------------------------------------------------------------
2,620 Essex County, New Jersey, Improvement Authority
Revenue Bonds, Series A, 5% due 10/01/2028 (b) 2,698
-----------------------------------------------------------------------------------------------
Garden State Preservation Trust of New Jersey, Capital
Appreciation Revenue Bonds, Series B (c)(i):
6,860 5.12% due 11/01/2023 2,987
4,540 5.25% due 11/01/2028 1,524
-----------------------------------------------------------------------------------------------
Garden State Preservation Trust of New Jersey, Open
Space and Farmland Preservation Revenue Bonds,
Series A (c):
4,300 5.80% due 11/01/2022 4,862
5,460 5.75% due 11/01/2028 6,400
-----------------------------------------------------------------------------------------------
Gloucester County, New Jersey, Improvement Authority,
Solid Waste Resource Recovery, Revenue Refunding
Bonds (Waste Management Inc. Project):
1,180 AMT, Series B, 7% due 12/01/2029 1,284
2,000 Series A, 6.85% due 12/01/2029 2,167
-----------------------------------------------------------------------------------------------
1,500 Hudson County, New Jersey, COP, Refunding, 6.25%
due 12/01/2016 (d) 1,744
-----------------------------------------------------------------------------------------------
13,950 Hudson County, New Jersey, Improvement Authority,
Facility Lease Revenue Refunding Bonds (Hudson
County Lease Project), 5.375% due 10/01/2024 (b) 14,519
-----------------------------------------------------------------------------------------------
6,840 Jackson Township, New Jersey, School District, GO, 5%
due 4/15/2012 (b)(g) 7,260
-----------------------------------------------------------------------------------------------
Middlesex County, New Jersey, Improvement Authority,
County-Guaranteed Revenue Bonds (Golf Course Projects):
1,455 5.25% due 6/01/2022 1,553
3,050 5% due 6/01/2029 3,147
-----------------------------------------------------------------------------------------------
970 Middlesex County, New Jersey, Improvement Authority,
Senior Revenue Bonds, (Heldrich Center Hotel/
Conference Project), Series A, 5% due 1/01/2020 971
-----------------------------------------------------------------------------------------------
1,500 Middlesex County, New Jersey, Pollution Control
Financing Authority, Revenue Refunding Bonds
(Amerada Hess Corporation), 6.05% due 9/15/2034 1,601
-----------------------------------------------------------------------------------------------
Monmouth County, New Jersey, Improvement Authority,
Governmental Loan Revenue Refunding Bonds (a):
2,235 5% due 12/01/2015 2,355
2,345 5% due 12/01/2016 2,471
-----------------------------------------------------------------------------------------------
New Jersey EDA, Cigarette Tax Revenue Bonds:
1,720 5.625% due 6/15/2019 1,806
1,895 5.75% due 6/15/2029 2,011
370 5.50% due 6/15/2031 384
755 5.75% due 6/15/2034 796
-----------------------------------------------------------------------------------------------
New Jersey EDA, EDR (Masonic Charity Foundation of
New Jersey):
600 5.25% due 6/01/2024 628
685 5.25% due 6/01/2032 715
-----------------------------------------------------------------------------------------------
1,500 New Jersey EDA, First Mortgage Revenue Bonds
(Fellowship Village), Series C, 5.50% due 1/01/2028 1,503
-----------------------------------------------------------------------------------------------
New Jersey EDA, First Mortgage Revenue Refunding
Bonds, Series A:
1,250 (Fellowship Village), 5.50% due 1/01/2018 1,265
3,500 (Fellowship Village), 5.50% due 1/01/2025 3,516
2,500 (The Winchester Gardens at Ward Homestead
Project), 5.75% due 11/01/2024 2,635
2,000 (The Winchester Gardens at Ward Homestead
Project), 5.80% due 11/01/2031 2,107
-----------------------------------------------------------------------------------------------
New Jersey EDA, Motor Vehicle Surcharge Revenue
Bonds, Series A (d):
14,000 5.25% due 7/01/2033 14,792
2,870 5% due 7/01/2034 2,951
-----------------------------------------------------------------------------------------------
New Jersey EDA, Revenue Bonds:
400 (Department of Human Services), 5%
due 7/01/2011 418
220 (Department of Human Services), 5%
due 7/01/2012 231
3,850 (Saint Barnabas Project), Series A, 6.30%
due 7/01/2024 (d)(i) 1,616
-----------------------------------------------------------------------------------------------
Portfolio Abbreviations
To simplify the listings of MuniYield New Jersey 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
EDR Economic Development Revenue Bonds
GO General Obligation Bonds
M/F Multi-Family
RIB Residual Interest Bonds
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006 7
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================================
New Jersey (continued)
-----------------------------------------------------------------------------------------------
New Jersey EDA, School Facilities Construction
Revenue Bonds:
$ 5,800 Series L, 5% due 3/01/2030 (c) $ 5,974
5,400 Series O, 5.25% due 3/01/2023 5,726
3,000 Series P, 5% due 9/01/2015 3,183
3,115 Series P, 5.25% due 9/01/2016 3,345
-----------------------------------------------------------------------------------------------
6,670 New Jersey EDA, Water Facilities Revenue Bonds
(New Jersey-American Water Company, Inc. Project),
Series A, 6.875% due 11/01/2034 (b) 6,753
-----------------------------------------------------------------------------------------------
5,975 New Jersey Environmental Infrastructure Trust Revenue
Bonds (Environmental Infrastructure), Series A, 5.25%
due 9/01/2017 6,320
-----------------------------------------------------------------------------------------------
1,100 New Jersey Health Care Facilities Financing Authority,
Health System Revenue Bonds (Catholic Health East),
Series A, 5.375% due 11/15/2033 1,134
-----------------------------------------------------------------------------------------------
New Jersey Health Care Facilities Financing Authority
Revenue Bonds:
1,540 (Children's Specialized Hospital), Series A, 5.50%
due 7/01/2036 1,583
1,950 (Hunterdon Medical Center), Series A, 5.125%
due 7/01/2035 1,960
1,845 (Pascack Valley Hospital Association), 6.625%
due 7/01/2036 1,899
1,845 (RWJ Healthcare Corporation), Series B, 5%
due 7/01/2035 (f) 1,868
4,000 (Robert Wood University), 5.70% due 7/01/2020 (a) 4,256
1,875 (Somerset Medical Center), 5.50% due 7/01/2033 1,906
6,640 (South Jersey Hospital), 6% due 7/01/2026 7,018
2,000 (Southern Ocean County Hospital), 5.125%
due 7/01/2031 (f) 2,056
-----------------------------------------------------------------------------------------------
New Jersey Health Care Facilities Financing Authority,
Revenue Refunding Bonds:
1,020 (Atlantic City Medical Center), 6.25%
due 7/01/2017 1,124
2,185 (Atlantic City Medical Center), 5.75%
due 7/01/2025 2,314
1,650 (Capital Health System Inc.), Series A, 5.75%
due 7/01/2023 1,739
5,500 (Holy Name Hospital), 6% due 7/01/2025 5,667
1,500 (Meridian Health System Obligation Group), 5.25%
due 7/01/2019 (c) 1,568
2,250 (Meridian Health System Obligation Group),
5.375% due 7/01/2024 (c) 2,355
2,195 (Meridian Health System Obligation Group),
5.25% due 7/01/2029 (c) 2,289
-----------------------------------------------------------------------------------------------
4,150 New Jersey State Educational Facilities Authority,
Higher Education, Capital Improvement Revenue Bonds,
Series A, 5.125% due 9/01/2022 (a) 4,358
-----------------------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority
Revenue Bonds, Series C:
2,000 (Georgian Court College Project), 6.50%
due 7/01/2033 2,205
2,165 (Rowan University), 5.125% due 7/01/2028 (d) 2,260
1,955 (Rowan University), 5% due 7/01/2034 (d) 2,013
-----------------------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority,
Revenue Refunding Bonds:
5,305 (Montclair State University), Series L, 5%
due 7/01/2034 (d) 5,463
1,870 (Princeton Theological Seminary), 5%
due 7/01/2026 1,943
2,600 (Princeton University), Series A, 5%
due 7/01/2030 2,708
1,000 (Rider University), 5% due 7/01/2017 (f) 1,028
1,255 (Rider University), Series A, 5.50%
due 7/01/2023 (f) 1,344
1,450 (Rider University), Series A, 5.25%
due 7/01/2034 (f) 1,518
-----------------------------------------------------------------------------------------------
4,560 New Jersey State Higher Education Assistance
Authority, Student Loan Revenue Bonds, AMT,
Series A, 5.30% due 6/01/2017 (a) 4,591
-----------------------------------------------------------------------------------------------
2,500 New Jersey State Highway Authority, Garden State
Parkway General Revenue Refunding Bonds, 5.625%
due 1/01/2010 (g) 2,684
-----------------------------------------------------------------------------------------------
7,175 New Jersey State Housing and Mortgage Financing
Agency, Capital Fund Program Revenue Bonds,
Series A, 4.70% due 11/01/2025 (c) 7,216
-----------------------------------------------------------------------------------------------
New Jersey State Housing and Mortgage Finance
Agency, Home Buyer Revenue Bonds, AMT (d):
5,350 Series CC, 5.80% due 10/01/2020 5,543
3,335 Series U, 5.60% due 10/01/2012 3,423
-----------------------------------------------------------------------------------------------
4,535 New Jersey State Housing and Mortgage Financing
Agency, M/F Revenue Bonds, AMT, Series A, 4.90%
due 11/01/2035 (b) 4,517
-----------------------------------------------------------------------------------------------
3,620 New Jersey State Transit Corporation, COP (Federal
Transit Administration Grants), Series B, 5.75%
due 9/15/2014 3,924
-----------------------------------------------------------------------------------------------
New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Bonds:
3,525 Series A, 5.50% due 12/15/2021 3,903
4,140 Series C, 0% due 12/15/2035 (a) 958
6,405 Series D, 5% due 6/15/2020 6,636
-----------------------------------------------------------------------------------------------
5,865 New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Refunding Bonds,
Series B, 5.50% due 12/15/2021 (d) 6,585
-----------------------------------------------------------------------------------------------
4,870 New Jersey State Turnpike Authority, Turnpike Revenue
Bonds, Series B, 5.15% due 1/01/2035 (a)(i) 3,219
-----------------------------------------------------------------------------------------------
5,000 Port Authority of New Jersey and New York,
Consolidated Revenue Bonds, 93rd Series, 6.125%
due 6/01/2094 5,832
-----------------------------------------------------------------------------------------------
4,435 Port Authority of New Jersey and New York, Revenue
Bonds, Trust Receipts, AMT, Class R, Series 10, 7.937%
due 1/15/2017 (c)(h) 4,628
-----------------------------------------------------------------------------------------------
5,300 Port Authority of New Jersey and New York, Revenue
Refunding Bonds, DRIVERS, AMT, Series 153, 6.671%
due 9/15/2012 (b)(h) 5,444
-----------------------------------------------------------------------------------------------
2,000 Port Authority of New Jersey and New York, Special
Obligation Revenue Bonds (JFK International Air Terminal),
AMT, Series 6, 5.75% due 12/01/2022 (d) 2,090
-----------------------------------------------------------------------------------------------
8 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006
Schedule of Investments (concluded) (in Thousands)
Face
Amount Municipal Bonds Value
===============================================================================================
New Jersey (concluded)
-----------------------------------------------------------------------------------------------
$ 6,000 Rahway Valley Sewerage Authority, New Jersey, Sewer
Revenue Bonds (Capital Appreciation), Series A, 4.87%
due 9/01/2031 (d)(i) $ 1,706
-----------------------------------------------------------------------------------------------
South Jersey Port Corporation of New Jersey, Revenue
Refunding Bonds:
4,280 4.75% due 1/01/2018 4,348
2,485 4.85% due 1/01/2019 2,533
2,000 5% due 1/01/2020 2,058
-----------------------------------------------------------------------------------------------
Tobacco Settlement Financing Corporation of New
Jersey, Asset-Backed Revenue Bonds:
2,185 5.75% due 6/01/2032 2,266
3,010 7% due 6/01/2041 3,409
-----------------------------------------------------------------------------------------------
Union County, New Jersey, Utilities Authority, Senior
Lease Revenue Refunding Bonds (Ogden Martin
System of Union, Inc.), AMT, Series A (a):
1,585 5.375% due 6/01/2017 1,631
1,175 5.375% due 6/01/2018 1,209
-----------------------------------------------------------------------------------------------
University of Medicine and Dentistry, New Jersey,
Revenue Bonds, Series A (a):
945 5.50% due 12/01/2018 1,024
1,900 5.50% due 12/01/2019 2,058
1,870 5.50% due 12/01/2020 2,026
1,435 5.50% due 12/01/2021 1,549
===============================================================================================
Puerto Rico--10.6%
-----------------------------------------------------------------------------------------------
1,730 Puerto Rico Commonwealth Highway and
Transportation Authority, Transportation Revenue
Refunding Bonds, Series K, 5% due 7/01/2040 1,721
-----------------------------------------------------------------------------------------------
3,300 Puerto Rico Electric Power Authority, Power Revenue
Bonds, Series RR, 5% due 7/01/2028 (e) 3,414
-----------------------------------------------------------------------------------------------
2,500 Puerto Rico Electric Power Authority, Power Revenue
Refunding Bonds, Series PP, 5% due 7/01/2025 (b) 2,599
-----------------------------------------------------------------------------------------------
1,900 Puerto Rico Industrial, Tourist, Educational, Medical
and Environmental Control Facilities Revenue Bonds
(Cogeneration Facility--AES Puerto Rico Project),
AMT, 6.625% due 6/01/2026 2,072
-----------------------------------------------------------------------------------------------
3,750 Puerto Rico Municipal Finance Agency, GO, Series A,
5% due 8/01/2021 (c) 3,935
-----------------------------------------------------------------------------------------------
8,750 Puerto Rico Public Buildings Authority Revenue Bonds,
DRIVERS, Series 211, 6.807% due 7/01/2021 (d)(h) 9,314
===============================================================================================
U.S. Virgin Islands--2.8%
-----------------------------------------------------------------------------------------------
3,500 Virgin Islands Government Refinery Facilities, Revenue
Refunding Bonds (Hovensa Coker Project), AMT,
6.50% due 7/01/2021 3,929
-----------------------------------------------------------------------------------------------
1,900 Virgin Islands Public Finance Authority, Refinery
Facilities Revenue Bonds (Hovensa Refinery), AMT,
5.875% due 7/01/2022 2,061
-----------------------------------------------------------------------------------------------
Total Municipal Bonds
(Cost--$317,480)--152.4% 330,734
===============================================================================================
Shares
Held Short-Term Securities
===============================================================================================
4,449 CMA New Jersey Municipal Money Fund, 2.77% (j)(k) 4,449
-----------------------------------------------------------------------------------------------
Total Short-Term Securities
(Cost--$4,449)--2.1% 4,449
===============================================================================================
Total Investments (Cost--$321,929*)--154.5% 335,183
Other Assets Less Liabilities--0.4% 826
Preferred Stock, at Redemption Value--(54.9%) (119,044)
----------
Net Assets Applicable to Common Stock--100.0% $ 216,965
==========
* The cost and unrealized appreciation (depreciation) of investments as of
May 31, 2006, as computed for federal income tax purposes, were as
follows:
Aggregate cost ............................................. $321,561
========
Gross unrealized appreciation .............................. $ 14,195
Gross unrealized depreciation .............................. (573)
--------
Net unrealized appreciation ................................ $ 13,622
========
(a) AMBAC Insured.
(b) FGIC Insured.
(c) FSA Insured.
(d) MBIA Insured.
(e) CIFG Insured.
(f) Radian Insured.
(g) Prerefunded.
(h) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(i) Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(j) Investments in companies considered to be an affiliate of the Fund, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as
follows:
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
CMA New Jersey Municipal Money Fund 3,020 $20
--------------------------------------------------------------------------
(k) Represents the current yield as of 5/31/2006.
o Financial futures contracts sold as of May 31, 2006 were as follows:
---------------------------------------------------------------------------------------------------
Number of Expiration Face Unrealized
Contracts Issue Date Value Appreciation
---------------------------------------------------------------------------------------------------
175 10-Year U.S. September
Treasury Future 2006 $18,465 $103
---------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006 9
Statement of Net Assets
As of May 31, 2006
===============================================================================================================================
Assets
-------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value (identified cost--$317,480,236) $ 330,734,791
Investments in affiliated securities, at value (identified cost--$4,448,518) ... 4,448,518
Cash ........................................................................... 71,252
Receivables:
Interest .................................................................... $ 5,815,611
Variation margin ............................................................ 51,953
Securities sold ............................................................. 40,000 5,907,564
-------------
Prepaid expenses ............................................................... 11,045
-------------
Total assets ................................................................... 341,173,170
-------------
===============================================================================================================================
Liabilities
-------------------------------------------------------------------------------------------------------------------------------
Payables:
Securities purchased ........................................................ 4,839,777
Dividends to Common Stock shareholders ...................................... 135,893
Investment adviser .......................................................... 109,803
Other affiliates ............................................................ 2,905 5,088,378
-------------
Accrued expenses ............................................................... 76,265
-------------
Total liabilities .............................................................. 5,164,643
-------------
===============================================================================================================================
Preferred Stock
-------------------------------------------------------------------------------------------------------------------------------
Preferred Stock, at redemption value, par value $.05 per share (2,400 Series A
Shares and 1,500 Series B Shares) and $.10 per share (860 Series C Shares) of
AMPS* authorized, issued and outstanding at $25,000 per share liquidation
preference .................................................................... 119,043,912
-------------
===============================================================================================================================
Net Assets Applicable to Common Stock
-------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock .......................................... $ 216,964,615
=============
===============================================================================================================================
Analysis of Net Assets Applicable to Common Stock
-------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.10 per share (14,203,242 shares issued and outstanding) $ 1,420,324
Paid-in capital in excess of par ............................................... 203,960,129
Undistributed investment income--net ........................................... $ 1,792,995
Accumulated realized capital losses--net ....................................... (3,566,853)
Unrealized appreciation--net ................................................... 13,358,020
-------------
Total accumulated earnings--net ................................................ 11,584,162
-------------
Total--Equivalent to $15.28 net asset value per share of Common Stock
(market price--$14.52) ........................................................ $ 216,964,615
=============
* Auction Market Preferred Stock.
See Notes to Financial Statements.
10 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006
Statement of Operations
For the Six Months Ended May 31, 2006
===============================================================================================================================
Investment Income
-------------------------------------------------------------------------------------------------------------------------------
Interest and amortization of premium and discount earned ....................... $ 8,359,712
Dividends from affiliates ...................................................... 19,784
-------------
Total income ................................................................... 8,379,496
-------------
===============================================================================================================================
Expenses
-------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ....................................................... $ 842,796
Commission fees ................................................................ 154,968
Accounting services ............................................................ 63,527
Transfer agent fees ............................................................ 33,792
Professional fees .............................................................. 27,389
Printing and shareholder reports ............................................... 18,547
Custodian fees ................................................................. 10,175
Directors' fees and expenses ................................................... 10,012
Pricing fees ................................................................... 8,509
Listing fees ................................................................... 8,423
Other .......................................................................... 28,638
-------------
Total expenses before reimbursement ............................................ 1,206,776
Reimbursement of expenses ...................................................... (3,538)
-------------
Total expenses after reimbursement ............................................. 1,203,238
-------------
Investment income--net ......................................................... 7,176,258
-------------
===============================================================================================================================
Realized & Unrealized Gain (Loss)--Net
-------------------------------------------------------------------------------------------------------------------------------
Realized gain on:
Investments--net ............................................................ 687,546
Futures contracts and forward interest rate swaps--net ...................... 369,336 1,056,882
-------------
Change in unrealized appreciation on:
Investments--net ............................................................ (2,465,647)
Futures contracts--net ...................................................... 103,465 (2,362,182)
-------------------------------
Total realized and unrealized loss--net ........................................ (1,305,300)
-------------
===============================================================================================================================
Dividends to Preferred Stock Shareholders
-------------------------------------------------------------------------------------------------------------------------------
Investment income--net ......................................................... (1,716,791)
-------------
Net Increase in Net Assets Resulting from Operations ........................... $ 4,154,167
=============
See Notes to Financial Statements.
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006 11
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
May 31, November 30,
Increase (Decrease) in Net Assets: 2006 2005
===============================================================================================================================
Operations
-------------------------------------------------------------------------------------------------------------------------------
Investment income--net ......................................................... $ 7,176,258 $ 14,385,259
Realized gain--net ............................................................. 1,056,882 5,536,813
Change in unrealized appreciation--net ......................................... (2,362,182) (3,051,624)
Dividends to Preferred Stock shareholders ...................................... (1,716,791) (2,340,043)
-------------------------------
Net increase in net assets resulting from operations ........................... 4,154,167 14,530,405
-------------------------------
===============================================================================================================================
Dividends to Common Stock Shareholders
-------------------------------------------------------------------------------------------------------------------------------
Investment income--net ......................................................... (5,439,841) (12,896,544)
-------------------------------
Net decrease in net assets resulting from dividends to Common Stock shareholders (5,439,841) (12,896,544)
-------------------------------
===============================================================================================================================
Stock Transactions
-------------------------------------------------------------------------------------------------------------------------------
Adjustment of offering costs resulting from the issuance of Preferred Stock .... -- (1,735)
-------------------------------
Net decrease in net assets derived from stock transactions ..................... -- (1,735)
-------------------------------
===============================================================================================================================
Net Assets Applicable to Common Stock
-------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets applicable to Common Stock ............. (1,285,674) 1,632,126
Beginning of period ............................................................ 218,250,289 216,618,163
-------------------------------
End of period* ................................................................. $ 216,964,615 $ 218,250,289
===============================
* Undistributed investment income--net ...................................... $ 1,792,995 $ 1,773,369
===============================
See Notes to Financial Statements.
12 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006
Financial Highlights
For the Six
Months Ended For the Year Ended November 30,
The following per share data and ratios have been derived May 31, -----------------------------------------------------
from information provided in the financial statements. 2006 2005 2004 2003 2002
=================================================================================================================================
Per Share Operating Performance
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............... $ 15.37 $ 15.25 $ 15.39 $ 14.84 $ 14.78
--------------------------------------------------------------------
Investment income--net ............................. .51++ 1.01++ 1.06++ 1.05++ 1.06
Realized and unrealized gain (loss)--net ........... (.10) .18 (.14) .52 .05
Dividends and distributions to Preferred Stock
shareholders:
Investment income--net ......................... (.12) (.16) (.08) (.06) (.09)
Realized gain--net ............................. -- -- -- -- --+
--------------------------------------------------------------------
Total from investment operations ................... .29 1.03 .84 1.51 1.02
--------------------------------------------------------------------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net ......................... (.38) (.91) (.96) (.96) (.96)
Realized gain--net ............................. -- -- -- -- --+
--------------------------------------------------------------------
Total dividends and distributions to Common Stock
shareholders ...................................... (.38) (.91) (.96) (.96) (.96)
--------------------------------------------------------------------
Offering and underwriting costs resulting from the
issuance of Preferred Stock ....................... -- -- (.02) -- --
--------------------------------------------------------------------
Adjustment of offering costs resulting from the
issuance of Preferred Stock ....................... -- --+ -- -- --
--------------------------------------------------------------------
Net asset value, end of period ..................... $ 15.28 $ 15.37 $ 15.25 $ 15.39 $ 14.84
====================================================================
Market price per share, end of period .............. $ 14.52 $ 14.38 $ 14.73 $ 14.34 $ 14.07
====================================================================
=================================================================================================================================
Total Investment Return*
---------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ................. 2.01%@@ 7.08% 5.84% 10.81% 7.22%
====================================================================
Based on market price per share .................... 3.61%@@ 3.72% 9.72% 8.90% 4.27%
====================================================================
=================================================================================================================================
Ratios Based on Average Net Assets of Common Stock
---------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement** ................... 1.10%@ 1.09% 1.02% 1.02% 1.05%
====================================================================
Total expenses** ................................... 1.10%@ 1.09% 1.03% 1.02% 1.05%
====================================================================
Total investment income--net** ..................... 6.57%@ 6.47% 6.94% 6.94% 7.06%
====================================================================
Amount of dividends to Preferred Stock shareholders 1.57%@ 1.05% .50% .40% .58%
====================================================================
Investment income--net, to Common Stock shareholders 5.00%@ 5.42% 6.44% 6.54% 6.48%
====================================================================
=================================================================================================================================
Ratios Based on Average Net Assets of Preferred Stock
---------------------------------------------------------------------------------------------------------------------------------
Dividends to Preferred Stock shareholders .......... 2.89%@ 1.97% 1.04% .89% 1.25%
====================================================================
=================================================================================================================================
Supplemental Data
---------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock, end of period
(in thousands) .................................... $216,965 $218,250 $216,618 $218,642 $210,727
====================================================================
Preferred Stock outstanding, end of period
(in thousands) .................................... $119,000 $119,000 $119,000 $ 97,500 $ 97,500
====================================================================
Portfolio turnover ................................. 5.71% 34.49% 15.35% 28.93% 41.47%
====================================================================
=================================================================================================================================
Leverage
---------------------------------------------------------------------------------------------------------------------------------
Asset coverage per $1,000 .......................... $ 2,823 $ 2,834 $ 2,820 $ 3,242 $ 3,161
====================================================================
=================================================================================================================================
Dividends Per Share on Preferred Stock Outstanding
---------------------------------------------------------------------------------------------------------------------------------
Series A--Investment income--net ................... $ 364 $ 497 $ 259 $ 225 $ 325
====================================================================
Series B--Investment income--net ................... $ 357 $ 479 $ 250 $ 219 $ 292
====================================================================
Series C***--Investment income--net ................ $ 358 $ 500 $ 91 -- --
====================================================================
* 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 C was issued on August 23, 2004.
+ Amount is less than $(.01) per share.
++ Based on average shares outstanding.
@ Annualized.
@@ Aggregate total investment return.
See Notes to Financial Statements.
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006 13
Notes to Financial Statements
1. Significant Accounting Policies:
MuniYield New Jersey 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 shares are
listed on the New York Stock Exchange under the symbol MYJ. 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 ("OTC") markets and are valued at the last available bid price
in the OTC 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 the 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 OTC 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 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.
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.
14 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006
Notes to Financial Statements (concluded)
(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 date.
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 related to the public offering of the
Fund's Preferred Stock were charged to capital at the time of issuance of the
shares. Any adjustments to estimates of offering costs were recorded back to
capital.
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 six months ended May 31, 2006, FAM reimbursed the Fund in the amount of
$3,538.
For the six months ended May 31, 2006, the Fund reimbursed FAM $3,345 for
certain accounting services.
Certain officers and/or directors of the Fund are officers and/or directors of
FAM, PSI, and/or ML & Co.
In February 2006, ML & Co. and BlackRock, Inc. entered into an agreement to
contribute ML & Co.'s investment management business, including FAM, to the
investment management business of BlackRock, Inc. The transaction is expected to
close in the third quarter of 2006.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended May 31, 2006 were $19,008,063 and $19,242,400, 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 redeemable shares of Preferred Stock of the
Fund, with 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 May
31, 2006 were as follows: Series A, 3.21%, Series B, 3.00% and Series C, 3.30%.
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 May 31, 2006, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, an affiliate of FAM, earned $91,369 as commissions.
5. Capital Loss Carryforward:
On November 30, 2005, the Fund had a net capital loss carryforward of
$3,170,511, of which $2,930,955 expires in 2008 and $239,556 expires in 2012.
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 $.063000 per share on June 29, 2006 to shareholders of record on June
13, 2006.
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006 15
Disclosure of New Investment Advisory Agreement
New BlackRock Investment Advisory Agreement -- Matters Considered by the Board
In connection with the Transaction between Merrill Lynch and BlackRock, the
Fund's Board of Directors considered a new investment advisory agreement (the
"New Investment Advisory Agreement") between the Fund and BlackRock Advisors,
Inc. or its successor ("BlackRock Advisors"). If the New Investment Advisory
Agreement is approved by the Fund's shareholders, it will become effective upon
the closing of the Transaction, which is expected in the third quarter of 2006.
The Board discussed the New Investment Advisory Agreement at telephonic and
in-person meetings held during April and May 2006. The Board, including the
independent directors, approved the New Investment Advisory Agreement at a
meeting held on May 9, 2006.
To assist the Board in its consideration of the New Investment Advisory
Agreement, BlackRock provided materials and information about BlackRock,
including its financial condition and asset management capabilities and
organization, and Merrill Lynch provided materials and information about the
Transaction. The independent directors, through their independent legal counsel,
also requested and received additional information from Merrill Lynch and
BlackRock in connection with their consideration of the New Investment Advisory
Agreement. The additional information was provided in advance of the May 9, 2006
meeting. In addition, the independent directors consulted with their counsel and
Fund counsel on numerous occasions, discussing, among other things, the legal
standards and certain other considerations relevant to the directors'
deliberations.
At the Board meetings, members of the Board discussed with Merrill Lynch
management and certain BlackRock representatives the Transaction, its strategic
rationale and BlackRock's general plans and intentions regarding the Fund. At
these Board meetings, representatives of Merrill Lynch and BlackRock made
presentations to and responded to questions from the Board. The directors also
inquired about the plans for and anticipated roles and responsibilities of
certain employees and officers of the Investment Adviser and certain affiliates
being transferred to BlackRock in connection with the Transaction. The
independent directors of the Board also conferred separately and with their
counsel about the Transaction and other matters related to the Transaction on a
number of occasions, including in connection with the April and May 2006
meetings. After the presentations and after reviewing the written materials
provided, the independent directors met in executive sessions with their counsel
to consider the New Investment Advisory Agreement.
In connection with the Board's review of the New Investment Advisory Agreement,
Merrill Lynch and/or BlackRock advised the directors about a variety of matters.
The advice included the following, among other matters:
o that there is not expected to be any diminution in the nature, quality and
extent of services provided to the Fund and its shareholders by BlackRock
Advisors, including compliance services;
o that operation of New BlackRock as an independent investment management
firm will enhance its ability to attract and retain talented
professionals;
o that the Fund should benefit from having access to BlackRock's state of
the art technology and risk management analytic tools, including
investment tools, provided under the BlackRock Solutions(R) brand name;
o that BlackRock has no present intention to alter any applicable expense
waivers and reimbursements currently in effect and, while it reserves the
right to do so in the future, it would seek the approval of the Board
before making any changes;
o that under the Transaction Agreement, Merrill Lynch and BlackRock have
agreed to conduct, and use reasonable best efforts to cause their
respective affiliates to conduct, their respective businesses in
compliance with the conditions of Section 15(f) of the Investment Company
Act of 1940 (the "1940 Act") in relation to any public funds advised by
BlackRock or the Investment Adviser (or its affiliates), respectively; and
o that Merrill Lynch and BlackRock would derive benefits from the
Transaction and that, as a result, they have a different financial
interest in the matters that were being considered than do Fund
shareholders;
The directors considered the information provided by Merrill Lynch and BlackRock
above, and, among other factors, the following:
o the potential benefits to Fund shareholders from being part of a combined
fund family with BlackRock-sponsored funds, including possible economies
of scale and access to investment opportunities;
16 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006
o the reputation, financial strength and resources of BlackRock and its
investment advisory subsidiaries and the anticipated financial strength
and resources of New BlackRock;
o the compliance policies and procedures of BlackRock Advisors;
o the terms and conditions of the New Investment Advisory Agreement,
including the fact that the schedule of the Fund's total advisory fees
will not increase by virtue of the New Investment Advisory Agreement, but
will remain the same;
o that within the past year the Board performed a full annual review of the
investment advisory agreement currently in effect for the Fund (the
"Current Investment Advisory Agreement") as required by the 1940 Act and
has determined that the Investment Adviser has the capabilities, resources
and personnel necessary to provide the advisory and administrative
services currently provided to the Fund; and that the advisory and/or
management fees paid by the Fund, taking into account any applicable
agreed-upon fee waivers and breakpoints, represent reasonable compensation
to the Investment Adviser in light of the services provided, the costs to
the Investment Adviser of providing those services, economies of scale,
the fees and other expenses paid by similar funds (including information
provided by Lipper, Inc. ["Lipper"]), and such other matters as the
directors have considered relevant in the exercise of their reasonable
judgment (the Board had most recently performed a full annual review of
the Current Investment Advisory Agreement in August 2005); and
o that Merrill Lynch agreed to pay all expenses of the Fund in connection
with the Board's consideration of the New Investment Advisory Agreement
and related agreements and all costs of shareholder approval of the New
Investment Advisory Agreement and as a result the Fund would bear no costs
in obtaining shareholder approval of the New Investment Advisory
Agreement.
Certain of these considerations are discussed in more detail below.
In its review of the New Investment Advisory Agreement, the Board assessed the
nature, scope and quality of the services to be provided to the Fund by the
personnel of BlackRock Advisors and its affiliates, including administrative
services, shareholder services, oversight of fund accounting, marketing services
and assistance in meeting legal and regulatory requirements. In its review of
the New Investment Advisory Agreement, the Board also considered a range of
information in connection with its oversight of the services to be provided by
BlackRock Advisors and its affiliates. Among the matters considered were: (a)
fees (in addition to management fees) to be paid to BlackRock Advisors and its
affiliates by the Fund; (b) Fund operating expenses paid to third parties; (c)
the resources devoted to and compliance reports relating to the Fund's
investment objective, policies and restrictions, and its compliance with its
Code of Ethics and BlackRock Advisors' compliance policies and procedures; and
(d) the nature, cost and character of non-investment management services to be
provided by BlackRock Advisors and its affiliates.
In the period prior to the Board meetings to consider renewal of the Current
Investment Advisory Agreement, the Board had requested and received materials
specifically relating to the agreement. These materials included (a) information
compiled by Lipper on the fees and expenses and the investment performance of
the Fund as compared to a comparable group of funds as classified by Lipper; (b)
information comparing the Fund's market price with its net asset value per
share; (c) a discussion by the Fund's portfolio management team on investment
strategies used by the Fund during its most recent fiscal year; (d) information
on the profitability to the Investment Adviser of the Current Investment
Advisory Agreement and other payments received by the Investment Adviser and its
affiliates from the Fund; and (e) information provided by the Investment Adviser
concerning services related to the valuation and pricing of Fund portfolio
holdings, the Fund's portfolio turnover statistics, and direct and indirect
benefits to the Investment Adviser and its affiliates from their relationship
with the Fund.
In their deliberations, the directors considered information received in
connection with their most recent continuation of the Current Investment
Advisory Agreement, in addition to information provided by BlackRock and
BlackRock Advisors in connection with their evaluation of the terms and
conditions of the New Investment Advisory Agreement. The directors did not
identify any particular information that was all-important or controlling. The
directors, including a majority of the independent directors, concluded that the
terms of the New Investment Advisory Agreement are appropriate, that the fees to
be paid are reasonable in light of the services to be provided to the Fund, and
that the
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006 17
Disclosure of New Investment Advisory Agreement (continued)
New Investment Advisory Agreement should be approved and recommended to
Fund shareholders.
Nature, Quality and Extent of Services Provided -- The Board reviewed the
nature, extent and quality of services provided by the Investment Adviser,
including the investment advisory services and the resulting performance of the
Fund, as well as the nature, quality and extent of services expected to be
provided by BlackRock Advisors. The Board focused primarily on the Investment
Adviser's investment advisory services and the Fund's investment performance,
but also considered certain areas in which both the Investment Adviser and the
Fund receive services as part of the Merrill Lynch complex. The Board compared
the Fund's performance -- both including and excluding the effects of the Fund's
fees and expenses -- to the performance of a comparable group of funds, and the
performance of a relevant index or combination of indexes. While the Board
reviews performance data at least quarterly, consistent with the Investment
Adviser's investment goals, the Board attaches more importance to performance
over relatively long periods of time, typically three to five years.
In evaluating the nature, quality and extent of the services to be provided by
BlackRock Advisors under the New Investment Advisory Agreement, the directors
considered, among other things, the expected impact of the Transaction on the
operations, facilities, organization and personnel of New BlackRock and how it
would affect the Fund; the ability of BlackRock Advisors to perform its duties
after the Transaction; and any anticipated changes to the current investment and
other practices of the Fund.
The directors were given information with respect to the potential benefits to
the Fund and its shareholders from having access to BlackRock's state of the art
technology and risk management analytic tools, including the investment tools
provided under the BlackRock Solutions(R) brand name.
The directors were advised that, as a result of Merrill Lynch's equity interest
in BlackRock after the Transaction, the Fund will continue to be subject to
restrictions concerning certain transactions involving Merrill Lynch affiliates
(for example, transactions with a Merrill Lynch broker-dealer acting as
principal) absent revised or new regulatory relief. The directors were advised
that a revision of existing regulatory relief with respect to these restrictions
was being sought from the Securities and Exchange Commission and were advised of
the possibility of receipt of such revised regulatory relief. There can be no
assurance that such relief will be obtained.
Based on their review of the materials provided and the assurances they had
received from the management of Merrill Lynch and of BlackRock, the directors
determined that the nature and quality of services to be provided to the Fund
under the New Investment Advisory Agreement were expected to be as good or
better than that provided under the Current Investment Advisory Agreement. It
was noted, however, that it is expected that there will be changes in personnel
following the Transaction and the combination of the operations of the
Investment Adviser and its affiliates with those of BlackRock. The directors
noted that if current portfolio managers or other personnel cease to be
available, the Board would consider all available options, which could include
seeking the investment advisory or other services of BlackRock affiliates.
Accordingly, the directors concluded that, overall, they were satisfied at the
present time with assurances from BlackRock and BlackRock Advisors as to the
expected nature, extent and quality of the services to be provided to the Fund
under the New Investment Advisory Agreement.
Costs of Services Provided and Profitability -- It was noted that, in
conjunction with the recent review of the Current Investment Advisory Agreement,
the directors had received, among other things, a report from Lipper comparing
the Fund's fees, expenses and performance to those of a peer group selected by
Lipper, and information as to the fees charged by the Investment Adviser or its
affiliates to other registered investment company clients for investment
management services. The Board reviewed the Fund's contractual management fee
rate and actual management fee rate as a percentage of total assets at common
asset levels -- the actual rate includes advisory fees and the effects of any
fee waivers -- compared to the other funds in its Lipper category. They also
compared the Fund's total expenses to those of other comparable funds. The
information showed that the Fund had fees and expenses within the range of fees
and expenses of comparable funds. The Board considered the services to be
provided by and the fees to be charged by BlackRock Advisors to other funds with
similar investment mandates and noted that the fees charged by BlackRock
Advisors in those cases, including fee waivers and expense reimbursements, were
generally comparable to those being charged to the Fund. The Board also noted
that, as a general matter, according to the information provided by BlackRock,
fees charged to institutional clients were lower than the fees charged to the
Fund, but BlackRock Advisors provided less extensive services to such clients.
The Board concluded that the Fund's management fee and fee rate
18 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006
and overall expense ratio are reasonable compared to those of other comparable
funds.
In evaluating the costs of the services to be provided by BlackRock Advisors
under the New Investment Advisory Agreement, the directors considered, among
other things, whether advisory fees or other expenses would change as a result
of the Transaction. Based on their review of the materials provided and the fact
that the New Investment Advisory Agreement is substantially similar to the
Current Investment Advisory Agreement in all material respects, including the
rate of compensation, the directors determined that the Transaction should not
increase the total fees payable, including any fee waivers and expense
reimbursements, for advisory and administrative services. The directors noted
that it was not possible to predict how the Transaction would affect BlackRock
Advisors' profitability from its relationship with the Fund.
The directors discussed with BlackRock Advisors its general methodology to be
used in determining its profitability with respect to its relationship with the
Fund. The directors noted that they expect to receive profitability information
from BlackRock Advisors on at least an annual basis and thus be in a position to
evaluate whether any adjustments in Fund fees and/or fee breakpoints would be
appropriate.
Fees and Economies of Scale -- The Board considered the extent to which
economies of scale might be realized as the assets of the Fund increase and
whether there should be changes in the management fee rate or structure in order
to enable the Fund to participate in these economies of scale. The Board
considered economies of scale to the extent applicable to the Fund's closed-end
structure and determined that the Fund currently appropriately benefits from any
economies of scale and no changes were currently necessary.
In reviewing the Transaction, the directors considered, among other things,
whether advisory fees or other expenses would change as a result of the
Transaction. Based on the fact that the New Investment Advisory Agreement is
substantially similar to the Current Investment Advisory Agreement in all
material respects, including the rate of compensation, the directors determined
that as a result of the Transaction, the Fund's total advisory fees would be no
higher than the fees under its Current Investment Advisory Agreement. The
directors noted that in conjunction with their most recent deliberations
concerning the Current Investment Advisory Agreement, the directors had
determined that the total fees for advisory and administrative services for the
Fund were reasonable in light of the services provided. It was noted that in
conjunction with the recent review of the Current Investment Advisory Agreement,
the directors had received, among other things, a report from Lipper comparing
the Fund's fees, expenses and performance to those of a peer group selected by
Lipper, and information as to the fees charged by the Investment Adviser or its
affiliates to other registered investment company clients for investment
management services. The directors concluded that, because the rates for
advisory fees for the Fund would be no higher than its current fee rates, the
proposed management fee structure, including any fee waivers, was reasonable and
that no additional changes were currently necessary.
Fall-Out Benefits -- In evaluating the fall-out benefits to be received by
BlackRock Advisors under the New Investment Advisory Agreement, the directors
considered whether the Transaction would have an impact on the fall-out benefits
received by the Investment Adviser by virtue of the Current Investment Advisory
Agreement. Based on their review of the materials provided, including materials
received in connection with their most recent approval or continuance of the
Current Investment Advisory Agreement, and their discussions with management of
the Investment Adviser and BlackRock, the directors determined that those
benefits could include increased ability for BlackRock to distribute shares of
its funds and other investment products. The directors noted that any such
benefits were difficult to quantify with certainty at this time, and indicated
that they would continue to evaluate them going forward.
Investment Performance -- The directors considered investment performance for
the Fund. The directors compared the Fund's performance -- both including and
excluding the effects of the Fund's fees and expenses -- to the performance of a
comparable group of funds, and the performance of a relevant index or
combination of indexes. The comparative information received from Lipper showed
Fund performance at various levels within the range of performance of comparable
funds over different time periods. While the Board reviews performance data at
least quarterly, consistent with the Investment Adviser's investment goals, the
Board attaches more importance over relatively long periods of time, typically
three to five years. The directors believed the Fund's performance was
satisfactory. Also, the directors took into account the investment performance
of funds currently advised by BlackRock Advisors. The Board considered
comparative information from Lipper which showed that the performance of the
funds advised by BlackRock Advisors was
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006 19
Disclosure of New Investment Advisory Agreement (concluded)
within the range of performance of comparable funds over different time periods.
The Board noted BlackRock's considerable investment management experience and
capabilities, but were unable to predict what effect, if any, consummation of
the Transaction would have on the future performance of the Fund.
Conclusion -- After the independent directors of the Fund deliberated in
executive session, the entire Board, including the independent directors,
approved the New Investment Advisory Agreement, concluding that the advisory fee
rate was reasonable in relation to the services provided and that the New
Investment Advisory Agreement was in the best interests of the shareholders. In
approving the New Investment Advisory Agreement, the Board noted that it
anticipated reviewing the continuance of the agreement in advance of the
expiration of the initial two-year period.
Contingent BlackRock Subadvisory Agreement -- Matters Considered by the Board
At the telephonic and in-person meetings held during April and May 2006 at which
the Board of Directors discussed and approved the New Investment Advisory
Agreement, the Board, including the independent directors, also discussed and
approved a contingent subadvisory agreement (the "Contingent Subadvisory
Agreement") between the Investment Adviser and BlackRock Advisors (the
"BlackRock Subadviser"). The Contingent Subadvisory Agreement is intended to
ensure that the Fund operates with efficient portfolio management services until
the closing of the Transaction, in the event that the Board deems it necessary
and in the best interests of the Fund and its shareholders that the BlackRock
Subadviser assist in managing the operations of the Fund during the interim
period until the closing of the Transaction. If shareholders approve the
Contingent Subadvisory Agreement, it will take effect only upon recommendation
from the Investment Adviser and upon subsequent approval of the Board in the
period up to the closing of the Transaction. The effectiveness of the Contingent
Subadvisory Agreement, therefore, would be contingent on further Board approval
after shareholders approve it. Pursuant to the Contingent Subadvisory Agreement,
the BlackRock Subadviser would receive a monthly fee from the Investment Adviser
equal to 50% of the advisory fee received by the Investment Adviser. The
Investment Adviser would pay the BlackRock Subadviser out of its own resources.
There would be no increase in Fund expenses as a result of the Contingent
Subadvisory Agreement.
In making its approval, the Board considered the Contingent Subadvisory
Agreement in conjunction with the New Investment Advisory Agreement and reviewed
the same information and factors discussed above, and came to the same
conclusions. The Board also considered in conjunction with the Contingent
Subadvisory Agreement the necessity of ensuring that the Fund operates with
effective management services until the closing of the Transaction. In reviewing
the subadvisory fee rate provided in the Contingent Subadvisory Agreement, the
Board took note of the fact that both the Investment Adviser and the BlackRock
Subadviser would have significant responsibilities under their respective
advisory agreements. The Investment Adviser would remain responsible for
oversight of the Fund's operations and administration and the BlackRock
Subadviser would provide advisory services to the Fund under the Contingent
Subadvisory Agreement. The Board also took into account the expected short
duration of the term of any Contingent Subadvisory Agreement and the fact that
total advisory fees paid by the Fund would not increase as a result of the
Contingent Subadvisory Agreement. Under all of the circumstances, the Board
concluded that it was a reasonable allocation of fees for the BlackRock
Subadviser to receive 50% of the advisory fee paid by the Fund to the Investment
Adviser.
After the independent directors deliberated in executive session, the entire
Board, including the independent directors, approved the Contingent Subadvisory
Agreement, concluding that the advisory fee was reasonable in relation to the
services provided and that the Contingent Subadvisory Agreement was in the best
interests of shareholders.
20 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006
Proxy Results
During the six-month period ended May 31, 2006, MuniYield New Jersey Fund,
Inc.'s Common Stock shareholders voted on the following proposal. The proposal
was approved at a shareholders' meeting on April 27, 2006. 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. 13,492,358 497,819
James H. Bodurtha 13,483,178 506,999
Kenneth A. Froot 13,471,164 519,013
Joe Grills 13,479,382 510,795
Roberta Cooper Ramo 13,474,056 516,121
-----------------------------------------------------------------------------------------------------
During the six-month period ended May 31, 2006, MuniYield New Jersey Fund,
Inc.'s Preferred Stock shareholders (Series A - C) voted on the following
proposal. The proposal was approved at a shareholders' meeting on April 27,
2006. 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. 4,425 291
James H. Bodurtha 4,425 291
Kenneth A. Froot 4,425 291
Joe Grills 4,425 291
Herbert I. London 4,424 292
Roberta Cooper Ramo 4,422 294
Robert S. Salomon, Jr. 4,404 312
-----------------------------------------------------------------------------------------------------
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006 21
Officers and Directors
Robert C. Doll, Jr., President and Director
James H. Bodurtha, Director
Kenneth A. Froot, Director
Joe Grills, Director
Herbert I. London, Director
Roberta Cooper Ramo, Director
Robert S. Salomon, Jr., Director
Kenneth A. Jacob, Senior Vice President
John M. Loffredo, Senior Vice President
Donald C. Burke, Vice President and Treasurer
Theodore R. Jaeckel Jr., Vice President
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
MYJ
22 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006
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.
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.
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2006 23
[LOGO] Merrill Lynch Investment Managers
www.mlim.ml.com
--------------------------------------------------------------------------------
Mercury Advisors
A Division of Merrill Lynch Investment Managers
www.mercury.ml.com
MuniYield New Jersey Fund, Inc. seeks to provide shareholders with as high a
level of current income exempt from federal and New Jersey income taxes as is
consistent with its investment policies and prudent investment management by
investing primarily in a portfolio of long-term, 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 MuniYield New Jersey 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 1-800-637-3863; (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 Fund, Inc.
Box 9011
Princeton, NJ 08543-9011
#16381 -- 5/06
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.
MuniYield New Jersey Fund, Inc.
By: /s/ Robert C. Doll, Jr.
--------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
MuniYield New Jersey Fund, Inc.
Date: July 21, 2006
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
MuniYield New Jersey Fund, Inc.
Date: July 21, 2006
By: /s/ Donald C. Burke
--------------------------------
Donald C. Burke,
Chief Financial Officer of
MuniYield New Jersey Fund, Inc.
Date: July 21, 2006