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 811-6570
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: Terry K. Glenn, President, 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: 11/30/04
Date of reporting period: 12/01/03 - 05/31/04
Item 1 - Report to Stockholders
[LOGO] Merrill Lynch Investment Managers www.mlim.ml.com
MuniYield New Jersey
Fund, Inc.
Semi-Annual Report
May 31, 2004
[LOGO] Merrill Lynch Investment Managers
MuniYield New Jersey Fund, Inc.
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. Of course, increases in short-term interest rates would reduce (and even
eliminate) the dividends on the Common Stock.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term investments,
and therefore the Common Stock shareholders are the beneficiaries of the
incremental yield. However, if short-term interest rates rise, narrowing the
differential between short-term and long-term interest rates, the incremental
yield pickup on the Common Stock will be reduced or eliminated completely. At
the same time, the market value of the fund's Common Stock (that is, its price
as listed on the New York Stock Exchange) may, as a result, decline.
Furthermore, if long-term interest rates rise, the Common Stock's net asset
value will reflect the full decline in the price of the portfolio's investments,
since the value of the fund's Preferred Stock does not fluctuate. In addition to
the decline in net asset value, the market value of the fund's Common Stock may
also decline.
As a part of its investment strategy, the Fund may invest in certain securities
whose potential income return is inversely related to changes in a floating
interest rate ("inverse floaters"). In general, income on inverse floaters will
decrease when short-term interest rates increase and increase when short-term
interest rates decrease. Investments in inverse floaters may be characterized as
derivative securities and may subject the Fund to the risks of reduced or
eliminated interest payments and losses of invested principal. In addition,
inverse floaters have the effect of providing investment leverage and, as a
result, the market value of such securities will generally be more volatile than
that of fixed-rate, tax-exempt securities. To the extent the Fund invests in
inverse floaters, the market value of the Fund's portfolio and the net asset
value of the Fund's shares may also be more volatile than if the Fund did not
invest in these securities. As of May 31, 2004, the percentage of the Fund's
total net assets invested in inverse floaters was 12.26% before the deduction of
Preferred Stock.
Swap Agreements
The Fund may also invest in swap agreements, which are over-the-counter
contracts in which one party agrees to make periodic payments based on the
change in market value of a specified bond, basket of bonds, or index in return
for periodic payments based on a fixed or variable interest rate or the change
in market value of a different bond, basket of bonds or index. Swap agreements
may be used to obtain exposure to a bond or market without owning or taking
physical custody of securities. Swap agreements involve the risk that the party
with whom the Fund has entered into the swap will default on its obligation to
pay the Fund and the risk that the Fund will not be able to meet its obligations
to pay the other party to the agreement.
2 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2004
A Letter From the President
Dear Shareholder
For the six-month and 12-month periods ended May 31, 2004, the Lehman Brothers
Municipal Bond Index posted respective returns of -.22% and -.03%. Its taxable
counterpart, the Lehman Brothers Aggregate Bond Index, returned +.60% for the
six-month period and -.44% for the 12-month period ended May 31, 2004. Amid
considerable month-to-month volatility, tax-exempt bond yields rose over the
past year, generally mimicking the movement of U.S. Treasury yields. Given their
tax-exempt status, however, municipal bonds continued to be an attractive fixed
income investment alternative.
By May month-end, the Federal Reserve Board appeared poised to raise the Federal
Funds target rate from its 45-year low of 1%. This anticipated shift in monetary
policy was largely prompted by better-than-expected employment reports for the
months of March, April and May, as well as by rising producer prices. The good
news on the employment front -- previously a dim spot in an otherwise bright
economic picture -- helped cause the yield on the 10-year Treasury bond to spike
75 basis points (.75%), from 3.91% on April 1 to 4.66% on May 28.
Equity markets, in the meantime, gleaned support from the improving economic
environment and provided attractive returns. Although we did experience a market
correction toward the end of the period, for the six months and 12 months ended
May 31, 2004, the Standard & Poor's 500 Index returned +6.79% and +18.33%,
respectively. Significant fiscal and monetary stimulus in 2003, including low
interest rates and tax cuts, opened the door to consumer spending, capital
spending, increases in exports and long-awaited job growth. As expected, these
developments led the way to improvements in corporate earnings -- a positive for
stock markets.
The events and efforts of the past year leave us with a much stronger economy
today. Of course, markets will always fluctuate, and there are many
uncertainties -- including the possibility of geopolitical events -- that can
translate into negative market movements. Keeping this in mind, however, we
encourage you to revisit your portfolio and your asset allocation strategy to
ensure you are well positioned to take advantage of the opportunities that lie
ahead. Importantly, your financial advisor can help you develop a strategy most
suitable for your circumstances through all types of market and economic cycles.
We thank you for trusting Merrill Lynch Investment Managers with your investment
assets, and we look forward to serving you in the months and years ahead.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Director
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2004 3
[LOGO] Merrill Lynch Investment Managers
A Discussion With Your Fund's Portfolio Manager
We maintained a defensive market posture throughout the period, but
moderated that stance at period-end as interest rates inched higher.
Describe the recent market environment relative to municipal bonds.
Long-term bond yields rose over the past six months, as bond prices -- which
move opposite yields -- declined. For much of the period, bond prices actually
moved higher (yields declined) as it appeared the Federal Reserve Board, without
evidence of meaningful employment growth, was content to maintain short-term
interest rates at historic lows. In early April, however, a surprisingly strong
monthly jobs report triggered fears that the long-accommodative Federal Reserve
Board might raise interest rates sooner than many had expected. As a result,
bond yields rose (prices fell) for the remainder of the period. At the end of
May, long-term U.S. Treasury bond yields had climbed to 5.35%, representing an
increase of more than 20 basis points (.20%) over the past six months. Yields on
ten-year Treasury issues stood at 4.65% as of period-end, an increase of more
than 20 basis points.
Tax-exempt bond yields generally mimicked the movement of their taxable
counterparts. Long-term revenue bond yields, as measured by the Bond Buyer
Revenue Bond Index, rose approximately 25 basis points over the past six months.
For the same period, yields on AAA-rated issues maturing in 30 years rose
approximately 25 basis points to 4.99% while yields on 10-year, AAA-rated issues
increased more than 35 basis points to nearly 3.95%, according to Municipal
Market Data. The slightly larger increase in 10-year bond yields may be
attributed to the fact that recent issuance has been heavily concentrated in the
10-year - 20-year range. The resulting supply imbalance prompted higher
intermediate bond yields (and lower prices). Longer-maturity and lower-rated
issues continued to benefit from more favorable supply/demand factors and,
therefore, have seen less price depreciation. Overall, municipal bond supply
increased approximately 5% compared to the same six-month period a year ago,
with the pace of underwriting accelerating in the last three months of the
period.
Overall, demand for tax-exempt municipal bonds has remained positive. Federal
Reserve Board statistics showed that U.S. household holdings of municipal
securities increased by more than $25 billion during the fourth quarter of 2003
to approximately $680 billion.
Describe conditions in the State of New Jersey.
At period-end, New Jersey had credit ratings of AA from Standard & Poor's, Aa2
from Moody's and AA from Fitch. In early March, however, Moody's placed the
state's credit rating under review for a possible downgrade.
Following two years of tax-revenue shortfalls, New Jersey's projected revenues
for the fiscal year ended June 30, 2004, were more optimistic than forecasted,
thanks primarily to better-than-expected income tax and sales tax receipts --
both signs of economic improvement. Underscoring the economy's recovery was a
substantial decline in the state's unemployment rate. At 5.4% in February 2004,
the state unemployment rate was below the national average of 5.6% and down from
6% the prior year.
The 2005 state budget, despite a modest general fund surplus, relies on the use
of a number of one-time revenues. These include an expected $1.5 billion in
bonds backed by cigarette tax revenues and revenues from a proposed vehicle
surcharge for "unsafe driving." Measured as a percentage of general fund
revenues, New Jersey's projected 2005 budget deficit is one of the nation's
largest. For the third straight year, the budget does not propose any increases
in state income tax or sales tax rates. However, the state authorized higher
corporate taxes, effective beginning in 2003, and a hotel occupancy tax that
takes effect this year. The 2005 budget also proposes an increase in state
cigarette taxes, already the highest in the United States, and raising $199
million from various surcharges on pollution-related products and services. New
Jersey recently authorized a significant amount of new debt issuance, including
$6.2 billion in school construction bonds and $650 million annually for
transportation trust bonds.
How did the Fund perform during the period in light of the existing market
conditions?
For the six-month period ended May 31, 2004, the Common Stock of MuniYield New
Jersey Fund, Inc. had net annualized yields of 6.52% and 7.03%, based on a
period-end per share net asset value of $14.68 and a per share market price of
$13.62, respectively, and $.480 per share income dividends. Over the same
period, the total investment return on the Fund's Common Stock was -1.44%, based
on a
4 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2004
change in per share net asset value from $15.39 to $14.68, and assuming
reinvestment of $.480 per share ordinary income dividends.
For the six-month period ended May 31, 2004, the Fund's Auction Market Preferred
Stock (AMPS) had an average yield of .88% for Series A and .88% for Series B.
The Fund's total return for the period, based on net asset value, modestly
lagged the -1.25% average return of the Lipper category of New Jersey Municipal
Debt Funds. (Funds in this Lipper category invest in securities exempt from
taxation in New Jersey or a city in New Jersey.) The Fund's relative
underperformance is primarily attributed to two factors. First was the
portfolio's defensive positioning. Given our concerns about the market
environment -- specifically, the negative price impact associated with rising
interest rates -- we sought to shorten the Fund's duration relative to our peers
in order to limit the Fund's sensitivity to interest rate moves. Persistent
market strength through the first half of the period, characterized by
relatively low rates, caused the lag in performance. However, as market
conditions deteriorated during the remainder of the period, our defensive
positioning helped enhance the Fund's returns. Second, unlike many of its Lipper
peers, the Fund is precluded from investing in speculative grade bonds,
reflecting the lower risk tolerance of an investment grade portfolio. These
issues were among the market's best performers during the period.
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
included in this report. As a closed-end fund, the Fund's shares may trade in
the secondary market at a premium or discount to the Fund's net asset value. As
a result, total investment returns based on changes in the market value of the
Fund's Common Stock can vary significantly from total investment returns based
on changes in the Fund's net asset value.
What changes were made to the portfolio during the period?
Portfolio activity during the period was restricted in large part by the
significant decline in New Jersey tax-exempt issuance. Over the past six months,
approximately $5.5 billion in bonds were issued by New Jersey municipalities,
representing a decline of about 25% compared to the same period a year ago.
Cash reserves were kept at minimal levels throughout the period while sector
concentrations continued to reflect above-market weightings in education and
health care issues. In addition, our constructive outlook for credit spreads
prompted an above-market concentration at the lower end of the investment grade
spectrum, where we found what we believed to be a compelling balance of risk and
reward. Nevertheless, the Fund continued to be disadvantaged by the conservative
investment parameters typical of investment grade portfolios, as speculative
grade and non-rated credits remained one of the municipal bond market's
top-performing sectors.
The Fund's borrowing costs remained below 1% through-out most of the period.
These attractive funding levels, in combination with a steep yield curve,
continued to generate significant income to the Fund's Common Stock
shareholders. Currently, the Federal Reserve Board appears poised to begin
raising short-term interest rates. The increase, however, is expected to be
gradual and should not have a material impact on the positive advantage leverage
has had on the Fund's Common Stock yield. 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 31.86% of total
net assets. (For a more complete explanation of the benefits and risks of
leveraging, see page 2 of this report to shareholders.)
How would you characterize the Fund's position at the close of the period?
Late in the period, as interest rates rose modestly, we elected to moderate the
portfolio's defensive stance to achieve a more neutral market position. At the
same time, the Fund remained fully invested in order to enhance investment
income.
Amid ongoing geopolitical and economic uncertainty, we expect that the markets
will be subjected to bouts of significant volatility in the months ahead. Under
these circumstances, we believe a more conservative investment strategy is
appropriate until a clearer picture emerges on both fronts.
Theodore R. Jaeckel Jr.
Vice President and Portfolio Manager
June 14, 2004
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2004 5
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (in Thousands)
S&P Moody's Face
Ratings Ratings Amount Municipal Bonds Value
====================================================================================================================================
New Jersey--140.4%
------------------------------------------------------------------------------------------------------------------------------------
AA NR* $ 1,000 Burlington County, New Jersey, Bridge Commission Revenue
Bonds (Governmental Leasing Program), 5.25% due 8/15/2020 $ 1,040
----------------------------------------------------------------------------------------------------------
AAA Aaa 6,925 Cape May County, New Jersey, Industrial Pollution Control
Financing Authority Revenue Bonds (Atlantic City Electric
Company Project), AMT, Series A, 7.20% due 11/01/2029 (d) 7,206
----------------------------------------------------------------------------------------------------------
Delaware River Joint Toll Bridge Commission, Pennsylvania,
Bridge Revenue Refunding Bonds:
A- A2 2,010 5% due 7/01/2021 2,020
A- A2 3,645 5% due 7/01/2028 3,569
----------------------------------------------------------------------------------------------------------
NR* Aaa 3,930 Delaware River Port Authority of Pennsylvania and New
Jersey Revenue Bonds, RIB, Series 396, 10.633%
due 1/01/2019 (c)(e) 4,760
----------------------------------------------------------------------------------------------------------
NR* Aaa 2,620 Essex County, New Jersey, Improvement Authority Revenue
Bonds, Series A, 5% due 10/01/2028 (b) 2,610
----------------------------------------------------------------------------------------------------------
Garden State Preservation Trust, New Jersey, Capital
Appreciation Revenue Bonds, Series B:
AAA Aaa 6,860 5.12%** due 11/01/2023 (c) 2,497
AAA Aaa 4,540 5.25%** due 11/01/2028 1,202
----------------------------------------------------------------------------------------------------------
Garden State Preservation Trust, New Jersey, Open Space
and Farmland Preservation Revenue Bonds, Series A (c):
AAA Aa3 4,300 5.80% due 11/01/2022 4,478
AAA Aa3 5,460 5.75% due 11/01/2028 5,711
----------------------------------------------------------------------------------------------------------
AAA Aaa 3,440 Garden State Preservation Trust, New Jersey, Revenue
Bonds, Series A, 5% due 11/01/2020 (c) 3,539
----------------------------------------------------------------------------------------------------------
Gloucester County, New Jersey, Improvement Authority,
Solid Waste Resource Recovery Revenue Refunding Bonds
(Waste Management Inc. Project):
BBB NR* 1,180 AMT, Series B, 7% due 12/01/2029 1,316
BBB NR* 2,000 Series A, 6.85% due 12/01/2029 2,237
----------------------------------------------------------------------------------------------------------
AAA Aaa 1,500 Hudson County, New Jersey, COP, Refunding, 6.25%
due 12/01/2016 (d) 1,765
----------------------------------------------------------------------------------------------------------
AAA NR* 13,950 Hudson County, New Jersey, Improvement Authority, Facility
Lease Revenue Refunding Bonds (Hudson County Lease
Project), 5.375% due 10/01/2024 (b) 14,413
----------------------------------------------------------------------------------------------------------
Jackson Township, New Jersey, School District, GO (b):
AAA Aaa 3,090 5% due 4/15/2018 3,200
AAA Aaa 3,750 5% due 4/15/2019 3,863
----------------------------------------------------------------------------------------------------------
Middlesex County, New Jersey, Improvement Authority,
County-Guaranteed Revenue Bonds (Golf Course Projects):
AAA Aa1 1,455 5.25% due 6/01/2022 1,504
AAA Aa1 3,050 5% due 6/01/2029 2,994
----------------------------------------------------------------------------------------------------------
NR* Baa1 1,000 Middlesex County, New Jersey, Improvement Authority
Revenue Bonds (George Street Student Housing Project),
Series A, 5% due 8/15/2023 979
----------------------------------------------------------------------------------------------------------
Monmouth County, New Jersey, Improvement Authority,
Governmental Loan Revenue Refunding Bonds (a):
AAA Aaa 2,235 5% due 12/01/2015 2,348
AAA Aaa 2,345 5% due 12/01/2016 2,451
----------------------------------------------------------------------------------------------------------
Morris County, New Jersey, Improvement Authority Revenue
Bonds (Pooled Program):
NR* Aaa 825 5% due 8/15/2017 863
NR* Aaa 860 5% due 8/15/2018 895
NR* Aaa 890 5% due 8/15/2019 920
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
6 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2004
Schedule of Investments (continued) (in Thousands)
S&P Moody's Face
Ratings Ratings Amount Municipal Bonds Value
====================================================================================================================================
New Jersey (continued)
------------------------------------------------------------------------------------------------------------------------------------
New Jersey EDA, EDR (Masonic Charity Foundation of New
Jersey):
A+ NR* $ 600 5.25% due 6/01/2024 $ 605
A+ NR* 685 5.25% due 6/01/2032 686
----------------------------------------------------------------------------------------------------------
BBB- NR* 1,500 New Jersey EDA, First Mortgage Revenue Bonds (Fellowship
Village), Series C, 5.50% due 1/01/2028 1,392
----------------------------------------------------------------------------------------------------------
New Jersey EDA, First Mortgage Revenue Refunding Bonds,
Series A:
BBB- NR* 1,250 (Fellowship Village), 5.50% due 1/01/2018 1,240
BBB- NR* 3,500 (Fellowship Village), 5.50% due 1/01/2025 3,271
NR* NR* 2,500 (The Winchester Gardens at Ward Homestead Project),
5.75% due 11/01/2024 2,433
NR* NR* 2,000 (The Winchester Gardens at Ward Homestead Project),
5.80% due 11/01/2031 1,919
----------------------------------------------------------------------------------------------------------
NR* Aaa 5,575 New Jersey EDA, Natural Gas Facilities Revenue Refunding
Bonds (NUI Corporation), RIB, Series 371, 11.32%
due 10/01/2022 (a)(e) 5,959
----------------------------------------------------------------------------------------------------------
New Jersey EDA, Revenue Bonds:
A NR* 400 (Department of Human Services), 5% due 7/01/2011 429
A NR* 220 (Department of Human Services), 5% due 7/01/2012 235
NR* Aaa 3,850 (Saint Barnabas Project), Series A, 6.30%**
due 7/01/2024 (d) 1,333
AAA Aaa 10,000 (Transportation Project), Sublease, Series A, 5.875%
due 5/01/2009 (c)(g) 11,232
----------------------------------------------------------------------------------------------------------
NR* Aaa 3,335 New Jersey EDA, Water Facilities Revenue Bonds, RIB, AMT,
Series 417, 12.38% due 11/01/2034 (b)(e) 3,596
----------------------------------------------------------------------------------------------------------
AAA Aaa 1,850 New Jersey EDA, Water Facilities Revenue Refunding Bonds
(American Water), AMT, Series B, 5.125% due 4/01/2022 (a) 1,874
----------------------------------------------------------------------------------------------------------
AAA Aaa 5,975 New Jersey Environmental Infrastructure Trust Revenue
Bonds (Environmental Infrastructure), Series A, 5.25%
due 9/01/2017 6,290
----------------------------------------------------------------------------------------------------------
A A2 1,100 New Jersey Health Care Facilities Financing Authority,
Health System Revenue Bonds (Catholic Health East),
Series A, 5.375% due 11/15/2033 1,077
----------------------------------------------------------------------------------------------------------
New Jersey Health Care Facilities Financing Authority
Revenue Bonds:
AAA Aaa 2,155 (Jersey Shore Medical Center), 6.75%
due 7/01/2019 (a) 2,207
BB+ NR* 2,345 (Pascack Valley Hospital Association), 6.625%
due 7/01/2036 2,425
AAA Aaa 4,000 (Robert Wood University), 5.70% due 7/01/2020 (a) 4,315
NR* Baa2 1,875 (Somerset Medical Center), 5.50% due 7/01/2033 1,781
NR* Baa1 6,640 (South Jersey Hospital), 6% due 7/01/2026 6,810
AA NR* 2,000 (Southern Ocean County Hospital), 5.125%
due 7/01/2031 (f) 1,972
NR* Baa1 4,200 (Southern Ocean County Hospital), Series A, 6.25%
due 7/01/2023 4,248
----------------------------------------------------------------------------------------------------------
New Jersey Health Care Facilities Financing Authority,
Revenue Refunding Bonds:
A A3 1,020 (Atlantic City Medical Center), 6.25% due 7/01/2017 1,112
A A3 2,185 (Atlantic City Medical Center), 5.75% due 7/01/2025 2,249
BBB Baa1 1,650 (Capital Health System Inc.), Series A, 5.75%
due 7/01/2023 1,678
BBB+ NR* 5,500 (Holy Name Hospital), 6% due 7/01/2025 5,567
AAA Aaa 1,500 (Meridian Health System Obligation Group), 5.25%
due 7/01/2019 (c) 1,560
AAA Aaa 2,250 (Meridian Health System Obligation Group), 5.375%
due 7/01/2024 (c) 2,296
AAA Aaa 2,195 (Meridian Health System Obligation Group), 5.25%
due 7/01/2029 (c) 2,218
----------------------------------------------------------------------------------------------------------
AAA Aaa 4,150 New Jersey State Educational Facilities Authority, Higher
Education, Capital Improvement Revenue Bonds, Series A,
5.125% due 9/01/2022 (a) 4,255
----------------------------------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority Revenue
Bonds:
NR* Baa3 1,000 (Bloomfield College), Series A, 6.85% due 7/01/2030 1,016
BBB+ Baa1 2,000 (Georgian Court College Project), Series C, 6.50%
due 7/01/2033 2,153
AAA Aaa 1,730 (Rowan University), Series B, 5.25% due 7/01/2017 (b) 1,829
AAA Aaa 1,620 (Rowan University), Series B, 5.25% due 7/01/2018 (b) 1,708
----------------------------------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority, Revenue
Refunding Bonds:
AAA Aaa 5,000 (Montclair State University), Series L, 5%
due 7/01/2034 4,974
AAA Aaa 3,870 (Princeton Theological Seminary), 5% due 7/01/2026 3,904
AAA Aaa 3,725 (Princeton University), Series E, 5% due 7/01/2020 3,846
AA NR* 1,000 (Rider University), 5% due 7/01/2017 (f) 1,024
AAA Aaa 1,515 (William Paterson University), Series E, 5.25%
due 7/01/2018 (h) 1,593
AAA Aaa 1,595 (William Paterson University), Series E, 5.25%
due 7/01/2019 (h) 1,669
AAA Aaa 1,680 (William Paterson University), Series E, 5.25%
due 7/01/2020 (h) 1,750
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2004 7
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (continued) (in Thousands)
S&P Moody's Face
Ratings Ratings Amount Municipal Bonds Value
====================================================================================================================================
New Jersey (concluded)
------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa $ 7,215 New Jersey State Higher Education Assistance Authority,
Student Loan Revenue Bonds, AMT, Series A, 5.30%
due 6/01/2017 (a) $ 7,464
----------------------------------------------------------------------------------------------------------
AAA A1 2,500 New Jersey State Highway Authority, Garden State Parkway
General Revenue Refunding Bonds, 5.625% due 1/01/2010 (g) 2,817
----------------------------------------------------------------------------------------------------------
New Jersey State Housing and Mortgage Finance Agency, Home
Buyer Revenue Bonds, AMT (d):
AAA Aaa 5,350 Series CC, 5.80% due 10/01/2020 5,558
AAA Aaa 3,335 Series U, 5.60% due 10/01/2012 3,483
----------------------------------------------------------------------------------------------------------
AAA Aaa 1,795 New Jersey State Housing and Mortgage Finance Agency, M/F
Housing Revenue Refunding Bonds, Series A, 6.05%
due 11/01/2020 (a) 1,847
----------------------------------------------------------------------------------------------------------
New Jersey State Transit Corporation, COP:
AAA Aaa 3,650 6.50% due 4/01/2007 (c)(g) 4,081
A- A2 3,620 (Federal Transit Administration Grants), Series B,
5.75% due 9/15/2014 3,968
----------------------------------------------------------------------------------------------------------
New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Bonds:
AAA Aaa 5,250 Series B, 5% due 6/15/2013 (a) 5,594
AA- Aa3 7,400 Series C, 5.50% due 6/15/2019 7,950
----------------------------------------------------------------------------------------------------------
AAA Aaa 7,000 New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Refunding Bonds, Series B,
6% due 12/15/2011 (d)(g) 8,092
----------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 New Jersey State Turnpike Authority, Turnpike Revenue
Refunding Bonds, Series A, 5.75% due 1/01/2019 (d) 5,440
----------------------------------------------------------------------------------------------------------
AA- A1 5,000 Port Authority of New York and New Jersey, Consolidated
Revenue Bonds, 93rd Series, 6.125% due 6/01/2094 5,510
----------------------------------------------------------------------------------------------------------
AAA Aaa 4,435 Port Authority of New York and New Jersey, Revenue Bonds,
Trust Receipts, AMT, Class R, Series 10, 10.373%
due 1/15/2017 (c)(e) 5,077
----------------------------------------------------------------------------------------------------------
AAA Aaa 5,300 Port Authority of New York and New Jersey, Revenue
Refunding Bonds, DRIVERS, AMT, Series 153, 9.13%
due 9/15/2012 (b)(e) 5,727
----------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 Port Authority of New York and New Jersey, Special
Obligation Revenue Bonds (JFK International Air Terminal),
AMT, Series 6, 5.75% due 12/01/2022 (d) 2,137
----------------------------------------------------------------------------------------------------------
South Jersey Port Corporation of New Jersey Revenue
Refunding Bonds:
A NR* 4,280 4.75% due 1/01/2018 4,259
A NR* 2,485 4.85% due 1/01/2019 2,464
A NR* 2,000 5% due 1/01/2020 2,019
----------------------------------------------------------------------------------------------------------
Tobacco Settlement Financing Corporation of New Jersey
Revenue Bonds:
BBB Baa3 5,510 6.75% due 6/01/2039 4,878
BBB Baa3 3,010 7% due 6/01/2041 2,753
----------------------------------------------------------------------------------------------------------
Union County, New Jersey, Utilities Authority, Senior
Lease Revenue Refunding Bonds (Ogden Martin System of
Union), AMT, Series A (a)(e):
AAA Aaa 1,585 5.375% due 6/01/2017 1,634
AAA Aaa 1,175 5.375% due 6/01/2018 1,208
----------------------------------------------------------------------------------------------------------
University of Medicine and Dentistry, New Jersey, Revenue
Bonds, Series A (a):
AAA Aaa 945 5.50% due 12/01/2018 1,021
AAA Aaa 1,900 5.50% due 12/01/2019 2,048
AAA Aaa 1,870 5.50% due 12/01/2020 2,009
AAA Aaa 1,435 5.50% due 12/01/2021 1,538
8 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2004
Schedule of Investments (concluded) (in Thousands)
S&P Moody's Face
Ratings Ratings Amount Municipal Bonds Value
===================================================================================================================================
Puerto Rico--7.5%
-----------------------------------------------------------------------------------------------------------------------------------
A Baa1 $ 1,100 Puerto Rico Commonwealth Highway and Transportation
Authority, Transportation Revenue Refunding Bonds,
Series J, 5.50% due 7/01/2024 $ 1,141
---------------------------------------------------------------------------------------------------------
NR* Baa3 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 1,969
---------------------------------------------------------------------------------------------------------
A- Baa1 3,000 Puerto Rico Public Buildings Authority, Government
Facilities Revenue Refunding Bonds, Series I, 5.25%
due 7/01/2033 2,969
---------------------------------------------------------------------------------------------------------
AAA NR* 8,750 Puerto Rico Public Buildings Authority Revenue Bonds,
DRIVERS, Series 211, 9.178% due 7/01/2021 (d)(e) 9,556
---------------------------------------------------------------------------------------------------------
===================================================================================================================================
Virgin Islands--2.7%
-----------------------------------------------------------------------------------------------------------------------------------
BBB- Baa3 3,500 Virgin Islands Government Refinery Facilities Revenue
Refunding Bonds (Hovensa Coker Project), AMT, 6.50%
due 7/01/2021 3,699
---------------------------------------------------------------------------------------------------------
BBB- Baa3 1,900 Virgin Islands Public Finance Authority, Refinery
Facilities Revenue Bonds (Hovensa Refinery), AMT, 5.875%
due 7/01/2022 1,923
---------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost--$302,901)--150.6% 313,943
=========================================================================================================
Shares
Held Short-Term Securities
===================================================================================================================================
324 CMA New Jersey Municipal Money Fund+ 324
---------------------------------------------------------------------------------------------------------
Total Short-Term Securities (Cost--$324)--0.1% 324
===================================================================================================================================
Total Investments (Cost--$303,225)--150.7% 314,267
Liabilities in Excess of Other Assets--(3.9%) (8,242)
Preferred Stock, at Redemption Value--(46.8%) (97,507)
--------
Net Assets Applicable to Common Stock--100.0% $208,518
========
(a) AMBAC Insured.
(b) FGIC Insured.
(c) FSA Insured.
(d) MBIA Insured.
(e) The interest rate is subject to change periodically and inversely based
upon prevailing market rates. The interest rate shown is the rate in
effect at May 31, 2004.
(f) Radian Insured.
(g) Prerefunded.
(h) XL Capital Insured.
* Not Rated.
** Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase by the Fund.
+ Investments in companies considered to be an affiliate of the Fund (such
companies are defined as "Affiliated Companies" in Section 2(a)(3) of the
Investment Company Act of 1940) are as follows:
(in Thousands)
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
CMA New Jersey Municipal
Money Fund (6,387) $ 10
--------------------------------------------------------------------------
Forward interest rate swaps entered into as of May 31, 2004 were as
follows:
(in Thousands)
--------------------------------------------------------------------------
Notional Unrealized
Amount Depreciation
--------------------------------------------------------------------------
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate and pay
a fixed rate of 4.385%
Broker, J.P. Morgan Chase Bank
Expires November 2018 $2,510 $ (26)
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate and
pay a fixed rate equal to 4.625%
Broker, J.P. Morgan Chase Bank
Expires November 2028 $5,310 (73)
--------------------------------------------------------------------------
Total $ (99)
======
See Notes to Financial Statements.
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2004 9
[LOGO] Merrill Lynch Investment Managers
Statement of Net Assets
As of May 31, 2004
============================================================================================================================
Assets
----------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value (identified
cost--$302,901,015) ............................................. $313,942,983
Investments in affiliated securities, at value (identified
cost--$324,331) ................................................. 324,331
Cash ............................................................. 75,261
Receivables:
Interest ...................................................... $ 5,702,957
Securities sold ............................................... 3,943,847
Dividends from affiliates ..................................... 4 9,646,808
-------------
Prepaid expenses ................................................. 5,282
-------------
Total assets ..................................................... 323,994,665
-------------
============================================================================================================================
Liabilities
----------------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward interest rate swaps ........... 98,661
Payables:
Securities purchased .......................................... 17,557,290
Dividends to Common Stock shareholders ........................ 184,718
Investment adviser ............................................ 120,320
Other affiliates .............................................. 2,710 17,865,038
-------------
Accrued expenses ................................................. 5,924
-------------
Total liabilities ................................................ 17,969,623
-------------
============================================================================================================================
Preferred Stock
----------------------------------------------------------------------------------------------------------------------------
Preferred Stock, at redemption value, par value $.05 per share
(2,400 Series A Shares and 1,500 Series B Shares of AMPS*
issued and outstanding at $25,000 per share liquidation preference) 97,506,825
-------------
============================================================================================================================
Net Assets Applicable to Common Stock
----------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock ............................ $ 208,518,217
=============
============================================================================================================================
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 ................................. 204,306,838
Undistributed investment income--net ............................. $ 2,457,730
Accumulated realized capital losses on investments--net .......... (10,609,982)
Unrealized appreciation on investments--net ...................... 10,943,307
-------------
Total accumulated earnings--net .................................. 2,791,055
-------------
Total--Equivalent to $14.68 net asset value per share of Common
Stock (market price--$13.62) .................................... $ 208,518,217
=============
* Auction Market Preferred Stock.
See Notes to Financial Statements.
10 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2004
Statement of Operations
For the Six Months Ended May 31, 2004
============================================================================================================================
Investment Income
----------------------------------------------------------------------------------------------------------------------------
Interest ......................................................... $ 8,502,130
Dividends from affiliates ........................................ 10,445
-------------
Total income ..................................................... 8,512,575
-------------
============================================================================================================================
Expenses
----------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ......................................... $ 788,081
Commission fees .................................................. 126,360
Accounting services .............................................. 58,639
Transfer agent fees .............................................. 29,929
Professional fees ................................................ 24,385
Printing and shareholder reports ................................. 19,889
Listing fees ..................................................... 10,518
Directors' fees and expenses ..................................... 9,820
Custodian fees ................................................... 9,468
Pricing fees ..................................................... 6,178
Other ............................................................ 18,515
-------------
Total expenses before reimbursement .............................. 1,101,782
Reimbursement of expenses ........................................ (11,046)
-------------
Total expenses after reimbursement ............................... 1,090,736
-------------
Investment income--net ........................................... 7,421,839
-------------
============================================================================================================================
Realized & Unrealized Loss on Investments--Net
----------------------------------------------------------------------------------------------------------------------------
Realized loss on investments--net ................................ (202,467)
Change in unrealized appreciation on investments--net ............ (10,097,610)
-------------
Total realized and unrealized loss on investments--net ........... (10,300,077)
-------------
============================================================================================================================
Dividends to Preferred Stock Shareholders
----------------------------------------------------------------------------------------------------------------------------
Investment income--net ........................................... (428,142)
-------------
Net Decrease in Net Assets Resulting from Operations ............. $ (3,306,380)
=============
See Notes to Financial Statements.
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2004 11
[LOGO] Merrill Lynch Investment Managers
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
May 31, November 30,
Increase (Decrease) in Net Assets: 2004 2003
============================================================================================================================
Operations
----------------------------------------------------------------------------------------------------------------------------
Investment income--net ........................................... $ 7,421,839 $ 14,953,557
Realized gain (loss) on investments--net ......................... (202,467) 800,586
Change in unrealized appreciation on investments--net ............ (10,097,610) 6,664,870
Dividends to Preferred Stock shareholders ........................ (428,142) (868,764)
-------------------------------
Net increase (decrease) in net assets resulting from operations .. (3,306,380) 21,550,249
-------------------------------
============================================================================================================================
Dividends to Common Stock Shareholders
----------------------------------------------------------------------------------------------------------------------------
Investment income--net ........................................... (6,817,556) (13,635,112)
-------------------------------
Net decrease in net assets resulting from dividends to Common
Stock shareholders .............................................. (6,817,556) (13,635,112)
-------------------------------
============================================================================================================================
Net Assets Applicable to Common Stock
----------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets applicable to Common Stock (10,123,936) 7,915,137
Beginning of period .............................................. 218,642,153 210,727,016
-------------------------------
End of period* ................................................... $ 208,518,217 $ 218,642,153
===============================
* Undistributed investment income--net ........................ $ 2,457,730 $ 2,281,589
===============================
See Notes to Financial Statements.
12 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2004
Financial Highlights
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended For the Year Ended November 30,
May 31, --------------------------------------------
Increase (Decrease) in Net Asset Value: 2004 2003 2002 2001+ 2000+
================================================================================================================================
Per Share Operating Performance
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of
period .................................... $ 15.39 $ 14.84 $ 14.78 $ 13.99 $ 13.60
---------------------------------------------------------
Investment income--net ..................... .52@@@ 1.05@@@ 1.06 1.08 1.01
Realized and unrealized gain (loss)
on investments--net ....................... (.72) .52 .05 .78 .45
Dividends and distributions to
Preferred Stock shareholders:
Investment income--net .................. (.03) (.06) (.09) (.20) (.26)
Realized gain on investments--net ....... -- -- --@@ -- --
---------------------------------------------------------
Total from investment operations ........... (.23) 1.51 1.02 1.66 1.20
---------------------------------------------------------
Less dividends and distributions to
Common Stock shareholders:
Investment income--net .................. (.48) (.96) (.96) (.87) (.81)
Realized gain on investments--net ....... -- -- --@@ -- --
---------------------------------------------------------
Total dividends and distributions to
Common Stock shareholders ................. (.48) (.96) (.96) (.87) (.81)
---------------------------------------------------------
Net asset value, end of period ............. $ 14.68 $ 15.39 $ 14.84 $ 14.78 $ 13.99
=========================================================
Market price per share, end of period ...... $ 13.62 $ 14.34 $ 14.07 $ 14.41 $12.8125
=========================================================
================================================================================================================================
Total Investment Return**
--------------------------------------------------------------------------------------------------------------------------------
Based on market price per share ............ (1.86%)@ 8.90% 4.27% 19.45% 11.55%
=========================================================
Based on net asset value per share ......... (1.44%)@ 10.81% 7.22% 12.20% 9.71%
=========================================================
================================================================================================================================
Ratios Based on Average Net Assets of Common Stock
--------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement and
excluding reorganization expenses*** ...... 1.00%* 1.02% 1.05% 1.06% 1.10%
=========================================================
Total expenses, excluding
reorganization expenses*** ................ 1.01%* 1.02% 1.05% 1.06% 1.10%
=========================================================
Total expenses*** .......................... 1.01%* 1.02% 1.05% 1.06% 1.29%
=========================================================
Total investment income--net*** ............ 6.80%* 6.94% 7.06% 7.26% 7.59%
=========================================================
Amount of dividends to Preferred
Stock shareholders ........................ .39%* .40% .58% 1.33% 1.91%
=========================================================
Investment income--net, to Common
Stock shareholders ........................ 6.41%* 6.54% 6.48% 5.93% 5.68%
=========================================================
================================================================================================================================
Ratios Based on Average Net Assets of Common & Preferred Stock***++
--------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of reimbursement
and excluding reorganization
expenses .................................. .69%* .70% .72% .72% .73%
=========================================================
Total expenses, excluding
reorganization expenses ................... .70%* .70% .72% .72% .73%
=========================================================
Total expenses ............................. .70%* .70% .72% .72% .86%
=========================================================
Total investment income--net ............... 4.70%* 4.78% 4.83% 4.95% 5.04%
=========================================================
================================================================================================================================
Ratios Based on Average Net Assets of Preferred Stock++
--------------------------------------------------------------------------------------------------------------------------------
Dividends to Preferred Stock
shareholders .............................. .88%* .89% 1.25% 2.84% 3.77%
=========================================================
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2004 13
[LOGO] Merrill Lynch Investment Managers
Financial Highlights (concluded)
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. 2004 2003 2002 2001+ 2000+
===========================================================================================================================
Supplemental Data
---------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common
Stock, end of period (in thousands) $208,518 $218,642 $210,727 $209,617 $198,407
============================================================
Preferred Stock outstanding, end of
period (in thousands) ............. $ 97,500 $ 97,500 $ 97,500 $ 97,500 $ 97,500
============================================================
Portfolio turnover ................. 4.65% 28.93% 41.47% 52.03% 54.78%
============================================================
===========================================================================================================================
Leverage
---------------------------------------------------------------------------------------------------------------------------
Asset coverage per $1,000 .......... $ 3,139 $ 3,242 $ 3,161 $ 3,150 $ 3,035
============================================================
===========================================================================================================================
Dividends Per Share on Preferred Stock Outstanding++
---------------------------------------------------------------------------------------------------------------------------
Series A--Investment income--net ... $ 110 $ 225 $ 325 $ 723 $ 962
============================================================
Series B--Investment income--net ... $ 110 $ 219 $ 292 $ 702 $ 739
============================================================
* Annualized.
** Total investment returns based on market value, which can be significantly
greater or lesser than the net asset value, may result in substantially
different returns. Total investment returns exclude the effect of sales
charges.
*** Do not reflect the effect of dividends to Preferred Stock shareholders.
+ Certain prior year amounts have been reclassified to conform to current
year presentation.
++ The Fund's Preferred Stock was issued on November 30, 1992 for Series A
and February 7, 2000 for Series B.
@ Aggregate total investment return.
@@ Amount is less than $(.01) per share.
@@@ Based on average shares outstanding.
See Notes to Financial Statements.
14 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2004
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 a fair statement of the results
for the interim period presented. All such adjustments are of a normal,
recurring nature. The Fund determines and makes available for publication the
net asset value of its Common Stock on a daily basis. The Fund's Common Stock is
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 markets and are valued at the last available bid price in the
over-the-counter market or on the basis of yield equivalents as obtained by the
Fund's pricing service from one or more dealers that make markets in the
securities. Financial futures contracts and options thereon, which are traded on
exchanges, are valued at their closing prices as of the close of such exchanges.
Options written or purchased are valued at the last sale price in the case of
exchange-traded options. In the case of options traded in the over-the-counter
market, valuation is the last asked price (options written) or the last bid
price (options purchased). Swap agreements are valued by quoted fair values
received daily by the Fund from the counterparty. Short-term investments with a
remaining maturity of sixty days or less are valued at amortized cost, which
approximates market value. Securities and assets for which market quotations are
not readily available are valued at fair value as determined in good faith by or
under the direction of the Board of Directors of the Fund, including valuations
furnished by a pricing service retained by the Fund, which may utilize a matrix
system for valuations. The procedures of the pricing service and its valuations
are reviewed by the officers of the Fund under the general supervision of the
Board of Directors.
(b) Derivative financial instruments -- The Fund may engage in various portfolio
investment strategies 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.
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2004 15
[LOGO] Merrill Lynch Investment Managers
Notes to Financial Statements (continued)
o Forward interest rate swaps -- The Fund may enter into forward interest
rate swaps. In a forward interest rate swap, the Fund and the counterparty
agree to make periodic net payments on a specified notional contract
amount, commencing on a specified future effective date, unless terminated
earlier. When the agreement is closed, the Fund records a realized gain or
loss in an amount equal to the value of the agreement.
(c) Income taxes -- It is the Fund's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no Federal income tax provision is required.
(d) Security transactions and investment income -- Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend 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.
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. For the six months ended May 31,
2004, FAM reimbursed the Fund in the amount of $11,046.
For the six months ended May 31, 2004, the Fund reimbursed FAM $3,271 for
certain accounting services.
Certain officers and/or directors of the Fund are officers and/or directors of
FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended May 31, 2004 were $32,292,781 and $14,354,610, respectively.
Net realized gains (losses) for the six months ended May 31, 2004 and net
unrealized appreciation/depreciation as of May 31, 2004 were as follows:
--------------------------------------------------------------------------------
Unrealized
Realized Appreciation/
Gains (Losses) Depreciation
--------------------------------------------------------------------------------
Long-term investments ................ $ 631,599 $ 11,041,968
Forward interest rate swaps .......... (834,066) (98,661)
---------------------------------
Total ................................ $ (202,467) $ 10,943,307
=================================
As of May 31, 2004, net unrealized appreciation for Federal income tax purposes
aggregated $11,309,428, of which $12,716,295 related to appreciated securities
and $1,406,867 related to depreciated securities. The aggregate cost of
investments at May 31, 2004 for Federal income tax purposes was $302,957,886.
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.
16 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2004
Notes to Financial Statements (concluded)
Preferred Stock
Auction Market Preferred Stock are redeemable shares of Preferred Stock of the
Fund, with a par value of $.05 per share and a liquidation preference of $25,000
per share plus accrued and unpaid dividends that entitle their holders to
receive cash dividends at an annual rate that may vary for the successive
dividend periods. The yields in effect at May 31, 2004 were as follows: Series
A, .90% and Series B, .95%.
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, 2004, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, an affiliate of FAM, earned $58,420 as commissions.
5. Capital Loss Carryforward:
On November 30, 2003, the Fund had a net capital loss carryforward of
$7,948,348, of which $1,092,188 expires in 2007 and $6,856,160 expires in 2008.
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 $.080000 per share on June 29, 2004 to shareholders of record on June
14, 2004.
Proxy Results
During the six-month period ended May 31, 2004, 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, 2004. 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: James H. Bodurtha 13,337,121 459,647
Joe Grills 13,325,345 471,423
Roberta Cooper Ramo 13,331,103 465,665
Robert S. Salomon, Jr. 13,331,965 464,803
Stephen B. Swensrud 13,320,984 475,784
---------------------------------------------------------------------------------------------------------
During the six-month period ended May 31, 2004, MuniYield New Jersey Fund,
Inc.'s Preferred Stock shareholders (Series A & B) voted on the following
proposal. The proposal was approved at a shareholders' meeting on April 27,
2004. A description of the proposal and number of shares voted are as follows:
--------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
--------------------------------------------------------------------------------------------------------
1. To elect the Fund's Board of Directors: James H. Bodurtha 3,680 149
Joe Grills 3,680 149
Herbert I. London 3,680 149
Andre F. Perold 3,680 149
Roberta Cooper Ramo 3,676 153
Robert S. Salomon, Jr. 3,680 149
Stephen B. Swensrud 3,680 149
--------------------------------------------------------------------------------------------------------
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2004 17
[LOGO] Merrill Lynch Investment Managers
Quality Profile
The quality ratings of securities in the Fund as of May 31, 2004 were as
follows:
--------------------------------------------------------------------------------
Percent of
Total
S&P Rating/Moody's Rating Investments
--------------------------------------------------------------------------------
AAA/Aaa ................................................. 67.9%
AA/Aa ................................................... 5.5
A/A ..................................................... 8.8
BBB/Baa ................................................. 15.6
BB/Ba ................................................... 0.8
NR (Not Rated) .......................................... 1.4
--------------------------------------------------------------------------------
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.
18 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2004
Officers and Directors
Terry K. Glenn, President and Director
James H. Bodurtha, Director
Joe Grills, Director
Herbert I. London, Director
Andre F. Perold, Director
Roberta Cooper Ramo, Director
Robert S. Salomon, Jr., Director
Stephen B. Swensrud, Director
Kenneth A. Jacob, Senior Vice President
John M. Loffredo, Senior Vice President
Theodore R. Jaeckel Jr., Vice President
Donald C. Burke, Vice President and Treasurer
Phillip S. Gillespie, 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
New York, NY 10286
Preferred Stock:
The Bank of New York
101 Barclay Street - 7 West
New York, NY 10286
NYSE Symbol
MYJ
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 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, 2004 19
[LOGO] Merrill Lynch Investment Managers www.mlim.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-MER-FUND (1-800-637-3863); (2)
at www.mutualfunds.ml.com; and (3) on the Securities and Exchange Commission's
Web site at http://www.sec.gov.
MuniYield New Jersey Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
#16381 -- 5/04
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 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 9 - Submission of Matters to a Vote of Security Holders - Not Applicable
Item 10 - Controls and Procedures
10(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others particularly
during the period in which this report is being prepared. The
registrant's certifying officers have determined that the registrant's
disclosure controls and procedures are effective based on our evaluation
of these controls and procedures as of a date within 90 days prior to
the filing date of this report.
10(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR
270.30a-3(d)) that occurred during the 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 11 - Exhibits attached hereto
11(a)(1) - Code of Ethics - Not Applicable to this semi-annual report
11(a)(2) - Certifications - Attached hereto
11(a)(3) - Not Applicable
11(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MuniYield New Jersey Fund, Inc.
By: /s/ Terry K. Glenn
----------------------
Terry K. Glenn,
President of
MuniYield New Jersey Fund, Inc.
Date: July 19, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by
the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
By: /s/ Terry K. Glenn
----------------------
Terry K. Glenn,
President of
MuniYield New Jersey Fund, Inc.
Date: July 19, 2004
By: /s/ Donald C. Burke
----------------------
Donald C. Burke,
Chief Financial Officer of
MuniYield New Jersey Fund, Inc.
Date: July 19, 2004