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: 11/30/05
Date of reporting period: 12/01/04 - 05/31/05
Item 1 - Report to Stockholders
MuniYield New Jersey
Fund, Inc.
Semi-Annual Report
May 31, 2005
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.
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, 2005, the percentage of the Fund's
total net assets invested in inverse floaters was 7.33%, before the deduction of
Preferred Stock.
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.
2 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2005
A Letter From the President
Dear Shareholder
After expanding at an annualized rate of 4.4% in 2004, U.S. gross domestic
product grew at an estimated 3.5% in the first quarter of 2005. The slowdown was
not entirely unexpected given last year's healthy growth and the evolution of
the economic cycle. The Federal Reserve Board -- with one eye firmly affixed on
the economic indicators and the other on inflationary measures -- has increased
the federal funds rate by 25 basis points (.25%) at each of its eight meetings
since June 2004. At period-end, the target short-term interest rate stood at 3%.
U.S. equity markets ended 2004 in a strong rally, but have struggled to record
meaningful gains in 2005. The potential for slowing economic and corporate
earnings growth, as well as volatile energy prices, have intermittently hampered
equity market progress. On the positive side, corporate transactions, such as
mergers and acquisitions, stock buy-backs and dividend payouts, have all
increased. In Asia, equities have continued to benefit from higher economic
growth prospects and valuations that appear inexpensive relative to other parts
of the world.
In the bond market, the yield curve flattening "conundrum" continued as
short-term and long-term yields moved still closer together. Over the past year,
the two-year Treasury yield increased 106 basis points while the 10-year
Treasury yield declined 66 basis points. At May 31, 2005, the two-year Treasury
note yielded 3.60% and the 10-year Treasury note yielded 4%. The falling
long-term rates may be partly attributed to foreign interest in U.S. assets and
increased issuance of short-term Treasury bonds to finance the federal deficit.
Notably, the government is considering the reissuance of the 30-year Treasury,
which was suspended in August 2001. This would allow the U.S. Treasury to adopt
a more flexible approach to borrowing, while providing investors with another
long-term fixed income option.
Amid these conditions, the major benchmarks posted six-month and 12-month
returns as follows:
Total Returns as of May 31, 2005 6-month 12-month
=======================================================================================
U.S. equities (Standard & Poor's 500 Index) +2.42% + 8.24%
---------------------------------------------------------------------------------------
Small-cap U.S. equities (Russell 2000 Index) -2.10% + 9.82%
---------------------------------------------------------------------------------------
International equities (MSCI Europe Australasia Far East Index) +1.81% +14.62%
---------------------------------------------------------------------------------------
Fixed income (Lehman Brothers Aggregate Bond Index) +2.90% + 6.82%
---------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) +3.51% + 7.96%
---------------------------------------------------------------------------------------
High yield bonds (Credit Suisse First Boston High Yield Index) +0.60% + 9.97%
---------------------------------------------------------------------------------------
While the environment is likely to remain somewhat challenging, we believe
opportunities exist for investors. With this in mind, we encourage you to meet
with your financial advisor to review your goals and asset allocation and to
rebalance your portfolio, as necessary, to ensure it remains aligned with your
objectives and risk tolerance. As always, we thank you for trusting Merrill
Lynch Investment Managers with your investment assets, and we look forward to
serving you in the months and years ahead.
Sincerely,
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
President and Director
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2005 3
A Discussion With Your Fund's Portfolio Manager
We continued to focus our investment further out on the municipal yield
curve, a strategy that proved constructive as the curve flattened and long-term
bonds outperformed short-term issues.
Describe the recent market environment relative to municipal bonds.
Amid significant volatility, long-term bond yields moved lower over the past six
months as shorter-term yields increased. Yields on 30-year Treasury bonds
declined 68 basis points (.68%) to 4.32%, while 10-year Treasury note yields
declined 36 basis points to 4%. In the meantime, the Federal Reserve Board (the
Fed) continued to raise short-term interest rates at each of its meetings
throughout the period, bringing the federal funds rate to 3% at period-end. As
long-term rates fell while short-term rates moved in concert with the Fed rate
hikes, the yield curve flattened.
In the tax-exempt market, yields on 30-year revenue bonds, as measured by the
Bond Buyer Revenue Bond Index, fell 29 basis points to 4.78%. According to
Municipal Market Data, yields on AAA-rated issues maturing in 30 years declined
50 basis points to 4.26%, while AAA-rated bonds maturing in 10 years saw their
yields decline 17 basis points to 3.49%.
During the past six months, more than $186 billion in tax-exempt bonds was
underwritten, an increase of 7.5% versus the same period a year earlier.
Issuance so far in 2005 has been boosted by a more than 40% increase in
refunding issues as municipalities sought to refinance existing higher-coupon
debt. These refunding issues have been heavily weighted in the 10-year - 20-year
maturity range to lower the overall interest cost of the refunding issue. This
concentration has put pressure on intermediate tax-exempt bond yields while
supporting longer-term bond prices.
Investor demand for municipal product has remained generally positive. According
to statistics from the Investment Company Institute, through April 30, 2005,
year-to-date net new cash flows into long-term municipal bond funds have
exceeded $697 million. This represents a significant improvement from the $2.86
billion net outflow seen during the same four months in 2004.
Describe conditions in the State of New Jersey.
New Jersey has remained active in the debt market, reflecting the state's
efforts to manage its fiscal challenges. Revenue collections for the first seven
months of fiscal year 2005 (which ends June 30, 2005) fell short by $204
million. However, income tax revenue increased by 19.9% and sales tax by 4.2%,
while corporate business tax decreased by 7.4%. On March 1, Acting Governor
Richard Codey submitted his fiscal year 2006 budget recommendations. He proposed
a budget of $27.4 billion, which was 2.2% less than the 2005 budget and relies
much less on the use of one-time revenues. Proposed spending reductions include,
among other things, $1.2 billion from eliminating and reducing New Jersey's
property tax rebates for at least one year, and savings of approximately $600
million from reductions in government spending, including 500 job cuts. Further
savings would be realized from freezing most direct state aid to municipalities
and school districts at current levels.
On the revenue side, the budget proposal includes raising $275 million by
extending the state's 6% sales tax to some goods and services that are currently
tax-exempt, $500 million from asset sales, and $150 million from installing
video slot machines at the Meadowlands. The budget proposal received positive
responses from credit ratings agencies, prompting Moody's and Standard & Poor's
to confirm their Aa3 and AA- ratings, respectively, on the state's debt.
New Jersey's unemployment rate is improving, according to U.S. Department of
Labor Statistics. Most recently, the state's unemployment rate declined from
4.2% in April to 3.9% in May.
How did the Fund perform during the period?
For the six-month period ended May 31, 2005, the Common Stock of MuniYield New
Jersey Fund, Inc. had net annualized yields of 5.93% and 6.25%, based on a
period-end per share net asset value of $15.84 and a per share market price of
$15.02, respectively, and $.468 per share income dividends. Over the same
period, the total investment return on the Fund's Common Stock was +7.21%, based
on a change in per share net asset value from $15.25 to $15.84, and assuming
reinvestment of all distributions.
The Fund's total return, based on net asset value, exceeded the +6.54% 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.) Several
factors contributed to Fund performance. Most notable was our yield curve
positioning, which was designed to capitalize on what we expected would be a
flattening yield curve. We moved a portion of bonds in the 10-year - 15-year
4 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2005
maturity range further out on the curve to the 20-year - 25-year area. Our
strategy paid off, as the yield curve did flatten and shorter-term bonds
significantly lagged longer-term issues. Also contributing to performance were
our positions in zero-coupon, or capital appreciation, bonds, as well as the
advance refunding of a portion of the Fund's holdings. Finally, bonds backed by
tobacco revenues performed quite well, and we were able to participate in the
gains enjoyed by this sector.
Detracting from performance, albeit not significantly, was our somewhat
conservative investment strategy relative to some of our peers. Our focus on
higher-quality, insured bonds prohibited us from taking fuller advantage of the
spread compression trend that benefited lower-quality issues during the period.
Still, we were able to outperform our Lipper average with a more moderate level
of risk.
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?
As mentioned earlier, we focused on adding longer-dated bonds to the portfolio
and selling some of our shorter-dated holdings. For the six-month period,
issuance of long-term municipal bonds in New Jersey increased a remarkable 77%
versus the same six months one year earlier. The significant increase in debt
issuance was prompted by the state's need to close its budget gap and also
reflected the state's efforts to aggressively refinance its debt in the low
interest rate environment. The net result was that New Jersey municipal bonds
cheapened on a relative basis. This presented us with sufficient opportunity to
accomplish our restructuring goals.
For the six-month period ended May 31, 2005, the Fund's Auction Market Preferred
Stock (AMPS) had an average yield of 1.77% for Series A, 1.66% for Series B and
1.77% for Series C. The Fund's borrowing costs moved somewhat higher during the
period, predominately as a result of the Fed's continued interest rate hikes,
but also reflecting seasonal (tax-time) factors as investors redeemed monies
from their short-term tax-exempt investments to pay their tax liabilities.
Still, the tax-exempt yield curve remained relatively steep and continued to
generate an income benefit to 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 34.6% 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?
The Fund ended the period relatively neutral with respect to interest rate risk.
As a result, we would expect the Fund to perform, on average, similar to its
benchmark in the months ahead. We maintain a high-quality portfolio. In fact,
the Fund's average credit quality improved modestly during the period as spreads
tightened, and we took profits on some of our low investment grade holdings,
particularly bonds backed by tobacco revenues, which were among the market's
best performers.
Overall, we do not anticipate any major changes in terms of portfolio
composition or structure. We expect that New Jersey supply will remain robust as
the state continues to refinance its debt, which should keep New Jersey bonds
inexpensive on a relative basis.
Theodore R. Jaeckel Jr., CFA
Vice President and Portfolio Manager
June 9, 2005
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2005 5
Proxy Results
During the six-month period ended May 31, 2005, MuniYield New Jersey Fund,
Inc.'s Common Stock shareholders voted on the following proposals. Proposal 1
was approved at a shareholders' meeting on April 28, 2005. With respect to
Proposal 2, the proposal was adjourned until May 27, 2005, at which time it
passed. A description of the proposals and number of shares voted were as
follows:
Shares Voted Shares Withheld
For From Voting
-----------------------------------------------------------------------------------------------------
1. To elect the Fund's Directors: Robert C. Doll, Jr. 7,483,126 176,507
James H. Bodurtha 7,469,117 190,516
Joe Grills 7,470,573 189,060
Roberta Cooper Ramo 7,464,667 194,966
Stephen B. Swensrud 7,464,512 195,121
-----------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
-----------------------------------------------------------------------------------------------------
2. To approve an amendment to the Fund's
fundamental investment restriction. 5,669,490 314,890 147,730
-----------------------------------------------------------------------------------------------------
During the six-month period ended May 31, 2005, MuniYield New Jersey Fund,
Inc.'s Preferred Stock shareholders (Series A - C) voted on the following
proposals. Proposal 1 was approved at a shareholders' meeting on April 28, 2005.
With respect to Proposal 2, the proposal was adjourned until May 27, 2005, at
which time it passed. A description of the proposals and number of shares voted
were as follows:
Shares Voted Shares Withheld
For From Voting
-----------------------------------------------------------------------------------------------------
1. To elect the Fund's Directors: Robert C. Doll, Jr., James H.
Bodurtha, Joe Grills, Herbert I. London, Roberta Cooper Ramo,
Robert S. Salomon, Jr. and Stephen B. Swensrud 2,509 56
-----------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
-----------------------------------------------------------------------------------------------------
2. To approve an amendment to the Fund's
fundamental investment restriction. 3,973 445 136
-----------------------------------------------------------------------------------------------------
Portfolio Information as of May 31, 2005
Percent of
Quality Ratings by Total
S&P/Moody's Investments
--------------------------------------------------------------------------------
AAA/Aaa ................................................. 67.5%
AA/Aa ................................................... 3.9
A/A ..................................................... 8.3
BBB/Baa ................................................. 17.7
B/B ..................................................... 0.7
NR (Not Rated) .......................................... 1.4
Other* .................................................. 0.5
--------------------------------------------------------------------------------
* Includes portfolio holdings in variable rate demand notes.
6 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2005
Schedule of Investments (in Thousands)
Face
Amount Municipal Bonds Value
===================================================================================================================================
New Jersey--139.7%
-----------------------------------------------------------------------------------------------------------------------------------
$ 1,000 Burlington County, New Jersey, Bridge Commission Revenue Bonds (Governmental
Leasing Program), 5.25% due 8/15/2020 $ 1,085
---------------------------------------------------------------------------------------------------------
1,500 Delaware River and Bay Authority Revenue Bonds, 5% due 1/01/2033 (d) 1,583
---------------------------------------------------------------------------------------------------------
Delaware River Joint Toll Bridge Commission, Pennsylvania and New Jersey, Bridge
Revenue Refunding Bonds:
2,010 5% due 7/01/2021 2,136
3,645 5% due 7/01/2028 3,812
---------------------------------------------------------------------------------------------------------
3,930 Delaware River Port Authority of Pennsylvania and New Jersey Revenue Bonds, RIB,
Series 396, 8.743% due 1/01/2019 (c)(i) 4,828
---------------------------------------------------------------------------------------------------------
2,620 Essex County, New Jersey, Improvement Authority Revenue Bonds, Series A, 5%
due 10/01/2028 (b) 2,777
---------------------------------------------------------------------------------------------------------
Garden State Preservation Trust of New Jersey, Capital Appreciation Revenue Bonds,
Series B (c):
6,860 5.12%** due 11/01/2023 3,056
4,540 5.25%** due 11/01/2028 1,565
---------------------------------------------------------------------------------------------------------
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 4,914
5,460 5.75% due 11/01/2028 6,678
---------------------------------------------------------------------------------------------------------
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 1,318
2,000 Series A, 6.85% due 12/01/2029 2,249
---------------------------------------------------------------------------------------------------------
1,500 Hudson County, New Jersey, COP, Refunding, 6.25% due 12/01/2016 (d) 1,837
---------------------------------------------------------------------------------------------------------
13,950 Hudson County, New Jersey, Improvement Authority, Facility Lease Revenue Refunding
Bonds (Hudson County Lease Project), 5.375% due 10/01/2024 (b) 14,908
---------------------------------------------------------------------------------------------------------
Jackson Township, New Jersey, School District, GO (b):
3,090 5% due 4/15/2018 3,332
3,750 5% due 4/15/2019 4,043
---------------------------------------------------------------------------------------------------------
Middlesex County, New Jersey, Improvement Authority, County-Guaranteed Revenue
Bonds (Golf Course Projects):
1,455 5.25% due 6/01/2022 1,603
3,050 5% due 6/01/2029 3,248
---------------------------------------------------------------------------------------------------------
Middlesex County, New Jersey, Improvement Authority, Senior Revenue Bonds
(Heldrich Center Hotel/Conference Project), Series A:
970 5% due 1/01/2020 975
480 5% due 1/01/2032 477
725 5.125% due 1/01/2037 726
---------------------------------------------------------------------------------------------------------
1,500 Middlesex County, New Jersey, Pollution Control Financing Authority, Revenue
Refunding Bonds (Amerada Hess Corporation), 6.05% due 9/15/2034 1,609
---------------------------------------------------------------------------------------------------------
Monmouth County, New Jersey, Improvement Authority, Governmental Loan Revenue
Refunding Bonds (a):
2,235 5% due 12/01/2015 2,421
2,345 5% due 12/01/2016 2,540
---------------------------------------------------------------------------------------------------------
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
VRDN Variable Rate Demand Notes
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2005 7
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
===================================================================================================================================
New Jersey (continued)
-----------------------------------------------------------------------------------------------------------------------------------
New Jersey EDA, Cigarette Tax Revenue Bonds:
$ 1,720 5.625% due 6/15/2019 $ 1,853
1,275 5.75% due 6/15/2029 1,378
370 5.50% due 6/15/2031 390
755 5.75% due 6/15/2034 808
---------------------------------------------------------------------------------------------------------
New Jersey EDA, EDR (Masonic Charity Foundation of New Jersey):
600 5.25% due 6/01/2024 647
685 5.25% due 6/01/2032 738
---------------------------------------------------------------------------------------------------------
1,500 New Jersey EDA, First Mortgage Revenue Bonds (Fellowship Village), Series C,
5.50% due 1/01/2028 1,518
---------------------------------------------------------------------------------------------------------
New Jersey EDA, First Mortgage Revenue Refunding Bonds:
1,250 (Fellowship Village), Series A, 5.50% due 1/01/2018 1,277
3,500 (Fellowship Village), Series A, 5.50% due 1/01/2025 3,545
2,500 (The Winchester Gardens at Ward Homestead Project), Series A, 5.75%
due 11/01/2024 2,664
2,000 (The Winchester Gardens at Ward Homestead Project), Series A, 5.80%
due 11/01/2031 2,109
---------------------------------------------------------------------------------------------------------
New Jersey EDA, Motor Vehicle Surcharge Revenue Bonds, Series A (d):
14,000 5.25% due 7/01/2033 15,277
2,870 5% due 7/01/2034 3,048
---------------------------------------------------------------------------------------------------------
New Jersey EDA, Revenue Bonds:
400 (Department of Human Services), 5% due 7/01/2011 434
220 (Department of Human Services), 5% due 7/01/2012 239
3,850 (Saint Barnabas Project), Series A, 6.30%** due 7/01/2024 (d) 1,628
---------------------------------------------------------------------------------------------------------
New Jersey EDA, School Facilities Construction Revenue Bonds:
2,095 Series I, 5% due 9/01/2014 (g) 2,330
5,800 Series L, 5% due 3/01/2030 (c) 6,196
---------------------------------------------------------------------------------------------------------
1,500 New Jersey EDA, Solid Waste Disposal Facilities Revenue Bonds (Waste Management
Inc.), AMT, Series A, 4.50% due 6/01/2015 1,500
---------------------------------------------------------------------------------------------------------
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) 6,824
---------------------------------------------------------------------------------------------------------
1,400 New Jersey EDA, Water Facilities Revenue Refunding Bonds (United Water of New
Jersey Inc. Project), VRDN, Series A, 2.90% due 11/01/2026 (a)(h) 1,400
---------------------------------------------------------------------------------------------------------
5,975 New Jersey Environmental Infrastructure Trust Revenue Bonds (Environmental
Infrastructure), Series A, 5.25% due 9/01/2017 6,564
---------------------------------------------------------------------------------------------------------
1,100 New Jersey Health Care Facilities Financing Authority, Health System Revenue Bonds
(Catholic Health East), Series A, 5.375% due 11/15/2033 1,149
---------------------------------------------------------------------------------------------------------
New Jersey Health Care Facilities Financing Authority Revenue Bonds:
2,345 (Pascack Valley Hospital Association), 6.625% due 7/01/2036 2,342
4,000 (Robert Wood Johnson University), 5.70% due 7/01/2020 (a) 4,399
1,875 (Somerset Medical Center), 5.50% due 7/01/2033 1,929
6,640 (South Jersey Hospital), 6% due 7/01/2026 7,213
2,000 (Southern Ocean County Hospital), 5.125% due 7/01/2031 (f) 2,124
4,200 (Southern Ocean County Hospital), Series A, 6.25% due 7/01/2023 4,206
---------------------------------------------------------------------------------------------------------
New Jersey Health Care Facilities Financing Authority, Revenue Refunding Bonds:
1,020 (Atlantic City Medical Center), 6.25% due 7/01/2017 1,168
2,185 (Atlantic City Medical Center), 5.75% due 7/01/2025 2,374
1,650 (Capital Health System Inc.), Series A, 5.75% due 7/01/2023 1,792
5,500 (Holy Name Hospital), 6% due 7/01/2025 5,756
1,500 (Meridian Health System Obligation Group), 5.25% due 7/01/2019 (c) 1,617
2,250 (Meridian Health System Obligation Group), 5.375% due 7/01/2024 (c) 2,421
2,195 (Meridian Health System Obligation Group), 5.25% due 7/01/2029 (c) 2,350
---------------------------------------------------------------------------------------------------------
4,150 New Jersey State Educational Facilities Authority, Higher Education, Capital
Improvement Revenue Bonds, Series A, 5.125% due 9/01/2022 (a) 4,474
---------------------------------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority Revenue Bonds:
985 (Bloomfield College), Series A, 6.85% due 7/01/2030 1,006
2,000 (Georgian Court College Project), Series C, 6.50% due 7/01/2033 2,282
2,165 (Rowan University), Series C, 5.125% due 7/01/2028 (d) 2,328
1,955 (Rowan University), Series C, 5% due 7/01/2034 (d) 2,077
8 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2005
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
===================================================================================================================================
New Jersey (concluded)
-----------------------------------------------------------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority, Revenue Refunding Bonds:
$ 5,305 (Montclair State University), Series L, 5% due 7/01/2034 (d) $ 5,635
3,870 (Princeton Theological Seminary), 5% due 7/01/2026 4,121
3,100 (Princeton University), Series A, 5% due 7/01/2030 3,339
3,725 (Princeton University), Series E, 5% due 7/01/2013 (g) 4,143
1,000 (Rider University), 5% due 7/01/2017 (f) 1,060
1,255 (Rider University), Series A, 5.50% due 7/01/2023 (f) 1,379
1,450 (Rider University), Series A, 5.25% due 7/01/2034 (f) 1,565
865 (Rowan University), 4.50% due 7/01/2027 (a) 875
1,515 (William Paterson University), Series E, 5.25% due 7/01/2018 (j) 1,668
1,595 (William Paterson University), Series E, 5.25% due 7/01/2019 (j) 1,756
1,680 (William Paterson University), Series E, 5.25% due 7/01/2020 (j) 1,828
---------------------------------------------------------------------------------------------------------
5,855 New Jersey State Higher Education Assistance Authority, Student Loan Revenue
Bonds, AMT, Series A, 5.30% due 6/01/2017 (a) 6,025
---------------------------------------------------------------------------------------------------------
2,500 New Jersey State Highway Authority, Garden State Parkway General Revenue Refunding
Bonds, 5.625% due 1/01/2010 (g) 2,797
---------------------------------------------------------------------------------------------------------
7,175 New Jersey State Housing and Mortgage Financing Agency, Capital Fund Program
Revenue Bonds, Series A, 4.70% due 11/01/2025 (c) 7,329
---------------------------------------------------------------------------------------------------------
New Jersey State Housing and Mortgage Finance Agency, Home Buyer Revenue Bonds,
AMT (d):
5,350 Series CC, 5.80% due 10/01/2020 5,644
3,335 Series U, 5.60% due 10/01/2012 3,480
---------------------------------------------------------------------------------------------------------
1,650 New Jersey State Housing and Mortgage Financing Agency, M/F Revenue Bonds, Series
D, 4.60% due 11/01/2025 (b) 1,664
---------------------------------------------------------------------------------------------------------
3,620 New Jersey State Transit Corporation, COP (Federal Transit Administration Grants),
Series B, 5.75% due 9/15/2014 4,068
---------------------------------------------------------------------------------------------------------
New Jersey State Transportation Trust Fund Authority, Transportation System
Revenue Refunding Bonds, Series B (d):
4,735 5.50% due 12/15/2015 5,470
5,865 5.50% due 12/15/2021 6,906
---------------------------------------------------------------------------------------------------------
New Jersey State Turnpike Authority, Turnpike Revenue Bonds:
4,870 Series B, 5.15%** due 1/01/2035 (a) 3,154
200 VRDN, Series C-3, 2.95% due 1/01/2024 (c)(h) 200
---------------------------------------------------------------------------------------------------------
5,000 New Jersey State Turnpike Authority, Turnpike Revenue Refunding Bonds, Series A,
5.75% due 1/01/2010 (d)(g) 5,578
---------------------------------------------------------------------------------------------------------
5,000 Port Authority of New York and New Jersey, Consolidated Revenue Bonds, 93rd
Series, 6.125% due 6/01/2094 6,110
---------------------------------------------------------------------------------------------------------
4,435 Port Authority of New York and New Jersey, Revenue Bonds, Trust Receipts, AMT,
Class R, Series 10, 8.492% due 1/15/2017 (c)(i) 4,881
---------------------------------------------------------------------------------------------------------
5,300 Port Authority of New York and New Jersey, Revenue Refunding Bonds, DRIVERS, AMT,
Series 153, 7.215% due 9/15/2012 (b)(i) 5,657
---------------------------------------------------------------------------------------------------------
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) 2,151
---------------------------------------------------------------------------------------------------------
South Jersey Port Corporation of New Jersey, Revenue Refunding Bonds:
4,280 4.75% due 1/01/2018 4,451
2,485 4.85% due 1/01/2019 2,590
2,000 5% due 1/01/2020 2,115
---------------------------------------------------------------------------------------------------------
4,480 Tobacco Settlement Financing Corporation of New Jersey, Asset-Backed Revenue
Bonds, 5.75% due 6/01/2032 4,531
---------------------------------------------------------------------------------------------------------
3,010 Tobacco Settlement Financing Corporation of New Jersey Revenue Bonds, 7%
due 6/01/2041 3,334
---------------------------------------------------------------------------------------------------------
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 1,667
1,175 5.375% due 6/01/2018 1,236
---------------------------------------------------------------------------------------------------------
University of Medicine and Dentistry, New Jersey, Revenue Bonds, Series A (a):
945 5.50% due 12/01/2018 1,062
1,900 5.50% due 12/01/2019 2,135
1,870 5.50% due 12/01/2020 2,078
1,435 5.50% due 12/01/2021 1,595
---------------------------------------------------------------------------------------------------------
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2005 9
Schedule of Investments (concluded) (in Thousands)
Face
Amount Municipal Bonds Value
===================================================================================================================================
Puerto Rico--8.1%
-----------------------------------------------------------------------------------------------------------------------------------
$ 3,300 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series RR, 5%
due 7/01/2028 (e) $ 3,538
---------------------------------------------------------------------------------------------------------
2,500 Puerto Rico Electric Power Authority, Power Revenue Refunding Bonds, Series PP,
5% due 7/01/2025 (b) 2,687
---------------------------------------------------------------------------------------------------------
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 2,064
---------------------------------------------------------------------------------------------------------
8,750 Puerto Rico Public Buildings Authority Revenue Bonds, DRIVERS, Series 211, 7.241%
due 7/01/2021 (d)(i) 9,852
===================================================================================================================================
U.S. Virgin Islands--2.7%
-----------------------------------------------------------------------------------------------------------------------------------
3,500 Virgin Islands Government Refinery Facilities, Revenue Refunding Bonds (Hovensa
Coker Project), AMT, 6.50% due 7/01/2021 3,980
---------------------------------------------------------------------------------------------------------
1,900 Virgin Islands Public Finance Authority, Refinery Facilities Revenue Bonds
(Hovensa Refinery), AMT, 5.875% due 7/01/2022 2,055
=========================================================================================================
Total Investments (Cost--$315,302*)--150.5% 338,547
Other Assets Less Liabilities--2.4% 5,408
Preferred Stock, at Redemption Value--(52.9%) (119,046)
---------
Net Assets Applicable to Common Stock--100.0% $ 224,909
=========
* The cost and unrealized appreciation (depreciation) of investments as of
May 31, 2005, as computed for federal income tax purposes, were as
follows:
(in Thousands)
--------------------------------------------------------------------------
Aggregate cost ............................................... $314,984
========
Gross unrealized appreciation ................................ $ 23,743
Gross unrealized depreciation ................................ (180)
--------
Net unrealized appreciation .................................. $ 23,563
========
** Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase by the Fund.
(a) AMBAC Insured.
(b) FGIC Insured.
(c) FSA Insured.
(d) MBIA Insured.
(e) CIFG Insured.
(f) Radian Insured.
(g) Prerefunded.
(h) Security may have a maturity of more than one year at the time of
issuance, but has variable rate and demand features that qualify it as a
short-term security. The rate disclosed is that currently in effect. This
rate changes periodically based upon prevailing market rates.
(i) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(j) XL Capital Insured.
Forward interest rate swaps outstanding as of May 31, 2005 were as
follows:
(in Thousands)
--------------------------------------------------------------------------
Notional Unrealized
Amount Depreciation
--------------------------------------------------------------------------
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate and pay
a fixed rate of 3.82%
Broker, JPMorgan Chase Bank
Expires November 2018 $ 2,510 $ (57)
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate and pay
a fixed rate of 4.042%
Broker, JPMorgan Chase Bank
Expires August 2026 $ 5,310 (178)
--------------------------------------------------------------------------
Total $(235)
=====
Financial futures contracts sold as of May 31, 2005 were as follows:
(in Thousands)
--------------------------------------------------------------------------
Number of Expiration Face Unrealized
Contracts Issue Date Value Depreciation
--------------------------------------------------------------------------
350 10-Year U.S. September
Treasury Future 2005 $39,319 $(324)
--------------------------------------------------------------------------
Investments in companies considered to be an affiliate of the Fund (such
companies are defined as "Affiliated Companies" in Section 2(a)(3) of the
Investment Company Act of 1940) were as follows:
(in Thousands)
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
CMA New Jersey Municipal Money Fund $(9,631) $ 4
--------------------------------------------------------------------------
See Notes to Financial Statements.
10 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2005
Statement of Net Assets
As of May 31, 2005
====================================================================================================================
Assets
--------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value
(identified cost--$315,301,921) ......................... $ 338,547,179
Cash ..................................................... 117,686
Receivables:
Securities sold ....................................... $ 11,760,838
Interest .............................................. 5,946,230 17,707,068
-------------
Prepaid expenses and other assets ........................ 27,485
-------------
Total assets ............................................. 356,399,418
-------------
====================================================================================================================
Liabilities
--------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward interest rate swaps ... 234,920
Payables:
Securities purchased .................................. 11,669,341
Variation margin ...................................... 202,344
Dividends to Common Stock shareholders ................ 174,036
Investment adviser .................................... 107,970
Other affiliates ...................................... 1,783 12,155,474
-------------
Accrued expenses ......................................... 54,041
-------------
Total liabilities ........................................ 12,444,435
-------------
====================================================================================================================
Preferred Stock
--------------------------------------------------------------------------------------------------------------------
Preferred Stock, at redemption value, par value $.05 per
share on Series A Shares and Series B Shares and $.10 per
share on Series C Shares (2,400 Series A Shares, 1,500
Series B Shares and 860 Series C Shares of AMPS*
authorized, issued and outstanding at $25,000 per share
liquidation preference) ................................. 119,046,113
-------------
====================================================================================================================
Net Assets Applicable to Common Stock
--------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock .................... $ 224,908,870
=============
====================================================================================================================
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 ......................... 203,961,864
Undistributed investment income--net ..................... $ 2,053,196
Accumulated realized capital losses--net ................. (5,213,219)
Unrealized appreciation--net ............................. 22,686,705
-------------
Total accumulated earnings--net .......................... 19,526,682
-------------
Total--Equivalent to $15.84 net asset value per share of
Common Stock (market price--$15.02) ..................... $ 224,908,870
=============
* Auction Market Preferred Stock.
See Notes to Financial Statements.
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2005 11
Statement of Operations
For the Six Months Ended May 31, 2005
====================================================================================================================
Investment Income
--------------------------------------------------------------------------------------------------------------------
Interest ................................................. $ 8,330,970
Dividends from affiliates ................................ 4,148
-------------
Total income ............................................. 8,335,118
-------------
====================================================================================================================
Expenses
--------------------------------------------------------------------------------------------------------------------
Investment advisory fees ................................. $ 850,210
Commission fees .......................................... 148,534
Accounting services ...................................... 62,060
Transfer agent fees ...................................... 32,806
Professional fees ........................................ 27,650
Printing and shareholder reports ......................... 19,875
Custodian fees ........................................... 10,989
Directors' fees and expenses ............................. 9,837
Listing fees ............................................. 9,403
Pricing fees ............................................. 8,116
Other .................................................... 24,321
-------------
Total expenses before reimbursement ...................... 1,203,801
Reimbursement of expenses ................................ (2,036)
-------------
Total expenses after reimbursement ....................... 1,201,765
-------------
Investment income--net ................................... 7,133,353
-------------
====================================================================================================================
Realized & Unrealized Gain (Loss)--Net
--------------------------------------------------------------------------------------------------------------------
Realized gain on:
Investments--net ...................................... 4,446,968
Futures contracts and forward interest rate swaps--net 500,361 4,947,329
-------------
Change in unrealized appreciation/depreciation--net:
Investments--net ...................................... 4,672,567
Futures contracts and forward interest rate swaps--net (757,688) 3,914,879
-------------------------------
Total realized and unrealized gain--net .................. 8,862,208
-------------
====================================================================================================================
Dividends to Preferred Stock Shareholders
--------------------------------------------------------------------------------------------------------------------
Investment income--net ................................... (1,029,330)
-------------
Net Increase in Net Assets Resulting from Operations ..... $ 14,966,231
=============
See Notes to Financial Statements.
12 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2005
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
May 31, November 30,
Increase (Decrease) in Net Assets: 2005 2004
====================================================================================================================
Operations
--------------------------------------------------------------------------------------------------------------------
Investment income--net ................................... $ 7,133,353 $ 15,052,816
Realized gain--net ....................................... 4,947,329 246,967
Change in unrealized appreciation/depreciation--net ...... 3,914,879 (2,269,091)
Dividends to Preferred Stock shareholders ................ (1,029,330) (1,074,596)
-------------------------------
Net increase in net assets resulting from operations ..... 14,966,231 11,956,096
-------------------------------
====================================================================================================================
Dividends to Common Stock Shareholders
--------------------------------------------------------------------------------------------------------------------
Investment income--net ................................... (6,675,524) (13,635,112)
-------------------------------
Net decrease in net assets resulting from dividends to
Common Stock shareholders ............................... (6,675,524) (13,635,112)
-------------------------------
====================================================================================================================
Capital Stock Transactions
--------------------------------------------------------------------------------------------------------------------
Offering and underwriting costs resulting from issuance
of Preferred Stock ...................................... -- (344,974)
-------------------------------
====================================================================================================================
Net Assets Applicable to Common Stock
--------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets applicable to
Common Stock ............................................ 8,290,707 (2,023,990)
Beginning of period ...................................... 216,618,163 218,642,153
-------------------------------
End of period* ........................................... $ 224,908,870 $ 216,618,163
===============================
* Undistributed investment income--net ................ $ 2,053,196 $ 2,624,697
===============================
See Notes to Financial Statements.
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2005 13
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. 2005 2004 2003 2002 2001
=============================================================================================================================
Per Share Operating Performance
-----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period . $ 15.25 $ 15.39 $ 14.84 $ 14.78 $ 13.99
--------------------------------------------------------------
Investment income--net ............... .50++ 1.06++ 1.05++ 1.06 1.08
Realized and unrealized gain
(loss)--net ......................... .63 (.14) .52 .05 .78
Dividends and distributions to
Preferred Stock shareholders:
Investment income--net ............ (.07) (.08) (.06) (.09) (.20)
Realized gain--net ................ -- -- -- --+ --
--------------------------------------------------------------
Total from investment operations ..... 1.06 .84 1.51 1.02 1.66
--------------------------------------------------------------
Less dividends and distributions to
Common Stock shareholders:
Investment income--net ............ (.47) (.96) (.96) (.96) (.87)
Realized gain--net ................ -- -- -- --+ --
--------------------------------------------------------------
Total dividends and distributions to
Common Stock shareholders ........... (.47) (.96) (.96) (.96) (.87)
--------------------------------------------------------------
Offering and underwriting costs
resulting from the issuance of
Preferred Stock ..................... -- (.02) -- -- --
--------------------------------------------------------------
Net asset value, end of period ....... $ 15.84 $ 15.25 $ 15.39 $ 14.84 $ 14.78
==============================================================
Market price per share, end of period $ 15.02 $ 14.73 $ 14.34 $ 14.07 $ 14.41
==============================================================
=============================================================================================================================
Total Investment Return**
-----------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ... 7.21%@ 5.84% 10.81% 7.22% 12.20%
==============================================================
Based on market price per share ...... 5.25%@ 9.72% 8.90% 4.27% 19.45%
==============================================================
=============================================================================================================================
Ratios Based on Average Net Assets of Common Stock
-----------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement*** .... 1.09%* 1.02% 1.02% 1.05% 1.06%
==============================================================
Total expenses*** .................... 1.09%* 1.03% 1.02% 1.05% 1.06%
==============================================================
Total investment income--net*** ...... 6.44%* 6.94% 6.94% 7.06% 7.26%
==============================================================
Amount of dividends to Preferred
Stock shareholders .................. .93%* .50% .40% .58% 1.33%
==============================================================
Investment income--net, to Common
Stock shareholders .................. 5.51%* 6.44% 6.54% 6.48% 5.93%
==============================================================
=============================================================================================================================
Ratios Based on Average Net Assets of Preferred Stock
-----------------------------------------------------------------------------------------------------------------------------
Dividends to Preferred Stock
shareholders ........................ 1.73%* 1.04% .89% 1.25% 2.84%
==============================================================
14 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2005
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. 2005 2004 2003 2002 2001
=============================================================================================================================
Supplemental Data
-----------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock,
end of period (in thousands) ........ $ 224,909 $ 216,618 $ 218,642 $ 210,727 $ 209,617
==============================================================
Preferred Stock outstanding, end of
period (in thousands) ............... $ 119,000 $ 119,000 $ 97,500 $ 97,500 $ 97,500
==============================================================
Portfolio turnover ................... 26.23% 15.35% 28.93% 41.47% 52.03%
==============================================================
=============================================================================================================================
Leverage
-----------------------------------------------------------------------------------------------------------------------------
Asset coverage per $1,000 ............ $ 2,890 $ 2,820 $ 3,242 $ 3,161 $ 3,150
==============================================================
=============================================================================================================================
Dividends Per Share on Preferred Stock Outstanding
-----------------------------------------------------------------------------------------------------------------------------
Series A--Investment income--net ..... $ 220 $ 259 $ 225 $ 325 $ 723
==============================================================
Series B--Investment income--net ..... $ 207 $ 250 $ 219 $ 292 $ 702
==============================================================
Series C@@--Investment income--net ... $ 221 $ 91 -- -- --
==============================================================
* 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.
+ Amount is less than $(.01) per share.
++ Based on average shares outstanding.
@ Aggregate total investment return.
@@ Series C was issued on August 23, 2004.
See Notes to Financial Statements.
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2005 15
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.
16 MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2005
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.
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 the CMA New Jersey Municipal Money
Fund. For the six months ended May 31, 2005, FAM reimbursed the Fund in the
amount of $2,036.
For the six months ended May 31, 2005, the Fund reimbursed FAM $3,796 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, 2005 were $89,163,068 and $91,236,572, 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 par value of $.05 per share for Series A and Series B and $.10 per
share for Series C 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, 2005 were as follows: Series A, 2.35%, Series B,
2.65% and Series C, 2.45%.
Shares issued and outstanding during the six months ended May 31, 2005 remained
constant. Shares issued and outstanding during the year ended November 30, 2004
increased by 860 shares from the issuance of an additional series of Preferred
Stock.
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, 2005, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, an affiliate of FAM, earned $80,105 as commissions.
5. Capital Loss Carryforward:
On November 30, 2004, the Fund had a net capital loss carryforward of $8,187,904
of which $1,092,188 expires in 2007, $6,856,160 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 $.078000 per share on June 29, 2005 to shareholders of record on June
14, 2005.
MUNIYIELD NEW JERSEY FUND, INC. MAY 31, 2005 17
Officers and Directors
Robert C. Doll, Jr., President and Director
James H. Bodurtha, Director
Joe Grills, Director
Herbert I. London, 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
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
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, 2005
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, 2005 19
[LOGO] Merrill Lynch Investment Managers
www.mlim.ml.com
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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-MER-FUND (1-800-637-3863); (2)
at www.mutualfunds.ml.com; and (3) on the Securities and Exchange Commission's
Web site at http://www.sec.gov. Information about how the Fund voted proxies
relating to securities held in the Fund's portfolio during the most recent
12-month period ended June 30 is available (1) at www.mutualfunds.ml.com and (2)
on the Securities and Exchange Commission's Web site at http://www.sec.gov.
MuniYield New Jersey Fund, Inc.
Box 9011
Princeton, NJ 08543-9011
#16381 -- 5/05
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this semi-annual
report
Item 4 - Principal Accountant Fees and Services - Not Applicable to this
semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable to this
semi-annual report
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable to this semi-annual
report
Item 8 - Portfolio Managers of Closed-End Management Investment Companies - Not
Applicable to this semi-annual report
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - Not Applicable
Item 11 - Controls and Procedures
11(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others particularly
during the period in which this report is being prepared. The
registrant's certifying officers have determined that the registrant's
disclosure controls and procedures are effective based on our evaluation
of these controls and procedures as of a date within 90 days prior to
the filing date of this report.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR
270.30a-3(d)) that occurred during the last fiscal half-year of the
period covered by this report that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - Not Applicable to this semi-annual report
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
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 15, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Robert C. Doll, Jr.
-------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
MuniYield New Jersey Fund, Inc.
Date: July 15, 2005
By: /s/ Donald C. Burke
-------------------------------
Donald C. Burke,
Chief Financial Officer of
MuniYield New Jersey Fund, Inc.
Date: July 15, 2005