UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-06570
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 - 11/30/05
Item 1 - Report to Stockholders
MuniYield New Jersey
Fund, Inc.
Annual Report
November 30, 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 November 30, 2005, the percentage of the
Fund's total net assets invested in inverse floaters was 7.24%, 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. NOVEMBER 30, 2005
A Letter From the President
Dear Shareholder
As the financial markets continued to muddle their way through 2005, the Federal
Reserve Board (the Fed) advanced its monetary tightening campaign full steam
ahead. The 13th consecutive interest rate hike since June 2004 came on December
13, bringing the target federal funds rate to 4.25%. Oil prices, after reaching
record highs on more than one occasion over the past several months, moderated
somewhat by period-end, as did inflation expectations. Against this backdrop,
most major market indexes managed to post positive results for the current
reporting period:
Total Returns as of November 30, 2005 6-month 12-month
======================================================================================
U.S. equities (Standard & Poor's 500 Index) + 5.88% + 8.44%
--------------------------------------------------------------------------------------
Small-cap U.S. equities (Russell 2000 Index) +10.47 + 8.14
--------------------------------------------------------------------------------------
International equities (MSCI Europe Australasia Far East Index) +11.23 +13.25
--------------------------------------------------------------------------------------
Fixed income (Lehman Brothers Aggregate Bond Index) - 0.48 + 2.40
--------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 0.36 + 3.88
--------------------------------------------------------------------------------------
High yield bonds (Credit Suisse First Boston High Yield Index) + 2.33 + 2.94
--------------------------------------------------------------------------------------
With the kick-off of the holiday shopping season, attention turned to the
consumer, who has remained resilient even amid high energy prices and rising
interest rates. Some observers surmise that a slowdown in residential real
estate may ultimately contribute to a weakening in consumer spending. At this
juncture, the outlook remains unclear.
Equity markets moved sideways for much of 2005, notwithstanding a strong rally
in the middle of the fourth quarter. Corporate earnings have continued to
surprise on the upside and company profit margins remain high, as does
productivity. On the other hand, high energy prices, more Fed interest rate
hikes, a consumer slowdown and/or the potential for slower earnings growth pose
the greatest risks to U.S. stocks. Internationally, many markets have benefited
from strong economic statistics, trade surpluses and solid finances. Emerging
markets have had a particularly strong year, partly reflecting high economic
growth rates and positive financial reforms.
The bond market continued to be characterized by a flattening yield curve. The
difference between the two-year and 10-year Treasury yield was just seven basis
points (.07%) at period-end, compared to 40 basis points six months ago and 134
basis points 12 months ago.
Navigating the financial markets can be a challenge, particularly during
uncertain times. With that in mind, we invite you to visit our online magazine
at www.mlim.ml.com/shareholdermagazine. Shareholder is a publication designed to
provide insights on investing and timely "food for thought" for investors. We
are pleased to make the magazine available online, where we are able to expand
our reach in terms of content and readership.
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. NOVEMBER 30, 2005 3
A Discussion With Your Fund's Portfolio Manager
The Fund outperformed its Lipper category average for the fiscal year,
benefiting from our focus on longer-dated bonds and ample exposure to
lower-rated credits, which continued to perform well.
Describe the recent market environment relative to municipal bonds.
Over the past year, long-term bond yields declined modestly as their prices,
which move in the opposite direction, increased. Initially, bond prices rallied
strongly as long-term yields declined. More recently, however, yields rose
(prices fell) as investors worried that higher energy costs in the wake of
Hurricanes Katrina and Rita would pressure inflation upward.
Stronger-than-expected third quarter gross domestic product growth also added to
inflationary concerns.
The Federal Reserve Board (the Fed) continued to raise short-term interest rates
at each of its meetings during the period, lifting the federal funds target rate
to 4% by period-end (and to 4.25% on December 13). As short-term interest rates
moved higher in concert with the Fed interest rate hikes and longer-term rates
declined, the yield curve continued to flatten. During the past 12 months,
10-year Treasury yields rose 13 basis points (.13%) to 4.49%, while 30-year
Treasury yields declined 31 basis points to 4.69%. Tax-exempt bond yields
exhibited a similar pattern during the year. According to Municipal Market Data,
the yield on AAA-rated issues maturing in 30 years declined 21 basis points to
4.55%, while the yield on AAA-rated issues maturing in 10 years rose 21 basis
points to 3.87%.
Historically low nominal tax-exempt bond yields continued to encourage
municipalities to issue new debt and refund outstanding, higher-couponed issues.
During the past year, more than $404 billion in new long-term tax-exempt bonds
was issued nationwide, a 12.9% increase over the previous year's total of $360
billion. Year-to-date through November 30, the volume of refunding issues
increased by more than 44% on a year-over-year basis. Refunding issues were
heavily weighted in the 10-year - 20-year maturity range, putting pressure on
intermediate tax-exempt bond yields while supporting longer-term bond prices.
Municipal bond supply in New Jersey increased 6.5% during the fiscal year. The
majority of the new supply came to market in the first six months as issuers
took advantage of the declining interest rate environment to refinance their
outstanding debt. In the latter six months of the period, new issuance dropped
36% versus the same period a year ago.
Describe conditions in the State of New Jersey.
New Jersey's fiscal year 2006 budget was passed on June 30, 2005. Shortly after,
Standard & Poor's (S&P) upgraded the state's credit rating to AA while Moody's
and Fitch affirmed the state's credit ratings of Aa3 and AA-, respectively, all
three with stable outlooks. The S&P rating was based largely on the state's
improving revenue collections in fiscal year 2005 and a more structurally
balanced 2006 budget when compared to the amount of one-time revenues used in
the past several years. However, New Jersey's plan to use $150 million of
tobacco settlement refinancing proceeds to balance the 2006 budget was
challenged in court. The lawsuit alleged that using the proceeds in the budget
was deficit funding and, therefore, was unconstitutional as ruled by New
Jersey's Supreme Court last year when the state used revenue from securitizing
motor vehicle surcharges and cigarette taxes to balance the budget.
New Jersey's economy continued to show signs of recovery as revenues through the
first 10 months of fiscal year 2005 came in better than budget. The largest
revenue increase was in the income tax category, which rose by 31.7% compared to
the prior year. The state's unemployment rate of 3.9% in October compared
favorably to the national unemployment rate of 5%. On the political front, a
gubernatorial election in November brought victory for Senator Jon Corzine, who
will assume the governor's seat in January.
How did the Fund perform during the fiscal year?
For the 12-month period ended November 30, 2005, the Common Stock of MuniYield
New Jersey Fund, Inc. had net annualized yields of 5.83% and 6.23%, based on a
year-end per share net asset value of $15.37 and a per share market price of
$14.38, respectively, and $.896 per share income dividends. Over the same
period, the total investment return on the Fund's Common Stock was +7.08%, based
on a change in per share net asset value from $15.25 to $15.37, and assuming
reinvestment of all distributions.
The Fund's total return, based on net asset value, exceeded the +6.59% average
return of the Lipper New Jersey Municipal Debt Funds category for the 12-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.) The
favorable results were achieved primarily in the first half
4 MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2005
of the fiscal year, when the Fund maintained a neutral duration posture and had
a competitive dividend yield. Portfolio performance was somewhat less favorable
in the latter six months of the period, partly due to the rise in interest rates
all along the curve. We viewed this as an opportunity to lengthen duration
modestly versus the Fund's peers, which proved somewhat detrimental on a
relative basis, although not enough to derail the strong one-year performance.
Contributing to performance throughout the year was our yield curve strategy,
which involved shifting our focus toward longer-dated bonds in an effort to
capitalize on the flattening phenomenon. As longer-term issues outperformed, our
approach was rewarded. Finally, as credit spreads continued to narrow, albeit at
a slower pace in the second half of the period, the portfolio's lower-rated
investment grade holdings contributed to the positive attribution.
For the six-month period ended November 30, 2005, the total investment return on
the Fund's Common Stock was -.12%, based on a change in per share net asset
value from $15.84 to $15.37, and assuming reinvestment of all distributions.
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?
We continued to position the Fund for a flattening yield curve, moving our
exposure further out and focusing on selected areas of the yield curve that we
believed offered compelling value -- typically the 15-year and 25-year sectors.
We added these maturities whenever they became available, paying for our
purchases through the sale of recently prerefunded holdings that had appreciated
significantly in value. When a security is advance refunded, it tends to exhibit
risk characteristics more reflective of a 5-year to 10-year bond, which is not
our preferred maturity range given the flattening trend. Thus, to offset that
dynamic, we generally took opportunities to sell those bonds, particularly those
with lower relative yields, and reallocated the proceeds further out.
For the most part, our new purchases have been high-quality issues, as spread
contraction has slowed and we believe the outperformance of lower-rated issues
may have run its course. In terms of specific sectors, we increased exposure to
housing -- an area where we perceive good value and which also tends to be of
high quality.
For the six-month period ended November 30, 2005, the Fund's Auction Market
Preferred Stock (AMPS) had an average yield of 2.21% for Series A, 2.17% for
Series B and 2.22% for Series C. The Fed's interest rate hikes are clearly
having a material impact on the Fund's borrowing costs. The Fed raised the
short-term interest rate target 200 basis points during the 12-month period (and
25 basis points more on December 13). Still, the tax-exempt yield curve remained
relatively steep and continued to generate an income benefit to the holders of
Common Stock from the leveraging of Preferred Stock. However, should the spread
between short-term and long-term interest rates narrow, the benefits of
leveraging will decline and, as a result, reduce the yield on the Fund's Common
Stock. At the end of the period, the Fund's leverage amount, due to AMPS, was
35.28% of total net assets, before the deduction of Preferred Stock. (For a more
complete explanation of the benefits and risks of leveraging, see page 2 of this
report to shareholders.)
How would you characterize the Fund's position at the close of the period?
The Fund ended the period with a duration slightly longer than the average of
its peers. We believe this is the appropriate posture at this juncture, as we
expect economic growth to slow somewhat in 2006 and believe that current
inflationary fears will prove transitory. In addition, market fluctuations over
the past year suggest we are at the bottom of a well-established trading range
where long-term market rates have previously attracted buyers. Furthermore,
additional support may well develop as investors come to the conclusion that the
Fed is approaching the end of its interest rate hiking campaign.
Theodore R. Jaeckel Jr., CFA
Vice President and Portfolio Manager
December 13, 2005
MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2005 5
Portfolio Information as of November 30, 2005
Percent of
Quality Ratings by Total
S&P/Moody's Investments
--------------------------------------------------------------------
AAA/Aaa ................................................. 63.8%
AA/Aa ................................................... 8.1
A/A ..................................................... 7.6
BBB/Baa ................................................. 18.1
B/B ..................................................... 0.6
NR (Not Rated) .......................................... 1.4
Other* .................................................. 0.4
--------------------------------------------------------------------
* Includes portfolio holdings in short-term investments.
Dividend Policy
The Fund's dividend policy is to distribute all or a portion of its net
investment income to its shareholders on a monthly basis. In order to provide
shareholders with a more stable level of dividend distributions, the Fund may at
times pay out less than the entire amount of net investment income earned in any
particular month and may at times in any month pay out such accumulated but
undistributed income in addition to net investment income earned in that month.
As a result, the dividends paid by the Fund for any particular month may be more
or less than the amount of net investment income earned by the Fund during such
month. The Fund's current accumulated but undistributed net investment income,
if any, is disclosed in the Statement of Net Assets, which comprises part of the
financial information included in this report.
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.
6 MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2005
Schedule of Investments (in Thousands)
Face
Amount Municipal Bonds Value
==================================================================================
New Jersey--140.9%
----------------------------------------------------------------------------------
$ 1,000 Burlington County, New Jersey, Bridge Commission
Revenue Bonds (Governmental Leasing Program),
5.25% due 8/15/2020 $ 1,065
----------------------------------------------------------------------------------
1,500 Delaware River and Bay Authority Revenue Bonds, 5%
due 1/01/2033 (d) 1,544
----------------------------------------------------------------------------------
Delaware River Joint Toll Bridge Commission,
New Jersey and Pennsylvania, Bridge Revenue
Refunding Bonds:
2,010 5% due 7/01/2021 2,087
3,645 5% due 7/01/2028 3,723
----------------------------------------------------------------------------------
3,930 Delaware River Port Authority of New Jersey and
Pennsylvania Revenue Bonds, RIB, Series 396,
8.663% due 1/01/2019 (c)(h) 4,620
----------------------------------------------------------------------------------
2,620 Essex County, New Jersey, Improvement Authority
Revenue Bonds, Series A, 5% due 10/01/2028 (b) 2,709
----------------------------------------------------------------------------------
Garden State Preservation Trust of New Jersey, Capital
Appreciation Revenue Bonds, Series B (c):
6,860 5.12%* due 11/01/2023 2,979
4,540 5.25%* due 11/01/2028 1,500
----------------------------------------------------------------------------------
Garden State Preservation Trust of New Jersey, Open
Space and Farmland Preservation Revenue Bonds,
Series A (c)(j):
4,300 5.80% due 11/01/2022 4,925
5,460 5.75% due 11/01/2028 6,482
----------------------------------------------------------------------------------
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 1,302
2,000 Series A, 6.85% due 12/01/2029 2,198
----------------------------------------------------------------------------------
1,500 Hudson County, New Jersey, COP, Refunding, 6.25%
due 12/01/2016 (d) 1,780
----------------------------------------------------------------------------------
13,950 Hudson County, New Jersey, Improvement Authority,
Facility Lease Revenue Refunding Bonds (Hudson
County Lease Project), 5.375% due 10/01/2024 (b) 14,695
----------------------------------------------------------------------------------
Jackson Township, New Jersey, School District, GO (b):
3,090 5% due 4/15/2018 3,265
3,750 5% due 4/15/2019 3,960
----------------------------------------------------------------------------------
Middlesex County, New Jersey, Improvement Authority,
County-Guaranteed Revenue Bonds (Golf
Course Projects):
1,455 5.25% due 6/01/2022 1,566
3,050 5% due 6/01/2029 3,165
----------------------------------------------------------------------------------
970 Middlesex County, New Jersey, Improvement Authority,
Senior Revenue Bonds (Heldrich Center Hotel/Conference
Project), Series A, 5% due 1/01/2020 974
----------------------------------------------------------------------------------
1,500 Middlesex County, New Jersey, Pollution Control
Financing Authority, Revenue Refunding Bonds
(Amerada Hess Corporation), 6.05% due 9/15/2034 1,601
----------------------------------------------------------------------------------
Monmouth County, New Jersey, Improvement Authority,
Governmental Loan Revenue Refunding Bonds (a):
2,235 5% due 12/01/2015 2,383
2,345 5% due 12/01/2016 2,486
----------------------------------------------------------------------------------
New Jersey EDA, Cigarette Tax Revenue Bonds:
1,720 5.625% due 6/15/2019 1,820
1,895 5.75% due 6/15/2029 1,986
370 5.50% due 6/15/2031 380
755 5.75% due 6/15/2034 788
----------------------------------------------------------------------------------
New Jersey EDA, EDR (Masonic Charity Foundation
of New Jersey):
600 5.25% due 6/01/2024 633
685 5.25% due 6/01/2032 718
----------------------------------------------------------------------------------
1,500 New Jersey EDA, First Mortgage Revenue Bonds
(Fellowship Village), Series C, 5.50% due 1/01/2028 1,500
----------------------------------------------------------------------------------
New Jersey EDA, First Mortgage Revenue Refunding
Bonds, Series A:
1,250 (Fellowship Village), 5.50% due 1/01/2018 1,264
3,500 (Fellowship Village), 5.50% due 1/01/2025 3,510
2,500 (The Winchester Gardens at Ward Homestead
Project), 5.75% due 11/01/2024 2,612
2,000 (The Winchester Gardens at Ward Homestead
Project), 5.80% due 11/01/2031 2,067
----------------------------------------------------------------------------------
New Jersey EDA, Motor Vehicle Surcharge Revenue
Bonds, Series A (d):
14,000 5.25% due 7/01/2033 14,832
2,870 5% due 7/01/2034 2,959
----------------------------------------------------------------------------------
New Jersey EDA, Revenue Bonds :
400 (Department of Human Services), 5%
due 7/01/2011 423
220 (Department of Human Services), 5%
due 7/01/2012 233
3,850 (Saint Barnabas Project), Series A, 6.30%*
due 7/01/2024 (d) 1,591
----------------------------------------------------------------------------------
Portfolio Abbreviations
To simplify the listings of MuniYield New Jersey Fund, Inc.'s portfolio holdings
in the Schedule of Investments, we have abbreviated the names of many of the
securities according to the list at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
DRIVERS Derivative Inverse Tax-Exempt Receipts
EDA Economic Development Authority
EDR Economic Development Revenue Bonds
GO General Obligation Bonds
M/F Multi-Family
RIB Residual Interest Bonds
MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2005 7
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
==================================================================================
New Jersey (continued)
----------------------------------------------------------------------------------
New Jersey EDA, School Facilities Construction
Revenue Bonds:
$5,800 Series L, 5% due 3/01/2030 (c) $ 6,008
5,400 Series O, 5.25% due 3/01/2023 5,737
----------------------------------------------------------------------------------
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) 6,755
----------------------------------------------------------------------------------
5,975 New Jersey Environmental Infrastructure Trust Revenue
Bonds (Environmental Infrastructure), Series A, 5.25%
due 9/01/2017 6,401
----------------------------------------------------------------------------------
1,100 New Jersey Health Care Facilities Financing Authority,
Health System Revenue Bonds (Catholic Health East),
Series A, 5.375% due 11/15/2033 1,128
----------------------------------------------------------------------------------
New Jersey Health Care Facilities Financing Authority
Revenue Bonds:
1,540 (Children's Specialized Hospital), Series A, 5.50%
due 7/01/2036 1,590
1,845 (Pascack Valley Hospital Association), 6.625%
due 7/01/2036 1,889
4,000 (Robert Wood University), 5.70% due 7/01/2020 (a) 4,310
1,845 (RWJ Healthcare Corporation), Series B, 5%
due 7/01/2035 (f) 1,876
1,875 (Somerset Medical Center), 5.50% due 7/01/2033 1,895
6,640 (South Jersey Hospital), 6% due 7/01/2026 7,070
2,000 (Southern Ocean County Hospital), 5.125%
due 7/01/2031 (f) 2,059
4,200 (Southern Ocean County Hospital), Series A, 6.25%
due 7/01/2023 4,205
----------------------------------------------------------------------------------
New Jersey Health Care Facilities Financing Authority,
Revenue Refunding Bonds:
1,020 (Atlantic City Medical Center), 6.25%
due 7/01/2017 1,137
2,185 (Atlantic City Medical Center), 5.75%
due 7/01/2025 2,322
1,650 (Capital Health System Inc.), Series A, 5.75%
due 7/01/2023 1,756
5,500 (Holy Name Hospital), 6% due 7/01/2025 5,701
1,500 (Meridian Health System Obligation Group), 5.25%
due 7/01/2019 (c) 1,587
2,250 (Meridian Health System Obligation Group), 5.375%
due 7/01/2024 (c) 2,379
2,195 (Meridian Health System Obligation Group), 5.25%
due 7/01/2029 (c) 2,313
----------------------------------------------------------------------------------
4,150 New Jersey State Educational Facilities Authority, Higher
Education, Capital Improvement Revenue Bonds,
Series A, 5.125% due 9/01/2022 (a) 4,402
----------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority
Revenue Bonds:
970 (Bloomfield College), Series A, 6.85%
due 7/01/2030 986
2,000 (Georgian Court College Project), Series C, 6.50%
due 7/01/2033 2,222
2,165 (Rowan University), Series C, 5.125%
due 7/01/2028 (d) 2,270
1,955 (Rowan University), Series C, 5% due 7/01/2034 (d) 2,021
----------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority,
Revenue Refunding Bonds:
5,305 (Montclair State University), Series L, 5%
due 7/01/2034 (d) 5,484
1,870 (Princeton Theological Seminary), 5%
due 7/01/2026 1,949
3,100 (Princeton University), Series A, 5% due 7/01/2030 3,244
3,725 (Princeton University), Series E, 5%
due 7/01/2013 (g) 4,027
1,000 (Rider University), 5% due 7/01/2017 (f) 1,039
1,255 (Rider University), Series A, 5.50% due 7/01/2023 (f) 1,343
1,450 (Rider University), Series A, 5.25%
due 7/01/2034 (f) 1,521
----------------------------------------------------------------------------------
5,155 New Jersey State Higher Education Assistance Authority,
Student Loan Revenue Bonds, AMT, Series A, 5.30%
due 6/01/2017 (a) 5,242
----------------------------------------------------------------------------------
2,500 New Jersey State Highway Authority, Garden State
Parkway General Revenue Refunding Bonds, 5.625%
due 1/01/2010 (g) 2,725
----------------------------------------------------------------------------------
New Jersey State Housing and Mortgage Finance
Agency, Home Buyer Revenue Bonds, AMT (d):
5,350 Series CC, 5.80% due 10/01/2020 5,575
3,335 Series U, 5.60% due 10/01/2012 3,445
----------------------------------------------------------------------------------
7,175 New Jersey State Housing and Mortgage Financing
Agency, Capital Fund Program Revenue Bonds, Series A,
4.70% due 11/01/2025 (c) 7,224
----------------------------------------------------------------------------------
4,535 New Jersey State Housing and Mortgage Financing
Agency, M/F Revenue Bonds, AMT, Series A, 4.90%
due 11/01/2035 (b) 4,535
----------------------------------------------------------------------------------
3,620 New Jersey State Transit Corporation, COP (Federal
Transit Administration Grants), Series B, 5.75%
due 9/15/2014 3,962
----------------------------------------------------------------------------------
6,405 New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Bonds, Series D, 5%
due 6/15/2020 6,712
----------------------------------------------------------------------------------
5,865 New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Refunding Bonds,
Series B, 5.50% due 12/15/2021 (d) 6,682
----------------------------------------------------------------------------------
4,870 New Jersey State Turnpike Authority, Turnpike Revenue
Bonds, Series B, 5.15%* due 1/01/2035 (a) 3,148
----------------------------------------------------------------------------------
4,500 New Jersey State Turnpike Authority, Turnpike Revenue
Refunding Bonds, Series A, 5.75% due 1/01/2010 (d)(g) 4,888
----------------------------------------------------------------------------------
5,000 Port Authority of New Jersey and New York,
Consolidated Revenue Bonds, 93rd Series, 6.125%
due 6/01/2094 5,861
----------------------------------------------------------------------------------
4,435 Port Authority of New Jersey and New York Revenue
Bonds, Trust Receipts, AMT, Class R, Series 10,
8.307% due 1/15/2017 (c)(h) 4,731
----------------------------------------------------------------------------------
5,300 Port Authority of New Jersey and New York, Revenue
Refunding Bonds, DRIVERS, AMT, Series 153, 7.104%
due 9/15/2012 (b)(h) 5,532
----------------------------------------------------------------------------------
2,000 Port Authority of New Jersey and New York, Special
Obligation Revenue Bonds (JFK International Air
Terminal), AMT, Series 6, 5.75% due 12/01/2022 (d) 2,112
----------------------------------------------------------------------------------
8 MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2005
Schedule of Investments (concluded) (in Thousands)
Face
Amount Municipal Bonds Value
==================================================================================
New Jersey (concluded)
----------------------------------------------------------------------------------
$6,000 Rahway Valley Sewerage Authority, New Jersey, Sewer
Revenue Bonds (Capital Appreciation), Series A, 4.87%*
due 9/01/2031 (d) $ 1,656
----------------------------------------------------------------------------------
South Jersey Port Corporation of New Jersey, Revenue
Refunding Bonds:
4,280 4.75% due 1/01/2018 4,370
2,485 4.85% due 1/01/2019 2,546
2,000 5% due 1/01/2020 2,069
----------------------------------------------------------------------------------
4,480 Tobacco Settlement Financing Corporation of New
Jersey, Asset-Backed Revenue Bonds, 5.75%
due 6/01/2032 4,585
----------------------------------------------------------------------------------
3,010 Tobacco Settlement Financing Corporation of New
Jersey Revenue Bonds, 7% due 6/01/2041 3,417
----------------------------------------------------------------------------------
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 1,647
1,175 5.375% due 6/01/2018 1,221
----------------------------------------------------------------------------------
University of Medicine and Dentistry, New Jersey,
Revenue Bonds, Series A (a):
945 5.50% due 12/01/2018 1,034
1,900 5.50% due 12/01/2019 2,080
1,870 5.50% due 12/01/2020 2,046
1,435 5.50% due 12/01/2021 1,570
==================================================================================
Puerto Rico--8.9%
----------------------------------------------------------------------------------
1,730 Puerto Rico Commonwealth Highway and
Transportation Authority, Transportation Revenue
Refunding Bonds, Series K, 5% due 7/01/2045 1,695
----------------------------------------------------------------------------------
3,300 Puerto Rico Electric Power Authority, Power Revenue
Bonds, Series RR, 5% due 7/01/2028 (e) 3,435
----------------------------------------------------------------------------------
2,500 Puerto Rico Electric Power Authority, Power Revenue
Refunding Bonds, Series PP, 5% due 7/01/2025 (b) 2,619
----------------------------------------------------------------------------------
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 2,041
----------------------------------------------------------------------------------
8,750 Puerto Rico Public Buildings Authority Revenue Bonds,
DRIVERS, Series 211, 7.14% due 7/01/2021 (d)(h) 9,544
==================================================================================
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 3,947
----------------------------------------------------------------------------------
1,900 Virgin Islands Public Finance Authority, Refinery
Facilities Revenue Bonds (Hovensa Refinery), AMT,
5.875% due 7/01/2022 2,044
----------------------------------------------------------------------------------
Total Municipal Bonds
(Cost--$317,171)--152.5% 332,891
==================================================================================
Shares
Held Short-Term Securities
==================================================================================
1,429 CMA New Jersey Municipal Money Fund (i) 1,429
----------------------------------------------------------------------------------
Total Short-Term Securities
(Cost--$1,429)--0.7% 1,429
==================================================================================
Total Investments (Cost--$318,600**)--153.2% 334,320
Other Assets Less Liabilities--1.3% 2,965
Preferred Stock, at Redemption Value--(54.5%) (119,035)
---------
Net Assets Applicable to Common Stock--100.0% $ 218,250
=========
* Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
** The cost and unrealized appreciation (depreciation) of investments as of
November 30, 2005, as computed for federal income tax purposes, were as
follows:
Aggregate cost .......................................... $ 318,257
=========
Gross unrealized appreciation ........................... $ 16,615
Gross unrealized depreciation ........................... (552)
---------
Net unrealized appreciation ............................. $ 16,063
=========
(a) AMBAC Insured.
(b) FGIC Insured.
(c) FSA Insured.
(d) MBIA Insured.
(e) CIFG Insured.
(f) Radian Insured.
(g) Prerefunded.
(h) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(i) Investments in companies considered to be an affiliate of the Fund, for
purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as
follows:
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
CMA New Jersey Municipal Money Fund (8,202) $34
--------------------------------------------------------------------------
(j) This security, or portion thereof, has been purchased on a "when-issued"
basis period.
See Notes to Financial Statements.
MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2005 9
Statement of Net Assets
As of November 30, 2005
====================================================================================================================
Assets
--------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value
(identified cost--$317,170,881) ....................... $ 332,891,083
Investments in affiliated securities, at value
(identified cost--$1,428,961) ......................... 1,428,961
Cash ................................................... 49,956
Receivables:
Securities sold ..................................... $ 7,442,368
Interest ............................................ 5,944,487
Dividends from affiliates ........................... 94 13,386,949
-------------
Prepaid expenses ....................................... 11,045
-------------
Total assets ........................................... 347,767,994
-------------
====================================================================================================================
Liabilities
--------------------------------------------------------------------------------------------------------------------
Payables:
Securities purchased ................................ 10,169,341
Dividends to Common Stock shareholders .............. 142,169
Investment adviser .................................. 110,393
Other affiliates .................................... 3,570 10,425,473
-------------
Accrued expenses ....................................... 57,488
-------------
Total liabilities ...................................... 10,482,961
-------------
====================================================================================================================
Preferred Stock
--------------------------------------------------------------------------------------------------------------------
Preferred Stock, at redemption value, par value $.05 per
share (2,400 Series A Shares and 1,500 Series B Shares)
and $.10 per share (860 Series C Shares) of AMPS*
authorized, issued and outstanding at $25,000 per share
liquidation preference ................................ 119,034,744
-------------
====================================================================================================================
Net Assets Applicable to Common Stock
--------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock .................. $ 218,250,289
=============
====================================================================================================================
Analysis of Net Assets Applicable to Common Stock
--------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.10 per share (14,203,242 shares
issued and outstanding) ............................... $ 1,420,324
Paid-in capital in excess of par ....................... 203,960,129
Undistributed investment income--net ................... $ 1,773,369
Accumulated realized capital losses--net ............... (4,623,735)
Unrealized appreciation--net ........................... 15,720,202
-------------
Total accumulated earnings--net ........................ 12,869,836
-------------
Total--Equivalent to $15.37 net asset value per share
of Common Stock (market price--$14.38) ................ $ 218,250,289
=============
* Auction Market Preferred Stock.
See Notes to Financial Statements.
10 MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2005
Statement of Operations
For the Year Ended November 30, 2005
====================================================================================================================
Investment Income
--------------------------------------------------------------------------------------------------------------------
Interest and amortization of premium and discount earned $ 16,775,271
Dividends from affiliates .............................. 33,558
-------------
Total income ........................................... 16,808,829
-------------
====================================================================================================================
Expenses
--------------------------------------------------------------------------------------------------------------------
Investment advisory fees ............................... $ 1,706,174
Commission fees ........................................ 303,780
Accounting services .................................... 127,284
Transfer agent fees .................................... 74,529
Professional fees ...................................... 51,460
Printing and shareholder reports ....................... 36,707
Custodian fees ......................................... 22,502
Directors' fees and expenses ........................... 20,680
Listing fees ........................................... 19,117
Pricing fees ........................................... 18,636
Other .................................................. 51,932
-------------
Total expenses before reimbursement .................... 2,432,801
Reimbursement of expenses .............................. (9,231)
-------------
Total expenses after reimbursement ..................... 2,423,570
-------------
Investment income--net ................................. 14,385,259
-------------
====================================================================================================================
Realized & Unrealized Gain (Loss)--Net
--------------------------------------------------------------------------------------------------------------------
Realized gain on:
Investments--net .................................... 5,098,083
Futures contracts and forward interest rate swaps--net 438,730 5,536,813
-------------
Change in unrealized appreciation--net:
Investments--net .................................... (2,852,489)
Futures contracts and forward interest rate swaps--net (199,135) (3,051,624)
--------------------------------
Total realized and unrealized gain--net ................ 2,485,189
-------------
====================================================================================================================
Dividends to Preferred Stock Shareholders
--------------------------------------------------------------------------------------------------------------------
Investment income--net ................................. (2,340,043)
-------------
Net Increase in Net Assets Resulting from Operations ... $ 14,530,405
=============
See Notes to Financial Statements.
MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2005 11
Statements of Changes in Net Assets
For the Year Ended
November 30,
--------------------------------
Increase (Decrease) in Net Assets: 2005 2004
====================================================================================================================
Operations
--------------------------------------------------------------------------------------------------------------------
Investment income--net ................................. $ 14,385,259 $ 15,052,816
Realized gain--net ..................................... 5,536,813 246,967
Change in unrealized appreciation--net ................. (3,051,624) (2,269,091)
Dividends to Preferred Stock shareholders .............. (2,340,043) (1,074,596)
--------------------------------
Net increase in net assets resulting from operations ... 14,530,405 11,956,096
--------------------------------
====================================================================================================================
Dividends to Common Stock Shareholders
--------------------------------------------------------------------------------------------------------------------
Investment income--net ................................. (12,896,544) (13,635,112)
--------------------------------
Net decrease in net assets resulting from dividends to
Common Stock shareholders ............................. (12,896,544) (13,635,112)
--------------------------------
====================================================================================================================
Capital Stock Transactions
--------------------------------------------------------------------------------------------------------------------
Offering and underwriting costs resulting from issuance
of Preferred Stock .................................... -- (344,974)
Adjustment of offering costs resulting from the issuance
of Preferred Stock .................................... (1,735) --
--------------------------------
Net decrease in net assets derived from Stock
transactions .......................................... (1,735) (344,974)
--------------------------------
====================================================================================================================
Net Assets Applicable to Common Stock
--------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets applicable to
Common Stock .......................................... 1,632,126 (2,023,990)
Beginning of year ...................................... 216,618,163 218,642,153
--------------------------------
End of year* ........................................... $ 218,250,289 $ 216,618,163
================================
* Undistributed investment income--net .............. $ 1,773,369 $ 2,624,697
================================
See Notes to Financial Statements.
Financial Highlights
For the Year Ended November 30,
The following per share data and ratios have been derived ---------------------------------------------------------------
from information provided in the financial statements. 2005 2004 2003 2002 2001
===================================================================================================================================
Per Share Operating Performance
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ......................... $ 15.25 $ 15.39 $ 14.84 $ 14.78 $ 13.99
---------------------------------------------------------------
Investment income--net ..................................... 1.01++ 1.06++ 1.05++ 1.06 1.08
Realized and unrealized gain (loss)--net ................... .18 (.14) .52 .05 .78
Dividends and distributions to Preferred
Stock shareholders:
Investment income--net .................................. (.16) (.08) (.06) (.09) (.20)
Realized gain--net ...................................... -- -- -- --+ --
---------------------------------------------------------------
Total from investment operations ........................... 1.03 .84 1.51 1.02 1.66
---------------------------------------------------------------
Less dividends and distributions to
Common Stock shareholders:
Investment income--net .................................. (.91) (.96) (.96) (.96) (.87)
Realized gain--net ...................................... -- -- -- --+ --
---------------------------------------------------------------
Total dividends and distributions to
Common Stock shareholders ................................. (.91) (.96) (.96) (.96) (.87)
---------------------------------------------------------------
Offering and underwriting costs resulting
from the issuance of Preferred Stock ...................... -- (.02) -- -- --
---------------------------------------------------------------
Adjustment of offering costs resulting
from the issuance of Preferred Stock ...................... --+ -- -- -- --
---------------------------------------------------------------
Net asset value, end of year ............................... $ 15.37 $ 15.25 $ 15.39 $ 14.84 $ 14.78
===============================================================
Market price per share, end of year ........................ $ 14.38 $ 14.73 $ 14.34 $ 14.07 $ 14.41
===============================================================
12 MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2005
Financial Highlights (concluded)
For the Year Ended November 30,
The following per share data and ratios have been derived ---------------------------------------------------------------
from information provided in the financial statements. 2005 2004 2003 2002 2001
===================================================================================================================================
Total Investment Return*
-----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ...... 7.08% 5.84% 10.81% 7.22% 12.20%
===============================================================
Based on market price per share ......... 3.72% 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** .......... 6.47% 6.94% 6.94% 7.06% 7.26%
===============================================================
Amount of dividends to Preferred Stock
shareholders ........................... 1.05% .50% .40% .58% 1.33%
===============================================================
Investment income--net, to Common Stock
shareholders ........................... 5.42% 6.44% 6.54% 6.48% 5.93%
===============================================================
===================================================================================================================================
Ratios Based on Average Net Assets of Preferred Stock
-----------------------------------------------------------------------------------------------------------------------------------
Dividends to Preferred Stock shareholders 1.97% 1.04% .89% 1.25% 2.84%
===============================================================
===================================================================================================================================
Supplemental Data
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock,
end of year (in thousands) ............. $218,250 $216,618 $218,642 $210,727 $209,617
===============================================================
Preferred Stock outstanding, end of year
(in thousands) ......................... $119,000 $119,000 $ 97,500 $ 97,500 $ 97,500
===============================================================
Portfolio turnover ...................... 34.49% 15.35% 28.93% 41.47% 52.03%
===============================================================
===================================================================================================================================
Leverage
-----------------------------------------------------------------------------------------------------------------------------------
Asset coverage per $1,000 ............... $ 2,834 $ 2,820 $ 3,242 $ 3,161 $ 3,150
===============================================================
===================================================================================================================================
Dividends Per Share on Preferred Stock Outstanding
-----------------------------------------------------------------------------------------------------------------------------------
Series A--Investment income--net ........ $ 497 $ 259 $ 225 $ 325 $ 723
===============================================================
Series B--Investment income--net ........ $ 479 $ 250 $ 219 $ 292 $ 702
===============================================================
Series C@--Investment income--net ....... $ 500 $ 91 -- -- --
===============================================================
* Total investment returns based on market value, which can be significantly
greater or lesser than the net asset value, may result in substantially
different returns. Total investment returns exclude the effects of sales
charges.
** Do not reflect the effect of dividends to Preferred Stock shareholders.
+ Amount is less than $(.01) per share.
++ Based on average shares outstanding.
@ Series C was issued on August 23, 2004.
See Notes to Financial Statements.
MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2005 13
Notes to Financial Statements
1. Significant Accounting Policies:
MuniYield New Jersey Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940, as amended, as a non-diversified, closed-end Management
investment company. The Fund's financial statements are prepared in conformity
with U.S. generally accepted accounting principles, which may require the use of
management accruals and estimates. Actual results may differ from these
estimates. 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.
(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.
14 MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2005
Notes to Financial Statements (continued)
(d) Security transactions and investment income -- Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend date.
Interest income is recognized on the accrual basis. The Fund amortizes all
premiums and discounts on debt securities.
(e) Dividends and distributions -- Dividends from net investment income are
declared and paid monthly. Distributions of capital gains are recorded on the
ex-dividend dates.
(f) Offering costs -- Direct expenses related to the public offering of the
Fund's Preferred Stock were charged to capital at the time of issuance of the
shares. Any adjustments to estimates of offering costs were recorded back to
capital.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect, wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML
& Co."), which is the limited partner.
FAM is responsible for the management of the Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. For such services, the Fund pays a monthly fee at
an annual rate of .50% of the Fund's average weekly net assets, including
proceeds from the issuance of Preferred Stock. The Investment Adviser has agreed
to reimburse its management fee by the amount of management fees the Fund pays
to FAM indirectly through its investment in the CMA New Jersey Municipal Money
Fund. For the year ended November 30, 2005, FAM reimbursed the Fund in the
amount of $9,231.
For the year ended November 30, 2004, Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("MLPF&S"), an affiliate of FAM, received underwriting fees of
$215,000 in connection with the issuance of the Fund's Preferred Stock.
For the year ended November 30, 2005, the Fund reimbursed FAM $8,825 for certain
accounting services.
Certain officers and/or directors of the Fund are officers and/or directors of
FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended November 30, 2005 were $118,963,437 and $118,121,682, respectively.
4. Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of stock, including Preferred
Stock, par value $.10 per share, all of which were initially classified as
Common Stock. The Board of Directors is authorized, however, to reclassify any
unissued shares of stock without approval of holders of Common Stock.
Preferred Stock
Auction Market Preferred Stock are redeemable shares of Preferred Stock of the
Fund, with a liquidation preference of $25,000 per share plus accrued and unpaid
dividends that entitle their holders to receive cash dividends at an annual rate
that may vary for the successive dividend periods. The yields in effect at
November 30, 2005 were as follows: Series A, 2.90%, Series B, 2.75% and Series
C, 2.81%.
Shares issued and outstanding during the year ended November 30, 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 year ended November 30, 2005, MLPF&S earned $166,930 as
commissions.
MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2005 15
Notes to Financial Statements (concluded)
5. Distributions to Shareholders:
The Fund paid a tax-exempt income dividend to holders of Common Stock in the
amount of $.068000 per share on December 29, 2005 to shareholders of record on
December 15, 2005.
The tax character of distributions paid during the fiscal years ended November
30, 2005 and November 30, 2004 was as follows:
--------------------------------------------------------------------------------
11/30/2005 11/30/2004
--------------------------------------------------------------------------------
Distributions paid from:
Tax-exempt income ................... $15,236,587 $14,709,708
-------------------------------
Total distributions .................... $15,236,587 $14,709,708
===============================
As of November 30, 2005, the components of accumulated earnings on a tax basis
were as follows:
-----------------------------------------------------------------------------
Undistributed tax-exempt income--net .................... $ 1,430,680
Undistributed long-term capital gains--net .............. --
------------
Total undistributed earnings--net ....................... 1,430,680
Capital loss carryforward ............................... (3,170,511)*
Unrealized gains--net ................................... 14,609,667**
------------
Total accumulated earnings--net ......................... $ 12,869,836
============
* On November 30, 2005, the Fund had a net capital loss carryforward of
$3,170,511, of which $2,930,955 expires in 2008 and $239,556 expires in
2012. This amount will be available to offset like amounts of any future
taxable gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on straddles and the
difference between book and tax amortization methods for premiums and
discounts on fixed income securities.
16 MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2005
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
MuniYield New Jersey Fund, Inc.:
We have audited the accompanying statement of net assets, including the schedule
of investments, of MuniYield New Jersey Fund, Inc. as of November 30, 2005, and
the related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of November 30, 2005, by correspondence with the
custodian and brokers; where replies were not received from brokers, we
performed other auditing procedures. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
MuniYield New Jersey Fund, Inc. as of November 30, 2005, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and its financial highlights for each of
the five years in the period then ended, in conformity with U.S. generally
accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
January 18, 2006
Fund Certification (unaudited)
In May 2005, the Fund filed its Chief Executive Officer Certification for the
prior year with the New York Stock Exchange pursuant to Section 303A.12(a) of
the New York Stock Exchange Corporate Governance Listing Standards.
The Fund's Chief Executive Officer and Chief Financial Officer Certifications
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 were filed with the
Fund's Form N-CSR and are available on the Securities and Exchange Commission's
Web site at http://www.sec.gov.
Important Tax Information (unaudited)
All of the net investment income distributions paid by MuniYield New Jersey
Fund, Inc. during the taxable year ended November 30, 2005 qualify as tax-exempt
interest dividends for federal income tax purposes.
MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2005 17
Disclosure of Investment Advisory Agreement
Activities of and Composition of the Board of Directors
All but one member of the Board of Directors is an independent director whose
only affiliation with Fund Asset Management, L.P. (the "Investment Adviser") or
other Merrill Lynch affiliates is as a director of the Fund and certain other
funds advised by the Investment Adviser or its affiliates. The Co-chairmen of
the Board are also independent directors. New director nominees are chosen as
nominees by a Nominating Committee comprised of independent directors. All
independent directors also are members of the Board's Audit Committee and the
independent directors meet in executive session at each in-person Board meeting.
The Board and the Audit Committee meet in person for at least two days each
quarter and conduct other in-person and telephone meetings throughout the year,
some of which are formal board meetings, and some of which are informational
meetings. The independent counsel to the independent directors attends all
in-person Board and Audit Committee meetings and other meetings at the
independent directors' request.
Investment Advisory Agreement -- Matters Considered by the Board
Every year, the Board considers approval of the Fund's investment advisory
agreement (the "Investment Advisory Agreement"). The Board assesses the nature,
scope and quality of the services provided to the Fund by the personnel of the
Investment Adviser and its affiliates, including administrative services,
shareholder services, oversight of fund accounting, marketing services and
assistance in meeting legal and regulatory requirements. The Board also receives
and assesses information regarding the services provided to the Fund by certain
unaffiliated service providers.
At various times throughout the year, the Board also considers a range of
information in connection with its oversight of the services provided by the
Investment Adviser and its affiliates. Among the matters considered are: (a)
fees (in addition to management fees) paid to the Investment Adviser and its
affiliates by the Fund; (b) Fund operating expenses paid to third parties; (c)
the resources devoted to and compliance reports relating to the Fund's
investment objective, policies and restrictions, and its compliance with its
Code of Ethics and the Investment Adviser's compliance policies and procedures;
and (d) the nature, cost and character of non-investment management services
provided by the Investment Adviser and its affiliates.
The Board believes that the Investment Adviser is one of the most experienced
global asset management firms and considers the overall services provided by the
Investment Adviser to be of high quality. The Board also believes that the
Investment Adviser is financially sound and well managed and notes that the
Investment Adviser is affiliated with one of America's largest financial firms.
The Board works closely with the Investment Adviser in overseeing the Investment
Adviser's efforts to achieve good performance. As part of this effort, the Board
discusses portfolio manager effectiveness and, when performance is not
satisfactory, discusses with the Investment Adviser taking steps such as
changing investment personnel.
Annual Consideration of Approval by the Board of Directors
In the period prior to the Board meeting to consider renewal of the Investment
Advisory Agreement, the Board requests and receives materials specifically
relating to the Fund's Investment Advisory Agreement. These materials include
(a) information compiled by Lipper Inc. ("Lipper") on the fees and expenses and
the investment performance of the Fund as compared to a comparable group of
funds as classified by Lipper; (b) information comparing the Fund's market price
with its net asset value per share; (c) a discussion by the Fund's portfolio
management team of investment strategies used by the Fund during its most recent
fiscal year; and (d) information on the profitability to the Investment Adviser
and its affiliates of the Investment Advisory Agreement and other relationships
with the Fund. The Board also considers other matters it deems important to the
approval process such as services related to the valuation and pricing of Fund
portfolio holdings, allocation of Fund portfolio transactions, the Fund's
portfolio turnover statistics, and direct and indirect benefits to the
Investment Adviser and its affiliates from their relationship with the Fund.
Certain Specific Renewal Data
In connection with the most recent renewal of the Fund's Investment Advisory
Agreement which occurred in August 2005, the independent directors' and Board's
review included the following:
Services Provided by the Investment Adviser -- The Board reviewed the nature,
extent and quality of services provided by the Investment Adviser, including the
investment advisory
18 MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2005
services and the resulting performance of the Fund. The Board focused primarily
on the Investment Adviser's investment advisory services and the Fund's
investment performance, having concluded that the other services provided to the
Fund by the Investment Adviser were satisfactory. The Board compared Fund
performance -- both including and excluding the effects of the Fund's fees and
expenses -- to the performance of a comparable group of funds, and the
performance of a relevant index or combination of indexes. While the Board
reviews performance data at least quarterly, consistent with the Investment
Adviser's investment goals, the Board attaches more importance to performance
over relatively long periods of time, typically three to five years. For the
periods ended May 31, 2005, the Fund's performance after fees and expenses
ranked in the third quintile for each of the one- and three-year periods and in
the second quintile for the five-year period. Considering these factors, the
Board concluded that the nature and quality of these services supported the
continuation of the Investment Advisory Agreement.
The Investment Adviser's Personnel and Investment Process -- The Board reviews
at least annually the Fund's investment objectives and strategies. The Board
discusses with senior management of the Investment Adviser responsible for
investment operations and the senior management of the Investment Adviser's
municipal investing group the strategies being used to achieve the stated
objectives. Among other things, the Board considers the size, education and
experience of the Investment Adviser's investment staff, its use of technology,
and the Investment Adviser's approach to training and retaining portfolio
managers and other research, advisory and management personnel. The Board also
reviews the Investment Adviser's compensation policies and practices with
respect to the Fund's portfolio managers. The Board also considered the
experience of the Fund's portfolio manager and noted that Mr. Jaeckel has more
than fifteen years of experience in portfolio management. The Investment Adviser
and its investment staff have extensive experience in analyzing and managing the
types of investments used by the Fund. The Board concluded that the Fund
benefits from that expertise.
Management Fees and Other Expenses -- The Board reviews the Fund's contractual
management fee rate and actual management fee rate as a percentage of total
assets at common asset levels -- the actual rate includes advisory and
administrative service fees and the effects of any fee waivers -- compared to
the other funds in its Lipper category. It also compares the Fund's total
expenses to those of other comparable funds. The Fund's contractual and actual
management fee rates and total expenses were below the median fees and expenses
charged by comparable funds, as determined by Lipper. The Board has concluded
that the Fund's management fee and fee rate and overall expense ratio are
reasonable compared to those of other comparable funds.
Profitability -- The Board considers the cost of the services provided to the
Fund by the Investment Adviser, and the Investment Adviser's and its affiliates'
profits relating to the management of the Fund and the MLIM/FAM-advised funds.
As part of its analysis, the Board reviewed the Investment Adviser's methodology
in allocating its costs to the management of the Fund and concluded that there
was a reasonable basis for the allocation. The Board also considered federal
court decisions discussing an investment adviser's profitability and
profitability levels considered to be reasonable in those decisions. The Board
believes the Investment Adviser's profits are acceptable in relation to the
nature and quality of services provided.
Economies of Scale -- The Board considered the extent to which economies of
scale might be realized as the assets of the Fund increase and whether there
should be changes in the management fee rate or structure in order to enable the
Fund to participate in these economies of scale. The Board considered economies
of scale to the extent applicable to the Fund's closed-end structure and
determined that the Fund appropriately benefits from any economies of scale and
no changes were currently necessary.
Conclusion
After the independent directors deliberated in executive session, the entire
Board, including all of the independent directors, approved the renewal of the
existing Investment Advisory Agreement, concluding that the advisory fee was
reasonable in relation to the services provided and that a contract renewal was
in the best interests of the shareholders.
MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2005 19
Automatic Dividend Reinvestment Plan
How the Plan Works -- The Fund offers a Dividend Reinvestment Plan (the "Plan")
under which income and capital gains dividends paid by the Fund are
automatically reinvested in additional shares of Common Stock of the Fund. The
Plan is administered on behalf of the shareholders by The Bank of New York (the
"Plan Agent"). Under the Plan, whenever the Fund declares a dividend,
participants in the Plan will receive the equivalent in shares of Common Stock
of the Fund. The Plan Agent will acquire the shares for the participant's
account either (i) through receipt of additional unissued but authorized shares
of the Fund ("newly issued shares") or (ii) by purchase of outstanding shares of
Common Stock on the open market on the New York Stock Exchange or elsewhere. If,
on the dividend payment date, the Fund's net asset value per share is equal to
or less than the market price per share plus estimated brokerage commissions (a
condition often referred to as a "market premium"), the Plan Agent will invest
the dividend amount in newly issued shares. If the Fund's net asset value per
share is greater than the market price per share (a condition often referred to
as a "market discount"), the Plan Agent will invest the dividend amount by
purchasing on the open market additional shares. If the Plan Agent is unable to
invest the full dividend amount in open market purchases, or if the market
discount shifts to a market premium during the purchase period, the Plan Agent
will invest any uninvested portion in newly issued shares. The shares acquired
are credited to each shareholder's account. The amount credited is determined by
dividing the dollar amount of the dividend by either (i) when the shares are
newly issued, the net asset value per share on the date the shares are issued or
(ii) when shares are purchased in the open market, the average purchase price
per share.
Participation in the Plan -- Participation in the Plan is automatic, that is, a
shareholder is automatically enrolled in the Plan when he or she purchases
shares of Common Stock of the Fund unless the shareholder specifically elects
not to participate in the Plan. Shareholders who elect not to participate will
receive all dividend distributions in cash. Shareholders who do not wish to
participate in the Plan, must advise the Plan Agent in writing (at the address
set forth below) that they elect not to participate in the Plan. Participation
in the Plan is completely voluntary and may be terminated or resumed at any time
without penalty by writing to the Plan Agent.
Benefits of the Plan -- The Plan provides an easy, convenient way for
shareholders to make additional, regular investments in the Fund. The Plan
promotes a long-term strategy of investing at a lower cost. All shares acquired
pursuant to the Plan receive voting rights. In addition, if the market price
plus commissions of the Fund's shares is above the net asset value, participants
in the Plan will receive shares of the Fund for less than they could otherwise
purchase them and with a cash value greater than the value of any cash
distribution they would have received. However, there may not be enough shares
available in the market to make distributions in shares at prices below the net
asset value. Also, since the Fund does not redeem shares, the price on resale
may be more or less than the net asset value.
Plan Fees -- There are no enrollment fees or brokerage fees for participating in
the Plan. The Plan Agent's service fees for handling the reinvestment of
distributions are paid for by the Fund. However, brokerage commissions may be
incurred when the Fund purchases shares on the open market and shareholders will
pay a pro rata share of any such commissions.
Tax Implications -- The automatic reinvestment of dividends and distributions
will not relieve participants of any federal, state or local income tax that may
be payable (or required to be withheld) on such dividends. Therefore, income and
capital gains may still be realized even though shareholders do not receive
cash. Participation in the Plan generally will not effect the tax-exempt status
of exempt interest dividends paid by the Fund. If, when the Fund's shares are
trading at a market premium, the Fund issues shares pursuant to the Plan that
have a greater fair market value than the amount of cash reinvested, it is
possible that all or a portion of the discount from the market value (which may
not exceed 5% of the fair market value of the Fund's shares) could be viewed as
a taxable distribution. If the discount is viewed as a taxable distribution, it
is also possible that the taxable character of this discount would be allocable
to all the shareholders, including shareholders who do not participate in the
Plan. Thus, shareholders who do not participate in the Plan might be required to
report as ordinary income a portion of their distributions equal to their
allocable share of the discount.
Contact Information -- All correspondence concerning the Plan, including any
questions about the Plan, should be directed to the Plan Agent at The Bank of
New York, Church Street Station, P.O. Box 11258, New York, NY 10286-1258,
Telephone: 800-432-8224.
20 MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2005
Officers and Directors
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
====================================================================================================================================
Interested Director
------------------------------------------------------------------------------------------------------------------------------------
Robert C. P.O. Box 9011 President 2005 to President of the MLIM/FAM-advised funds since 2005; 131 Funds None
Doll, Jr.* Princeton, NJ and present President of MLIM and FAM since 2001; Co-Head 177 Portfolios
08543-9011 Director (Americas Region) thereof from 2000 to 2001 and
Age: 51 Senior Vice President from 1999 to 2001; President
and Director of Princeton Services, Inc. ("Princeton
Services") since 2001; President of Princeton
Administrators, L.P. ("Princeton Administrators")
since 2001; Chief Investment Officer of Oppenheimer-
Funds, Inc. in 1999 and Executive Vice President
thereof from 1991 to 1999.
------------------------------------------------------------------------------------------------------------------------
* Mr. Doll is a director, trustee or member of an advisory board of certain other investment companies for which MLIM or
FAM acts as investment adviser. Mr. Doll is an "interested person," as described in the Investment Company Act, of the
Fund based on his present and former positions with MLIM, FAM, Princeton Services and Princeton Administrators.
Directors serve until their resignation, removal, or death, or until December 31 of the year in which they turn 72. As
Fund President, Mr. Doll serves at the pleasure of the Board of Directors.
====================================================================================================================================
Independent Directors*
------------------------------------------------------------------------------------------------------------------------------------
James H. P.O. Box 9095 Director 1995 to Director, The China Business Group, Inc. since 1996 39 Funds None
Bodurtha** Princeton, NJ present and Executive Vice President thereof from 1996 59 Portfolios
08543-9095 to 2003; Chairman of the Board, Berkshire Holding
Age: 61 Corporation since 1980; Partner, Squire, Sanders &
Dempsey from 1980 to 1993.
------------------------------------------------------------------------------------------------------------------------------------
Kenneth A. P.O. Box 9095 Director 2005 to Professor, Harvard University since 1992; Professor, 39 Funds None
Froot Princeton, NJ present Massachusetts Institute of Technology from 1986 to 59 Portfolios
08543-9095 1992.
Age: 48
------------------------------------------------------------------------------------------------------------------------------------
Joe P.O. Box 9095 Director 2002 to Member of the Committee of Investment of Employee 39 Funds Kimco
Grills** Princeton, NJ present Benefit Assets of the Association of Financial 59 Portfolios Realty
08543-9095 Professionals ("CIEBA") since 1986; Member of Corporation
Age: 70 CIEBA's Executive Committee since 1988 and its
Chairman from 1991 to 1992; Assistant Treasurer of
International Business Machines Corporation ("IBM")
and Chief Investment Officer of IBM Retirement Fund
from 1986 to 1993; Member of the Investment Advisory
Committee of the State of New York Common Retirement
Fund since 1989; Member of the Investment Advisory
Committee of the Howard Hughes Medical Institute
from 1997 to 2000; Director, Duke University
Management Company from 1992 to 2004, Vice Chairman
thereof from 1998 to 2004, and Director Emeritus
thereof since 2004; Director, LaSalle Street Fund
from 1995 to 2001; Director, Kimco Realty
Corporation since 1997; Member of the Investment
Advisory Committee of the Virginia Retirement System
since 1998, Vice Chairman thereof from 2002 to 2005,
and Chairman thereof since 2005; Director,
Montpelier Foundation since 1998 and its Vice
Chairman since 2000; Member of the Investment
Committee of the Woodberry Forest School since 2000;
Member of the Investment Committee of the National
Trust for Historic Preservation since 2000.
MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2005 21
Officers and Directors (continued)
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
====================================================================================================================================
Independent Directors* (concluded)
------------------------------------------------------------------------------------------------------------------------------------
Herbert I. P.O. Box 9095 Director 1992 to John M. Olin Professor of Humanities, New York 39 Funds None
London Princeton, NJ present University since 1993 and Professor thereof since 59 Portfolios
08543-9095 1980; President, Hudson Institute since 1997 and
Age: 66 Trustee thereof since 1980; Dean, Gallatin Division
of New York University from 1976 to 1993;
Distinguished Fellow, Herman Kahn Chair, Hudson
Institute from 1984 to 1985; Director, Damon Corp.
from 1991 to 1995; Overseer, Center for Naval
Analyses from 1983 to 1993.
------------------------------------------------------------------------------------------------------------------------------------
Roberta P.O. Box 9095 Director 1999 to Shareholder, Modrall, Sperling, Roehl, Harris & 39 Funds None
Cooper Princeton, NJ present Sisk, P.A. since 1993; President, American Bar 59 Portfolios
Ramo 08543-9095 Association from 1995 to 1996 and Member of the
Age: 63 Board of Governors thereof from 1994 to 1997;
Shareholder, Poole, Kelly & Ramo, Attorneys at Law,
P.C. from 1977 to 1993; Director of ECMC Group
(service provider to students, schools and lenders)
since 2001; Director, United New Mexico Bank (now
Wells Fargo) from 1983 to 1988; Director, First
National Bank of New Mexico (now Wells Fargo) from
1975 to 1976; Vice President, American Law Institute
since 2004.
------------------------------------------------------------------------------------------------------------------------------------
Robert S. P.O. Box 9095 Director 2002 to Principal of STI Management (investment adviser) 39 Funds None
Salomon Princeton, NJ present since 1994; Chairman and CEO of Brothers Asset 59 Portfolios
Jr. 08543-9095 Management Inc. from 1992 to 1995; Chairman of
Age: 69 Salomon Brothers Equity Mutual Funds from 1992 to
1995; regular columnist with Forbes Magazine from
1992 to 2002; Director of Stock Research and U.S.
Equity Strategist at Salomon Brothers Inc. from 1975
to 1991; Trustee, Commonfund from 1980 to 2001.
------------------------------------------------------------------------------------------------------------------------------------
Stephen B. P.O. Box 9095 Director 2002 to Chairman of Fernwood Advisors, Inc. (investment 40 Funds None
Swensrud Princeton, NJ present adviser) since 1996; Principal,Fernwood Associates 60 Portfolios
08543-9095 (financial consultants) since 1975; Chairman of
Age: 72 R.P.P. Corporation (manufacturing company) since
1978; Director of International Mobile
Communications, Inc. (telecommunications) since
1998.
------------------------------------------------------------------------------------------------------------------------
* Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72.
** Co-Chairman of the Board and the Audit Committee.
--------------------------------------------------------------------------------
Effective January 1, 2006, Stephen B. Swensrud retired as Director of MuniYield
New Jersey Fund, Inc. The Fund's Board of Directors wishes Mr. Swensrud well in
his retirement.
--------------------------------------------------------------------------------
22 MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2005
Officers and Directors (concluded)
Position(s) Length of
Held with Time
Name Address & Age Fund Served* Principal Occupation(s) During Past 5 Years
====================================================================================================================================
Fund Officers
------------------------------------------------------------------------------------------------------------------------------------
Donald C. P.O. Box 9011 Vice 1993 to First Vice President of MLIM and FAM since 1997 and Treasurer thereof since 1999;
Burke Princeton, NJ President present Senior Vice President and Treasurer of Princeton Services since 1999 and Director
08543-9011 and and 1999 since 2004; Vice President of FAM Distributors, Inc. ("FAMD") since 1999 and
Age: 45 Treasurer to Director since 2004; Vice President of MLIM and FAM from 1990 to 1997; Director of
present Taxation of MLIM from 1990 to 2001; Vice President, Treasurer and Secretary of the
IQ Funds since 2004.
------------------------------------------------------------------------------------------------------------------------------------
Kenneth A. P.O. Box 9011 Senior Vice 2002 to Managing Director (Municipal Tax-Exempt Fund Management) of MLIM since 2000;
Jacob Princeton, NJ President present Director of MLIM from 1997 to 2000.
08543-9011
Age: 54
------------------------------------------------------------------------------------------------------------------------------------
John M. P.O. Box 9011 Senior Vice 2002 to Managing Director (Municipal Tax-Exempt Fund Management) of MLIM since 2000;
Loffredo Princeton, NJ President present Director of MLIM from 1997 to 2000.
08543-9011
Age: 41
------------------------------------------------------------------------------------------------------------------------------------
Theodore R. P.O. Box 9011 Vice 1998 to Managing Director (Municipal Tax-Exempt Fund Management) of MLIM since 2005;
Jaeckel Jr. Princeton, NJ President present Director of MLIM from 1997 to 2005; Vice President of MLIM from 1991 to 1997.
08543-9011
Age: 46
------------------------------------------------------------------------------------------------------------------------------------
Jeffrey P.O. Box 9011 Chief 2004 to Chief Compliance Officer of the MLIM/FAM-advised funds and First Vice President and
Hiller Princeton, NJ Compliance present Chief Compliance Officer of MLIM (Americas Region) since 2004; Chief Compliance
08543-9011 Officer Officer of the IQ Funds since 2004; Global Director of Compliance at Morgan Stanley
Age: 54 Investment Management from 2002 to 2004; Managing Director and Global Director of
Compliance at Citigroup Asset Management from 2000 to 2002; Chief Compliance
Officer at Soros Fund Management in 2000; Chief Compliance Officer at Prudential
Financial from 1995 to 2000; Senior Counsel in the Commission's Division of
Enforcement in Washington, D.C. from 1990 to 1995.
------------------------------------------------------------------------------------------------------------------------------------
Alice A. P.O. Box 9011 Secretary 2004 to Director (Legal Advisory) of MLIM since 2002; Vice President of MLIM from 1999 to
Pellegrino Princeton, NJ present 2002; Attorney associated with MLIM since 1997; Secretary of MLIM, FAM, FAMD and
08543-9011 Princeton Services since 2004.
Age: 45
------------------------------------------------------------------------------------------------------------------------
* Officers of the Fund serve at the pleasure of the Board of Directors.
------------------------------------------------------------------------------------------------------------------------------------
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street -- 11 East
New York, NY 10286
Preferred Stock:
The Bank of New York
101 Barclay Street -- 7 West
New York, NY 10286
NYSE Symbol
MYJ
Electronic Delivery
The Fund offers electronic delivery of communi cations 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. NOVEMBER 30, 2005 23
[LOGO] Merrill Lynch Investment Managers
www.mlim.ml.com
--------------------------------------------------------------------------------
Mercury Advisors
A Division of Merrill Lynch Investment Managers
www.mercury.ml.com
MuniYield New Jersey Fund, Inc. seeks to provide shareholders with as high a
level of current income exempt from federal and New Jersey income taxes as is
consistent with its investment policies and prudent investment management by
investing primarily in a portfolio of long-term, investment grade municipal
obligations the interest on which, in the opinion of bond counsel to the issuer,
is exempt from federal income tax and New Jersey personal income taxes.
This report, including the financial information herein, is transmitted to
shareholders of MuniYield New Jersey Fund, Inc. for their information. It is not
a prospectus. Past performance results shown in this report should not be
considered a representation of future performance. The Fund has leveraged its
Common Stock and intends to remain leveraged by issuing Preferred Stock to
provide the Common Stock shareholders with a potentially higher rate of return.
Leverage creates risks for Common Stock shareholders, including the likelihood
of greater volatility of net asset value and market price of shares of the
Common Stock, and the risk that fluctuations in the short-term dividend rates of
the Preferred Stock may affect the yield to Common Stock shareholders.
Statements and other information herein are as dated and are subject to change.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free 1-800-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 -- 11/05
Item 2 - Code of Ethics - The registrant has adopted a code of ethics, as of the
end of the period covered by this report, that applies to the
registrant's principal executive officer, principal financial officer
and principal accounting officer, or persons performing similar
functions. A copy of the code of ethics is available without charge
upon request by calling toll-free 1-800-MER-FUND (1-800-637-3863).
Item 3 - Audit Committee Financial Expert - The registrant's board of directors
has determined that (i) the registrant has the following audit
committee financial experts serving on its audit committee and (ii)
each audit committee financial expert is independent: (1) Joe Grills,
(2) Robert S. Salomon, Jr., and (3) Stephen B. Swensrud.
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees - Fiscal Year Ending November 30, 2005 - $34,300
Fiscal Year Ending November 30, 2004 - $26,000
(b) Audit-Related Fees - Fiscal Year Ending November 30, 2005 - $13,200
Fiscal Year Ending November 30, 2004 - $3,000
The nature of the services include assurance and related services
reasonably related to the performance of the audit of financial
statements not included in Audit Fees, and services rendered in
connection with the registration and issuance of a new series of AMPS.
(c) Tax Fees - Fiscal Year Ending November 30, 2005 - $5,700
Fiscal Year Ending November 30, 2004 - $5,610
The nature of the services include tax compliance, tax advice and tax
planning.
(d) All Other Fees - Fiscal Year Ending November 30, 2005 - $0
Fiscal Year Ending November 30, 2004 - $0
(e)(1) The registrant's audit committee (the "Committee") has adopted
policies and procedures with regard to the pre-approval of services.
Audit, audit-related and tax compliance services provided to the
registrant on an annual basis require specific pre-approval by the
Committee. The Committee also must approve other non-audit services
provided to the registrant and those non-audit services provided to the
registrant's affiliated service providers that relate directly to the
operations and the financial reporting of the registrant. Certain of
these non-audit services that the Committee believes are a) consistent
with the SEC's auditor independence rules and b) routine and recurring
services that will not impair the independence of the independent
accountants may be approved by the Committee without consideration on a
specific case-by-case basis ("general pre-approval"). However, such
services will only be deemed pre-approved provided that any individual
project does not exceed $5,000 attributable to the registrant or
$50,000 for all of the registrants the Committee oversees. Any proposed
services exceeding the pre-approved cost levels will require specific
pre-approval by the Committee, as will any other services not subject
to general pre-approval (e.g., unanticipated but permissible services).
The Committee is informed of each service approved subject to general
pre-approval at the next regularly scheduled in-person board meeting.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ending November 30, 2005 - $5,738,110
Fiscal Year Ending November 30, 2004 - $12,448,225
(h) The registrant's audit committee has considered and determined that
the provision of non-audit services that were rendered to the
registrant's investment adviser and any entity controlling, controlled
by, or under common control with the investment adviser that provides
ongoing services to the registrant that were not pre-approved pursuant
to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible
with maintaining the principal accountant's independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $1,227,000, 0%
Item 5 - Audit Committee of Listed Registrants - The following individuals are
members of the registrant's separately-designated standing audit
committee established in accordance with Section 3(a)(58)(A) of the
Exchange Act (15 U.S.C. 78c(a)(58)(A)):
James H. Bodurtha
Kenneth A. Froot (as of June 1, 2005)
Joe Grills
Herbert I. London
Roberta Cooper Ramo
Robert S. Salomon, Jr.
Stephen B. Swensrud
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies -
Proxy Voting Policies and Procedures
Each Fund's Board of Directors/Trustees has delegated to Merrill Lynch
Investment Managers, L.P. and/or Fund Asset Management, L.P. (the
"Investment Adviser") authority to vote all proxies relating to the
Fund's portfolio securities. The Investment Adviser has adopted
policies and procedures ("Proxy Voting Procedures") with respect to the
voting of proxies related to the portfolio securities held in the
account of one or more of its clients, including a Fund. Pursuant to
these Proxy Voting Procedures, the Investment Adviser's primary
objective when voting proxies is to make proxy voting decisions solely
in the best interests of each Fund and its shareholders, and to act in
a manner that the Investment Adviser believes is most likely to enhance
the economic value of the securities held by the Fund. The Proxy Voting
Procedures are designed to ensure that the Investment Adviser considers
the interests of its clients, including the Funds, and not the
interests of the Investment Adviser, when voting proxies and that real
(or perceived) material conflicts that may arise between the Investment
Adviser's interest and those of the Investment Adviser's clients are
properly addressed and resolved.
In order to implement the Proxy Voting Procedures, the Investment
Adviser has formed a Proxy Voting Committee (the "Committee"). The
Committee is comprised of the Investment Adviser's Chief Investment
Officer (the "CIO"), one or more other senior investment professionals
appointed by the CIO, portfolio managers and investment analysts
appointed by the CIO and any other personnel the CIO deems appropriate.
The Committee will also include two non-voting representatives from the
Investment Adviser's Legal department appointed by the Investment
Adviser's General Counsel. The Committee's membership shall be limited
to full-time employees of the Investment Adviser. No person with any
investment banking, trading, retail brokerage or research
responsibilities for the Investment Adviser's affiliates may serve as a
member of the Committee or participate in its decision making (except
to the extent such person is asked by the Committee to present
information to the Committee, on the same basis as other interested
knowledgeable parties not affiliated with the Investment Adviser might
be asked to do so). The Committee determines how to vote the proxies of
all clients, including a Fund, that have delegated proxy voting
authority to the Investment Adviser and seeks to ensure that all votes
are consistent with the best interests of those clients and are free
from unwarranted and inappropriate influences. The Committee
establishes general proxy voting policies for the Investment Adviser
and is responsible for determining how those policies are applied to
specific proxy votes, in light of each issuer's unique structure,
management, strategic options and, in certain circumstances, probable
economic and other anticipated consequences of alternate actions. In so
doing, the Committee may determine to vote a particular proxy in a
manner contrary to its generally stated policies. In addition, the
Committee will be responsible for ensuring that all reporting and
recordkeeping requirements related to proxy voting are fulfilled.
The Committee may determine that the subject matter of a recurring
proxy issue is not suitable for general voting policies and requires a
case-by-case determination. In such cases, the Committee may elect not
to adopt a specific voting policy applicable to that issue. The
Investment Adviser believes that certain proxy voting issues require
investment analysis - such as approval of mergers and other significant
corporate transactions - akin to investment decisions, and are,
therefore, not suitable for general guidelines. The Committee may elect
to adopt a common position for the Investment Adviser on certain proxy
votes that are akin to investment decisions, or determine to permit the
portfolio manager to make individual decisions on how best to maximize
economic value for a Fund (similar to normal buy/sell investment
decisions made by such portfolio managers). While it is expected that
the Investment Adviser will generally seek to vote proxies over which
the Investment Adviser exercises voting authority in a uniform manner
for all the Investment Adviser's clients, the Committee, in conjunction
with a Fund's portfolio manager, may determine that the Fund's specific
circumstances require that its proxies be voted differently.
To assist the Investment Adviser in voting proxies, the Committee has
retained Institutional Shareholder Services ("ISS"). ISS is an
independent adviser that specializes in providing a variety of
fiduciary-level proxy-related services to institutional investment
managers, plan sponsors, custodians, consultants, and other
institutional investors. The services provided to the Investment
Adviser by ISS include in-depth research, voting recommendations
(although the Investment Adviser is not obligated to follow such
recommendations), vote execution, and recordkeeping. ISS will also
assist the Fund in fulfilling its reporting and recordkeeping
obligations under the Investment Company Act.
The Investment Adviser's Proxy Voting Procedures also address special
circumstances that can arise in connection with proxy voting. For
instance, under the Proxy Voting Procedures, the Investment Adviser
generally will not seek to vote proxies related to portfolio securities
that are on loan, although it may do so under certain circumstances. In
addition, the Investment Adviser will vote proxies related to
securities of foreign issuers only on a best efforts basis and may
elect not to vote at all in certain countries where the Committee
determines that the costs associated with voting generally outweigh the
benefits. The Committee may at any time override these general policies
if it determines that such action is in the best interests of a Fund.
From time to time, the Investment Adviser may be required to vote proxies in
respect of an issuer where an affiliate of the Investment Adviser (each, an
"Affiliate"), or a money management or other client of the Investment Adviser
(each, a "Client") is involved. The Proxy Voting Procedures and the Investment
Adviser's adherence to those procedures are designed to address such conflicts
of interest. The Committee intends to strictly adhere to the Proxy Voting
Procedures in all proxy matters, including matters involving Affiliates and
Clients. If, however, an issue representing a non-routine matter that is
material to an Affiliate or a widely known Client is involved such that the
Committee does not reasonably believe it is able to follow its guidelines (or if
the particular proxy matter is not addressed by the guidelines) and vote
impartially, the Committee may, in its discretion for the purposes of ensuring
that an independent determination is reached, retain an independent fiduciary to
advise the Committee on how to vote or to cast votes on behalf of the Investment
Adviser's clients.
In the event that the Committee determines not to retain an independent
fiduciary, or it does not follow the advice of such an independent
fiduciary, the powers of the Committee shall pass to a subcommittee,
appointed by the CIO (with advice from the Secretary of the Committee),
consisting solely of Committee members selected by the CIO. The CIO
shall appoint to the subcommittee, where appropriate, only persons
whose job responsibilities do not include contact with the Client and
whose job evaluations would not be affected by the Investment Adviser's
relationship with the Client (or failure to retain such relationship).
The subcommittee shall determine whether and how to vote all proxies on
behalf of the Investment Adviser's clients or, if the proxy matter is,
in their judgment, akin to an investment decision, to defer to the
applicable portfolio managers, provided that, if the subcommittee
determines to alter the Investment Adviser's normal voting guidelines
or, on matters where the Investment Adviser's policy is case-by-case,
does not follow the voting recommendation of any proxy voting service
or other independent fiduciary that may be retained to provide research
or advice to the Investment Adviser on that matter, no proxies relating
to the Client may be voted unless the Secretary, or in the Secretary's
absence, the Assistant Secretary of the Committee concurs that the
subcommittee's determination is consistent with the Investment
Adviser's fiduciary duties
In addition to the general principles outlined above, the Investment
Adviser has adopted voting guidelines with respect to certain recurring
proxy issues that are not expected to involve unusual circumstances.
These policies are guidelines only, and the Investment Adviser may
elect to vote differently from the recommendation set forth in a voting
guideline if the Committee determines that it is in a Fund's best
interest to do so. In addition, the guidelines may be reviewed at any
time upon the request of a Committee member and may be amended or
deleted upon the vote of a majority of Committee members present at a
Committee meeting at which there is a quorum.
The Investment Adviser has adopted specific voting guidelines with
respect to the following proxy issues:
o Proposals related to the composition of the Board of Directors of issuers
other than investment companies. As a general matter, the Committee
believes that a company's Board of Directors (rather than shareholders) is
most likely to have access to important, nonpublic information regarding a
company's business and prospects, and is therefore best-positioned to set
corporate policy and oversee management. The Committee, therefore,
believes that the foundation of good corporate governance is the election
of qualified, independent corporate directors who are likely to diligently
represent the interests of shareholders and oversee management of the
corporation in a manner that will seek to maximize shareholder value over
time. In individual cases, the Committee may look at a nominee's history
of representing shareholder interests as a director of other companies or
other factors, to the extent the Committee deems relevant.
o Proposals related to the selection of an issuer's independent auditors. As
a general matter, the Committee believes that corporate auditors have a
responsibility to represent the interests of shareholders and provide an
independent view on the propriety of financial reporting decisions of
corporate management. While the Committee will generally defer to a
corporation's choice of auditor, in individual cases, the Committee may
look at an auditors' history of representing shareholder interests as
auditor of other companies, to the extent the Committee deems relevant.
o Proposals related to management compensation and employee benefits. As a
general matter, the Committee favors disclosure of an issuer's
compensation and benefit policies and opposes excessive compensation, but
believes that compensation matters are normally best determined by an
issuer's board of directors, rather than shareholders. Proposals to
"micro-manage" an issuer's compensation practices or to set arbitrary
restrictions on compensation or benefits will, therefore, generally not be
supported.
o Proposals related to requests, principally from management, for approval
of amendments that would alter an issuer's capital structure. As a general
matter, the Committee will support requests that enhance the rights of
common shareholders and oppose requests that appear to be unreasonably
dilutive.
o Proposals related to requests for approval of amendments to an issuer's
charter or by-laws. As a general matter, the Committee opposes poison pill
provisions.
o Routine proposals related to requests regarding the formalities of
corporate meetings.
o Proposals related to proxy issues associated solely with holdings of
investment company shares. As with other types of companies, the Committee
believes that a fund's Board of Directors (rather than its shareholders)
is best-positioned to set fund policy and oversee management. However, the
Committee opposes granting Boards of Directors authority over certain
matters, such as changes to a fund's investment objective, that the
Investment Company Act envisions will be approved directly by
shareholders.
o Proposals related to limiting corporate conduct in some manner that
relates to the shareholder's environmental or social concerns. The
Committee generally believes that annual shareholder meetings are
inappropriate forums for discussion of larger social issues, and opposes
shareholder resolutions "micromanaging" corporate conduct or requesting
release of information that would not help a shareholder evaluate an
investment in the corporation as an economic matter. While the Committee
is generally supportive of proposals to require corporate disclosure of
matters that seem relevant and material to the economic interests of
shareholders, the Committee is generally not supportive of proposals to
require disclosure of corporate matters for other purposes.
Item 8 - Portfolio Managers of Closed-End Management Investment Companies - as
of November 30, 2005.
(a)(1) Mr. Theodore R. Jaeckel, Jr. is primarily responsible for the
day-to-day management of the registrant's portfolio ("Portfolio
Manager"). Mr. Jaeckel has been a Managing Director of MLIM
since 2005. He was a Director of MLIM from 1997 to 2005. Mr.
Jaeckel has been a portfolio manager with the Investment Adviser
and MLIM since 1991 and has been a Vice President and portfolio
manager of the Fund since 1998.
(a)(2) As of November 30, 2005:
(iii) Number of Other Accounts and
(ii) Number of Other Accounts Managed Assets for Which Advisory Fee is
and Assets by Account Type Performance-Based
Other Other
(i) Name of Registered Other Pooled Registered Other Pooled
Portfolio Investment Investment Other Investment Investment Other
Manager Companies Vehicles Accounts Companies Vehicles Accounts
-------------- ----------
Theodore R.
Jaeckel, Jr. 7 1 0 0 1 0
$2,336,653,106 $ 20,516,106 $ 0 $ 0 $ 20,516,106 $ 0
(iv) Potential Material Conflicts of Interest
Real, potential or apparent conflicts of interest may arise when a
portfolio manager has day-to-day portfolio management responsibilities with
respect to more than one fund or account, including the following:
Certain investments may be appropriate for the Fund and also for
other clients advised by the Investment. Adviser and its affiliates, including
other client accounts managed by the Fund's portfolio management team.
Investment decisions for the Fund and other clients are made with a view to
achieving their respective investment objectives and after consideration of such
factors as their current holdings, availability of cash for investment and the
size of their investments generally. Frequently, a particular security may be
bought or sold for only one client or in different amounts and at different
times for more than one but less than all clients. Likewise, because clients of
the Investment Adviser and its affiliates may have differing investment
strategies, a particular security may be bought for one or more clients when one
or more other clients are selling the security. The investment results for the
Fund may differ from the results achieved by other clients of the Investment
Adviser and its affiliates and results among clients may differ. In addition,
purchases or sales of the same security may be made for two or more clients on
the same day. In such event, such transactions will be allocated among the
clients in a manner believed by the Investment Adviser and its affiliates to be
equitable to each. The Investment Adviser will not determine allocations based
on whether it receives a performance based fee from the client. In some cases,
the allocation procedure could have an adverse effect on the price or amount of
the securities purchased or sold by the Fund. Purchase and sale orders for the
Fund may be combined with those of other clients of the Investment Adviser and
its affiliates in the interest of achieving the most favorable net results to
the Fund.
To the extent that the Fund's portfolio management team has
responsibilities for managing accounts in addition to the Fund, a portfolio
manager will need to divide his time and attention among relevant accounts.
In some cases, a real, potential or apparent conflict may also arise
where (i) the Investment Adviser may have an incentive, such as a performance
based fee, in managing one account and not with respect to other accounts it
manages or (ii) where a member of the Fund's portfolio management team owns an
interest in one fund or account he or she manages and not another.
(a)(3) As of November 30, 2005:
Portfolio Manager Compensation
The Portfolio Manager Compensation Program of MLIM and its affiliates,
including the Investment Adviser, is critical to MLIM's ability to attract and
retain the most talented asset management professionals. This program ensures
that compensation is aligned with maximizing investment returns and it provides
a competitive pay opportunity for competitive performance.
Compensation Program
The elements of total compensation for MLIM and its affiliates portfolio
managers are a fixed base salary, annual performance-based cash and stock
compensation (cash and stock bonus) and other benefits. MLIM has balanced these
components of pay to provide portfolio managers with a powerful incentive to
achieve consistently superior investment performance. By design, portfolio
manager compensation levels fluctuate -- both up and down -- with the relative
investment performance of the portfolios that they manage.
Base Salary
Under the MLIM approach, like that of many asset management firms, base
salaries represent a relatively small portion of a portfolio manager's total
compensation. This approach serves to enhance the motivational value of the
performance-based (and therefore variable) compensation elements of the
compensation program.
Performance-Based Compensation
MLIM believes that the best interests of investors are served by
recruiting and retaining exceptional asset management talent and managing their
compensation within a consistent and disciplined framework that emphasizes pay
for performance in the context of an intensely competitive market for talent. To
that end, MLIM and its affiliates portfolio manager incentive compensation is
based on a formulaic compensation program. MLIM's formulaic portfolio manager
compensation program includes: investment performance relative to a subset of
general closed-end, New Jersey municipal debt funds over 1-, 3- and 5-year
performance periods and a measure of operational efficiency. Portfolio managers
are compensated based on the pre-tax performance of the products they manage. If
a portfolio manager's tenure is less than 5 years, performance periods will
reflect time in position. Portfolio managers are compensated based on products
they manage. A discretionary element of portfolio manager compensation may
include consideration of: financial results, expense control, profit margins,
strategic planning and implementation, quality of client service, market share,
corporate reputation, capital allocation, compliance and risk control,
leadership, workforce diversity, supervision, technology and innovation. MLIM
and its affiliates also consider the extent to which individuals exemplify and
foster ML & Co.'s principles of client focus, respect for the individual,
teamwork, responsible citizenship and integrity. All factors are considered
collectively by MLIM management.
Cash Bonus
Performance-based compensation is distributed to portfolio managers in a
combination of cash and stock. Typically, the cash bonus, when combined with
base salary, represents more than 60% of total compensation for portfolio
managers.
Stock Bonus
A portion of the dollar value of the total annual performance-based bonus
is paid in restricted shares of ML & Co. stock. Paying a portion of annual
bonuses in stock puts compensation earned by a portfolio manager for a given
year "at risk" based on the company's ability to sustain and improve its
performance over future periods. The ultimate value of stock bonuses is
dependent on future ML & Co. stock price performance. As such, the stock bonus
aligns each portfolio manager's financial interests with those of the ML & Co.
shareholders and encourages a balance between short-term goals and long-term
strategic objectives. Management strongly believes that providing a significant
portion of competitive performance-based compensation in stock is in the best
interests of investors and shareholders. This approach ensures that portfolio
managers participate as shareholders in both the "downside risk" and "upside
opportunity" of the company's performance. Portfolio managers therefore have a
direct incentive to protect ML & Co.'s reputation for integrity.
Other Compensation Programs
Portfolio managers who meet relative investment performance and financial
management objectives during a performance year are eligible to participate in a
deferred cash program. Awards under this program are in the form of deferred
cash that may be benchmarked to a menu of MLIM mutual funds (including their own
fund) during a five-year vesting period. The deferred cash program aligns the
interests of participating portfolio managers with the investment results of
MLIM products and promotes continuity of successful portfolio management teams.
Other Benefits
Portfolio managers are also eligible to participate in broad-based plans
offered generally to employees of ML & Co. and its affiliates, including
broad-based retirement, 401(k), health, and other employee benefit plans.
(a)(4) Beneficial Ownership of Securities. As of November 30, 2005,
Mr. Jaeckel does not beneficially own any stock issued by the
Fund.
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 second fiscal half-year of the
period covered by this report that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - See Item 2
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: January 25, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Robert C. Doll, Jr.
-------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
MuniYield New Jersey Fund, Inc.
Date: January 25, 2006
By: /s/ Donald C. Burke
-------------------------------
Donald C. Burke,
Chief Financial Officer of
MuniYield New Jersey Fund, Inc.
Date: January 25, 2006