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: BlackRock 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, BlackRock MuniYield New Jersey Fund, Inc., 800 Scudders Mill
Road, Plainsboro, NJ 08536. Mailing address: P.O. Box 9011, Princeton,
NJ 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 11/30/06
Date of reporting period: 12/01/05 - 11/30/06
Item 1 - Report to Stockholders
ALTERNATIVES BLACKROCK SOLUTIONS EQUITIES
FIXED INCOME LIQUIDITY REAL ESTATE
BlackRock MuniYield BLACKROCK
New Jersey Fund, Inc.
ANNUAL REPORT | NOVEMBER 30, 2006
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
BlackRock MuniYield New Jersey Fund, Inc.
The Benefits and Risks of Leveraging
BlackRock 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 of November 30, 2006, the Fund's leverage amount, due to Auction Market
Preferred Stock, was 34.51%, before the deduction of Preferred Stock.
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.
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 BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006
A Letter to Shareholders
Dear Shareholder
As 2006 nears a conclusion, we are able to say it has been an interesting year
for investors. After a volatile start and far-reaching mid-year correction, the
financial markets regained some positive momentum through late summer and into
fall. For the six-month and 12-month periods ended November 30, 2006, the major
market indexes posted positive returns:
Total Returns as of November 30, 2006 6-month 12-month
===============================================================================================
U.S. equities (Standard & Poor's 500 Index) +11.33% +14.23%
-----------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) + 9.72 +17.43
-----------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) +11.19 +28.20
-----------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers Aggregate Bond Index) + 5.93 + 5.94
-----------------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 4.53 + 6.12
-----------------------------------------------------------------------------------------------
High yield bonds (Credit Suisse High Yield Index) + 6.28 +11.53
-----------------------------------------------------------------------------------------------
After raising the target short-term interest rate 17 times between June 2004 and
June 2006, the Federal Reserve Board (the Fed) finally opted to pause on August
8. This left the federal funds rate at 5.25%, where it remained through the
September, October and December Federal Open Market Committee meetings. In
interrupting its two-year interest rate-hiking campaign, the Fed acknowledged
that economic growth is slowing, led by softness in the housing market. However,
the central bankers continue to take a cautionary position on inflation, despite
a decline in energy prices in the fall. At the time of this writing, the price
of crude oil was roughly $62 per barrel after reaching nearly $78 per barrel in
the summer.
Notwithstanding the mid-year correction, equity markets generally found support
in solid corporate earnings reports in the first three quarters of the year.
Overall corporate health, including strong company balance sheets, helped to
sustain robust dividend-distribution, share-buyback and merger-and-acquisition
activity. Many international equity markets fared equally well or better, thanks
in part to higher economic growth rates and low inflation.
In the U.S. bond market, prices declined (and yields correspondingly rose) for
much of the year as investors focused on decent economic activity and inflation
concerns. Bond prices began to improve (yields fell) in the summer as the
economy showed signs of weakening and the Fed paused. Notably, the Treasury
curve has inverted periodically, a phenomenon typically associated with periods
of economic weakness. At the end of November, the one-month Treasury bill
offered the highest yield on the curve at 5.22%, while the 30-year Treasury bond
had a yield of 4.56%.
Amid the uncertainty inherent in the financial markets, we encourage you to
review your goals periodically with your financial professional and to make
portfolio changes, as needed. For additional insight and timely "food for
thought" for investors, we also invite you to visit Shareholder magazine at
www.blackrock.com/shareholdermagazine. We are pleased to make our
investor-friendly magazine available to you online. We thank you for trusting
BlackRock with your investment assets, and we look forward to continuing to
serve your investment needs.
Sincerely,
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
President and Director
BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006 3
A Discussion With Your Fund's Portfolio Manager
As the year progressed, we began to shift our focus down the yield curve
somewhat while continuing our efforts to balance yield and total return in the
portfolio.
Describe the recent market environment relative to municipal bonds.
Long-term taxable bond yields were little changed year over year, despite
considerable volatility. For much of the first half of the period,
longer-maturity U.S. Treasury yields rose (and prices correspondingly fell) as
investors focused on strong first-quarter economic activity and inflationary
concerns triggered by rising oil prices. Bond prices began to improve in late
June as economic activity softened. The price improvement accelerated in
response to the Federal Reserve Board's (the Fed) decision on August 8 to
refrain from raising its target interest rate. This occurred after 17
consecutive interest rate increases since June 2004.
At the end of November, the 30-year U.S. Treasury bond yield had fallen to
4.56%, a decline of 13 basis points (.13%) over the past 12 months. Meanwhile,
10-year Treasury yields fell three basis points to 4.46%. The tax-exempt bond
market was able to significantly outperform its taxable counterpart, especially
in recent months, as new-issue volume declined and investor demand rose. As
reported by Municipal Market Data, yields on AAA-rated issues maturing in 30
years declined 64 basis points over the 12-month period to 3.91%, while yields
on 10-year, AAA-rated issues fell 31 basis points to 3.56%.
Investor demand for municipal product has remained strong despite the recent
decline in yields. As reported by the Investment Company Institute, long-term
municipal bond funds saw net new cash inflows of over $2.2 billion in October
2006, a material increase from flows seen in the summer. During the first 10
months of the year, long-term tax-exempt bond funds had net new cash flows of
over $11.8 billion, a 70% increase versus the same period a year earlier.
Further supporting tax-exempt bond prices has been a recent decline in new
issuance. Year-to-date through November 2006, over $325 billion in new long-term
municipal bonds was underwritten, a decline of more than 13% compared to the
same period last year. The market's favorable technical position should continue
to support municipal bond prices in the months ahead.
Describe conditions in the State of New Jersey.
The $31 billion fiscal year 2007 budget adopted by the New Jersey legislature
generally kept the governor's original proposals intact, although a stalemate
about the budget initially resulted in a government shutdown in early July. A 1%
sales tax increase, expected to generate roughly $1.2 billion, and approximately
$2 billion in spending reductions and freezes are the key factors in reducing a
projected $4.5 billion budget gap. However, to end the budget stalemate,
Governor Jon Corzine agreed to an allocation of one-half of the new sales tax
receipts to property tax rebates. On November 7, New Jersey voters made this
allocation permanent by means of a ballot proposal. The budget also includes tax
increases and surcharges on various items, such as cigarettes, car rentals and
luxury goods.
On the expense side, state aid to municipalities and school districts is
essentially flat for another year, but $1.1 billion will go into the state
pension system, exceeding the entire amount allocated in the last 10 years. The
budget significantly reduces reliance on one-time revenues and, therefore, is
the most structurally balanced budget in several years. This is a favorable
credit rating factor for New Jersey's general obligation bonds, which are
currently rated Aa3, AA and AA- by Moody's, Standard & Poor's and Fitch,
respectively. All three agencies maintain stable outlooks.
How did the Fund perform during the fiscal year?
For the 12-month period ended November 30, 2006, the Common Stock of BlackRock
MuniYield New Jersey Fund, Inc. had net annualized yields of 4.72% and 4.85%,
based on a year-end per share net asset value of $15.90 and a per share market
price of $15.47, respectively, and $.751 per share income dividends. Over the
same period, the total investment return on the Fund's Common Stock was +8.83%,
based on a change in per share net asset value from $15.37 to $15.90, and
assuming reinvestment of all distributions.
The Fund's total return, based on net asset value, lagged the +9.30% 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 Fund
was disadvantaged relative to many of its peers by its inability to invest in
non-investment grade issues, which outperformed during the period as credit
spreads tightened. However, the Fund is permitted to invest in lower-quality
investment grade issues, and taking into consideration the extent that we
invested this way, their strong performance was advantageous. Also detracting
somewhat from performance was a number of the Fund's seasoned holdings with
higher
4 BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006
coupons that were called by their issuers. Given our inability to buy
non-investment grade debt and limited new-issue supply, it was difficult to
compensate for the income lost to calls.
For the six-month period ended November 30, 2006, the total investment return on
the Fund's Common Stock was +6.68%, based on a change in per share net asset
value from $15.28 to $15.90, 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?
New municipal issuance in New Jersey declined 36% over the 12 months compared to
the same period a year ago, limiting portfolio activity somewhat. In May,
however, opportunities came to market in the form of $2.8 billion in new issues
representing the first installment of a $6 billion, five-year New Jersey
Transportation Trust Fund refinancing deal. This provided a number of 15-year
issues that were attractively priced and helped us to achieve a shift toward the
intermediate part of the yield curve. This maturity range was offering yields
similar to longer-maturity bonds, representing a compelling risk/reward
proposition. We also looked to add yield to the portfolio with the purchase of
some out-of-favor coupons (particularly, discount bonds), which were offering 25
basis points - 35 basis points in yield pickup. We purchased some housing bonds
that were offering a similar yield advantage.
Financing for our new purchases came primarily from the sale of shorter-maturity
bonds, such as prerefunded bonds that we expected to be called within five
years. We also started looking for opportunities to sell issues on the long end
of the curve, as these issues add a large amount of interest rate risk for very
little additional yield.
For the six-month period ended November 30, 2006, the Fund's Auction Market
Preferred Stock (AMPS) had an average yield of 3.19% for Series A, 3.19% for
Series B and 3.15% for Series C. The Fed raised short-term interest rates five
times during the 12-month reporting period, but opted to keep the target rate on
hold at 5.25% at its last four meetings of the year. As such, the Fund's
borrowing costs started to stabilize and even move slightly lower late in the
period. The municipal yield curve remained positively sloped and continued to
generate an income benefit to the Common Stock shareholder from the leveraging
of Preferred Stock. However, should the spread between short-term and long-term
interest rates narrow, the benefits of leverage will decline and, as a result,
reduce the yield on the Fund's Common 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?
Recently, amid the decline in yields and conjecture about a future Fed ease, it
appears that the market's valuation is overextended. With the 30-year Treasury
yield at 4.56%, 69 basis points below the federal funds rate, it seems unlikely
that these interest rates can be sustained. This prompted us to move to a
slightly more defensive posture at period-end. Ultimately, with the Fed
predisposed toward easing interest rates, we believe maintaining a fully
invested portfolio is the best course. As such, when taking profits in the
portfolio, we will look to reinvest the proceeds promptly and, in doing so,
continue our efforts to balance yield and total return in the portfolio.
Timothy T. Browse, CFA
Vice President and Portfolio Manager
December 12, 2006
--------------------------------------------------------------------------------
Effective October 2, 2006, Timothy T. Browse assumed responsibility for the
day-to-day management of the Fund's portfolio. Mr. Browse is a Vice President of
BlackRock, Inc. Previously, he was a Vice President in the Municipal Tax-Exempt
Fund Management group of Merrill Lynch Investment Managers (MLIM) from 2004 to
2006. Prior to joining MLIM, Mr. Browse was a Vice President, portfolio manager
and team leader of the Municipal Investments Team with Lord Abbett & Co. from
2000 to 2003, and Vice President and portfolio manager in the municipal fund
management group of Eaton Vance Management, Inc. from 1992 to 2000.
--------------------------------------------------------------------------------
BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006 5
Portfolio Information as of November 30, 2006
Percent of
Quality Ratings by Total
S&P/Moody's Investments
--------------------------------------------------------------------------------
AAA/Aaa ............................................................ 63.5%
AA/Aa .............................................................. 10.3
A/A ................................................................ 8.0
BBB/Baa ............................................................ 16.1
CCC/Caa ............................................................ 0.6
NR (Not Rated) ..................................................... 1.4
Other* ............................................................. 0.1
--------------------------------------------------------------------------------
* 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.
Announcement of Annual Stockholders Meeting
The Fund has determined that its annual stockholders meeting originally
scheduled to be held in April 2007 will be postponed until and will be held in
June 2007. Proposals of stockholders intended to be presented at the meeting
must be received by the Fund by February 15, 2007 for inclusion in the Fund's
proxy statement and form of proxy for that meeting. The persons named as proxies
in the proxy materials for the Fund's 2007 annual meeting of stockholders may
exercise discretionary authority with respect to any stockholder proposal
presented at such meeting if written notice of such proposal has not been
received by the Fund by April 1, 2007. Written proposals and notices should be
sent to the Secretary of the Fund, 800 Scudders Mill Road, Plainsboro, New
Jersey 08536.
6 BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006
Schedule of Investments as of November 30, 2006 (in Thousands)
Face
Amount Municipal Bonds Value
============================================================================================
New Jersey--135.3%
--------------------------------------------------------------------------------------------
$ 1,000 Burlington County, New Jersey, Bridge Commission
Revenue Bonds (Governmental Leasing Program),
5.25% due 8/15/2020 $ 1,074
--------------------------------------------------------------------------------------------
1,500 Delaware River and Bay Authority Revenue Bonds, 5%
due 1/01/2033 (d) 1,587
--------------------------------------------------------------------------------------------
Delaware River Joint Toll Bridge Commission of New
Jersey and Pennsylvania, Bridge Revenue
Refunding Bonds:
2,010 5% due 7/01/2021 2,129
3,645 5% due 7/01/2028 3,833
--------------------------------------------------------------------------------------------
2,620 Essex County, New Jersey, Improvement Authority
Revenue Bonds, Series A, 5% due 10/01/2028 (b) 2,790
--------------------------------------------------------------------------------------------
Garden State Preservation Trust of New Jersey, Capital
Appreciation Revenue Bonds, Series B (c)(h):
6,860 5.12% due 11/01/2023 3,407
4,540 5.25% due 11/01/2028 1,814
--------------------------------------------------------------------------------------------
Garden State Preservation Trust of New Jersey, Open
Space and Farmland Preservation Revenue Bonds,
Series A (c):
4,300 5.80% due 11/01/2022 4,985
5,460 5.75% due 11/01/2028 6,864
--------------------------------------------------------------------------------------------
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 1,272
2,000 Series A, 6.85% due 12/01/2029 2,148
--------------------------------------------------------------------------------------------
1,500 Hudson County, New Jersey, COP, Refunding, 6.25%
due 12/01/2016 (d) 1,794
--------------------------------------------------------------------------------------------
12,700 Hudson County, New Jersey, Improvement Authority,
Facility Lease Revenue Refunding Bonds (Hudson
County Lease Project), 5.375% due 10/01/2024 (b) 13,192
--------------------------------------------------------------------------------------------
6,840 Jackson Township, New Jersey, School District, GO, 5%
due 4/15/2012 (b)(f) 7,328
--------------------------------------------------------------------------------------------
Middlesex County, New Jersey, Improvement Authority,
County-Guaranteed Revenue Bonds (Golf
Course Projects):
1,455 5.25% due 6/01/2022 1,593
3,050 5% due 6/01/2029 3,252
--------------------------------------------------------------------------------------------
970 Middlesex County, New Jersey, Improvement Authority,
Senior Revenue Bonds (Heldrich Center Hotel/
Conference Project), Series A, 5% due 1/01/2020 997
--------------------------------------------------------------------------------------------
1,500 Middlesex County, New Jersey, Pollution Control
Financing Authority, Revenue Refunding Bonds
(Amerada Hess Corporation), 6.05% due 9/15/2034 1,631
--------------------------------------------------------------------------------------------
Monmouth County, New Jersey, Improvement Authority,
Governmental Loan Revenue Refunding Bonds (a):
2,235 5% due 12/01/2015 2,374
2,345 5% due 12/01/2016 2,491
--------------------------------------------------------------------------------------------
New Jersey EDA, Cigarette Tax Revenue Bonds:
1,720 5.625% due 6/15/2019 1,815
1,895 5.75% due 6/15/2029 2,071
370 5.50% due 6/15/2031 396
755 5.75% due 6/15/2034 820
--------------------------------------------------------------------------------------------
New Jersey EDA, EDR (Masonic Charity Foundation of
New Jersey):
1,425 5.25% due 6/01/2024 1,535
685 5.25% due 6/01/2032 738
--------------------------------------------------------------------------------------------
1,500 New Jersey EDA, First Mortgage Revenue Bonds
(Fellowship Village), Series C, 5.50% due 1/01/2028 1,542
--------------------------------------------------------------------------------------------
New Jersey EDA, First Mortgage Revenue
Refunding Bonds:
1,250 (Fellowship Village), Series A, 5.50%
due 1/01/2018 1,282
3,500 (Fellowship Village), Series A, 5.50%
due 1/01/2025 3,576
2,500 (The Winchester Gardens at Ward Homestead
Project), Series A, 5.75% due 11/01/2024 2,736
2,000 (The Winchester Gardens at Ward Homestead
Project), Series A, 5.80% due 11/01/2031 2,196
--------------------------------------------------------------------------------------------
New Jersey EDA, Motor Vehicle Surcharge Revenue
Bonds, Series A (d):
14,000 5.25% due 7/01/2033 15,230
2,870 5% due 7/01/2034 3,055
--------------------------------------------------------------------------------------------
New Jersey EDA, Revenue Bonds:
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)(h) 1,857
--------------------------------------------------------------------------------------------
New Jersey EDA, School Facilities Construction
Revenue Bonds:
5,800 Series L, 5% due 3/01/2030 (c) 6,200
3,400 Series O, 5.25% due 3/01/2023 3,716
3,000 Series P, 5% due 9/01/2015 3,281
3,115 Series P, 5.25% due 9/01/2016 3,448
--------------------------------------------------------------------------------------------
6,670 New Jersey EDA, Water Facilities Revenue Bonds (New
Jersey-American Water Company, Inc. Project), AMT,
Series A, 6.875% due 11/01/2034 (b) 6,688
--------------------------------------------------------------------------------------------
5,975 New Jersey Environmental Infrastructure Trust Revenue
Bonds (Environmental Infrastructure), Series A, 5.25%
due 9/01/2010 (f) 6,392
--------------------------------------------------------------------------------------------
Portfolio Abbreviations
To simplify the listings of BlackRock 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
EDA Economic Development Authority
EDR Economic Development Revenue Bonds
GO General Obligation Bonds
M/F Multi-Family
BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006 7
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
============================================================================================
New Jersey (continued)
--------------------------------------------------------------------------------------------
$ 1,100 New Jersey Health Care Facilities Financing Authority,
Health System Revenue Bonds (Catholic Health East),
Series A, 5.375% due 11/15/2033 $ 1,170
--------------------------------------------------------------------------------------------
New Jersey Health Care Facilities Financing Authority
Revenue Bonds:
1,540 (Children's Specialized Hospital), Series A, 5.50%
due 7/01/2036 1,653
1,950 (Hunterdon Medical Center), Series A, 5.125%
due 7/01/2035 2,068
1,845 (Pascack Valley Hospital Association), 6.625%
due 7/01/2036 1,969
1,845 (RWJ Healthcare Corporation), Series B, 5%
due 7/01/2035 (e) 1,953
4,000 (Robert Wood University), 5.70% due 7/01/2020 (a) 4,259
1,875 (Somerset Medical Center), 5.50% due 7/01/2033 1,973
6,640 (South Jersey Hospital), 6% due 7/01/2012 (f) 7,408
2,000 (Southern Ocean County Hospital), 5.125%
due 7/01/2031 (e) 2,101
--------------------------------------------------------------------------------------------
New Jersey Health Care Facilities Financing Authority,
Revenue Refunding Bonds:
1,020 (Atlantic City Medical Center), 6.25%
due 7/01/2017 1,142
2,185 (Atlantic City Medical Center), 5.75%
due 7/01/2025 2,363
1,650 (Capital Health System Inc.), Series A, 5.75%
due 7/01/2023 1,790
5,500 (Holy Name Hospital), 6% due 7/01/2025 5,663
1,500 (Meridian Health System Obligation Group),
5.25% due 7/01/2019 (c) 1,570
2,250 (Meridian Health System Obligation Group),
5.375% due 7/01/2024 (c) 2,357
2,195 (Meridian Health System Obligation Group),
5.25% due 7/01/2029 (c) 2,298
1,385 (South Jersey Hospital System) 5% due 7/01/2036 1,457
1,650 (South Jersey Hospital System) 5% due 7/01/2046 1,724
--------------------------------------------------------------------------------------------
4,150 New Jersey State Educational Facilities Authority,
Higher Education, Capital Improvement Revenue
Bonds, Series A, 5.125% due 9/01/2012 (a)(f) 4,492
--------------------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority
Revenue Bonds:
2,000 (Georgian Court College Project), Series C, 6.50%
due 7/01/2033 2,260
2,165 (Rowan University), Series C, 5.125%
due 7/01/2028 (d) 2,333
1,955 (Rowan University), Series C, 5%
due 7/01/2034 (d) 2,084
400 (Rowan University), Series G, 4.50%
due 7/01/2031 (d) 406
--------------------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority,
Revenue Refunding Bonds:
5,305 (Montclair State University), Series L, 5%
due 7/01/2034 (d) 5,654
1,870 (Princeton Theological Seminary), 5%
due 7/01/2026 1,993
2,600 (Princeton University), Series A, 5%
due 7/01/2030 2,813
1,250 (Ramapo College), Series I, 4.25%
due 7/01/2031 (a) 1,239
1,000 (Ramapo College), Series I, 4.25%
due 7/01/2036 (a) 988
--------------------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority,
Revenue Refunding Bonds (concluded):
1,000 (Rider University), 5% due 7/01/2017 (e) 1,051
1,255 (Rider University), Series A, 5.50%
due 7/01/2023 (e) 1,383
1,450 (Rider University), Series A, 5.25%
due 7/01/2034 (e) 1,570
--------------------------------------------------------------------------------------------
4,095 New Jersey State Higher Education Assistance
Authority, Student Loan Revenue Bonds, AMT, Series A,
5.30% due 6/01/2017 (a) 4,105
--------------------------------------------------------------------------------------------
2,500 New Jersey State Highway Authority, Garden State
Parkway General Revenue Refunding Bonds, 5.625%
due 1/01/2010 (f) 2,677
--------------------------------------------------------------------------------------------
7,175 New Jersey State Housing and Mortgage Finance
Agency, Capital Fund Program Revenue Bonds, Series A,
4.70% due 11/01/2025 (c) 7,406
--------------------------------------------------------------------------------------------
New Jersey State Housing and Mortgage Finance
Agency, Home Buyer Revenue Bonds, AMT (d):
5,350 Series CC, 5.80% due 10/01/2020 5,582
3,335 Series U, 5.60% due 10/01/2012 3,418
--------------------------------------------------------------------------------------------
1,500 New Jersey State Housing and Mortgage Finance
Agency, M/F Revenue Bonds, AMT, Series A, 4.90%
due 11/01/2035 (b) 1,533
--------------------------------------------------------------------------------------------
3,620 New Jersey State Transit Corporation, COP (Federal
Transit Administration Grants), Series B, 5.75%
due 9/15/2014 3,989
--------------------------------------------------------------------------------------------
New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Bonds:
3,525 Series A, 5.50% due 12/15/2021 4,131
4,140 Series C, 5.05% due 12/15/2035 (a)(h) 1,207
6,405 Series D, 5% due 6/15/2020 6,860
--------------------------------------------------------------------------------------------
5,865 New Jersey State Transportation Trust Fund Authority,
Transportation System Revenue Refunding Bonds,
Series B, 5.50% due 12/15/2021 (d) 6,932
--------------------------------------------------------------------------------------------
4,870 New Jersey State Turnpike Authority, Turnpike Revenue
Bonds, Series B, 5.15% due 1/01/2035 (a)(h) 3,515
--------------------------------------------------------------------------------------------
5,000 Port Authority of New York and New Jersey,
Consolidated Revenue Bonds, 93rd Series, 6.125%
due 6/01/2094 6,199
--------------------------------------------------------------------------------------------
10,600 Port Authority of New York and New Jersey,
Consolidated Revenue Refunding Bonds, AMT, 119th
Series, 5.25% due 9/15/2014 (b) 10,719
--------------------------------------------------------------------------------------------
2,000 Port Authority of New York and New Jersey, Special
Obligation Revenue Bonds (JFK International Air
Terminal), AMT, Series 6, 5.75% due 12/01/2022 (d) 2,079
--------------------------------------------------------------------------------------------
6,000 Rahway Valley Sewerage Authority, New Jersey, Sewer
Revenue Bonds (Capital Appreciation), Series A, 4.87%
due 9/01/2031 (d)(h) 2,108
--------------------------------------------------------------------------------------------
South Jersey Port Corporation of New Jersey, Revenue
Refunding Bonds:
4,280 4.75% due 1/01/2018 4,459
2,485 4.85% due 1/01/2019 2,595
2,000 5% due 1/01/2020 2,110
--------------------------------------------------------------------------------------------
Tobacco Settlement Financing Corporation of New
Jersey, Asset-Backed Revenue Bonds:
2,185 5.75% due 6/01/2032 2,324
3,010 7% due 6/01/2041 3,504
--------------------------------------------------------------------------------------------
8 BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006
Schedule of Investments (concluded) (in Thousands)
Face
Amount Municipal Bonds Value
============================================================================================
New Jersey (concluded)
--------------------------------------------------------------------------------------------
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 $ 1,633
1,175 5.375% due 6/01/2018 1,210
--------------------------------------------------------------------------------------------
University of Medicine and Dentistry of New Jersey,
Revenue Bonds, Series A (a):
945 5.50% due 12/01/2018 1,037
1,900 5.50% due 12/01/2019 2,086
1,870 5.50% due 12/01/2020 2,053
1,435 5.50% due 12/01/2021 1,575
============================================================================================
Puerto Rico--4.1%
--------------------------------------------------------------------------------------------
1,730 Puerto Rico Commonwealth Highway and
Transportation Authority, Transportation Revenue
Refunding Bonds, Series K, 5% due 7/01/2040 1,821
--------------------------------------------------------------------------------------------
1,260 Puerto Rico Electric Power Authority, Power Revenue
Refunding Bonds, Series PP, 5% due 7/01/2025 (b) 1,353
--------------------------------------------------------------------------------------------
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 2,069
--------------------------------------------------------------------------------------------
3,750 Puerto Rico Municipal Finance Agency, GO, Series A,
5% due 8/01/2021 (c) 4,085
============================================================================================
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 3,967
--------------------------------------------------------------------------------------------
1,900 Virgin Islands Public Finance Authority, Refinery
Facilities Revenue Bonds (Hovensa Refinery), AMT,
5.875% due 7/01/2022 2,095
--------------------------------------------------------------------------------------------
Total Municipal Bonds
(Cost--$299,404)--142.1% 320,982
============================================================================================
Municipal Bonds Held in Trust (g)
============================================================================================
New Jersey--7.7%
--------------------------------------------------------------------------------------------
Delaware River Port Authority of Pennsylvania and
New Jersey Revenue Bonds (c):
2,500 6% due 1/01/2018 2,674
5,360 6% due 1/01/2019 5,732
--------------------------------------------------------------------------------------------
8,870 Port Authority of New York and New Jersey,
Consolidated Revenue Bonds, AMT, 108th Series,
5.875% due 1/15/2017 (c) 8,982
============================================================================================
Puerto Rico--7.9%
--------------------------------------------------------------------------------------------
17,500 Puerto Rico Public Buildings Authority Revenue Bonds
(Government Facilities), Series B, 5.25%
due 7/01/2007 (d)(f) 17,938
--------------------------------------------------------------------------------------------
Total Municipal Bonds Held in Trust
(Cost--$34,639)--15.6% 35,326
============================================================================================
Shares
Held Short-Term Securities
============================================================================================
275 CMA New Jersey Municipal Money Fund, 2.92% (i)(j) 275
--------------------------------------------------------------------------------------------
Total Short-Term Securities
(Cost--$275)--0.1% 275
============================================================================================
Total Investments (Cost--$334,318*)--157.8% 356,583
Other Assets Less Liabilities--2.5% 5,655
Liability for Trust Certificates,
Including Interest Expense Payable--(7.6%) (17,365)
Preferred Stock, at Redemption Value--(52.7%) (119,018)
---------
Net Assets Applicable to Common Stock--100.0% $ 225,855
=========
* The cost and unrealized appreciation (depreciation) of investments as of
November 30, 2006, as computed for federal income tax purposes, were as
follows:
Aggregate cost ................................................. $317,285
========
Gross unrealized appreciation .................................. $ 22,183
Gross unrealized depreciation .................................. --
--------
Net unrealized appreciation .................................... $ 22,183
========
(a) AMBAC Insured.
(b) FGIC Insured.
(c) FSA Insured.
(d) MBIA Insured.
(e) Radian Insured.
(f) Prerefunded.
(g) Securities represent underlying bonds transferred to a separate
securitization trust established in a tender option bond transaction in
which the Fund may have acquired the residual interest certificates. These
securities serve as collateral in a financing transaction. See Note 1 (c)
to Financial Statements for details of Municipal Bonds Held in Trust.
(h) Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase.
(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 (1,154) $ 44
--------------------------------------------------------------------------
(j) Represents the current yield as of November 30, 2006.
See Notes to Financial Statements.
BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006 9
Statement of Net Assets
As of November 30, 2006
===================================================================================================================================
Assets
-----------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value (identified cost--$334,043,256) ... $ 356,307,599
Investments in affiliated securities, at value (identified cost--$275,071) ......... 275,071
Cash ............................................................................... 33,446
Interest receivable ................................................................ 5,971,180
Prepaid expenses ................................................................... 10,932
-------------
Total assets ....................................................................... 362,598,228
-------------
===================================================================================================================================
Liabilities
-----------------------------------------------------------------------------------------------------------------------------------
Trust certificates ................................................................. 17,115,000
Payables: ..........................................................................
Interest expense ................................................................ $ 249,880
Dividends to Common Stock shareholders .......................................... 156,793
Investment adviser .............................................................. 139,872
Other affiliates ................................................................ 2,731 549,276
-------------
Accrued expenses ................................................................... 61,062
-------------
Total liabilities .................................................................. 17,725,338
-------------
===================================================================================================================================
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 ........................................................................ 119,018,059
-------------
===================================================================================================================================
Net Assets Applicable to Common Stock
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock .............................................. $ 225,854,831
=============
===================================================================================================================================
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 ............................................... $ 1,613,177
Accumulated realized capital losses--net ........................................... (3,403,142)
Unrealized appreciation--net ....................................................... 22,264,343
-------------
Total accumulated earnings--net .................................................... 20,474,378
-------------
Total--Equivalent to $15.90 net asset value per share of Common Stock
(market price--$15.47) ............................................................ $ 225,854,831
=============
* Auction Market Preferred Stock
See Notes to Financial Statements.
10 BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006
Statement of Operations
For the Year Ended November 30, 2006
===================================================================================================================================
Investment Income
-----------------------------------------------------------------------------------------------------------------------------------
Interest and amortization of premium and discount earned ........................... $ 17,375,238
Dividends from affiliates .......................................................... 43,611
-------------
Total income ....................................................................... 17,418,849
-------------
===================================================================================================================================
Expenses
-----------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ........................................................... $ 1,691,574
Interest expense and fees .......................................................... 755,542
Commission fees .................................................................... 304,870
Accounting services ................................................................ 123,820
Transfer agent fees ................................................................ 64,573
Professional fees .................................................................. 52,578
Printing and shareholder reports ................................................... 35,070
Directors' fees and expenses ....................................................... 19,954
Custodian fees ..................................................................... 19,676
Listing fees ....................................................................... 16,572
Pricing fees ....................................................................... 16,112
Other .............................................................................. 60,248
-------------
Total expenses before reimbursement ................................................ 3,160,589
Reimbursement of expenses .......................................................... (7,224)
-------------
Total expenses after reimbursement ................................................. 3,153,365
-------------
Investment income--net ............................................................. 14,265,484
-------------
===================================================================================================================================
Realized & Unrealized Gain--Net
-----------------------------------------------------------------------------------------------------------------------------------
Realized gain on:
Investments--net ................................................................ 1,064,615
Financial futures contracts and forward interest rate swaps--net ................ 453,220 1,517,835
-------------
Change in unrealized appreciation on investments--net .............................. 6,246,899
-------------
Total realized and unrealized gain--net ............................................ 7,764,734
-------------
===================================================================================================================================
Dividends to Preferred Stock Shareholders
-----------------------------------------------------------------------------------------------------------------------------------
Investment income--net ............................................................. (3,617,009)
-------------
Net Increase in Net Assets Resulting from Operations ............................... $ 18,413,209
=============
See Notes to Financial Statements.
BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006 11
Statements of Changes in Net Assets (As Restated for 2005. See Note 6)
For the Year Ended
November 30,
-------------------------------
Increase (Decrease) in Net Assets: 2006 2005
===================================================================================================================================
Operations
-----------------------------------------------------------------------------------------------------------------------------------
Investment income--net ............................................................. $ 14,265,484 $ 14,385,259
Realized gain--net ................................................................. 1,517,835 6,007,924
Change in unrealized appreciation--net ............................................. 6,246,899 (3,522,735)
Dividends to Preferred Stock shareholders .......................................... (3,617,009) (2,340,043)
-------------------------------
Net increase in net assets resulting from operations ............................... 18,413,209 14,530,405
-------------------------------
===================================================================================================================================
Dividends to Common Stock Shareholders
-----------------------------------------------------------------------------------------------------------------------------------
Investment income--net ............................................................. (10,808,667) (12,896,544)
-------------------------------
Net decrease in net assets resulting from dividends to Common Stock shareholders ... (10,808,667) (12,896,544)
-------------------------------
===================================================================================================================================
Stock Transactions
-----------------------------------------------------------------------------------------------------------------------------------
Offering and underwriting costs, including adjustments, resulting from the
issuance of Preferred Stock ....................................................... -- (1,735)
-------------------------------
Net decrease in net assets derived from stock transactions ......................... -- (1,735)
-------------------------------
===================================================================================================================================
Net Assets Applicable to Common Stock
-----------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets applicable to Common Stock ............................ 7,604,542 1,632,126
Beginning of year .................................................................. 218,250,289 216,618,163
-------------------------------
End of year* ....................................................................... $ 225,854,831 $ 218,250,289
===============================
* Undistributed investment income--net .......................................... $ 1,613,177 $ 1,773,369
===============================
See Notes to Financial Statements.
12 BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006
Financial Highlights (As Restated for 2005, 2004, 2003 and 2002. See Note 6)
For the Year Ended November 30,
The following per share data and ratios have been derived -----------------------------------------------------------------
from information provided in the financial statements. 2006 2005 2004 2003 2002
===================================================================================================================================
Per Share Operating Performance
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ....................... $ 15.37 $ 15.25 $ 15.39 $ 14.84 $ 14.78
-----------------------------------------------------------------
Investment income--net ................................... 1.00++ 1.01++ 1.06++ 1.05++ 1.06
Realized and unrealized gain (loss)--net ................. .54 .18 (.14) .52 .05
Dividends and distributions to Preferred Stock
shareholders:
Investment income--net ............................... (.25) (.16) (.08) (.06) (.09)
Realized gain--net ................................... -- -- -- -- --+
-----------------------------------------------------------------
Total from investment operations ......................... 1.29 1.03 .84 1.51 1.02
-----------------------------------------------------------------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net ............................... (.76) (.91) (.96) (.96) (.96)
Realized gain--net ................................... -- -- -- -- --+
-----------------------------------------------------------------
Total dividends and distributions to Common Stock
shareholders ............................................ (.76) (.91) (.96) (.96) (.96)
-----------------------------------------------------------------
Offering and underwriting costs, including
adjustments, resulting from the issuance of
Preferred Stock ......................................... -- --+ (.02) -- --
-----------------------------------------------------------------
Net asset value, end of year ............................. $ 15.90 $ 15.37 $ 15.25 $ 15.39 $ 14.84
=================================================================
Market price per share, end of year ...................... $ 15.47 $ 14.38 $ 14.73 $ 14.34 $ 14.07
=================================================================
===================================================================================================================================
Total Investment Return*
-----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ....................... 8.83% 7.08% 5.84% 10.81% 7.22%
=================================================================
Based on market price per share .......................... 13.17% 3.72% 9.72% 8.90% 4.27%
=================================================================
===================================================================================================================================
Ratios Based on Average Net Assets Applicable to Common Stock
-----------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of reimbursement and excluding
interest expense** ...................................... 1.09% 1.09% 1.02% 1.02% 1.05%
=================================================================
Total expenses, net of reimbursement** ................... 1.44% 1.39% 1.24% 1.21% 1.31%
=================================================================
Total expenses** ......................................... 1.44% 1.39% 1.25% 1.22% 1.31%
=================================================================
Total investment income--net** ........................... 6.50% 6.47% 6.94% 6.94% 7.06%
=================================================================
Amount of dividends to Preferred Stock shareholders ...... 1.65% 1.05% .50% .40% .58%
=================================================================
Investment income to Common Stock shareholders--net ...... 4.85% 5.42% 6.44% 6.54% 6.48%
=================================================================
===================================================================================================================================
Ratios Based on Average Net Assets Applicable to Preferred Stock
-----------------------------------------------------------------------------------------------------------------------------------
Dividends to Preferred Stock shareholders ................ 3.04% 1.97% 1.04% .89% 1.25%
=================================================================
===================================================================================================================================
Supplemental Data
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock, end of year
(in thousands) .......................................... $ 225,855 $ 218,250 $ 216,618 $ 218,642 $ 210,727
=================================================================
Preferred Stock outstanding at liquidation preference,
end of year (in thousands) .............................. $ 119,000 $ 119,000 $ 119,000 $ 97,500 $ 97,500
=================================================================
Portfolio turnover ....................................... 9% 32% 14% 26% 37%
=================================================================
===================================================================================================================================
Leverage
-----------------------------------------------------------------------------------------------------------------------------------
Asset coverage per $1,000 ................................ $ 2,898 $ 2,834 $ 2,820 $ 3,242 $ 3,161
=================================================================
===================================================================================================================================
Dividends Per Share on Preferred Stock Outstanding
-----------------------------------------------------------------------------------------------------------------------------------
Series A--Investment income--net ......................... $ 764 $ 497 $ 259 $ 225 $ 325
=================================================================
Series B--Investment income--net ......................... $ 757 $ 479 $ 250 $ 219 $ 292
=================================================================
Series C@--Investment income--net ........................ $ 753 $ 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.
BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006 13
Notes to Financial Statements
1. Significant Accounting Policies:
On September 29, 2006, MuniYield New Jersey Fund, Inc. was renamed BlackRock
MuniYield New Jersey Fund, Inc. (the "Fund"). 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.
Options traded in the OTC market are valued at 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 financial futures contracts.
Financial futures contracts are contracts for delayed delivery of
securities at a specific future date and at a specific price or yield.
Upon entering into a contract, the Fund deposits and maintains as
collateral such initial margin as required by the exchange on which the
transaction is effected. Pursuant to the contract, the Fund agrees to
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are known
as variation margin and are recorded by the Fund as unrealized gains or
losses. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the value of the contract at the time
it was opened and the value at the time it was closed.
o Options -- The Fund may write covered call options and purchase put
options. When the Fund writes an option, an amount equal to the premium
received by the Fund is reflected as an asset and an equivalent liability.
The amount of the liability is subsequently marked-to-market to reflect
the current market value of the option written. When a security is
purchased or sold through an exercise of an option, the related premium
paid (or received) is added to (or deducted from) the basis of the
security acquired or deducted from (or added to) the proceeds of the
security sold. When an option expires (or the Fund enters into a closing
transaction), the Fund realizes a gain or loss on the option to the extent
of the premiums received or paid (or gain or loss to the extent the cost
of the closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
o Forward interest rate swaps -- The Fund may enter into forward interest
rate swaps. In a forward interest rate swap, the Fund and the counterparty
agree to make periodic net payments on a specified notional contract
amount, commencing on a specified future effective date, unless terminated
earlier. When the agreement is closed, the Fund records a realized gain or
loss in an amount equal to the value of the agreement.
14 BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006
Notes to Financial Statements (continued)
o Swaps -- The Fund may enter into swap agreements, which are OTC contracts
in which the Fund and a counterparty agree to make periodic net payments
on a specified notional amount. The net payments can be made for a set
period of time or may be triggered by a pre-determined credit event. The
net periodic payments may be based on a fixed or variable interest rate;
the change in market value of a specified security, basket of securities,
or index; or the return generated by a security. These periodic payments
received or made by the Fund are recorded in the accompanying Statement of
Operations as realized gains or losses, respectively. Gains or losses are
also realized upon termination of the swap agreements. Swaps are
marked-to-market daily and changes in value are recorded as unrealized
appreciation (depreciation). Risks include changes in the returns of the
underlying instruments, failure of the counterparties to perform under the
contracts' terms and the possible lack of liquidity with respect to the
swap agreements.
(c) Municipal bonds held in trust -- The Fund invests in leveraged residual
certificates ("TOB Residuals") issued by tender option bond trusts ("TOBs"). A
TOB is established by a third party sponsor forming a special purpose entity,
into which the Fund, or an agent on behalf of the Fund, transfers municipal
securities. A TOB typically issues two classes of beneficial interests:
short-term floating rate certificates, which are sold to third party investors,
and residual certificates, which are generally issued to the Fund which made the
transfer or to affiliates of the Fund. The transfer of the municipal securities
to a TOB does not qualify for sale treatment under Statement of Financial
Accounting Standards No. 140 "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," therefore the municipal
securities deposited into a TOB are presented in the Fund's schedule of
investments and the proceeds from the transaction are reported as a liability
for trust certificates of the Fund. Similarly, proceeds from residual
certificates issued to affiliates, if any, from the transaction are included in
the liability for trust certificates. Interest income from the underlying
security is recorded by the Fund on an accrual basis. Interest expense incurred
on the secured borrowing and other expenses related to remarketing,
administration and trustee services to a TOB are reported as expenses of the
Fund. The floating rate certificates have interest rates that generally reset
weekly and their holders have the option to tender certificates to the TOB for
redemption at par at each reset date. The residual interests held by the Fund
include the right of the Fund (1) to cause the holders of a proportional share
of the floating rate certificates to tender their certificates at par, and (2)
to transfer a corresponding share of the municipal securities from the TOB to
the Fund. At November 30, 2006, the aggregate value of the underlying municipal
securities transferred to TOBs was $35,325,644, the related liability for trust
certificates was $17,115,000 and the range of interest rates was 3.47% to 3.53%.
Financial transactions executed through TOBs generally will underperform the
market for fixed rate municipal bonds in a rising interest rate environment, but
tend to outperform the market for fixed rate bonds when interest rates decline
or remain relatively stable. Should short-term interest rates rise, the Fund's
investment in TOB Residuals likely will adversely affect the Fund's investment
income-net and distributions to shareholders. Fluctuations in the market value
of municipal securities deposited into the TOB may adversely affect the Fund's
net asset value per share.
While the Fund's investment policies and restrictions expressly permit
investments in inverse floating rate securities such as TOB Residuals, they
generally do not allow the Fund to borrow money for purposes of making
investments. The Fund's management believes that the Fund's restrictions on
borrowings do not apply to the secured borrowings deemed to have occurred for
accounting purposes.
(d) 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.
(e) 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.
(f) Dividends and distributions -- Dividends from net investment income are
declared and paid monthly. Distributions of capital gains are recorded on the
ex-dividend dates.
(g) 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 to capital.
(h) Recent accounting pronouncements -- In July 2006, the Financial Accounting
Standards Board ("FASB") issued
BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006 15
Notes to Financial Statements (continued)
Interpretation No. 48 ("FIN 48"), "Accounting for Uncertainty in Income Taxes --
an interpretation of FASB Statement No. 109." FIN 48 prescribes the minimum
recognition threshold a tax position must meet in connection with accounting for
uncertainties in income tax positions taken or expected to be taken by an entity
including mutual funds before being measured and recognized in the financial
statements. Adoption of FIN 48 is required for fiscal years beginning after
December 15, 2006. The impact on the Fund's financial statements, if any, is
currently being assessed.
In addition, in September 2006, Statement of Financial Accounting Standards No.
157, "Fair Value Measurements" ("FAS 157"), was issued and is effective for
fiscal years beginning after November 15, 2007. FAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. Management is currently evaluating the implications of
FAS 157. At this time its impact on the Fund's financial statements has not been
determined.
2. Investment Advisory Agreement and Transactions with Affiliates:
On September 29, 2006, BlackRock, Inc. and Merrill Lynch & Co., Inc. ("Merrill
Lynch") combined Merrill Lynch's investment management business Merrill Lynch
Investment Managers, L.P. ("MLIM") and its affiliates, including Fund Asset
Management, L.P. ("FAM"), with BlackRock, Inc. to create a new independent
company. Merrill Lynch has a 49.8% economic interest and a 45% voting interest
in the combined company and The PNC Financial Services Group, Inc., ("PNC") has
approximately a 34% economic and voting interest. The new company operates under
the BlackRock name and is governed by a board of directors with a majority of
independent members.
On August 15, 2006, shareholders of the Fund approved a new Investment Advisory
Agreement with BlackRock Advisors, Inc. (the "Manager"), an indirect, wholly
owned subsidiary of BlackRock, Inc. BlackRock Advisors, Inc. was recently
reorganized into a limited liability company and renamed BlackRock Advisors,
LLC. The new Investment Advisory Agreement between the Fund and the Manager
became effective on September 29, 2006. Prior to September 29, 2006, FAM was the
Investment Adviser. The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect, wholly owned subsidiary of Merrill Lynch, which is the
limited partner.
The Manager 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 daily net
assets, including proceeds from the issuance of Preferred Stock. The Manager
(and previously FAM) has agreed to reimburse its management fee by the amount of
management fees the Fund pays to the Manager indirectly through its investment
in CMA New Jersey Municipal Money Fund. The reimbursements were as follows:
--------------------------------------------------------------------------------
For the Period For the Period
December 1, 2005 to September 30, 2006
September 29, 2006 to November 30, 2006
Reimbursement Reimbursement
by FAM by the Manager
--------------------------------------------------------------------------------
$5,413 $1,811
--------------------------------------------------------------------------------
In addition, the Manager has entered into a Sub-Advisory agreement with
BlackRock Investment Management, LLC, an affiliate of the Manager, under which
the Manager pays the Sub-Adviser for services it provides a fee that is a
percentage of the management fee paid by the Fund to the Manager.
The Fund reimbursed FAM and the Manager for certain accounting services. The
reimbursements were as follows:
--------------------------------------------------------------------------------
For the Period For the Period
December 1, 2005 to September 30, 2006
September 29, 2006 to November 30, 2006
Reimbursement Reimbursement
to FAM to the Manager
--------------------------------------------------------------------------------
$5,697 $1,092
--------------------------------------------------------------------------------
Prior to September 29, 2006, certain officers and/or directors of the Fund were
officers and/or directors of Merrill Lynch, FAM, MLIM, and/or PSI.
Commencing September 29, 2006, certain officers and/or directors of the Fund are
officers and/or directors of BlackRock, Inc. or its affiliates.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended November 30, 2006 were $33,292,981 and $34,152,281, 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
16 BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006
Notes to Financial Statements (continued)
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, 2006 were as follows: Series A, 3.32%, Series B, 3.25% and Series
C, 3.35%.
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, 2006, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, an affiliate of FAM and BlackRock, Inc., earned $181,530 as
commissions.
5. Distributions to Shareholders:
The Fund paid a tax-exempt income dividend to holders of Common Stock in the
amount of $.058000 per share on December 28, 2006 to shareholders of record on
December 15, 2006.
The tax character of distributions paid during the fiscal years ended November
30, 2006 and November 30, 2005 was as follows:
--------------------------------------------------------------------------------
11/30/2006 11/30/2005
--------------------------------------------------------------------------------
Distributions paid from:
Tax-exempt income .......................... $14,425,676 $15,236,587
--------------------------------
Total distributions .......................... $14,425,676 $15,236,587
================================
As of November 30, 2006, the components of accumulated earnings on a tax basis
were as follows:
-----------------------------------------------------------------------------
Undistributed tax-exempt income -- net .................... $ 1,235,884
Undistributed long-term capital gains -- net .............. --
------------
Total undistributed earnings -- net ....................... 1,235,884
Capital loss carryforward ................................. (2,191,962)*
Unrealized gains -- net ................................... 21,430,456**
------------
Total accumulated earnings -- net ......................... $ 20,474,378
============
* On November 30, 2006, the Fund had a net capital loss carryforward of
$2,191,962, of which $1,952,406 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, tax amortization methods for premiums and
discounts on fixed income securities and the difference between the book
and tax treatment of residual interests in tender option bond trusts.
6. Restatement Information:
During the year ended November 30, 2006, the Fund determined that the criteria
for sale accounting in Statement of Financial Accounting Standards No. 140 had
not been met for certain transfers of municipal bonds and that these transfers
should have been accounted for as secured borrowings rather than as sales.
Accordingly, the Fund has restated its statement of changes in net assets for
the year ended November 30, 2005 to give effect to offsetting changes in
realized gain -- net and in the change in unrealized appreciation -- net on the
transferred municipal securities. Additionally, the Fund has restated the
financial highlights for the years ended November 30, 2005, 2004, 2003 and 2002
to give effect to recording the transfers of the municipal bonds as secured
borrowings, including recording interest on the bonds as interest income and
interest on the secured borrowings as interest expense.
--------------------------------------------------------------------------------
Statement of Changes in Net Assets
For the Year Ended November 30, 2005
--------------------------------------------------------------------------------
Previously
Reported Restated
--------------------------------------------------------------------------------
Realized gain -- net ......................... $ 5,536,813 $ 6,007,924
Change in unrealized appreciation -- net ..... $(3,051,624) $(3,522,735)
--------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
Financial Highlights
For the Years Ended November 30, 2005, 2004, 2003 and 2002
-----------------------------------------------------------------------------------------------------------------------------------
2005 2004 2003 2002
-------------------- --------------------- --------------------- ---------------------
Previously Previously Previously Previously
Reported Restated Reported Restated Reported Restated Reported Restated
-----------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of reimbursement** 1.09% 1.39% 1.02% 1.24% 1.02% 1.21% 1.05% 1.31%
Total expenses** ..................... 1.09% 1.39% 1.03% 1.25% 1.02% 1.22% 1.05% 1.31%
Portfolio turnover ................... 34.49% 32% 15.35% 14% 28.93% 26% 41.47% 37%
-----------------------------------------------------------------------------------------------------------------------------------
** Do not reflect the effect of dividends to Preferred Stock shareholders.
BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006 17
Notes to Financial Statements (concluded)
While the Statements of Net Assets as of November 30, 2005, 2004, 2003 and 2002,
not presented herein, have not been reissued to give effect to the restatement,
the principal effects of the restatement would be to increase investments and
liability for trust certificates by corresponding amounts at each year, with no
effect on previously reported net assets.
The Statements of Operations for the years ended November 30, 2005, 2004, 2003
and 2002, not presented herein, have not been reissued to give effect to the
restatement. However, the principal effects of the restatement would be to
increase interest income and interest expense and fees by corresponding amounts
each year, and, where applicable, to revise realized gain (loss) on investments
-- net, and the change in unrealized appreciation on investments -- net, by
corresponding and offsetting amounts.
The Statements of Changes in Net Assets for the years ended November 30, 2004,
2003 and 2002, not presented herein, have not been reissued to give effect to
the restatement, but the principal effects of a restatement, where applicable,
would be to revise previously reported realized gain (loss) -- net, and change
in unrealized appreciation/depreciation -- net, by corresponding and offsetting
amounts.
18 BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of BlackRock MuniYield New Jersey
Fund, Inc.:
We have audited the accompanying statement of net assets, including the schedule
of investments, of BlackRock MuniYield New Jersey Fund, Inc. (formerly MuniYield
New Jersey Fund, Inc.) as of November 30, 2006, 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, 2006, by correspondence with the
custodian. 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
BlackRock MuniYield New Jersey Fund, Inc. as of November 30, 2006, 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 accounting
principles generally accepted in the United States of America.
As discussed in Note 6, the statement of changes in net assets for the year
ended November 30, 2005, and the financial highlights for the years ended
November 30, 2005, 2004, 2003 and 2002 have been restated.
Deloitte & Touche LLP
Princeton, New Jersey
January 26, 2007
Fund Certification (unaudited)
In May 2006, 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 BlackRock MuniYield New
Jersey Fund, Inc. during the taxable year ended November 30, 2006 qualify as
tax-exempt interest dividends for federal income tax purposes.
BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006 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 affect 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 BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006
Disclosure of Investment Advisory Agreement
BlackRock Investment Advisory Agreement -- Matters Considered by the Board
The following disclosure appeared in the May 31, 2006 Semi-Annual Report of the
Fund and is the discussion referred to in "New BlackRock Sub-Advisory Agreement
-- Matters Considered by the Board" below.
In connection with the Transaction between Merrill Lynch and BlackRock, the
Fund's Board of Directors considered a new investment advisory agreement (the
"New Investment Advisory Agreement") between the Fund and BlackRock Advisors,
Inc. or its successor ("BlackRock Advisors"). If the New Investment Advisory
Agreement is approved by the Fund's shareholders, it will become effective upon
the closing of the Transaction, which is expected in the third quarter of 2006.
The Board discussed the New Investment Advisory Agreement at telephonic and
in-person meetings held during April and May 2006. The Board, including the
independent directors, approved the New Investment Advisory Agreement at a
meeting held on May 9, 2006.
To assist the Board in its consideration of the New Investment Advisory
Agreement, BlackRock provided materials and information about BlackRock,
including its financial condition and asset management capabilities and
organization, and Merrill Lynch provided materials and information about the
Transaction. The independent directors, through their independent legal counsel,
also requested and received additional information from Merrill Lynch and
BlackRock in connection with their consideration of the New Investment Advisory
Agreement. The additional information was provided in advance of the May 9, 2006
meeting. In addition, the independent directors consulted with their counsel and
Fund counsel on numerous occasions, discussing, among other things, the legal
standards and certain other considerations relevant to the directors'
deliberations.
At the Board meetings, members of the Board discussed with Merrill Lynch
management and certain BlackRock representatives the Transaction, its strategic
rationale and BlackRock's general plans and intentions regarding the Fund. At
these Board meetings, representatives of Merrill Lynch and BlackRock made
presentations to and responded to questions from the Board. The directors also
inquired about the plans for and anticipated roles and responsibilities of
certain employees and officers of the Investment Adviser and certain affiliates
being transferred to BlackRock in connection with the Transaction. The
independent directors of the Board also conferred separately and with their
counsel about the Transaction and other matters related to the Transaction on a
number of occasions, including in connection with the April and May 2006
meetings. After the presentations and after reviewing the written materials
provided, the independent directors met in executive sessions with their counsel
to consider the New Investment Advisory Agreement.
In connection with the Board's review of the New Investment Advisory Agreement,
Merrill Lynch and/or BlackRock advised the directors about a variety of matters.
The advice included the following, among other matters:
o that there is not expected to be any diminution in the nature, quality and
extent of services provided to the Fund and its shareholders by BlackRock
Advisors, including compliance services;
o that operation of New BlackRock as an independent investment management
firm will enhance its ability to attract and retain talented
professionals;
o that the Fund should benefit from having access to BlackRock's state of
the art technology and risk management analytic tools, including
investment tools, provided under the BlackRock Solutions(R) brand name;
o that BlackRock has no present intention to alter any applicable expense
waivers and reimbursements currently in effect and, while it reserves the
right to do so in the future, it would seek the approval of the Board
before making any changes;
o that under the Transaction Agreement, Merrill Lynch and BlackRock have
agreed to conduct, and use reasonable best efforts to cause their
respective affiliates to conduct, their respective businesses in
compliance with the conditions of Section 15(f) of the Investment Company
Act of 1940 (the "1940 Act") in relation to any public funds advised by
BlackRock or the Investment Adviser (or its affiliates), respectively; and
o that Merrill Lynch and BlackRock would derive benefits from the
Transaction and that, as a result, they have a different financial
interest in the matters that were being considered than do Fund
shareholders;
BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006 21
Disclosure of Investment Advisory Agreement (continued)
The directors considered the information provided by Merrill Lynch and BlackRock
above, and, among other factors, the following:
o the potential benefits to Fund shareholders from being part of a combined
fund family with BlackRock-sponsored funds, including possible economies
of scale and access to investment opportunities;
o the reputation, financial strength and resources of BlackRock and its
investment advisory subsidiaries and the anticipated financial strength
and resources of New BlackRock;
o the compliance policies and procedures of BlackRock Advisors;
o the terms and conditions of the New Investment Advisory Agreement,
including the fact that the schedule of the Fund's total advisory fees
will not increase by virtue of the New Investment Advisory Agreement, but
will remain the same;
o that within the past year the Board performed a full annual review of the
investment advisory agreement currently in effect for the Fund (the
"Current Investment Advisory Agreement") as required by the 1940 Act and
has determined that the Investment Adviser has the capabilities, resources
and personnel necessary to provide the advisory and administrative
services currently provided to the Fund; and that the advisory and/or
management fees paid by the Fund, taking into account any applicable
agreed-upon fee waivers and breakpoints, represent reasonable compensation
to the Investment Adviser in light of the services provided, the costs to
the Investment Adviser of providing those services, economies of scale,
the fees and other expenses paid by similar funds (including information
provided by Lipper, Inc. ["Lipper"]), and such other matters as the
directors have considered relevant in the exercise of their reasonable
judgment (the Board had most recently performed a full annual review of
the Current Investment Advisory Agreement in August 2005); and
o that Merrill Lynch agreed to pay all expenses of the Fund in connection
with the Board's consideration of the New Investment Advisory Agreement
and related agreements and all costs of shareholder approval of the New
Investment Advisory Agreement and as a result the Fund would bear no costs
in obtaining shareholder approval of the New Investment Advisory
Agreement.
Certain of these considerations are discussed in more detail below.
In its review of the New Investment Advisory Agreement, the Board assessed the
nature, scope and quality of the services to be provided to the Fund by the
personnel of BlackRock Advisors and its affiliates, including administrative
services, shareholder services, oversight of fund accounting, marketing services
and assistance in meeting legal and regulatory requirements. In its review of
the New Investment Advisory Agreement, the Board also considered a range of
information in connection with its oversight of the services to be provided by
BlackRock Advisors and its affiliates. Among the matters considered were: (a)
fees (in addition to management fees) to be paid to BlackRock Advisors and its
affiliates by the Fund; (b) Fund operating expenses paid to third parties; (c)
the resources devoted to and compliance reports relating to the Fund's
investment objective, policies and restrictions, and its compliance with its
Code of Ethics and BlackRock Advisors' compliance policies and procedures; and
(d) the nature, cost and character of non-investment management services to be
provided by BlackRock Advisors and its affiliates.
In the period prior to the Board meetings to consider renewal of the Current
Investment Advisory Agreement, the Board had requested and received materials
specifically relating to the agreement. These materials included (a) information
compiled by Lipper on the fees and expenses and the investment performance of
the Fund as compared to a comparable group of funds as classified by Lipper; (b)
information comparing the Fund's market price with its net asset value per
share; (c) a discussion by the Fund's portfolio management team on investment
strategies used by the Fund during its most recent fiscal year; (d) information
on the profitability to the Investment Adviser of the Current Investment
Advisory Agreement and other payments received by the Investment Adviser and its
affiliates from the Fund; and (e) information provided by the Investment Adviser
concerning services related to the valuation and pricing of Fund portfolio
holdings, the Fund's portfolio turnover statistics, and direct and indirect
benefits to the Investment Adviser and its affiliates from their relationship
with the Fund.
In their deliberations, the directors considered information received in
connection with their most recent continuation of the Current Investment
Advisory Agreement, in addition to information provided by BlackRock and
BlackRock Advisors in connection with their evaluation of the terms and
conditions of the New Investment Advisory Agreement. The
22 BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006
directors did not identify any particular information that was all-important or
controlling. The directors, including a majority of the independent directors,
concluded that the terms of the New Investment Advisory Agreement are
appropriate, that the fees to be paid are reasonable in light of the services to
be provided to the Fund, and that the New Investment Advisory Agreement should
be approved and recommended to Fund shareholders.
Nature, Quality and Extent of Services Provided -- The Board reviewed the
nature, extent and quality of services provided by the Investment Adviser,
including the investment advisory services and the resulting performance of the
Fund, as well as the nature, quality and extent of services expected to be
provided by BlackRock Advisors. The Board focused primarily on the Investment
Adviser's investment advisory services and the Fund's investment performance,
but also considered certain areas in which both the Investment Adviser and the
Fund receive services as part of the Merrill Lynch complex. The Board compared
the Fund's performance -- both including and excluding the effects of the Fund's
fees and expenses -- to the performance of a comparable group of funds, and the
performance of a relevant index or combination of indexes. While the Board
reviews performance data at least quarterly, consistent with the Investment
Adviser's investment goals, the Board attaches more importance to performance
over relatively long periods of time, typically three to five years.
In evaluating the nature, quality and extent of the services to be provided by
BlackRock Advisors under the New Investment Advisory Agreement, the directors
considered, among other things, the expected impact of the Transaction on the
operations, facilities, organization and personnel of New BlackRock and how it
would affect the Fund; the ability of BlackRock Advisors to perform its duties
after the Transaction; and any anticipated changes to the current investment and
other practices of the Fund.
The directors were given information with respect to the potential benefits to
the Fund and its shareholders from having access to BlackRock's state of the art
technology and risk management analytic tools, including the investment tools
provided under the BlackRock Solutions(R) brand name.
The directors were advised that, as a result of Merrill Lynch's equity interest
in BlackRock after the Transaction, the Fund will continue to be subject to
restrictions concerning certain transactions involving Merrill Lynch affiliates
(for example, transactions with a Merrill Lynch broker-dealer acting as
principal) absent revised or new regulatory relief. The directors were advised
that a revision of existing regulatory relief with respect to these restrictions
was being sought from the Securities and Exchange Commission and were advised of
the possibility of receipt of such revised regulatory relief. There can be no
assurance that such relief will be obtained.
Based on their review of the materials provided and the assurances they had
received from the management of Merrill Lynch and of BlackRock, the directors
determined that the nature and quality of services to be provided to the Fund
under the New Investment Advisory Agreement were expected to be as good or
better than that provided under the Current Investment Advisory Agreement. It
was noted, however, that it is expected that there will be changes in personnel
following the Transaction and the combination of the operations of the
Investment Adviser and its affiliates with those of BlackRock. The directors
noted that if current portfolio managers or other personnel cease to be
available, the Board would consider all available options, which could include
seeking the investment advisory or other services of BlackRock affiliates.
Accordingly, the directors concluded that, overall, they were satisfied at the
present time with assurances from BlackRock and BlackRock Advisors as to the
expected nature, extent and quality of the services to be provided to the Fund
under the New Investment Advisory Agreement.
Costs of Services Provided and Profitability -- It was noted that, in
conjunction with the recent review of the Current Investment Advisory Agreement,
the directors had received, among other things, a report from Lipper comparing
the Fund's fees, expenses and performance to those of a peer group selected by
Lipper, and information as to the fees charged by the Investment Adviser or its
affiliates to other registered investment company clients for investment
management services. The Board reviewed the Fund's contractual management fee
rate and actual management fee rate as a percentage of total assets at common
asset levels -- the actual rate includes advisory fees and the effects of any
fee waivers -- compared to the other funds in its Lipper category. They also
compared the Fund's total expenses to those of other comparable funds. The
information showed that the Fund had fees and expenses within the range of fees
and expenses of comparable funds. The Board considered the services to be
provided by and the fees to be charged by BlackRock Advisors to other funds with
similar investment mandates and noted that the fees charged by BlackRock
Advisors in those cases, including fee waivers and expense reimbursements, were
generally comparable to those
BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006 23
Disclosure of Investment Advisory Agreement (concluded)
being charged to the Fund. The Board also noted that, as a general matter,
according to the information provided by BlackRock, fees charged to
institutional clients were lower than the fees charged to the Fund, but
BlackRock Advisors provided less extensive services to such clients. The Board
concluded that the Fund's management fee and fee rate and overall expense ratio
are reasonable compared to those of other comparable funds.
In evaluating the costs of the services to be provided by BlackRock Advisors
under the New Investment Advisory Agreement, the directors considered, among
other things, whether advisory fees or other expenses would change as a result
of the Transaction. Based on their review of the materials provided and the fact
that the New Investment Advisory Agreement is substantially similar to the
Current Investment Advisory Agreement in all material respects, including the
rate of compensation, the directors determined that the Transaction should not
increase the total fees payable, including any fee waivers and expense
reimbursements, for advisory and administrative services. The directors noted
that it was not possible to predict how the Transaction would affect BlackRock
Advisors' profitability from its relationship with the Fund.
The directors discussed with BlackRock Advisors its general methodology to be
used in determining its profitability with respect to its relationship with the
Fund. The directors noted that they expect to receive profitability information
from BlackRock Advisors on at least an annual basis and thus be in a position to
evaluate whether any adjustments in Fund fees and/or fee breakpoints would be
appropriate.
Fees and Economies of Scale -- The Board considered the extent to which
economies of scale might be realized as the assets of the Fund increase and
whether there should be changes in the management fee rate or structure in order
to enable the Fund to participate in these economies of scale. The Board
considered economies of scale to the extent applicable to the Fund's closed-end
structure and determined that the Fund currently appropriately benefits from any
economies of scale and no changes were currently necessary.
In reviewing the Transaction, the directors considered, among other things,
whether advisory fees or other expenses would change as a result of the
Transaction. Based on the fact that the New Investment Advisory Agreement is
substantially similar to the Current Investment Advisory Agreement in all
material respects, including the rate of compensation, the directors determined
that as a result of the Transaction, the Fund's total advisory fees would be no
higher than the fees under its Current Investment Advisory Agreement. The
directors noted that in conjunction with their most recent deliberations
concerning the Current Investment Advisory Agreement, the directors had
determined that the total fees for advisory and administrative services for the
Fund were reasonable in light of the services provided. It was noted that in
conjunction with the recent review of the Current Investment Advisory Agreement,
the directors had received, among other things, a report from Lipper comparing
the Fund's fees, expenses and performance to those of a peer group selected by
Lipper, and information as to the fees charged by the Investment Adviser or its
affiliates to other registered investment company clients for investment
management services. The directors concluded that, because the rates for
advisory fees for the Fund would be no higher than its current fee rates, the
proposed management fee structure, including any fee waivers, was reasonable and
that no additional changes were currently necessary.
Fall-Out Benefits -- In evaluating the fall-out benefits to be received by
BlackRock Advisors under the New Investment Advisory Agreement, the directors
considered whether the Transaction would have an impact on the fall-out benefits
received by the Investment Adviser by virtue of the Current Investment Advisory
Agreement. Based on their review of the materials provided, including materials
received in connection with their most recent approval or continuance of the
Current Investment Advisory Agreement, and their discussions with management of
the Investment Adviser and BlackRock, the directors determined that those
benefits could include increased ability for BlackRock to distribute shares of
its funds and other investment products. The directors noted that any such
benefits were difficult to quantify with certainty at this time, and indicated
that they would continue to evaluate them going forward.
Investment Performance -- The directors considered investment performance for
the Fund. The directors compared the Fund's performance -- both including and
excluding the effects of the Fund's fees and expenses -- to the performance of a
comparable group of funds, and the performance of a relevant index or
combination of indexes. The comparative information received from Lipper showed
Fund performance at various evels within the range of performance of comparable
funds over different time periods. While the Board reviews performance data at
least quarterly, consistent with the Investment Adviser's investment goals, the
Board attaches more importance over relatively long periods of time, typically
three to five years. The directors believed the
24 BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006
Fund's performance was satisfactory. Also, the directors took into account the
investment performance of funds currently advised by BlackRock Advisors. The
Board considered comparative information from Lipper which showed that the
performance of the funds advised by BlackRock Advisors was within the range of
performance of comparable funds over different time periods. The Board noted
BlackRock's considerable investment management experience and capabilities, but
were unable to predict what effect, if any, consummation of the Transaction
would have on the future performance of the Fund.
Conclusion -- After the independent directors of the Fund deliberated in
executive session, the entire Board, including the independent directors,
approved the New Investment Advisory Agreement, concluding that the advisory fee
rate was reasonable in relation to the services provided and that the New
Investment Advisory Agreement was in the best interests of the shareholders. In
approving the New Investment Advisory Agreement, the Board noted that it
anticipated reviewing the continuance of the agreement in advance of the
expiration of the initial two-year period.
Contingent BlackRock Sub-Advisory Agreement -- Matters Considered by the Board
At the telephonic and in-person meetings held during April and May 2006 at which
the Board of Directors discussed and approved the New Investment Advisory
Agreement, the Board, including the independent directors, also discussed and
approved a contingent Sub-Advisory agreement (the "Contingent Sub-Advisory
Agreement") between the Investment Adviser and BlackRock Advisors (the
"BlackRock Sub-Adviser"). The Contingent Sub-Advisory Agreement is intended to
ensure that the Fund operates with efficient portfolio management services until
the closing of the Transaction, in the event that the Board deems it necessary
and in the best interests of the Fund and its shareholders that the BlackRock
Sub-Adviser assist in managing the operations of the Fund during the interim
period until the closing of the Transaction. If shareholders approve the
Contingent Sub-Advisory Agreement, it will take effect only upon recommendation
from the Investment Adviser and upon subsequent approval of the Board in the
period up to the closing of the Transaction. The effectiveness of the Contingent
Sub-Advisory Agreement, therefore, would be contingent on further Board approval
after shareholders approve it. Pursuant to the Contingent Sub-Advisory
Agreement, the BlackRock Sub-Adviser would receive a monthly fee from the
Investment Adviser equal to 50% of the advisory fee received by the Investment
Adviser. The Investment Adviser would pay the BlackRock Sub-Adviser out of its
own resources. There would be no increase in Fund expenses as a result of the
Contingent Sub-Advisory Agreement.
In making its approval, the Board considered the Contingent Sub-Advisory
Agreement in conjunction with the New Investment Advisory Agreement and reviewed
the same information and factors discussed above, and came to the same
conclusions. The Board also considered in conjunction with the Contingent
Sub-Advisory Agreement the necessity of ensuring that the Fund operates with
effective management services until the closing of the Transaction. In reviewing
the Sub-Advisory fee rate provided in the Contingent Sub-Advisory Agreement, the
Board took note of the fact that both the Investment Adviser and the BlackRock
Sub-Adviser would have significant responsibilities under their respective
advisory agreements. The Investment Adviser would remain responsible for
oversight of the Fund's operations and administration and the BlackRock
Sub-Adviser would provide advisory services to the Fund under the Contingent
Sub-Advisory Agreement. The Board also took into account the expected short
duration of the term of any Contingent Sub-Advisory Agreement and the fact that
total advisory fees paid by the Fund would not increase as a result of the
Contingent Sub-Advisory Agreement. Under all of the circumstances, the Board
concluded that it was a reasonable allocation of fees for the BlackRock
Sub-Adviser to receive 50% of the advisory fee paid by the Fund to the
Investment Adviser.
After the independent directors deliberated in executive session, the entire
Board, including the independent directors, approved the Contingent Sub-Advisory
Agreement, concluding that the advisory fee was reasonable in relation to the
services provided and that the Contingent Sub-Advisory Agreement was in the best
interests of shareholders.
BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006 25
Disclosure of Sub-Advisory Agreement
New BlackRock Sub-Advisory Agreement -- Matters Considered by the Board
At an in-person meeting held on August 22-23, 2006, the Board of Directors,
including the independent directors, discussed and approved the Sub-Advisory
agreement between BlackRock Advisors and its affiliate, BlackRock Investment
Management, LLC (the "Sub-Adviser") (the "BlackRock Sub-Advisory Agreement").
The BlackRock Sub-Advisory Agreement became effective on September 29, 2006, at
the same time the New Investment Advisory Agreement with BlackRock Advisors
(which had been approved by the Fund's shareholders) became effective.
Pursuant to the BlackRock Sub-Advisory Agreement, the Sub-Adviser receives a
monthly fee from BlackRock Advisors equal to 59% of the advisory fee received by
BlackRock Advisors from the Fund. BlackRock Advisors pays the Sub-Adviser out of
its own resources, and there is no increase in Fund expenses as a result of the
BlackRock Sub-Advisory Agreement.
In approving the BlackRock Sub-Advisory Agreement at the August in-person
meeting, the Board reviewed its considerations in connection with its approval
of the New Investment Advisory Agreement in May 2006. The Board relied on the
same information and considered the same factors as those discussed above in
connection with the approval of the New Investment Advisory Agreement, and came
to the same conclusions. In reviewing the Sub-Advisory fee rate provided for in
the BlackRock Sub-Advisory Agreement, the Board noted the fact that both
BlackRock Advisors and the Sub-Adviser have significant responsibilities under
their respective advisory agreements. Under the New Investment Advisory
Agreement, BlackRock Advisors is responsible for the overall management of the
Fund and for oversight of the Fund's operations and administration. Under the
BlackRock Sub-Advisory Agreement, the Sub-Adviser provides advisory services to
the Fund and is responsible for the day-to-day management of the Fund's
portfolio. The Board also took into account the fact that there is no increase
in total advisory fees paid by the Fund as a result of the BlackRock Sub-
Advisory Agreement. Based on its considerations, the Board concluded that it was
a reasonable allocation of fees for the Sub-Adviser to receive 59% of the
advisory fee paid by the Fund to BlackRock Advisors.
After the independent directors deliberated in executive session, the Fund's
entire Board, including the independent directors, approved the BlackRock
Sub-Advisory Agreement, concluding that the Sub-Advisory fee was reasonable in
relation to the services provided and that the BlackRock Sub-Advisory Agreement
was in the best interests of the Fund's shareholders.
FAM Investment Advisory Agreement -- Matters Considered by the Board
At the August 2006 in-person Board meeting, the Board of Directors considered
approval of the renewal of the Fund's investment advisory agreement with Fund
Asset Management, L.P., ("FAM") the Fund's investment adviser at that time (the
"FAM Advisory Agreement"). The FAM Advisory Agreement remained in effect until
September 29, 2006, at which time it was superseded by the New Investment
Advisory Agreement.
In connection with its consideration of the FAM Advisory Agreement, the Board
assessed the nature, scope and quality of the services provided to the Fund by
the personnel of FAM 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 received
and assessed information regarding the services provided to the Fund by certain
unaffiliated service providers.
At various times throughout the year, the Board also considered a range of
information in connection with its oversight of the services provided by the
Investment Adviser and its affiliates. Among the matters considered were: (a)
fees (in addition to management fees) paid to FAM 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
compliance policies and procedures; and (d) the nature, cost and character of
non-investment management services provided by FAM and its affiliates.
The Board noted its view of FAM as one of the most experienced global asset
management firms and considered the overall services provided by FAM to be of
high quality. The Board also noted its view of FAM as financially sound and well
managed and noted FAM's affiliation with one of America's largest financial
firms.
In the period prior to the Board meeting to consider renewal of the FAM Advisory
Agreement, the Board requested and received materials specifically relating to
the FAM Advisory Agreement. These materials included (a) information compiled by
Lipper on the fees and expenses, investment
26 BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006
performance and leverage 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 regarding investment strategies used by the Fund during its most
recent fiscal year; and (d) information on the profitability to FAM and its
affiliates of the FAM Advisory Agreement and other relationships with the Fund.
The Board also considered other matters it deemed important to the approval
process, such as payments made for services related to the valuation and pricing
of Fund portfolio holdings, the Fund's portfolio turnover statistics, and direct
and indirect benefits to FAM and its affiliates from their relationship with the
Fund.
The review by the independent directors and the Board included the following:
Services Provided by FAM -- The Board reviewed the nature, extent and quality of
services provided by FAM, focusing on the investment advisory services and the
resulting performance of the Fund. The Board used data provided by Lipper and by
management in its review of advisory services. 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, the Board attaches more importance
to performance over relatively long periods of time, typically three to five
years. The Board concluded that the comparative data indicated that the Fund's
performance was competitive. Considering all these factors, the Board concluded
that the nature and quality of the services provided supported the continuation
of the FAM Advisory Agreement.
FAM's Personnel and Investment Process -- The Board reviewed the Fund's
investment objectives and strategies and discussed with FAM's senior management
responsible for investment operations and the senior management of FAM's
municipal investing group the strategies being used to achieve the stated
objectives. Among other things, the Board considered the size, education and
experience of FAM's investment staff, its use of technology, and FAM's approach
to training and retaining portfolio managers and other research, advisory and
management personnel. The Board also reviewed FAM's compensation policies and
practices with respect to the Fund's portfolio managers. The Board also
considered the experience of Mr. Jaeckel the Fund's portfolio manager at that
time. The Board concluded that FAM and its investment staff have extensive
experience in analyzing and managing the types of investments used by the Fund
and that the Fund benefits from that experience.
Management Fees and Other Expenses -- The Board reviewed the Fund's contractual
management fee rate and actual management fee rate as a percentage of total
assets at common asset levels -- the actual rate includes advisory and
administrative service fees and the effects of any fee waivers -- compared to
the other funds in its Lipper category. It also compared the Fund's total
expenses to those of other comparable funds. The Board determined that the
Fund's contractual and actual management fee rates, as well as total expenses,
were competitive with those of comparable funds. The Board concluded that the
Fund's management fee rate and overall expense ratio were reasonable.
Profitability -- The Board considered the cost of the services provided to the
Fund by FAM, and the profits of FAM and its affiliates relating to the
management and distribution of the Fund and other funds advised by FAM and its
affiliates. As part of its analysis, the Board reviewed FAM'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 concluded that the profits of
FAM and its affiliates were 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. The
Board determined that the management fee structure was reasonable and that 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
FAM 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 Fund's shareholders.
BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006 27
Officers and Directors
Number of
Funds and
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 Vice Chairman and Director of BlackRock, Inc., 122 Funds None
Doll, Jr.* Princeton, NJ and present Global Chief Investment Officer for Equities, 168 Portfolios
08543-9011 Director Chairman of the BlackRock Retail Operating
Age: 52 Committee, and member of the BlackRock Executive
Committee since 2006; President of the Funds
advised by Merrill Lynch Investment Managers, L.P.
("MLIM") and its affiliates ("MLIM/FAM-advised
funds") from 2005 to 2006; President and Chief
Investment Officer of MLIM and Fund Asset
Management, L.P. ("FAM") from 2001 to 2006; Co-Head
(Americas Region) thereof from 2000 to 2001 and
Senior Vice President from 1999 to 2001; President
and Director of Princeton Services, Inc.
("Princeton Services") and President of Princeton
Administrators, L.P. ("Princeton Administrators")
from 2001 to 2006; Chief Investment Officer of
OppenheimerFunds, 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
BlackRock Advisors acts as investment adviser. Mr. Doll is an "interested person," as described in the Investment
Company Act, of the Fund based on his current and former positions with BlackRock, Inc. and its affiliates.
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 37 Funds None
Bodurtha** Princeton, NJ present and Executive Vice President thereof from 1996 to 57 Portfolios
08543-9095 2003; Chairman of the Board, Berkshire Holding
Age: 62 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, 37 Funds None
Froot Princeton, NJ present Massachusetts Institute of Technology from 1986 to 57 Portfolios
08543-9095 1992.
Age: 49
------------------------------------------------------------------------------------------------------------------------------------
28 BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006
Officers and Directors (continued)
Number of
Funds and
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* (continued)
------------------------------------------------------------------------------------------------------------------------------------
Joe P.O. Box 9095 Director 2002 to Member of the Committee of Investment of Employee 37 Funds Kimco
Grills** Princeton, NJ present Benefit Assets of the Association of Financial 57 Portfolios Realty
08543-9095 Professionals ("CIEBA") since 1986; Member of Corporation
Age: 71 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
Funds 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 from 2000 to 2006, and Chairman
thereof, since 2006; 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.
------------------------------------------------------------------------------------------------------------------------------------
Herbert I. P.O. Box 9095 Director 1992 to Professor Emeritus, New York University since 2005; 37 Funds None
London Princeton, NJ present John M. Olin Professor of Humanities, New York 57 Portfolios
08543-9095 University from 1993 to 2005; and Professor thereof
Age: 67 from 1980 to 2005; President, Hudson Institute
since 1997 and 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; Chairman of the
Board of Directors of Vigilant Research, Inc. since
2006; Member of the Board of Directors for Grantham
University since 2006; Director of AIMS since 2006;
Director of Reflex Security since 2006; Director of
InnoCentive, Inc. since 2006; Director of Cerego,
LLC since 2005; 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 & 37 Funds None
Cooper Princeton, NJ present Sisk, P.A. since 1993; President, American Bar 57 Portfolios
Ramo 08543-9095 Association from 1995 to 1996 and Member of the
Age: 64 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.
BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006 29
Officers and Directors (concluded)
Number of
Funds and
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)
------------------------------------------------------------------------------------------------------------------------------------
Robert S. P.O. Box 9095 Director 2002 to Principal of STI Management (investment adviser) 37 Funds None
Salomon, Princeton, NJ present from 1994 to 2005; Chairman and CEO of Salomon 57 Portfolios
Jr. 08543-9095 Brothers Asset Management Inc. from 1992 to 1995;
Age: 70 Chairman of 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.
------------------------------------------------------------------------------------------------------------------------
* 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 of Directors and the Audit Committee.
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 Managing Director of BlackRock, Inc. since 2006; Managing Director of Merrill Lynch
Burke Princeton, NJ President present Investment Managers, L.P. ("MLIM") and Fund Asset Management, L.P. ("FAM") in 2006;
08543-9011 and and First Vice President of MLIM and FAM from 1997 to 2005 and Treasurer thereof from
Age: 46 Treasurer 1999 to 1999 to 2006; Vice President of MLIM and FAM from 1990 to 1997.
present
------------------------------------------------------------------------------------------------------------------------------------
John M. P.O. Box 9011 Senior Vice 2002 to Managing Director of BlackRock since 2006; Managing Director (Municipal Tax-Exempt
Loffredo Princeton, NJ President present Fund Management) of MLIM from 2000 to 2006; Director of MLIM from 1997 to 2000.
08543-9011
Age: 42
------------------------------------------------------------------------------------------------------------------------------------
Jeffrey P.O. Box 9011 Fund Chief 2004 to Managing Director of BlackRock, Inc. and Fund Chief Compliance Officer since 2006;
Hiller Princeton, NJ Compliance present Chief Compliance Officer of the MLIM/FAM-advised funds and First Vice President and
08543-9011 Officer Chief Compliance Officer of MLIM (Americas Region) from 2004 to 2006; Chief
Age: 55 Compliance Officer of the IQ Funds since 2004; Global Director of Compliance at
Morgan Stanley 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 Securities and
Exchange Commission's Division of Enforcement in Washington, D.C. from 1990 to
1995.
------------------------------------------------------------------------------------------------------------------------------------
Alice A. P.O. Box 9011 Secretary 2004 to Director of BlackRock, Inc. since 2006; Director (Legal Advisory) of MLIM from 2002
Pellegrino Princeton, NJ present to 2006; Vice President of MLIM from 1999 to 2002; Attorney associated with MLIM
08543-9011 from 1997 to 2006; Secretary of MLIM, FAM, FAM Distributors, Inc. ("FAMD") and
Age: 46 Princeton Services from 2004 to 2006.
------------------------------------------------------------------------------------------------------------------------
* 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
30 BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006
Proxy Results
During the six-month period ended November 30, 2006, BlackRock MuniYield New
Jersey Fund, Inc.'s shareholders voted on the following proposals, which were
approved at a special shareholders' meeting on August 15, 2006. A description of
the proposals and number of shares voted were as follows:
-------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
-------------------------------------------------------------------------------------------------------------------------
To approve a new investment advisory agreement
with BlackRock Advisors, Inc. 7,777,507 273,578 404,621
-------------------------------------------------------------------------------------------------------------------------
To approve a contingent subadvisory agreement
with BlackRock Advisors, Inc. 7,794,844 269,631 391,231
-------------------------------------------------------------------------------------------------------------------------
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and former fund
investors and individual clients (collectively, "Clients") and to safeguarding
their nonpublic personal information. The following information is provided to
help you understand what personal information BlackRock collects, how we protect
that information and why in certain cases we share such information with select
parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.
BlackRock obtains or verifies personal nonpublic information from and about you
from different sources, including the following: (i) information we receive from
you or, if applicable, your financial intermediary, on applications, forms or
other documents; (ii) information about your transactions with us, our
affiliates, or others; (iii) information we receive from a consumer reporting
agency; and (iv) from visits to our Web sites.
BlackRock does not sell or disclose to nonaffiliated third parties any nonpublic
personal information about its Clients, except as permitted by law or as is
necessary to service Client accounts. These nonaffiliated third parties are
required to protect the confidentiality and security of this information and to
use it only for its intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that may
be of interest to you. In addition, BlackRock restricts access to nonpublic
personal information about its Clients to those BlackRock employees with a
legitimate business need for the information. BlackRock maintains physical,
electronic and procedural safeguards that are designed to protect the nonpublic
personal information of its Clients, including procedures relating to the proper
storage and disposal of such information.
Electronic Delivery
Electronic copies of most financial reports and prospectuses are available on
the Fund's Web site. Shareholders can sign up for e-mail notifications of
quarterly statements, annual and semi-annual reports and prospectuses by
enrolling in the Fund's electronic delivery program.
To enroll:
Shareholders Who Hold Accounts with Investment Advisers, Banks or Brokerages:
Please contact your financial adviser. Please note that not all investment
advisers, banks or brokerages may offer this service.
BLACKROCK MUNIYIELD NEW JERSEY FUND, INC. NOVEMBER 30, 2006 31
BlackRock 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 BlackRock 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 1-800-441-7762; (2) at
www.blackrock.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.blackrock.com and (2) on the Securities
and Exchange Commission's Web site at http://www.sec.gov.
BlackRock MuniYield New Jersey Fund, Inc.
P.O. Box 9011
Princeton, NJ 08543-9011
BLACKROCK
#16381-11/06
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 at
www.blackrock.com.
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 (retired as of
December 31, 2005).
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees - Fiscal Year Ending November 30, 2006 - $28,000
Fiscal Year Ending November 30, 2005 - $34,300
The nature of the services include audit and audit related fees
associated with new AMPs issuance.
(b) Audit-Related Fees - Fiscal Year Ending November 30, 2006 - $3,500
Fiscal Year Ending November 30, 2005 - $13,700
The nature of the services include agreed upon compliance procedures
associated with the Fund's AMPs and audit and audit related fees
associated with new AMPs issuance.
(c) Tax Fees - Fiscal Year Ending November 30, 2006 - $6,000
Fiscal Year Ending November 30, 2005 - $5,700
The nature of the services include tax compliance, tax advice and tax
planning.
(d) All Other Fees - Fiscal Year Ending November 30, 2006 - $0
Fiscal Year Ending November 30, 2005 - $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, 2006 - $3,138,117
Fiscal Year Ending November 30, 2005 - $5,738,110
(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) - $1,739,500, 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
Joe Grills
Herbert I. London
Roberta Cooper Ramo
Robert S. Salomon, Jr.
Stephen B. Swensrud (retired as of December 31, 2005)
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 has delegated to the Manager authority
to vote all proxies relating to the Fund's portfolio securities. The
Manager has adopted policies and procedures (the "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
Manager'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 Manager 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
Manager considers the interests of its clients, including each Fund,
and not the interests of the Manager, when voting proxies and that real
(or perceived) material conflicts that may arise between the Manager's
interest and those of the Manager's clients are properly addressed and
resolved.
In order to implement the Proxy Voting Procedures, the Manager has
formed a Proxy Voting Committee (the "Committee"). The Committee, which
is a subcommittee of the Manager's Equity Investment Policy Oversight
Committee ("EIPOC"), is comprised of a senior member of the Manager's
equity management group who is also a member of EIPOC, one or more
other senior investment professionals appointed by EIPOC, portfolio
managers and investment analysts appointed by EIPOC and any other
personnel EIPOC deems appropriate. The Committee will also include two
non-voting representatives from the Manager's Legal Department
appointed by the Manager's General Counsel. The Committee's membership
shall be limited to full-time employees of the Manager. No person with
any investment banking, trading, retail brokerage or research
responsibilities for the Manager'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 Manager 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 Manager 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 Manager 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 Manager
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 Manager 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 Manager will
generally seek to vote proxies over which the Manager exercises voting
authority in a uniform manner for all the Manager'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 Manager 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 Manager by ISS include in-depth research,
voting recommendations (although the Manager 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 Manager's Proxy Voting Procedures also address special
circumstances that can arise in connection with proxy voting. For
instance, under the Proxy Voting Procedures, the Manager 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 Manager 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 Manager may be required to vote proxies in
respect of an issuer where an affiliate of the Manager (each, an
"Affiliate"), or a money management or other client of the Manager,
including investment companies for which the Manager provides
investment advisory, administrative and/or other services (each, a
"Client"), is involved. The Proxy Voting Procedures and the Manager'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 Manager'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 Committee may pass the voting power to a subcommittee,
appointed by EIPOC (with advice from the Secretary of the Committee),
consisting solely of Committee members selected by EIPOC. EIPOC 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 Manager'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
Manager'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
Manager's normal voting guidelines or, on matters where the Manager'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 Manager 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
Manager's fiduciary duties.
In addition to the general principles outlined above, the Manager 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 Manager 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 Manager 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 number of other
directorships, 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, which 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.
Information about how a Fund voted proxies relating to securities held
in the Fund's portfolio during the most recent 12 month period ended
November 30 is available without charge (1) at www.blackrock.com and
(2) on the Commission's web site at http://www.sec.gov.
Item 8 - Portfolio Managers of Closed-End Management Investment Companies - as
of November 30, 2006.
(a)(1) BlackRock MuniYield New Jersey Fund, Inc. is managed by a team
of investment professionals comprised of Timothy T. Browse, Vice
President at BlackRock, Theodore R. Jaeckel, Jr., CFA, Managing
Director at BlackRock, and Walter O'Connor, Managing Director at
BlackRock. Each is a member of BlackRock's municipal tax-exempt
management group. Mr. Jaeckel and Mr. O'Connor are responsible for
setting the Fund's overall investment strategy and overseeing the
management of the Fund. Mr. Browse is the Fund's lead portfolio manager
and is responsible for the day-to-day management of the Fund's
portfolio and the selection of its investments. Messrs. Jaeckel and
O'Connor have been members of the Fund's management team since 2006 and
Mr. Browse has been the Fund's portfolio manager since 2006.
Mr. Jaeckel joined BlackRock in 2006. Prior to joining BlackRock, he
was a Managing Director (Municipal Tax-Exempt Fund Management) of
Merrill Lynch Investment Managers, L.P. ("MLIM") from 2005 to 2006 and
a Director of MLIM from 1997 to 2005. He has been a portfolio manager
with BlackRock or MLIM since 1991.
Mr. O'Connor joined BlackRock in 2006. Prior to joining BlackRock, he
was a Managing Director (Municipal Tax-Exempt Fund Management) of MLIM
from 2003 to 2006 and was a Director of MLIM from 1997 to 2002. He has
been a portfolio manager with BlackRock or MLIM since 1991.
Mr. Browse joined BlackRock in 2006. Prior to joining BlackRock, he was
a Vice President (Municipal Tax-Exempt Fund Management) of MLIM from
2004 to 2006. He has been a portfolio manager with BlackRock or MLIM
since 2004.
(a)(2)As of November 30, 2006:
(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. 82 0 0 0 0 0
$29,329,018,585 $ 0 $ 0 $ 0 $ 0 $ 0
Walter O'Connor 82 0 0 0 0 0
$29,329,018,585 $ 0 $ 0 $ 0 $ 0 $ 0
Timothy T.
Browse 17 0 0 0 0 0
$ 4,266,795,790 $ 0 $ 0 $ 0 $ 0 $ 0
(iv) Potential Material Conflicts of Interest
BlackRock has built a professional working environment, firm-wide
compliance culture and compliance procedures and systems designed to
protect against potential incentives that may favor one account over
another. BlackRock has adopted policies and procedures that address the
allocation of investment opportunities, execution of portfolio
transactions, personal trading by employees and other potential
conflicts of interest that are designed to ensure that all client
accounts are treated equitably over time. Nevertheless, BlackRock
furnishes investment management and advisory services to numerous
clients in addition to the Fund, and BlackRock may, consistent with
applicable law, make investment recommendations to other clients or
accounts (including accounts which are hedge funds or have performance
or higher fees paid to BlackRock, or in which portfolio managers have a
personal interest in the receipt of such fees), which may be the same
as or different from those made to the Fund. In addition, BlackRock,
its affiliates and any officer, director, stockholder or employee may
or may not have an interest in the securities whose purchase and sale
BlackRock recommends to the Fund. BlackRock, or any of its affiliates,
or any officer, director, stockholder, employee or any member of their
families may take different actions than those recommended to the Fund
by BlackRock with respect to the same securities. Moreover, BlackRock
may refrain from rendering any advice or services concerning securities
of companies of which any of BlackRock's (or its affiliates') officers,
directors or employees are directors or officers, or companies as to
which BlackRock or any of its affiliates or the officers, directors and
employees of any of them has any substantial economic interest or
possesses material non-public information. Each portfolio manager also
may manage accounts whose investment strategies may at times be opposed
to the strategy utilized for the Fund. In this connection, it should be
noted that certain portfolio managers currently manage certain accounts
that are subject to performance fees. In addition, certain portfolio
managers assist in managing certain hedge funds and may be entitled to
receive a portion of any incentive fees earned on such funds and a
portion of such incentive fees may be voluntarily or involuntarily
deferred. Additional portfolio managers may in the future manage other
such accounts or funds and may be entitled to receive incentive fees.
As a fiduciary, BlackRock owes a duty of loyalty to its clients and
must treat each client fairly. When BlackRock purchases or sells
securities for more than one account, the trades must be allocated in a
manner consistent with its fiduciary duties. BlackRock attempts to
allocate investments in a fair and equitable manner among client
accounts, with no account receiving preferential treatment. To this
end, BlackRock has adopted a policy that is intended to ensure that
investment opportunities are allocated fairly and equitably among
client accounts over time. This policy also seeks to achieve reasonable
efficiency in client transactions and provide BlackRock with sufficient
flexibility to allocate investments in a manner that is consistent with
the particular investment discipline and client base.
(a)(3) As of November 30, 2006:
Portfolio Manager Compensation
The portfolio manager compensation program of BlackRock and its
affiliates, including the Investment Adviser, is critical to BlackRock'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 certain BlackRock and its
affiliates portfolio managers are a fixed base salary, annual performance-based
cash and stock compensation (cash and stock bonus) and other benefits. BlackRock
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 BlackRock 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
BlackRock 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, certain BlackRock and its affiliates portfolio manager incentive
compensation is based on a formulaic compensation program.
BlackRock'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 the 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. All factors are considered
collectively by BlackRock 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 BlackRock 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 BlackRock stock
price performance. As such, the stock bonus aligns each portfolio manager's
financial interests with those of BlackRock 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 BlackRock'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 certain BlackRock mutual funds
(including their own funds) during a five-year vesting period. The deferred cash
program aligns the interests of participating portfolio managers with the
investment results of BlackRock 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 BlackRock employees, including broad-based retirement,
401(k), health, and other employee benefit plans.
(a)(4) Beneficial Ownership of Securities. As of November 30, 2006,
neither of Messrs. Browse, Jaeckel and O'Connor beneficially owns
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 principal executive and principal financial officers
have evaluated the Registrant's disclosure controls and procedures,
including internal control over financial reporting, within 90 days of
this filing. Such principal officers have concluded that as of January
26, 2007 the Registrant's disclosure controls and procedures were
effective in design and operation to reasonably ensure that information
required to be disclosed by the Registrant in this Form N-CSR was
recorded, processed, summarized, and reported within the required time
periods, and were sufficient to form the basis of the certifications
required by Rule 30a-2 of the Investment Company Act of 1940, as
amended. Prior to reaching that conclusion, such principal officers had
become aware of matters relating to the Registrant's participation in
certain inverse floater structures that necessitated adjustments to
financial information included in Item 1 of this filing. As a result,
management of the Registrant had reevaluated certain disclosure controls
and procedures determined not to be effective, as discussed more fully
below.
Management of the Registrant is responsible for establishing and
maintaining effective internal control over financial reporting. In
fulfilling this responsibility, estimates and judgments by management
are required to assess the expected benefits and related costs of
controls. The Registrant's internal control over financial reporting is
a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with U.S. generally
accepted accounting principles. Such internal control includes policies
and procedures that provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition of a
registrant's assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
A control deficiency exists when the design or operation of a control
does not allow management or employees, in the normal course of
performing their assigned functions, to prevent or detect misstatements
on a timely basis. A significant deficiency is a control deficiency, or
combination of control deficiencies, that adversely affects the
Registrant's ability to initiate, authorize, record, process or report
financial data reliably in accordance with generally accepted accounting
principles such that there is more than a remote likelihood that a
misstatement of the Registrant's annual or interim financial statements
that is more than inconsequential will not be prevented or detected. A
material weakness is a significant deficiency, or combination of
significant deficiencies, that results in more than a remote likelihood
that a material misstatement of the annual or interim financial
statements will not be prevented or detected.
Prior to the filing of the Registrant's Form N-CSR, the Registrant
identified the following control deficiency, that was determined to be a
material weakness, as defined above, in the Registrant's internal
control over financial reporting at November 30, 2006. The Registrant's
controls related to the review and analysis of relevant terms and
conditions of transfers of certain assets pertaining to inverse floater
structures were not operating effectively to appropriately determine
whether the transfers of assets qualified for sale accounting under the
provisions of Statement of Financial Accounting Standards No. 140,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" ("SFAS 140"). As a result, these
controls did not detect that certain transfers were not appropriately
recorded as borrowings. Accordingly, the Registrant's financial
statements as of and for the period ended November 30, 2006, including
prior periods where applicable, were adjusted prior to being issued to
appropriately reflect transfers of such securities as secured borrowings
and to report the related income and expense. These adjustments had no
impact on net assets, net asset value per share or total return.
Prior to the evaluation of the design and operation of the Registrant's
disclosure controls and procedures at January 26, 2007, the Registrant's
disclosure controls and procedures were modified to enhance the review
and analysis of the relevant terms and conditions of transfers of
securities in connection with inverse floater structures in light of
SFAS 140.
11(b) - There have been no changes in the Registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940, as amended) that occurred during the second half of
the Registrant's fiscal year that have materially affected, or are
reasonably likely to materially affect, the Registrant's internal
control over financial reporting. However, as discussed above,
subsequent to November 30, 2006, the Registrant has enhanced controls
related to the application of SFAS 140.
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.
BlackRock MuniYield New Jersey Fund, Inc.
By: /s/ Robert C. Doll, Jr.
----------------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
BlackRock MuniYield New Jersey Fund, Inc.
Date: January 29, 2007
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
BlackRock MuniYield New Jersey Fund, Inc.
Date: January 29, 2007
By: /s/ Donald C. Burke
----------------------------------
Donald C. Burke,
Chief Financial Officer of
BlackRock MuniYield New Jersey Fund, Inc.
Date: January 29, 2007