MUNIYIELD
NEW JERSEY
FUND, INC.
STRATEGIC
Performance
[GRAPHIC OMITTED]
Annual Report
November 30, 1997
<PAGE>
MuniYield New Jersey Fund, Inc.
TO OUR SHAREHOLDERS
For the year ended November 30, 1997, the Common Stock of MuniYield New Jersey
Fund, Inc. earned $0.906 per share income dividends, which included earned and
unpaid dividends of $0.073. This represented a net annualized yield of 5.84%,
based on a month-end per share net asset value of $15.51. Over the same period,
total investment return on the Fund's Common Stock was +6.52%, based on a change
in per share net asset value from $15.46 to $15.51, and assuming reinvestment of
$0.907 per share income dividends.
For the six-month period ended November 30, 1997, total investment return on the
Fund's Common Stock was +5.17%, based on a change in per share net asset value
from $15.19 to $15.51, and assuming reinvestment of $0.454 per share income
dividends.
For the six months ended November 30, 1997, the average yield on the Fund's
Auction Market Preferred Stock was 3.41%.
The Municipal Market Environment
During the six months ended November 30, 1997, long-term tax-exempt bond yields,
as measured by the Bond Buyer Revenue Bond Index, generally declined. On a
weekly basis, bond yields were buffeted by alternating strong and weak
indicators. The general financial environment has remained one of solid economic
growth with few or no inflationary pressures. However, economic growth remained
strong enough to suggest that the Federal Reserve Board (FRB) might soon be
obligated to raise short-term interest rates. Such action would be intended to
slow economic growth and ensure that any incipient inflationary pressures would
be curtailed. Over the last six months, long-term municipal bond yields have
fallen approximately 35 basis points (0.35%) to 5.55%.
Similarly, long-term US Treasury bond yields generally drifted lower during most
of the six-month period ended November 30, 1997. However, the turmoil in the
world's equity markets during the last week in October has resulted in a
significant rally in the Treasury bond market. The US Treasury bond market was
the beneficiary of a flight to quality mainly by foreign investors whose own
domestic markets have continued to be very volatile. Prior to the initial
decline in Asian equity markets, yields on long-term US Treasury securities had
declines similar to those experienced in the tax-exempt market. By the end of
November, US Treasury bond yields declined over 85 basis points to 6.05%, their
lowest level of 1997.
The tax-exempt bond market's continued underperformance as compared to its
taxable counterpart has been largely in response to its ongoing weakening
technical position. As municipal bond yields have declined, municipalities have
rushed to refinance outstanding higher-couponed debt with new issues financed at
present low rates. During the last six months, over $120 billion in new
long-term tax-exempt issues were underwritten, an increase of nearly 30% versus
the comparable period a year ago. As interest rates have continued to decline,
these refinancings have sustained municipal bond issuance. During the past three
months, approximately $60 billion in new long-term municipal securities were
underwritten, an increase of over 25% as compared to the November 30, 1996
quarter.
The recent trend toward larger and larger bond issues has also continued.
However, issues of such magnitude usually must be attractively priced to ensure
adequate investor interest. Obviously, the yields of other municipal bond issues
are impacted by the yield premiums such large issuers have been required to pay.
Much of the municipal bond market's recent underperformance can be traced to
market pressures that these large issues have exerted.
In our opinion, the recent correction in world equity markets has enhanced the
near-term prospects for continued low, if not declining, interest rates in the
United States. It is likely that the recent correction will result in slower US
domestic growth in the coming months. This decline should be generated in part
by reduced US export growth. Additionally, some decline in consumer spending can
also be expected in response to reduced consumer confidence. Perhaps
1
<PAGE>
MuniYield New Jersey Fund, Inc. November 30, 1997
more importantly, it is likely that barring a dramatic and unexpected resurgence
in domestic growth, the FRB may be unwilling to raise interest rates until the
full impact of the equity market's corrections can be established.
All of these factors suggest that for at least the near term, interest rates,
including tax-exempt bond yields, are unlikely to rise by any appreciable
amount. It is probable that municipal bond yields will remain under some
pressure as a result of continued strong new-issue supply. However, the recent
pace of municipal bond issuance is likely to be unsustainable. Continued
increases in bond issuance will require lower tax-exempt bond yields to generate
the economic savings necessary for additional municipal bond refinancing.
Additionally, municipal bond investors are expected to receive approximately $23
billion in January coupon payments, bond maturities and proceeds from early
redemptions. Such assets should serve to intensify investor demand in the near
future. With tax-exempt bond yields at already attractive yield ratios relative
to US Treasury bonds (approximately 90% at the end of November), any further
pressure on the municipal market may represent an attractive investment
opportunity.
Portfolio Strategy
The Fund closes its fiscal year ended November 30, 1997 exhibiting the same
attributes that it had since its inception. The Fund is characterized by a
stable and competitive dividend stream and a large core position in
high-quality, income-oriented securities. More than 84% of the Fund's net assets
are invested in securities rated in the top three rating categories by either
Moody's Investors Service, Inc. or Standard & Poor's Corp., reflecting our
conservative approach to managing credit risk. In terms of portfolio activity,
our efforts have been divided between improving average call protection and
employing a range-bound approach to interest rate fluctuations that entails
reducing market exposure during periods of strength and utilizing bouts of
weakness as an opportunity to lock in attractive yields.
During the past year, new-issue volume in New Jersey totaled $8.05 billion,
representing a sharp jump from the $5.81 billion issued in the prior year.
Included in this total is the $2.75 billion Federally taxable transaction issued
to extinguish the state pension systems' unfunded obligations. Exclusive of this
issue, tax-exempt volume for the year more closely approximates that seen in the
prior year.
The New Jersey economy continues to exhibit signs of strength in line with the
growth evident at the national level. The unemployment rate as of October 31,
1997 stood at 5.2%, sharply lower than the 6.2% rate seen at the same time last
year. Median family and household income totals continue to exceed the national
average by a significant margin. In June, Governor Christine Whitman signed a
$16.8 billion state budget for the fiscal year starting July 1, 1997, an
increase of 5% over the previous year's budget.
In our May report to shareholders, we cited concern over FRB policy as
justification for a more circumspect investment outlook. Since then, the bond
market has been buffeted by shifting perceptions over the sustainability of
economic growth and the resurgence of inflation. While the economy has
consistently exhibited surprising strength and durability at this late stage of
the expansion, most measures of inflation continue to demonstrate an economy
operating without any significant capacity constraints. These circumstances
present a favorable backdrop for bonds and, as a result, we have remained fully
invested. Recently, evidence of continued solid economic growth accompanied by
increasingly tight labor markets suggests that there is a need for a more
restrictive monetary policy. Under normal circumstances, these developments
would cause our investment outlook to grow more cautious resulting in the
implementation of a strategy designed to preserve the gains achieved thus far.
However, the recent volatility in world equity markets has resulted in a flight
to quality causing long-term interest rates to decline to their lows of the
year. As a consequence, the risk of a further tightening in monetary policy has
receded. Until such time as the full impact of the world equity markets'
correction can be determined, the adoption of a more neutral posture seems
appropriate. In the meantime, our efforts will continue to be directed toward
managing the portfolio's call risk in the context of securing and maintaining an
attractive dividend.
2
<PAGE>
MuniYield New Jersey Fund, Inc. November 30, 1997
In Conclusion
We appreciate your ongoing interest in MuniYield New Jersey Fund, Inc., and we
look forward to serving your investment needs in the months and years to come.
Sincerely,
/s/ Arthur Zeikel
Arthur Zeikel
President
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ Theodore R. Jaeckel Jr.
Theodore R. Jaeckel Jr.
Vice President and Portfolio Manager
January 2, 1998
PROXY RESULTS
During the six-month period ended November 30, 1997, MuniYield New Jersey Fund,
Inc. Common Stock shareholders voted on the following proposals. The proposals
were approved at a shareholders' meeting on September 18, 1997. The description
of each proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
1. To elect the Fund's Board of Directors: James H. Bodurtha 8,538,870 137,687
Herbert I. London 8,537,953 138,604
Robert R. Martin 8,534,657 141,900
Arthur Zeikel 8,527,991 148,566
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the
Fund's independent auditors. 8,506,683 59,964 109,910
- --------------------------------------------------------------------------------------------------------
</TABLE>
During the six-month period ended November 30, 1997, MuniYield New Jersey Fund,
Inc. Preferred Stock shareholders voted on the following proposals. The
proposals were approved at a shareholders' meeting on September 18, 1997. The
description of each proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
1. To elect the Fund's Board of Directors: James H. Bodurtha 2,391 1
Herbert I. London 2,391 1
Robert R. Martin 2,391 1
Joseph L. May 2,391 1
Andre F. Perold 2,391 1
Arthur Zeikel 2,391 1
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the
Fund's independent auditors. 2,391 0 1
- ---------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
MuniYield New Jersey Fund, Inc. November 30, 1997
THE BENEFITS AND RISKS OF LEVERAGING
MuniYield New Jersey Fund, Inc. utilizes leveraging to seek to enhance the yield
and net asset value of its Common Stock. However, these objectives cannot be
achieved in all interest rate environments. To leverage, the Fund issues
Preferred Stock, which pays dividends at prevailing short-term interest rates
and invests the proceeds in long-term municipal bonds. The interest earned on
these investments is paid to Common Stock shareholders in the form of dividends,
and the value of these portfolio holdings is reflected in the per share net
asset value of the Fund's Common Stock. However, in order to benefit Common
Stock shareholders, the yield curve must be positively sloped; that is,
short-term interest rates must be lower than long-term interest rates. At the
same time, a period of generally declining interest rates will benefit Common
Stock shareholders. If either of these conditions change, then the risks of
leveraging will begin to outweigh the benefits.
To illustrate these concepts, assume a fund's Common Stock capitalization of
$100 million and the issuance of Preferred Stock for an additional $50 million,
creating a total value of $150 million available for investment in long-term
municipal bonds. If prevailing short-term interest rates are approximately 3%
and long-term interest rates are approximately 6%, the yield curve has a
strongly positive slope. The fund pays dividends on the $50 million of Preferred
Stock based on the lower short-term interest rates. At the same time, the fund's
total portfolio of $150 million earns the income based on long-term interest
rates. Of course, increases in short-term interest rates would reduce (and even
eliminate) the dividends on the Common Stock.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term investments,
and therefore the Common Stock shareholders are the beneficiaries of the
incremental yield. However, if short-term interest rates rise, narrowing the
differential between short-term and long-term interest rates, the incremental
yield pickup on the Common Stock will be reduced or eliminated completely. At
the same time, the market value of the fund's Common Stock (that is, its price
as listed on the New York Stock Exchange) may, as a result, decline.
Furthermore, if long-term interest rates rise, the Common Stock's net asset
value will reflect the full decline in the price of the portfolio's investments,
since the value of the fund's Preferred Stock does not fluctuate. In addition to
the decline in net asset value, the market value of the fund's Common Stock may
also decline.
PORTFOLIO ABBREVIATIONS
To simplify the listings of MuniYield New Jersey Fund, Inc.'s portfolio holdings
in the Schedule of Investments, we have abbreviated the names of the securities
according to the list below and at right.
ACES(SM) Adjustable Convertible Extendable Securities
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
EDA Economic Development Authority
GO General Obligation Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RITR Residual Interest Trust Receipts
UT Unlimited Tax
VRDN Variable Rate Demand Notes
4
<PAGE>
MuniYield New Jersey Fund, Inc. November 30, 1997
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey--96.6%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AA NR* $ 1,490 Bernards Township, New Jersey, School District, Refunding, UT, 5.30% due 1/01/2019 $ 1,496
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 Cape May County, New Jersey, Industrial Pollution Control Financing Authority Revenue
Bonds (Atlantic City Electric Company Project), AMT, Series A, 7.20% due 11/01/2029 (b) 2,277
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,500 Casino Reinvestment Development Authority, New Jersey, Parking Fee Revenue Bonds,
Series A, 5.25% due 10/01/2015 (f) 2,508
- ------------------------------------------------------------------------------------------------------------------------------------
AA Aa2 1,000 Gloucester County, New Jersey, Industrial Refunding Bonds (Mobil Oil Refining
Corp. Project), 5.625% due 12/01/2028 1,016
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Highland Park, New Jersey, School District, GO, UT, 6.55% due 2/15/2005 (b)(g) 1,140
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 4,880 Hudson County, New Jersey, COP, Refunding (Correctional Facilities),
6.60% due 12/01/2021 (b) 5,297
- ------------------------------------------------------------------------------------------------------------------------------------
AA A3 3,200 Jersey City, New Jersey, School, GO, UT, 6.65% due 2/15/2002 (g) 3,536
- ------------------------------------------------------------------------------------------------------------------------------------
NR* Aa2 3,500 Mercer County, New Jersey, Improvement Authority Revenue Bonds
(County Courthouse Project), 6.60% due 11/01/2000 (g) 3,798
- ------------------------------------------------------------------------------------------------------------------------------------
NR* VMIG1+ 200 Monmouth County, New Jersey, Improvement Authority Revenue Bonds
(Pooled Government Loan Program), ACES, 3.60% due 8/01/2016 (a) 200
- ------------------------------------------------------------------------------------------------------------------------------------
NR* VMIG1+ 500 New Jersey EDA, Dock Facility Revenue Refunding Bonds (Bayonne/IMTT Project),
VRDN, Series A, 3.65% due 12/01/2027 (a) 500
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 New Jersey EDA, Natural Gas Facilities Revenue Refunding Bonds (NUI Corporation),
Series A, 6.35% due 10/01/2022 (e) 5,519
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey EDA, Revenue Bonds:
NR* Aa1 100 (400 International Drive Partners), VRDN, 3.60% due 9/01/2005 (a) 100
AAA Aaa 2,500 Refunding (RWJ Health Care Corporation), 6.50% due 7/01/2024 (f) 2,743
NR* Aaa 4,000 (Saint Barnabas Project), 5.55%** due 7/01/2017 (b) 1,446
NR* Aaa 4,200 (Saint Barnabas Project), 5.60%** due 7/01/2018 (b) 1,428
- ------------------------------------------------------------------------------------------------------------------------------------
NR* Aa1 10,750 New Jersey EDA, Solid Waste Disposal Facilities Revenue Bonds
(Garden State Paper Company), AMT, 7.125% due 4/01/2022 11,774
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 New Jersey EDA, Water Facilities Revenue Bonds (American Water Company
Inc. Project), AMT, 6% due 5/01/2036 (c) 2,108
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 New Jersey Environmental Infrastructure Trust (Wastewater Treatment), 5% due 9/01/2017 1,963
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey Health Care Facilities Financing Authority Revenue Bonds:
A- A3 6,060 Refunding (Atlantic City Medical Center), Series C, 6.80% due 7/01/2011 6,654
AAA Aaa 2,000 Refunding (Hackensack Medical Center), 6.625% due 7/01/2011 (c) 2,170
BBB+ NR* 3,500 Refunding (Holy Name Hospital), 6% due 7/01/2025 3,602
BBB Baa2 3,300 Refunding (Saint Elizabeth Hospital Obligation Group), 6% due 7/01/2020 3,411
AAA Aaa 1,570 Refunding (Shoreline Behavioral Health Center), 5.50% due 7/01/2017 (b) 1,597
AAA Aaa 3,875 (Saint Elizabeth Hospital), Series B, 8.25% due 7/01/2000 (g) 4,335
- ------------------------------------------------------------------------------------------------------------------------------------
A+ Aa 7,820 New Jersey Sports and Exposition Authority (State Contract), Series A, 6.50% due 3/01/2019 8,514
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority Revenue Bonds:
BBB+ NR* 6,250 Higher Education (Drew University), Series E, 6.25% due 7/01/2017 6,629
AAA Aaa 5,435 Higher Education (Princeton University), Series C, 6.375% due 7/01/2022 5,987
BBB+ Baa2 3,355 Higher Education (Saint Peter's College), Series B, 6.80% due 7/01/2008 3,684
BBB+ Baa2 3,600 Higher Education (Saint Peter's College), Series B, 6.85% due 7/01/2012 3,965
AA+ Aaa 2,325 (Institute for Advanced Study), Series G, 5% due 7/01/2028 2,258
A- Baa1 6,030 (Stevens Institute of Technology), Series A, 6.80% due 7/01/2008 6,639
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
MuniYield New Jersey Fund, Inc. November 30, 1997
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey (concluded)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
New Jersey State, GO:
AA+ NR* $ 3,000 6.75% due 9/15/2001 (g) $ 3,298
AA+ Aa1 2,105 AMT, 7.05% due 7/15/2015 2,434
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey State Housing and Mortgage Finance
Agency, Home Buyer Revenue Bonds, AMT (b):
AAA Aaa 3,895 Series M, 7% due 10/01/2026 4,220
AAA Aaa 3,335 Series U, 5.60% due 10/01/2012 3,410
- ------------------------------------------------------------------------------------------------------------------------------------
AAA NR* 2,520 New Jersey State Housing and Mortgage Finance Agency, M/F Housing Revenue
Refunding Bonds (Presidential Plaza), 7% due 5/01/2030 (d) 2,722
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 New Jersey State Transportation Corporation, COP (Raymond
Plaza East, Incorporated), 6.50% due 10/01/2016 (f) 2,228
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 6,500 New Jersey State Transportation Trust Fund Authority (Transportation System),
Series A, 4.75% due 12/15/2016 (b) 6,164
- ------------------------------------------------------------------------------------------------------------------------------------
North Brunswick Township, New Jersey, GO, UT:
NR* A1 1,190 6.50% due 5/15/2012 1,312
NR* A1 1,400 6.50% due 5/15/2013 1,543
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 8,250 North Hudson, New Jersey, Sewer Authority Revenue Bonds, 5.125% due 8/01/2022 (c) 8,130
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,010 North Jersey District Water Supply Commission, New Jersey, Refunding
(Wanaque North Project), Series B, 6.50% due 11/15/2011 (b) 2,192
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 6,230 Passaic Valley, New Jersey, Water Commission, Water Supply Revenue Bonds,
Series A, 6.40% due 12/15/2002 (c)(g) 6,921
- ------------------------------------------------------------------------------------------------------------------------------------
Port Authority of New York and New Jersey, Consolidated Revenue Bonds:
AA- A1 2,465 67th Series, 6.90% due 7/01/2011 2,620
AA- A1 1,000 69th Series, 7.125% due 6/01/2025 1,078
AA- A1 9,500 72nd Series, 7.35% due 10/01/2002 (g) 10,844
AA- A1 1,000 93rd Series, 6.125% due 6/01/2094 1,118
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 4,325 Port Authority of New York and New Jersey, RITR, AMT, 108th Series,
7.185% due 1/15/2017 (f)(h) 4,768
- ------------------------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,500 Port Authority of New York and New Jersey, Special Obligation Revenue Bonds (JFK
International Air Terminal Project), AMT, Series 6, 4th Installment, 5.75% due 12/01/2025 (b) 2,579
- ------------------------------------------------------------------------------------------------------------------------------------
Port Authority of New York and New Jersey, Special Obligation Revenue Bonds (Versatile
Structure Obligation), VRDN (a):
A1+ VMIG1+ 600 Series 2, 3.85% due 5/01/2019 600
A1+ VMIG1+ 2,500 Series 3, 3.85% due 6/01/2020 2,500
A1+ VMIG1+ 3,100 Series 5, 3.85% due 8/01/2024 3,100
- ------------------------------------------------------------------------------------------------------------------------------------
AA A1 2,275 Rutgers State University, New Jersey, Refunding (State University of New Jersey),
Series A, 6.50% due 5/01/2018 2,470
- ------------------------------------------------------------------------------------------------------------------------------------
AA+ Aaa 760 Union County, New Jersey, Improvement Authority, Revenue Refunding Bonds
(County Guaranteed Lease), 5.30% due 11/15/2006 803
- ------------------------------------------------------------------------------------------------------------------------------------
A1+ P1 2,200 Union County, New Jersey, Industrial Pollution Control Financing Authority, PCR,
Refunding (Exxon Project), VRDN, 3.60% due 10/01/2024 (a) 2,200
- ------------------------------------------------------------------------------------------------------------------------------------
AA- A3 3,100 University of Medicine and Dentistry, New Jersey, Revenue Bonds, Series E,
6.50% due 12/01/2001 (g) 3,406
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
MuniYield New Jersey Fund, Inc. November 30, 1997
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- ------------------------------------------------------------------------------------------------------------------------------------
Puerto Rico--2.8%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BBB+ Aaa $ 5,000 Puerto Rico Electric Power Authority, Power Revenue Bonds,
Series P, 7% due 7/01/2001 (g) $ 5,562
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments (Cost--$182,403)--99.4% 196,516
Other Assets Less Liabilities--0.6% 1,117
--------
Net Assets--100.0% $197,633
========
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The interest rate is subject to change periodically based upon prevailing
market rates. The interest rate shown is the rate in effect at November
30, 1997.
(b) MBIA Insured.
(c) FGIC Insured.
(d) FHA Insured.
(e) AMBAC Insured.
(f) FSA Insured.
(g) Prerefunded.
(h) The interest rate is subject to change periodically and inversely based
upon prevailing market rates. The interest rate shown is the rate in
effect at November 30, 1997.
* Not Rated.
** Represents a zero coupon bond; the interest rate shown is the effective
yield at the time of purchase by the Fund.
+ Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
7
<PAGE>
MuniYield New Jersey Fund, Inc. November 30, 1997
FINANCIAL INFORMATION
Statement of Assets, Liabilities and Capital as of November 30, 1997
<TABLE>
<S> <C> <C>
Assets: Investments, at value (identified cost--$182,403,295) (Note 1a) ............. $196,515,920
Cash ....................................................................... 56,618
Interest receivable.......................................................... 3,444,643
Prepaid expenses and other assets............................................ 6,393
------------
Total assets ................................................................ 200,023,574
------------
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities: Payables:
Securities purchased................................................... $ 2,234,426
Investment adviser (Note 2)............................................ 75,606 2,310,032
------------
Accrued expenses and other liabilities....................................... 80,544
------------
Total liabilities ........................................................... 2,390,576
------------
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets: Net assets................................................................... $197,632,998
============
- ---------------------------------------------------------------------------------------------------------------------------
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.05 per share (2,400 shares of AMPS*
issued and outstanding at $25,000 per share liquidation preference).... $ 60,000,000
Common Stock, par value $.10 per share (8,874,038 shares issued
and outstanding)....................................................... $ 887,404
Paid-in capital in excess of par............................................. 123,880,149
Undistributed investment income--net ........................................ 977,893
Accumulated realized capital losses on investments--net (Note 5)............. (2,225,073)
Unrealized appreciation on investments--net.................................. 14,112,625
------------
Total--Equivalent to $15.51 net asset value per share of Common Stock
(market price--$15.5625)...................................................... 137,632,998
------------
Total capital................................................................ $197,632,998
============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Auction Market Preferred Stock.
See Notes to Financial Statements.
8
<PAGE>
MuniYield New Jersey Fund, Inc November 30, 1997
FINANCIAL INFORMATION (continued)
Statement of Operations
<TABLE>
<CAPTION>
For the Year Ended
November 30, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Interest and amortization of premium and discount earned.................... $ 11,407,301
Income
(Note 1d):
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fees (Note 2)........................................... $ 974,004
Commission fees (Note 4).................................................... 152,232
Professional fees........................................................... 77,935
Accounting services (Note 2)................................................ 59,948
Transfer agent fees......................................................... 40,994
Directors' fees and expenses................................................ 23,020
Listing fees................................................................ 16,170
Custodian fees.............................................................. 14,325
Printing and shareholder reports............................................ 11,512
Pricing fees................................................................ 6,819
Amortization of organization expenses (Note 1e)............................. 2,674
Other....................................................................... 15,606
---------
Total expenses ............................................................. 1,395,239
------------
Investment income--net....................................................... 10,012,062
------------
- ------------------------------------------------------------------------------------------------------------------------------------
Realized & Realized gain on investments--net ........................................... 281,161
Unrealized Change in unrealized appreciation on investments--net ....................... 197,125
Gain on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations ....................... $ 10,490,348
(Notes 1b, 1d & 3): ============
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
MuniYield New Jersey Fund, Inc. November 30, 1997
FINANCIAL INFORMATION (continued)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Year Ended November 30,
-------------------------------
Increase (Decrease) in Net Assets: 1997 1996
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations: Investment income--net ................................................ $ 10,012,062 $ 10,092,795
Realized gain (loss) on investments--net .............................. 281,161 (330,513)
Change in unrealized appreciation on investments--net ................. 197,125 (568,391)
------------- -------------
Net increase in net assets resulting from operations .................. 10,490,348 9,193,891
------------- -------------
- ------------------------------------------------------------------------------------------------------------------------
Dividends to Investment income--net:
Shareholders Common Stock ........................................................ (8,018,125) (8,056,059)
(Note 1f): Preferred Stock ..................................................... (2,010,600) (2,009,280)
------------- -------------
Net decrease in net assets resulting from dividends to shareholderr ... (10,028,725) (10,065,339)
------------- -------------
- ------------------------------------------------------------------------------------------------------------------------
Capital Stock Value of shares issued to Common Stock shareholders in
Transactions reinvestment of dividends ............................................. 688,295 --
(Note 4): ------------- -------------
- ------------------------------------------------------------------------------------------------------------------------
Net Assets: Total increase (decrease) in net assets ............................... 1,149,918 (871,448)
Beginning of year ..................................................... 196,483,080 197,354,528
------------- -------------
End of year* .......................................................... $ 197,632,998 $ 196,483,080
============= =============
- ------------------------------------------------------------------------------------------------------------------------
* Undistributed investment income--net .................................. $ 977,893 $ 994,556
============= =============
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
MuniYield New Jersey Fund, Inc November 30, 1997
FINANCIAL INFORMATION (concluded)
Financial Highlights
<TABLE>
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. For the Year Ended November 30,
--------------------------------------------------------
Increase (Decrease) in Net Asset Value: 1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year ............. $ 15.46 $ 15.56 $ 13.22 $ 15.88 $ 14.40
Operating ======== ======== ======== ======== ========
Performance: Investment income--net ......................... 1.14 1.14 1.17 1.15 1.17
Realized and unrealized gain (loss) on
investments--net ............................... .05 (.10) 2.33 (2.67) 1.49
-------- -------- -------- -------- --------
Total from investment operations ............... 1.19 1.04 3.50 (1.52) 2.66
-------- -------- -------- -------- --------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net ....................... (.91) (.91) (.90) (.93) (.96)
Realized gain on investments--net ............ -- -- -- (.01) (.01)
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Stock shareholders ............................. (.91) (.91) (.90) (.94) (.97)
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:
Dividends to Preferred Stock shareholders:
Investment income--net .................... (.23) (.23) (.26) (.20) (.21)
-------- -------- -------- -------- --------
Net asset value, end of year ................... $ 15.51 $ 15.46 $ 15.56 $ 13.22 $ 15.88
======== ======== ======== ======== ========
Market price per share, end of year ............ $15.5625 $ 14.50 $ 13.75 $ 12.125 $ 15.625
======== ======== ======== ======== ========
- -------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on market price per share ................ 13.96% 12.34% 21.26% (16.87%) 11.78%
Return:* ======== ======== ======== ======== ========
Based on net asset value per share ............. 6.52% 5.84% 25.85% (10.82%) 17.35%
======== ======== ======== ======== ========
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses ....................................... .72% .72% .73% .74% .69%
Net Assets:** ======== ======== ======== ======== ========
Investment income--net ......................... 5.14% 5.18% 5.40% 5.30% 5.26%
======== ======== ======== ======== ========
- -------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, net of Preferred Stock, end of year
Data: (in thousands) ................................. $137,633 $136,483 $137,355 $116,746 $140,214
======== ======== ======== ======== ========
Preferred Stock outstanding, end of year
(in thousands) ................................. $ 60,000 $ 60,000 $ 60,000 $ 60,000 $ 60,000
======== ======== ======== ======== ========
Portfolio turnover ............................. 30.50% 49.76% 32.79% 15.06% 5.14%
======== ======== ======== ======== ========
- -------------------------------------------------------------------------------------------------------------------------------
Leverage: Asset coverage per $1,000 ...................... $ 3,294 $ 3,275 $ 3,289 $ 2,946 $ 3,337
======== ======== ======== ======== ========
- -------------------------------------------------------------------------------------------------------------------------------
Dividends Per Share Investment income--net ......................... $ 838 $ 837 $ 938 $ 741 $ 774
On Preferred Stock ======== ======== ======== ======== ========
Outstanding:+
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* 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 loads.
** Do not reflect the effect of dividends to Preferred
Stock shareholders.
+ Dividends have been adjusted to reflect a two-for-one
stock split that occurred on December 1, 1994.
See Notes to Financial Statements.
11
<PAGE>
MuniYield New Jersey Fund, Inc. November 30, 1997
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniYield New Jersey Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940 as a non-diversified, closed-end management investment
company. The Fund determines and makes available for publication the net asset
value of its Common Stock on a weekly basis. The Fund's Common Stock is listed
on the New York Stock Exchange under the symbol MYJ. The following is a summary
of significant accounting policies followed by the Fund.
(a) Valuation of investments--Municipal bonds are traded primarily in the
over-the-counter markets and are valued at the most recent bid price or yield
equivalent as obtained by the Fund's pricing service from dealers that make
markets in such securities. Financial futures contracts and options thereon,
which are traded on exchanges, are valued at their closing prices as of the
close of such exchanges. Options, which are traded on exchanges, are valued at
their last sale price as of the close of such exchanges or, lacking any sales,
at the last available bid price. Securities with remaining maturities of sixty
days or less are valued at amortized cost, which approximates market value.
Securities and assets for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the direction of
the Board of Directors of the Fund, including valuations furnished by a pricing
service retained by the Fund, which may utilize a matrix system for valuations.
The procedures of the pricing service and its valuations are reviewed by the
officers of the Fund under the general supervision of the Board of Directors.
(b) Derivative financial instruments--The Fund may engage in various portfolio
strategies to seek to increase its return by hedging its portfolio against
adverse movements in the debt 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 interest rate
futures contracts and options on such futures contracts for the purpose of
hedging the market risk on existing securities or the intended purchase of
securities. 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 is authorized to 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.
(c) Income taxes--It is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no Federal income tax provision is required.
(d) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Interest income is recognized on the accrual basis. Discounts and market
premiums are amortized into interest income. Realized gains and losses on
security transactions are determined on the identified cost basis.
12
<PAGE>
MuniYield New Jersey Fund, Inc. November 30, 1997
NOTES TO FINANCIAL STATEMENTS (concluded)
(e) Deferred organization expenses--Deferred organization expenses are amortized
on a straight-line basis over a five-year period.
(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.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML &
Co."), which is the limited partner.
FAM is responsible for the management of the Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. For such services, the Fund pays a monthly fee at
an annual rate of 0.50% of the Fund's average weekly net assets.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or directors of
FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended November 30, 1997 were $57,896,921 and $65,540,958, respectively.
Net realized and unrealized gains (losses) as of November 30, 1997 were as
follows:
- ---------------------------------------------------------------------
Realized Unrealized
Gains (Losses) Gains
- ---------------------------------------------------------------------
Long-term investments......... $ 1,453,580 $14,112,625
Short-term investments........ 36,431 --
Financial futures contracts... (1,208,850) --
----------- -----------
Total......................... $ 281,161 $14,112,625
=========== ===========
- ---------------------------------------------------------------------
As of November 30, 1997, net unrealized appreciation for Federal income tax
purposes aggregated $14,112,625, of which $14,112,669 related to appreciated
securities and $44 related to depreciated securities. The aggregate cost of
investments at November 30, 1997 for Federal income tax purposes was
$182,403,295.
4. Capital Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of capital stock, including
Preferred Stock, par value $.10 per share, all of which were initially
classified as Common Stock. The Board of Directors is authorized, however, to
reclassify any unissued shares of capital stock without approval of holders of
Common Stock.
Common Stock
Shares issued and outstanding during the year ended November 30, 1997 increased
by 44,387 as a result of dividend reinvestment and during the year ended
November 30, 1996 remained constant.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred Stock of the
Fund that entitle their holders to receive cash dividends at an annual rate that
may vary for the successive dividend periods. The yield in effect at November
30, 1997 was 3.65%.
As of November 30, 1997, there were 2,400 AMPS shares authorized, issued and
outstanding with a liquidation preference of $25,000 per share.
The Fund pays commissions to certain broker-dealers at the end of each auction
at an annual rate ranging from 0.25% to 0.375%, calculated on the proceeds of
each auction. For the year ended November 30, 1997, Merrill Lynch, Pierce,
Fenner & Smith Inc., an affiliate of FAM, earned $127,983 as commissions.
5. Capital Loss Carryforward:
At November 30, 1997, the Fund had a net capital loss carryforward of
approximately $122,000, all of which expires in 2002. This amount will be
available to offset like amounts of any future taxable gains.
6. Subsequent Event:
On December 9, 1997, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.073017 per share,
payable on December 30, 1997 to shareholders of record as of December 19, 1997.
13
<PAGE>
MuniYield New Jersey Fund, Inc. November 30, 1997
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of MuniYield New Jersey Fund, Inc.:
We have audited the accompanying statement of assets, liabilities and capital,
including the schedule of investments, of MuniYield New Jersey Fund, Inc. as of
November 30, 1997, the related statements of operations for the year then ended
and changes in net assets for each of the years in the two-year period then
ended, and the financial highlights for each of the years in the five-year
period then ended. These financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with gener-ally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at November
30, 1997 by correspondence with the custodian and broker. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of MuniYield New Jersey
Fund, Inc., as of November 30, 1997, the results of its operations, the changes
in its net assets, and the financial highlights for the respective stated
periods in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
January 7, 1998
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid monthly by MuniYield New
Jersey Fund, Inc. during its taxable year ended November 30, 1997 qualify as
tax-exempt interest dividends for Federal income tax purposes. Additionally,
there were no capital gains distributed by the Fund during the year.
Please retain this information for your records.
14
<PAGE>
MuniYield New Jersey Fund, Inc. November 30, 1997
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
James H. Bodurtha, Director
Herbert I. London, Director
Robert R. Martin, Director
Joseph L. May, Director
Andre F. Perold, Director
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Theodore R. Jaeckel Jr., Vice President
Gerald M. Richard, Treasurer
Philip M. Mandel, Secretary
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
NYSE Symbol
MYJ
15
<PAGE>
This report, including the financial information herein, is transmitted to the
shareholders of MuniYield New Jersey Fund, Inc. for their information. It is not
a prospectus, circular or representation intended for use in the purchase of
shares of the Fund or any securities mentioned in the report. Past performance
results shown in this report should not be considered a representation of future
performance. The Fund has leveraged its Common Stock 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.
MuniYield
New Jersey
Fund, Inc.
Box 9011
Princeton, NJ
08543-9011 #16381-11/97
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