MUNIYIELD
NEW JERSEY
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Semi-Annual Report
May 31, 1998
<PAGE>
MuniYield New Jersey Fund, Inc.
Dear Shareholder
For the six-month period ended May 31, 1998, the Common Stock of MuniYield New
Jersey Fund, Inc. earned $0.438 per share income dividends, which included
earned and unpaid dividends of $0.074. This represents a net annualized yield of
5.61%, based on a month-end per share net asset value of $15.67. Over the same
period, total investment return on the Fund's Common Stock was +3.92%, based on
a change in per share net asset value from $15.51 to $15.67, and assuming
reinvestment of $0.437 per share income dividends.
For the six months ended May 31, 1998, the average yield on the Fund's Auction
Market Preferred Stock was 3.55%.
The Municipal Market Environment
During the six months ended May 31, 1998, long-term bond yields generally moved
lower and by mid-January 1998, had declined to recent historic lows. US Treasury
bond yields declined 20 basis points (0.20%) to 5.95% by April 30, 1998.
Similarly, long-term uninsured tax-exempt bond yields, as measured by the Bond
Buyer Revenue Bond Index, fell approximately 35 basis points to 5.25%, a level
not seen since the mid-1970s. While low inflation has supported lower interest
rates, much of the decline in bond yields in late 1997 and early 1998 was driven
more by the turmoil in Asian financial markets than by domestic economic
fundamentals. Weak economic conditions in Asia were expected to negatively
impact US growth through reduced export demand. Additionally, inflation in the
United States was also expected to decline in response to lower prices on goods
imported from Asian manufacturers.
However, in recent months, many investors have become increasingly concerned
that most of the downturn in Asia, especially in Japan, has already occurred and
any future deterioration will not be severe enough to constrain US economic
growth. Some investors have feared that continued domestic economic growth,
particularly in such interest rate-sensitive sectors as housing and consumer
spending, would eventually trigger significant inflationary pressures. These
concerns served to push interest rates higher for the remainder of the six-month
period ended May 31, 1998, causing bond yields to retrace much of their earlier
gains. By May 31, 1998, the 30-year US Treasury bond yield was 5.80%, declining
almost 25 basis points during the last six months. Long-term municipal revenue
bond yields declined more than 15 basis points to end the May period at 5.39%.
Thus far in 1998, the municipal bond market has experienced unexpectedly strong
supply pressures. These supply pressures have prevented tax-exempt bond yields
from declining as much as US Treasury bond yields. Over the last six months,
more than $135 billion in new tax-exempt bonds were underwritten, an increase of
over 45% compared to the same period a year ago. During the May quarter,
municipalities issued more than $72 billion in new securities, an increase of
more than 45% compared to the same three-month period in 1997. Moreover, the
municipal bond market recently absorbed the largest single bond issue ever
underwritten, a $3.4 billion Long Island Power Authority Revenue Bond. These
bonds pushed total underwriting in May to more than $19 billion, the largest May
volume since 1993. Additionally, corporate issuers have also viewed current
interest rate levels as an opportunity to issue significant amounts of higher
nominal-yielding taxable securities. Thus far in 1998, over $400 billion in
investment-grade corporate bonds have been underwritten, an increase of more
than 75% compared to the same period a year ago. This sizeable corporate bond
issuance has tended to support generally higher fixed-income yields and reduce
the demand for tax-exempt bonds.
However, the recent pace of new municipal bond issuance is unlikely to be
maintained. Continued increases in bond issuance will require lower and lower
tax-exempt bond yields to generate the economic savings necessary for additional
municipal bond refinancings. Preliminary estimates for 1998 total municipal bond
issuance are presently in the $200 billion-$225 billion range. These estimates
suggest that recent supply pressures are likely to abate later in the year.
Earlier this year, municipal bond investors received approximately $30 billion
in coupon payments, bond maturities and proceeds from early redemptions.
Municipal bond investors are also expected to receive over $45 billion in June
and July from coupon payments and proceeds from maturities. These assets have
helped to support the tax-exempt market as it has been able to absorb the
dramatic increase in bond issuance with little difficulty.
It is also possible that at least some of the recent economic strength seen in
the United States will be reversed in the coming months. A particularly mild
1
<PAGE>
MuniYield New Jersey Fund, Inc. May 31, 1998
winter has been partially responsible for a strong housing sector, as well as
other construction industries. This past winter's economic strength may have
borrowed from future quarters' growth. This recent strong trend may not be
sustained and may lead to weaker construction growth later this year.
Additionally, strong economic growth in 1997 and the increased use of electronic
tax filings have resulted in larger and earlier Federal and state income tax
refunds to many individuals. These refunds appear to have supported strong
consumer spending in recent months, but may be borrowing against weaker spending
later this year.
The continued impact of the Asian financial crisis on the US domestic economy's
future growth remains unclear. Current Asian economic conditions continue to
reflect ongoing weakness. Recent trade data has indicated that reduced US
exports to these countries may have reduced US economic growth by as much as 2%
in the first quarter of 1998. Since further trade deterioration is possible in
the coming months, we do not believe, barring a dramatic and unexpected
resurgence of domestic inflation, that the Federal Reserve Board will be willing
to raise interest rates until the full impact of the Asian situation can be
established.
These factors suggest that over the near term, interest rates, including
tax-exempt bond yields, are unlikely to rise by any appreciable amount. Recent
supply pressures have caused municipal bond yield ratios to rise relative to US
Treasury bond yields. At May 31, 1998, long-term tax-exempt bond yields were at
attractive yield ratios relative to US Treasury securities (over 90%), well in
excess of their expected range of 85%-88%. Any further pressure on the municipal
market may well represent a very attractive investment opportunity.
Portfolio Strategy
Given the volatile market environment during the six months ended May 31, 1998,
MuniYield New Jersey Fund, Inc. benefited from our relatively conservative
strategy, motivated primarily by our efforts to maintain a competitive dividend
as well as to preserve the gains we achieved. Our strategy to keep the Fund
fully invested provided a positive contribution to the overall performance of
the Fund as interest rates broadly declined throughout the latter part of 1997.
Since then, however, our neutral investment strategy insulated the Fund from
much of the volatility experienced during the first quarter of 1998.
The New Jersey economy continues to improve as the state unemployment rate
dropped to 5.1% as of March 31, 1998. Furthermore, various measures of economic
growth, including employment, new business incorporations, per capita personal
income and gross state product, continue to reflect an economy growing at a pace
similar to that of the nation.
Looking ahead, we anticipate little change in our strategy, barring a further
rise in long-term interest rates. In our opinion, such a scenario would provide
an opportunity to extend the portfolio's average call protection. However, for
the time being, a continuation of our present approach appears warranted until
such time as the current trading range is broken.
Leverage continues to benefit the Fund's Common Stock shareholders as the Fund's
cost of borrowing, as reflected by short-term tax-exempt rates, remains well
below the yields available on long-term municipal bonds. The proceeds of the
borrowing can be invested in these long-term bonds, thereby providing an
incremental yield advantage over an unleveraged tax-exempt investment. While
leverage creates opportunities for yield enhancement, it also produces a higher
degree of volatility. For this reason, we have sought to maintain a relatively
low duration as a means to limit this inherent volatility until such time as the
interest rate outlook becomes clearer. (For a complete explanation of the
benefits and risks of leveraging, see page 3 of this report to shareholders.)
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
June 30, 1998
2
<PAGE>
MuniYield New Jersey Fund, Inc. May 31, 1998
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.
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute substantially all of its net
investment income to its share holders on a monthly basis. However, in order to
provide shareholders with a more consistent yield to the current trading price
of shares of Common Stock of the Fund, 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 Assets, Liabilities and Capital, which comprises
part of the Financial Information included in this report.
3
<PAGE>
MuniYield New Jersey Fund, Inc. May 31, 1998
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- -----------------------------------------------------------------------------------------------------------------------
New Jersey-97.6%
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AA A1 $ 2,490 Bernards Township, New Jersey, School District, Refunding (State School
District Enhancement Program), UT, 5.30% due 1/01/2019 $ 2,517
- -----------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,100 Camden County, New Jersey, Municipal Utilities Authority, Sewer Revenue
Refunding Bonds, 5.25% due 7/15/2017 (c) 1,116
- -----------------------------------------------------------------------------------------------------------------------
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) 2,296
- -----------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,500 Casino Reinvestment Development Authority, New Jersey, Parking Fee Revenue Bonds,
Series A, 5.25% due 10/01/2015 (f) 2,542
- -----------------------------------------------------------------------------------------------------------------------
East Orange, New Jersey, Board of Education, COP (AGH Leasing Inc.) (f):
AAA Aaa 1,420 5.30%** due 8/01/2016 572
AAA Aaa 1,000 5.34%** due 2/01/2019 352
- -----------------------------------------------------------------------------------------------------------------------
AA Aa2 1,000 Gloucester County, New Jersey, Industrial Refunding Bonds (Mobil Oil Refining
Corp. Project), 5.625% due 12/01/2028 1,035
- -----------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Highland Park, New Jersey, School District, GO, UT, 6.55% due 2/15/2005 (b)(g) 1,148
- -----------------------------------------------------------------------------------------------------------------------
AAA Aaa 4,880 Hudson County, New Jersey, COP, Refunding (Correctional Facilities),
6.60% due 12/01/2021 (b) 5,291
- -----------------------------------------------------------------------------------------------------------------------
AA Aa3 3,200 Jersey City, New Jersey, School, GO, UT, 6.65% due 2/15/2002 (g) 3,531
- -----------------------------------------------------------------------------------------------------------------------
NR* Aa2 3,500 Mercer County, New Jersey, Improvement Authority Revenue Bonds
(County Courthouse Project), 6.60% due 11/01/2000 (g) 3,775
- -----------------------------------------------------------------------------------------------------------------------
AAA Aaa 1,120 Metuchen, New Jersey, School District, GO, UT, 5.20% due 9/15/2022 (c) 1,124
- -----------------------------------------------------------------------------------------------------------------------
NR* VMIG1+ 100 Monmouth County, New Jersey, Improvement Authority Revenue Bonds
(Pooled Government Loan Program), ACES, 3.55% due 8/01/2016 (a) 100
- -----------------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 New Jersey EDA, Natural Gas Facilities Revenue Refunding Bonds (NUI Corp.),
Series A, 6.35% due 10/01/2022 (e) 5,560
- -----------------------------------------------------------------------------------------------------------------------
New Jersey EDA, Revenue Bonds:
A NR* 1,000 (First Mortgage--Cadbury Corporation Project), Series A, 5.50% due 7/01/2018 1,010
BBB- NR* 1,250 Refunding (First Mortgage--Fellowship Village), Series A, 5.50% due 1/01/2018 1,235
BBB- NR* 3,000 Refunding (First Mortgage--Fellowship Village), Series A, 5.50% due 1/01/2025 2,965
AAA Aaa 2,500 Refunding (RWJ Health Care Corporation), 6.50% due 7/01/2024 (f) 2,785
NR* Aaa 4,000 (Saint Barnabas Project), 5.55%** due 7/01/2017 (b) 1,532
NR* Aaa 5,435 (Saint Barnabas Project), 5.47%** due 7/01/2018 (b) 1,976
NR* Aaa 6,000 (Saint Barnabas Project), 5.19%** due 7/01/2019 (b) 2,066
NR* Aaa 1,000 (Saint Barnabas Project), 5.18%** due 7/01/2023 (b) 281
NR* Aaa 4,350 (Saint Barnabas Project), 5.23%** due 7/01/2025 (b) 1,101
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
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
RITR Residual Interest Trust Receipts
UT Unlimited Tax
4
<PAGE>
MuniYield New Jersey Fund, Inc. May 31, 1998
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- -----------------------------------------------------------------------------------------------------------------------
New Jersey (continued)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NR* Aa1 $10,750 New Jersey EDA, Solid Waste Disposal Facilities Revenue Bonds
(Garden State Paper Company), AMT, 7.125% due 4/01/2022 $ 11,807
- -----------------------------------------------------------------------------------------------------------------------
New Jersey EDA, Water Facilities Revenue Bonds, AMT (c):
AAA Aaa 2,000 (American Water Company Inc. Project), 6% due 5/01/2036 2,142
AAA Aaa 2,500 RITR, Series 34, 6.42% due 5/01/2032 (h) 2,556
- -----------------------------------------------------------------------------------------------------------------------
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 6,676
A- Baa1 3,000 Refunding (Capital Health System Obligation Group), 5.25% due 7/01/2027 2,982
BBB NR* 2,000 Refunding (Christian Healthcare Center), Series A, 5.25% due 7/01/2013 1,982
AAA Aaa 1,000 Refunding (Community Medical Center/Kimball), 5.25% due 7/01/2011 (f) 1,037
AAA Aaa 1,000 Refunding (Community Medical Center/Kimball), 5.25% due 7/01/2012 (f) 1,029
AAA Aaa 2,135 Refunding (Community Medical Center/Kimball), 5.25% due 7/01/2013 (f) 2,183
AAA Aaa 2,000 Refunding (Hackensack Medical Center), 6.625% due 7/01/2011 (c) 2,164
BBB+ NR* 3,500 Refunding (Holy Name Hospital), 6% due 7/01/2025 3,660
BBB Baa2 3,300 Refunding (Saint Elizabeth Hospital Obligation Group), 6% due 7/01/2020 3,465
AAA Aaa 3,875 (Saint Elizabeth Hospital), Series B, 8.25% due 7/01/2000 (g) 4,262
- -----------------------------------------------------------------------------------------------------------------------
A+ Aa 7,820 New Jersey Sports and Exposition Authority Revenue Bonds (State Contract),
Series A, 6.50% due 3/01/2019 8,546
- -----------------------------------------------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority Revenue Bonds:
BBB+ NR* 6,250 Higher Education (Drew University), Series E, 6.25% due 7/01/2017 6,671
AAA Aaa 4,935 Higher Education (Princeton University), Series C, 6.375% due 7/01/2002 (g) 5,437
BBB Baa2 3,355 Higher Education (Saint Peter's College), Series B, 6.80% due 7/01/2008 3,711
BBB Baa2 3,600 Higher Education (Saint Peter's College), Series B, 6.85% due 7/01/2012 3,981
AA+ Aaa 2,310 (Institute for Advanced Study), Series G, 5% due 7/01/2028 2,289
BBB Baa3 1,750 (Saint Peter's College), Series B, 5.50% due 7/01/2027 1,757
A- Baa1 6,030 (Stevens Institute of Technology), Series A, 6.80% due 7/01/2008 6,667
- -----------------------------------------------------------------------------------------------------------------------
AA+ Aa1 2,105 New Jersey State, GO, AMT, 7.05% due 7/15/2015 2,435
- -----------------------------------------------------------------------------------------------------------------------
AAA Aaa 5,000 New Jersey State Higher Educational Assistance Authority, Student Loan
Revenue Bonds, AMT, Series A, 5.30% due 6/01/2017 (e) 5,000
- -----------------------------------------------------------------------------------------------------------------------
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 4,237
AAA Aaa 1,940 Series U, 5.55% due 10/01/2011 2,028
AAA Aaa 3,335 Series U, 5.60% due 10/01/2012 3,486
- -----------------------------------------------------------------------------------------------------------------------
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) 2,730
- -----------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 New Jersey State Transportation Corporation, COP (Raymond Plaza East, Incorporated),
6.50% due 10/01/2016 (f) 2,282
- -----------------------------------------------------------------------------------------------------------------------
NR* A1 2,590 North Brunswick Township, New Jersey, GO, UT, 6.50% due 5/15/2002 (g) 2,853
- -----------------------------------------------------------------------------------------------------------------------
AAA Aaa 2,010 North Jersey District Water Supply Commission, New Jersey, Revenue Refunding Bonds
(Wanaque North Project), Series B, 6.50% due 11/15/2011 (b) 2,184
- -----------------------------------------------------------------------------------------------------------------------
AAA Aaa 6,230 Passaic Valley, New Jersey, Water Commission, Water Supply Revenue Bonds,
Series A, 6.40% due 12/15/2002 (c)(g) 6,922
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
MuniYield New Jersey Fund, Inc. May 31, 1998
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
- ----------------------------------------------------------------------------------------------------------------------
New Jersey (concluded)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Port Authority of New York and New Jersey, Consolidated Revenue Bonds:
AA- A1 $ 2,465 67th Series, 6.90% due 7/01/2011 $ 2,590
AA- A1 1,000 69th Series, 7.125% due 6/01/2025 1,062
AA- A1 9,500 72nd Series, 7.35% due 10/01/2002 (g) 10,791
AA- A1 1,000 93rd Series, 6.125% due 6/01/2094 1,153
- ----------------------------------------------------------------------------------------------------------------------
AAA Aaa 4,325 Port Authority of New York and New Jersey, RITR, AMT, 108th Series,
7.385% due 1/15/2017 (f)(h) 4,930
- -----------------------------------------------------------------------------------------------------------------------
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) 2,610
- -----------------------------------------------------------------------------------------------------------------------
AA A1 2,275 Rutgers State University, New Jersey, Revenue Refunding Bonds (State University of
New Jersey), Series A, 6.50% due 5/01/2018 2,473
- -----------------------------------------------------------------------------------------------------------------------
AA+ Aaa 760 Union County, New Jersey, Improvement Authority Revenue Refunding Bonds
(County Guaranteed Lease), 5.30% due 11/15/2006 813
- -----------------------------------------------------------------------------------------------------------------------
AA- A3 3,100 University of Medicine and Dentistry, New Jersey, Revenue Bonds, Series E,
6.50% due 12/01/2001 (g) 3,401
- ----------------------------------------------------------------------------------------------------------------------
Puerto Rico--2.7%
- ----------------------------------------------------------------------------------------------------------------------
BBB+ Aaa 5,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series P, 7%
due 7/01/2001 (g) 5,520
- ----------------------------------------------------------------------------------------------------------------------
Total Investments (Cost--$186,301)--100.3% 200,414
Liabilities in Excess of Other Assets--(0.3%) (685)
---------
Net Assets--100.0% $ 199,729
=========
- ----------------------------------------------------------------------------------------------------------------------
</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 May 31,
1998.
(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 May 31, 1998.
* 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.
See Notes to Financial Statements.
QUALITY PROFILE
The quality ratings of securities in the Fund as of May 31, 1998 were as
follows:
Percent of
Rating/Moody's Rating Net Assets
- --------------------------------------------------------------------------------
AAA/Aaa................................................................ 47.8%
AA/Aa.................................................................. 27.6
A/A.................................................................... 10.1
BBB/Baa................................................................ 14.7
Other+................................................................. 0.1
- --------------------------------------------------------------------------------
+Temporary investments in short-term municipal securities.
6
<PAGE>
MuniYield New Jersey Fund, Inc. May 31, 1998
FINANCIAL INFORMATION
Statement of Assets, Liabilities and Capital as of May 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$186,301,271) (Note 1a) . $200,414,135
Cash............................................................. 97,939
Receivables:
Interest....................................................... $ 3,523,135
Securities sold................................................ 1,021,327 4,544,462
------------
Prepaid expenses and other assets................................ 6,393
-----------
Total assets .................................................... 205,062,929
-----------
- ----------------------------------------------------------------------------------------------------------------------
Liabilities: Payables:
Securities purchased........................................... 5,019,139
Dividends to shareholders (Note 1e)............................ 205,407
Investment adviser (Note 2).................................... 84,327 5,308,873
---------
Accrued expenses and other liabilities........................... 24,805
------------
Total liabilities ............................................... 5,333,678
------------
- ----------------------------------------------------------------------------------------------------------------------
Net Assets: Net assets....................................................... $199,729,251
============
- ----------------------------------------------------------------------------------------------------------------------
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 (8,915,580 shares issued
and outstanding)............................................... $ 891,558
Paid-in capital in excess of par................................. 124,528,355
Undistributed investment income--net ............................. 1,075,234
Accumulated realized capital losses on investments--net (Note 5).. (878,760)
Unrealized appreciation on investments--net....................... 14,112,864
-----------
Total--Equivalent to $15.67 net asset value per share of Common Stock
(market price--$15.1875).......................................... 139,729,251
------------
Total capital.................................................... $199,729,251
============
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Auction Market Preferred Stock.
See Notes to Financial Statements.
7
<PAGE>
MuniYield New Jersey Fund, Inc. May 31, 1998
FINANCIAL INFORMATION (continued)
Statement of Operations
<TABLE>
<CAPTION>
For the Six Months Ended
May 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income Interest and amortization of premium and discount earned......... $ 5,752,472
(Note 1d):
- ------------------------------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fees (Note 2)................................ $ 497,570
Commission fees (Note 4)......................................... 77,007
Professional fees................................................ 40,225
Accounting services (Note 2)..................................... 20,176
Transfer agent fees.............................................. 17,638
Directors' fees and expenses..................................... 11,564
Printing and shareholder reports................................. 9,680
Listing fees..................................................... 8,258
Custodian fees................................................... 7,899
Pricing fees..................................................... 4,069
Other............................................................ 8,382
------------
Total expenses .................................................. 702,468
------------
Investment income--net........................................... 5,050,004
------------
- ---------------------------------------------------------------------------------------------------------------------------
Realized & Realized gain on investments--net ............................... 1,346,314
Unrealized Change in unrealized appreciation on investments--net ........... 239
Gain on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations ............ $ 6,396,557
(Notes 1b, 1d & 3) ============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
May 31, November 30
Increase (Decrease) in Net Assets: 1998 1997
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations: Investment income--net........................................... $ 5,050,004 $ 10,012,062
Realized gain on investments--net................................ 1,346,314 281,161
Change in unrealized appreciation on investments--net............ 239 197,125
------------ ------------
Net increase in net assets resulting from operations............. 6,396,557 10,490,348
------------ ------------
- --------------------------------------------------------------------------------------------------------------------------
Dividends to Investment income--net:
Shareholders Common Stock................................................... (3,891,503) (8,018,125)
(Note 1e): Preferred Stock................................................ (1,061,160) (2,010,600)
------------ ------------
Net decrease in net assets resulting from dividends to shareholders (4,952,663) (10,028,725)
------------ ------------
- --------------------------------------------------------------------------------------------------------------------------
Capital Stock Value of shares issued to Common Stock shareholders in
Transactions reinvestment of dividends ....................................... 652,359 688,295
(Note 4): ------------ ------------
- --------------------------------------------------------------------------------------------------------------------------
Net Assets: Total increase in net assets..................................... 2,096,253 1,149,918
Beginning of period.............................................. 197,632,998 196,483,080
------------ ------------
End of period*................................................... $199,729,251 $ 197,632,998
============ =============
- --------------------------------------------------------------------------------------------------------------------------
*Undistributed investment income--net............................. $ 1,075,234 $ 977,893
============ =============
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
MuniYield New Jersey Fund, Inc. May 31, 1998
FINANCIAL INFORMATION (concluded)
Financial Highlights
<TABLE>
<CAPTION>
For the
The following per share data and ratios have been derived Six Months For the Year Ended
from information provided in the financial statements. Ended November 30,
May 31, -------------------------------------------
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period ............ $ 15.51 $ 15.46 $ 15.56 $ 13.22 $ 15.88
Operating --------- -------- -------- -------- ---------
Performance: Investment income--net .......................... .57 1.14 1.14 1.17 1.15
Realized and unrealized gain (loss) on
investments--net ................................ .15 .05 (.10) 2.33 (2.67)
--------- -------- -------- -------- ---------
Total from investment operations ................ .72 1.19 1.04 3.50 (1.52)
--------- -------- -------- -------- ---------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net ........................ (.44) (.91) (.91) (.90) (.93)
Realized gain on investments--net ............. -- -- -- -- (.01)
--------- -------- -------- -------- ---------
Total dividends and distributions to Common
Stock shareholders .............................. (.44) (.91) (.91) (.90) (.94)
--------- -------- -------- -------- ---------
Effect of Preferred Stock activity:
Dividends to Preferred Stock shareholders:
Investment income--net ...................... (.12) (.23) (.23) (.26) (.20)
--------- -------- -------- -------- ---------
Net asset value, end of period .................. $ 15.67 $ 15.51 $ 15.46 $ 15.56 $ 13.22
========= ======== ======== ======== =========
Market price per share, end of period ........... $ 15.1875 $15.5625 $ 14.50 $ 13.75 $ 12.125
========= ======== ======== ======== =========
- ---------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on market price per share ................. .38%++ 13.96% 12.34% 21.26% (16.87%)
Return:** ========= ======== ======== ======== =========
Based on net asset value per share .............. 3.92%++ 6.52% 5.84% 25.85% (10.82%)
========= ======== ======== ======== =========
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses ........................................ .71%* .72% .72% .73% .74%
Net Assets:*** ========= ======== ======== ======== =========
Investment income--net .......................... 5.08%* 5.14% 5.18% 5.40% 5.30%
========= ======== ======== ======== =========
- ---------------------------------------------------------------------------------------------------------------------------------
Supplemental Net assets, net of Preferred Stock, end of period
Data: (in thousands) .................................. $ 139,729 $137,633 $136,483 $137,355 $ 116,746
========= ======== ======== ======== =========
Preferred Stock outstanding, end of period
(in thousands) .................................. $ 60,000 $ 60,000 $ 60,000 $ 60,000 $ 60,000
========= ======== ======== ======== =========
Portfolio turnover .............................. 19.10% 30.50% 49.76% 32.79% 15.06%
========= ======== ======== ======== =========
- ---------------------------------------------------------------------------------------------------------------------------------
Leverage: Asset coverage per $1,000 ....................... $ 3,329 $ 3,294 $ 3,275 $ 3,289 $ 2,946
========= ======== ======== ======== =========
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends Per Investment income--net .......................... $ 442 $ 838 $ 837 $ 938 $ 741
Share On Preferred ========= ======== ======== ======== =========
Stock Outstanding:+
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns based on market value,
which can be significantly greater or lesser than
the net asset value, may result in substantially
different returns. Total investment returns
exclude the 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.
++ Aggregate total investment return.
See Notes to Financial Statements.
9
<PAGE>
MuniYield New Jersey Fund, Inc. May 31, 1998
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. These unaudited financial statements reflect all adjustments which are,
in the opinion of management, necessary to a fair statement of the results for
the interim period presented. All such adjustments are of a normal recurring
nature. The Fund determines and makes available for publication the net asset
value of its Common Stock on a 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 financial 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
10
<PAGE>
MuniYield New Jersey Fund, Inc. May 31, 1998
income. Realized gains and losses on security transactions are determined on the
identified cost basis.
(e) Dividends and distributions-Dividends from net investment income are
declared and paid monthly. Distributions of capital gains are recorded on the
ex-dividend dates.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML &
Co."), which is the limited partner.
FAM is responsible for the management of the Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. For such services, the Fund pays a monthly fee at
an annual rate of 0.50% of the Fund's average weekly net assets, including
proceeds from the issuance of Preferred Stock.
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 six
months ended May 31, 1998 were $46,038,671 and $36,999,114, respectively.
Net realized gains for the six months ended May 31, 1998 and net unrealized
gains as of May 31, 1998 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains Gains
- --------------------------------------------------------------------------------
Long-term investments............... $1,346,314 $14,112,864
---------- -----------
Total............................... $1,346,314 $14,112,864
========== ===========
- --------------------------------------------------------------------------------
As of May 31, 1998, net unrealized appreciation for Federal income tax purposes
aggregated $14,112,864, of which $14,202,891 related to appreciated securities
and $90,027 related to depreciated securities. The aggregate cost of investments
at May 31, 1998 for Federal income tax purposes was $186,301,271.
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 six months ended May 31, 1998 and for
the year ended November 30, 1997 increased by 41,542 and 44,387, respectively,
as a result of dividend reinvestment.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred Stock of the
Fund, with a par value of $.05 per share and a liquidation preference of $25,000
per share, 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
May 31, 1998 was 3.75%.
Shares issued and outstanding during the six months ended May 31, 1998 and for
the year ended November 30, 1997 remained constant.
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 six months ended May 31, 1998, Merrill Lynch, Pierce,
Fenner & Smith Inc., an affiliate of FAM, earned $59,417 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 June 8, 1998, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.074161 per share,
payable on June 29, 1998 to shareholders of record as of June 22, 1998.
11
<PAGE>
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
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 #16381-5/98
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