MUNIYIELD
NEW JERSEY
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Annual Report
November 30, 1999
<PAGE>
MUNIYIELD NEW JERSEY FUND, INC.
The Benefits and
Risks of
Leveraging
MuniYield New Jersey Fund, Inc. utilizes leveraging to seek to enhance the yield
and net asset value of its Common Stock. However, these objectives cannot be
achieved in all interest rate environments. To leverage, the Fund issues
Preferred Stock, which pays dividends at prevailing short-term interest rates,
and invests the proceeds in long-term municipal bonds. The interest earned on
these investments 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.
As a part of its investment strategy, the Fund may invest in certain securities
whose potential income return is inversely related to changes in a floating
interest rate ("inverse floaters"). In general, income on inverse floaters will
decrease when short-term interest rates increase and increase when short-term
interest rates decrease. Investments in inverse floaters may be characterized as
derivative securities and may subject the Fund to the risks of reduced or
eliminated interest payments and losses of invested principal. In addition,
inverse floaters have the effect of providing investment leverage and, as a
result, the market value of such securities will generally be more volatile than
that of fixed-rate, tax-exempt securities. To the extent the Fund invests in
inverse floaters, the market value of the Fund's portfolio and the net asset
value of the Fund's shares may also be more volatile than if the Fund did not
invest in these securities.
<PAGE>
MuniYield New Jersey Fund, Inc., November 30, 1999
TO OUR SHAREHOLDERS
For the year ended November 30, 1999, the Common Stock of MuniYield New Jersey
Fund, Inc. earned $0.858 per share income dividends, which included earned and
unpaid dividends of $0.067. This represents a net annualized yield of 6.31%,
based on a month-end per share net asset value of $13.60. Over the same period,
the total investment return on the Fund's Common Stock was -7.48%, based on a
change in per share net asset value from $15.93 to $13.60, and assuming
reinvestment of $0.873 per share ordinary income dividends and $0.309 per share
capital gains distributions.
For the six-month period ended November 30, 1999, the total investment return on
the Fund's Common Stock was -6.93%, based on a change in per share net asset
value from $15.09 to $13.60, and assuming reinvestment of $0.427 per share
income dividends.
For the six-month period ended November 30, 1999, the Fund's Auction Market
Preferred Stock had an average yield of 3.36%.
The Municipal Market Environment
The combination of steady strong domestic economic growth, improvement in
foreign economies (most notably in Japan) and increasing investor concerns
regarding potential increases in US inflation put upward pressure on bond yields
throughout the six-month period ended November 30, 1999. Continued strong US
employment growth and consumer spending were among the reasons the Federal
Reserve Board cited for raising short-term interest rates in late June, August
and November. US Treasury bond yields reacted by climbing above 6.375% by late
October and into November. During the period, yields on 30-year US Treasury
bonds increased over 45 basis points (0.45%).
Long-term tax-exempt bond yields also rose during the six months ended November
30, 1999. For much of the first half of 1999, the municipal bond market was able
to withstand much of the upward pressure on bond yields. However, investor
concerns of additional moves by the Federal Reserve Board to moderate US
economic growth and, more importantly, the loss of the strong technical support
that the tax-exempt market enjoyed in early 1999 helped push municipal bond
yields significantly higher for the remainder of the period. The yields on
long-term tax-exempt revenue bonds rose over 70 basis points to 6.14% by
November 30, 1999, as measured by the Bond Buyer Revenue Bond Index.
In recent months, the significant decline in new tax-exempt bond issuance has
remained a positive factor within the municipal bond market, as it had been for
much of the past year. Over the last year, more than $230 billion in long-term
municipal bonds was issued, a decline of nearly 20% compared to the same period
a year ago. During the past six months, over $115 billion in long-term
tax-exempt bonds was underwritten, representing a decline of nearly 15% compared
to the corresponding period in 1998. Over the past three months, approximately
$55 billion in securities was issued by municipalities nationally. This
quarterly issuance represented a decline of over 5% when compared to the same
period in 1998. It is likely that many tax-exempt issuers have accelerated their
financings in recent months to avoid any potential Year 2000 (Y2K)-related
disruptions at year-end. It is likely that this increased new-issue volume in
October and November is at the expense of future bond issuance, particularly in
early 2000. Consequently, the municipal market's positive technical position is
likely to continue into early next year.
Although tax-exempt bond yields are at their highest level in over two years and
have attracted significant retail investor interest, institutional demand has
declined sharply. Long-term municipal mutual funds have seen consistent outflows
in recent months as the yields of individual securities have risen faster than
those of larger, more diverse mutual funds. In addition, the demand from
property/casualty insurance companies has weakened as a result of the losses,
and anticipated losses, incurred as a result of the series of damaging storms
across much of the eastern United States. Additionally, many institutional
investors who were attracted to the municipal bond market in recent years by
historically attractive tax-exempt bond yield ratios of over 90% have found
other asset classes even more attractive. Even with a reduced supply position,
tax-exempt issuers have been forced to repeatedly raise municipal bond yields in
the attempt to attract adequate demand.
The recent relative underperformance of the municipal bond market has resulted
in an opportunity for long-term investors to purchase tax-exempt issues whose
yields are nearly identical with taxable US Treasury securities. At November 30,
1999, long-term uninsured municipal revenue bond yields were almost 98% of
comparable US Treasury securities. In recent months, many taxable asset classes,
such as corporate bonds, mortgage-backed securities and US agency debt, have all
accelerated debt issuance. This acceleration was initiated largely to avoid
issuing securities at year-end and to minimize any associated Y2K problems that
may develop. However, this increased issuance has also resulted in higher yield
levels in the various asset classes as lower bond prices became necessary to
attract sufficient investor demand. Going forward, it is believed that the pace
of non-US Government debt issuance is likely to slow significantly. As the
supply of this debt declines, we would expect many institutional investors to
return to the municipal bond market and the attractive yield ratios available.
Looking ahead, it appears to us that long-term tax-exempt bond yields will
remain under pressure, trading in a broad range centered near current levels.
Investors are likely to remain concerned about future action by the Federal
Reserve Board. We believe Y2K considerations have prohibited any further Federal
Reserve Board moves from the end of the year and the beginning of 2000. Any
improvement in bond prices will probably be contingent upon weakening in both US
employment growth and consumer spending. The 100 basis point rise in US Treasury
bond yields seen thus far this year may negatively impact US economic growth.
The US housing market will be among the first sectors likely to be affected, as
some declines have already been evidenced in response to higher mortgage rates.
We believe that it is also unrealistic to expect double-digit returns in US
equity markets to continue indefinitely. Much of the US consumer's wealth is
tied to recent stock market appreciation. Any slowing in these incredible growth
rates is likely to reduce consumer spending. We believe that these factors
suggest that the worst of the recent increase in bond yields has passed and
stable, if not slightly improving, bond prices may be expected.
Portfolio Strategy
The volatility that characterized the municipal market during the six months
ended November 30, 1999 is in sharp contrast to the relative stability that
typified the environment for the prior six months. The degree and suddenness of
the decline caught many investors by surprise since few anticipated the extent
to which tax-exempt yields would climb relative to their taxable counterparts.
Much emphasis was placed on the favorable implications of a sharp reduction in
new-issue supply coupled with vigorous retail investor demand. Instead,
institutional selling proved to be the market's undoing as both mutual funds and
casualty insurers moved aggressively to liquidate tax-exempt holdings. As a
consequence, yields on long-term municipal bonds once again approached 100% of
Treasury bond yields. For this reason, they represented one of the more
compelling values in the fixed-income marketplace.
Developments within the New Jersey municipal market mirrored those of the
overall marketplace. The one exception proved to be issuance which, in contrast
to the 15% reduction nationwide, actually increased by 11% as compared to one
year ago. One large issue accounted for most of the upsurge and, as a
consequence, had no significant impact on relative trading values.
At the beginning of the six-month period, our investment outlook called for a
fairly stable interest rate environment. We reduced our cash reserve position on
the expectation that an income-oriented approach would generate the most
favorable return. While we achieved modest success through the use of selective
hedging strategies, hindsight suggests that Fund performance would have
benefited from a more consistent and prolonged defensive strategy designed to
preserve unrealized gains from last year's market rally. More recently, with
long-term
2 & 3
<PAGE>
MuniYield New Jersey Fund, Inc., November 30, 1999
interest rates at their highest level in over two years, we have turned our
efforts to seeking to limit tax liabilities through a program designed to offset
existing capital gains with the realization of losses incurred in recent months.
Despite the volatility experienced on longer-dated maturities, our cost of
borrowing remained far more stable as short-term tax-exempt interest rates
fluctuated within a relatively narrow range. Since this occurred in the midst of
a restrictive monetary policy, the resiliency of this incremental yield pick up
remains one of the more attractive aspects of MuniYield New Jersey Fund, Inc.
However, should the spread between short-term and long-term tax-exempt interest
rates narrow, the benefits of the leverage will decline and, as a result, reduce
the yield on the Fund's Common Stock. (For a complete explanation of the
benefits and risks of leveraging, see page 1 of this report to shareholders.)
We are comfortable with the Fund's current position given the absolute level of
long-term interest rates as well as the inherent value in the tax-exempt sector.
Economic fundamentals point to a modestly slower pace of economic growth with no
solid evidence of a broad-based pickup in inflation. Investors' increased level
of comfort with Federal Reserve Board policy combined with a favorable seasonal
outlook for municipal bonds suggest a more constructive outlook may soon be
warranted.
In Conclusion
On September 23, 1999, the Fund's Board of Directors approved a plan of
reorganization, subject to shareholder approval and certain other conditions,
whereby the Fund would acquire substantially all of the assets and liabilities
of MuniVest New Jersey Fund, Inc. in exchange for newly issued shares of the
Fund. These Funds are registered, non-diversified, closed-end management
investment companies. Both entities have a similar investment objective and are
managed by Fund Asset Management, L.P.
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/ Terry K. Glenn
Terry K. Glenn
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 7, 2000
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
New Jersey -- 93.7% AAA Aaa $ 1,100 Camden County, New Jersey, Municipal Utilities Authority,
Sewer Revenue Refunding Bonds (County Agreement), 5.25%
due 7/15/2017 (b) $ 1,045
--------------------------------------------------------------------------------------------------------
AAA Aaa 2,100 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 (d) 2,317
--------------------------------------------------------------------------------------------------------
East Orange, New Jersey, Board of Education, COP:
AAA Aaa 1,000 5.34%** due 2/01/2019 (c) 321
AAA Aaa 2,845 5.202%** due 8/01/2026 573
--------------------------------------------------------------------------------------------------------
AAA Aaa 750 Essex County, New Jersey, Improvement Authority, Parking
Facility Revenue Refunding Bonds, 5% due 10/01/2022 (a) 672
--------------------------------------------------------------------------------------------------------
AAA Aaa 1,000 Gloucester County, New Jersey, Industrial Pollution Control
Financing Authority, Revenue Refunding Bonds (Mobil Oil
Refining Corp. Project), 5.625% due 12/01/2028 962
--------------------------------------------------------------------------------------------------------
AAA Aaa 4,880 Hudson County, New Jersey, COP, Refunding (Correctional
Facilities), 6.60% due 12/01/2021 (d) 5,144
--------------------------------------------------------------------------------------------------------
AAA NR* 5,000 Hudson County, New Jersey, Improvement Authority, Facility
Lease Revenue Refunding Bonds, RIB, Series 34, 6.605% due
10/01/2024 (b)(e) 4,419
--------------------------------------------------------------------------------------------------------
AA Aa2 2,600 Jersey City, New Jersey, School, GO, 6.65% due 2/15/2002 (g) 2,769
--------------------------------------------------------------------------------------------------------
AAA Aaa 1,750 Middlesex County, New Jersey, COP, 4.85% due 6/15/2023 (d) 1,514
--------------------------------------------------------------------------------------------------------
Middlesex County, New Jersey, Improvement Authority, Utility
System Revenue Bonds (Perth Amboy Project), Series B (a):
AAA Aaa 1,000 5.16%** due 9/01/2023 241
AAA Aaa 500 5.16%** due 9/01/2024 113
AAA Aaa 1,000 5.16%** due 9/01/2025 212
AAA Aaa 1,300 5.16%** due 9/01/2026 259
--------------------------------------------------------------------------------------------------------
A1+ NR* 700 New Jersey EDA, Economic Development Revenue Refunding Bonds
(Foreign Trade Zone Project), VRDN, 3.75% due 12/01/2007 (f) 700
--------------------------------------------------------------------------------------------------------
New Jersey EDA, First Mortgage Revenue Refunding Bonds
(Fellowship Village), Series A:
BBB- NR* 1,250 5.50% due 1/01/2018 1,104
BBB- NR* 3,000 5.50% due 1/01/2025 2,586
--------------------------------------------------------------------------------------------------------
</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 many of the
securities according to the list at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
EDA Economic Development Authority
GO General Obligation Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
VRDN Variable Rate Demand Notes
4 & 5
<PAGE>
MuniYield New Jersey Fund, Inc., November 30, 1999
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
New Jersey AAA Aaa $ 5,000 New Jersey EDA, Natural Gas Facilities Revenue Refunding Bonds
(concluded) (NUI Corporation Project), Series A, 6.35% due 10/01/2022 (a) $ 5,153
--------------------------------------------------------------------------------------------------------
New Jersey EDA, Revenue Bonds (Saint Barnabas Medical Center
Project), Series A (d):
NR* Aaa 4,000 5.55%** due 7/01/2017 1,417
NR* Aaa 5,435 5.47%** due 7/01/2018 1,798
NR* Aaa 1,000 5.18%** due 7/01/2023 241
NR* Aaa 7,445 6.30%** due 7/01/2024 1,691
NR* Aaa 8,350 5.20%** due 7/01/2025 1,777
--------------------------------------------------------------------------------------------------------
AAA Aaa 10,000 New Jersey EDA, Revenue Bonds (Transportation Project),
Sublease, Series A, 5.875% due 5/01/2015 (c) 10,199
--------------------------------------------------------------------------------------------------------
AAA Aaa 2,500 New Jersey EDA, Revenue Refunding Bonds (RWJ Health Care
Corporation), 6.50% due 7/01/2024 (c) 2,630
--------------------------------------------------------------------------------------------------------
NR* Aa3 10,750 New Jersey EDA, Solid Waste Disposal Facilities Revenue
Bonds (Garden State Paper Company), 7.125% due 4/01/2022 11,417
--------------------------------------------------------------------------------------------------------
New Jersey EDA, Water Facilities Revenue Bonds, AMT (b):
AAA Aaa 2,000 (American Water Company Inc. Project), 6% due 5/01/2036 2,000
AAA Aaa 2,500 RITR, Series 34, 6.42% due 5/01/2032 (e) 2,087
--------------------------------------------------------------------------------------------------------
AAA Aaa 2,800 New Jersey Health Care Facilities Financing Authority, Health
System Revenue Bonds (Catholic Health East), Series E,
4.75% due 11/15/2029 (a) 2,306
--------------------------------------------------------------------------------------------------------
New Jersey Health Care Facilities Financing Authority, Revenue
Refunding Bonds:
A- A3 6,060 (Atlantic City Medical Center), Series C, 6.80% due 7/01/2011 6,410
BBB NR* 2,000 (Christian Health Care Center), Series A, 5.25% due 7/01/2013 1,740
AAA Aaa 1,000 (Community Medical Center/Kimball), 5.25% due 7/01/2011 (c) 998
AAA Aaa 3,000 (Hackensack University Medical Center), Series B, 5.20% due
1/01/2028 (d) 2,699
BBB+ NR* 3,500 (Holy Name Hospital), 6% due 7/01/2025 3,238
AAA Aaa 2,500 (Meridian Health System Obligation Group), 5.25% due
7/01/2019 (c) 2,321
BBB- Baa3 2,450 (Saint Elizabeth Hospital Obligation Group), 6% due 7/01/2020 2,296
--------------------------------------------------------------------------------------------------------
AAA Aaa 3,000 New Jersey Sports and Exposition Authority, Convention Center,
Luxury Tax Revenue Refunding Bonds, 5% due 9/01/2015 (d) 2,798
--------------------------------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority, Higher
Educational Revenue Bonds (Saint Peters College),
Series B (g):
BBB Baa3 3,355 6.80% due 7/01/2002 3,606
BBB Baa3 3,600 6.85% due 7/01/2002 3,873
--------------------------------------------------------------------------------------------------------
New Jersey State Educational Facilities Authority, Revenue
Refunding Bonds:
AAA Aaa 1,990 (Seton Hall University Project), 5.25% due 7/01/2013 (a) 1,954
A A3 6,030 (Stevens Institute of Technology), Series A, 6.80% due
7/01/2002 (g) 6,481
--------------------------------------------------------------------------------------------------------
AA+ Aa1 2,105 New Jersey State, GO, AMT, 7.05% due 7/15/2005 (g) 2,365
--------------------------------------------------------------------------------------------------------
AA+ Aa1 4,800 New Jersey State, GO, Refunding, Series F, 5.50% due 8/01/2011 4,967
--------------------------------------------------------------------------------------------------------
NR* Aaa 5,000 New Jersey State Higher Education Assistance Authority,
Student Loan Revenue Bonds, RIB, AMT, Series 18, 6.375%
due 6/01/2017 (a)(e) 4,480
--------------------------------------------------------------------------------------------------------
New Jersey State Housing and Mortgage Finance Agency, Home
Buyer Revenue Bonds, AMT (d):
AAA Aaa 3,640 Series M, 7% due 10/01/2026 3,852
AAA Aaa 3,335 Series U, 5.60% due 10/01/2012 3,354
--------------------------------------------------------------------------------------------------------
AAA Aaa 500 New Jersey State Housing and Mortgage Finance Agency, Home
Buyer Revenue Refunding Bonds, Series Z, 5.70% due 10/01/2017 495
--------------------------------------------------------------------------------------------------------
AAA Aaa 2,000 New Jersey State Transit Corporation, COP, 6.50% due
10/01/2016 (c) 2,162
--------------------------------------------------------------------------------------------------------
New Jersey State Transportation Trust Fund Authority Revenue
Bonds (Transportation System), Series A:
AA- Aa2 7,500 5.125% due 6/15/2015 7,096
AAA Aaa 2,210 5% due 6/15/2018 (c) 2,004
--------------------------------------------------------------------------------------------------------
North Brunswick Township, New Jersey, GO:
NR* A1 1,190 6.50% due 5/15/2012 1,260
NR* A1 1,400 6.50% due 5/15/2013 1,482
--------------------------------------------------------------------------------------------------------
Port Authority of New York and New Jersey, Consolidated
Revenue Bonds:
AA- A1 4,000 93rd Series, 6.125% due 6/01/2094 4,137
AAA Aaa 2,300 104th Series, 4.75% due 1/15/2026 (a) 1,923
--------------------------------------------------------------------------------------------------------
NR* Aaa 4,325 Port Authority of New York and New Jersey, RITR, AMT, 108th
Series, 7.385% due 1/15/2017 (c)(e) 4,376
--------------------------------------------------------------------------------------------------------
AAA Aaa 2,500 Port Authority of New York and New Jersey, Special Obligation
Revenue Bonds (JFK International Air Terminal Project), AMT,
Series 6, 5.75% due 12/01/2025 (d) 2,431
--------------------------------------------------------------------------------------------------------
A1+ VMIG1+ 1,400 Port Authority of New York and New Jersey, Special Obligation
Revenue Refunding Bonds (Versatile Structure Obligation),
VRDN, AMT, Series 1R, 3.85% due 8/01/2028 (f) 1,400
--------------------------------------------------------------------------------------------------------
AAA Aaa 1,160 Rancocas Valley, New Jersey, Regional High School District,
GO, 5.30% due 2/01/2025 1,079
--------------------------------------------------------------------------------------------------------
AA A1 2,700 Rutgers State University, New Jersey, Revenue Bonds, Series A,
4.75% due 5/01/2029 2,236
--------------------------------------------------------------------------------------------------------
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 2,395
--------------------------------------------------------------------------------------------------------
AAA Aaa 5,250 South Jersey Transportation Authority, New Jersey,
Transportation System Revenue Refunding Bonds, 5%
due 11/01/2029 (a) 4,609
--------------------------------------------------------------------------------------------------------
AA+ Aaa 635 Union County, New Jersey, Improvement Authority, Revenue
Refunding Bonds (County Guaranteed Lease), 5.30%
due 11/15/2006 655
--------------------------------------------------------------------------------------------------------
NR* Aaa 3,440 Union County, New Jersey, Utilities Authority, RITR, Series
38, 6.42% due 6/01/2020 (e) 3,079
--------------------------------------------------------------------------------------------------------
West Windsor -- Plainsboro, New Jersey, Regional School
District, GO, Refunding (b):
AAA Aaa 2,500 4.75% due 9/15/2020 2,161
AAA Aaa 2,500 4.75% due 9/15/2021 2,152
==============================================================================================================================
Puerto Rico -- 3.7% AAA Aaa 1,000 Puerto Rico Commonwealth, GO, Refunding, Public Improvement,
4.50% due 7/01/2023 (a) 816
--------------------------------------------------------------------------------------------------------
A1+ VMIG1+ 1,600 Puerto Rico Commonwealth, Highway and Transportation
Authority, Transportation Revenue Refunding Bonds,
VRDN, Series A, 3.65% due 7/01/2028 (a)(f) 1,600
--------------------------------------------------------------------------------------------------------
</TABLE>
6 & 7
<PAGE>
MuniYield New Jersey Fund, Inc., November 30, 1999
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
Puerto Rico AAA Aaa $ 5,000 Puerto Rico Public Buildings Authority Revenue Bonds
(concluded) (Government Facilities), Series B, 5% due 7/01/2027 (a) $ 4,395
==============================================================================================================================
Total Investments (Cost -- $181,672) -- 97.4% 179,042
Other Assets Less Liabilities -- 2.6% 4,718
--------
Net Assets -- 100.0% $183,760
========
==============================================================================================================================
</TABLE>
(a) AMBAC Insured.
(b) FGIC Insured.
(c) FSA Insured.
(d) MBIA Insured.
(e) 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, 1999.
(f) 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, 1999.
(g) Prerefunded.
* Not Rated.
** Represents a zero coupon bond; the interest rate shown reflects 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.
Quality Profile
The quality ratings of securities in the Fund as of November 30, 1999 were as
follows:
- ------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
- ------------------------------------------------
AAA/Aaa .............................. 56.5%
AA/Aa ................................ 20.4
A/A .................................. 8.5
BBB/Baa .............................. 10.0
Other+ ............................... 2.0
- ------------------------------------------------
+ Temporary investments in short-term municipal securities.
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<TABLE>
<CAPTION>
As of November 30, 1999
=================================================================================================================
<C> <S> <C> <C>
Assets: Investments, at value (identified cost -- $181,672,203) ......... $ 179,041,691
Cash ............................................................ 45,887
Receivables:
Interest ...................................................... $ 3,283,300
Securities sold ............................................... 1,592,750 4,876,050
-------------
Prepaid expenses and other assets ............................... 71,977
-------------
Total assets .................................................... 184,035,605
-------------
=================================================================================================================
Liabilities: Payables:
Dividends to shareholders ..................................... 210,261
Investment adviser ............................................ 5,009 215,270
-------------
Accrued expenses and other liabilities .......................... 59,952
-------------
Total liabilities ............................................... 275,222
-------------
=================================================================================================================
Net Assets: Net assets ...................................................... $ 183,760,383
=============
=================================================================================================================
Capital: Capital Stock (200,000,000 shares authorized):
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 (9,100,783 shares issued
and outstanding) .............................................. $ 910,078
Paid-in capital in excess of par ................................ 127,438,759
Undistributed investment income -- net .......................... 1,284,122
Accumulated realized capital losses on investments -- net ....... (58,794)
Accumulated distributions in excess of realized capital gains on
investments ..................................................... (3,183,270)
Unrealized depreciation on investments -- net ................... (2,630,512)
-------------
Total -- Equivalent to $13.60 net asset value per share of Common
Stock (market price -- $12.25) .................................. 123,760,383
-------------
Total capital ................................................... $ 183,760,383
=============
=================================================================================================================
</TABLE>
* Auction Market Preferred Stock.
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended November 30, 1999
=========================================================================================================================
<C> <S> <C> <C>
Investment Interest and amortization of premium and discount earned ........... $ 11,080,603
Income:
=========================================================================================================================
Expenses: Investment advisory fees ........................................... $ 973,555
Commission fees .................................................... 152,208
Professional fees .................................................. 67,332
Accounting services ................................................ 61,024
Transfer agent fees ................................................ 57,189
Directors' fees and expenses ....................................... 23,119
Printing and shareholder reports ................................... 22,495
Listing fees ....................................................... 16,630
Custodian fees ..................................................... 14,992
Pricing fees ....................................................... 11,569
Other .............................................................. 16,819
------------
Total expenses ..................................................... 1,416,932
------------
Investment income -- net ........................................... 9,663,671
------------
=========================================================================================================================
Realized & Realized loss on investments -- net ................................ (1,543,155)
Unrealized Loss on Change in unrealized appreciation/depreciation on investments -- net (16,500,165)
Investements -- Net: ------------
Net Decrease in Net Assets Resulting from Operations ............... (8,379,649)
============
=========================================================================================================================
</TABLE>
See Notes to Financial Statements.
8 & 9
<PAGE>
MuniYield New Jersey Fund, Inc., November 30, 1999
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Year Ended November 30,
-------------------------------
Increase (Decrease) in Net Assets: 1999 1998
=========================================================================================================================
<C> <S> <C> <C>
Operations: Investment income -- net ............................................ $ 9,663,671 $ 10,090,941
Realized gain (loss) on investments -- net .......................... (1,543,155) 3,971,836
Change in unrealized appreciation/depreciation on investments -- net (16,500,165) (242,972)
------------- -------------
Net increase (decrease) in net assets resulting from operations ..... (8,379,649) 13,819,805
------------- -------------
=========================================================================================================================
Dividends & Investment income -- net:
Distributions to Common Stock ...................................................... (7,926,649) (7,921,213)
Shareholders: Preferred Stock ................................................... (1,687,968) (1,914,624)
Realized gain on investments -- net:
Preferred Stock ................................................... -- (260,736)
In excess of realized gain on investments -- net:
Common Stock ...................................................... (2,790,654) --
Preferred Stock ................................................... (392,616) --
------------- -------------
Net decrease in net assets resulting from dividends and distributions
to shareholders ..................................................... (12,797,887) (10,096,573)
------------- -------------
=========================================================================================================================
Capital Stock Value of shares issued to Common Stock shareholders in reinvestment
Transactions: of dividends and distributions ...................................... 1,678,698 1,902,991
------------- -------------
=========================================================================================================================
Net Assets: Total increase (decrease) in net assets ............................. (19,498,838) 5,626,223
Beginning of year ................................................... 203,259,221 197,632,998
------------- -------------
End of year* ........................................................ $ 183,760,383 $ 203,259,221
============= =============
=========================================================================================================================
*Undistributed investment income -- net .............................. $ 1,284,122 $ 1,232,997
============= =============
=========================================================================================================================
</TABLE>
See Notes to Financial Statements.
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: 1999 1998 1997 1996 1995
==================================================================================================================================
<C> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year ............... $ 15.93 $ 15.51 $ 15.46 $ 15.56 $ 13.22
Operating -------- -------- -------- -------- --------
Performance: Investment income -- net ......................... 1.06 1.13 1.14 1.14 1.17
Realized and unrealized gain (loss)
on investments -- net ............................ (1.98) .42 .05 (.10) 2.33
-------- -------- -------- -------- --------
Total from investment operations ................. (.92) 1.55 1.19 1.04 3.50
-------- -------- -------- -------- --------
Less dividends and distributions to Common Stock
shareholders:
Investment income -- net ........................ (.87) (.89) (.91) (.91) (.90)
In excess of realized gain on investments -- net (.31) -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions to Common Stock
shareholders ..................................... (1.18) (.89) (.91) (.91) (.90)
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:
Dividends and distributions to Preferred Stock
shareholders:
Investment income -- net ....................... (.19) (.21) (.23) (.23) (.26)
-------- -------- -------- -------- --------
In excess of realized gain on investments -- net (.04) (.03) -- -- --
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity ......... (.23) (.24) (.23) (.23) (.26)
-------- -------- -------- -------- --------
Net asset value, end of year ..................... $ 13.60 $ 15.93 $ 15.51 $ 15.46 $ 15.56
======== ======== ======== ======== ========
Market price per share, end of year .............. $ 12.25 $ 16.75 $15.5625 $ 14.50 $ 13.75
======== ======== ======== ======== ========
==================================================================================================================================
Total Investment Based on market price per share .................. (20.75%) 13.89% 13.96% 12.34% 21.26%
Return:* ======== ======== ======== ======== ========
Based on net asset value per share ............... (7.48%) 8.68% 6.52% 5.84% 25.85%
======== ======== ======== ======== ========
==================================================================================================================================
Ratios Based on Total expenses** ................................. 1.05% 1.02% 1.04% 1.04% 1.07%
Average Net Assets ======== ======== ======== ======== ========
Of Common Stock: Total investment income -- net** ................. 7.16% 7.24% 7.48% 7.41% 7.86%
======== ======== ======== ======== ========
Amount of dividends to Preferred Stock
shareholders...................................... 1.25% 1.37% 1.50% 1.48% 1.73%
======== ======== ======== ======== ========
Investment income -- net, to Common Stock
shareholders...................................... 5.91% 5.87% 5.98% 5.93% 6.13%
======== ======== ======== ======== ========
==================================================================================================================================
Ratios Based on Total expenses ................................... .73% .71% .72% .72% .73%
Total Average Net ======== ======== ======== ======== ========
Assets:+** Total investment income -- net ................... 4.95% 5.03% 5.14% 5.18% 5.40%
==================================================================================================================================
Ratios Based on Dividends to Preferred Stock shareholders ........ 2.81% 3.19% 3.35% 3.35% 3.75%
Average Net Assets ======== ======== ======== ======== ========
Of Preferred Stock:
==================================================================================================================================
Supplemental Net assets, net of Preferred Stock, end of year
Data: (in thousands) ................................... $123,760 $143,259 $137,633 $136,483 $137,355
======== ======== ======== ======== ========
Preferred Stock outstanding, end of year
(in thousands).................................... $ 60,000 $ 60,000 $ 60,000 $ 60,000 $ 60,000
======== ======== ======== ======== ========
Portfolio turnover ............................... 57.94% 46.83% 30.50% 49.76% 32.79%
======== ======== ======== ======== ========
==================================================================================================================================
Leverage: Asset coverage per $1,000 ........................ $ 3,063 $ 3,388 $ 3,294 $ 3,275 $ 3,289
======== ======== ======== ======== ========
==================================================================================================================================
Dividends Per Share Investment income -- net ......................... $ 703 $ 798 $ 838 $ 837 $ 938
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
charges.
** Do not reflect the effect of dividends to Preferred Stock shareholders.
+ Includes Common and Preferred Stock average net assets.
See Notes to Financial Statements.
10 & 11
<PAGE>
MuniYield New Jersey Fund, Inc., November 30, 1999
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's financial statements are prepared in accordance with
generally accepted accounting principles, which may require the use of
management accruals and estimates. 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 written or purchased are valued at the last
sale price in the case of exchange-traded options. In the case of options traded
in the over-the-counter market, valuation is the last asked price (options
written) or the last bid price (options purchased). 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 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. Distributions in excess of realized capital gains are due
primarily to differing tax treatments for post-October losses.
(f) Reclassification -- Generally accepted accounting principles require that
certain components of net assets be adjusted to reflect permanent differences
between financial and tax reporting. Accordingly, current year's permanent
book/tax differences have been reclassified as follows: $396 between paid-in
capital in excess of par and undistributed net investment income; $9 between
paid-in capital in excess of par and accumulated net realized capital losses;
and $1,675 between accumulated net realized capital losses and undistributed net
investment income. These reclassifications have no effect on net assets or net
asset value per share.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML &
Co."), which is the limited partner.
FAM is responsible for the management of the Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. For such services, the Fund pays a monthly fee at
an annual rate of .50% of the Fund's average weekly net assets, including
proceeds from the issuance of Preferred Stock.
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, 1999 were $109,129,781 and $114,859,742, respectively.
Net realized losses for the year ended November 30, 1999 and net unrealized
losses as of November 30, 1999 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Losses Losses
- --------------------------------------------------------------------------------
Long-term investments ................ $(1,543,155) $(2,630,512)
----------- -----------
Total ................................ $(1,543,155) $(2,630,512)
=========== ===========
- --------------------------------------------------------------------------------
As of November 30, 1999, net unrealized depreciation for Federal income tax
purposes aggregated $3,194,710, of which $4,393,119 related to appreciated
securities and $7,587,829 related to depreciated securities. The aggregate cost
of investments at November 30, 1999 for Federal income tax purposes was
$182,236,401.
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 years ended November 30, 1999 and
November 30, 1998 increased by 106,361 and 120,384, 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
November 30, 1999 was 4.10%.
Shares issued and outstanding during the years ended November 30, 1999 and
November 30, 1998 remained constant.
The Fund pays commissions to certain broker-dealers at the end of each auction
at an annual rate ranging from .25% to .375%, calculated on the proceeds of each
auction. For the year ended November 30, 1999, Merrill Lynch, Pierce,
12 & 13
<PAGE>
MuniYield New Jersey Fund, Inc., November 30, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
Fenner & Smith Incorporated, an affiliate of FAM, earned $94,226 as commissions.
5. Capital Loss Carryforward:
At November 30, 1999, the Fund had a net capital loss carryforward of
approximately $1,860,000, all of which expires in 2007. This amount will be
available to offset like amounts of any future taxable gains.
6. Reorganization Plan:
On September 23, 1999, the Fund's Board of Directors approved a plan of
reorganization, subject to shareholder approval and certain other conditions,
whereby the Fund would acquire substantially all of the assets and liabilities
of MuniVest New Jersey Fund, Inc. in exchange for newly issued shares of the
Fund. These Funds are registered, non-diversified, closed-end management
investment companies. Both entities have a similar investment objective and are
managed by FAM.
7. Subsequent Event:
On December 8, 1999, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.067000 per share,
payable on December 30, 1999 to shareholders of record as of December 23, 1999.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
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, 1999, 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 generally 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, 1999 by correspondence with the custodian. 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, 1999, 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 11, 2000
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, 1999 qualify as
tax-exempt interest dividends for Federal income tax purposes.
Additionally, the following table summarizes the per share taxable distributions
paid by the Fund during the year:
- --------------------------------------------------------------------------------
Payable Ordinary Long-Term
Date Income Capital Gains*
- --------------------------------------------------------------------------------
Common Stock Shareholders 12/30/98 $.001077 $.309188
- --------------------------------------------------------------------------------
Preferred Stock Shareholders 12/03/98 -- $21.40
12/10/98 $.19 $27.37
12/17/98 $.18 $25.77
12/24/98 $.19 $27.29
12/31/98 $.19 $28.18
1/07/99 $.16 $26.19
1/14/99 $.04 $ 6.44
- --------------------------------------------------------------------------------
* All of the distributions are subject to the 20% tax rate.
Please retain this information for your records.
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute all or a portion of its net
investment income to its shareholders on a monthly basis. In order to provide
shareholders with a more 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.
14 & 15
<PAGE>
Officers and Directors
Terry K. Glenn, President and Director
James H. Bodurtha, Director
Herbert I. London, Director
Robert R. Martin, Director
Joseph L. May, Director
Andre F. Perold, Director
Arthur Zeikel, Director
Vincent R. Giordano, Senior Vice President
Kenneth A. Jacob, Vice President
Theodore R. Jaeckel Jr., Vice President
Donald C. Burke, Vice President and
Treasurer
Alice A. Pellegrino, 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:
The Bank of New York
100 Church Street
New York, NY 10286
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--11/99
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