-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PLMwbKSyOsvTD7SOHTbisuGeAsj8s4isJMfRbaxSzcr7gt9ChBx10kyYFR+wJek9 iwZhqeBlIZ5vg59CyHtiGg== 0000900092-95-000373.txt : 19951222 0000900092-95-000373.hdr.sgml : 19951222 ACCESSION NUMBER: 0000900092-95-000373 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19951221 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MUNIYIELD FUND INC CENTRAL INDEX KEY: 0000879361 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-06414 FILM NUMBER: 95603237 BUSINESS ADDRESS: STREET 1: 800 SCUDDERS MILL RD CITY: PLAINSBORO STATE: NJ ZIP: 08543-9011 BUSINESS PHONE: 6092822800 MAIL ADDRESS: STREET 1: PO BOX 9011 STREET 2: C/O MERRILL LYNCH ASSET MANAGEMENT CITY: PRINCETON STATE: NJ ZIP: 08543-9011 N-30D 1 ANNUAL REPORT MUNIYIELD FUND, INC. FUND LOGO Annual Report October 31, 1995 This report, including the financial information herein, is transmitted to the shareholders of MuniYield 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. MuniYield Fund, Inc. Box 9011 Princeton, NJ 08543-9011 MuniYield Fund, Inc. DEAR SHAREHOLDER For the year ended October 31, 1995, the Common Stock of MuniYield Fund, Inc. earned $0.999 per share income dividends, which included earned and unpaid dividends of $0.086. This represents a net annualized yield of 6.46%, based on a month-end net asset value of $15.47 per share. Over the same period, the total investment return on the Fund's Common Stock was +18.00%, based on a change in per share net asset value from $14.35 to $15.47, and assuming reinvestment of $1.001 per share income dividends and $0.219 per share capital gains distributions. For the six-month period ended October 31, 1995, the total investment return on the Fund's Common Stock was +8.59%, based on a change in per share net asset value from $14.76 to $15.47, and assuming reinvestment of $0.491 per share income dividends. For the six-month period ended October 31, 1995, the Fund's Auction Market Preferred Stock had an average yield as follows: Series A, 3.51%; Series B, 4.14%; Series C, 3.50%; Series D, 4.09%; and Series E, 3.53%. The Environment After losing momentum through the second calendar quarter of 1995, it now appears that the US economic expansion has resumed. Gross domestic product growth for the three months ended September 30 was reported to be 4.2%, higher than generally expected. September durable goods orders increased a surprisingly strong 3%, and existing home sales rose to a near-record level. At the same time, there is evidence that inflationary pressures remain subdued. Reflecting the trend of renewed economic growth--and continued good news on the inflation front--the Federal Reserve Board signaled no near-term shift in monetary policy following its September meeting. Thus, official interest rates may not be reduced further in the immediate future. Another significant development has been the strengthening of the US dollar relative to the yen and the Deutschemark. Improving interest rate differentials favoring the US currency, combined with coordinated central bank intervention and more positive investor sentiment, have helped to bolster the dollar in foreign exchange markets. Other factors that appear to be improving the US dollar's outlook in the near term are a pick-up in capital flows to the United States and the prospect of increased capital outflows from Japan. However, it remains to be seen if the US dollar's strengthening trend can continue without significant improvements in the US budget and trade deficits. In the weeks ahead, investor interest will continue to focus on US economic activity. Clear signs of a moderate, noninflationary expansion could further benefit the US stock and bond markets. In addition, should the current Federal budget deficit reduction efforts now underway in Washington prove successful, the implications would likely be positive for the US financial markets. The Municipal Market Tax-exempt bond yields continued to decline during the six-month period ended October 31, 1995. As measured by the Bond Buyer Revenue Bond Index, the yield on uninsured, long-term municipal revenue bonds fell 30 basis points (0.30%) to end the October period at approximately 6.00%. While tax-exempt bond yields have declined dramatically from their highs one year ago, municipal bond yields have exhibited considerable yield volatility on a weekly basis. In recent months, tax-exempt bond yields have fluctuated by as much as 20 basis points on a week-to-week basis. US Treasury bond yields have displayed similar volatility, but the extent of their decline has been greater. By the end of October, long-term US Treasury bond yields had declined almost 100 basis points to 6.33%. Proposed Federal tax restructuring continued to weigh heavily on the tax- exempt bond market. Thus far in 1995, US Treasury bond yields have declined approximately 150 basis points. Municipal bond yields have fallen approximately 95 basis points as the uncertainty surrounding any changes to the existing Federal income tax structure has prevented the municipal bond market from rallying as strongly as its taxable counterpart. A general view of a moderately expanding domestic economy, supported by a very favorable inflationary environment, allowed interest rates to significantly decline from their recent highs in November 1994. However, this decline was not a smooth downward curve. Conflicting economic indicators were released during recent months that have prevented a clear consensus regarding the near-term direction of interest rates from being reached. The resultant uncertainty has promoted more of a saw-toothed pattern as interest rate declines were repeatedly interrupted by indications of stronger-than-expected economic growth. As these concerns were overcome by subsequent weaker economic releases, interest rate declines have resumed. These periods of volatility are likely to continue for the remainder of 1995, or until proposed Federal budget deficit reduction packages are resolved and any resultant responses by the Federal Reserve Board have occurred. However, the municipal bond market's technical position remained supportive throughout recent quarters. Approximately $82 billion in long-term municipal securities were issued during the six months ended October 31, 1995. While this issuance is virtually identical to underwritings during the October 31, 1994 quarter, tax-exempt bond issuance over the last 12 months remained approximately 25% below comparable 1994 levels. The municipal bond market should maintain this positive technical position well into 1996. Annual issuance for 1995 is now projected to be approximately $140 billion, significantly less than last year's already low level of $162 billion. Projected maturities and early redemptions for the remainder of 1995 and throughout 1996 will lead to a continued decline in the total outstanding municipal bond supply throughout 1996 and, perhaps, into 1998 should new bond issuance remain at historically low levels. Despite the municipal bond market's relative underperformance compared to the US Treasury market thus far in 1995, the extent of the tax-exempt bond market's rally was nonetheless quite impressive. Municipal bond yields have fallen 135 basis points from their highs reached in November 1994 and municipal bond prices rose accordingly. Most tax-exempt products recouped almost all of the losses incurred in 1994 and are well on their way to posting double-digit total returns for all of 1995. This relative underperformance so far in 1995 provided long-term investors with the rare opportunity to purchase tax-exempt securities at yield levels near those of taxable securities. Additionally, many of the factors that led to the relative underperformance of the tax-exempt bond market thus far in 1995, namely investor concern regarding Federal budget deficit reductions and proposed changes in the Federal income tax structure, are nearing resolution. The Federal budget reconciliation process has already begun, and may be essentially completed by year-end. Recent public opinion polls suggest that the majority of American taxpayers prefer the existing Federal income tax system compared to proposed changes, such as the flat tax or national sales tax. In an upcoming election year, neither party is likely to advocate a clearly unpopular position, particularly one that can be expected to negatively impact the Federal budget deficit reduction program through reduced tax revenues. As these factors are resolved, we believe that much of the resistance that the municipal bond market met this year should dissipate. This should allow municipal bond yields to significantly decline from current levels in order to return to more normal historic yield relationships. Portfolio Strategy As a result of a sustained rally in the fixed-income markets in 1995, MuniYield Fund, Inc. was able to recoup substantially all of the ground that had been lost in 1994. This came about despite what can best be described as a skeptical and somewhat cautious view of the market. Notwithstanding such a circumspect investment outlook, we remained fully invested for much of the Fund's fiscal year as we sought to provide shareholders with as high a level as possible of tax-exempt income. However, our caution was reflected more in the Fund's investments; their defensive nature served the dual purpose of partially insulating the portfolio from volatility while still generating a competitive dividend. As a result, the Fund participated in much of the rally experienced this past year and still remains well positioned to withstand any potential correction in the markets that may ensue in the coming months. In our last report to shareholders, we remarked that leverage continued to benefit Common Stock shareholders. The benefits and risks of leveraging have both been seen during in the past two years. Price volatility is one component of leverage. Yield enhancement is the other, and it is this aspect of total return that has remained consistently favorable throughout this market cycle. Moreover, the Federal Reserve Board's decision to lower short-term interest rates in early July has further improved the outlook for the Fund. The prospect for an easing of monetary policy in the near term makes for a compelling argument in favor of leveraging and, to the extent that these expectations are upheld, market discounts should narrow over time. However, should the spread between short- term and long-term interest rates narrow, the benefits of leverage will diminish and the yield on the Fund's Common Stock will be reduced. (For a complete explanation of the benefits and risks of leveraging, see page 5 of this report to shareholders.) In Conclusion We appreciate your ongoing interest in MuniYield Fund, Inc., and we look forward to assisting you with your financial needs in the months and years ahead. Sincerely, (Arthur Zeikel) Arthur Zeikel President (Vincent R. Giordano) Vincent R. Giordano Vice President (Theodore R. Jaeckel Jr.) Theodore R. Jaeckel Jr. Portfolio Manager December 6, 1995 We are pleased to announce that Theodore R. Jaeckel Jr. is responsible for the day-to-day management of MuniYield Fund, Inc. Mr. Jaeckel has been employed by Merrill Lynch Asset Management, L.P. (an affiliate of the Fund's investment adviser) since 1991 as Vice President and Portfolio Manager. Prior thereto, he was employed by Chemical Bank from 1983 to 1991, becoming Vice President in the Tax-Exempt Bond Division in 1983. PROXY RESULTS
During the six-month period ended October 31, 1995, MuniYield Fund, Inc. Common Stock shareholders voted on the following proposals. The proposals were approved at a special shareholders' meeting on September 8, 1995. The description of each proposal and number of shares voted are as follows: Shares Voted Shares Voted For Without Authority 1. To elect the Fund's Board of Directors: Herbert I. London 35,610,041 780,373 Robert R. Martin 35,603,235 787,179 Andre F. Perold 35,613,766 776,648 Arthur Zeikel 35,601,172 789,242 Shares Voted Shares Voted Shares Voted For Against Abstain 2. To ratify the selection of Deloitte & Touche LLP as the Fund's independent auditors for the current fiscal year. 35,491,192 253,899 645,323 During the six-month period ended October 31, 1995, MuniYield Fund, Inc. Preferred Stock shareholders (Series A, B, C, D and E) voted on the following proposals. The proposals were approved at a special shareholders' meeting on September 8, 1995. The description of each proposal and number of shares voted are as follows: Shares Voted Shares Voted For Without Authority 1. To elect the Fund's Board of Directors: James H. Bodurtha, Herbert I. London, Robert R. Martin, Joseph L. May, Andre F. Perold and Arthur Zeikel as follows: Series A 1,420 0 Series B 1,570 0 Series C 1,001 0 Series D 1,586 9 Series E 1,585 0 Shares Voted Shares Voted Shares Voted For Against Abstain 2. To ratify the selection of Deloitte & Touche LLP as the Fund's independent auditors for the current fiscal year as follows: Series A 1,420 0 0 Series B 1,490 0 80 Series C 921 0 80 Series D 1,595 0 0 Series E 1,585 0 0 THE BENEFITS AND RISKS OF LEVERAGING MuniYield 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 of 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 pick-up on the Common Stock will be reduced or eliminated completely. At the same time, the market value on the fund's Common Stock (that is, its price as listed on the New York Stock Exchange) may, as a result, decline. Furthermore, if long-term interest rates rise, the Common Stock's net asset value will reflect the full decline in the price of the portfolio's investments, since the value of the fund's Preferred Stock does not fluctuate. In addition to the decline in net asset value, the market value of the fund's Common Stock may also decline. PORTFOLIO ABBREVIATIONS To simplify the listings of MuniYield Fund, Inc.'s portfolio holdings in the Schedule of Investments, we have abbreviated the names of many of the securities according to the list below and at right. AMT Alternative Minimum Tax (subject to) COP Certificates of Participation DATES Daily Adjustable Tax-Exempt Securities GO General Obligation Bonds HFA Housing Finance Agency IDA Industrial Development Authority IDB Industrial Development Board IDR Industrial Development Revenue Bonds M/F Multi-Family PCR Pollution Control Revenue Bonds S/F Single-Family UT Unlimited Tax VRDN Variable Rate Demand Notes
SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face Value State Ratings Ratings Amount Issue (Note 1a) Alabama--1.1% BBB Baa1 $ 8,750 Courtland, Alabama, IDB, IDR, Refunding (Champion International Corporation), Series A, 7.20% due 12/01/2013 $ 9,366 Alaska--4.6% A+ Aa 12,285 Alaska State, Housing Finance Corporation, GO, Series B, 7% due 12/01/2027 12,846 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds: NR* NR* 5,000 (Amerada Hess Pipeline Corporation), 6.10% due 2/01/2024 4,755 AA- A1 8,000 (British Petroleum Pipeline), Series B, 7% due 12/01/2025 8,619 AA- A1 10,635 (Sohio Pipeline), 7.125% due 12/01/2025 11,591 California A A1 7,730 Los Angeles, California, Wastewater System Revenue - --3.4% Refunding Bonds, Series C, 7.10% due 6/01/2018 8,533 AAA Aaa 2,750 Los Angeles County, California, Metropolitan Transportation Authority, Sales Tax Revenue Bonds (Proposition C), Second Series A, 5% due 7/01/2025 (c) 2,472 AAA NR* 5,000 Orange County, California, Community Facilities District, Special Tax No. 88-1 Revenue Bonds (Aliso Viejo Project), Series A, 7.35% due 8/15/2002 (b) 5,893 NR* NR* 2,895 Pleasanton, California, Joint Powers Financing Authority, Revenue Reassessment Bonds, Sub-Series B, 6.75% due 9/02/2017 2,924 AAA Aaa 7,750 University of California Revenue Bonds (Multiple Purpose Projects), Series D, 6.375% due 9/01/2019 (e) 8,119 Colorado--5.6% NR* Baa 7,000 Arapahoe County, Colorado, Capital Improvement Trust Fund, Highway Revenue Bonds, Series B, 7% due 8/31/2026 7,394 BBB+ Baa1 4,000 Colorado Health Facilities Authority Revenue Bonds (P/SL Healthcare System Project), Series A, 6.875% due 2/15/2023 4,504 Denver, Colorado, City and County Airport Revenue Bonds: BBB Baa 8,000 AMT, Series D, 7.75% due 11/15/2013 9,393 BBB Baa 3,310 AMT, Series D, 7.75% due 11/15/2021 3,644 BBB Baa 19,250 Series A, 7.25% due 11/15/2025 20,742 NR* NR* 1,650 Mountain Village, Colorado, Metropolitan District, Revenue Refunding Bonds (San Miguel County), UT, 7.95% due 12/01/2003 1,830 Connecticut A1+ VMIG1++ 500 Connecticut State Development Authority, PCR, Refunding - --0.5% (Connecticut Light & Power Co. Project), VRDN, Series A, 3.90% due 9/01/2028 (a) 500 NR* B1 2,645 New Haven, Connecticut, Facilities Revenue Bonds (Hill Health Corporation Project), 9.25% due 5/01/2017 2,943
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
S&P Moody's Face Value State Ratings Ratings Amount Issue (Note 1a) District of B- NR* $ 4,000 District of Columbia, COP, 7.30% due 1/01/2013 $ 4,099 Columbia--0.5% Florida--2.1% BBB Baa1 3,210 Escambia County, Florida, PCR (Champion International Corporation Project), AMT, 6.90% due 8/01/2022 3,346 AA Aa 5,000 Florida State, Revenue Refunding Bonds (Dade County Road), UT, 5.30% due 7/01/2019 4,741 AA Aa1 10,000 Orlando, Florida, Utilities Commission, Water and Electric Revenue Bonds, 5.125% due 10/01/2019 9,229 A1+ VMIG1++ 400 Saint Lucie County, Florida, PCR, Refunding (Florida Power and Lighting Co. Project), VRDN, 4% due 1/01/2026 (a) 400 Georgia--1.4% NR* NR* 5,680 Atlanta, Georgia, Urban Residential Finance Authority, College Facilities Revenue Bonds (Morris Brown College Project), 9.50% due 6/01/2011 6,467 AAA Aaa 4,200 Georgia Municipal Electric Authority, Special Obligation Bonds (Fifth Crossover Series--Project One), 6.40% due 1/01/2013 (c) 4,567 Hawaii--0.9% Hawaii State, Housing Finance and Development Corporation, S/F Mortgage Purchase Revenue Bonds: A Aa 1,945 AMT, Series A, 7% due 7/01/2011 2,062 A Aa 870 AMT, Series A, 7.10% due 7/01/2024 909 A Aa 3,040 Series B, 6.90% due 7/01/2016 3,185 A Aa 1,110 Series B, 7% due 7/01/2031 1,159 Idaho--1.3% Idaho Housing Agency, S/F Mortgage Revenue Bonds, AMT: AAA NR* 6,000 Senior Series A, 6.70% due 7/01/2027 6,170 AA NR* 4,125 Senior Series C-2, 7.15% due 7/01/2023 4,335 Illinois--1.4% BBB Baa2 2,750 Illinois Development Finance Authority, PCR, Refunding (Illinois Power Company Project), Series A, 7.375% due 7/01/2021 2,983 BBB+ NR* 2,500 Illinois Educational Facilities Authority Revenue Bonds (Chicago Osteopathic Health Systems), 7.25% due 5/15/2002 (b) 2,881 Illinois Health Facilities Authority Revenue Bonds: A A 1,500 (Edward Hospital Association Project), 7% due 2/15/2022 1,576 BBB NR* 2,625 Refunding (Saint Elizabeth's Hospital of Chicago), 7.75% due 7/01/2016 2,753 NR* VMIG1++ 700 (Resurrection Health Care System), VRDN, 4.05% due 5/01/2011 (a) 700 Indiana--4.1% Indiana Health Facilities Finance Authority, Hospital Revenue Bonds: NR* Aa 10,000 (Daughters of Charity--Saint Vincent Hospital and Healthcare Center), 5.75% due 11/15/2022 9,514 NR* A 1,150 Refunding (Saint Anthony Medical Center), Series A, 7% due 10/01/2017 1,220 Indianapolis, Indiana, Local Public Improvement Bond Bank Revenue Bonds: A+ NR* 11,775 Refunding, Series D, 6.75% due 2/01/2020 12,566 NR* A1 9,000 Series C, 6.70% due 1/01/2017 9,478 Iowa--0.0% A1+ NR* 100 Iowa Finance Authority, Solid Waste Disposal Revenue Bonds (Cedar River Paper Company Project), VRDN, AMT, Series A, 3.95% due 6/01/2024 (a) 100 Kansas--1.1% AAA Aaa 8,300 Burlington, Kansas, PCR, Refunding (Kansas Gas and Electric Company Project), 7% due 6/01/2031 (e) 9,221
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
S&P Moody's Face Value State Ratings Ratings Amount Issue (Note 1a) Kentucky--1.1% BB Ba1 $ 5,300 Kenton County, Kentucky, Airport Board, Special Facilities Revenue Bonds (Delta Airlines Project), AMT, Series A, 7.50% due 2/01/2020 $ 5,637 NR* NR* 3,000 Perry County, Kentucky, Solid Waste Disposal Revenue Bonds (TJ International Project), AMT, 7% due 6/01/2024 3,072 Louisiana--5.7% A- A3 7,250 De Soto Parish, Louisiana, Environmental Improvement Revenue Refunding Bonds (International Paper Co. Project), AMT, Series B, 6.55% due 4/01/2019 7,433 NR* Baa2 35,000 Lake Charles, Louisiana, Harbor and Terminal District, Port Facilities Revenue Refunding Bonds (Trunkline Company Project), 7.75% due 8/15/2022 39,451 Maine--2.8% BBB- NR* 11,300 Maine Financial Authority, Solid Waste Disposal Revenue Bonds (Boise Cascade Corporation Project), AMT, 7.90% due 6/01/2015 12,203 AA- Aa 10,460 Maine Housing Authority, S/F Mortgage Acquisition Bonds, Series 1, 7.15% due 11/01/2021 11,086 Maryland--1.9% NR* NR* 10,000 Maryland State Energy Financing Administration Ltd., Obligation Revenue Bonds (Cogeneration--AES Warrior Run), AMT, 7.40% due 9/01/2019 10,333 NR* Aaa 4,500 Prince Georges County, Maryland, Hospital Revenue Bonds (Dimensions Health Corporation), 7.25% due 7/01/2002 (b) 5,258 Massachusetts-- A+ Aaa 8,500 Massachusetts Bay Transportation Authority Revenue 2.6% Bonds (Massachusetts General Transportation Systems), Series A, 7% due 3/01/2001 (b) 9,653 BBB+ A 6,030 Massachusetts Municipal Wholesale Electric Company, Power Supply System Revenue Bonds, Series B, 6.75% due 7/01/2017 6,458 AAA Aaa 5,000 Massachusetts State, HFA, Residential Development Bonds, Series C, 6.90% due 11/15/2021 (f) 5,253 Michigan--1.2% Detroit, Michigan, GO, UT, Series A: BBB Ba1 2,500 6.70% due 4/01/2010 2,633 BBB Ba1 1,500 6.80% due 4/01/2015 1,578 AA- A1 5,575 Michigan State Building Authority, Revenue Refunding Bonds, Series I, 6.75% due 10/01/2011 6,060 Minnesota--2.6% A1+ NR* 600 Beltrami County, Minnesota, Environmental Control Revenue Bonds (Northwood Panelboard Co. Project), VRDN, 4.10% due 7/01/2025 (a) 600 A1+ NR* 300 Hubbard County, Minnesota, Solid Waste Disposal Revenue Bonds (Potlatch Corporation Project), VRDN, AMT, 4.05% due 8/01/2014 (a) 300 AA- A1 600 Minneapolis, Minnesota, Community Development Agency, PCR (Northern States Power Co. Project), VRDN, 4% due 3/01/2011 (a) 600 AA A1 10,000 Minnesota State HFA, Housing Development Bonds, Series A, 6.95% due 2/01/2014 10,593 AA+ Aa 3,410 Minnesota State HFA, S/F Mortgage Bonds, AMT, Series A, 7.05% due 7/01/2022 3,553 BBB Baa1 5,700 Sartell, Minnesota, PCR, Refunding (Champion International Corporation), 6.95% due 10/01/2012 6,020
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
S&P Moody's Face Value State Ratings Ratings Amount Issue (Note 1a) Mississippi A A2 $17,750 Lowndes County, Mississippi, Solid Waste Disposal and - --3.9% PCR, Refunding (Weyerhaeuser Company Project), Series A, 6.80% due 4/01/2022 $ 19,848 AAA Aaa 11,100 Mississippi State, GO, 6.20% due 2/01/2008 (i) 11,939 Missouri--0.4% BBB- NR* 2,935 Joplin, Missouri, IDA, Hospital Facilities Revenue Refunding and Improvement Bonds (Tri-State Osteopathic), 8.25% due 12/15/2014 3,024 New Jersey-- NR* Ba 4,050 Atlantic County, New Jersey, Utilities Authority, Solid 3.5% Waste Revenue Bonds, 7.125% due 3/01/2016 4,119 Camden County, New Jersey, Pollution Control Financing Authority, Solid Waste Resource Recovery Revenue Bonds, AMT: BBB+ Ba 2,500 Series A, 7.50% due 12/01/2010 2,585 BBB+ Ba 7,000 Series B, 7.50% due 12/01/2009 7,243 AAA NR* 9,500 New Jersey State Housing and M/F Mortgage Finance Agency, Housing Revenue Refunding Bonds (Presidential Plaza), 7% due 5/01/2030 (d) 9,980 AA+ Aa1 4,500 New Jersey State Revenue Refunding Bonds, UT, Series D, 5.75% due 2/15/2006 4,828 New Mexico--1.4% Farmington, New Mexico, PCR, Refunding, Series A: BB Ba2 5,000 (Public Service Company--San Juan Project), 6.40% due 8/15/2023 4,799 A+ Aa3 5,850 (Southern California Edison Company), 7.20% due 4/01/2021 6,412 New York--14.6% New York City, New York, GO, UT: BBB+ Baa1 2,000 Series A, 7.75% due 8/15/2008 2,232 BBB+ Baa1 4,600 Series A, 7.75% due 8/15/2012 5,113 BBB+ Baa1 5,000 Series A, 7.75% due 8/15/2016 5,558 BBB+ Baa1 15,000 Series B, 7.75% due 2/01/2010 16,671 BBB+ Baa1 1,555 Series B, 7.75% due 2/01/2013 1,727 BBB+ Baa1 4,500 Series B, 7% due 6/01/2016 4,728 BBB+ Baa1 6,400 Series B, Sub-Series B-1, 7% due 8/15/2016 6,806 BBB+ Baa1 5,000 Series C, Sub-Series C-1, 7.50% due 8/01/2021 5,478 AAA VMIG1++ 2,500 New York City, New York, Municipal Water Finance Authority, Water and Sewer System Revenue Bonds, VRDN, Series G, 3.90% due 6/15/2024 (a) (h) 2,500 BBB+ Baa1 5,000 New York State Dormitory Authority Revenue Bonds (Court Facilities Lease Bonds), Series A, 5.25% due 5/15/2021 4,471 A+ A1 5,000 New York State Energy Research and Development Authority, Electric Facilities Revenue Bonds (Con Edison Co. of New York, Inc. Project), AMT, Series A, 7.50% due 1/01/2026 5,423 A Aa 24,200 New York State Environmental Facilities Corporation, PCR (State Water--Revolving Fund), Series E, 6.875% due 6/15/2010 26,503 New York State Local Government Assistance Corporation Revenue Bonds: A A 5,000 Series A, 6.50% due 4/01/2020 5,264 AAA Aaa 5,000 Series D, 7% due 4/01/2002 (b) 5,771 AAA Aaa 8,000 New York State Thruway Authority, Service Contract Revenue Bonds (Local Highway and Bridge), 5.75% due 4/01/2013 (e) 8,100 A+ Aa 15,515 Triborough Bridge and Tunnel Authority, New York, Revenue Refunding Bonds (General Purpose), Series A, 5% due 1/01/2015 14,274
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
S&P Moody's Face Value State Ratings Ratings Amount Issue (Note 1a) North Carolina A A2 $ 3,385 Martin County, North Carolina, Industrial Facilities and - --3.1% Pollution Control Financing Authority Revenue Bonds (Solid Waste--Weyerhaeuser Company), AMT, 5.65% due 12/01/2023 $ 3,203 North Carolina HFA, S/F Revenue Bonds: A+ Aa 5,385 AMT, Series T, 7.05% due 9/01/2020 5,650 A+ Aa 15,520 Refunding, Series S, 6.95% due 3/01/2017 16,443 NR* VMIG1++ 200 Person County, North Carolina, Industrial Facilities and Pollution Control Financing Authority, Solid Waste Disposal Revenue Bonds (Carolina Power and Light Company), AMT, DATES, 4% due 11/01/2016 (a) 200 North A+ Aa 3,990 North Dakota State, HFA, S/F Mortgage Revenue Bonds, Dakota--0.5% Series A, 7% due 7/01/2023 4,194 Ohio--1.3% NR* Ba2 3,600 Hilliard, Ohio, IDR, Refunding (Kroger Co.), 8.10% due 7/01/2012 3,940 NR* Ba2 3,600 Lucas County, Ohio, IDR, Refunding (Kroger Co.), 8.50% due 7/01/2011 3,977 BBB Baa1 2,000 Montgomery County, Ohio, Health Systems Revenue Bonds (Franciscan Sisters of the Poor), Series B-1, 8.10% due 7/01/2018 2,237 Pennsylvania BB Ba2 2,500 Beaver County, Pennsylvania, IDA, PCR, Refunding (Cleveland - --4.5% Electric Project), 7.625% due 5/01/2025 2,588 Pennsylvania Convention Center Authority, Revenue Refunding Bonds, Series A: BBB- Baa 9,675 6.70% due 9/01/2014 10,176 BBB- Baa 5,000 6.75% due 9/01/2019 5,242 NR* NR* 10,500 Pennsylvania Economic Development Financing Authority, Recycling Revenue Bonds (Ponderosa Fibres Project), AMT, Series A, 9.25% due 1/01/2022 10,754 NR* NR* 8,500 Philadelphia, Pennsylvania, IDR, Refunding (Commercial Development--Host Marriott), AMT, 7.75% due 12/01/2017 8,649 South A1+ VMIG1++ 650 Berkeley County, South Carolina, Pollution Control, Revenue Carolina--2.1% Refunding (Amoco Chemical Co. Project), VRDN, 3.90% due 7/01/2012 (a) 650 AAA Aaa 5,000 Piedmont, South Carolina, Municipal Power Agency, Electric Revenue Refunding Bonds, Series A, 6.375% due 1/01/2006 (h) 5,568 A- A1 2,500 Richland County, South Carolina, PCR, Refunding (Union Camp Corporation Project), Series C, 6.55% due 11/01/2020 2,607 AAA Aaa 7,125 South Carolina State, Public Service Authority, Revenue Refunding Bonds (Santee Cooper), Series B, 7.10% due 7/01/2001 (b) 8,172 South BBB Baa 2,500 South Dakota State, Health and Educational Facilities Dakota--0.3% Authority, Revenue Refunding Bonds (Prairie Lakes Health Care), 7.25% due 4/01/2022 2,561 Tennessee--1.5% NR* NR* 1,765 Knox County, Tennessee, Health, Educational, and Housing Facilities Board, Hospital Facilities Revenue Bonds (Baptist Health Systems of East Tennessee), 8.50% due 4/15/2004 1,928 BBB+ A3 10,285 Maury County, Tennessee, IDB, PCR, Refunding (Saturn Corp. Project), 6.50% due 9/01/2024 10,664 Texas--8.9% A1+ VMIG1++ 700 Brazos River Authority, Texas, PCR, Refunding (Texas Utilities Electric Co.), VRDN, AMT, Series C, 4.05% due 6/01/2030 (a) 700 A- A 3,800 Ector County, Texas, Hospital District Revenue Bonds (Medical Center Hospital), 7.30% due 4/15/2012 4,110 BBB Baa1 8,400 Gulf Coast, Texas, Waste Disposal Authority Revenue Bonds (Champion International Corporation), AMT, 7.45% due 5/01/2026 8,979 AA Aa 10,000 Harris County, Texas, Toll Road Sub-Lien, Revenue Refunding Bonds, UT, 6.75% due 8/01/2014 10,775
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
S&P Moody's Face Value State Ratings Ratings Amount Issue (Note 1a) Texas A A2 $ 7,000 Matagorda County, Texas, Navigational District No. 1, PCR (concluded) (Central Power and Light Company Project), 7.50% due 12/15/2014 $ 7,765 BB Ba 5,000 Odessa, Texas, Junior College District, Revenue Refunding Bonds, Series A, 8.125% due 12/01/2018 5,300 Port Corpus Christi Authority, Texas, Nueces County, PCR (Hoechst Celanese Corporation Project): A+ A2 10,000 AMT, 6.875% due 4/01/2017 10,504 A+ A2 9,600 Refunding, 7.50% due 8/01/2012 10,555 A+ A2 5,000 Red River Authority, Texas, PCR (Hoechst Celanese Corporation Project), AMT, 6.875% due 4/01/2017 5,252 AAA Aaa 5,110 Texas National Research Laboratory Commission Financing Corporation, Lease Revenue Bonds (Superconducting Super Collider Project), 7.10% due 12/01/2001 (b) 5,903 Travis County, Texas, Housing Finance Corporation, Residential Mortgage Revenue Refunding Bonds, Series A (f) (g): AAA NR* 985 7% due 12/01/2011 1,062 AAA NR* 2,805 7.05% due 12/01/2025 2,965 Utah--0.3% AA NR* 2,140 Utah State, HFA, S/F Mortgage Revenue Bonds, AMT, Series E-2, 7.15% due 7/01/2024 2,238 Vermont--0.4% AA NR 3,585 Vermont Educational and Health Buildings Financing Agency Revenue Bonds (Middlebury College Project), 6% due 11/01/2022 3,625 Virginia--1.0% AA+ Aa1 8,125 Virginia State, HDA, Commonwealth Mortgage Revenue Bonds, Series A, 7.10% due 1/01/2025 8,560 Washington--2.5% Washington State Public Power Supply System, Revenue Refunding Bonds: AA Aa 9,235 (Nuclear Project No. 1), Series A, 7% due 7/01/2011 9,882 AA Aa 5,000 (Nuclear Project No. 1), Series A, 6.875% due 7/01/2017 5,284 AA Aa 5,000 (Nuclear Project No. 2), Series B, 7% due 7/01/2012 5,350 West BBB+ A3 7,500 Mason County, West Virginia, PCR, Refunding (Appalachian Virginia--1.9% Power Company Project), Series I, 6.85% due 6/01/2022 7,902 BBB+ Baa1 5,500 Randolph County, West Virginia, Building Commission, Hospital Revenue Refunding and Improvement Bonds (Davis Memorial Hospital Project), Series A, 7.65% due 11/01/2021 5,802 NR* NR* 1,500 Upshur County, West Virginia, Solid Waste Disposal Revenue Bonds (TJ International Project), AMT, 7% due 7/15/2025 1,538 Wisconsin--0.3% NR* A 2,710 Wisconsin State Health and Educational Facilities Authority Revenue Bonds (Mercy Hospital of Janesville Incorporated), 6.60% due 8/15/2022 2,805 Puerto A- Baa1 2,500 Puerto Rico, Electric Power Authority, Power Revenue Bonds, Rico--0.3% Series T, 6.375% due 7/01/2024 2,621 Total Investments (Cost--$759,191)--98.6% 811,779 Other Assets Less Liabilities--1.4% 11,621 -------- Net Assets--100.0% $823,400 ======== (a)The interest rate is subject to change periodically based upon prevailing market rates. The interest rate shown is the rate in effect at October 31, 1995. (b)Prerefunded. (c)AMBAC Insured. (d)FHA Insured. (e)MBIA Insured. (f)FNMA Collateralized. (g)GNMA Collateralized. (h)FGIC Insured. (i)Escrowed to Maturity. *Not Rated ++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.
FINANCIAL INFORMATION Statement of Assets, Liabilities and Capital as of October 31, 1995 Assets: Investments, at value (identified cost--$759,190,746) (Note 1a) $811,778,549 Cash 2,163,295 Receivables: Interest $ 15,584,356 Securities sold 243,514 15,827,870 ------------ Deferred organization expenses (Note 1e) 11,698 Prepaid expenses and other assets 22,458 ------------ Total assets 829,803,870 ------------ Liabilities: Payables: Securities purchased 4,746,163 Dividends to shareholders (Note 1f) 1,181,125 Investment adviser (Note 2) 359,951 6,287,239 ------------ Accrued expenses and other liabilities 116,529 ------------ Total liabilities 6,403,768 ------------ Net Assets: Net assets $823,400,102 ============ Capital: Capital Stock (200,000,000 shares authorized) (Note 4): Preferred Stock, par value $.10 per share (10,000 shares of AMPS* issued and outstanding at $25,000 per share liquidation preference) $250,000,000 Common Stock, par value $.10 per share (37,061,414 shares issued and outstanding) $ 3,706,141 Paid-in capital in excess of par 519,009,869 Undistributed investment income--net 7,709,254 Accumulated realized capital losses on investments--net (Note 5) (9,612,965) Unrealized appreciation on investments--net 52,587,803 ------------ Total--Equivalent to $15.47 net asset value per Common Stock (market price--$14.375) 573,400,102 ------------ Total capital $823,400,102 ============ *Auction Market Preferred Stock. See Notes to Financial Statements.
FINANCIAL INFORMATION (continued) Statement of Operations
For the Year Ended October 31, 1995 Investment Income Interest and amortization of premium and discount earned $ 52,237,797 (Note 1d): Expenses: Investment advisory fees (Note 2) $ 3,981,816 Commission fees (Note 4) 686,889 Transfer agent fees 120,525 Accounting services (Note 2) 102,573 Professional fees 83,557 Printing and shareholder reports 58,653 Custodian fees 56,217 Directors' fees and expenses 46,667 Listing fees 33,437 Pricing fees 18,398 Amortization of organization expenses (Note 1e) 10,782 Other 28,425 ------------ Total expenses 5,227,939 ------------ Investment income--net 47,009,858 ------------ Realized & Realized loss on investments--net (9,612,893) Unrealized Gain Change in unrealized appreciation/depreciation on investments--net 59,252,744 (Loss) on ------------ Investments Net Increase in Net Assets Resulting from Operations $ 96,649,709 - --Net (Notes 1b, ============ 1d & 3): See Notes to Financial Statements.
FINANCIAL INFORMATION (continued) Statements of Changes in Net Assets
For the Year Ended October 31, Increase (Decrease) in Net Assets: 1995 1994 Operations: Investment income--net $ 47,009,858 $ 47,624,907 Realized gain (loss) on investments--net (9,612,893) 9,469,638 Change in unrealized appreciation/depreciation on investments--net 59,252,744 (92,046,200) ------------ ------------ Net increase (decrease) in net assets resulting from operations 96,649,709 (34,951,655) ------------ ------------ Dividends & Investment income--net: Distributions to Common Stock (37,084,429) (39,600,729) Shareholders Preferred Stock (8,354,970) (6,723,911) (Note 1f): Realized gain on investments--net: Common Stock (8,130,978) (8,671,336) Preferred Stock (1,336,651) (1,008,475) ------------ ------------ Net decrease in net assets resulting from dividends and distributions to shareholders (54,907,028) (56,004,451) ------------ ------------ Capital Stock Value of shares issued to Common Stock shareholders in Transactions reinvestment of dividends and distributions -- 2,807,654 (Notes 1e & 4): Offering costs resulting from the issuance of Preferred Stock -- 30,500 ------------ ------------ Net increase in net assets derived from capital stock transactions -- 2,838,154 ------------ ------------ Net Assets: Total increase (decrease) in net assets 41,742,681 (88,117,952) Beginning of year 781,657,421 869,775,373 ------------ ------------ End of year* $823,400,102 $781,657,421 ============ ============ *Undistributed investment income--net (Note 1g) $ 7,709,254 $ 6,136,765 ============ ============ See Notes to Financial Statements.
FINANCIAL INFORMATION (concluded) Financial Highlights
For the Period The following per share data and ratios have been derived Nov. 29, from information provided in the financial statements. 1991++ to For the Year Ended October 31, Oct. 31, Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992 Per Share Net asset value, beginning of period $ 14.35 $ 16.80 $ 14.69 $ 14.18 Operating -------- -------- -------- -------- Performance: Investment income--net 1.27 1.29 1.31 1.18 Realized and unrealized gain (loss) on investments--net 1.34 (2.23) 2.27 .57 -------- -------- -------- -------- Total from investment operations 2.61 (.94) 3.58 1.75 -------- -------- -------- -------- Less dividends and distributions to Common Stock shareholders: Investment income--net (1.00) (1.07) (1.11) (.89) Realized gain on investments--net (.22) (.23) (.16) -- -------- -------- -------- -------- Total dividends and distributions to Common Stock shareholders (1.22) (1.30) (1.27) (.89) -------- -------- -------- -------- Capital charge resulting from issuance of Common Stock -- -- -- (.02) -------- -------- -------- -------- Effect of Preferred Stock activity:++++ Dividends and distributions to Preferred Stock shareholders: Investment income--net (.23) (.18) (.17) (.19) Realized gain on investments--net (.04) (.03) (.03) -- Capital charge resulting from issuance of Preferred Stock -- -- -- (.14) -------- -------- -------- -------- Total effect of Preferred Stock activity (.27) (.21) (.20) (.33) -------- -------- -------- -------- Net asset value, end of period $ 15.47 $ 14.35 $ 16.80 $ 14.69 ======== ======== ======== ======== Market price per share, end of period $ 14.375 $ 12.125 $ 16.75 $ 15.125 ======== ======== ======== ======== Total Based on market price per share 29.76% (20.94%) 19.91% 7.06%+++ Investment ======== ======== ======== ======== Return:** Based on net asset value per share 18.00% (6.71%) 23.83% 9.99%+++ ======== ======== ======== ======== Ratios to Expenses, net of reimbursement .66% .66% .64% .58%* Average ======== ======== ======== ======== Net Assets:*** Expenses .66% .66% .64% .65%* ======== ======== ======== ======== Investment income--net 5.91% 5.76% 5.72% 6.08%* ======== ======== ======== ======== Supplemental Net assets, net of Preferred Stock, end of period Data: (in thousands) $573,400 $531,657 $619,775 $526,287 ======== ======== ======== ======== Preferred Stock outstanding, end of period (in thousands) $250,000 $250,000 $250,000 $250,000 ======== ======== ======== ======== Portfolio turnover 52.99% 44.27% 25.58% 66.45% ======== ======== ======== ======== Dividends Per Series A--Investment income--net $ 887 $ 598 $ 560 $ 680 Share on Series B--Investment income--net 850 733 554 690 Preferred Stock Series C--Investment income--net 827 647 566 685 Outstanding:++++++ Series D--Investment income--net 897 659 556 688 Series E--Investment income--net 759 707 542 688 *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. ++Commencement of Operations. ++++The Fund's Preferred Stock was issued on December 23, 1991. ++++++Dividends per share have been adjusted to reflect a two-for- one stock split. +++Aggregate total investment return. See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS 1. Significant Accounting Policies: MuniYield Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a non-diversified, closed-end management investment company. The Fund determines and makes available for publication the net asset value of its Common Stock on a weekly basis. The Fund's Common Stock is listed on the New York Stock Exchange under the symbol MYD. 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 price 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 for which market quotations are not readily available are valued at their 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. * Financial futures contracts--The Fund may purchase or sell interest rate futures contracts and options on such futures contracts for the purpose of hedging the market risk on existing securities or the intended purchase of securities. Futures contracts are contracts for delayed delivery of securities at a specific future date and at a specific price or yield. Upon entering into a contract, the Fund deposits and maintains as collateral such initial margin as required by the exchange on which the transaction is effected. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. * 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 in-come. Realized gains and losses on security transac- tions are determined on the identified cost basis. (e) Deferred organization expenses and offering expenses--Deferred organization expenses are amortized on a straight-line basis over a five-year period. Direct expenses relating to the public offering of the Common and Preferred Stock were charged to capital at the time of issuance. (f) Dividends and distributions--Dividends from net investment income are declared and paid monthly. Distributions of capital gains are recorded on the ex-dividend dates. (g) Reclassification--Generally accepted accounting principles require that certain differences between accumulated net realized capital losses for financial reporting and tax purposes, if permanent, be reclassified to undistributed net investment income. Accordingly, current year's permanent book/tax differences of $2,030 have been reclassified from accumulated net realized capital losses to 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 0.50% of the Fund's average weekly net assets. Accounting services are provided to the Fund by FAM at cost. Certain officers and/or directors of the Fund are officers and/or directors of FAM, PSI, Merrill Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S"), and/or ML & Co. 3. Investments: Purchases and sales of investments, excluding short-term securities, for the year ended October 31, 1995 were $399,221,368 and $409,032,383, respectively. Net realized and unrealized gains (losses) as of October 31, 1995 were as follows: Realized Unrealized Gains (Losses) Gains Long-term investments $ 1,575,962 $52,587,803 Short-term investments 18,313 -- Financial futures contracts (11,207,168) -- ------------ ----------- Total $ (9,612,893) $52,587,803 ============ =========== As of October 31, 1995, net unrealized appreciation for Federal income tax purposes aggregated $52,587,803, of which $52,639,044 related to appreciated securities and $51,241 related to depreciated securities. The aggregate cost of investments at October 31, 1995 for Federal income tax purposes was $759,190,746. 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 the holders of Common Stock. Common Stock For the year ended October 31, 1995, shares issued and outstanding remained constant at 37,061,414. At October 31, 1995, total paid-in capital amounted to $522,716,010. Preferred Stock Auction Market Preferred Stock ("AMPS") are shares of Preferred Stock of the Fund that entitle their holders to receive cash dividends at an annual rate that may vary for the successive dividend periods. The yields in effect at October 31, 1995 were as follows: Series A, 3.799%; Series B, 3.779%; Series C, 3.786%, Series D, 3.69%; and Series E, 3.79%. A two-for-one stock split occurred on December 1, 1994. As a result, as of October 31, 1995, there were 10,000 AMPS shares authorized, issued and outstanding with a liquidation preference of $25,000 per share, plus accumulated and unpaid dividends of $1,130,421. The Fund pays commissions to certain broker-dealers at the end of each auction at an annual rate ranging from 0.25% to 0.375%, calculated on the proceeds of each auction. For the year ended October 31, 1995, MLPF&S, an affiliate of FAM, earned $184,279 as commissions. 5. Capital Loss Carryforward: At October 31, 1995, the Fund had a net capital loss carryforward of approximately $751,000, all of which expires in 2003. This amount will be available to offset like amounts on any future taxable gains. 6. Subsequent Event: On November 13, 1995, the Fund's Board of Directors declared an ordinary income dividend to Common Stock shareholders in the amount of $0.085969 per share, payable on November 29, 1995 to shareholders of record as of November 24, 1995. INDEPENDENT AUDITOR'S REPORT The Board of Directors and Shareholders of MuniYield Fund, Inc.: We have audited the accompanying statement of assets, liabilities and capital, including the schedule of investments, of MuniYield Fund, Inc. as of October 31, 1995, 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 three-year period then ended and the period November 29, 1991 (commencement of operations) to October 31, 1992. 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 October 31, 1995 by correspondence with the custodian, broker and an affiliated fund. 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 Fund, Inc. as of October 31, 1995, 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 December 6, 1995 IMPORTANT TAX INFORMATION (UNAUDITED) All of the net investment income distributions paid monthly by MuniYield Fund, Inc. during its taxable year ended October 31, 1995 qualify as tax-exempt interest dividends for Federal income tax purposes. Additionally, the following table summarizes the per share capital gains distributions paid by the Fund during the year.
Payable Short-Term Long-Term Date Capital Gains Capital Gains Common Stock Shareholders 12/29/94 -- $ 0.219392 Preferred Stock Shareholders: Series A 12/07/94 -- $100.32 1/04/95 -- $ 18.42 Series B 12/14/94 -- $109.17 1/11/95 -- $ 36.58 Series C 12/01/94 -- $191.57 12/07/94 -- $ 19.15 1/04/95 -- $ 13.73 Series D 11/30/94 -- $198.86 12/28/94 -- $ 31.49 Series E 12/01/94 -- $205.13 12/29/94 -- $ 37.90 Please retain this information for your records.
PER SHARE INFORMATION (UNAUDITED) Per Share Selected Quarterly Financial Data*
Dividends/Distributions Net Realized Unrealized Investment Gains Gains Net Investment Income Capital Gains For the Quarter Income (Losses) (Losses) Common Preferred Common Preferred November 1, 1993 to January 31, 1994 $.33 $.20 $(.07) $.27 $.05 $.23 $.03 February 1, 1994 to April 30, 1994 .31 .10 (1.79) .27 .03 -- -- May 1, 1994 to July 31, 1994 .32 -- .20 .26 .05 -- -- August 1, 1994 to October 31, 1994 .33 (.04) (.83) .27 .05 -- -- November 1, 1994 to January 31, 1995 .33 (.27) .38 .26 .04 .22 .04 February 1, 1995 to April 30, 1995 .30 (.29) .61 .25 .06 -- -- May 1, 1995 to July 31, 1995 .32 (.09) .32 .24 .07 -- -- August 1, 1995 to October 31, 1995 .32 .39 .29 .25 .06 -- -- Net Asset Value Market Price** For the Quarter High Low High Low Volume*** November 1, 1993 to January 31, 1994 $16.82 $16.35 $16.75 $15.125 3,287 February 1, 1994 to April 30, 1994 16.65 14.63 16.50 13.50 3,670 May 1, 1994 to July 31, 1994 15.52 14.68 14.50 13.375 3,341 August 1, 1994 to October 31, 1994 15.23 14.35 14.25 11.625 5,570 November 1, 1994 to January 31, 1995 14.31 13.39 13.50 11.25 7,793 February 1, 1995 to April 30, 1995 14.99 14.33 13.75 13.25 2,612 May 1, 1995 to July 31, 1995 15.46 14.75 14.75 13.875 4,144 August 1, 1995 to October 31, 1995 15.56 14.90 14.375 13.375 3,140 *Calculations are based upon shares of Common Stock outstanding at the end of each quarter. **As reported in the consolidated transaction reporting system. ***In thousands.
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 Donald C. Burke, Vice President Vincent R. Giordano, Vice President Kenneth A. Jacob, Vice President Gerald M. Richard, Treasurer Mark B. Goldfus, Secretary Custodian The Bank of New York 90 Washington Street New York, New York 10286 Transfer Agents Common Stock: The Bank of New York 101 Barclay Street New York, New York 10286 Preferred Stock: IBJ Schroder Bank & Trust Company One State Street New York, New York 10004 NYSE Symbol MYD -----END PRIVACY-ENHANCED MESSAGE-----