MUNIYIELD
FUND, INC.
FUND LOGO
Annual Report
October 31, 1994
Officers and Directors
Arthur Zeikel, President and Director
Kenneth S. Axelson, 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
<PAGE>
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, 1994, the Common
Stock of MuniYield Fund, Inc. earned $1.208 per share
income dividends, which includes earned and unpaid
dividends of $0.088. This represents a net annualized
yield of 8.42%, based on a month-end net asset value
of $14.35 per share. Over the same period, the total
investment return on the Fund's Common Stock was
- -6.71%, based on a change in per share net asset
value from $16.80 to $14.35, and assuming reinvest-
ment of $1.214 per share income dividends and $0.090
per share capital gains distributions.
For the six-month period ended October 31, 1994, the
total investment return on the Fund's Common Stock
was -0.44%, based on a change in per share net asset
value from $14.99 to $14.35, and assuming reinvest-
ment of $0.525 per share income dividends.
<PAGE>
For the year ended October 31, 1994, the Fund's
Auction Market Preferred Stock had an average yield
as follows: Series A, 3.015%; Series B, 3.13%; Series C,
3.03%; Series D, 2.988%; and Series E, 3.20%.
The Environment
As discussed in our last report to shareholders, the
Federal Reserve Board moved to counteract inflation-
ary pressures by tightening monetary policy. This
trend continued during the May--October period.
Despite the series of preemptive strikes against
inflation by the central bank, concerns of increasing
inflationary pressures continued to prompt volatility
in the US capital markets during the period. In addi-
tion, the weakness of the US dollar in foreign exchange
markets prolonged stock and bond market declines.
Ongoing strength in the manufacturing sector and
better-than-expected economic results continue to
fuel speculation that the Federal Reserve Board will
continue to raise short-term interest rates in the
months ahead. However, although consumer spending
is increasing, it is doing so at a lower rate than has
been the case in recent economic recoveries. In the
weeks ahead, investors will continue to assess eco-
nomic data and inflationary trends in order to gauge
whether further increases in short-term interest rates
are imminent. Continued indications of moderate and
sustainable levels of economic growth would be
positive for the US capital markets. At the same time,
greater US dollar stability in foreign exchange markets
would help to dampen expectations of significantly
higher short-term interest rates.
The Municipal Market
The long-term tax-exempt market continued to erode
throughout the three months ended October 31, 1994.
As measured by the Bond Buyer Revenue Bond Index,
yields on A-rated municipal revenue bonds maturing
in 30 years rose by almost 50 basis points (0.50%) to
6.95% during the October 31, 1994 quarter. This
represents the highest level in tax-exempt bond yields
in over two years. US Treasury bonds suffered even
greater declines during the quarter as Treasury bond
yields rose approximately 60 basis points to end the
quarter at 8.00%.
<PAGE>
The tax-exempt bond market reacted negatively
throughout the October quarter to indications that,
despite a series of interest rate increases by the
Federal Reserve Board, the strength of the domestic
economy seen in recent quarters has not yet been
significantly reduced. While inflationary pressures
have remained well contained, additional Federal
Reserve Board actions have been expected both to
ensure that domestic economic growth is eventually
confined to current levels and to assure nervous
financial markets of its anti-inflationary intentions.
Fortunately, while the demand for tax-exempt bonds
has declined somewhat in recent months, new bond
issuance has remained greatly reduced. During the
quarter ended October 31, 1994, only $32 billion in
long-term tax-exempt securities were issued, a decline
of over 50% versus the October 31, 1993 quarter. Simi-
larly, for the six months ended October 31, 1994, only
$75 billion in municipal securities were underwritten,
a decline of over 50% versus the comparable period
a year earlier. This reduction in issuance in recent
quarters has allowed the municipal bond market to
react to both the decline in investor demand and the
rise in fixed-income yields in a more orderly fashion
than in similar situations in the past, particularly
during 1987.
Long-term tax-exempt revenue bonds currently yield
approximately 7%, or almost 11.5% on an after-tax
equivalent basis, to an investor in the 39.6% Federal
income tax bracket. As inflation has only marginally
increased in the past year, real tax-exempt interest
rates have risen dramatically. The Federal Reserve
Board appears committed to maintaining inflation at
or below its current levels. Indeed, most forecasts
expect inflation to remain in its present range of
3%--4% throughout 1995 and potentially, for the remainder
of the the 1990s. Real after-tax equivalent interest
rates exceeding 7% represent historically attractive
municipal investments for long-term investors.
<PAGE>
Federal Reserve Board actions taken thus far have yet
to fully impact US domestic growth and expected
additional actions should promote only a modest
economic expansion within a benign inflationary
context beginning sometime early in 1995. Within
such an environment, it is unlikely that tax-exempt
interest rates will remain at their current attractive
levels. Tax-exempt bond issuance is unlikely to return
to the historic high levels seen in 1992 and 1993, while
investor demand should return as markets stabilize.
As we have discussed in earlier reports, the total
number of tax-exempt bonds outstanding is sched-
uled to decline dramatically in 1994 and 1995 as a
result of both regualr bond maturities and early
redemptions. Investors seeking tax-advantaged issues
are likely to find it very difficult to obtain currently
available tax-exempt yields as the current supply/
demand balance is unlikely to be maintained in the
coming quarters.
Portfolio Strategy
During the six months ended October 31, 1994, our
portfolio strategy evolved to reflect a somewhat more
constructive market outlook. While our efforts in that
direction have proven somewhat premature, we remain
convinced that long-term tax-exempt interest rates
represent extraordinary value in light of what we
perceive to be unwarranted inflationary fears within
the investor community. We have kept cash reserves
at low levels in recognition of the strong technical
foundation underlying the municipal market. Indeed,
long-term volume for the year ended October 31, 1994
is down significantly from levels of one year ago. At the
same time, demand for municipals has also declined
sharply this year, muting the favorable impact of
diminished supply. Nevertheless, we believe that
when the market does turn, scarcity will be a
serious obstacle for the underinvested attempting to
enhance total return.
Another phase of our investment strategy has been to
reduce the Fund's holdings of prerefunded bonds and
to reinvest the proceeds in long-term, high-quality
current coupon securities. The former have been
trading at historically overvalued levels, while the
latter are quite attractive when considered on a
taxable equivalent basis. These efforts will not only
maintain a competitive yield over time, but they will
also contribute to the Fund's ability to more fully
benefit from the anticipated rebound in the fixed-
income markets.
<PAGE>
While Preferred Stock interest rates have risen some-
what over the last six months, the rise has been muted
relative to other comparable measures in the short-
term taxable market. As a consequence, the persistent
steepness of the municipal yield curve continues
to benefit the leveraged Common Stock shareholder.
Nonetheless, a portion of the Fund's Preferred Stock
remains in an extended mode, and as short-term
interest rates continue to edge up, we believe that the
Fund's Common Stock is likely to continue to be at
least somewhat insulated from the consequences of a
flattening yield curve. (For a complete explanation
of the benefits and risks of leveraging, see page 3
of this report to shareholders.)
We appreciate your ongoing interest in MuniYield
Fund, Inc., and we look forward to serving your
investment needs and objectives in the months and
years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
December 5, 1994
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.
<PAGE>
To illustrate these concepts, assume a fund's Common
Stock capitalization of $100 million and the issuance of
Preferred Stock for an additional $50 million, creating
a total value of $150 million available for investment
in long-term municipal bonds. If prevailing short-term
interest rates are approximately 3% and long-term
interest rates are approximately 6%, the yield curve
has a strongly positive slope. The fund pays dividends
on the $50 million of Preferred Stock based on the
lower short-term interest rates. At the same time, the
fund's total portfolio of $150 million earns the income
based on long-term interest rates.
In this case, the dividends paid to Preferred Stock
shareholders are significantly lower than the income
earned on the fund's long-term investments, and
therefore the Common Stock shareholders are the
beneficiaries of the incremental yield. However, if
short-term interest rates rise, narrowing the differen-
tial between short-term and long-term interest rates,
the incremental yield pick-up on the Common Stock
will be reduced. 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)
DATES Daily Adjustable Tax-Exempt Securities
GO General Obligation Bonds
HFA Housing Finance Authority
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
TRAN Tax Revenue Anticipation Notes
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Alabama--1.1% BBB Baa1 $ 8,750 Courtland, Alabama, IDB, Industrial Development Revenue
Refunding Bonds (Champion International Corporation),
Series A, 7.20% due 12/01/2013 $ 8,660
Alaska--3.8% A+ Aa 12,285 Alaska State, Housing Finance Corporation, GO, Series B,
7% due 12/01/2027 12,128
Valdez, Alaska, Marine Terminal Revenue Refunding Bonds:
AA- A1 8,000 (British Petroleum Pipeline), Series B, 7% due 12/01/2025 7,979
AA- A1 9,635 (Sohio Pipeline), 7.125% due 12/01/2025 9,748
Arizona--0.7% BB Ba2 6,550 Maricopa County, Arizona, Pollution Control Corporation, PCR,
Refunding (Public Service Company--Palo Verde), Series A,
6.375% due 8/15/2023 5,623
Arkansas--0.0% NR* NR* 210 Ozark, Arkansas, IDR (Baldor Electric Company Project), AMT,
5.75% due 5/01/2003 200
California--7.3% AA Aa 5,000 California State, Department of Water Resources, Water System
Revenue Refunding Bonds (Central Valley Project), Series L,
5.875% due 12/01/2025 4,353
Los Angeles, California, Department of Water and Power,
Electric Plant Revenue Refunding Bonds:
AA Aa 5,750 6.375% due 2/01/2020 5,443
AA Aa 5,000 5.375% due 9/01/2023 4,030
A A1 7,730 Los Angeles, California, Wastewater System Revenue
Refunding Bonds, Series C, 7.10% due 6/01/2018 7,871
NR* NR* 7,000 Orange County, California, Community Facilities District,
Special Tax No. 88-1 Revenue Bonds (Aliso Viejo Project),
Series A, 7.35% due 8/15/2002 (a) 7,832
SP-1+ MIG1++ 8,000 Santa Clara County, California, TRAN, UT, 4.25% due 7/07/1995 7,985
University of California Revenue Bonds (Multiple
Purpose Projects):
AAA Aaa 8,000 Refunding, Series C, 5% due 9/01/2023 (c) 6,100
AAA Aaa 13,600 Series D, 6.375% due 9/01/2019 (e) 13,035
Colorado--2.8% BBB+ Baa1 4,000 Colorado Health Facilities Authority Revenue Bonds
(P/SL Healthcare System Project), Series A, 6.875%
due 2/15/2023 3,721
NR* VMIG1 800 Colorado HFA, M/F Housing Revenue Bonds (Hampden and Estes),
VRDN, 3.25% due 12/01/2005 (b) 800
Denver, Colorado, City and County Airport Revenue Bonds:
BB Baa 8,000 AMT, Series D, 7.75% due 11/15/2013 7,882
BB Baa 3,310 AMT, Series D, 7.75% due 11/15/2021 3,173
BB Baa 5,000 Series A, 7.25% due 11/15/2025 4,636
NR* NR* 1,650 Mountain Village, Colorado, Metropolitan District, San Miguel
County Refunding Bonds, UT, 7.95% due 12/01/2003 1,760
<PAGE>
Connecticut--0.6% NR* Baa1 500 Connecticut State, Health and Educational Facilities Authority
Revenue Bonds (The Griffin Hospital), Series A, 5.75% due 7/01/2023 399
A1+ VMIG1 600 Connecticut State, Special Assessment Unemployment
Compensation, Advanced Fund Revenue Bonds (Connecticut
Unemployment), VRDN, Series B, 3.45% due 11/01/2001 (b) 600
A1 VMIG1 600 Connecticut State, Special Tax Obligation Revenue Bonds
(Transportation Infrastructure), VRDN, Second Lien, Series 1,
3.45% due 12/01/2010 (b) 600
NR* NR* 2,685 New Haven, Connecticut, Facilities Revenue Bonds
(Hill Health Corporation Project), 9.25% due 5/01/2017 2,829
District of BBB Baa1 1,890 District of Columbia, Hospital Revenue Refunding Bonds
Columbia--0.2% (Metlantic--Washington Hospital Center), Series A, 7.125%
due 8/15/2019 1,776
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Florida--1.9% A+ A1 $ 7,000 Orange County, Florida, Sales Tax Revenue Bonds, Series B,
5.375% due 1/01/2024 $ 5,666
AA Aa1 10,000 Orlando, Florida, Utilities Commission, Water and Electric
Revenue Bonds, 5.125% due 10/01/2019 7,942
A1 VMIG1 900 Saint Lucie County, Florida, PCR, Refunding (Florida Power
and Light Company Project), VRDN, 3.65% due 1/01/2026 (b) 900
Georgia--1.2% NR* NR* 5,765 Atlanta, Georgia, Urban Residential Finance Authority,
College Facilities Revenue Bonds (Morris Brown College
Project), 9.50% due 6/01/2011 5,477
AAA Aaa 4,200 Georgia Municipal Electric Authority, Special Obligation Bonds
(Fifth Crossover Series--Project One), 6.40% due 1/01/2013 (c) 4,116
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 1,947
A Aa 870 AMT, Series A, 7.10% due 7/01/2024 866
A Aa 3,040 Series B, 6.90% due 7/01/2016 3,023
A Aa 1,110 Series B, 7% due 7/01/2031 1,090
Idaho--0.6% AA NR* 4,345 Idaho Housing Agency, S/F Mortgage Bonds, AMT, Series C-2,
7.15% due 7/01/2023 4,373
<PAGE>
Illinois--1.7% BBB Baa2 2,750 Illinois Development Financing Authority, PCR, Refunding
(Illinois Power Company Project), Series A, 7.375% due 7/01/2021 2,758
BBB+ NR* 2,500 Illinois Educational Facilities Authority Revenue Bonds
(Chicago Osteopathic Health Systems), 7.25% due 5/15/2022 2,402
Illinois Health Facilities Authority Revenue Bonds:
A A 1,500 (Edward Hospital Association Project), 7% due 2/15/2022 1,461
A+ A1 5,000 Refunding (OSF Healthcare Systems), 6% due 11/15/2023 4,236
BBB- NR* 2,625 Refunding (Saint Elizabeth Hospital), Chicago, 7.75% due 7/01/2016 2,529
Indiana--1.7% A+ A1 7,000 Fort Wayne, Indiana, Hospital Authority, Revenue Refunding Bonds
(Parkview Memorial Hospital Inc. Project), 6.40% due 11/15/2022 6,387
NR* A 2,500 Indiana Health Facilities Financing Authority, Hospital Revenue
Refunding Bonds (Saint Anthony Medical Center), Series A,
7% due 10/01/2017 2,417
BBB Baa2 5,000 Indianapolis, Indiana, Airport Authority, Special Facilities
Revenue Bonds (Federal Express Corporation Project), AMT,
7.10% due 1/15/2017 4,875
Kansas--1.1% AAA Aaa 8,300 Burlington, Kansas, PCR, Refunding (Kansas Gas and Electric
Company Project), 7% due 6/01/2031 (e) 8,404
Kentucky--2.6% BBB Baa1 2,500 Ashland, Kentucky, Solid Waste Revenue Bonds (Ashland Oil
Incorporated Project), AMT, 7.20% due 10/01/2020 2,488
A1+ VMIG1 1,400 Daviess County, Kentucky, Solid Waste Disposal Facility Revenue
Bonds (Scott Paper Co. Project), VRDN, AMT, Series B, 3.65%
due 12/01/2023 (b) 1,400
Kenton County, Kentucky, Airport Board, Airport Special Facilities
Revenue Bonds (Delta Airlines Project), AMT, Series A:
BB Ba1 10,575 7.125% due 2/01/2021 9,585
BB Ba1 3,000 6.125% due 2/01/2022 2,385
Trimble County, Kentucky, PCR (Louisville Gas and Electric
Company), AMT, Series A:
AA Aa2 750 7.625% due 11/01/2000 (a) 841
AA Aa2 3,775 7.625% due 11/01/2020 3,979
Louisiana--4.7% NR* Baa3 35,000 Lake Charles, Louisiana, Harbor and Terminal District,
Port Facilities Revenue Refunding Bonds (Trunkline Company
Project), 7.75% due 8/15/2022 36,556
Maine--1.3% AA- Aa 10,460 Maine Housing Authority, S/F Mortgage Acquisition Bonds,
Series 1, 7.15% due 11/01/2021 10,386
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Maryland--0.7% Prince Georges County, Maryland, Hospital Revenue Bonds:
NR* Aaa $ 4,500 (Dimensions Health Corporation), 7.25% due 7/01/2002 (a) $ 4,971
NR* Baa 815 (Greater Southeast Healthcare Systems), 6.20% due 1/01/2008 753
Massachusetts--5.2% Massachusetts Bay Transportation Authority, Massachusetts,
General Transportation Systems Revenue Bonds:
A+ Aaa 8,500 Series A, 7% due 3/01/2001 (a) 9,251
A+ A 12,600 Series B, 5.875% due 3/01/2019 11,086
NR* Aa 5,400 Massachusetts State Health and Educational Facilities
Authority Revenue Refunding Bonds (Daughters of Charity),
Series D, 6% due 7/01/2009 5,093
A+ Aa 2,915 Massachusetts State, HFA, Housing Revenue Bonds, AMT,
Series 29, 6.75% due 6/01/2026 2,769
AAA Aaa 5,000 Massachusetts State, HFA, Residential Development Bonds,
Series C, 6.90% due 11/15/2021 (f) 5,007
AAA Aaa 10,000 Massachusetts State, Water Reserve Authority, GO, Refunding,
Series B, 5% due 3/01/2022 (e) 7,656
Michigan--0.8% AA- A 5,575 Michigan State, Building Authority Revenue Refunding Bonds,
Series I, 6.75% due 10/01/2011 5,593
A P1 700 Midland County, Michigan, Economic Development Corp., Economic
Development, Limited Obligation Revenue Refunding Bonds (Dow
Chemical Co. Project), VRDN, Series B, 3.75% due 2/01/2015 (b) 700
Minnesota--3.2% A1+ NR* 500 Beltrami County, Minnesota, Environmental Control Revenue
Refunding Bonds (Northwood Panelboard), VRDN, 3.70%
due 12/01/2021 (b) 500
A+ A1 10,000 Minnesota State, HFA, Housing Development Bonds, Series A,
6.95% due 2/01/2014 10,067
AA+ Aa 3,440 Minnesota State, HFA, S/F Mortgage Bonds, AMT, Series A, 7.05%
due 7/01/2022 3,446
BBB- Baa 6,000 Saint Paul, Minnesota, Housing and Redevelopment Authority,
Hospital Revenue Bonds (Healtheast Project), Series B,
6.625% due 11/01/2017 5,354
BBB Baa1 5,700 Sartell, Minnesota, PCR, Refunding (Champion International
Corporation), 6.95% due 10/01/2012 5,580
Mississippi--2.7% A A2 17,750 Lowndes County, Mississippi, Solid Waste Disposal and
PCR, Refunding (Weyerhaeuser Company Project), Series A, 6.80%
due 4/01/2022 17,467
NR* Baa 2,615 Mississippi Hospital Equipment and Facilities Authority Revenue
Bonds (Riley Memorial Hospital), Series B, 7.125% due 5/01/2022 2,465
NR* P1 800 Perry County, Mississippi, PCR, Refunding (Leaf River Forest
Project), VRDN, 3.55% due 3/01/2002 (b) 800
<PAGE>
Missouri--0.4% BBB- NR* 3,000 Joplin, Missouri, IDA, Hospital Facilities Revenue Refunding and
Improvement Bonds (Tri-State Osteopathic), 8.25% due 12/15/2014 3,148
New Jersey--3.7% NR* Baa 4,050 Atlantic County, New Jersey, Utilities Authority, Solid Waste
Revenue Bonds, 7.125% due 3/01/2016 3,901
Camden County, New Jersey, Pollution Control Financing Authority,
Solid Waste Resource Recovery Revenue Bonds, AMT:
BBB+ Baa1 2,500 Series A, 7.50% due 12/01/2010 2,415
BBB+ Baa1 7,000 Series B, 7.50% due 12/01/2009 6,785
AAA NR* 9,500 New Jersey State, Housing and Mortgage Financing Agency,
M/F Housing Revenue Refunding Bonds (Presidential Plaza),
7% due 5/01/2030 (d) 9,389
AA- A1 8,000 Port Authority of New York and New Jersey, Consolidated Revenue
Bonds, Ninety-First Series, 5.20% due 11/15/2016 6,517
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
New Mexico--1.3% Farmington, New Mexico, PCR, Refunding, Series A:
BB Ba2 $ 5,000 (Public Service Company--San Juan Project), 6.40%
due 8/15/2023 $ 4,328
A+ Aa3 5,850 (Southern California Edison Company), 7.20% due 4/01/2021 5,983
New York--13.1% Metropolitan Transportation Authority, New York, Service Contract
Revenue Refunding Bonds, Series 5:
BBB Baa1 3,590 (Commuter Facilities), 6.90% due 7/01/2005 3,643
BBB Baa1 6,100 (Transit Facilities), 6.90% due 7/01/2005 6,190
New York City, New York, GO, UT:
A- Baa1 2,000 Series A, 7.75% due 8/15/2008 2,131
A- Baa1 4,600 Series A, 7.75% due 8/15/2012 4,875
A- Baa1 5,000 Series A, 7.75% due 8/15/2016 5,299
A- Baa1 15,000 Series B, 7.75% due 2/01/2010 15,933
A- Baa1 1,555 Series B, 7.75% due 2/01/2013 1,652
A- Baa1 5,000 Series C, Subseries C-1, 7.50% due 8/01/2021 5,152
AAA VMIG1 800 New York City, New York, Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds, VRDN, Series G, 3.60%
due 6/15/2024 (b) (h) 800
BBB+ Baa1 5,000 New York State, Dormitory Authority, Educational Facilities
Revenue Bonds (State University), Series B, 5.75% due 5/15/2024 4,165
New York State, Energy Research and Development Authority,
Electric Facilities Revenue Bonds (Con Edison Co. of
New York, Inc. Project), AMT:
A+ Aa3 5,000 Series A, 7.50% due 1/01/2026 5,252
<PAGE> A+ Aa3 7,000 Series C, 7.25% due 11/01/2024 7,192
A Aa 24,200 New York State, Environmental Facilities Corporation, PCR
(State Water Revolving Fund), Series E, 6.875% due 6/15/2010 24,951
AAA Aaa 5,000 New York State, Local Government Assistance Corporation Revenue
Bonds, Series D, 7% due 4/01/2002 (a) 5,487
A+ Aa 12,000 Triborough Bridge and Tunnel Authority, Revenue Refunding
Bonds (General Purpose), Series A, 5% due 1/01/2015 9,669
North Carolina--2.9% NR* Aa2 900 Halifax County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Exempt Facilities--
Westmoreland), VRDN, 3.75% due 12/01/2019 (b) 900
North Carolina HFA, S/F Mortgage Revene Bonds:
A+ Aa 5,385 AMT, Series T, 7.05% due 9/01/2020 5,359
A+ Aa 15,520 Refunding, Series S, 6.95% due 3/01/2017 15,539
NR* P1 1,000 Wake County, North Carolina, Industrial Facilities and Pollution
Control Finance Authority Revenue Bonds (Carolina Power and
Light Company Project), DATES, 3.65% due 3/01/2017 (b) 1,000
North Dakota--0.5% A+ Aa 4,090 North Dakota State, HFA, S/F Mortgage Revenue Bonds, Series A,
7% due 7/01/2023 4,089
Ohio--0.7% AAA Aaa 3,000 Hamilton, Ohio, Electric System Mortgage Revenue Refunding
Bonds, Series A, 6% due 10/15/2023 (h) 2,751
BBB- Baa 2,000 Montgomery County, Ohio, Health Systems Revenue Bonds
(Franciscan Sisters of the Poor), Series B-1, 8.10% due 7/01/2018 2,082
Oklahoma--0.1% A+ A1 730 Oklahoma State Turnpike Authority, Turnpike Revenue Bonds,
First Senior, Series A, 6.125% due 1/01/2020 688
Pennsylvania--3.7% Pennsylvania Convention Center Authority, Revenue Refunding
Bonds, Series A:
BB Ba 9,675 6.70% due 9/01/2014 9,070
BB Ba 7,325 6.75% due 9/01/2019 6,786
BBB- NR* 5,000 Pennsylvania Economic Development Financing Authority,
Resource Recovery Revenue Bonds (Colver Project), AMT,
Series D, 7.15% due 12/01/2018 4,747
AA- A1 10,000 Pennsylvania State University, Revenue Refunding Bonds,
Second Series, 5.50% due 8/15/2016 8,502
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
South Carolina--2.3% A- A1 $ 7,000 Richland County, South Carolina, PCR, Refunding (Union Camp
Corporation Project), Series C, 6.55% due 11/01/2020 $ 6,689
A+ Aaa 10,125 South Carolina State, Public Service Authority, Revenue Refunding
Bonds (Santee Cooper), Series B, 7.10% due 7/01/2001 (a) 11,105
<PAGE>
South Dakota--0.3% BBB Baa 2,500 South Dakota State, Health and Educational Facilities Authority,
Revenue Refunding Bonds (Prairie Lakes Health Care),
7.25% due 4/01/2022 2,367
Tennessee--0.3% NR* NR* 1,885 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 1,986
Texas--11.7% BBB Baa2 5,000 Brazos River Authority, Texas, PCR (Texas Utilities Electric
Company Project), AMT, Series A, 7.875% due 3/01/2021 5,243
BBB A 3,900 Ector County, Texas, Hospital District Revenue Bonds (Medical
Center Hospital), 7.30% due 4/15/2012 3,858
BBB Baa1 8,400 Gulf Coast, Texas, Waste Disposal Authority Revenue Bonds
(Champion International Corporation), AMT, 7.45% due 5/01/2026 8,426
A A2 7,000 Matagorda County, Texas, Navigational District No. 1, PCR
(Central Power and Light Company Project), 7.50% due 12/15/2014 7,392
Port Corpus Christi Authority, Texas, Nueces County, PCR
(Hoechst Celanese Corporation Project):
AA- A2 10,000 AMT, 6.875% due 4/01/2017 9,870
AA- A2 9,600 Refunding, 7.50% due 8/01/2012 10,160
AA- A2 5,000 Red River Authority, Texas, PCR (Hoechst Celanese Corporation
Project), AMT, 6.875% due 4/01/2017 4,885
AA Aa1 5,960 San Antonio, Texas, Electric and Gas Revenue Refunding Bonds,
Series B, 6.50% due 2/01/2012 5,826
NR* Aa 5,000 Tarrant County, Texas, Health Facilities Development Corp.,
Health System Revenue Bonds (Harris Methodist Health Systems),
6% due 9/01/2014 4,537
Texas National Research Laboratory, Community Financing
Corporation, Lease Revenue Bonds (Superconducting Super
Collider Project):
A- A 10,000 6.95% due 12/01/2012 10,350
A- A 16,900 7.10% due 12/01/2021 17,491
Travis County, Texas, Housing Finance Corporation, Residential
Mortgage Revenue Refunding Bonds, Series A (f) (g):
AAA NR* 1,045 7% due 12/01/2011 1,034
AAA NR* 2,805 7.05% due 12/01/2025 2,756
Utah--0.3% AA NR* 2,280 Utah State, HFA, S/F Mortgage Revenue Bonds, AMT, Series E-2,
7.15% due 7/01/2024 2,274
Virginia--1.9% AA+ Aa 8,125 Virginia State, Housing Development Authority, Commonwealth
Mortgage Revenue Bonds, Series A, 7.10% due 1/01/2025 8,135
AA Aa 6,600 Virginia State, Transportation Board, Transportation Contract
Revenue Refunding Bonds (Route 28 Project), 6.50% due 4/01/2018 6,467
<PAGE>
Washington--5.0% Washington State, Public Power Supply Systems Revenue
Refunding Bonds:
AA Aa 9,235 (Nuclear Project No. 1), Series A, 7% due 7/01/2011 9,302
AA Aa 19,775 (Nuclear Project No. 1), Series A, 6.875% due 7/01/2017 19,761
AA Aa 5,000 (Nuclear Project No. 2), Series A, 6.30% due 7/01/2012 4,814
AA Aa 5,000 (Nuclear Project No. 2), Series B, 7% due 7/01/2012 4,979
West Virginia--1.6% BBB+ A3 7,500 Mason County, West Virginia, PCR, Refunding (Appalachian
Power Company Project), Series I, 6.85% due 6/01/2022 7,143
BBB+ Baa1 5,500 Randolph County, West Virginia, Building Community Hospital
Revenue Refunding and Improvement Bonds (Davis Memorial
Hospital Project), Series A, 7.65% due 11/01/2021 5,500
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Wisconsin--0.6% NR* A $ 5,360 Wisconsin State Health and Educational Facilities Authority
Revenue Bonds (Mercy Hospital of Janesville Incorporated),
6.60% due 8/15/2022 $ 5,030
Puerto Rico--1.4% A Baa 10,000 Puerto Rico Commonwealth, Aqueduct and Sewer Authority
Revenue Bonds, Series A, 7.875% due 7/01/2017 10,926
Total Investments (Cost--$777,551)--98.6% 770,886
Other Assets Less Liabilities--1.4% 10,771
--------
Net Assets--100.0% $781,657
========
<FN>
(a)Prerefunded.
(b)The interest rate is subject to change periodically based upon
the prevailing market rate. The interest rate shown is the rate
in effect at October 31, 1994.
(c)AMBAC Insured.
(d)FHA Insured.
(e)MBIA Insured.
(f)FNMA Collateralized.
(g)GNMA Collateralized.
(h)FGIC Insured.
*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.
</TABLE>
<PAGE>
PER SHARE INFORMATION (unaudited)
<TABLE>
Per Share Selected Quarterly Financial Data**
<CAPTION>
Net Realized Unrealized Dividends/Distributions
Investment Gains Gains Net Investment Income Capital Gains
For the Quarter Income (Losses) (Losses) Common Preferred Common Preferred
<S> <C> <C> <C> <C> <C> <C> <C>
November 1, 1992 to January 31, 1993 $.34 $.05 $.69 $.28 $.05 $.16 $.03
February 1, 1993 to April 30, 1993 .33 .11 .55 .27 .04 -- --
May 1, 1993 to July 31, 1993 .32 .04 .32 .28 .04 -- --
August 1, 1993 to October 31, 1993 .32 .07 .44 .28 .04 -- --
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 -- --
<CAPTION>
Net Asset Value Market Price**
For the Quarter High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
November 1, 1992 to January 31, 1993 $15.31 $14.71 $15.875 $14.75 2,406
February 1, 1993 to April 30, 1993 16.32 15.24 16.375 15.50 3,060
May 1, 1993 to July 31, 1993 16.45 15.85 16.75 15.625 3,166
August 1, 1993 to October 31, 1993 16.99 16.28 16.875 16.25 3,357
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 14.375 13.625 3,341
August 1, 1994 to October 31, 1994 15.23 14.35 14.625 11.875 5,570
<FN>
*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.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL INFORMATION
<CAPTION>
Statement of Assets, Liabilities and Capital as of October 31, 1994
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$777,551,040) (Note 1a) $770,886,099
Cash 2,764
Receivables:
Interest $ 15,807,620
Securities sold 9,559,479 25,367,099
------------
Deferred organization expenses (Note 1e) 22,480
Prepaid expenses and other assets 218,458
------------
Total assets 796,496,900
------------
Liabilities: Payables:
Securities purchased 12,496,746
Dividends to shareholders (Note 1g) 1,827,674
Investment adviser (Note 2) 336,026 14,660,446
------------
Accrued expenses and other liabilities 179,033
------------
Total liabilities 14,839,479
------------
Net Assets: Net assets $781,657,421
============
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.10 per share (5,000 shares of AMPS* issued and
outstanding at $50,000 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 6,136,765
Undistributed realized capital gains--net 9,469,587
Unrealized depreciation on investments--net (6,664,941)
------------
Total--Equivalent to $14.35 net asset value per share of Common Stock
(market price--$12.125) 531,657,421
------------
Total capital $781,657,421
============
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL INFORMATION (continued)
<CAPTION>
Statement of Operations
For the Year Ended
October 31, 1994
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 53,111,701
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 4,147,735
Commission fees (Note 4) 765,060
Transfer agent fees 128,795
Accounting services (Note 2) 100,354
Professional fees 78,009
Custodian fees 59,817
Printing and shareholder reports 56,212
Directors' fees and expenses 45,480
Listing fees 35,778
Pricing fees 16,726
Amortization of organization expenses (Note 1e) 10,841
Other 41,987
------------
Total expenses 5,486,794
------------
Investment income--net 47,624,907
------------
Realized & Unreal- Realized gain on investments 9,469,638
ized Gain (Loss) Change in unrealized appreciation/depreciation on investments--net (92,046,200)
on Investments--Net ------------
(Notes 1d & 3): Net Decrease in Net Assets Resulting from Operations $(34,951,655)
============
</TABLE>
<PAGE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended Oct. 31,
Increase (Decrease) in Net Assets: 1994 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 47,624,907 $ 47,354,528
Realized gain on investments--net 9,469,638 9,699,758
Change in unrealized appreciation/depreciation on investments--net (92,046,200) 72,689,721
------------ ------------
Net increase (decrease) in net assets resulting from operations (34,951,655) 129,744,007
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (39,600,729) (40,472,606)
Shareholders Preferred Stock (6,723,911) (5,537,729)
(Note 1g): Realized gain on investments--net:
Common Stock (8,671,336) (5,767,714)
Preferred Stock (1,008,475) (1,226,622)
------------ ------------
Net decrease in net assets resulting from dividends and distributions
to shareholders (56,004,451) (53,004,671)
------------ ------------
Capital Stock Value of shares issued to Common Stock shareholders in reinvestment of
Transactions dividends and distributions 2,807,654 16,748,873
(Note 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 16,748,873
------------ ------------
Net Assets: Total increase (decrease) in net assets (88,117,952) 93,488,209
Beginning of year 869,775,373 776,287,164
------------ ------------
End of year* $781,657,421 $869,775,373
============ ============
*Undistributed investment income--net $ 6,136,765 $ 4,836,498
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and rations have been derived
From information provided in the financial statements. For the Year Ended For the Period
October 31, Nov. 29, 1991++
Increase(Decrease)in Net Asset Value: 1994 1993 to Oct. 31, 1992
<S> <S> <C> <C> <C>
Per Share Operating Net asset value, beginning of period $ 16.80 $ 14.69 $ 14.18
Performance: ------------ ----------- -----------
Investment income--net 1.29 1.31 1.18
Realized and unrealized gain (loss) on investments--net (2.23) 2.27 .57
------------ ----------- -----------
Total from investment operations (.94) 3.58 1.75
------------ ----------- -----------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net (1.07) (1.11) (.89)
Realized gain on investments--net (.23) (.16) --
------------ ----------- -----------
Total dividends and distributions (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 (.18) (.17) (.19)
Realized gain on investments--net (.03) (.03) --
Capital charge resulting from issuance of Preferred
Stock -- -- (.14)
------------ ----------- -----------
Total effect of Preferred Stock activity (.21) (.20) (.33)
------------ ----------- -----------
Net asset value, end of period $ 14.35 $ 16.80 $ 14.69
============ =========== ===========
Market price per share, end of period $ 12.125 $ 16.75 $ 15.125
============ =========== ===========
Total Investment Based on market price per share (20.94%) 19.91% 7.06%+++
Return:** ============ =========== ===========
Based on net asset value per share (6.71%) 23.83% 9.99%+++
============ =========== ===========
Ratios to Average Expenses, net of reimbursement .66% .64% .58%*
Net Assets:*** ============ =========== ===========
Expenses .66% .64% .65%*
============ =========== ===========
Investment income--net 5.76% 5.72% 6.08%*
============ =========== ===========
<PAGE>
Supplemental Net assets, net of Preferred Stock, at end of period
Data: (in thousands) $ 531,657 $ 619,775 $ 526,287
============ =========== ===========
Preferred Stock outstanding, at end of period
(in thousands) $ 250,000 $ 250,000 $ 250,000
============ =========== ===========
Portfolio turnover 44.27% 25.58% 66.45%
============ =========== ===========
Dividends Per Share Series A--Investment income--net $ 1,195 $ 1,119 $ 1,360
On Preferred Stock Series B--Investment income--net 1,466 1,108 1,379
Outstanding: Series C--Investment income--net 1,294 1,131 1,369
Series D--Investment income--net 1,317 1,111 1,375
Series E--Investment income--net 1,413 1,083 1,376
<FN>
*Annualized.
**Total investment returns based on market value, which can be significantly greater
or lesser than the net asset value, 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.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
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-diversi-
fied, closed-end management investment company.
The Fund determines and makes available for publi-
cation 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.
<PAGE>
(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, 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.
(b) 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.
(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 secu-
rity transactions are determined on the identified
cost basis.
<PAGE>
(e) Deferred organization expenses--Deferred organiza-
tion 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) Non-income producing investments--Written
and purchased options are non-income producing
investments.
(g) Dividends and distributions--Dividends from net
investment income are declared and paid monthly.
Distributions of capital gains are recorded on the
ex-dividend dates.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory
Agreement with Fund Asset Management, L.P. ("FAM").
Effective January 1, 1994, the investment advisory
business of FAM was reorganized from a corporation
to a limited partnership. Both prior to and after the
reorganization, ultimate control of FAM was vested
with Merrill Lynch & Co., Inc. ("ML & Co."). The
general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect wholly-owned subsidiary of
ML & Co. The limited partners are ML & Co. and Fund
Asset Management, Inc. ("FAMI"), which is also an
indirect wholly-owned subsidiary of ML & Co.
FAM is responsible for the management of the Fund's
portfolio and provides the necessary personnel, facil-
ities, 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.
NOTES TO FINANCIAL STATEMENTS (concluded)
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, FAMI, PSI, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), and/or
ML & Co.
<PAGE>
3. Investments:
Purchases and sales of investments, excluding
short-term securities, for the year ended October 31,
1994 were $369,154,748 and $350,322,451, respectively.
Net realized and unrealized gains (losses) as of
October 31, 1994 were as follows:
Realized
Gains Unrealized
(Losses) Losses
Long-term investments $4,400,292 $(6,622,869)
Short-term investments (1,180) (42,072)
Financial future contracts 5,070,526 --
---------- -----------
Total $9,469,638 $(6,664,941)
========== ===========
As of October 31, 1994, net unrealized depreciation for
Federal income tax purposes aggregated $6,664,941,
of which $11,470,115 related to appreciated securities
and $18,135,056 related to depreciated securities. The
aggregate cost of investments at October 31, 1994 for
Federal income tax purposes was $777,551,040.
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, 1994, shares issued
and outstanding increased by 169,647 to 37,061,414 as
a result of dividend reinvestment. At October 31, 1994,
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, 1994 were as follows: Series A,
3.244%; Series B, 3.13%; Series C, 3.03%; Series D,
3.31%; and Series E, 3.20%.
<PAGE>
For the year ended October 31, 1994, there were
5,000 AMPS shares authorized, issued and outstand-
ing with a liquidation preference of $50,000 per share,
plus accumulated and unpaid dividends of $702,710.
Effective December 1, 1994, as a result of a two-for-one
stock split, there will be 10,000 AMPS shares with a
$25,000 liquidation preference per share.
The Fund pays commissions to certain broker-dealers
at the end of each auction at an annnual rate ranging
from 0.25% to 0.375%, calculated on the proceeds of
each auction. For the year ended October 31, 1994,
MLPF&S, an affiliate of FAMI, earned $487,037 as
commissions.
5. Subsequent Event:
On November 8, 1994, the Fund's Board of Directors
declared an ordinary income dividend to Common
Stock shareholders in the amount of $0.087905 per
share, payable on November 29, 1994 to shareholders of
record as of November 18, 1994.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' 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, 1994, 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
two-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 manage-
ment. Our responsibility is to express an opinion on
these financial statements and the financial highlights
based on our audits.
<PAGE>
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 pro-
cedures included confirmation of securities owned at
October 31, 1994 by correspondence with the cus-
todian and brokers. 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, 1994, 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 5, 1994
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid
monthly by MuniYield Fund, Inc. during its taxable year
ended October 31, 1994 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:
<PAGE>
<TABLE>
<CAPTION>
Payable Short-Term Long-Term
Date Capital Gains Capital Gains
<S> <S> <C> <C> <C>
Common Stock Shareholders 12/30/93 $ 0.145052 $ 0.089996
Preferred Stock Shareholders: Series A 12/08/93 $ 99.59 $ 57.20
01/05/94 $ 26.94 $ 21.01
Series B 12/01/93 $ 61.59 $ 35.38
12/30/93 $ 63.05 $ 41.67
Series C 12/01/93 $112.70 $ 64.72
12/30/93 $ 14.60 $ 13.97
Series D 12/01/93 $ 95.68 $ 54.95
12/29/93 $ 29.84 $ 22.64
Series E 11/23/93 $ 21.03 $ 12.08
12/01/93 $ 27.53 $ 16.06
12/08/93 $ 24.01 $ 14.35
12/15/93 $ 18.96 $ 11.74
12/22/93 $ 21.04 $ 13.65
12/29/93 $ 8.60 $ 7.02
Please retain this information for your records.
</TABLE>
