MUNIYIELD
FUND, INC.
FUND LOGO
Annual Report
October 31, 1996
Officers and Directors
Arthur Zeikel, President and Director
James H. Bodurtha, Director
Herbert I. London, Director
Robert R. Martin, Director
Joseph L. May, Director
Andre F. Perold, Director
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Theodore R. Jaeckel Jr., Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
<PAGE>
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
NYSE Symbol
MYD
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. Statements and other information herein are as dated
and are subject to change.
MuniYield Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MuniYield Fund, Inc.
DEAR SHAREHOLDER
<PAGE>
For the year ended October 31, 1996, the Common Stock of MuniYield
Fund, Inc. earned $1.036 per share income dividends, which included
earned and unpaid dividends of $0.085. This represents a net
annualized yield of 6.61%, based on a month-end per share net asset
value of $15.68. Over the same period, the total investment return
on the Fund's Common Stock was +8.61%, based on a change in per
share net asset value from $15.47 to $15.68, and assuming
reinvestment of $1.037 per share income dividends.
For the six-month period ended October 31, 1996, the total
investment return on the Fund's Common Stock was +6.64%, based on a
change in per share net asset value from $15.22 to $15.68, and
assuming reinvestment of $0.518 per share income dividends.
For the six-month period ended October 31, 1996, the Fund's Auction
Market Preferred Stock had an average yield as follows: Series A,
3.21%; Series B, 3.23%; Series C, 4.03%; Series D, 3.72%; and
Series E, 3.27%.
The Municipal Market Environment
Municipal bond yields generally moved lower during the six-month
period ended October 31, 1996. Long-term tax-exempt revenue bond
yields, as measured by the Bond Buyer Revenue Bond Index, declined
approximately 35 basis points (0.35%) to end the October period at
approximately 5.94%. The municipal bond market exhibited
considerable weekly yield volatility over the last six months with
bond yields vacillating as much as 20 basis points. This ongoing
volatility was in response to fluctuating evidence regarding the
degree to which recent economic growth will result in any
significant increase in inflationary pressures. Much of the evidence
supporting stronger growth centered around the strong employment
growth seen in April and June and bond yields rose in response.
Other, more recent, economic indicators suggested that economic
growth will not be excessive and inflationary pressures will remain
well-contained. This continued benign inflationary environment
supported lower tax-exempt bond yields in recent months. US Treasury
bond yields exhibited similar, albeit greater, volatility during the
period falling over 20 basis points to end the period at 6.64%. Over
the past six months, tax-exempt bond yields registered significantly
greater declines than shown by the US Treasury bond market. This
relative outperformance by the municipal bond market was largely the
result of the strong technical support the tax-exempt market enjoyed
throughout most of 1996. Perhaps most significantly, the pace of new
bond issuance recently slowed.
Over the last year, approximately $180 billion in long-term
municipal securities was issued, an increase of over 25% compared to
the same period a year ago. Much of this increase was the result of
issuers seeking to refinance their existing higher-couponed debt as
interest rates declined in 1995 and early 1996. As interest rates
rose, these financings became increasingly economically impractical,
and issuance declined. Over the last six months, approximately $90
billion in long-term, tax-exempt securities was underwritten, an
increase of 5% versus the comparable period a year earlier. Only $41
billion in tax-exempt securities was issued in the last three
months, a 3% decline in issuance versus the October 31, 1995
quarter.
<PAGE>
At the same time, investor demand remained consistently strong. With
nominal new-issue yields generally above 6%, retail investor
interest was steady. Additionally, investors received over $50
billion this June and July in assets derived from coupon income,
bond maturities, and proceeds from early redemptions. Annual new
bond issuance declined in recent years and is expected to remain
below levels seen in the early 1990s. Consequently, as the higher-
couponed bonds issued in the early-to-mid 1980s were redeemed at
their first optional call dates, the total number of outstanding tax-
exempt bonds has declined. This combination of a declining net
supply and significant amounts of assets available for investment
helped maintain investor demand in recent months.
It is unlikely that the municipal bond market will continue to
significantly outperform US Treasury securities in the near future.
The tax-exempt bond market's recent performance led to the yield
ratio between long-term taxable and tax-exempt securities falling
from in excess of 90% to approximately 85%. While historically still
very attractive, some institutional investors, particularly short-
term traders, began to view the tax-exempt bond market's recent
outperformance as an opportunity to sell a relatively expensive
asset. However, to the long-term investor such a sale would
represent the loss of an attractively priced asset which may not be
easily replaced given the relative scarcity of municipal bonds under
present supply conditions.
Looking ahead, no clear consensus for the direction of interest
rates currently exists. Perhaps, the primary focus going forward
will be the extent to which the increase in interest rates seen thus
far in 1996 will negatively impact future economic growth. Should
growth slow in the interest rate-sensitive sectors of the economy,
like housing, auto, and consumer spending, as many economists assert
is likely, then bond yields are likely to decline. Under such a
scenario, the municipal bond market's performance is likely to
closely mirror that of the US Treasury bond market.
Portfolio Strategy
Despite the continued volatility in the fixed-income markets this
past year, MuniYield Fund, Inc.'s net asset value appreciated while
consistently providing an attractive level of tax-exempt income to
shareholders. In our April shareholder report, we discussed our more
constructive market outlook and an investment strategy designed to
position the Fund more advantageously. For the last six months, our
efforts were directed toward increasing the portfolio's interest
rate sensitivity without negatively impacting the monthly dividend.
To a large degree, these efforts were successful, since the Fund
provided superior performance in a period of stable to declining
interest rates while sustaining a competitive yield throughout.
A positive byproduct of this strategy was the gradual extension in
the average call protection for all the holdings. For the long-term
investor, the possibility of early redemption prior to maturity
represents a serious threat to a reliable and constant stream of
interest income. Since most tax-exempt investors rely on that steady
stream of income, the maintenance of stable call protection over the
long term remains a priority for us.
<PAGE>
Apart from the shift in our market outlook, there was no appreciable
change in portfolio composition in terms of either credit rating or
sector diversification. Approximately 90% of the Fund's holdings
are rated investment grade by at least one of the major rating
agencies, while fully 20% are classified as corporate-related
industrial development bonds. We currently maintain a significant
amount of New York securities in the Fund's portfolio, since this
sector had declined to attractive levels because of substantial new-
issue supply within a fairly brief time frame. This supply imbalance
should correct itself shortly, affording the opportunity to lock in
a profit and return a more balanced market weighting in the New York
sector.
In the upcoming months, we will continue to closely follow economic
releases for renewed signs of economic vigor. However, currently
the economy appears to have slowed to trend growth from the outsized
gain registered during the second quarter. Investor concerns of a
restrictive monetary policy subsided, thereby alleviating near-term
concerns about an increase in short-term interest rates. Therefore,
the current environment appears quite favorable for leveraged
products such as MuniYield Fund, Inc. (For a complete explanation of
the benefits and risks of leveraging, see page 4 of this report to
shareholders.)
In Conclusion
We appreciate your ongoing interest in MuniYield Fund, Inc., and we
look forward to serving your investment needs in the months and
years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
<PAGE>
(Theodore R. Jaeckel, Jr.)
Theodore R. Jaeckel, Jr.
Vice President and Portfolio Manager
December 4, 1996
<TABLE>
PROXY RESULTS
<CAPTION>
During the six-month period ended October 31, 1996, MuniYield Fund,
Inc. Common Stock shareholders voted on the following proposals. The
proposals were approved at a special shareholders' meeting on
September 19, 1996. The description of each proposal and number of
shares voted are as follows:
Shares Voted Shares Voted
For Without Authority
<S> <S> <C> <C>
1.To elect the Fund's Board of Directors: Herbert I. London 35,777,286 621,370
Robert R. Martin 35,771,493 627,163
Andre F. Perold 35,763,243 635,413
Arthur Zeikel 35,759,438 639,218
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2.To ratify the selection of Deloitte & Touche LLP as the Fund's
independent auditors. 35,613,171 207,178 578,307
<CAPTION>
During the six-month period ended October 31, 1996, 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 19, 1996. The
description of each proposal and number of shares voted are
as follows:
<PAGE>
Shares Voted Shares Voted
For Without Authority
<S> <S> <C> <C>
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 1,688 0
Series B 977 0
Series C 1,662 96
Series D 1,557 0
Series E 2,281 0
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <S> <C> <C> <C>
2.To select Deloitte & Touche LLP as the
Fund's independent auditors as follows: Series A 1,688 0 0
Series B 977 0 0
Series C 1,662 0 96
Series D 1,557 0 0
Series E 2,281 0 0
</TABLE>
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.
<PAGE>
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term
investments, and therefore the Common Stock shareholders are the
beneficiaries of the incremental yield. However, if short-term
interest rates rise, narrowing the differential between short-term
and long-term interest rates, the incremental yield pickup on the
Common Stock will be reduced or eliminated completely. At the same
time, the market value 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)
GO General Obligation Bonds
HDA Housing Development Authority
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
<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, IDR, Refunding (Champion
International Corporation), Series A, 7.20% due 12/01/2013 $ 9,447
<PAGE>
Alaska--5.2% A+ Aa 12,285 Alaska State Housing Finance Corporation, GO, Series B, 7%
due 12/01/2027 12,826
Valdez, Alaska, Marine Terminal Revenue Refunding Bonds:
NR* NR* 10,050 (Amerada Hess Pipeline Corporation), 6.10% due 2/01/2024 9,845
AA Aa3 8,000 (British Petroleum Pipeline), Series B, 7% due 12/01/2025 8,735
AA Aa3 10,635 (Sohio Pipeline--British Petroleum Oil), 7.125% due
12/01/2025 11,737
Arizona--0.5% A A1 5,095 Phoenix, Arizona, Civic Improvement Corporation, Wastewater
System, Lease Revenue Refunding Bonds, 4.75% due 7/01/2023 4,370
California--3.1% Foothill/Eastern Transportation Corridor Agency, California,
Toll Road Revenue Bonds, Senior Lien, Series A:
BBB- Baa 10,000 6.25%** due 1/01/2018 2,609
BBB- Baa 24,250 6.24%** due 1/01/2020 5,572
BBB- Baa 30,245 6.24%** due 1/01/2021 6,522
BBB- Baa 25,000 6.25%** due 1/01/2022 5,035
AAA NR* 5,000 Orange County, California, Community Facilities District, Special
Tax No. 88-1 (Aliso Viejo Project), Series A, 7.35% due
8/15/2002 (b) 5,818
Colorado--4.5% Denver, Colorado, City and County Airport Revenue Bonds:
BBB Baa 8,000 AMT, Series D, 7.75% due 11/15/2013 9,510
BBB Baa 3,310 AMT, Series D, 7.75% due 11/15/2021 3,666
BBB Baa 14,350 Series A, 7.25% due 11/15/2002 (b) 16,545
AAA NR* 4,900 Series A, 7.25% due 11/15/2002 (b) 5,661
NR* NR* 1,650 Mountain Village, Colorado, Metropolitan District, Refunding
(San Miguel County), UT, 7.95% due 12/01/2003 1,836
Connecticut NR* B1 2,605 New Haven, Connecticut, Facilities Revenue Bonds
- --0.3% (Hill Health Corporation Project), 9.25% due 5/01/2017 2,829
District of A+ A3 4,940 District of Columbia Revenue Bonds (Howard University),
Columbia--0.6% Series B, 6.75% due 10/01/2012 5,230
Florida--2.9% AA Aa 19,285 Florida State Department of Transportation (Right of Way
Acquisition and Bridge), 5.375% due 7/01/2026 18,551
AAA Aaa 6,060 Sarasota County, Florida, Utility System Revenue Refunding
Bonds, Series A, 5.25% due 10/01/2025 (h) 5,766
Georgia--1.4% NR* NR* 5,620 Atlanta, Georgia, Urban Residential Finance Authority,
College Facilities Revenue Bonds (Morris Brown College
Project), 9.50% due 12/01/2001 (b) 6,991
AAA Aaa 4,200 Municipal Electric Authority, Georgia, Special Obligation Bonds
(Fifth Crossover Series, Project One), 6.40% due 1/01/2013 (c)(j) 4,610
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 2,033
A Aa 870 AMT, Series A, 7.10% due 7/01/2024 911
A Aa 3,040 Series B, 6.90% due 7/01/2016 3,199
A Aa 1,110 Series B, 7% due 7/01/2031 1,166
<PAGE>
Idaho--0.5% AA NR* 4,030 Idaho Housing Agency, S/F Mortgage, AMT, Senior Series C-2,
7.15% due 7/01/2023 4,244
Illinois--4.4% AAA Aaa 10,000 Chicago, Illinois, Refunding, Series B, 5.125% due 1/01/2025 (h) 9,158
NR* Aaa 5,000 Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT, Series B,
7.625% due 9/01/2027 (f)(g) 5,547
AAA Aaa 3,000 Chicago, Illinois, Water Revenue Bonds, 5% due 11/01/2025 (h) 2,692
BBB Baa1 2,750 Illinois Development Finance Authority, PCR, Refunding
(Illinois Power Company Project), Series A, 7.375% due 7/01/2021 3,056
</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>
Illinois NR* NR* $ 2,500 Illinois Educational Facilities Authority Revenue Bonds
(concluded) (Chicago Osteopathic Health Systems), 7.25% due 11/15/2019 (b) $ 2,957
Illinois Health Facilities Authority Revenue Bonds:
A A 1,500 (Edward Hospital Association Project), 7% due 2/15/2022 1,592
BBB NR* 2,625 Refunding (Saint Elizabeth's Hospital of Chicago),
7.75% due 7/01/2016 2,884
BBB- NR* 8,000 Metropolitan Pier and Exposition Authority, Illinois, Hospitality
Facilities Revenue Bonds (McCormick Place Convention),
7% due 7/01/2026 8,807
A1+ VMIG1++ 100 Southwestern Illinois Development Authority, Solid Waste
Disposal Revenue Bonds (Shell Oil Co.--Wood River Project),
VRDN, AMT, 3.65% due 4/01/2022 (a) 100
Indiana--3.0% NR* A 1,150 Indiana Health Facilities Finance Authority, Hospital Revenue
Refunding Bonds (Saint Anthony Medical Center), Series A,
7% due 10/01/2017 1,234
BBB Baa2 10,000 Indianapolis, Indiana, Airport Authority, Special Facilities
Revenue Bonds (Federal Express Corporation Project),
AMT, 7.10% due 1/15/2017 10,693
A+ NR* 11,775 Indianapolis, Indiana, Local Public Improvement Bond Bank,
Refunding, Series D, 6.75% due 2/01/2020 12,711
Kansas--1.1% AAA Aaa 8,300 Burlington, Kansas, PCR, Refunding (Kansas Gas and Electric
Company Project), 7% due 6/01/2031 (e) 9,148
Kentucky--1.2% BB+ Baa3 5,785 Kenton County, Kentucky, Airport Board, Special Facilities
Airport Revenue Bonds (Delta Airlines Project), AMT, Series A,
7.50% due 2/01/2020 6,214
NR* NR* 4,000 Perry County, Kentucky, Solid Waste Disposal Revenue
Bonds (TJ International Project), AMT, 7% due 6/01/2024 4,133
<PAGE>
Louisiana--4.9% 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 39,482
Saint Charles Parish, Louisiana, PCR, VRDN, AMT (a):
A1+ VMIG1++ 400 (Shell Oil Company--Norco Project), 3.65% due 11/01/2021 400
A1+ VMIG1++ 1,200 (Shell Oil Company Project), Series A, 3.65% due 10/01/2022 1,200
Maine--0.3% BBB- NR* 2,100 Maine Finance Authority, Solid Waste Disposal Revenue Bonds
(Boise Cascade Corporation Project), AMT, 7.90% due 6/01/2015 2,277
Maryland--1.3% NR* NR* 3,000 Maryland State Energy Financing Administration, Limited
Obligation Revenue Bonds (Cogeneration--AES Warrior Run),
AMT, 7.40% due 9/01/2019 3,149
A- NR* 2,500 Maryland State Energy Financing Administration, Solid Waste
Disposal and Limited Obligation Revenue Bonds (Wheelabrator
Water Projects), AMT, 6.30% due 12/01/2010 2,599
NR* Aaa 4,500 Prince Georges County, Maryland, Hospital Revenue Bonds
(Dimensions Health Corporation Issue), 7.25% due 7/01/2002 (b) 5,178
Massachusetts AAA Aaa 5,000 Massachusetts State, HFA, Residential Development Bonds,
- --1.4% Series C, 6.90% due 11/15/2021 (f) 5,266
A+ Aa 5,970 Massachusetts State, HFA, S/F Housing Revenue Bonds,
AMT, Series 38, 7.20% due 12/01/2026 6,386
Michigan--1.8% Detroit, Michigan, GO, UT, Series A:
BBB Baa 2,500 6.70% due 4/01/2010 2,621
BBB Baa 1,500 6.80% due 4/01/2015 1,580
AAA Aaa 4,935 Detroit, Michigan, Water Supply System Revenue Bonds,
Second Lien, Series A, 5.50% due 7/01/2025 (e) 4,789
AA- A1 5,575 Michigan State Building Authority, Revenue Refunding Bonds,
Series I, 6.75% due 10/01/2011 5,964
NR* VMIG1++ 100 Michigan State Strategic Fund, Solid Waste Disposal Revenue Bonds
Grayling Generating Project), VRDN, AMT, 3.60% due 1/01/2014 (a) 100
</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>
Minnesota AA+ A1 $10,000 Minnesota State, HFA, Housing Development, Series A, 6.95%
- --2.5% due 2/01/2014 $ 10,568
AA+ Aa 3,410 Minnesota State, HFA, S/F Mortgage, AMT, Series A, 7.05%
due 7/01/2022 3,549
AA- A1 600 Red Wing, Minnesota, PCR (Northern States Power
Company Project), VRDN, 3.65% due 3/01/2011 (a) 600
BBB Baa1 5,700 Sartell, Minnesota, PCR, Refunding (Champion International
Corporation), 6.95% due 10/01/2012 6,073
<PAGE>
Mississippi A A2 17,750 Lowndes County, Mississippi, Solid Waste Disposal and PCR,
- --2.4% Refunding (Weyerhaeuser Company Project), Series A,
6.80% due 4/01/2022 20,158
Missouri--1.3% BBB- NR* 2,885 Joplin, Missouri, IDA, Hospital Facilities Revenue Refunding and
Improvement Bonds (Tri-State Osteopathic), 8.25% due 12/15/2014 3,119
AAA NR* 6,500 Missouri State Housing Development Commission, S/F Mortgage
Revenue Bonds, AMT, Series B, 7.55% due 9/01/2027 (f)(g) 7,220
New Jersey AAA NR* 9,500 New Jersey State Housing and Mortgage Finance Agency,
- --2.9% M/F Housing Revenue Refunding Bonds (Presidential Plaza),
7% due 5/01/2030 (d) 10,191
AAA Aaa 15,000 New Jersey State Transportation Trust Fund Authority,
Transportation System, Series A, 4.75% due 12/15/2016 (e) 13,522
New Mexico--2.6% Farmington, New Mexico, PCR, Refunding, Series A:
BB+ Ba1 15,000 (Public Service Company--San Juan Project), 6.40%
due 8/15/2023 15,029
A+ A2 5,850 (Southern California Edison Company), 7.20% due 4/01/2021 6,364
New York--23.6% New York City, New York, GO, UT:
BBB+ Baa1 7,500 Refunding, Series C, 5.875% due 2/01/2016 7,252
BBB+ Baa1 5,000 Refunding, Series C, 6% due 2/01/2022 4,854
BBB+ Baa1 2,825 Series A, 7.75% due 8/15/2001 (b) 3,236
AAA Aaa 2,740 Series A, 7.75% due 8/15/2001 (b) 3,159
BBB+ Baa1 305 Series A, 7.75% due 8/15/2008 340
BBB+ Baa1 3,470 Series A, 7.75% due 8/15/2012 3,870
BBB+ Baa1 2,260 Series A, 7.75% due 8/15/2016 2,521
BBB+ Baa1 110 Series B, 7% due 6/01/2001 (b) 122
BBB+ Baa1 8,970 Series B, 5.875% due 8/15/2013 8,722
BBB+ Baa1 4,390 Series B, 7% due 6/01/2016 4,664
BBB+ Baa1 15,000 Series B, Fiscal 92, 7.75% due 2/01/2010 16,783
BBB+ Baa1 1,555 Series B, Fiscal 92, 7.75% due 2/01/2013 1,732
BBB+ Baa1 6,400 Series B, Sub-Series B-1, 7% due 8/15/2016 6,887
BBB+ Baa1 5,000 Series C, Sub-Series C-1, 7.50% due 8/01/2021 5,562
New York State Dormitory Authority Revenue Bonds:
BBB Baa1 5,225 (Department of Health), 5.50% due 7/01/2025 4,849
BBB+ Baa1 14,000 (State University Educational Facilities), 5.50% due 5/15/2026 13,036
BBB+ Baa1 20,000 (State University Educational Facilities), Series B,
5.75% due 5/15/2024 19,071
New York State Environmental Facilities Corporation, PCR
(State Water, Revolving Fund):
A- Aa 17,000 Refunding, Series A, 5.875% due 6/15/2014 17,343
A Aa 24,400 Series E, 6.875% due 6/15/2010 26,803
New York State Local Government Assistance Corporation
Revenue Bonds:
A A 9,000 Refunding, Series C, 5.50% due 4/01/2017 8,880
A A 5,000 Refunding, Series E, 5% due 4/01/2021 4,554
A A 6,000 Series A, 6.50% due 4/01/2020 6,365
AAA Aaa 5,000 Series D, 7% due 4/01/2002 (b) 5,666
A A 7,000 Series D, 5% due 4/01/2023 6,239
</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>
New York AAA Aaa $ 8,500 New York State Thruway Authority, Highway and Bridge
(concluded) Trust Fund, Series B, 5.125% due 4/01/2015 (e) $ 8,077
AAA Aaa 5,000 Triborough Bridge and Tunnel Authority, New York, General
Purpose Revenue Refunding Bonds, Series Y, 6.125%
due 1/01/2021 (i) 5,387
North Carolina A A2 4,540 Martin County, North Carolina, Industrial Facilities and Pollution
- --3.2% Control Financing Authority, Solid Waste Revenue Bonds
(Weyerhaeuser Company Project), AMT, 6% due 11/01/2025 4,578
North Carolina HFA, S/F Revenue Bonds:
AA Aa 5,300 AMT, Series T, 7.05% due 9/01/2020 5,540
AA Aa 15,280 Refunding, Series S, 6.95% due 3/01/2017 16,176
North Dakota A+ Aa 3,770 North Dakota State, HFA, S/F Mortgage Revenue Bonds,
- --0.5% Series A, 7% due 7/01/2023 3,962
Ohio--1.2% NR* Ba1 3,600 Hilliard, Ohio, IDR, Refunding (Kroger Co.), 8.10% due 7/01/2012 3,981
NR* Ba1 3,600 Lucas County, Ohio, IDR, Refunding (Kroger Co.), 8.50% due 7/01/2011 3,992
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 2,289
Oklahoma--0.4% BBB Baa 3,250 Holdenville, Oklahoma, Industrial Authority, Correctional Facility
Revenue Bonds, 6.70% due 7/01/2015 3,353
Pennsylvania BB Ba2 2,500 Beaver County, Pennsylvania, IDA, PCR, Refunding
- --4.1% (Cleveland Electric Co. Project), 7.625% due 5/01/2025 2,678
AAA Aaa 8,700 Bethlehem, Pennsylvania, Water Authority, Revenue Refunding
Bonds, 4.875% due 11/15/2014 (e) 7,980
NR* Ba1 1,995 McCandless, Pennsylvania, IDA, IDR, Refunding (Kroger Co.),
7.375% due 10/15/2007 2,142
Pennsylvania Convention Center Authority, Revenue Refunding
Bonds, Series A:
BBB- Baa 9,675 6.70% due 9/01/2014 10,417
BBB- Baa 5,000 6.75% due 9/01/2019 5,383
AA+ Aa 5,250 Pennsylvania HFA, S/F Mortgage, AMT, Series 42, 6.85%
due 4/01/2025 5,527
South Carolina A- A1 2,500 Richland County, South Carolina, PCR, Refunding (Union Camp
- --0.3% Corporation Project), Series C, 6.55% due 11/01/2020 2,655
South Dakota BBB Baa 2,500 South Dakota State Health and Educational Facilities Authority,
- --0.3% Revenue Refunding Bonds (Prairie Lakes Health Care),
7.25% due 4/01/2022 2,635
<PAGE>
Tennessee--0.4% NR* NR* 1,630 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 1,730
AAA Aaa 4,250 Metropolitan Government, Nashville and Davidson County, Tennessee,
Electric Revenue Bonds, Series A, 5.90%** due 5/15/2011 (e) 1,904
Texas--6.6% BBB Baa2 3,450 Alliance Airport Authority, Inc., Texas, Special Facilities
Revenue Bonds (Federal Express Corporation Project),
AMT, 6.375% due 4/01/2021 3,455
A- A 3,800 Ector County, Texas, Hospital District, Hospital Revenue Bonds
(Medical Center Hospital), 7.30% due 4/15/2012 4,186
AA- Aa3 5,000 Guadalupe-Blanco River Authority, Texas, Sewage and Solid Waste
Disposal Facilities Revenue Bonds (du Pont (E.I.) de Nemours
and Co. Project), AMT, 6.40% due 4/01/2026 5,204
A1+ VMIG1++ 500 Gulf Coast, Texas, IDA, Solid Waste Disposal Revenue Bonds (Citgo
Petroleum Corp. Project), VRDN, AMT, 3.70% due 4/01/2026 (a) 500
BBB Baa1 8,400 Gulf Coast, Texas, Waste Disposal Authority Revenue Bonds
(Champion International Corporation), AMT, 7.45% due 5/01/2026 9,032
</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>
Texas A1+ NR* $ 200 Gulf Coast, Texas, Waste Disposal Authority, Pollution Control
(concluded) and Solid Waste Disposal, Revenue Refunding Bonds (Amoco Oil
Co. Project), VRDN, AMT, 3.65% due 5/01/2024 (a) $ 200
AAA Aaa 5,500 Harris County, Texas, Toll Road, Refunding, Senior Lien,
5% due 8/15/2016 (h) 5,089
AAA Aaa 5,125 Houston, Texas, Water and Sewer System Revenue Bonds,
Junior Lien, Series A, 6.375% due 12/01/2022 (e) 5,455
BB Ba 5,000 Odessa, Texas, Junior College District, Revenue Refunding Bonds,
Series A, 8.125% due 12/01/2018 5,409
A+ A2 5,000 Port Corpus Christi Authority, Texas, Nueces County, PCR (Hoechst
Celanese Corporation Project), AMT, 6.875% due 4/01/2017 5,354
A+ A2 5,000 Red River Authority, Texas, PCR (Hoechst Celanese Corporation
Project), AMT, 6.875% due 4/01/2017 5,355
Travis County, Texas, Housing Finance Corporation, Residential
Mortgage Revenue Refunding Bonds, Series A (f)(g):
AAA NR* 880 7% due 12/01/2011 929
AAA NR* 2,805 7.05% due 12/01/2025 2,960
A1+ Aa3 1,500 West Side Calhoun County, Texas, Navigational District, Sewer and
Solid Waste Disposal Revenue Bonds (BP Chemicals Inc. Project),
VRDN, AMT, 3.65% due 4/01/2031 (a) 1,500
Utah--0.7% BBB+ Baa2 3,300 Carbon County, Utah, Solid Waste Disposal Revenue Refunding
Bonds (Laidlaw Inc.--ECDC Project), AMT, Series A, 7.50%
due 2/01/2010 3,635
AA NR* 1,890 Utah State, HFA, S/F Mortgage, AMT, Series E-2, 7.15% due 7/01/2024 1,974
<PAGE>
Virginia--1.0% AA+ Aa1 8,125 Virginia State, HDA, Commonwealth Mortgage, Series A, 7.10%
due 1/01/2025 8,523
Washington BBB+ Baa1 2,420 Pilchuck Development Public Corporation, Washington,
- --2.9% Special Facilities Airport Revenue Bonds (Tramco Inc.
Project--BF Goodrich), AMT, 6% due 8/01/2023 2,340
Washington State Public Power Supply System,
Revenue Refunding Bonds (b):
AA- Aa1 9,235 (Nuclear Project No. 1), Series A, 7% due 7/01/2000 10,203
AA- Aa1 5,000 (Nuclear Project No. 1), Series A, 6.875% due 7/01/2001 5,549
AA- Aa1 5,000 (Nuclear Project No. 2), Series B, 7% due 7/01/2000 5,524
West Virginia BBB+ Baa1 7,500 Mason County, West Virginia, PCR, Refunding (Appalachian
- --1.4% Power Company Project), Series I, 6.85% due 6/01/2022 8,101
NR* NR* 3,000 Upshur County, West Virginia, Solid Waste Disposal Revenue
Bonds (TJ International Project), AMT, 7% due 7/15/2025 3,108
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 2,822
Total Investments (Cost--$774,191)--99.0% 822,877
Other Assets Less Liabilities--1.0% 8,247
--------
Net Assets--100.0% $831,124
========
<FN>
(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, 1996.
(b)Prerefunded.
(c)AMBAC Insured.
(d)FHA Insured.
(e)MBIA Insured.
(f)FNMA Collateralized.
(g)GNMA Collateralized.
(h)FGIC Insured.
(i)CAPMAC Insured.
(j)Escrow to Maturity.
++Highest short-term rating by Moody's Investors Service, Inc.
*Not Rated.
**Represents a zero coupon bond; the interest rate shown is the
effective yield at the time of purchase by the Fund.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of October 31, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$774,191,006) (Note 1a) $822,876,520
Cash 38,614
Interest receivable 14,699,181
Deferred organization expenses (Note 1e) 886
Prepaid expenses and other assets 58,541
Total assets 837,673,742
------------
Liabilities: Payables:
Securities purchased $ 4,974,438
Dividends to shareholders (Note 1f) 1,073,535
Investment adviser (Note 2) 350,832 6,398,805
------------
Accrued expenses and other liabilities 151,396
------------
Total liabilities 6,550,201
------------
Net Assets: Net assets $831,123,541
============
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.05 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 6,837,968
Undistributed realized capital gains on investments--net 2,884,049
Unrealized appreciation on investments--net 48,685,514
------------
Total--Equivalent to $15.68 net asset value per share of Common
Stock (market price--$14.875) 581,123,541
------------
Total capital $831,123,541
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Year Ended
October 31, 1996
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 51,919,151
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 4,120,747
Commission fees (Note 4) 643,106
Transfer agent fees 119,479
Accounting services (Note 2) 88,453
Professional fees 83,137
Custodian fees 58,318
Directors' fees and expenses 45,397
Printing and shareholder reports 43,603
Listing fees 32,500
Pricing fees 20,367
Amortization of organization expenses (Note 1e) 10,812
Other 37,121
------------
Total expenses 5,303,040
------------
Investment income--net 46,616,111
------------
Realized & Realized gain on investments--net 12,497,013
Unrealized Gain Change in unrealized appreciation on investments--net (3,902,288)
(Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 55,210,836
(Notes 1b, 1d & 3): ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 1996 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 46,616,111 $ 47,009,858
Realized gain (loss) on investments--net 12,497,013 (9,612,893)
Change in unrealized appreciation/depreciation on
investments--net (3,902,288) 59,252,744
------------ ------------
Net increase in net assets resulting from operations 55,210,836 96,649,709
------------ ------------
<PAGE>
Dividends & Investment income--net:
Distributions to Common Stock (38,420,345) (37,084,429)
Shareholders Preferred Stock (9,067,052) (8,354,970)
(Note 1f): Realized gain on investments--net:
Common Stock -- (8,130,978)
Preferred Stock -- (1,336,651)
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (47,487,397) (54,907,028)
------------ ------------
Net Assets: Total increase in net assets 7,723,439 41,742,681
Beginning of year 823,400,102 781,657,421
------------ ------------
End of year* $831,123,541 $823,400,102
============ ============
<FN>
*Undistributed investment income--net $ 6,837,968 $ 7,709,254
============ ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
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: 1996 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 15.47 $ 14.35 $ 16.80 $ 14.69 $ 14.18
Operating -------- -------- -------- -------- --------
Performance: Investment income--net 1.26 1.27 1.29 1.31 1.18
Realized and unrealized gain (loss) on
investments--net .23 1.34 (2.23) 2.27 .57
-------- -------- -------- -------- --------
Total from investment operations 1.49 2.61 (.94) 3.58 1.75
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (1.04) (1.00) (1.07) (1.11) (.89)
Realized gain on investments--net -- (.22) (.23) (.16) --
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Stock shareholders (1.04) (1.22) (1.30) (1.27) (.89)
-------- -------- -------- -------- --------
<PAGE> Capital charge resulting from issuance of
Common Stock -- -- -- -- (.02)
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:++++
Dividends and distributions to Preferred
Stock shareholders:
Investment income--net (.24) (.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 (.24) (.27) (.21) (.20) (.33)
-------- -------- -------- -------- --------
Net asset value, end of period $ 15.68 $ 15.47 $ 14.35 $ 16.80 $ 14.69
======== ======== ======== ======== ========
Market price per share, end of period $ 14.875 $ 14.375 $ 12.125 $ 16.75 $ 15.125
======== ======== ======== ======== ========
Total Investment Based on market price per share 10.88% 29.76% (20.94%) 19.91% 7.06%+++
Return:** ======== ======== ======== ======== ========
Based on net asset value per share 8.61% 18.00% (6.71%) 23.83% 9.99%+++
======== ======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement .64% .66% .66% .64% .58%*
Net Assets:*** ======== ======== ======== ======== ========
Expenses .64% .66% .66% .64% .65%*
======== ======== ======== ======== ========
Investment income--net 5.64% 5.91% 5.76% 5.72% 6.08%*
======== ======== ======== ======== ========
Supplemental Net assets, net of Preferred Stock, end of
Data: period (in thousands) $581,124 $573,400 $531,657 $619,775 $526,287
======== ======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $250,000 $250,000 $250,000 $250,000 $250,000
======== ======== ======== ======== ========
Portfolio turnover 96.74% 52.99% 44.27% 25.58% 66.45%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,324 $ 3,294 $ 3,127 $ 3,479 $ 3,105
======== ======== ======== ======== ========
Dividends Per Series A--Investment income--net $ 894 $ 887 $ 598 $ 560 $ 680
Share on ======== ======== ======== ======== ========
Preferred Stock Series B--Investment income--net $ 897 $ 850 $ 733 $ 554 $ 690
Outstanding:++++++ ======== ======== ======== ======== ========
Series C--Investment income--net $ 998 $ 827 $ 647 $ 566 $ 685
======== ======== ======== ======== ========
Series D--Investment income--net $ 888 $ 897 $ 659 $ 556 $ 688
======== ======== ======== ======== ========
Series E--Investment income--net $ 875 $ 759 $ 707 $ 542 $ 688
======== ======== ======== ======== ========
<PAGE>
<FN>
*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 that occurred on December 1, 1994.
+++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-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.
<PAGE>
(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 income. Realized gains and losses on security transactions
are determined on the identified cost basis.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
(e) Deferred organization expenses--Deferred organization expenses
are amortized on a straight-line basis over a five-year period.
(f) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of 0.50% of
the Fund's average weekly net assets.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, 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, 1996 were $783,928,774 and
$780,107,439, respectively.
Net realized and unrealized gains (losses) as of October 31, 1996
were as follows:
Realized
Gains Unrealized
(Losses) Gains
Long-term investments $13,314,243 $48,685,514
Short-term investments (1,849) --
Financial futures contracts (815,381) --
----------- -----------
Total $12,497,013 $48,685,514
=========== ===========
<PAGE>
As of October 31, 1996, net unrealized appreciation for Federal
income tax purposes aggregated $48,501,329, of which $50,028,982
related to appreciated securities and $1,527,653 related to
depreciated securities. The aggregate cost of investments at October
31, 1996 for Federal income tax purposes was $774,375,191.
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
As of October 31, 1996, shares issued and outstanding remained
constant at 37,061,414. At April 30, 1996, 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, 1996 were as
follows: Series A, 3.35%; Series B, 3.45%; Series C, 3.75%, Series
D, 3.447%; and Series E, 3.075%.
For the year ended October 31, 1996, there were 10,000 AMPS shares
authorized, issued and outstanding with a liquidation preference of
$25,000 per share.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from 0.25% to 0.375%,
calculated on the proceeds of each auction. For the six months ended
October 31, 1996, MLPF&S, an affiliate of FAM, earned $355,197 as
commissions.
5. Subsequent Event:
On November 8, 1996, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the amount
of $.085115 per share, payable on November 27, 1996 to shareholders
of record as of November 18, 1996.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
<PAGE>
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, 1996, 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 four-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, 1996 by correspondence with the custodian and broker. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
MuniYield Fund, Inc. as of October 31, 1996, 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 4, 1996
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by MuniYield
Fund, Inc. during its taxable year ended October 31, 1996 qualify as
tax-exempt interest dividends for Federal income tax purposes.
Additionally, there were no capital gains distributed by the Fund
during the year.
Please retain this information for your records.
