MUNIYIELD
FUND, INC.
FUND LOGO
Semi-Annual Report
April 30, 1998
Officers and Directors
Arthur Zeikel, President and Director
James H. Bodurtha, Director
Herbert I. London, Director
Robert R. Martin, Director
Joseph L. May, Director
Andre F. Perold, Director
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Theodore R. Jaeckel Jr., Vice President
Gerald M. Richard, Treasurer
Philip M. Mandel, Secretary
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
NYSE Symbol
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
Printed on post-consumer recycled paper
MuniYield Fund, Inc.
DEAR SHAREHOLDER
For the six months ended April 30, 1998, the Common Stock of
MuniYield Fund, Inc. earned $0.602 per share income dividends, which
included earned and unpaid dividends of $0.080. This represents a
net annualized yield of 7.65%, based on a month-end per share net
asset value of $15.87. Over the same period, the total investment
return on the Fund's Common Stock was +3.31%, based on a change in
per share net asset value from $16.09 to $15.87, and assuming
reinvestment of $0.605 per share income dividends and $0.143 per
share capital gains distributions.
For the six-month period ended April 30, 1998, the Fund's Auction
Market Preferred Stock had an average yield as follows: Series A,
4.43%; Series B, 4.49%; Series C, 4.02%; Series D, 3.99%; and Series
E, 4.16%.
The Municipal Market Environment
During the six months ended April 30, 1998, bond yields generally
moved lower, and by mid-January 1998 had declined to recent historic
lows. Long-term US Treasury bond yields declined 20 basis points
(0.20%) during the same period and stood at 5.95% by April 30, 1998.
Similarly, long-term uninsured tax-exempt bond yields, as measured
by the Bond Buyer Revenue Bond Index, fell approximately 35 basis
points to 5.25%, a level not seen since the mid-1970s. While low
inflation has supported lower interest rates, much of the decline in
bond yields in late 1997 and early 1998 was driven more by the
turmoil in Asian financial markets than by domestic economic
fundamentals. Weak economic conditions in Asia were expected to
negatively impact US growth through reduced export demand.
Additionally, inflation in the United States was also expected to
decline in response to lower prices on goods imported from Asian
manufacturers.
However, in recent months, many investors have become increasingly
concerned that most of the downturn in Asia, especially in Japan,
has already occurred and any future deterioration will not be severe
enough to constrain US economic growth and inflationary pressures.
These concerns served to push interest rates higher in the latter
part of the period, causing fixed-income yields to retrace much of
their earlier gains.
Thus far in 1998, the municipal bond market has experienced
unexpectedly strong supply pressures. These supply pressures have
prevented tax-exempt bond yields from declining as much as US
Treasury bond yields. Over the last six months, more than $135
billion in new tax-exempt bonds were underwritten, an increase of
over 40% compared to the same period a year ago. During the last
three months, municipalities issued over $72 billion in new
securities, an increase of more than 60% compared to the same three-
month period in 1997. Additionally, corporate issuers have also
viewed current interest rate levels as an opportunity to issue
significant amounts of taxable securities. Thus far in 1998, over
$100 billion in investment-grade corporate bonds have been
underwritten, an increase of more than 60% relative to the
comparable period a year ago. This sizeable corporate bond issuance
has tended to support generally higher fixed-income yields and
reduce the demand for tax-exempt bonds.
However, the recent pace of new municipal bond issuance is unlikely
to be maintained. Continued increases in bond issuance will require
lower and lower tax-exempt bond yields to generate the economic
savings necessary for additional municipal bond refinancings.
Preliminary estimates for 1998 total municipal bond issuance are
presently in the $200 billion--$225 billion range. These estimates
suggest that recent supply pressures are likely to abate later in
the year. Municipal bond investors received approximately $30
billion earlier this year in coupon payments, bond maturities and
proceeds from early redemptions. The demand generated by these
assets has helped offset the increase in supply seen thus far this
year. Furthermore, looking ahead, June and July have also tended to
be periods of strong investor demand as seasonal factors are likely
to generate strong income flows similar to those seen earlier this
year.
MuniYield Fund, Inc.
April 30, 1998
It is also possible that at least some of the recent economic
strength seen in the United States will be reversed in the coming
months. A particularly mild winter has been partially responsible
for a strong housing sector, as well as other construction
industries. This recent strong trend may not be sustained and may
lead to weaker construction growth later this year. Additionally,
strong economic growth in 1997 and the increased use of electronic
tax filing have resulted in larger and earlier Federal and state
income tax refunds to many individuals. These refunds appear to have
supported strong consumer spending in recent months, but may be
borrowing against weaker spending later this year. In addition, the
continued impact of the Asian financial crisis on the US domestic
economy's future growth remains unclear. Barring a dramatic and
unexpected resurgence of domestic inflation, we do not believe that
the Federal Reserve Board will be willing to raise interest rates
until the full impact of the Asian situation can be established.
All these factors suggest that over the near term, tax-exempt as
well as taxable bond yields are unlikely to rise by any appreciable
amount. Recent supply pressures have caused municipal bond yield
ratios to rise relative to US Treasury bond yields. At April 30,
1998, long-term tax-exempt bond yields were at attractive yield
ratios relative to comparable US Treasury securities (over 90%), and
well in excess of their expected range of 85%--88%. Any further
pressure upon the municipal market may well represent a very
attractive investment opportunity.
Portfolio Strategy
Given the volatile market environment during the six months ended
April 30, 1998, MuniYield Fund, Inc. benefited from our relatively
conservative strategy, motivated primarily by our efforts to
maintain a competitive dividend as well as to preserve the gains we
achieved. Our strategy to keep the Fund fully invested provided a
positive contribution to the overall performance of the Fund as
interest rates broadly declined through the latter part of 1997.
Since then, however, our conservative strategy has insulated the
Fund from much of the volatility experienced during the first
quarter of 1998. In addition, an ongoing contraction in credit
spreads has enabled our position in high-yield securities to make
significant contributions to the Fund's total return.
Looking ahead, we anticipate little change in our position, barring
a further rise in long-term interest rates. In our opinion, such a
scenario would provide an opportunity to further pursue our strategy
to extend the portfolio's average call protection. Until recently,
we have been reluctant to explore this approach given the extent of
the bond market rally. With long-term municipal yields beginning to
approach more reasonable levels on both an absolute and a relative
basis, our positive long-term outlook for interest rates may well
warrant a more aggressive pursuit of this strategy.
Leverage continues to benefit the Fund's Common Stock shareholders
as the Fund's cost of borrowing, as reflected by short-term tax-
exempt interest rates, remains well below the yields available on
long-term municipal bonds. The proceeds of borrowing can be invested
in these long-term bonds, thereby providing an incremental yield
advantage over an unleveraged tax-exempt investment. While leverage
creates opportunities for yield enhancement, it also produces a
higher degree of volatility. For this reason, we have sought to
maintain a relatively low duration as a means to limit this inherent
volatility until such time as the interest rate outlook comes into
full view. However, should the spread between short-term and long-
term interest rates narrow, the benefits of leverage will decline,
and as a result reduce the yield to the Fund's Common Stock. (For a
complete explanation of the benefits and risks of leveraging, see
page 3 of this report to shareholders.)
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Theodore R. Jaeckel Jr.)
Theodore R. Jaeckel Jr.
Vice President and Portfolio Manager
June 8, 1998
MuniYield Fund, Inc.
April 30, 1998
THE BENEFITS AND RISKS OF LEVERAGING
MuniYield Fund, Inc. utilizes leveraging to seek to enhance the
yield and net asset value of its Common Stock. However, these
objectives cannot be achieved in all interest rate environments. To
leverage, the Fund issues Preferred Stock, which pays dividends at
prevailing short-term interest rates, and invests the proceeds in
long-term municipal bonds. The interest earned on these investments
is paid to Common Stock shareholders in the form of dividends, and
the value of these portfolio holdings is reflected in the per share
net asset value of the Fund's Common Stock. However, in order to
benefit Common Stock shareholders, the yield curve must be
positively sloped; that is, short-term interest rates must be lower
than long-term interest rates. At the same time, a period of
generally declining interest rates will benefit Common Stock
shareholders. If either of these conditions change, then the risks
of leveraging will begin to outweigh the benefits.
To illustrate these concepts, assume a fund's Common Stock
capitalization of $100 million and the issuance of Preferred Stock
for an additional $50 million, creating a total value of $150
million available for investment in long-term municipal bonds. If
prevailing short-term interest rates are approximately 3% and long-
term interest rates are approximately 6%, the yield curve has a
strongly positive slope. The fund pays dividends on the $50 million
of Preferred Stock based on the lower short-term interest rates. At
the same time, the fund's total portfolio of $150 million earns the
income based on long-term interest rates. Of course, increases in
short-term interest rates would reduce (and even eliminate) the
dividends of the Common Stock.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term
investments, and therefore the Common Stock shareholders are the
beneficiaries of the incremental yield. However, if short-term
interest rates rise, narrowing the differential between short-term
and long-term interest rates, the incremental yield pickup on the
Common Stock will be reduced or eliminated completely. At the same
time, the market value of the fund's Common Stock (that is, its
price as listed on the New York Stock Exchange) may, as a result,
decline. Furthermore, if long-term interest rates rise, the Common
Stock's net asset value will reflect the full decline in the price
of the portfolio's investments, since the value of the fund's
Preferred Stock does not fluctuate. In addition to the decline in
net asset value, the market value of the fund's Common Stock may
also decline.
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute substantially all of its
net investment income to its shareholders on a monthly basis.
However, in order to provide shareholders with a more consistent
yield to the current trading price of shares of Common Stock of the
Fund, the Fund may at times pay out less than the entire amount of
net investment income earned in any particular month and may at
times in any month pay out such accumulated but undistributed income
in addition to net investment income earned in that month. As a
result, the dividends paid by the Fund for any particular month may
be more or less than the amount of net investment income earned by
the Fund during such month. The Fund's current accumulated but
undistributed net investment income, if any, is disclosed in the
Statement of Assets, Liabilities and Capital, which comprises part
of the Financial Information included in this report.
MuniYield Fund, Inc.
April 30, 1998
PORTFOLIO ABBREVIATIONS
To simplify the listings of MuniYield Fund, Inc.'s portfolio
holdings in the Schedule of Investments, we have abbreviated the
names of many of the securities according to the list below and at
right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
EDA Economic Development Authority
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
RITR Residual Interest Trust Receipts
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 $ 9,637
Alaska--2.3% Valdez, Alaska, Marine Terminal Revenue Refunding Bonds:
NR* NR* 10,050 (Amerada Hess Pipeline Corporation), 6.10% due 2/01/2024 10,604
AA Aa2 8,000 (British Petroleum Pipeline), Series B, 7% due 12/01/2025 8,771
Arizona--4.2% Maricopa County, Arizona, Pollution Control Corporation, PCR,
Refunding:
BB+ Ba1 5,275 (Public Service Co.), Series A, 5.75% due 11/01/2022 5,363
BB+ Ba1 9,000 (Public Service Company of New Mexico Project), Series A,
6.30% due 12/01/2026 9,609
NR* B1 5,300 Phoenix, Arizona, IDA, Airport Facilities Revenue Refunding
Bonds (America West Airlines Inc.), AMT, 6.30% due 4/01/2023 5,322
B B2 15,000 Pima County, Arizona, IDA, Industrial Revenue Bonds (Tucson
Electric Power Co. Project), Series B, 6% due 9/01/2029 15,331
California California Foothill/Eastern Transportation Corridor Agency,
- - --4.6% Toll Road Revenue Bonds, Senior Lien, Series A**:
AAA Aaa 10,000 5.75% due 1/01/2018 (i) 3,479
AAA Aaa 10,000 5.791% due 1/01/2020 (i) 3,106
BBB- Baa 34,165 6.33% due 1/01/2020 10,023
AAA Aaa 10,000 5.788% due 1/01/2021 (i) 2,942
BBB- Baa 20,245 6.24% due 1/01/2021 5,625
AAA Aaa 10,000 5.783% due 1/01/2022 (i) 2,785
BBB- Baa 15,000 6.25% due 1/01/2022 3,939
A1+ NR* 900 California Pollution Control Financing Authority, PCR,
Refunding (Pacific Gas and Electric Co.), VRDN, AMT, Series C,
4.20% due 11/01/2026 (a) 900
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) 5,679
Colorado--5.1% Denver, Colorado, City and County Airport Revenue Bonds:
BBB Aaa 700 AMT, Series D, 7.75% due 11/15/2001 (b) 790
BBB Baa1 8,000 AMT, Series D, 7.75% due 11/15/2013 9,912
BBB Baa1 2,610 AMT, Series D, 7.75% due 11/15/2021 2,896
AAA NR* 4,900 Series A, 7.25% due 11/15/2002 (b) 5,546
AAA Baa1 14,350 Series A, 7.25% due 11/15/2002 (b) 16,267
</TABLE>
MuniYield Fund, Inc.
April 30, 1998
<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>
Colorado NR* NR* $ 5,000 Denver, Colorado, Urban Renewal Authority, Tax Increment
(concluded) Revenue Bonds (Downtown Denver), AMT, Series A, 7.75%
due 9/01/2016 $ 5,529
Mountain Village, Colorado, Metropolitan District, Refunding
(San Miguel County), UT:
NR* NR* 240 7.95% due 12/01/2002 (b) 276
NR* NR* 1,410 7.95% due 12/01/2003 1,575
Connecticut A+ NR* 15,000 Connecticut State Development Authority, Water Facilities
- - --2.2% Revenue Bonds (Bridgeport Hydraulic Co. Project), AMT, 6%
due 9/01/2036 15,705
NR* B1 2,550 New Haven, Connecticut, Facilities Revenue Bonds (Hill Health
Corporation Project), 9.25% due 5/01/2017 2,834
District of A+ A3 4,940 District of Columbia, Revenue Bonds (Howard University),
Columbia--0.6% Series B, 6.75% due 10/01/2002 (b) 5,478
Florida--1.8% NR* NR* 4,600 Grand Haven, Florida, Community Development District, Special
Assessment, Series A, 6.30% due 5/01/2002 4,705
AAA Aaa 10,000 Hillsborough County, Florida, School Board, COP, RITR,
Series 31, 6.27% due 7/01/2021 (e)(k) 10,125
Georgia--0.8% NR* Aaa 5,535 Atlanta, Georgia, Urban Residential Finance Authority,
College Facilities Revenue Bonds (Morris Brown College
Project), 9.50% due 12/01/2001 (b) 6,607
Idaho--0.5% AA NR* 3,710 Idaho Housing Agency, S/F Mortgage, AMT, Senior Series C-2,
7.15% due 7/01/2023 3,927
Illinois--3.1% NR* Aaa 4,715 Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT, Series B,
7.625% due 9/01/2027 (f)(g) 5,356
BBB Baa1 2,750 Illinois Development Finance Authority, PCR, Refunding
(Illinois Power Company Project), Series A, 7.375% due 7/01/2021 3,166
NR* NR* 2,500 Illinois Educational Facilities Authority Revenue Bonds
(Chicago Osteopathic Health Systems), 7.25% due 11/15/2019 (b) 3,072
Illinois Health Facilities Authority Revenue Bonds (b):
A+ A2 1,500 (Edward Hospital Association Project), 7% due 2/15/2002 1,660
NR* NR* 2,625 Refunding (Saint Elizabeth's Hospital--Chicago), 7.75%
due 7/01/2004 3,107
BBB- NR* 8,000 Metropolitan Pier and Exposition Authority, Illinois,
Hospitality Facilities Revenue Bonds (McCormick Place
Convention), 7% due 7/01/2026 9,848
Indiana--1.4% NR* A2 1,150 Indiana Health Facilities Financing Authority, Revenue
Refunding Bonds (Saint Anthony Medical Center), Series A,
7% due 10/01/2017 1,248
BBB- Baa3 3,930 Indiana State Development Finance Authority, Environmental
Revenue Refunding and Improvement Bonds (USX Corporation
Project), 6.25% due 7/15/2030 4,179
AA NR* 6,000 Indianapolis, Indiana, Local Public Improvement Bond Bank,
Refunding, Series D, 6.75% due 2/01/2020 6,611
A1+ Aaa 100 Rockport, Indiana, PCR, Refunding (AEP Generating Co. Project),
VRDN, Series A, 4.15% due 7/01/2025 (a)(c) 100
Kansas--1.1% AAA Aaa 8,300 Burlington, Kansas, PCR, Refunding (Kansas Gas and Electric
Company Project), 7% due 6/01/2031 (e) 8,998
Kentucky--0.6% BBB- Baa3 500 Kenton County, Kentucky, Airport Board, Special Facilities
Airport Revenue Bonds (Delta Airlines Project), AMT, Series A,
6.125% due 2/01/2022 510
NR* NR* 4,000 Perry County, Kentucky, Solid Waste Disposal Revenue Bonds
(TJ International Project), AMT, 7% due 6/01/2024 4,407
</TABLE>
MuniYield Fund, Inc.
April 30, 1998
<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>
Louisiana NR* A3 $35,000 Lake Charles, Louisiana, Harbor and Terminal District, Port
- - --7.5% Facilities Revenue Refunding Bonds (Trunkline Long Company
Project), 7.75% due 8/15/2022 $ 40,147
A1+ VMIG1++ 1,500 Louisiana State Offshore Terminal Authority, Deepwater Port
Revenue Refunding Bonds (Loop Inc.--First Stage), VRDN,
Series A, 4.10% due 9/01/2008 (a) 1,500
BB NR* 20,000 Port New Orleans, Louisiana, IDR, Refunding (Continental
Grain Company Project), 6.50% due 1/01/2017 21,497
Maryland--1.5% NR* NR* 7,050 Maryland State Energy Financing Administration, Limited
Obligation Revenue Bonds (Cogeneration--AES Warrior Run),
AMT, 7.40% due 9/01/2019 7,773
NR* Aaa 4,500 Prince Georges County, Maryland, Hospital Revenue Bonds
(Dimensions Health Corporation Issue), 7.25% due 7/01/2002 (b) 5,062
Massachusetts AAA Aaa 5,000 Massachusetts State, HFA, Residential Development Bonds,
- - --1.4% Series C, 6.90% due 11/15/2021 (f) 5,431
A+ Aa 5,970 Massachusetts State, HFA, S/F Housing Revenue Bonds, AMT,
Series 38, 7.20% due 12/01/2026 6,469
Michigan--0.7% Detroit, Michigan, GO, UT, Series A (b):
BBB+ Aaa 2,500 6.70% due 4/01/2005 2,828
BBB+ Aaa 1,500 6.80% due 4/01/2005 1,715
A1+ VMIG1++ 1,800 Royal Oak, Michigan, Hospital Finance Authority Revenue
Bonds (William Beaumont Hospital), VRDN, Series L, 4.15%
due 1/01/2027 (a) 1,800
Minnesota--2.4% AA Aa2 10,000 Minnesota State, HFA, Housing Development, Series A, 6.95%
due 2/01/2014 10,587
AA Aa2 3,410 Minnesota State, HFA, S/F Mortgage, AMT, Series A, 7.05%
due 7/01/2022 3,569
BBB Baa1 5,700 Sartell, Minnesota, PCR, Refunding (Champion International
Corporation), 6.95% due 10/01/2012 6,173
Mississippi NR* P1 1,000 Jackson County, Mississippi, PCR, Refunding (Chevron USA,
- - --3.2% Inc. Project), VRDN, 4.05% due 6/01/2023 (a) 1,000
A A2 17,750 Lowndes County, Mississippi, Solid Waste Disposal and PCR,
Refunding (Weyerhaeuser Company Project), Series A, 6.80%
due 4/01/2022 21,231
BBB- NR* 5,000 Mississippi Business Financial Corporation, Mississippi, Solid
Waste Disposal Revenue Refunding Bonds (Mississippi
Phosphates Corporation Project), AMT, 5.80% due 3/01/2022 4,955
Missouri--0.8% AAA NR* 5,965 Missouri State Housing Development Commission, S/F
Mortgage Revenue Bonds, AMT, Series B, 7.55% due
9/01/2027 (f)(g) 6,779
Montana--0.3% BBB Baa2 2,720 Lewis & Clark County, Montana, Environmental Revenue
Refunding Bonds (Asarco Inc. Project), 5.60% due 1/01/2027 2,721
New Jersey BB- Ba2 6,000 New Jersey EDA, Special Facility Revenue Bonds (Continental
- - --1.9% Airlines Inc. Project), AMT, 5.50% due 4/01/2028 5,897
AAA NR* 9,500 New Jersey State Housing and Mortgage Finance Agency, M/F
Housing Revenue Refunding Bonds (Presidential Plaza), 7%
due 5/01/2030 (d) 10,276
New Mexico Farmington, New Mexico, PCR, Refunding (Public Service Co.):
- - --2.8% BB+ Ba1 13,500 Series A, 5.80% due 4/01/2022 13,744
BB+ Ba1 10,000 Series B, 5.80% due 4/01/2022 10,181
</TABLE>
MuniYield Fund, Inc.
April 30, 1998
<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 $ 5,595 Metropolitan Transportation Authority, New York, Commuter
- - --14.6% Facilities Revenue Bonds, RITR, Series 9, 7.72% due
7/01/2026 (k) $ 6,469
New York City, New York, GO, UT:
AAA Aaa 1,930 Series A, 7.75% due 8/15/2001 (b) 2,162
BBB+ Aaa 5,605 Series A, 7.75% due 8/15/2001 (b) 6,279
BBB+ Aaa 3,970 Series B, 7% due 6/01/2001 (b) 4,338
BBB+ A3 1,555 Series B, 7.75% due 2/01/2002 (b) 1,755
BBB+ A3 420 Series B, 7% due 6/01/2016 452
BBB+ A3 15,000 Series B, Fiscal 92, 7.75% due 2/01/2010 16,717
BBB+ Aaa 6,400 Series B, Sub-Series B-1, 7% due 8/15/2004 (b) 7,343
BBB+ Aaa 4,615 Series C, Sub-Series C-1, 7.50% due 8/01/2002 (b) 5,237
BBB+ A3 385 Series C, Sub-Series C-1, 7.50% due 8/01/2021 428
A A 5,500 New York City, New York, IDA, Special Facilities Revenue
Bonds, RITR, AMT, Series RI-5, 7.395% due 1/01/2024 (k) 6,078
A1+ VMIG1++ 7,100 New York City, New York, Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds, VRDN, Series G, 4.05%
due 6/15/2024 (a)(h) 7,100
AA NR* 3,000 New York State Dormitory Authority Revenue Bonds (Hebrew
Home for the Aged--Riverdale), 6.125% due 2/01/2037 (d) 3,173
New York State Environmental Facilities Corporation, PCR:
A- Aa 17,525 RITR, Series RI-1, 7.095% due 6/15/2014 (k) 19,891
AA+ NR* 22,700 (State Water Revolving Fund), Series E, 6.875% due
6/15/2001 (b) 24,826
AA+ Aaa 1,700 (State Water Revolving Fund), Series E, 6.875% due
6/15/2010 1,849
AA- A1 8,000 Port Authority of New York and New Jersey, Consolidated
Revenue Bonds, 93rd Series, 6.125% due 6/01/2094 9,012
North Carolina North Carolina HFA, S/F Revenue Bonds:
- - --2.4% AA Aa 4,875 AMT, Series T, 7.05% due 9/01/2020 5,179
AA Aa 13,700 Refunding, Series S, 6.95% due 3/01/2017 14,678
North A+ Aa2 3,680 North Dakota State, HFA, S/F Mortgage Revenue Bonds, Series A,
Dakota--0.5% 7% due 7/01/2023 3,910
Ohio--3.9% BB- Ba2 11,400 Cleveland, Ohio, Airport Special Revenue Bonds (Continental
Airlines Inc. Project), AMT, 5.375% due 9/15/2027 10,835
BBB Ba1 12,500 Ohio State, Solid Waste Disposal Revenue Bonds (USG
Corporation Project ), AMT, 5.65% due 3/01/2033 12,349
NR* NR* 10,000 Ohio State, Water Development Authority, Solid Waste Disposal
Revenue Bonds (Bay Shore Power Project), AMT, Series A,
5.875% due 9/01/2020 10,018
Oklahoma--1.1% AAA Baa 3,250 Holdenville, Oklahoma, Industrial Authority, Correctional
Facility Revenue Bonds, 6.70% due 7/01/2006 (b)(j) 3,769
BBB- Baa2 5,050 Tulsa, Oklahoma, Municipal Airport Trust, Revenue Refunding
Bonds (American Airlines Project), 6.25% due 6/01/2020 5,338
Oregon--1.3% NR* Baa2 10,680 Oregon State Economic Development Revenue Refunding Bonds
(Georgia Pacific Corporation Project), Series 183, 5.70%
due 12/01/2025 10,847
Pennsylvania A NR* 2,975 Berks County, Pennsylvania, Municipal Authority, College
- - --4.1% Revenue Bonds (Alvernia College Project), 6% due 11/15/2018 3,142
NR* Baa3 1,855 McCandless, Pennsylvania, IDA, IDR, Refunding (Kroger Co.),
7.375% due 10/15/2007 2,094
</TABLE>
MuniYield Fund, Inc.
April 30, 1998
<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>
Pennsylvania Pennsylvania Convention Center Authority, Revenue Refunding
(concluded) Bonds, Series A:
BBB Baa $ 9,675 6.70% due 9/01/2014 $ 10,699
BBB Baa 5,000 6.75% due 9/01/2019 5,543
AA+ Aa 5,250 Pennsylvania HFA, S/F Mortgage, AMT, Series 42, 6.85%
due 4/01/2025 5,667
Philadelphia, Pennsylvania, Authority for IDR, Refunding
(Commercial Development):
NR* NR* 3,650 (Days Inn), Series B, 6.50% due 10/01/2027 3,899
NR* NR* 3,000 (Doubletree), Series A, 6.50% due 10/01/2027 3,204
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 2,700
South BBB Baa2 2,500 South Dakota State Health and Educational Facilities Authority,
Dakota--0.3% Revenue Refunding Bonds (Prairie Lakes Health Care), 7.25%
due 4/01/2003 (b) 2,837
Tennessee--0.4% NR* NR* 3,000 Hardeman County, Tennessee, Correctional Facilities
Corporation Revenue Bonds, 7.75% due 8/01/2017 3,357
Texas--10.1% NR* Aaa 3,800 Ector County, Texas, Hospital District, Hospital Revenue Bonds
(Medical Center Hospital), 7.30% due 4/15/2002 (b) 4,264
AA- Aa3 5,000 Guadalupe-Blanco River Authority, Texas, Sewage and Solid
Waste Disposal Facility Revenue Bonds (du Pont (E.I.)
de Nemours and Company Project), AMT, 6.40% due 4/01/2026 5,450
BBB Baa1 8,400 Gulf Coast, Texas, Waste Disposal Authority Revenue Bonds
(Champion International Corporation), AMT, 7.45% due 5/01/2026 9,237
A1+ NR* 14,400 Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds (Methodist Hospital), VRDN, 4.15%
due 12/01/2025 (a) 14,400
Harris County, Texas, Industrial Development Corp., Airport
Facilities Revenue Refunding Bonds (Continental Airlines
Project), AMT:
BB- Ba2 1,730 5% due 7/01/2007 1,692
BB- Ba2 8,305 5.375% due 7/01/2019 8,057
Houston, Texas, Airport System Revenue Bonds, Special
Facilities, AMT:
BB Ba2 9,200 (Continental Airline Airport Improvement), Series C,
6.125% due 7/15/2027 9,583
BB Ba2 10,300 (Continental Airline Terminal Improvement), Series B,
6.125% due 7/15/2017 10,729
AAA Aaa 4,050 Houston, Texas, Water and Sewer Systems Revenue Bonds,
Junior Lien, Series A, 6.375% due 12/01/2022 (e) 4,401
BBB Baa2 4,000 Nueces River Authority, Texas, Environmental Improvement
Revenue Refunding Bonds (Asarco Inc. Project), 5.60%
due 1/01/2027 4,000
BB Ba2 3,500 Odessa, Texas, Junior College District, Revenue Refunding
Bonds, Series A, 8.125% due 12/01/2018 4,030
BBB- Baa3 3,000 Port Corpus Christi, Texas, Industrial Development Corporation,
Revenue Refunding Bonds (Valero), Series B, 5.40% due 4/01/2018 2,924
A+ A2 5,000 Red River Authority, Texas, PCR (Hoechst Celanese Corporation
Project), AMT, 6.875% due 4/01/2017 5,421
AAA NR* 820 Travis County, Texas, Housing Finance Corporation, Residential
Mortgage Revenue Refunding Bonds, Series A, 7% due
12/01/2011 (f)(g) 872
</TABLE>
MuniYield Fund, Inc.
April 30, 1998
<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>
Utah--1.1% Carbon County, Utah, Solid Waste Disposal Revenue Refunding
Bonds, AMT, Series A:
NR* NR* $ 3,900 (Laidlaw Environmental), 7.45% due 7/01/2017 $ 4,272
BBB+ Baa2 3,300 (Laidlaw Inc.--ECDC Project), 7.50% due 2/01/2010 3,799
AAA NR* 1,265 Utah State, HFA, S/F Mortgage, AMT, Senior Series E-2,
7.15% due 7/01/2024 1,331
Virginia--4.9% NR* Baa2 4,500 Bedford County, Virginia, IDA, IDR, Refunding (Nekoosa
Packaging Corp. Project), AMT, 5.60% due 12/01/2025 4,469
Fairfax County, Virginia, Water Authority, Water Revenue
Refunding Bonds:
AAA Aaa 9,370 6% due 4/01/2007 (b) 10,453
AA Aa2 15,235 6% due 4/01/2022 16,451
NR* NR* 1,000 Pittsylvania County, Virginia, IDA, Revenue Bonds
(Multi-trade), AMT, Series A, 7.55% due 1/01/2019 1,100
AA+ Aa1 8,125 Virginia State, HDA, Commonwealth Mortgage, Series A, 7.10%
due 1/01/2025 8,493
West BBB+ Baa1 7,500 Mason County, West Virginia, PCR, Refunding (Appalachian
Virginia--1.4% Power Company Project), Series I, 6.85% due 6/01/2022 8,191
NR* NR* 3,000 Upshur County, West Virginia, Solid Waste Disposal Revenue
Bonds (TJ International Project), AMT, 7% due 7/15/2025 3,342
Wisconsin--0.3% NR* A2 2,710 Wisconsin State Health and Educational Facilities Authority
Revenue Bonds (Mercy Hospital of Janesville Inc.), 6.60%
due 8/15/2022 2,892
Total Investments (Cost--$771,146)--98.6% 831,911
Other Assets Less Liabilities--1.4% 11,743
--------
Net Assets--100.0% $843,654
========
<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 April 30, 1998.
(b)Prerefunded.
(c)AMBAC Insured.
(d)FHA Insured.
(e)MBIA Insured.
(f)FNMA Collateralized.
(g)GNMA Collateralized.
(h)FGIC Insured.
(i)FSA Insured.
(j)Connie Lee Insured.
(k)The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rate shown is the
rate in effect at April 30, 1998.
*Not Rated.
**Represents a zero coupon bond; the interest rate shown is the
effective yield at the time of purchase by the Fund.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
QUALITY PROFILE
The quality ratings of securities in the Fund as of April 30, 1998
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 19.2%
AA/Aa 18.6
A/A 14.8
BBB/Baa 18.5
BB/Ba 13.2
B/B 2.8
NR (Not Rated) 8.3
Other* 3.2
[FN]
*Temporary investments in short-term municipal securities.
MuniYield Fund, Inc.
April 30, 1998
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of April 30, 1998
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$771,145,538) (Note 1a) $831,910,587
Cash 118,822
Receivables:
Interest $ 12,860,097
Securities sold 5,452,792 18,312,889
------------
Prepaid expenses and other assets 20,558
------------
Total assets 850,362,856
------------
Liabilities: Payables:
Securities purchased 5,406,292
Dividends to shareholders (Note 1e) 866,572
Investment adviser (Note 2) 350,654 6,623,518
------------
Accrued expenses and other liabilities 85,045
------------
Total liabilities 6,708,563
------------
Net Assets: Net assets $843,654,293
============
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 (37,396,123 shares
issued and outstanding) $ 3,739,612
Paid-in capital in excess of par 524,363,240
Undistributed investment income--net 9,007,278
Accumulated realized capital losses on investments--net (3,711,115)
Accumulated distributions in excess of realized capital
gains--net (Note 1e) (509,771)
Unrealized appreciation on investments--net 60,765,049
------------
Total--Equivalent to $15.87 net asset value per share of
Common Stock (market price--$15.625) 593,654,293
------------
Total capital $843,654,293
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
MuniYield Fund, Inc.
April 30, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months Ended
April 30, 1998
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 24,889,609
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 2,088,762
Commission fees (Note 4) 312,400
Transfer agent fees 51,279
Professional fees 43,184
Accounting services (Note 2) 42,959
Custodian fees 30,358
Directors' fees and expenses 22,472
Listing fees 18,670
Printing and shareholder reports 15,332
Pricing fees 12,234
Other 20,208
------------
Total expenses 2,657,858
------------
Investment income--net 22,231,751
------------
Realized & Realized gain on investments--net 7,931,224
Unrealized Gain Change in unrealized appreciation on investments--net (5,249,831)
(Loss) on ------------
Investments Net Increase in Net Assets Resulting from Operations $ 24,913,144
- - --Net (Notes 1b, ============
1d & 3):
See Notes to Financial Statements.
</TABLE>
MuniYield Fund, Inc.
April 30, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 1998 1997
<S> <S> <C> <C>
Operations: Investment income--net $ 22,231,751 $ 45,865,643
Realized gain on investments--net 7,931,224 7,007,842
Change in unrealized appreciation/depreciation on
investments--net (5,249,831) 17,329,366
------------ ------------
Net increase in net assets resulting from operations 24,913,144 70,202,851
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (18,076,745) (37,067,233)
Shareholders Preferred Stock (3,246,150) (7,546,880)
(Note 1e): Realized gain on investments--net:
Common Stock (9,726,657) (7,968,243)
Preferred Stock (1,915,682) (1,923,648)
In excess of realized gain on investments--net:
Common Stock -- (403,449)
Preferred Stock -- (97,398)
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (32,965,234) (55,006,851)
------------ ------------
Capital Stock Value of shares issued to Common Stock shareholders in
Transactions reinvestment of dividends and distributions 5,386,842 --
(Note 4): ------------ ------------
Net increase in net assets derived from capital stock
transactions 5,386,842 --
------------ ------------
Net Assets: Total increase (decrease) in net assets (2,665,248) 15,196,000
Beginning of period 846,319,541 831,123,541
------------ ------------
End of period* $843,654,293 $846,319,541
============ ============
<FN>
*Undistributed investment income--net $ 9,007,278 $ 8,098,422
============ ============
See Notes to Financial Statements.
</TABLE>
MuniYield Fund, Inc.
April 30, 1998
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended
April 30, For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 16.09 $ 15.68 $ 15.47 $ 14.35 $ 16.80
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .60 1.24 1.26 1.27 1.29
Realized and unrealized gain (loss) on
investments--net .07 .65 .23 1.34 (2.23)
-------- -------- -------- -------- --------
Total from investment operations .67 1.89 1.49 2.61 (.94)
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.49) (1.00) (1.04) (1.00) (1.07)
Realized gain on investments--net (.26) (.22) -- (.22) (.23)
In excess of realized gain on
investments--net -- (.01) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Stock shareholders (.75) (1.23) (1.04) (1.22) (1.30)
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:
Dividends and distributions to Preferred
Stock shareholders:
Investment income--net (.09) (.20) (.24) (.23) (.18)
Realized gain on investments--net (.05) (.05) -- (.04) (.03)
In excess of realized gain on
investments--net -- --++++ -- -- --
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity (.14) (.25) (.24) (.27) (.21)
-------- -------- -------- -------- --------
Net asset value, end of period $ 15.87 $ 16.09 $ 15.68 $ 15.47 $ 14.35
======== ======== ======== ======== ========
Market price per share, end of period $ 15.625 $ 15.875 $ 14.875 $ 14.375 $ 12.125
======== ======== ======== ======== ========
Total Investment Based on market price per share 3.09%+++ 15.56% 10.88% 29.76% (20.94%)
Return:** ======== ======== ======== ======== ========
Based on net asset value per share 3.31%+++ 11.11% 8.61% 18.00% (6.71%)
======== ======== ======== ======== ========
Average Net Expenses .64%* .64% .64% .66% .66%
Assets:*** ======== ======== ======== ======== ========
Investment income--net 5.32%* 5.48% 5.64% 5.91% 5.76%
======== ======== ======== ======== ========
Supplemental Net assets, net of Preferred Stock, end of
Data: period (in thousands) $593,654 $596,320 $581,124 $573,400 $531,657
======== ======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $250,000 $250,000 $250,000 $250,000 $250,000
======== ======== ======== ======== ========
Portfolio turnover 37.92% 111.45% 96.74% 52.99% 44.27%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,375 $ 3,385 $ 3,324 $ 3,294 $ 3,127
======== ======== ======== ======== ========
Dividends Series A--Investment income--net $ 353 $ 747 $ 894 $ 887 $ 598
Per Share on ======== ======== ======== ======== ========
Preferred Stock Series B--Investment income--net $ 360 $ 751 $ 897 $ 850 $ 733
Outstanding:++ ======== ======== ======== ======== ========
Series C--Investment income--net $ 299 $ 763 $ 998 $ 827 $ 647
======== ======== ======== ======== ========
Series D--Investment income--net $ 295 $ 762 $ 888 $ 897 $ 659
======== ======== ======== ======== ========
Series E--Investment income--net $ 319 $ 752 $ 875 $ 759 $ 707
======== ======== ======== ======== ========
<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.
++Dividends per share have been adjusted to reflect a two-for-one
stock split that occurred on December 1, 1994.
++++Amount is less than $.01 per share.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
MuniYield Fund, Inc.
April 30, 1998
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. These unaudited financial statements reflect all
adjustments which are, in the opinion of management, necessary to a
fair statement of the results for the interim period presented. All
such adjustments are of a normal recurring nature. The Fund
determines and makes available for publication the net asset value
of its Common Stock on a weekly basis. The Fund's Common Stock is
listed on the New York Stock Exchange under the symbol MYD. The
following is a summary of significant accounting policies followed
by the Fund.
(a) Valuation of investments--Municipal bonds are traded primarily
in the over-the-counter markets and are valued at the most recent
bid price or yield equivalent as obtained by the Fund's pricing
service from dealers that make markets in such securities. Financial
futures contracts and options thereon, which are traded on
exchanges, are valued at their closing price as of the close of such
exchanges. Options, which are traded on exchanges, are valued at
their last sale price as of the close of such exchanges or, lacking
any sales, at the last available bid price. Securities with
remaining maturities of sixty days or less are valued at amortized
cost, which approximates market value. Securities for which market
quotations are not readily available are valued at their fair value
as determined in good faith by or under the direction of the Board
of Directors of the Fund, including valuations furnished by a
pricing service retained by the Fund, which may utilize a matrix
system for valuations. The procedures of the pricing service and its
valuations are reviewed by the officers of the fund under the
general supervision of the Board of Directors.
(b) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell
financial futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities or
the intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at
a specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
* 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.
MuniYield Fund, Inc.
April 30, 1998
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates. Distributions in excess of
realized capital gains are due primarily to differing tax treatments
for futures transactions.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of 0.50% of
the Fund's average weekly net assets, including proceeds from the
issuance of Preferred Stock.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 1998 were $315,934,496 and
$345,486,312, respectively.
Net realized gains for the six months ended April 30, 1998 and net
unrealized gains as of April 30, 1998 were as follows:
Realized Unrealized
Gains Gains
Long-term investments $7,931,223 $60,765,049
Short-term investments 1 --
---------- -----------
Total $7,931,224 $60,765,049
========== ===========
As of April 30, 1998, net unrealized appreciation for Federal income
tax purposes aggregated $60,765,049, of which $61,751,427 related to
appreciated securities and $986,378 related to depreciated
securities. The aggregate cost of investments at April 30, 1998 for
Federal income tax purposes was $771,145,538.
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
Shares issued and outstanding during the six months ended April 30,
1998 increased by 334,709 as a result of dividend reinvestment and
during the year ended October 31, 1997 remained constant.
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 April 30, 1998 were as
follows: Series A, 3.80%; Series B, 3.65%; Series C, 3.775%; Series
D, 3.66%; and Series E, 3.69%.
For the six months ended April 30, 1998, 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
April 30, 1998, Merrill Lynch, Pierce, Fenner & Smith Inc., an
affiliate of FAM, earned $127,809 as commissions.
5. Subsequent Event:
On May 7, 1998, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$.080393 per share, payable on May 28, 1998 to shareholders of
record as of May 21, 1998.
