MUNIYIELD
FUND, INC.
FUND LOGO
Annual Report
October 31, 1999
Officers and Directors
Terry K. Glenn, President and Director
James H. Bodurtha, Director
Herbert I. London, Director
Robert R. Martin, Director
Joseph L. May, Director
Andre F. Perold, Director
Arthur Zeikel, Director
Vincent R. Giordano, Senior Vice President
Kenneth A. Jacob, Vice President
Theodore R. Jaeckel Jr., Vice President
Donald C. Burke, Vice President and
Treasurer
Alice A. Pellegrino, Secretary
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Stock:
The Bank of New York
100Church Street
New York, NY 10286
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.
TO OUR SHAREHOLDERS
For the year ended October 31, 1999, the Common Stock of MuniYield
Fund, Inc. earned $0.937 per share income dividends, which included
earned and unpaid dividends of $0.077. This represents a net
annualized yield of 7.10%, based on a month-end per share net asset
value of $13.21. Over the same period, the total investment return
on the Fund's Common Stock was -9.92%, based on a change in per
share net asset value from $16.27 to $13.21, and assuming
reinvestment of $1.087 per share ordinary income dividends and
$0.506 per share capital gains distributions.
For the six-month period ended October 31, 1999, the total
investment return on the Fund's Common Stock was -11.11%, based on a
change in per share net asset value from $15.36 to $13.21, and
assuming reinvestment of $0.458 per share income dividends.
For the six-month period ended October 31, 1999, the Fund's Auction
Market Preferred Stock had an average yield as follows: Series A,
2.98%; Series B, 3.09%; Series C, 3.59%; Series D, 3.57%; and
Series E, 3.31%.
The Municipal Market Environment
The combination of steady strong domestic economic growth,
improvement in foreign economies (most notably in Japan) and
increasing investor concerns regarding potential increases in US
inflation put upward pressure on bond yields throughout the six-
month period ended October 31, 1999. Continued strong US employment
growth, particularly the decline in the US unemployment rate to 4.2%
in early June, was among the reasons the Federal Reserve Board cited
for raising short-term interest rates in late June and again in late
August. US Treasury bond yields reacted by climbing above 6.375% by
late October. However, at October month-end, economic indicators
were released suggesting that, despite strong economic and
employment growth in the third quarter, inflationary pressures have
remained extremely well-contained. This resulted in a significant
rally in the US Treasury bond market, pushing US Treasury bond
yields downward to end the six-month period at approximately 6.15%.
During the period, yields on 30-year US Treasury bonds increased
over 50 basis points (0.50%).
Long-term tax-exempt bond yields also rose during the six months
ended October 31, 1999. Until early May, the municipal bond market
was able to withstand much of the upward pressure on bond yields.
However, investor concerns of additional moves by the Federal
Reserve Board to moderate US economic growth and, more importantly,
the loss of the strong technical support that the tax-exempt market
enjoyed in early 1999 helped push municipal bond yields
significantly higher for the remainder of the period. The yields on
long-term tax-exempt revenue bonds rose nearly 90 basis points to
6.18% by October 31, 1999, as measured by the Bond Buyer Revenue
Bond Index.
In recent months, the significant decline in new tax-exempt bond
issuance has remained a positive factor within the municipal bond
market, as it had been for much of the past year. During the last
six months, more than $110 billion in long-term municipal bonds was
issued, a decline of nearly 20% compared to the same period a year
ago. During the past three months, $55 billion in municipal bonds
was underwritten, representing a decline of nearly 10% compared to
the corresponding period in 1998. Additionally, in June and July,
investors received more than $40 billion in coupon income and
proceeds from bond maturities and early bond redemptions. These
proceeds have generated considerable retail investor interest, which
has helped absorb the recent diminished supply.
Although tax-exempt bond yields are at their highest level in over
two years and have attracted significant retail investor interest,
institutional demand has declined sharply. Long-term municipal
mutual funds have seen consistent outflows in recent months as the
yields of individual securities have risen faster than those of
larger, more diverse mutual funds. In addition, the demand from
property/casualty insurance companies has weakened as a result of
the losses, and anticipated losses, incurred as a result of the
series of damaging storms across much of the eastern United States.
Additionally, many institutional investors who were attracted to the
municipal bond market in recent years by historically attractive tax-
exempt bond yield ratios of over 90% have found other asset classes
even more attractive. Even with a reduced supply position, tax-
exempt issuers have been forced to repeatedly raise municipal bond
yields in the attempt to attract adequate demand.
MuniYield Fund, Inc.
October 31, 1999
The recent relative underperformance of the municipal bond market
has resulted in an opportunity for long-term investors to purchase
tax-exempt issues whose yields are nearly identical with taxable US
Treasury securities. At October 31, 1999, long-term uninsured
municipal revenue bond yields were 100% of comparable US Treasury
securities. In recent months, many taxable asset classes, such as
corporate bonds, mortgage-backed securities and US agency debt, have
all accelerated debt issuance. This acceleration was initiated
largely to avoid issuing securities at year-end and to minimize any
associated Year 2000 (Y2K) problems that may develop. However, this
increased issuance has also resulted in higher yield levels in the
various asset classes as lower bond prices became necessary to
attract sufficient investor demand. Going forward, it is believed
that the pace of non-US government debt issuance is likely to slow
significantly. As the supply of this debt declines, we would expect
many institutional investors to return to the municipal bond market
and the attractive yield ratios available.
Looking ahead, it appears to us that long-term tax-exempt bond
yields will remain under pressure, trading in a broad range centered
near current levels. Investors are likely to remain concerned about
future action by the Federal Reserve Board in November. Y2K
considerations may prohibit any further Federal Reserve Board moves
through the end of the year and the beginning of 2000. Any
improvement in bond prices will probably be contingent upon
weakening in both US employment growth and consumer spending. The
100 basis point rise in US Treasury bond yields seen thus far this
year may negatively impact US economic growth. The US housing market
will be among the first sectors likely to be affected, as some
declines have already been evidenced in response to higher mortgage
rates. We believe that it is also unrealistic to expect double-digit
returns in US equity markets to continue indefinitely. Much of the
US consumer's wealth is tied to recent stock market appreciation.
Any slowing in these incredible growth rates is likely to reduce
consumer spending. We believe that these factors suggest that the
worst of the recent increase in bond yields has passed and stable,
if not slightly improving, bond prices may be expected.
Portfolio Strategy
The volatility that characterized the municipal market during the
six months ended October 31, 1999 is in sharp contrast to the
relative stability that typified the environment for the prior six
months. The degree and suddenness of the decline caught many
investors by surprise since few anticipated the extent to which tax-
exempt yields would climb relative to their taxable counterparts.
Much emphasis was placed on the favorable implications of a sharp
reduction in new-issue supply coupled with vigorous retail investor
demand. Instead, institutional selling proved to be the market's
undoing as both mutual funds and casualty insurers moved
aggressively to liquidate tax-exempt holdings. As a consequence,
yields on long-term municipal bonds once again approached 100% of
Treasury bond yields. For this reason, they represented one of the
more compelling values in the fixed-income marketplace.
At the beginning of the six-month period, our investment outlook
called for a fairly stable interest rate environment. We reduced our
cash reserve position on the expectation that an income-oriented
approach would generate the most favorable return. While we achieved
modest success through the use of selective hedging strategies,
hindsight suggests that Fund performance would have benefited from a
more consistent and prolonged defensive strategy designed to
preserve unrealized gains from last year's market rally. More
recently, with long-term interest rates at their highest level in
over two years, our efforts have turned to seeking to limit tax
liabilities through a program designed to offset existing capital
gains with the realization of losses incurred in recent months.
Despite the volatility experienced on longer-dated maturities, our
cost of borrowing remained far more stable as short-term tax-exempt
interest rates fluctuated within a relatively narrow range. Since
this occurred in the midst of a restrictive monetary policy, the
resiliency of this incremental yield pick up remains one of the more
attractive aspects of MuniYield Fund, Inc. However, should the
spread between short-term and long-term tax-exempt interest rates
narrow, the benefits of the leverage will decline and, as a result,
reduce the yield on the Fund's Common Stock. (For a complete
explanation of the benefits and risks of leverage, see page 4 of
this report to shareholders.)
MuniYield Fund, Inc.
October 31, 1999
We are comfortable with the Fund's current position given the
absolute level of long-term interest rates as well as the inherent
value in the tax-exempt sector. Economic fundamentals point to a
modestly slower pace of economic growth with no solid evidence of a
broad-based pickup in inflation. Investors' increased level of
comfort with Federal Reserve Board policy combined with a favorable
seasonal outlook for municipal bonds suggest that a more
constructive outlook may soon be warranted.
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,
(Terry K. Glenn)
Terry K. Glenn
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Theodore R. Jaeckel Jr.)
Theodore R. Jaeckel Jr.
Vice President and Portfolio Manager
December 7, 1999
MuniYield Fund, Inc.
October 31, 1999
<TABLE>
PROXY RESULTS
<CAPTION>
During the six-month period ended October 31, 1999, MuniYield Fund,
Inc.'s Common Stock shareholders voted on the following proposal.
Proposal 1 was approved at a shareholders' meeting on May 27, 1999.
A description of the proposal and number of shares voted are as
follows:
Shares Shares Voted Shares Voted
Voted For Against Abstain
<S> <C> <C> <C>
1. To approve an amendment to the Articles Supplementary of the Fund. 20,296,494 1,159,359 1,008,686
<CAPTION>
During the six-month period ended October 31, 1999, MuniYield Fund,
Inc.'s Preferred Stock shareholders (Series A, B, C, D and E) voted
on the following proposal. Proposal 1 was approved at a
shareholders' meeting on May 27, 1999. A description of the proposal
and number of shares voted are as follows:
Shares Shares Voted Shares Voted
Voted For Against Abstain
<S> <C> <C> <C>
1. To approve an amendment to the Articles Supplementary
of the Fund as follows: Series A 809 207 81
Series B 386 23 1
Series C 353 6 0
Series D 1,452 28 4
Series E 2,146 458 132
</TABLE>
MuniYield Fund, Inc.
October 31, 1999
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.
As a part of its investment strategy, the Fund may invest in certain
securities whose potential income return is inversely related to
changes in a floating interest rate ("inverse floaters"). In
general, income on inverse floaters will decrease when short-term
interest rates increase and increase when short-term interest rates
decrease. Investments in inverse floaters may be characterized as
derivative securities and may subject the Fund to the risks of
reduced or eliminated interest payments and losses of invested
principal. In addition, inverse floaters have the effect of
providing investment leverage and, as a result, the market value of
such securities will generally be more volatile than that of fixed-
rate, tax-exempt securities. To the extent the Fund invests in
inverse floaters, the market value of the Fund's portfolio and the
net asset value of the Fund's shares may also be more volatile than
if the Fund did not invest in such securities.
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.
October 31, 1999
<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--1.0% AA- Aa3 $ 8,000 Birmingham, Alabama, Water and Sewer Revenue Refunding
Bonds, Series A, 4.75% due 1/01/2029 $ 6,471
A1 VMIG1++ 1,100 Columbia, Alabama, IDB, PCR, Refunding (Alabama Power
Company Project), VRDN, Series C, 3.55% due 10/01/2022 (a) 1,100
Alaska--1.5% NR* NR* 10,050 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds
(Amerada Hess Pipeline Corporation), 6.10% due 2/01/2024 10,089
Valdez, Alaska, Marine Terminal Revenue Refunding Bonds
(Exxon Pipeline Company Project), VRDN (a):
A1+ VMIG1++ 1,000 Series A, 3.50% due 12/01/2033 1,000
A1+ VMIG1++ 500 Series B, 3.50% due 12/01/2033 500
Arizona--4.9% AAA Aaa 3,400 Arizona State Wastewater Management Authority, Wastewater
Treatment Final Assessment Revenue Bonds, Series A, 5.60%
due 7/01/2012 (c) 3,428
Maricopa County, Arizona, Pollution Control Corporation, PCR,
Refunding (Public Service Company of New Mexico Project),
Series A:
BBB- Baa3 5,475 5.75% due 11/01/2022 4,866
BBB- Baa3 9,000 6.30% due 12/01/2026 8,547
Phoenix, Arizona, IDA, Airport Facility Revenue Refunding Bonds
(America West Airlines Inc. Project), AMT:
NR* B1 8,000 6.25% due 6/01/2019 7,371
NR* B1 5,300 6.30% due 4/01/2023 4,885
B B2 7,950 Pima County, Arizona, IDA, Industrial Revenue Refunding Bonds
(Tucson Electric Power Company Project), Series B, 6% due
9/01/2029 7,113
California Anaheim, California, Public Financing Authority, Lease Revenue
- --9.1% Bonds (Public Improvements Project), Sub-Series C (i):
AAA Aaa 14,000 5.95%** due 9/01/2036 1,473
AAA Aaa 16,080 5.65%** due 3/01/2037 1,640
NR* A2 15,000 California Health Facilities Finance Authority Revenue Bonds
(Cedars-Sinai Medical Center), Series A, 6.25% due 12/01/2034 14,785
AAA Aaa 8,500 California State, GO, 4.50% due 12/01/2024 (h) 6,782
AA- Aa3 5,000 California State, GO, Refunding, 4.75% due 4/01/2029 4,071
AAA Aaa 10,600 California State University and Colleges, Student Union Revenue
Bonds (Chico), Series B, 4.375% due 11/01/2028 (e) 8,139
</TABLE>
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
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
VRDN Variable Rate Demand Notes
MuniYield Fund, Inc.
October 31, 1999
<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>
California Foothill/Eastern Corridor Agency, California, Toll Road Revenue
(concluded) Bonds, Senior Lien, Series A (m):
BBB- Aaa $34,165 6.33%** due 1/01/2020 $ 10,286
BBB- Aaa 20,245 6.24%** due 1/01/2021 5,732
BBB- Aaa 15,000 6.25%** due 1/01/2022 3,992
Foothill/Eastern Corridor Agency, California, Toll Road Revenue
Bonds, Series A (i):
AAA Aaa 10,000 5.75%** due 1/01/2018 3,421
AAA Aaa 10,000 5.791%** due 1/01/2020 3,011
AAA Aaa 10,000 5.788%** due 1/01/2021 2,831
AAA Aaa 10,000 5.783%** due 1/01/2022 2,662
Colorado--2.6% Denver, Colorado, City and County Airport Revenue Bonds, AMT,
Series D:
BBB+ Aaa 700 7.75% due 11/15/2001 (b) 760
BBB+ Baa1 8,000 7.75% due 11/15/2013 9,385
NR* NR* 5,000 Denver, Colorado, Urban Renewal Authority, Tax Increment
Revenue Bonds (Pavilions), AMT, 7.75% due 9/01/2016 5,467
Metropolitan Football Stadium District, Colorado, Sales Tax
Revenue Bonds, Series A (e):
AAA Aaa 3,700 5.22%** due 1/01/2011 1,979
AAA Aaa 2,000 5.30%** due 1/01/2012 1,000
Mountain Village Metropolitan District, Colorado, San Miguel
County, GO, Refunding:
NR* NR* 240 7.95% due 12/01/2002 (b) 266
NR* NR* 945 7.95% due 12/01/2003 992
Connecticut BB- Ba1 27,750 Connecticut State Development Authority, PCR, Refunding
- --3.7% (Connecticut Light & Power Company), Series A, 5.85% due
9/01/2028 25,361
NR* B1 2,445 New Haven, Connecticut, Facility Revenue Bonds (Hill Health
Corporation Project), 9.25% due 5/01/2017 2,599
District of A1+ VMIG1++ 1,000 District of Columbia, GO (General Fund Recovery), VRDN,
Columbia--0.1% Series B-2, 3.55% due 6/01/2003 (a) 1,000
Florida--1.7% NR* Aaa 10,000 Hillsborough County, Florida, School Board, COP, RITR, Series 31,
6.82% due 7/01/2021 (e)(k) 8,585
A1+ VMIG1++ 4,600 Saint Lucie County, Florida, PCR, Refunding (Florida Power and
Light Company Project), VRDN, 3.50% due 1/01/2026 (a) 4,600
Georgia--1.6% AAA Aaa 1,000 Burke County, Georgia, Development Authority, PCR, Refunding
(Georgia Power Company Plant--Vogtle), 2nd Series, 5.25% due
5/01/2034 (c) 872
AA Aa2 2,000 De Kalb County, Georgia, Water and Sewer Revenue Bonds, 5%
due 10/01/2024 1,731
BBB- Baa2 10,700 Effingham County, Georgia, Development Authority, Solid Waste
Disposal Revenue (Fort James Project), AMT, 5.625% due 7/01/2018 9,510
Idaho--0.4% AA NR* 2,875 Idaho Housing Agency, Revenue Refunding Bonds, S/F Mortgage,
AMT, Senior Series C-2, 7.15% due 7/01/2023 2,957
Illinois--3.4% NR* Aaa 3,060 Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT, Series B,
7.625% due 9/01/2027 (f)(g)(l) 3,372
East Chicago, Indiana, Solid Waste Disposal Revenue Bonds
(USG Corporation Project), AMT:
BBB+ Baa3 4,750 5.50% due 9/01/2028 3,997
BBB+ Baa2 3,500 6.375% due 8/01/2029 3,307
</TABLE>
MuniYield Fund, Inc.
October 31, 1999
<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 BBB Baa1 $ 2,750 Illinois Development Finance Authority, PCR, Refunding (Illinois
(concluded) Power Company Project), Series A, 7.375% due 7/01/2021 $ 2,976
NR* NR* 2,500 Illinois Educational Facilities Authority, Revenue Refunding
Bonds (Chicago Osteopathic Health System), 7.25% due
11/15/2019 (b) 2,846
BBB- NR* 8,000 Metropolitan Pier and Exposition Authority, Illinois, Hospitality
Facilities Revenue Bonds (McCormick Place Convention Center),
7% due 7/01/2026 (m) 9,102
Indiana--0.2% A1 VMIG1++ 1,500 Jasper County, Indiana, PCR, Refunding (Northern Indiana
Public Service), VRDN, Series C, 3.50% due 4/01/2019 (a) 1,500
Kentucky--0.6% BBB- Baa3 500 Kenton County, Kentucky, Airport Board, Airport Revenue Bonds
(Special Facilities-Delta Airlines Project), AMT, Series A, 6.125%
due 2/01/2022 469
NR* NR* 4,000 Perry County, Kentucky, Solid Waste Disposal Revenue Bonds
(TJ International Project), AMT, 7% due 6/01/2024 4,124
Louisiana--5.9% A1+ P1 4,000 East Baton Rouge Parish, Louisiana, PCR, Refunding (Exxon
Project), VRDN, 3.45% due 3/01/2022 (a) 4,000
NR* A3 20,000 Lake Charles, Louisiana, Harbor and Terminal District, Port
Facilities Revenue Refunding Bonds (Trunkline Long Company
Project), 7.75% due 8/15/2022 21,869
CC NR* 20,000 Port New Orleans, Louisiana, IDR, Refunding (Continental Grain
Company Project), 6.50% due 1/01/2017 19,000
Maryland--1.0% NR* NR* 7,050 Maryland State Energy Financing Administration, Limited
Obligation Revenue Bonds (Cogeneration--AES Warrior Run),
AMT, 7.40% due 9/01/2019 7,357
Massachusetts AAA Aaa 2,500 Boston, Massachusetts, Water and Sewer Commission Revenue
- --3.0% Bonds, Senior-Series D, 5% due 11/01/2028 (h) 2,128
BBB+ A3 2,500 Massachusetts State Development Finance Agency, Revenue
Refunding Bonds (Boston University), Series P, 5.45% due
5/15/2059 2,161
AAA Aaa 2,000 Massachusetts State Health and Educational Facilities Authority
Revenue Bonds (Northeastern University), Series I, 5% due
10/01/2029 (e) 1,699
NR* Ba2 5,220 Massachusetts State Health and Educational Facilities Authority,
Revenue Refunding Bonds (Bay Cove Human Services Issue),
Series A, 5.90% due 4/01/2028 4,533
BBB NR* 4,350 Massachusetts State Industrial Financial Agency, Resource
Recovery Revenue Refunding Bonds (Ogden Haven Hill Project),
AMT, Series A, 5.60% due 12/01/2019 3,802
Massachusetts State Turnpike Authority, Metropolitan Highway
System, Revenue Refunding Bonds, Senior-Series A (e):
AAA Aaa 6,350 5% due 1/01/2027 5,428
AAA Aaa 3,250 5% due 1/01/2037 2,707
Michigan--1.3% BBB Ba1 1,000 Michigan State Strategic Fund, Limited Obligation Revenue
Bonds (Waste Management Inc. Project), AMT, 6.625% due
12/01/2012 1,007
NR* Aaa 10,000 Wayne Charter County, Michigan, Airport Revenue Bonds, RIB,
AMT, Series 68, 6.845% due 12/01/2017 (e)(k) 8,457
</TABLE>
MuniYield Fund, Inc.
October 31, 1999
<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--0.3% AA Aa2 $ 2,465 Minnesota State, HFA, S/F Mortgage Revenue Bonds, AMT,
Series A, 7.05% due 7/01/2022 $ 2,514
Mississippi A A2 18,000 Lowndes County, Mississippi, Solid Waste Disposal and PCR,
- --2.5% Refunding (Weyerhaeuser Company Project), Series A, 6.80% due
4/01/2022 19,184
Missouri--0.7% AAA NR* 4,675 Missouri State Housing Development Commission, S/F Mortgage
Revenue Bonds, Homeownership, AMT, Series B, 7.55% due
9/01/2027 (f)(g) 4,964
Nevada--0.4% BBB NR* 3,500 Clark County, Nevada, IDR, Refunding (Nevada Power Company
Project), AMT, Series B, 5.90% due 10/01/2030 3,073
New Jersey BBB- NR* 3,000 New Jersey EDA, Revenue Bonds, First Mortgage (Fellowship
- --4.0% Village Project), Series C, 5.50% due 1/01/2028 2,522
New Jersey EDA, Special Facility Revenue Bonds (Continental
Airlines Inc. Project), AMT:
BB Ba2 7,530 6.25% due 9/15/2019 7,128
BB Ba2 10,000 5.50% due 4/01/2028 8,450
BB Ba2 13,000 6.25% due 9/15/2029 12,105
New Mexico A1+ P1 1,100 Farmington, New Mexico, PCR, Refunding (Arizona Public Service
- --3.0% Company), VRDN, Series A, 3.55% due 5/01/2024 (a) 1,100
NR* Baa3 10,000 Farmington, New Mexico, PCR, Refunding (Public Service
Company), Series A, 5.80% due 4/01/2022 8,904
NR* Baa3 14,500 Farmington, New Mexico, PCR, Series B, 5.80% due 4/01/2022 12,911
New York AAA Aaa 3,075 Dutchess County, New York, Resource Recovery Agency Revenue
- --12.9% Bonds (Solid Waste System-Forward), Series A, 5.25% due
1/01/2011 (e) 3,014
A1+ VMIG1++ 1,200 Long Island Power Authority, New York, Electric System Revenue
Bonds, VRDN, Sub-Series 5, 3.50% due 5/01/2033 (a) 1,200
AAA Aaa 17,750 Long Island Power Authority, New York, Electric System Revenue
Refunding Bonds, Series A, 5.50% due 12/01/2029 (e) 16,427
NR* Aaa 5,595 Metropolitan Transportation Authority, New York, Commuter
Facilities Revenue Bonds, RITR, Series 9, 8.22% due
7/01/2006 (b)(h)(k) 6,518
AAA Aaa 22,430 Metropolitan Transportation Authority, New York, Commuter
Facilities Revenue Refunding Bonds, Series B, 4.75% due
7/01/2026 (h) 18,362
AAA Aaa 10,000 Metropolitan Transportation Authority, New York, Transportation
Facilities Revenue Refunding Bonds, Series C, 4.75% due
7/01/2016 (i) 8,589
NR* A 5,500 New York City, New York, City IDA, Special Facilities Revenue
Bonds, RITR, AMT, Series RI-6, 7.995% due 1/01/2024 (k) 5,478
AA Aa3 11,500 New York City, New York, City Transitional Finance Authority
Revenue Bonds, Future Tax Secured, Series C, 5% due 5/01/2029 9,737
New York City, New York, GO, Refunding, Series B(b):
A- A3 1,150 7.75% due 2/01/2002 1,247
A- A3 1,555 7.75% due 2/01/2002 1,687
A- Aaa 385 New York City, New York, GO, Series C, Sub-Series C-1, 7.50% due
8/01/2002 (b) 421
AAA Aaa 2,545 New York State Dormitory Authority, Revenue Refunding Bonds
(Hamilton College), 4.75% due 7/01/2017 (e) 2,179
NR* Aa1 17,525 New York State Environmental Facilities Corporation, PCR,
Refunding, RITR, Series RI-1, 7.645% due 6/15/2014 (k) 17,876
AA- A1 5,000 Port Authority of New York and New Jersey, Consolidated Revenue
Bonds, 93rd Series, 6.125% due 6/01/2094 5,118
</TABLE>
MuniYield Fund, Inc.
October 31, 1999
<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>
Ohio--5.6% NR* A2 $ 2,500 Butler County, Ohio, Hospital Facilities Revenue Refunding and
Improvement Bonds (Middletown Hospital), 5% due 11/15/2028 $ 1,989
NR* Baa3 5,500 Franklin County, Ohio, Hospital Revenue Bonds (Doctors Ohio
Health Corp.), Series A, 5.60% due 12/01/2028 4,616
Ohio State Solid Waste Disposal Revenue Bonds (USG Corporation
Project), AMT:
BBB+ Baa2 17,000 5.60% due 8/01/2032 14,421
BBB+ Baa2 15,000 5.65% due 3/01/2033 12,883
AA+ Aa1 7,000 Orange, Ohio, City School District, GO, 5% due 12/01/2023 6,130
AAA Aaa 2,405 Toledo, Ohio, Sewer System Revenue Refunding & Improvement
Bonds, Mortgage, 4.75% due 11/15/2017 (e) 2,074
Oklahoma--0.5% AAA NR* 3,250 Holdenville, Oklahoma, Industrial Authority, Correctional Facility
Revenue Bonds, 6.70% due 7/01/2006 (b)(j) 3,575
Oregon--1.5% AAA Aaa 14,000 Oregon Health Sciences University Revenue Refunding Bonds,
Series A, 5.16%** due 7/01/2021 (e) 3,896
AAA Aaa 3,500 Port of Portland, Oregon, Airport Revenue Bonds (Portland
International Airport), Series A, 5.50% due 7/01/2024 (c) 3,284
NR* Aaa 5,000 Portland, Oregon, Sewer System Revenue Refunding Bonds, RIB,
Series 134, 6.17% due 6/01/2014 (h)(k) 4,257
Pennsylvania A NR* 2,975 Berks County, Pennsylvania, Municipal Authority, College
- --7.6% Revenue Refunding Bonds (Alvernia College Project), 6% due
11/15/2018 2,909
Chester County, Pennsylvania, Health and Education Facilities
Authority Revenue Bonds (Devereux Foundation):
A- NR* 2,000 6% due 11/01/2019 1,919
A- NR* 2,000 6% due 11/01/2029 1,871
A1+ VMIG1++ 1,000 Geisinger Authority, Pennsylvania, Health System Revenue
Refunding Bonds (Penn State-Geisinger Health), VRDN, Series B,
3.50% due 8/15/2028 (a) 1,000
Pennsylvania Convention Center Authority, Revenue Refunding
Bonds, Series A:
BBB Baa 9,675 6.70% due 9/01/2014 10,264
BBB Baa 5,000 6.75% due 9/01/2019 5,306
NR* NR* 5,000 Pennsylvania Economic Development Financing Authority,
Exempt Facilities Revenue Bonds (National Gypsum Company),
AMT, Series A, 6.25% due 11/01/2027 4,746
AA+ Aa2 5,250 Pennsylvania HFA, S/F Mortgage Refunding Bonds, AMT,
Series 42, 6.85% due 4/01/2025 5,463
AAA Aaa 16,270 Pennsylvania State Higher Educational Facilities Authority,
Health Services Revenue Refunding Bonds (Allegheny Delaware
Valley Obligation), Series C, 5.875% due 11/15/2016 (e) 15,998
Philadelphia, Pennsylvania, Authority for IDR, Refunding,
Commercial Development:
NR* NR* 3,650 (Days Inn), Series B, 6.50% due 10/01/2027 3,625
NR* NR* 3,000 (Doubletree), Series A, 6.50% due 10/01/2027 2,979
AAA Aaa 2,000 Southeastern Pennsylvania Transportation Authority,
Pennsylvania, Special Revenue Bonds, Series A, 4.75% due
3/01/2024 (h) 1,653
South Carolina BBB+ A3 2,500 Richland County, South Carolina, PCR, Refunding (Union Camp
- --0.6% Corporation Project), Series C, 6.55% due 11/01/2020 2,510
NR* NR* 2,135 South Carolina Jobs EDA, Health Facilities Revenue Refunding
Bonds (First Mortgage--Lutheran Homes), 5.70% due 5/01/2026 1,810
</TABLE>
MuniYield Fund, Inc.
October 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
State Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
South BBB+ Baa3 $ 900 South Dakota State Health and Educational Facilities Authority,
Dakota--0.1% Revenue Refunding Bonds (Prairie Lakes), 7.25% due 4/01/2022 $ 960
Tennessee--1.1% NR* NR* 3,000 Hardeman County, Tennessee, Correctional Facilities Corporation
Revenue Bonds, 7.75% due 8/01/2017 3,156
AA Aa3 5,630 Metropolitan Government, Nashville and Davidson County,
Tennessee, Electric Revenue Bonds, Series A, 5.20% due 5/15/2023 4,988
Texas--6.5% AA- Aa3 5,000 Guadalupe-Blanco River Authority, Texas, Sewage and Solid Waste
Disposal Facility Revenue Bonds (E. I. du Pont de Nemours and
Company Project), AMT, 6.40% due 4/01/2026 5,058
A1+ VMIG1++ 3,550 Gulf Coast Waste Disposal Authority, Texas, PCR, Refunding
(Amoco Oil Company Project), VRDN, 3.50% due 10/01/2017 (a) 3,550
A1+ NR* 700 Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Refunding Bonds (Methodist Hospital), VRDN,
3.55% due 12/01/2025 (a) 700
Houston, Texas, Airport System Revenue Bonds (Special
Facilities--Continental Airlines), AMT:
BB Ba1 10,300 Series B, 6.125% due 7/15/2017 9,609
BB Ba1 9,200 Series C, 6.125% due 7/15/2027 8,439
BB Ba1 5,575 Series C, 5.70% due 7/15/2029 4,802
AAA Aaa 2,750 Houston, Texas, Water and Sewer System Revenue Refunding
Bonds, Junior Lien, Series D, 6.125% due 12/01/2029 (e) 2,722
AAA Aaa 5,000 Keller, Texas, Independent School District, GO, Refunding, 5%
due 8/15/2030 4,215
San Antonio, Texas, Electric and Gas Revenue Refunding Bonds:
NR* Aa1 8,500 RIB, Series 76, 6.645% due 2/01/2015 (k) 7,397
AA Aa1 2,000 Series A, 4.50% due 2/01/2021 1,603
AAA Aaa 1,000 Texas Technology University Revenue Refunding and Improvement
Bonds, Financing System, 6th Series, 5% due 2/15/2029 (c) 847
Utah--0.6% NR* NR* 3,900 Carbon County, Utah, Solid Waste Disposal Revenue Refunding
Bonds (Laidlaw Environmental), AMT, Series A, 7.45% due
7/01/2017 4,063
AAA NR* 635 Utah State, HFA, S/F Mortgage Revenue Bonds, AMT,
Senior-Series E-2, 7.15% due 7/01/2024 (d) 651
Virginia--8.3% NR* NR* 7,030 Dulles Town Center Community Development Authority, Virginia,
Special Assessment Tax (Dulles Town Center Project), 6.25% due
3/01/2026 6,640
AA Aa2 8,815 Fairfax County, Virginia, Water Authority, Revenue Refunding
Bonds, 6% due 4/01/2022 8,827
NR* NR* 8,650 Peninsula Ports Authority, Virginia, Revenue Refunding Bonds
(Port Facility--Zeigler Coal), 6.90% due 5/02/2022 8,363
NR* NR* 1,000 Pittsylvania County, Virginia, IDA Revenue Bonds, Exempt-
Facility, AMT, Series A, 7.55% due 1/01/2019 1,050
Pocahontas Parkway Association, Virginia, Toll Road Revenue
Bonds:
BBB- Baa3 16,600 Senior Series A, 5.50% due 8/15/2028 14,201
BBB- Baa3 24,600 Senior Series B, 5.90%** due 8/15/2019 6,387
BBB- Baa3 48,400 Senior Series B, 5.90%** due 8/15/2030 5,852
BBB- Baa3 70,500 Senior Series B, 5.95%** due 8/15/2035 6,048
AA+ Aa1 5,125 Virginia State, HDA, Commonwealth Mortgage Revenue Bonds,
Series A, 7.10% due 1/01/2025 5,245
</TABLE>
MuniYield Fund, Inc.
October 31, 1999
<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>
West NR* NR* $ 3,000 Upshur County, West Virginia, Solid Waste Disposal Revenue
Virginia--0.4% Bonds (TJ International Project), AMT, 7% due 7/15/2025 $ 3,182
Wisconsin--0.7% AAA Aaa 6,000 Wisconsin Center District, Wisconsin, Tax Revenue Refunding
Bonds, Junior Dedicated, 5.25% due 12/15/2027 (i) 5,355
Wyoming--0.2% NR* VMIG1++ 1,300 Uinta County, Wyoming, PCR, Refunding (Chevron USA Inc.
Project), VRDN, 3.50% due 12/01/2022 (a) 1,300
Total Investments (Cost--$787,865)--99.5% 752,196
Other Assets Less Liabilities--0.5% 3,834
--------
Net Assets--100.0% $756,030
========
<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, 1999.
(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 October 31, 1999.
(l)FHLMC Collateralized.
(m)Escrowed to maturity.
*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.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
QUALITY PROFILE
The quality ratings of securities in the Fund as of October 31, 1999
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 26.4%
AA/Aa 12.6
A/A 10.3
BBB/Baa 21.9
BB/Ba 10.6
B/B 2.9
CC/Ca 2.5
NR (Not Rated) 9.3
Other++ 3.0
[FN]
++Temporary investments in short-term municipal securities.
MuniYield Fund, Inc.
October 31, 1999
<TABLE>
FINANCIAL INFORMATION
<CAPTION>
Statement of Assets, Liabilities and Capital as of October 31, 1999
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$787,864,702) (Note 1a) $752,196,452
Cash 906,499
Receivables:
Securities sold $ 16,958,575
Interest 11,879,395 28,837,970
------------
Prepaid expenses and other assets 23,883
------------
Total assets 781,964,804
------------
Liabilities: Payables:
Securities purchased 24,690,450
Dividends to shareholders (Note 1e) 750,303
Investment adviser (Note 2) 367,873 25,808,626
------------
Accrued expenses and other liabilities 125,845
------------
Total liabilities 25,934,471
------------
Net Assets: Net assets $756,030,333
============
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 (38,317,103 shares
issued and outstanding) $ 3,831,710
Paid-in capital in excess of par 538,873,283
Undistributed investment income--net 10,014,289
Accumulated distributions in excess of realized capital gains on
investments--net (Note 1e) (11,020,699)
Unrealized depreciation on investments--net (35,668,250)
------------
Total--Equivalent to $13.21 net asset value per share
of Common Stock (market price--$12.875) 506,030,333
------------
Total capital $756,030,333
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
MuniYield Fund, Inc.
October 31, 1999
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Year Ended
October 31, 1999
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 47,925,885
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 4,104,482
Commission fees (Note 4) 632,194
Transfer agent fees 191,848
Accounting services (Note 2) 103,026
Professional fees 85,554
Custodian fees 59,314
Directors' fees and expenses 41,940
Printing and shareholder reports 41,167
Listing fees 34,780
Pricing fees 18,541
Other 36,809
------------
Total expenses 5,349,655
------------
Investment income--net 42,576,230
------------
Realized & Realized loss on investments--net (545,814)
Unrealized Loss on Change in unrealized appreciation/depreciation on
Investments--Net investments--net (89,396,899)
(Notes 1b, 1d & 3): ------------
Net Decrease in Net Assets Resulting from Operations $(47,366,483)
============
See Notes to Financial Statements.
</TABLE>
MuniYield Fund, Inc.
October 31, 1999
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 1999 1998
<S> <S> <C> <C>
Operations: Investment income--net $ 42,576,230 $ 44,789,520
Realized gain (loss) on investments--net (545,814) 30,241,513
Change in unrealized appreciation/depreciation on
investments--net (89,396,899) (12,286,231)
------------ ------------
Net increase (decrease) in net assets resulting from
operations (47,366,483) 62,744,802
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (36,119,916) (36,306,077)
Shareholders Preferred Stock (6,368,964) (6,658,668)
(Note 1e): Realized gain on investments--net:
Common Stock (14,409,079) (9,726,657)
Preferred Stock (1,619,668) (3,428,543)
In excess of realized gain on investments--net:
Common Stock (9,906,186) --
Preferred Stock (1,113,516) --
------------ ------------
Net decrease in net assets resulting from dividends
and distributions to shareholders (69,537,329) (56,119,945)
------------ ------------
Capital Stock Value of shares issued to Common Stock shareholders
Transactions in reinvestment of dividends and distributions 11,711,691 8,278,056
(Note 4): ------------ ------------
Net Assets: Total increase (decrease) in net assets (105,192,121) 14,902,913
Beginning of year 861,222,454 846,319,541
------------ ------------
End of year* $756,030,333 $861,222,454
============ ============
<FN>
*Undistributed investment income--net (Note 1f) $ 10,014,289 $ 9,925,942
============ ============
See Notes to Financial Statements.
</TABLE>
MuniYield Fund, Inc.
October 31, 1999
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements.
For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 16.27 $ 16.09 $ 15.68 $ 15.47 $ 14.35
Operating -------- -------- -------- -------- --------
Performance: Investment income--net 1.12 1.19 1.24 1.26 1.27
Realized and unrealized gain (loss) on
investments--net (2.34) .49 .65 .23 1.34
-------- -------- -------- -------- --------
Total from investment operations (1.22) 1.68 1.89 1.49 2.61
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.95) (.97) (1.00) (1.04) (1.00)
Realized gain on investments--net (.38) (.26) (.22) -- (.22)
In excess of realized gain on
investments--net (.27) -- (.01) -- --
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Stock shareholders (1.60) (1.23) (1.23) (1.04) (1.22)
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:
Dividends and distributions to Preferred
Stock shareholders:
Investment income--net (.17) (.18) (.20) (.24) (.23)
Realized gain on investments--net (.04) (.09) (.05) -- (.04)
In excess of realized gain on
investments--net (.03) -- --++++ -- --
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity (.24) (.27) (.25) (.24) (.27)
-------- -------- -------- -------- --------
Net asset value, end of year $ 13.21 $ 16.27 $ 16.09 $ 15.68 $ 15.47
======== ======== ======== ======== ========
Market price per share, end of year $ 12.875 $ 16.875 $ 15.875 $ 14.875 $ 14.375
======== ======== ======== ======== ========
Total Investment Based on market price per share (15.35%) 14.74% 15.56% 10.88% 29.76%
Return:* ======== ======== ======== ======== ========
Based on net asset value per share (9.92%) 9.15% 11.11% 8.61% 18.00%
======== ======== ======== ======== ========
Ratios Based on Total expenses** .93% .89% .91% .92% .96%
Average Net Assets ======== ======== ======== ======== ========
Of Common Stock: Total investment income--net** 7.42% 7.43% 7.81% 8.06% 8.67%
======== ======== ======== ======== ========
Amount of dividends to Preferred Stock
shareholders 1.11% 1.10% 1.28% 1.57% 1.54%
======== ======== ======== ======== ========
Investment income--net, to Common Stock
shareholders 6.31% 6.33% 6.53% 6.49% 7.13%
======== ======== ======== ======== ========
Ratios Based Total expenses .65% .63% .64% .64% .66%
On Total Average ======== ======== ======== ======== ========
Net Assets:++** Total investment income--net 5.17% 5.26% 5.48% 5.64% 5.91%
======== ======== ======== ======== ========
Ratios Based on Dividends to Preferred Stock shareholders 2.55% 2.66% 3.02% 3.63% 3.34%
Average Net ======== ======== ======== ======== ========
Assets Of
Preferred Stock:
Supplemental Net assets, net of Preferred Stock,
Data: end of year (in thousands) $506,030 $611,222 $596,320 $581,124 $573,400
======== ======== ======== ======== ========
Preferred Stock outstanding, end of year
(in thousands) $250,000 $250,000 $250,000 $250,000 $250,000
======== ======== ======== ======== ========
Portfolio turnover 78.42% 91.63% 111.45% 96.74% 52.99%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,024 $ 3,445 $ 3,385 $ 3,324 $ 3,294
======== ======== ======== ======== ========
Dividends Series A--Investment income--net $ 588 $ 694 $ 747 $ 894 $ 887
Per Share on ======== ======== ======== ======== ========
Preferred Stock Series B--Investment income--net $ 595 $ 687 $ 751 $ 897 $ 850
Outstanding: ======== ======== ======== ======== ========
Series C--Investment income--net $ 687 $ 643 $ 763 $ 998 $ 827
======== ======== ======== ======== ========
Series D--Investment income--net $ 694 $ 637 $ 762 $ 888 $ 897
======== ======== ======== ======== ========
Series E--Investment income--net $ 627 $ 656 $ 752 $ 875 $ 759
======== ======== ======== ======== ========
<FN>
*Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, may result
in substantially different returns. Total investment returns exclude
the effects of sales charges.
**Do not reflect the effect of dividends to Preferred Stock
shareholders.
++Includes Common and Preferred Stock average net assets.
++++Amount is less than $.01 per share.
See Notes to Financial Statements.
</TABLE>
MuniYield Fund, Inc.
October 31, 1999
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's financial statements are prepared in
accordance with generally accepted accounting principles, which may
require the use of management accruals and estimates. The Fund
determines and makes available for publication the net asset value
of its Common Stock on a weekly basis. The Fund's Common Stock is
listed on the New York Stock Exchange under the symbol 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 written or purchased are valued at the last sale
price in the case of exchange-traded options. In the case of options
traded in the over-counter-market, valuation is the last asked price
(options written) or the last bid price (options purchased).
Securities with remaining maturities of sixty days or less are
valued at amortized cost, which approximates market value.
Securities and assets for which market quotations are not readily
available are valued at 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.
(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.
MuniYield Fund, Inc.
October 31, 1999
(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.
(f) Reclassification--Generally accepted accounting principles
require that certain components of net assets be adjusted to reflect
permanent differences between financial and tax reporting.
Accordingly, current year's permanent book/tax differences of $997
have been reclassified between accumulated distributions in excess
of net realized capital gains and undistributed net investment
income. These reclassifications have no effect on net assets or net
asset value per share.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of .50% of
the Fund's average weekly net assets, including proceeds from the
issuance of Preferred Stock.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended October 31, 1999 were $639,077,359 and
$629,384,170, respectively.
Net realized gains (losses) for the year ended October 31, 1999 and
net unrealized losses as of October 31, 1999 were as follows:
Realized Unrealized
Gains (Losses) Losses
Long-term investments $(3,472,553) $(35,668,250)
Financial futures contracts 2,926,739 --
----------- ------------
Total $ (545,814) $(35,668,250)
=========== ============
As of October 31, 1999, net unrealized depreciation for Federal
income tax purposes aggregated $35,675,252, of which $12,957,014
related to appreciated securities and $48,632,266 related to
depreciated securities. The aggregate cost of investments at October
31, 1999 for Federal income tax purposes was $787,871,704.
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 years ended October 31,
1999 and October 31, 1998 increased by 742,979 and 512,710,
respectively, as a result of dividend reinvestment.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred
Stock of the Fund, with a par value of $.05 per share and a
liquidation preference of $25,000 per share, that entitle their
holders to receive cash dividends at an annual rate that may vary
for the successive dividend periods. The yields in effect at October
31, 1999 were as follows: Series A, 3.40%; Series B, 3.60%; Series
C, 3.45%, Series D, 3.45%; and Series E, 3.25%.
Shares issued and outstanding during the years ended October 31,
1999 and October 31, 1998 remained constant.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from .25% to .375%,
calculated on the proceeds of each auction. For the year ended
October 31, 1999, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, an affiliate of FAM, earned $235,465 as commissions.
MuniYield Fund, Inc.
October 31, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
5. Capital Loss Carryforward:
At October 31, 1999, the Fund had a net capital loss carryforward of
approximately $6,930,000, all of which expires in 2007. This amount
will be available to offset like amounts of any future taxable
gains.
6. Subsequent Event:
On November 8, 1999, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the amount
of $.077000 per share, payable on November 29, 1999 to shareholders
of record as of November 22, 1999.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
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, 1999, the related statement of
operations for the year then ended and changes in net assets for
each of the years in the two-year period then ended, and the
financial highlights for each of the years in the five-year period
then ended. These financial statements and the financial highlights
are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at October
31, 1999 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
MuniYield Fund, Inc. as of October 31, 1999, the results of its
operations, the changes in its net assets, and the financial
highlights for the respective stated periods in conformity with
generally accepted accounting principles.
Deloitte &Touche LLP
Princeton, New Jersey
December 10, 1999
</AUDIT-REPORT>
MuniYield Fund, Inc.
October 31, 1999
<TABLE>
IMPORTANT TAX INFORMATION (unaudited)
<CAPTION>
All of the net investment income distributions paid by MuniYield
Fund, Inc. during its taxable year ended October 31, 1999 qualify as
tax-exempt interest dividends for Federal income tax purposes.
Additionally, the following table summarizes the taxable
distributions paid by the Fund during the year:
Payable Ordinary Long-Term
Date Income Capital Gains*
<S> <S> <C> <C> <C>
Common Stock Shareholders 12/30/98 $.140334 $.505848
Preferred Stock Shareholders: Series A 11/04/98 -- $99.43
12/02/98 $41.11 $57.11
12/30/98 $42.00 $58.34
1/27/99 $12.98 $28.22
Series B 11/12/98 $30.36 $73.54
12/09/98 $28.23 $70.51
1/06/99 $29.02 $76.29
2/03/99 $ 9.94 $33.90
Series C 11/25/98 $44.32 $54.42
12/23/98 $44.40 $58.32
1/20/99 $ 0.31 $ 4.89
Series D 11/25/98 $45.93 $54.69
12/23/98 $42.33 $58.39
Series E 11/04/98 -- $23.23
11/12/98 $10.55 $16.75
11/18/98 $ 8.58 $13.78
11/25/98 $ 8.68 $14.06
12/02/98 $ 7.91 $12.92
12/09/98 $ 8.29 $13.68
12/16/98 $ 8.48 $14.18
12/23/98 $10.10 $17.17
12/30/98 $ 9.55 $16.65
1/06/99 $ 8.64 $15.57
1/13/99 $ 8.54 $16.32
1/20/99 $ 1.56 $ 4.46
<FN>
*All of these distributions are subject to the 20% tax rate.
Please retain this information for your records.
</TABLE>
YEAR 2000 ISSUES
Many computer systems were designed using only two digits to
designate years. These systems may not be able to distinguish the
Year 2000 from the Year 1900 (commonly known as the "Year 2000
Problem"). The Fund could be adversely affected if the computer
systems used by the Fund's management or other Fund service
providers do not properly address this problem before January 1,
2000. The Fund's management expects to have addressed this problem
before then, and does not anticipate that the services it provides
will be adversely affected. The Fund's other service providers have
told the Fund's management that they also expect to resolve the Year
2000 Problem, and the Fund's management will continue to monitor the
situation as the Year 2000 approaches. However, if the problem has
not been fully addressed, the Fund could be negatively affected. The
Year 2000 Problem could also have a negative impact on the
securities in which the Fund invests, and this could hurt the Fund's
investment returns.
