MUNIYIELD
FUND, INC.
FUND LOGO
Annual Report
October 31, 2000
MuniYield Fund, Inc. seeks to provide shareholders with as high a
level of current income exempt from Federal income taxes as is
consistent with its investment policies and prudent investment
management by investing primarily in a portfolio of long-term,
investment-grade municipal obligations the interest on which, in the
opinion of bond counsel to the issuer, is exempt from Federal income
taxes.
This report, including the financial information herein, is
transmitted to shareholders of MuniYield Fund, Inc. for their
information. It is not a prospectus. 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.
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.
MuniYield Fund, Inc., October 31, 2000
DEAR SHAREHOLDER
For the year ended October 31, 2000, the Common Stock of MuniYield
Fund, Inc. earned $0.864 per share income dividends, which included
earned and unpaid dividends of $0.071. This represents a net
annualized yield of +6.61%, based on a month-end per share net asset
value of $13.08. Over the same period, the total investment return
on the Fund's Common Stock was +6.28%, based on a change in per
share net asset value from $13.21 to $13.08, and assuming
reinvestment of $0.870 per share income dividends.
For the six-month period ended October 31, 2000, the total
investment return on the Fund's Common Stock was +4.49%, based on a
change in per share net asset value from $12.95 to $13.08, and
assuming reinvestment of $0.428 per share income dividends.
For the six-month period ended October 31, 2000, the Fund's Auction
Market Preferred Stock had an average yield as follows: Series A,
4.44%; Series B, 3.91%; Series C, 4.59%; Series D, 4.59%; and Series
E, 4.38%.
The Municipal Market Environment
During the six months ended October 31, 2000, long-term US Treasury
bond yields generally drifted lower. A number of economic
indicators, particularly employment, new home sales and consumer
spending, have suggested that US economic growth, while still
strong, has moderated from 1999's robust levels. Preliminary
estimates for third-quarter 2000 US gross domestic product growth
were recently released at 2.7%, well below the first-quarter 2000
rate of 4.8% and the second-quarter 2000 rate of 5.6%. This decline
in economic growth suggests to some analysts that the Federal
Reserve Board has finished raising interest rates for its current
interest rate cycle. The Federal Reserve Board increased short-term
interest rates at its May meeting and has since kept monetary policy
steady at its subsequent meetings. Given the potential for stable
short-term interest rates in the coming months, investor emphasis
focused on the continuing US Treasury debt reduction program and
forecasts of sizeable Federal budgetary surpluses going forward.
Many investors have concluded that there will be a significant
future shortage of longer-dated maturity US Treasury securities. By
late August, US Treasury bond yields declined 30 basis points
(0.30%) to 5.66%, their lowest level in more than a year.
However, for the remainder of the period, bond yields were unable to
maintain their earlier gains. Rising oil prices were the major focus
behind the decline in bond prices, as many investors feared that
higher oil prices would result in increased inflationary pressures.
Additionally, US corporations issued large amounts of taxable debt
in order to take advantage of the current low interest rate
environment. During the last three months, US corporations issued
more than $100 billion in investment-grade securities, offering
yields in the 7.25% - 9% range. Many investors found these taxable
issues an attractive and more plentiful alternative to US Treasury
bonds. As the demand for US Treasury issues weakened, US bond yields
rose. Although US Treasury bond yields rose to 5.78% by the end of
October, overall they declined almost 20 basis points during the
last six months.
The six-month period ended October 31, 2000 was one of the few
periods in recent years in which the tax-exempt bond market
outperformed its taxable counterpart, the US Treasury bond market.
While municipal bond yields followed the similar seesaw pattern of
Treasury bond yields, tax-exempt bond price volatility was
significantly reduced. Municipal bond yields traded in a relatively
narrow range during much of October 2000. Overall investor demand
for municipal bonds remained strong, allowing tax-exempt bond
yields, as measured by the Bond Buyer Revenue Bond Index, to decline
30 basis points to end the period at 5.75%.
In the past three months, new long-term municipal bond issuance has
continued to decline, albeit at a slower rate than earlier this
year. Over this period, more than $53 billion in new long-term
municipal bonds was issued, a decline of 3% compared to the same
three-month period in 1999. During the last six months, more than
$105 billion in tax-exempt bonds was underwritten, a decline of 8%
compared to the same six-month period in 1999. Just under $200
billion in new municipal securities was marketed during the past
year, a decline of more than 16% compared to the same 12-month
period in 1999.
The demand for municipal bonds came from a number of non-traditional
and conventional sources. Derivative/arbitrage programs and
insurance companies remained the dominant institutional buyers,
while individual retail purchases also remained strong. Traditional,
open-end tax-exempt mutual funds have continued to see significant
disintermediation. It was recently reported that thus far during the
2000 calendar year, long-term municipal bond mutual funds
experienced net cash outflows of more than $15 billion. Fortunately,
the combination of reduced new bond issuance and ongoing demand from
non-traditional sources has been able to more than offset the
decline in demand from tax-exempt mutual funds. This favorable
balance has fostered a significant decline in municipal bond yields
in recent months.
Currently, there is no reason to expect that the positive technical
position of the municipal bond market will significantly
deteriorate. The steeply positive yield curve and the relatively
high credit quality that the tax-exempt bond market offers should
continue to attract different classes of institutional buyers.
Strong state and local governmental financial conditions also
suggest that issuance should remain manageable into next year.
However, the results of the presidential election may affect the tax-
exempt bond market. Various tax and spending programs proposed by
both candidates have obvious implications for state and local
governments as well as corporate and individual taxpayers. Political
history has shown that the enactment of campaign promises, both
Republican and Democratic, has very often been a long, laborious
process. This suggests that over the next few months US economic
factors will most likely have a greater effect on bond yields than
political considerations.
Portfolio Strategy
During the six-month period ended October 31, 2000, we managed the
Fund with the intent of sustaining an appealing level of tax-exempt
income. At the end of May, we believed that the municipal market was
approaching a high in yields. In our opinion, investors had fully
discounted any further increases in short-term interest rates and we
believed that any other increases would serve to slow economic
growth and keep inflation manageable.
The months leading to October brought extreme volatility to the
municipal market. Tax-exempt yields dropped about 40 basis points
from the end of May to the end of October although the average yield
change from month to month was about 13 basis points. This
volatility occurred because most investors could not decide if the
Federal Reserve Board was ahead or behind the curve in taming
inflation.
We structured the investment-grade portion of the Fund to take
advantage of any drop in yields. However, the high-yield portion of
the Fund negatively affected its performance as the spreads between
high-grade municipal bonds and lower quality bonds widened out
significantly.
In July, we began selling high-yield positions that outperformed the
market and were still trading at tight spreads, along with credits
that would not respond well to an economic "hard landing." This
strategy helped cushion the Fund slightly from another round of
widening that affected high-yield bonds from the end of July to the
end of October. Despite the Fund's increased cost of borrowing, the
leveraging of the portfolio remained an important income-generating
vehicle for the Fund. (For a complete explanation of the benefits
and risks of leveraging, see page 1 of this report to shareholders.)
Going forward, we will seek to take advantage of any backup in
interest rates to invest the Fund's cash in investment-grade
positions. This positioning would allow us the opportunity to take
advantage of anticipated lower interest rates in the future, as a
result of the impending economic slowdown and a potential easing in
the Federal Funds rate.
MuniYield Fund, Inc., October 31, 2000
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 ahead.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Roberto W. Roffo)
Roberto W. Roffo
Vice President and Portfolio Manager
December 8, 2000
We are pleased to announce that Roberto W. Roffo is responsible for
the day-to-day management of MuniYield Fund, Inc. Mr. Roffo has been
employed by Merrill Lynch Investment Managers, L.P. since 1996 and
is Vice President and Portfolio Manager.
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute all or a portion of its
net investment income to its shareholders on a monthly basis. 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.
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
Alaska--0.7% NR* NR* $ 5,050 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds
(Amerada Hess Pipeline Corporation), 6.10% due 2/01/2024 $ 5,056
Arizona--2.6% AAA Aaa 1,460 Arizona State Wastewater Management Authority, Wastewater
Treatment Financial Assistance Revenue Bonds, Series A,
5.60% due 7/01/2006 (b)(c) 1,558
Phoenix, Arizona, IDA, Airport Facility Revenue Refunding
Bonds (America West Airlines Inc. Project), AMT:
NR* B1 8,000 6.25% due 6/01/2019 7,152
NR* B1 5,300 6.30% due 4/01/2023 4,719
Pima County, Arizona, IDA, Industrial Revenue Refunding
Bonds (Tucson Electric Power Company Project):
B+ Ba3 4,600 Series B, 6% due 9/01/2029 4,169
B+ Ba3 2,500 Series C, 6% due 9/01/2029 2,266
Colorado--2.9% NR* Aaa 4,680 Broomfield, Colorado, COP (Open Space Park and Recreational
Facilities), 5.75% due 12/01/2015 (c) 4,891
Denver, Colorado, City and County Airport Revenue Bonds,
AMT, Series D:
A Aaa 700 7.75% due 11/15/2001 (b) 737
A A2 8,000 7.75% due 11/15/2013 9,542
NR* NR* 5,000 Denver, Colorado, Urban Renewal Authority, Tax Increment
Revenue Bonds (Pavilions), AMT, 7.75% due 9/01/2016 5,318
NR* NR* 690 Mountain Village Metropolitan District, Colorado, San Miguel
County, GO, Refunding, 7.95% due 12/01/2003 716
NR* NR* 240 San Miguel County, Colorado (Mountain Village Metropolitan
District), GO, Refunding, 7.95% due 12/01/2003 (b) 258
Connecticut BB+ Ba1 35,000 Connecticut State Development Authority, PCR, Refunding
--4.4% (Connecticut Light and Power Company), Series A, 5.85%
due 9/01/2028 32,811
Florida--1.5% NR* NR* 12,000 Hillsborough County, Florida, IDA, Exempt Facilities Revenue
Bonds (National Gypsum), AMT, Series A, 7.125% due 4/01/2030 11,200
</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 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
IDR Industrial Development Revenue Bonds
INFLOS Inverse Floating Rate Municipal Bonds
PCR Pollution Control Revenue Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
Georgia--2.1% AAA Aaa $ 12,140 Atlanta, Georgia, Airport Revenue Refunding Bonds, Series A,
5.875% due 1/01/2016 (h) $ 12,788
A1 VMIG1++ 3,300 Burke County, Georgia, Development Authority, PCR, Refunding
(Georgia Power Company Plant--Vogtle Project), VRDN, 3rd Series,
4.60% due 9/01/2025 (a) 3,300
Idaho--0.4% AA NR* 2,655 Idaho Housing Agency, S/F Mortgage Revenue Refunding Bonds,
AMT, Senior Series C-2, 7.15% due 7/01/2023 2,715
Illinois--4.8% AAA Aaa 10,000 Chicago, Illinois, GO, Series A, 6.75% due 1/01/2035 (h) 11,167
NR* Aaa 2,655 Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT,
Series B, 7.625% due 9/01/2027 (f)(g)(l) 2,970
BBB+ Baa1 2,750 Illinois Development Finance Authority, PCR, Refunding
(Illinois Power Company Project), Series A, 7.375% due 7/01/2021 2,945
NR* NR* 2,500 Illinois Educational Facilities Authority, Revenue
Refunding Bonds (Chicago Osteopathic Health System),
7.25% due 11/15/2019 (b) 2,970
A1 VMIG1++ 6,300 Illinois Health Facilities Authority, Revenue Refunding
Bonds (Resurrection Health), VRDN, Series A, 4.65% due
5/01/2029 (a)(i) 6,300
AAA Aaa 8,000 Metropolitan Pier and Exposition Authority, Illinois,
Hospitality Facilities Revenue Bonds (McCormick Place
Convention Center), 7% due 7/01/2026 (m) 9,467
Indiana--0.4% BBB Baa1 3,500 East Chicago, Indiana, Solid Waste Disposal Revenue Bonds
(USG Corporation Project), AMT, 6.375% due 8/01/2029 3,093
Kentucky--0.5% NR* NR* 4,000 Perry County, Kentucky, Solid Waste Disposal Revenue Bonds
(TJ International Project), AMT, 7% due 6/01/2024 4,085
Louisiana--6.9% 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 21,375
AAA Aaa 11,100 Louisiana State, GO, Series A, 6% due 5/15/2014 (e) 11,649
BB- NR* 20,000 Port New Orleans, Louisiana, IDR, Refunding (Continental
Grain Company Project), 6.50% due 1/01/2017 18,850
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 7,141
Massachusetts AAA Aa1 10,000 Massachusetts Bay, Massachusetts, Transportation
--5.7% Authority, Revenue Refunding Bonds (Special Assessment),
Series A, 5.25% due 7/01/2030 9,482
BBB+ A3 2,500 Massachusetts State Development Finance Agency, Revenue
Refunding Bonds (Boston University), Series P, 5.45% due 5/15/2059 2,297
A NR* 11,030 Massachusetts State Health and Educational Facilities Authority
Revenue Bonds (Schepens Eye Research Project), Series A,
6.50% due 7/01/2028 11,511
AAA Aaa 10,700 Massachusetts State Turnpike Authority, Metropolitan
Highway System Revenue Refunding Bonds, Senior-Series A,
5.125% due 1/01/2023 (e) 10,045
Tantasqua, Massachusetts, Regional School District, GO (i):
NR* Aaa 2,575 5% due 8/15/2017 2,476
NR* Aaa 2,575 5% due 8/15/2018 2,458
NR* Aaa 2,575 5% due 8/15/2019 2,445
NR* Aaa 2,315 5% due 8/15/2020 2,187
Michigan--0.9% AAA Aaa 2,500 Holly, Michigan, Area School District, GO, Refunding,
4.75% due 5/01/2025 (h) 2,179
AAA Aaa 3,100 Michigan State Hospital Finance Authority, Revenue Refunding
Bonds, INFLOS, 7.956% due 2/15/2022 (i)(k) 3,259
A1 VMIG1++ 1,400 Royal Oak, Michigan, Hospital Finance Authority, Hospital
Revenue Bonds (William Beaumont Hospital), VRDN, Series J,
4.60% due 1/01/2003 (a) 1,400
Minnesota--0.9% AAA Aaa 4,980 Minneapolis and Saint Paul, Minnesota, Metropolitan Airports
Commission, Airport Revenue Bonds, Series A, 5.125% due
1/01/2025 (h) 4,694
AA+ Aa1 2,465 Minnesota State, HFA, S/F Mortgage Revenue Bonds, AMT,
Series A, 7.05% due 7/01/2022 2,500
Mississippi A A3 18,000 Lowndes County, Mississippi, Solid Waste Disposal and PCR,
--3.4% Refunding (Weyerhaeuser Company Project), Series A, 6.80%
due 4/01/2022 20,057
BBB- Ba1 5,650 Mississippi Business Finance Corporation, Mississippi,
PCR, Refunding (System Energy Resources Inc. Project),
5.90% due 5/01/2022 5,236
Missouri--0.6% AAA NR* 4,050 Missouri State Housing Development Commission, S/F
Mortgage Revenue Bonds, Homeownership, AMT,
Series B, 7.55% due 9/01/2027 (f)(g) 4,288
Nevada--0.6% BBB NR* 5,000 Clark County, Nevada, IDR, Refunding (Nevada Power
Company Project), Series C, 5.50% due 10/01/2030 4,179
New Jersey BBB- NR* 650 New Jersey EDA, First Mortgage Revenue Bonds,
--4.7% (Fellowship Village), Series C, 5.50% due
1/01/2028 504
NR* NR* 1,500 New Jersey EDA, Retirement Community Revenue Bonds
(Seabrook Village Inc.), Series A, 8.25% due 11/15/2030 1,452
New Jersey EDA, Special Facility Revenue Bonds
(Continental Airlines Inc. Project), AMT:
BB Ba2 13,000 6.25% due 9/15/2019 12,179
BB Ba2 9,400 5.50% due 4/01/2028 7,661
BB Ba2 7,180 6.25% due 9/15/2029 6,573
AAA Aaa 4,450 New Jersey EDA, Water Facilities Revenue Bonds
(New Jersey American Water Company Inc. Project), AMT,
6.50% due 4/01/2022 (h) 4,596
BBB- Baa3 3,000 New Jersey Health Care Facilities Financing Authority,
Revenue Refunding Bonds (Saint Elizabeth Hospital Obligation
Group), 6% due 7/01/2027 2,594
New Mexico--0.1% Farmington, New Mexico, PCR, Refunding (Arizona Public
Service Company), VRDN (a):
A1+ P1 200 Series A, 4.60% due 5/01/2024 200
A1+ P1 500 Series B, 4.60% due 9/01/2024 500
New York--24.4% AAA Aaa 2,675 Dutchess County, New York, Resource Recovery Agency Revenue
Bonds (Solid Waste System), Series A, 5.25% due 1/01/2011 (e) 2,740
Long Island Power Authority, New York, Electric System
Revenue Bonds, VRDN (a):
A1+ VMIG1++ 200 Sub-Series 5, 4.60% due 5/01/2033 200
A1+ VMIG1++ 5,500 Sub-Series 6, 4.55% due 5/01/2033 5,500
NR* Aaa 5,595 Metropolitan Transportation Authority, New York, Commuter
Facilities Revenue Bonds, RITR, Series 9, 6.10% due
7/01/2006 (b)(h)(k) 6,637
NR* A 5,500 New York City, New York, City IDA, Special Facilities
Revenue Bonds, RITR, AMT, Series RI-5, 7.045% due 1/01/2024 (k) 5,720
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
New York AAA Aaa $ 10,000 New York City, New York, City Municipal Water Finance
(concluded) Authority, Water and Sewer System Revenue Bonds, Series B,
5.75% due 6/15/2026 (e) $ 10,081
A1+ VMIG1++ 2,200 New York City, New York, City Municipal Water Finance
Authority, Water and Sewer System Revenue Refunding Bonds,
VRDN, Series G, 4.55% due 6/15/2024 (a)(h) 2,200
New York City, New York, City Transitional Finance
Authority Revenue Bonds, Future Tax Secured, Series B:
AA+ Aa2 6,805 6.25% due 11/15/2017 7,357
AA+ Aa2 6,405 6.25% due 11/15/2018 6,915
AA+ Aa2 9,000 4.75% due 11/01/2023 7,870
AA+ Aa2 10,000 4.75% due 11/15/2023 8,743
New York City, New York, GO, Refunding:
AAA Aaa 10,000 Series A, 6.375% due 5/15/2014 (h) 11,063
AAA Aaa 10,000 Series A, 6.375% due 5/15/2015 (h) 11,015
A A2 1,555 Series B, 7.75% due 2/01/2002 (b) 1,641
A A2 1,150 Series B, 7.75% due 2/01/2002 (b) 1,214
A Aaa 385 New York City, New York, GO, Series C, Sub-Series C-1,
7.50% due 8/01/2002 (b) 411
AAA Aaa 10,000 New York City, New York, GO, Series H, 5% due 3/15/2029 (h) 9,086
AAA Aaa 5,000 New York State Dormitory Authority Revenue Bonds
(Mental Health Services Facilities Improvement), Series B,
5.125% due 8/15/2021 (e) 4,716
AAA Aaa 2,545 New York State Dormitory Authority, Revenue Refunding Bonds
(Hamilton College), 4.75% due 7/01/2017 (e) 2,323
New York State Dormitory Authority, State University
Educational Facilities Revenue Refunding Bonds, Series 1989 (e):
AAA NR* 7,500 6% due 5/15/2015 8,045
AAA NR* 3,750 6% due 5/15/2016 4,002
NR* Aa1 17,575 New York State Environmental Facilities Corporation, PCR,
Refunding, RITR, Class R, Series 9, 6.992% due 6/15/2014 (k) 18,977
AAA Aaa 10,000 Port Authority of New York and New Jersey, Consolidated
Revenue Bonds, 116th Series, 4.25% due 10/01/2026 (h) 8,004
AAA Aaa 38,300 Port Authority of New York and New Jersey, Special Obligation
Revenue Bonds (JFK International Air Terminal Project),
AMT, Series 6, 5.75% due 12/01/2025 (e) 38,675
North Carolina BBB Baa3 4,750 North Carolina Eastern Municipal Power Agency, Power
--0.8% System Revenue Bonds, Series D, 6.75% due 1/01/2026 4,915
AA Aa2 1,000 North Carolina HFA, Home Ownership Revenue Bonds, AMT,
Series 8-A, 6.20% due 7/01/2016 1,034
Ohio--3.6% NR* Aa1 2,470 Dublin, Ohio, GO, Refunding and Improvement, Series A,
4.625% due 12/01/2018 2,202
NR* Baa3 5,500 Franklin County, Ohio, Hospital Revenue Bonds (Doctors of
Ohio Health Corp.), Series A, 5.60% due 12/01/2028 3,597
NR* NR* 2,175 Lucas County, Ohio, Health Care Facility Revenue Refunding
and Improvement Bonds (Sunset Retirement Communities),
Series A, 6.625% due 8/15/2030 2,139
BBB Baa1 24,000 Ohio State Solid Waste Disposal Revenue Bonds (USG Corporation
Project), AMT, 5.60% due 8/01/2032 18,982
Oklahoma--0.5% AAA NR* 3,250 Holdenville, Oklahoma, Industrial Authority, Correctional
Facility Revenue Bonds, 6.70% due 7/01/2006 (b)(j) 3,584
Oregon--1.7% AAA Aaa 14,000 Oregon Health Sciences University Revenue Refunding Bonds,
Series A, 5.16%** due 7/01/2021 (e) 4,400
Oregon State Department of Administrative Services,
COP, Series A (c):
AAA Aaa 4,405 6% due 5/01/2015 4,713
AAA Aaa 3,500 6% due 5/01/2016 3,724
Pennsylvania A NR* 1,775 Berks County, Pennsylvania, Municipal Authority,
--8.9% College Revenue Refunding Bonds (Alvernia College Project),
6% due 11/15/2018 1,812
AAA Aaa 5,000 Lehigh County, Pennsylvania, IDA, PCR, Refunding
(Pennsylvania Power and Light Company Project),
Series B, 6.40% due 9/01/2029 (e) 5,222
AAA Aaa 9,675 Pennsylvania Convention Center Revenue Refunding Bonds,
Series A, 6.70% due 9/01/2014 (e) 10,469
Pennsylvania Economic Development Financing Authority,
Exempt Facilities Revenue Bonds (National Gypsum Company), AMT:
NR* NR* 17,100 Series A, 6.25% due 11/01/2027 14,299
NR* NR* 2,000 Series B, 6.125% due 11/01/2027 1,644
AA+ Aa2 5,145 Pennsylvania HFA, S/F Mortgage Refunding Bonds, AMT,
Series 42, 6.85% due 4/01/2025 5,368
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) 16,577
Philadelphia, Pennsylvania, Authority for IDR, Refunding,
Commercial Development:
NR* NR* 3,650 (Days Inn), Series B, 6.50% due 10/01/2027 3,520
NR* NR* 3,000 (Doubletree), Series A, 6.50% due 10/01/2027 2,893
Philadelphia, Pennsylvania, Hospitals and Higher Education
Facilities Authority, Hospital Revenue Bonds (Children's
Hospital of Philadelphia Project), VRDN (a):
A1+ VMIG1++ 1,240 4.60% due 3/01/2027 1,240
A1+ VMIG1++ 4,000 Series A, 4.60% due 3/01/2027 4,000
Rhode Island Woonsocket, Rhode Island, GO (h):
--0.3% NR* Aaa 1,225 6% due 10/01/2017 1,302
NR* Aaa 1,195 6% due 10/01/2018 1,265
South Carolina BBB+ Baa1 2,500 Richland County, South Carolina, PCR, Refunding (Union Camp
--0.3% Corporation Project), Series C, 6.55% due 11/01/2020 2,517
South Dakota BBB+ Baa3 900 South Dakota State Health and Educational Facilities
--0.1% Authority, Revenue Refunding Bonds (Prairie Lakes),
7.25% due 4/01/2022 912
Tennessee--1.3% Elizabethton, Tennessee, Health and Educational Facilties
Board, Hospital Revenue Refunding and Improvement Bonds,
First Mortgage, Series B (e):
AAA Aaa 2,005 6% due 7/01/2011 2,154
AAA Aaa 2,125 6% due 7/01/2012 2,280
AAA Aaa 2,255 6.25% due 7/01/2013 2,466
NR* NR* 3,000 Hardeman County, Tennessee, Correctional Facilities Corporation
Revenue Bonds, 7.75% due 8/01/2017 3,068
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
Texas--6.6% BBB- Baa1 $ 7,700 Dallas-Fort Worth, Texas, International Airport Facility
Improvement Corporation Revenue Bonds (American Airlines Inc.),
AMT, 7.50% due 11/01/2000 (b) $ 7,854
AAA Aaa 5,000 Grapevine-Colleyville, Texas, Independent School District, GO,
Refunding, 5% due 8/15/2029 4,481
Gregg County, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds (Good Shepherd
Medical Center Project):
AA NR* 3,000 6.875% due 10/01/2020 3,257
AA NR* 2,000 6.375% due 10/01/2025 2,058
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 5,188
Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Refunding Bonds (Methodist Hospital), VRDN (a):
A1+ NR* 1,100 4.60% due 12/01/2025 1,100
A1+ NR* 500 4.60% due 12/01/2026 500
Houston, Texas, Airport System, Special Facilities Revenue
Bonds (Continental Airlines Terminal Improvement), AMT:
BB Ba1 5,000 Series B, 6.125% due 7/15/2027 4,414
BB Ba1 9,700 Series C, 6.125% due 7/15/2027 8,563
Lower Colorado River Authority, Texas, PCR (Samsung Austin
Semiconductor), AMT:
BBB- Baa3 6,500 6.375% due 4/01/2027 6,247
BBB- Baa3 4,000 6.95% due 4/01/2030 4,077
San Antonio, Texas, Water Revenue Refunding Bonds:
AA- Aa3 1,000 5.875% due 5/15/2016 1,043
AA- Aa3 1,000 5.875% due 5/15/2017 1,038
Utah--0.3% AAA Aaa 1,545 Utah State Board of Regents Revenue Refunding Bonds (University
of Utah Research Facilities), Series A, 5.50% due 4/01/2018 (e) 1,546
AAA NR* 535 Utah State, HFA, S/F Mortgage Revenue Bonds, AMT,
Senior-Series E-2, 7.15% due 7/01/2024 (d) 546
Virginia--1.6% NR* NR* 8,650 Peninsula Ports Authority, Virginia, Revenue Refunding Bonds
(Port Facility-Zeigler Coal), 6.90% due 5/02/2022 (n) 2,076
NR* NR* 1,000 Pittsylvania County, Virginia, IDA, Revenue Refunding Bonds,
Exempt-Facility, AMT, Series A, 7.55% due 1/01/2019 1,017
Pocahontas Parkway Association, Virginia, Toll Road Revenue
Bonds, Senior Series B:
BBB- Baa3 9,100 5.90%** due 8/15/2019 2,414
BBB- Baa3 12,840 7.35%** due 8/15/2029 1,657
AA+ Aa1 5,125 Virginia State, HDA, Commonwealth Mortgage Revenue Bonds,
Series A, 7.10% due 1/01/2025 5,280
West Virginia NR* NR* 3,000 Upshur County, West Virginia, Solid Waste Disposal
--0.4% Revenue Bonds (TJ International Project), AMT,
7% due 7/15/2025 3,062
Wisconsin--0.3% AA NR* 2,560 Wisconsin State Health and Educational Facilties Authority
Revenue Bonds (Howard Young Medical Center Inc. Project),
5.125% due 8/15/2028 2,198
Puerto NR* Aaa 12,500 Puerto Rico Commonwealth, Highway and Transportation
Rico--2.2% Authority, Transportation Revenue Bonds, Trust Receipts,
Class R, Series B, 7.57% due 7/01/2035 (e)(k) 13,511
NR* Aaa 2,500 Puerto Rico Electric Power Authority, Power Revenue Bonds,
Trust Receipts, Class R, Series 16 HH, 7.346% due 7/01/2013 (k) 2,817
Total Investments (Cost--$740,323)--98.4% 739,537
Other Assets Less Liabilities--1.6% 11,824
--------
Net Assets--100.0% $751,361
========
(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, 2000.
(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, 2000.
(l)FHLMC Collateralized.
(m)Escrowed to maturity.
(n)Non-income producing security.
*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, 2000
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 40.1%
AA/Aa 11.0
A/A 10.0
BBB/Baa 9.6
BB/Ba 13.0
B/B 1.6
NR (Not Rated) 9.6
Other++ 3.5
++Temporary investments in short-term municipal securities.
MuniYield Fund, Inc., October 31, 2000
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of October 31, 2000
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$740,323,387) $739,537,102
Receivables:
Interest $ 12,727,541
Securities sold 430,724 13,158,265
------------
Prepaid expenses and other assets 87,775
------------
Total assets 752,783,142
------------
Liabilities: Payables:
Dividends to shareholders 760,012
Investment adviser 308,284 1,068,296
------------
Accrued expenses and other liabilities 353,779
------------
Total liabilities 1,422,075
------------
Net Assets: Net assets $751,361,067
============
Capital: Capital Stock (200,000,000 shares authorized):
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 8,118,528
Accumulated realized capital losses on investments--net (37,655,470)
Accumulated distributions in excess of realized
capital gains on investments--net (11,020,699)
Unrealized depreciation on investments--net (786,285)
------------
Total--Equivalent to $13.08 net asset value per
share of Common Stock (market price--$12.625) 501,361,067
------------
Total capital $751,361,067
============
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Year Ended October 31, 2000
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 46,717,999
Income:
Expenses: Investment advisory fees $ 3,743,649
Commission fees 632,528
Transfer agent fees 128,681
Accounting services 115,121
Professional fees 90,310
Directors' fees and expenses 52,397
Custodian fees 51,831
Listing fees 35,756
Printing and shareholder reports 32,881
Pricing fees 21,710
Other 53,993
------------
Total expenses 4,958,857
------------
Investment income--net 41,759,142
------------
Realized & Realized loss on investments--net (37,655,470)
Unrealized Change in unrealized depreciation on investments--net 34,881,965
Gain (Loss) on ------------
Investments--Net: Net Increase in Net Assets Resulting from Operations $ 38,985,637
============
See Notes to Financial Statements.
</TABLE>
MuniYield Fund, Inc., October 31, 2000
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Year Ended
October 31,
Increase (Decrease) in Net Assets: 2000 1999
<S> <S> <C> <C>
Operations: Investment income--net $ 41,759,142 $ 42,576,230
Realized loss on investments--net (37,655,470) (545,814)
Change in unrealized appreciation/depreciation
on investments--net 34,881,965 (89,396,899)
------------ ------------
Net increase (decrease) in net assets
resulting from operations 38,985,637 (47,366,483)
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (33,320,553) (36,119,916)
Shareholders: Preferred Stock (10,334,350) (6,368,964)
Realized gain on investments--net:
Common Stock -- (14,409,079)
Preferred Stock -- (1,619,668)
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 (43,654,903) (69,537,329)
------------ ------------
Capital Stock Value of shares issued to Common Stock
Transactions: shareholders in reinvestment of dividends
and distributions -- 11,711,691
------------ ------------
Net Assets: Total decrease in net assets (4,669,266) (105,192,121)
Beginning of year 756,030,333 861,222,454
------------ ------------
End of year* $751,361,067 $756,030,333
============ ============
*Undistributed investment income--net $ 8,118,528 $ 10,014,289
============ ============
See Notes to Financial Statements.
</TABLE>
<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: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 13.21 $ 16.27 $ 16.09 $ 15.68 $ 15.47
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net 1.09 1.12 1.19 1.24 1.26
Realized and unrealized gain (loss) on
investments--net (.08) (2.34) .49 .65 .23
--------- --------- --------- --------- ---------
Total from investment operations 1.01 (1.22) 1.68 1.89 1.49
--------- --------- --------- --------- ---------
Less dividends and distributions to
Common Stock shareholders:
Investment income--net (.87) (.95) (.97) (1.00) (1.04)
Realized gain on investments--net -- (.38) (.26) (.22) --
In excess of realized gain on
investments--net -- (.27) -- (.01) --
--------- --------- --------- --------- ---------
Total dividends and distributions to
Common Stock shareholders (.87) (1.60) (1.23) (1.23) (1.04)
--------- --------- --------- --------- ---------
Effect of Preferred Stock activity:
Dividends and distributions to
Preferred Stock shareholders:
Investment income--net (.27) (.17) (.18) (.20) (.24)
Realized gain on investments--net -- (.04) (.09) (.05) --
In excess of realized gain on
investments--net -- (.03) -- --++++ --
--------- --------- --------- --------- ---------
Total effect of Preferred Stock activity (.27) (.24) (.27) (.25) (.24)
--------- --------- --------- --------- ---------
Net asset value, end of year $ 13.08 $ 13.21 $ 16.27 $ 16.09 $ 15.68
========= ========= ========= ========= =========
Market price per share, end of year $ 12.625 $ 12.875 $ 16.875 $ 15.875 $ 14.875
========= ========= ========= ========= =========
Total Investment Based on market price per share 5.26% (15.35%) 14.74% 15.56% 10.88%
Return:* ========= ========= ========= ========= =========
Based on net asset value per share 6.28% (9.92%) 9.15% 11.11% 8.61%
========= ========= ========= ========= =========
Ratios Based on Total expenses** .99% .93% .89% .91% .92%
Average Net ========= ========= ========= ========= =========
Assets of Total investment income--net** 8.35% 7.42% 7.43% 7.81% 8.06%
Common Stock: ========= ========= ========= ========= =========
Amount of dividends to
Preferred Stock shareholders 2.07% 1.11% 1.10% 1.28% 1.57%
========= ========= ========= ========= =========
Investment income--net, to
Common Stock shareholders 6.28% 6.31% 6.33% 6.53% 6.49%
========= ========= ========= ========= =========
Ratios Based on Total expenses .66% .65% .63% .64% .64%
Total Average Net ========= ========= ========= ========= =========
Assets:**++ Total investment income--net 5.56% 5.17% 5.26% 5.48% 5.64%
========= ========= ========= ========= =========
Ratios Based on Dividends to Preferred Stock shareholders 4.12% 2.55% 2.66% 3.02% 3.63%
Average Net ========= ========= ========= ========= =========
Assets of
Preferred Stock:
Supplemental Net assets, net of Preferred Stock,
Data: end of year (in thousands) $501,361 $506,030 $611,222 $596,320 $581,124
========= ========= ========= ========= =========
Preferred Stock outstanding, end of year
(in thousands) $250,000 $250,000 $250,000 $250,000 $250,000
========= ========= ========= ========= =========
Portfolio turnover 103.44% 78.42% 91.63% 111.45% 96.74%
========= ========= ========= ========= =========
Leverage: Asset coverage per $1,000 $ 3,005 $ 3,024 $ 3,445 $ 3,385 $ 3,324
========= ========= ========= ========= =========
Dividends Series A--Investment income--net $ 1,052 $ 588 $ 694 $ 747 $ 894
Per Share on ========= ========= ========= ========= =========
Preferred Stock Series B--Investment income--net $ 1,009 $ 595 $ 687 $ 751 $ 897
Outstanding: ========= ========= ========= ========= =========
Series C--Investment income--net $ 1,032 $ 687 $ 643 $ 763 $ 998
========= ========= ========= ========= =========
Series D--Investment income--net $ 1,035 $ 694 $ 637 $ 762 $ 888
========= ========= ========= ========= =========
Series E--Investment income--net $ 1,038 $ 627 $ 656 $ 752 $ 875
========= ========= ========= ========= =========
*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, 2000
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
conformity with accounting principles generally accepted in the
United States of America, 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 pro-
cedures 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 investment strategies to increase or decrease the level of
risk to which the Fund is exposed more quickly and efficiently than
transactions in other types of instruments. 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.
(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 .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, 2000 were $747,038,221 and
$762,952,578, respectively.
Net realized losses for the year ended October 31, 2000 and net
unrealized losses as of October 31, 2000 were as follows:
Realized Unrealized
Losses Losses
Long-term investments $(36,233,144) $ (786,285)
Financial futures contracts (1,422,326) --
------------ ------------
Total $(37,655,470) $ (786,285)
============ ============
As of October 31, 2000, net unrealized depreciation for Federal
income tax purposes aggregated $786,285 of which $20,839,622 related
to appreciated securities and $21,625,907 related to depreciated
securities. The aggregate cost of investments at October 31, 2000
for Federal income tax purposes was $740,323,387.
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 year ended October 31, 2000
remained constant and during the year ended October 31, 1999,
increased by 742,979 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, 2000 were as follows: Series A, 4.20%; Series B, 4.20%; Series
C, 4.16%, Series D, 4.20%; and Series E, 4.13%.
Shares issued and outstanding during the years ended October 31,
2000 and October 31, 1999 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, 2000, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, an affiliate of FAM, earned $260,297 as commissions.
5. Capital Loss Carryforward:
At October 31, 2000, the Fund had a net capital loss carryforward of
approximately $47,781,000, of which $6,930,000 expires in 2007 and
$40,851,000 expires in 2008. This amount will be available to offset
like amounts of any future taxable gains.
6. Subsequent Event:
On November 8, 2000, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the amount
of $.071400 per share, payable on November 29, 2000 to shareholders
of record as of November 20, 2000.
MuniYield Fund, Inc., October 31, 2000
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, 2000, 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 auditing standards
generally accepted in the United States of America. 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, 2000 by correspondence
with the custodian. 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, 2000, the results of its
operations, the changes in its net assets, and the financial
highlights for the respective stated periods in conformity with
accounting principles generally accepted in the United States of
America.
Deloitte & Touche LLP
Princeton, New Jersey
December 7, 2000
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by MuniYield
Fund, Inc. during its taxable year ended October 31, 2000 qualify as
tax-exempt interest dividends for Federal income tax purposes.
Additionally, there were no capital gains distributions paid by the
Fund during the year.
Please retain this information for your records.
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
James H. Bodurtha, Director
Herbert I. London, Director
Joseph L. May, Director
Andre F. Perold, Director
Roberta Cooper Ramo, Director
Arthur Zeikel, Director
Vincent R. Giordano, Senior Vice President
Kenneth A. Jacob, Vice President
Roberto W. Roffo, 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
100 Church Street
New York, NY 10286
NYSE Symbol
MYD