MUNIYIELD
MICHIGAN
FUND, INC.
FUND LOGO
Semi-Annual Report
April 30, 1995
This report, including the financial information
herein, is transmitted to the shareholders of MuniYield
Michigan Fund, Inc. for their information. It is not a pro-
spectus, 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 volatili-
ty 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.
<PAGE>
MuniYield
Michigan Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MuniYield Michigan Fund, Inc.
TO OUR SHAREHOLDERS
For the six months ended April 30, 1995, the Common
Stock of MuniYield Michigan Fund, Inc. earned
$0.465 per share income dividends, which included
earned and unpaid dividends of $0.073. This repre-
sents a net annualized yield of 6.43%, based on a
month-end net asset value of $14.56 per share. Over
the same period, the total investment return on the
Fund's Common Stock was +9.51%, based on a
change in per share net asset value from $14.05
to $14.56, and assuming reinvestment of $0.473 per
share income dividends and $0.266 per share capital
gains distributions.
The average yield of the Fund's Auction Market
Preferred Stock for the six months ended April 30,
1995 was 4.29%.
<PAGE>
The Environment
During the six months ended April 30, 1995, the
perception that the US economy was overheating and
inflationary pressures were increasing gave way to a
more benign economic outlook. With more signs of
slowing growth, investors now appear to be fore-
casting a "soft landing" for the US economy. Although
gross domestic product was reported to have in-
creased at a revised 5.1% rate during the final quarter
of 1994, declines in other indicators such as new
home sales and durable goods orders registered thus
far in 1995 have led investors to anticipate that the
economy is losing enough momentum to keep infla-
tion under control and preclude further significant
monetary policy tightening by the Federal Reserve
Board. A further indication of a slowing economy was
the reported decline in the Index of Leading Eco-
nomic Indicators for March.
As US stock and bond markets have risen on more
positive economic news, the value of the US dollar
has reached new lows relative to the yen and the
Deutschemark. Persistent trade deficits and exports
of capital from the United States have kept the US
currency in a decade-long decline relative to the
Japanese and German currencies. Over the longer
term, since the United States has the highest produc-
tivity among industrialized nations and among the
lowest labor costs, demand for US dollar-denominated
assets may improve. However, a reduction of the
still-widening US trade deficit may be necessary
before the US dollar appreciates substantially rela-
tive to the yen and the Deutschemark.
The first months of 1995 have been very positive
for the stock and bond markets. Continued signs of a
moderating expansion and well-contained inflationary
pressures would provide further assurance that the
peak in interest rates is behind us. On the other
hand, indications of reaccelerating growth and further
significant monetary policy tightening by the Federal
Reserve Board would be a decided negative for the
US financial markets.
<PAGE>
The Municipal Market
During the six-month period ended April 30, 1995,
the tax-exempt bond market gradually recouped
much of the losses sustained during 1994. Signs of a
weakening domestic economy and ongoing moderate
inflationary pressures have fostered an environment
of declining interest rates. Since October 31, 1994,
A-rated, uninsured municipal revenue bond yields,
as measured by the Bond Buyer Revenue Bond Index,
have declined over 65 basis points (0.65%) to close
the six-month period ended April 30, 1995 at 6.29%.
Tax-exempt bond yields initially continued to climb
in late 1994, reaching a high of 7.37% in late November
1994. Municipal bond yields have since declined
over 100 basis points from their recent highs and
are presently lower than they were a year ago.
US Treasury bond yields have experienced similar
declines over the last six months to end the April
period at 7.34%.
Much of the recent improvement in the tax-exempt
bond market, however, has occurred over the last
three months. During this most recent quarter,
municipal bond yields have fallen approximately
50 basis points, while US Treasury bond yields have
declined only 35 basis points. Tax-exempt bond
yields declined more than their taxable counterparts
in recent months, largely in response to the signifi-
cant decline in new bond issuance in recent quarters.
Over the last six months, less than $60 billion in
new long-term municipal securities were under-
written, a decline of nearly 45% versus the compa-
rable period a year earlier. Issuance was particularly
low this past January and February, with monthly
volume of less than $8 billion. These levels are the
lowest monthly totals since the mid-1980s.
<PAGE>
To compound the municipal market's already strong
technical posture, both institutional and individual
investors have seen significant cash inflows in recent
months. These assets were derived from regular
coupon payments, bond maturities and the proceeds
from early bond calls and redemptions. It has been
estimated that investors received over $20 billion
in principal redemptions and coupon income in
January 1995 alone. With monthly issuance in the
$10 billion range thus far this year, the current supply/
demand imbalance has dominated the municipal
market and bond prices have risen accordingly. The
tax-exempt bond market's technical position is likely
to remain very strong throughout most of 1995.
Investors are expected to receive almost $40 billion
in principal and coupon payments on July 1, 1995.
Investor proceeds from all sources have been esti-
mated to exceed $200 billion for all of 1995. Esti-
mates of total new bond issuance for 1995 have
continued to be lowered with most estimates now in
the $125 billion range. Investors should find it
increasingly difficult to replace existing holdings as
they mature and to reinvest coupon income in such
an environment.
The municipal bond market's outperformance thus
far this year caused the tax-exempt market to become
temporarily expensive relative to its taxable counter-
part in late April. Investor concerns regarding the
international currency situation and the future
impact of proposed revisions to US taxation policies
upon the tax advantage inherent to municipal bonds
have combined to cause tax-exempt bond yields to
increase marginally in recent weeks. Municipal bond
yields have risen approximately 15 basis points
from their lows in mid-April 1995. Long-term US
Treasury bond yields have remained essentially stable.
<PAGE>
Such an underperformance by the tax-exempt bond
market is likely to be limited in duration. The recent
increase in tax-exempt bond yields has already
begun to attract institutional investors since some
municipal bonds yielding in excess of 85% of US
Treasury bond yields are again available. Also, con-
cerns regarding the implication for municipal bonds'
tax advantage resulting from various proposed tax
law changes (for example, flat-tax, value-added tax
or national sales tax) are all likely to quickly recede
as investors realize that such, if any, changes are
unlikely to be enacted before late 1996 at the earliest.
Long-term investors will also recall 1986 when similar
tax proposals were made and tax-exempt bond yields
initially rose and then quickly fell. Investors are
likely to view the current situation as an opportunity
to purchase very attractively priced tax-advantaged
products. This should cause municipal bond yields
to quickly return to their more historic relationship.
Portfolio Strategy
We continued to maintain the constructive outlook
toward the municipal bond market that we adopted
near the end of 1994. We reduced cash reserves to
below 5% of net assets both to seek to allow the Fund
to fully participate in the recent bond market rally
and to enhance its current dividend payout. However,
we continued to emphasize the purchase of larger-coupon,
more defensive issues rather than those securities
which are more interest-rate sensitive. The Fund
remains well-positioned to respond to the interest
rate declines seen in recent months, and the Fund's
per share net asset value increased accordingly
during the six months ended April 30, 1995.
Looking forward, we have adopted a more neutral
posture regarding the direction of tax-exempt interest
rates. The strong technical structure within the
Michigan municipal bond market makes it unattractive
to raise cash reserves to the levels held throughout
much of 1994. Over the past six months, approximately
$1.8 billion in long-term municipal securities were
underwritten by Michigan municipalities. This represents
a decline of nearly 50% versus the comparable period
a year ago. This relative scarcity of attractively
priced Michigan tax-exempt product will prevent us
from raising significant cash reserves in the near
future. We will focus on enhancing current income
and preserving net asset value until the direction
of interest rates becomes clearer.
<PAGE>
Short-term tax-exempt bond interest rates rose into
the 3.75%--4.25% range over the past six months.
The recent rise has largely came from investor
fears of inflationary pressures resulting from the
dramatic decline in the value of the US dollar and
increases in many crude raw materials. It is unclear
whether the decline in the US dollar or the rise in
raw material prices, either separately or in combina-
tion, will be adequate to rekindle inflation since
wage pressures remain weak and the economy has
significantly weakened since late 1994. It is very
important to note that, despite the recent rise in
short-term interest rates, the municipal bond yield
curve remained steeply positive. Therefore, the
leverage of the Fund's Preferred Stock continued to
positively impact the yield paid to the Fund's
Common Stock shareholder. However, should the spread
between short-term and long-term interest rates narrow
the benefits of the leverage will decline and, as a
result, reduce the yield of the Common Stock. (For
a complete explanation of the benefits and risks of
leveraging see the information provided below.)
In Conclusion
We appreciate your ongoing interest in MuniYield
Michigan Fund, Inc., and we look forward to assisting
you with your financial needs in the months and
years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
May 25, 1995
<PAGE>
THE BENEFITS AND RISKS OF LEVERAGING
MuniYield Michigan 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 lever-
age, the Fund issues Preferred Stock, which pays div-
idends 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 divi-
dends, 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, creat-
ing 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 in-
come based on long-term interest rates. Of course, in-
creases in short-term interest rates would reduce (and
even eliminate) the dividends on 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 differ-
ential between short-term and long-term interest
rates, the incremental yield pick-up on the Common
Stock will be reduced or eliminated completely.
At the same time, the market value on the fund's
Common Stock (that is, its price as listed on the
New York Stock Exchange) may, as a result, decline.
Furthermore, if long-term interest rates rise, the
Common Stock's net asset value will reflect the full
decline in the price of the portfolio's investments,
since the value of the fund's Preferred Stock does
not fluctuate. In addition to the decline in net asset
value, the market value of the fund's Common Stock
may also decline.
<PAGE>
PORTFOLIO ABBREVIATIONS
To simplify the listings of MuniYield Michigan Fund, Inc.'s
portfolio holdings in the Schedule of Investments, we have
abbreviated the names of many securities according to the
list at right.
AMT Alternative Minimum Tax (subject to)
PCR Pollution Control Revenue Bonds
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Michigan--95.3%
<S> <S> <C> <S> <C>
Battle Creek, Michigan, Tax Increment Finance Authority Revenue Bonds:
A- NR* $ 1,320 7.10% due 5/01/2010 $ 1,393
A- NR* 1,000 7.40% due 5/01/2016 1,048
AAA Aaa 3,545 Capital Region Airport Authority, Michigan, Airport Revenue Bonds, AMT, 6.60% due
7/01/2012 (c) 3,701
Detroit, Michigan, Sewage Disposal Revenue Bonds (d):
AAA Aaa 2,005 6.70% due 7/01/2008 2,130
AAA Aaa 3,140 6.625% due 7/01/2011 3,302
AAA Aaa 1,400 6.625% due 7/01/2021 1,453
A1 NR* 100 Detroit, Michigan, Tax Increment Finance Authority Revenue Bonds (Central Industrial
Park Project), VRDN, 4.55% due 10/01/2010 (a) 100
BBB Baa1 2,000 Dickinson County, Michigan, Economic Development Corporation, PCR, Refunding
(Champion International Corp. Project), 5.85% due 10/01/2018 1,831
AAA Aaa 2,000 Grand Ledge, Michigan, Public School District Revenue Bonds, UT, 6.45% due 5/01/2014 (c) 2,068
AA- A1 1,000 Grand Rapids, Michigan, Sanitation Sewer Systems Revenue Improvement Bonds,
6% due 1/01/2022 958
<PAGE>
Grand Rapids, Michigan, Water Supply Systems, Revenue Refunding Bonds (d):
AAA Aaa 5,850 6.50% due 1/01/2015 6,049
A1+ VMIG1++ 500 VRDN, 5.25% due 1/01/2020 (a) 500
Kalamazoo, Michigan, Hospital Finance Authority, Hospital Facility Revenue Refunding
and Improvement Bonds (Bronson Methodist), Series A:
A+ A1 2,500 6.25% due 5/15/2012 2,401
A+ A1 1,750 6.375% due 5/15/2017 1,666
AAA Aaa 2,500 Kent, Michigan, Hospital Finance Authority, Hospital Facility Revenue Refunding Bonds
(Pine Rest Christian Hospital), 6.50% due 11/01/2010 (d) 2,601
Michigan Higher Education Student Loan Authority Revenue Bonds, AMT:
NR* A 1,250 Series XIV-A, 6.75% due 10/01/2006 1,346
A1 VMIG1++ 1,400 VRDN, Series XII-D, 4.65% due 10/01/2015 (a)(b) 1,400
Michigan Municipal Bond Authority Revenue Bonds:
A NR* 1,100 (Local Government Loan), Series B, 5.80% due 11/01/2013 1,071
AA A1 2,500 Refunding (Local Government-Qualified School), Series A, 6.50% due 5/01/2016 2,559
AA Aa 4,700 (State Revolving Fund), Series A, 6.55% due 10/01/2013 4,873
AA- A1 3,500 Michigan Public Power Agency, Revenue Refunding Bonds (Belle River Project), Series A,
5.25% due 1/01/2018 3,098
AA- A 10,150 Michigan State Building Authority Revenue Bonds, Series II, 6.75% due 10/01/2011 10,729
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Michigan (concluded)
<S> <S> <C> <S> <C>
Michigan State Hospital Finance Authority Revenue Bonds:
AA Aa $ 1,750 (Henry Ford Health System), Series A, 7% due 7/01/2010 $ 1,826
A A 1,000 (Mid-Michigan Obligation Group), 6.90% due 12/01/2024 1,018
AAA Aaa 2,000 (Oakwood Hospital Obligation Group), 7.10% due 7/01/2000 (d)(f) 2,220
A- A 2,000 Refunding (Detroit Medical Center Obligation Group), Series A, 6.25% due 8/15/2013 1,947
A- A 5,875 Refunding (Detroit Medical Center Obligation Group), Series A, 6.50% due 8/15/2018 5,750
AAA Aaa 1,000 Refunding (Oakwood Hospital Obligation Group), Series A, 5.50% due 11/01/2013 (d) 928
A NR* 1,250 (Sisters of Mercy Health Corp.), Series J, 7.50% due 2/15/2001 (f) 1,417
Michigan State Housing Development Authority, Rental Housing Revenue Bonds:
A+ NR* 5,000 AMT, Series A, 7.15% due 4/01/2010 5,254
A+ NR* 6,000 Series B, 7.10% due 4/01/2021 6,199
<PAGE>
Michigan State Housing Development Authority, S/F Mortgage Revenue Bonds:
AA+ NR* 2,500 Refunding, Series C, 6.50% due 6/01/2016 2,510
AA+ NR* 1,000 Series A, 6.80% due 12/01/2012 1,038
AA+ NR* 3,325 Series A, 6.875% due 6/01/2023 3,405
Michigan State Strategic Fund, Limited Obligation Revenue Bonds:
A+ A1 2,500 (Ford Motor Co. Project), AMT, Series A, 6.55% due 10/01/2022 2,512
A1+ Aa3 1,300 Refunding (Consumers Power Co. Project), VRDN, Series A, 4.95% due 6/15/2010 (a) 1,300
AAA Aaa 7,500 Refunding (Detroit Edison Co. Project), 6.875% due 12/01/2021 (d) 7,935
AAA Aaa 2,500 Refunding (Detroit Edison Co. Project), Series CC, 6.95% due 9/01/2021 (d) 2,658
A+ A1 8,000 Refunding (Ford Motor Co. Project), Series A, 7.10% due 2/01/2006 8,591
A+ A1 2,500 (Waste Management Inc. Project), AMT, 6.625% due 12/01/2012 2,524
NR* P1 1,400 Michigan State Strategic Fund, PCR, Refunding (Consumers Power Project), VRDN,
Series A, 5% due 4/15/2018 (a) 1,400
Michigan State Trunk Line Revenue Bonds, Series A:
AA- A1 1,000 5.625% due 11/15/2013 950
AA- A1 6,370 5.70% due 11/15/2016 6,048
AAA Aaa 6,500 Monroe County, Michigan, Economic Development Corporation, Limited Obligation Revenue
Refunding Bonds (Detroit Edison Co.), Series AA, 6.95% due 9/01/2022 (d) 7,277
BBB Baa1 2,500 Monroe County, Michigan, PCR (Detroit Edison Co. Project), AMT, Series A,
7.75% due 12/01/2019 2,677
AA A1 1,370 Plymouth-Canton, Michigan, Community School District, Revenue Refunding Bonds, UT,
Series A, 6.625% due 5/01/2016 1,403
AA A1 2,250 Reeths-Puffer, Michigan, School Building Revenue Bonds, UT, Series Q, 6.625% due
5/01/2012 2,348
AAA Aaa 2,000 Romulus, Michigan, Community Schools District, UT, Series I, 6.75% due 5/01/2001
(e)(f) 2,206
Royal Oak, Michigan, Hospital Finance Authority, Revenue Bonds
(William Beaumont Hospital):
AA Aa 2,250 Refunding, Series G, 5.25% due 11/15/2019 1,962
AA Aa 6,250 Series D, 6.75% due 1/01/2011 6,434
AA Aa 6,000 Series D, 6.75% due 1/01/2020 6,154
NR* VMIG1++ 2,900 University of Michigan, University Hospital Revenue Refunding Bonds, VRDN, Series A,
4.90% due 12/01/2019 (a) 2,900
AAA Aaa 2,400 Western Michigan University, Revenue Refunding Bonds, Series B, 6.50% due 7/15/2021 (b) 2,467
Total Investments (Cost--$155,176)--95.3% 159,535
<PAGE>
Other Assets Less Liabilities--4.7% 7,857
--------
Net Assets--100.0% $167,392
========
<FN>
(a)The interest rate is subject to change periodically based
upon the prevailing market rates. The interest rate shown
is the rate in effect at April 30, 1995.
(b)AMBAC Insured.
(c)MBIA Insured.
(d)FGIC Insured.
(e)FSA Insured.
(f)Prerefunded.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of April 30, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$155,175,805) (Note 1a) $159,534,536
Cash 18,696
Receivables:
Securities sold $ 5,251,515
Interest 2,884,240 8,135,755
------------
Deferred organization expenses (Note 1e) 18,303
Prepaid expenses and other assets 54,658
------------
Total assets 167,761,948
------------
Liabilities: Payables:
Dividends to shareholders (Note 1f) 242,170
Investment adviser (Note 2) 64,892 307,062
------------
Accrued expenses and other liabilities 62,818
------------
Total liabilities 369,880
------------
Net Assets: Net assets $167,392,068
============
<PAGE>
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.10 per share (2,200 shares of AMPS* issued
and outstanding at $25,000 per share liquidation preference) $ 55,000,000
Common Stock, par value $.10 per share (7,719,431 shares issued
and outstanding) $ 771,943
Paid-in capital in excess of par 107,640,564
Undistributed investment income--net 1,110,528
Accumulated realized capital losses on investments--net (1,489,698)
Unrealized appreciation on investments--net 4,358,731
------------
Total--Equivalent to $14.56 net asset value per share of Common Stock
(market price--$14.00) 112,392,068
------------
Total capital $167,392,068
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months
Ended April 30, 1995
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 5,171,792
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 401,663
Commission fees (Note 4) 71,787
Professional fees 36,748
Transfer agent fees 21,665
Accounting services (Note 2) 20,228
Printing and shareholder reports 15,561
Directors' fees and expenses 11,103
Listing fees 7,979
Custodian fees 6,416
Amortization of organization expenses (Note 1e) 3,812
Pricing fees 3,791
Other 9,229
------------
Total expenses 609,982
------------
Investment income--net 4,561,810
------------
<PAGE>
Realized & Unreal- Realized loss on investments--net (1,489,673)
ized Gain (Loss) Change in unrealized appreciation/depreciation on investments--net 7,713,273
on Investments-- ------------
Net (Notes 1b, Net Increase in Net Assets Resulting from Operations $ 10,785,410
1d & 3): ============
</TABLE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: April 30, 1995 Oct. 31, 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 4,561,810 $ 9,173,702
Realized gain (loss) on investments--net (1,489,673) 2,514,178
Change in unrealized appreciation/depreciation on investments--net 7,713,273 (21,380,168)
------------ ------------
Net increase (decrease) in net assets resulting from operations 10,785,410 (9,692,288)
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (3,648,767) (7,390,421)
Shareholders Preferred Stock (696,894) (1,682,428)
(Note 1f): Realized gain on investments--net:
Common Stock (2,053,090) (761,499)
Preferred Stock (461,109) (125,147)
------------ ------------
Net decrease in net assets resulting from dividends and distributions
to shareholders (6,859,860) (9,959,495)
------------ ------------
Capital Stock Offering costs resulting from the issuance of Common Stock -- 17,002
Transactions Offering costs resulting from the issuance of Preferred Stock -- 22,938
(Notes 1e & 4): ------------ ------------
Net increase in net assets derived from capital stock transactions -- 39,940
------------ ------------
<PAGE>
Net Assets: Total increase (decrease) in net assets 3,925,550 (19,611,843)
Beginning of period 163,466,518 183,078,361
------------ ------------
End of period* $167,392,068 $163,466,518
============ ============
<FN>
*Undistributed investment income--net $ 1,110,528 $ 894,379
============ ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
For the
For the Period
The following per share data and ratios have been derived Six Months Feb. 28,
from information provided in the financial statements. Ended For the Year Ended 1992++ to
April 30, October 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 14.05 $ 16.59 $ 14.22 $ 14.18
Operating -------- -------- -------- --------
Performance: Investment income--net .59 1.20 1.21 .77
Realized and unrealized gain (loss) on investments--net .81 (2.44) 2.41 .14
-------- -------- -------- --------
Total from investment operations 1.40 (1.24) 3.62 .91
-------- -------- -------- --------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net (.47) (.96) (1.00) (.56)
Realized gain on investments--net (.27) (.10) (.05) --
-------- -------- -------- --------
Total dividends and distributions to Common Stock
shareholders (.74) (1.06) (1.05) (.56)
-------- -------- -------- --------
Capital charge resulting from issuance of Common Stock -- -- -- (.03)
-------- -------- -------- --------
Effect of Preferred Stock activity:++++
Dividends and distributions to Preferred Stock
shareholders:
Investment income--net (.09) (.22) (.19) (.13)
Realized gain on investments--net (.06) (.02) (.01) --
Capital charge resulting from issuance of Preferred Stock -- -- -- (.15)
-------- -------- -------- --------
Total effect of Preferred Stock activity (.15) (.24) (.20) (.28)
-------- -------- -------- --------
Net asset value, end of period $ 14.56 $ 14.05 $ 16.59 $ 14.22
======== ======== ======== ========
Market price per share, end of period $ 14.00 $ 12.625 $ 16.625 $ 14.875
======== ======== ======== ========
<PAGE>
Total Investment Based on market price per share 17.18%+++ (18.40%) 19.54% 3.05%+++
Return:** ======== ======== ======== ========
Based on net asset value per share 9.51%+++ (9.00%) 24.78% 4.21%+++
======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement .76%* .76% .74% .54%*
Net Assets:*** ======== ======== ======== ========
Expenses .76%* .76% .74% .72%*
======== ======== ======== ========
Investment income--net 5.69%* 5.25% 5.32% 5.66%*
======== ======== ======== ========
Supplemental Net assets, net of Preferred Stock, end of period
Data: (in thousands) $112,392 $108,467 $128,078 $106,938
======== ======== ======== ========
Preferred Stock outstanding, end of period (in thousands) $ 55,000 $ 55,000 $ 55,000 $ 55,000
======== ======== ======== ========
Portfolio turnover 11.24% 18.88% 12.88% 22.49%
======== ======== ======== ========
Dividends Per Investment income--net $ 317 $ 765 $ 647 $ 444
Share On Pre-
ferred Stock
Outstanding:++++++
<FN>
*Annualized.
**Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, may
result in substantially different returns. Total investment
returns exclude the effects of sales loads.
***Do not reflect the effect of dividends to Preferred Stock shareholders.
++Commencement of Operations.
+++The Fund's Preferred Stock was issued on April 10, 1992.
++++++Dividends per share have been adjusted to reflect a two-for-one stock split.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniYield Michigan Fund, Inc. (the "Fund") is regis-
tered under the Investment Company Act of 1940 as a
non-diversified, closed-end management investment
company. These unaudited financial statements reflect
all adjustments which are, in the opinion of manage-
ment, necessary to a fair statement of the results for
the interim period presented. All such adjustments
are of a normal recurring nature. The Fund determines
and makes available for publication the net asset
value of its Common Stock on a weekly basis. The
Fund's Common Stock is listed on the New York Stock
Exchange under the symbol MYM. The following is a
summary of significant accounting policies followed
by the Fund.
(a) Valuation of investments--Municipal bonds are
traded primarily in the over-the-counter markets
and are valued at the most recent bid price or yield
equivalent as obtained by the Fund's pricing service
from dealers that make markets in such securities.
Financial futures contracts and options thereon,
which are traded on exchanges, are valued at their
closing price as of the close of such exchanges.
Options, which are traded on exchanges, are valued at
their last sale price as of the close of such exchanges
or, lacking any sales, at the last available bid price.
Securities with remaining maturities of sixty days or
less are valued at amortized cost, which approximates
market value. Securities for which market quotations
are not readily available are valued at their fair value
as determined in good faith by or under the direction
of the Board of Directors of the Fund.
(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.
<PAGE>
* Financial futures contracts--The Fund may purchase
or sell interest rate futures contracts and options on
such futures contracts for the purpose of hedging the
market risk on existing securities or the intended
purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future
date and at a specific price or yield. Upon entering
into a contract, the Fund deposits and maintains as
collateral such initial margin as required by the ex-
change 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 pro-
ducing 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 trans-
actions are determined on the identified cost basis.
<PAGE>
(e) Deferred organization expenses and offering
expenses--Deferred organization expenses are
amortized on a straight-line basis over a five-year
period. Direct expenses relating to the public offering
of the Common and Preferred Stock were charged to
capital at the time of issuance.
(f) Dividends and distributions--Dividends from net
investment income are declared and paid monthly.
Distributions of capital gains are recorded on the
ex-dividend dates.
NOTES TO FINANCIAL STATEMENTS (concluded)
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, facil-
ities, equipment and certain other services necessary
to the operations of the Fund. For such services, the
Fund pays a monthly fee at an annual rate of 0.50% of
the Fund's average weekly net assets.
Accounting services are provided to the Fund by FAM
at cost.
Certain officers and/or directors of the Fund are offi-
cers and/or directors of FAM, PSI, Merrill Lynch, Pierce,
Fenner & Smith Inc. ("MLPF&S"), and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding
short-term securities, for the six months ended April 30,
1995 were $17,463,632 and $23,614,087, respectively.
Net realized and unrealized gains (losses) as of
April 30, 1995 were as follows:
Realized Unrealized
Gains (Losses) Gains
Long-term investments $ 483,764 $4,358,731
Financial futures contracts (1,973,437) --
----------- ----------
Total $(1,489,673) $4,358,731
=========== ==========
<PAGE>
As of April 30, 1995, net unrealized appreciation for
Federal income tax purposes aggregated $4,358,731,
of which $4,811,973 related to appreciated securities
and $453,242 related to depreciated securities. The
aggregate cost of investments at April 30, 1995 for
Federal income tax purposes was $155,175,805.
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 author-
ized, however, to reclassify any unissued shares of
capital stock without approval of the holders of
Common Stock.
Common Stock
For the six months ended April 30, 1995, shares
issued and outstanding remained constant at 7,719,431.
At April 30, 1995, total paid-in capital amounted to
$108,412,507.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are
shares of Preferred Stock of the Fund that entitle
their holders to receive cash dividends at an annual
rate that may vary for the successive dividend
periods. The yield in effect at April 30, 1995 was
4.15%.
A two-for-one stock split occurred on December 1,
1994. As a result, at April 30, 1995, there were
2,200 AMPS shares authorized, issued and outstanding
with a liquidation preference of $25,000 per share,
plus accumulated and unpaid dividends of $273,608.
The Fund pays commissions to certain broker-dealers
at the end of each auction at an annual rate ranging
from 0.25% to 0.375%, calculated on the proceeds of
each auction. For the six months ended April 30, 1995,
MLPF&S, an affiliate of FAM, earned $38,256 as
commissions.
5. Subsequent Event:
On May 9, 1995, the Fund's Board of Directors declared
an ordinary income dividend to Common Stock share-
holders in the amount of $0.072810 per share, payable
on May 30, 1995 to shareholders of record as of
May 19, 1995.
<PAGE>
PER SHARE INFORMATION
<TABLE>
Per Share Quarterly Financial Data*
<CAPTION>
Net Realized Unrealized Dividends/Distributions
Investment Gains Gains Net Investment Income Capital Gains
For the Quarter Income (Losses) (Losses) Common Preferred Common Preferred
<S> <C> <C> <C> <C> <C> <C> <C>
May 1, 1993 to July 31, 1993 $.30 $.01 $ .36 $.25 $.05 -- --
August 1, 1993 to October 31, 1993 .30 -- .59 .25 .05 -- --
November 1, 1993 to January 31, 1994 .31 -- .15 .25 .05 -- --
February 1, 1994 to April 30, 1994 .29 .28 (2.12) .24 .05 $.10 $.02
May 1, 1994 to July 31, 1994 .29 .01 .25 .23 .06 -- --
August 1, 1994 to October 31, 1994 .31 .04 (1.05) .24 .06 -- --
November 1, 1994 to January 31, 1995 .30 (.14) .51 .24 .02 .27 .06
February 1, 1995 to April 30, 1995 .29 (.05) .49 .23 .07 -- --
<CAPTION>
Net Asset Value Market Price**
For the Quarter High Low High Low Volume***
<C> <C> <C> <C> <C>
May 1, 1993 to July 31, 1993 $16.17 $15.56 $16.625 $15.00 402
August 1, 1993 to October 31, 1993 16.83 16.01 17.125 16.00 430
November 1, 1993 to January 31, 1994 16.64 16.12 16.375 15.00 528
February 1, 1994 to April 30, 1994 16.60 14.30 16.625 13.75 548
May 1, 1994 to July 31, 1994 15.38 14.49 14.875 14.125 366
August 1, 1994 to October 31, 1994 15.07 14.04 14.50 12.25 861
November 1, 1994 to January 31, 1995 14.15 13.09 13.50 11.625 1,355
February 1, 1995 to April 30, 1995 14.85 14.17 14.00 13.125 465
<FN>
*Calculations are based upon shares of Common Stock outstanding at the end of each quarter.
**As reported in the consolidated transaction reporting system.
***In thousands.
</TABLE>
<PAGE>
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
The Bank of New York
90 Washington Street
New York, New York 10286
Transfer Agents
Common Shares:
The Bank of New York
101 Barclay Street
New York, New York 10286
Preferred Shares:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
NYSE Symbol
MYF
