MUNIYIELD
CALIFORNIA
FUND, INC.
FUND LOGO
Semi-Annual Report
April 30, 1997
This report, including the financial information herein, is
transmitted to the shareholders of MuniYield California Fund, Inc.
for their information. It is not a prospectus, circular or
representation intended for use in the purchase of shares of the
Fund or any securities mentioned in the report. Past performance
results shown in this report should not be considered a
representation of future performance. The Fund has leveraged its
Common Stock by issuing Preferred Stock to provide the Common Stock
shareholders with a potentially higher rate of return. Leverage
creates risks for Common Stock shareholders, including the
likelihood of greater volatility of net asset value and market price
of shares of the Common Stock, and the risk that fluctuations in the
short-term dividend rates of the Preferred Stock may affect the
yield to Common Stock shareholders. Statements and other information
herein are as dated and are subject to change.
<PAGE>
MuniYield
California Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MuniYield California Fund, Inc.
TO OUR SHAREHOLDERS
For the six months ended April 30, 1997, the Common Stock of
MuniYield California Fund, Inc. earned $0.462 per share income
dividends, which included earned and unpaid dividends of $0.074.
This represents a net annualized yield of 6.13%, based on a month-
end net asset value of $15.19 per share. Over the same period, the
total investment return on the Fund's Common Stock was +1.51%, based
on a change in per share net asset value from $15.44 to $15.19, and
assuming reinvestment of $0.466 per share income dividends.
For the six-month period ended April 30, 1997, the Fund's Auction
Market Preferred Stock had an average yield of 3.62% for Series A
and 3.46% for Series B.
<PAGE>
The Municipal Market Environment
Long-term tax-exempt revenue bonds traded in a relatively narrow
range throughout much of the six-month period ended April 30, 1997.
By mid-January 1997, municipal bond yields rose to over 6% as in-
vestors reacted negatively to reports of progressively stronger
domestic economic growth. However, a continued lack of any material
inflationary pressures allowed bond yields to decline to their prior
levels by late February. Bond yields rose again as investors became
increasingly concerned that the US domestic economic strength seen
thus far in 1997 would continue, and that the increase in short-term
interest rates by the Federal Reserve Board in late March would be
the first in a series of such moves designed to slow the US economy
before any dormant inflationary pressures were awakened. Long-term
tax-exempt bond yields rose approximately 15 basis points (0.15%) to
almost 6.15% by mid-April. Similarly, long-term US Treasury bond
yields rose over 35 basis points over the same period to 7.16%.
However, in late April economic indicators were released showing
that despite considerable economic growth any inflationary
pressures, particularly those associated with wage increases, were
well-contained and of no immediate concern. Fixed-income bond prices
staged a significant rally during the last week in April with long-
term US Treasury bond yields falling nearly 20 basis points to end
the month at 6.95%. Municipal bond yields, as measured by the Bond
Buyer Revenue Bond Index, declined nearly 15 basis points to stand
at 6.01% by April 30, 1997.
As in recent quarters, the relative stability of long-term tax-
exempt bond yields was supported by low levels of new municipal bond
issuance. During the six months ended April 30, 1997, approximately
$90 billion in long-term tax-exempt bonds was underwritten, a
decline of over 6% compared to the corresponding period a year
earlier. During the three-month period ended April 30, 1997, $41
billion in new long-term municipal bonds was issued, also a 6%
decline in issuance compared to the three months ended April 30,
1996. Overall investor demand remained strong, particularly from
property and casualty insurance companies and individual retail
investors. In recent years, investor demand increased whenever tax-
exempt bond yields approached or exceeded the 6% level as they have
in the past few months.
Additionally, in recent months much of the new bond issuance was
dominated by a number of larger issues. These included $710 million
in New York City water bonds, $600 million in state of California
bonds, $1 billion in New York City general obligation bonds, $435
million in Dade County, Florida water and sewer revenue bonds, $450
million in Puerto Rico Electric Authority issues and $930 million in
Port Authority of New York and New Jersey issues. These bonds have
typically been issued in states with relatively high state income
taxes and consequently were generally underwritten at yields that
were relatively unattractive to residents in other states. This has
exacerbated the general decline in overall issuance in recent years,
making the decrease in supply even more dramatic for general market
investors.
<PAGE>
The present economic situation remains nearly ideal. The domestic
economy continues to grow steadily with little, if any, signs of a
resurgence in inflation. Recent economic growth generated
considerable unexpected tax revenues for the Federal government.
Forecasts for the 1997 Federal fiscal deficit were reduced to under
$100 billion, a level not seen since the early 1980s. Such a reduced
Federal deficit enhances the prospect for a balanced Federal budget.
All these factors support a scenario of steady, or even falling,
interest rates in the coming years. Present annual estimates of
future municipal bond issuance remain centered around $175 billion,
indicating that the current relative scarcity of tax-exempt bonds
should continue for at least the remainder of the year. Should
interest rates begin to decline later this year, either as the
result of a balanced Federal budget or continued benign inflation,
investors are unlikely to be able to purchase long-term municipal
bonds at their currently attractive levels.
Portfolio Strategy
During the six-month period ended April 30, 1997, the municipal
market conformed to a fairly well-defined trading range, albeit at
less expensive levels than those seen in recent history. As long-
term US Treasury interest rates rose to 7% and California municipal
bonds approached 6%, we took a more aggressive investment stance for
MuniYield California Fund, Inc. Generally, demand for municipal
bonds has historically increased when interest rates reach the
levels currently seen, and the recent marketplace has proved to be
no exception. This increased interest in municipal bonds combined
with a drastic decrease in California municipal issuance has created
an unusually thin marketplace. Therefore, as interest rates rose we
attempted to utilize any periods of market weakness to add
aggressively structured, higher-yielding securities to the portfolio
mix. We intend to remain focused on seeking to provide an above-
industry average current yield while enhancing the Fund's net asset
value. Because of the inordinately narrow nature of credit quality
spreads, the Fund's portfolio is concentrated in higher-rated
credits with over 84% of portfolio assets in securities rated AA or
better by at least one of the major rating services.
In Conclusion
We appreciate your ongoing interest in MuniYield California 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
<PAGE>
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Walter C. O'Connor)
Walter C. O'Connor
Vice President and Portfolio Manager
May 28, 1997
THE BENEFITS AND RISKS OF LEVERAGING
MuniYield California 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 on the Common Stock.
<PAGE>
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term
investments, and therefore the Common Stock shareholders are the
beneficiaries of the incremental yield. However, if short-term
interest rates rise, narrowing the differential between short-term
and long-term interest rates, the incremental yield pickup on the
Common Stock will be reduced or eliminated completely. At the same
time, the market value 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.
PORTFOLIO ABBREVIATIONS
To simplify the listings of MuniYield California 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
GO General Obligation Bonds
HFA Housing Finance Agency
PCR Pollution Control Revenue Bonds
RAN Revenue Anticipation Notes
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
California--96.3%
<S> <S> <C> <S> <C>
Anaheim, California, Public Financing Authority, Lease Revenue Bonds (Public
Improvement Project), Sub-Series C (f):
AAA Aaa $22,750 5.95%** due 9/01/2022 $ 5,087
AAA Aaa 10,000 5.98%** due 9/01/2023 2,105
AAA Aaa 5,000 6%** due 9/01/2025 932
AAA Aaa 19,430 6%** due 9/01/2026 3,389
AAA Aaa 10,000 6.05%** due 9/01/2029 1,456
<PAGE>
California Health Facilities Financing Authority Revenue Bonds:
AA Aa3 1,000 (Kaiser Permanente), Series A, 7% due 12/01/2010 1,091
AAA Aaa 2,000 (Kaiser Permanente), Series A, 7% due 10/01/2018 (c) 2,131
AAA Aaa 1,000 Refunding (Adventist Health), Series A, 6.50% due 3/01/2014 (c) 1,060
AAA Aaa 2,000 Refunding (Insured Catholic Health Facility), Series B, 5% due 7/01/2014 (b) 1,838
AAA Aaa 4,085 (San Diego Hospital Association), Series A, 6.70% due 10/01/2010 (c) 4,396
NR* A 2,835 (Scripps Research Institute), Series A, 6.625% due 7/01/2018 3,022
A+ A 3,600 (Sutter Health Hospital), Series 89-A, 6.70% due 1/01/2013 3,732
California HFA, Home Mortgage Revenue Bonds:
AA- Aa 1,105 AMT, Series C, 7.45% due 8/01/2011 1,138
AA- Aa 2,585 AMT, Series E-1, 6.70% due 8/01/2025 2,674
AA- Aa 4,955 AMT, Series F-1, 7% due 8/01/2026 5,226
AA- Aa 970 Series D, 7.25% due 8/01/2017 1,020
AA- Aa 2,850 California HFA, Revenue Bonds, RIB, AMT, 9.112% due 8/01/2023 (h) 2,982
A1+ NR* 100 California Pollution Control Financing Authority, PCR, Refunding (Pacific Gas
and Electric Co.), VRDN, Series C, 4.15% due 11/01/2026 (a) 100
California Pollution Control Financing Authority, PCR (Southern California Edison),
VRDN (a):
A1 VMIG1++ 700 Series A, 4.10% due 2/28/2008 700
A1 VMIG1++ 800 Series B, 4.10% due 2/28/2008 800
NR* P1 2,100 California Pollution Control Financing Authority, Resource Recovery Revenue Bonds
(Delano Project), VRDN, AMT, Series 1991, 4.45% due 8/01/2019 (a) 2,100
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
California (continued)
<S> <S> <C> <S> <C>
A1+ VMIGI++ $1,400 California Pollution Control Financing Authority, Solid Waste Disposal
Revenue Bonds (Shell Oil Co.--Martinez Project), VRDN, AMT, Series A,
4.15% due 10/01/2024 (a) $ 1,400
AA Aa 5,000 California State Department of Water Resources, Water System Revenue Bonds
(Central Valley Project), Series O, 5% due 12/01/2022 4,482
California State Public Works Board, Lease Revenue Bonds (g):
A Aaa 3,000 (California Community College), Series A, 6.75% due 9/01/2001 3,295
A Aaa 6,800 (Department of Corrections--Monterey County, Soledad II), Series A, 7%
due 11/01/2004 7,805
A A 3,600 (Various California State University Projects), Series A, 6.625% due 10/01/2002 3,964
A Aaa 9,800 (Various California State University Projects), Series A, 6.70% due 10/01/2002 10,860
A Aaa 3,535 (Various Community College Projects), Series B, 7% due 3/01/2004 4,023
<PAGE>
SP1+ MIG1++ 2,200 California State, RAN, Series A, 4.50% due 6/30/1997 2,202
AA Aa 4,750 California Statewide Community Development Authority Revenue Bonds, COP
(Saint Joseph Health System Group), 6.625% due 7/01/2021 5,133
A+ Aaa 3,000 Contra Costa County, California, COP (Merrithew Memorial Hospital),
6.60% due 11/01/2002 (g) 3,303
BBB NR* 1,000 Contra Costa County, California, Public Financing Authority, Tax Allocation Revenue
Refunding Bonds, Series A, 7.10% due 8/01/2022 1,061
AAA Aaa 2,000 Cucamonga County, California, Water District Facilities Refinancing Bonds, COP,
6.50% due 9/01/2022 (d) 2,132
AAA Aaa 395 Culver City, California, Redevelopment Finance Authority Revenue Bonds (Senior Lien
Project Loans), Series A, 6.75% due 11/01/2015 (b) 422
East Bay, California, Municipal Utility District, Water System Subordinated Revenue
Refunding Bonds (d):
AAA Aaa 1,750 5% due 6/01/2016 1,607
AAA Aaa 2,000 5% due 6/01/2026 1,789
AAA Aaa 1,000 El Cajon, California, Redevelopment Agency, Tax Allocation Bonds (El Cajon
Redevelopment Project), 6.60% due 10/01/2022 (b) 1,074
BBB Baa 1,875 Inglewood, California, Public Financing Authority Revenue Bonds (Manchester-
Prairie-North Inglewood Industrial Park Project), Series B, 7% due 5/01/2022 1,990
AAA Aaa 3,645 Los Angeles, California, Community Redevelopment Agency, Tax Allocation Refunding
Bonds (Bunker Hill), Series H, 6.50% due 12/01/2015 (f) 3,918
A+ Aa3 3,600 Los Angeles, California, Department of Water and Power, Electric Plant Revenue
Refunding Bonds, 6.375% due 2/01/2020 3,744
AAA Aaa 3,925 Los Angeles, California, Department of Water and Power, Waterworks Revenue Bonds,
6.30% due 7/01/2024 (c) 4,097
Los Angeles, California, Harbor Department Revenue Bonds:
AA Aa 4,240 AMT, Series B, 6.60% due 8/01/2015 4,532
AA Aa 6,855 AMT, Series B, 6.625% due 8/01/2019 7,295
AAA Aaa 4,000 RITR, 8.345% due 11/01/2026 (c)(h) 4,230
AAA Aaa 3,000 Los Angeles, California, Wastewater System Revenue Bonds, Series D, 6.625% due
12/01/2012 (c) 3,213
AAA Aaa 5,000 Los Angeles County, California, COP (Correctional Facilities Project), 6.50% due
9/01/2000 (c)(g) 5,388
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
California (continued)
<S> <S> <C> <S> <C>
Los Angeles County, California, Metropolitan Transportation Authority, Sales
Tax Revenue Bonds:
AAA Aaa $ 7,875 (Proposition C), Second Series A, 5% due 7/01/2025 (b) $ 7,035
AAA Aaa 5,000 Refunding (Proposition A), Series A, 5% due 7/01/2021 (d) 4,436
AA- Aaa 6,500 Los Angeles County, California, Transportation Commission, Sales Tax Revenue
Bonds, Series A, 6.75% due 7/01/2001 (g) 7,121
M-S-R Public Power Agency, California, Revenue Bonds (San Juan Project):
A A3 5,000 Refunding, Series H, 5.90% due 7/01/2020 4,950
AAA Aaa 6,155 Series E, 6.50% due 7/01/2017 (c) 6,584
Metropolitan Water District, Southern California Waterworks Revenue Bonds:
AA Aa 6,000 6.625% due 7/01/2001(g) 6,538
AAA Aaa 2,000 Refunding, Series B, 5% due 7/01/2014 (c) 1,858
AA Aa 6,100 Series C, 5% due 7/01/2027 5,448
AAA Aaa 5,000 Mountain View, California, Tax Allocation Bonds (Shoreline Regional Community
Park), Series A, 5.50% due 8/01/2021 (c) 4,818
AAA Aaa 2,500 Northern California Power Agency, Multiple Capital Facilities Revenue Bonds, RIB,
9.04% due 9/02/2025 (c)(h) 2,831
AAA Aaa 7,840 Orange County, California, Local Transportation Authority, Sales Tax Revenue
Bonds, RITR, Series B, 8.27% due 2/14/2011 (d)(h) 8,310
A NR* 5,000 Palmdale, California, Civic Authority, Revenue Refunding Bonds (Merged
Redevelopment Project), Series A, 6.60% due 9/01/2034 5,304
AAA Aaa 3,700 Pittsburg, California, Public Financing Authority, Wastewater Revenue Refunding
Bonds, Series A, 5.125% due 6/01/2015 (d) 3,454
AAA Aaa 3,905 Rancho Cucamonga, California, Redevelopment Agency, Tax Allocation Bonds
(Rancho Redevelopment Project), 6.75% due 9/01/2020 (c) 4,163
NR* A2 3,750 Rancho Mirage, California, Joint Powers Financing Authority, COP (Eisenhower
Memorial Hospital), 7% due 3/01/2002 (g) 4,160
AAA Aaa 2,225 Redding, California, Joint Powers Financing Authority, Lease Revenue Bonds (Civic
Center Project), Series A, 5.25% due 3/01/2026 (c) 2,069
<PAGE>
Redwood City, California, Public Financing Authority, Local Agency Revenue Bonds:
AAA Aaa 5,025 Refunding, Series A, 6.50% due 7/15/2011 (b) 5,377
A- NR* 1,500 Series B, 7.25% due 7/15/2011 1,630
AAA Aaa 7,950 Riverside County, California, Transportation Commission, Sales Tax Revenue
Refunding Bonds, Series A, 6% due 6/01/2005 (d) 8,511
A+ Aaa 18,000 Sacramento, California, City Financing Authority Revenue Bonds, 6.80% due
11/01/2001(g) 19,856
Sacramento, California, Municipal Utility District, Electric Revenue Bonds,
Series B (c):
AAA Aaa 3,180 6.25% due 8/15/2011 3,349
AAA Aaa 4,865 6.375% due 8/15/2022 5,106
AAA Aaa 4,890 San Diego, California, Public Facilities Financing Authority, Sewer Revenue
Bonds, Series B, 5.25% due 5/15/2027 (d) 4,542
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
California (concldued)
<S> <S> <C> <S> <C>
San Francisco, California, City and County Airport Commission, International
Airport Revenue Bonds, Second Series:
AAA Aaa $ 1,500 AMT, Issue 5, 6.50% due 5/01/2019 (d) $ 1,572
AAA Aaa 4,525 AMT, Issue 6, 6.60% due 5/01/2020 (b) 4,773
AAA Aaa 11,000 Refunding, Issue 1, 6.50% due 5/01/2013 (b) 11,803
AA- A1 5,480 San Francisco, California, City and County, GO (Various Purpose Projects), UT,
Series A, 6.50% due 12/15/2010 5,760
San Francisco, California, City and County Public Utilities Commission, Water
Revenue Bonds, Series A:
AA- Aaa 5,000 6.50% due 11/01/2001 (g) 5,455
AA- Aa 2,000 Refunding, 5% due 11/01/2015 1,846
AAA Aaa 4,715 San Francisco, California, City and County Redevelopment Agency, Lease Revenue
Bonds (George R. Moscone Convention Center), 6.80% due 7/01/2019 (f) 5,167
AAA Aaa 1,310 San Jose, California, Redevelopment Agency, Tax Allocation Refunding Bonds
(Merged Area Redevelopment Project), 5.50% due 8/01/2017 (c) 1,273
AAA Aaa 3,180 Santa Clara, California, Electric Revenue Bonds, Series A, 6.50% due 7/01/2021 (c) 3,389
<PAGE>
AAA Aaa 9,525 Santa Clara County, California, Financing Authority, Lease Revenue Bonds (VMC
Facility Replacement Project), Series A, 6.75% due 11/15/2020 (b) 10,440
AA A1 5,000 Santa Clara County, California, Transportation District, Sales Tax Revenue
Bonds, Series A, 6.75% due 6/01/2011 5,414
AAA Aaa 3,000 Santa Fe Springs, California, Redevelopment Agency, Tax Allocation Bonds
(Conservation Redevelopment Project), Series A, 6% due 9/01/2014 (c) 3,069
AAA Aaa 7,750 Santa Rosa, California, Wastewater Revenue Bonds (Sub-Regional Wastewater
Project), Series A, 6.50% due 9/01/2002 (d)(g) 8,476
AAA NR* 1,125 Southern California Home Financing Authority, S/F Mortgage Revenue Bonds, AMT,
Series A, 6.75% due 9/01/2022 (e) 1,157
A A 2,700 Southern California Public Power Authority, Power Project Revenue Refunding Bonds,
5.50% due 7/01/2020 2,516
AAA Aaa 5,000 Stockton, California, Revenue Bonds, COP (Wastewater Treatment Plant Expansion),
Series A, 6.80% due 9/01/2024 (d) 5,487
AAA Aaa 1,730 Stockton, California, Unified School District, COP (Capital Financing Projects),
5.375% due 2/01/2022 (c) 1,638
AAA Aaa 3,750 Tracy, California, Area Public Facilities Financing Agency, Special Tax Community
Facilities District, 5.50% due 10/01/2021 (c) 3,613
University of California Revenue Bonds:
A NR* 3,300 Refunding (Multiple Purpose Projects), Series A, 6.875% due 9/01/2002 (g) 3,668
AAA Aaa 6,645 RITR, Series 13, 8% due 9/01/2019 (c)(h) 7,168
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Puerto Rico--2.3%
<S> <S> <C> <S> <C>
A Baa1 $5,500 Puerto Rico Commonwealth, Highway and Transportation Authority, Highway Revenue
Refunding Bonds, Series V, 6.625% due 7/01/2012 $ 5,870
BBB+ Baa1 2,600 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series T, 6.375%
due 7/01/2024 2,728
Total Investments (Cost--$350,369)--98.6% 369,670
Other Assets Less Liabilities--1.4% 5,258
--------
Net Assets--100.0% $374,928
========
<PAGE>
<FN>
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at April 30, 1997.
(b)AMBAC Insured.
(c)MBIA Insured.
(d)FGIC Insured.
(e)FNMA/GNMA Collateralized.
(f)FSA Insured.
(g)Prerefunded.
(h)The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rate shown is the
rate in effect at April 30, 1997.
++Highest short-term ratings by Moody's Investors Service, Inc.
*Not rated.
**Represents a zero coupon bond; the interest rate shown is the
effective yield at the time of purchase by the Fund.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of April 30, 1997
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$350,368,631) (Note 1a) $369,670,419
Cash 18,153
Receivables:
Securities sold $ 14,071,041
Interest receivable 6,476,262 20,547,303
------------
Deferred organization expenses (Note 1e) 1,859
Prepaid expenses and other assets 14,186
------------
Total assets 390,251,920
------------
Liabilities: Payables:
Securities purchased 14,566,290
Dividends to shareholders (Note 1f) 542,468
Investment adviser (Note 2) 152,976 15,261,734
------------
Accrued expenses and other liabilities 61,728
------------
Total liabilities 15,323,462
------------
<PAGE>
Net Assets: Net assets $374,928,458
============
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.05 per share (4,800 shares of
AMPS* issued and outstanding at $25,000 per share liquidation
preference) $120,000,000
Common Stock, par value $.10 per share (16,781,559 shares issued
and outstanding) $ 1,678,156
Paid-in capital in excess of par 233,789,454
Undistributed investment income--net 2,762,686
Accumulated realized capital losses on investments--net (Note 5) (2,603,626)
Unrealized appreciation on investments--net 19,301,788
------------
Total--Equivalent to $15.19 net asset value per share Common Stock
(market price--$14.75) 254,928,458
------------
Total capital $374,928,458
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
For the Six Months Ended
April 30, 1997
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 11,005,795
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 939,162
Commission fees (Note 4) 149,544
Professional fees 36,705
Accounting services (Note 2) 34,936
Transfer agent fees 28,115
Printing and shareholder reports 19,818
Custodian fees 14,311
Listing fees 11,939
Directors' fees and expenses 11,130
Pricing fees 4,022
Amortization of organization expenses (Note 1e) 915
Other 11,723
------------
Total expenses 1,262,320
------------
Investment income--net 9,743,475
------------
<PAGE>
Realized & Realized gain on investments--net 1,313,639
Unrealized Gain Change in unrealized appreciation on investments--net (5,276,746)
(Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 5,780,368
(Notes 1b, 1d & 3): ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 1997 1996
<S> <S> <C> <C>
Operations: Investment income--net $ 9,743,475 $ 19,405,691
Realized gain on investments--net 1,313,639 279,008
Change in unrealized appreciation on investments--net (5,276,746) 4,438,485
------------ ------------
Net increase in net assets resulting from operations 5,780,368 24,123,184
------------ ------------
Dividends to Investment income--net:
Shareholders Common Stock (7,825,946) (15,619,604)
(Note 1f): Preferred Stock (2,107,465) (4,164,120)
------------ ------------
Net decrease in net assets resulting from dividends to
shareholders (9,933,411) (19,783,724)
------------ ------------
Net Assets: Total increase (decrease) in net assets (4,153,043) 4,339,460
Beginning of period 379,081,501 374,742,041
------------ ------------
End of period* $374,928,458 $379,081,501
============ ============
<FN>
*Undistributed investment income--net $ 2,762,686 $ 2,952,622
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended For the
April 30, Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1997 1996 1995 1994 1993
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 15.44 $ 15.18 $ 13.91 $ 16.60 $ 14.03
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .58 1.16 1.18 1.23 1.22
Realized and unrealized gain (loss) on
investments--net (.23) .28 1.53 (2.65) 2.62
-------- -------- -------- -------- --------
Total from investment operations .35 1.44 2.71 (1.42) 3.84
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.47) (.93) (.90) (1.00) (.99)
Realized gain on investments--net -- -- (.25) (.07) (.08)
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Stock shareholders (.47) (.93) (1.15) (1.07) (1.07)
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:
Dividends and distributions to Preferred
Stock shareholders:
Investment income--net (.13) (.25) (.25) (.19) (.18)
Realized gain on investments--net -- -- (.04) (.01) (.02)
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity (.13) (.25) (.29) (.20) (.20)
-------- -------- -------- -------- --------
Net asset value, end of period $ 15.19 $ 15.44 $ 15.18 $ 13.91 $ 16.60
======== ======== ======== ======== ========
Market price per share, end of period $ 14.75 $ 14.875 $ 13.375 $ 12.125 $ 15.625
======== ======== ======== ======== ========
Total Investment Based on market price per share 2.31%+++ 18.68% 20.62% (16.36%) 15.56%
Return:** ======== ======== ======== ======== ========
Based on net asset value per share 1.51%+++ 8.54% 19.33% (9.69%) 26.88%
======== ======== ======== ======== ========
Ratios to Average Expenses .67%* .67% .69% .66% .69%
Net Assets:*** ======== ======== ======== ======== ========
Investment income--net 5.19%* 5.16% 5.48% 5.44% 5.35%
======== ======== ======== ======== ========
<PAGE>
Supplemental Net assets, net of Preferred Stock, end of
Data: period (in thousands) $254,928 $259,082 $254,742 $233,425 $278,522
======== ======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $120,000 $120,000 $120,000 $120,000 $120,000
======== ======== ======== ======== ========
Portfolio turnover 43.33% 67.48% 69.59% 78.89% 21.68%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,124 $ 3,159 $ 3,123 $ 2,945 $ 3,321
======== ======== ======== ======== ========
Dividends Series A--Investment income--net $ 449 $ 875 $ 882 $ 694 $ 547
Per Share on ======== ======== ======== ======== ========
Preferred Stock Series B--Investment income--net $ 429 $ 860 $ 864 $ 615 $ 688
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.
++Dividends per share have been adjusted to reflect a two-for-one
stock split that occurred on December 1, 1994.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniYield California Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a non-diversified, closed-end
management investment company. These unaudited financial statements
reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the interim period
presented. All such adjustments are of a normal recurring nature.
The Fund determines and makes available for publication the net
asset value of its Common Stock on a weekly basis. The Fund's Common
Stock is listed on the New York Stock Exchange under the symbol MYC.
The following is a summary of significant accounting policies
followed by the Fund.
<PAGE>
(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 prices 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 and assets for
which market quotations are not readily available are valued at fair
value as determined in good faith by or under the direction of the
Board of Directors of the Fund, including valuations furnished by a
pricing service retained by the Fund, which may utilize a matrix
system for valuations. The procedures of the pricing service and its
valuations are reviewed by the officers of the Fund under the
general supervision of the Board of Directors.
(b) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell
interest rate futures contracts and options on such futures
contracts for the purpose of hedging the market risk on existing
securities or the intended purchase of securities. Futures contracts
are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a
contract, the Fund deposits and maintains as collateral such initial
margin as required by the exchange on which the transaction is
effected. Pursuant to the contract, the Fund agrees to receive from
or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are
known as variation margin and are recorded by the Fund as unrealized
gains or losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed.
* Options--The Fund is authorized to write covered call options and
purchase put options. When the Fund writes an option, an amount
equal to the premium received by the Fund is reflected as an asset
and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written. When a security is purchased or sold through an
exercise of an option, the related premium paid (or received) is
added to (or deducted from) the basis of the security acquired or
deducted from (or added to) the proceeds of the security sold. When
an option expires (or the Fund enters into a closing transaction),
the Fund realizes a gain or loss on the option to the extent of the
premiums received or paid (or gain or loss to the extent the cost of
the closing transaction exceeds the premium paid or received).
<PAGE>
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 secur-ity transactions are
determined on the identified cost basis.
NOTES TO FINANCIAL STATEMENTS (concluded)
(e) Deferred organization expenses--Deferred organization expenses
are amortized on a straight-line basis over a five-year period.
(f) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of 0.50% of
the Fund's average weekly net assets.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 1997 were $157,168,731 and
$169,164,741, respectively.
<PAGE>
Net realized and unrealized gains (losses) as of April 30, 1997 were
as follows:
Realized Unrealized
Gains Gains (Losses)
Long-term investments $ 1,313,639 $19,303,388
Short-term investments -- (1,600)
----------- -----------
Total $ 1,313,639 $19,301,788
=========== ===========
As of April 30, 1997, net unrealized appreciation for Federal income
tax purposes aggregated $19,301,788, of which $19,850,811 related to
appreciated securities and $549,023 related to depreciated
securities. The aggregate cost of investments at April 30, 1997 for
Federal income tax purposes was $350,368,631.
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
For the six months ended April 30, 1997, shares issued and
outstanding remained constant at 16,781,559. At April 30, 1997,
total paid-in capital amounted to $235,467,610.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred
Stock of the Fund that entitle their holders to receive cash
dividends at an annual rate that may vary for the successive
dividend periods. The yields in effect at April 30, 1997 were as
follows: Series A, 3.585% and Series B, 4.00%.
As of April 30, 1997, there were 4,800 AMPS shares authorized,
issued and outstanding with a liquidation preference of $25,000 per
share.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from 0.25% to 0.375%,
calculated on the proceeds of each auction. For the six months ended
April 30, 1997, Merrill Lynch, Pierce, Fenner & Smith Inc., an
affiliate of FAM, earned $88,176 as commissions.
5. Capital Loss Carryforward:
At April 30, 1997, the Fund had a net capital loss carryforward of
approximately $2,658,000, all of which expires in 2003. This amount
will be available to offset like amounts of any future taxable
gains.
<PAGE>
6. Subsequent Event:
On May 9, 1997, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$.074230 per share, payable on May 29, 1997 to shareholders of
record as of May 19, 1997.
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
James H. Bodurtha, Director
Herbert I. London, Director
Robert R. Martin, Director
Joseph L. May, Director
Andre F. Perold, Director
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Walter C. O'Connor, Vice President
Gerald M. Richard, Treasurer
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
<PAGE>
NYSE Symbol
MYC
