MUNIYIELD
CALIFORNIA
FUND, INC.
FUND LOGO
Annual Report
October 31, 1999
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.
MuniYield
California Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MuniYield California Fund, Inc.
TO OUR SHAREHOLDERS
For the year ended October 31, 1999, the Common Stock of MuniYield
California Fund, Inc. earned $0.866 per share income dividends,
which included earned and unpaid dividends of $0.070. This
represents a net annualized yield of 6.50%, based on a month-end per
share net asset value of $13.32. Over the same period, the total
investment return on the Fund's Common Stock was -9.70%, based on a
change in per share net asset value from $16.23 to $13.32, and
assuming reinvestment of $0.982 per share ordinary income dividends
and $0.474 per share capital gains distributions.
For the six-month period ended October 31, 1999, the total
investment return on the Fund's Common Stock was -10.46%, based on a
change in per share net asset value from $15.33 to $13.32, and
assuming reinvestment of $0.419 per share income dividends.
For the six-month period ended October 31, 1999, the average yields
of the Fund's Auction Market Preferred Stock were: Series A, 2.66%;
Series B, 2.97%; and Series C, 2.65%.
The Municipal Market Environment
The combination of steady strong domestic economic growth,
improvement in foreign economies (most notably in Japan) and
increasing investor concerns regarding potential increases in US
inflation put upward pressure on bond yields throughout the six-
month period ended October 31, 1999. Continued strong US employment
growth, particularly the decline in the US unemployment rate to 4.2%
in early June, was among the reasons the Federal Reserve Board cited
for raising short-term interest rates in late June and again in late
August. US Treasury bond yields reacted by climbing above 6.375% by
late October. However, at October month-end, economic indicators
were released suggesting that, despite strong economic and
employment growth in the third quarter, inflationary pressures have
remained extremely well-contained. This resulted in a significant
rally in the US Treasury bond market, pushing US Treasury bond
yields downward to end the six-month period at approximately 6.15%.
During the period, yields on 30-year US Treasury bonds increased
over 50 basis points (0.50%).
Long-term tax-exempt bond yields also rose during the six months
ended October 31, 1999. Until early May, the municipal bond market
was able to withstand much of the upward pressure on bond yields.
However, investor concerns of additional moves by the Federal
Reserve Board to moderate US economic growth and, more importantly,
the loss of the strong technical support that the tax-exempt market
enjoyed in early 1999 helped push municipal bond yields
significantly higher for the remainder of the period. The yields on
long-term tax-exempt revenue bonds rose nearly 90 basis points to
6.18% by October 31, 1999, as measured by the Bond Buyer Revenue
Bond Index.
In recent months, the significant decline in new tax-exempt bond
issuance has remained a positive factor within the municipal bond
market, as it had been for much of the past year. During the last
six months, more than $110 billion in long-term municipal bonds was
issued, a decline of nearly 20% compared to the same period a year
ago. During the past three months, $55 billion in municipal bonds
was underwritten, representing a decline of nearly 10% compared to
the corresponding period in 1998. Additionally, in June and July,
investors received more than $40 billion in coupon income and
proceeds from bond maturities and early bond redemptions. These
proceeds have generated considerable retail investor interest, which
has helped absorb the recent diminished supply.
MuniYield California Fund, Inc.
October 31, 1999
Although tax-exempt bond yields are at their highest level in over
two years and have attracted significant retail investor interest,
institutional demand has declined sharply. Long-term municipal
mutual funds have seen consistent outflows in recent months as the
yields of individual securities have risen faster than those of
larger, more diverse mutual funds. In addition, the demand from
property/casualty insurance companies has weakened as a result of
the losses, and anticipated losses, incurred as a result of the
series of damaging storms across much of the eastern United States.
Additionally, many institutional investors who were attracted to the
municipal bond market in recent years by historically attractive tax-
exempt bond yield ratios of over 90% have found other asset classes
even more attractive. Even with a reduced supply position, tax-
exempt issuers have been forced to repeatedly raise municipal bond
yields in the attempt to attract adequate demand.
The recent relative underperformance of the municipal bond market
has resulted in an opportunity for long-term investors to purchase
tax-exempt issues whose yields are nearly identical with taxable US
Treasury securities. At October 31, 1999, long-term uninsured
municipal revenue bond yields were 100% of comparable US Treasury
securities. In recent months, many taxable asset classes, such as
corporate bonds, mortgage-backed securities and US agency debt, have
all accelerated debt issuance. This acceleration was initiated
largely to avoid issuing securities at year-end and to minimize any
associated Year 2000 (Y2K) problems that may develop. However, this
increased issuance has also resulted in higher yield levels in the
various asset classes as lower bond prices became necessary to
attract sufficient investor demand. Going forward, it is believed
that the pace of non-US government debt issuance is likely to slow
significantly. As the supply of this debt declines, we would expect
many institutional investors to return to the municipal bond market
and the attractive yield ratios available.
Looking ahead, it appears to us that long-term tax-exempt bond
yields will remain under pressure, trading in a broad range centered
near current levels. Investors are likely to remain concerned about
future action by the Federal Reserve Board in November. Y2K
considerations may prohibit any further Federal Reserve Board moves
through the end of the year and the beginning of 2000. Any
improvement in bond prices will probably be contingent upon
weakening in both US employment growth and consumer spending. The
100 basis point rise in US Treasury bond yields seen thus far this
year may negatively impact US economic growth. The US housing market
will be among the first sectors likely to be affected, as some
declines have already been evidenced in response to higher mortgage
rates. We believe that it is also unrealistic to expect double-digit
returns in US equity markets to continue indefinitely. Much of the
US consumer's wealth is tied to recent stock market appreciation.
Any slowing in these incredible growth rates is likely to reduce
consumer spending. We believe that these factors suggest that the
worst of the recent increase in bond yields has passed and stable,
if not slightly improving, bond prices may be expected.
Portfolio Strategy
During the six-month period ended October 31, 1999, we sought to
provide an attractive level of tax-exempt income as well as
competitive total returns. However, while we were able to provide an
attractive level of tax-exempt income, we were less successful in
achieving competitive total returns. This was largely the result of
the Fund being relatively fully invested in an environment of
dramatically rising interest rates, causing the Fund's net asset
valuation to decline. These yields were not offset by dividend
income, as reflected in the Fund's total returns.
Helping the Fund's performance to some degree during the period was
our emphasis on credit quality as credit spreads widened in the
rising interest rate environment. With value having been restored to
the taxable and tax-exempt fixed-income markets, we intend to stay
the course and monitor financial data for signs pointing to an
environment more supportive of fixed-income securities.
At October 31, 1999, MuniYield California Fund, Inc. was
overweighted in high-quality holdings with nearly 89% of Fund assets
rated at least AA by at least one of the major rating agencies.
MuniYield California Fund, Inc.
October 31, 1999
In Conclusion
We appreciate your investment in MuniYield California Fund, Inc.,
and we look forward to assisting you with your financial needs in
the months and years to come.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Walter C. O'Connor)
Walter C. O'Connor
Vice President and Portfolio Manager
November 30, 1999
<TABLE>
PROXY RESULTS
<CAPTION>
During the six-month period ended October 31, 1999, MuniYield
California Fund, Inc.'s Common Stock Shareholders voted on the
following proposal. Proposal 1 was not approved at a shareholders'
meeting on June 23, 1999. A description of the proposal and number
of shares voted are as follows:
Shares Shares Voted Shares Voted
Voted For Against Abstain
<S> <C> <C> <C>
1. To approve an amendment to the Articles Supplementary of the Fund. 10,898,893 540,470 597,055
During the six-month period ended October 31, 1999, MuniYield
California Fund, Inc.'s Preferred Stock Shareholders (Series A, B
and C) voted on the following proposal. Proposal 1 was not approved
at a shareholders' meeting on June 23, 1999. A description of the
proposal and number of shares voted are as follows:
<CAPTION>
Shares Shares Voted Shares Voted
Voted For Against Abstain
<S> <C> <C> <C>
1. To approve an amendment to the Articles Supplementary of the Fund as follows:
Series A 359 45 8
Series B 389 38 33
Series C 238 61 100
</TABLE>
MuniYield California Fund, Inc.
October 31, 1999
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.
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 these securities.
MuniYield California Fund, Inc.
October 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
California--97.4%
<S> <S> <C> <S> <C>
AAA NR* $ 2,000 ABAG Finance Authority for Nonprofit Corporations, California,
COP (Children's Hospital Medical Center), 6% due 12/01/2029 (a) $ 1,983
AAA Aaa 4,225 Alameda Corridor Transportation Authority, California, Revenue Bonds,
Senior Lien, Series A, 4.75% due 10/01/2025 (h) 3,496
California HFA, Home Mortgage Revenue Bonds, AMT:
AA- Aa2 285 Series C, 7.60% due 8/01/2030 (c) 288
AA- Aa2 410 Series D, 7.75% due 8/01/2010 (c) 422
AAA Aaa 5,000 Series E, 6.10% due 8/01/2029 (a) 5,010
AA- Aa2 2,000 Series E-1, 6.70% due 8/01/2025 (c) 2,053
AA- Aa2 3,915 Series F-1, 7% due 8/01/2026 (c) 4,061
AA- Aa2 5,330 Series N, 6.375% due 2/01/2027 (c) 5,453
A+ Aa2 3,700 California HFA, Revenue Bonds, RIB, AMT, Series B-2, 8.879% due 8/01/2023 (c)(j) 3,964
California Health Facilities Finance Authority Revenue Bonds:
NR* Aaa 10,000 RITR, Series 17, 6.43% due 8/15/2030 (h)(j) 8,046
NR* A1 2,835 (Scripps Research Institute), Series A, 6.625% due 7/01/2018 2,953
California Health Facilities Finance Authority, Revenue Refunding Bonds:
A1+ VMIG1++ 1,200 (Adventist Hospital), VRDN, Series B, 3.55% due 9/01/2028 (h)(k) 1,200
A1+ VMIG1++ 35 (Adventist Hospital), VRDN, Series C, 3.55% due 9/01/2015 (h)(k) 35
AAA Aaa 5,435 (Children's Hospital), 5.375% due 7/01/2016 (h) 5,156
A1+ VMIG1++ 7,100 (Sutter/Catholic Healthcare System), VRDN, Series B, 3.50% due 7/01/2012 (a)(k) 7,100
AAA Aaa 3,000 (Sutter Health), Series C, 5.125% due 8/15/2022 (f) 2,652
California Pollution Control Financing Authority, PCR, Refunding, VRDN (k):
A1+ NR* 400 (Pacific Gas and Electric), Series A, 3.55% due 12/01/2018 400
A1+ VMIG1++ 2,600 (Pacific Gas and Electric), Series E, 3.55% due 11/01/2026 2,600
A1 P1 4,100 (Southern California Edison), Series C, 3.60% due 2/28/2008 4,100
NR* Aaa 1,215 California Rural Home Mortgage Finance Authority, S/F Mortgage Revenue Bonds
(Mortgage-Backed Securities Program), AMT, Series A-1, 6.90% due 12/01/2024 (d)(g) 1,293
California State, Department of Water Resources, Water System Revenue
Refunding Bonds (Central Valley Project):
AAA Aaa 2,500 Series Q, 5.375% due 12/01/2027 (h) 2,298
AA Aa2 5,855 Series S, 5% due 12/01/2022 5,108
California State Economic Development Financing Authority Revenue Bonds
(California Independent Systems Project), VRDN (k):
A1+ VMIG1++ 100 Series A, 3.50% due 4/01/2008 100
A1+ VMIG1++ 800 Series C, 3.55% due 4/01/2008 800
A1+ VMIG1++ 2,000 Series D, 3.50% due 4/01/2008 2,000
</TABLE>
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 below and 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
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
VRDN Variable Rate Demand Notes
MuniYield California Fund, Inc.
October 31, 1999
<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>
AAA Aaa $ 7,500 California State, GO, 5.375% due 6/01/2026 (b) $ 6,908
AAA Aaa 15,000 California State, GO, Refunding, 4.25% due 10/01/2026 (h) 11,369
California State Public Works Board, Lease Revenue Bonds (i):
A+ Aaa 1,000 (Department of Corrections), Series A, 6.875% due 11/01/2004 1,126
A+ Aaa 6,800 (Department of Corrections), Series A, 7% due 11/01/2004 7,693
A+ Aaa 3,535 (Various Community College Projects), 7% due 3/01/2004 3,951
NR* VMIG1++ 3,400 California Statewide Communities Development Authority, COP
(Continuing Care/University Project), VRDN, 3.55% due 11/15/2028 (k) 3,400
AAA Aaa 6,185 Contra Costa County, California, Public Financing Authority, Lease Revenue
Refunding Bonds (Various Capital Facilities), Series A, 5.35% due 8/01/2024 (h) 5,696
BBB NR* 3,000 Contra Costa County, California, Public Financing Authority, Tax Allocation
Revenue Bonds, Series A, 7.10% due 8/01/2022 (i) 3,194
AAA Aaa 2,500 Corona, California, Public Financing Authority, Revenue Refunding Bonds,
Superior Lien, Series A, 5% due 9/01/2020 (f) 2,205
AAA Aaa 10,500 East Bay, California, Municipal Utilities District, Water System Revenue
Bonds, 4.75% due 6/01/2028 (h) 8,617
AAA Aaa 2,500 Fontana, California, Redevelopment Agency Tax Allocation Refunding Bonds
(Southwest Industrial Park Project), 5% due 9/01/2022 (h) 2,194
BBB Baa3 1,810 Inglewood, California, Public Financing Authority, Revenue Refunding
Bonds, Series B, 7% due 5/01/2002 (i) 1,932
AAA Aaa 11,735 Irvine, California, Public Facilities and Infrastructure Authority,
Assessment Revenue Refunding Bonds, Series A, 5.05% due 9/02/2022 (a) 10,371
AAA Aaa 4,145 Lodi, California, Electric System Revenue Bonds, COP, Series A, 5.75%
due 1/15/2027 (h) 4,023
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
NR* Aaa 4,000 Los Angeles, California, Convention and Exhibition Center Authority,
Lease Revenue Refunding Bonds, RITR, Series 21, 6.72% due 8/15/2018 (h)(j) 3,526
NR* Aaa 6,200 Los Angeles, California, Department of Water and Power, Electric Plant
Revenue Refunding Bonds, RITR, Series 18, 6.77% due 11/15/2031 (b)(j) 5,109
Los Angeles, California, Harbor Department Revenue Bonds, AMT:
NR* Aaa 4,000 RITR, Series RI-7, 8.345% due 11/01/2026 (h)(j) 4,160
AA Aa3 4,240 Series B, 6.60% due 8/01/2015 4,497
AA Aa3 8,855 Series B, 6.625% due 8/01/2019 9,328
AAA NR* 140 Los Angeles, California, S/F Home Mortgage Revenue Bonds (Mortgage-Backed
Securities Program), AMT, Issue A, 7.55% due 12/01/2023 (c)(g) 144
Los Angeles, California, Wastewater System Revenue Bonds, Series A (b):
AAA Aaa 13,750 5% due 6/01/2023 12,010
AAA Aaa 14,500 5% due 6/01/2028 12,476
NR* NR* 5,000 Los Angeles County, California, Metropolitan Transportation Authority,
Sales Tax Revenue Bonds, RITR, Series 30, 6.47% due 7/01/2023 (a)(j) 4,058
Los Angeles County, California, Metropolitan Transportation Authority,
Sales Tax Revenue Refunding Bonds:
AAA Aaa 7,760 Proposition A, First Tier, Senior Series C, 5% due 7/01/2020 (a) 6,839
AAA Aaa 10,080 Proposition C, Second Series, Series A, 4.75% due 7/01/2026 (f) 8,320
AAA NR* 2,000 Madera County, California, COP, Refunding (Valley Children's Hospital
Project), 5% due 3/15/2023 (h) 1,743
</TABLE>
MuniYield California Fund, Inc.
October 31, 1999
<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>
AAA Aaa $ 3,105 Marin, California, Emergency Radio Authority Revenue Bonds
(Public Safety and Emergency Radio), 4.75% due 8/15/2021 (a) $ 2,620
Metropolitan Water District of Southern California, Waterworks
Revenue Bonds, Series A:
AA Aa2 2,465 5% due 7/01/2016 2,261
AA Aa2 3,400 5% due 7/01/2026 2,930
AAA Aaa 5,000 Modesto, California, Public Financing Authority, Lease Revenue Refunding Bonds
(Capital Improvements and Refinancing Project), 5% due 9/01/2029 (a) 4,303
AAA Aaa 8,705 Modesto, California, Wastewater Treatment Facilities Revenue Bonds, 5.625% due
11/01/2017 (h) 8,574
AAA Aaa 1,270 Northern California Power Agency, Multiple Capital Facilities Revenue Bonds,
RIB, 9.395% due 8/01/2025 (h)(j) 1,405
Northern California Power Agency, Public Power Revenue Refunding Bonds
(Hydroelectric Project Number One), Series A (h):
AAA Aaa 13,600 5.125% due 7/01/2023 12,058
AAA Aaa 4,000 5% due 7/01/2028 3,431
Oakland, California, Joint Powers Financing Authority, Lease Revenue Bonds
(Oakland Administration Buildings)(a):
AAA Aaa 2,000 5.90% due 8/01/2016 2,026
AAA Aaa 6,000 5.75% due 8/01/2021 5,897
AAA Aaa 5,395 5.75% due 8/01/2026 5,265
AAA Aaa 4,160 Oakland, California, State Building Authority, Lease Revenue Bonds
(Elihu M. Harris), Series A, 5% due 4/01/2023 (a) 3,645
Pomona, California, Public Financing Authority, Revenue Refunding Bonds
(Southwest Pomona Redevelopment Project), Series W (h):
AAA Aaa 5,350 5% due 2/01/2024 4,670
AAA Aaa 5,300 5% due 2/01/2030 4,544
AAA Aaa 2,345 Richmond, California, Redevelopment Agency, Tax Allocation Refunding Bonds
(Harbour Redevelopment Project), Series A, 5.50% due 7/01/2018 (h) 2,252
AAA Aaa 1,750 Riverside County, California, Asset Leasing Corporation, Leasehold Revenue
Refunding Bonds (Riverside County Hospital Project), Series B, 5.70%
due 6/01/2016 (h) 1,722
AAA Aaa 5,000 Sacramento, California, Municipal Utility District, Electric Revenue
Refunding Bonds, Series L, 5.125% due 7/01/2022 (h) 4,467
AAA Aaa 5,100 San Bernardino, California, City Unified School District, GO, Refunding,
Series A, 5.875% due 8/01/2024 (b) 5,070
AAA Aaa 10,000 San Diego, California, Certificates of Undivided Interest, Water Utility Fund,
Net System Revenue Bonds, 5% due 8/01/2021 (b) 8,815
AAA Aaa 6,000 San Diego, California, Convention Center Expansion Financing Authority,
Lease Revenue Bonds, Series A, 4.75% due 4/01/2028 (a) 4,926
AAA Aaa 2,500 San Diego, California, Public Facilities Financing Authority, Sewer Revenue
5 Bonds, 5% due /15/2020 (b) 2,207
BBB+ Baa1 1,300 San Diego, California, Redevelopment Agency, Tax Allocation Refunding Bonds
(Horton Project), Series B, 6.625% due 11/01/2017 1,363
NR* Baa3 1,300 San Diego County, California, COP (Burnham Institute), 6.25% due 9/01/2029 1,272
AAA Aaa 10,760 San Diego County, California, Water Authority, Water Revenue Bonds, COP,
Series A, 5% due 5/01/2022 (b) 9,405
</TABLE>
MuniYield California Fund, Inc.
October 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
California (concluded)
<S> <S> <C> <S> <C>
San Francisco, California, Bay Area Rapid Transit District, Sales Tax
Revenue Refunding Bonds (a):
AAA Aaa $ 5,000 4.75% due 7/01/2023 $ 4,182
AAA Aaa 5,000 5% due 7/01/2028 4,313
San Francisco, California, City and County Airport Commission, International
Airport Revenue Bonds, Second Series:
AAA Aaa 3,000 AMT, Issue 5, 6.50% due 5/01/2019 (b) 3,172
AAA Aaa 4,525 AMT, Issue 6, 6.60% due 5/01/2020 (a) 4,820
AAA Aaa 5,000 Issue 15B, 5% due 5/01/2024 (h) 4,362
AAA Aaa 4,715 San Francisco, California, City and County Redevelopment Agency, Lease Revenue
Refunding Bonds (George R. Moscone Convention Center), 6.80% due 7/01/2019 (f) 5,131
AA+ NR* 95 San Francisco, California, City and County S/F Mortgage Revenue Bonds
(Mortgage-Backed Securities Program), AMT, 7.45% due 1/01/2024 (e) 98
AAA Aaa 2,000 San Francisco, California, Unified School District, COP, 4.75% due 8/01/2024 (a) 1,655
AAA Aaa 5,000 San Joaquin Hills, California, Transportation Corridor Agency, Toll Road
Revenue Refunding Bonds, Series A, 5.375% due 1/15/2029 (h) 4,546
San Jose, California, Redevelopment Agency Tax Allocation Bonds (Merged Area
Redevelopment Project)(a):
AAA Aaa 3,000 4.75% due 8/01/2023 2,508
AAA Aaa 5,000 5% due 8/01/2026 4,332
Santa Clara County, California, Financing Authority, Lease Revenue Bonds
(VMC Facility Replacement Project), Series A (a)(i):
AAA Aaa 9,525 6.75% due 11/15/2004 10,685
AAA Aaa 2,000 6.875% due 11/15/2004 2,250
AAA Aaa 3,000 Santa Fe Springs, California, Redevelopment Agency, Tax Allocation Refunding
Bonds (Conservation Redevelopment Project), Series A, 6% due 9/01/2014 (h) 3,103
Southern California Home Finance Authority, S/F Mortgage Revenue Bonds
(Mortgage-Backed Securities Program), AMT:
AAA NR* 895 Series A, 6.75% due 9/01/2022 (e) 914
AAA NR* 1,445 Series A, 7.625% due 10/01/2023 (g) 1,486
AAA NR* 85 Series B, 7.75% due 3/01/2024 (e) 88
AAA Aaa 5,000 Stockton, California, COP (Wastewater Treatment Plant Expansion),
Series A, 6.80% due 9/01/2004 (b)(i) 5,600
AAA Aaa 3,000 Stockton, California, Revenue Refunding Bonds, COP (Wastewater System Project),
Series A, 5.20% due 9/01/2029 (h) 2,654
AAA Aaa 5,000 University of California, COP, Series A, 5.30% due 11/01/2029 (a) 4,502
AAA Aaa 4,885 University of California Revenue Bonds (Research Facilities), Series D,
5% due 9/01/2024 (f) 4,258
AAA Aaa 6,445 University of California, Revenue Refunding Bonds (Research Facilities),
Series C, 5% due 9/01/2021 (f) 5,680
AAA Aaa 5,000 Westlands, California, Water District Revenue Bonds, COP, Series A,
5% due 3/01/2029 (a) 4,283
</TABLE>
MuniYield California Fund, Inc.
October 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Puerto Rico--1.6%
<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 $ 5,796
BBB+ Baa1 1,000 Puerto Rico Electric Power Authority, Power Revenue Refunding Bonds,
Series U, 6% due 7/01/2014 1,020
Total Investments (Cost--$431,870)--99.0% 417,944
Other Assets Less Liabilities--1.0% 4,170
--------
Net Assets--100.0% $422,114
========
<FN>
(a)AMBAC Insured.
(b)FGIC Insured.
(c)FHA Insured.
(d)FHLMC Collateralized.
(e)FNMA/GNMA Collateralized.
(f)FSA Insured.
(g)GNMA Collateralized.
(h)MBIA Insured.
(i)Prerefunded.
(j)The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rate shown is the
rate in effect at October 31, 1999.
(k)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at October 31, 1999.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
QUALITY PROFILE
The quality ratings of securities in the Fund as of October 31, 1999
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 79.2%
AA/Aa 9.5
A/A 2.1
BBB/Baa 2.1
NR (Not Rated) 1.0
Other++ 5.1
[FN]
++Temporary investments in short-term municipal securities.
MuniYield California Fund, Inc.
October 31, 1999
<TABLE>
FINANCIAL INFORMATION
<CAPTION>
Statement of Assets, Liabilities and Capital as of October 31, 1999
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$431,870,484) (Note 1a) $417,944,428
Cash 18,831
Receivables:
Securities sold $ 23,926,720
Interest 7,337,690 31,264,410
------------
Prepaid expenses and other assets 18,244
------------
Total assets 449,245,913
------------
Liabilities: Payables:
Securities purchased 26,561,324
Dividend payable (Note 1f) 279,563
Investment adviser (Note 2) 204,643 27,045,530
------------
Accrued expenses and other liabilities 86,820
------------
Total liabilities 27,132,350
------------
Net Assets: Net assets $422,113,563
============
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.10 per share (5,600 shares of AMPS*
issued and outstanding at $25,000 per share liquidation preference) $140,000,000
Common Stock, par value $.10 per share (21,184,475 shares issued
and outstanding) $ 2,118,448
Paid-in capital in excess of par 298,320,316
Undistributed investment income--net 3,897,517
Accumulated distributions in excess of realized capital gains--net
(Note 1f) (8,296,662)
Unrealized depreciation on investments--net (13,926,056)
------------
Total--Equivalent to $13.32 net asset value per Common Stock
(market price--$12.625) 282,113,563
------------
Total capital $422,113,563
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
MuniYield California Fund, Inc.
October 31, 1999
<TABLE>
FINANCIAL INFORMATION (continued)
<CAPTION>
Statement of Operations
For the Year Ended
October 31, 1999
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 24,885,236
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 2,279,408
Commission fees (Note 4) 354,756
Transfer agent fees 99,230
Professional fees 94,467
Accounting services (Note 2) 84,428
Printing and shareholder reports 43,631
Custodian fees 35,814
Listing fees 31,780
Directors' fees and expenses 23,287
Pricing fees 15,750
Other 38,701
------------
Total expenses 3,101,252
------------
Investment income--net 21,783,984
------------
Realized & Realized loss on investments--net (5,955,228)
Unrealized Change in unrealized appreciation/depreciation on investments--net (41,734,304)
Loss on ------------
Investments--Net Net Decrease in Net Assets Resulting from Operations ($25,905,548)
(Notes 1b, 1d & 3): ============
See Notes to Financial Statements.
</TABLE>
MuniYield California Fund, Inc.
October 31, 1999
<TABLE>
FINANCIAL INFORMATION (continued)
<CAPTION>
Statements of Changes in Net Assets
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 1999 1998
<S> <S> <C> <C>
Operations: Investment income--net $ 21,783,984 $ 22,247,040
Realized gain (loss) on investments--net (5,955,228) 14,829,943
Change in unrealized appreciation/depreciation on
investments--net (41,734,304) (7,832,939)
------------ ------------
Net increase (decrease) in net assets resulting from operations (25,905,548) 29,244,044
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (18,534,023) (17,763,984)
Shareholders Preferred Stock (3,048,224) (3,786,536)
(Note 1f): Realized gain on investments--net:
Common Stock (4,949,446) (1,382,438)
Preferred Stock (777,830) (936,720)
In excess of realized gain on investments--net:
Common Stock (7,168,573) --
Preferred Stock (1,126,578) --
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (35,604,674) (23,869,678)
------------ ------------
Capital Stock Value of shares issued to Common Stock shareholders in
Transactions reinvestment of dividends and distributions 4,278,659 3,578,320
(Note 1e & 4): Proceeds from issuance of Common Stock resulting from
reorganization -- 62,338,657
Offering costs from issuance of Common Stock resulting from
reorganization -- (243,170)
Proceeds from issuance of Preferred Stock resulting from
reorganization -- 20,000,000
------------ ------------
Net increase in net assets derived from capital stock transactions 4,278,659 85,673,807
------------ ------------
Net Assets: Total increase (decrease) in net assets (57,231,563) 91,048,173
Beginning of year 479,345,126 388,296,953
------------ ------------
End of year* $422,113,563 $479,345,126
============ ============
<FN>
*Undistributed investment income--net (Note 1g) $ 3,897,517 $ 3,679,209
============ ============
See Notes to Financial Statements.
</TABLE>
MuniYield California Fund, Inc.
October 31, 1999
<TABLE>
FINANCIAL INFORMATION (concluded)
<CAPTION>
Financial Highlights
The following per share data and ratios have been derived
from information provided in the financial statements.
For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 16.23 $ 15.98 $ 15.44 $ 15.18 $ 13.91
Operating -------- -------- -------- -------- --------
Performance: Investment income--net 1.03 1.11 1.17 1.16 1.18
Realized and unrealized gain (loss) on
investments--net (2.25) .39 .54 .28 1.53
-------- -------- -------- -------- --------
Total from investment operations (1.22) 1.50 1.71 1.44 2.71
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.88) (.92) (.93) (.93) (.90)
Realized gain on investments--net (.24) (.08) -- -- (.25)
In excess of realized gain on investments--net (.34) -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Stock shareholders (1.46) (1.00) (.93) (.93) (1.15)
-------- -------- -------- -------- --------
Capital charge resulting from issuance of
Common Stock -- (.01) -- -- --
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:++++
Dividends and distributions to Preferred Stock
shareholders:
Investment income--net (.14) (.19) (.24) (.25) (.25)
Realized gain on investments--net (.04) (.05) -- -- (.04)
In excess of realized gain on
investments--net (.05) -- -- -- --
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity (.23) (.24) (.24) (.25) (.29)
-------- -------- -------- -------- --------
Net asset value, end of year $ 13.32 $ 16.23 $ 15.98 $ 15.44 $ 15.18
======== ======== ======== ======== ========
Market price per share, end of year $ 12.625 $16.5625 $ 15.875 $ 14.875 $ 13.375
======== ======== ======== ======== ========
Total Investment Based on market price per share (16.13%) 8.10% 13.44% 18.68% 20.62%
Return:* ======== ======== ======== ======== ========
Based on net asset value per share (9.70%) 11.04% 10.01% 8.54% 19.33%
======== ======== ======== ======== ========
Ratios Based on Total expenses** .98% .93% .97% .98% 1.03%
Average Net Assets ======== ======== ======== ======== ========
Of Common Stock: Total investment income--net** 6.86% 7.12% 7.47% 7.50% 8.22%
======== ======== ======== ======== ========
Amount of dividends to Preferred
Stock shareholders .96% 1.21% 1.53% 1.61% 1.74%
======== ======== ======== ======== ========
Investment income--net, to Common Stock
shareholders 5.90% 5.91% 5.94% 5.89% 6.48%
======== ======== ======== ======== ========
Ratios Based on Total expenses .68% .65% .67% .67% .69%
Total Average ======== ======== ======== ======== ========
Net Assets:**++ Total investment income--net 4.77% 4.94% 5.14% 5.16% 5.48%
======== ======== ======== ======== ========
Ratios Based on Dividends to Preferred Stock shareholders 2.18% 2.82% 3.36% 3.47% 3.49%
Average Net Assets ======== ======== ======== ======== ========
Of Preferred Stock:
Supplemental Net assets, net of Preferred Stock,
Data: end of year (in thousands) $282,114 $339,345 $268,297 $259,082 $254,742
======== ======== ======== ======== ========
Preferred Stock outstanding, end of year
(in thousands) $140,000 $140,000 $120,000 $120,000 $120,000
======== ======== ======== ======== ========
Portfolio turnover 146.39% 136.88% 88.68% 67.48% 69.59%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,015 $ 3,424 $ 3,236 $ 3,159 $ 3,123
======== ======== ======== ======== ========
Dividends per Series A--Investment income--net $ 527 $ 729 $ 852 $ 875 $ 882
Share On ======== ======== ======== ======== ========
Preferred Stock Series B--Investment income--net $ 546 $ 693 $ 830 $ 860 $ 864
Outstanding: ======== ======== ======== ======== ========
Series C--Investment income--net $ 591 $ 466 -- -- --
======== ======== ======== ======== ========
<FN>
*Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, may result
in substantially different returns. Total investment returns exclude
the effects of sales charges.
**Do not reflect the effect of dividends to Preferred Stock
shareholders.
++Includes Common and Preferred Stock average net assets.
++++The Fund's Preferred Stock was issued on April 10, 1992 (Series
A and B) and February 9, 1998 (Series C).
See Notes to Financial Statements.
</TABLE>
MuniYield California Fund, Inc.
October 31, 1999
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. The Fund's financial statements are
prepared in accordance with generally accepted accounting
principals, 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 MYC. 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 prices 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-the-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 fair value as determined in good faith by or
under the direction of the Board of Directors of the Fund, including
valuations furnished by a pricing service retained by the Fund,
which may utilize a matrix system for valuations. The procedures of
the pricing service and its valuations are reviewed by the officers
of the Fund under the general supervision of the Board of Directors.
(b) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell
financial futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities or
the intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at
a specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
* Options--The Fund is authorized to write covered call options and
purchase put options. When the Fund writes an option, an amount
equal to the premium received by the Fund is reflected as an asset
and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written. When a security is purchased or sold through an
exercise of an option, the related premium paid (or received) is
added to (or deducted from) the basis of the security acquired or
deducted from (or added to) the proceeds of the security sold. When
an option expires (or the Fund enters into a closing transaction),
the Fund realizes a gain or loss on the option to the extent of the
premiums received or paid (or gain or loss to the extent the cost of
the closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
MuniYield California Fund, Inc.
October 31, 1999
(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) Offering costs--Direct expenses relating to the issuance of
Common Stock resulting from reorganization were charged to capital.
(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. Distributions in excess of
realized capital gains are due primarily to differing tax treatments
for futures transactions.
(g) Reclassification--Generally accepted accounting principles
require that certain components of net assets be adjusted to reflect
permanent differences between financial and tax reporting.
Accordingly, current year's permanent book/tax differences of
$15,060 have been reclassified between paid-in capital in excess of
par and undistributed net investment income and $1,511 has been
reclassified between accumulated distributions in excess of net
realized capital gains and undistributed net investment income.
These reclassifications have no effect on net assets or net asset
value per share.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of .50% of
the Fund's average weekly net assets, including proceeds from the
issuance of Preferred Stock.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended October 31, 1999 were $637,411,624 and
$657,091,134, respectively.
Net realized gains (losses) for the year ended October 31, 1999 and
net unrealized losses as of October 31, 1999 were as follows:
Realized Unrealized
Gains (Losses) Losses
Long-term investments $(7,416,009) $(13,926,056)
Financial futures contracts 1,460,781 --
----------- ------------
Total $(5,955,228) $(13,926,056)
=========== ============
As of October 31, 1999, net unrealized depreciation for Federal
income tax purposes aggregated $14,029,018, of which $7,761,084
related to appreciated securities and $21,790,102 related to
depreciated securities. The aggregate cost of investments at October
31, 1999 for Federal income tax purposes was $431,973,446.
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, 1999
increased by 274,041 as a result of dividend reinvestment and during
the year ended October 31, 1998 increased by 3,896,657 pursuant to a
plan of reorganization and by 223,455 as a result of dividend
reinvestment.
MuniYield California Fund, Inc.
October 31, 1999
NOTES TO FINANCIAL STATEMENTS (concluded)
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred
Stock of the Fund, with a par value of $.10 per share and a
liquidation preference of $25,000 per share, that entitle their
holders to receive cash dividends at an annual rate that may vary
for the successive dividend periods. The yields in effect at October
31, 1999 were: Series A, 3.00%; Series B, 3.00%; Series C, 2.75%.
Shares issued and outstanding during the year ended October 31, 1999
remained constant and during the year ended October 31, 1998
increased by 800 pursuant to a plan of reorganization.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from .25% to .375%,
calculated on the proceeds of each auction. For the year ended
October 31, 1999, Merrill Lynch, Pierce, Fenner & Smith Incorporated
("MLPF&S"), an affiliate of FAM, earned $141,701 as commissions.
5. Capital Loss Carryforward:
At October 31, 1999, the Fund had a net capital loss carryforward of
approximately $7,128,000, all of which expires in 2007. This amount
will be available to offset like amounts of any future taxable
gains.
6. Subsequent Event:
On November 8, 1999, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the amount
of $.070458 per share, payable on November 29, 1999 to shareholders
of record as of November 22, 1999.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
MuniYield California Fund, Inc.:
We have audited the accompanying statement of assets, liabilities
and capital, including the schedule of investments, of MuniYield
California Fund, Inc. as of October 31, 1999, the related statements
of operations for the year then ended and changes in net assets for
each of the years in the two-year period then ended, and the
financial highlights for each of the years in the five-year period
then ended. These financial statements and the financial highlights
are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reason-able assurance about whether the
financial statements and the financial highlights are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned
at October 31, 1999 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
MuniYield California Fund, Inc. as of October 31, 1999, the results
of its operations, the changes in its net assets, and the financial
highlights for the respective stated periods in conformity with
generally accepted accounting principles.
Deloitte &Touche LLP
Princeton, New Jersey
December 6, 1999
</AUDIT-REPORT>
MuniYield California Fund, Inc.
October 31, 1999
<TABLE>
IMPORTANT TAX INFORMATION (unaudited)
<CAPTION>
All of the net investment income distributions paid by MuniYield
California Fund, Inc. during its taxable year ended October 31, 1999
qualify as tax-exempt interest dividends for Federal Income tax
purposes. Additionally, the following table summarizes the taxable
distributions paid by the Fund during the year:
Payable Ordinary Long-Term
Date Income Capital Gains*
<S> <S> <C> <C> <C>
Common Stock Shareholders 12/30/98 $.104632 $.474305
Preferred Stock Shareholders: Series A 11/12/98 $26.18 $ 77.75
12/10/98 $26.18 $ 80.35
1/07/99 $23.55 $ 76.62
2/04/99 $ 9.51 $ 39.69
Series B 11/05/98 -- $ 26.70
11/12/98 $ 7.05 $ 19.63
11/19/98 $ 6.52 $ 18.24
11/27/98 $ 7.03 $ 19.86
12/03/98 $ 4.97 $ 14.14
12/10/98 $ 6.30 $ 18.04
12/17/98 $ 6.79 $ 19.61
12/24/98 $ 7.12 $ 20.84
12/31/98 $ 7.27 $ 21.52
1/07/99 $ 9.11 $ 27.51
1/14/99 $ 6.01 $ 18.72
1/21/99 $ 5.95 $ 19.17
1/28/99 $ 5.18 $ 17.45
2/04/99 $ 4.03 $ 16.11
Series C 11/05/98 -- $100.33
12/03/98 $45.89 $ 48.20
12/31/98 $ 9.39 $ 14.60
<FN>
*All of the distributions are subject to the 20% tax rate.
Please retain this information for your records.
</TABLE>
MuniYield California Fund, Inc.
October 31, 1999
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute substantially all of its
net investment income to its shareholders on a monthly basis.
However, in order to provide shareholders with a more consistent
yield to the current trading price of shares of Common Stock of the
Fund, the Fund may at times pay out less than the entire amount of
net investment income earned in any particular month and may at
times in any month pay out such accumulated but undistributed income
in addition to net investment income earned in that month. As a
result, the dividends paid by the Fund for any particular month may
be more or less than the amount of net investment income earned by
the Fund during such month. The Fund's current accumulated but
undistributed net investment income, if any, is disclosed in the
Statement of Assets, Liabilities and Capital, which comprises part
of the Financial Information included in this report.
YEAR 2000 ISSUES
Many computer systems were designed using only two digits to
designate years. These systems may not be able to distinguish the
Year 2000 from the Year 1900 (commonly known as the "Year 2000
Problem"). The Fund could be adversely affected if the computer
systems used by the Fund's management or other Fund service
providers do not properly address this problem before January 1,
2000. The Fund's management expects to have addressed this problem
before then, and does not anticipate that the services it provides
will be adversely affected. The Fund's other service providers have
told the Fund's management that they also expect to resolve the Year
2000 Problem, and the Fund's management will continue to monitor the
situation as the Year 2000 approaches. However, if the problem has
not been fully addressed, the Fund could be negatively affected. The
Year 2000 Problem could also have a negative impact on the
securities in which the Fund invests, and this could hurt the Fund's
investment returns.
MuniYield California Fund, Inc.
October 31, 1999
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
James H. Bodurtha, Director
Herbert I. London, Director
Robert R. Martin, Director
Joseph L. May, Director
Andre F. Perold, Director
Arthur Zeikel, Director
Vincent R. Giordano, Senior Vice President
Kenneth A. Jacob, Vice President
Walter C. O'Connor, 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
MYC
