MUNIYIELD
CALIFORNIA
FUND, INC.
FUND LOGO
Semi-Annual Report
April 30, 2000
MuniYield California Fund, Inc. seeks to provide shareholders with
as high a level of current income exempt from Federal and California
income taxes as is consistent with its investment policies and
prudent investment management by investing primarily in a portfolio
of long-term, municipal obligations the interest on which, in the
opinion of bond counsel to the issuer, is exempt from Federal and
California income taxes.
This report, including the financial information herein, is
transmitted to shareholders of MuniYield California Fund, Inc. for
their information. It is not a prospectus. Past performance results
shown in this report should not be considered a representation of
future performance. The Fund has leveraged its Common Stock by
issuing Preferred Stock to provide the Common Stock shareholders
with a potentially higher rate of return. Leverage creates risks for
Common Stock shareholders, including the likelihood of greater
volatility of net asset value and market price of shares of the
Common Stock, and the risk that fluctuations in the short-term
dividend rates of the Preferred Stock may affect the yield to Common
Stock shareholders. Statements and other information herein are as
dated and are subject to change.
MuniYield
California Fund
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MUNIYIELD CALIFORNIA FUND, INC.
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., April 30, 2000
TO OUR SHAREHOLDERS
For the six-month period ended April 30, 2000, the Common Stock of
MuniYield California Fund, Inc. earned $0.402 per share income
dividends, which included earned and unpaid dividends of $0.066.
This represents a net annualized yield of 6.01%, based on a month-
end per share net asset value of $13.41. Over the same period, the
total investment return on the Fund's Common Stock was +4.06%, based
on a change in per share net asset value from $13.32 to $13.41, and
assuming reinvestment of $0.406 per share income dividends.
For the six-month period ended April 30, 2000, the average yields of
the Fund's Auction Market Preferred Stock were: Series A, 3.69%;
Series B, 3.38%; and Series C, 3.27%.
The Municipal Market Environment
Since October 1999 through mid-January 2000, fixed-income bond
yields rose steadily higher. US economic growth, in part intensified
by Year 2000 preparations, grew at a 7.3% rate in the fourth quarter
of 1999 and at a 4.2% annual rate for all of 1999. Initial estimates
for the first quarter of 2000 were reported at 5.4%. However,
despite these significant growth rates, no price measure indicator
has shown any considerable signs of future price pressures at the
consumer level, despite the lowest unemployment rates since January
1970. Given no signs of an economic slowdown, the Federal Reserve
Board continued to raise short-term interest rates in November 1999
and again in February and March 2000. In each instance, the Federal
Reserve Board cited both the continued growth of US employment and
the impressive strength of the US equity markets as reasons for
attempting to moderate US economic growth before inflationary price
increases are realized. By mid-January 2000, US Treasury bond yields
rose 60 basis points (0.60%) to 6.75%. Similarly, as measured by the
Bond Buyer Revenue Bond Index, long-term tax-exempt bond yields rose
approximately 20 basis points to 6.35%.
Since mid-January, fixed-income markets have largely ignored strong
economic fundamentals and concentrated on very positive technical
supply factors. Declining bond issuance, both current, and more
importantly, expected future issuance, helped push bond yields lower
from mid-January to mid-April 2000. In late January and early
February 2000, the US Treasury announced its intention to reduce the
number of issues to be auctioned in the quarterly Treasury note and
bond auctions. Furthermore, budgetary surpluses would allow the US
Treasury to repurchase outstanding, higher-couponed Treasury issues,
primarily in the 15-year and longer-term maturity sectors. Both
these actions would result in a significant reduction in the
outstanding supply of long-term US Treasury debt. Domestic and
international investors quickly began to accumulate what was
expected to become a scarce commodity and bond prices quickly rose.
By mid-April 2000, US Treasury bond yields had declined over 100
basis points to 5.67%. However, bond yields rose somewhat during the
last two weeks of the period as economic statistics were released,
indicating that the economic strength seen in late 1999 was
continuing into early 2000. The decline in long-term US Treasury
bond yields resulted in an inverted taxable yield curve as short-
term and intermediate-term interest rates have not fallen
proportionately since the Federal Reserve Board is expected to
continue to raise short-term interest rates. The current inversion
has had much more to do with debt reduction and Treasury buybacks
than with investor expectations of slower economic growth. Over the
last six months, long-term US Treasury bond yields have fallen
almost 20 basis points to close the six-month period ended April 30,
2000 at 5.96%.
Tax-exempt bond yields have also declined in recent months. The
decline has largely been in response to the rally in US Treasury
securities, as well as a continued positive technical supply
environment. States such as California and Maryland have announced
that their large current and anticipated future budget surpluses
will permit the cancellation or postponement of expected bond
issuance. Additionally, some issuers have also initiated tenders to
repurchase existing debt, reducing the supply of tax-exempt bonds in
the secondary market as well. Since their recent peak in January
2000, long-term municipal bond yields declined over 25 basis points
to finish the six-month period ended April 30, 2000 at 6.07%. During
the last six months, municipal bond yields declined just 10 basis
points overall.
The relative underperfomance of the municipal bond market in recent
months has been especially disappointing given the strong technical
position the tax-exempt bond market enjoyed. The issuance of long-
term tax-exempt securities has dramatically declined. Over the last
year, $203 billion in new long-term municipal securities was issued,
a decline of almost 25% compared to the same period a year earlier.
For the six months ended April 30, 2000, approximately $90 billion
in new tax-exempt bonds was underwritten, a decline of more than 25%
compared to the same period in 1999. Although investors received
over $30 billion in coupon payments, bond maturities, and the
proceeds from early bond redemptions, coupled with the highest
municipal bond yields in three years, overall investor demand has
diminished. Long-term municipal bond 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. Over the last four months, tax-exempt mutual funds
have had net redemptions of more than $8 billion. Also, the demand
from property and casualty insurance companies has weakened as a
result of the losses and anticipated losses incurred from a series
of damaging storms across much of the eastern United States.
Additionally, many institutional investors who have in recent years
been attracted to the municipal bond market by historically
attractive tax-exempt bond yield ratios of over 90% found other
asset classes even more attractive. Even with a favorable supply
position, tax-exempt municipal bond yields have underperformed their
taxable counterparts.
Any significantly lower municipal bond yields are still likely to
require weaker US employment growth and consumer spending. The
actions taken in recent months by the Federal Reserve Board should
eventually slow US economic growth. The recent declines in US home
sales are perhaps the first sign that consumer spending is being
slowed by higher interest rates. Until further signs develop, it is
likely that the municipal bond market's current favorable technical
position will dampen significant tax-exempt interest rate volatility
and provide a stable environment for eventual improvement in
municipal bond prices.
Portfolio Strategy
The six-month period ended April 30, 2000 was an extremely volatile
interest rate environment. As a result, we slightly restructured the
Fund and aimed to reduce the Fund's net asset volatility. We
maintained our fully invested position primarily in higher-quality
California municipal bonds. However, we concentrated our strategy on
utilizing any strength in market conditions to pare back durations
and increase current return; that is, we looked to raise the overall
level of average couponing while tempering the Fund's exposure to
changes in long-term interest rates. We adopted a more neutral
stance as a closed-end leveraged municipal fund. However, we believe
our fully invested position may still allow for significant price
appreciation if fixed-income securities' values start to improve
following signs of an economic slowdown.
MuniYield California Fund, Inc., April 30, 2000
The Fund's cost of borrowing increased somewhat in recent months as
short-term tax-exempt interest rates rose along with the adjustment
evident in the taxable market. Long-term tax-exempt interest rates
have actually declined modestly, causing the municipal yield curve
to flatten. While this flattening has reduced the incremental yield
enhancement resulting from leveraging the Fund's Common Stock, it is
important to note that in contrast to the inverted shape of the
USTreasury yield curve, the municipal yield curve remained
positively sloped. (For a complete explanation of the benefits and
risks of leveraging, see page 1 of this report to shareholders.)
Looking ahead, we do not intend to make any significant changes to
the Fund. However, we will monitor the overall economic backdrop for
signs of a more favorable environment for fixed-income securities,
and California municipal bonds in particular.
In Conclusion
We appreciate your ongoing interest in MuniYield California Fund,
Inc., and we look forward to serving your investment needs in the
months and years to come.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Walter C. O'Connor)
Walter C. O'Connor
Vice President and
Portfolio Manager
May 31, 2000
PROXY RESULTS
During the six-month period ended April 30, 2000, MuniYield
California Fund, Inc.'s Common Stock shareholders voted on the
following proposals. The proposals were approved at a shareholders'
meeting on April 27, 2000. The description of each proposal and
number of shares voted are as follows:
<TABLE>
<CAPTION>
Shares Voted Shares Withheld
For From Voting
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors: Terry K. Glenn 14,509,892 271,237
James H. Bodurtha 14,500,464 280,665
Herbert I. London 14,507,954 273,175
Roberta Cooper Ramo 14,507,856 278,273
Arthur Zeikel 14,505,640 275,489
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent auditors for the current fiscal year. 14,524,393 42,851 213,885
</TABLE>
During the six-month period ended April 30, 2000, MuniYield
California Fund, Inc.'s Preferred Stock shareholders (Series A, B
and C) voted on the following proposals. The proposals were approved
at a shareholders' meeting on April 27, 2000. The description of
each proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
Shares Voted Shares Withheld
For From Voting
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors: Terry K. Glenn,
James H. Bodurtha, Herbert I. London, Joseph L. May,
Andre F. Perold, Roberta Cooper Ramo and Arthur
Zeikel as follows: Series A 1,986 0
Series B 1,959 8
Series C 613 4
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent auditors for the current fiscal year as follows:
Series A 1,986 0 0
Series B 1,965 0 2
Series C 617 0 0
</TABLE>
MuniYield California Fund, Inc., April 30, 2000
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute all or a portion of its
net investment income to its shareholders on a monthly basis. In
order to provide shareholders with a more consistent yield to the
current trading price of shares of Common Stock of the Fund, the
Fund may at times pay out less than the entire amount of net
investment income earned in any particular month and may at times in
any month pay out such accumulated but undistributed income in
addition to net investment income earned in that month. As a result,
the dividends paid by the Fund for any particular month may be more
or less than the amount of net investment income earned by the Fund
during such month. The Fund's current accumulated but undistributed
net investment income, if any, is disclosed in the Statement of
Assets, Liabilities and Capital, which comprises part of the
Financial Information included in this report.
QUALITY PROFILE
The quality ratings of securities in the Fund as of April 30, 2000
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 79.3%
AA/Aa 13.1
A/A 2.0
BBB/Baa 1.3
Other++ 0.3
++Temporary investments in short-term municipal securities.
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
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
VRDN Variable Rate Demand Notes
MuniYield California Fund, Inc., April 30, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
California AAA Aaa $ 2,000 ABAG Finance Authority for Nonprofit Corporations, California,
--94.4% COP (Children's Hospital Medical Center), 6% due 12/01/2029 (a) $ 2,023
AAA Aaa 2,500 Bakersfield, California, COP, Refunding (Convention Center
Expansion Project), 5.80% due 4/01/2017 (h) 2,538
California Educational Facilities Authority, Revenue Refunding
Bonds:
AAA NR* 2,100 (Pooled College), Series A, 5.60% due 12/01/2014 (h) 2,126
AAA Aaa 2,500 (University of San Francisco), 6% due 10/01/2026 (h) 2,526
AA+ Aa2 1,500 (University of Southern California), Series A, 5.70% due
10/01/2015 1,524
California HFA, Home Mortgage Revenue Bonds, AMT:
AA- Aa2 215 Series C, 7.60% due 8/01/2030 (c) 216
AA- Aa2 410 Series D, 7.75% due 8/01/2010 (c) 419
AAA Aaa 5,000 Series E, 6.10% due 8/01/2029 (a) 5,010
AA- Aa2 1,725 Series E-1, 6.70% due 8/01/2025 (c) 1,754
AA- Aa2 2,705 Series F-1, 7% due 8/01/2026 (c) 2,778
AA- Aa2 5,080 Series N, 6.375% due 2/01/2027 (c) 5,143
A+ Aa2 3,700 California HFA, Revenue Bonds, RIB, AMT, Series B-2, 8.483% due
8/01/2023 (c)(j) 3,885
NR* A1 2,835 California Health Facilities Finance Authority Revenue Bonds
(Scripps Research Institute), Series A, 6.625% due 7/01/2018 2,915
California Health Facilities Finance Authority, Revenue
Refunding Bonds, VRDN (k):
A1+ VMIG1++ 10 (Adventist Hospital), Series C, 5.45% due 9/01/2015 (h) 10
A1+ VMIG1++ 200 (Sutter/Catholic Healthcare System), Series B, 5.85% due
7/01/2012 (a) 200
California Pollution Control Financing Authority, PCR,
Refunding:
A1+ NR* 400 (Pacific Gas and Electric), VRDN, Series A, 5.45% due
12/01/2018 (k) 400
AAA Aaa 2,000 (Southern California Edison Company), Series B, 5.45% due
9/01/2029 (h) 1,891
A1 VMIG1++ 800 (Southern California Edison Company), VRDN, Series B, 6.15%
due 2/28/2008 (k) 800
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) 1,276
AAA Aaa 4,500 California State, GO, 5.375% due 6/01/2026 (b) 4,221
California State, GO, Refunding:
AAA Aaa 3,000 5% due 2/01/2023 (b) 2,647
AAA Aaa 15,000 4.25% due 10/01/2026 (h) 11,477
</TABLE>
MuniYield California Fund, Inc., April 30, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
California California State Public Works Board, Lease Revenue Bonds,
(continued) Series A:
A+ Aaa $ 1,000 (Department of Corrections), 6.875% due 11/01/2004 (i) $ 1,102
A+ Aaa 6,800 (Department of Corrections), 7% due 11/01/2004 (i) 7,524
AAA Aaa 6,645 (Department of Health Services), 5.75% due 11/01/2017 (h) 6,751
California State University and Colleges, Housing System
Revenue Refunding Bonds (b):
AAA Aaa 3,000 5.75% due 11/01/2015 3,057
AAA Aaa 3,500 5.80% due 11/01/2017 3,553
AAA Aaa 2,700 5.90% due 11/01/2021 2,722
AAA Aaa 1,000 California State University, Foundation Revenue Bonds, GO
(Monterey Bay Auxiliary), 5% due 6/01/2024 (h) 879
AAA Aaa 5,250 California Statewide Communities Development Authority, COP
(John Muir/Mount Diablo Health System), 5.125% due 8/15/2022 (h) 4,677
AAA Aaa 4,500 Central Coast Water Authority, California, Revenue Refunding
Bonds (State Water Project Regional Facilities), Series A, 5%
due 10/01/2022 (a) 3,979
AAA Aaa 2,000 Chino Basin, California, Regional Financing Authority Revenue
Bonds (Inland Empire Utility Agency Sewer Project), 5.75%
due 11/01/2019 (h) 2,014
AAA Aaa 1,000 Contra Costa, California, Water District, Water Revenue Bonds,
Series G, 5.75% due 10/01/2014 (h) 1,019
Contra Costa County, California, Public Financing Authority,
Lease Revenue Refunding Bonds (Various Capital Facilities),
Series A (h):
AAA Aaa 2,705 5.30% due 8/01/2020 2,550
AAA Aaa 3,485 5.35% due 8/01/2024 3,264
Contra Costa County, California, Public Financing Authority,
Tax Allocation Revenue Bonds, Series A:
AAA NR* 1,860 7.10% due 8/01/2002 (i) 1,988
BBB NR* 1,140 7.10% due 8/01/2022 1,168
AAA Aaa 2,500 Corona, California, Public Financing Authority, Revenue
Refunding Bonds, Superior Lien, Series A, 5% due 9/01/2020 (f) 2,233
AAA Aaa 4,500 Culver City, California, Redevelopment Finance Authority,
Tax Allocation Revenue Refunding Bonds, 5.50% due 11/01/2014 (a) 4,599
AAA Aaa 2,500 Davis, California, Joint Unified School District, Community
Facilities District, Special Tax Refunding Bonds, Number 1,
5.50% due 8/15/2021 (h) 2,415
AAA Aaa 3,950 East Bay, California, Municipal Utilities District, Water
System Subordinated Revenue Refunding Bonds, 5% due
6/01/2026 (b) 3,456
AAA Aaa 2,500 Fontana, California, Redevelopment Agency Tax Allocation
Refunding Bonds (Southwest Industrial Park Project), 5%
due 9/01/2022 (h) 2,208
BBB Baa3 1,775 Inglewood, California, Public Financing Authority, Revenue
Refunding Bonds, Series B, 7% due 5/01/2002 (i) 1,865
NR* Aaa 2,000 Los Angeles, California, COP (Sonnenblick Del Rio West
Los Angeles), 6.20% due 11/01/2031 (a) 2,033
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) 3,875
AAA Aaa 8,000 Los Angeles, California, Convention and Exhibition Center
Authority, Lease Revenue Refunding Bonds, Series A, 5.375%
due 8/15/2018 (h) 7,724
Los Angeles, California, Department of Water and Power,
Electric Plant Revenue Refunding Bonds:
A+ Aa3 10,000 6% due 2/15/2024 10,023
A+ Aa3 10,000 6% due 2/15/2028 10,013
AAA Aaa 10,000 (Second Issue), 5.40% due 11/15/2031 (b) 9,276
Los Angeles, California, Harbor Department Revenue Bonds, AMT:
NR* Aaa 4,000 RITR, Series RI-7, 6.845% due 11/01/2026 (h)(j) 4,185
AA Aa3 2,000 Series B, 6% due 8/01/2015 2,049
AA Aa3 4,240 Series B, 6.60% due 8/01/2015 4,442
AA Aa3 8,855 Series B, 6.625% due 8/01/2019 9,277
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) 143
AAA Aaa 7,000 Los Angeles, California, Unified School District, GO, Series A,
5% due 7/01/2021 (b) 6,228
AAA Aaa 13,750 Los Angeles, California, Wastewater System Revenue Bonds,
Series A, 5% due 6/01/2023 (b) 12,105
AAA Aaa 4,000 Los Angeles County, California, Metropolitan Transportation
Authority, Sales Tax Revenue Bonds, Proposition C, Second Tier,
Senior Series A, 5.50% due 7/01/2017 (a) 3,960
Los Angeles County, California, Metropolitan Transportation
Authority, Sales Tax Revenue Refunding Bonds, Proposition A,
First Tier, Senior Series C (a):
AAA Aaa 6,000 5% due 7/01/2020 5,374
AAA Aaa 3,500 5% due 7/01/2026 3,061
AAA Aaa 2,000 Menlo Park, California, Community Development Agency, Tax
Allocation Refunding Bonds (Las Pulgas Community Development
Project), 5.375% due 6/01/2016 (a) 1,961
Metropolitan Water District of Southern California, Waterworks
Revenue Bonds, Series A:
AAA Aaa 5,730 5.75% due 7/01/2013 (h) 5,875
AA Aa2 1,465 5% due 7/01/2016 1,360
AA Aa2 3,000 5% due 7/01/2026 2,624
AAA Aaa 8,705 Modesto, California, Wastewater Treatment Facilities Revenue
Bonds, 5.625% due 11/01/2017 (h) 8,753
AAA Aaa 1,750 North City-West, California, School Facilities Financing
Authority, Special Tax Refunding Bonds, Series B, 5.75% due
9/01/2015 (f) 1,782
AAA Aaa 1,270 Northern California Power Agency, Multiple Capital Facilities
Revenue Bonds, RIB, 9.192% due 8/01/2025 (h)(j) 1,394
AAA Aaa 13,600 Northern California Power Agency, Public Power Revenue
Refunding Bonds (Hydroelectric Project Number One), Series A,
5.125% due 7/01/2023 (h) 12,182
Oakland, California, Joint Powers Financing Authority, Lease
Revenue Bonds (Oakland Administration Buildings) (a):
AAA Aaa 2,000 5.90% due 8/01/2016 2,055
AAA Aaa 11,395 5.75% due 8/01/2021 11,401
AAA Aaa 4,160 Oakland, California, State Building Authority, Lease Revenue
Bonds (Elihu M. Harris), Series A, 5% due 4/01/2023 (a) 3,669
Oakland, California, Unified School District, Alameda County,
GO, Series F (h):
AAA Aaa 3,290 5.50% due 8/01/2017 3,272
AAA Aaa 3,770 5.50% due 8/01/2018 3,723
</TABLE>
MuniYield California Fund, Inc., April 30, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
California Pleasant Valley, California, School District, Ventura County,
(concluded) GO, Series C (h):
AAA Aaa $ 1,750 5.75% due 8/01/2025 $ 1,738
AAA Aaa 4,000 5.80% due 8/01/2030 3,983
AAA Aaa 10,600 Port Oakland, California, Port Revenue Refunding Bonds, Series
I, 5.40% due 11/01/2017 (h) 10,412
AAA Aaa 2,345 Richmond, California, Redevelopment Agency, Tax Allocation
Refunding Bonds (Harbour Redevelopment Project), Series A,
5.50% due 7/01/2018 (h) 2,310
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) 1,761
AAA Aaa 5,000 Roseville, California, Electric System Revenue Bonds, COP,
5.50% due 2/01/2024 (f) 4,801
AAA Aaa 5,000 Sacramento, California, Municipal Utility District, Electric
Revenue Refunding Bonds, Series L, 5.125% due 7/01/2022 (h) 4,501
AAA Aaa 9,850 San Bernardino, California, City Unified School District, GO,
Refunding, Series A, 5.875% due 8/01/2024 (b) 9,883
AAA Aaa 5,000 San Bernardino, California, Joint Powers Financing Authority,
Tax Allocation Revenue Refunding Bonds, Series A, 5.75% due
10/01/2015 (f) 5,081
AAA Aaa 2,500 San Diego, California, Public Facilities Financing Authority,
Sewer Revenue Bonds, 5% due 5/15/2020 (b) 2,229
BBB+ Baa1 1,300 San Diego, California, Redevelopment Agency, Tax Allocation
Refunding Bonds (Horton Project), Series B, 6.625% due 11/01/2017 1,356
AAA Aaa 8,000 San Francisco, California, Bay Area Rapid Transit District,
Sales Tax Revenue Refunding Bonds, 4.75% due 7/01/2023 (a) 6,730
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) 3,155
AAA Aaa 4,525 AMT, Issue 6, 6.60% due 5/01/2020 (a) 4,793
AAA Aaa 3,000 AMT, Issue 11, 6.25% due 5/01/2026 (b) 3,048
AAA Aaa 5,000 Issue 15B, 5% due 5/01/2024 (h) 4,385
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) 5,080
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) 97
AAA Aaa 8,000 San Joaquin Hills, California, Transportation Corridor Agency,
Toll Road Revenue Refunding Bonds, Series A, 5.375% due
1/15/2029 (h) 7,442
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 10,450
AAA Aaa 2,000 6.875% due 11/15/2004 2,200
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) 3,107
AAA Aaa 4,000 Santa Monica, California, Redevelopment Agency, Tax Allocation
Bonds (Earthquake Recovery Redevelopment Project), 6% due
7/01/2029 (a) 4,045
Southern California Home Finance Authority, S/F Mortgage
Revenue Bonds (Mortgage-Backed Securities Program), AMT:
AAA NR* 815 Series A, 6.75% due 9/01/2022 (e) 827
AAA NR* 1,255 Series A, 7.625% due 10/01/2023 (g) 1,282
AAA NR* 85 Series B, 7.75% due 3/01/2024 (e) 87
AAA Aaa 3,235 Taft, California, Public Financing Authority, Lease Revenue
Bonds (Community Correctional Facility), Series A, 6.05%
due 1/01/2017 (h) 3,343
AAA Aaa 5,000 University of California, COP, Series A, 5.30% due 11/01/2029 (a) 4,576
AAA Aaa 4,885 University of California Revenue Bonds (Research Facilities),
Series D, 5% due 9/01/2024 (f) 4,292
AAA Aaa 6,445 University of California, Revenue Refunding Bonds (Research
Facilities), Series C, 5% due 9/01/2021 (f) 5,731
AAA Aaa 5,000 Vista, California, Joint Powers Financing Authority, Lease
Revenue Refunding Bonds, 5.625% due 5/01/2016 (h) 5,044
Puerto A Baa1 5,500 Puerto Rico Commonwealth, Highway and Transportation Authority,
Rico--1.6% Highway Revenue Refunding Bonds, Series V, 6.625% due 7/01/2012 5,750
BBB+ Baa1 1,000 Puerto Rico Electric Power Authority, Power Revenue Refunding
Bonds, Series U, 6% due 7/01/2014 1,023
Total Investments (Cost--$403,349)--96.0% 407,163
Other Assets Less Liabilities--4.0% 16,882
--------
Net Assets--100.0% $424,045
========
(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 April 30, 2000.
(k)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, 2000.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
MuniYield California Fund, Inc., April 30, 2000
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of April 30, 2000
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$403,349,483) $407,162,626
Cash 18,644
Receivables:
Securities sold $ 9,639,297
Interest 7,636,994 17,276,291
------------
Prepaid expenses and other assets 18,244
------------
Total assets 424,475,805
------------
Liabilities: Payables:
Dividends to shareholders 215,701
Investment adviser 164,668 380,369
------------
Accrued expenses and other liabilities 50,057
------------
Total liabilities 430,426
------------
Net Assets: Net assets $424,045,379
============
Capital: Capital Stock (200,000,000 shares authorized):
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 3,759,218
Accumulated distributions in excess of realized capital
gains--net (8,296,662)
Accumulated realized capital losses on investments--net (15,669,084)
Unrealized appreciation on investments--net 3,813,143
------------
Total--Equivalent to $13.41 net asset value per Common Stock
(market price--$12.625) 284,045,379
------------
Total capital $424,045,379
============
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended April 30, 2000
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 12,323,769
Income:
Expenses: Investment advisory fees $ 1,052,783
Commission fees 165,392
Transfer agent fees 43,409
Professional fees 40,858
Accounting services 26,272
Listing fees 19,065
Custodian fees 16,522
Printing and shareholder reports 15,118
Directors' fees and expenses 12,919
Pricing fees 6,527
Other 16,998
------------
Total expenses 1,415,863
------------
Investment income--net 10,907,906
------------
Realized & Realized loss on investments--net (15,669,084)
Unrealized Change in unrealized appreciation/depreciation on investments--net 17,739,199
Gain (Loss) on ------------
Investments--Net: Net Increase in Net Assets Resulting from Operations $ 12,978,021
============
See Notes to Financial Statements.
</TABLE>
MuniYield California Fund, Inc., April 30, 2000
<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: 2000 1999
<S> <S> <C> <C>
Operations: Investment income--net $ 10,907,906 $ 21,783,984
Realized loss on investments--net (15,669,084) (5,955,228)
Change in unrealized appreciation/depreciation on
investments--net 17,739,199 (41,734,304)
------------ ------------
Net increase (decrease) in net assets resulting from operations 12,978,021 (25,905,548)
------------ ------------
Dividends & Investment income--net:
Distributions to Common Stock (8,604,245) (18,534,023)
Shareholders: Preferred Stock (2,441,960) (3,048,224)
Realized gain on investments--net:
Common Stock -- (4,949,446)
Preferred Stock -- (777,830)
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 (11,046,205) (35,604,674)
------------ ------------
Capital Stock Value of shares issued to Common Stock shareholders in
Transactions: reinvestment of dividends and distributions -- 4,278,659
------------ ------------
Net increase in net assets derived from capital stock
transactions -- 4,278,659
------------ ------------
Net Assets: Total increase (decrease) in net assets 1,931,816 (57,231,563)
Beginning of period 422,113,563 479,345,126
------------ ------------
End of period* $424,045,379 $422,113,563
============ ============
*Undistributed investment income--net $ 3,759,218 $ 3,897,517
============ ============
See Notes to Financial Statements.
</TABLE>
<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
April 30, For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.32 $ 16.23 $ 15.98 $ 15.44 $ 15.18
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .53 1.03 1.11 1.17 1.16
Realized and unrealized gain (loss) on
investments--net .09 (2.25) .39 .54 .28
-------- -------- -------- -------- --------
Total from investment operations .62 (1.22) 1.50 1.71 1.44
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.41) (.88) (.92) (.93) (.93)
Realized gain on investments--net -- (.24) (.08) -- --
In excess of realized gain on
investments--net -- (.34) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Stock shareholders (.41) (1.46) (1.00) (.93) (.93)
-------- -------- -------- -------- --------
Capital charge resulting from issuance
of Common Stock -- -- (.01) -- --
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:++++
Dividends and distributions to Preferred
Stock shareholders:
Investment income--net (.12) (.14) (.19) (.24) (.25)
Realized gain on investments--net -- (.04) (.05) -- --
In excess of realized gain on
investments--net -- (.05) -- -- --
-------- -------- -------- -------- --------
Total effect of Preferred Stock activity (.12) (.23) (.24) (.24) (.25)
-------- -------- -------- -------- --------
Net asset value, end of period $ 13.41 $ 13.32 $ 16.23 $ 15.98 $ 15.44
======== ======== ======== ======== ========
Market price per share, end of period $ 12.625 $ 12.625 $16.5625 $ 15.875 $ 14.875
======== ======== ======== ======== ========
Total Investment Based on market price per share 3.36%+++ (16.13%) 8.10% 13.44% 18.68%
Return:** ======== ======== ======== ======== ========
Based on net asset value per share 4.06%+++ (9.70%) 11.04% 10.01% 8.54%
======== ======== ======== ======== ========
Ratios Based on Total expenses*** 1.00%* .98% .93% .97% .98%
Average Net ======== ======== ======== ======== ========
Assets of Total investment income--net*** 7.72%* 6.86% 7.12% 7.47% 7.50%
Common Stock: ======== ======== ======== ======== ========
Amount of dividends to Preferred Stock
shareholders 1.73%* .96% 1.21% 1.53% 1.61%
======== ======== ======== ======== ========
Investment income--net, to Common Stock
shareholders 5.99%* 5.90% 5.91% 5.94% 5.89%
======== ======== ======== ======== ========
Ratios Based Total expenses .67%* .68% .65% .67% .67%
on Total ======== ======== ======== ======== ========
Average Net Total investment income--net 5.17%* 4.77% 4.94% 5.14% 5.16%
Assets:***++ ======== ======== ======== ======== ========
Ratios Based on Dividends to Preferred Stock shareholders 3.50%* 2.18% 2.82% 3.36% 3.47%
Average Net ======== ======== ======== ======== ========
Assets of
Preferred Stock:
Supplemental Net assets, net of Preferred Stock, end
Data: of period (in thousands) $284,045 $282,114 $339,345 $268,297 $259,082
======== ======== ======== ======== ========
Preferred Stock outstanding, end of period
(in thousands) $140,000 $140,000 $140,000 $120,000 $120,000
======== ======== ======== ======== ========
Portfolio turnover 55.94% 146.39% 136.88% 88.68% 67.48%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,029 $ 3,015 $ 3,424 $ 3,236 $ 3,159
Dividends ======== ======== ======== ======== ========
Per Share on Series A--Investment income--net $ 460 $ 527 $ 729 $ 852 $ 875
Preferred Stock ======== ======== ======== ======== ========
Series B--Investment income--net $ 422 $ 546 $ 693 $ 830 $ 860
======== ======== ======== ======== ========
Outstanding: Series C--Investment income--net $ 408 $ 591 $ 466 -- --
======== ======== ======== ======== ========
*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 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).
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
MuniYield California Fund, Inc., April 30, 2000
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 accounting principles generally accepted
in the United States of America, which may require the use of
management accruals and estimates. 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.
(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 investment strategies to increase or decrease the level of
risk to which the Fund is exposed more quickly and efficiently than
transactions in other types of instruments. Losses may arise due to
changes in the value of the contract or if the counterparty does not
perform under the contract.
* Financial futures contracts--The Fund may purchase or sell financial
futures contracts and options on such futures contracts for the
purpose of hedging the market risk on existing securities or the
intended purchase of securities. Futures contracts are contracts for
delayed delivery of securities at a specific future date and at a
specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
* Options--The Fund is authorized to write covered call options and
purchase put options. When the Fund writes an option, an amount
equal to the premium received by the Fund is reflected as an asset
and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written. When a security is purchased or sold through an
exercise of an option, the related premium paid (or received) is
added to (or deducted from) the basis of the security acquired or
deducted from (or added to) the proceeds of the security sold. When
an option expires (or the Fund enters into a closing transaction),
the Fund realizes a gain or loss on the option to the extent of the
premiums received or paid (or gain or loss to the extent the cost of
the closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income is recognized on the accrual
basis. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates. Distributions in excess of
realized capital gains are due primarily to differing tax treatments
for futures transactions.
2. Investment Advisory Agreement and Transactions with
Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of .50% of
the Fund's average weekly net assets, including proceeds from the
issuance of Preferred Stock.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 2000 were $233,439,076 and
$226,085,944, respectively.
Net realized losses for the six months ended April 30, 2000 and net
unrealized gains as of April 30, 2000 were as follows:
Realized Unrealized
Losses Gains
Long-term investments $(15,532,134) $ 3,813,143
Short-term investments (136,950) --
------------ -----------
Total $(15,669,084) $ 3,813,143
============ ===========
As of April 30, 2000, net unrealized appreciation for Federal income
tax purposes aggregated $3,813,143, of which $9,104,728 related to
appreciated securities and $5,291,585 related to depreciated
securities. The aggregate cost of investments at April 30, 2000 for
Federal income tax purposes was $403,349,483.
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 six months ended April 30,
2000 remained constant and during the year ended October 31, 1999
increased by 274,041 as a result of dividend reinvestment.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred
Stock of the Fund, with a par value of $.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 April
30, 2000 were: Series A, 4.09%; Series B, 4.35%; Series C, 3.90%.
Shares issued and outstanding during the six months ended April 30,
2000 and year ended October 31, 1999 remained constant.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from .25% to .375%,
calculated on the proceeds of each auction. For the six months ended
April 30, 2000, Merrill Lynch, Pierce, Fenner & Smith Incorporated
("MLPF&S"), an affiliate of FAM, earned $59,742 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 May 5, 2000, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$.065900 per share, payable on May 30, 2000 to shareholders of
record as of May 16, 2000.
MuniYield California Fund, Inc., April 30, 2000
OFFICERS AND DIRECTORS
Terry K. Glenn, President and Director
James H. Bodurtha, Director
Herbert I. London, Director
Joseph L. May, Director
Andre F. Perold, Director
Roberta Cooper Ramo, Director
Arthur Zeikel, Director
Vincent R. Giordano, Senior Vice President
Kenneth A. Jacob, Vice President
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
100Church Street
New York, NY 10286
NYSE Symbol
MYC
Robert R. Martin, Director of MuniYield California Fund, Inc., has
recently retired. The Fund's Board of Directors wishes Mr. Martin
well in his retirement.
