MUNIYIELD
FLORIDA FUND
[FUND LOGO]
STRATEGIC
Performance
Annual Report
October 31, 1997
This report, including the financial information herein, is
transmitted to the shareholders of MuniYield Florida Fund 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 Shares by issuing
Preferred Shares to provide the Common Shareholders with a
potentially higher rate of return. Leverage creates risks for Common
Shareholders, including the likelihood of greater volatility of net
asset value and market price of shares of the Common Shares, and the
risk that fluctuations in the short-term dividend rates of the
Preferred Shares may affect the yield to Common Shareholders.
Statements and other information herein are as dated and are subject
to change.
MuniYield
Florida Fund
Box 9011
Princeton, NJ
08543-9011 #16165 -- 10/97
[RECYCLE LOGO] Printed on post-consumer recycled paper
MuniYield Florida Fund
TO OUR SHAREHOLDERS
For the year ended October 31, 1997, the Common Shares of MuniYield
Florida Fund earned $0.892 per share income dividends, which
included earned and unpaid dividends of $0.073. This represents a
net annualized yield of 5.72%, based on a month-end per share net
asset value of $15.59. Over the same period, the total investment
return on the Fund's Common Shares was +8.93%, based on a change in
per share net asset value from $15.23 to $15.59, and assuming
reinvestment of $0.895 per share income dividends and $0.043 per
share capital gains distributions.
For the six-month period ended October 31, 1997, the total
investment return on the Fund's Common Shares was +7.49%, based on a
change in per share net asset value from $14.93 to $15.59, and
assuming reinvestment of $0.443 per share income dividends.
For the six-month period ended October 31, 1997, the Fund's Auction
Market Preferred Shares had an average yield of 3.55%.
The Municipal Market Environment
Long-term interest rates generally declined during the six-month
period ended October 31, 1997. The general financial environment has
remained one of solid economic growth tempered by few or no
inflationary pressures. While economic growth has been conducive to
declining bond yields, it has remained strong enough to suggest that
the Federal Reserve Board (FRB) might find it necessary to raise
short-term interest rates. This would be intended to slow economic
growth and ensure that any incipient inflationary pressures would be
curtailed. There were investor concerns that the FRB would be forced
to raise interest rates prior to year-end, thus preventing an even
more dramatic decline in interest rates. Long-term tax-exempt
revenue bonds, as measured by the Bond Buyer Revenue Bond Index,
declined over 50 basis points (0.50%) to end the six-month period
ended October 31, 1997 at 5.60%.
Similarly, long-term US Treasury bond yields generally moved lower
during most of the six-month period ended October 31, 1997. However,
the turmoil in the world's equity markets during the last week in
October has resulted in a significant rally in the Treasury bond
market. The US Treasury bond market was the beneficiary of a flight
to quality mainly by foreign investors whose own domestic markets
have continued to be very volatile. Prior to the initial decline in
Asian equity markets, long-term US Treasury bond yields were
essentially unchanged. By the end of October, US Treasury bond
yields declined 80 basis points to 6.15%, their lowest level of
1997.
The tax-exempt bond market's continued underperformance as compared
to its taxable counterpart has been largely in response to its
ongoing weakening technical position. As municipal bond yields have
declined, municipalities have hurriedly rushed to refinance
outstanding higher-couponed debt with new issues financed at present
low rates. During the last six months, over $118 billion in new
long-term tax-exempt issues were underwritten, an increase of over
25% versus the comparable period a year ago. As interest rates have
continued to decline, these refinancings have intensified municipal
bond issuance. During the past three months, approximately $60
billion in new long-term municipal securities were underwritten, an
increase of over 34% as compared to the October 31, 1996 quarter.
The recent trend toward larger and larger bond issues has also
continued. However, issues of such magnitude usually must be
attractively priced to ensure adequate investor interest. Obviously,
the yields of other municipal bond issues are impacted by the yield
premiums such large issuers have been required to pay. Much of the
municipal bond market's recent underperformance can be traced to
market pressures that these large bond issuances have exerted.
In our opinion, the recent correction in world equity markets has
enhanced the near-term prospects for continued low, if not
declining, interest rates in the United States. It is likely that
the recent correction will result in slower US domestic growth in
the coming months. This decline is likely to be generated in part by
reduced US export growth. Additionally, some decline in consumer
spending also can be expected in response to reduced consumer
confidence. Perhaps more importantly, it is likely that barring a
dramatic and unexpected resurgence in domestic growth, the FRB may
be unwilling to raise interest rates until the full impact of the
equity market's corrections can be established.
All of these factors suggest that for at least the near term,
interest rates, including tax-exempt bond yields, are unlikely to
rise by any appreciable amount. It is probable that municipal bond
yields will remain under some pressure as a result of continued
strong new-issue supply. However, the recent pace of municipal bond
issuance is likely to be unsustainable. Continued increases in bond
issuance will require lower tax-exempt bond yields to generate the
economic savings necessary for additional municipal bond
refinancing. With tax-exempt bond yields at already attractive yield
ratios relative to US Treasury bonds (approximately 90% at the end
of October), any further pressure on the municipal market may
represent an attractive investment opportunity.
Portfolio Strategy
At the beginning of 1997, our outlook was for higher interest rates.
Since the bond market had rallied in anticipation of a weakening
economy with no possibility of an FRB tightening, we perceived a
risk of sudden change in investor expectations. At this time, the
Fund remained fully invested as we purchased bonds less sensitive to
interest rate volatility, such as shorter-duration bonds. This
strategy proved beneficial as economic data released during the
fourth quarter of 1996 and the first quarter of 1997 showed
significant signs of strength. As a result, the FRB increased short-
term interest rates 25 basis points and pushed tax-exempt interest
rates to 6% by the middle of April. Anticipating further tightening,
we remained cautious on the bond market and concentrated on
protecting the Fund's net asset value and maintaining as high a
level as possible of tax-exempt income.
Surprisingly, the bond market staged a significant rally during the
summer months, and long-term tax-exempt yields declined nearly 75
basis points. In our opinion, this occurred as a result of the
economy turning decidedly weaker in the second quarter of 1997.
Fortunately, higher-coupon bonds, which we purchased for defensive
measures, outperformed aggressively structured bonds since they were
now advance refunding candidates. We maintained a defensive, fully
invested posture for the Fund for the remainder of the 12-month
period ended October 31, 1997 as the bond market remained in a
narrow 25 basis point trading range.
Looking ahead, our outlook is for lower interest rates. The economic
expansion is now entering its seventh year with benign inflation.
Equity markets throughout the world have entered into a very
volatile stage triggered by the currency crisis in the Southeast
Asia. We believe a continuation of equity market declines may have a
negative impact on economic growth, thereby constraining global
inflation.
The yield on the Fund's Auction Market Preferred Shares has been
trading between 3.0% -- 3.7% during the past year. Leverage
continues to benefit the Fund's Common Shareholders by significantly
augmenting their yield. However, should the spread between short-
term and long-term tax-exempt interest rates narrow, the benefits of
leverage will decline and, as a result, reduce the yield to the
Fund's Common Shares. (For a complete explanation of the benefits
and risks of leveraging, see page 4 of this report to shareholders.)
In Conclusion
We appreciate your ongoing interest in MuniYield Florida Fund, and
we look forward to serving your investment needs in the months and
years to come.
Sincerely,
/S/ARTHUR ZEIKEL
Arthur Zeikel
President
/S/VINCENT R. GIORDANO
Vincent R. Giordano
Senior Vice President
/S/ROBERT A. DIMELLA
Robert A. DiMella
Vice President and Portfolio Manager
December 3, 1997
MuniYield Florida Fund October 31, 1997
<TABLE>
<CAPTION>
PROXY RESULTS
During the six-month period ended October 31, 1997, MuniYield Florida Fund Common Shareholders voted
on the following proposals. The proposals were approved at a shareholders' meeting on October 20, 1997.
The description of each proposal and number of shares voted are as follows:
<CAPTION>
Shares Voted Shares Withheld
For From Voting
<S> <C> <C> <C>
1. To elect the Fund's Board of Trustees: James H. Bodurtha 7,624,923 116,202
Herbert I. London 7,622,458 118,667
Robert R. Martin 7,614,153 126,972
Arthur Zeikel 7,619,223 121,902
<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. 7,540,488 51,559 149,078
During the six-month period ended October 31, 1997, MuniYield Florida Fund Preferred Shareholders
voted on the following proposals. The proposals were approved at a special shareholders' meeting
on October 20, 1997. The description of each proposal and number of shares voted are as follows:
<CAPTION>
Shares Voted Shares Withheld
For From Voting
<S> <C> <C> <C>
1. To elect the Fund's Board of Trustees: James H. Bodurtha 1,289 0
Herbert I. London 1,289 0
Robert R. Martin 1,289 0
Joseph L. May 1,289 0
Andre F. Perold 1,289 0
Arthur Zeikel 1,289 0
<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. 1,289 0 0
</TABLE>
THE BENEFITS AND RISKS OF LEVERAGING
MuniYield Florida Fund utilizes leveraging to seek to enhance the
yield and net asset value of its Common Shares. However, these
objectives cannot be achieved in all interest rate environments. To
leverage, the Fund issues Preferred Shares, which pay 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 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 Shares. However, in order to benefit
Common 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 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 Share
capitalization of $100 million and the issuance of Preferred Shares
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 Shares
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
Shares.
In this case, the dividends paid to Preferred Shareholders are
significantly lower than the income earned on the fund's long-term
investments, and therefore the Common 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 Shares will be reduced or eliminated completely. At the same
time, the market value of the fund's Common Shares (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
Shares' net asset value will reflect the full decline in the price of
the portfolio's investments, since the value of the fund's Preferred
Shares does not fluctuate. In addition to the decline in net asset
value, the market value of the fund's Common Shares may also
decline.
<TABLE>
<CAPTION>
MuniYield Florida Fund October 31, 1997
SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <C>
Florida -- 96.2%
AAA Aaa $7,750 Alachua County, Florida, Public Improvement Revenue Refunding Bonds,
5.125% due 8/01/2021 (g) $7,557
AAA Aaa 2,650 Brevard County, Florida, IDR (NUI Corporation Project), AMT, 6.40% due 10/01/2024 (b) 2,894
A+ A1 13,700 Citrus County, Florida, PCR, Refunding (Florida Power Corporation -- Crystal River),
Series A, 6.625% due 1/01/2027 14,766
Dade County, Florida, Aviation Revenue Bonds, AMT, Series B (c):
AAA Aaa 1,000 6.55% due 10/01/2013 1,090
AAA Aaa 5,000 6.60% due 10/01/2022 5,457
AAA Aaa 5,000 Dade County, Florida, Aviation Revenue Bonds (Miami International Airport),
Series C, 5.125% due 10/01/2027 (g) 4,847
A1+ VMIG1+ 400 Dade County, Florida, Water and Sewer System Revenue Bonds, VRDN,
3.60% due 10/05/2022 (a)(d) 400
Escambia County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT (f):
NR* Aaa 2,020 (Multi-County Program), Series A, 6.90% due 4/01/2020 2,134
AAA Aaa 2,805 Refunding (Multi-County Program), 7% due 4/01/2028 (e) 3,078
NR* Aaa 2,000 Series A, 7.40% due 10/01/2023 2,113
A1 VMIG1+ 3,700 Escambia County, Florida, PCR, Refunding (Gulf Power Co. Project),
VRDN, 4.20% due 7/01/2022 (a) 3,700
NR* Aaa 1,715 Florida HFA, Home Ownership Revenue Bonds, AMT, Series G-1, 7.90% due 3/01/2022 (f) 1,823
Florida State Board of Education, Public Education Revenue Bonds (Capital Outlay) (h):
AAA Aaa 11,800 Series A, 6.75% due 6/01/2001 12,921
AAA Aaa 4,500 Series B, 6.70% due 6/01/2001 4,920
AAA Aaa 1,000 Florida State Correctional Privatization Commission, COP (Youthful -- Polk County),
Series B, 5% due 8/01/2017 (b) 974
AA+ Aa2 10,000 Florida State Department of Transportation (Right-of-Way), Series A, 5% due 7/01/2027 9,510
AAA Aaa 6,500 Florida State Division Board of Finance, Department of General Services Revenue
Bonds (Department of Natural Resource Preservation), Series 2000-A,
6.75% due 7/01/2001 (b)(h) 7,186
NR* NR* 5,495 Florida State Mid-Bay Bridge Authority Revenue Bonds, Series A, 7.50% due 10/01/2017 6,019
AAA Aaa 8,500 Florida State Turnpike Authority, Turnpike Revenue Refunding Bonds,
Series A, 5% due 7/01/2019 (d) 8,152
AA Aa 5,000 Gainesville, Florida, Utilities System Revenue Bonds, Series A, 6.50% due 10/01/2002 (h) 5,573
AAA Aaa 4,000 Greater Orlando Aviation Authority Revenue Bonds (Orlando Airport Facilities),
AMT, Series A, 6.50% due 10/01/2012 (d) 4,351
A A3 6,000 Hillsborough County, Florida, Capital Improvement Revenue Bonds
(County Center Project), Second Series, 6.75% due 7/01/2002 (h) 6,719
AAA Aaa 1,000 Hillsborough County, Florida, IDA, Revenue Bonds (Allegany Health
System -- J. Knox Village), 6.375% due 12/01/2012 (c) 1,082
Hillsborough County, Florida, Utility Revenue Refunding Bonds:
BBB+ Baa1 1,245 Series A, 7% due 8/01/2014 1,352
AAA Aaa 2,000 Series B, 6.50% due 8/01/2016 (g) 2,171
AAA Aaa 1,300 Indian River County, Florida, Hospital Revenue Refunding Bonds, 5.70% due 10/01/2015 (g) 1,357
AAA Aaa 2,000 Jacksonville, Florida, District Water and Sewer Revenue Bonds, 5% due 10/01/2008 (c)(h) 2,077
AAA Aaa 4,000 Lee County, Florida, Solid Waste System Revenue Bonds, AMT, Series A,
6.50% due 10/01/2013 (c) 4,314
AAA NR* 1,880 Leon County, Florida, HFA, S/F Mortgage Revenue Bonds (Multi-County Program),
AMT, Series B, 7.30% due 1/01/2028 (f) 2,105
AAA Aaa 6,000 Miami Beach, Florida, Parking Revenue Bonds, 5.125% due 9/01/2022 (g) 5,847
AAA Aaa 2,625 Okaloosa County, Florida, Gas District Revenue Bonds (Gas System), Series A,
5.20% due 10/01/2019 (c) 2,610
Orange County, Florida, Health Facilities Authority Revenue Bonds
(Hospital -- Orlando Regional Healthcare) (c):
AAA Aaa 500 Refunding, Series C, 6.25% due 10/01/2016 565
AAA Aaa 2,000 Series A, 6.25% due 10/01/2013 2,260
Orange County, Florida, Tourist Development, Tax Revenue Bonds:
AAA Aaa 2,810 Refunding, 6% due 10/01/2007 (c) 3,127
AAA Aaa 5,000 Series B, 6.50% due 10/01/2002 (b)(h) 5,585
AAA Aaa 1,500 Palm Beach County, Florida, Criminal Justice Facilities Revenue Bonds,
7.20% due 6/01/2015 (d) 1,867
NR* Aaa 1,390 Palm Beach County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT,
Series A, 6.80% due 10/01/2027 (e)(f) 1,479
AAA Aaa 10,000 Port Saint Lucie, Florida, Utility Revenue Refunding and Improvement Bonds,
Series A, 5.125% due 9/01/2027 (c) 9,768
Saint Petersburg, Florida, Health Facilities Authority Revenue Bonds
(Allegheny Health System) (c):
AAA Aaa 1,550 (Saint Anthony's), 6.75% due 12/01/2021 1,702
AAA Aaa 2,000 Series A, 7% due 12/01/2015 2,215
AAA Aaa 3,000 Tampa, Florida, Revenue Bonds (Allegheny Health System -- Saint Joseph),
6.75% due 12/01/2017 (c) 3,294
Puerto Rico -- 0.6%
BBB+ Baa1 1,000 Puerto Rico Electric Power Authority, Power Revenue Bonds, Series T, 6% due 7/01/2016 1,053
Total Investments (Cost -- $161,179) -- 96.8% 172,014
Other Assets Less Liabilities -- 3.2% 5,717
---------
Net Assets -- 100.0% $177,731
=========
(a) The interest rate is subject to change periodically based upon prevailing market rates.
The interest rate shown is the rate in effect at October 31, 1997.
(b) AMBAC Insured.
(c) MBIA Insured.
See Notes to Financial Statements.
(d) FGIC Insured.
(e) FNMA Collateralized.
(f) GNMA Collateralized.
(g) FSA Insured.
(h) Prerefunded.
* Not Rated.
+ Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
PORTFOLIO ABBREVIATIONS
To simplify the listings of MuniYield Florida Fund'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
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
PCR Pollution Control Revenue Bonds
S/F Single-Family
VRDN Variable Rate Demand Notes
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL INFORMATION
Statement of Assets, Liabilities and Capital as of October 31, 1997
<S> <C> <C> <C>
Assets: Investments, at value (identified cost -- $161,178,528) (Note 1a) $172,013,991
Cash 286,751
Receivables:
Securities sold $3,206,608
Interest 2,462,401 5,669,009
-------------
Prepaid expenses and other assets 9,195
-------------
Total assets 177,978,946
-------------
Liabilities: Payables:
Dividends to shareholders (Note 1f) 86,270
Investment adviser (Note 2) 79,923 166,193
-------------
Accrued expenses and other liabilities 81,952
-------------
Total liabilities 248,145
-------------
Net Assets: Net assets $177,730,801
=============
Capital: Capital Shares (unlimited number of shares of beneficial interest
authorized) (Note 4):
Preferred Shares, par value $.05 per share (2,200 shares of AMPS*
issued and outstanding at $25,000 per share liquidation preference) $55,000,000
Common Shares, par value $.10 per share (7,871,723 shares
issued and outstanding) 787,172
Paid-in capital in excess of par 109,788,176
Undistributed investment income -- net 1,021,699
Undistributed realized capital gains on investments -- net 298,291
Unrealized appreciation on investments -- net 10,835,463
-------------
Total -- Equivalent to $15.59 net asset value per Common Share
(market price -- $15.50) 122,730,801
-------------
Total capital $177,730,801
=============
* Auction Market Preferred Shares.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
For the Year Ended
October 31, 1997
<S> <C> <C> <C>
Investment Income Interest and amortization of premium and discount earned $10,182,453
(Note 1d):
Expenses: Investment advisory fees (Note 2) $880,089
Commission fees (Note 4) 139,546
Accounting services (Note 2) 77,816
Professional fees 76,474
Transfer agent fees 35,266
Printing and shareholder reports 31,815
Trustees' fees and expenses 22,905
Listing fees 16,170
Custodian fees 14,017
Pricing fees 5,516
Amortization of organization expenses (Note 1e) 2,566
Other 18,627
-------------
Total expenses 1,320,807
-------------
Investment income -- net 8,861,646
-------------
Realized & Realized gain on investments -- net 1,872,160
Unrealized Gain on Change in unrealized appreciation on investments -- net 1,383,784
Investments -- Net -------------
(Notes 1b, 1d & 3):
Net Increase in Net Assets Resulting from Operations $12,117,590
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 1997 1996
<S> <C> <C> <C>
Operations: Investment income -- net $8,861,646 $8,878,718
Realized gain on investments -- net 1,872,160 2,221,773
Change in unrealized appreciation/depreciation on investments -- net 1,383,784 (846,661)
------------ ------------
Net increase in net assets resulting from operations 12,117,590 10,253,830
------------ ------------
Dividends & Investment income -- net:
Distributions to Common Shares (7,029,122) (7,040,873)
Shareholders Preferred Shares (1,816,122) (1,911,250)
(Note 1f): Realized gain on investments -- net:
Common Shares (347,814) --
Preferred Shares (95,370) --
------------ ------------
Net decrease in net assets resulting from dividends and distributions
to shareholders (9,288,428) (8,952,123)
------------ ------------
Capital Share Value of shares issued to Common Shareholders in
Transactions reinvestment of dividends and distributions 197,507 --
(Note 4): ------------ ------------
Net increase in net assets derived from capital share transactions 197,507 --
------------ ------------
Net Assets: Total increase in net assets 3,026,669 1,301,707
Beginning of year 174,704,132 173,402,425
------------ ------------
End of year* $177,730,801 $174,704,132
============ ============
* Undistributed investment income -- net (Note 1g) $1,021,699 $1,004,046
============ ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
The following per share data and ratios have been derived For the Year Ended October 31,
from information provided in the financial statements.
1997 1996 1995 1994 1993
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $15.23 $15.07 $13.82 $16.74 $14.13
Operating -------- -------- -------- -------- --------
Performance: Investment income -- net 1.13 1.13 1.14 1.15 1.17
Realized and unrealized gain (loss)
on investments -- net .41 .17 1.25 (2.46) 2.66
-------- -------- -------- -------- --------
Total from investment operations 1.54 1.30 2.39 (1.31) 3.83
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Shareholders:
Investment income -- net (.89) (.90) (.88) (.95) (.97)
Realized gain on investments -- net (.04) -- -- (.43) (.04)
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Shareholders (.93) (.90) (.88) (1.38) (1.01)
Effect of Preferred Share activity: -------- -------- -------- -------- --------
Dividends and distributions to Preferred
Shareholders:
Investment income -- net (.24) (.24) (.26) (.15) (.20)
Realized gain on investments -- net (.01) -- -- (.08) (.01)
-------- -------- -------- -------- --------
Total effect of Preferred Share activity (.25) (.24) (.26) (.23) (.21)
-------- -------- -------- -------- --------
Net asset value, end of year $15.59 $15.23 $15.07 $13.82 $16.74
======== ======== ======== ======== ========
Market price per share, end of year $15.50 $14.50 $13.375 $11.375 $16.625
======== ======== ======== ======== ========
Total Investment Based on market price per share 13.76% 15.29% 25.63% (24.94%) 20.13%
Return:* ======== ======== ======== ======== ========
Based on net asset value per share 8.93% 7.47% 16.50% (9.43%) 26.27%
======== ======== ======== ======== ========
Ratios to Average Expenses .75% .74% .77% .76% .78%
Net Assets:** ======== ======== ======== ======== ========
Investment income -- net 5.04% 5.11% 5.32% 5.15% 5.16%
======== ======== ======== ======== ========
Supplemental Net assets, net of Preferred Shares, end of
Data: year (in thousands) $122,731 $119,704 $118,402 $108,591 $130,275
======== ======== ======== ======== ========
Preferred Shares outstanding, end of year
(in thousands) $55,000 $55,000 $55,000 $55,000 $55,000
======== ======== ======== ======== ========
Portfolio turnover 107.09% 119.29% 97.93% 18.31% 32.84%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $3,231 $3,176 $3,153 $2,974 $3,369
======== ======== ======== ======== ========
Dividends Per Share Investment income -- net $826 $869 $927 $549 $719
On Preferred Shares ======== ======== ======== ======== ========
Outstanding:+
* Total investment returns based on market value, which can be significantly greater or lesser
than the net asset value, may result in substantially different returns. Total investment
returns exclude the effects of sales loads.
** Do not reflect the effect of dividends to Preferred Shareholders.
+ Dividends per share have been adjusted to reflect a two-for-one stock split that occurred
on December 1, 1994.
See Notes to Financial Statements.
</TABLE>
MuniYield Florida Fund October 31, 1997
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniYield Florida Fund (the "Fund") is registered under the Investment
Company Act of 1940 as a non-diversified, closed-end management investment
company. The Fund determines and makes available for publication the net
asset value of its Common Shares on a weekly basis. The Fund's Common
shares are listed on the New York Stock Exchange under the symbol MYF.
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, which are
traded on exchanges, are valued at their last sale price as of the close
of such exchanges or, lacking any sales, at the last available bid price.
Securities with remaining maturities of sixty days or less are valued at
amortized cost, which approximates market value. Securities for which
market quotations are not readily available are valued at their fair value
as determined in good faith by or under the direction of the Board of
Trustees 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
Trustees.
(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 con-tract or if the
counterparty does not perform under the contract.
[bullet] Financial futures contracts -- The Fund may purchase or sell
interest rate futures contracts and options on such futures contracts for
the purpose of hedging the market risk on existing securities or the
intended purchase of securities. Futures contracts are contracts for
delayed delivery of securities at a specific future date and at a specific
price or yield. Upon entering into a contract, the Fund deposits and
maintains as collateral such initial margin as required by the exchange on
which the transaction is effected. Pursuant to the contract, the Fund
agrees to receive from or pay to the broker an amount of cash equal to the
daily fluctuation in value of the contract. Such receipts or payments are
known as variation margin and are recorded by the Fund as unrealized gains
or losses. When the contract is closed, the Fund records a realized gain
or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
[bullet] 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) Deferred organization expenses -- Deferred organization expenses are
amortized on a straight-line basis over a five-year period.
(f) Dividends and distributions -- Dividends from net investment income
are declared and paid monthly. Distributions of capital gains are recorded
on the ex-dividend dates.
(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 $1,251 have been reclassified
between undistributed 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 0.50% of the Fund's average weekly net
assets.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or trustees 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, 1997 were $178,674,070 and $183,052,471,
respectively.
Net realized and unrealized gains (losses) as of October 31, 1997 were as
follows:
Realized Unrealized
Gains (Losses) Gains
Long-term investments $2,212,182 $10,835,463
Financial futures contracts (340,022) --
------------ -------------
Total $1,872,160 $10,835,463
============ =============
As of October 31, 1997, unrealized appreciation for Federal income tax
purposes aggregated $10,835,463, all of which related to appreciated
securities. The aggregate cost of investments at October 31, 1997 for
Federal income tax purposes was $161,178,528.
4. Capital Share Transactions:
The Fund is authorized to issue an unlimited number of shares of
beneficial interest, including Preferred Shares, par value $.10 per share,
all of which were initially classified as Common Shares. The Board of
Trustees is authorized, however, to reclassify any unissued shares of
capital without approval of the holders of Common Shares.
Common Shares
Shares issued and outstanding during the year ended October 31, 1997
increased by 12,947 as a result of dividend reinvestment and during the
year ended October 31, 1996 remained constant.
Preferred Shares
Auction Market Preferred Shares ("AMPS") are Preferred Shares of the Fund
that entitle their holders to receive cash dividends at an annual rate
that may vary for the successive dividend periods. The yield in effect at
October 31, 1997 was 3.59%.
As of October 31, 1997, there were 2,200 AMPS shares authorized, issued
and outstanding with a liquidation preference of $25,000 per share.
The Fund pays commissions to certain broker-dealers at the end of each
auction at an annual rate ranging from 0.25% to 0.375%, calculated on the
proceeds of each auction. For the year ended October 31, 1997, Merrill
Lynch, Pierce, Fenner & Smith Inc., an affiliate of FAM, earned $74,564
as commissions.
5. Subsequent Event:
On November 6, 1997, the Fund's Board of Trustees declared an ordinary
income dividend to holders of Common Shares in the amount of $.073372 per
share, payable on November 26, 1997 to shareholders of record as of
November 17, 1997.
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of MuniYield Florida Fund:
We have audited the accompanying statement of assets, liabilities and
capital, including the schedule of investments, of MuniYield Florida Fund
as of October 31, 1997, 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 reasonable assurance about whether the financial statements and the
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned at October 31, 1997 by correspondence
with the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of MuniYield
Florida Fund, as of October 31, 1997, 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 5, 1997
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid monthly by MuniYield
Florida Fund during its taxable year ended October 31, 1997 qualify as
tax-exempt interest dividends for Federal income tax purposes.
Additionally, the following summarizes the per share capital gain
distributions paid by the fund during the year:
Payable Short-Term Long-Term
Date Capital Gains Capital Gains
Common Shareholders 12/30/96 $.000863 $.043395
Preferred Shareholders: 11/29/96 $.38 $19.56
11/21/96 $.46 $22.95
Please retain this information for your records.
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Robert A. DiMella, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Philip M. Mandel, Secretary
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agents
Common Shares:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Shares:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
NYSE Symbol
MYF
