UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-6414
Name of Fund: MuniYield Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Terry K. Glenn, President,
MuniYield Fund, Inc., 800 Scudders Mill Road, Plainsboro, NJ,
08536. Mailing address: P.O. Box 9011, Princeton, NJ, 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 10/31/04
Date of reporting period: 11/01/03 - 04/30/04
Item 1 - Report to Stockholders
(BULL LOGO)
Merrill Lynch Investment Managers
www.mlim.ml.com
MuniYield Fund, Inc.
Semi-Annual Report
April 30, 2004
MuniYield Fund, Inc. seeks to provide shareholders with as high a
level of current income exempt from Federal income taxes as is
consistent with its investment policies and prudent investment
management by investing primarily in a portfolio of long-term,
investment grade municipal obligations the interest on which, in
the opinion of bond counsel to the issuer, is exempt from Federal
income taxes.
This report, including the financial information herein, is
transmitted to shareholders of MuniYield 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 and intends to
remain leveraged 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.
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities is
available (1) without charge, upon request, by calling toll-free
1-800-MER-FUND (1-800-637-3863); (2) on www.mutualfunds.ml.com;
and (3) on the Securities and Exchange Commission's website at
http://www.sec.gov.
MuniYield Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
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MuniYield Fund, Inc.
The Benefits and Risks of Leveraging
MuniYield 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,
net of dividends to Preferred Stock, 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 of 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 such securities. As of April 30, 2004,
the percentage of the Fund's total net assets invested in inverse
floaters was 9.41%.
Swap Agreements
The Fund may also invest in swap agreements, which are over-the-
counter contracts in which one party agrees to make periodic
payments based on the change in market value of a specified bond,
basket of bonds, or index in return for periodic payments based on a
fixed or variable interest rate or the change in market value of a
different bond, basket of bonds or index. Swap agreements may be
used to obtain exposure to a bond or market without owning or taking
physical custody of securities.
MUNIYIELD FUND, INC., APRIL 30, 2004
A Letter From the President
Dear Shareholder
For the six-month and 12-month periods ended April 30, 2004, the
Lehman Brothers Municipal Bond Index posted returns of +1.19% and
+2.68%, respectively. Its taxable counterpart, the Lehman Brothers
Aggregate Bond Index, had returns of +1.25% and +1.82% for the same
periods. Amid considerable month-to-month volatility, tax-exempt
bond yields rose over the past year, although not to the same extent
as 10-year U.S. Treasury yields. In all, tax-exempt securities
continued to be an attractive fixed income investment alternative.
As of April month-end, the Federal Reserve Board maintained its
accommodative policy stance, although a better-than-expected
employment report for the month of March prompted speculation that
an interest rate increase could come sooner than many had expected.
On April 2, 2004, the good news on the employment front - previously
the one dim spot in an otherwise bright economic picture - helped
prompt the yield on the 10-year Treasury bond to spike nearly 25
basis points (.25%), from 3.91% to 4.15%. Market watchers continue
to monitor the economic data and Federal Reserve Board language for
indications of interest rate direction. If economic growth maintains
its recent pace and employment figures continue to improve, many
believe it is just a matter of time before interest rates move
upward.
Equity markets, in the meantime, gleaned support from the improving
economic environment and provided attractive returns. For the
six-month and 12-month periods ended April 30, 2004, the Standard &
Poor's 500 Index returned +6.27% and +22.88%, respectively.
Significant fiscal and monetary stimulus in 2003, including low
interest rates and tax cuts, has opened the door to consumer
spending, capital spending, increases in exports and long-awaited
job growth. As expected, these developments have led the way to
improvements in corporate earnings - a positive for stock markets.
The events and efforts of the past year leave us with a much
stronger economy today. Of course, markets will always fluctuate,
and there are many uncertainties - not the least of which are
geopolitical in nature - which can translate into negative market
movements. Keeping this in mind, we encourage you to revisit your
portfolio and your asset allocation strategy to ensure you are well
positioned to take advantage of the opportunities that lie ahead.
Importantly, your financial advisor can help you develop a strategy
most suitable for your circumstances through all types of market and
economic cycles.
We thank you for trusting Merrill Lynch Investment Managers with
your investment assets, and we look forward to serving you in the
months and years ahead.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
MUNIYIELD FUND, INC., APRIL 30, 2004
A Discussion With Your Fund's Portfolio Manager
The Fund continued to benefit from an above-average exposure to
lower-rated and nonrated bonds, allowing it to outperform its Lipper
category average for the period.
Describe the market environment relative to municipal bonds during
the fiscal year.
For much of the six-month period, a positive economic backdrop
helped bond prices to move higher as yields, which typically move
opposite of prices, declined. In early April, however, a
surprisingly strong monthly employment report triggered fears that
the long-accommodative Federal Reserve Board might raise interest
rates sooner than many had expected. As a result, bond yields rose
(prices fell) sharply for the remainder of the period. At the end of
April, long-term U.S. Treasury bond yields had climbed to 5.13%,
representing an increase of approximately 15 basis points (.15%)
over the past six months. Ten-year U.S. Treasury note yields stood
at 4.30% as of period-end, an increase of more than 20 basis points.
Tax-exempt bond yields generally mimicked the movement of their
taxable counterparts, although volatility in the municipal market
was more subdued. Long-term revenue bond yields, as measured by the
Bond Buyer Revenue Bond Index, rose just four basis points over the
past six months. For the same period, yields on AAA-rated issues
maturing in 30 years rose approximately 10 basis points to 4.93%
while yields on 10-year, AAA-rated issues increased more than 16
basis points to nearly 4%, according to Municipal Market Data. The
more marked increase in 10-year bond yields may be attributed to
the fact that recent issuance has been heavily concentrated in the
10-year - 20-year range. The resulting supply imbalance prompted
higher intermediate bond yields (and lower prices). Longer-maturity
and lower-rated issues continued to benefit from more favorable
supply/demand factors and, therefore, have seen less price
depreciation. For the six-month period as a whole, municipal bond
supply declined approximately 5% compared to the same period a year
ago.
While investor enthusiasm for stocks has taken some attention away
from fixed income markets, overall demand for tax-exempt municipal
bonds has remained positive. Recent Federal Reserve Board statistics
showed that U.S. household holdings of municipal securities
increased by more than $25 billion during the fourth quarter of 2003
to approximately $680 billion. In addition, data from the Investment
Company Institute indicates that, in just the first three months of
2004, tax-exempt bond funds have seen net new cash flows of almost
$640 million.
How did the Fund perform during the period?
For the six-month period ended April 30, 2004, the Common Stock of
MuniYield Fund, Inc. had net annualized yields of 7.01% and 7.70%,
based on a period-end per share net asset value of $13.73 and a per
share market price of $12.50, respectively, and $.480 per share
income dividends. Over the same period, the total investment return
on the Fund's Common Stock was +2.71%, based on a change in per
share net asset value from $13.85 to $13.73, and assuming
reinvestment of $.477 per share ordinary income dividends.
The average yields for the Fund's Auction Market Preferred Stock
(AMPS) for the six months ended April 30, 2004 were: .84% for
Series A; 1.02% for Series B; .85% for Series C; .86% for Series D;
..88% for Series E; and .92% for Series F.
The Fund's total return, based on net asset value, exceeded that of
its comparable Lipper category of General Municipal Debt Funds
(Leveraged), which had a return of +2.20% for the same six-month
period. (Funds in this Lipper category invest primarily in municipal
debt issues rated in the top four credit-rating categories. These
funds can be leveraged via use of debt, preferred equity and/or
reverse repurchase agreements.) The Fund's outperformance is
primarily attributed to our overweight exposure to lower-rated and
nonrated bonds, both of which responded well as investors became
increasingly comfortable with accepting risk in pursuit of higher
yields. The Fund benefited from tightening credit spreads and from
the extra income provided by these below investment grade
securities. Specific sector concentrations that contributed to Fund
results include health care and tax-backed debt - especially
corporate-related tax-backed debt, with a focus on such cyclical
industries as forest products, chemicals and airlines.
MUNIYIELD FUND, INC., APRIL 30, 2004
For a description of the Fund's total investment return based on a
change in the per share market value of the Fund's Common Stock (as
measured by the trading price of the Fund's shares on the New York
Stock Exchange), and assuming reinvestment of dividends, please
refer to the Financial Highlights section included in this report.
As a closed-end fund, the Fund's shares may trade in the secondary
market at a premium or discount to the Fund's net asset value. As a
result, total investment returns based on changes in the market
value of the Fund's Common Stock can vary significantly from total
investment return based on changes in the Fund's net asset value.
What changes were made to the portfolio during the period?
Our strategy centered on modestly extending the Fund's average
portfolio maturity by shifting our focus from higher-quality
investments maturing in approximately 15 years to those with
maturities in the 20-year - 25-year range. The goal was to
capitalize on the relative value and reduced volatility that we
have observed in this portion of the yield curve.
We also sought to capture relative value in the high yield sector as
a means to enhance Fund returns over time. To this end, our
investment process was geared toward improving diversification and
carefully choosing securities we believed to be fundamentally sound.
Specifically, we established new positions or added to existing
holdings in the transportation, education and health care sectors,
as well as general obligation (GO) bonds.
Our GO investments included an increase in exposure to California
bonds. The state's recent fiscal problems have afforded us an
opportunity to add attractively priced state-backed issues to the
Fund's holdings. Our new purchases enabled us to satisfy a larger
goal of bringing the Fund's GO weighting in line with the market
average. For some time we had underweighted this sector because we
had concerns about issuers' deteriorating fiscal health. Recent
evidence of a gradual, broad-based increase in tax revenues,
however, has caused us to revisit this stance.
In terms of leverage, the Fund's borrowing costs remained around 1%
throughout most of the six-month period. These attractive funding
levels, in combination with the steep municipal yield curve,
continued to generate significant income to the Fund's Common Stock
shareholders. The Federal Reserve Board appears poised to begin
raising short-term interest rates, most likely later in 2004. The
increase, however, is expected to be gradual and should not have a
material impact on the positive advantage leverage has had on the
Fund's Common Stock yield. However, should the spread between short-
term and long-term interest rates narrow, the benefits of leveraging
will decline and, as a result, reduce the yield on the Fund's Common
Stock. At the end of the period, the Fund's leverage amount, due to
AMPS, was 32.45% of total assets. (For a more complete explanation
of the benefits and risks of leveraging, see page 2 of this report
to shareholders.)
How would you characterize the portfolio's position at the close of
the period?
Late in the period, as interest rates rose modestly, we elected to
moderate the portfolio's defensive stance and position the Fund more
neutrally. We also remained fully invested to enhance investment
income for shareholders. Against a backdrop of continuing
geopolitical and economic uncertainty, we anticipate significant
market volatility ahead. Until some of this uncertainty dissipates,
we believe that maintaining the Fund's generally conservative
investment strategy remains appropriate.
Theodore R. Jaeckel Jr.
Vice President and Portfolio Manager
May 14, 2004
MUNIYIELD FUND, INC., APRIL 30, 2004
Schedule of Investments (In Thousands)
S&P Moody's Face
State Ratings Ratings Amount Municipal Bonds Value
Alabama--0.4% NR* A2 $ 2,500 Huntsville, Alabama, Health Care Authority Revenue Bonds,
Series B, 5.75% due 6/01/2032 $ 2,594
Alaska--0.3% NR* Ba1 2,050 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds
(Amerada Hess Pipeline Corporation), 6.10% due 2/01/2024 2,072
Arizona--9.0% Arizona State Transportation Board, Highway Revenue Bonds,
Sub-Series A:
AA Aa2 5,825 5% due 7/01/2021 6,007
AA Aa2 7,030 5% due 7/01/2022 7,199
AA Aa2 5,240 5% due 7/01/2023 5,336
NR* Baa3 2,300 Maricopa County, Arizona, IDA, Education Revenue Bonds (Arizona
Charter Schools Project 1), SeriesA, 6.75% due 7/01/2029 2,297
Maricopa County, Arizona, IDA, M/F Housing Revenue Refunding Bonds
(CRS Pine Ridge Housing Corporation), Series A-1 (g):
AAA NR* 5,000 6% due 10/20/2031 5,155
AAA NR* 5,000 6.05% due 10/20/2036 5,157
Phoenix, Arizona, IDA, Airport Facility Revenue Refunding Bonds
(America West Airlines Inc. Project), AMT:
NR* Caa2 5,800 6.25% due 6/01/2019 4,600
NR* Caa2 6,900 6.30% due 4/01/2023 5,353
Phoenix, Arizona, IDA, M/F Housing Revenue Bonds (Summit
Apartments LLC Project) (g):
AAA NR* 1,610 6.25% due 7/20/2022 1,682
AAA NR* 1,425 6.45% due 7/20/2032 1,484
AAA NR* 1,305 6.55% due 7/20/2037 1,364
NR* Baa3 1,400 Pima County, Arizona, IDA, Education Revenue Bonds (Arizona Charter
Schools Project II), Series A, 6.75% due 7/01/2031 1,411
Pima County, Arizona, IDA, M/F Housing Revenue Bonds (Columbus
Village), Series A (g):
AAA NR* 990 5.90% due 10/20/2021 997
AAA NR* 1,725 6% due 10/20/2031 1,738
AAA NR* 2,295 6.05% due 10/20/2041 2,312
NR* Baa2 2,500 Yavapai County, Arizona, IDA, Hospital Facility Revenue Bonds
(Yavapai Regional Medical Center), Series A, 6% due 8/01/2033 2,528
California-- AAA Aaa 1,360 Anaheim, California, Union High School District, GO, Series A,
22.8% 5% due 8/01/2022 (i) 1,387
BBB Baa1 8,760 California State, GO, 5% due 2/01/2033 8,324
California State Public Works Board, Lease Revenue Bonds:
BBB- Baa2 2,000 (Department of Corrections), Series C, 5% due 6/01/2025 1,907
BBB- Baa2 4,500 (Department of Mental Health--Coalinga State Hospital),
Series A, 5.125% due 6/01/2029 4,313
California State, Various Purpose, GO:
BBB Baa1 6,800 5.25% due 11/01/2025 6,748
AAA Aaa 10,000 5% due 4/01/2031 (c) 9,854
BBB Baa1 5,550 5.50% due 11/01/2033 5,669
Golden State Tobacco Securitization Corporation of California,
Tobacco Settlement Revenue Bonds:
BBB Baa3 5,500 Series A-3, 7.875% due 6/01/2042 5,838
BBB Baa3 7,500 Series A-4, 7.80% due 6/01/2042 7,924
BBB- Baa2 5,000 Series B, 5.50% due 6/01/2018 5,135
BBB- Baa2 5,000 Series B, 5.375% due 6/01/2028 4,865
BBB- Aaa 9,520 Series B, 5.50% due 6/01/2043 9,310
Portfolio Abbreviations
To simplify the listings of MuniYield 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
DRIVERS Derivative Inverse Tax-Exempt Receipts
EDA Economic Development Authority
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
VRDN Variable Rate Demand Notes
MUNIYIELD FUND, INC., APRIL 30, 2004
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
State Ratings Ratings Amount Municipal Bonds Value
California AAA Aaa $10,000 Los Angeles, California, Community Redevelopment Agency, Community
(concluded) Redevelopment Financing Authority Revenue Bonds (Bunker Hill Project),
Series A, 5% due 12/01/2027 (i) $ 9,972
AAA Aaa 18,400 Los Angeles, California, Unified School District, GO, Series A, 5%
due 7/01/2023 (i) 18,696
AAA Aaa 6,160 Los Angeles, California, Water and Power Revenue Refunding Bonds
(Power System), Series A, Sub-Series A-2, 5% due 7/01/2022 (e) 6,278
Los Angeles County, California, Schools Regionalized Business
Services, COP, Pooled Financing, Series A (c):
AAA Aaa 1,430 5.90%** due 8/01/2019 649
AAA Aaa 2,510 6%** due 8/01/2029 601
AA Aa3 1,250 Sacramento County, California, Sanitation District, Financing
Authority, Revenue Refunding Bonds, Trust Receipts, Class R,
Series A, 10.56% due 12/01/2019 (k) 1,426
AAA Aaa 5,145 Santa Clara, California, Subordinated Electric Revenue Bonds,
Series A, 5% due 7/01/2022 (e) 5,243
AAA Aaa 10,000 University of California Hospital Revenue Bonds (UCLA Medical Center),
Series A, 5% due 5/15/2039 (c) 9,783
AAA Aaa 7,465 University of California Revenue Bonds (Multiple Purpose Projects),
Series Q, 5% due 9/01/2021 (i) 7,661
University of California, Revenue Refunding Bonds, Series A (c):
AAA Aaa 3,000 5.125% due 5/15/2019 3,147
AAA Aaa 2,500 5.125% due 5/15/2020 2,609
BBB+ Aaa 1,675 Vernon, California, Electric System Revenue Bonds (Malburg
Generating Station Project), 5.30% due 4/01/2026 1,668
Colorado-- AA Aa2 650 Colorado HFA, Revenue Refunding Bonds (S/F Program), AMT,
5.2% Series D-2, 6.90% due 4/01/2029 661
AAA Aaa 8,000 Denver, Colorado, City and County Airport Revenue Bonds, AMT,
Series D, 7.75% due 11/15/2013 (c) 9,740
NR* Baa2 5,500 Denver, Colorado, Urban Renewal Authority, Tax Increment Revenue
Bonds (Pavilions), AMT, 7.75% due 9/01/2016 5,823
Elk Valley, Colorado, Public Improvement Revenue Bonds (Public
Improvement Fee), Series A:
NR* NR* 1,735 7.10% due 9/01/2014 1,786
NR* NR* 5,065 7.35% due 9/01/2031 5,212
BB+ Ba1 1,750 Northwest Parkway, Colorado, Public Highway Authority Revenue
Bonds, First Tier, Sub-Series D, 7.125% due 6/15/2041 1,804
NR* NR* 6,850 Plaza Metropolitan District No. 1, Colorado, Tax Allocation
Revenue Bonds (Public Improvement Fees), 8% due 12/01/2025 6,955
Connecticut-- NR* NR* 600 Connecticut State Development Authority, IDR (AFCO Cargo BDL-LLC
0.1% Project), AMT, 7.35% due 4/01/2010 603
Florida--4.1% NR* NR* 880 Bonnet Creek Resort, Florida, Community Development District, Special
Assessment Revenue Bonds, 7.50% due 5/01/2034 923
Hillsborough County, Florida, IDA, Exempt Facilities Revenue Bonds
(National Gypsum), AMT:
NR* NR* 11,500 Series A, 7.125% due 4/01/2030 12,261
NR* NR* 5,000 Series B, 7.125% due 4/01/2030 5,331
AAA Aaa 1,115 Miami-Dade County, Florida, Aviation Revenue Bonds (Miami
International Airport), AMT, Series A, 5% due 10/01/2033 (h) 1,088
Saint Lucie County, Florida, Sales Tax Revenue Refunding and
Improvement Bonds (e):
AAA Aaa 2,140 5.25% due 10/01/2022 2,245
AAA Aaa 500 5.25% due 10/01/2023 521
B- B1 3,000 Santa Rosa Bay Bridge Authority, Florida, Revenue Bonds, 6.25%
due 7/01/2028 2,464
Georgia--3.0% AAA Aaa 12,140 Atlanta, Georgia, Airport Revenue Refunding Bonds, Series A, 5.875%
due 1/01/2016 (h) 13,455
NR* NR* 4,600 Atlanta, Georgia, Tax Allocation Revenue Bonds (Atlantic Station
Project), 7.90% due 12/01/2024 4,773
Idaho--2.1% AA NR* 635 Idaho Housing Agency, S/F Mortgage Revenue Refunding Bonds, AMT,
Senior Series C-2, 7.15% due 7/01/2023 635
BB+ Ba3 12,125 Power County, Idaho, Industrial Development Corporation, Solid
Waste Disposal Revenue Bonds (FMC Corporation Project), AMT, 6.45%
due 8/01/2032 12,151
MUNIYIELD FUND, INC., APRIL 30, 2004
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
State Ratings Ratings Amount Municipal Bonds Value
Illinois-- NR* B2 $ 795 Beardstown, Illinois, IDR (Jefferson Smurfit Corp. Project),
4.9% 8% due 10/01/2016 $ 826
AAA Aaa 13,200 Chicago, Illinois, O'Hare International Airport Revenue Bonds,
3rd Lien, AMT, Series B-2, 6% due 1/01/2029 (j) 14,233
NR* Aaa 285 Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT, Series B,
7.625% due 9/01/2027 (f)(g)(l) 290
B B1 2,750 Illinois Development Finance Authority, PCR, Refunding (Illinois
Power Company Project), Series A, 7.375% due 7/01/2006 (b) 3,099
AAA Aaa 3,285 Illinois Development Finance Authority Revenue Bonds (Presbyterian
Home Lake Project), Series B, 6.30% due 9/01/2022 (i) 3,604
NR* NR* 2,500 Illinois Educational Facilities Authority, Revenue Refunding Bonds
(Chicago Osteopathic Health System), 7.25% due 11/15/2019 (b) 2,506
NR* B2 1,250 Illinois Health Facilities Authority Revenue Bonds (Holy Cross
Hospital Project), 6.70% due 3/01/2014 975
A1 VMIG1++ 10 Illinois Health Facilities Authority, Revenue Refunding Bonds
(University of Chicago Hospitals), VRDN, 1.07% due 8/01/2026 (e)(m) 10
AAA Aaa 4,000 Metropolitan Pier and Exposition Authority, Illinois, Dedicated
State Tax Revenue Bonds (McCormick Place Expansion), Series A, 5.50%
due 6/15/2023 (e) 4,263
Kansas--0.2% BB+ NR* 1,250 Lenexa, Kansas, Health Care Facility Revenue Bonds (Lakeview
Village Inc.), Series C, 6.875% due 5/15/2032 1,306
Kentucky--0.7% NR* Baa2 4,000 Perry County, Kentucky, Solid Waste Disposal Revenue Bonds
(TJ International Project), AMT, 7% due 6/01/2024 4,091
Louisiana-- B NR* 4,125 Hodge, Louisiana, Utility Revenue Refunding Bonds (Stone Container
3.8% Corporation), AMT, 7.45% due 3/01/2024 4,167
BB- NR* 19,000 Port New Orleans, Louisiana, IDR, Refunding (Continental Grain
Company Project), 6.50% due 1/01/2017 19,234
Maryland--1.5% NR* NR* 3,000 Maryland State Energy Financing Administration, Limited Obligation
Revenue Bonds (Cogeneration--AES Warrior Run), AMT, 7.40% due
9/01/2019 3,036
Maryland State Health and Higher Educational Facilities Authority
Revenue Bonds (Johns Hopkins University), Series A:
AA Aa2 1,250 5% due 7/01/2024 1,268
AA Aa2 1,000 5% due 7/01/2033 1,005
A A3 4,000 Maryland State Health and Higher Educational Facilities Authority,
Revenue Refunding Bonds (University of Maryland Medical System),
6% due 7/01/2032 4,189
Michigan-- BBB- NR* 3,325 Macomb County, Michigan, Hospital Finance Authority, Hospital
0.5% Revenue Bonds (Mount Clemens General Hospital), Series B, 5.875%
due 11/15/2034 3,058
Minnesota-- Eden Prairie, Minnesota, M/F Housing Revenue Bonds (Rolling Hills
0.6% Project), Series A (g):
NR* A1 420 6% due 8/20/2021 455
NR* A1 2,000 6.20% due 2/20/2043 2,145
NR* Aa2 985 Minneapolis, Minnesota, M/F Housing Revenue Bonds (Gaar Scott
Loft Project), AMT, 5.95% due 5/01/2030 1,037
Missouri--0.7% Fenton, Missouri, Tax Increment Revenue Refunding and Improvement
Bonds (Gravois Bluffs):
NR* NR* 635 6.75% due 10/01/2015 646
NR* NR* 2,800 7% due 10/01/2021 2,999
AAA NR* 475 Missouri State Housing Development Commission, S/F Mortgage
Revenue Bonds, Homeownership, AMT, Series B, 7.55% due 9/01/2027 (f)(g) 479
New BBB+ Baa1 3,425 New Hampshire Health and Education Facilities Authority, Revenue
Hampshire--0.6% Refunding Bonds (Elliot Hospital), Series B, 5.60% due 10/01/2022 3,430
New Jersey-- NR* NR* 3,000 New Jersey EDA, First Mortgage Revenue Bonds (The Presbyterian Home),
10.7% Series A, 6.375% due 11/01/2031 3,015
NR* NR* 4,400 New Jersey EDA, Retirement Community Revenue Bonds (Cedar Crest
Village Inc. Facility), Series A, 7.25% due 11/15/2031 4,467
New Jersey EDA, Special Facility Revenue Bonds (Continental Airlines
Inc. Project), AMT:
B Caa2 3,905 6.25% due 9/15/2019 3,207
B Caa2 16,195 6.25% due 9/15/2029 12,659
BB+ NR* 3,680 New Jersey Health Care Facilities Financing Authority Revenue Bonds
(Pascack Valley Hospital Association), 6.625% due 7/01/2036 3,811
AAA NR* 4,360 Port Authority of New York and New Jersey Revenue Refunding Bonds,
DRIVERS, AMT, Series 177, 10.607% due 10/15/2032 (e)(k) 5,063
MUNIYIELD FUND, INC., APRIL 30, 2004
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
State Ratings Ratings Amount Municipal Bonds Value
New Jersey AAA NR* $20,575 Port Authority of New York and New Jersey, Special Obligation
(concluded) Revenue Bonds, DRIVERS, AMT, Series 192, 10.106% due
12/01/2025 (e)(k) $ 22,557
BBB Baa3 7,500 Tobacco Settlement Financing Corporation of New Jersey,
Asset-Backed Revenue Refunding Bonds, 6% due 6/01/2037 6,370
BBB Baa3 4,500 Tobacco Settlement Financing Corporation of New Jersey Revenue
Bonds, 6.75% due 6/01/2039 4,215
New York-- NR* NR* 2,240 Dutchess County, New York, IDA, Civic Facility Revenue Refunding
21.4% Bonds (Saint Francis Hospital), Series A, 7.50% due 3/01/2029 2,174
A- Baa1 2,405 Long Island Power Authority, New York, Electric System Revenue Bonds,
Series C, 5% due 9/01/2022 2,410
AAA Aaa 5,595 Metropolitan Transportation Authority, New York, Commuter Facilities
Revenue Bonds, RITR, Series 9, 6.10% due 7/01/2006 (b)(h)(k) 6,806
New York City, New York, City IDA, Special Facilities Revenue
Bonds, AMT:
BB- Ba2 1,250 (British Airways PLC Project), 7.625% due 12/01/2032 1,228
BBB+ A3 10,000 (Terminal One Group Association Project), 6.125% due 1/01/2024 10,236
New York City, New York, City Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds (k):
AAA NR* 5,000 DRIVERS, Series 198, 10.157% due 6/15/2026 (e) 5,768
AAA Aaa 3,000 RITR, Series 11, 10.30% due 6/15/2026 (i) 3,518
AA Aa2 14,000 New York City, New York, City Municipal Water Finance Authority,
Water and Sewer System Revenue Refunding Bonds, 5.50% due 6/15/2033 14,561
New York City, New York, GO, Refunding, Series G (b):
AAA Aaa 2,090 5.75% due 2/01/2014 (e) 2,243
AAA Aaa 2,000 5.75% due 2/01/2014 (h) 2,147
NR* Aaa 10,000 New York City, New York, GO, Refunding, Trust Receipts, Series R,
11.34% due 5/15/2014 (h)(k) 13,149
AA- NR* 6,795 New York State Dormitory Authority, Hospital Revenue Refunding
Bonds (North General Hospital), 5.75% due 2/15/2015 7,515
New York State Dormitory Authority, Revenue Refunding Bonds
(Mount Sinai Health), Series A:
BB Ba1 5,000 6.75% due 7/01/2020 5,128
BB Ba1 315 6.50% due 7/01/2025 318
AA A1 10,000 New York State Urban Development Corporation, Personal Income Tax
Revenue Bonds (State Facilities), Series A, 5.50% due 3/15/2032 10,393
NR* NR* 2,500 Suffolk County, New York, IDA, IDR, Refunding (Nissequogue
Cogeneration Partners Facility), AMT, 5.50% due 1/01/2023 2,323
Tobacco Settlement Financing Corporation of New York Revenue Bonds:
AAA Aaa 13,875 Series A-1, 5.25% due 6/01/2022 (c) 14,350
AA- A3 9,400 Series C-1, 5.50% due 6/01/2021 9,915
A+ A1 10,000 Triborough Bridge and Tunnel Authority, New York, Subordinate
Revenue Bonds, 5.25% due 11/15/2030 10,180
Westchester County, New York, IDA, Continuing Care Retirement
Mortgage Revenue Bonds (Kendal on Hudson Project), Series A:
NR* NR* 3,450 6.375% due 1/01/2024 3,472
NR* NR* 2,895 6.50% due 1/01/2034 2,864
North BBB Baa3 4,750 North Carolina Eastern Municipal Power Agency, Power System Revenue
Carolina--1.3% Bonds, Series D, 6.75% due 1/01/2026 5,206
AA Aa2 380 North Carolina HFA, Home Ownership Revenue Bonds, AMT, Series 8-A,
6.20% due 7/01/2016 398
AA Aa2 1,055 North Carolina HFA, S/F Revenue Bonds, Series II, 6.20% due
3/01/2016 (d) 1,100
NR* NR* 1,000 North Carolina Medical Care Commission, Health Care Facilities,
First Mortgage Revenue Bonds (Arbor Acres Community Project), 6.375%
due 3/01/2032 1,010
Ohio--3.2% Cuyahoga County, Ohio, Mortgage Revenue Bonds (West Tech Apartments
Project), AMT (g):
NR* Aaa 1,410 5.75% due 9/20/2020 1,473
NR* Aaa 2,250 5.85% due 9/20/2030 2,325
NR* NR* 2,175 Lucas County, Ohio, Health Care Facility Revenue Refunding and
Improvement Bonds (Sunset Retirement Communities), Series A, 6.625%
due 8/15/2030 2,245
NR* Aaa 5,000 Mason, Ohio, City School District, GO (School Improvement), 5%
due 12/01/2031 (i) 5,000
Mason, Ohio, Sewer System Revenue Refunding and Improvement Bonds (e):
NR* Aaa 350 4.625% due 12/01/2025 334
NR* Aaa 2,495 5% due 12/01/2028 2,501
NR* Aaa 1,000 Montgomery County, Ohio, Water System Revenue Refunding Bonds
(Greater Moraine Beaver), 5.375% due 11/15/2015 (c) 1,085
MUNIYIELD FUND, INC., APRIL 30, 2004
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
State Ratings Ratings Amount Municipal Bonds Value
Ohio Port of Greater Cincinnati Development Authority, Ohio, Special
(concluded) Assessment Revenue Bonds (Cooperative Public Parking Infrastructure
Project):
NR* NR* $ 970 6.30% due 2/15/2024 $ 941
NR* NR* 410 6.40% due 2/15/2034 396
Princeton, Ohio, City School District, GO (e):
AAA Aaa 1,575 5% due 12/01/2024 1,592
AAA Aaa 1,710 5% due 12/01/2025 1,724
Oregon--2.5% AAA Aaa 7,905 Oregon State Department of Administrative Services, COP, Series A,
6% due 5/01/2010 (b)(c) 9,140
AA- Aa3 4,305 Oregon State, GO, Refunding (Veterans Welfare), Series 80A, 5.70%
due 10/01/2032 4,476
NR* NR* 1,830 Portland, Oregon, Housing Authority, Housing Revenue Bonds (Pine
Square and University Place), Series A, 5.875% due 1/01/2022 1,753
Pennsylvania-- AAA Aaa 5,000 Lehigh County, Pennsylvania, IDA, PCR, Refunding (Pennsylvania
11.5% Power and Light Company Project), Series B, 6.40% due 9/01/2029 (e) 5,171
Pennsylvania Economic Development Financing Authority, Exempt
Facilities Revenue Bonds (National Gypsum Company), AMT:
NR* NR* 12,100 Series A, 6.25% due 11/01/2027 12,251
NR* NR* 8,800 Series B, 6.125% due 11/01/2027 8,847
AAA Aaa 16,270 Pennsylvania State Higher Educational Facilities Authority,
Health Services Revenue Refunding Bonds (Allegheny Delaware Valley
Obligation), Series C, 5.875% due 11/15/2016 (e) 17,490
NR* NR* 1,265 Philadelphia, Pennsylvania, Authority for IDR, Commercial Development,
7.75% due 12/01/2017 1,276
Philadelphia, Pennsylvania, Authority for IDR, Refunding,
Commercial Development:
NR* NR* 3,650 (Days Inn), Series B, 6.50% due 10/01/2027 3,684
NR* NR* 4,000 (Doubletree), Series A, 6.50% due 10/01/2027 4,038
AAA Aaa 10,965 Philadelphia, Pennsylvania, School District, GO, Series A, 5.50%
due 2/01/2031 (i) 11,456
A- NR* 5,000 Sayre, Pennsylvania, Health Care Facilities Authority Revenue Bonds
(Guthrie Health Issue), Series B, 1% due 12/01/2031 5,680
Rhode Island-- Woonsocket, Rhode Island, GO (h):
0.5% NR* Aaa 1,225 6% due 10/01/2017 1,394
NR* Aaa 1,195 6% due 10/01/2018 1,362
Tennessee-- NR* NR* 4,610 Hardeman County, Tennessee, Correctional Facilities Corporation
2.4% Revenue Bonds, 7.75% due 8/01/2017 4,788
BB Ba2 10,000 McMinn County, Tennessee, IDB, Solid Waste Revenue Bonds (Recycling
Facility--Calhoun Newsprint), AMT, 7.40% due 12/01/2022 10,060
Texas--18.0% Austin, Texas, Convention Center Revenue Bonds (Convention
Enterprises Inc.), First Tier, Series A:
BBB- Baa3 5,000 6.70% due 1/01/2028 5,255
BBB- Baa3 5,000 6.70% due 1/01/2032 5,241
Bexar County, Texas, Housing Finance Corporation, M/F Housing
Revenue Bonds (Water at Northern Hills Apartments), Series A (e):
NR* Aaa 1,300 5.80% due 8/01/2021 1,343
NR* Aaa 2,460 6% due 8/01/2031 2,525
NR* Aaa 1,000 6.05% due 8/01/2036 1,027
BBB Baa2 6,850 Brazos River Authority, Texas, PCR, Refunding (Utilities Electric
Company), AMT, Series B, 5.05% due 6/01/2030 7,094
BBB- NR* 3,755 Brazos River Authority, Texas, Revenue Refunding Bonds (Reliant
Energy Inc. Project), Series B, 7.75% due 12/01/2018 4,082
BBB- Baa3 6,230 Dallas-Fort Worth, Texas, International Airport Facility, Improvement
Corporation Revenue Bonds (Learjet Inc.), AMT, Series 2001-A-1,
6.15% due 1/01/2016 6,230
CCC Caa2 6,500 Dallas-Fort Worth, Texas, International Airport Facility, Improvement
Corporation Revenue Refunding Bonds (American Airlines), AMT, Series B,
6.05% due 5/01/2029 6,159
AAA Aaa 15,000 Dallas-Fort Worth, Texas, International Airport Revenue Bonds, AMT,
Series A, 5.50% due 11/01/2033 (e) 15,402
Gregg County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds (Good Shepherd Medical Center Project) (a):
AA Baa2 3,000 6.875% due 10/01/2020 3,478
AA Baa2 2,000 6.375% due 10/01/2025 2,205
MUNIYIELD FUND, INC., APRIL 30, 2004
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
State Ratings Ratings Amount Municipal Bonds Value
Texas AA- Aa3 $ 5,000 Guadalupe-Blanco River Authority, Texas, Sewage and Solid Waste
(concluded) Disposal Facility Revenue Bonds (E. I. du Pont de Nemours and
Company Project), AMT, 6.40% due 4/01/2026 $ 5,286
BB Ba3 3,900 Gulf Coast, Texas, IDA, Solid Waste Disposal Revenue Bonds
(Citgo Petroleum Corporation Project), AMT, 7.50% due 5/01/2025 4,088
NR* Baa3 1,600 Houston, Texas, Industrial Development Corporation Revenue Bonds
(Air Cargo), AMT, 6.375% due 1/01/2023 1,608
Lower Colorado River Authority, Texas, PCR (Samsung Austin
Semiconductor), AMT:
A- A3 6,200 6.375% due 4/01/2027 6,641
A- A3 3,330 6.95% due 4/01/2030 3,747
BBB- Ba2 7,030 Matagorda County, Texas, Navigation District Number 1 Revenue
Refunding Bonds (Reliant Energy Inc.), Series C, 8% due 5/01/2029 7,624
BB Ba3 3,900 Port Corpus Christi, Texas, Individual Development Corporation,
Environmental Facilities Revenue Bonds (Citgo Petroleum Corporation
Project), AMT, 8.25% due 11/01/2031 4,061
San Antonio, Texas, Water Revenue Refunding Bonds:
AA- Aa3 1,000 5.875% due 5/15/2016 1,119
AA- Aa3 1,000 5.875% due 5/15/2017 1,118
AAA Aaa 6,500 Texas State Turnpike Authority, Central Texas Turnpike System
Revenue Bonds, First Tier, Series A, 5.50% due 8/15/2039 (c) 6,761
AAA Aaa 7,020 Tyler, Texas, Waterworks and Sewer Revenue Bonds, 5.70% due
9/01/2030 (h) 7,488
Utah--0.3% AAA Aaa 1,545 Utah State Board of Regents Revenue Refunding Bonds (University of
Utah Research Facilities), Series A, 5.50% due 4/01/2018 (e) 1,675
Virginia-- BBB NR* 5,000 Amelia County, Virginia, IDA, Solid Waste Disposal Revenue Refunding
3.4% Bonds (Waste Management Project), VRDN, AMT, 4.90% due 4/01/2027 (m) 5,111
AAA Aaa 5,000 Fairfax County, Virginia, EDA, Resource Recovery Revenue Refunding
Bonds, AMT, Series A, 6.10% due 2/01/2011 (c) 5,583
NR* NR* 1,000 Pittsylvania County, Virginia, IDA, Revenue Refunding Bonds, Exempt
Facility, AMT, Series A, 7.55% due 1/01/2019 970
Pocahontas Parkway Association, Virginia, Toll Road Revenue Bonds:
NR* B1 6,200 First Tier, Sub-Series C, 6.25%** due 8/15/2031 438
BB Ba2 6,500 Senior Series A, 5.50% due 8/15/2028 5,355
BB Ba2 24,800 Senior Series B, 6.67%** due 8/15/2029 3,546
Washington-- Vancouver, Washington, Housing Authority, Housing Revenue Bonds
0.3% (Teal Pointe Apartments Project), AMT:
NR* NR* 945 6% due 9/01/2022 892
NR* NR* 1,250 6.20% due 9/01/2032 1,167
West B- B2 1,000 Princeton, West Virginia, Hospital Revenue Refunding Bonds
Virginia--0.6% (Community Hospital Association Inc.Project), 6% due 5/01/2019 763
BBB Baa2 3,000 Upshur County, West Virginia, Solid Waste Disposal Revenue Bonds
(TJ International Project), AMT, 7% due 7/15/2025 3,185
Wisconsin-- NR* Baa3 700 Milwaukee, Wisconsin, Revenue Bonds (Air Cargo), AMT, 6.50% due
0.3% 1/01/2025 709
AAA Aaa 1,140 Wisconsin State, GO, AMT, Series B, 6.20% due 11/01/2026 (e) 1,197
Wyoming--0.9% BB+ Ba3 2,550 Sweetwater County, Wyoming, Solid Waste Disposal Revenue Bonds
(FMC Corporation Project), AMT, Series A, 7% due 6/01/2024 2,576
AA NR* 2,500 Wyoming Student Loan Corporation, Student Loan Revenue Refunding
Bonds, Series A, 6.20% due 6/01/2024 2,656
Puerto Rico-- AAA Aaa 15,000 Puerto Rico Commonwealth, Highway and Transportation Authority,
7.2% Transportation Revenue Bonds, Trust Receipts, Class R, Series B,
10.34% due 7/01/2035 (e)(k) 18,648
A Baa1 16,360 Puerto Rico Commonwealth, Highway and Transportation Authority,
Transportation Revenue Refunding Bonds, Series D, 5.75% due 7/01/2041 17,270
AAA Aaa 2,500 Puerto Rico Electric Power Authority, Power Revenue Bonds, Trust
Receipts, Class R, Series 16 HH, 10.07% due 7/01/2013 (i)(k) 3,228
AAA NR* 4,350 Puerto Rico Public Finance Corporation Revenue Bonds, DRIVERS,
Series 272, 9.975% due 8/01/2030 (k) 4,824
Virgin BBB- Baa3 6,250 Virgin Islands Public Finance Authority, Refinery Facilities Revenue
Islands--1.1% Bonds (Hovensa Refinery), AMT, 6.125% due 7/01/2022 6,482
Total Municipal Bonds (Cost--$858,109)--146.1% 891,190
MUNIYIELD FUND, INC., APRIL 30, 2004
Schedule of Investments (concluded) (In Thousands)
Shares
Held Short-Term Securities Value
613 Merrill Lynch Institutional Tax-Exempt Fund++++ $ 613
Total Short-Term Securities (Cost--$613)--0.1% 613
Total Investments (Cost--$858,722)--146.2% 891,803
Other Assets Less Liabilities--1.8% 11,037
Preferred Stock, at Redemption Value--(48.0%) (293,000)
---------
Net Assets Applicable to Common Stock--100.0% $ 609,840
=========
(a)Radian Insured.
(b)Prerefunded.
(c)AMBAC Insured.
(d)FHA Insured.
(e)MBIA Insured.
(f)FNMA Collateralized.
(g)GNMA Collateralized.
(h)FGIC Insured.
(i)FSA Insured.
(j)XL Capital Insured.
(k)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, 2004.
(l)FHLMC Collateralized.
(m)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, 2004.
++Highest short-term rating by Moody's Investors Service, Inc.
++++Investments in companies considered to be an affiliate of the
Fund (such companies are defined as "Affiliated Companies" in
Section 2(a)(3) of the Investment Company Act of 1940) are as
follows:
(in Thousands)
Net Dividend
Affiliate Activity Income
Merrill Lynch Institutional
Tax-Exempt Fund (16,000) $82
*Not Rated.
**Represents a zero coupon bond; the interest rate shown reflects
the effective yield at the time of purchase by the Fund.
See Notes to Financial Statements.
MUNIYIELD FUND, INC., APRIL 30, 2004
Statement of Net Assets
As of April 30, 2004
Assets
Investments in unaffiliated securities, at value
(identified cost--$858,109,084) $ 891,190,397
Investments in affiliated securities, at value (identified cost--$612,782) 612,782
Cash 43,322
Receivables:
Securities sold $ 20,722,608
Interest 17,296,804
Dividends from affiliates 15 38,019,427
---------------
Prepaid expenses 9,449
---------------
Total assets 929,875,377
---------------
Liabilities
Payables:
Securities purchased 26,012,500
Dividends to Common Stock shareholders 509,249
Investment adviser 435,367
Other affiliates 6,312 26,963,428
---------------
Accrued expenses and other liabilities 71,945
---------------
Total liabilities 27,035,373
---------------
Preferred Stock
Preferred Stock, at redemption value, par value $.05 per share
(1,800 Series A Shares, 1,800 Series B Shares, 1,800 Series C Shares,
1,800 Series D Shares, 2,800 Series E Shares and 1,720 Series F Shares
of AMPS* issued and outstanding at $25,000 per share liquidation preference) 293,000,000
---------------
Net Assets Applicable to Common Stock
Net assets applicable to Common Stock $ 609,840,004
===============
Analysis of Net Assets Applicable to Common Stock
Common Stock, par value $.10 per share (44,430,631 shares issued and
outstanding) $ 4,443,063
Paid-in capital in excess of par 632,818,026
Undistributed investment income--net $ 12,555,461
Accumulated realized capital losses on investments--net (73,057,859)
Unrealized appreciation on investments--net 33,081,313
---------------
Total accumulated losses--net (27,421,085)
---------------
Total--Equivalent to $13.73 net asset value per share of Common Stock
(market price--$12.50) $ 609,840,004
===============
*Auction Market Preferred Stock.
See Notes to Financial Statements.
MUNIYIELD FUND, INC., APRIL 30, 2004
Statement of Operations
For the Six Months Ended April 30, 2004
Investment Income
Interest $ 26,499,130
Dividends from affiliates 82,456
---------------
Total income 26,581,586
---------------
Expenses
Investment advisory fees $ 2,291,512
Commission fees 374,171
Accounting services 131,572
Transfer agent fees 55,311
Professional fees 38,406
Printing and shareholder reports 23,806
Custodian fees 23,298
Listing fees 17,514
Pricing fees 16,218
Directors' fees and expenses 15,595
Other 28,343
---------------
Total expenses before reimbursement 3,015,746
Reimbursement of expenses (19,446)
---------------
Total expenses after reimbursement 2,996,300
---------------
Investment income--net 23,585,286
---------------
Realized & Unrealized Loss on Investments--Net
Realized loss on investments--net (1,222,485)
Change in unrealized appreciation on investments--net (5,193,016)
---------------
Total realized and unrealized loss on investments--net (6,415,501)
---------------
Dividends to Preferred Stock Shareholders
Investment income--net (1,305,007)
---------------
Net Increase in Net Assets Resulting from Operations $ 15,864,778
===============
See Notes to Financial Statements.
MUNIYIELD FUND, INC., APRIL 30, 2004
Statements of Changes in Net Assets
For the For the
Six Months Year
Ended Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 2004 2003
Operations
Investment income--net $ 23,585,286 $ 47,140,570
Realized loss on investments--net (1,222,485) (749,067)
Change in unrealized appreciation on investments--net (5,193,016) 23,276,447
Dividends to Preferred Stock shareholders (1,305,007) (3,013,368)
--------------- ---------------
Net increase in net assets resulting from operations 15,864,778 66,654,582
--------------- ---------------
Dividends to Common Stock Shareholders
Investment income--net (21,193,411) (41,587,071)
--------------- ---------------
Net decrease in net assets resulting from dividends to Common Stock
shareholders (21,193,411) (41,587,071)
--------------- ---------------
Net Assets Applicable to Common Stock
Total increase (decrease) in net assets applicable to Common Stock (5,328,633) 25,067,511
Beginning of period 615,168,637 590,101,126
--------------- ---------------
End of period* $ 609,840,004 $ 615,168,637
=============== ===============
*Undistributed investment income--net $ 12,555,461 $ 11,468,593
=============== ===============
See Notes to Financial Statements.
MUNIYIELD FUND, INC., APRIL 30, 2004
Financial Highlights
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: 2004 2003 2002 2001++++ 2000++++
Per Share Operating Performance
Net asset value, beginning of period $ 13.85 $ 13.28 $ 13.55 $ 13.08 $ 13.21
------------ ---------- ---------- ---------- ----------
Investment income--net .53+++ 1.06+++ 1.04 1.03 1.09
Realized and unrealized gain (loss) on
investments--net (.14) .52 (.31) .52 (.08)
Dividends to Preferred Stock shareholders
from investment income--net (.03) (.07) (.08) (.22) (.27)
------------ ---------- ---------- ---------- ----------
Total from investment operations .36 1.51 .65 1.33 .74
------------ ---------- ---------- ---------- ----------
Less dividends to Common Stock shareholders
from investment income--net (.48) (.94) (.92) (.86) (.87)
------------ ---------- ---------- ---------- ----------
Net asset value, end of period $ 13.73 $ 13.85 $ 13.28 $ 13.55 $ 13.08
============ ========== ========== ========== ==========
Market price per share, end of period $ 12.50 $ 13.29 $ 12.88 $ 13.94 $ 12.625
============ ========== ========== ========== ==========
Total Investment Return**
Based on market price per share (2.55%)+++++ 10.80% (.94%) 17.79% 5.26%
============ ========== ========== ========== ==========
Based on net asset value per share 2.71%+++++ 11.99% 5.07% 10.51% 6.28%
============ ========== ========== ========== ==========
Ratios Based on Average Net Assets of Common Stock
Total expenses, net of reimbursement*** .96%* .99% 1.01% 1.01% .99%
============ ========== ========== ========== ==========
Total expenses*** .96%* .99% 1.01% 1.01% .99%
============ ========== ========== ========== ==========
Total investment income--net*** 7.54%* 7.86% 7.97% 7.74% 8.35%
============ ========== ========== ========== ==========
Amount of dividends to Preferred Stock
shareholders .42%* .50% .74% 1.63% 2.07%
============ ========== ========== ========== ==========
Investment income--net, to Common Stock
shareholders 7.12%* 7.36% 7.23% 6.11% 6.28%
============ ========== ========== ========== ==========
Ratios Based on Average Net Assets of Common & Preferred Stock***
Total expenses, net of reimbursement .65%* .66% .67% .68% .66%
============ ========== ========== ========== ==========
Total expenses .66%* .66% .67% .68% .66%
============ ========== ========== ========== ==========
Total investment income--net 5.14%* 5.27% 5.33% 5.20% 5.56%
============ ========== ========== ========== ==========
MUNIYIELD FUND, INC., APRIL 30, 2004
Financial Highlights (concluded)
For the Six
Months Ended
The following per share data and ratios have been derived April 30, For the Year Ended October 31,
from information provided in the financial statements. 2004 2003 2002 2001++++ 2000++++
Ratios Based on Average Net Assets of Preferred Stock
Dividends to Preferred Stock shareholders .89%* 1.02% 1.50% 3.33% 4.12%
============ ========== ========== ========== ==========
Supplemental Data
Net assets applicable to Common Stock,
end of period (in thousands) $ 609,840 $ 615,169 $ 590,101 $ 524,737 $ 501,361
============ ========== ========== ========== ==========
Preferred Stock outstanding, end of period
(in thousands) $ 293,000 $ 293,000 $ 293,000 $ 250,000 $ 250,000
============ ========== ========== ========== ==========
Portfolio turnover 13.32% 61.95% 104.63% 83.26% 103.44%
============ ========== ========== ========== ==========
Leverage
Asset coverage per $1,000 $ 3,081 $ 3,100 $ 3,014 $ 3,099 $ 3,005
============ ========== ========== ========== ==========
Dividends Per Share on Preferred Stock Outstanding
Series A--Investment income--net $ 105 $ 256 $ 346 $ 816 $ 1,052
============ ========== ========== ========== ==========
Series B--Investment income--net $ 128 $ 274 $ 369 $ 864 $ 1,009
============ ========== ========== ========== ==========
Series C--Investment income--net $ 105 $ 261 $ 353 $ 847 $ 1,032
============ ========== ========== ========== ==========
Series D--Investment income--net $ 107 $ 281 $ 504 $ 850 $ 1,035
============ ========== ========== ========== ==========
Series E--Investment income--net $ 109 $ 236 $ 346 $ 805 $ 1,038
============ ========== ========== ========== ==========
Series F--Investment income--net $ 114 $ 247 $ 324++ -- --
============ ========== ========== ========== ==========
*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.
++Series F was issued on November 19, 2001.
++++Certain prior year amounts have been reclassified to conform to
current year presentation.
+++Based on average shares outstanding.
+++++Aggregate total investment return.
See Notes to Financial Statements.
MUNIYIELD FUND, INC., APRIL 30, 2004
Notes to Financial Statements
1. Significant Accounting Policies:
MuniYield Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940, as amended, as a non-diversified, closed-end
management investment company. The Fund's financial statements are
prepared in conformity with accounting principles generally accepted
in the United States of America, which may require the use of
management accruals and estimates. Actual results may differ from
these 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 MYD. 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 last available
bid price in the over-the-counter market or on the basis of yield
equivalents as obtained by the Fund's pricing service from one or
more 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). Swap
agreements are valued by quoted fair values received daily by the
Fund from the counterparty. Short-term investments with a remaining
maturity 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 both to increase the return of the
Fund and to hedge, or protect, its exposure to interest rate
movements and movements in the securities 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.
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 may purchase and write call and 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).
MUNIYIELD FUND, INC., APRIL 30, 2004
Notes to Financial Statements (continued)
Written and purchased options are non-income producing investments.
* Forward interest rate swaps--The Fund may enter into forward
interest rate swaps. In a forward interest rate swap, the Fund and
the counterparty agree to make periodic net payments on a specified
notional contract amount, commencing on a specified future effective
date, unless terminated earlier. When the agreement is closed, the
Fund records a realized gain or loss in an amount equal to the value
of the agreement.
(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). Realized gains and losses on security
transactions are determined on the identified cost basis. Dividend
income is recorded on the ex-dividend dates. Interest income is
recognized on the accrual basis. The Fund amortizes all premiums and
discounts on debt securities.
(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.
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. For the six months ended April 30,
2004, FAM reimbursed the Fund in the amount of $19,446.
For the six months ended April 30, 2004, the Fund reimbursed FAM
$9,331 for certain accounting services.
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, 2004 were $130,677,008 and
$118,712,198, respectively.
Net realized gains (losses) for the six months ended April 30, 2004
and net unrealized appreciation as of April 30, 2004 were as
follows:
Realized Unrealized
Gains (Losses) Appreciation
Long-term investments $ 633,096 $ 33,081,313
Forward interest rate swaps (1,855,581) --
-------------- --------------
Total $ (1,222,485) $ 33,081,313
============== ==============
As of April 30, 2004, net unrealized appreciation for Federal income
tax purposes aggregated $33,495,161, of which $42,657,194 related
to appreciated securities and $9,162,033 related to depreciated
securities. The aggregate cost of investments at April 30, 2004 for
Federal income tax purposes was $858,308,018.
4. Stock Transactions:
The Fund is authorized to issue 200,000,000 shares of 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 stock
without approval of the holders of Common Stock.
MUNIYIELD FUND, INC., APRIL 30, 2004
Notes to Financial Statements (concluded)
Preferred Stock
Auction Market Preferred Stock are redeemable shares of Preferred
Stock of the Fund, with a par value of $.05 per share and a
liquidation preference of $25,000 per share, plus accrued and unpaid
dividends, 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, 2004 were as follows: Series A,
..97%, Series B, 1.05%, Series C, .83%, Series D, .87%, Series E,
..97% and Series F, .97%.
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, 2004, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
an affiliate of FAM, earned $135,927 as commissions.
5. Capital Loss Carryforward:
On October 31, 2003, the Fund had a net capital loss carryforward of
$65,210,507, of which $3,822,310 expires in 2006; $14,347,687
expires in 2007; $40,851,001 expires in 2008; $6,000,235 expires in
2009 and $189,274 expires in 2010. This amount will be available to
offset like amounts of any future taxable gains.
6. Subsequent Event:
The Fund paid a tax-exempt income dividend to holders of Common
Stock in the amount of $.081000 per share on May 27, 2004 to
shareholders of record on May 14, 2004.
MUNIYIELD FUND, INC., APRIL 30, 2004
Quality Profile
The quality ratings of securities in the Fund as of April 30, 2004
were as follows:
Percent of
Total
S&P Rating/Moody's Rating Investments
AAA/Aaa 40.8%
AA/Aa 8.2
A/A 8.5
BBB/Baa 16.5
BB/Ba 8.6
B/B 3.2
CCC/Caa 1.8
NR (Not Rated) 12.4
Other* --++
*Temporary investments in short-term variable rate municipal
securities.
++Holdings are less than 0.1%.
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 stable level of dividend
distributions, 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 particular 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 Net Assets, which comprises part of
the financial information included in this report.
MUNIYIELD FUND, INC., APRIL 30, 2004
Proxy Results
During the six-month period ended April 30, 2004, MuniYield Fund,
Inc.'s Common Stock shareholders voted on the following proposal.
The proposal was approved at a shareholders' meeting on April 27,
2004. A description of the proposal and number of shares voted are
as follows:
Shares Voted Shares Withheld
For From Voting
1. To elect the Fund's Directors: Joe Grills 41,882,206 964,043
Andre F. Perold 41,887,035 959,214
Roberta Cooper Ramo 41,894,596 951,653
Robert S. Salomon, Jr. 41,899,384 946,865
Stephen B. Swensrud 41,848,597 997,652
During the six-month period ended April 30, 2004, MuniYield Fund,
Inc.'s Preferred Stock shareholders (Series A - F) voted on the
following proposal. The proposal was approved at a shareholders'
meeting on April 27, 2004. A description of the proposal and number
of shares voted are as follows:
Shares Voted Shares Withheld
For From Voting
1. To elect the Fund's Board of Directors: James H. Bodurtha,
Joe Grills, Herbert I. London, Andre F. Perold,
Roberta Cooper Ramo, Robert S. Salomon, Jr. and
Stephen B. Swensrud 10,091 48
Officers and Directors
Terry K. Glenn, President and Director
James H. Bodurtha, Director
Joe Grills, Director
Herbert I. London, Director
Andre F. Perold, Director
Roberta Cooper Ramo, Director
Robert S. Salomon, Jr., Director
Stephen B. Swensrud, Director
Kenneth A. Jacob, Senior Vice President
John M. Loffredo, Senior Vice President
Theodore R. Jaeckel Jr., Vice President
Donald C. Burke, Vice President and Treasurer
Phillip S. Gillespie, Secretary
Custodian
The Bank of New York
100 Church 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
101 Barclay Street - 7 West
New York, NY 10286
NYSE Symbol
MYD
MUNIYIELD FUND, INC., APRIL 30, 2004
Electronic Delivery
The Fund offers electronic delivery of communications to its
shareholders. In order to receive this service, you must
register your account and provide us with e-mail information.
To sign up for this service, simply access this website
http://www.icsdelivery.com/live and follow the instructions.
When you visit this site, you will obtain a personal identification
number (PIN). You will need this PIN should you wish to update your
e-mail address, choose to discontinue this service and/or make any
other changes to the service. This service is not available for
certain retirement accounts at this time.
MUNIYIELD FUND, INC., APRIL 30, 2004
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this
semi-annual report
Item 4 - Principal Accountant Fees and Services - Not Applicable to
this semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable to
this semi-annual report
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for
Closed-End Management Investment Companies - Not Applicable to this
semi-annual report
Item 8 - Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers - Not Applicable
Item 9 - Submission of Matters to a Vote of Security Holders - Not
Applicable
Item 10 - Controls and Procedures
10(a) - The registrant's certifying officers have reasonably
designed such disclosure controls and procedures to ensure material
information relating to the registrant is made known to us by others
particularly during the period in which this report is being
prepared. The registrant's certifying officers have determined that
the registrant's disclosure controls and procedures are effective
based on our evaluation of these controls and procedures as of a
date within 90 days prior to the filing date of this report.
10(b) - There were no changes in the registrant's internal control
over financial reporting (as defined in Rule 30a-3(d) under the Act
(17 CFR 270.30a-3(d)) that occurred during the last fiscal half-year
of the period covered by this report that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
Item 11 - Exhibits attached hereto
11(a)(1) - Code of Ethics - Not Applicable to this semi-annual
report
11(a)(2) - Certifications - Attached hereto
11(a)(3) - Not Applicable
11(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MuniYield Fund, Inc.
By: _/s/ Terry K. Glenn_______
Terry K. Glenn,
President of
MuniYield Fund, Inc.
Date: June 18, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By: _/s/ Terry K. Glenn________
Terry K. Glenn,
President of
MuniYield Fund, Inc.
Date: June 18, 2004
By: _/s/ Donald C. Burke________
Donald C. Burke,
Chief Financial Officer of
MuniYield Fund, Inc.
Date: June 18, 2004