UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-6435
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: 10/31/03
Date of reporting period: 11/01/02 - 10/31/03
Item 1 - Attach shareholder report
(BULL LOGO)
Merrill Lynch Investment Managers
www.mlim.ml.com
MuniYield Fund, Inc.
Annual Report
October 31, 2003
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.
MuniYield Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
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 October 31,
2003, the percentage of the Fund's total net assets invested in
inverse floaters was 9.65%.
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., OCTOBER 31, 2003
A Letter From the President
Dear Shareholder
As 2003 draws to a close, it seems appropriate to reflect on what
has been a meaningful year in many respects. We saw the beginning
and the end of all-out war in Iraq, equity market uncertainty turned
to strength and sub par gross domestic product growth of 1.4% in the
first quarter of 2003 grew to an extraordinary 8.2% in the third
quarter. Amid the good news, fixed income investments, which had
become the asset class of choice during the preceding three-year
equity market decline, faced new challenges.
During 2003, municipal bond yields rose and fell in reaction to
geopolitical events, equity market performance, economic activity
and employment figures. By the end of October, long-term municipal
revenue bond yields were slightly higher than they were one year
earlier, at 5.24% as measured by the Bond Buyer Revenue Bond Index.
With many state deficits at record levels, municipalities issued
nearly $400 billion in new long-term tax-exempt bonds during the
12-month period ended October 31, 2003. The availability of bonds,
together with attractive yield ratios relative to U.S. Treasury
issues, made municipal bonds a popular fixed income investment
alternative.
Throughout the year, our portfolio managers continued to work
diligently to deliver on our commitment to provide superior
performance within reasonable expectations for risk and return. This
included striving to outperform our peers and the market indexes.
With that said, remember that the advice and guidance of a skilled
financial advisor often can mean the difference between successful
and unsuccessful investing. A financial professional can help you
choose those investments that will best serve you as you plan for
your financial future.
Finally, I am proud to premiere a new look to our shareholder
communications. Our portfolio manager commentaries have been trimmed
and organized in such a way that you can get the information you
need at a glance, in plain language. Today's markets are confusing
enough. We want to help you put it all in perspective. The report's
new size also allows us certain mailing efficiencies. Any cost
savings in production or postage are passed on to the Fund and,
ultimately, to Fund shareholders.
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., OCTOBER 31, 2003
A Discussion With Your Fund's Portfolio Manager
Contracting credit spreads, combined with our overweight position in
high yield securities, contributed to the Fund's strong absolute and
relative performance during the fiscal year.
Describe the market environment relative to municipal bonds during
the fiscal year.
At the end of October, long-term tax-exempt bond yields were
90% - 95% of comparable U.S. Treasury securities, substantially
exceeding their historical average of 85% - 88%. Considering their
tax-free status, this made long-term municipal bonds an attractive
investment alternative during the past 12 months.
Long-term U.S. Treasury bond yields declined throughout most of the
first seven months of the fiscal year, while bond prices--which move
in the opposite direction of yields--rose in response to weak equity
markets, concerns about a growing conflict in Iraq, and continued
sub-par U.S. economic growth. The Federal Reserve Board continued to
lower short-term interest rates to stimulate business and consumer
economic activity. Bond yields reversed course in July and August,
rising sharply as economic conditions began to improve and as most
analysts agreed the Federal Reserve Board had finished lowering
interest rates. In mid-August, U.S. Treasury bond yields reached
5.45%, their highest level during the period, before again moving
lower for the remainder of the fiscal year. At the end of the
12-month period, long-term U.S. Treasury bond yields were 5.13%,
15 basis points (.15%) higher than a year earlier. The relatively
modest yield increase year-over-year masks the considerable month-to-
month volatility in interest rates during the period.
Long-term tax-exempt bond yields also rose from year-ago levels,
although to a lesser extent than U.S. Treasury bonds. Yield
movements were less volatile than those experienced by U.S. Treasury
issues, because municipal bond prices typically are less sensitive
to short-term economic and geopolitical pressures. By the end of
October, long-term municipal revenue bond yields stood at 5.24%, a
small increase compared to the previous year. Yields for long-term
Aaa-rated tax-exempt bonds (the highest rated) declined 10 basis
points during the past year. The decline largely reflected
investors' growing demand for high-quality bonds, which provided
valuable stability in an uncertain market.
The municipal market's outperformance of the U.S. Treasury market
was especially impressive given the dramatic in-crease in new bond
issuance during the fiscal year. State and local governments took
advantage of historically low interest rates to finance existing
infrastructure needs and refinance outstanding high-interest-rate
debt. During the past 12 months, municipalities issued nearly $400
billion in new securities, an increase of more than 12% compared to
last year's issuance. More recently, however, new municipal bond
issuance slowed as tax-exempt bond yields rose, making borrowing
more expensive. This decline in supply helped support the tax-exempt
market's recent performance.
How did the Fund perform during the fiscal year in light of the
existing market conditions?
For the year ended October 31, 2003, the Common Stock of MuniYield
Fund, Inc. had a net annualized yield of 6.76%, based on a year-end
per share net asset value of $13.85 and $.936 per share in income
dividends. Over the same period, the total investment return on the
Fund's Common Stock was +11.99%, based on a change in per share net
asset value from $13.28 to $13.85, and assuming reinvestment of
$.936 per share in ordinary income dividends.
For the six-month period ended October 31, 2003, the total
investment return on the Fund's Common Stock was +6.57%, based on a
change in per share net asset value from $13.46 to $13.85, and
assuming reinvestment of $.468 per share in ordinary income
dividends.
The average yields for the Fund's Auction Market Preferred Stock for
the six months ended October 31, 2003 were: .94% for Series A; .86%
for Series B; .99% for Series C; 1.01% for Series D; .81% for Series
E; and .82% for Series F.
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 of the Financial
Statements 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.
MUNIYIELD FUND, INC., OCTOBER 31, 2003
The Fund's return, based on net asset value, significantly exceeded
that of its comparable Lipper category of General Municipal Debt
Funds (Leveraged), which had an average return of +8.08% for the
12-month period ended October 31, 2003. The favorable performance is
attributed primarily to the Fund's overweight position in low
investment grade, speculative grade and non-rated securities
relative to its peers. As credit spreads narrowed during the past
year, the high yield sector turned in the municipal market's best
performance. Investments in corporate-backed industrial development
bonds, health care issuance, and tax-backed debt all contributed to
this year's results.
What changes were made to the portfolio during the period?
Two major themes characterized our portfolio management. First, we
emphasized speculative-grade and non-rated securities in recognition
of the attractive risk/reward characteristics of the high yield
market during the fiscal year. Credit spreads--the difference in
yields between high yield and AAA-rated securities--were at
historically wide levels early in the period and narrowed
considerably as investors appeared to become more risk tolerant
later in the period. This spread contraction, combined with the
Fund's above-average weighting in high yield securities, contributed
to strong performance during the past 12 months.
The second theme involved increasing the portfolio's defensiveness
while reinvesting proceeds from portfolio holdings subject to early
redemption. During the period, we saw several issuers redeem their
bonds prior to maturity to take advantage of continued low interest
rates. With that, we sought to reinvest the proceeds from the early
calls while at the same time adopting a more defensive stance for
the Fund. Because of the tendency for reinvestments to lengthen the
portfolio's overall duration, we employed measures to achieve a more
desirable average life for the portfolio. Maintaining the longer
duration would have left the Fund vulnerable to future interest rate
changes. Thus, we sold several of the portfolio's longer-dated
securities since the distant maturity dates made these positions
most vulnerable to a rise in interest rates. We reinvested the
proceeds from those sales in high-quality callable bonds with low
volatility characteristics. Late in the year, as another defensive
measure, we initiated a modest hedge designed to insulate the
portfolio from the risk associated with a rise in interest rates.
During the period, the Fund's borrowing costs generally remained in
the .75% - 1.25% range. These attractive funding levels, in
combination with a steep tax-exempt yield curve, generated a
significant income benefit to the Fund's Common Stock shareholders.
Further declines in the Fund's borrowing costs would require
significant easing of monetary policy by the Federal Reserve Board.
While such action is not expected, neither is an imminent increase
in short-term interest rates. We expect short-term borrowing costs
to remain near current attractive levels for the coming months.
However, should the spread between short-term and long-term interest
rates narrow, the benefits of leverage will decline, and as a
result, reduce the yield on the Fund's Common Stock. (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?
The portfolio was positioned for an expected rise in interest rates,
as improving economic news at the close of the period heightened
speculation over whether the Federal Reserve Board would shift its
easing policy. While our recent investment strategy has placed the
Fund more defensively than its peers, we believe this posturing
should benefit relative performance if market sentiment does cause
interest rates to rise.
Should the high-yield segment of the municipal market continue to
outperform, we may look to selectively reduce the portfolio's
holdings in this area to gradually position the Fund more
appropriately for an eventual reversal in this trend.
Theodore R. Jaeckel Jr.
Portfolio Manager
November 20, 2003
We are pleased to announce that Theodore R. Jaeckel Jr. has been
named Portfolio Manager of the Fund and is primarily responsible for
the day-to-day management of the portfolio. Mr. Jaeckel has been
Director of Merrill Lynch Investment Managers since 1997. Prior to
that, he was Vice President with MLIM since 1991.
MUNIYIELD FUND, INC., OCTOBER 31, 2003
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 $ 2,540
Alaska--0.3% NR* Baa3 2,050 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds
(Amerada Hess Pipeline Corporation), 6.10% due 2/01/2024 2,096
Arizona--8.4% Arizona State Transportation Board, Highway Revenue Bonds,
Sub-Series A:
AA Aa2 5,825 5% due 7/01/2021 6,044
AA Aa2 7,030 5% due 7/01/2022 7,247
AA Aa2 5,240 5% due 7/01/2023 5,366
Maricopa County, Arizona, IDA, M/F Housing Revenue Refunding
Bonds (CRS Pine Ridge Housing Corporation), Series A-1 (d)(g):
AAA NR* 5,000 6% due 10/20/2031 5,214
AAA NR* 5,000 6.05% due 10/20/2036 5,239
Phoenix, Arizona, IDA, Airport Facility Revenue Refunding
Bonds (America West Airlines Inc. Project), AMT:
NR* Caa3 5,800 6.25% due 6/01/2019 4,649
NR* Caa3 6,900 6.30% due 4/01/2023 5,324
Phoenix, Arizona, IDA, M/F Housing Revenue Bonds (Summit
Apartments LLC Project) (g):
AAA NR* 1,610 6.25% due 7/20/2022 1,697
AAA NR* 1,425 6.45% due 7/20/2032 1,500
AAA NR* 1,305 6.55% due 7/20/2037 1,380
Pima County, Arizona, IDA, M/F Housing Revenue Bonds
(Columbus Village) Series A (g):
AAA NR* 990 5.90% due 10/20/2021 1,079
AAA NR* 1,725 6% due 10/20/2031 1,859
AAA NR* 2,295 6.05% due 10/20/2041 2,465
NR* Baa2 2,500 Yavapai County, Arizona, IDA, Hospital Facility Revenue Bonds
(Yavapai Regional Medical Center), Series A, 6% due 8/01/2033 2,531
California-- AAA Aaa 1,360 Anaheim, California, Union High School District, GO,
14.9% Series A, 5% due 8/01/2022 (i) 1,395
California State, Various Purpose, GO:
BBB A3 6,800 5.125% due 11/01/2024 6,693
BBB A3 6,800 5.25% due 11/01/2025 6,774
BBB A3 5,550 5.50% due 11/01/2033 5,631
Golden State Tobacco Securitization Corporation of California,
Tobacco Settlement Revenue Bonds:
BBB Baa2 5,500 Series A-3, 7.875% due 6/01/2042 5,650
BBB Baa2 7,500 Series A-4, 7.80% due 6/01/2042 7,667
BBB- Baa1 9,520 Series B, 5.50% due 6/01/2043 9,036
AAA Aaa 18,400 Los Angeles, California, Unified School District, GO, Series A,
5% due 7/01/2023 (i) 18,781
AAA Aaa 6,160 Los Angeles, California, Water and Power Revenue Refunding Bonds
(Power System), Series A, Subseries A-2, 5% due 7/01/2022 (e) 6,331
Los Angeles County, California, Schools Regionalized Business
Services, COP, Pooled Financing, Series A (c):
AAA Aaa 1,430 5.90%** due 8/01/2019 651
AAA Aaa 2,510 6%** due 8/01/2029 611
AA Aa3 1,250 Sacramento County, California, Sanitation District Financing
Authority, Revenue Refunding Bonds, Trust Receipts, Class R,
Series A, 10.591% due 12/01/2019 (k) 1,504
AAA Aaa 5,145 Santa Clara, California, Subordinated Electric Revenue Bonds,
Series A, 5% due 7/01/2022 (e) 5,288
AAA Aaa 7,465 University of California Revenue Bonds (Multiple Purpose Projects),
Series Q, 5% due 9/01/2021 (i) 7,729
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., OCTOBER 31, 2003
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
California University of California, Revenue Refunding Bonds, Series A (c):
(concluded) AAA Aaa $ 3,000 5.125% due 5/15/2019 $ 3,180
AAA Aaa 2,500 5.125% due 5/15/2020 2,632
BBB+ A2 2,175 Vernon, California, Electric System Revenue Bonds (Malburg
Generating Station Project), 5.30% due 4/01/2026 2,154
Colorado--5.7% AA Aa2 775 Colorado HFA Revenue Refunding Bonds (S/F Program), AMT,
Series D-2, 6.90% due 4/01/2029 791
Colorado Health Facilities Authority, Health Facilities Revenue
Bonds (National Benevolent Association):
NR* B3 1,000 Series A, 6.375% due 9/01/2029 615
NR* B3 750 Series C, 7% due 3/01/2024 461
AAA NR* 8,000 Denver, Colorado, City and County Airport Revenue Bonds, AMT,
Series D, 7.75% due 11/15/2013 (c) 10,045
NR* Baa2 5,500 Denver, Colorado, Urban Renewal Authority, Tax Increment Revenue
Bonds (Pavilions), AMT, 7.75% due 9/01/2016 5,883
Elk Valley, Colorado, Public Improvement Revenue Bonds (Public
Improvement Fee), Series A:
NR* NR* 1,735 7.10% due 9/01/2014 1,778
NR* NR* 5,065 7.35% due 9/01/2031 5,189
BB+ Ba1 3,500 Northwest Parkway, Colorado, Public Highway Authority Revenue
Bonds, First Tier, Sub-Series D, 7.125% due 6/15/2041 3,559
NR* NR* 6,850 Plaza Metropolitan District No. 1, Colorado, Tax Allocation
Revenue Bonds (Public Improvement Fees), 8% due 12/01/2025 6,859
Connecticut-- NR* NR* 650 Connecticut State Development Authority, IDR (AFCO Cargo BDL-LLC
0.1% Project), AMT, 7.35% due 4/01/2010 657
Florida--4.5% NR* NR* 880 Bonnet Creek Resort, Florida, Community Development District,
Special Assessment Revenue Bonds, 7.50% due 5/01/2034 920
A A3 5,000 Highlands County, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Adventist Health System), Series D, 6%
due 11/15/2025 5,256
Hillsborough County, Florida, IDA, Exempt Facilities Revenue
Bonds (National Gypsum), AMT:
NR* NR* 11,500 Series A, 7.125% due 4/01/2030 12,183
NR* NR* 5,000 Series B, 7.125% due 4/01/2030 5,297
AAA Aaa 1,490 Miami-Dade County, Florida, Aviation Revenue Bonds (Miami
International Airport), AMT, Series A, 5% due 10/01/2033 (h) 1,476
Saint Lucie County, Florida, Sales Tax Revenue Refunding and
Improvement Bonds (e):
AAA Aaa 2,140 5.25% due 10/01/2022 2,255
AAA Aaa 500 5.25% due 10/01/2023 524
Georgia--3.0% AAA Aaa 12,140 Atlanta, Georgia, Airport Revenue Refunding Bonds, Series A,
5.875% due 1/01/2016 (h) 13,687
NR* NR* 4,600 Atlanta, Georgia, Tax Allocation Revenue Bonds (Atlantic
Station Project), 7.90% due 12/01/2024 4,731
Idaho--2.0% AA NR* 1,025 Idaho Housing Agency, S/F Mortgage Revenue Refunding Bonds, AMT,
Senior Series C-2, 7.15% due 7/01/2023 1,026
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 11,317
Illinois--4.9% NR* B2 795 Beardstown, Illinois, IDR (Jefferson Smurfit Corp. Project),
8% due 10/01/2016 832
AAA Aaa 13,200 Chicago, Illinois, O'Hare International Airport, Airport Revenue
Bonds, 3rd Lien, AMT, Series B-2, 6% due 1/01/2029 (o) 14,329
NR* Aaa 525 Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT, Series B,
7.625% due 9/01/2027 (f)(g)(l) 535
NR* B3 2,750 Illinois Development Finance Authority, PCR, Refunding (Illinois
Power Company Project), Series A, 7.375% due 7/01/2006 (b) 3,188
AAA Aaa 3,285 Illinois Development Finance Authority Revenue Bonds (Presbyterian
Home Lake Project), Series B, 6.30% due 9/01/2022 (i) 3,702
NR* NR* 2,500 Illinois Educational Facilities Authority, Revenue Refunding
Bonds (Chicago Osteopathic Health System), 7.25% due 11/15/2019 (b) 2,561
NR* Ba3 1,250 Illinois Health Facilities Authority Revenue Bonds (Holy Cross
Hospital Project), 6.70% due 3/01/2014 904
A1 VMIG1++ 10 Illinois Health Facilities Authority, Revenue Refunding Bonds
(University of Chicago Hospitals), VRDN, 1.12% 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) 4,296
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 1,298
MUNIYIELD FUND, INC., OCTOBER 31, 2003
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
Kentucky--0.7% BBB Baa2 $ 4,000 Perry County, Kentucky, Solid Waste Disposal Revenue Bonds
(TJ International Project), AMT, 7% due 6/01/2024 $ 4,150
Louisiana-- BB- NR* 24,000 Port New Orleans, Louisiana, IDR, Refunding (Continental
3.8% Grain Company Project), 6.50% due 1/01/2017 23,286
Maryland--1.2% NR* NR* 3,000 Maryland State Energy Financing Administration, Limited
Obligation Revenue Bonds (Cogeneration--AES Warrior Run), AMT,
7.40% due 9/01/2019 3,041
A Baa1 4,000 Maryland State Health and Higher Educational Facilities Authority,
Revenue Refunding Bonds (University of Maryland Medical System),
6% due 7/01/2032 4,192
Minnesota-- Eden Prairie, Minnesota, M/F Housing Revenue Bonds (Rolling
0.6% Hills Project), Series A (g):
NR* A1 420 6% due 8/20/2021 461
NR* A1 2,000 6.20% due 2/20/2043 2,174
NR* Aa2 990 Minneapolis, Minnesota, M/F Housing Revenue Bonds (Gaar Scott
Loft Project), AMT, 5.95% due 5/01/2030 1,051
Missouri--0.8% Fenton, Missouri, Tax Increment Revenue Refunding and Improvement
Bonds (Gravois Bluffs):
NR* NR* 1,005 6.75% due 10/01/2015 1,032
NR* NR* 2,800 7% due 10/01/2021 3,010
AAA NR* 795 Missouri State Housing Development Commission, S/F Mortgage
Revenue Bonds, Homeownership, AMT, Series B, 7.55% due
9/01/2027 (f)(g) 801
New Hampshire-- BBB+ Baa1 3,425 New Hampshire Health and Education Facilities Authority,
0.6% Revenue Refunding Bonds (Elliot Hospital), Series B, 5.60% due
10/01/2022 3,401
New Jersey-- NR* NR* 3,000 New Jersey EDA, First Mortgage Revenue Bonds (The Presbyterian
10.3% Home), Series A, 6.375% due 11/01/2031 2,949
NR* NR* 4,400 New Jersey EDA, Retirement Community Revenue Bonds (Cedar Crest
Village Inc. Facility), Series A, 7.25% due 11/15/2031 4,473
New Jersey EDA, Special Facility Revenue Bonds (Continental
Airlines Inc. Project), AMT:
B Caa2 3,905 6.25% due 9/15/2019 3,446
B Caa2 10,695 6.25% due 9/15/2029 9,091
BB+ NR* 4,680 New Jersey Health Care Facilities Financing Authority Revenue
Bonds (Pascack Valley Hospital Association), 6.625% due 7/01/2036 4,687
AAA NR* 4,360 Port Authority of New York and New Jersey Revenue Refunding
Bonds, DRIVERS, AMT, Series 177, 10.62% due 10/15/2032 (e)(k) 5,328
AAA NR* 20,575 Port Authority of New York and New Jersey, Special Obligation
Revenue Bonds, DRIVERS, AMT, Series 192, 10.12% due
12/01/2025 (e)(k) 23,300
BBB Baa2 7,500 Tobacco Settlement Financing Corporation of New Jersey,
Asset-Backed Revenue Bonds, 6% due 6/01/2037 6,141
BBB Baa2 4,500 Tobacco Settlement Financing Corporation of New Jersey Revenue
Bonds, 6.75% due 6/01/2039 4,082
New York-- Long Island Power Authority, New York, Electric System Revenue
23.6% Bonds, Series C:
A- Baa1 2,405 5% due 9/01/2022 2,409
A- Baa1 2,500 5% due 9/01/2024 2,492
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) 7,135
AAA Aaa 7,500 Metropolitan Transportation Authority, New York, Transportation
Revenue Refunding Bonds, Series F, 5.25% due 11/15/2027 (e) 7,778
BBB+ A3 10,000 New York City, New York, City IDA, Special Facilities Revenue
Bonds (Terminal One Group Association Project), AMT, 6.125% due
1/01/2024 10,302
New York City, New York, City Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds (k):
AAA NR* 5,000 DRIVERS, Series 198, 10.15% due 6/15/2026 (e) 5,985
AAA Aaa 3,000 RITR, Series 11, 10.27% due 6/15/2026 (i) 3,665
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 14,939
New York City, New York, GO, Refunding, Series G:
AAA Aaa 2,090 5.75% due 2/01/2014 (e) 2,274
AAA Aaa 2,000 5.75% due 2/01/2014 (h) 2,176
AAA Aaa 10,000 New York City, New York, GO, Refunding, Trust Receipts,
Series R, 11.363% due 5/15/2014 (h)(k) 13,545
AA- NR* 6,795 New York State Dormitory Authority, Hospital Revenue Refunding
Bonds (North General Hospital), 5.75% due 2/15/2015 7,637
MUNIYIELD FUND, INC., OCTOBER 31, 2003
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
New York New York State Dormitory Authority, Revenue Refunding Bonds
(concluded) (Mount Sinai Health), Series A:
BB Ba1 $ 5,000 6.75% due 7/01/2020 $ 5,107
BB Ba1 315 6.50% due 7/01/2025 317
AAA Aaa 3,100 New York State Thruway Authority, Second General Highway
and Bridge Trust Fund Revenue Bonds, Series A, 5.25% due
4/01/2023 (e) 3,248
New York State Thruway, Transportation Authority, State Personal
Income Tax Revenue Bonds, Series A (e):
AAA Aaa 1,575 5% due 3/15/2020 1,637
AAA Aaa 1,575 5% due 3/15/2022 1,618
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 10,555
NR* NR* 2,500 Suffolk County, New York, IDA, IDR, Refunding (Nissequogue
Cogeneration Partners Facility), AMT, 5.50% due 1/01/2023 2,308
Tobacco Settlement Financing Corporation of New York, Revenue
Bonds, Series A-1 (c):
AAA NR* 8,450 5.25% due 6/01/2021 8,878
AAA NR* 13,875 5.25% due 6/01/2022 14,480
A+ A1 10,000 Triborough Bridge and Tunnel Authority, New York, Subordinate
Revenue Bonds, 5.25% due 11/15/2030 10,299
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 3,426
NR* NR* 2,895 6.50% due 1/01/2034 2,867
North BBB Baa3 4,750 North Carolina Eastern Municipal Power Agency, Power System
Carolina--2.5% Revenue Bonds, Series D, 6.75% due 1/01/2026 5,096
AA Aa2 635 North Carolina HFA, Home Ownership Revenue Bonds, AMT,
Series 8-A, 6.20% due 7/01/2016 666
AA Aa2 1,305 North Carolina HFA, S/F Revenue Bonds, Series II, 6.20% due
3/01/2016 (d) 1,368
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 1,007
North Carolina Municipal Power Agency Number 1, Catawba Electric
Revenue Bonds, Series A (e):
AAA Aaa 4,500 5.25% due 1/01/2019 4,789
AAA Aaa 2,250 5.25% due 1/01/2020 2,382
Ohio--4.0% Cincinnati, Ohio, City School District, Classroom Facilities
Construction & Improvement, GO (I):
AAA Aaa 4,000 5% due 12/01/2025 4,057
AAA Aaa 4,250 5% due 12/01/2026 4,304
Cuyahoga County, Ohio, Mortgage Revenue Bonds (West Tech
Apartments Project), AMT (g):
NR* Aaa 1,410 5.75% due 9/20/2020 1,470
NR* Aaa 2,250 5.85% due 9/20/2030 2,335
Hamilton County, Ohio, Sewer System Revenue Refunding and
Improvement Bonds (Metropolitan Sewer District), Series A (e):
AAA Aaa 1,620 5% due 12/01/2017 1,724
AAA Aaa 4,050 5% due 12/01/2018 4,276
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 2,253
NR* Aaa 1,000 Montgomery County, Ohio, Water System Revenue Refunding Bonds
(Greater Moraine Beaver), 5.375% due 11/15/2015 (c) 1,106
Princeton, Ohio, City School District, GO (e):
AAA Aaa 1,575 5% due 12/01/2024 1,600
AAA Aaa 1,710 5% due 12/01/2025 1,734
Oklahoma--0.9% Holdenville, Oklahoma, Industrial Authority, Correctional
Facility Revenue Bonds (b)(c)(j):
AAA NR* 1,650 6.60% due 7/01/2006 1,896
AAA NR* 3,250 6.70% due 7/01/2006 3,743
Oregon--2.7% AAA Aaa 7,905 Oregon State Department of Administrative Services, COP,
Series A, 6% due 5/01/2010 (b)(c) 9,379
AA Aa3 5,170 Oregon State, GO, Refunding (Veterans Welfare), Series 80A,
5.70% due 10/01/2032 5,350
NR* NR* 1,830 Portland, Oregon, Housing Authority, Housing Revenue Bonds
(Pine Square and University Place), Series A, 5.875% due 1/01/2022 1,781
MUNIYIELD FUND, INC., OCTOBER 31, 2003
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
Pennsylvania-- AAA Aaa $ 5,000 Lehigh County, Pennsylvania, IDA, PCR, Refunding (Pennsylvania
14.0% Power and Light Company Project), Series B, 6.40% due
9/01/2029 (e) $ 5,295
AAA Aaa 9,675 Pennsylvania Convention Center, Revenue Refunding Bonds,
Series A, 6.70% due 9/01/2014 (e) 10,296
Pennsylvania Economic Development Financing Authority,
Exempt Facilities Revenue Bonds (National Gypsum Company), AMT:
NR* NR* 16,350 Series A, 6.25% due 11/01/2027 16,290
NR* NR* 8,800 Series B, 6.125% due 11/01/2027 8,643
AA+ Aa2 1,445 Pennsylvania HFA, S/F Mortgage Refunding Bonds, AMT, Series 42,
6.85% due 4/01/2025 1,482
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) 18,271
NR* NR* 1,265 Philadelphia, Pennsylvania, Authority for IDR, Commercial
Development, AMT, 7.75% due 12/01/2017 1,283
Philadelphia, Pennsylvania, Authority for IDR, Refunding,
Commercial Development:
NR* NR* 3,650 (Days Inn), Series B, 6.50% due 10/01/2027 3,557
NR* NR* 4,000 (Doubletree), Series A, 6.50% due 10/01/2027 3,868
AAA Aaa 10,965 Philadelphia, Pennsylvania, School District, GO, Series A,
5.50% due 2/01/2031 (i) 11,558
A- NR* 5,000 Sayre, Pennsylvania, Health Care Facilities Authority Revenue
Bonds (Guthrie Health Issue), Series B, 1%/7.125% due
12/01/2031 (n) 5,440
Rhode Island-- Woonsocket, Rhode Island, GO (h):
0.5% NR* Aaa 1,225 6% due 10/01/2017 1,418
NR* Aaa 1,195 6% due 10/01/2018 1,377
Tennessee-- NR* NR* 4,610 Hardeman County, Tennessee, Correctional Facilities Corporation
2.4% Revenue Bonds, 7.75% due 8/01/2017 4,766
BB+ Ba1 10,000 McMinn County, Tennessee, IDB, Solid Waste Revenue Bonds
(Recycling Facility--Calhoun Newsprint), AMT, 7.40% due 12/01/2022 9,999
Texas--17.9% Austin, Texas, Convention Center Revenue Bonds (Convention
Enterprises Inc.), First Tier, Series A:
BBB- Baa3 5,000 6.70% due 1/01/2028 5,281
BBB- Baa3 5,000 6.70% due 1/01/2032 5,281
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 1,368
NR* Aaa 2,460 6% due 8/01/2031 2,567
NR* Aaa 1,000 6.05% due 8/01/2036 1,045
BBB Baa2 6,850 Brazos River Authority, Texas, PCR, Refunding (Utilities
Electric Company), AMT, Series B, 5.05% due 6/01/2030 7,153
BBB- Ba1 3,755 Brazos River Authority, Texas, Revenue Refunding Bonds (Reliant
Energy Inc. Project), Series B, 7.75% due 12/01/2018 4,064
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 5,608
AAA Aaa 15,000 Dallas-Fort Worth, Texas, International Airport Revenue Bonds,
AMT, Series A, 5.50% due 11/01/2033 (e) 15,525
Gregg County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds (Good Shepherd Medical Center Project) (a):
AA NR* 3,000 6.875% due 10/01/2020 3,573
AA NR* 2,000 6.375% due 10/01/2025 2,251
AA- Aa3 5,000 Guadalupe-Blanco River Authority, Texas, Sewage and Solid Waste
Disposal Facility Revenue Bonds (E. I. du Pont de Nemours and
Company Project), AMT, 6.40% due 4/01/2026 5,334
NR* Ba3 3,900 Gulf Coast, Texas, IDA, Solid Waste Disposal Revenue Bonds
(Citgo Petroleum Corporation Project), AMT, 7.50% due 5/01/2025 3,871
NR* Baa3 1,600 Houston, Texas, Industrial Development Corporation Revenue Bonds
(Air Cargo), AMT, 6.375% due 1/01/2023 1,621
Lower Colorado River Authority, Texas, PCR (Samsung Austin
Semiconductor), AMT:
A- A3 6,200 6.375% due 4/01/2027 6,509
A- A3 3,330 6.95% due 4/01/2030 3,649
MUNIYIELD FUND, INC., OCTOBER 31, 2003
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
State Ratings+++ Ratings+++ Amount Municipal Bonds Value
Texas Matagorda County, Texas, Navigation District Number 1 Revenue
(concluded) Refunding Bonds (Reliant Energy Inc.):
BBB- Ba1 $ 3,000 AMT, Series B, 5.95% due 5/01/2030 $ 2,825
BBB- Ba1 7,030 Series C, 8% due 5/01/2029 7,633
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 3,994
San Antonio, Texas, Water Revenue Refunding Bonds:
AA- Aa3 1,000 5.875% due 5/15/2016 1,138
AA- Aa3 1,000 5.875% due 5/15/2017 1,135
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) 6,869
AA Aa1 4,090 Texas State, Water Financial Assisstance, GO, AMT, Series A,
5.375% due 8/01/2033 4,159
AAA Aaa 7,020 Tyler, Texas, Waterworks and Sewer Revenue Bonds, 5.70% due
9/01/2030 (h) 7,571
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) 1,701
Virginia-- BBB NR* 5,000 Amelia County, Virginia, IDA, Solid Waste Disposal Revenue
2.8% Refunding Bonds (Waste Management Project), VRDN, AMT, 4.90%
due 4/01/2027 (m) 5,139
AAA Aaa 5,000 Fairfax County, Virginia, EDA, Resource Recovery Revenue
Refunding Bonds, AMT, Series A, 6.10% due 2/01/2011 (c) 5,687
NR* NR* 1,000 Pittsylvania County, Virginia, IDA, Revenue Refunding Bonds,
Exempt-Facility, AMT, Series A, 7.55% due 1/01/2019 981
Pocahontas Parkway Association, Virginia, Toll Road Revenue Bonds:
NR* Ba1 6,200 First Tier, Sub-Series C, 6.25%** due 8/15/2031 225
BB Baa3 3,000 Senior-Series A, 5.50% due 8/15/2028 2,318
BB Baa3 24,800 Senior Series B, 6.67%** due 8/15/2029 3,168
Washington-- Vancouver, Washington, Housing Authority, Housing Revenue
0.3% Bonds (Teal Pointe Apartments Project), AMT:
NR* NR* 945 6% due 9/01/2022 906
NR* NR* 1,250 6.20% due 9/01/2032 1,189
West B+ Ba3 1,000 Princeton, West Virginia, Hospital Revenue Refunding Bonds
Virginia--0.7% (Community Hospital Association Inc. Project), 6% due 5/01/2019 773
BBB Baa2 3,000 Upshur County, West Virginia, Solid Waste Disposal Revenue Bonds
(TJ International Project), AMT, 7% due 7/15/2025 3,167
Wisconsin-- NR* Baa3 700 Milwaukee, Wisconsin, Revenue Bonds (Air Cargo), AMT, 6.50% due
0.5% 1/01/2025 705
AAA Aaa 2,030 Wisconsin State, GO, AMT, Series B, 6.20% due 11/01/2026 (e) 2,250
Wyoming--0.8% BB+ Ba3 2,550 Sweetwater County, Wyoming, Solid Waste Disposal Revenue Bonds
(FMC Corporation Project), AMT, Series A, 7% due 6/01/2024 2,550
AA NR* 2,500 Wyoming Student Loan Corporation, Student Loan Revenue Refunding
Bonds, Series A, 6.20% due 6/01/2024 2,653
Puerto Puerto Rico Commonwealth Highway and Transportation Authority,
Rico--7.3% Transportation Revenue Bonds:
A Baa1 16,360 Series D, 5.75% due 7/01/2041 17,667
AAA Aaa 15,000 Trust Receipts, Class R, Series B, 10.364% due 7/01/2035 (e)(k) 18,888
AAA Aaa 2,500 Puerto Rico Electric Power Authority, Power Revenue Bonds, Trust
Receipts, Class R, Series 16 HH, 10.094% due 7/01/2013 (i)(k) 3,349
NR* Aa2 4,350 Puerto Rico Public Finance Corporation Revenue Bonds, DRIVERS,
Series 272, 9.41% due 8/01/2030 (k) 4,919
Total Municipal Bonds (Cost--$845,796)--143.6% 883,392
MUNIYIELD FUND, INC., OCTOBER 31, 2003
Schedule of Investments (concluded) (In Thousands)
Shares
Held Short-Term Securities Value
16,613 Merrill Lynch Institutional Tax-Exempt Fund++++ $ 16,613
Total Short-Term Securities (Cost--$16,613)--2.7% 16,613
Total Investments (Cost--$862,409)--146.3% 900,005
Unrealized Appreciation on Forward Interest Rate Swaps--Net***--0.1% 679
Other Assets Less Liabilities--1.2% 7,485
Preferred Stock, at Redemption Value--(47.6%) (293,000)
---------
Net Assets Applicable to Common Stock--100.0% $ 615,169
=========
(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)Connie Lee 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 October 31, 2003.
(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 October 31, 2003.
(n)Represents a step bond. The first interest rate is in effect
until a predetermined date and the second interest rate is effective
thereafter until maturity.
(o)XL Capital Insured.
*Not Rated.
**Represents a zero coupon bond; the interest rate shown reflects
the effective yield at the time of purchase by the Fund.
***Forward interest rate swaps entered into as of October 31, 2003
were as follows:
(in Thousands)
Unrealized
Notional Appreciation/
Amount Depreciation
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate and
pay a fixed rate equal to 4.129%
Broker, Morgan Stanley Capital
Services, Inc.
Expires January 2024 $45,000 $ 920
Receive a variable rate equal to
3 Month LIBOR at quarterly reset
date and pay a fixed rate equal
to 4.863%
Broker, JP Morgan Chase Bank
Expires February 2014 $71,600 (241)
-----
Total $ 679
=====
++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 16,601 $143
+++Ratings of issues shown are unaudited.
See Notes to Financial Statements.
MUNIYIELD FUND, INC., OCTOBER 31, 2003
Statement of Net Assets
As of October 31, 2003
Assets
Investments, at value (identified cost--$862,409,305) $ 900,005,091
Cash 19,617
Unrealized appreciation on forward interest rate swaps--net 678,543
Receivables:
Securities sold $ 30,490,248
Interest 16,107,560
Dividends from affiliates 401 46,598,209
---------------
Prepaid expenses 9,449
---------------
Total assets 947,310,909
---------------
Liabilities
Payables:
Securities purchased 38,131,005
Dividends to Common Stock shareholders 521,067
Investment adviser 430,878
Other affiliates 6,384 39,089,334
---------------
Accrued expenses and other liabilities 52,938
---------------
Total liabilities 39,142,272
---------------
Preferred Stock
Preferred Stock, 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 $ 615,168,637
===============
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 $ 11,468,593
Accumulated realized capital losses on investments--net (71,835,374)
Unrealized appreciation on investments--net 38,274,329
---------------
Total accumulated losses--net (22,092,452)
---------------
Total--Equivalent to $13.85 net asset value per share of Common Stock
(market price--$13.29) $ 615,168,637
===============
*Auction Market Preferred Stock.
See Notes to Financial Statements.
MUNIYIELD FUND, INC., OCTOBER 31, 2003
Statement of Operations
For the Year Ended October 31, 2003
Investment Income
Interest $ 52,909,327
Dividends from affiliates 143,036
---------------
Total income 53,052,363
---------------
Expenses
Investment advisory fees $ 4,474,523
Commission fees 764,424
Accounting services 257,433
Transfer agent fees 121,367
Professional fees 73,654
Custodian fees 44,629
Printing and shareholder reports 41,912
Directors' fees and expenses 40,842
Listing fees 31,871
Pricing fees 25,612
Other 68,179
---------------
Total expenses before reimbursement 5,944,446
Reimbursement of expenses (32,653)
---------------
Total expenses after reimbursement 5,911,793
---------------
Investment income--net 47,140,570
---------------
Realized & Unrealized Gain (Loss) on Investments--Net
Realized loss on investments--net (749,067)
Change in unrealized appreciation on investments--net 23,276,447
---------------
Total realized and unrealized gain on investments--net 22,527,380
---------------
Dividends to Preferred Stock Shareholders
Investment income--net (3,013,368)
---------------
Net Increase in Net Assets Resulting from Operations $ 66,654,582
===============
See Notes to Financial Statements.
MUNIYIELD FUND, INC., OCTOBER 31, 2003
Statements of Changes in Net Assets
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 2003 2002
Operations
Investment income--net $ 47,140,570 $ 46,897,259
Realized loss on investments--net (749,067) (3,498,012)
Change in unrealized appreciation/depreciation on investments--net 23,276,447 (9,783,800)
Dividends to Preferred Stock shareholders (3,013,368) (4,354,062)
--------------- ---------------
Net increase in net assets resulting from operations 66,654,582 29,261,385
--------------- ---------------
Dividends to Common Stock Shareholders
Investment income--net (41,587,071) (40,283,240)
--------------- ---------------
Net decrease in net assets resulting from dividends to Common Stock
shareholders (41,587,071) (40,283,240)
--------------- ---------------
Common Stock Transactions
Proceeds from issuance of Common Stock resulting from reorganization -- 73,630,647
Value of shares issued to Common Stock shareholders in reinvestment
of dividends -- 2,755,535
--------------- ---------------
Net increase in net assets derived from Common Stock transactions -- 76,386,182
--------------- ---------------
Net Assets Applicable to Common Stock
Total increase in net assets applicable to Common Stock 25,067,511 65,364,327
Beginning of year 590,101,126 524,736,799
--------------- ---------------
End of year* $ 615,168,637 $ 590,101,126
=============== ===============
*Undistributed investment income--net $ 11,468,593 $ 8,945,048
=============== ===============
See Notes to Financial Statements.
MUNIYIELD FUND, INC., OCTOBER 31, 2003
Financial Highlights
The following per share data and ratios have been derived
from information provided in the financial statements.
For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 2003 2002 2001++++ 2000++++ 1999++++
Per Share Operating Performance
Net asset value, beginning of year $ 13.28 $ 13.55 $ 13.08 $ 13.21 $ 16.27
---------- ---------- ---------- ---------- ----------
Investment income--net 1.06+++ 1.04 1.03 1.09 1.12
Realized and unrealized gain (loss)
on investments--net .52 (.31) .52 (.08) (2.34)
Dividends and distributions to Preferred
Stock shareholders:
Investment income--net (.07) (.08) (.22) (.27) (.17)
Realized gain on investments--net -- -- -- -- (.04)
In excess of realized gain on
investments--net -- -- -- -- (.03)
---------- ---------- ---------- ---------- ----------
Total from investment operations 1.51 .65 1.33 .74 (1.46)
---------- ---------- ---------- ---------- ----------
Less dividends and distributions to
Common Stock shareholders:
Investment income--net (.94) (.92) (.86) (.87) (.95)
Realized gain on investments--net -- -- -- -- (.38)
In excess of realized gain on
investment--net -- -- -- -- (.27)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions to
Common Stock shareholders (.94) (.92) (.86) (.87) (1.60)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 13.85 $ 13.28 $ 13.55 $ 13.08 $ 13.21
========== ========== ========== ========== ==========
Market price per share, end of year $ 13.29 $ 12.88 $ 13.94 $ 12.625 $ 12.875
========== ========== ========== ========== ==========
Total Investment Return*
Based on market price per share 10.80% (.94%) 17.79% 5.26% (15.35%)
========== ========== ========== ========== ==========
Based on net asset value per share 11.99% 5.07% 10.51% 6.28% (9.92%)
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Common Stock
Total expenses, net of reimbursement** .99% 1.01% 1.01% .99% .93%
========== ========== ========== ========== ==========
Total expenses** .99% 1.01% 1.01% .99% .93%
========== ========== ========== ========== ==========
Total investment income--net** 7.86% 7.97% 7.74% 8.35% 7.42%
========== ========== ========== ========== ==========
Amount of dividends to Preferred Stock
shareholders .50% .74% 1.63% 2.07% 1.11%
========== ========== ========== ========== ==========
Investment income--net, to Common Stock
shareholders 7.36% 7.23% 6.11% 6.28% 6.31%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Common & Preferred Stock**
Total expenses, net of reimbursement .66% .67% .68% .66% .65%
========== ========== ========== ========== ==========
Total expenses .66% .67% .68% .66% .65%
========== ========== ========== ========== ==========
Total investment income--net 5.27% 5.33% 5.20% 5.56% 5.17%
========== ========== ========== ========== ==========
MUNIYIELD FUND, INC., OCTOBER 31, 2003
Financial Highlights (concluded)
The following per share data and ratios have been derived
from information provided in the financial statements.
For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 2003 2002 2001++++ 2000++++ 1999++++
Ratios Based on Average Net Assets of Preferred Stock
Dividends to Preferred Stock shareholders 1.02% 1.50% 3.33% 4.12% 2.55%
========== ========== ========== ========== ==========
Supplemental Data
Net assets applicable to Common Stock,
end of year (in thousands) $ 615,169 $ 590,101 $ 524,737 $ 501,361 $ 506,030
========== ========== ========== ========== ==========
Preferred Stock outstanding, end of
year (in thousands) $ 293,000 $ 293,000 $ 250,000 $ 250,000 $ 250,000
========== ========== ========== ========== ==========
Portfolio turnover 61.95% 104.63% 83.26% 103.44% 78.42%
========== ========== ========== ========== ==========
Leverage
Asset coverage per $1,000 $ 3,100 $ 3,014 $ 3,099 $ 3,005 $ 3,024
========== ========== ========== ========== ==========
Dividends Per Share on Preferred Stock Outstanding
Series A--Investment income--net $ 256 $ 346 $ 816 $ 1,052 $ 588
========== ========== ========== ========== ==========
Series B--Investment income--net $ 274 $ 369 $ 864 $ 1,009 $ 595
========== ========== ========== ========== ==========
Series C--Investment income--net $ 261 $ 353 $ 847 $ 1,032 $ 687
========== ========== ========== ========== ==========
Series D--Investment income--net $ 281 $ 504 $ 850 $ 1,035 $ 694
========== ========== ========== ========== ==========
Series E--Investment income--net $ 236 $ 346 $ 805 $ 1,038 $ 627
========== ========== ========== ========== ==========
Series F--Investment income--net $ 247 $ 324++ -- -- --
========== ========== ========== ========== ==========
*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.
See Notes to Financial Statements.
MUNIYIELD FUND, INC., OCTOBER 31, 2003
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. 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). Forward
interest rate swaps are valued by quoted fair values received daily
by the Fund from the counterparty. 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 is authorized to 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).
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 ealier. When the agreement is closed, the
Fund records a realized gain or loss in an amount equal to the value
of the agreement.
MUNIYIELD FUND, INC., OCTOBER 31, 2003
Notes to Financial Statements (continued)
(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.
(f) Reclassification--Accounting principles generally accepted in
the United States of America require that certain components of net
assets be adjusted to reflect permanent differences between
financial and tax reporting. Accordingly, the current year's
permanent book/tax differences of $1,025 has been reclassified
between undistributed net investment income and paid-in capital in
excess of par and $15,561 has been reclassified between
undistributed net investment income and accumulated net realized
capital losses. These reclassifications have no effect on net assets
or net asset value per share.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect, wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of .50% of
the Fund's average weekly net assets, including proceeds from the
issuance of Preferred Stock. For the year ended October 31, 2003,
FAM reimbursed the Fund in the amount of $32,653.
In addition, FAM received $2,600 in commissions on the execution
of portfolio transactions for the Fund for the year ended October
31, 2003.
For the year ended October 31, 2003, the Fund reimbursed FAM $19,339
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 year ended October 31, 2003 were $530,097,622 and
$535,930,180, respectively.
Net realized gains (losses) for the year ended October 31, 2003 and
net unrealized gains as of October 31, 2003 were as follows:
Realized Unrealized
Gains (Losses) Gains
Long-term investments $ (230,035) $ 37,595,786
Financial futures contracts (1,354,485) --
Forward interest rate swaps 835,453 678,543
------------- -------------
Total $ (749,067) $ 38,274,329
============= =============
As of October 31, 2003, net unrealized appreciation for Federal
income tax purposes aggregated $37,878,913, of which $47,691,278
related to appreciated securities and $9,812,365 related to
depreciated securities. The aggregate cost of investments at
October 31, 2003 for Federal income tax purposes was $862,126,178.
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.
Common Stock
Shares issued and outstanding during the year ended October 31, 2003
remained constant and for the year ended October 31, 2002 increased
by 5,508,830 as a result of issuance of Common Stock from
reorganization and 207,485 as a result of dividend reinvestment.
MUNIYIELD FUND, INC., OCTOBER 31, 2003
Notes to Financial Statements (concluded)
Preferred Stock
Auction Market Preferred Stock ("AMPS") 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 October 31, 2003 were as
follows: Series A, .81%; Series B, .81%; Series C, .875%, Series D,
1.00%, Series E, .85% and Series F, .85%.
Shares issued and outstanding during the year ended October 31, 2003
remained constant and for the year ended October 31, 2002 increased
by 1,720 as a result of issuance of Preferred Stock from
reorganization.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from .25% to .375%,
calculated on the proceeds of each auction. For the year ended
October 31, 2003, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, an affiliate of FAM, earned $353,723 as commissions.
5. Distributions to Shareholders:
The Fund paid a tax-exempt income dividend to holders of Common
Stock in the amount of $.078000 per share on November 26, 2003 to
shareholders of record on November 14, 2003.
The tax character of distributions paid during the fiscal years
ended October 31, 2003 and October 31, 2002 was as follows:
10/31/2003 10/31/2002
Distributions paid from:
Tax-exempt income $ 44,600,439 $ 44,637,302
------------- -------------
Total distributions $ 44,600,439 $ 44,637,302
============= =============
As of October 31, 2003, the components of accumulated losses on a
tax basis were as follows:
Undistributed tax-exempt income--net $ 11,058,555
Undistributed long-term capital gains--net --
-------------
Total undistributed earnings--net 11,058,555
Capital loss carryforward (65,210,507)*
Unrealized gains--net 32,059,500**
-------------
Total accumulated losses--net $(22,092,452)
=============
*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.
**The difference between book-basis and tax-basis net unrealized
gains is attributable primarily to the tax deferral of losses on
wash sales, the tax deferral of losses on straddles, and the
difference between book and tax amortization methods for premiums
and discounts on fixed income securities.
MUNIYIELD FUND, INC., OCTOBER 31, 2003
Independent Auditors' Report
To the Shareholders and Board of Directors
of MuniYield Fund, Inc.:
We have audited the accompanying statement of net assets, including
the schedule of investments, of MuniYield Fund, Inc. as of October
31, 2003, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for
each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and 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 as of October 31, 2003, by
correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures.
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, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of MuniYield Fund, Inc. as of October 31, 2003,
the results of its operations for the year then ended, the changes
in its net assets for each of the two years in the period then
ended, and its financial highlights for each of the five years in
the period then ended, in conformity with accounting principles
generally accepted in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
December 17, 2003
Important Tax Information (unaudited)
All of the net investment income distributions paid by MuniYield
Fund, Inc. during its taxable year ended October 31, 2003 qualify as
tax-exempt interest dividends for Federal income tax purposes.
Please retain this information for your records.
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., OCTOBER 31, 2003
Automatic Dividend Reinvestment Plan
The following description of the Fund's Automatic Dividend
Reinvestment Plan (the "Plan") is sent to you annually as required
by Federal securities laws.
Pursuant to the Fund's Plan, unless a holder of Common Stock
otherwise elects, all dividend and capital gains distributions will
be automatically reinvested by The Bank of New York (the "Plan
Agent"), as agent for shareholders in administering the Plan, in
additional shares of Common Stock of the Fund. Holders of Common
Stock who elect not to participate in the Plan will receive all
distributions in cash paid by check mailed directly to the
shareholder of record (or, if the shares are held in street or other
nominee name then to such nominee) by The Bank of New York, as
dividend paying agent. Such participants may elect not to
participate in the Plan and to receive all distributions of
dividends and capital gains in cash by sending written instructions
to The Bank of New York, as dividend paying agent, at the address
set forth below. Participation in the Plan is completely voluntary
and may be terminated or resumed at any time without penalty by
written notice if received by the Plan Agent not less than ten days
prior to any dividend record date; otherwise such termination will
be effective with respect to any subsequently declared dividend or
distribution.
Whenever the Fund declares an income dividend or capital gains
distribution (collectively referred to as "dividends") payable
either in shares or in cash, non-participants in the Plan will
receive cash and participants in the Plan will receive the
equivalent in shares of Common Stock. The shares will be acquired by
the Plan Agent for the participant's account, depending upon the
circumstances described below, either (i) through receipt of
additional unissued but authorized shares of Common Stock from the
Fund ("newly issued shares") or (ii) by purchase of outstanding
shares of Common Stock on the open market ("open-market purchases")
on the New York Stock Exchange or elsewhere. If on the payment date
for the dividend, the net asset value per share of the Common Stock
is equal to or less than the market price per share of the Common
Stock plus estimated brokerage commissions (such conditions being
referred to herein as "market premium"), the Plan Agent will invest
the dividend amount in newly issued shares on behalf of the
participant. The number of newly issued shares of Common Stock to be
credited to the participant's account will be determined by dividing
the dollar amount of the dividend by the net asset value per share
on the date the shares are issued, provided that the maximum
discount from the then current market price per share on the date of
issuance may not exceed 5%. If on the dividend payment date the net
asset value per share is greater than the market value (such
condition being referred to herein as "market discount"), the Plan
Agent will invest the dividend amount in shares acquired on behalf
of the participant in open-market purchases.
In the event of a market discount on the dividend payment date, the
Plan Agent will have until the last business day before the next
date on which the shares trade on an "ex-dividend" basis or in no
event more than 30 days after the dividend payment date (the "last
purchase date") to invest the dividend amount in shares acquired in
open-market purchases. It is contemplated that the Fund will pay
monthly income dividends. Therefore, the period during which open-
market purchases can be made will exist only from the payment date
on the dividend through the date before the next "ex-dividend" date,
which typically will be approximately ten days. If, before the Plan
Agent has completed its open-market purchases, the market price of a
share of Common Stock exceeds the net asset value per share, the
average per share purchase price paid by the Plan Agent may exceed
the net asset value of the Fund's shares, resulting in the
acquisitions of fewer shares than if the dividend had been paid in
newly issued shares on the dividend payment date. Because of the
foregoing difficulty with respect to open-market purchases, the Plan
provides that if the Plan Agent is unable to invest the full
dividend amount in open-market purchases during the purchase period
or if the market discount shifts to a market premium during the
purchase period, the Plan Agent will cease making open-market
purchases and will invest the uninvested portion of the dividend
amount in newly issued shares at the close of business on the last
purchase date determined by dividing the uninvested portion of the
dividend by the net asset value per share.
The Plan Agent maintains all shareholders' accounts in the Plan and
furnishes written confirmation of all transactions in the account,
including information needed by shareholders for tax records. Shares
in the account of each Plan participant will be held by the Plan
Agent in non-certificated form in the name of the participant, and
each shareholder's proxy will include those shares purchased or
received pursuant to the Plan. The Plan Agent will forward all proxy
solicitation materials to participants and vote proxies for shares
held pursuant to the Plan in accordance with the instructions of the
participants.
MUNIYIELD FUND, INC., OCTOBER 31, 2003
Automatic Dividend Reinvestment Plan (concluded)
In the case of shareholders such as banks, brokers or nominees which
hold shares of others who are the beneficial owners, the Plan Agent
will administer the Plan on the basis of the number of shares
certified from time to time by the record shareholders as
representing the total amount registered in the record shareholder's
name and held for the account of beneficial owners who are to
participate in the Plan.
There will be no brokerage charges with respect to shares issued
directly by the Fund as a result of dividends or capital gains
distributions payable either in shares or in cash. However, each
participant will pay a pro rata share of brokerage commissions
incurred with respect to the Plan Agent's open-market purchases in
connection with the reinvestment of dividends.
The automatic reinvestment of dividends and distributions will not
relieve participants of any Federal, state or local income tax that
may be payable (or required to be withheld) on such dividends.
Shareholders participating in the Plan may receive benefits not
available to shareholders not participating in the Plan. If the
market price plus commissions of the Fund's shares is above the net
asset value, participants in the Plan will receive shares of the
Fund at less than they could otherwise purchase them and will have
shares with a cash value greater than the value of any cash
distribution they would have received on their shares. If the market
price plus commissions is below the net asset value, participants
will receive distributions in shares with a net asset value greater
than the value of any cash distribution they would have received on
their shares. However, there may be insufficient shares available in
the market to make distributions in shares at prices below the net
asset value. Also, since the Fund does not redeem shares, the price
on resale may be more or less than the net asset value.
The value of shares acquired pursuant to the Plan will generally be
excluded from gross income to the extent that the cash amount
reinvested would be excluded from gross income. If, when the Fund's
shares are trading at a premium over net asset value, the Fund
issues shares pursuant to the Plan that have a greater fair market
value than the amount of cash reinvested, it is possible that all or
a portion of such discount (which may not exceed 5% of the fair
market value of the Fund's shares) could be viewed as a taxable
distribution. If the discount is viewed as a taxable distribution,
it is also possible that the taxable character of this discount
would be allocable to all the shareholders, including shareholders
who do not participate in the Plan. Thus, shareholders who do not
participate in the Plan might be required to report as ordinary
income a portion of their distributions equal to their allocable
share of the discount.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the
Plan. There is no direct service charge to participants in the Plan;
however, the Fund reserves the right to amend the Plan to include a
service charge payable by the participants.
All correspondence concerning the Plan should be directed to the
Plan Agent at The Bank of New York, Church Street Station, P.O. Box
11258, New York , NY 10286-1258, Telephone: 800-432-8224.
MUNIYIELD FUND, INC., OCTOBER 31, 2003
Officers and Directors (unaudited)
Number of
Portfolios in Other Public
Position(s) Length Fund Complex Directorships
Held Of Time Overseen by Held by
Name, Address & Age with Fund Served Principal Occupation(s) During Past 5 Years Director Director
Interested Director
Terry K. Glenn* President 1999 to President and Chairman of Merrill Lynch 124 Funds None
P.O. Box 9011 and present Investment Managers, L.P. ("MLIM")/Fund 163 Portfolios
Princeton, Director and Asset Management, L.P. ("FAM")--Advised
NJ 08543-9011 1991 to Funds since 1999; Chairman (Americas
Age: 63 present Region) of MLIM from 2000 to 2002;
Executive Vice President of MLIM and FAM
(which terms as used herein include their
corporate predecessors) from 1983 to 2002;
President of FAM Distributors, Inc. ("FAMD")
from 1986 to 2002 and Director thereof from
1991 to 2002; Executive Vice President and
Director of Princeton Services, Inc.
("Princeton Services") from 1993 to 2002;
President of Princeton Administrators, L.P.
from 1989 to 2002; Director of Financial Data
Services, Inc. since 1985.
* Mr. Glenn is a director, trustee or member of an advisory board of
certain other investment companies for which MLIM or FAM acts as
investment adviser. Mr. Glenn is an "interested person," as
described in the Investment Company Act, of the Fund based on his
former positions with MLIM, FAM, FAMD, Princeton Services and
Princeton Administrators, L.P. The Director's term is unlimited.
Directors serve until their resignation, removal or death, or until
December 31 of the year in which they turn 72. As Fund President,
Mr. Glenn serves at the pleasure of the Board of Directors.
Independent Directors*
James H. Bodurtha Director 1995 to Director, The China Business Group, Inc. 40 Funds None
P.O. Box 9095 present since 1996 and Executive Vice President 59 Portfolios
Princeton, thereof from 1996 to 2003; Chairman of
NJ 08543-9095 the Board, Berkshire Holding Corporation
Age: 59 since 1980; Partner, Squire, Sanders &
Dempsey from 1980 to 1993.
Joe Grills Director 2002 to Member of the Committee of Investment of 40 Funds Kimco Realty
P.O. Box 9095 present Employee Benefit Assets of the Association 59 Portfolios Corporation
Princeton, of Financial Professionals ("CIEBA") since
NJ 08543-9095 1986 and its Chairman from 1991 to 1992;
Age: 68 Member of the Investment Advisory Committees
of the State of New York Common Retirement
Fund since 1989; Member of the Investment
Advisory Committee of the Howard Hughes
Medical Institute from 1997 to 2000;
Director, Duke Management Company since
1992 and Vice Chairman thereof since 1998;
Director LaSalle Street Fund from 1995 to
2001; Director, Kimco Realty Corporation
since 1997; Member of the Investment
Advisory Committee of the Virginia
Retirement System since 1998 and Vice
Chairman thereof since 2002; Director,
Montpelier Foundation since 1998 and Vice
Chairman thereof since 2000; Member of the
Investment Committee of the Woodberry Forest
School since 2000; Member of the Investment
Committee of the National Trust for Historic
Preservation since 2000.
MUNIYIELD FUND, INC., OCTOBER 31, 2003
Officers and Directors (unaudited)(continued)
Number of
Portfolios in Other Public
Position(s) Length Fund Complex Directorships
Held Of Time Overseen by Held by
Name, Address & Age with Fund Served Principal Occupation(s) During Past 5 Years Director Director
Independent Directors* (concluded)
Herbert I. London Director 1991 to John M. Olin Professor of Humanities, New 40 Funds None
P.O. Box 9095 present York University since 1993 and Professor 59 Portfolios
Princeton, thereof since 1980; President of Hudson
NJ 08543-9095 Institute since 1997 and Trustee thereof
Age: 64 since 1980.
Andre F. Perold Director 1991 to George Gund Professor of Finance and 40 Funds None
P.O. Box 9095 present Banking, Harvard Business School since 59 Portfolios
Princeton, 2000 and a member of the faculty since
NJ 08543-9095 1979; Director and Chairman of the Board,
Age: 51 UNX, Inc. since 2003; Director, Sanlam
Limited and Sanlam Life since 2001; Director,
Genbel Securities and Gensec Bank since 1999;
Director, Stockback.com from 2002 to 2002;
Director, Bulldogresearch.com from 2000
to 2001; Director, Sanlam Investment
Management from 1999 to 2001; Director,
Quantec Limited from 1991 to 1999.
Roberta Cooper Ramo Director 1999 to Shareholder, Modrall, Sperling, Roehl, 40 Funds None
P.O. Box 9095 present Harris & Sisk, P.A. since 1993; Director 59 Portfolios
Princeton, of Cooper's, Inc. since 1999 and Chairman
NJ 08543-9095 of the Board since 2000; Director of ECMC,
Age: 61 Inc. since 2001.
Robert S. Salomon, Jr. Director 2002 to Principal of STI Management since 1994, 40 Funds None
P.O. Box 9095 present Trustee of Commonfund from 1980 to 2001; 59 Portfolios
Princeton, Director of Rye Country Day School since
NJ 08543-9095 2001.
Age: 66
Stephen B. Swensrud Director 2002 to Chairman, Fernwood Advisors (investment 41 Funds None
P.O. Box 9095 present adviser) since 1996; Principal of Fernwood 60 Portfolios
Princeton, Associates (financial consultant) since
NJ 08543-9095 1975; Chairman of RPP Corporation since
Age: 70 1978; Director, International Mobile
Communications, Inc. since 1998.
* The Director's term is unlimited. Directors serve until their
resignation, removal or death, or until December 31 of the year in
which they turn 72.
MUNIYIELD FUND, INC., OCTOBER 31, 2003
Officers and Directors (unaudited)(concluded)
Position(s) Length
Held Of Time
Name, Address & Age with Fund Served* Principal Occupation(s) During Past 5 Years
Fund Officers
Donald C. Burke Vice 1993 to First Vice President of MLIM and FAM since 1997 and Treasurer thereof since
P.O. Box 9011 President present 1999; Senior Vice President and Treasurer of Princeton Services since 1999;
Princeton, and and Vice President of FAMD since 1999; Director of MLIM Taxation since 1990.
NJ 08543-9011 Treasurer 1999 to
Age: 43 present
Kenneth A. Jacob Senior 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
P.O. Box 9011 Vice present Management) of MLIM from 1997 to 2000.
Princeton, President
NJ 08543-9011
Age: 52
John M. Loffredo Senior 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
P.O. Box 9011 Vice present Management) of MLIM from 1998 to 2000.
Princeton, President
NJ 08543-9011
Age: 39
Brian D. Stewart Secretary 2003 to Vice President (Legal Advisory) of MLIM since 2002; Attorney with Reed Smith
P.O. Box 9011 present from 2001 to 2002; Attorney with Saul Ewing from 1999 to 2001.
Princeton,
NJ 08543-9011
Age: 34
* Officers of the Fund serve at the pleasure of the Board of
Directors.
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
100 Church Street
New York, NY 10286
NYSE Symbol
MYD
MUNIYIELD FUND, INC., OCTOBER 31, 2003
Electronic Delivery
The Fund is now offering 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.
Quality Profile (unaudited)
The quality ratings of securities in the Fund as of October 31, 2003
were as follows:
Percent of
Total
S&P Rating/Moody's Rating Investments
AAA/Aaa 42.2%
AA/Aa 10.0
A/A 10.5
BBB/Baa 11.6
BB/Ba 8.0
B/B 2.0
CCC/Caa 1.7
NR (Not Rated) 14.0
Other* 0.0++
*Temporary investments on short-term municipal securities.
++Holdings are less than 0.1%.
MUNIYIELD FUND, INC., OCTOBER 31, 2003
Item 2 - Did registrant adopt a code of ethics, as of the end of the
period covered by this report, that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by
the registrant or a third party? If not, why not? Briefly describe
any amendments or waivers that occurred during the period. State
here if code of ethics/amendments/waivers are on website and give
website address-. State here if fund will send code of ethics to
shareholders without charge upon request--
The registrant has adopted a code of ethics, as of the end of the
period covered by this report, that applies to the registrant's
principal executive officer, principal financial officer and
principal accounting officer, or persons performing similar
functions. A copy of the code of ethics is available without charge
upon request by calling toll-free 1-800-MER-FUND (1-800-637-3863).
Item 3 - Did the registrant's board of directors determine that the
registrant either: (i) has at least one audit committee financial
expert serving on its audit committee; or (ii) does not have an
audit committee financial expert serving on its audit committee? If
yes, disclose name of financial expert and whether he/she is
"independent," (fund may, but is not required, to disclose
name/independence of more than one financial expert) If no, explain
why not. -
The registrant's board of directors has determined that (i) the
registrant has the following audit committee financial experts
serving on its audit committee and (ii) each audit committee
financial expert is independent: (1) Joe Grills, (2) Andre Perold,
(3) Robert S. Salomon, Jr., and (4) Stephen B. Swensrud.
Item 4 - Disclose annually only (not answered until December 15,
2003)
(a) Audit Fees - Disclose aggregate fees billed for each of the last
two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial
statements or services that are normally provided by the accountant
in connection with statutory and regulatory filings or engagements
for those fiscal years. N/A.
(b) Audit-Related Fees - Disclose aggregate fees billed in each of
the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance
of the audit of the registrant's financial statements and are not
reported under paragraph (a) of this Item. Registrants shall
describe the nature of the services comprising the fees disclosed
under this category. N/A.
(c) Tax Fees - Disclose aggregate fees billed in each of the last
two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning.
Registrants shall describe the nature of the services comprising the
fees disclosed under this category. N/A.
(d) All Other Fees - Disclose aggregate fees billed in each of the
last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs
(a) through (c) of this Item. Registrants shall describe the nature
of the services comprising the fees disclosed under this category.
N/A.
(e)(1) Disclose the audit committee's pre-approval policies and
procedures described in paragraph (c)(7) of Rule 2-01 of Regulation
S-X. N/A.
(e)(2)Disclose the percentage of services described in each of
paragraphs (b) through (d) of this Item that were approved by the
audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X. N/A.
(f) If greater than 50%, disclose the percentage of hours expended
on the principal accountant's engagement to audit the registrant's
financial statements for the most recent fiscal year that were
attributed to work performed by persons other than the principal
accountant's full-time, permanent employees. N/A.
(g) Disclose the aggregate non-audit fees billed by the registrant's
accountant for services rendered to the registrant, and rendered to
the registrant's investment adviser (not including any sub-adviser
whose role is primarily portfolio management and is subcontracted
with or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant for each of the
last two fiscal years of the registrant. N/A.
(h) Disclose whether the registrant's audit committee has considered
whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser
whose role is primarily portfolio management and is subcontracted
with or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence. N/A.
Item 5 - If the registrant is a listed issuer as defined in Rule
10A-3 under the Exchange Act, state whether or not the registrant
has a separately-designated standing audit committee established in
accordance with Section 3(a)(58)(A) of the Exchange Act. If the
registrant has such a committee, however designated, identify each
committee member. If the entire board of directors is acting as the
registrant's audit committee in Section 3(a)(58)(B) of the Exchange
Act, so state.
If applicable, provide the disclosure required by Rule 10A-3(d)
under the Exchange Act regarding an exemption from the listing
standards for audit committees. N/A
(Listed issuers must be in compliance with the new listing rules by
the earlier of their first annual shareholders meeting after January
2004, or October 31, 2004 (annual requirement))
Item 6 - Reserved
Item 7 - For closed-end funds that contain voting securities in
their portfolio, describe the policies and procedures that it uses
to determine how to vote proxies relating to those portfolio
securities.
Proxy Voting Policies and Procedures
Each Fund's Board of Directors/Trustees has delegated to Merrill
Lynch Investment Managers, L.P. and/or Fund Asset Management, L.P.
(the "Investment Adviser") authority to vote all proxies relating to
the Fund's portfolio securities. The Investment Adviser has adopted
policies and procedures ("Proxy Voting Procedures") with respect to
the voting of proxies related to the portfolio securities held in
the account of one or more of its clients, including a Fund.
Pursuant to these Proxy Voting Procedures, the Investment Adviser's
primary objective when voting proxies is to make proxy voting
decisions solely in the best interests of each Fund and its
shareholders, and to act in a manner that the Investment Adviser
believes is most likely to enhance the economic value of the
securities held by the Fund. The Proxy Voting Procedures are
designed to ensure that that the Investment Adviser considers the
interests of its clients, including the Funds, and not the interests
of the Investment Adviser, when voting proxies and that real (or
perceived) material conflicts that may arise between the Investment
Adviser's interest and those of the Investment Adviser's clients are
properly addressed and resolved.
In order to implement the Proxy Voting Procedures, the Investment
Adviser has formed a Proxy Voting Committee (the "Committee"). The
Committee is comprised of the Investment Adviser's Chief Investment
Officer (the "CIO"), one or more other senior investment
professionals appointed by the CIO, portfolio managers and
investment analysts appointed by the CIO and any other personnel the
CIO deems appropriate. The Committee will also include two non-
voting representatives from the Investment Adviser's Legal
department appointed by the Investment Adviser's General Counsel.
The Committee's membership shall be limited to full-time employees
of the Investment Adviser. No person with any investment banking,
trading, retail brokerage or research responsibilities for the
Investment Adviser's affiliates may serve as a member of the
Committee or participate in its decision making (except to the
extent such person is asked by the Committee to present information
to the Committee, on the same basis as other interested
knowledgeable parties not affiliated with the Investment Adviser
might be asked to do so). The Committee determines how to vote the
proxies of all clients, including a Fund, that have delegated proxy
voting authority to the Investment Adviser and seeks to ensure that
all votes are consistent with the best interests of those clients
and are free from unwarranted and inappropriate influences. The
Committee establishes general proxy voting policies for the
Investment Adviser and is responsible for determining how those
policies are applied to specific proxy votes, in light of each
issuer's unique structure, management, strategic options and, in
certain circumstances, probable economic and other anticipated
consequences of alternate actions. In so doing, the Committee may
determine to vote a particular proxy in a manner contrary to its
generally stated policies. In addition, the Committee will be
responsible for ensuring that all reporting and recordkeeping
requirements related to proxy voting are fulfilled.
The Committee may determine that the subject matter of a recurring
proxy issue is not suitable for general voting policies and requires
a case-by-case determination. In such cases, the Committee may
elect not to adopt a specific voting policy applicable to that
issue. The Investment Adviser believes that certain proxy voting
issues require investment analysis - such as approval of mergers and
other significant corporate transactions - akin to investment
decisions, and are, therefore, not suitable for general guidelines.
The Committee may elect to adopt a common position for the
Investment Adviser on certain proxy votes that are akin to
investment decisions, or determine to permit the portfolio manager
to make individual decisions on how best to maximize economic value
for a Fund (similar to normal buy/sell investment decisions made by
such portfolio managers). While it is expected that the Investment
Adviser will generally seek to vote proxies over which the
Investment Adviser exercises voting authority in a uniform manner
for all the Investment Adviser's clients, the Committee, in
conjunction with a Fund's portfolio manager, may determine that the
Fund's specific circumstances require that its proxies be voted
differently.
To assist the Investment Adviser in voting proxies, the Committee
has retained Institutional Shareholder Services ("ISS"). ISS is an
independent adviser that specializes in providing a variety of
fiduciary-level proxy-related services to institutional investment
managers, plan sponsors, custodians, consultants, and other
institutional investors. The services provided to the Investment
Adviser by ISS include in-depth research, voting recommendations
(although the Investment Adviser is not obligated to follow such
recommendations), vote execution, and recordkeeping. ISS will also
assist the Fund in fulfilling its reporting and recordkeeping
obligations under the Investment Company Act.
The Investment Adviser's Proxy Voting Procedures also address
special circumstances that can arise in connection with proxy
voting. For instance, under the Proxy Voting Procedures, the
Investment Adviser generally will not seek to vote proxies related
to portfolio securities that are on loan, although it may do so
under certain circumstances. In addition, the Investment Adviser
will vote proxies related to securities of foreign issuers only on a
best efforts basis and may elect not to vote at all in certain
countries where the Committee determines that the costs associated
with voting generally outweigh the benefits. The Committee may at
any time override these general policies if it determines that such
action is in the best interests of a Fund.
From time to time, the Investment Adviser may be required to vote
proxies in respect of an issuer where an affiliate of the Investment
Adviser (each, an "Affiliate"), or a money management or other
client of the Investment Adviser (each, a "Client") is involved.
The Proxy Voting Procedures and the Investment Adviser's adherence
to those procedures are designed to address such conflicts of
interest. The Committee intends to strictly adhere to the Proxy
Voting Procedures in all proxy matters, including matters involving
Affiliates and Clients. If, however, an issue representing a non-
routine matter that is material to an Affiliate or a widely known
Client is involved such that the Committee does not reasonably
believe it is able to follow its guidelines (or if the particular
proxy matter is not addressed by the guidelines) and vote
impartially, the Committee may, in its discretion for the purposes
of ensuring that an independent determination is reached, retain an
independent fiduciary to advise the Committee on how to vote or to
cast votes on behalf of the Investment Adviser's clients.
In the event that the Committee determines not to retain an
independent fiduciary, or it does not follow the advice of such an
independent fiduciary, the powers of the Committee shall pass to a
subcommittee, appointed by the CIO (with advice from the Secretary
of the Committee), consisting solely of Committee members selected
by the CIO. The CIO shall appoint to the subcommittee, where
appropriate, only persons whose job responsibilities do not include
contact with the Client and whose job evaluations would not be
affected by the Investment Adviser's relationship with the Client
(or failure to retain such relationship). The subcommittee shall
determine whether and how to vote all proxies on behalf of the
Investment Adviser's clients or, if the proxy matter is, in their
judgment, akin to an investment decision, to defer to the applicable
portfolio managers, provided that, if the subcommittee determines to
alter the Investment Adviser's normal voting guidelines or, on
matters where the Investment Adviser's policy is case-by-case, does
not follow the voting recommendation of any proxy voting service or
other independent fiduciary that may be retained to provide research
or advice to the Investment Adviser on that matter, no proxies
relating to the Client may be voted unless the Secretary, or in the
Secretary's absence, the Assistant Secretary of the Committee
concurs that the subcommittee's determination is consistent with the
Investment Adviser's fiduciary duties
In addition to the general principles outlined above, the Investment
Adviser has adopted voting guidelines with respect to certain
recurring proxy issues that are not expected to involve unusual
circumstances. These policies are guidelines only, and the
Investment Adviser may elect to vote differently from the
recommendation set forth in a voting guideline if the Committee
determines that it is in a Fund's best interest to do so. In
addition, the guidelines may be reviewed at any time upon the
request of a Committee member and may be amended or deleted upon the
vote of a majority of Committee members present at a Committee
meeting at which there is a quorum.
The Investment Adviser has adopted specific voting guidelines with
respect to the following proxy issues:
* Proposals related to the composition of the Board of Directors of
issuers other than investment companies. As a general matter, the
Committee believes that a company's Board of Directors (rather than
shareholders) is most likely to have access to important, nonpublic
information regarding a company's business and prospects, and is
therefore best-positioned to set corporate policy and oversee
management. The Committee, therefore, believes that the foundation
of good corporate governance is the election of qualified,
independent corporate directors who are likely to diligently
represent the interests of shareholders and oversee management of
the corporation in a manner that will seek to maximize shareholder
value over time. In individual cases, the Committee may look at a
nominee's history of representing shareholder interests as a
director of other companies or other factors, to the extent the
Committee deems relevant.
* Proposals related to the selection of an issuer's independent
auditors. As a general matter, the Committee believes that
corporate auditors have a responsibility to represent the interests
of shareholders and provide an independent view on the propriety of
financial reporting decisions of corporate management. While the
Committee will generally defer to a corporation's choice of auditor,
in individual cases, the Committee may look at an auditors' history
of representing shareholder interests as auditor of other companies,
to the extent the Committee deems relevant.
* Proposals related to management compensation and employee
benefits. As a general matter, the Committee favors disclosure of
an issuer's compensation and benefit policies and opposes excessive
compensation, but believes that compensation matters are normally
best determined by an issuer's board of directors, rather than
shareholders. Proposals to "micro-manage" an issuer's compensation
practices or to set arbitrary restrictions on compensation or
benefits will, therefore, generally not be supported.
* Proposals related to requests, principally from management, for
approval of amendments that would alter an issuer's capital
structure. As a general matter, the Committee will support requests
that enhance the rights of common shareholders and oppose requests
that appear to be unreasonably dilutive.
* Proposals related to requests for approval of amendments to an
issuer's charter or by-laws. As a general matter, the Committee
opposes poison pill provisions.
* Routine proposals related to requests regarding the formalities of
corporate meetings.
* Proposals related to proxy issues associated solely with holdings
of investment company shares. As with other types of companies, the
Committee believes that a fund's Board of Directors (rather than its
shareholders) is best-positioned to set fund policy and oversee
management. However, the Committee opposes granting Boards of
Directors authority over certain matters, such as changes to a
fund's investment objective, that the Investment Company Act
envisions will be approved directly by shareholders.
* Proposals related to limiting corporate conduct in some manner
that relates to the shareholder's environmental or social concerns.
The Committee generally believes that annual shareholder meetings
are inappropriate forums for discussion of larger social issues, and
opposes shareholder resolutions "micromanaging" corporate conduct or
requesting release of information that would not help a shareholder
evaluate an investment in the corporation as an economic matter.
While the Committee is generally supportive of proposals to require
corporate disclosure of matters that seem relevant and material to
the economic interests of shareholders, the Committee is generally
not supportive of proposals to require disclosure of corporate
matters for other purposes.
Item 8--Reserved
Item 9(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.
Item 9(b)--There were no significant changes in the registrant's
internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Item 10 - Exhibits
10(a) - Attach code of ethics or amendments/waivers, unless code of
ethics or amendments/waivers is on website or offered to
shareholders upon request without charge. N/A.
10(b) - Attach certifications pursuant to Section 302 of the
Sarbanes-Oxley Act. 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: December 22, 2003
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: December 22, 2003
By: _/s/ Donald C. Burke________
Donald C. Burke,
Chief Financial Officer of
MuniYield Fund, Inc.
Date: December 22, 2003
Attached hereto as a furnished exhibit are the certifications
pursuant to Section 906 of the Sarbanes-Oxley Act.