UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-6499
Name of Fund: MuniYield California Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Terry K. Glenn, President,
MuniYield California Fund, Inc., 800 Scudders Mill Road, Plainsboro,
NJ, 08536. Mailing address: P.O. Box 9011, Princeton, NJ, 08543-
9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 10/31/04
Date of reporting period: 11/01/03 - 04/30/04
Item 1 - Report to Stockholders
(BULL LOGO)
Merrill Lynch Investment Managers
www.mlim.ml.com
MuniYield California
Fund, Inc.
Semi-Annual Report
April 30, 2004
MuniYield California Fund, Inc. seeks to provide shareholders with
as high a level of current income exempt from Federal and California
income taxes as is consistent with its investment policies and
prudent investment management by investing primarily in a portfolio
of long-term municipal obligations the interest on which, in the
opinion of bond counsel to the issuer, is exempt from Federal and
California income taxes.
This report, including the financial information herein, is
transmitted to shareholders of MuniYield California Fund, Inc. for
their information. It is not a prospectus. Past performance results
shown in this report should not be considered a representation of
future performance. The Fund has leveraged its Common Stock and
intends to remain leveraged by issuing Preferred Stock to provide
the Common Stock shareholders with a potentially higher rate of
return. Leverage creates risks for Common Stock shareholders,
including the likelihood of greater volatility of net asset value
and market price of shares of the Common Stock, and the risk that
fluctuations in the short-term dividend rates of the Preferred Stock
may affect the yield to Common Stock shareholders. Statements and
other information herein are as dated and are subject to change.
A description of the policies and procedures that the Fund uses to
determine how to vote proxies relating to portfolio securities is
available (1) without charge, upon request, by calling toll-free
1-800-MER-FUND (1-800-637-3863; (2) on www.mutualfunds.ml.com;
and (3) on the Securities and Exchange Commission's website at
http://www.sec.gov.
MuniYield California Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
(GO PAPERLESS LOGO)
It's Fast, Convenient, & Timely!
To sign up today, go to www.icsdelivery.com/live.
MuniYield California Fund, Inc.
The Benefits and Risks of Leveraging
MuniYield California Fund, Inc. utilizes leveraging to seek
to enhance the yield and net asset value of its Common Stock.
However, these objectives cannot be achieved in all interest rate
environments. To leverage, the Fund issues Preferred Stock, which
pays dividends at prevailing short-term interest rates, and invests
the proceeds in long-term municipal bonds. The interest earned on
these investments, 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 on the Common Stock.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term
investments, and therefore the Common Stock shareholders are the
beneficiaries of the incremental yield. However, if short-term
interest rates rise, narrowing the differential between short-term
and long-term interest rates, the incremental yield pickup on the
Common Stock will be reduced or eliminated completely. At the same
time, the market value of the fund's Common Stock (that is, its
price as listed on the New York Stock Exchange) may, as a result,
decline. Furthermore, if long-term interest rates rise, the Common
Stock's net asset value will reflect the full decline in the price
of the portfolio's investments, since the value of the fund's
Preferred Stock does not fluctuate. In addition to the decline in
net asset value, the market value of the fund's Common Stock may
also decline.
As a part of its investment strategy, the Fund may invest in certain
securities whose potential income return is inversely related to
changes in a floating interest rate ("inverse floaters"). In
general, income on inverse floaters will decrease when short-term
interest rates increase and increase when short-term interest rates
decrease. Investments in inverse floaters may be characterized as
derivative securities and may subject the Fund to the risks of
reduced or eliminated interest payments and losses of invested
principal. In addition, inverse floaters have the effect of
providing investment leverage and, as a result, the market value of
such securities will generally be more volatile than that of fixed-
rate, tax-exempt securities. To the extent the Fund invests in
inverse floaters, the market value of the Fund's portfolio and the
net asset value of the Fund's shares may also be more volatile than
if the Fund did not invest in such securities. As of April 30, 2004,
the percentage of the Fund's total net assets invested in inverse
floaters was 9.88%.
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 CALIFORNIA FUND, INC., APRIL 30, 2004
A Letter From the President
Dear Shareholder
For the six-month and 12-month periods ended April 30, 2004, the
Lehman Brothers Municipal Bond Index posted returns of +1.19% and
+2.68%, respectively. Its taxable counterpart, the Lehman Brothers
Aggregate Bond Index, had returns of +1.25% and +1.82% for the same
periods. Amid considerable month-to-month volatility, tax-exempt
bond yields rose over the past year, although not to the same extent
as 10-year U.S. Treasury yields. In all, tax-exempt securities
continued to be an attractive fixed income investment alternative.
As of April month-end, the Federal Reserve Board maintained its
accommodative policy stance, although a better-than-expected
employment report for the month of March prompted speculation that
an interest rate increase could come sooner than many had expected.
On April 2, 2004, the good news on the employment front - previously
the one dim spot in an otherwise bright economic picture - helped
prompt the yield on the 10-year Treasury bond to spike nearly 25
basis points (.25%) from 3.91% to 4.15%. Market watchers continue to
monitor the economic data and Federal Reserve Board language for
indications of interest rate direction. If economic growth maintains
its recent pace and employment figures continue to improve, many
believe it is just a matter of time before interest rates move
upward.
Equity markets, in the meantime, gleaned support from the improving
economic environment and provided attractive returns. For the
six-month and 12-month periods ended April 30, 2004, the Standard &
Poor's 500 Index returned +6.27% and +22.88%, respectively.
Significant fiscal and monetary stimulus in 2003, including low
interest rates and tax cuts, has opened the door to consumer
spending, capital spending, increases in exports and long-awaited
job growth. As expected, these developments have led the way to
improvements in corporate earnings - a positive for stock markets.
The events and efforts of the past year leave us with a much
stronger economy today. Of course, markets will always fluctuate,
and there are many uncertainties - not the least of which are
geopolitical in nature - which can translate into negative market
movements. Keeping this in mind, we encourage you to revisit your
portfolio and your asset allocation strategy to ensure you are well
positioned to take advantage of the opportunities that lie ahead.
Importantly, your financial advisor can help you develop a strategy
most suitable for your circumstances through all types of market and
economic cycles.
We thank you for trusting Merrill Lynch Investment Managers with
your investment assets, and we look forward to serving you in the
months and years ahead.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Director
MUNIYIELD CALIFORNIA FUND, INC., APRIL 30, 2004
A Discussion With Your Fund's Portfolio Manager
Given the still uncertain interest rate environment, we maintained a
defensive stance throughout the period, seeking to protect the
Fund's net asset value and enhance current yield for our
shareholders.
Describe the recent market environment relative to municipal bonds.
For much of the six-month period, a positive economic backdrop
helped bond prices to move higher as yields, which typically move
opposite of prices, declined. In early April, however, a
surprisingly strong monthly employment report triggered fears that
the long-accommodative Federal Reserve Board might raise interest
rates sooner than many had expected. As a result, bond yields rose
(prices fell) sharply for the remainder of the period. At the end of
April, long-term U.S. Treasury bond yields had climbed to 5.13%,
representing an increase of approximately 15 basis points (.15%)
over the past six months. Ten-year U.S. Treasury note yields stood
at 4.30% as of period-end, an increase of more than 20 basis points.
Tax-exempt bond yields generally mimicked the movement of their
taxable counterparts, although volatility in the municipal market
was more subdued. Long-term revenue bond yields, as measured by the
Bond Buyer Revenue Bond Index, rose just four basis points over the
past six months. For the same period, yields on AAA-rated issues
maturing in 30 years increased approximately 10 basis points to
4.93% while yields on 10-year, AAA-rated issues rose more than
16 basis points to nearly 4%, according to Municipal Market Data.
The more marked increase in 10-year bond yields may be attributed to
the fact that recent issuance has been heavily concentrated in the
10-year - 20-year range. The resulting supply imbalance prompted
higher intermediate bond yields (and lower prices). Longer-maturity
and lower-rated issues continued to benefit from more favorable
supply/demand factors and, therefore, have seen less price
depreciation. For the six-month period as a whole, municipal bond
supply declined approximately 5% compared to the same period a year
ago.
While investor enthusiasm for stocks has taken some attention away
from fixed income markets, overall demand for tax-exempt municipal
bonds has remained positive. Recent Federal Reserve Board statistics
showed that U.S. household holdings of municipal securities
increased by more than $25 billion during the fourth quarter of 2003
to approximately $680 billion. In addition, data from the Investment
Company Institute indicates that, in just the first three months of
2004, tax-exempt bond funds have seen net new cash flows of almost
$640 million.
Describe conditions in the State of California.
In March 2004, California voters approved measures authorizing the
issuance of up to $15 billion in economic recovery bonds to finance
accumulated fiscal-year deficits. At the same time, the State
Constitution was amended to provide for the enactment and
maintenance of a balanced state budget; the establishment of
specific reserve requirements; and restrictions on future
deficit-related borrowing. Passage of the propositions mitigated
short-term liquidity risks while providing the Legislature with
additional time to formulate future budget solutions.
Following the approval of these measures, Moody's Investors Service
revised the state's credit outlook from negative to stable
while Standard & Poor's (S&P) revised the outlook from stable to
positive. Moody's and S&P affirmed California's outstanding long-
term ratings of Baa1 and BBB, respectively, noting that further
credit improvement is contingent on the state's ability to reduce
its structural imbalances. The positive developments came as a
welcomed change following several months of negative news,
highlighted by a $38 billion budget deficit, a gubernatorial recall
election in October 2003 and credit downgrades from all three major
rating agencies.
How did the Fund perform in light of the existing market conditions?
For the six-month period ended April 30, 2004, the Common Stock of
MuniYield California Fund, Inc. had net annualized yields of 6.56%
and 7.14%, based on a period-end per share net asset value of $14.85
and a per share market price of $13.66, respectively, and $.486 per
share income dividends. Over the same period, the total investment
return on the Fund's Common Stock was +1.22%, based on a change in
per share net asset value from $15.17 to $14.85, and assuming
reinvestment of $.486 per share ordinary income dividends.
For the six-month period ended April 30, 2004, the Fund's Auction
Market Preferred Stock (AMPS) had an average yield of 1.03% for
Series A, .92% for Series B and .81% for Series C.
MUNIYIELD CALIFORNIA FUND, INC., APRIL 30, 2004
The Fund's total return, based on net asset value, lagged its
comparable Lipper category of California Municipal Debt Funds, which
had an average return of +2.41% for the six-month period. (Funds in
this Lipper category invest primarily in municipal debt issues
exempt from taxation in the State of California.) We have been
managing the Fund conservatively, maintaining a shorter duration
than many of our peers in order to protect the Fund's net asset
value and insulate the portfolio from any spikes in interest rates.
During the past six months, the municipal bond market rallied
(yields fell as prices rose) more strongly than anticipated, and our
strategy temporarily resulted in under-performance relative to our
peers. We continue to believe the Fund is positioned to outperform
when interest rates eventually rise, a phenomenon we began to see as
the period closed.
For a description of the Fund's total investment return based on a
change in the per share market value of the Fund's Common Stock (as
measured by the trading price of the Fund's shares on the New York
Stock Exchange), and assuming reinvestment of dividends, please
refer to the Financial Highlights section included in this report.
As a closed-end fund, the Fund's shares may trade in the secondary
market at a premium or discount to the Fund's net asset value. As a
result, total investment returns based on changes in the market
value of the Fund's Common Stock can vary significantly from total
investment return based on changes in the Fund's net asset value.
What changes were made to the portfolio during the period?
We have been managing the Fund defensively - preparing for an
eventual rise in long-term interest rates - for some time. In
keeping with this approach, our portfolio duration has been
substantially below the industry average. Generally, the lower the
duration, the less an investment will fluctuate in value as interest
rates move up or down. Although our emphasis on limiting price
volatility does result in slight underperformance when interest
rates move lower, that trend had already started to reverse
dramatically as the period came to a close. We believe the Fund's
relative performance will improve meaningfully as market rates
continue to rise on expectations that the Federal Reserve Board will
raise the Federal Funds target rate sooner than many had
anticipated.
While seeking to protect the Fund's net asset value, we also have
been emphasizing current yield in the portfolio. To that end, our
primary focus when making purchases has been on higher-coupon bonds
that we believe can deliver a high current accrual.
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.
At this point, the Federal Reserve Board appears poised to begin
raising short-term interest rates, most likely later in 2004. The
increase, however, is expected to be gradual and should not have a
material impact on the positive advantage leverage has had on the
Fund's Common Stock yield. 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. At the end of
the period, the Fund's leverage amount, due to AMPS, was 30.68% of
total assets. (For a more complete explanation of the benefits and
risks of leveraging, see page 2 of this report to shareholders.)
How would you characterize the Fund's position at the close of the
period?
In preparation for rising interest rates, the Fund remained
defensively positioned at period-end with a shorter-than-average
portfolio duration. The Fund also was fully invested at the close of
the period. With short-term cash equivalents yielding only about 1%,
the performance penalty for holding assets in cash reserves is far
too severe.
While we are keeping an eye toward adopting a more aggressive
stance, we believe such a move is further down the road, perhaps
after the Federal Reserve Board has entered a tightening monetary
cycle. As interest rates rise, we also intend to address the Fund's
call structure. If the market falls far enough, in our estimation,
it may be time to extend the average call protection in the Fund,
effectively making it a more aggressive portfolio.
Finally, credit quality remains an important focus in managing the
Fund. Given the recent positive developments in California's
finances, we may look to increase the Fund's exposure to state-
related credits; that is, California general obligation bonds and
other direct obligations backed by the full faith and credit of the
state.
Walter C. O'Connor
Vice President and Portfolio Manager
May 7, 2004
MUNIYIELD CALIFORNIA FUND, INC., APRIL 30, 2004
Schedule of Investments (In Thousands)
S&P Moody's Face
Ratings Ratings Amount Municipal Bonds Value
California--133.7%
ABAG Finance Authority for Nonprofit Corporations, California,
Revenue Refunding Bonds:
BBB+ NR* $ 2,000 (Episcopal Homes Foundation), COP, 5.125% due 7/01/2018 $ 1,900
BBB NR* 1,730 (Redwood Senior Homes and Services), 6% due 11/15/2022 1,764
AAA Aaa 3,975 Antioch Area Public Facilities Financing Agency, California,
Special Tax (Community Facilities District Number 1989-1), 5.70%
due 8/01/2022 (a) 4,324
AAA Aaa 4,690 Arcata, California, Joint Powers Financing Authority, Tax Allocation
Revenue Refunding Bonds (Community Development Project Loan),
Series A, 6% due 8/01/2023 (a) 4,830
AAA Aaa 2,500 Bakersfield, California, COP, Refunding (Convention Center Expansion
Project), 5.80% due 4/01/2017 (h) 2,728
AA- Aa2 3,135 California HFA, Home Mortgage Revenue Bonds, Series D, 5.85% due
8/01/2017 3,316
California Health Facilities Financing Authority Revenue Bonds:
AAA NR* 5,000 (Kaiser Permanente), RIB, Series 26, 9.59% due 6/01/2022 (f)(j) 5,541
NR* Aa3 2,835 (Scripps Research Institute), Series A, 6.625% due 7/01/2018 2,910
A- A3 2,500 (Stanford Hospital and Clinics), Series A, 5% due 11/15/2023 2,442
AAA Aaa 1,490 California Health Facilities Financing Authority, Revenue Refunding
Bonds (Pomona Valley Hospital Medical Center), Series A, 5.625% due
7/01/2019 (h) 1,615
California Infrastructure and Economic Development Bank Revenue
Bonds:
AAA Aaa 2,520 (Asian Museum Foundation of San Francisco), 5.50% due
6/01/2018 (h) 2,734
A- NR* 4,990 (J. David Gladstone Institute Project), 5.50% due 10/01/2022 5,205
BBB+ Baa2 13,000 California Pollution Control Financing Authority, Solid Waste
Disposal Revenue Refunding Bonds (Republic Services Inc. Project),
AMT, Series C, 5.25% due 6/01/2023 12,925
California Rural Home Mortgage Finance Authority, S/F Mortgage
Revenue Bonds (Mortgage-Backed Securities Program), AMT:
NR* Aaa 270 Series A-1, 6.90% due 12/01/2024 (d)(g) 284
AAA NR* 280 Series B, 6.15% due 6/01/2020 (e) 290
California State Department of Veteran Affairs, Home Purpose Revenue
Refunding Bonds:
AAA Aaa 3,000 Series A, 5.30% due 12/01/2021 (a) 3,116
AA- Aa2 5,970 Series C, 5.875% due 12/01/2015 6,210
AA- Aa2 9,315 Series C, 6.05% due 12/01/2020 9,704
AA- Aa2 2,500 Series C, 6.15% due 12/01/2027 2,605
BBB+ A3 4,500 California State Department of Water Resources, Power Supply Revenue
Bonds, Series A, 5.75% due 5/01/2017 4,875
AA Aa3 8,000 California State Department of Water Resources Revenue Bonds
(Central Valley Project), 5.25% due 7/01/2022 8,017
Portfolio Abbreviations
To simplify the listings of MuniYield California Fund, Inc.'s
portfolio holdings in the Schedule of Investments, we have
abbreviated the names of many of the securities according to the
list at right.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
GO General Obligation Bonds
HFA Housing Finance Agency
M/F Multi-Family
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
MUNIYIELD CALIFORNIA FUND, INC., APRIL 30, 2004
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
Ratings Ratings Amount Municipal Bonds Value
California (continued)
California State, GO, Refunding:
BBB Baa1 $ 8,000 5.75% due 5/01/2030 $ 8,286
AA- Baa1 2,785 (Veterans), AMT, Series BJ, 5.70% due 12/01/2032 2,808
California State Public Works Board, Lease Revenue Bonds:
AAA Aaa 2,000 (California State University), Series C, 5.40% due 10/01/2022 (h) 2,091
BBB- Aaa 6,800 (Department of Corrections), Series A, 7% due 11/01/2004 (i) 7,133
BBB- Baa2 5,000 (Department of Corrections), Series C, 5.50% due 6/01/2023 5,093
AAA Aaa 6,645 (Department of Health Services), Series A, 5.75% due 11/01/2017 (h) 7,323
AAA Baa2 17,000 (Various Community College Projects), Series A, 5.625% due
3/01/2016 (a) 18,295
California State University and Colleges, Housing System Revenue
Refunding Bonds (c):
AAA Aaa 3,000 5.75% due 11/01/2015 3,215
AAA Aaa 3,500 5.80% due 11/01/2017 3,754
AAA Aaa 3,900 5.90% due 11/01/2021 4,180
California State, Various Purpose, GO:
BBB Aaa 4,730 5.50% due 4/01/2030 4,839
BBB Baa1 6,850 5.50% due 11/01/2033 6,997
AAA Aaa 5,250 California Statewide Communities Development Authority, COP
(John Muir/Mount Diablo Health System), 5.125% due 8/15/2022 (h) 5,378
California Statewide Communities Development Authority, Health
Facility Revenue Bonds (Memorial Health Services), Series A:
A A3 3,270 6% due 10/01/2023 3,462
A A3 3,000 5.50% due 10/01/2033 3,004
AA- A1 5,000 California Statewide Communities Development Authority Revenue Bonds
(Sutter Health), Series B, 5.50% due 8/15/2028 5,096
BBB Baa2 2,000 Central California, Joint Powers Health Financing Authority, COP
(Community Hospitals of Central California), 6% due 2/01/2020 2,080
AAA Aaa 2,000 Chino Basin, California, Regional Financing Authority Revenue Bonds
(Inland Empire Utility Agency Sewer Project), 5.75% due 11/01/2019 (h) 2,220
AAA Aaa 2,705 Contra Costa County, California, Public Financing Lease Revenue
Refunding Bonds (Various Capital Facilities), Series A, 5.30% due
8/01/2020 (h) 2,841
AAA Aaa 2,500 Davis, California, Joint Unified School District, Community
Facilities District, Special Tax Refunding Bonds, Number 1, 5.50%
due 8/15/2021 (h) 2,651
BBB Baa3 5,650 Golden State Tobacco Securitization Corporation of California,
Tobacco Settlement Revenue Bonds, Series A-4, 7.80% due 6/01/2042 5,969
NR* Aaa 9,957 Industry, California, Urban Development Agency, Tax Allocation
Refunding Bonds, RIB, Series 632-X, 9.66% due 5/01/2021 (h)(j) 11,332
NR* Aaa 2,000 Los Angeles, California, COP (Sonnenblick Del Rio West Los Angeles),
6.20% due 11/01/2031 (a) 2,248
AAA Aaa 10,000 Los Angeles, California, Community College District, GO, Series A,
5.50% due 8/01/2021 (h) 10,705
MUNIYIELD CALIFORNIA FUND, INC., APRIL 30, 2004
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
Ratings Ratings Amount Municipal Bonds Value
California (continued)
Los Angeles, California, Department of Water and Power, Electric
Plant Revenue Refunding Bonds:
AA- Aaa $ 9,865 6% due 2/15/2005 (i) $ 10,330
NR* Aa3 4,920 RIB, Series 370, 10.61% due 2/15/2024 (j) 5,382
Los Angeles, California, Harbor Department Revenue Bonds, AMT:
AA Aa2 2,000 Series B, 6% due 8/01/2015 2,153
AA Aa2 6,000 Series B, 5.375% due 11/01/2023 6,068
AAA Aaa 4,000 RITR, Series RI-7, 10.975% due 11/01/2026 (h)(j) 4,696
AAA Aaa 9,000 Los Angeles, California, Wastewater System Revenue Bonds, Series A,
5% due 6/01/2023 (c) 9,094
AAA Aaa 4,000 Los Angeles County, California, Metropolitan Transportation Authority,
Sales Tax Revenue Bonds (Proposition C), Second Tier, Senior Series A,
5.50% due 7/21/2005 (a)(i) 4,271
AAA Aaa 5,000 Los Angeles County, California, Public Works Financing Authority,
Lease Revenue Bonds (Multiple Capital Facilities Project VI), Series A,
5.625% due 5/01/2026 (a) 5,277
AAA Aaa 8,705 Modesto, California, Wastewater Treatment Facilities Revenue Bonds,
5.625% due 11/01/2017 (h) 9,561
AAA Aaa 1,750 North City-West, California, School Facilities Financing Authority,
Special Tax Refunding Bonds, Series B, 5.75% due 9/01/2015 (f) 1,912
Oakland, California, Joint Powers Financing Authority, Lease Revenue
Bonds (Oakland Administration Buildings) (a):
AAA Aaa 2,000 5.90% due 8/01/2016 2,191
AAA Aaa 11,395 5.75% due 8/01/2021 12,314
Oakland, California, Unified School District, Alameda County, GO,
Series F (h):
AAA Aaa 3,290 5.50% due 8/01/2017 3,574
AAA Aaa 3,770 5.50% due 8/01/2018 4,093
AAA Aaa 1,750 Pleasant Valley, California, School District, Ventura County, GO,
Series C, 5.75% due 8/01/2025 (b)(h) 1,896
BBB- NR* 2,255 Pomona, California, Public Financing Authority, Revenue Refunding
Bonds (Merged Redevelopment Project), Series A1, 5.75% due 2/01/2034 2,183
AAA Aaa 10,600 Port Oakland, California, Port Revenue Refunding Bonds, Series I,
5.40% due 11/01/2017 (h) 11,424
AAA Aaa 2,000 Port Oakland, California, Revenue Refunding Bonds, AMT, Series N, 5%
due 11/01/2022 (h) 2,008
NR* Aaa 5,808 Port Oakland, California, RIB, Refunding, AMT, Series 717X, 9.40% due
11/01/2027 (c)(j) 6,055
AAA Aaa 4,315 Rancho Cucamonga, California, Redevelopment Agency, Tax Allocation
Refunding Bonds (Rancho Redevelopment Project), 5.25% due 9/01/2020 (f) 4,543
AAA Aaa 2,345 Richmond, California, Redevelopment Agency, Tax Allocation, Refunding
Bonds (Harbour Redevelopment Project), Series A, 5.50% due 7/01/2018 (h) 2,540
AAA Aaa 5,000 Sacramento, California, Municipal Utility District, Electric Revenue
Refunding Bonds, Series L, 5.125% due 7/01/2022 (h) 5,134
Sacramento County, California, Sanitation District, Financing
Authority, Revenue Refunding Bonds:
AA Aa3 4,500 RIB, Series 366, 10.362% due 12/01/2027 (j) 5,054
AA Aa3 5,695 Series A, 5.60% due 12/01/2017 6,038
AA Aa3 6,190 Series A, 5.75% due 12/01/2018 6,582
AA Aa3 3,750 Trust Receipts, Class R, Series A, 10.56% due 12/01/2019 (j) 4,278
AAA Aaa 10,100 San Bernardino, California, City Unified School District, GO,
Refunding, Series A, 5.875% due 8/01/2024 (c) 11,040
AAA Aaa 3,000 San Bernardino, California, Joint Powers Financing Authority, Lease
Revenue Bonds (Department of Transportation Lease), Series A, 5.50%
due 12/01/2020 (h) 3,186
AAA Aaa 5,000 San Bernardino, California, Joint Powers Financing Authority, Tax
Allocation Revenue Refunding Bonds, Series A, 5.75% due 10/01/2015 (f) 5,345
AAA Aaa 2,000 San Francisco, California, City and County Airport Commission,
International Airport Revenue Bonds, AMT, Second Series, Issue 11,
6.25% due 5/01/2005 (c)(i) 2,114
MUNIYIELD CALIFORNIA FUND, INC., APRIL 30, 2004
Schedule of Investments (continued) (In Thousands)
S&P Moody's Face
Ratings Ratings Amount Municipal Bonds Value
California (concluded)
AA Aa3 $ 1,720 San Francisco, California, City and County Educational Facilities,
GO (Community College), Series A, 5.75% due 6/15/2019 $ 1,898
AAA Aaa 4,715 San Francisco, California, City and County Redevelopment Agency,
Lease Revenue Refunding Bonds (George R. Moscone Convention Center),
6.80% due 7/01/2019 (f) 4,849
AA Aa3 1,310 San Francisco, California, City and County Zoo Facilities, GO,
Series B, 5.75% due 6/15/2019 1,446
AAA Aaa 4,590 San Joaquin Hills, California, Transportation Corridor Agency, Toll
Road Revenue Refunding Bonds, Series A, 5.25% due 1/15/2030 (h) 4,635
AAA Aaa 2,020 Santa Clara, California, Unified School District, GO, 5.50% due
7/01/2021 (c) 2,179
NR* A3 3,500 Santa Clara County, California, Housing Authority, M/F Housing Revenue
Bonds (John Burns Gardens Apartments Project), AMT, Series A, 6% due
8/01/2041 3,492
AAA Aaa 4,000 Santa Monica, California, Redevelopment Agency, Tax Allocation Bonds
(Earthquake Recovery Redevelopment Project), 6% due 7/01/2029 (a) 4,386
AAA Aaa 2,000 Sequoia, California, Unified High School District, GO, 5.70% due
7/01/2024 (f) 2,140
AAA Aaa 2,265 South Bayside, California, Waste Management Authority, Waste System
Revenue Bonds, 5.75% due 3/01/2020 (a) 2,488
AAA NR* 90 Southern California Home Finance Authority, S/F Mortgage Revenue
Bonds (Mortgage-Backed Securities Program), AMT, Series A, 6.75% due
9/01/2022 (e) 90
AAA Aaa 3,235 Taft, California, Public Financing Authority, Lease Revenue Bonds
(Community Correctional Facilty), Series A, 6.05% due 1/01/2017 (h) 3,536
A+ A1 1,310 Torrance, California, Hospital Revenue Refunding Bonds (Torrance
Memorial Medical Center), Series A, 6% due 6/01/2022 1,387
Vernon, California, Electric System Revenue Bonds (Malburg Generating
Station Project):
BBB+ Aaa 2,740 5.50% due 4/01/2022 2,767
BBB+ Aaa 1,250 5.50% due 4/01/2023 1,261
BBB+ Aaa 2,250 5.30% due 4/01/2026 2,241
AAA Aaa 5,000 Vista, California, Joint Powers Financing Authority, Lease Revenue
Refunding Bonds, 5.625% due 5/01/2016 (h) 5,485
Puerto Rico--2.9%
AAA Aaa 2,140 Puerto Rico Commonwealth Highway and Transportation Authority,
Highway Revenue Bonds, Series Y, 5.50% due 7/01/2026 (h)(i) 2,334
Puerto Rico Electric Power Authority, Power Revenue Bonds:
A- A3 3,000 Series NN, 5.125% due 7/01/2029 3,003
AAA Aaa 2,600 Series X, 5.50% due 7/01/2025 (h) 2,679
A- A3 1,000 Puerto Rico Electric Power Authority, Power Revenue Refunding Bonds,
Series U, 6% due 7/01/2014 1,026
Virgin Islands--1.0%
BBB- Baa3 3,000 Virgin Islands Government Refinery Facilities, Revenue Refunding
Bonds (Hovensa Coker Project), AMT, 6.50% due 7/01/2021 3,194
Total Municipal Bonds (Cost--$415,544)--137.6% 435,187
MUNIYIELD CALIFORNIA FUND, INC., APRIL 30, 2004
Schedule of Investments (concluded) (In Thousands)
Shares
Held Short-Term Securities Value
47 CMA California Municipal Money Fund++ $ 47
Total Short-Term Securities (Cost--$47)--0.0% 47
Total Investments (Cost--$415,591)--137.6% 435,234
Other Assets Less Liabilities--6.7% 21,038
Preferred Stock, at Redemption Value--(44.3%) (140,000)
---------
Net Assets Applicable to Common Stock--100.0% $ 316,272
=========
(a)AMBAC Insured.
(b)Escrowed to maturity.
(c)FGIC Insured.
(d)FHLMC Collateralized.
(e)FNMA/GNMA Collateralized.
(f)FSA Insured.
(g)GNMA Collateralized.
(h)MBIA Insured.
(i)Prerefunded.
(j)The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rate shown is the
rate in effect at April 30, 2004.
*Not Rated.
++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
CMA California Municipal
Money Fund (14,286) $10
See Notes to Financial Statements.
Quality Profile
The quality ratings of securities in the Fund as of April 30, 2004
were as follows:
Percent of
Total
S&P Rating/Moody's Rating Investments
AAA/Aaa 63.7%
AA/Aa 18.3
A/A 6.4
BBB/Baa 11.6
MUNIYIELD CALIFORNIA FUND, INC., APRIL 30, 2004
Statement of Net Assets
As of April 30, 2004
Assets
Investments in unaffiliated securities, at value
(identified cost--$415,543,953) $ 435,186,557
Investments in affiliated securities, at value (identified cost--$46,973) 46,973
Receivables:
Securities sold $ 16,453,668
Interest 9,163,836 25,617,504
---------------
Prepaid expenses 6,380
---------------
Total assets 460,857,414
---------------
Liabilities
Payables:
Custodian bank 4,126,281
Investment adviser 219,442
Dividends to Common Stock shareholders 193,171
Other affiliates 3,196 4,542,090
---------------
Accrued expenses 42,856
---------------
Total liabilities 4,584,946
---------------
Preferred Stock
Preferred Stock, at redemption value, par value $.10 per share
(2,400 Series A Shares, 2,400 Series B Shares and 800 Series C Shares of
AMPS* issued and outstanding at $25,000 per share liquidation preference) 140,000,000
---------------
Net Assets Applicable to Common Stock
Net assets applicable to Common Stock $ 316,272,468
===============
Analysis of Net Assets Applicable to Common Stock
Common Stock, par value $.10 per share (21,295,255 shares issued and
outstanding) $ 2,129,526
Paid-in capital in excess of par 299,957,928
Undistributed investment income--net $ 2,929,720
Accumulated realized capital losses on investments--net (8,387,310)
Unrealized appreciation on investments--net 19,642,604
---------------
Total accumulated earnings--net 14,185,014
---------------
Total--Equivalent to $14.85 net asset value per share of Common Stock
(market price--$13.66) $ 316,272,468
===============
*Auction Market Preferred Stock.
See Notes to Financial Statements.
MUNIYIELD CALIFORNIA FUND, INC., APRIL 30, 2004
Statement of Operations
For the Six Months Ended April 30, 2004
Investment Income
Interest $ 12,513,496
Dividends from affiliates 9,546
---------------
Total income 12,523,042
---------------
Expenses
Investment advisory fees $ 1,160,689
Commission fees 176,414
Accounting services 77,832
Transfer agent fees 31,622
Professional fees 29,829
Printing and shareholder reports 19,973
Custodian fees 12,258
Directors' fees and expenses 11,322
Listing fees 10,582
Pricing fees 7,287
Other 20,640
---------------
Total expenses before reimbursement 1,558,448
Reimbursement of expenses (8,258)
---------------
Total expenses after reimbursement 1,550,190
---------------
Investment income--net 10,972,852
---------------
Realized & Unrealized Gain (Loss) on Investments--Net
Realized gain on investments--net 1,206,596
Change in unrealized appreciation on investments--net (8,048,655)
---------------
Total realized and unrealized loss on investments--net (6,842,059)
---------------
Dividends to Preferred Stock Shareholders
Investment income--net (664,016)
---------------
Net Increase in Net Assets Resulting from Operations $ 3,466,777
===============
See Notes to Financial Statements.
MUNIYIELD CALIFORNIA FUND, INC., APRIL 30, 2004
Statements of Changes in Net Assets
For the For the
Six Months Year
Ended Ended
April 30, October 31,
Increase (Decrease) in Net Asset Value: 2004 2003
Operations
Investment income--net $ 10,972,852 $ 22,666,324
Realized gain (loss) on investments--net 1,206,596 (41,823)
Change in unrealized appreciation on investments--net (8,048,655) 1,001,147
Dividends and distributions to Preferred Stock shareholders (664,016) (2,059,080)
--------------- ---------------
Net increase in net assets resulting from operations 3,466,777 21,566,568
--------------- ---------------
Dividends & Distributions to Common Stock Shareholders
Investment income--net (10,349,494) (20,698,988)
Realized gain on invesments--net -- (57,092)
--------------- ---------------
Net decrease in net assets resulting from dividends and distributions
to Common Stock shareholders (10,349,494) (20,756,080)
--------------- ---------------
Net Assets Applicable to Common Stock
Total increase (decrease) in net assets applicable to Common Stock (6,882,717) 810,488
Beginning of period 323,155,185 322,344,697
--------------- ---------------
End of period* $ 316,272,468 $ 323,155,185
=============== ===============
*Undistributed investment income--net $ 2,929,720 $ 2,970,378
=============== ===============
See Notes to Financial Statements.
MUNIYIELD CALIFORNIA FUND, INC., APRIL 30, 2004
Financial Highlights
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
April 30, For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 2004 2003 2002 2001++ 2000++
Per Share Operating Performance
Net asset value, beginning of period $ 15.17 $ 15.14 $ 15.22 $ 14.19 $ 13.32
---------- ---------- ---------- ---------- ----------
Investment income--net .52++++ 1.06++++ 1.07++++ 1.03 1.02
Realized and unrealized gain (loss)
on investments--net (.32) .04 (.06) 1.05 .88
Dividends and distributions to Preferred
Stock shareholders:
Investment income--net (.03) (.10) (.12) (.20) (.23)
Realized gain on investments--net -- --+++++ --+++++ -- --
---------- ---------- ---------- ---------- ----------
Total from investment operations .17 1.00 .89 1.88 1.67
---------- ---------- ---------- ---------- ----------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.49) (.97) (.97) (.85) (.80)
Realized gain on investments--net -- --+++++ --+++++ -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions to Common
Stock shareholders (.49) (.97) (.97) (.85) (.80)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 14.85 $ 15.17 $ 15.14 $ 15.22 $ 14.19
========== ========== ========== ========== ==========
Market price per share, end of period $ 13.66 $ 14.15 $ 14.46 $ 15.10 $ 13.0625
========== ========== ========== ========== ==========
Total Investment Return**
Based on market price per share (.18%)+++ 4.64% 2.18% 22.71% 10.18%
========== ========== ========== ========== ==========
Based on net asset value per share 1.22%+++ 7.14% 6.14% 13.85% 13.45%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Common Stock
Total expenses, net of reimbursement*** .95%* .95% .99% 1.00% 1.02%
========== ========== ========== ========== ==========
Total expenses*** .96%* .96% .99% 1.00% 1.02%
========== ========== ========== ========== ==========
Total investment income--net*** 6.74%* 6.93% 7.13% 7.00% 7.51%
========== ========== ========== ========== ==========
Amount of dividends to Preferred Stock
shareholders .41%* .63% .77% 1.37% 1.69%
========== ========== ========== ========== ==========
Investment income--net, to Common Stock
shareholders 6.33%* 6.30% 6.36% 5.63% 5.82%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Common & Preferred Stock***
Total expenses, net of reimbursement .67%* .67% .69% .69% .69%
========== ========== ========== ========== ==========
Total expenses .67%* .67% .69% .69% .69%
========== ========== ========== ========== ==========
Total investment income--net 4.72%* 4.84% 4.95% 4.83% 5.05%
========== ========== ========== ========== ==========
Ratios Based on Average Net Assets of Preferred Stock
Dividends to Preferred Stock shareholders .95%* 1.46% 1.76% 3.04% 3.47%
========== ========== ========== ========== ==========
MUNIYIELD CALIFORNIA FUND, INC., APRIL 30, 2004
Financial Highlights (concluded)
For the Six
Months Ended
The following per share data and ratios have been derived April 30, For the Year Ended October 31,
from information provided in the financial statements. 2004 2003 2002 2001++ 2000++
Supplemental Data
Net assets applicable to Common Stock,
end of period (in thousands) $ 316,272 $ 323,155 $ 322,345 $ 322,524 $ 300,503
========== ========== ========== ========== ==========
Preferred Stock outstanding, end of
period (in thousands) $ 140,000 $ 140,000 $ 140,000 $ 140,000 $ 140,000
========== ========== ========== ========== ==========
Portfolio turnover 12.23% 20.24% 49.87% 58.17% 93.01%
========== ========== ========== ========== ==========
Leverage
Asset coverage per $1,000 $ 3,259 $ 3,308 $ 3,302 $ 3,304 $ 3,146
========== ========== ========== ========== ==========
Dividends Per Share on Preferred Stock Outstanding
Series A--Investment income--net $ 129 $ 569 $ 607 $ 802 $ 865
========== ========== ========== ========== ==========
Series B--Investment income--net $ 114 $ 217 $ 322 $ 721 $ 875
========== ========== ========== ========== ==========
Series C--Investment income--net $ 101 $ 207 $ 292 $ 745 $ 875
========== ========== ========== ========== ==========
*Annualized.
**Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, may result
in substantially different returns. Total investment returns exclude
the effects of sales charges.
***Do not reflect the effect of dividends to Preferred Stock
shareholders.
++Certain prior year amounts have been reclassified to conform to
current year presentation.
++++Based on average shares outstanding.
+++Aggregate total investment return.
+++++Amount is less than $(.01) per share.
See Notes to Financial Statements.
MUNIYIELD CALIFORNIA FUND, INC., APRIL 30, 2004
Notes to Financial Statements
1. Significant Accounting Policies:
MuniYield California Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a non-diversified,
closed-end management investment company. The Fund's financial
statements are prepared in conformity with accounting principles
generally accepted in the United States of America, which may
require the use of management accruals and estimates. Actual results
may differ from these estimates. These unaudited financial
statements reflect all adjustments, which are, in the opinion of
management, necessary to a fair statement of the results for the
interim period presented. All such adjustments are of a normal,
recurring nature. The Fund determines and makes available for
publication the net asset value of its Common Stock on a weekly
basis. The Fund's Common Stock is listed on the New York Stock
Exchange under the symbol MYC. The following is a summary of
significant accounting policies followed by the Fund.
(a) Valuation of investments--Municipal bonds are traded primarily
in the over-the-counter markets and are valued at the last available
bid price in the over-the-counter market or on the basis of yield
equivalents as obtained by the Fund's pricing service from one or
more dealers that make markets in such securities. Financial futures
contracts and options thereon, which are traded on exchanges, are
valued at their closing prices as of the close of such exchanges.
Options written or purchased are valued at the last sale price in
the case of exchange-traded options. In the case of options traded
in the over-the-counter market, valuation is the last asked price
(options written) or the last bid price (options purchased). Swap
agreements are valued by quoted fair values received daily by the
Fund from the counterparty. Short-term investments with a remaining
maturity of sixty days or less are valued at amortized cost, which
approximates market value. Securities and assets for which market
quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of
Directors of the Fund, including valuations furnished by a pricing
service retained by the Fund, which may utilize a matrix system for
valuations. The procedures of the pricing service and its valuations
are reviewed by the officers of the Fund under the general
supervision of the Board of Directors.
(b) Derivative financial instruments--The Fund may engage in various
portfolio investment strategies both to increase the return of the
Fund and to hedge, or protect, its exposure to interest rate
movements and movements in the securities markets. Losses may arise
due to changes in the value of the contract or if the counterparty
does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell
financial futures contracts and options on such futures contracts.
Futures contracts are contracts for delayed delivery of securities
at a specific future date and at a specific price or yield. Upon
entering into a contract, the Fund deposits and maintains as
collateral such initial margin as required by the exchange on which
the transaction is effected. Pursuant to the contract, the Fund
agrees to receive from or pay to the broker an amount of cash equal
to the daily fluctuation in value of the contract. Such receipts or
payments are known as variation margin and are recorded by the Fund
as unrealized gains or losses. When the contract is closed, the Fund
records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the
time it was closed.
* Options--The Fund may write covered call options and purchase put
options. When the Fund writes an option, an amount equal to the
premium received by the Fund is reflected as an asset and an
equivalent liability. The amount of the liability is subsequently
marked to market to reflect the current market value of the option
written. When a security is purchased or sold through an exercise of
an option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
MUNIYIELD CALIFORNIA FUND, INC., APRIL 30, 2004
Notes to Financial Statements (continued)
* Forward interest rate swaps--The Fund may enter into forward
interest rate swaps. In a forward interest rate swap, the Fund and
the counterparty agree to make periodic net payments on a specified
notional contract amount, commencing on a specified future effective
date, unless terminated earlier. When the agreement is closed, the
Fund records a realized gain or loss in an amount equal to the value
of the agreement.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(d) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Realized gains and losses on security
transactions are determined on the identified cost basis. Interest
income is recognized on the accrual basis. Dividend income is
recorded on the ex-dividend dates. 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) Custodian bank--The Fund recorded an amount payable to the
custodian bank reflecting an overnight overdraft, which resulted
from management estimates of available cash.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect, wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of .50% of
the Fund's average weekly net assets, including proceeds from the
issuance of Preferred Stock. For the six months ended April 30,
2004, FAM reimbursed the Fund in the amount of $8,258.
For the six months ended April 30, 2004, the Fund reimbursed FAM
$4,718 for certain accounting services.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 2004 were $56,266,833 and
$55,405,947, respectively.
Net realized gains for the six months ended April 30, 2004 and net
unrealized appreciation as of April 30, 2004 were as follows:
Realized Unrealized
Gains Appreciation
Long-term investments $ 800,140 $ 19,642,604
Forward interest rate swaps 406,456 --
------------ ------------
Total $ 1,206,596 $ 19,642,604
============ ============
As of April 30, 2004, net unrealized appreciation for Federal income
tax purposes aggregated $19,803,276, of which $21,353,763 related to
appreciated securities and $1,550,487 related to depreciated
securities. The aggregate cost of investments at April 30, 2004 for
Federal income tax purposes was $415,430,254.
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.
Preferred Stock
Auction Market Preferred Stock are shares of Preferred Stock of the
Fund, with a par value of $.10 per share and a liquidation
preference of $25,000 per share, that entitle their holders to
receive cash dividends at an annual rate that may vary for the
successive dividend periods. The yields in effect at April 30, 2004
were: Series A, 1.05%; Series B, .97%; and Series C, .98%.
MUNIYIELD CALIFORNIA FUND, INC., APRIL 30, 2004
Notes to Financial Statements (concluded)
The Fund pays commissions to certain broker-dealers at the end
of each auction at an annual rate ranging from .25% to .375%,
calculated on the proceeds of each auction. For the six months ended
April 30, 2004, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
an affiliate of FAM, earned $102,586 as commissions.
5. Capital Loss Carryforward:
On October 31, 2003, the Fund had a net capital loss carryforward of
$8,339,735, of which $7,985,889 expires in 2008 and $353,846 expires
in 2011. This amount will be available to offset like amounts of any
future taxable gains.
6. Subsequent Event:
The Fund paid a tax-exempt income dividend to holders of Common
Stock in the amount of $0.081000 per share on May 27, 2004 to
shareholders of record on May 14, 2004.
Proxy Results
During the six-month period ended April 30, 2004, MuniYield
California Fund, Inc.'s Common Stock shareholders voted on the
following proposal. The proposal was approved at a shareholders'
meeting on April 27, 2004. A description of the proposal and number
of shares voted are as follows:
Shares Voted Shares Withheld
For From Voting
1. To elect the Fund's Directors: James H. Bodurtha 19,978,919 361,989
Joe Grills 19,965,818 375,090
Roberta Cooper Ramo 19,973,962 366,946
Robert S. Salomon, Jr. 19,966,741 374,167
Stephen B. Swensrud 19,960,164 380,744
During the six-month period ended April 30, 2004, MuniYield
California Fund, Inc.'s Preferred Stock shareholders (Series A - C)
voted on the following proposal. The proposal was approved at a
shareholders' meeting on April 27, 2004. A description of the
proposal and number of shares voted are as follows:
Shares Voted Shares Withheld
For From Voting
1. To elect the Fund's Board of Directors: James H. Bodurtha,
Joe Grills, Herbert I. London, Andre F. Perold,
Roberta Cooper Ramo, Robert S. Salomon, Jr., and
Stephen B. Swensrud 3,403 180
MUNIYIELD CALIFORNIA FUND, INC., APRIL 30, 2004
Officers and Directors
Terry K. Glenn, President and Director
James H. Bodurtha, Director
Joe Grills, Director
Herbert I. London, Director
Andre F. Perold, Director
Roberta Cooper Ramo, Director
Robert S. Salomon, Jr., Director
Stephen B. Swensrud, Director
Kenneth A. Jacob, Senior Vice President
John M. Loffredo, Senior Vice President
Walter C. O'Connor, Vice President
Donald C. Burke, Vice President and Treasurer
Phillip S. Gillespie, Secretary
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Stock:
The Bank of New York
101 Barclay Street - 7 West
New York, NY 10286
NYSE Symbol
MYC
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.
Electronic Delivery
The Fund offers electronic delivery of communications to its
shareholders. In order to receive this service, you must
register your account and provide us with e-mail information.
To sign up for this service, simply access this website
http://www.icsdelivery.com/live and follow the instructions.
When you visit this site, you will obtain a personal identification
number (PIN). You will need this PIN should you wish to update your
e-mail address, choose to discontinue this service and/or make any
other changes to the service. This service is not available for
certain retirement accounts at this time.
MUNIYIELD CALIFORNIA FUND, INC., APRIL 30, 2004
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this
semi-annual report
Item 4 - Principal Accountant Fees and Services - Not Applicable to
this semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable to
this semi-annual report
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for
Closed-End Management Investment Companies - Not Applicable to this
semi-annual report
Item 8 - Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers - Not Applicable
Item 9 - Submission of Matters to a Vote of Security Holders - Not
Applicable
Item 10 - Controls and Procedures
10(a) - The registrant's certifying officers have reasonably
designed such disclosure controls and procedures to ensure material
information relating to the registrant is made known to us by others
particularly during the period in which this report is being
prepared. The registrant's certifying officers have determined that
the registrant's disclosure controls and procedures are effective
based on our evaluation of these controls and procedures as of a
date within 90 days prior to the filing date of this report.
10(b) - There were no changes in the registrant's internal control
over financial reporting (as defined in Rule 30a-3(d) under the Act
(17 CFR 270.30a-3(d)) that occurred during the last fiscal half-year
of the period covered by this report that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
Item 11 - Exhibits attached hereto
11(a)(1) - Code of Ethics - Not Applicable to this semi-annual
report
11(a)(2) - Certifications - Attached hereto
11(a)(3) - Not Applicable
11(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MuniYield California Fund, Inc.
By: _/s/ Terry K. Glenn_______
Terry K. Glenn,
President of
MuniYield California Fund, Inc.
Date: June 18, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By: _/s/ Terry K. Glenn________
Terry K. Glenn,
President of
MuniYield California Fund, Inc.
Date: June 18, 2004
By: _/s/ Donald C. Burke________
Donald C. Burke,
Chief Financial Officer of
MuniYield California Fund, Inc.
Date: June 18, 2004