UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number 811-07083
Name of Fund: BlackRock MuniYield Arizona Fund, Inc. (MZA)
Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809
Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock MuniYield
Arizona Fund, Inc., 55 East 52nd Street, New York, NY 10055
Registrant’s telephone number, including area code: (800) 882-0052, Option 4
Date of fiscal year end: 07/31/2017
Date of reporting period: 10/31/2016
Item 1 – Schedule of Investments
| Schedule of Investments October 31, 2016 (Unaudited) |
BlackRock MuniYield Arizona Fund, Inc. (MZA) (Percentages shown are based on Net Assets) |
| BLACKROCK MUNIYIELD ARIZONA FUND, INC. | OCTOBER 31, 2016 | 1 |
| Schedule of Investments (continued) |
BlackRock MuniYield Arizona Fund, Inc. (MZA) |
| 2 | BLACKROCK MUNIYIELD ARIZONA FUND, INC. | OCTOBER 31, 2016 |
| Schedule of Investments (continued) |
BlackRock MuniYield Arizona Fund, Inc. (MZA) |
| Notes to Schedule of Investments |
| (a) | U.S. Government securities, held in escrow, are used to pay interest on this security, as well as to retire the bond in full at the date indicated, typically at a premium to par. |
| (b) | Variable rate security. Rate as of period end. |
| BLACKROCK MUNIYIELD ARIZONA FUND, INC. | OCTOBER 31, 2016 | 3 |
| Schedule of Investments (continued) |
BlackRock MuniYield Arizona Fund, Inc. (MZA) |
| (c) | Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors. |
| (d) | When-issued security. |
| (e) | Represent bonds transferred to a TOB Trust in exchange of cash and residual certificates received by the Fund. These bonds serve as collateral in a secured borrowing. |
| (f) | During the period ended October 31, 2016, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows: |
| Affiliate | Shares Held at July 31, 2016 |
Net Activity |
Shares Held at October 31, 2016 |
Value at October 31, 2016 |
Income |
Realized Gain |
||||||||||||||||||
| BlackRock Liquidity Funds, MuniCash, Institutional Class |
776,573 | (364,079 | ) | 412,494 | $ | 412,536 | $ | 376 | $ | 1 | ||||||||||||||
| (g) | Current yield as of period end. |
For Fund compliance purposes, the Fund’s sector classifications refer to any one or more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.
| Derivative Financial Instruments Outstanding as of Period End |
Futures Contracts
| Contracts Short |
Issue | Expiration | Notional Value |
Unrealized Appreciation |
||||||||
| (12 | ) | 10-Year U.S. Treasury Note | December 2016 | $1,555,500 | $ | 19,704 | ||||||
| (10 | ) | Long U.S. Treasury Bond | December 2016 | $1,627,188 | 62,425 | |||||||
| (1 | ) | Ultra U.S. Treasury Bond | December 2016 | $175,937 | 10,848 | |||||||
| Total | $ | 92,977 | ||||||||||
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| Portfolio Abbreviations |
| AGC | Assured Guarantee Corp. | |||||||
| AGM | Assured Guaranty Municipal Corp. | |||||||
| AMT | Alternative Minimum Tax (subject to) | |||||||
| COP | Certificates of Participation | |||||||
| ERB | Education Revenue Bonds | |||||||
| GO | General Obligation Bonds | |||||||
| IDA | Industrial Development Authority | |||||||
| NPFGC | National Public Finance Guarantee Corp. | |||||||
| RB | Revenue Bonds | |||||||
| S/F | Single-Family | |||||||
| 4 | BLACKROCK MUNIYIELD ARIZONA FUND, INC. | OCTOBER 31, 2016 |
| Schedule of Investments (continued) |
BlackRock MuniYield Arizona Fund, Inc. (MZA) |
| Fair Value Hierarchy as of Period End |
Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation methodologies are categorized into a fair value hierarchy consisting of three broad levels for financial reporting purposes as follows:
| • | Level 1 — unadjusted price quotations in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access |
| • | Level 2 — other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs) |
| • | Level 3 — unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments and derivative financial instruments) |
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 Investments include equity or debt issued by privately-held companies. There may not be a secondary market, and/or there are a limited number of investors. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Global Valuation Committee in the absence of market information.
Changes in valuation methodologies may result in transfers into or out of an assigned level within the hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments is based on the pricing transparency of the investments and is not necessarily an indication of the risks associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments instruments, refer to the Fund’s most recent financial statements as contained in its annual report.
The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: |
||||||||||||||||
| Investments: |
||||||||||||||||
| Long-Term Investments1 |
— | $ | 112,778,394 | — | $ | 112,778,394 | ||||||||||
| Short-Term Securities |
$ | 412,536 | — | — | 412,536 | |||||||||||
|
|
|
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| Total |
$ | 412,536 | $ | 112,778,394 | $ | 113,190,930 | ||||||||||
|
|
|
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| Derivative Financial Instruments2 |
||||||||||||||||
| Assets: |
||||||||||||||||
| Interest rate contracts |
$ | 92,977 | — | — | $ | 92,977 | ||||||||||
| 1 See above Schedule of Investments for values in each sector. |
| |||||||||||||||
| 2 Derivative financial instruments are futures contracts. Futures contracts are valued at the unrealized appreciation (depreciation) on the instrument. |
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| BLACKROCK MUNIYIELD ARIZONA FUND, INC. | OCTOBER 31, 2016 | 5 |
| Schedule of Investments (concluded) |
BlackRock MuniYield Arizona Fund, Inc. (MZA) |
The Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial reporting purposes. As of period end, such assets and/or liabilities are categorized within the disclosure hierarchy as follows:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||
| Assets: |
||||||||||||||
| Cash pledged for futures contracts |
$ | 59,000 | — | — | $ | 59,000 | ||||||||
| Liabilities: |
||||||||||||||
| TOB Trust Certificates |
— | $ | (3,000,000 | ) | — | (3,000,000 | ) | |||||||
| VRDP Shares at Liquidation Value |
— | (37,300,000 | ) | — | (37,300,000 | ) | ||||||||
|
|
|
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| Total |
$ | 59,000 | $ | (40,300,000 | ) | $— | $ | (40,241,000 | ) | |||||
|
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|
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During the period ended October 31, 2016, there were no transfers between levels.
| 6 | BLACKROCK MUNIYIELD ARIZONA FUND, INC. | OCTOBER 31, 2016 |
Item 2 – Controls and Procedures
| 2(a) – | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended. |
| 2(b) – | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 3 – Exhibits
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.
| BlackRock MuniYield Arizona Fund, Inc. | ||
| By: | /s/ John M. Perlowski | |
| John M. Perlowski | ||
| Chief Executive Officer (principal executive officer) of | ||
| BlackRock MuniYield Arizona Fund, Inc. | ||
Date: December 20, 2016
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/ John M. Perlowski | |
| John M. Perlowski | ||
| Chief Executive Officer (principal executive officer) of | ||
| BlackRock MuniYield Arizona Fund, Inc. |
Date: December 20, 2016
| By: | /s/ Neal J. Andrews | |
| Neal J. Andrews | ||
| Chief Financial Officer (principal financial officer) of | ||
| BlackRock MuniYield Arizona Fund, Inc. |
Date: December 20, 2016