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: 07/31/2013

 

Date of reporting period: 10/31/2012

 

Item 1 – Schedule of Investments

  
 
Schedule of Investments October 31, 2012 (Unaudited)

BlackRock MuniYield Arizona Fund, Inc. (MZA)

(Percentages shown are based on Net Assets)

 

    Par
(000)		   Value  
Municipal Bonds  

Arizona — 133.3%

  
Corporate — 9.3%  
Maricopa County Pollution Control Corp., Refunding RB, Southern California Edison Co., Series A, 5.00%, 6/01/35 $ 4,350 $ 4,833,198  
Pima County IDA, RB, Tucson Electric Power, Series A, 5.25%, 10/01/40   1,000   1,092,580  
Pima County IDA, Refunding IDRB, Tucson Electric Power, 5.75%, 9/01/29   500   532,135  
 
  6,457,913  
 
County/City/Special District/School District — 41.7%  
City of Glendale Arizona, RB (NPFGC), 5.00%, 7/01/25   1,000   1,150,660  
City of Tucson Arizona, COP (AGC), 5.00%, 7/01/29   1,000   1,125,140  
County of Pinal Arizona, COP:  
  5.00%, 12/01/26   1,250   1,312,050  
  5.00%, 12/01/29   1,250   1,306,025  
Gilbert Public Facilities Municipal Property Corp. Arizona, RB, 5.50%, 7/01/27   2,000   2,315,700  
Gladden Farms Community Facilities District, GO, 5.50%, 7/15/31   750   770,648  
Greater Arizona Development Authority, RB, Santa Cruz County Jail, Series 2, 5.25%, 8/01/31   1,155   1,264,425  
Marana Municipal Property Corp., RB, Series A, 5.00%, 7/01/28   2,500   2,742,275  
Maricopa County Community College District Arizona, GO, Series C, 3.00%, 7/01/22   1,000   1,072,460  
Maricopa County Public Finance Corp., RB, Series A (AMBAC), 5.00%, 7/01/24   1,000   1,149,570  
Maricopa County Unified School District No. 89-Dysart Arizona, GO, School Improvement Project of 2006,  Series C, 6.00%, 7/01/28   1,000   1,164,850  
Mohave County Unified School District No. 20 Kingman, GO, School Improvement Project of 2006,   Series C (AGC), 5.00%, 7/01/26   1,000   1,209,940  
Phoenix Civic Improvement Corp., RB, Subordinate, Civic Plaza Expansion Project, Series A (NPFGC), 5.00%, 7/01/35   3,325   3,596,220  
Phoenix Mesa Airport Authority, RB, Mesa Project, AMT, 5.00%, 7/01/38   3,600   3,803,220  
Scottsdale Municipal Property Corp. Arizona, RB, Water & Sewer Development Project, Series A, 5.00%, 7/01/24   1,500   1,787,715  
           
    Par
(000)		   Value  
Municipal Bonds  

Arizona (continued)

  
County/City/Special District/School District (concluded)    
Vistancia Community Facilities District Arizona, GO:  
  6.75%, 7/15/22 $ 1,275 $ 1,278,697  
  5.75%, 7/15/24   750   796,943  
Yuma County Library District, GO (Syncora), 5.00%, 7/01/26   1,000     1,133,240  
 
  28,979,778  
 
Education — 14.6%  
Arizona Board of Regents, Refunding, COP, University of Arizona, Series C, 5.00%, 6/01/31   2,000   2,287,940  
Arizona State University, RB, Series 2008-C:  
  6.00%, 7/01/25   970   1,157,074  
  6.00%, 7/01/26   745   886,937  
  6.00%, 7/01/27   425   504,110  
  6.00%, 7/01/28   400   473,760  
Maricopa County IDA Arizona, RB, Arizona Charter Schools Project, Series A, 6.63%, 7/01/20   700   571,536  
Phoenix IDA Arizona, ERB, Great Hearts Academies Project, 6.30%, 7/01/42   500   540,330  
Pima County IDA, RB, Arizona Charter Schools Project:  
  Series A, 6.75%, 7/01/21   395   395,751  
  Series C, 6.70%, 7/01/21   700   701,211  
  Series C, 6.75%, 7/01/31   980   981,186  
Pima County IDA, Refunding RB, Arizona Charter Schools Project, Series O, 5.00%, 7/01/26   995   951,250  
University of Arizona, COP, University of Arizona Projects, Series B (AMBAC), 5.00%, 6/01/13 (a)   650     667,361  
 
  10,118,446  
 
Health — 20.6%  
Arizona Health Facilities Authority, RB, Catholic Healthcare West, Series B-2 (AGM), 5.00%, 3/01/41   500   544,725  
Arizona Health Facilities Authority, Refunding RB:  
  Banner Health, Series D, 6.00%, 1/01/13 (a)   1,500   1,512,120  
  Banner Health, Series D, 5.50%, 1/01/38   2,300   2,558,083  
  Phoenix Children's Hospital, Series A, 5.00%, 2/01/42   1,000   1,070,230  
                       
BLACKROCK MUNIYIELD ARIZONA FUND, INC.OCTOBER 31, 2012                    1
 
Schedule of Investments (continued)

BlackRock MuniYield Arizona Fund, Inc. (MZA)

(Percentages shown are based on Net Assets)

 

    Par
(000)		   Value  
Municipal Bonds  

Arizona (continued)

  
Health (concluded)    
Maricopa County IDA Arizona, Refunding RB:  
  Catholic Healthcare West, Series A, 5.50%, 7/01/26 $ 1,850 $ 1,957,762  
  Catholic Healthcare West, Series A, 6.00%, 7/01/39   170   195,830  
  Samaritan Health Services, Series A (NPFGC), 7.00%, 12/01/16 (b)   1,000   1,159,000  
Tempe IDA, Refunding RB, Friendship Village of Tempe, Series A, 6.25%, 12/01/42   500   541,930  
University Medical Center Corp. Arizona, RB, 6.50%, 7/01/39   500   581,690  
University Medical Center Corp. Arizona, Refunding RB, 6.00%, 7/01/39   1,000   1,161,900  
Yavapai County IDA Arizona, RB, Yavapai Regional Medical Center, Series A, 6.00%, 8/01/33   1,800   1,862,874  
Yavapai County IDA Arizona, Refunding RB, Northern Arizona Healthcare System, 5.25%, 10/01/26   1,000     1,186,910  
 
  14,333,054  
 
Housing — 1.7%  
Maricopa County & Phoenix IDA, Refunding RB, AMT (Ginnie Mae), S/F:  
  Series A-1, 5.75%, 5/01/40   140   151,616  
  Series A-2, 5.80%, 7/01/40   155   159,727  

Maricopa County IDA Arizona, RB,
Series 3-B, AMT (Ginnie Mae), 5.25%, 8/01/38

   337   359,068  

Phoenix & Pima County IDA, RB,
Series 1A, AMT (Ginnie Mae), 5.65%, 7/01/39

   116   123,085  
Phoenix & Pima County IDA, Refunding RB, Series 2007-1, AMT (Ginnie Mae), 5.25%, 8/01/38   172   179,782  
Phoenix IDA Arizona, Refunding RB, Series 2007-2, AMT (Ginnie Mae), 5.50%, 8/01/38   205     217,164  
 
  1,190,442  
 
State — 23.6%  
Arizona School Facilities Board, COP:  
  5.13%, 9/01/21   1,000   1,143,760  
  5.75%, 9/01/22   2,000   2,340,040  
Arizona Sports & Tourism Authority, Refunding RB, Multipurpose Stadium Facility Project, Series A, 5.00%, 7/01/36   3,000   3,316,950  
Arizona State Transportation Board, RB, Series B, 5.00%, 7/01/30   4,000   4,568,320  
           
    Par
(000)		   Value  
Municipal Bonds  

Arizona (concluded)

  
State (concluded)    
Greater Arizona Development Authority, RB, Series B (NPFGC):  
  5.00%, 8/01/30 $ 1,600 $ 1,726,432  
  5.00%, 8/01/35   1,000   1,076,620  
State of Arizona, RB, Lottery Revenue, Series A (AGM), 5.00%, 7/01/29   1,930     2,190,492  
 
  16,362,614  
 
Transportation — 6.4%  
Phoenix Civic Improvement Corp., RB, Senior Lien:  
  Series A, 5.00%, 7/01/33   1,000   1,112,840  
  Series B, AMT (NPFGC), 5.75%, 7/01/17   1,000   1,003,420  
  Series B, AMT (NPFGC), 5.25%, 7/01/27   450   450,697  
  Series B, AMT (NPFGC), 5.25%, 7/01/32   755   756,027  
Phoenix Civic Improvement Corp., Refunding RB, Junior Lien, Series A, 5.00%, 7/01/40   1,000     1,107,850  
 
  4,430,834  
 
Utilities — 15.4%  
Gilbert Water Resource Municipal Property Corp., RB, Subordinate Lien (NPFGC), 5.00%, 10/01/29   900   978,687  
Phoenix Civic Improvement Corp., Refunding RB, Senior Lien, 5.50%, 7/01/22   2,000   2,437,800  
Pima County Arizona, RB, Series B, 5.00%, 7/01/26   1,000   1,170,320  
Pinal County Electric District No 3, Refunding RB, 5.25%, 7/01/36   2,500   2,810,575  
Pinal County IDA Arizona, RB, San Manuel Facility Project, AMT, 6.25%, 6/01/26   500   504,115  
Salt River Project Agricultural Improvement & Power District, RB, Series A, 5.00%, 1/01/24   1,000   1,176,080  
Salt River Project Agricultural Improvement & Power District, Refunding RB, Series A, 5.00%, 1/01/35   1,500     1,652,430  
 
  10,730,007  
 
Total Municipal Bonds in Arizona   92,603,088  
       
 

Guam — 2.0%

  
State — 1.5%  
Government of Guam Business Privilege Tax Revenue, RB, Series A, 5.13%, 1/01/42   800   889,872  
                           
BLACKROCK MUNIYIELD ARIZONA FUND, INC.OCTOBER 31, 2012                    2
 
Schedule of Investments (continued)

BlackRock MuniYield Arizona Fund, Inc. (MZA)

(Percentages shown are based on Net Assets)

 

    Par
(000)		   Value  
Municipal Bonds  

Guam (concluded)

  
State (concluded)    
Territory of Guam, RB, Series B-1, 5.00%, 1/01/37 $ 145 $ 160,128  
 
  1,050,000  
 
Utilities — 0.5%  
Guam Power Authority, Refunding RB, Series A (AGM):  
  5.00%, 10/01/26   120   136,587  
  5.00%, 10/01/27   145   164,321  
 
  300,908  
 
Total Municipal Bonds in Guam   1,350,908  
       
 

Puerto Rico — 7.4%

  
State — 7.4%  
Puerto Rico Public Buildings Authority, Refunding RB, Government Facilities, Series M-3 (NPFGC), 6.00%, 7/01/28   700   763,273  
Puerto Rico Sales Tax Financing Corp., RB, First Sub-Series A, 6.38%, 8/01/39   1,500   1,733,760  
Puerto Rico Sales Tax Financing Corp., Refunding RB:  
  CAB, Series A (NPFGC), 5.58%, 8/01/41 (c)   9,530   1,956,985  
  First Sub-Series C, 6.00%, 8/01/39   600   671,610  
 
Total Municipal Bonds in Puerto Rico   5,125,628  
 
Total Municipal Bonds – 142.7%   99,079,624  
       
 
  
Municipal Bonds Transferred to Tender Option Bond (TOB) Trusts (d)  

Arizona — 11.1%

  
Utilities — 11.1%  
City of Mesa Arizona, RB, 5.00%, 7/01/35   3,000   3,440,010  
Phoenix Arizona Civic Improvement Corp., RB, 5.00%, 7/01/34   3,000   3,518,340  
Salt River Project Agricultural Improvement & Power District, RB, 5.00%, 1/01/38   660   750,802  
 
Total Municipal Bonds Transferred to Tender Option Bond (TOB) Trusts – 11.1%   7,709,152  
 
Total Long-Term Investments
(Cost – $97,879,287) – 153.8%		   106,788,776  
                           

 

   
Shares		   Value  
 
Short-Term Securities  
 
FFI Institutional Tax-Exempt Fund, 0.04% (e)(f)   1,881,549 $   1,881,549  
 
Total Short-Term Securities
(Cost – $1,881,549) – 2.7%		   1,881,549   
 
Total Investments (Cost - $99,760,836*) – 156.5%   108,670,325   
Other Assets Less Liabilities – 2.0%   1,417,134   
Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable – (4.8)%   (3,331,925)  
VRDP Shares, at Liquidation Value – (53.7)%   (37,300,000)  
 
Net Assets Applicable to Common Shares – 100.0% $ 69,455,534   
 
                   

 

* As of October 31, 2012, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:

 

  Tax cost $ 96,416,233   
 
  Gross unrealized appreciation $ 9,098,369   
  Gross unrealized depreciation   (174,277)  
 
  Net unrealized appreciation $ 8,924,092   

 

(a) US 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) Security is collateralized by Municipal or US Treasury obligations.
(c) Represents a zero-coupon bond. Rate shown reflects the current yield as of report date.
(d) Securities represent bonds transferred to a TOB in exchange for which the Fund acquired residual interest certificates. These securities serve as collateral in a financing transaction.
(e) Investments in issuers considered to be an affiliate of the Fund during the period ended October 31, 2012, 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, 2012		 Net
Activity		   Shares
Held at
October 31, 2012		   Income
FFI Institutional Tax-Exempt Fund   1,351,621 529,928   1,881,549 $ 51
                     
(f) Represents the current yield as of report date.
   
• 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 Fund management. These definitions may not apply for purposes of this report, which may combine such sector sub-classifications for reporting ease.
     

 

BLACKROCK MUNIYIELD ARIZONA FUND, INC.OCTOBER 31, 2012                    3
 
Schedule of Investments (concluded)

BlackRock MuniYield Arizona Fund, Inc. (MZA)

(Percentages shown are based on Net Assets)

 

Portfolio Abbreviations

To simplify the listings of portfolio holdings in the Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list: 
 
AGC Assured Guaranty Corp.
AGM Assured Guaranty Municipal Corp.
AMBAC American Municipal Bond Assurance Corp.
AMT Alternative Minimum Tax (subject to)
CAB Capital Appreciation Bonds
COP Certificates of Participation
ERB Education Revenue Bonds
Ginnie Mae Government National Mortgage Obligation
GO General Obligation Bonds
IDA Industrial Development Authority
IDRB Industrial Development Revenue Bonds
NPFGC National Public Finance Guarantee Corp.
RB Revenue Bonds
S/F Single-Family
Syncora Syncora Guarantee
   
• Fair Value Measurements - Various inputs are used in determining the fair value of investments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes as follows:
   
  • Level 1 — unadjusted price quotations in active markets/exchanges for identical assets and 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)
           
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 level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.  
   
Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Fund's policy, transfers between different levels of the fair value disclosure 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 investment 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 and other significant accounting policies, please refer to the Fund's most recent financial statements as contained in its annual report.  
   
The following table summarizes the Fund's investments categorized in the disclosure hierarchy as of October 31, 2012:
     

 

  Level 1   Level 2   Level 3 Total
Assets:  
Investments:  
 

Long-Term

Investments1

   — $ 106,788,776   — $ 106,788,776
 

Short-Term

Securities

 $ 1,881,549   —   —   1,881,549
Total $ 1,881,549 $ 106,788,776   — $ 108,670,325
                   

 

1  See above Schedule of Investments for values in each sector.

 

Certain of the Fund’s liabilities are held at carrying amount, which approximates fair value for financial reporting purposes.  As of October 31, 2012, such liabilities are categorized within the disclosure hierarchy as follows:

 

  Level 1   Level 2   Level 3 Total
Liabilities:  
  TOB trust certificates   — $ (3,330,000)   — $ (3,330,000)
  VRDP Shares   —   (37,300,000)   —   (37,300,000)
Total   — $ (40,630,000)   — $ (40,630,000)
                     

 

There were no transfers between levels during the period ended October 31, 2012.

 

 

BLACKROCK MUNIYIELD ARIZONA FUND, INC.OCTOBER 31, 2012                    4
 

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 21, 2012

 

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 21, 2012

 

By: /s/ Neal J. Andrews
  Neal J. Andrews
  Chief Financial Officer (principal financial officer) of
  BlackRock MuniYield Arizona Fund, Inc.

 

Date: December 21, 2012