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: 07/31/2015
Date of reporting period: 10/31/2014
Item 1 – Schedule of Investments
| Schedule of Investments October 31, 2014 (Unaudited) | BlackRock MuniYield Arizona Fund, Inc. (MZA) |
| (Percentages shown are based on Net Assets) | |
| Municipal Bonds | Par (000) |
Value | ||||
|
Arizona — 141.4% |
||||||
| Corporate — 17.1% | ||||||
| County of Maricopa Arizona Pollution Control Corp., Refunding RB, Southern California Edison Co., Series A, 5.00%, 6/01/35 | $ | 4,350 | $ | 4,890,575 | ||
| County of Pima Arizona IDA, RB, Tucson Electric Power Co. Project, Series A, 5.25%, 10/01/40 | 1,000 | 1,086,810 | ||||
| County of Pima Arizona IDA, Refunding, IDRB, Tucson Electric Power Co. Project, Remarketing, Series B, 5.75%, 9/01/29 | 500 | 503,220 | ||||
| County of Pima Arizona IDA, Refunding RB, Tucson Electric Power Co. Project, Series A, 4.00%, 9/01/29 | 1,000 | 1,021,300 | ||||
| Salt Verde Financial Corp., RB, Senior: | ||||||
| 5.50%, 12/01/29 | 2,000 | 2,428,780 | ||||
| 5.00%, 12/01/37 | 1,500 | 1,695,360 | ||||
| 11,626,045 | ||||||
| County/City/Special District/School District — 39.0% | ||||||
| City of Phoenix Arizona Civic Improvement Corp., RB, Subordinate, Civic Plaza Expansion Project, Series A (NPFGC), 5.00%, 7/01/35 | 3,325 | 3,404,334 | ||||
| City of Tucson Arizona, COP (AGC), 5.00%, 7/01/29 | 1,000 | 1,083,730 | ||||
| County of Maricopa Arizona Community College District, GO, Series C, 3.00%, 7/01/22 | 1,000 | 1,050,050 | ||||
| County of Maricopa Arizona School District No. 28 Kyrene Elementary, GO, School Improvement Project of 2010, Series B (a): | ||||||
| 1.00%, 7/01/29 | 480 | 555,144 | ||||
| 1.00%, 7/01/30 | 400 | 462,620 | ||||
| County of Maricopa Arizona Unified School District No. 89 Dysart, GO, School Improvement Project of 2006, Series C, 6.00%, 7/01/28 | 1,000 | 1,187,120 | ||||
| County of Mohave Arizona Unified School District No. 20 Kingman, GO, School Improvement Project of 2006, Series C (AGC), 5.00%, 7/01/26 | 1,000 | 1,153,900 | ||||
| Municipal Bonds | Par (000) |
Value | ||||
|
Arizona (continued) |
||||||
| County/City/Special District/School District (concluded) | ||||||
| County of Pinal Arizona, COP: | ||||||
| 5.00%, 12/01/26 | $ | 1,250 | $ | 1,254,962 | ||
| 5.00%, 12/01/29 | 1,250 | 1,252,438 | ||||
| County of Yuma Arizona Library District, GO (Syncora), 5.00%, 7/01/26 | 1,000 | 1,098,210 | ||||
| Gilbert Public Facilities Municipal Property Corp., RB, 5.50%, 7/01/27 | 2,000 | 2,311,640 | ||||
| Gladden Farms Community Facilities District, GO, 5.50%, 7/15/31 | 750 | 761,265 | ||||
| Greater Arizona Development Authority, RB, Santa Cruz County Jail, Series 2, 5.25%, 8/01/31 | 1,155 | 1,243,069 | ||||
| Marana Municipal Property Corp., RB, Series A, 5.00%, 7/01/28 | 2,500 | 2,780,250 | ||||
| Phoenix-Mesa Gateway Airport Authority, RB, Mesa Project, AMT, 5.00%, 7/01/38 | 3,600 | 3,912,264 | ||||
| Scottsdale Municipal Property Corp., RB, Water & Sewer Development Project, Series A, 5.00%, 7/01/24 | 1,000 | 1,137,600 | ||||
| Vistancia Community Facilities District Arizona, GO: | ||||||
| 6.75%, 7/15/22 | 1,155 | 1,158,604 | ||||
| 5.75%, 7/15/24 | 750 | 763,365 | ||||
| 26,570,565 | ||||||
| Education — 23.9% | ||||||
| Arizona Board of Regents, COP, Refunding, University of Arizona, Series C, 5.00%, 6/01/30 | 2,595 | 2,922,125 | ||||
| Arizona State University, RB, Series C: | ||||||
| 6.00%, 7/01/25 | 970 | 1,132,484 | ||||
| 6.00%, 7/01/26 | 745 | 868,335 | ||||
| 6.00%, 7/01/27 | 425 | 495,359 | ||||
| 6.00%, 7/01/28 | 400 | 462,660 | ||||
| City of Phoenix Arizona IDA, RB: | ||||||
| Candeo School, Inc. Project, 6.63%, 7/01/33 | 500 | 558,120 | ||||
| Great Hearts Academies - Veritas Project, 6.30%, 7/01/42 | 500 | 534,845 | ||||
| Legacy Traditional Schools, Series A, 6.75%, 7/01/44 (b) | 440 | 497,156 | ||||
| BLACKROCK MUNIYIELD ARIZONA FUND, INC. | OCTOBER 31, 2014 1 |
| Schedule of Investments (continued) | BlackRock MuniYield Arizona Fund, Inc. (MZA) |
| (Percentages shown are based on Net Assets) | |
| Municipal Bonds | Par (000) |
Value | ||||
|
Arizona (continued) |
||||||
| Education (concluded) | ||||||
| County of Maricopa Arizona IDA, RB, Arizona Charter School Project 1, Series A, 6.63%, 7/01/20 | $ | 320 | $ | 310,941 | ||
| County of Pima Arizona IDA, RB, Arizona Charter Schools Project, Series C: | ||||||
| 6.70%, 7/01/21 | 20 | 20,047 | ||||
| 6.75%, 7/01/31 | 45 | 45,072 | ||||
| County of Pima Arizona IDA, Refunding RB, Arizona Charter Schools Project, Series O, 5.00%, 7/01/26 | 985 | 987,896 | ||||
| Florence Town Inc., IDA, ERB, Legacy Traditional School Project, Queen Creek and Casa Grande Campuses, 6.00%, 7/01/43 | 500 | 534,055 | ||||
| Industrial Development Authority of the City of Phoenix, RB, 5.00%, 7/01/44 | 2,000 | 2,041,380 | ||||
| Northern Arizona University, RB, Stimulus Plan for Economic and Educational Development, 5.00%, 8/01/38 | 3,000 | 3,338,880 | ||||
| Student & Academic Services LLC, RB, 5.00%, 6/01/39 | 1,400 | 1,570,898 | ||||
| 16,320,253 | ||||||
| Health — 19.3% | ||||||
| Arizona Health Facilities Authority, RB: | ||||||
| 5.25%, 3/01/39 | 1,500 | 1,653,255 | ||||
| Catholic Healthcare West, Series B-2 (AGM), 5.00%, 3/01/41 | 500 | 536,960 | ||||
| Arizona Health Facilities Authority, Refunding RB: | ||||||
| Banner Health, Series D, 5.50%, 1/01/38 | 4,800 | 5,203,584 | ||||
| Phoenix Children's Hospital, Series A, 5.00%, 2/01/42 | 1,000 | 1,073,400 | ||||
| City of Tempe Arizona IDA, Refunding RB, Friendship Village of Tempe, Series A, 6.25%, 12/01/42 | 500 | 537,180 | ||||
| County of Maricopa Arizona IDA, RB, Catholic Healthcare West, Series A, 6.00%, 7/01/39 | 170 | 193,475 | ||||
| Municipal Bonds | Par (000) |
Value | ||||
|
Arizona (continued) |
||||||
| Health (concluded) | ||||||
| County of Maricopa Arizona IDA, Refunding RB, Samaritan Health Services, Series A (NPFGC), 7.00%, 12/01/16 (c) | $ | 1,000 | $ | 1,050,970 | ||
| University Medical Center Corp., RB, 6.50%, 7/01/39 | 500 | 584,435 | ||||
| University Medical Center Corp., Refunding RB, 6.00%, 7/01/39 | 1,000 | 1,151,940 | ||||
| Yavapai County IDA, Refunding RB, Northern Arizona Healthcare System, 5.25%, 10/01/26 | 1,000 | 1,155,620 | ||||
| 13,140,819 | ||||||
| Housing — 0.6% | ||||||
| City of Phoenix & County of Maricopa Arizona IDA, Refunding RB, S/F, AMT (Fannie Mae): | ||||||
| Series A-1, 5.75%, 5/01/40 | 40 | 42,993 | ||||
| Series A-2, 5.80%, 7/01/40 | 55 | 55,964 | ||||
| City of Phoenix & County of Pima Arizona IDA, RB, S/F, Series 1A, AMT (Fannie Mae), 5.65%, 7/01/39 | 157 | 156,790 | ||||
| City of Phoenix & County of Pima Arizona IDA, Refunding RB, S/F, Series 1, AMT (Fannie Mae), 5.25%, 8/01/38 | 19 | 19,837 | ||||
| City of Phoenix Arizona IDA, Refunding RB, S/F, Series 2, AMT (Fannie Mae), 5.50%, 12/01/38 | 40 | 41,638 | ||||
| County of Maricopa Arizona IDA, RB, S/F, Series 3-B, AMT (Ginnie Mae), 5.25%, 8/01/38 | 79 | 79,490 | ||||
| 396,712 | ||||||
| State — 16.4% | ||||||
| Arizona Department of Transportation State Highway Fund, RB, Series B, 5.00%, 7/01/30 | 4,000 | 4,502,960 | ||||
| Arizona School Facilities Board, COP: | ||||||
| 5.13%, 9/01/21 | 1,000 | 1,150,180 | ||||
| 5.75%, 9/01/22 | 2,000 | 2,343,860 | ||||
| Arizona Sports & Tourism Authority, Refunding RB, Multipurpose Stadium Facility Project, Series A, 5.00%, 7/01/31 | 1,000 | 1,087,430 | ||||
| BLACKROCK MUNIYIELD ARIZONA FUND, INC. | OCTOBER 31, 2014 2 |
| Schedule of Investments (continued) | BlackRock MuniYield Arizona Fund, Inc. (MZA) |
| (Percentages shown are based on Net Assets) | |
| Municipal Bonds | Par (000) |
Value | ||||
|
Arizona (continued) |
||||||
| State (concluded) | ||||||
| State of Arizona, RB, Lottery Revenue, Series A (AGM), 5.00%, 7/01/29 | $ | 1,930 | $ | 2,121,147 | ||
| 11,205,577 | ||||||
| Transportation — 4.3% | ||||||
| City of Phoenix Arizona Civic Improvement Corp., RB, Senior Lien, Series A, AMT, 5.00%, 7/01/33 | 1,000 | 1,107,040 | ||||
| City of Phoenix Arizona Civic Improvement Corp., Refunding RB: | ||||||
| Junior Lien, Series A, 5.00%, 7/01/40 | 1,000 | 1,068,500 | ||||
| Senior Lien, AMT, 5.00%, 7/01/32 | 700 | 790,720 | ||||
| 2,966,260 | ||||||
| Utilities — 20.8% | ||||||
| City of Phoenix Arizona Civic Improvement Corp., Refunding RB, Senior Lien, 5.50%, 7/01/22 | 2,000 | 2,316,460 | ||||
| County of Pinal Arizona, RB, Electric District No. 4, 6.00%, 12/01/38 | 2,000 | 2,230,800 | ||||
| County of Pinal Arizona, Refunding RB, Electric District No. 3, 5.25%, 7/01/36 | 2,500 | 2,794,250 | ||||
| County of Pinal Arizona IDA, RB, San Manuel Facility Project, AMT, 6.25%, 6/01/26 | 500 | 507,835 | ||||
| Gilbert Water Resource Municipal Property Corp., RB, Subordinate Lien (NPFGC), 5.00%, 10/01/29 | 900 | 983,205 | ||||
| Greater Arizona Development Authority, RB, Series B (NPFGC): | ||||||
| 5.00%, 8/01/30 | 1,600 | 1,640,528 | ||||
| 5.00%, 8/01/35 | 1,000 | 1,026,010 | ||||
| Salt River Project Agricultural Improvement & Power District, RB, Series A, 5.00%, 1/01/24 | 1,000 | 1,125,030 | ||||
| Municipal Bonds | Par (000) |
Value | ||||
|
Arizona (concluded) |
||||||
| Utilities (concluded) | ||||||
| Salt River Project Agricultural Improvement & Power District, Refunding RB, Series A, 5.00%, 1/01/35 | $ | 1,500 | $ | 1,564,920 | ||
| 14,189,038 | ||||||
| Total Municipal Bonds in Arizona | 96,415,269 | |||||
|
Guam — 3.1% |
||||||
| State — 3.1% | ||||||
| Territory of Guam, RB, Business Privilege Tax: | ||||||
| Bonds, Series A, 5.25%, 1/01/36 | 65 | 71,160 | ||||
| Bonds, Series A, 5.13%, 1/01/42 | 800 | 863,048 | ||||
| Bonds, Series B-1, 5.00%, 1/01/37 | 80 | 86,177 | ||||
| Series B-1, 5.00%, 1/01/42 | 1,000 | 1,070,730 | ||||
| Total Municipal Bonds in Guam | 2,091,115 | |||||
| Total Municipal Bonds — 144.5% | 98,506,384 | |||||
|
Municipal Bonds Transferred to Tender Option Bond Trusts (d) |
||||||
|
Arizona — 10.9% |
||||||
| Utilities — 10.9% | ||||||
| City of Mesa Arizona, RB, Utility System, 5.00%, 7/01/35 | 3,000 | 3,350,370 | ||||
| City of Phoenix Arizona Civic Improvement Corp., Refunding RB, Water System, Junior Lien, Series A, 5.00%, 7/01/34 | 3,000 | 3,379,080 | ||||
| Salt River Project Agricultural Improvement & Power District, RB, Electric System, Series A, 5.00%, 1/01/38 | 660 | 721,723 | ||||
|
Total Municipal Bonds Transferred to Tender Option Bond Trusts — 10.9% |
7,451,173 | |||||
| Total Long-Term Investments (Cost — $97,426,191) — 155.4% |
105,957,557 | |||||
| BLACKROCK MUNIYIELD ARIZONA FUND, INC. | OCTOBER 31, 2014 3 |
| Schedule of Investments (continued) | BlackRock MuniYield Arizona Fund, Inc. (MZA) |
| (Percentages shown are based on Net Assets) | |
| Short-Term Securities | Shares | Value | |||
| FFI Institutional Tax-Exempt Fund, 0.03% (e)(f) | 914,065 | $ | 914,065 | ||
| Total Short-Term Securities (Cost — $914,065) — 1.4% |
914,065 | ||||
| Total Investments (Cost — $98,340,256*) — 156.8% |
106,871,622 | ||||
| Other Assets Less Liabilities — 2.8% | 1,938,251 | ||||
| Liability for TOB Trust Certificates, Including Interest Expense and Fees Payable — (4.9%) | (3,330,595) | ||||
| VRDP Shares, at Liquidation Value — (54.7%) | (37,300,000) | ||||
| Net Assets Applicable to Common Shares — 100.0% | $ | 68,179,278 | |||
| * | As of October 31, 2014, gross unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows: |
|||
| Tax cost | $ | 94,998,703 | ||
| Gross unrealized appreciation | $ | 8,555,362 | ||
| Gross unrealized depreciation | (12,443) | |||
| Net unrealized appreciation | $ | 8,542,919 | ||
|
Notes to Schedule of Investments | ||
| (a) | Represents a step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate shown is as of report date. | |
| (b) | 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. | |
| (c) | Security is collateralized by municipal or U.S. Treasury obligations. | |
| (d) | Represent bonds transferred to a TOB. In exchange for which the Fund received cash and residual interest certificates. These bonds 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, 2014, for purposes of Section 2(a)(3) of the Investment Act of 1940, were as follows: | |
| Affiliate | Shares Held at July 31, 2014 |
Net Activity |
Shares Held at October 31, 2014 |
Income | |||||||||||||||||
| FFI Institutional Tax-Exempt Fund | 3,656,883 | (2,742,818) | 914,065 | — | |||||||||||||||||
| (f) | Represents the current yield as of report date. |
| BLACKROCK MUNIYIELD ARIZONA FUND, INC. | OCTOBER 31, 2014 4 |
| Schedule of Investments (continued) | BlackRock MuniYield Arizona Fund, Inc. (MZA) |
|
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 | |
| IDRB | Industrial Development Revenue Bonds | |
| NPFGC | National Public Finance Guarantee Corp. | |
| RB | Revenue Bonds | |
| S/F | Single-Family | |
| Syncora | Syncora Guarantee | |
| 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. |
| • |
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 statement purposes. 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. 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. The three levels of the fair value hierarchy are as follows:
| |
| • | Level 1 — unadjusted quoted prices 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) | |
|
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. For information about the Fund’s policy regarding valuation of investments, please refer to the Fund’s most recent financial statements as contained in its annual report.
| ||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Investments: | ||||||||||||||||
| Municipal Bonds 1 | — | $ | 105,957,557 | — | $ | 105,957,557 | ||||||||||
| Short-Term Securities | $ | 914,065 | — | — | 914,065 | |||||||||||
| Total | $ | 914,065 | $ | 105,957,557 | — | $ | 106,871,622 | |||||||||
| 1 | See above Schedule of Investments for values in each sector. |
| BLACKROCK MUNIYIELD ARIZONA FUND, INC. | OCTOBER 31, 2014 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 October 31, 2014, such assets and/or 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, 2014. |
| BLACKROCK MUNIYIELD ARIZONA FUND, INC. | OCTOBER 31, 2014 6 |
| 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 23, 2014 | ||
| 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 23, 2014 | ||
| By: | /s/ Neal J. Andrews | |
| Neal J. Andrews | ||
| Chief Financial Officer (principal financial officer) of | ||
| BlackRock MuniYield Arizona Fund, Inc. | ||
| Date: December 23, 2014 | ||