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: 04/30/2013

 

Item 1 – Schedule of Investments

 
 
Schedule of Investments April 30, 2013 (Unaudited)

BlackRock MuniYield Arizona Fund, Inc. (MZA)

(Percentages shown are based on Net Assets)

 

  Par
(000)		  Value
Municipal Bonds      
Arizona — 135.7%
Corporate — 10.7%          
Maricopa County Pollution Control Corp., Refunding RB, Southern California Edison Co., Series A, 5.00%, 6/01/35  $4,350   $4,825,325 
Pima County IDA, RB, Tucson Electric Power, Series A, 5.25%, 10/01/40   1,000    1,094,980 
Pima County IDA, Refunding IDRB, Tucson Electric Power, 5.75%, 9/01/29   500    526,775 
Pima County IDA, Refunding RB, Tucson Electric Power, Series A, 4.00%, 9/01/29   1,000    1,004,810 
         7,451,890 
County/City/Special District/School District — 45.6%          
City of Glendale Arizona, RB (NPFGC), 5.00%, 7/01/25   1,000    1,138,810 
City of Tucson Arizona, COP (AGC), 5.00%, 7/01/29   1,000    1,118,410 
County of Pinal Arizona, COP:          
5.00%, 12/01/26   1,250    1,336,200 
5.00%, 12/01/29   1,250    1,325,737 
Gilbert Public Facilities Municipal Property Corp. Arizona, RB, 5.50%, 7/01/27   2,000    2,305,160 
Gladden Farms Community Facilities District, GO, 5.50%, 7/15/31   750    769,418 
Glendale Municipal Property Corp., Refunding RB, Sub-Series C:          
4.00%, 7/01/38   500    504,535 
5.00%, 7/01/38   2,000    2,209,640 
Greater Arizona Development Authority, RB, Santa Cruz County Jail, Series 2, 5.25%, 8/01/31   1,155    1,258,673 
Marana Municipal Property Corp., RB, Series A, 5.00%, 7/01/28   2,500    2,840,225 
Maricopa County Community College District Arizona, GO, Series C, 3.00%, 7/01/22   1,000    1,075,840 
Maricopa County Public Finance Corp., RB, Series A (AMBAC), 5.00%, 7/01/24   1,000    1,133,080 
Maricopa County Unified School District No. 89-Dysart Arizona, GO, School Improvement Project of 2006, Series C, 6.00%, 7/01/28   1,000    1,191,970 
Mohave County Unified School District No. 20 Kingman, GO, School Improvement Project of 2006, Series C (AGC), 5.00%, 7/01/26   1,000    1,203,200 
Phoenix Civic Improvement Corp., RB, Subordinate, Civic Plaza Expansion Project, Series A (NPFGC), 5.00%, 7/01/35   3,325    3,552,563 
Phoenix Mesa Airport Authority, RB, Mesa Project, AMT, 5.00%, 7/01/38   3,600    3,828,384 
            
  Par
(000)		  Value
Municipal Bonds          
Arizona (continued)
County/City/Special District/School District (concluded)          
Scottsdale Municipal Property Corp. Arizona, RB, Water & Sewer Development Project, Series A, 5.00%, 7/01/24  $1,500   $1,768,455 
Vistancia Community Facilities District Arizona, GO:          
6.75%, 7/15/22   1,275    1,278,812 
5.75%, 7/15/24   750    788,858 
Yuma County Library District, GO (Syncora), 5.00%, 7/01/26   1,000    1,135,340 
         31,763,310 
Education — 17.9%          
Arizona Board of Regents, Refunding, COP, University of Arizona, Series C, 5.00%, 6/01/31   2,000    2,276,780 
Arizona State University, RB, Series 2008-C:          
6.00%, 7/01/25   970    1,176,154 
6.00%, 7/01/26   745    900,459 
6.00%, 7/01/27   425    511,445 
6.00%, 7/01/28   400    478,740 
Florence Town, Inc., IDA, ERB, Legacy Traditional School Project, Queen Creek and Casa Grande Campuses, 6.00%, 7/01/43   500    510,635 
Maricopa County IDA Arizona, RB, Arizona Charter Schools Project, Series A, 6.63%, 7/01/20   700    576,926 
Phoenix Arizona IDA, ERB, Great Hearts Academies Project, 6.30%, 7/01/42   500    534,335 
Pima County IDA, RB, Arizona Charter Schools Project:          
Series A, 6.75%, 7/01/21   395    395,889 
Series C, 6.70%, 7/01/21   690    691,428 
Series C, 6.75%, 7/01/31   980    981,411 
Pima County IDA, Refunding RB, Arizona Charter Schools Project, Series O, 5.00%, 7/01/26   995    991,130 
Sun Devil Energy Center LLC, Refunding RB, AZ State University, 5.00%, 7/01/30   1,500    1,756,905 
University of Arizona, COP, University of Arizona Projects, Series B (AMBAC), 5.00%, 6/01/13 (a)   650    652,613 
         12,434,850 
Health — 18.3%          
Arizona Health Facilities Authority, RB, Catholic Healthcare West, Series B-2 (AGM), 5.00%, 3/01/41   500    541,365 

 

BLACKROCK MUNIYIELD ARIZONA FUND, INC.APRIL 30, 20131
 

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)          
Arizona Health Facilities Authority, Refunding RB:          
Banner Health, Series D, 5.50%, 1/01/38  $2,300   $2,552,931 
Phoenix Children's Hospital, Series A, 5.00%, 2/01/42   1,000    1,074,710 
Maricopa County IDA Arizona, Refunding RB:          
Catholic Healthcare West, Series A, 5.50%, 7/01/26   1,850    1,932,991 
Catholic Healthcare West, Series A, 6.00%, 7/01/39   170    194,199 
Samaritan Health Services, Series A (NPFGC), 7.00%, 12/01/16 (b)   1,000    1,136,220 
Tempe IDA Arizona, Refunding RB, Friendship Village of Tempe, Series A, 6.25%, 12/01/42   500    545,175 
University Medical Center Corp. Arizona, RB, 6.50%, 7/01/39   500    579,550 
University Medical Center Corp. Arizona, Refunding RB, 6.00%, 7/01/39   1,000    1,154,720 
Yavapai County IDA Arizona, RB, Yavapai Regional Medical Center, Series A, 6.00%, 8/01/33   1,800    1,822,536 
Yavapai County IDA Arizona, Refunding RB, Northern Arizona Healthcare System, 5.25%, 10/01/26   1,000    1,184,260 
         12,718,657 
Housing — 1.1%          
Maricopa County & Phoenix IDA, Refunding RB, S/F, AMT (Ginnie Mae):          
Series A-1, 5.75%, 5/01/40   90    97,257 
Series A-2, 5.80%, 7/01/40   110    113,348 
Maricopa County IDA Arizona, RB, Series 3-B, AMT (Ginnie Mae), 5.25%, 8/01/38   235    248,211 
Phoenix & Pima County IDA, RB, Series 1A, AMT (Ginnie Mae), 5.65%, 7/01/39   48    51,246 
Phoenix & Pima County IDA, Refunding RB, Series 2007-1, AMT (Ginnie Mae), 5.25%, 8/01/38   121    121,693 
Phoenix IDA Arizona, Refunding RB, Series 2007-2, AMT (Ginnie Mae), 5.50%, 12/01/38   129    136,200 
         767,955 
State — 23.5%          
Arizona School Facilities Board, COP:          
5.13%, 9/01/21   1,000    1,162,150 
5.75%, 9/01/22   2,000    2,371,420 
            
  Par
(000)		  Value
Municipal Bonds          
Arizona (concluded)
State (concluded)          
Arizona Sports & Tourism Authority, Refunding RB, Multipurpose Stadium Facility Project, Series A, 5.00%, 7/01/36  $3,000   $3,330,330 
Arizona State Transportation Board, RB, Series B, 5.00%, 7/01/30   4,000    4,569,600 
Greater Arizona Development Authority, RB, Series B (NPFGC):          
5.00%, 8/01/30   1,600    1,710,784 
5.00%, 8/01/35   1,000    1,069,470 
State of Arizona, RB, Lottery Revenue, Series A (AGM), 5.00%, 7/01/29   1,930    2,177,851 
         16,391,605 
Transportation — 3.2%          
Phoenix Civic Improvement Corp., RB, Senior Lien, Series A, 5.00%, 7/01/33   1,000    1,130,870 
Phoenix Civic Improvement Corp., Refunding RB, Junior Lien, Series A, 5.00%, 7/01/40   1,000    1,097,000 
         2,227,870 
Utilities — 15.4%          
Gilbert Water Resource Municipal Property Corp., RB, Subordinate Lien (NPFGC), 5.00%, 10/01/29   900    1,013,346 
Phoenix Civic Improvement Corp., Refunding RB, Senior Lien, 5.50%, 7/01/22   2,000    2,433,280 
Pima County Arizona, RB, Series B, 5.00%, 7/01/26   1,000    1,174,780 
Pinal County Electric District No 3, Refunding RB, 5.25%, 7/01/36   2,500    2,814,075 
Pinal County IDA Arizona, RB, San Manuel Facility Project, AMT, 6.25%, 6/01/26   500    510,550 
Salt River Project Agricultural Improvement & Power District, RB, Series A, 5.00%, 1/01/24   1,000    1,162,160 
Salt River Project Agricultural Improvement & Power District, Refunding RB, Series A, 5.00%, 1/01/35   1,500    1,630,260 
         10,738,451 
Total Municipal Bonds in Arizona        94,494,588 
            

 

BLACKROCK MUNIYIELD ARIZONA FUND, INC.APRIL 30, 20132
 

Schedule of Investments (continued)

BlackRock MuniYield Arizona Fund, Inc. (MZA)

(Percentages shown are based on Net Assets)

  Par
(000)		  Value
Municipal Bonds          
Guam — 1.5%
State — 1.5%          
Government of Guam Business Privilege Tax Revenue, RB, Series A, 5.13%, 1/01/42  $800   $892,648 
Territory of Guam, RB, Series B-1, 5.00%, 1/01/37   145    160,679 
Total Municipal Bonds in Guam        1,053,327 
            
Puerto Rico — 7.3%
State — 7.3%          
Puerto Rico Public Buildings Authority, Refunding RB, Government Facilities, Series M-3 (NPFGC), 6.00%, 7/01/28   700    730,513 
Puerto Rico Sales Tax Financing Corp., RB, First Sub-Series A, 6.38%, 8/01/39   1,500    1,690,830 
Puerto Rico Sales Tax Financing Corp., Refunding RB:          
CAB, Series A (NPFGC), 5.64%, 8/01/41 (c)   9,530    1,981,001 
First Sub-Series C, 6.00%, 8/01/39   600    660,576 
Total Municipal Bonds in Puerto Rico        5,062,920 
Total Municipal Bonds – 144.5%        100,610,835 
            
           
Municipal Bonds Transferred to
Tender Option Bond (TOB) Trusts (d)		          
Arizona — 11.0%
Utilities — 11.0%          
City of Mesa Arizona, RB, 5.00%, 7/01/35   3,000    3,431,730 
            
Municipal Bonds Transferred to
Tender Option Bond (TOB) Trusts (d)		      Par
    (000)		             Value 
Arizona (concluded)
Utilities (concluded)          
Phoenix Arizona Civic Improvement Corp., RB, 5.00%, 7/01/34  $3,000   $3,474,540 
Salt River Project Agricultural Improvement & Power District, RB, 5.00%, 1/01/38   660    745,318 
         7,651,588 
Total Municipal Bonds Transferred to
Tender Option Bond (TOB) Trusts – 11.0%		        7,651,588 
Total Long-Term Investments
(Cost – $99,314,128) – 155.5%		        108,262,423 
            
           
Short-Term Securities   Shares      
FFI Institutional Tax-Exempt Fund, 0.03% (e)(f)   526,246    526,246 
Total Short-Term Securities
(Cost – $526,246) – 0.8%		        526,246 
Total Investments (Cost - $99,840,374*) – 156.3%        108,788,669 
Other Assets Less Liabilities – 2.1%         1,463,001 
Liability for TOB Trust Certificates, Including Interest Expense and
Fees Payable –  (4.8)%		         (3,331,691)
VRDP Shares, at Liquidation Value – (53.6)%       (37,300,000)
Net Assets Applicable to Common Shares – 100.0%       $69,619,979 

 

* As of April 30, 2013 gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows:  
  Tax cost         $ 96,495,772  
  Gross unrealized appreciation         $ 9,088,611  
  Gross unrealized depreciation           (125,714)  
Net unrealized appreciation         $ 8,962,897  

Notes to Schedule of Investments

 

(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.
BLACKROCK MUNIYIELD ARIZONA FUND, INC.APRIL 30, 20133
 
Schedule of Investments (continued)

BlackRock MuniYield Arizona Fund, Inc. (MZA)

(e)Investments in issuers considered to be an affiliate of the Fund during the period ended April 30, 2013, 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
April 30, 2013		 Income
  FFI Institutional Tax-Exempt Fund 1,351,621 (825,375) 526,246 $13

 

(f)Represents the current yield as of report date.

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 Association
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

 

•Financial futures contracts as of April 30, 2013 were as follows:

 

  Contracts
Sold		 Issue Exchange Expiration Notional
Value		 Unrealized  
Depreciation
  (20) 10-Year US Treasury Note Chicago Board of Trade June 2013 $2,667,188 $(39,714)

 

BLACKROCK MUNIYIELD ARIZONA FUND, INC.APRIL 30, 20134
 
Schedule of Investments (concluded)

BlackRock MuniYield Arizona Fund, Inc. (MZA)

•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 ratings 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.
•Fair Value Measurements - Various inputs are used in determining the fair value of investments and derivative financial instruments. 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 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 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 and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument 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 derivative financial instruments and other significant accounting policies, please refer to the Fund's most recent financial statements as contained in its semi-annual report.

The following tables summarize the Fund's investments categorized in the disclosure hierarchy as of April 30, 2013:

  Level 1 Level 2 Level 3 Total
Assets:        
Investments:        
   Long-Term Investments1 — $108,262,423 — $108,262,423
   Short-Term Securities $526,246 — — 526,246
Total $526,246 $108,262,423 — $108,788,669

 

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

 

 

  Level 1 Level 2 Level 3 Total
Derivative Financial Instruments2        
Liabilities:        
   Interest rate contracts $(39,714) — — $(39,714)

 

2 Derivative financial instruments are financial futures contracts, which are valued at the unrealized appreciation/depreciation on the instrument.

 

Certain of the Fund’s assets and liabilities are held at carrying amount, which approximates fair value for financial reporting purposes. As of April 30, 2013, such assets and liabilities are categorized within the disclosure hierarchy as follows:

 

  Level 1 Level 2 Level 3 Total
Assets:        
Cash pledged for financial futures contracts $26,000 — — $         26,000
Liabilities:        
    TOB trust certificates — $  (3,330,000) — (3,330,000)
    VRDP shares — (37,300,000) — (37,300,000)
Total $26,000 $(40,630,000) — $(40,604,000)

 

There were no transfers between levels during the period ended April 30, 2013.

 

BLACKROCK MUNIYIELD ARIZONA FUND, INC.APRIL 30, 20135
 

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: June 24, 2013

 

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: June 24, 2013

 

By: /s/ Neal J. Andrews

Neal J. Andrews

Chief Financial Officer (principal financial officer) of

BlackRock MuniYield Arizona Fund, Inc.

 

Date: June 24, 2013