MuniYield Pennsylvania Fund
Semi-Annual
Report
April 30, 1994
Officers and Trustees
Arthur Zeikel, President and Trustee
Donald Cecil, Trustee
M. Colyer Crum, Trustee
Edward H. Meyer, Trustee
Jack B. Sunderland, Trustee
J. Thomas Touchton, Trustee
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Vincent R. Giordano, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Transfer Agents
Common Shares:
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Preferred Shares:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
NYSE Symbol
MPA
<PAGE>
This report, including the financial information
herein, is transmitted to the shareholders of Muni-
Yield Pennsylvania Fund for their information. It
is not a prospectus, circular or representation in-
tended for use in the purchase of shares of the Fund
or any securities mentioned in the report. Past per-
formance results shown in this report should not be
considered a representation of future performance.
The Fund has leveraged its Common Shares by issuing
Preferred Shares to provide the Common Shareholders
with a potentially higher rate of return. Leverage
creates risks for Common Shareholders, including
the likelihood of greater volatility of net asset
value and market price of shares of the Common Shares,
and the risk that fluctuations in the short-term
dividend rates of the Preferred Shares may affect
the yield to Common Shareholders.
MuniYield Pennsylvania Fund
Box 9011
Princeton, NJ
08543-9011
MuniYield Pennsylvania Fund
TO OUR SHAREHOLDERS
For the six-month period ended April 30, 1994, the Common Stock
of MuniYield Pennsylvania Fund earned $0.591 per share income
dividends, which includes earned and unpaid dividends of $0.074.
This represents a net annualized yield of 8.19%, based on a
month-end per share net asset value of $14.55. Over the same
period, the total investment return on the Fund's Common Shares
was -7.61%, based on a change in per share net asset value from
$16.37 to $14.55, and assuming reinvestment of $0.600 per share
income dividends.
The average yield on the Fund's Auction Market Preferred Shares
for the six-month period ended April 30, 1994 was 3.15%.
The Environment
Inflationary expectations and investor sentiment changed for the
worse during the three-month period ended April 30, 1994.
Following stronger-than-expected economic results through year-
end 1993, the Federal Reserve Board broke with tradition on
February 4, 1994 and publicly announced a modest 25 basis point
(0.25%) increase in short-term interest rates. At the March 22,
1994 meeting of the Federal Open Market Committee, the Federal
Reserve Board again raised the Federal Funds rate by 25 basis
points, followed by another 25 basis point increase on April 18,
1994.
<PAGE>
Rather than view the Federal Reserve Board's first tightening
move as a preemptive strike against inflation, fixed-income in-
vestors focused on Chairman Greenspan's implicit promise of fur-
ther tightening should the rate of inflation accelerate, and
bond prices declined sharply. The setback in the bond market was
also reflected in greater stock market volatility. While the
second and third increases in the Federal Funds rate were less of
a surprise, investors remained concerned that interest rates would
trend upward sharply as the central bank aggressively attempted
to contain the inflationary pressures of an improving economy. At
the same time, highly leveraged investors were forced to liquidate
positions in the face of declining stock and bond prices. In-
vestor confidence was not restored with the announcement of the
surprisingly slow 2.6% gross domestic product growth rate for the
first calendar quarter of 1994. Instead, investors focused on the
higher-than-expected (but still moderate) broad inflation measures
and became concerned that business activity was beginning to stag-
nate as inflationary pressures were increasing.
The volatility in the US capital markets was mirrored in inter-
national markets during the period. Political and economic de-
velopments, along with concerns of heightened global inflationary
pressures, led to a sell-off in most capital markets, especially
the emerging markets that had appreciated strongly in 1993.
The Municipal Market
During the six months ended April 30, 1994, tax-exempt bond yields
exhibited considerable volatility as they rose to their highest
level in the past two years. As measured by the Bond Buyer Revenue
Bond Index, the yield on newly issued municipal bonds maturing in
30 years rose over 90 basis points to 6.42% by the end of April.
Yields on seasonal municipal revenue bonds rose by over 100 basis
points in sympathy with the equally dramatic increase in long-term
US Treasury bond yields. By the end of April, the yields on US
Treasury securities rose by over 95 basis points to approximately
7.30%.
<PAGE>
Long-term tax-exempt bond yields were essentially unchanged from
the end of October 1993 to the end of January 1994. However, on a
weekly basis, tax-exempt bond yields fluctuated by as much as 15
basis points as investors were unable to reconcile the rapid eco-
nomic growth seen late last year with continued low inflation.
Following the initial interest rate increase by the Federal Re-
serve Board in early February, municipal bond prices began to
erode in concert with taxable bond prices as investors began to
sell securities in anticipation of further interest rate in-
creases. This fear led investors to withdraw from the tax-exempt
market. From early February to the end of March, total assets
of all tax-exempt bond funds declined by $14 billion to $247
billion. This decline in investor demand, coupled with fears
that the robust economic recovery seen during the fourth quarter
of 1993 would continue well into 1994, helped push municipal bond
yields higher in February and March. Attracted by tax-exempt
yields in excess of 6.25%, investor demand returned in April,
allowing yields to decline approximately 15 basis points to end
the April period at approximately 6.40%.
A rise in tax-exempt bond yields the magnitude of that exper-
ienced over the past six months has not been seen since 1987
when municipal bond rates rose 250 basis points between March
and October of that year. It is very important to note that the
recent municipal bond price declines were largely the result of
consistent and insistent selling pressures over the last two
months. In 1987, the tax-exempt bond market was much more vol-
atile and, at times, chaotic as investors sought to liquidate
positions without concern for fundamental value. For the most
part, the recent price deterioration has been orderly, and the
municipal bond market's liquidity and integrity have not been
challenged or jeopardized.
To a large extent, the municipal bond market has continued to be
supported by its strong technical position. New-issue volume for
the last six months has been less than $105 billion. This rep-
resents a decline of approximately 20% versus the comparable
period a year ago. This decline was expected and has been dis-
cussed in previous shareholder reports. This reduced issuance
has minimized potential selling pressure in recent months since
institutional investors have been wary of selling appreciable
amounts of securities that they may be unable to replace later
this year at any price level. We expect this decline in issuance
to continue since we anticipate recent yield increases to sig-
nificantly impact future municipal bond issuance. Just as higher
mortgage rates slow home mortgage refinancings, the recent rise
in bond yields will prevent bond refinancings from becoming the
driving force in bond issuance in 1994 as they were in 1993.
<PAGE>
Despite recent price declines, tax-exempt securities remain among
the most attractive investment alternatives available. After the
recent yield increases, longer-term municipal securities yielded
approximately 90% of comparable US Treasury yields. Purchasers of
these municipal bonds also accrue substantial after-tax yield
advantages. To investors in the 39% marginal Federal income tax
bracket, the purchase of a municipal bond yielding 6.50% rep-
resents an after-tax equivalent of 10.65%. With prevailing esti-
mates of 1994 inflation at no more than 3%--4%, real after-tax
rates in excess of 6.50% easily compensate longer-term investors
for much of the price volatility recently experienced.
Portfolio Strategy
The Fund is cautious on interest rates because we expect the
market to be volatile over the coming months. However, we are
optimistic that the expected slowing of the economy during the
second half of 1994 will prove to be beneficial to the fixed-
income markets. In particular, municipal bonds are likely to
benefit since projected new issuance is significantly lower than
last year.
In line with our near-term concerns about the market, we have
increased the Fund's cash reserves to 5%--10% of net assets.
This will allow us to purchase attractively priced Pennsylvania
securities as opportunities arise. The Fund's Preferred Shares
were locked in on February 15 for one year at a rate of 3.15% to
take full advantage of the extremely steep yield curve. The lev-
eraging benefit derived from the Preferred Shares' interest rate
should continue to provide Common Shareholders with an attractive
level of tax-exempt income for that period. However, since long-
term interest rates have risen, the net asset value of the Common
Shares has declined. (For a complete explanation of leveraging,
see page 3 of this report to shareholders.) We appreciate your
ongoing interest in MuniYield Pennsylvania Fund, and we look for-
ward to assisting you with your financial needs in the months and
years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Vice President and Portfolio Manager
<PAGE>
May 27, 1994
THE BENEFITS AND RISKS OF LEVERAGING
MuniYield Pennsylvania Fund utilizes leveraging to seek to
enhance the yield and net asset value of its Common Shares.
However, these objectives cannot be achieved in all interest
rate environments. To leverage, the Fund issues Preferred Shares,
which pay dividends at prevailing short-term interest rates, and
invests the proceeds in long-term municipal bonds. The interest
earned on these investments is paid to Common 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
Shares. However, in order to benefit Common Shareholders, the
yield curve must be positively sloped; that is, short-term in-
terest rates must be lower than long-term interest rates. At the
same time, a period of generally declining interest rates will
benefit Common 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 Share
capitalization of $100 million and the issuance of Preferred
Shares 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 Shares 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.
In this case, the dividends paid to Preferred Shareholders are
significantly lower than the income earned on the fund's long-
term investments, and therefore the Common 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 pick-up
on the Common Shares will be reduced. At the same time, the
market value of the fund's Common Shares (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 Shares'
net asset value will reflect the full decline in the price of the
portfolio's investments, since the value of the fund's Preferred
Shares do not fluctuate. In addition to the decline in net asset
value, the market value of the fund's Common Shares may also
decline.
<PAGE>
PER SHARE INFORMATION
<TABLE>
Per Share Selected Quarterly Financial Data*
<CAPTION>
Net Unrealized Dividends/Distributions
Investment Realized Gains Net Investment Income Capital Gains
For the Period Income Gains (Losses) Common Preferred Common Preferred
<S> <C> <C> <C> <C> <C> <C> <C>
October 30, 1992++ to January 31, 1993 $.25 -- $ .58 $.13 $.04 -- --
February 1, 1993 to April 30, 1993 .29 $.03 .54 .24 .05 -- --
May 1, 1993 to July 31, 1993 .29 .09 .32 .24 .05 -- --
August 1, 1993 to October 31, 1993 .29 .04 .70 .24 .04 -- --
November 1, 1993 to January 31, 1994 .30 -- .09 .24 .05 $.12 $.02
February 1, 1994 to April 30, 1994 .27 .06 (1.84) .23 .05 -- --
<CAPTION>
Net Asset Value Market Price**
For the Period High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
October 30, 1992++ to January 31, 1993 $14.64 $14.13 $15.375 $15.00 161
February 1, 1993 to April 30, 1993 15.66 14.64 16.625 14.875 437
May 1, 1993 to July 31, 1993 15.78 15.18 16.25 14.875 288
August 1, 1993 to October 31, 1993 16.66 15.63 16.875 15.625 593
November 1, 1993 to January 31, 1994 16.35 15.89 16.625 15.00 370
February 1, 1994 to April 30, 1994 16.32 14.03 16.375 13.50 354
<FN>
++ Commencement of Operations.
* Calculations are based upon shares of Common Shares outstanding
at the end of each period.
** As reported in the consolidated transaction reporting system.
*** In thousands.
</TABLE>
PORTFOLIO ABBREVIATIONS
To simplify the listings of MuniYield Pennsylvania Fund's
portfolio holdings in the Schedule of Investments, we
have abbreviated the names of many of the securities accord-
ing to the list below and at right.
AMT Alternative Minimum Tax (subject to)
GO General Obligation Bonds
HFA Housing Finance Authority
IDA Industrial Development Authority
PCR Pollution Control Revenue Bonds
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Pennsylvania--100.7%
<S> <S> <C> <S> <C>
AAA Aaa $4,000 Allegheny County, Pennsylvania, Hospital Development Authority, Health Center Revenue
Bonds (Presbyterian University Hospital), Series A, 6.25% due 11/01/2023 (c) $ 3,942
A1+ VMIG1 3,200 Allegheny County, Pennsylvania, Hospital Development Authority, Health Center Revenue
Bonds (Presbyterian University Hospital), VRDN, Series A, 3.20% due 3/01/2020 (a)(c) 3,200
NR A 1,000 Allegheny County, Pennsylvania, Hospital Development Authority, Revenue Refunding Bonds
(South Hills Health Facility), 6% due 5/01/2020 915
AAA Aaa 5,000 Beaver County, Pennsylvania, Hospital Authority Revenue Refunding Bonds
(Medical Center Beaver County, Inc.), 6.625% due 7/01/2010 (b) 5,196
AAA Aaa 3,000 Bethlehem, Pennsylvania, Water Authority Revenue Refunding Bonds,
6.25% due 11/15/2001 (c)(e) 3,177
AAA Aaa 2,750 Bucks County, Pennsylvania, Water and Sewer Authority Revenue Bonds (Water System),
Series B, 6.50% due 12/01/2002 (d)(e) 2,963
A A3 1,000 Butler County, Pennsylvania, IDA, PCR, Refunding (Witco Corp. Project), 5.85% due
12/01/2023 902
AAA Aaa 5,000 Exeter Township, Pennsylvania, Sewer Authority Revenue Refunding Bonds (Berks County),
6.20% due 7/15/2022 (c) 4,934
NR Baa1 1,785 Latrobe, Pennsylvania, IDA, Revenue Bonds (Saint Vincent College Project), 6.75%
due 5/01/2014 1,737
AAA Aaa 3,750 Lehigh County, Pennsylvania, IDA, PCR, Refunding (Pennsylvania Power and Light
Company Project), Series A, 6.40% due 11/01/2021 (c) 3,773
BBB- Baa3 4,000 Luzerne County, Pennsylvania, IDA, Exempt Facilities Revenue Bonds (Pennsylvania Gas
and Water Company Project), AMT, Series B, 7.125% due 12/01/2022 3,978
Montgomery County, Pennsylvania, Higher Education and Health Authority, Revenue
Refunding Bonds (Saint Joseph University):
AAA NR 1,800 6.50% due 12/15/2012 1,830
AAA NR 3,500 6.50% due 12/15/2022 3,518
AAA Aaa 4,400 Montgomery County, Pennsylvania, IDA, PCR, Refunding (Philadelphia Electric Company),
Series B, 6.70% due 12/01/2021 (c) 4,509
<PAGE>
AAA Aaa 5,000 North Penn, Pennsylvania, Water Authority Revenue Bonds, 6.20% due 11/01/2022 (d) 4,902
NR VMIG1 1,450 Pennsylvania Energy Development Authority, Energy Development Revenue Bonds
(B&W Ebensburg Project), VRDN, AMT, 3.60% due 12/01/2011 (a) 1,450
AA Aa 1,100 Pennsylvania HFA Revenue Bonds, S/F Mortgage, Series 34B, AMT, 7% due 4/01/2024 1,130
AAA Aaa 5,000 Pennsylvania HFA, Revenue Refunding Bonds (Rental Housing), 6.50% due 7/01/2023 4,986
Pennsylvania Intergovernmental Co-op Authority, Special Tax Revenue Bonds (City of
Philadelphia Funding Program):
A- Baa 3,965 6.80% due 6/15/2002 (e) 4,318
AAA Aaa 3,680 5.625% due 6/15/2023 (c) 3,323
A NR 2,000 Pennsylvania State Finance Authority, Revenue Refunding Bonds (Municipal Capital
Improvements Project), 6.60% due 11/01/2009 2,002
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Pennsylvania (concluded)
<S> <S> <C> <S> <C>
AA- A1 $5,000 Pennsylvania State GO, Second Series A, UT, 6.60% due 11/01/2011 $ 5,243
Pennsylvania State Higher Educational Assistance Agency, Student Loan Revenue Bonds,
AMT:
A-1 VMIG1 1,100 Series A, VRDN, 3.55% due 1/01/2018 (a) 1,100
AAA Aaa 5,100 Series C, 6.40% due 3/01/2022 (b) 5,093
Pennsylvania State Higher Educational Facilities Authority, College and University
Revenue Bonds:
AAA Aaa 1,750 (Hahnemann University Project), 6.90% due 7/01/2021 (c) 1,823
AAA Aaa 1,255 Refunding (Duquesne University), Series A, 6.75% due 4/01/2020 (c) 1,290
NR P1 5,800 VRDN (Temple University), 3% due 10/01/2009 (a) 5,800
A+ Aa 5,000 Pennsylvania State Higher Educational Facilities Authority, Revenue Refunding Bonds
(Thomas Jefferson University), Series A, 6.625% due 8/15/2009 5,245
Pennsylvania State IDA, Revenue Bonds (Economic Development):
A- A 2,050 Series A, 7% due 1/01/2011 2,277
AAA Aaa 3,500 6% due 1/01/2012 3,465
AAA Aaa 1,000 Pennsylvania State Turnpike Commission, Turnpike Revenue Bonds, Series L,
6.25% due 6/01/2011 (b) 1,010
<PAGE>
AA- A1 3,500 Pennsylvania State University, Revenue Refunding Bonds, 6.25% due 3/01/2011 3,535
BBB Baa1 2,000 Philadelphia, Pennsylvania, Gas Works Revenue Refunding Bonds (Fourteenth), Series A,
6.375% due 7/01/2026 1,945
Philadelphia, Pennsylvania, Hospital and Higher Educational Facilities Authority,
Hospital Revenue Bonds:
NR Aaa 5,000 (Children's Hospital), Series A, 6.50% due 2/15/2002 (e) 5,425
BBB Baa1 1,000 (Frankford Hospital), Series A, 6% due 6/01/2014 886
BBB Baa1 2,000 (Frankford Hospital), Series A, 6% due 6/01/2023 1,720
A- A 1,000 Refunding (Chestnut Hill Hospital), 6.50% due 11/15/2022 977
A- NR 3,000 Refunding (Presbyterian Medical Center), 6.65% due 12/01/2019 2,938
BBB+ Baa1 2,500 Refunding (Temple University Hospital), Series A, 6.625% due 11/15/2023 2,399
BBB Baa 2,000 Ridley Park, Pennsylvania, Hospital Authority Revenue Refunding Bonds (Taylor Hospital),
Series A, 6% due 12/01/2013 1,742
A-2 Aaa 400 Sayre, Pennsylvania, Health Care Facilities Authority Revenue Bonds (Pennsylvania
Capital Financing Project), VRDN, Series I, 2.90% due 12/01/2020 (a)(b) 400
A- NR 2,520 Scranton--Lackawanna, Pennsylvania, Health and Welfare Authority, Revenue Refunding
Bonds (University of Scranton Project), Series B, 6.50% due 3/01/2015 2,520
BBB+ NR 1,000 Sharon, Pennsylvania, Regional Health System Authority, Hospital Revenue Refunding Bonds
(Regional Health System Project), Series A, 6.875% due 12/01/2009 985
Puerto Rico--1.7%
Puerto Rico Commonwealth, Highway and Transportation Authority, Highway
Revenue Bonds (e):
AAA NR 900 Series S, 6.50% due 7/01/2002 980
AAA NR 1,000 Series T, 6.50% due 7/01/2002 1,089
Total Investments (Cost--$124,484)--102.4% 126,572
Liabilities in Excess of Other Assets--(2.4%) (2,985)
--------
Net Assets--100.0% $123,587
========
<FN>
(a) The interest rate is subject to change periodically based
upon prevailing market rates. The interest rates shown are
the rates in effect at April 30, 1994.
(b) AMBAC Insured.
(c) MBIA Insured.
(d) FGIC Insured.
(e) Prerefunded.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of April 30, 1994
<CAPTION>
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$124,484,009) (Note 1a) $126,571,730
Cash 28,903
Interest receivable 2,537,122
Deferred organization expenses (Note 1e) 28,882
Prepaid expenses 39,632
------------
Total assets 129,206,269
============
Liabilities: Payables:
Securities purchased $ 5,246,526
Dividends to shareholders (Note 1g) 212,829
Investment adviser (Note 2) 48,973 5,508,328
------------
Accrued expenses and other liabilities 111,105
------------
Total liabilities 5,619,433
------------
Net Assets: Net assets $123,586,836
============
Capital: Capital Shares (unlimited number of shares of beneficial interest
authorized)(Note 4):
Preferred Shares, par value $.10 per share (800 shares of AMPS* issued
and outstanding at $50,000 per share liquidation preference) $ 40,000,000
Common Shares, par value $.10 per share (5,743,422 shares issued and
outstanding) $ 574,342
Paid-in capital in excess of par 80,027,115
Undistributed investment income--net 542,790
Undistributed realized capital gains--net 354,868
Unrealized appreciation on investments--net 2,087,721
------------
Total--Equivalent to $14.55 net asset value per Common Share
(market price--$14.00) 83,586,836
------------
Total capital $123,586,836
============
<FN>
* Auction Market Preferred Shares.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months
Ended April 30, 1994
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 3,771,566
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 322,609
Commission fees (Note 4) 65,168
Professional fees 36,203
Transfer agent fees 20,087
Accounting services (Note 2) 16,579
Printing and shareholder reports 16,471
Trustees' fees and expenses 10,886
Listing fees 7,448
Custodian fees 3,522
Pricing fees 3,420
Amortization of organization expenses (Note 1e) 3,416
Other 8,255
------------
Total expenses 514,064
------------
Investment income--net 3,257,502
------------
Realized & Realized gain on investments--net 354,868
Unrealized Change in unrealized appreciation on investments--net (9,950,039)
Gain (Loss) on ------------
Investments--Net Net Decrease in Net Assets Resulting from Operations $ (6,337,669)
(Notes 1d & 3): ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
<PAGE>
For the Six For the
Months Ended Year Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 1994 1993
<S> <S> <C> <C>
Operations: Investment income--net $ 3,257,502 $ 6,279,837
Realized gain on investments--net 354,868 836,352
Change in unrealized appreciation on investments--net (9,950,039) 12,037,760
------------ ------------
Net increase (decrease) in net assets resulting from operations (6,337,669) 19,153,949
------------ ------------
Dividends & Investment Income--net:
Distributions Common Shares (2,723,596) (4,773,353)
To Shareholders Preferred Shares (467,936) (1,029,664)
(Note 1g): Realized gain on investments--net:
Common Shares 699,225 --
Preferred Shares (137,128) --
------------ ------------
Net decrease in net assets resulting from dividends and distributions
to shareholders (4,027,885) (5,803,017)
------------ ------------
Common & Proceeds from issuance of Preferred Shares -- 40,000,000
Preferred Shares Total offering and underwriting costs resulting from the issuance of
Transactions Preferred Shares -- (851,884)
(Notes 1e & 4): Value of shares issued to Common Shareholders in reinvestment
of dividends 1,297,939 1,840,212
------------ ------------
Net increase in net assets derived from capital share transactions 1,297,939 40,988,328
------------ ------------
Net Assets: Total increase (decrease) in net assets (9,067,615) 54,339,260
Beginning of period 132,654,451 78,315,191
------------ ------------
End of period* $123,586,836 $132,654,451
============ ============
<FN>
*Undistributed investment income--net $ 542,790 $ 476,820
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
For the For the For the
The following per share data and ratios have been derived Six Months Year Period
from information provided in the financial statements. Ended Ended Oct. 30, 1992++
April 30, Oct. 31, to Oct. 31,
Increase (Decrease) in Net Asset Value: 1994 1993 1992
<S> <S> <C> <C> <C>
Per Share Net asset value, beginning of period $ 16.37 $ 14.13 $ 14.18
Operating ------------ ------------ ------------
Performance: Investment income--net .58 1.12 --
Realized and unrealized gain (loss) on investments--net (1.69) 2.30 --
------------ ------------ ------------
Total from investment operations (1.11) 3.42 --
------------ ------------ ------------
Less dividends to Common Shareholders:
Investment income--net (.47) (.85) --
Realized gain on investments--net (.12) -- --
------------ ------------ ------------
Total dividends to Common Shareholders (.59) (.85) --
------------ ------------ ------------
Capital charge resulting from issuance of Common Shares -- -- (.05)
------------ ------------ ------------
Effect of Preferred Share activity++++:
Dividends to Preferred Shareholders:
Investment income--net (.10) (.18) --
Realized gain on investment--net (.02) (.15) --
Capital charge resulting from issuance of Preferred
Shares -- -- --
------------ ------------ ------------
Total effect of Preferred Share activity (.12) (.33) --
------------ ------------ ------------
Net asset value, end of period $ 14.55 $ 16.37 $ 14.13
============ ============ ============
Market price per share, end of period $ 14.00 $ 16.375 $ 15.00
============ ============ ============
Total Investment Based on market price per share (11.13%)+++ 15.30% 0.00%+++
Return:** ============ ============ ============
Based on net asset value per share (7.61%)+++ 22.36% (0.35%)+++
============ ============ ============
<PAGE>
Ratios to Average Expenses, net of reimbursement .79%* .64% --%*
Net Assets:*** ============ ============ ============
Expenses .79%* .78% --%*
============ ============ ============
Investment income--net 5.03%* 5.20% --%*
============ ============ ============
Supplemental Net assets, net of Preferred Shares, end of period
Data: (in thousands) $ 83,587 $ 92,654 $ 78,315
============ ============ ============
Preferred Shares outstanding, end of period (in thousands) $ 40,000 $ 40,000 --
============ ============ ============
Portfolio turnover 5.09% 14.03% --%
============ ============ ============
Dividends Per Share Investment income--net $ 585 $ 1,287 $ --
On Preferred Shares
Outstanding:
<FN>
* Annualized.
** Total investment returns based on market value,
which can be significantly greater or lesser than
the net asset value, result in substantially differ-
ent returns. Total investment returns exclude the
effects of sales loads.
*** Do not reflect the effect of dividends to Preferred
Shareholders.
++ Commencement of Operations.
+++ Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniYield Pennsylvania Fund (the "Fund") is registered under the
Investment Company Act of 1940 as a non-diversified, closed-end
management investment company. The Fund determines and makes
available for publication the net asset value of its Common
Shares on a weekly basis. The Fund's Common Shares are listed on
the New York Stock Exchange under the symbol MPA. The following
is a summary of significant accounting policies followed by the
Fund.
<PAGE>
(a) Valuation of investments--Municipal bonds are traded pri-
marily in the over-the-counter market and are valued at the
most recent bid price or yield equivalent as obtained by the
Fund's pricing service from dealers that make markets in such
securities. Financial futures contracts, which are traded on
exchanges, are valued at their closing prices as of the close of
such exchanges. Options, which are traded on exchanges, are val-
ued at their last sale price as of the close of such exchanges
or, lacking any sales, at the last available bid price. Sec-
urities with sixty days or less to maturity are valued at amor-
tized cost. Securities for which market quotations are not read-
ily available are valued at their fair value as determined in
good faith by or under the direction of the Board of Trustees of
the Fund.
(b) Financial futures contracts--The Fund may purchase or sell
interest rate futures contracts and options on such futures
contracts for the purpose of hedging the market risk on existing
securities or the intended purchase of securities. 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.
(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). Interest income is recognized on
the accrual basis. Original issue discounts and market premiums
are amortized into interest income. Realized gains and losses on
security transactions are determined on the identified cost
basis.
<PAGE>
(e) Deferred organization and offering expenses--Deferred organ-
ization expenses are amortized on a straight-line basis over a
five-year period beginning with the commencement of operations
of the Fund. Direct expenses relating to the public offering of
the Common and Preferred Shares were charged to capital at the
time of issuance.
(f) Non-income producing investments--Written and purchased
options are non-income producing investments.
(g) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital
gains are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and Transactions with
Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Fund Asset Management, L.P. ("FAM"). Effective January 1, 1994,
the investment advisory business of FAM was reorganized from a
corporation to a limited partnership. Both prior to and after the
reorganization, ultimate control of FAM was vested with Merrill
Lynch & Co., Inc. ("ML & Co."). The general partner of FAM is
Princeton Services, Inc., an indirect wholly-owned subsidiary of
ML & Co. The limited partners are ML & Co. and Merrill Lynch
Investment Management, Inc. ("MLIM"), which is also an indirect
wholly-owned subsidiary of ML & Co.
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 0.50% of the Fund's average weekly net assets.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of FAM, MLIM, Merrill Lynch, Pierce, Fenner & Smith
Inc. ("MLPF&S"), and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term
securities, for the six months ended April 30, 1994 were
$6,221,137 and $8,572,908, respectively.
<PAGE>
Net realized and unrealized gains as of April 30, 1994 were as
follows:
Realized Unrealized
Gains Gains
Long-term investments $ 354,868 $ 2,087,721
----------- -----------
Total $ 354,868 $ 2,087,721
=========== ===========
As of April 30, 1994, net unrealized appreciation for Federal
income tax purposes aggregated $2,087,721, of which $3,061,077
related to appreciated securities and $973,356 related to
depreciated securities. The aggregate cost of investments at
April 30, 1994 for Federal income tax purposes was $124,484,009.
4. Capital Share Transactions:
The Fund is authorized to issue an unlimited number of shares of
beneficial interest, including Preferred Shares, par value $.10
per share, all of which were initially classified as Common Shares.
The Board of Trustees is authorized, however, to reclassify any
unissued shares of capital without approval of the holders of
Common Shares.
Common Stock
For the six months ended April 30, 1994, shares issued and out-
standing increased by 81,973 to 5,743,422 as a result of divi-
dend reinvestment. At April 30, 1994, total paid-in capital
amounted to $80,601,457.
Preferred Stock
Auction Market Preferred Shares ("AMPS") are Preferred Shares
of the Fund that entitle their holders to receive cash dividends
at an annual rate that may vary for the successive dividend periods.
The yield in effect at April 30, 1994 is 3.15%.
In connection with the offering of AMPS, the Board of Trustees
reclassified 800 shares of unissued capital shares as AMPS. For
the six months ended April 30, 1994, there were 800 AMPS shares
authorized, issued and outstanding with a liquidation preference
of $50,000 per share and accumulated and unpaid dividends of
$71,312.
<PAGE>
The Fund pays commissions to certain broker-dealers at the end of
each auction at the annual rate of one-quarter of 1% calculated
on the proceeds of each auction. For the six months ended April
30, 1994, MLPF&S, an affiliate of MLIM, earned $83,107 as commis-
sions.
5. Subsequent Event:
On May 6, 1994, the Fund's Board of Trustees declared an ordinary
income dividend to Common Shareholders in the amount of $.073695
per share, payable on May 27, 1994 to shareholders of record as
of May 17, 1994.
