MUNIYIELD
PENNSYLVANIA
FUND
FUND LOGO
Annual Report
October 31, 1995
<PAGE>
This report, including the financial information herein, is
transmitted to the shareholders of MuniYield Pennsylvania Fund for
their information. It is not a prospectus, circular or
representation intended for use in the purchase of shares of the
Fund or any securities mentioned in the report. Past performance
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
<PAGE>
TO OUR SHAREHOLDERS
For the year ended October 31, 1995, the Common Shares of MuniYield
Pennsylvania Fund earned $0.927 per share income dividends, which
included earned and unpaid dividends of $0.076. This represents a
net annualized yield of 6.04%, based on a month-end net asset value
of $15.36 per share. Over the same period, the total investment
return on the Fund's Common Shares was +18.95%, based on a change in
per share net asset value from $13.86 to $15.36, and assuming
reinvestment of $0.927 per share income dividends and $0.014 per
share capital gains distributions.
For the six-month period ended October 31, 1995, the total
investment return on the Fund's Common Shares was +8.27%, based on a
change in per share net asset value from $14.65 to $15.36, and
assuming reinvestment of $0.443 per share income dividends.
For the six-month period ended October 31, 1995, the Fund's Auction
Market Preferred Shares had an average yield of 3.81%.
The Environment
After losing momentum through the second calendar quarter of 1995,
it now appears that the US economic expansion has resumed. Gross
domestic product growth for the three months ended September 30 was
reported to be 4.2%, higher than generally expected. September
durable goods orders increased a surprisingly strong 3%, and
existing home sales rose to a near-record level. At the same time,
there is evidence that inflationary pressures remain subdued.
Reflecting the trend of renewed economic growth--and continued good
news on the inflation front--the Federal Reserve Board signaled no
near-term shift in monetary policy following its September meeting.
Thus, official interest rates may not be reduced further in the
immediate future.
Another significant development has been the strengthening of the US
dollar relative to the yen and the Deutschemark. Improving interest
rate differentials favoring the US currency, combined with
coordinated central bank intervention and more positive investor
sentiment, have helped to bolster the dollar in foreign exchange
markets. Other factors that appear to be improving the US dollar's
outlook in the near term are a pick-up in capital flows to the
United States and the prospect of increased capital outflows from
Japan. However, it remains to be seen if the US dollar's
strengthening trend can continue without significant improvements in
the US budget and trade deficits.
In the weeks ahead, investor interest will continue to focus on US
economic activity. Clear signs of a moderate, noninflationary
expansion could further benefit the US stock and bond markets. In
addition, should the current Federal budget deficit reduction
efforts now underway in Washington prove successful, the
implications would likely be positive for the US financial markets.
<PAGE>
The Municipal Market
Tax-exempt bond yields continued to decline during the six-month
period ended October 31, 1995. As measured by the Bond Buyer Revenue
Bond Index, the yield on uninsured, long-term municipal revenue
bonds fell 30 basis points (0.30%) to end the October period at
approximately 6.00%. While tax-exempt bond yields have declined
dramatically from their highs one year ago, municipal bond yields
have exhibited considerable yield volatility on a weekly basis. In
recent months, tax-exempt bond yields have fluctuated by as much as
20 basis points on a week-to-week basis. US Treasury bond yields
have displayed similar volatility, but the extent of their decline
has been greater. By the end of October, long-term US Treasury bond
yields had declined almost 100 basis points to 6.33%. Proposed
Federal tax restructuring continued to weigh heavily on the tax-
exempt bond market. Thus far in 1995, US Treasury bond yields have
declined approximately 150 basis points. Municipal bond yields have
fallen approximately 95 basis points as the uncertainty surrounding
any changes to the existing Federal income tax structure has
prevented the municipal bond market from rallying as strongly as its
taxable counterpart.
A general view of a moderately expanding domestic economy, supported
by a very favorable inflationary environment, allowed interest rates
to significantly decline from their recent highs in November 1994.
However, this decline was not a smooth downward curve. Conflicting
economic indicators were released during recent months that have
prevented a clear consensus regarding the near-term direction of
interest rates from being reached. The resultant uncertainty has
promoted more of a saw-toothed pattern as interest rate declines
were repeatedly interrupted by indications of stronger-than-expected
economic growth. As these concerns were overcome by subsequent
weaker economic releases, interest rate declines have resumed. These
periods of volatility are likely to continue for the remainder of
1995, or until proposed Federal budget deficit reduction packages
are resolved and any resultant responses by the Federal Reserve
Board have occurred.
However, the municipal bond market's technical position remained
supportive throughout recent quarters. Approximately $82 billion in
long-term municipal securities were issued during the six months
ended October 31, 1995. While this issuance is virtually identical
to underwritings during the October 31, 1994 quarter, tax-exempt
bond issuance over the last 12 months remained approximately 25%
below comparable 1994 levels. The municipal bond market should
maintain this positive technical position well into 1996. Annual
issuance for 1995 is now projected to be approximately $140 billion,
significantly less than last year's already low level of $162
billion. Projected maturities and early redemptions for the
remainder of 1995 and throughout 1996 will lead to a continued
decline in the total outstanding municipal bond supply throughout
1996 and, perhaps, into 1998 should new bond issuance remain at
historically low levels.
<PAGE>
Despite the municipal bond market's relative underperformance
compared to the US Treasury market thus far in 1995, the extent of
the tax-exempt bond market's rally was nonetheless quite impressive.
Municipal bond yields have fallen 135 basis points from their highs
reached in November 1994 and municipal bond prices rose accordingly.
Most tax-exempt products recouped almost all of the losses incurred
in 1994 and are well on their way to posting double-digit total
returns for all of 1995. This relative underperformance so far in
1995 provided long-term investors with the rare opportunity to
purchase tax-exempt securities at yield levels near those of taxable
securities.
Additionally, many of the factors that led to the relative
underperformance of the tax-exempt bond market thus far in 1995,
namely investor concern regarding Federal budget deficit reductions
and proposed changes in the Federal income tax structure, are
nearing resolution. The Federal budget reconciliation process has
already begun, and may be essentially completed by year-end. Recent
public opinion polls suggest that the majority of American taxpayers
prefer the existing Federal income tax system compared to proposed
changes, such as the flat tax or national sales tax. In an upcoming
election year, neither party is likely to advocate a clearly
unpopular position, particularly one that can be expected to
negatively impact the Federal budget deficit reduction program
through reduced tax revenues. As these factors are resolved, we
believe that much of the resistance that the municipal bond market
met this year should dissipate. This should allow municipal bond
yields to significantly decline from current levels in order to
return to more normal historic yield relationships.
Portfolio Strategy
As interest rates continued to move lower at the beginning of May,
our strategy of adding lower-coupon, longer-maturity issues to the
portfolio continued to enhance the Fund's net asset value. Economic
releases during the second quarter of 1995 confirmed our belief that
the economy was indeed slowing and the potential of an ease in
interest rates by the Federal Reserve Board was a real possibility.
In July, the Federal Reserve Board cut the Federal Fund's target
rate by 25 basis points. While the cut was not significant in size,
it did indicate the prob-able end to any further interest rate
increases which had taken a severe toll on the performance of the
credit markets during the preceding 12 months.
The economic soft landing that investors hoped for came into
question during the third quarter of this year as the economy
produced stronger-than-expected results. This caused a temporary
rise in yields as investors feared renewed inflationary pressure
along with renewed growth.
<PAGE>
The bounce back in economic growth seems to be waning as we move
into the fourth quarter of 1995. Consumers have curtailed their
spending and continue to be extremely price conscious in the
purchase of goods, which has produced the lowest level of inflation
in many years. As a result, we are anticipating a continued decline
in interest rates during the remainder of 1995.
Issuance in Pennsylvania has declined on a year-over-year basis as
has issuance on a national level. The decline in issuance helped
relative value for shareholders but also made it more difficult to
find the aggressively structured bonds that would be the strongest
performers in a declining interest rate environment.
In Conclusion
We appreciate your ongoing interest in MuniYield Pennsylvania Fund,
and we look forward 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
(James C. Cahill)
James C. Cahill
Portfolio Manager
November 28, 1995
<PAGE>
We are pleased to announce that James C. Cahill is responsible for
the day-to-day management of MuniYield Pennsylvania Fund. Mr. Cahill
has been employed by Merrill Lynch Asset Management, L.P. (an
affiliate of the Fund's investment adviser) since 1994 as Vice
President and Portfolio Manager. Prior thereto, he was employed by
the Prudential Insurance Company.
PROXY RESULTS
During the six-month period ended October 31, 1995, MuniYield
Pennsylvania Fund Common Shareholders voted on the following
proposals. The proposals were approved at a special shareholders'
meeting on May 12, 1995. The description of each proposal and number
of shares voted are as follows:
<TABLE>
<CAPTION>
Shares Voted Shares Voted
For Without Authority
<S> <S> <C> <C>
1. To elect the Fund's Board of Trustees: Edward H. Meyer 5,492,653 114,246
Jack B. Sunderland 5,493,419 113,479
J. Thomas Touchton 5,494,635 112,264
Arthur Zeikel 5,494,033 112,866
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's independent
auditors for the current fiscal year. 5,446,044 68,715 92,139
</TABLE>
During the six-month period ended October 31, 1995, MuniYield
Pennsylvania Fund Preferred Shareholders voted on the following
proposals. The proposals were approved at a special shareholders'
meeting on May 12, 1995. The description of each proposal and
number of shares voted are as follows:
<PAGE>
<TABLE>
<CAPTION>
Shares Voted Shares Voted
For Without Authority
<S> <S> <C> <C>
1. To elect the Fund's Board of Trustees: Donald Cecil 1,400 0
M. Colyer Crum 1,400 0
Edward H. Meyer 1,400 0
Jack B. Sunderland 1,400 0
J. Thomas Touchton 1,400 0
Arthur Zeikel 1,400 0
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's independent
auditors for the current fiscal year. 1,400 0 0
</TABLE>
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 interest 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. Of course, increases in
short-term interest rates would reduce (and even eliminate) the
dividends on the Common Shares.
<PAGE>
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 or eliminated completely. 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 does not fluctuate. In addition to the decline in
net asset value, the market value of the fund's Common Shares may
also decline.
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 according to the list at right.
AMT Alternative Minimum Tax (subject to)
GO General Obligation Bonds
HFA Housing Finance Agency
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--97.4%
<S> <S> <C> <S> <C>
AAA Aaa $ 1,000 Allegheny County, Pennsylvania, Hospital Development Authority, Health Center
Revenue Bonds (Presbyterian University Hospital), Series A, 6.25% due
11/01/2023 (c) $ 1,027
A1+ VMIG1++ 100 Allegheny County, Pennsylvania, Hospital Development Authority Revenue Bonds
(Presbyterian Health Center), VRDN, Series A, 3.85% due 3/01/2020 (a) 100
NR* A 3,000 Allegheny County, Pennsylvania, Hospital Development Authority Revenue Bonds
(South Hills Health System), Series A, 6.50% 5/01/2014 3,069
AAA Aaa 5,000 Beaver County, Pennsylvania, Hospital Authority, Revenue Refunding Bonds
(Medical Center Beaver County, Inc.), 6.625% due 7/01/2010 (b) 5,394
AAA Aaa 2,500 Beaver County, Pennsylvania, IDA, PCR, Refunding (Pennsylvania Power Company--
Beaver Valley Project), 6% due 9/01/2028 (b) 2,527
AAA Aaa 3,000 Bethlehem, Pennsylvania, Water Authority, Revenue Refunding Bonds,
6.25% due 11/15/2001 (c)(e) 3,283
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) 3,071
NR* NR* 1,300 Delaware County, Pennsylvania, IDA, PCR, Refunding (BP Exploration & Oil),
VRDN, 4% due 10/01/2019 (a) 1,300
Emmaus, Pennsylvania, General Authority Revenue Bonds, VRDN (a):
A1+ NR* 1,400 (Local Government Pooled Program), Series H, 3.70% due 3/01/2024 1,400
A1 NR* 1,700 Sub-Series B-2, 3.60% due 3/01/2024 1,700
A1 NR* 200 Sub-Series B-12, 3.75% due 3/01/2024 200
NR* Baa1 1,785 Latrobe, Pennsylvania, IDA, Revenue Bonds (Saint Vincent College Project),
6.75% due 5/01/2014 1,849
AAA Aaa 5,050 Lehigh County, Pennsylvania, IDA, PCR, Refunding (Pennsylvania Power and
Light Company Project), Series A, 6.40% due 11/01/2021 (c) 5,307
Luzerne County, Pennsylvania, IDA, Exempt Facilities Revenue Bonds (Pennsylvania
Gas and Water Company Project), AMT:
BBB- Baa3 2,500 Refunding, Series A, 7.20% due 10/01/2017 2,588
AAA Aaa 2,000 Refunding, Series A, 7% due 12/01/2017 (b) 2,211
BBB- Baa3 1,500 Series B, 7.125% due 12/01/2022 1,545
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Pennsylvania (continued)
<S> <S> <C> <S> <C>
BBB NR* $ 2,050 Montgomery County, Pennsylvania, Higher Education and Health Authority Revenue
Bonds (Northwestern Corporation), 7.125% due 6/01/2018 $ 2,094
Montgomery County, Pennsylvania, Higher Education and Health Authority,
Revenue Refunding Bonds (Saint Joseph University) (f):
AAA NR* 1,800 6.50% due 12/15/2012 1,904
AAA NR* 2,500 6.50% due 12/15/2022 2,642
Montgomery County, Pennsylvania, IDA, PCR, Refunding (Philadelphia Electric
Company):
BBB+ Baa2 1,800 AMT, Series A, 7.60% due 4/01/2021 1,952
AAA Aaa 4,400 Series B, 6.70% due 12/01/2021 (c) 4,754
AAA Aaa 1,260 North Penn, Pennsylvania, Water Authority Revenue Bonds, 6.875% due
11/01/2004 (d)(e) 1,459
AAA Aaa 1,000 North Wales, Pennsylvania, Water Authority Revenue Bonds, 6.75% due
11/01/2004 (d)(e) 1,150
BBB- Baa2 1,500 Pennsylvania Economic Development Financing Authority, Exempt Facilities
Revenue Bonds (MacMillan Limited Partnership Project), AMT, 7.60% due 12/01/2020 1,647
BBB+ Baa1 4,000 Pennsylvania Economic Development Financing Authority, Wastewater Treatment
Revenue Bonds (Sun Company Inc., R & M Project), AMT, Series A, 7.60% due
12/01/2024 4,383
AAA Aaa 4,000 Pennsylvania HFA, Revenue Refunding Bonds (Rental Housing), 6.50% due
7/01/2023 (g) 4,130
Pennsylvania HFA, S/F Mortgage Revenue Bonds, AMT:
AA Aa 2,630 Series 34-B, 7% due 4/01/2024 2,745
AA Aa 3,000 Series 41-B, 6.65% due 4/01/2025 3,084
Pennsylvania Intergovernmental Cooperative Authority, Special Tax Revenue
Bonds:
NR* Aaa 3,965 (City of Philadelphia Funding Program), 6.80% due 6/15/2002 (e) 4,470
AAA Aaa 2,000 Refunding, Series A, 5% due 6/15/2013 (c) 1,862
A NR* 2,000 Pennsylvania State Finance Authority, Revenue Refunding Bonds (Municipal
Capital Improvements Program), 6.60% due 11/01/2009 2,117
AA- A1 5,000 Pennsylvania State, GO, UT, Second Series A, 6.60% due 11/01/2011 5,396
<PAGE>
AAA Aaa 2,000 Pennsylvania State Higher Educational Assistance Agency, Student Loan
Revenue Bonds, AMT, Series C, 7.15% due 9/01/2021 (b) 2,145
AAA Aaa 1,255 Pennsylvania State Higher Educational Facilities Authority, College and
University Revenue Refunding Bonds, (Duquesne University), Series A, 6.75%
due 4/01/2020 (c) 1,360
A+ Aa 5,000 Pennsylvania State Higher Educational Facilities Authority, Revenue Refunding
Bonds (Thomas Jefferson University), Series A, 6.625% due 8/15/2009 5,378
A- A 2,050 Pennsylvania State, IDA, Revenue Bonds (Economic Development), Series A,
7% due 7/01/2001 (e) 2,331
Pennsylvania State University, Revenue Refunding Bonds:
AA- A1 2,500 6.25% due 3/01/2011 2,636
AA- A1 1,750 Series A, 5.10% due 3/01/2018 1,608
Philadelphia, Pennsylvania, Hospital and Higher Educational Facilities Authority,
Hospital Revenue Bonds:
A- NR* 1,000 (Children's Seashore House), Series B, 7% due 8/15/2022 1,057
AAA Aaa 2,500 (Pennsylvania Hospital), Series A, 5.25% due 2/15/2014 (d) 2,362
A- NR* 3,000 Refunding (Presbyterian Medical Center), 6.65% due 12/01/2019 3,246
</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>
BBB NR* $ 1,630 Philadelphia, Pennsylvania, Hospital and Higher Educational Facilities Authority
Revenue Bonds (Northwestern Corporation), 7% due 6/01/2012 $ 1,695
Philadelphia, Pennsylvania, Water and Wastewater Revenue Bonds (c):
AAA Aaa 1,000 5.50% due 8/01/2014 982
AAA Aaa 3,820 5.60% due 8/01/2018 3,776
AAA Aaa 7,095 Pittsburgh, Pennsylvania, Water and Sewer Authority, Water and Sewer System
Revenue Bonds (First Lien), Series A, 5.65% due 9/01/2025 (d) 7,054
Robinson Township, Pennsylvania, Municipal Authority, Water and Sewer Revenue
Refunding Bonds, Series A (d):
AAA Aaa 2,130 5.93%** due 5/15/2018 574
AAA Aaa 2,200 5.93%** due 5/15/2019 559
AAA Aaa 2,700 5.93%** due 5/15/2021 610
<PAGE>
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 2,659
BBB+ NR* 1,000 Sharon, Pennsylvania, Regional Health System Authority, Hospital Revenue Refunding
Bonds (Sharon Regional Health System Project), Series A, 6.875% due 12/01/2009 1,043
AAA Aaa 1,550 Washington County, Pennsylvania, Hospital Authority Revenue Bonds
(The Washington Hospital Project), 5.625% due 7/01/2023 (b) 1,515
Puerto Rico--3.2%
Puerto Rico Commonwealth, Highway and Transportation Authority,
Highway Revenue Bonds:
AAA NR* 900 Series S, 6.50% due 7/01/2002 (e) 1,014
AAA NR* 1,000 Series T, 6.50% due 7/01/2002 (e) 1,126
A Baa1 1,000 Series W, 5.50% due 7/01/2015 974
A Baa1 1,000 Series W, 5.50% due 7/01/2017 956
Total Investments (Cost--$120,979)--100.6% 129,020
Liabilities in Excess of Other Assets--(0.6%) (794)
--------
Net Assets--100.0% $128,226
========
<FN>
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at October 31, 1995.
(b)AMBAC Insured.
(c)MBIA Insured.
(d)FGIC Insured.
(e)Prerefunded.
(f)Insured by Connie Lee.
(g)FNMA Insured.
++Highest short-term rating by Moody's Investors Service, Inc.
*Not Rated.
**Represents a zero coupon bond; the interest rate shown is the
effective yield at the time of purchase by the Fund.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of October 31, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$120,979,146) (Note 1a) $129,020,352
Interest receivable 2,538,938
Deferred organization expense (Note 1e) 14,480
Prepaid expenses and other assets 3,186
------------
Total assets 131,576,956
------------
Liabilities: Payables:
Securities purchased $ 1,735,813
Dividends to shareholders (Note 1f) 157,979
Investment adviser (Note 2) 56,030 1,949,822
------------
Accrued expenses and other liabilities 1,400,959
------------
Total liabilities 3,350,781
------------
Net Assets: Net assets $128,226,175
============
Capital: Capital Shares (unlimited number of shares of beneficial interest
authorized) (Note 4):
Preferred Shares, par value $.10 per share (1,600 shares of
AMPS* issued and outstanding at $25,000 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 80,027,116
Undistributed investment income--net 876,098
Accumulated realized capital losses on investments--net (Note 5) (954,961)
Accumulated distributions in excess of realized capital
gains--net (337,626)
Unrealized appreciation on investments--net 8,041,206
------------
Total--Equivalent to $15.36 net asset value per Common Share
(market price--$13.75) 88,226,175
------------
Total capital $128,226,175
============
<FN>
*Auction Market Preferred Shares.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Year Ended October 31, 1995
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 7,743,210
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 620,113
Commission fees (Note 4) 117,907
Professional fees 72,823
Transfer agent fees 47,575
Printing and shareholder reports 44,193
Accounting services (Note 2) 30,437
Trustees' fees and expenses 22,825
Listing fees 19,447
Custodian fees 7,752
Pricing fees 7,220
Amortization of organization expenses (Note 1e) 7,201
Other 12,222
------------
Total expenses 1,009,715
------------
Investment income--net 6,733,495
------------
Realized & Realized loss on investments--net (941,783)
Unrealized Gain Change in unrealized appreciation/depreciation on investments--net 9,730,987
(Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 15,522,699
(Notes 1b, ============
1d & 3):
</TABLE>
<TABLE>
Statement of Changes in Net Assets
<CAPTION>
For the Year Ended October 31,
Increase (Decrease) in Net Assets: 1995 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 6,733,495 $ 6,517,937
Realized loss on investments--net (941,783) (13,177)
Change in unrealized appreciation/depreciation on investments--net 9,730,987 (13,727,541)
------------ ------------
Net increase (decrease) in net assets resulting from operations 15,522,699 (7,222,781)
------------ ------------
<PAGE>
Dividends & Investment income--net:
Distributions to Common Shares (5,124,407) (5,185,019)
Shareholders Preferred Shares (1,443,064) (1,099,664)
(Note 1f): Realized gain on investments--net:
Common Shares -- (699,225)
Preferred Shares -- (137,128)
In excess of realized gain on investments--net:
Common Shares (280,658) --
Preferred Shares (56,968) --
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (6,905,097) (7,121,036)
------------ ------------
Capital Share Value of shares issued to Common Shareholders in reinvestment
Transactions of dividends and distributions -- 1,297,939
(Note 4): ------------ ------------
Net increase in net assets derived from capital share transactions -- 1,297,939
------------ ------------
Net Assets: Total increase (decrease) in net assets 8,617,602 (13,045,878)
Beginning of year 119,608,573 132,654,451
------------ ------------
End of year* $128,226,175 $119,608,573
============ ============
<FN>
*Undistributed investment income--net $ 876,098 $ 710,074
============ ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (concluded)
<PAGE>
<TABLE>
Financial Highlights
<CAPTION>
For the
Period
The following per share data and ratios have been derived October 30,
from information provided in the financial statements. For the Year Ended 1992++ to
October 31, October 31,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.86 $ 16.37 $ 14.13 $ 14.18
Operating -------- -------- -------- --------
Performance: Investment income--net 1.17 1.15 1.12 --
Realized and unrealized gain (loss) on
investments--net 1.53 (2.41) 2.30 --
-------- -------- -------- --------
Total from investment operations 2.70 (1.26) 3.42 --
-------- -------- -------- --------
Less dividends and distributions to Common
Shareholders:
Investment income--net (.89) (.91) (.85) --
Realized gain on investments--net -- (.12) -- --
In excess of realized gain on investments--net (.05) -- -- --
-------- -------- -------- --------
Total dividends and distributions to Common
Shareholders (.94) (1.03) (.85) --
-------- -------- -------- --------
Capital charge resulting from issuance of
Common Shares -- -- -- (.05)
-------- -------- -------- --------
Effect of Preferred Share activity++++:
Dividends and distributions to Preferred
Shareholders:
Investment income--net (.25) (.20) (.18) --
Realized gain on investments--net -- (.02) -- --
In excess of realized gain on investments--net (.01) -- -- --
Capital charge resulting from issuance of
Preferred Shares -- -- (.15) --
-------- -------- -------- --------
Total effect of Preferred Share activity (.26) (.22) (.33) --
-------- -------- -------- --------
Net asset value, end of period $ 15.36 $ 13.86 $ 16.37 $ 14.13
======== ======== ======== ========
Market price per share, end of period $ 13.75 $ 11.00 $ 16.375 $ 15.00
======== ======== ======== ========
Total Based on market price per share 34.17% (27.82%) 15.30% .00%+++
Investment ======== ======== ======== ========
Return:** Based on net asset value per share 18.95% (9.02%) 22.36% (.35%)+++
======== ======== ======== ========
Ratios to Expenses, net of reimbursement .82% .82% .64% --%*
Average ======== ======== ======== ========
Net Assets:*** Expenses .82% .82% .78% --%*
======== ======== ======== ========
Investment income--net 5.44% 5.12% 5.20% --%*
======== ======== ======== ========
<PAGE>
Supplemental Net assets, net of Preferred Shares,
Data: end of period (in thousands) $ 88,226 $ 79,609 $ 92,654 $ 78,315
======== ======== ======== ========
Preferred Shares outstanding, end of period
(in thousands) $ 40,000 $ 40,000 $ 40,000 $ --
======== ======== ======== ========
Portfolio turnover 43.59% 18.64% 14.03% --
======== ======== ======== ========
Dividends Per Investment income--net $ 902 $ 688 $ 644 $ --
Share 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, may result
in substantially different returns. Total investment returns exclude
the effects of sales loads.
***Do not reflect the effect of dividends to Preferred Shareholders.
++Commencement of Operations.
++++The Fund's Preferred Shares were issued on November 30, 1992.
++++++Dividends per share have been adjusted to reflect a two-for-
one stock split.
+++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 primarily
in the over-the-counter markets 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 and options thereon, 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 valued
at their last sale price as of the close of such exchanges or,
lacking any sales, at the last available bid price. Securities with
remaining maturities of sixty days or less are valued at amortized
cost, which approximates market value. Securities for which market
quotations are not readily 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, including valuations furnished by a pricing
service retained by the Fund, which may utilize a matrix system for
valuations. The procedures of the pricing service and its valuations
are reviewed by the officers of the Fund under the general
supervisions of the Board of Trustees.
(b) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* 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.
* Options--The Fund is authorized to write covered call options and
purchase put options. When the Fund writes an option, an amount
equal to the premium received by the Fund is reflected as an asset
and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written.
When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the
closing transaction exceeds the premium paid or received).
<PAGE>
Written and purchased options are non-income producing investments.
(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. Discounts and market premiums are amortized into interest
income. Realized gains and losses on security transactions are
determined on the identified cost basis.
(e) Deferred organization expenses--Deferred organization expenses
are amortized on a straight-line basis over a five-year period.
(f) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates. Distributions in excess of
realized capital gains are due primarily to differing tax treatments
for futures transactions and post-October losses.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
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, PSI, 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 year ended October 31, 1995 were $61,738,056 and
$51,041,985, respectively.
<PAGE>
Net realized and unrealized gains (losses) as of October 31, 1995
were as follows:
Realized Unrealized
Losses Gains
Long-term investments $ (501,849) $8,041,206
Financial futures contracts (439,934) --
----------- ----------
Total $ (941,783) $8,041,206
=========== ==========
As of October 31, 1995, unrealized appreciation for Federal income
tax purposes aggregated $8,041,206, all of which related to
appreciated securities. The aggregate cost of investments at October
31, 1995 for Federal income tax purposes was $120,979,146.
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 beneficial interest without approval of the holders of
Common Shares.
Common Shares
For the year ended October 31, 1995, shares issued and outstanding
remained constant at 5,743,422. At October 31, 1995, total paid-in
capital amounted to $80,601,458.
Preferred Shares
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 October 31, 1995 was 3.80%.
A two-for-one stock split occurred on December 1, 1994. As a result,
as of October 31, 1995, there were 1,600 AMPS shares authorized,
issued and outstanding with a liquidation preference of $25,000 per
share, plus accumulated and unpaid dividends of $36,754.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from 0.25% to 0.375%,
calculated on the proceeds of each auction. For the year ended
October 31, 1995, MLPF&S, an affiliate of FAM, earned $62,523 as
commissions.
5. Capital Loss Carryforward:
At October 31, 1995, the Fund had a net capital loss carryforward of
approximately $305,000, all of which expires in 2003. This amount
will be available to offset like amounts of any future taxable
gains.
<PAGE>
6. Subsequent Event:
On November 13, 1995, the Fund's Board of Trustees declared an
ordinary income dividend to holders of Common Shares in the amount
of $0.076173 per share, payable on November 29, 1995 to shareholders
of record as of November 24, 1995.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
MuniYield Pennsylvania Fund:
We have audited the accompanying statement of assets, liabilities
and capital, including the schedule of investments, of MuniYield
Pennsylvania Fund as of October 31, 1995, the related statements of
operations for the year then ended and changes in net assets for
each of the years in the two-year period then ended and the
financial highlights for each of the years in the three-year period
then ended and the period October 30, 1992 (commencement of
operations) to October 31, 1992. These financial statements and the
financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at October
31, 1995 by correspondence with the custodian and broker. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
MuniYield Pennsylvania Fund as of October 31, 1995, the results of
its operatons, the changes in its net assets and the financial
highlights for the respective stated periods in conformity with
generally accepted accounting principles.
<PAGE>
Deloitte & Touche LLP
Princeton, New Jersey
December 1, 1995
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid monthly by
MuniYield Pennsylvania Fund during its taxable year ended October
31, 1995 qualify as tax-exempt interest dividends for Federal income
tax purposes. Additionally, the following table summarizes the per
share capital gains distributions paid by the Fund during the year:
<TABLE>
<CAPTION>
Payable Short-Term Long-Term
Date Capital Gains Capital Gains
<S> <C> <C> <C>
Common Shareholders 12/29/94 -- $ 0.048866
Preferred Shareholders 12/01/94 -- $71.21
Please retain this information for your records.
</TABLE>
PER SHARE INFORMATION (unaudited)
<TABLE>
Per Share Selected Quarterly Financial Data*
<CAPTION>
Dividends/Distributions
Net Realized Unrealized
Investment Gains Gains Net Investment Income Capital Gains
For the Quarter Income (Losses) (Losses) Common Preferred Common Preferred
<S> <C> <C> <C> <C> <C> <C> <C>
November 1, 1993 to January 31, 1994 $.30 -- $ .10 $.24 $.05 $.12 $.02
February 1, 1994 to April 30, 1994 .28 $ .06 (1.84) .24 .05 -- --
May 1, 1994 to July 31, 1994 .28 .07 2.30 .27 .05 -- --
August 1, 1994 to October 31, 1994 .29 (.14) (2.96) .16 .05 -- --
November 1, 1994 to January 31, 1995 .34 (.09) .56 .23 .05 .05 .01
February 1, 1995 to April 30, 1995 .24 (.10) .46 .22 .06 -- --
May 1, 1995 to July 31, 1995 .30 .07 .18 .22 .07 -- --
August 1, 1995 to October 31, 1995 .29 (.04) .49 .22 .07 -- --
<PAGE>
<CAPTION>
Net Asset Value Market Price**
For the Quarter High Low High Low Volume***
<S> <C> <C> <C> <C> <C>
November 1, 1993 to January 31, 1994 $16.35 $15.89 $15.00 $15.00 370
February 1, 1994 to April 30, 1994 16.32 14.03 13.50 13.50 354
May 1, 1994 to July 31, 1994 15.13 14.26 14.375 13.125 357
August 1, 1994 to October 31, 1994 14.85 13.86 13.375 11.125 668
November 1, 1994 to January 31, 1995 14.29 13.03 12.875 10.50 1,090
February 1, 1995 to April 30, 1995 14.94 14.32 13.75 12.75 487
May 1, 1995 to July 31, 1995 15.46 14.63 14.375 13.00 509
August 1, 1995 to October 31, 1995 15.46 14.70 14.125 13.25 403
<FN>
*Calculations are based upon Common Shares outstanding at the end of
each quarter.
**As reported in the consolidated transaction reporting system.
***In thousands.
</TABLE>
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
<PAGE>
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
