MUNIYIELD
PENNSYLVANIA
FUND
FUND LOGO
Semi-Annual Report
April 30, 1998
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
Fred G. Weiss, Trustee
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
William R. Bock, Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Patrick D. Sweeney, Secretary
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Transfer Agents
Common Shares:
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Preferred Shares:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
NYSE Symbol
MPA
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 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. Statements and other information herein are as dated
and are subject to change.
MuniYield
Pennsylvania Fund
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MuniYield Pennsylvania Fund
TO OUR SHAREHOLDERS
For the six-month period ended April 30, 1998, the Common Shares of
MuniYield Pennsylvania Fund earned $0.539 per share income
dividends, which included earned and unpaid dividends of $0.071.
This represents a net annualized yield of 7.00%, based on a month-
end per share net asset value of $15.54. Over the same period, the
total investment return on the Fund's Common Shares was +2.53%,
based on a change in per share net asset value from $15.86 to
$15.54, and assuming reinvestment of $0.544 per share income
dividends and $0.168 per share capital gains distributions.
For the six-month period ended April 30, 1998, the Fund's Auction
Market Preferred Shares had an average yield of 4.325%.
The Municipal Market Environment
During the six months ended April 30, 1998, bond yields generally
moved lower, and by mid-January 1998 had declined to recent historic
lows. Long-term US Treasury bond yields declined 20 basis points
(0.20%) during the same period and stood at 5.95% by April 30, 1998.
Similarly, long-term uninsured tax-exempt bond yields, as measured
by the Bond Buyer Revenue Bond Index, fell approximately 35 basis
points to 5.25%, a level not seen since the mid-1970s. While low
inflation has supported lower interest rates, much of the decline
in bond yields in late 1997 and early 1998 was driven more by the
turmoil in Asian financial markets than by domestic economic
fundamentals. Weak economic conditions in Asia were expected to
negatively impact US growth through reduced export demand.
Additionally, inflation in the United States was also expected to
decline in response to lower prices on goods imported from Asian
manufacturers.
However, in recent months, many investors have become increasingly
concerned that most of the downturn in Asia, especially in Japan,
has already occurred and any future deterioration will not be severe
enough to constrain US economic growth and inflationary pressures.
These concerns served to push interest rates higher in the latter
part of the period, causing fixed-income yields to retrace much of
their earlier gains.
Thus far in 1998, the municipal bond market has experienced
unexpectedly strong supply pressures. These supply pressures have
prevented tax-exempt bond yields from declining as much as US
Treasury bond yields. Over the last six months, more than $135
billion in new tax-exempt bonds were underwritten, an increase of
over 40% compared to the same period a year ago. During the last
three months, municipalities issued over $72 billion in new
securities, an increase of more than 60% compared to the same three-
month period in 1997. Additionally, corporate issuers have also
viewed current interest rate levels as an opportunity to issue
significant amounts of taxable securities. Thus far in 1998, over
$100 billion in investment-grade corporate bonds have been
underwritten, an increase of more than 60% relative to the
comparable period a year ago. This sizeable corporate bond issuance
has tended to support generally higher fixed-income yields and
reduce the demand for tax-exempt bonds.
However, the recent pace of new municipal bond issuance is unlikely
to be maintained. Continued increases in bond issuance will require
lower and lower tax-exempt bond yields to generate the economic
savings necessary for additional municipal bond refinancing.
Preliminary estimates for 1998 total municipal bond issuance are
presently in the $200 billion--$225 billion range. These estimates
suggest that recent supply pressures are likely to abate later in
the year. Municipal bond investors received approximately $30
billion earlier this year in coupon payments, bond maturities and
proceeds from early redemptions. The demand generated by these
assets has helped offset the increase in supply seen thus far this
year. Furthermore, looking ahead, June and July have also tended to
be periods of strong investor demand as seasonal factors are likely
to generate strong income flows similar to those seen earlier this
year.
MuniYield Pennsylvania Fund
April 30, 1998
It is also possible that at least some of the recent economic
strength seen in the United States will be reversed in the coming
months. A particularly mild winter has been partially responsible
for a strong housing sector, as well as other construction
industries. This recent strong trend may not be sustained and may
lead to weaker construction growth later this year. Additionally,
strong economic growth in 1997 and the increased use of electronic
tax filing have resulted in larger and earlier Federal and state
income tax refunds to many individuals. These refunds appear to have
supported strong consumer spending in recent months, but may be
borrowing against weaker spending later this year. In addition, the
continued impact of the Asian financial crisis on the US domestic
economy's future growth remains unclear. Barring a dramatic and
unexpected resurgence of domestic inflation, we do not believe that
the Federal Reserve Board will be willing to raise interest rates
until the full impact of the Asian situation can be established.
All these factors suggest that over the near term, tax-exempt as
well as taxable bond yields are unlikely to rise by any appreciable
amount. Recent supply pressures have caused municipal bond yield
ratios to rise relative to US Treasury bond yields. At April 30,
1998, long-term tax-exempt bond yields were at attractive yield
ratios relative to comparable US Treasury securities (over 90%),
and well in excess of their expected range of 85%--88%. Any further
pressure upon the municipal market may well represent a very
attractive investment opportunity.
Portfolio Strategy
During the six-month period ended April 30, 1998, we continued to
follow the portfolio strategy that we had adopted during the prior
six-month period. At that time, our outlook was constructive toward
the municipal market because we believed any risk was biased toward
lower rather than higher interest rates. Therefore, we followed a
more aggressive investment strategy. We have essentially maintained
a fully invested position since that time and have kept cash
reserves at a minimum to seek to enhance the Fund's dividend and
capital appreciation potential.
Looking ahead, we expect to remain fully invested during the next
several months. We will continue to monitor economic data for any
signs of inflationary pressure or economic downturn so that we can
modify our portfolio strategy in an effort to seek to preserve the
Fund's capital or enhance total return.
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
Senior Vice President
(William R. Bock)
William R. Bock
Vice President and Portfolio Manager
May 28, 1998
MuniYield Pennsylvania Fund
April 30, 1998
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.
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 pickup 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.
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute substantially all of its
net investment income to its shareholders on a monthly basis.
However, in order to provide shareholders with a more consistent
yield to the current trading price of Common Shares of the Fund, the
Fund may at times pay out less than the entire amount of net
investment income earned in any particular month and may at times in
any month pay out such accumulated but undistributed income in
addition to net investment income earned in that month. As a result,
the dividends paid by the Fund for any particular month may be more
or less than the amount of net investment income earned by the Fund
during such month. The Fund's current accumulated but undistributed
net investment income, if any, is disclosed in the Statement of
Assets, Liabilities and Capital, which comprises part of the
Financial Information included in this report.
MuniYield Pennsylvania Fund
April 30, 1998
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 below and 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
RITR Residual Interest Trust Receipts
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
Ratings Ratings Amount Issue (Note 1a)
Pennsylvania--100.6%
<S> <S> <C> <S> <C>
Allegheny County, Pennsylvania, Hospital Development Authority Revenue Bonds,
Series A:
AAA Aaa $2,000 (Allegheny General Hospital Project), 6.25% due 9/01/2020 (c) $ 2,177
NR* A3 3,000 (South Hills Health System), 6.50% due 5/01/2014 3,290
BBB- Baa3 2,680 Allegheny County, Pennsylvania, IDA, Enviromental Improvement Revenue Refunding
Bonds (USX Corp.), 5.60% due 9/01/2030 2,645
AAA Aaa 5,750 Allegheny County, Pennsylvania, Sanitation Authority, Sewer Revenue Bonds, RITR,
Series 20, 6.37% due 12/01/2024 (c)(i) 5,800
BBB+ NR* 1,000 Cumberland County, Pennsylvania, Municipal Authority Revenue Bonds (Presbyterian
Homes Inc. Project), 6% due 12/01/2026 1,040
A- NR* 2,250 Delaware County, Pennsylvania, Hospital Authority Revenue Bonds (Riddle Memorial
Hospital), 6.50% due 1/01/2022 2,374
A Baa1 2,000 Delaware County, Pennsylvania, IDA, Revenue Refunding Bonds (Resource Recovery
Facility), Series A, 6.10% due 7/01/2013 2,159
AAA Aaa 1,100 Delaware County, Pennsylvania, Interboro School District, UT, 5.375%
due 8/15/2025 (c) 1,102
NR* Aaa 4,000 Delaware County, Pennsylvania, University Revenue Bonds (Villanova University),
Series A, 5% due 12/01/2028 (c) 3,790
AAA Aaa 1,750 Greater Johnston, Pennsylvania, School District, Refunding, GO, UT, Series 1998,
5% due 2/01/2019 (c) 1,684
NR* Baa1 1,785 Latrobe, Pennsylvania, IDA, College Revenue Bonds (Saint Vincent College Project),
6.75% due 5/01/2014 1,934
AAA Aaa 4,000 Lehigh County, Pennsylvania, General Purpose Authority, Revenue Bonds (Saint Luke's
Hospital of Bethlehem), 6.25% due 7/01/2022 (b) 4,298
AAA Aaa 3,000 Lehigh County, Pennsylvania, IDA, PCR, Refunding (Pennsylvania Power and Light
Company Project), Series A, 6.40% due 11/01/2021 (c) 3,260
NR* Aaa 2,020 Lower Merion Township, Pennsylvania, School District, UT, 5% due 5/15/2023 1,928
AAA Aaa 4,570 Lower Providence Township, Pennsylvania, Sewer Authority, Sewer Revenue Refunding
Bonds, UT, 5.25% due 5/01/2022 (c) 4,497
Luzerne County, Pennsylvania, IDA, Exempt Facilities Revenue Bonds (Pennsylvania Gas
and Water Company Project), AMT:
A- A3 2,500 Refunding, Series A, 7.20% due 10/01/2017 2,751
AAA Aaa 2,000 Refunding, Series A, 7% due 12/01/2017 (b) 2,251
A- A3 1,500 Series B, 7.125% due 12/01/2022 1,647
</TABLE>
MuniYield Pennsylvania Fund
April 30, 1998
<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 $ 2,224
Montgomery County, Pennsylvania, IDA, PCR, Refunding (Philadelphia Electric
Company):
BBB+ Baa2 1,800 AMT, Series A, 7.60% due 4/01/2021 1,949
AAA Aaa 4,400 Series B, 6.70% due 12/01/2021 (c) 4,762
AAA Aaa 2,000 Northeastern, Pennsylvania, Hospital and Education Authority, Health Care
Revenue Bonds (Wyoming Valley Health Care), Series A, 5.25% due 1/01/2026 (b) 1,949
BBB Baa3 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 4,649
AAA Aaa 4,000 Pennsylvania HFA, Refunding (Rental Housing), 6.50% due 7/01/2023 (g) 4,266
Pennsylvania HFA, S/F Mortgage, AMT:
AA+ Aa2 1,720 Refunding, Series 60A, 5.85% due 10/01/2027 1,766
AA+ Aa 2,630 Series 34B, 7% due 4/01/2024 2,816
AA+ Aa 3,000 Series 41B, 6.65% due 4/01/2025 3,203
AA- NR* 2,000 Pennsylvania State Finance Authority, Revenue Refunding Bonds (Municipal Capital
Improvements Program), 6.60% due 11/01/2009 2,199
AAA Aaa 2,000 Pennsylvania State Higher Education Assistance Agency, Student Loan Revenue Bonds,
AMT, Series C, 7.15% due 9/01/2021 (b) 2,163
Pennsylvania State Higher Educational Facilities Authority, College and
University Revenue Refunding Bonds:
A1+ NR* 2,100 (Carnegie Mellon University), VRDN, Series C, 4.15% due 11/01/2029 (a) 2,100
AAA Aaa 1,255 (Duquesne University), Series A, 6.75% due 4/01/2020 (c) 1,326
AA- Aa3 2,500 Pennsylvania State University, Refunding, 6.25% due 3/01/2011 2,672
AAA Aaa 1,500 Philadelphia, Pennsylvania, Airport Revenue Bonds (Philadelphia Airport System),
AMT, Series B, 5.40% due 6/15/2027 (d) 1,489
Philadelphia, Pennsylvania, Hospitals and Higher Education Facilities Authority,
Hospital Revenue Bonds:
A1+ VMIG1++ 2,400 (Children's Hospital of Philadelphia Project), VRDN, 4.15% due 3/01/2027 (a) 2,400
A- NR* 1,000 (Children's Seashore House), Series B, 7% due 8/15/2022 1,086
BBB NR* 1,630 (Northwestern Corporation), 7% due 6/01/2012 1,764
AAA NR* 3,000 Refunding (Presbyterian Medical Center), 6.65% due 12/01/2019 (h) 3,523
AA Aa3 2,000 Philadelphia, Pennsylvania, IDA, Industrial and Commercial Revenue Bonds
(Girard Estates Facilities Leasing Project), 5% due 5/15/2027 1,900
AAA Aaa 4,000 Philadelphia, Pennsylvania, Industrial Development Lease Authority Revenue Bonds,
Series A, 5.375% due 2/15/2027 (c) 4,008
AAA Aaa 4,820 Pittsburgh, Pennsylvania, Water and Sewer Authority, Water and Sewer System Revenue
Bonds, Sub-Series C, 5.05% due 9/01/2025 (f) 4,620
A1+ NR* 3,600 Schuylkill County, Pennsylvania, IDA, Resource Recovery Revenue Refunding Bonds
(Northeastern Power Company), VRDN, Series A, 4.10% due 12/01/2022 (a) 3,600
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 2,686
A- NR* 1,000 Sharon, Pennsylvania, Regional Health System Authority, Hospital Revenue Refunding
Bonds (Sharon Regional Health System Project), Series A, 6.875% due 12/01/2002 (e) 1,114
NR* Aaa 5,000 Somerset County, Pennsylvania, UT, Series A, 5% due 10/01/2027 (d) 4,749
</TABLE>
MuniYield Pennsylvania Fund
April 30, 1998
<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+ Aa1 $4,900 Swarthmore Borough, Pennsylvania, College Authority, Revenue Refunding Bonds,
6% due 9/15/2020 $ 5,178
AAA Aaa 2,000 University of Pittsburgh, Pennsylvania, Commonwealth System of Higher Education
(Pennsylvania University Capital Projects), 5.125% due 6/01/2027 (d) 1,931
AA Aa3 3,500 Upper Saint Clair Township, Pennsylvania, School District, Refunding, UT, 5.20%
due 7/15/2027 3,423
Puerto Rico--2.2%
AAA Aaa 3,000 Puerto Rico Public Buildings Authority Revenue Bonds (Government Facilities),
Series B, 5% due 7/01/2027 (b) 2,875
Total Investments (Cost--$126,333)--102.8% 133,017
Liabilities in Excess of Other Assets--(2.8%) (3,656)
--------
Net Assets--100.0% $129,361
========
<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 April 30, 1998.
(b)AMBAC Insured.
(c)MBIA Insured.
(d)FGIC Insured.
(e)Prerefunded.
(f)FSA Insured.
(g)FNMA Collateralized.
(h)Escrowed to maturity.
(i)The interest rate is subject to change periodically and inversely
based upon prevailing market rates. The interest rate shown is the
rate in effect at April 30, 1998.
++Highest short-term rating by Moody's Investors Service, Inc.
*Not Rated.
See Notes to Financial Statements.
</TABLE>
QUALITY PROFILE
The quality ratings of securities in the Fund as of April 30, 1998
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 52.9%
AA/Aa 17.9
A/A 13.2
BBB/Baa 12.5
Other++ 6.3
[FN]
++Temporary investments in short-term municipal securities.
MuniYield Pennsylvania Fund
April 30, 1998
FINANCIAL INFORMATION
<TABLE>
Statement of Assets, Liabilities and Capital as of April 30, 1998
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$126,333,040) (Note 1a) $133,016,877
Cash 31,212
Interest receivable 2,053,346
Prepaid expenses and other assets 6,790
------------
Total assets 135,108,225
------------
Liabilities: Payables:
Securities purchased $ 5,516,086
Dividends to shareholders (Note 1e) 132,735
Investment adviser (Note 2) 53,730 5,702,551
------------
Accrued expenses and other liabilities 44,622
------------
Total liabilities 5,747,173
------------
Net Assets: Net assets $129,361,052
============
Capital: Capital Shares (unlimited number of shares of beneficial
interest authorized) (Note 4):
Preferred Shares, par value $.05 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 (5,752,062 shares
issued and outstanding) $ 575,206
Paid-in capital in excess of par 80,163,196
Undistributed investment income--net 1,051,377
Undistributed realized capital gains on investments--net 887,436
Unrealized appreciation on investments--net 6,683,837
------------
Total--Equivalent to $15.54 net asset value per Common Share
(market price--$14.8125) 89,361,052
------------
Total capital $129,361,052
============
<FN>
*Auction Market Preferred Shares.
See Notes to Financial Statements.
</TABLE>>
MuniYield Pennsylvania Fund
April 30, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months Ended April 30, 1998
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 3,672,683
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 321,414
Commission fees (Note 4) 50,060
Professional fees 36,423
Accounting services (Note 2) 24,040
Transfer agent fees 21,198
Trustees' fees and expenses 12,706
Printing and shareholder reports 10,434
Listing fees 7,976
Custodian fees 4,475
Pricing fees 3,949
Other 7,752
------------
Total expenses 500,427
------------
Investment income--net 3,172,256
------------
Realized & Unreal- Realized gain on investments--net 1,984,079
ized Gain (Loss) Change in unrealized appreciation on investments--net (2,061,932)
on Investments--Net ------------
(Notes 1b, 1d & 3): Net Increase in Net Assets Resulting from Operations $ 3,094,403
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: April 30, 1998 Oct. 31, 1997
<S> <S> <C> <C>
Operations: Investment income--net $ 3,172,256 $ 6,545,559
Realized gain on investments--net 1,984,079 2,016,285
Change in unrealized appreciation on investments--net (2,061,932) 1,698,298
------------ ------------
Net increase in net assets resulting from operations 3,094,403 10,260,142
------------ ------------
Dividends & Investment income--net:
Distributions to Common Shares (2,517,494) (5,129,565)
Shareholders Preferred Shares (433,856) (1,364,112)
(Note 1e): Realized gain on investments--net:
Common Shares (1,574,973) (544,213)
Preferred Shares (414,640) (152,208)
------------ ------------
Net decrease in net assets resulting from dividends
and distributions to shareholders (4,940,963) (7,190,098)
------------ ------------
Beneficial Net increase in net assets derived from beneficial
Interest interest transactions 136,944 --
Transactions ------------ ------------
(Note 4):
Net Assets: Total increase (decrease) in net assets (1,709,616) 3,070,044
Beginning of period 131,070,668 128,000,624
------------ ------------
End of period* $129,361,052 $131,070,668
============ ============
<FN>
*Undistributed investment income--net $ 1,051,377 $ 830,471
============ ============
See Notes to Financial Statements.
</TABLE>
MuniYield Pennsylvania Fund
April 30, 1998
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended For the
April 30, Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 15.86 $ 15.32 $ 15.36 $ 13.86 $ 16.37
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .56 1.13 1.15 1.17 1.15
Realized and unrealized gain (loss) on
investments--net (.02) .66 (.03) 1.53 (2.41)
-------- -------- -------- -------- --------
Total from investment operations .54 1.79 1.12 2.70 (1.26)
-------- -------- -------- -------- --------
Less dividends and distributions to
Common Shareholders:
Investment income--net (.44) (.89) (.91) (.89) (.91)
Realized gain on investments--net (.27) (.09) -- -- (.12)
In excess of realized gain on
investments--net -- -- -- (.05) --
-------- -------- -------- -------- --------
Total dividends and distributions to
Common Shareholders (.71) (.98) (.91) (.94) (1.03)
-------- -------- -------- -------- --------
Effect of Preferred Share activity:
Dividends and distributions to Preferred
Shareholders:
Investment income--net (.08) (.24) (.25) (.25) (.20)
Realized gain on investments--net (.07) (.03) -- -- (.02)
In excess of realized gain on
investments--net -- -- -- (.01) --
-------- -------- -------- -------- --------
Total effect of Preferred Share activity (.15) (.27) (.25) (.26) (.22)
-------- -------- -------- -------- --------
Net asset value, end of period $ 15.54 $ 15.86 $ 15.32 $ 15.36 $ 13.86
======== ======== ======== ======== ========
Market price per share, end of period $14.8125 $14.8125 $ 14.125 $ 13.75 $ 11.00
======== ======== ======== ======== ========
Total Investment Based on market price per share 4.64%++ 12.15% 9.48% 34.17% (27.82%)
Return:** ======== ======== ======== ======== ========
Based on net asset value per share 2.53%++ 10.71% 6.30% 18.95% (9.02%)
======== ======== ======== ======== ========
Ratios to Average Expenses .78%* .79% .78% .82% .82%
Net Assets:*** ======== ======== ======== ======== ========
Investment income--net 4.94%* 5.07% 5.14% 5.44% 5.12%
======== ======== ======== ======== ========
Supplemental Net assets, net of Preferred Shares,
Data: end of period (in thousands) $ 89,361 $ 91,071 $ 88,001 $ 88,226 $ 79,609
======== ======== ======== ======== ========
Preferred Shares outstanding, end of
period (in thousands) $ 40,000 $ 40,000 $ 40,000 $ 40,000 $ 40,000
======== ======== ======== ======== ========
Portfolio turnover 40.01% 70.14% 75.83% 43.59% 18.64%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,234 $ 3,277 $ 3,200 $ 3,206 $ 2,990
======== ======== ======== ======== ========
Dividends Investment income--net $ 271 $ 853 $ 901 $ 902 $ 688
Per 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.
++Aggregate total investment return.
++++Dividends per share have been adjusted to reflect a two-for-one
stock split that occurred on December 1, 1994.
See Notes to Financial Statements.
</TABLE>
MuniYield Pennsylvania Fund
April 30, 1998
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. These unaudited financial statements
reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the interim period
presented. All such adjustments are of a normal recurring nature.
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.
(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
supervision 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
financial 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).
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.
MuniYield Pennsylvania Fund
April 30, 1998
(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) 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"). 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, including proceeds from the
issuance of Preferred Shares.
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, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 1998 were $50,344,030 and
$51,160,199, respectively.
Net realized gains for the six months ended April 30, 1998 and net
unrealized gains as of April 30, 1998 were as follows:
Realized Unrealized
Gains Gains
Long-term investments $ 1,984,079 $ 6,683,837
----------- -----------
Total $ 1,984,079 $ 6,683,837
=========== ===========
As of April 30, 1998, net unrealized appreciation for Federal income
tax purposes aggregated $6,683,837, of which $7,256,603 related to
appreciated securities and $572,766 related to depreciated
securities. The aggregate cost of investments at April 30, 1998 for
Federal income tax purposes was $126,333,040.
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
Shares issued and outstanding during the six months ended April 30,
1998 increased by 8,640 as a result of dividend reinvestment and
during the year ended October 31, 1997 remained constant.
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 April 30, 1998 was 3.70%.
As of April 30, 1998, there were 1,600 AMPS shares authorized,
issued and outstanding with a liquidation preference of $25,000 per
share.
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 six months ended
April 30, 1998, Merrill Lynch, Pierce, Fenner & Smith Inc., an
affiliate of FAM, earned $33,372 as commissions.
5. Subsequent Event:
On May 7, 1998, the Fund's Board of Trustees declared an ordinary
income dividend to holders of Common Shares in the amount of
$.070524 per share, payable on May 28, 1998 to shareholders of
record as of May 21, 1998.
