MUNIYIELD
PENNSYLVANIA
INSURED FUND
FUND LOGO
Semi-Annual Report
April 30, 2000
MuniYield Pennsylvania Insured Fund seeks to provide shareholders
with as high a level of current income exempt from Federal and
Pennsylvania income taxes as is consistent with its investment
policies and prudent investment management by investing primarily in
a portfolio of long-term municipal obligations the interest on
which, in the opinion of bond counsel to the issuer, is exempt from
Federal and Pennsylvania income taxes.
This report, including the financial information herein, is
transmitted to shareholders of MuniYield Pennsylvania Insured Fund
for their information. It is not a prospectus. 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
Insured Fund
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MUNIYIELD PENNSYLVANIA INSURED FUND
The Benefits and
Risks of
Leveraging
MuniYield Pennsylvania Insured 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, their
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.
As a part of its investment strategy, the Fund may invest in certain
securities whose potential income return is inversely related to
changes in a floating interest rate ("inverse floaters"). In
general, income on inverse floaters will decrease when short-term
interest rates increase and increase when short-term interest rates
decrease. Investments in inverse floaters may be characterized as
derivative securities and may subject the Fund to the risks of
reduced or eliminated interest payments and losses of invested
principal. In addition, inverse floaters have the effect of
providing investment leverage and, as a result, the market value of
such securities will generally be more volatile than that of fixed-
rate, tax-exempt securities. To the extent the Fund invests in
inverse floaters, the market value of the Fund's portfolio and the
net asset value of the Fund's shares may also be more volatile than
if the Fund did not invest in these securities.
MuniYield Pennsylvania Insured Fund, April 30, 2000
DEAR SHAREHOLDER
For the six months ended April 30, 2000, the Common Shares of
MuniYield Pennsylvania Insured Fund earned $0.406 per share income
dividends, which included earned and unpaid dividends of $0.070.
This represents a net annualized yield of 6.01%, based on a month-
end per share net asset value of $13.54. Over the same period, the
total investment return on the Fund's Common Shares was +2.82%,
based on a change in per share net asset value from $13.62 to
$13.54, and assuming reinvestment of $0.404 per share income
dividends.
For the six-month period ended April 30, 2000, the Fund's Auction
Market Preferred Shares had an average yield of 3.82% for Series A
and 3.46% for Series B.
The Municipal Market Environment
Since October 1999 through mid-January 2000, fixed-income bond
yields rose steadily higher. US economic growth, in part intensified
by Year 2000 preparations, grew at a 7.3% rate in the fourth quarter
of 1999 and at a 4.2% annual rate for all of 1999. Initial estimates
for the first quarter of 2000 were reported at 5.4%. However,
despite these significant growth rates, no price measure indicator
has shown any considerable signs of future price pressures at the
consumer level, despite the lowest unemployment rates since January
1970. Given no signs of an economic slowdown, the Federal Reserve
Board continued to raise short-term interest rates in November 1999
and again in February and March 2000. In each instance, the Federal
Reserve Board cited both the continued growth of US employment and
the impressive strength of the US equity markets as reasons for
attempting to moderate US economic growth before inflationary price
increases are realized. By mid-January 2000, US Treasury bond yields
rose 60 basis points (0.60%) to 6.75%. Similarly, as measured by the
Bond Buyer Revenue Bond Index, long-term tax-exempt bond yields rose
approximately 20 basis points to 6.35%.
Since mid-January, fixed-income markets have largely ignored strong
economic fundamentals and concentrated on very positive technical
supply factors. Declining bond issuance, both current, and more
importantly, expected future issuance, helped push bond yields lower
from mid-January to mid-April 2000. In late January and early
February 2000, the US Treasury announced its intention to reduce the
number of issues to be auctioned in the quarterly Treasury note and
bond auctions. Furthermore, budgetary surpluses would allow the US
Treasury to repurchase outstanding, higher-couponed Treasury issues,
primarily in the 15-year and longer-term maturity sectors. Both
these actions would result in a significant reduction in the
outstanding supply of long-term US Treasury debt. Domestic and
international investors quickly began to accumulate what was
expected to become a scarce commodity and bond prices quickly rose.
By mid-April 2000, US Treasury bond yields had declined over 100
basis points to 5.67%. However, bond yields rose somewhat during the
last two weeks of the period as economic statistics were released,
indicating that the economic strength seen in late 1999 was
continuing into early 2000. The decline in long-term US Treasury
bond yields resulted in an inverted taxable yield curve as short-
term and intermediate-term interest rates have not fallen
proportionately since the Federal Reserve Board is expected to
continue to raise short-term interest rates. The current inversion
has had much more to do with debt reduction and Treasury buybacks
than with investor expectations of slower economic growth. Over the
last six months, long-term US Treasury bond yields have fallen
almost 20 basis points to close the six-month period ended April 30,
2000 at 5.96%.
Tax-exempt bond yields have also declined in recent months. The
decline has largely been in response to the rally in US Treasury
securities, as well as a continued positive technical supply
environment. States such as California and Maryland have announced
that their large current and anticipated future budget surpluses
will permit the cancellation or postponement of expected bond
issuance. Additionally, some issuers have also initiated tenders to
repurchase existing debt, reducing the supply of tax-exempt bonds in
the secondary market as well. Since their recent peak in January
2000, long-term municipal bond yields declined over 25 basis points
to finish the six-month period ended April 30, 2000 at 6.07%. During
the last six months, municipal bond yields declined just 10 basis
points overall.
The relative underperfomance of the municipal bond market in recent
months has been especially disappointing given the strong technical
position the tax-exempt bond market enjoyed. The issuance of long-
term tax-exempt securities has dramatically declined. Over the last
year, $203 billion in new long-term municipal securities was issued,
a decline of almost 25% compared to the same period a year earlier.
For the six months ended April 30, 2000, approximately $90 billion
in new tax-exempt bonds was underwritten, a decline of more than 25%
compared to the same period in 1999. Although investors received
over $30 billion in coupon payments, bond maturities, and the
proceeds from early bond redemptions, coupled with the highest
municipal bond yields in three years, overall investor demand has
diminished. Long-term municipal bond mutual funds have seen
consistent outflows in recent months as the yields of individual
securities have risen faster than those of larger, more diverse
mutual funds. Over the last four months, tax-exempt mutual funds
have had net redemptions of more than $8 billion. Also, the demand
from property and casualty insurance companies has weakened as a
result of the losses and anticipated losses incurred from a series
of damaging storms across much of the eastern United States.
Additionally, many institutional investors who have in recent years
been attracted to the municipal bond market by historically
attractive tax-exempt bond yield ratios of over 90% found other
asset classes even more attractive. Even with a favorable supply
position, tax-exempt municipal bond yields have underperformed their
taxable counterparts.
Any significantly lower municipal bond yields are still likely to
require weaker US employment growth and consumer spending. The
actions taken in recent months by the Federal Reserve Board should
eventually slow US economic growth. The recent declines in US home
sales are perhaps the first sign that consumer spending is being
slowed by higher interest rates. Until further signs develop, it is
likely that the municipal bond market's current favorable technical
position will dampen significant tax-exempt interest rate volatility
and provide a stable environment for eventual improvement in
municipal bond prices.
Portfolio Strategy
During the six-month period ended April 30, 2000, we continued our
investment strategy of seeking to enhance the level of tax-exempt
income and to decrease the price volatility of the Fund. We focused
on purchasing premium couponed issues in the 11-year - 20-year
maturity range and the sale of long duration bonds. Because of the
steepness in the municipal bond market yield curve, these issues
represented 90% - 95% of the yield available on the long end of the
curve. This maturity sector also provided for greater protection
from any volatility the market has experienced recently. We were
prevented from fully reducing the Fund's duration because of a
scarcity of new issues coming to market that could be defensively
structured.
The Fund's cost of borrowing increased somewhat in recent months as
short-term tax-exempt interest rates rose along with the adjustment
evident in the taxable market. Long-term tax-exempt interest rates
have actually declined modestly, causing the municipal yield curve
to flatten. While this flattening has reduced the incremental yield
enhancement resulting from leveraging the Fund's Common Shares, it
is important to note that in contrast to the inverted shape of the
USTreasury yield curve, the municipal yield curve remained
positively sloped. (For a complete explanation of the benefits and
risks of leveraging, see page 1 of this report to shareholders).
Looking ahead, we expect to maintain our fully invested position in
order to seek to enhance shareholder income. Because tax-exempt bond
yields are expected to remain in a narrow range, we do not
anticipate making any consequential changes to the Fund, and we
expect to continue to maintain our present investment strategy. If
either the US economy or equity markets display any major weakness,
we may adopt a more positive stance in order to enhance portfolio
appreciation.
In Conclusion
On February 7, 2000, the Fund acquired all of the net assets of
MuniHoldings Pennsylvania Insured Fund and MuniVest Pennsylvania
Insured Fund pursuant to a plan of reorganization and was renamed
MuniYield Pennsylvania Insured Fund.
We appreciate your ongoing interest in MuniYield Pennsylvania
Insured Fund, and we look forward to serving your investment needs
in the months and years to come.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Trustee
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(William R. Bock)
William R. Bock
Vice President and Portfolio Manager
June 2, 2000
MuniYield Pennsylvania Insured Fund, April 30, 2000
PROXY RESULTS
During the six-month period ended April 30, 2000, MuniYield
Pennsylvania Insured Fund's Common Shareholders voted on the
following proposals. Proposals 1 and 2 were approved at a
shareholders' meeting on April 27, 2000. Proposal 3 was approved on
December 15, 1999. The description of each proposal and number of
shares voted are as follows:
<TABLE>
<CAPTION>
Shares Voted Shares Withheld
For From Voting
<S> <S> <C> <C>
1. To elect the Fund's Board of Trustees: Terry K. Glenn 5,563,213 102,500
Jack B. Sunderland 5,563,213 102,500
Stephen B. Swensrud 5,563,213 102,500
J. Thomas Touchton 5,563,213 102,500
Fred G. Weiss 5,563,212 102,500
Arthur Zeikel 5,563,212 102,500
<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. 5,545,380 42,184 78,149
3. To approve the Agreement and Plan of Reorganization among
the Fund, MuniVest Pennsylvania Insured Fund and
MuniHoldings Pennsylvania Insured Fund. 3,233,518 61,099 86,082
</TABLE>
During the six-month period ended April 30, 2000, MuniYield
Pennsylvania Insured Fund's Preferred Shareholders voted on the
following proposals. Proposals 1 and 2 were approved at a
shareholders' meeting on April 27, 2000. Proposal 3 was approved on
December 15, 1999. The description of each proposal and number of
shares voted are as follows:
<TABLE>
Shares Voted Shares Withheld
For From Voting
<S> <S> <C> <C>
1. To elect the Fund's Board of Trustees: Terry K. Glenn, M. Colyer Crum,
Laurie Simon Hodrick, Jack B. Sunderland, Stephen B. Swensrud,
J. Thomas Touchton, Fred G. Weiss and Arthur Zeikel
as follows:
Series A 895 0
Series B 947 0
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's
independent auditors for the current fiscal year as follows:
Series A 895 0 0
Series B 920 26 1
3. To approve the Agreement and Plan of Reorganization among
the Fund, MuniVest Pennsylvania Insured Fund and
MuniHoldings Pennsylvania Insured Fund. 1,593 0 7
</TABLE>
MuniYield Pennsylvania Insured Fund, April 30, 2000
Portfolio
Abbreviations
To simplify the listings of MuniYield Pennsylvania Insured 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.
ACES SM Adjustable Convertible
Extendible Securities
AMT Alternative Minimum Tax
(subject to)
COP Certificates of Participation
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
S/F Single-Family
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
Pennsylvania Allegheny County, Pennsylvania, COP (a):
--98.7% NR* Aaa $ 2,500 5% due 12/01/2019 $ 2,209
NR* Aaa 1,000 5% due 12/01/2024 858
Allegheny County, Pennsylvania, Hospital Development Authority
Revenue Bonds:
AAA Aaa 2,000 (Allegheny General Hospital Project), Series A, 6.25% due
9/01/2020 (d) 2,007
NR* VMIG1++ 1,330 (Presbyterian University Hospital), ACES, Series B3, 5.15%
due 3/01/2018 (f) 1,330
NR* A2 3,000 (South Hills Health System), Series A, 6.50% due 5/01/2014 3,015
AAA Aaa 6,000 Allegheny County, Pennsylvania, Port Authority, Special
Transportation Revenue Bonds, 6% due 3/01/2024 (d) 6,053
AAA Aaa 14,500 Allegheny County, Pennsylvania, Sanitation Authority, Sewer
Revenue Bonds, 5.375% due 12/01/2024 (d) 13,465
AAA Aaa 2,550 Berks County, Pennsylvania, GO, Refunding, 5.85% due
11/15/2018 (b) 2,561
AAA Aaa 1,500 Boyertown, Pennsylvania, School District, GO, Refunding,
6.10% due 9/01/2002 (a)(j) 1,543
AAA Aaa 1,000 Bucks County, Pennsylvania, IDA, Revenue Refunding Bonds
(Grand View Hospital), Series A, 5.25% due 7/01/2021 (a) 900
NR* Aaa 4,500 Bucks County, Pennsylvania, Water and Sewer Authority,
Revenue Refunding Bonds (Neshaminy Interceptor Sewer System),
5.60% due 6/01/2024 (a) 4,338
Delaware County, Pennsylvania, IDA, PCR, Refunding:
AA P1 300 (BP Exploration and Oil), VRDN, 5.40% due 10/01/2019 (f) 300
AAA Aaa 2,000 (Philadelphia Electric Company Project), Series A, 7.375%
due 4/01/2021 (a) 2,078
A1+ VMIG1++ 5,000 Geisinger Authority, Pennsylvania, Health System Revenue
Refunding Bonds (Penn State-Geisinger Health), VRDN, Series B,
5.40% due 8/15/2028 (f) 5,000
AAA Aaa 4,000 Gettysburg, Pennsylvania, Municipal Authority, College
Revenue Refunding Bonds, 5% due 8/15/2023 (d) 3,483
AAA Aaa 3,280 Johnstown, Pennsylvania, GO, Refunding, 6.45% due
10/01/2019 (b) 3,402
AAA Aaa 7,000 Lehigh County, Pennsylvania, General Purpose Authority
Revenue Bonds (Saint Luke's Hospital--Bethlehem), 6.25%
due 7/01/2022 (a) 7,060
AAA Aaa 6,000 Lehigh County, Pennsylvania, IDA, PCR, Refunding (Pennsylvania
Power and Light Company Project), Series A, 6.40% due
11/01/2021 (d) 6,185
AAA Aaa 4,570 Lower Providence Township, Pennsylvania, Sewer Authority,
Sewer Revenue Refunding Bonds, 5.25% due 5/01/2022 (d) 4,159
A A3 1,500 Luzerne County, Pennsylvania, IDA, Exempt Facilities Revenue
Bonds (Pennsylvania Gas and Water Company Project), AMT,
Series B, 7.125% due 12/01/2022 1,582
Luzerne County, Pennsylvania, IDA, Exempt Facilities Revenue
Refunding Bonds (Pennsylvania Gas and Water Company
Project), AMT, Series A:
A A3 2,500 7.20% due 10/01/2017 2,636
AAA Aaa 5,000 7% due 12/01/2017 (a) 5,372
</TABLE>
MuniYield Pennsylvania Insured Fund, April 30, 2000
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
<S> <S> <S> <C> <S> <C>
Pennsylvania AAA Aaa $ 1,000 Northeastern Pennsylvania, Hospital and Education Authority,
(concluded) College Revenue Bonds (Luzerne County Community College),
6.625% due 2/15/2005 (a)(j) $ 1,065
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 (a) 1,764
AAA NR* 4,000 Norwin, Pennsylvania, School District, GO, 6% due 4/01/2024 (b) 4,035
BBB Baa2 6,500 Pennsylvania Economic Development Financing Authority,
Wastewater Treatment Revenue Bonds (Sun Company Inc.--
R & M Project), AMT, Series A, 7.60% due 12/01/2024 6,879
AA+ Aa2 2,000 Pennsylvania HFA, Revenue Bonds, RIB, AMT, 7.614% due
4/01/2025 (g) 1,963
AAA Aaa 4,000 Pennsylvania HFA, Revenue Refunding Bonds (Rental Housing),
6.50% due 7/01/2023 (e) 4,030
AA+ Aa2 2,630 Pennsylvania HFA, S/F Mortgage Revenue Bonds, AMT,
Series 34B, 7% due 4/01/2024 (h) 2,689
Pennsylvania HFA, S/F Mortgage Revenue Refunding Bonds, AMT:
AA+ Aa2 2,500 Series 39B, 6.875% due 10/01/2024 2,549
AA+ Aa2 2,970 Series 41B, 6.65% due 4/01/2025 3,031
AA+ Aa2 2,720 Series 60A, 5.85% due 10/01/2027 2,571
AA+ Aa2 1,000 Series 62A, 5.50% due 10/01/2022 927
AA+ Aa2 4,000 Series 67A, 5.90% due 10/01/2030 3,861
AAA Aaa 6,900 Pennsylvania Intergovernmental Co-Op Authority, Special Tax
Revenue Refunding Bonds (Philadelphia Funding Program),
5% due 6/15/2021 (b) 6,064
Pennsylvania State, GO, Refunding, First Series:
AA Aa3 8,605 6% due 1/15/2011 9,070
AAA Aaa 5,770 6% due 1/15/2017 (d) 5,926
AAA Aaa 11,000 Pennsylvania State, GO, Second Series, 5.75% due 10/01/2019 (d) 10,936
AAA Aaa 3,000 Pennsylvania State Higher Education Assistance Agency, Capital
Acquisition Revenue Bonds, 5.875% due 12/15/2025 (d) 2,966
AAA Aaa 6,000 Pennsylvania State Higher Education Assistance Agency, Student
Loan Revenue Bonds, AMT, Series C, 7.15% due 9/01/2021 (a) 6,381
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 (d) 1,275
Pennsylvania State Higher Educational Facilities Authority,
Revenue Refunding Bonds:
A1+ NR* 1,000 (Carnegie Mellon University), VRDN, Series A, 5.40% due
11/01/2025 (f) 1,000
A1+ NR* 1,000 (Carnegie Mellon University), VRDN, Series B, 5.40% due
11/01/2027 (f) 1,000
A1+ NR* 700 (Carnegie Mellon University), VRDN, Series C, 5.40% due
11/01/2029 (f) 700
A1+ NR* 100 (Carnegie Mellon University), VRDN, Series D, 5.40% due
11/01/2030 (f) 100
AA Baa3 1,400 (Philadelphia University), 6% due 6/01/2029 1,362
AAA Aaa 1,000 (Temple University), First Series, 5.25% due 4/01/2017 (d) 941
AAA Aaa 2,000 (Temple University), First Series, 5% due 4/01/2019 (d) 1,782
AAA Aaa 4,000 Pennsylvania State Turnpike Commission, Oil Franchise Tax
Revenue Refunding Bonds, Senior Series A, 5% due 12/01/2023 (a) 3,480
AAA Aaa 6,800 Philadelphia, Pennsylvania, Authority for Industrial
Development, Airport Revenue Bonds (Philadelphia Airport
System Project), AMT, Series A, 5.125% due 7/01/2028 (b) 5,794
AAA Aaa 9,125 Philadelphia, Pennsylvania, Authority for Industrial
Development, Lease Revenue Bonds (City of Philadelphia
Project), Series A, 5.375% due 2/15/2027 (d) 8,345
AAA Aaa 8,500 Philadelphia, Pennsylvania, GO, 5% due 3/15/2028 (c) 7,262
A1+ VMIG1++ 200 Philadelphia, Pennsylvania, Hospitals and Higher Education
Facilities Authority, Hospital Revenue Bonds (Children's
Hospital of Philadelphia Project), VRDN, 5.40% due 3/01/2027 (f) 200
AAA NR* 3,000 Philadelphia, Pennsylvania, Hospitals and Higher Education
Facilities Authority, Hospital Revenue Refunding Bonds
(Presbyterian Medical Center), 6.65% due 12/01/2019 (i) 3,315
AAA Aaa 6,250 Philadelphia, Pennsylvania, Parking Authority, Airport
Parking Revenue Bonds, 5.25% due 9/01/2022 (c) 5,684
AAA Aaa 5,500 Philadelphia, Pennsylvania, Parking Authority, Parking
Revenue Refunding Bonds, 5% due 2/01/2027 (a) 4,719
Philadelphia, Pennsylvania, School District, GO, Series B (a):
AAA Aaa 1,625 5.375% due 4/01/2022 1,511
AAA Aaa 7,000 5.375% due 4/01/2027 6,426
AAA Aaa 2,000 Philadelphia, Pennsylvania, Water and Wastewater Revenue
Bonds, Series A, 5% due 8/01/2017 (a) 1,809
AAA Aaa 2,400 Philadelphia, Pennsylvania, Water and Wastewater Revenue
Refunding Bonds, 6.25% due 8/01/2009 (d) 2,565
AAA Aaa 3,070 Pittsburgh, Pennsylvania, GO, Series A, 5.65% due 9/01/2017 (b) 3,060
Pittsburgh, Pennsylvania, Public Parking Authority, Parking
Revenue Bonds (a):
AAA Aaa 1,460 5.80% due 12/01/2017 1,471
AAA Aaa 1,525 5.85% due 12/01/2018 1,535
AAA Aaa 2,000 Pittsburgh, Pennsylvania, Water and Sewer Authority, Water
and Sewer System Revenue Refunding Bonds, First Lien, Series A,
5% due 9/01/2018 (b) 1,796
Schuylkill County, Pennsylvania, IDA, Resource Recovery Revenue
Refunding Bonds (Northeastern Power Company), VRDN (f):
A1+ NR* 1,300 AMT, Series B, 5.95% due 12/01/2022 1,300
A1+ NR* 600 Series A, 5.85% due 12/01/2022 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 2,616
Southeastern Pennsylvania Transportation Authority, Special
Revenue Bonds (b):
AAA Aaa 2,525 5.375% due 3/01/2022 2,360
AAA Aaa 2,000 Series A, 5.25% due 3/01/2017 1,887
AA+ Aaa 3,985 Swarthmore Borough Authority, Pennsylvania, College Revenue
Refunding Bonds, 6% due 9/15/2020 4,011
AAA Aaa 3,500 Washington County, Pennsylvania, Capital Funding Authority
Revenue Bonds (Capital Projects and Equipment Program),
6.15% due 12/01/2029 (a) 3,567
Total Investments (Cost--$240,938)--98.7% 239,716
Other Assets Less Liabilities--1.3% 3,121
--------
Net Assets--100.0% $242,837
========
(a)AMBAC Insured.
(b)FGIC Insured.
(c)FSA Insured.
(d)MBIA Insured.
(e)FNMA Collateralized.
(f)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, 2000.
(g)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, 2000.
(h)FHA Insured.
(i)Escrowed to maturity.
(j)Prerefunded.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
MuniYield Pennsylvania Insured Fund, April 30, 2000
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of April 30, 2000
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$240,938,024) $239,715,932
Cash 28,766
Receivables:
Interest $ 3,546,200
Securities sold 701,880 4,248,080
------------
Prepaid expenses and other assets 10,135
------------
Total assets 244,002,913
------------
Liabilities: Payables:
Dividends to shareholders 839,348
Reorganization costs 212,471
Investment adviser 12,380 1,064,199
------------
Accrued expenses and other liabilities 101,711
------------
Total liabilities 1,165,910
------------
Net Assets: Net assets $242,837,003
============
Capital: Capital Shares (unlimited number of shares authorized):
Preferred Shares, par value $.05 per share (3,520 shares
of AMPS* issued and outstanding at $25,000 per share
liquidation preference) $ 88,000,000
Common Shares, par value $.10 per share (11,434,069 shares
issued and outstanding) $ 1,143,407
Paid-in capital in excess of par 170,409,652
Undistributed investment income--net 1,124,017
Accumulated realized capital losses on investments--net (15,277,726)
Accumulated distributions in excess of realized capital gains
on investments--net (1,340,255)
Unrealized depreciation on investments--net (1,222,092)
------------
Total--Equivalent to $13.54 net asset value per Common
Share (market price--$11.5625) 154,837,003
------------
Total capital $242,837,003
============
*Auction Market Preferred Shares.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended April 30, 2000
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 5,182,837
Income:
Expenses: Investment advisory fees $ 438,781
Reorganization expenses 312,948
Commission fees 81,181
Transfer agent fees 41,297
Professional fees 34,970
Accounting services 29,746
Trustees' fees and expenses 14,844
Printing and shareholder reports 11,422
Custodian fees 7,002
Pricing fees 4,046
Listing fees 3,631
Other 7,428
------------
Total expenses 987,296
------------
Investment income--net 4,195,541
------------
Realized & Realized loss on investments--net (5,599,494)
Unrealized Change in unrealized depreciation on investments--net 7,529,355
Gain (Loss) on ------------
Investments--Net: Net Increase in Net Assets Resulting from Operations $ 6,125,402
============
See Notes to Financial Statements.
</TABLE>
MuniYield Pennsylvania Insured Fund, April 30, 2000
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 2000 1999
<S> <S> <C> <C>
Operations: Investment income--net $ 4,195,541 $ 6,162,649
Realized loss on investments--net (5,599,494) (247,464)
Change in unrealized appreciation/depreciation on investments--net 7,529,355 (10,834,889)
------------ ------------
Net increase (decrease) in net assets resulting from operations 6,125,402 (4,919,704)
------------ ------------
Dividends & Investment income--net:
Distributions to Common Shares (3,054,661) (5,107,217)
Shareholders: Preferred Shares (1,143,521) (1,089,472)
Realized gain on investments--net:
Common Shares -- (1,443,729)
Preferred Shares -- (184,564)
In excess of realized gain on investments--net:
Common Shares -- (1,188,339)
Preferred Shares -- (151,916)
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (4,198,182) (9,165,237)
------------ ------------
Capital Share Proceeds from issuance of Common Shares resulting from
Transactions: reorganization 72,664,149 --
Proceeds from issuance of Preferred Shares resulting
from reorganization 48,000,000 --
Value of shares issued to Common Shareholders in reinvestment
of dividends and distributions -- 1,563,742
------------ ------------
Net increase in net assets derived from capital share
transactions 120,664,149 1,563,742
------------ ------------
Net Assets: Total increase (decrease) in net assets 122,591,369 (12,521,199)
Beginning of period 120,245,634 132,766,833
------------ ------------
End of period* $242,837,003 $120,245,634
============ ============
*Undistributed investment income--net $ 1,124,017 $ 1,126,658
============ ============
See Notes to Financial Statements.
</TABLE>
<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
April 30, For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.62 $ 16.01 $ 15.86 $ 15.32 $ 15.36
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .45 1.05 1.12 1.13 1.15
Realized and unrealized gain (loss) on
investments--net .01 (1.87) .46 .66 (.03)
-------- -------- -------- -------- --------
Total from investment operations .46 (.82) 1.58 1.79 1.12
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Shareholders:
Investment income--net (.40) (.87) (.88) (.89) (.91)
Realized gain on investments--net -- (.25) (.27) (.09) --
In excess of realized gain on
investments--net -- (.20) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Shareholders (.40) (1.32) (1.15) (.98) (.91)
-------- -------- -------- -------- --------
Effect of Preferred Share activity:++++
Dividends and distributions to Preferred
Shareholders:
Investment income--net (.14) (.19) (.18) (.24) (.25)
Realized gain on investments--net -- (.03) (.10) (.03) --
In excess of realized gain on
investments--net -- (.03) -- -- --
-------- -------- -------- -------- --------
Total effect of Preferred Share activity (.14) (.25) (.28) (.27) (.25)
-------- -------- -------- -------- --------
Net asset value, end of period $ 13.54 $ 13.62 $ 16.01 $ 15.86 $ 15.32
======== ======== ======== ======== ========
Market price per share, end of period $11.5625 $ 12.25 $ 16.50 $14.8125 $ 14.125
======== ======== ======== ======== ========
Total Investment Based on market price per share (2.38%)+++ (18.98%) 19.82% 12.15% 9.48%
Return:** ======== ======== ======== ======== ========
Based on net asset value per share 2.82%+++ (7.16%) 8.58% 10.71% 6.30%
======== ======== ======== ======== ========
Ratios Based on Total expenses, excluding reorganization
Average Net expenses*** 1.18%* 1.15% 1.11% 1.14% 1.13%
Assets of ======== ======== ======== ======== ========
Common Shares: Total expenses*** 1.41%* 1.15% 1.11% 1.14% 1.13%
======== ======== ======== ======== ========
Total investment income--net*** 7.69%* 7.00% 7.01% 7.30% 7.43%
======== ======== ======== ======== ========
Amount of dividends to Preferred
Shareholders 2.01%* 1.24% 1.15% 1.52% 1.62%
======== ======== ======== ======== ========
Investment income--net, to Common
Shareholders 5.68%* 5.76% 5.86% 5.78% 5.81%
======== ======== ======== ======== ========
Ratios Based on Total expenses, excluding reorganization
Total Average Net expenses .77%* .79% .77% .79% .78%
Assets:***++ ======== ======== ======== ======== ========
Total expenses .92%* .79% .77% .79% .78%
======== ======== ======== ======== ========
Total investment income--net 4.98%* 4.82% 4.90% 5.07% 5.14%
======== ======== ======== ======== ========
Ratios Based on Dividends to Preferred Shareholders 3.69%* 2.73% 2.62% 3.41% 3.60%
Average ======== ======== ======== ======== ========
Net Assets of
Preferred Shares:
Supplemental Net assets, net of Preferred Shares,
Data: end of period (in thousands) $154,837 $ 80,246 $ 92,767 $ 91,071 $ 88,001
======== ======== ======== ======== ========
Preferred Shares outstanding, end of
period (in thousands) $ 88,000 $ 40,000 $ 40,000 $ 40,000 $ 40,000
======== ======== ======== ======== ========
Portfolio turnover 22.36% 53.28% 60.52% 70.14% 75.83%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 2,760 $ 3,006 $ 3,319 $ 3,277 $ 3,200
======== ======== ======== ======== ========
Dividends Series A--Investment income--net $ 476 $ 681 $ 655 $ 853 $ 901
Per Share ======== ======== ======== ======== ========
On Preferred Series B--Investment income--net $ 199 -- -- -- --
Shares ======== ======== ======== ======== ========
Outstanding:
*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 charges.
***Do not reflect the effect of dividends to Preferred Shareholders.
++Includes Common and Preferred Share average net assets.
++++The Fund's Preferred Shares were issued on November 30, 1992
(Series A) and February 7, 2000 (Series B).
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
MuniYield Pennsylvania Insured Fund, April 30, 2000
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniYield Pennsylvania Insured Fund (the "Fund")(formerly MuniYield
Pennsylvania Fund) is registered under the Investment Company Act of
1940 as a non-diversified, closed-end management investment company.
The Fund's financial statements are prepared in accordance with
accounting principles generally accepted in the United States of
America, which may require the use of management accruals and
estimates. 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 written or purchased are valued at the last
sale price in the case of exchange-traded options. In the case of
options traded in the over-the-counter market, valuation is the last
asked price (options written) or the last bid price (options
purchased). Securities with remaining maturities of sixty days or
less are valued at amortized cost, which approximates market value.
Securities and assets 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 investment strategies to seek to increase or decrease the
level of risk to which the Fund is exposed more quickly and
efficiently than transactions in other types of instruments. 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.
(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. Distributions in excess of
realized capital gains are due primarily to differing tax treatments
for futures transactions.
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 .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, 2000 were $41,555,030 and
$36,192,020, respectively.
Net realized losses for the six months ended April 30, 2000 and net
unrealized losses as of April 30, 2000 were as follows:
Realized Unrealized
Losses Losses
Long-term investments $ (4,877,314) $ (1,222,092)
Financial futures contracts (722,180) --
------------- ------------
Total $ (5,599,494) $ (1,222,092)
============= ============
As of April 30, 2000, net unrealized depreciation for Federal income
tax purposes aggregated $1,222,092, of which $4,265,488 related to
appreciated securities and $5,487,580 related to depreciated
securities. The aggregate cost of investments at April 30, 2000 for
Federal income tax purposes was $240,938,024.
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,
2000 increased by 5,542,663 as a result of issuance of Common Shares
from reorganization and during the year ended October 31, 1999
increased by 98,662 as a result of dividend reinvestment.
Preferred Shares
Auction Market Preferred Shares ("AMPS") are Preferred Shares of the
Fund, with a par value of $.05 per share and a liquidation
preference of $25,000 per share, that entitle their holders to
receive cash dividends at an annual rate that may vary for the
successive dividend periods. The yields in effect at April 30, 2000
were 4.70% for Series A and 4.40% for Series B.
Shares issued and outstanding during the six months ended April 30,
2000 increased by 1,920 as a result of issuance of Preferred Shares
from reorganization and during the year ended October 31, 1999
remained constant.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from .25% to .375%,
calculated on the proceeds of each auction. For the six months ended
April 30, 2000, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
an affiliate of FAM, earned $45,783 as commissions.
5. Capital Loss Carryforward:
At October 31, 1999, the Fund had a net capital loss carryforward of
approximately $353,000, all of which expires in 2007. This amount
will be available to offset like amounts of any future taxable
gains.
6. Acquisition of Other FAM-Managed Investment Companies:
On February 7, 2000, the Fund acquired all of the net assets of
MuniHoldings Pennsylvania Insured Fund and MuniVest Pennsylvania
Insured Fund pursuant to a plan of reorganization. The acquisition
was accomplished by a tax-free exchange of the following capital
shares:
Common Shares AMPS
Exchanged Exchanged
MuniHoldings Pennsylvania
Insured Fund 2,170,570 820
MuniVest Pennsylvania Insured
Fund 4,042,798 1,100
MuniYield Pennsylvania Insured Fund, April 30, 2000
NOTES TO FINANCIAL STATEMENTS (concluded)
In exchange for these shares, the Fund issued 5,542,663 Common
Shares and 1,920 AMPS Shares. As of that date, net assets of the
acquired funds, including unrealized depreciation and accumulated
net realized capital losses, were as follows:
Accumulated
Net Unrealized Net Realized
Assets Depreciation Capital Losses
MuniHoldings
Pennsylvania
Insured Fund $46,498,659 $4,568,915 $1,583,563
MuniVest
Pennsylvania
Insured Fund $74,165,490 $1,690,594 $8,094,669
The aggregate net assets of the Fund immediately after the
acquisition amounted to $237,900,271.
7. Subsequent Event:
On May 5, 2000, the Fund's Board of Trustees declared an ordinary
income dividend to holders of Common Shares in the amount of
$.070255 per share, payable on May 30, 2000 to shareholders of
record as of May 16, 2000.
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute all or a portion of its
net investment income to its shareholders on a monthly basis. In
order to provide shareholders with a more consistent yield to the
current trading price of shares 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.
QUALITY PROFILE
The quality ratings of securities in the Fund as of April 30, 2000
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 75.5%
AA/Aa 11.5
A/A 4.1
BBB/Baa 2.8
Other++ 4.8
++Temporary investments in short-term municipal securities.
OFFICERS AND TRUSTEES
Terry K. Glenn, President and Trustee
M. Colyer Crum, Trustee
Laurie Simon Hodrick, Trustee
Jack B. Sunderland, Trustee
Stephen B. Swensrud, Trustee
J. Thomas Touchton, Trustee
Fred G. Weiss, Trustee
Arthur Zeikel, Trustee
Vincent R. Giordano, Senior Vice President
William R. Bock, Vice President
Kenneth A. Jacob, Vice President
Donald C. Burke, Vice President and Treasurer
Alice A. Pellegrino, 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:
The Bank of New York
100 Church Street
New York, NY 10286
NYSE Symbol
MPA
Donald Cecil and Edward H. Meyer, Trustees of MuniYield Pennsylvania
Insured Fund, have recently retired. The Fund's Board of Trustees
wishes Mr. Cecil and Mr. Meyer well in their retirements.
