MUNIVEST
PENNSYLVANIA
INSURED
FUND
FUND LOGO
Semi-Annual Report
April 30, 1997
Officers and Trustees
Arthur Zeikel, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
William M. Petty, Vice President
Gerald M. Richard, Treasurer
<PAGE>
Transfer Agents
Common Shares:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Shares:
IBJ Schroder Bank &Trust Company
One State Street
New York, NY 10004
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
NYSE Symbol
MVP
This report, including the financial information herein, is
transmitted to the shareholders of MuniVest Pennsylvania Insured
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 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.
MuniVest Pennsylvania
Insured Fund
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MUNIVEST PENNSYLVANIA INSURED FUND
<PAGE>
The Benefits and
Risks of
Leveraging
MuniVest 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, 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.
<PAGE>
DEAR SHAREHOLDER
For the six-month period ended April 30, 1997, the Common Shares of
MuniVest Pennsylvania Insured Fund earned $0.348 per share income
dividends, which included earned and unpaid dividends of $0.056.
This represents a net annualized yield of 5.62%, based on a month-
end per share net asset value of $12.47. Over the same period, the
total investment return on the Fund's Common Shares was +1.36%,
based on a change in per share net asset value from $12.68 to
$12.47, and assuming reinvestment of $0.352 per share income
dividends.
For the six-month period ended April 30, 1997, the Fund's Auction
Market Preferred Shares had an average yield of 3.34%.
The Municipal Market
Environment
Long-term tax-exempt revenue bonds traded in a relatively narrow
range throughout much of the six months ended April 30, 1997. By mid-
January 1997, municipal bond yields had risen to over 6% as
investors reacted negatively to reports of progressively stronger
domestic economic growth. However, a continued lack of any material
inflationary pressures allowed bond yields to decline to their prior
levels by late February. Bond yields rose again as investors became
increasingly concerned that the US domestic economic strength seen
thus far in 1997 would continue and that the increase in short-term
interest rates administered by the Federal Reserve Board (FRB) in
late March would be the first in a series of such moves designed to
slow the US economy before any dormant inflationary pressures were
awakened. Long-term tax-exempt bond yields rose approximately 15
basis points (0.15%) to almost 6.15% by mid-April. Similarly, long-
term US Treasury bond yields rose over 35 basis points over the same
period to 7.16%. However, in late April economic indicators were
released showing that despite considerable economic growth, any
inflationary pressures, particularly those associated with wage
increases, were well-contained and of no immediate concern. Fixed-
income bond prices staged a significant rally during the last week
of April with long-term US Treasury bond yields falling nearly 20
basis points to end the month at 6.95%. Municipal bond yields, as
measured by the Bond Buyer Revenue Bond Index, declined nearly 15
basis points to stand at 6.01% by April 30, 1997.
<PAGE>
As in recent quarters, the relative stability of long-term tax-
exempt bond yields was supported by low levels of new municipal
bond issuance. Over the past six months, approximately $90 billion
in long-term tax-exempt bonds was underwritten, a decline of more
than 6% versus the corresponding period a year earlier. During the
three months ended April 30, 1997, $41 billion in new long-term
municipal bonds was issued, also a 6% decline in issuance as
compared to the three-month period ended April 30, 1996. Overall
investor demand has remained strong, particularly from property and
casualty insurance companies and individual retail investors. In
recent years, investor demand has increased whenever tax-exempt bond
yields have approached or exceeded the 6% level as they have in the
past few months.
Additionally, in recent months much of the new bond issuance was
dominated by a number of larger issues. These included $710 million
in New York City water bonds, $600 million in state of California
bonds, $1 billion in New York City general obligation bonds, $435
million in Dade County, Florida water and sewer revenue bonds, $450
million in Puerto Rico Electric Authority issues, and $930 million
in Port Authority of New York and New Jersey issues. These bonds
have typically been issued in states with relatively high state
income taxes and consequently generally were underwritten at yields
that were relatively unattractive to residents in other states. This
has exacerbated the general decline in overall issuance in recent
years, making the decrease in supply even more dramatic for general
market investors.
The present economic situation remains nearly ideal. The domestic
economy continues to grow steadily with little, if any, sign of a
resurgence in inflation. Recent economic growth generated
considerable unexpected tax revenues for the Federal government.
Forecasts for the 1997 Federal fiscal deficit were reduced to under
$100 billion, a level not seen since the early 1980s. Such a reduced
Federal deficit enhances the prospect for a balanced Federal budget.
All of these factors support a scenario of steady, or even falling,
interest rates in the coming years. Present annual estimates of
future municipal bond issuance remain centered around $175 billion,
indicating that the current relative scarcity of tax-exempt bonds
should continue for at least the remainder of the year. Should
interest rates begin to decline later this year, either as the
result of a balanced Federal budget or continued benign inflation,
investors are unlikely to be able to purchase long-term municipal
bonds at their currently attractive levels.
Portfolio Strategy
During the past six months, we generally maintained a cautious
approach toward the fixed-income market since powerful economic
growth was effectively neutralized by tame inflation reports.
However, this strong growth/low inflation scenario may have ended in
late March as the FRB decided to strike preemptively against a
future rise in inflation by tightening monetary policy.
<PAGE>
Historically, once the FRB chooses to see economic growth slow down,
it is reasonable to expect several additional increases in short-
term interest rates over the following six months--twelve months.
This is referred to as a tightening cycle, and long-term interest
rates typically rise along with short-term interest rates until
economic growth falters. Although taxable yields could rise as high
as 7.50% from the current level of 6.90% during the tightening
cycle, we expect the impact on municipal bond yields to be muted in
response to the combination of scarce Pennsylvania supply and
increasing retail investor demand as municipal bonds yield 6% or
higher.
The Fund is currently well-positioned for such a turn of events as a
substantial portion of its holdings are in bonds which traditionally
appeal to individual or retail investors and therefore are likely to
outperform other issues in a declining market. As tax-exempt
interest rates rise toward 6%, we are prepared to swap these retail
bonds for aggressively structured and higher-yielding securities.
This will allow us to more fully participate in the bond market
rally we expect later in the year should economic growth finally
begin to falter as a result of tighter monetary policy. If a Federal
budget agreement which is deemed to be credible by bond market
investors is enacted, the decline in yields could happen sooner than
anticipated as further FRB tightenings may not then be needed.
Should this occur, we are prepared to quickly adopt a more
aggressive stance in the bond market. We would expect the Fund to
benefit from a sharp drop in interest rates as many of the
portfolio's higher-coupon bonds can be advance refunded, providing a
boost to the Fund's total return.
In Conclusion
We appreciate your ongoing interest in MuniVest Pennsylvania Insured
Fund, and we look forward to assisting you with your financial needs
in the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
<PAGE>
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(William M. Petty)
William M. Petty
Vice President and
Portfolio Manager
May 27, 1997
Portfolio Abbreviations
To simplify the listings of MuniVest 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.
AMT Alternative Minimum Tax (subject to)
GO Government Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
PCR Pollution Control Revenue Bonds
S/F Single-Family
UPDATES Unit Priced Demand Adjustable Tax-Exempt Securities
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Pennsylvania-- AAA Aaa $ 3,050 Albert Gallatin, Pennsylvania, Area School District, GO,
95.4% UT, Series A, 6.30% due 9/01/2024 (b) $ 3,175
Allegheny County, Pennsylvania, Hospital Development
Authority, Health Center Revenue Bonds (University of
Pittsburgh Medical Center) (b):
AAA Aaa 400 5.375% due 12/01/2025 373
AAA Aaa 2,000 Refunding, Series A, 5.625% due 4/01/2027 1,923
<PAGE>
NR* A1 200 Allegheny County, Pennsylvania, IDA, Revenue Refunding Bonds
(Commercial Development Parkway Center Mall Project), VRDN,
Series A, 4.60% due 5/01/2009 (a) 200
AAA Aaa 1,600 Altoona, Pennsylvania, City Authority, Water Revenue Bonds,
Series A, 6.50% due 11/01/2019 (c) 1,710
AAA Aaa 2,550 Berks County, Pennsylvania, Refunding, Series--1995, 5.85%
due 11/15/2018 (c) 2,558
AAA Aaa 1,000 Bethlehem, Pennsylvania, Area School District, GO, UT, 6%
due 3/15/2016 (b) 1,018
AAA Aaa 3,000 Bethlehem, Pennsylvania, Water Authority, Revenue Refunding
Bonds, 6.25% due 11/15/2001 (b)(e) 3,182
AAA Aaa 2,550 Blair County, Pennsylvania, Hospital Authority Revenue Bonds
(Altoona Hospital Project), 6.375% due 7/01/2013 (d) 2,685
AAA Aaa 1,000 Bucks County, Pennsylvania, IDA, Revenue Refunding Bonds
(Grand View Hospital), Series A, 5.25% due 7/01/2021 (d) 912
AAA Aaa 1,590 Bucks County, Pennsylvania, Water and Sewer Authority, Sewer
System Revenue Bonds, 6.75% due 12/01/2002 (c)(e) 1,736
BBB+ NR* 1,500 Cumberland County, Pennsylvania, Municipal Authority Revenue
Bonds (Presbyterian Homes Inc. Project), 6% due 12/01/2026 1,452
Delaware County, Pennsylvania, IDA, PCR:
AA Aa2 100 (BP Oil Inc. Project), UPDATES, 4.40% due 12/01/2009 (a) 100
AAA Aaa 2,000 (Philadelphia Electric Company Project), Series A, 7.375%
due 4/01/2021 (d) 2,178
AAA Aaa 5,000 Exeter Township, Pennsylvania, Sewer Authority, Revenue
Refunding Bonds (Berks County), 6.20% due 7/15/2022 (b) 5,122
AAA Aaa 2,750 Hampton Township, Pennsylvania, School District, GO, UT,
6.75% due 11/15/2004 (d)(e) 3,056
AAA Aaa 3,280 Johnstown, Pennsylvania, Refunding, UT, 6.45% due 10/01/2019
(c) 3,472
<PAGE>
AAA Aaa 3,000 Lehigh County, Pennsylvania, IDA, PCR, Refunding (Pennsylvania
Power & Light Company Project), Series A, 6.40% due
11/01/2021 (b) 3,136
AAA Aaa 3,000 Luzerne County, Pennsylvania, IDA, Exempt Facilities Revenue
Refunding Bonds (Pennsylvania Gas & Water Company Project),
AMT, Series A, 7% due 12/01/2017 (d) 3,298
A- NR* 1,000 Montgomery County, Pennsylvania, IDA, Retirement Community
Revenue Refunding Bonds (Adult Communities Total Services),
Series A, 5.875% due 11/15/2022 962
AAA Aaa 3,000 North Penn, Pennsylvania, Water Authority, Water Revenue Bonds,
7% due 11/01/2004 (c)(e) 3,400
AAA Aaa 1,000 Northeastern Pennsylvania, Hospital and Education Authority,
College Revenue Bonds (Luzerne County Community College),
6.625% due 8/15/2015 (d) 1,073
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 (d) 1,837
BBB Baa1 2,500 Pennsylvania Economic Development Financing Authority,
Wastewater Treatment Revenue Bonds (Sun Company Inc.--R & M
Project), AMT, Series A, 7.60% due 12/01/2024 2,774
AA+ Aa 2,500 Pennsylvania State, HFA, S/F Mortgage, AMT, Series 39B, 6.875%
due 10/01/2024 2,621
AAA Aaa 4,000 Pennsylvania State Higher Education Assistance Agency, Student
Loan Revenue Bonds, AMT, Series C, 7.15% due 9/01/2021 (d) 4,214
AAA Aaa 2,500 Pennsylvania State, IDA, Economic Development Revenue
Refunding Bonds, 5.50% due 1/01/2014 (d) 2,441
A1+ VMIG1++ 1,000 Philadelphia, Pennsylvania, Hospitals and Higher Education
Facilities Authority, Hospital Revenue Bonds (Children's
Hospital Project), VRDN, Series A, 4.40% due 3/01/2027 (a) 1,000
AAA Aaa 5,125 Philadelphia, Pennsylvania, Industrial Development Lease
Authority Revenue Bonds, Series A, 5.375% due 2/15/2027 (b) 4,804
AAA Aaa 1,000 Philadelphia, Pennsylvania, Water and Wastewater Revenue
Refunding Bonds, 5% due 6/15/2019 (b) 893
AAA Aaa 2,000 Solanco, Pennsylvania, School District, GO, UT, 6.30% due
2/15/2014 (c) 2,095
AAA Aaa 3,000 Somerset County, Pennsylvania, General Authority, Commonwealth
Lease Revenue Bonds, 6.25% due 10/15/2001 (c)(e) 3,179
<PAGE>
AAA Aaa 1,725 Valley View, Pennsylvania, School District, Refunding, GO,
UT, Series A, 5% due 11/15/2021 (c) 1,545
Total Investments (Cost--$71,600)--95.4% 74,124
Other Assets Less Liabilities--4.6% 3,571
-------
Net Assets--100.0% $77,695
=======
<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, 1997.
(b)MBIA Insured.
(c)FGIC Insured.
(d)AMBAC Insured.
(e)Prerefunded.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of April 30, 1997
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$71,600,477) (Note 1a) $ 74,123,686
Cash 61,987
Receivables:
Securities sold $ 2,222,142
Interest 1,417,772 3,639,914
------------
Deferred organization expenses (Note 1e) 22,300
Prepaid expenses and other assets 5,578
------------
Total assets 77,853,465
------------
Liabilities: Payables:
Dividends to shareholders (Note 1f) 65,245
Investment adviser (Note 2) 31,696 96,941
------------
Accrued expenses and other liabilities 61,801
------------
Total liabilities 158,742
------------
<PAGE>
Net Assets: Net assets $ 77,694,723
============
Capital: Capital Shares (unlimited number of shares authorized) (Note 4):
Preferred Shares, par value $.05 per share (1,100 shares of
AMPS* issued and outstanding at $25,000 per share liquidation
preference) $ 27,500,000
Common Shares, par value $.10 per share (4,024,856 shares
issued and outstanding) $ 402,486
Paid-in capital in excess of par 55,795,642
Undistributed investment income--net 248,590
Accumulated realized capital losses on investments--net (Note 5) (8,775,204)
Unrealized appreciation on investments--net 2,523,209
------------
Total--Equivalent to $12.47 net asset value per Common Share
(market price--$11.625) 50,194,723
------------
Total capital $ 77,694,723
============
<FN>
*Auction Market Preferred Shares.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended April 30, 1997
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 2,201,141
Income (Note 1d):
Expenses: Investment advisory fees (Note 2) $ 194,416
Commission fees (Note 4) 35,161
Professional fees 34,513
Transfer agent fees 17,265
Printing and shareholder reports 16,067
Trustees' fees and expenses 11,314
Accounting services (Note 2) 10,951
Listing fees 8,165
Amortization of organization expenses (Note 1e) 6,327
Custodian fees 3,640
Pricing fees 2,916
Other 7,265
------------
Total expenses 348,000
------------
Investment income--net 1,853,141
------------
<PAGE>
Realized & Realized gain on investments--net 260,943
Unrealized Gain Change in unrealized appreciation on investments--net (1,095,100)
(Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 1,018,984
(Notes 1b, 1d & 3): ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the Year
Months Ended Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 1997 1996
<S> <S> <C> <C>
Operations: Investment income--net $ 1,853,141 $ 3,873,514
Realized gain (loss) on investments--net 260,943 (886,000)
Change in unrealized appreciation on investments--net (1,095,100) 109
------------ ------------
Net increase in net assets resulting from operations 1,018,984 2,987,623
------------ ------------
Dividends to Investment income--net:
Shareholders Common Shares (1,418,500) (2,910,646)
(Note 1f): Preferred Shares (455,433) (966,790)
------------ ------------
Net decrease in net assets resulting from dividends to
shareholders (1,873,933) (3,877,436)
------------ ------------
Capital Share Value of shares issued to Common Shareholders in reinvestment
Transactions of dividends -- 72,730
(Note 4): ------------ ------------
Net increase in net assets derived from capital share
transactions -- 72,730
------------ ------------
Net Assets: Total decrease in net assets (854,949) (817,083)
Beginning of period 78,549,672 79,366,755
------------ ------------
End of period* $ 77,694,723 $ 78,549,672
============ ============
<FN>
*Undistributed investment income--net $ 248,590 $ 269,382
============ ============
<PAGE>
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
For the
The following per share data and ratios have For the Six Period
been derived from information provided in the Months July 30,
financial statements. Ended 1993++ to
April 30, For the Year Ended October 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1997 1996 1995 1994 1993
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 12.68 $ 12.91 $ 11.54 $ 14.70 $ 14.18
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .45 .97 1.01 1.05 .25
Realized and unrealized gain (loss) on
investments--net (.20) (.23) 1.37 (3.08) .64
-------- -------- -------- -------- --------
Total from investment operations .25 .74 2.38 (2.03) .89
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Shareholders:
Investment income--net (.35) (.73) (.75) (.86) (.13)
Realized gain on investments--net -- -- -- (.06) --
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Shareholders (.35) (.73) (.75) (.92) (.13)
-------- -------- -------- -------- --------
Capital charge resulting from issuance of
Common Shares -- -- -- -- (.05)
-------- -------- -------- -------- --------
Effect of Preferred Share activity:++++
Dividends and distributions to Preferred
Shareholders:
Investment income--net (.11) (.24) (.26) (.20) (.03)
Realized gain on investments--net -- -- -- (.01) --
Capital charge resulting from issuance of
Preferred Shares -- -- -- -- (.16)
-------- -------- -------- -------- --------
Total effect of Preferred Share activity (.11) (.24) (.26) (.21) (.19)
-------- -------- -------- -------- --------
Net asset value, end of period $ 12.47 $ 12.68 $ 12.91 $ 11.54 $ 14.70
======== ======== ======== ======== ========
Market price per share, end of period $ 11.625 $ 11.625 $ 11.875 $ 10.875 $ 15.00
======== ======== ======== ======== ========
<PAGE>
Total Investment Based on market price per share 3.07%+++ 3.98% 16.58% (22.20%) .92%+++
Return:** ======== ======== ======== ======== ========
Based on net asset value per share 1.36%+++ 4.32% 19.44% (15.76%) 4.62%+++
======== ======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement .89%* .90% .83% .51% .90%*
Net Assets:*** ======== ======== ======== ======== ========
Expenses .89%* .90% .95% .86% .90%*
======== ======== ======== ======== ========
Investment income--net 4.76%* 4.91% 5.332% 5.24% 5.27%*
======== ======== ======== ======== ========
Supplemental Net assets, net of Preferred Shares, end
Data: of period (in thousands) $ 50,195 $ 51,050 $ 51,867 $ 46,390 $ 57,869
======== ======== ======== ======== ========
Preferred Shares outstanding, end of period
(in thousands) $ 27,500 $ 27,500 $ 27,500 $ 27,500 $ 27,500
======== ======== ======== ======== ========
Portfolio turnover 32.86% 113.65% 73.19% 93.00% 22.31%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 2,825 $ 2,856 $ 2,886 $ 2,687 $ 3,104
======== ======== ======== ======== ========
Dividends Investment income--net $ 414 $ 879 $ 966 $ 721 $ 119
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.
++Commencement of Operations.
++++The Fund's Preferred Shares were issued on September 2,
1993.
++++++Dividends per share have been adjusted to reflect a two-
for-one stock split that occurred on December 1, 1994.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniVest Pennsylvania Insured 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 MVP. 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 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
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.
<PAGE>
* 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) 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.
2. Investment Advisory Agreement and Transactions
with Affiliates:
<PAGE>
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, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 1997 were $24,042,539 and
$24,906,447, respectively.
Net realized and unrealized gains as of April 30, 1997 were as
follows:
Realized Unrealized
Gains Gains
Long-term investments $ 260,943 $ 2,523,209
------------ ------------
Total $ 260,943 $ 2,523,209
============ ============
As of April 30, 1997, net unrealized appreciation for Federal income
tax purposes aggregated $2,523,209, of which $2,720,594 related to
appreciated securities and $197,385 related to depreciated
securities. The aggregate cost of investments at April 30, 1997 for
Federal income tax purposes was $71,600,477.
4. Capital Shares Transactions:
The Fund is authorized to issue an unlimited number of shares of
beneficial interest, including Preferred Shares, par value $.10 per
share, all of which were initially classified as Common Shares. The
Board of Trustees is authorized, however, to reclassify any unissued
shares of capital without approval of the holders of Common Shares.
Common Shares
For the six months ended April 30, 1997, shares issued and
outstanding remained constant at 4,024,856. At April 30, 1997, total
paid-in capital amounted to $56,198,128.
<PAGE>
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, 1997 was 4.00%.
As of April 30, 1997, there were 1,100 AMPS 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, 1997, Merrill Lynch, Pierce, Fenner & Smith Inc., an
affiliate of FAM, earned $19,594 as commissions.
5. Capital Loss Carryforward:
At October 31, 1996, the Fund had a net capital loss carryforward of
approximately $8,545,000, of which $4,474,000 expires in 2002,
$3,117,000 expires in 2003 and $954,000 expires in 2004. This amount
will be available to offset like amounts of any future taxable
gains.
6. Subsequent Event:
On May 9, 1997, the Fund's Board of Trustees declared an ordinary
income dividend to Common Shareholders in the amount of $.055542 per
share, payable on May 29, 1997 to shareholders of record as of May
19, 1997.
