MUNIVEST
PENNSYLVANIA
INSURED
FUND
[FUND LOGO]
STRATEGIC
Performance
Annual Report
October 31, 1997
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 #16744 -- 10/97
[RECYCLE LOGO]
Printed on post-consumer recycled paper
MUNIVEST PENNSYLVANIA INSURED FUND
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 on 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.
MuniVest Pennsylvania Insured Fund, October 31, 1997
DEAR SHAREHOLDER
For the year ended October 31, 1997, the Common Shares of MuniVest
Pennsylvania Insured Fund earned $0.708 per share income dividends,
which included earned and unpaid dividends of $0.063. This represents
a net annualized yield of 5.33%, based on a month-end per share net
asset value of $13.28. Over the same period, the total investment
return on the Fund's Common Stock was +11.12%, based on a change in
per share net asset value from $12.68 to $13.28, and assuming
reinvestment of $0.706 per share income dividends.
For the six-month period ended October 31, 1997, the total investment
return on the Fund's Common Shares was +9.63%, based on a change in
per share net asset value from $12.47 to $13.28, and assuming
reinvestment of $0.353 per share income dividends.
For the six-month period ended October 31, 1997, the Fund's Auction
Market Preferred Shares had an average yield of 3.32%.
The Municipal Market Environment
Long-term interest rates generally declined during the six-month
period ended October 31, 1997. The general financial environment has
remained one of solid economic growth tempered by few or no
inflationary pressures. While economic growth has been conducive to
declining bond yields, it has remained strong enough to suggest that
the Federal Reserve Board (FRB) might find it necessary to raise
short-term interest rates. This would be intended to slow economic
growth and ensure that any incipient inflationary pressures would be
curtailed. There were investor concerns that the FRB would be forced
to raise interest rates prior to year-end, thus preventing an even
more dramatic decline in interest rates. Long-term tax-exempt revenue
bonds, as measured by the Bond Buyer Revenue Bond Index, declined over
50 basis points (0.50%) to end the six-month period ended October 31,
1997 at 5.60%.
Similarly, long-term US Treasury bond yields generally moved lower
during most of the six-month period ended October 31, 1997. However,
the turmoil in the world's equity markets during the last week in
October has resulted in a significant rally in the Treasury bond
market. The US Treasury bond market was the beneficiary of a flight to
quality mainly by foreign investors whose own domestic markets have
continued to be very volatile. Prior to the initial decline in Asian
equity markets, long-term US Treasury bond yields were essentially
unchanged. By the end of October, US Treasury bond yields declined 80
basis points to 6.15%, their lowest level of 1997.
The tax-exempt bond market's continued underperformance as compared to
its taxable counterpart has been largely in response to its ongoing
weakening technical position. As municipal bond yields have declined,
municipalities have hurriedly rushed to refinance outstanding higher-
couponed debt with new issues financed at present low rates.
During the last six months, over $118 billion in new long-term tax-
exempt issues were underwritten, an increase of over 25% versus the
comparable period a year ago. As interest rates have continued to
decline, these refinancings have intensified municipal bond issuance.
During the past three months, approximately $60 billion in new long-
term municipal securities were underwritten, an increase of over 34%
as compared to the October 31, 1996 quarter.
The recent trend toward larger and larger bond issues has also
continued. However, issues of such magnitude usually must be
attractively priced to ensure adequate investor interest. Obviously,
the yields of other municipal bond issues are impacted by the yield
premiums such large issuers have been required to pay. Much of the
municipal bond market's recent underperformance can be traced to
market pressures that these large bond issuances have exerted.
In our opinion, the recent correction in world equity markets has
enhanced the near-term prospects for continued low, if not declining,
interest rates in the United States. It is likely that the recent
correction will result in slower US domestic growth in the coming
months. This decline is likely to be generated in part by reduced US
export growth. Additionally, some decline in consumer spending also
can be expected in response to reduced consumer confidence. Perhaps
more importantly, it is likely that barring a dramatic and unexpected
resurgence in domestic growth, the FRB may be unwilling to raise
interest rates until the full impact of the equity market's
corrections can be established.
All of these factors suggest that for at least the near term, interest
rates, including tax-exempt bond yields, are unlikely to rise by any
appreciable amount. It is probable that municipal bond yields will
remain under some pressure as a result of continued strong new-issue
supply. However, the recent pace of municipal bond issuance is likely
to be unsustainable. Continued increases in bond issuance will require
lower tax-exempt bond yields to generate the economic savings
necessary for additional municipal bond refinancing. With tax-exempt
bond yields at already attractive yield ratios relative to US Treasury
bonds (approximately 90% at the end of October), any further pressure
on the municipal market may represent an attractive investment
opportunity.
Portfolio Strategy
During the first part of the six-month period ended October 31, 1997,
we basically maintained the strategy we had adopted in the six-month
period ended July 31, 1997. This was because the US economy was
growing at an above-average pace, with no signs that a slowdown was
imminent. The FRB chose not to raise interest rates, which would have
resulted in higher short-term interest rates. This decision was based
on strong economic growth, with no visible signs of inflationary
pressures.
During the last two months of the six-month period, the Fund's
structure allowed it to perform well during periods of market
improvement. In addition, we were able to take advantage of buying
opportunities that occurred as a result of large increases in new-
issue supply that started coming to market in August.
We continued our strategy of purchasing higher-quality, current
coupon, income-oriented securities with extended call protection and
selling short-call bonds. Through midSeptember when our outlook became
positive toward the market, we believed that risk was biased toward
lower rather than higher interest rates. We adopted a more aggressive
portfolio strategy by reducing the Fund's cash reserve level, selling
prerefunded bonds and increasing the Fund's duration with the purchase
of performance-oriented securities.
Looking ahead, we expect to remain fully invested in the coming months
in order to seek to enhance the Fund's dividend yield and performance.
We believe that the turmoil in the world's equity markets in October
is likely to remove concerns regarding the FRB's raising interest
rates during the remainder of 1997 and early 1998.
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,
/S/ARTHUR ZEIKEL
Arthur Zeikel
President
/S/VINCENT R. GIORDANO
Vincent R. Giordano
Senior Vice President
/S/WILLIAM R. BOCK
William R. Bock
Vice President and Portfolio Manager
December 3, 1997
We are pleased to announce that William R. Bock is responsible for the
day-to-day management of MuniVest Pennsylvania Insured Fund. Mr. Bock
has been employed by Merrill Lynch Asset Management, L.P. (an
affiliate of the Fund's investment adviser) since 1989 as Vice
President and Portfolio Manager. Prior thereto, Mr. Bock was employed
by Bear Stearns and E.F. Hutton in their Tax-Exempt Bond Divisions
from 1978 to 1989.
<TABLE>
<CAPTION>
PROXY RESULTS
During the six-month period ended October 31, 1997, MuniVest Pennsylvania Insured Fund Common Shareholders voted on the
following proposals. The proposals were approved at a shareholders' meeting on September 18, 1997. The description of each
proposal and number of shares voted are as follows:
Shares Voted Shares Withheld
For From Voting
<S> <C> <C> <C>
1. To elect the Fund's Board of Trustees: Herbert I. London 3,856,529 105,289
Robert R. Martin 3,859,144 102,674
Andre F. Perold 3,858,004 103,814
Arthur Zeikel 3,859,144 102,674
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To select Deloitte & Touche LLP as the Fund's independent auditors. 3,859,502 52,587 49,729
During the six-month period ended October 31, 1997, MuniVest Pennsylvania Insured Fund Preferred Shareholders voted on the
following proposals. The proposals were approved at a shareholders' meeting on September 18, 1997. The description of each
proposal and number of shares voted are as follows:
<CAPTION>
Shares Voted Shares Withheld
For From Voting
<S> <C> <C> <C>
1. To elect the Fund's Board of Trustees: James H. Bodurtha 1,089 11
Herbert I. London 1,089 11
Robert R. Martin 1,089 11
Joseph L. May 1,089 11
Andre F. Perold 1,089 11
Arthur Zeikel 1,089 11
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To select Deloitte & Touche LLP as the Fund's independent auditors. 1,089 11 0
</TABLE>
<TABLE>
<CAPTION>
MuniVest Pennsylvania Insured Fund, October 31, 1997
SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <C> <C>
Pennsylvania -- AAA Aaa $3,050 Albert Gallatin, Pennsylvania, Area School District,
102.7% GO, UT, Series A, 102.7% 6.30% due 9/01/2004 (b)(e) $3,385
AAA Aaa 1,500 Allegheny County, Pennsylvania, Hospital Development
Authority, Health Center Revenue Bonds (University of
Pittsburgh Medical Center), Series B, 5.125% due 7/01/2022
(b) 1,444
NR* Aa3 200 Allegheny County, Pennsylvania, IDA, Revenue Refunding Bonds
(Commercial Development Parkway -- Center Mall Project),
VRDN, Series A, 3.65% due 5/01/2009 (a) 200
AAA Aaa 3,000 Allegheny County, Pennsylvania, Sanitation Authority, Sewer
Revenue Bonds, 5.375% due 12/01/2024 (b) 2,993
AAA Aaa 1,600 Altoona, Pennsylvania, City Authority, Water Revenue Bonds,
Series A, 6.50% due 11/01/2019 (c) 1,811
AAA Aaa 2,550 Berks County, Pennsylvania, Refunding, Series 1995, 5.85% due
11/15/2018 (c) 2,643
AAA Aaa 1,000 Bethlehem, Pennsylvania, Area School District, UT, 6% due
3/01/2006 (b)(e) 1,102
AAA Aaa 2,550 Blair County, Pennsylvania, Hospital Authority Revenue Bonds
(Altoona Hospital Project), 6.375% due 7/01/2013 (d) 2,771
AAA Aaa 1,000 Bucks County, Pennsylvania, IDA, Revenue Refunding Bonds (Grand
View Hospital), Series A, 5.25% due 7/01/2021 (d) 967
AAA Aaa 1,590 Bucks County, Pennsylvania, Water and Sewer Authority, Sewer
System Revenue Bonds, 6.75% due 12/01/2002 (c)(e) 1,769
BBB+ NR* 1,500 Cumberland County, Pennsylvania, Municipal Authority Revenue
Bonds (Presbyterian Homes Inc. Project), 6% due 12/01/2026 1,536
Delaware County, Pennsylvania, IDA, PCR:
A1+ P1 2,600 (BP Oil Inc. Project), 3.70% due 12/01/2009 (a) 2,600
AAA Aaa 2,000 (Philadelphia Electric Company Project), Series A, 7.375% due
4/01/2021 (d) 2,202
AAA Aaa 5,000 Exeter Township, Pennsylvania, Sewer Authority, Revenue Refunding
Bonds (Berks County), 6.20% due 7/15/2002 (b)(e) 5,409
AAA Aaa 2,750 Hampton Township, Pennsylvania, School District, GO, UT, 6.75%
due 11/15/2004 (d)(e) 3,134
AAA Aaa 1,000 Hollidaysburg, Pennsylvania, Area School District, Refunding,
UT, Series A, 5.25% due 6/01/2020 (b) 986
AAA Aaa 3,280 Johnstown, Pennsylvania, Refunding, UT, 6.45% due 10/01/2019
(c) 3,587
AAA Aaa 3,000 Lehigh County, Pennsylvania, General Purpose Authority Revenue
Bonds (Saint Luke's Hospital of Bethlehem), 6.25% due 7/01/2022
(d) 3,185
AAA Aaa 3,000 Lehigh County, Pennsylvania, IDA, PCR, Refunding (Pennsylvania
Power and Light Company Project), Series A, 6.40% due 11/01/2021
(b) 3,280
AAA Aaa 3,000 Luzerne County, Pennsylvania, IDA, Exempt Facilities Revenue
Refunding Bonds (Pennsylvania Gas and Water Company Project),
AMT, Series A, 7% due 12/01/2017 (d) 3,391
NR* Aaa 1,000 North Allegheny, Pennsylvania, School District, GO, Series D,
5% due 5/01/2021 (c) 960
AAA Aaa 3,000 North Penn, Pennsylvania, Water Authority, Water Revenue Bonds,
7% due 11/01/2004 (c)(e) 3,484
AAA Aaa 1,000 Northeastern, Pennsylvania, Hospital and Education Authority,
College Revenue Guaranteed Bonds (Luzerne County Community
College), 6.625% due 2/15/2005 (d)(e) 1,129
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) 1,943
BBB Baa3 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 2,888
Pennsylvania HFA, S/F Mortgage, AMT:
AA+ Aa2 1,000 Refunding, Series 60A, 5.85% due 10/01/2027 1,015
AA+ Aa 2,500 Series 39B, 6.875% due 10/01/2024 2,698
AAA Aaa 4,000 Pennsylvania State Higher Education Assistance Agency, Student
Loan Revenue Bonds, AMT, Series C, 7.15% due 9/01/2021 (d) 4,235
A1+ NR* 700 Pennsylvania State Higher Educational Facilities Authority,
Revenue Refunding Bonds (Carnegie Mellon University), VRDN,
Series B, 3.70% due 11/01/2027 (a) 700
AAA Aaa 1,000 Philadelphia, Pennsylvania, GO, UT, 5% due 5/15/2025 (b) 950
A1+ VMIG1+ 100 Philadelphia, Pennsylvania, Hospitals and Higher Education
Facilities Authority, Hospital Revenue Bonds (Children's Hospital
of Philadelphia Project), VRDN, 3.70% due 3/01/2027 (a) 100
AAA Aaa 5,125 Philadelphia, Pennsylvania, Industrial Development Lease Authority
Revenue Bonds, Series A, 5.375% due 2/15/2027 (b) 5,113
Philadelphia, Pennsylvania, Water and Wastewater Revenue Bonds
AAA Aaa 1,000 Refunding, 5% due 6/15/2019 (b) 955
AAA Aaa 1,155 Series A, 5% due 8/01/2022 (d) 1,104
A1+ NR* 300 Schuylkill County, Pennsylvania, IDA, Resource Recovery Revenue
Refunding Bonds (Northeastern Power Company), VRDN, Series A,
3.65% due 12/01/2022 (a) 300
AAA Aaa 2,000 Solanco, Pennsylvania, School District, GO, UT, 6.30% due
2/15/2004 (c)(e) 2,204
AAA Aaa 5,000 Southeastern Pennsylvania, Transportation Authority Special
Revenue Bonds, 5.375% due 3/01/2022 (c) 4,989
---------
Total Investments (Cost -- $77,652) -- 102.7% 83,162
Liabilities in Excess of Other Assets -- (2.7%) (2,206)
---------
Net Assets -- 100.0% $80,956
=========
(a) The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate
in effect at October 31, 1997.
(b) MBIA Insured.
(c) FGIC Insured.
(d) AMBAC Insured.
(e) Prerefunded.
* Not Rated.
+ Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
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
UT Unlimited Tax
VRDN Variable Rate Demand Notes
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
As of October 31, 1997
<S> <C> <C> <C>
Assets: Investments, at value (identified cost -- $77,652,079) (Note 1a) $83,161,842
Cash 74,827
Interest receivable 1,362,978
Deferred organization expense (Note 1e) 9,502
Prepaid expenses and other assets 5,767
-------------
Total assets 84,614,916
-------------
Liabilities: Payables:
Securities purchased $3,474,511
Dividends to shareholders (Note 1f) 62,304
Investment adviser (Note 2) 36,357 3,573,172
-------------
Accrued expenses and other liabilities 85,743
-------------
Total liabilities 3,658,915
-------------
Net Assets: Net assets $80,956,001
=============
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 55,795,641
Undistributed investment income -- net 303,379
Accumulated realized capital losses on investments -- net (Note 5) (8,555,268)
Unrealized appreciation on investments -- net 5,509,763
-------------
Total -- Equivalent to $13.28 net asset value per Common Share
(market price -- $12.25) 53,456,001
-------------
Total capital $80,956,001
=============
* Auction Market Preferred Shares.
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Year Ended October 31, 1997
<S> <C> <C> <C>
Investment Interest and amortization of premium and discount earned $4,497,690
Income (Note 1d):
Expenses: Investment advisory fees (Note 2) $397,766
Commission fees (Note 4) 69,773
Professional fees 69,667
Transfer agent fees 35,619
Printing and shareholder reports 30,043
Trustees' fees and expenses 22,908
Accounting services (Note 2) 21,952
Listing fees 16,342
Amortization of organization expenses (Note 1e) 12,798
Custodian fees 6,976
Pricing fees 5,478
Other 13,356
-----------
Total expenses 702,678
-----------
Investment income -- net 3,795,012
-----------
Realized & Realized gain on investments -- net 480,878
Unrealized Gain on Change in unrealized appreciation on investments -- net 1,891,454
Investments -- -----------
Net (Notes 1b, 1d & 3): Net Increase in Net Assets Resulting from Operations $6,167,344
===========
See Notes to Financial Statements
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ended
October 31,
Increase (Decrease) in Net Assets: 1997 1996
<S> <C> <C> <C>
Operations: Investment income -- net $3,795,012 $3,873,514
Realized gain (loss) on investments -- net 480,878 (886,000
Change in unrealized appreciation on investments -- net 1,891,454 109
------------- -------------
Net increase in net assets resulting from operations 6,167,344 2,987,623
------------- -------------
Dividends to Investment income -- net:
Shareholders Common Shares (2,840,678) (2,910,646)
(Note 1f): Preferred Shares (920,337) (966,790)
------------- -------------
Net decrease in net assets resulting from dividends to shareholders (3,761,015) (3,877,436)
------------- -------------
Capital Share Value of shares issued to Common Shareholders in reinvestment of dividends -- 72,730
Transactions ------------- -------------
(Note 4): Net increase in net assets derived from capital share transactions -- 72,730
------------- -------------
Net Assets: Total increase (decrease) in net assets 2,406,329 (817,083)
Beginning of year 78,549,672 79,366,755
------------- -------------
End of year* $80,956,001 $78,549,672
============= =============
* Undistributed investment income -- net $303,379 $269,382
============= =============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For the
Period
The following per share data and ratios have been derived July 30,
from information provided in the financial statements. 1993+ to
For the Year Ended October 31, Oct. 31,
1997 1996 1995 1994 1993
Increase (Decrease) in Net Asset Value:
<S> <C> <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 .95 .97 1.01 1.05 .25
Realized and unrealized gain (loss) on
investments -- net .59 (.23) 1.37 (3.08) .64
--------- --------- --------- --------- ---------
Total from investment operations 1.54 .74 2.38 (2.03) .89
--------- --------- --------- --------- ---------
Less dividends and distributions to Common
Shareholders:
Investment income -- net (.71) (.73) (.75) (.86) (.13)
Realized gain on investments -- net -- -- -- (.06) --
--------- --------- --------- --------- ---------
Total dividends and distributions to Common
Shareholders (.71) (.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 (.23) (.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 (.23) (.24) (.26) (.21) (.19)
--------- --------- --------- --------- ---------
Net asset value, end of period $13.28 $12.68 $12.91 $11.54 $14.70
========= ========= ========= ========= =========
Market price per share, end of period $12.25 $11.625 $11.875 $10.875 $15.00
========= ========= ========= ========= =========
Total Investment Based on market price per share 11.80% 3.98% 16.58% (22.20%) .92%++++
Return:** ========= ========= ========= ========= =========
Based on net asset value per share 11.12% 4.32% 19.44% (15.76%) 4.62%++++
========= ========= ========= ========= =========
Ratios to Average Expenses, net of reimbursement .88% .90% .83% .51% .90%*
Net Assets:*** ========= ========= ========= ========= =========
Expenses .88% .90% .95% .86% .90%*
========= ========= ========= ========= =========
Investment income -- net 4.77% 4.91% 5.33% 5.24% 5.27%*
========= ========= ========= ========= =========
Supplemental Net assets, net of Preferred Shares, end of
Data: period (in thousands) $53,456 $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 61.03% 113.65% 73.19% 93.00% 22.31%
========= ========= ========= ========= =========
Leverage: Asset coverage per $1,000 $2,944 $2,856 $2,886 $2,687 $3,104
========= ========= ========= ========= =========
Dividends Investment income -- net $837 $879 $966 $721 $119
Per Share on ========= ========= ========= ========= =========
Preferred 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 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>
MuniVest Pennsylvania Insured Fund, October 31, 1997
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. 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.
[bullet] 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.
[bullet] 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:
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 year ended October 31, 1997 were $48,150,876 and $45,748,378,
respectively.
Net realized and unrealized gains (losses) as of October 31, 1997 were
as follows:
Realized Unrealized
Gains (Losses) Gains
Long-term investments $602,735 $5,509,763
Short-term investments (121,857) --
---------- ----------
Total $480,878 $5,509,763
========== ==========
As of October 31, 1997, net unrealized appreciation for Federal income
tax purposes aggregated $5,509,763, all of which related to
appreciated securities. The aggregate cost of investments at October
31, 1997 for Federal income tax purposes was $77,652,079.
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
Shares issued and outstanding during the year ended October 31, 1997
remained constant and during the year ended October 31, 1996 increased
by 5,823 as a result of dividend reinvestment.
Preferred Shares
Auction Market Preferred Shares ("AMPS") are Preferred Shares of the
Fund that entitle their holders to receive cash dividends at an annual
rate that may vary for the successive dividend periods. The yield in
effect at October 31, 1997 was 3.55%.
As of October 31, 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 year ended October 31, 1997,
Merrill Lynch, Pierce, Fenner & Smith Inc., an affiliate of FAM,
earned $40,388 as commissions.
5. Capital Loss Carryforward:
At October 31 1997, the Fund had a net capital loss carryforward of
approximately $8,129,000, of which $4,058,000 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 November 6, 1997, the Fund's Board of Trustees declared an ordinary
income dividend to Common Shareholders in the amount of $.062674 per
share, payable on November 26, 1997 to shareholders of record as of
November 17, 1997.
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders,
MuniVest Pennsylvania Insured Fund:
We have audited the accompanying statement of assets, liabilities and
capital, including the schedule of investments, of MuniVest
Pennsylvania Insured Fund as of October 31, 1997, the related
statements of operations for the year then ended and changes in
net assets for each of the years in the two-year period then ended,
and the financial highlights for each of the years in the four-year
period then ended and the period July 30, 1993 (commencement
of operations) to October 31, 1993. These financial statements and the
financial highlights are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of October 31, 1997 by
correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
MuniVest Pennsylvania Insured Fund as of October 31, 1997, the results
of its operations, the changes in its net assets, and the financial
highlights for the respective stated periods in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 3, 1997
PORTFOLIO INFORMATION (unaudited)
All of the net investment income distributions paid by MuniVest
Pennsylvania Insured Fund during its taxable year ended October 31,
1997, qualify as tax-exempt interest dividends for Federal income tax
purposes. Additionally, there were no capital gains distributed by the
Fund during the year.
Please retain this information for your records.
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
William R. Bock, Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Gerald M. Richard, Treasurer
Patrick D. Sweeney, Secretary
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
