MUNIVEST
PENNSYLVANIA
INSURED
FUND
FUND LOGO
Annual Report
October 31, 1998
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
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.
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, interest rates 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 such securities.
MuniVest Pennsylvania Insured Fund, October 31, 1998
DEAR SHAREHOLDER
For the year ended October 31, 1998, the Common Shares of MuniVest
Pennsylvania Insured Fund earned $0.716 per share income dividends,
which included earned and unpaid dividends of $0.063. This
represents a net annualized yield of 5.22%, based on a month-end per
share net asset value of $13.70. Over the same period, the total
investment return on the Fund's Common Shares was +8.95%, based on a
change in per share net asset value from $13.28 to $13.70, and
assuming reinvestment of $0.715 per share income dividends.
For the six-month period ended October 31, 1998, the total
investment return on the Fund's Common Shares was +6.36%, based on a
change in per share net asset value from $13.23 to $13.70, and
assuming reinvestment of $0.358 per share income dividends.
For the six-month period ended October 31, 1998, the Fund's Auction
Market Preferred Shares had an average yield of 3.25%.
The Municipal Market
Environment
During the six months ended October 31, 1998, long-term bond yields
declined significantly. The near absence of any inflationary
pressures in the United States continued to support historic low
interest rates. Additionally, foreign economic factors have
continued to outweigh US domestic fundamentals, as they have for
much of 1998. The economic crisis that began in Asia over a year ago
has spread both to Russia and South America. However, economic
factors in these countries have begun to negatively impact US
growth. For example, employment in the US manufacturing sector
declined in recent months as a result of reduced demand for export
goods. Concern that the modest decline in US economic growth seen
thus far would spread and intensify led the Federal Reserve Board to
lower short-term interest rates in late September, in mid-October
and in mid-November. These actions were taken to offset the drag of
foreign economies on future US growth.
US Treasury bond yields continued to benefit from a strong "flight
to quality" as foreign investors were drawn to the relative safe
haven of US Government securities. Additionally, the sharp equity
market correction, which began at the end of August, triggered a
further flight into US Treasury securities. Long-term US Treasury
bond yields fell over 90 basis points (0.90%) to approximately 5% by
the end of September. This is the lowest level since the US Treasury
reintroduced 30-year maturity bond auctions in 1977.
By early October, worldwide investor confidence began to rise,
reducing the demand for the safety and liquidity of US Treasury
securities. Investor confidence was restored by the belief that
major world governments, as well as the International Monetary Fund,
would take the necessary action to support weak domestic economies
in Asia and Latin America. Additionally, rapid recovery in US and
world equity markets caused some investors to reallocate funds from
US debt instruments back to various world equity markets. US
Treasury security yields rose for the remainder of the month to end
October at 5.15%. During the six-month period ended October 31,
1998, long-term Treasury security yields declined approximately 80
basis points.
During the past 12 months, the tax-exempt bond market has contended
with significant new-issue supply pressures. Over the past year,
more than $277 billion in new long-term tax-exempt bonds were
underwritten, an increase of almost 30% compared to the same period
a year ago. During the most recent six-month period, approximately
$140 billion in new long-term municipal bonds were underwritten,
representing an increase of more than 15% over the same six-month
period last year. This increased supply, coupled with the high
returns the US equity market generated for much of 1998, was one of
the major reasons municipal bond yields declined less than their
taxable counterparts during the period.
The continued increase in new bond issuance has required ever-lower
tax-exempt bond yields to generate the economic savings necessary
for additional municipal bond financings. Consequently, the pace of
new bond issuance has slowed in recent months. In fact, the trend
may be reversing. During the three months ended October 31, 1998,
just over $60 billion in new long-term municipal bonds were
underwritten, a decline of 4% compared to the same quarter a year
ago. During the month of October, there were less than $20 billion
in new municipal bond securities issued, a decline of over 10%
compared to October 1997. We will monitor this trend closely in the
coming months to determine if the supply pressures exerted thus far
in 1998 are abating and fostering a more balanced supply/demand
environment.
Throughout the six-month period ended October 31, 1998, municipal
bond yields followed a pattern that was similar to US Treasury
securities, although the yield declines were more muted. As measured
by the unmanaged Bond Buyer Revenue Bond Index, long-term, uninsured
tax-exempt revenue bond yields declined over 40 basis points to
5.09% by the end of September, their lowest level since the early
1970s. Municipal bond yields rose during October to end the period
at 5.24%. Over the past six months, long-term tax-exempt bond yields
declined almost 30 basis points.
Although municipal bond yields declined during the six-month period,
recent supply pressures and the absence of the safe haven status
enjoyed by US securities caused municipal bond yields to rise
relative to US Treasury bond yields. At October 31, 1998, long-term
tax-exempt bond yield spreads were attractive relative to US
Treasury securities of comparable maturities (over 100%), well in
excess of their historic range of 85%--88%. Tax-exempt bond yield
ratios have rarely exceeded 90% in the 1980s and 1990s.
Historically, yield spreads have been wider than these levels when
there have been potential changes in Federal tax codes that would
have adversely affected the tax-favored status of municipal bonds.
Currently, municipal bond investors find themselves in a unique
investment environment. Previous opportunities to purchase tax-
exempt bonds with yields exceeding that of comparable US Treasury
issues have been limited to relatively brief episodes and then
further limited to a few municipal credits undergoing specific
financial pressures. At present, almost the entire municipal bond
universe, across nearly all maturity and credit sectors, can be
purchased at yields greater than their taxable counterparts.
However, the current opportunity may quickly disappear should tax-
exempt bond supply pressures diminish or the safe-haven status of US
Treasury securities become less desirable. Under these conditions,
municipal bond ratios should quickly revert to more normal historic
percentages, certainly well below their presently attractive levels.
Portfolio Strategy
We continued to maintain a constructive strategy during the six-
month period ended October 31, 1998. We believed that the robust
economic growth seen in late 1997 and the first quarter of 1998
would be tempered by deteriorating Asian and Latin American
economies and an absence of inflation. Consequently, we expected tax-
exempt bond yields to trade in a relatively narrow range with a bias
toward lower bond yields as 1998 progressed. We maintained a fully
invested position in order to seek to enhance total return. Looking
ahead, we expect to remain fully invested over the coming months
with little change to the Fund's present structure.
Our outlook calls for a substantial slowdown in the growth of the
economy in the coming year as consumption growth slows along with
capital spending and a further trade drag. We believe that the
Federal Reserve Board will respond with an easier monetary policy,
which is likely to cause interest rates on intermediate-term and
long-term municipal bonds to fall further.
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
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(William R. Bock)
William R. Bock
Vice President and
Portfolio Manager
December 3, 1998
MuniVest Pennsylvania Insured Fund, October 31, 1998
PROXY RESULTS
During the six-month period ended October 31, 1998, MuniVest
Pennsylvania Insured Fund Common Shareholders voted on the following
proposals. The proposals were approved at a shareholders' meeting on
September 24, 1998. 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: Herbert I. London 3,750,373 82,646
Robert R. Martin 3,745,868 87,151
Andre F. Perold 3,750,318 82,701
Arthur Zeikel 3,748,668 84,351
<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. 3,776,236 24,650 32,133
</TABLE>
During the six-month period ended October 31, 1998, MuniVest
Pennsylvania Insured Fund Preferred Shareholders voted on the
following proposals. The proposals were approved at a shareholders'
meeting on September 24, 1998. The description of each proposal and
number of shares voted are as follows:
<TABLE>
<CAPTION>
Shares Voted Shares Withheld
For From Voting
<S> <C> <C>
1. To elect the Fund's Board of Trustees: James H. Bodurtha, Herbert I. London,
Robert R. Martin, Joseph L. May, Andre F. Perold and Arthur Zeikel 1,070 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. 1,030 50 0
</TABLE>
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute substantially all of its
net investment income to its shareholders on a monthly basis.
However, in order to provide shareholders with a more consistent
yield to the current trading price of Common Shares of the Fund, the
Fund may at times pay out less than the entire amount of net
investment income earned in any particular month and may at times in
any particular 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 October 31, 1998
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 85.7%
AA/Aa 4.4
BBB/Baa 7.5
Other++ 4.0
[FN]
++Temporary investments in short-term municipal securities.
MuniVest Pennsylvania Insured Fund, October 31, 1998
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 below and at right.
AMT Alternative Minimum Tax (subject to)
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
PCR Pollution Control Revenue Bonds
RITES Residual Interest Tax-Exempt Securities
RITR Residual Interest Trust Receipts
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Pennsylvania-- BBB- Baa2 $ 1,670 Allegheny County, Pennsylvania, IDA, Environmental Improvement,
101.6% Revenue Refunding Bonds (USX Corp.), 5.60% due 9/01/2030 $ 1,683
AAA Aaa 1,500 Allegheny County, Pennsylvania, Sanitation Authority,
Sewer Revenue Bonds, RITR, Series 20, 7.02% due 12/01/2024 (g) 1,610
AAA Aaa 1,600 Altoona, Pennsylvania, City Authority, Water Revenue Bonds,
Series A, 6.50% due 11/01/2004 (c)(f) 1,845
AAA Aaa 2,000 Beaver County, Pennsylvania, IDA, Exempt Facilities Revenue
Bonds (Shippingport Project), AMT, Series A, 5.375% due
6/01/2028 (b) 2,029
Berks County, Pennsylvania, GO:
AAA Aaa 2,550 Refunding, Series 1995, 5.85% due 11/15/2018 (c) 2,744
NR* Aaa 1,000 UT, 5% due 11/15/2025 (b) 985
AAA Aaa 2,550 Blair County, Pennsylvania, Hospital Authority Revenue Bonds
(Altoona Hospital Project), RITES, 6.375% due 7/01/2013 (b)(g) 2,787
AAA Aaa 1,000 Bucks County, Pennsylvania, IDA, Revenue Refunding Bonds
(Grand View Hospital), Series A, 5.25% due 7/01/2021 (b) 1,005
AAA Aaa 2,500 Butler, Pennsylvania, Refunding (Area School District), UT,
Series B, 4.75% due 10/01/2022 (c) 2,400
BBB+ NR* 1,500 Cumberland County, Pennsylvania, Municipal Authority
Revenue Bonds (Presbyterian Homes Inc. Project), 6% due
12/01/2026 1,572
AAA Aaa 2,000 Delaware County, Pennsylvania, IDA, PCR, Refunding
(Philadelphia Electric Company Project), Series A, 7.375%
due 4/01/2021 (b) 2,188
NR* Aaa 2,000 Delaware County, Pennsylvania, University Authority
Revenue Bonds (Villanova University), Series A, 5% due
12/01/2028 (e) 1,969
NR* Aaa 2,000 Erie, Pennsylvania, Sewer Authority Revenue Bonds, Series A,
5% due 6/01/2018 (b) 1,993
AAA Aaa 3,280 Johnstown, Pennsylvania, Refunding, GO, UT, 6.45% due
10/01/2019 (c) 3,663
Lehigh County, Pennsylvania, General Purpose Authority
Revenue Bonds:
NR* Aaa 2,000 (Lehigh Valley Health Network), Series C, 5% due
7/01/2028 (e) 1,946
AAA Aaa 3,000 (Saint Luke's Hospital--Bethlehem), 6.25% due 7/01/2022 (b) 3,275
AAA Aaa 3,000 Lehigh County, Pennsylvania, IDA, PCR, Refunding
(Pennsylvania Power and Light Company Project), Series A,
6.40% due 11/01/2021 (e) 3,315
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 (b) 3,450
AAA Aaa 2,650 McGuffey School District, Pennsylvania, GO, 4.75% due
8/01/2028 (b) 2,548
AAA Aaa 1,000 Northeastern, Pennsylvania, Hospital and Educational
Authority, College Revenue Bonds (Luzerne County Community
College), 6.625% due 2/15/2005 (b)(f) 1,144
BBB Baa2 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 2,908
Pennsylvania HFA, S/F Mortgage, AMT:
AA+ Aa2 1,000 Refunding, Series 60A, 5.85% due 10/01/2027 1,039
AA+ Aa2 2,500 Series 39B, 6.875% due 10/01/2024 2,628
AAA Aaa 3,000 Pennsylvania State, GO, Second Series, 5% due 8/01/2018 (c) 3,008
AAA Aaa 4,000 Pennsylvania State Higher Educational Assistance Agency,
Student Loan Revenue Bonds, AMT, Series C, 7.15% due
9/01/2021 (b) 4,317
Pennsylvania State Higher Educational Facilities Authority,
Revenue Refunding Bonds:
A1+ NR* 700 (Carnegie Mellon University), VRDN, Series B, 3.70% due
11/01/2027 (a) 700
A1+ NR* 200 (Carnegie Mellon University), VRDN, Series C, 3.70%
due 11/01/2029 (a) 200
AAA Aaa 1,100 (University of Pennsylvania--Health Services), Series A,
5.375% due 1/01/2015 (e) 1,148
Pennsylvania State Turnpike Commission, Tax Revenue Bonds
(Oil Franchise)(b):
AAA Aaa 1,300 Senior Series A, 4.75% due 12/01/2027 1,243
AAA Aaa 1,480 Sub-Series B, 4.75% due 12/01/2027 1,415
AAA Aaa 5,125 Philadelphia, Pennsylvania, Authority for Industrial
Development, Lease Revenue Bonds (City of Philadelphia
Project), Series A, 5.375% due 2/15/2027 (e) 5,299
AAA Aaa 1,000 Philadelphia, Pennsylvania, Gas Works Revenue Bonds (First),
Series B, 5% due 7/01/2028 (d) 983
Philadelphia, Pennsylvania, Hospitals and Higher Educational
Facilities Authority Revenue Bonds, Series A:
A1+ VMG1++ 1,100 (Children's Hospital Project), VRDN, 3.70% due 3/01/2027 (a) 1,100
AAA Aaa 3,000 (Jefferson Health System), 5.125% due 5/15/2018 (b) 3,004
Philadelphia, Pennsylvania, Water and Wastewater Revenue Bonds:
AAA Aaa 1,000 Refunding, 5% due 6/15/2019 (e) 992
AAA Aaa 2,000 Series A, 5% due 8/01/2017 (b) 1,997
AAA Aaa 4,000 Pittsburgh, Pennsylvania, Water and Sewer Authority, Water
and Sewer System Revenue Bonds, Sub-Series C, 5.05% due
9/01/2025 (d) 3,959
A1+ NR* 1,300 Schuylkill County, Pennsylvania, IDA, Resource Recovery
Revenue Refunding Bonds (Northeastern Power Company), VRDN,
Series A, 3.75% due 12/01/2022 (a) 1,300
AAA Aaa 2,525 Southeastern, Pennsylvania, Transportation Authority, Special
Revenue Bonds, 5.375% due 3/01/2022 (c) 2,615
Total Investments (Cost--$79,052)--101.6% 84,006
Liabilities in Excess of Other Assets--(1.6%) (1,299)
-------
Net Assets--100.0% $82,707
=======
<FN>
(a)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at October 31, 1998.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)FSA Insured.
(e)MBIA Insured.
(f)Prerefunded.
(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 October 31, 1998.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche
LLP.
See Notes to Financial Statements.
</TABLE>
MuniVest Pennsylvania Insured Fund, October 31, 1998
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of October 31, 1998
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$79,051,894) (Note 1a) $ 84,005,941
Cash 59,931
Interest receivable 1,287,174
Prepaid expenses and other assets 7,995
------------
Total assets 85,361,041
------------
Liabilities: Payables:
Securities purchased $ 2,551,043
Investment adviser (Note 2) 36,444 2,587,487
------------
Accrued expenses and other liabilities 66,087
------------
Total liabilities 2,653,574
------------
Net Assets: Net assets $ 82,707,467
============
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 (4,028,976 shares
issued and outstanding) $ 402,898
Paid-in capital in excess of par 55,851,679
Undistributed investment income--net 303,140
Accumulated realized capital losses on investments--net (Note 5) (6,304,297)
Unrealized appreciation on investments--net 4,954,047
------------
Total--Equivalent to $13.70 net asset value per Common Share
(market price--$13.875) 55,207,467
------------
Total capital $ 82,707,467
============
<FN>
*Auction Market Preferred Shares.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Year Ended October 31, 1998
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 4,515,650
Income (Note 1d):
Expenses: Investment advisory fees (Note 2) $ 408,660
Commission fees (Note 4) 69,784
Professional fees 69,484
Accounting services (Note 2) 43,697
Trustees' fees and expenses 23,045
Transfer agent fees 21,206
Printing and shareholder reports 20,243
Listing fees 16,170
Amortization of organization expenses (Note 1e) 9,502
Custodian fees 6,641
Pricing fees 5,987
Other 11,630
------------
Total expenses 706,049
------------
Investment income--net 3,809,601
------------
Realized & Realized gain on investments--net 2,250,971
Unrealized Gain Change in unrealized appreciation on investments--net (555,716)
(Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 5,504,856
(Notes 1b, ============
1d & 3):
See Notes to Financial Statements.
</TABLE>
MuniVest Pennsylvania Insured Fund, October 31, 1998
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Year Ended
October 31,
Increase (Decrease) in Net Assets: 1998 1997
<S> <S> <C> <C>
Operations: Investment income--net $ 3,809,601 $ 3,795,012
Realized gain on investments--net 2,250,971 480,878
Change in unrealized appreciation on investments--net (555,716) 1,891,454
------------ ------------
Net increase in net assets resulting from operations 5,504,856 6,167,344
------------ ------------
Dividends to Investment income--net:
Shareholders Common Shares (2,877,458) (2,840,678)
(Note 1f): Preferred Shares (932,382) (920,337)
------------ ------------
Net decrease in net assets resulting from dividends to
shareholders (3,809,840) (3,761,015)
------------ ------------
Capital Share Value of shares issued to Common Shareholders in reinvestment
Transactions of dividends 56,450 --
(Note 4): ------------ ------------
Net increase in net assets derived from capital share
transactions 56,450 --
------------ ------------
Net Assets: Total increase in net assets 1,751,466 2,406,329
Beginning of year 80,956,001 78,549,672
------------ ------------
End of year* $ 82,707,467 $ 80,956,001
============ ============
<FN>
*Undistributed investment income--net $ 303,140 $ 303,379
============ ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have
been derived from information provided in
the financial statements.
For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 13.28 $ 12.68 $ 12.91 $ 11.54 $ 14.70
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .94 .95 .97 1.01 1.05
Realized and unrealized gain (loss) on
investments--net .42 .59 (.23) 1.37 (3.08)
-------- -------- -------- -------- --------
Total from investment operations 1.36 1.54 .74 2.38 (2.03)
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Shareholders:
Investment income--net (.71) (.71) (.73) (.75) (.86)
Realized gain on investments--net -- -- -- -- (.06)
-------- -------- -------- -------- --------
Total dividends and distributions to
Common Shareholders (.71) (.71) (.73) (.75) (.92)
-------- -------- -------- -------- --------
Effect of Preferred Share activity:
Dividends and distributions to Preferred
Shareholders:
Investment income--net (.23) (.23) (.24) (.26) (.20)
Realized gain on investments--net -- -- -- -- (.01)
-------- -------- -------- -------- --------
Total effect of Preferred Share activity (.23) (.23) (.24) (.26) (.21)
-------- -------- -------- -------- --------
Net asset value, end of year $ 13.70 $ 13.28 $ 12.68 $ 12.91 $ 11.54
======== ======== ======== ======== ========
Market price per share, end of year $ 13.875 $ 12.25 $ 11.625 $ 11.875 $ 10.875
======== ======== ======== ======== ========
Total Investment Based on market price per share 19.62% 11.80% 3.98% 16.58% (22.20%)
Return:* ======== ======== ======== ======== ========
Based on net asset value per share 8.95% 11.12% 4.32% 19.44% (15.76%)
======== ======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement .86% .88% .90% .83% .51%
Net Assets:** ======== ======== ======== ======== ========
Expenses .86% .88% .90% .95% .86%
======== ======== ======== ======== ========
Investment income--net 4.66% 4.77% 4.91% 5.33% 5.24%
======== ======== ======== ======== ========
Supplemental Net assets, net of Preferred Shares,
Data: end of year (in thousands) $ 55,207 $ 53,456 $ 51,050 $ 51,867 $ 46,390
======== ======== ======== ======== ========
Preferred Shares outstanding, end
of year (in thousands) $ 27,500 $ 27,500 $ 27,500 $ 27,500 $ 27,500
======== ======== ======== ======== ========
Portfolio turnover 60.37% 61.03% 113.65% 73.19% 93.00%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,008 $ 2,944 $ 2,856 $ 2,886 $ 2,687
======== ======== ======== ======== ========
Dividends Investment income--net $ 848 $ 837 $ 879 $ 966 $ 721
Per Share on ======== ======== ======== ======== ========
Preferred Shares
Outstanding:++
<FN>
*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.
++Dividends per share have been adjusted to reflect a two-for-one
stock split that occurred on December 1, 1994.
See Notes to Financial Statements.
</TABLE>
MuniVest Pennsylvania Insured Fund, October 31, 1998
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 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 fair value as determined in good faith by or
under the direction of the Board of Trustees of the Fund, including
valuations furnished by a pricing service retained by the Fund,
which may utilize a matrix system for valuations. The procedures of
the pricing service and its valuations are reviewed by the officers
of the Fund under the general supervision of the Board of Trustees.
(b) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the
counterparty does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell
financial futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities or
the intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at
a specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
* Options--The Fund is authorized to write covered call options and
purchase put options. When the Fund writes an option, an amount
equal to the premium received by the Fund is reflected as an asset
and an equivalent liability. The amount of the liability is
subsequently marked to market to reflect the current market value of
the option written. When a security is purchased or sold through an
exercise of an option, the related premium paid (or received) is
added to (or deducted from) the basis of the security acquired, or
deducted from (or added to) the proceeds of the security sold. When
an option expires (or the Fund enters into a closing transaction),
the Fund realizes a gain or loss on the option to the extent of the
premiums received or paid (or gain or loss to the extent the cost of
the closing transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(c) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no Federal income tax
provision is required.
(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 period not exceeding
five years.
(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, 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 year ended October 31, 1998 were $47,537,197 and
$47,789,758, respectively.
Net realized gains for the year ended October 31, 1998 and net
unrealized gains as of October 31, 1998 were as follows:
Realized Unrealized
Gains Gains
Long-term investments $ 2,250,971 $ 4,954,047
-------------- -------------
Total $ 2,250,971 $ 4,954,047
============== =============
As of October 31, 1998, net unrealized appreciation for Federal
income tax purposes aggregated $4,954,047, of which $4,954,153
related to appreciated securities and $106 related to depreciated
securities. The aggregate cost of investments at October 31, 1998
for Federal income tax purposes was $79,051,894.
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 capital without approval of the holders of Common Shares.
Common Shares
Shares issued and outstanding during the year ended October 31, 1998
increased by 4,120 as a result of dividend reinvestment and during
the year ended October 31, 1997 remained constant.
Preferred Shares
Auction Market Preferred Shares ("AMPS") are Preferred Shares
of the Fund, 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 yield in effect at October 31, 1998
was 2.40%.
Shares issued and outstanding during the years ended October 31,
1998 and October 31, 1997 remained constant.
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, 1998, Merrill Lynch, Pierce, Fenner & Smith Inc., an
affiliate of FAM, earned $40,877 as commissions.
5. Capital Loss Carryforward:
At October 31, 1998, the Fund had a net capital loss carryforward of
approximately $5,878,000, of which $1,807,000 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 5, 1998, the Fund's Board of Trustees declared an
ordinary income dividend to Common Shareholders in the amount of
$.063266 per share, payable on November 27, 1998 to shareholders of
record as of November 20, 1998.
MuniVest Pennsylvania Insured Fund, October 31, 1998
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
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, 1998, 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 five-year
period then ended. 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, 1998 by correspondence with the custodian and broker. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
MuniVest Pennsylvania Insured Fund as of October 31, 1998, 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 4, 1998
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by MuniVest
Pennsylvania Insured Fund during its taxable year ended October 31,
1998 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
Philip M. Mandel, 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
