MUNIVEST
PENNSYLVANIA
INSURED
FUND
FUND LOGO
Semi-Annual Report
April 30, 1999
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, their
price as listed on the New York Stock Exchange) may, as a result,
decline. Furthermore, if long-term interest rates rise, the Common
Shares' net asset value will reflect the full decline in the price
of the portfolio's investments, since the value of the fund's
Preferred Shares does not fluctuate. In addition to the decline in
net asset value, the market value of the fund's Common Shares may
also decline.
As a part of its investment strategy, the Fund may invest in certain
securities whose potential income return is inversely related to
changes in a floating interest rate ("inverse floaters"). In
general, income on inverse floaters will decrease when short-term
interest rates increase and increase when short-term interest rates
decrease. Investments in inverse floaters may be characterized as
derivative securities and may subject the Fund to the risks of
reduced or eliminated interest payments and losses of invested
principal. In addition, inverse floaters have the effect of
providing investment leverage and, as a result, the market value of
such securities will generally be more volatile than that of fixed-
rate, tax-exempt securities. To the extent the Fund invests in
inverse floaters, the market value of the Fund's portfolio and the
net asset value of the Fund's shares may also be more volatile than
if the Fund did not invest in these securities.
MuniVest Pennsylvania Insured Fund, April 30, 1999
DEAR SHAREHOLDER
For the six months ended April 30, 1999, the Common Shares of
MuniVest Pennsylvania Insured Fund earned $0.359 per share income
dividends, which included earned and unpaid dividends of $0.058.
This represents a net annualized yield of 5.36%, based on a month-
end per share net asset value of $13.52. Over the same period, the
total investment return on the Fund's Common Shares was +1.38%,
based on a change in per share net asset value from $13.70 to
$13.52, and assuming reinvestment of $0.364 per share income
dividends.
For the six-month period ended April 30, 1999, the Fund's Auction
Market Preferred Shares had an average yield of 2.96%.
The Municipal Market Environment
During the six months ended April 30, 1999, long-term bond yields
generally moved higher. From November 1998 through mid-January 1999,
long-term bond yields traded in a relatively narrow range. However,
during February, a number of economic indicators were released that
suggested that economic growth in the United States would likely
remain strong throughout most of 1999. Consequently, long-term US
Treasury bond yields rose more than 60 basis points (0.60%) to 5.70%
by early March. During the remainder of the six-month period, US
Treasury bond yields traded between 5.50% and 5.70% as the lack of
inflationary pressures off-set much of the concerns generated by
continued strong economic growth. During most of the period, long-
term, uninsured tax-exempt bond yields exhibited far less volatility
and were largely stable. Also, long-term municipal bond yields rose
just 5 basis points to 5.29% at the end of April 1999, as measured
by the Bond Buyer Revenue Bond Index.
In recent months, the tax-exempt market was better able to withstand
much of the upward pressure on bond yields because of its stronger
technical position. While the continued positive inflationary
environment limited some of the recent increases in taxable bond
yields, a deteriorating supply/demand position helped push taxable
bond yields significantly higher than municipal bond yields. Much of
the US Treasury bond market's underperformance in recent months can
be attributed to the large amounts of taxable corporate issuance.
Large taxable corporate underwritings reduced the demand for US
Government securities in recent months, pushing US Treasury bond
yields higher.
On the other hand, the tax-exempt bond market enjoyed only limited
new-issue supply. During the six months ended April 30, 1999, more
than $123 billion in new long-term tax-exempt securities was
underwritten, a decline of 10% compared to the same period a year
ago. Municipalities issued less than $60 billion in long-term tax-
exempt securities during the three months ended April 30, 1999, a
decline of 25% compared to the April 30, 1998 quarter. More
recently, the rate of new tax-exempt issuance has declined even
further. During April 1999, just over $15 billion in long-term tax-
exempt securities was marketed, a decline of over 33% compared to
April 1998 levels. As municipal bond yields fell and stabilized in
recent quarters, the ability of municipalities to refinance existing
higher-couponed debt declined. This led to a significant decrease in
refunding issuance and an overall drop in new municipal bond supply.
When coupled with ongoing, moderate retail and institutional demand,
the tax-exempt bond market was able to avoid much of the yield
volatility exhibited by US Treasury securities.
Looking ahead, the expected combination of moderate economic growth
in the United States and continued negligible inflation suggests a
relatively stable interest rate environment. However, in recent
years, bond yields reached their annual peaks in early May and
declined for the remainder of the year. A meaningful decline in
fixed-income bond yields would require either evidence of a
significant slowdown in the US economy or the resumption of concerns
regarding renewed shocks to the world's economic system. Currently,
neither condition exists or seems likely in the immediate future. In
our opinion, this suggests a continuation of the narrow trading
ranges seen in recent months.
Portfolio Strategy
During the last several months, we adopted a neutral investment
strategy, since indicators pointed to a continuation of both benign
inflation and healthy domestic economic growth. These favorable
conditions led us to believe that long-term tax-exempt bond yields
would remain trading within a somewhat narrow range. Therefore, we
chose to focus on income-producing securities rather than on those
issues with the potential for capital gains. We believed that coupon
income could be the more significant segment for the Fund if the tax-
exempt bond market performed as anticipated. Keeping shareholder
income in mind, MuniVest Pennsylvania Insured Fund remained fully
invested for most of the past several months, and we expect to
maintain this position going forward.
Short-term tax-exempt yields exhibited considerable volatility in
recent months. Interest rates paid to the Fund's Preferred
Shareholders traded below 3% in December 1998, reflecting heightened
investor demand at year-end. Current interest rate levels of 3.375%
and 3.50% reflect tax season-related pressures, which we expect to
abate soon. During the six-month period ended April 30, 1999,
leveraging generated a significant incremental yield to the Fund's
Common Shareholders. Because we believe that the Federal Reserve
Board's monetary policy is likely to remain in a narrow range for
the remainder of the year, we expect short-term tax-exempt interest
rates to remain at, or slightly below, current levels. However,
should the spread between short-term and long-term interest rates
narrow, the benefits of the leverage will decline and, as a result,
reduce the yield to the Fund's Common Shares. (For a complete
explanation of the benefits and risks of leveraging, see page 1 of
this report to shareholders.)
In Conclusion
We appreciate your ongoing interest in MuniVest Pennsylvania Insured
Fund, and we look forward to serving your investment needs in the
months and years ahead.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(William R. Bock)
William R. Bock
Vice President and
Portfolio Manager
June 1, 1999
After more than 20 years of service, Arthur Zeikel recently retired
as Chairman of Merrill Lynch Asset Management, L.P. (MLAM). Mr.
Zeikel served as President of MLAM from 1977 to 1997 and as Chairman
since December 1997. Mr. Zeikel is one of the country's most
respected leaders in asset management and presided over the growth
of Merrill Lynch's asset management business. During his tenure,
client assets under management grew from $300 million to over $500
billion. Mr. Zeikel will remain on MuniVest Pennsylvania Insured
Fund's Board of Trustees. We are pleased to announce that Terry K.
Glenn has been elected President and Trustee of the Fund. Mr. Glenn
has held the position of Executive Vice President of MLAM since
1983.
Mr. Zeikel's colleagues at MLAM join the Fund's Board of Trustees in
wishing him well in his retirement from Merrill Lynch and are
pleased that he will continue as a member of the Fund's Board of
Trustees.
MuniVest Pennsylvania Insured Fund, April 30, 1999
<TABLE>
PROXY RESULTS
<CAPTION>
During the six-month period ended April 30, 1999, MuniVest
Pennsylvania Insured Fund's Common Shareholders voted on the
following proposals. Proposals 1 and 2 were approved at a
shareholders' meeting on April 21, 1999. The meeting was
adjourned with respect to Proposal 3. The description of
each proposal and number of shares voted are as follows:
Shares Voted Shares Withheld
For From Voting
<S> <S> <C> <C>
1. To elect the Fund's Trustees: Terry K. Glenn 3,789,440 111,445
Herbert I. London 3,784,104 116,781
Robert R. Martin 3,783,028 117,857
Andre F. Perold 3,784,104 116,781
Arthur Zeikel 3,783,478 117,407
Shares Voted Shares Voted Shares Voted
For Against Abstain
2. To select Deloitte & Touche LLP as the Fund's independent auditors. 3,866,778 11,560 30,581
3. To approve an amendment to the Certificate of Designation of the Fund. Adjourned Adjourned Adjourned
<CAPTION>
During the six-month period ended April 30, 1999, MuniVest
Pennsylvania Insured Fund's Preferred Shareholders voted on the
following proposals. Proposals 1 and 2 were approved at a
shareholders' meeting on April 21, 1999. The meeting was
adjourned with respect to Proposal 3. The description of
each proposal and number of shares voted are as follows:
Shares Voted Shares Withheld
For From Voting
<S> <C> <C>
1. To elect the Fund's Board of Trustees: James H. Bodurtha, Terry K. Glenn,
Herbert I. London, Robert R. Martin, Joseph L. May, Andre F. Perold and
Arthur Zeikel 1,040 0
Shares Voted Shares Voted Shares Voted
For Against Abstain
2. To select Deloitte & Touche LLP as the Fund's independent auditors. 1,029 11 0
3. To approve an amendment to the Certificate of Designation of the Fund. Adjourned Adjourned Adjourned
</TABLE>
QUALITY PROFILE
The quality ratings of securities in the Fund as of April 30,
1999 were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 81.0%
AA/Aa 4.5
BBB/Baa 5.5
Other++ 7.5
[FN]
++Temporary investments in short-term municipal securities.
MuniVest Pennsylvania Insured Fund, April 30, 1999
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
IDR Industrial Development Revenue Bonds
PCR Pollution Control Revenue Bonds
RITES Residual Interest Tax-Exempt Securities
RITR Residual Interest Trust Receipts
S/F Single-Family
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> <C> <C> <C> <S> <C>
Pennsylvania-- BBB- Baa2 $ 1,670 Allegheny County, Pennsylvania, IDA, Environmental Improvement,
98.5% Revenue Refunding Bonds (USX Corp.), 5.60% due 9/01/2030 $ 1,671
AAA Aaa 1,500 Allegheny County, Pennsylvania, Sanitation Authority, Sewer
Revenue Bonds, RITR, Series 20, 6.37% due 12/01/2024 (g) 1,569
AAA NR* 1,600 Altoona, Pennsylvania, City Water Authority, Revenue
Refunding Bonds, Series A, 6.50% due 11/01/2004 (c)(f) 1,829
AAA Aaa 2,550 Berks County, Pennsylvania, GO, Refunding, 5.85% due
11/15/2018 (c) 2,715
AAA Aaa 2,550 Blair County, Pennsylvania, Hospital Authority Revenue Bonds
(Altoona Hospital Project), RITES, 6.375% due 7/01/2013 (b)(g) 2,765
AAA Aaa 2,000 Delaware County, Pennsylvania, IDA, PCR, Refunding
(Philadelphia Electric Company Project), Series A, 7.375%
due 4/01/2021 (b) 2,160
AAA Aaa 4,500 Delaware Valley, Pennsylvania, Regional Finance Authority,
Local Government Revenue Bonds, Series A, 5.50% due
8/01/2028 (b) 4,829
NR* Aaa 2,000 Erie, Pennsylvania, Sewer Authority, Revenue Refunding
Bonds, Series A, 5% due 6/01/2018 (b) 1,978
AAA Aaa 3,280 Johnstown, Pennsylvania, GO, Refunding, 6.45% due 10/01/2019 (c) 3,633
Lehigh County, Pennsylvania, General Purpose Authority
Revenue Bonds:
NR* Aaa 2,000 (Lehigh Valley Health Network), Series C, 5%
due 7/01/2028 (e) 1,920
AAA Aaa 3,000 (Saint Lukes Hospital--Bethlehem), 6.25% due 7/01/2022 (b) 3,249
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) 3,287
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) 3,420
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) 1,130
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 2,824
AA+ Aa2 1,000 Pennsylvania HFA, S/F Mortgage Revenue Bonds, AMT,
Series 60A, 5.85% due 10/01/2027 1,043
AA+ Aa2 2,500 Pennsylvania HFA, S/F Mortgage Revenue Refunding Bonds,
AMT, Series 39B, 6.875% due 10/01/2024 2,613
AAA Aaa 3,000 Pennsylvania State, GO, Second Series, 5% due 8/01/2018 (c) 2,985
AAA Aaa 4,000 Pennsylvania State Higher Educational Assistance Agency,
Student Loan Revenue Bonds, AMT, Series C, 7.15% due
9/01/2021 (b) 4,493
AAA Aaa 2,000 Pennsylvania State Higher Educational Facilities
Authority Revenue Bonds (UPMC Health System), Series A,
5% due 8/01/2029 (d) 1,919
A1+ NR* 1,600 Pennsylvania State Higher Educational Facilities Authority,
Revenue Refunding Bonds (Carnegie Mellon University), VRDN,
Series A, 4.20% due 11/01/2025 (a) 1,600
Pennsylvania State Turnpike Commission, Oil Franchise
Tax Revenue Bonds (b):
AAA Aaa 1,300 Senior Series A, 4.75% due 12/01/2027 1,217
AAA Aaa 1,480 Sub-Series B, 4.75% due 12/01/2027 1,386
A1+ NR* 300 Philadelphia, Pennsylvania, Authority for IDR (Fox Chase
Cancer Center Project), VRDN, 4.25% due 7/01/2025 (a) 300
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) 5,236
AAA Aaa 2,675 Philadelphia, Pennsylvania, GO, 5% due 3/15/2028 (d) 2,599
AAA Aaa 1,000 Philadelphia, Pennsylvania, Gas Works Revenue Bonds,
First Series B, 5% due 7/01/2028 (d) 972
Philadelphia, Pennsylvania, Hospitals and Higher
Education Facilities Authority, Hospital Revenue Bonds
(Children's Hospital of Philadelphia Project),VRDN (a):
A1+ VMIG1++ 1,100 4.20% due 3/01/2027 1,100
A1+ VMIG1++ 1,000 Series A, 4.20% due 3/01/2027 1,000
AAA Aaa 3,000 Philadelphia, Pennsylvania, Hospitals and Higher
Educational Facilities Authority, Revenue Refunding Bonds
(Jefferson Health System), Series A, 5.125% due 5/15/2018 (b) 2,969
AAA Aaa 2,000 Philadelphia, Pennsylvania, Water and Wastewater Revenue
Bonds, Series A, 5% due 8/01/2017 (b) 1,983
AAA Aaa 1,000 Philadelphia, Pennsylvania, Water and Wastewater Revenue
Refunding Bonds, 5% due 6/15/2019 (e) 983
AAA Aaa 2,655 Pittsburgh, Pennsylvania, GO, 5.125% due 9/01/2015 (b) 2,699
A1+ NR* 2,200 Schuylkill County, Pennsylvania, IDA, Resource Recovery
Revenue Refunding Bonds (Northeastern Power Company), VRDN,
Series A, 4.10% due 12/01/2022 (a) 2,200
AAA Aaa 2,525 Southeastern Pennsylvania Transportation Authority,
Special Revenue Bonds, 5.375% due 3/01/2022 (c) 2,580
Total Investments (Cost--$76,924)--98.5% 80,856
Other Assets Less Liabilities--1.5% 1,231
-------
Net Assets--100.0% $82,087
=======
<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, 1999.
(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 April 30, 1999.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
MuniVest Pennsylvania Insured Fund, April 30, 1999
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of April 30, 1999
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$76,924,058) (Note 1a) $ 80,856,110
------------
Cash 75,295
Interest receivable 1,255,043
Prepaid expenses and other assets 7,996
------------
Total assets 82,194,444
------------
Liabilities: Payables:
Dividends to shareholders (Note 1e) $ 52,697
Investment adviser (Note 2) 36,079 88,776
------------
Accrued expenses and other liabilities 18,400
------------
Total liabilities 107,176
------------
Net Assets: Net assets $ 82,087,268
============
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 (4,037,179 shares
issued and outstanding) $ 403,718
Paid-in capital in excess of par 55,962,716
Undistributed investment income--net 295,148
Accumulated realized capital losses on investments--net (Note 5) (6,006,366)
Unrealized appreciation on investments--net 3,932,052
------------
Total--Equivalent to $13.52 net asset value per
Common Share (market price--$13.0625) 54,587,268
------------
Total capital $ 82,087,268
============
<FN>
*Auction Market Preferred Shares.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended April 30, 1999
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 2,226,969
Income (Note 1d):
Expenses: Investment advisory fees (Note 2) $ 205,636
Commission fees (Note 4) 33,669
Professional fees 30,941
Accounting services (Note 2) 27,447
Transfer agent fees 16,162
Printing and shareholder reports 12,094
Trustees' fees and expenses 11,224
Listing fees 7,804
Custodian fees 3,542
Pricing fees 3,008
Other 7,598
------------
Total expenses 359,125
------------
Investment income--net 1,867,844
------------
Realized & Realized gain on investments--net 297,931
Unrealized Gain Change in unrealized appreciation on investments--net (1,021,995)
(Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 1,143,780
(Notes 1b, 1d & 3): ============
See Notes to Financial Statements.
</TABLE>
MuniVest Pennsylvania Insured Fund, April 30, 1999
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 1999 1998
<S> <S> <C> <C>
Operations: Investment income--net $ 1,867,844 $ 3,809,601
Realized gain on investments--net 297,931 2,250,971
Change in unrealized appreciation on investments--net (1,021,995) (555,716)
------------ ------------
Net increase in net assets resulting from operations 1,143,780 5,504,856
------------ ------------
Dividends to Investment income--net:
Shareholders Common Shares (1,470,475) (2,877,458)
(Note 1e): Preferred Shares (405,361) (932,382)
------------ ------------
Net decrease in net assets resulting from dividends
to shareholders (1,875,836) (3,809,840)
------------ ------------
Capital Share Value of shares issued to Common Shareholders in
Transactions reinvestment of dividends 111,857 56,450
(Note 4): ------------ ------------
Net Assets: Total increase (decrease) in net assets ( 620,199) 1,751,466
Beginning of period 82,707,467 80,956,001
------------ ------------
End of period* $ 82,087,268 $ 82,707,467
============ ============
<FN>
*Undistributed investment income--net $ 295,148 $ 303,140
============ ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
April 30, For the Year Ended October 31,
Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.70 $ 13.28 $ 12.68 $ 12.91 $ 11.54
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .45 .94 .95 .97 1.01
Realized and unrealized gain (loss)
on investments--net (.17) .42 .59 (.23) 1.37
-------- -------- -------- -------- --------
Total from investment operations .28 1.36 1.54 .74 2.38
-------- -------- -------- -------- --------
Less divdends from investment income--
net to Common Shareholders (.36) (.71) (.71) (.73) (.75)
Effect of Preferred Share activity:
Dividends to Preferred Shareholders:
Investment income--net (.10) (.23) (.23) (.24) (.26)
-------- -------- -------- -------- --------
Net asset value, end of period $ 13.52 $ 13.70 $ 13.28 $ 12.68 $ 12.91
======== ======== ======== ======== ========
Market price per share, end of period $13.0625 $ 13.875 $ 12.25 $ 11.625 $ 11.875
======== ======== ======== ======== ========
Total Investment Based on market price per share (3.29%)++ 19.62% 11.80% 3.98% 16.58%
Return:** ======== ======== ======== ======== ========
Based on net asset value per share 1.38%++ 8.95% 11.12% 4.32% 19.44%
======== ======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement .87%* .86% .88% .90% .83%
Net Assets:*** ======== ======== ======== ======== ========
Expenses .87%* .86% .88% .90% .95%
======== ======== ======== ======== ========
Investment income--net 4.54%* 4.66% 4.77% 4.91% 5.33%
======== ======== ======== ======== ========
Supplemental Net assets, net of Preferred Shares,
Data: end of period (in thousands) $ 54,587 $ 55,207 $ 53,456 $ 51,050 $ 51,867
======== ======== ======== ======== ========
Preferred Shares outstanding, end of
period (in thousands) $ 27,500 $ 27,500 $ 27,500 $ 27,500 $ 27,500
======== ======== ======== ======== ========
Portfolio turnover 19.64% 60.37% 61.03% 113.65% 73.19%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 2,985 $ 3,008 $ 2,944 $ 2,856 $ 2,886
======== ======== ======== ======== ========
Dividends Investment income--net $ 369 $ 848 $ 837 $ 879 $ 966
Per Share on ======== ======== ======== ======== ========
Preferred Shares
Outstanding:
<FN>
*Annualized.
**Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, may result
in substantially different returns. Total investment returns exclude
the effects of sales loads.
***Do not reflect the effect of dividends to Preferred Shareholders.
++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
MuniVest Pennsylvania Insured Fund, April 30, 1999
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's financial statements are
prepared in accordance with generally accepted accounting principles
which may require the use of management accruals and estimates.
These unaudited financial statements reflect all adjustments which
are, in the opinion of management, necessary to a fair statement of
the results for the interim period presented. All such adjustments
are of a normal recurring nature. The Fund determines and makes
available for publication the net asset value of its Common Shares
on a weekly basis. The Fund's Common Shares are listed on the New
York Stock Exchange under the symbol 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) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of 0.50% of
the Fund's average weekly net assets, including proceeds from the
issuance of Preferred Shares.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 1999 were $15,375,027 and
$20,704,109, respectively.
Net realized gains for the six months ended April 30, 1999 and net
unrealized gains as of April 30, 1999 were as follows:
Realized Unrealized
Gains Gains
Long-term investments $ 297,931 $ 3,932,052
-------------- ------------
Total $ 297,931 $ 3,932,052
============== =============
As of April 30, 1999, net unrealized appreciation for Federal income
tax purposes aggregated $3,932,052, of which $4,004,277 related to
appreciated securities and $72,225 related to depreciated
securities. The aggregate cost of investments at April 30, 1999 for
Federal income tax purposes was $76,924,058.
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 six months ended April 30,
1999 and the year ended October 31, 1998 increased by 8,203 and
4,120, respectively, as a result of dividend reinvestment.
Preferred Shares
Auction Market Preferred Shares ("AMPS") are Preferred Shares of the
Fund, with a par value of $.05 per share and a liquidation
preference of $25,000 per share, that entitle their holders to
receive cash dividends at an annual rate that may vary for the
successive dividend periods. The yield in effect at April 30, 1999
was 3.50%.
Shares issued and outstanding during the six months ended April 30,
1999 and the year ended October 31, 1998 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 six months ended
April 30, 1999, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
an affiliate of FAM, earned $16,699 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 May 6, 1999, the Fund's Board of Trustees declared an ordinary
income dividend to Common Shareholders in the amount of $.058103 per
share, payable on May 27, 1999 to shareholders of record as of May
21, 1999.
MuniVest Pennsylvania Insured Fund, April 30, 1999
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.
YEAR 2000 ISSUES
Many computer systems were designed using only two digits to
designate years. These systems may not be able to distinguish the
Year 2000 from the Year 1900 (commonly known as the "Year 2000
Problem"). The Fund could be adversely affected if the computer
systems used by the Fund's management or other Fund service
providers do not properly address this problem before January 1,
2000. The Fund's management expects to have addressed this problem
before then, and does not anticipate that the services it provides
will be adversely affected. The Fund's other service providers have
told the Fund's management that they also expect to resolve the Year
2000 Problem, and the Fund's management will continue to monitor the
situation as the Year 2000 approaches. However, if the problem has
not been fully addressed, the Fund could be negatively affected. The
Year 2000 Problem could also have a negative impact on the
securities in which the Fund invests, and this could hurt the Fund's
investment returns.
OFFICERS AND TRUSTEES
Terry K. Glenn, President and Trustee
James H. Bodurtha, Trustee
Herbert I. London, Trustee
Robert R. Martin, Trustee
Joseph L. May, Trustee
Andre F. Perold, Trustee
Arthur Zeikel, Trustee
Vincent R. Giordano, Senior Vice President
William R. Bock, Vice President
Donald C. Burke, Vice President and Treasurer
Kenneth A. Jacob, Vice President
Alice A. Pellegrino, Secretary
Gerald M. Richard, Treasurer and Philip M. Mandel, Secretary of
MuniVest Pennsylvania Insured Fund have recently retired. Their
colleagues at Merrill Lynch Asset Management, L.P. join the Fund's
Board of Trustees in wishing Mr. Richard and Mr. Mandel well in
their retirements.
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agents
Common Shares:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Shares:
IBJ Whitehall Bank &Trust Company
One State Street
New York, NY 10004
NYSE Symbol
MVP
