MUNIVEST
PENNSYLVANIA
INSURED
FUND
FUND LOGO
Annual Report
October 31, 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, October 31, 1999
DEAR SHAREHOLDER
For the year ended October 31, 1999, the Common Shares of MuniVest
Pennsylvania Insured Fund earned $0.716 per share income dividends,
which included earned and unpaid dividends of $0.061. This
represents a net annualized yield of 6.01%, based on a month-end net
asset value of $11.91 per share. Over the same period, the total
investment return on the Fund's Common Shares was -8.06%, based on a
change in per share net asset value from $13.70 to $11.91, and
assuming reinvestment of $0.718 per share income dividends.
For the six-month period ended October 31, 1999, the total
investment return on the Fund's Common Shares was -9.31%, based on a
change in per share net asset value from $13.52 to $11.91, and
assuming reinvestment of $0.354 per share income dividends.
For the six-month period ended October 31, 1999, the Fund's Auction
Market Preferred Shares had an average yield of 3.06%.
The Municipal Market Environment
The combination of steady strong domestic economic growth,
improvement in foreign economies (most notably in Japan) and
increasing investor concerns regarding potential increases in US
inflation put upward pressure on bond yields throughout the 12-month
period ended October 31, 1999. Continued strong US employment
growth, particularly the decline in the US unemployment rate to 4.2%
in early June, was among the reasons the Federal Reserve Board cited
for raising short-term interest rates in late June and again in late
August. US Treasury bond yields reacted by climbing above 6.375% by
late October. However, by October 31, 1999, economic indicators were
released suggesting that despite strong economic and employment
growth in the third fiscal quarter of 1999, inflationary pressures
have remained extremely well-contained. This resulted in a
significant rally in the US Treasury bond market, pushing US
Treasury bond yields downward to approximately 6.15% by October 31,
1999. During the last six months, yields on 30-year US Treasury
bonds increased more than 50 basis points (0.50%).
Long-term tax-exempt bond yields also rose during the six months
ended October 31, 1999. Until early May, the municipal bond market
was able to withstand much of the upward pressure on bond yields.
However, investor concerns of additional moves by the Federal
Reserve Board to moderate US economic growth and, more importantly,
the loss of the strong technical support that the tax-exempt market
enjoyed in early 1999 helped push municipal bond yields
significantly higher for the remainder of the period. The yields on
long-term tax-exempt revenue bonds rose almost 90 basis points to
6.18% by October 31, 1999, as measured by the Bond Buyer Revenue
Bond Index.
In recent months, the significant decline in new tax-exempt bond
issuance has remained a positive factor within the municipal bond
market, as it had been for much of the past year. During the last
six months, more than $110 billion in long-term municipal bonds was
issued, a decline of almost 20% compared to the same period a year
ago. During the past three months, $55 billion in municipal bonds
was underwritten, representing a decline of nearly 10% compared to
the corresponding period in 1998. Additionally, in June and July,
investors received more than $40 billion in coupon income and
proceeds from bond maturities and early bond redemptions. These
proceeds have generated considerable retail investor interest, which
has helped absorb the recent diminished supply.
Although tax-exempt bond yields are at their highest level in over
two years and have attracted significant retail investor interest,
institutional demand has declined sharply. Long-term municipal
mutual funds have seen consistent outflows in recent months as the
yields of individual securities have risen faster than those of
larger, more diverse mutual funds. In addition, the demand from
property/casualty insurance companies has weakened as a result of
the losses, and anticipated losses, incurred as a result of the
series of damaging storms across much of the eastern United States.
Additionally, many institutional investors who were attracted to the
municipal bond market in recent years by historically attractive tax-
exempt bond yield ratios of over 90% have found other asset classes
even more attractive. Even with a reduced supply position, tax-
exempt issuers have been forced to repeatedly raise municipal bond
yields in the attempt to attract adequate demand.
The recent relative underperformance of the municipal bond market
has resulted in an opportunity for long-term investors to purchase
tax-exempt issues whose yields are nearly identical to taxable US
Treasury securities. At October 31, 1999, long-term uninsured
municipal revenue bond yields were 100% of comparable US Treasury
securities. In recent months, many taxable asset classes, such as
corporate bonds, mortgage-backed securities and US agency debt, have
all accelerated debt issuance. This acceleration was initiated
largely to avoid issuing securities at year-end and to minimize any
associated Year 2000 (Y2K) problems that may develop. However, this
increased issuance has also resulted in higher yield levels in the
various asset classes as lower bond prices became necessary to
attract sufficient investor demand. Going forward, it is believed
that the pace of non-US Government debt issuance is likely to slow
significantly. As the supply of this debt declines, we would expect
many institutional investors to return to the municipal bond market
and the attractive yield ratios available.
Looking ahead, it appears to us that long-term municipal bond yields
will remain under pressure, trading in a broad range centered near
current levels. Investors are likely to remain concerned about
future action by the Federal Reserve Board. Y2K considerations may
prohibit any further Federal Reserve Board moves through the end of
the year and the beginning of 2000. Any improvement in bond prices
will probably be contingent upon weakening in both US employment
growth and consumer spending. The 100 basis point rise in US
Treasury bond yields seen thus far this year may negatively affect
US economic growth. The US housing market will be among the first
sectors likely to be affected, as some declines have already been
evidenced in response to higher mortgage rates. We believe that it
is also unrealistic to expect double-digit returns in US equity
markets to continue indefinitely. Much of the US consumer's wealth
is tied to recent stock market appreciation. Any slowing in these
incredible growth rates is likely to reduce consumer spending. We
believe that these factors suggest that the worst of the recent
increase in bond yields has passed and stable, if not slightly
improving, bond prices may be expected.
In Conclusion
On September 23, 1999, MuniVest Pennsylvania Insured Fund's Board of
Trustees approved a plan of reorganization, subject to shareholder
approval and certain other conditions, whereby MuniYield
Pennsylvania Fund would acquire substantially all of the assets and
liabilities of the Fund and MuniHoldings Pennsylvania Insured Fund
in exchange for newly issued shares of MuniYield Pennsylvania Fund.
These Funds are registered, non-diversified, closed-end management
investment companies. All three entities have similar investment
objectives and are managed by Fund Asset Management, L.P.
We appreciate your interest in MuniVest Pennsylvania Insured Fund.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Trustee
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(William R. Bock)
William R. Bock
Vice President and Portfolio Manager
November 30, 1999
MuniVest Pennsylvania Insured Fund, October 31, 1999
PROXY RESULTS
During the six-month period ended October 31, 1999, MuniVest
Pennsylvania Insured Fund's Common Shareholders voted on the
following proposal. The proposal was approved at a shareholders'
meeting on May 27, 1999. The description of the proposal and number
of shares voted are as follows:
<TABLE>
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
1. To approve an amendment to the Certificate of Designation of the Fund. 2,097,073 95,565 75,762
</TABLE>
During the six-month period ended October 31, 1999, MuniVest
Pennsylvania Insured Fund's Preferred Shareholders voted on the
following proposal. The proposal was approved at a shareholders'
meeting on May 27, 1999. The description of the proposal and number
of shares voted are as follows:
<TABLE>
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
1. To approve an amendment to the Certificate of Designation of the Fund. 948 139 13
</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.
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.
QUALITY PROFILE
The quality ratings of securities in the Fund as of October 31, 1999
were as follows:
Percent of
S&P Rating/Moody's Rating Net Assets
AAA/Aaa 82.4%
AA/Aa 6.0
BBB/Baa 3.5
Other++ 6.7
[FN]
++Temporary investments in short-term municipal securities.
MuniVest Pennsylvania Insured Fund, October 31, 1999
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <C> <C> <S> <C>
Pennsylvania NR* Aaa $ 1,000 Allegheny County, Pennsylvania, COP, 5% due 12/01/2024 (b) $ 853
- --98.6%
A1 VMIG1++ 1,800 Allegheny County, Pennsylvania, Hospital Development Authority
Revenue Bonds (Health Center--Presbyterian University Health
System), VRDN, Series D, 3.60% due 3/01/2020 (a)(e) 1,800
NR* Aaa 1,500 Allegheny County, Pennsylvania, Sanitation Authority, Sewer
Revenue Bonds, RITR, Series 20, 6.82% due 12/01/2024 (e)(g) 1,247
AAA Aaa 2,550 Berks County, Pennsylvania, GO, Refunding, 5.85% due
11/15/2018 (c) 2,530
AAA Aaa 2,550 Blair County, Pennsylvania, Hospital Authority Revenue Bonds
(Altoona Hospital Project), RITES, 6.375% due 7/01/2013
(b)(f)(g) 2,719
NR* Aaa 1,000 Bucks County, Pennsylvania, Water and Sewer Authority,
Revenue Refunding Bonds (Neshaminy Interceptor Sewer
System), 5.60% due 6/01/2024 (b) 947
AAA Aaa 2,000 Delaware County, Pennsylvania, IDA, PCR, Refunding (Philadelphia
Electric Company Project), Series A, 7.375% due 4/01/2021 (b) 2,107
AAA Aaa 4,500 Delaware Valley, Pennsylvania, Regional Finance Authority,
Local Government Revenue Bonds, Series A, 5.50% due 8/01/2028 (b) 4,258
AAA Aaa 3,280 Johnstown, Pennsylvania, GO, Refunding, 6.45% due 10/01/2019 (c) 3,405
Lehigh County, Pennsylvania, General Purpose Authority Revenue
Bonds:
NR* Aaa 2,000 Refunding (Lehigh Valley Health Network), Series C, 5% due
7/01/2028 (e) 1,674
AAA Aaa 3,000 (Saint Lukes Hospital--Bethlehem), 6.25% due 7/01/2022 (b) 3,016
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) 3,076
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) 3,262
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) 1,084
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 2,678
Pennsylvania HFA, S/F Mortgage Revenue Refunding Bonds, AMT:
AA+ Aa2 2,500 Series 39B, 6.875% due 10/01/2024 2,572
AA+ Aa2 1,000 Series 60A, 5.85% due 10/01/2027 964
AA+ Aa2 1,000 Series 67A, 5.90% due 10/01/2030 958
AAA Aaa 2,500 Pennsylvania Intergovernmental Co-Op Authority, Special Tax
Revenue Refunding Bonds (Philadelphia Funding Program), 5% due
6/15/2021 (c) 2,175
AAA Aaa 4,000 Pennsylvania State, GO, Second Series, 5.75% due 10/01/2019 (e) 3,912
AAA Aaa 4,000 Pennsylvania State Higher Educational Assistance Agency, Student
Loan Revenue Bonds, AMT, Series C, 7.15% due 9/01/2021 (b) 4,274
AAA Aaa 2,000 Pennsylvania State Higher Educational Facilities Authority
Revenue Bonds (UPMC Health System), Series A, 5% due
8/01/2029 (d) 1,683
Pennsylvania State Higher Educational Facilities Authority,
Revenue Refunding Bonds:
A1+ NR* 400 (Carnegie Mellon University), VRDN, Series A, 3.60% due
11/01/2025 (a) 400
A1+ NR* 1,000 (Carnegie Mellon University), VRDN, Series C, 3.60% due
11/01/2029 (a) 1,000
AAA Aaa 2,000 (Temple University), First Series, 5% due 4/01/2019 (e) 1,741
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) 4,621
AAA Aaa 1,000 Philadelphia, Pennsylvania, Gas Works Revenue Bonds, First
Series B, 5% due 7/01/2028 (d) 843
A1+ VMIG1++ 100 Philadelphia, Pennsylvania, Hospitals and Higher Education
Facilities Authority, Hospital Revenue Bonds (Children's
Hospital of Philadelphia Project), VRDN, Series A, 3.60% due
3/01/2027 (a) 100
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) 2,644
AAA Aaa 5,500 Philadelphia, Pennsylvania, Parking Authority, Parking Revenue
Refunding Bonds, 5% due 2/01/2027 (b) 4,656
AAA Aaa 1,625 Philadelphia, Pennsylvania, School District, GO, Series B,
5.375% due 4/01/2022 (b) 1,502
AAA Aaa 2,000 Philadelphia, Pennsylvania, Water and Wastewater Revenue Bonds,
Series A, 5% due 8/01/2017 (b) 1,763
Schuylkill County, Pennsylvania, IDA, Resource Recovery Revenue
Refunding Bonds (Northeastern Power Company), VRDN (a):
A1+ NR* 100 AMT, Series B, 3.55% due 12/01/2022 100
A1+ NR* 1,700 Series A, 3.50% due 12/01/2022 1,700
AAA Aaa 2,525 Southeastern Pennsylvania Transportation Authority, Special
Revenue Bonds, 5.375% due 3/01/2022 (c) 2,335
Total Investments (Cost--$76,358)--98.6% 74,599
Other Assets Less Liabilities--1.4% 1,044
-------
Net Assets--100.0% $75,643
=======
<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, 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 October 31, 1999.
*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>
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)
COP Certificates of Participation
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
VRDN Variable Rate Demand Notes
MuniVest Pennsylvania Insured Fund, October 31, 1999
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of October 31, 1999
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$76,358,003) (Note 1a) $ 74,599,340
Cash 42,419
Interest receivable 1,138,199
Prepaid expenses and other assets 5,400
------------
Total assets 75,785,358
------------
Liabilities: Payables:
Dividends to shareholders (Note 1e) $ 49,198
Investment adviser (Note 2) 36,570 85,768
------------
Accrued expenses and other liabilities 56,308
------------
Total liabilities 142,076
------------
Net Assets: Net assets $ 75,643,282
============
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 (4,041,184 shares
issued and outstanding) $ 404,118
Paid-in capital in excess of par 56,013,860
Undistributed investment income--net 294,738
Accumulated realized capital losses on investments--net (Note 5) (6,810,771)
Unrealized depreciation on investments--net (1,758,663)
------------
Total--Equivalent to $11.91 net asset value per Common Share
(market price--$11.25) 48,143,282
------------
Total capital $ 75,643,282
============
<FN>
*Auction Market Preferred Shares.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Year Ended October 31, 1999
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 4,429,531
Income
(Note 1d):
Expenses: Investment advisory fees (Note 2) $ 402,436
Commission fees (Note 4) 69,773
Professional fees 66,193
Accounting services (Note 2) 44,641
Transfer agent fees 43,361
Trustees' fees and expenses 23,176
Printing and shareholder reports 20,861
Listing fees 16,202
Custodian fees 7,188
Pricing fees 5,474
Other 15,263
------------
Total expenses 714,568
------------
Investment income--net 3,714,963
------------
Realized & Realized loss on investments--net (506,474)
Unrealized Loss on Change in unrealized appreciation/depreciation on investments--net (6,712,710)
Investments--Net ------------
(Notes 1b, Net Decrease in Net Assets Resulting from Operations $ (3,504,221)
1d & 3): ============
See Notes to Financial Statements.
</TABLE>
MuniVest Pennsylvania Insured Fund, October 31, 1999
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Year Ended
October 31,
Increase (Decrease) in Net Assets: 1999 1998
<S> <S> <C> <C>
Operations: Investment income--net $ 3,714,963 $ 3,809,601
Realized gain (loss) on investments--net (506,474) 2,250,971
Change in unrealized appreciation/depreciation on investments--net (6,712,710) (555,716)
------------ ------------
Net increase (decrease) in net assets resulting from operations (3,504,221) 5,504,856
------------ ------------
Dividends to Investment income--net:
Shareholders Common Shares (2,898,783) (2,877,458)
(Note 1e): Preferred Shares (824,582) (932,382)
------------ ------------
Net decrease in net assets resulting from dividends to
shareholders (3,723,365) (3,809,840)
------------ ------------
Capital Share Value of shares issued to Common Shareholders in
Transactions reinvestment of dividends 163,401 56,450
(Note 4): ------------ ------------
Net Assets: Total increase (decrease) in net assets (7,064,185) 1,751,466
Beginning of year 82,707,467 80,956,001
------------ ------------
End of year* $ 75,643,282 $ 82,707,467
============ ============
<FN>
*Undistributed investment income--net $ 294,738 $ 303,140
============ ============
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: 1999 1998 1997 1996 1995
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 13.70 $ 13.28 $ 12.68 $ 12.91 $ 11.54
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .91 .94 .95 .97 1.01
Realized and unrealized gain (loss) on
investments--net (1.78) .42 .59 (.23) 1.37
-------- -------- -------- -------- --------
Total from investment operations (.87) 1.36 1.54 .74 2.38
-------- -------- -------- -------- --------
Less dividends to Common Shareholders from
investment income--net (.72) (.71) (.71) (.73) (.75)
-------- -------- -------- -------- --------
Effect of Preferred Share activity:
Dividends to Preferred Shareholders:
Investment income--net (.20) (.23) (.23) (.24) (.26)
-------- -------- -------- -------- --------
Net asset value, end of year $ 11.91 $ 13.70 $ 13.28 $ 12.68 $ 12.91
-------- -------- -------- -------- --------
Market price per share, end of year $ 11.25 $ 13.875 $ 12.25 $ 11.625 $ 11.875
======== ======== ======== ======== ========
Total Investment Based on market price per share (14.25%) 19.62% 11.80% 3.98% 16.58%
Return:* ======== ======== ======== ======== ========
Based on net asset value per share (8.06%) 8.95% 11.12% 4.32% 19.44%
======== ======== ======== ======== ========
Ratios Based on Total expenses, net of reimbursement** 1.34% 1.29% 1.34% 1.38% 1.30%
Average Net ======== ======== ======== ======== ========
Assets of Total expenses** 1.34% 1.29% 1.34% 1.38% 1.48%
Common Shares: ======== ======== ======== ======== ========
Total investment income--net** 6.98% 6.98% 7.25% 7.52% 8.33%
======== ======== ======== ======== ========
Amount of dividends to Preferred
Shareholders 1.55% 1.71% 1.76% 1.88% 2.17%
======== ======== ======== ======== ========
Investment income--net, to Common
Shareholders 5.43% 5.27% 5.49% 5.64% 6.16%
======== ======== ======== ======== ========
Ratios Based on Total expenses, net of reimbursement .89% .86% .88% .90% .83%
Total Average ======== ======== ======== ======== ========
Net Assets:++** Total expenses .89% .86% .88% .90% .95%
======== ======== ======== ======== ========
Total investment income--net 4.61% 4.66% 4.77% 4.91% 5.33%
======== ======== ======== ======== ========
Ratios Based on Dividends to Preferred Shareholders 3.00% 3.39% 3.35% 3.52% 3.86%
Average Net ======== ======== ======== ======== ========
Assets of
Preferred
Shares:
Supplemental Net assets, net of Preferred Shares, end of
Data: year (in thousands) $ 48,143 $ 55,207 $ 53,456 $ 51,050 $ 51,867
======== ======== ======== ======== ========
Preferred Shares outstanding, end of year
(in thousands) $ 27,500 $ 27,500 $ 27,500 $ 27,500 $ 27,500
======== ======== ======== ======== ========
Portfolio turnover 51.55% 60.37% 61.03% 113.65% 73.19%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 2,751 $ 3,008 $ 2,944 $ 2,856 $ 2,886
======== ======== ======== ======== ========
Dividends Investment income--net $ 750 $ 848 $ 837 $ 879 $ 966
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 charges.
**Do not reflect the effect of dividends to Preferred Shareholders.
++Includes Common and Preferred Share average net assets.
See Notes to Financial Statements.
</TABLE>
MuniVest Pennsylvania Insured Fund, October 31, 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. 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 .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, 1999 were $38,929,056 and
$42,793,508, respectively.
Net realized gains (losses) for the year ended October 31, 1999 and
net unrealized losses as of October 31, 1999 were as follows:
Realized Unrealized
Gains (Losses) Losses
Long-term investments $ (628,064) $ (1,758,663)
Financial futures contracts 121,590 --
------------ ------------
Total $ (506,474) $ (1,758,663)
============ ============
As of October 31, 1999, net unrealized depreciation for Federal
income tax purposes aggregated $1,758,663, of which $1,334,144
related to appreciated securities and $3,092,807 related to
depreciated securities. The aggregate cost of investments at October
31, 1999 for Federal income tax purposes was $76,358,003.
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 beneficial interest without approval of the holders of
Common Shares.
Common Shares
Shares issued and outstanding during the years ended October 31,
1999 and October 31, 1998 increased by 12,208 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 October 31, 1999
was 2.85%.
Shares issued and outstanding during the years ended October 31,
1999 and 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 .25% to .375%,
calculated on the proceeds of each auction. For the year ended
October 31, 1999, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, an affiliate of FAM, earned $35,959 as commissions.
5. Capital Loss Carryforward:
At October 31, 1999, the Fund had a net capital loss carryforward of
approximately $6,483,000, of which $1,807,000 expires in 2002,
$3,117,000 expires in 2003, $954,000 expires in 2004 and $605,000
expires in 2007. This amount will be available to offset like
amounts of any future taxable gains.
6. Reorganization Plan:
On September 23, 1999, the Fund's Board of Trustees approved a plan
of reorganization, subject to shareholder approval and certain other
conditions, whereby MuniYield Pennsylvania Fund would acquire
substantially all of the assets and liabilities of the Fund and
MuniHoldings Pennsylvania Insured Fund in exchange for newly issued
shares of MuniYield Pennsylvania Fund. These Funds are registered,
non-diversified, closed-end management investment companies. All
three entities have a similar investment objective and are managed
by FAM.
7. Subsequent Event:
On November 8, 1999, the Fund's Board of Trustees declared an
ordinary income dividend to Common Shareholders in the amount of
$.060954 per share, payable on November 29, 1999 to shareholders of
record as of November 22, 1999.
MuniVest Pennsylvania Insured Fund, October 31, 1999
<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, 1999, 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, 1999 by correspondence with the custodian. 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, 1999, 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, 1999
</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,
1999 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
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
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:
The Bank of New York
100 Church Street
New York, NY 10286
NYSE Symbol
MVP
