-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UNZFgzAYIdBL45C2a3FHHEWaioMBwJK3wWmEbbvVTCpUcB0PnQKLaUek7doDy5YM T/TDrQjWGwpZiu/SASTMDg== 0001005477-99-001918.txt : 19990422 0001005477-99-001918.hdr.sgml : 19990422 ACCESSION NUMBER: 0001005477-99-001918 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990228 FILED AS OF DATE: 19990421 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MUNIVEST FUND INC CENTRAL INDEX KEY: 0000835948 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: NJ FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-05611 FILM NUMBER: 99598157 BUSINESS ADDRESS: STREET 1: P O BOX 9011 CITY: PRINCETON STATE: NJ ZIP: 08543-9011 BUSINESS PHONE: 6092822467 FORMER COMPANY: FORMER CONFORMED NAME: MUNIPLUS FUND INC DATE OF NAME CHANGE: 19880913 N-30D 1 SEMI-ANNUAL REPORT MUNIVEST FUND, INC. [GRAPHIC OMITTED] STRATEGIC Performance Semi-Annual Report February 28, 1999 MUNIVEST FUND, INC. The Benefits and Risks of Leveraging MuniVest Fund, Inc. utilizes leveraging to seek to enhance the yield and net asset value of its Common Stock. However, these objectives cannot be achieved in all interest rate environments. To leverage, the Fund issues Preferred Stock, which pays 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 Stock 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 Stock. However, in order to benefit Common Stock 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 Stock 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 Stock capitalization of $100 million and the issuance of Preferred Stock 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 Stock 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 Stock. In this case, the dividends paid to Preferred Stock shareholders are significantly lower than the income earned on the fund's long-term investments, and therefore the Common Stock 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 pick-up on the Common Stock will be reduced or eliminated completely. At the same time, the market value on the fund's Common Stock (that is, its price as listed on the American Stock Exchange), may, as a result, decline. Furthermore, if long-term interest rates rise, the Common Stock's net asset value will reflect the full decline in the price of the portfolio's investments, since the value of the fund's Preferred Stock does not fluctuate. In addition to the decline in net asset value, the market value of the fund's Common Stock 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 Fund, Inc., February 28, 1999 DEAR SHAREHOLDER For the six months ended February 28, 1999, the Common Stock of MuniVest Fund, Inc. earned $0.306 per share income dividends, which included earned and unpaid dividends of $0.044. This represents a net annualized yield of 6.12%, based on a month-end per share net asset value of $10.06. Over the same period, the total investment return on the Fund's Common Stock was +1.99%, based on a change in per share net asset value from $10.20 to $10.06, and assuming reinvestment of $0.312 per share income dividends and $0.029 per share capital gains distributions. For the six months ended February 28, 1999, the Fund's Preferred Stock had an average yield as follows: Series A, 3.37%; Series B, 3.57%; Series C, 3.09%; Series D, 3.11%; and Series E, 3.25%. The Municipal Market Environment During most of the six months ended February 28, 1999, fixed-income investors concentrated on the positive elements within the current economic framework. On an annual basis, US economic growth remained modest, although it strengthened somewhat in recent months. More important, continued weak foreign economic growth has been seen as preventing US growth from overheating and generating increased inflationary pressures. World commodity prices continued to decline to their lowest level in over a decade, reinforcing the extremely positive inflationary environment in the United States. Additionally, the Federal Reserve Board lowered short-term interest rates in September, October and November. These actions were taken both to ensure that US domestic economic growth would not be negatively impacted by weak foreign demand and that US financial markets would have adequate liquidity to offset deteriorating financial conditions in Asia, Russia and Brazil. Despite considerable volatility, such positive factors allowed long-term fixed-income interest rates to modestly decline into late January 1999. During the six-month period ended February 28, 1999, US Treasury bond yields declined almost 20 basis points (0.20%) to 5.09%, and long-term tax-exempt revenue bond yields fell approximately 10 basis points to 5.17%, as measured by the Bond Buyer Revenue Bond Index. However, during February investors have developed a more negative bias toward both the prospects for US economic growth and long-term bond yields. Economic indicators released during February did not suggest that the US economy was materially stronger in February than it had been in January or even in late 1998. Inflationary measures, such as the consumer price index and the gross domestic product price deflator, have continued to suggest that domestic price pressures are nearly non-existent. The consensus among economists was that Federal Reserve Board Chairman Alan Greenspan's Humphrey-Hawkins testimony emphasized that the balance between moderate economic growth and low inflation seen in recent quarters remains in place and that it was unlikely that the Federal Reserve Board would lower or raise short-term interest rates during 1999. However, investors largely chose to ignore these interpretations and began to anticipate that the Federal Reserve Board was likely to raise short-term interest rates sometime during 1999. Subsequently, fixed-income bond yields rose for the remainder of the month. In February, US Treasury bond yields rose almost 50 basis points to 5.57%, and long-term uninsured municipal revenue bond yields rose less than 15 basis points to end the month at 5.29%. During the February quarter, US Treasury bond yields rose 30 basis points, while long-term municipal bond yields rose less than 5 basis points, as measured by the Bond Buyer Revenue Bond Index. Throughout most of 1998, the municipal bond market's performance was impeded by a significant increase in annual new-issue supply. However, in recent months, the technical position of the tax-exempt market improved. This has led to the outperformance by long-term municipal bonds seen thus far in 1999. Over the last 12 months, more than $275 billion in new long-term tax-exempt bonds was underwritten, an increase of almost 16% compared to the same period a year ago. As municipal bond yields declined in recent years, it has taken increasingly lower bond yields to generate the cost savings necessary to refinance remaining higher-couponed debt. Consequently, the rate of increases in municipal bond issuance slowed dramatically in recent quarters. During the last six months, over $120 billion in new tax-exempt bonds was issued, a decrease of approximately 7% compared to the same period a year ago. During the quarter ended February 28, 1999, less than $60 billion in new long-term municipal bonds was underwritten, representing a decline of nearly 10% compared to the quarter ended February 28, 1998. The pace of tax-exempt issuance slowed further in 1999. Year-to-date issuance was less than $33 billion, representing a decline of almost 25% compared to January 1998's volume. Additionally, investors received over $40 billion in coupon payments, maturities and proceeds from early redemptions in January and February. Consequently, investor demand has been strong in recent months, easily matching, if not at times exceeding, available supply. We will monitor this situation closely in the coming months to determine if the supply pressures exerted in 1998 are abating and fostering a more balanced supply/demand environment for 1999. Such an environment should allow the tax-exempt market's performance to more closely mirror that of its taxable counterpart. Foreign investors have rarely been active investors in the tax-exempt bond market since they are unable to benefit from the inherent tax advantage of municipal securities. Consequently, the municipal bond market has not been able to benefit from the strong "flight to quality" demand enjoyed by US Treasury securities since late 1997. This inability has in large part resulted in significantly smaller declines in municipal bond yields compared to US Treasury securities. However, this has resulted in the opportunity to purchase tax-exempt securities with yields very close to or, in some instances, exceeding those of comparable US Treasury bonds. By February 28, 1999, long-term tax-exempt bond yields were at 95% of US Treasury bond yields. Municipal bond yield ratios have averaged approximately 92% for the last 12 months. During 1997, tax-exempt bond yield ratios averaged 84%. It is likely that the combination of the annual increase in new-issue volume and the "safe-haven" status of US Treasury securities drove municipal bond yield ratios to their present attractive levels. Should new volume decline and/or foreign financial markets regain stability in 1999, tax-exempt bond yield ratios could quickly return to their more historic levels (85%-88%). Looking ahead, the expected combination of moderate economic growth in the United States and continued negligible inflation suggests a relatively stable interest rate environment into early 1999. However, it is likely that foreign financial markets will again be a critical factor in determining US bond yields. While some Pacific Rim economies are expected to improve somewhat in 1999, the economies of Japan and much of Europe are unlikely to show much growth in the coming months. Also, economic problems in Russia and Brazil remain unresolved suggesting that additional shocks to the world's financial system are possible. On the other hand, the continued robustness of the US economy has led to some back up in interest rates. However, at present these factors suggest that there is little immediate risk of sustained significant increases in long-term bond yields. Portfolio Strategy In recent months, we gradually adopted a more neutral position toward the tax-exempt bond market and interest rates. Presently, this change is expected to be a temporary measure, since our longer-term outlook for interest rates remains positive. During 1999, we expect annual economic growth in the United States to be similar to 1998, if not slightly below trend. Given the current low levels of world commodity prices, we believe that any meaningful increase in inflation is unlikely. Similar to 1998, we believe that this scenario suggests that fixed-income bond yields are likely to reach their annual highs early in the year and subsequently decline. During the six-month period ended February 28, 1999, we reduced the Fund's position of interest rate-sensitive issues and placed greater 2 & 3 emphasis on securities that are expected to generate higher levels of tax-exempt income. However, the Fund remains well positioned to participate in any bond market improvement. We will closely monitor the impact foreign economies will have on US exports, as well as the ability of the US equity market to sustain current levels of valuation. Should foreign economic conditions weaken further, and/or the US equity market roll back from its current level, we are likely to return the Fund to a more aggressive structure. Until then, we will keep the Fund fully invested in an effort to seek to enhance shareholder income through the purchase of high-quality tax-exempt securities. In Conclusion We appreciate your ongoing interest in MuniVest Fund, Inc., and we look forward to assisting you with your financial needs in the months and years ahead. Sincerely, /s/ Terry K. Glenn Terry K. Glenn President and Director /s/ Vincent R. Giordano Vincent R. Giordano Senior Vice President /s/ Fred K. Stuebe Fred K. Stuebe Vice President and Portfolio Manager April 7, 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 Fund, Inc.'s Board of Directors. We are pleased to announce that Terry K. Glenn has been elected President and Director 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 Directors 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 Directors. ================================================================================ Quality Profile The quality ratings of securities in the Fund as of February 28, 1999 were as follows: - -------------------------------------------------------------------------------- Percent of S&P Rating/Moody's Rating Net Assets - -------------------------------------------------------------------------------- AAA/Aaa................................................................. 41.3% AA/Aa .................................................................. 24.3 A/A..................................................................... 16.4 BBB/Baa................................................................. 8.6 NR (Not Rated).......................................................... 3.7 Other*.................................................................. 4.0 - -------------------------------------------------------------------------------- * Temporary investments in short-term municipal securities. PROXY RESULTS During the six-month period ended February 28, 1999, MuniVest Fund, Inc. Common Stock 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:
- ---------------------------------------------------------------------------------------------------------------------------------- Shares Voted Shares Withheld For From Voting - ---------------------------------------------------------------------------------------------------------------------------------- 1. To elect the Fund's Directors: Cynthia A. Montgomery 58,886,197 937,046 Charles C. Reilly 58,865,863 957,380 Kevin A. Ryan 58,893,958 929,285 Arthur Zeikel 58,856,557 966,686 - ---------------------------------------------------------------------------------------------------------------------------------- Shares Voted Shares Voted Shares Voted For Against Abstain - ---------------------------------------------------------------------------------------------------------------------------------- 2. To ratify the selection of Deloitte & Touche LLP as the Fund's independent auditors for the current fiscal year. 58,789,779 255,585 777,879 - ----------------------------------------------------------------------------------------------------------------------------------
During the six-month period ended February 28, 1999, MuniVest Fund, Inc. Preferred Stock (Series A, B, C, D and E) 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:
- ---------------------------------------------------------------------------------------------------------------------------------- Shares Voted Shares Withheld For From Voting - ---------------------------------------------------------------------------------------------------------------------------------- 1. To elect the Fund's Directors as follows: Series A: Ronald W. Forbes and Richard R. West 1,806 0 Series B: Ronald W. Forbes and Richard R. West 1,967 0 Series C: Ronald W. Forbes 1,481 0 Richard R. West 1,477 4 Series D: Ronald W. Forbes 1,617 4 Richard R. West 1,621 0 Series E: Ronald W. Forbes 2,748 0 Richard R. West 2,740 8 - ---------------------------------------------------------------------------------------------------------------------------------- Shares Voted Shares Voted Shares Voted For Against Abstain - ---------------------------------------------------------------------------------------------------------------------------------- 2. To ratify the selection of Deloitte & Touche LLP as the Fund's Series A 1,802 4 0 independent auditors for the current fiscal year as follows: Series B 1,967 0 0 Series C 1,481 0 0 Series D 1,581 0 39 Series E 2,746 0 2 - ----------------------------------------------------------------------------------------------------------------------------------
4 & 5 MuniVest Fund, Inc., February 28, 1999 SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face Value STATE Ratings Ratings Amount Issue (Note 1a) ========================================================================================================================= Alabama--6.6% NR* Aaa $ 4,165 Alabama HFA, S/F Mortgage Revenue Bonds (Collateral Home Mortgage), Series A-1, 5.20% due 4/01/2017 (b)(d) $ 4,221 AAA NR* 9,740 Alabama HFA, S/F Mortgage Revenue Refunding Bonds, Series A, 7.60% due 10/01/2022 (d) 10,158 A1+ P1 7,900 Columbia, Alabama, IDB, PCR, Refunding (Alabama Power Company Project), VRDN, Series E, 3.20% due 10/01/2022 (g) 7,900 BBB Baa1 8,750 Courtland, Alabama, IDB, IDR, Refunding (Champion International Corporation), Series A, 7.20% due 12/01/2013 9,559 Courtland, Alabama, IDB, Solid Waste Disposal Revenue Bonds (Champion International Corporation Project), AMT: BBB Baa1 5,000 7% due 6/01/2022 5,374 BBB Baa1 6,170 Series A, 6.375% due 3/01/2029 6,521 NR* Aaa 12,500 Jefferson County, Alabama, Sewer Revenue Bonds, RITR, Series 7, 7.32% due 2/01/2027 (j) 13,040 A1 VMIG1+ 2,100 Mobile, Alabama, IDB, PCR, Refunding (Alabama Power Company Project), VRDN, 3.25% due 6/01/2015 (g) 2,100 ========================================================================================================================= Alaska--1.3% North Slope Boro, Alaska, GO, Series B (c): AAA Aaa 6,000 5.10%** due 1/01/2002 5,380 AAA Aaa 6,000 5.20%** due 1/01/2003 5,154 A1+ VMIG1+ 1,000 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds (Exxon Pipeline Company Project), VRDN, Series C, 3.15% due 12/01/2033 (g) 1,000 ========================================================================================================================= Colorado--3.3% NR* Aaa 5,000 Arapahoe County, Colorado, Capital Improvement Trust Fund, Highway Revenue Bonds (SR-E-470 Project), 7% due 8/31/2005 (a) 5,994 Denver, Colorado, City and County Airport Revenue Bonds: BBB+ Aaa 1,720 AMT, Series C, 6.75% due 11/15/2002 (a) 1,932 BBB+ Baa1 9,850 AMT, Series C, 6.75% due 11/15/2013 10,682 BBB+ Baa1 1,485 AMT, Series C, 6.75% due 11/15/2022 1,608 AAA Baa1 7,340 Series A, 7.25% due 11/15/2002 (a) 8,376 AAA NR* 525 El Paso County, Colorado, Local S/F Mortgage Revenue Bonds, AMT, Series A, 8% due 9/01/2022 (d)(k) 549 ========================================================================================================================= Delaware--0.5% AAA Aaa 3,630 Delaware Transportation Authority, Transportation System Revenue Bonds (Senior), 7% due 7/01/2004 (a)(f) 4,245 ========================================================================================================================= Florida--0.9% NR* Aaa 6,370 Florida HFA, Home Ownership Revenue Refunding Bonds, AMT, Series G-1, 7.90% due 3/01/2022 (d) 6,721 A1+ VMIG1+ 1,300 Manatee County, Florida, PCR, Refunding (Florida Power and Light Company Project), VRDN, 3.20% due 9/01/2024 (g) 1,300 A1+ VMIG1+ 100 Saint Lucie County, Florida, PCR, Refunding (Florida Power and Light Company Project), VRDN, 3.20% due 1/01/2026 (g) 100 ========================================================================================================================= Georgia--5.9% Georgia Municipal Electric Authority, Power Revenue Refunding Bonds: A A3 4,850 Series W, 6.60% due 1/01/2018 5,737 A A3 12,940 Series Y, 6.50% due 1/01/2017 15,097 Georgia State, GO: AAA Aaa 5,000 Series B, 5.75% due 7/01/2005 5,524 AAA Aaa 5,000 Series C, 5.75% due 9/01/2007 5,595 AAA Aaa 6,400 Series F, 6.50% due 12/01/2006 7,449 AAA Aaa 5,000 Series F, 6.50% due 12/01/2007 5,868 AAA Aa2 1,550 Georgia State Housing and Finance Authority, Revenue Refunding Bonds, S/F Mortgage, AMT, Sub-Series A-2, 6.55% due 12/01/2027 (k) 1,648 A A3 4,785 Monroe County, Georgia, Development Authority, PCR, Refunding (Oglethorpe Power Corporation Scherer), Series A, 6.80% due 1/01/2011 5,711 ========================================================================================================================= Hawaii--3.7% AA- NR* 3,500 Hawaii State Department of Budget and Finance, Special Purpose Mortgage Revenue Bonds, AMT, RIB, 6.66% due 11/01/2021 (j) 3,767 A A 10,000 Hawaii State Department of Budget and Finance, Special Purpose Revenue Bonds, 6.25% due 7/01/2021 10,873 AAA Aaa 20,500 Honolulu, Hawaii, City and County, Wastewater System Revenue Refunding Bonds, Junior Series, 4.50% due 7/01/2028 (f) 18,724 ========================================================================================================================= Idaho--0.5% NR* Aaa 4,420 Idaho Housing Agency, S/F Mortgage Revenue Refunding Bonds, AMT, Series E-2, 6.90% due 1/01/2027 4,733 ========================================================================================================================= Illinois--9.5% AAA Aaa 12,000 Chicago, Illinois, GO, Refunding Bonds (Project and Refunding), 5.25% due 1/01/2028 (f) 12,122 Chicago, Illinois, Sales Tax Revenue Bonds, RITR (j): NR* Aaa 6,950 Series 24, 7.32% due 1/01/2027 7,252 AAA NR* 4,175 Series 92, 7.375% due 1/01/2030 (f) 4,350 AAA Aaa 5,300 Cook County, Illinois, GO, Refunding, Series B, 5.375% due 11/15/2018 (c) 5,397 Illinois Educational Facilities Authority, Revenue Refunding Bonds (a): NR* NR* 2,500 (Chicago Osteopathic Health System), 7.25% due 11/15/2019 3,166 NR* A1 2,000 (Loyola University--Chicago), Series A, 7.125% due 7/01/2001 2,199 Illinois HDA, Revenue Refunding Bonds: A+ A1 660 (M/F Housing), Series A, 7.375% due 7/01/2017 720 A+ A1 7,000 (M/F Program), Series 5, 6.75% due 9/01/2023 7,609 Illinois Health Facilities Authority Revenue Bonds: NR* Baa1 2,650 (Holy Cross Hospital Project), 6.70% due 3/01/2014 2,862 A1+ VMIG1+ 500 (Northwestern Memorial Hospital), VRDN, 3.25% due 8/15/2025 (g) 500 NR* NR* 2,205 (Ravenswood Hospital Medical Center), 6.85% due 6/01/2002 (a) 2,446 NR* NR* 7,375 (Ravenswood Hospital Medical Center), 6.90% due 6/01/2002 (a) 8,193 Illinois Health Facilities Authority, Revenue Refunding Bonds: AA A1 9,000 (Advocate Health Care), Series A, 5.875% due 8/15/2022 9,605 NR* VMIG1+ 700 (Resurrection Health Care System), VRDN, 3.25% due 5/01/2011 (g) 700 Illinois Regional Transportation Authority Revenue Bonds: AAA Aaa 3,500 Series A, 7.20% due 11/01/2020 (h) 4,484 AAA Aaa 4,000 Series C, 7.75% due 6/01/2020 (f) 5,436 AAA Aaa 2,500 Series C, 7.10% due 6/01/2025 (f) 2,874 A1+ P1 1,900 Joliet, Illinois, Regional Port District, Marine Terminal Revenue Refunding Bonds (Exxon Project), VRDN, 3.15% due 10/01/2024 (g) 1,900 NR* NR* 2,500 Lansing, Illinois, Tax Increment Revenue Refunding Bonds (Sales Tax--Landings Redevelopment), 7% due 12/01/2008 2,751 =========================================================================================================================
Portfolio Abbreviations To simplify the listings of MuniVest Fund, Inc.'s portfolio holdings in the Schedule of Investments, we have abbreviated the names of many of the securities according to the list at right. ACES(SM) Adjustable Convertible Extendable Securities AMT Alternative Minimum Tax (subject to) GO General Obligation Bonds HDA Housing Development Authority HFA Housing Finance Agency IDA Industrial Development Authority IDB Industrial Development Board IDR Industrial Development Revenue Bonds INFLOS Inverse Floating Rate Municipal Bonds M/F Multi-Family PCR Pollution Control Revenue Bonds RIB Residual Interest Bonds RITR Residual Interest Trust Receipts S/F Single-Family VRDN Variable Rate Demand Notes 6 & 7 MuniVest Fund, Inc., February 28, 1999 SCHEDULE OF INVESTMENTS (continued) (in Thousands)
S&P Moody's Face Value STATE Ratings Ratings Amount Issue (Note 1a) ========================================================================================================================= Indiana--8.8% AAA NR* $ 5,250 Indiana Bond Bank Revenue Bonds (State Revolving Fund Program), Series A, 6.75% due 2/01/2017 $ 5,957 Indiana Health Facility Financing Authority, Hospital Revenue Refunding Bonds: AA Aa3 10,250 (Clarian Health Partners Inc.), Series A, 6% due 2/15/2021 11,097 BBB+ NR* 3,000 (Hancock Memorial Hospital Health Services), 6.125% due 8/15/2017 3,178 NR* Aaa 5,290 Indiana State, HFA, S/F Mortgage Revenue Refunding Bonds, Series A, 6.80% due 1/01/2017 5,587 AA- Aa3 7,195 Indiana Transportation Finance Authority, Highway Revenue Bonds, Series A, 6.80% due 12/01/2016 8,784 Indianapolis, Indiana, Local Public Improvement Bond Bank Revenue Bonds, Series D: AA NR* 15,335 6.75% due 2/01/2014 18,492 AA NR* 20,350 6.75% due 2/01/2020 22,401 A1 VMIG1+ 800 Jasper County, Indiana, PCR, Refunding (Northern Indiana Public Service), VRDN, Series C, 3.20% due 4/01/2019 (g) 800 AA Aa2 2,000 Purdue University, Indiana, University Revenue Bonds (Student Fee), Series B, 6.70% due 1/01/2005 (a) 2,328 ========================================================================================================================= Iowa--0.3% NR* Aaa 2,400 Iowa Finance Authority, S/F Mortgage Revenue Bonds, AMT, Series A, 7.90% due 11/01/2022 (d) 2,490 ========================================================================================================================= Louisiana--2.1% BBB+ A3 4,000 De Soto Parish, Louisiana, Environmental Improvement Revenue Refunding Bonds (International Paper Co. Project), AMT, Series B, 6.55% due 4/01/2019 4,341 AAA Aaa 1,800 East Baton Rouge Parish, Louisiana, PCR, Refunding (Exxon Project), VRDN, 3.25% due 3/01/2022 (g) 1,800 NR* A3 3,000 Lake Charles, Louisiana, Harbor and Terminal District, Port Facilities Revenue Refunding Bonds (Trunkline Long Company Project), 7.75% due 8/15/2022 3,389 A+ A1 5,000 Louisiana Public Facilities Authority Revenue Bonds (Tulane University), 6.625% due 11/15/2002 (a) 5,587 NR* VMIG1+ 3,500 Louisiana State Offshore Terminal Authority, Deepwater Port Revenue Refunding Bonds (Loop Inc.), ACES, 1st Stage, 3.20% due 9/01/2006 (c)(g) 3,500 ========================================================================================================================= Maryland--0.6% AAA Aaa 5,000 Maryland State, GO (State and Local Facilities Loan), Second Series, 5% due 7/15/2005 5,320 ========================================================================================================================= Massachusetts--4.7% AAA Aaa 2,035 Boston, Massachusetts, Water and Sewer Commission Revenue Bonds, 9.25% due 1/01/2011 (e) 2,892 AA- Aa3 3,010 Massachusetts Bay Transportation Authority Revenue Refunding Bonds (Massachusetts General Transportation System), Series A, 7% due 3/01/2019 3,735 A A1 30,000 Massachusetts State Water Resource Authority Revenue Bonds, Series A, 6.50% due 7/15/2019 35,338 ========================================================================================================================= Michigan--3.3% AAA Aaa 2,500 Avondale, Michigan, School District, GO, Refunding, 4.75% due 5/01/2022 (h) 2,385 AAA Aaa 2,420 Eaton Rapids, Michigan, Public Schools, GO, Refunding, 4.75% due 5/01/2025 (c) 2,295 AA Aa2 1,760 Michigan State Building Authority, Revenue Refunding Bonds (Facilities Program), Series 1, 5% due 10/15/2006 1,862 AA+ NR* 7,740 Michigan State, HDA, Revenue Refunding Bonds, AMT, Series D, 6.85% due 6/01/2026 (k) 8,185 Michigan State Hospital Finance Authority, Revenue Refunding Bonds: BBB Baa2 3,250 (Detroit Medical Center Obligation Group), Series A, 6.25% due 8/15/2013 3,338 BBB Baa2 7,930 (Detroit Medical Center Obligation Group), Series A, 6.50% due 8/15/2018 8,230 NR* A1 2,500 (McLaren Health Care Corp.), Series A, 5% due 6/01/2028 2,333 NR* VMIG1+ 100 (Mt. Clemens Hospital), VRDN, 2.95% due 8/15/2015 (g) 100 AAA Aaa 1,000 Richmond, Michigan, Community School District, GO, 5.60% due 5/01/2006 (a)(h) 1,097 ========================================================================================================================= Minnesota--2.1% AAA Aaa 5,820 Minnesota State, GO, Refunding (Refunding and Various Purpose), 4% due 11/01/2002 5,905 Minnesota State, HFA, S/F Mortgage Revenue Bonds: AA+ Aa2 3,315 AMT, Series L, 6.70% due 7/01/2020 3,528 AA+ Aa2 5,180 AMT, Series M, 6.70% due 7/01/2026 5,514 AA+ Aa2 3,805 Series H, 6.70% due 1/01/2018 4,075 ========================================================================================================================= Nevada--2.1% AAA Aaa 5,000 Clark County, Nevada, School District, GO, 6.75% due 12/15/2004 (a)(f) 5,790 A A2 5,000 Henderson, Nevada, Health Care Facilities Revenue Bonds (Catholic Healthcare West), 5.375% due 7/01/2026 5,020 Nevada State Housing Division Revenue Bonds, AMT: AAA Aa2 1,235 (Multi-Unit Housing), Issue B, 7.45% due 10/01/2017 (b) 1,375 NR* Aa2 2,200 (S/F Program-Mezzanine), Series A, 6.55% due 10/01/2012 (k) 2,357 AAA Aaa 3,060 Nevada State Housing Division, S/F Program, AMT, Senior Series E, 7% due 10/01/2019 (k) 3,295 A1+ P1 700 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra Pacific Power Company Project), AMT, VRDN, 3.35% due 12/01/2020 (g) 700 ========================================================================================================================= New Jersey--1.0% AAA Aaa 7,000 New Jersey Healthcare Facilities Financing Authority, Revenue Refunding Bonds (Saint Barnabas Health), Series B, 5.25% due 7/01/2015 (c) 7,204 AAA Aaa 2,000 New Jersey State Housing and Mortgage Finance Agency Revenue Bonds (Home Buyer), AMT, Series M, 6.95% due 10/01/2022 (c) 2,185 ========================================================================================================================= New York--16.7% Long Island Power Authority, New York, Electric System Revenue Bonds (c): AAA Aaa 12,345 Series A, 5.50% due 12/01/2029 12,765 A1+ VMIG1+ 2,900 VRDN, Sub-Series 7, 3.20% due 4/01/2025 (g) 2,900 AAA Aaa 5,000 Metropolitan Transportation Authority, New York, Commuter Facilities, Revenue Refunding Bonds, Series B, 4.75% due 7/01/2026 (f) 4,750 AAA Aaa 6,300 Metropolitan Transportation Authority, New York, Dedicated Tax Fund Revenue Bonds, Series A, 4.75% due 4/01/2028 (f) 5,976 New York City, New York, GO: A- A3 3,750 Refunding, Series C, 5.875% due 2/01/2016 4,036 A- A3 5,000 Refunding, Series F, 5.875% due 8/01/2024 5,385 A- Aaa 4,000 Series B, 7.25% due 8/15/2004 (a) 4,704 A- A3 2,800 Series B, 5.875% due 8/15/2016 3,015 A- Aaa 960 Series D, 9.50% due 8/01/2001 (a) 1,108 A- A3 430 Series D, 6% due 2/15/2005 (a) 479 A- A3 1,720 Series D, 6% due 2/15/2020 1,843 New York City, New York, Municipal Water Finance Authority, Water and Sewer System Revenue Bonds: NR* Aaa 11,920 RITR, Series 10, 7.37% due 6/15/2026 (j) 12,583 AAA Aaa 10,000 Series A, 4.75% due 6/15/2031 (f) 9,433 A A1 6,000 Series B, 5.75% due 6/15/2026 6,456 New York City, New York, Municipal Water Finance Authority, Water and Sewer System Revenue Refunding Bonds: A A1 5,750 Series A, 5.50% due 6/15/2023 5,888 A A1 12,000 Series B, 5.25% due 6/15/2029 12,069 AAA Aaa 6,250 Series D, 4.75% due 6/15/2025 (c) 5,943 AA Aa3 6,500 New York City, New York, Transitional Finance Authority Revenue Bonds (Future Tax), Second Series C, 4.75% due 5/01/2023 6,194 AAA Aaa 24,500 New York State Dormitory Authority, Lease Revenue Bonds, Municipal Health Facilities Improvement Program, Series 1, 4.75% due 1/15/2029 (i) 23,191 AAA Aaa 4,000 New York State Dormitory Authority Revenue Bonds (Mental Health Services Facilities Improvement), Series G, 4.50% due 8/15/2018 3,739
8 & 9 MuniVest Fund, Inc., February 28, 1999 SCHEDULE OF INVESTMENTS (continued) (in Thousands)
S&P Moody's Face Value STATE Ratings Ratings Amount Issue (Note 1a) ========================================================================================================================= New York NR* NR* $ 9,000 New York State Energy Research and Development (concluded) Authority, Gas Facilities Revenue Bonds, RITR, Series 9, 7.62% due 1/01/2021 (c)(j) $ 9,857 AA- A1 2,750 Port Authority of New York and New Jersey, Consolidated Revenue Refunding Bonds, 76th Series, AMT, 6.50% due 11/01/2026 2,922 A1+ VMIG1+ 1,600 Port Authority of New York and New Jersey, Special Obligation Revenue Refunding Bonds (Versatile Structure Obligation), VRDN, AMT, Series 1R, 3.35% due 8/01/2028 (g) 1,600 AAA Aaa 1,750 Westchester County, New York, GO, Refunding, Series B, 4% due 11/15/2003 1,775 ========================================================================================================================= North Carolina--2.8% AA Aa3 12,250 North Carolina Medical Care Commission, Health Care Facilities Revenue Refunding Bonds (Duke University Health System), Series A, 4.75% due 6/01/2028 11,407 NR* VMIG1+ 4,750 North Carolina Medical Care Commission, Hospital Revenue Bonds (Pooled Financing Project), ACES, Series A, 3.20% due 10/01/2020 (g) 4,750 AAA Aaa 6,800 North Carolina Medical Care Commission, Hospital Revenue Refunding Bonds (Pitt County Memorial Hospital), Series A, 4.75% due 12/01/2028 (c) 6,417 AAA Aaa 2,900 University of North Carolina, System Pool Revenue Bonds, Series B, 4.50% due 10/01/2018 (c) 2,727 ========================================================================================================================= Ohio--0.7% AAA Aaa 2,925 Ohio HFA, S/F Mortgage Revenue Bonds, AMT, RIB, Series B, 10.226% due 3/31/2031 (d)(j) 3,250 AAA Aa1 3,000 Ohio State, GO (Highway Capital Improvements), Series B, 5% due 5/01/2007 3,190 ========================================================================================================================= Pennsylvania--1.4% AA+ Aa2 320 Pennsylvania HFA, S/F Mortgage Revenue Bonds, AMT, Series U, 7.80% due 10/01/2020 321 AAA Aaa 10,000 Pennsylvania State Higher Educational Assistance Agency, Student Loan Revenue Bonds, AMT, RIB, 10.128% due 9/03/2026 (h)(j) 11,838 ========================================================================================================================= Rhode Island--0.8% AA+ Aa2 6,000 Rhode Island Housing and Mortgage Finance Corporation, Revenue Refunding Bonds, INFLOS, AMT, 10.833% due 4/01/2024 (j) 6,728 ========================================================================================================================= South Carolina--1.1% AAA A1 5,000 Charleston, South Carolina, Waterworks and Sewer Revenue Refunding Bonds (Refunding and Capital Improvement), 4.50% due 1/01/2024 4,613 AAA Aaa 5,000 South Carolina State Public Service Authority, Revenue Refunding Bonds, Series A, 5.75% due 1/01/2022 (c) 5,335 ========================================================================================================================= Tennessee--1.0% AAA Aaa 9,000 Metropolitan Government Nashville and Davidson County, Tennessee, Water and Sewer Revenue Refunding Bonds, Series A, 4.75% due 1/01/2022 (f) 8,624 ========================================================================================================================= Texas--7.7% Copperas Cove, Texas, Independent School District, GO (a): AAA Aaa 1,430 6.90% due 8/15/2004 1,645 AAA Aaa 1,610 6.90% due 8/15/2004 1,852 AA- Aa3 6,250 Guadalupe-Blanco River Authority, Texas, Sewage and Solid Waste Disposal Facility Revenue Bonds (E.I. du Pont de Nemours and Company Project), AMT, 6.40% due 4/01/2026 6,887 BBB Baa1 4,000 Gulf Coast, Texas, IDA (Champion International Corp.), 7.125% due 4/01/2010 4,336 A1+ VMIG1+ 1,900 Gulf Coast Waste Disposal Authority, Texas, PCR, Refunding (Amoco Oil Company Project), VRDN, 3.15% due 10/01/2017 (g) 1,900 AA Aa2 2,400 Harris County, Texas, GO (Certificates of Obligation), 10% due 10/01/2002 (e) 2,894 Harris County, Texas, Health Facilities Development Corporation, Hospital Revenue Bonds: AAA Aaa 1,485 (Hermann Hospital Project), 6.375% due 10/01/2004 (a) 1,683 NR* NR* 3,500 (Memorial Hospital System Project), Series A, 6.60% due 6/01/2004 (a) 3,990 NR* NR* 2,500 (Memorial Hospital System Project), Series A, 6.625% due 6/01/2004 (a) 2,853 AAA Aa3 5,290 (Saint Luke's Episcopal Hospital Project), 6.625% due 2/15/2012 (e) 5,684 A1+ NR* 1,900 Harris County, Texas, Health Facilities Development Corporation, Hospital Revenue Refunding Bonds (Methodist Hospital), VRDN, 3.25% due 12/01/2025 (g) 1,900 NR* Aa3 10,385 Harris County, Texas, Health Facilities Development Corporation Revenue Bonds, RITR, Series 6, 7.995% due 12/01/2027 (j) 11,508 AA Aa3 5,500 Harris County, Texas, Health Facilities Development Corporation, Revenue Refunding Bonds (School Health Care System), Series B, 6.25% due 7/01/2027 6,415 NR* Aaa 6,000 Houston, Texas, Water and Sewer System Revenue Bonds, RITR, Series 5, 7.32% due 12/01/2027 (f)(j) 6,293 AA Aa2 5,000 Lower Neches Valley Authority, Texas, Industrial Development Corporation, Sewer Facilities Revenue Bonds (Mobil Oil Refining Corp. Project), AMT, 6.40% due 3/01/2030 5,467 BBB- Baa2 3,250 Texas Gulf Coast Waste Disposal Authority, Revenue Refunding Bonds (USX Corporation Projects), 5.50% due 9/01/2017 3,216 ========================================================================================================================= Virginia--3.0% AAA Aaa 5,000 Chesterfield County, Virginia, GO, Refunding Bonds, 4% due 1/01/2005 5,041 BBB- Baa3 10,000 Pocahontas Parkway Association, Virginia, Toll Road Revenue Bonds, Senior Series A, 5.50% due 8/15/2028 9,899 AA+ Aa1 1,930 University of Virginia, University Revenue Bonds, Series A, 5% due 6/01/2006 2,045 AA+ Aa1 4,400 Virginia State, HDA, Commonwealth Mortgage Revenue Bonds, Series J, Sub-Series J-2, 6.75% due 7/01/2017 4,714 AA+ Aa1 2,950 Virginia State, HDA, Commonwealth Mortgage Revenue Refunding Bonds, AMT, Series G, Sub-Series G-2, 6.65% due 1/01/2019 3,132 AA+ Aa1 2,050 Virginia State Public School Authority, Revenue Refunding Bonds (School Financing), Series I, 5.25% due 8/01/2007 2,210 ========================================================================================================================= Washington--4.2% AA+ Aa1 6,955 King County, Washington, GO, Series B, 6.625% due 12/01/2015 8,170 NR* Aaa 1,540 Washington State Housing Finance Commission Revenue Bonds (S/F Program), Series 3N, 5.25% due 12/01/2017 (b)(d) 1,556 Washington State Public Power Supply System, Revenue Refunding Bonds (Nuclear Project No. 1): AA- Aa1 3,000 Series A, 7% due 7/01/2008 3,582 AA- Aa1 5,000 Series B, 7.25% due 7/01/2009 5,951 AA- Aa1 14,320 Series B, 7.125% due 7/01/2016 17,953 ========================================================================================================================= Wisconsin--0.5% NR* A3 4,000 Wisconsin State Health and Educational Facilities Authority, Revenue Refunding Bonds (Saint Claire Hospital Project), 7% due 2/15/2002 (a) 4,432 ========================================================================================================================= Wyoming--1.2% BBB- Baa2 7,475 Sweetwater County, Wyoming, Solid Waste Disposal Revenue Bonds (FMC Corp. Project), AMT, Series B, 6.90% due 9/01/2024 8,175 NR* VMIG1+ 250 Uinta County, Wyoming, PCR, Refunding (Chevron USA Inc. Project), VRDN, 3.20% due 12/01/2022 (g) 250 AA Aa2 2,500 Wyoming Community Development Authority Revenue Bonds, S/F, AMT, Series H, 7.10% due 6/01/2012 (k) 2,697 ========================================================================================================================= Total Investments (Cost--$824,877)--98.3% 877,136 Other Assets Less Liabilities--1.7% 14,807 -------- Net Assets--100.0% $891,943 ======== =========================================================================================================================
(a) Prerefunded. (b) FNMA Collateralized. (c) MBIA Insured. (d) GNMA Collateralized. (e) Escrowed to maturity. (f) FGIC Insured. (g) The interest rate is subject to change periodically based upon prevailing market rates. The interest rate shown is the rate in effect at February 28, 1999. (h) AMBAC Insured. (i) FSA Insured. (j) 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 February 28, 1999. (k) FHA Insured. * Not Rated. ** Represents a zero coupon bond; the interest rate shown is the effective yield at the time of purchase by the Fund. + Highest short-term rating by Moody's Investors Service, Inc. See Notes to Financial Statements. 10 & 11 MuniVest Fund, Inc., February 28, 1999 STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
As of February 28, 1999 ============================================================================================================================ Assets: Investments, at value (identified cost -- $824,877,159) (Note 1a) ........ $ 877,135,599 Cash ..................................................................... 43,594 Receivables: Securities sold ........................................................ $ 16,396,324 Interest ............................................................... 10,586,028 26,982,352 ------------- Prepaid expenses and other assets ........................................ 22,503 ------------- Total assets ............................................................. 904,184,048 ------------- ============================================================================================================================ Liabilities: Payables: Securities purchased ................................................... 10,986,839 Dividends to shareholders (Note 1e) .................................... 798,544 Investment adviser (Note 2) ............................................ 343,766 12,129,149 ------------- Accrued expenses and other liabilities ................................... 112,223 ------------- Total liabilities ........................................................ 12,241,372 ------------- ============================================================================================================================ Net Assets: Net assets ............................................................... $ 891,942,676 ============= ============================================================================================================================ Capital: Preferred Stock, par value $.025 per share; 10,000,000 shares authorized (11,000 shares of AMPS* issued and outstanding, at $25,000 per share liquidation preference) (Note 4) ............................... $ 275,000,000 Common Stock, par value $.10 per share; 150,000,000 shares authorized; 61,346,288 shares issued and outstanding (Note 4) ........................ $ 6,134,629 Paid-in capital in excess of par ......................................... 565,767,507 Undistributed investment income--net ..................................... 6,017,711 Accumulated realized capital losses on investments--net (Note 5) ......... (13,235,611) Unrealized appreciation on investments--net .............................. 52,258,440 ------------- Total -- Equivalent to $10.06 net asset value per share of Common Stock (market price--$9.875) ................................................... 616,942,676 ------------- Total capital ............................................................ $ 891,942,676 ============= ============================================================================================================================
* Auction Market Preferred Stock. See Notes to Financial Statements. STATEMENT OF OPERATIONS
For the Six Months Ended February 28, 1999 ================================================================================================================ Investment Interest and amortization of premium and discount earned .. $ 24,988,927 Income (Note 1d): ================================================================================================================ Expenses: Investment advisory fees (Note 2) ......................... $ 2,225,537 Commission fees (Note 4) .................................. 345,142 Transfer agent fees ....................................... 85,594 Professional fees ......................................... 40,203 Accounting services (Note 2) .............................. 39,302 Custodian fees ............................................ 30,031 Printing and shareholder reports .......................... 16,680 Pricing fees .............................................. 12,694 Directors' fees and expenses .............................. 9,657 Listing fees .............................................. 7,193 Other ..................................................... 15,137 ------------ Total expenses ............................................ 2,827,170 ------------ Investment income--net .................................... 22,161,757 ------------ ================================================================================================================ Realized & Unreal- Realized gain on investments--net ......................... 7,098,225 ized Gain (Loss) on Change in unrealized appreciation on investments--net ..... (13,379,324) Investments--Net ------------ (Notes 1b, 1d & 3): Net Increase in Net Assets Resulting from Operations ...... $ 15,880,658 ============ ================================================================================================================
See Notes to Financial Statements. 12 & 13 MuniVest Fund, Inc., February 28, 1999 STATEMENTS OF CHANGES IN NET ASSETS
For the Six For the Months Ended Year Ended February 28, August 31, Increase (Decrease) in Net Assets: 1999 1998 ========================================================================================================================== Operations: Investment income--net ............................................... $ 22,161,757 $ 45,972,603 Realized gain on investments--net .................................... 7,098,225 8,274,227 Change in unrealized appreciation on investments--net ................ (13,379,324) 10,430,911 ------------- ------------- Net increase in net assets resulting from operations ................. 15,880,658 64,677,741 ------------- ------------- ========================================================================================================================== Dividends & Investment income--net: Distributions to Common Stock ....................................................... (18,139,014) (36,155,315) Shareholders Preferred Stock .................................................... (4,465,672) (9,767,310) (Note 1e): Realized gain on investments--net to Common Stock shareholders ....... (1,863,437) -- ------------- ------------- Net decrease in net assets resulting from dividends and distributions to shareholders ...................................................... (24,468,123) (45,922,625) ------------- ------------- ========================================================================================================================== Capital Stock Value of shares issued to Common Stock shareholders in reinvestment of Transactions dividends and distributions .......................................... 2,260,151 -- (Note 4): ------------- ------------- ========================================================================================================================== Net Assets: Total increase (decrease) in net assets .............................. (6,327,314) 18,755,116 Beginning of period .................................................. 898,269,990 879,514,874 ------------- ------------- End of period* ....................................................... $ 891,942,676 $ 898,269,990 ============= ============= ========================================================================================================================== *Undistributed investment income--net ................................. $ 6,017,711 $ 6,460,640 ============= ============= ==========================================================================================================================
See Notes to Financial Statements. FINANCIAL HIGHLIGHTS
The following per share data and ratios For the have been derived from information Six Months provided in the financial statements. Ended For the Year Ended August 31, February 28, -------------------------------------------- Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995 =================================================================================================================================== Per Share Operating Net asset value, beginning of period .............. $ 10.20 $ 9.89 $ 9.45 $ 9.51 $ 9.57 Performance: -------- -------- -------- -------- -------- Investment income--net ............................ .37 .76 .77 .79 .81 Realized and unrealized gain (loss) on investments--net .................................. (.10) .30 .45 (.06) .10 -------- -------- -------- -------- -------- Total from investment operations .................. .27 1.06 1.22 .73 .91 -------- -------- -------- -------- -------- Less dividends and distributions to Common Stock shareholders: Investment income--net .......................... (.30) (.59) (.62) (.63) (.64) Realized gain on investments--net ............... (.03) -- -- -- (.12) In excess of realized gain on investments--net .. -- -- -- -- (.04) -------- -------- -------- -------- -------- Total dividends and distributions to Common Stock shareholders ...................................... (.33) (.59) (.62) (.63) (.80) -------- -------- -------- -------- -------- Effect of Preferred Stock activity: Dividends to Preferred Stock shareholders from investment income--net .......................... (.08) (.16) (.16) (.16) (.17) -------- -------- -------- -------- -------- Net asset value, end of period .................... $ 10.06 $ 10.20 $ 9.89 $ 9.45 $ 9.51 ======== ======== ======== ======== ======== Market price per share, end of period ............. $ 9.875 $ 10.00 $ 9.50 $ 9.125 $ 8.563 ======== ======== ======== ======== ======== =================================================================================================================================== Total Investment Based on market price per share ................... 2.12%+ 11.78% 11.25% 14.18% 10.88% Return:** ======== ======== ======== ======== ======== Based on net asset value per share ................ 1.99%+ 9.52% 11.84% 6.46% 9.38% ======== ======== ======== ======== ======== =================================================================================================================================== Ratios to Average Expenses .......................................... .64%* .64% .64% .64% .66% Net Assets:*** ======== ======== ======== ======== ======== Investment income--net ............................ 4.98%* 5.19% 5.40% 5.57% 5.91% ======== ======== ======== ======== ======== =================================================================================================================================== Supplemental Data: Net assets, net of Preferred Stock, end of period (in thousands) .................................... $616,943 $623,270 $604,515 $577,540 $581,211 ======== ======== ======== ======== ======== Preferred Stock outstanding, end of period (in thousands) ........................................ $275,000 $275,000 $275,000 $275,000 $275,000 ======== ======== ======== ======== ======== Portfolio turnover ................................ 48.65% 102.77% 78.02% 69.87% 71.95% ======== ======== ======== ======== ======== =================================================================================================================================== Leverage: Asset coverage per $1,000 ......................... $ 3,243 $ 3,266 $ 3,198 $ 3,100 $ 3,113 ======== ======== ======== ======== ======== =================================================================================================================================== Dividends Per Series A--Investment income--net .................. $ 418 $ 890 $ 872 $ 895 $ 922 Share on Preferred ======== ======== ======== ======== ======== Stock Outstanding: Series B--Investment income--net .................. $ 442 $ 902 $ 871 $ 903 $ 946 ======== ======== ======== ======== ======== Series C--Investment income--net .................. $ 383 $ 886 $ 860 $ 900 $ 947 ======== ======== ======== ======== ======== Series D--Investment income--net .................. $ 385 $ 880 $ 868 $ 901 $ 1,014 ======== ======== ======== ======== ======== Series E--Investment income--net .................. $ 403 $ 884 $ 868 $ 895 $ 968 ======== ======== ======== ======== ======== ===================================================================================================================================
* 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 Stock shareholders. + Aggregate total investment return. See Notes to Financial Statements. 14 & 15 MuniVest Fund, Inc., February 28, 1999 NOTES TO FINANCIAL STATEMENTS 1. Significant Accounting Policies: MuniVest Fund, Inc. (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 Stock on a weekly basis. The Fund's Common Stock is listed on the American Stock Exchange under the symbol MVF. 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 Directors 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 Directors. (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. o 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. o 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. ("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. Accounting services are provided to the Fund by FAM at cost. Certain officers and/or directors 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 February 28, 1999 were $420,589,121 and $447,714,439, respectively. Net realized gains for the for the six months ended February 28, 1999 and net unrealized gains as of February 28, 1999 were as follows: - -------------------------------------------------------------------------------- Realized Unrealized Gains Gains - ------------------------------------------------------------------------------- Long-term investments .............................. $ 7,098,225 $52,258,440 ----------- ----------- Total .............................................. $ 7,098,225 $52,258,440 =========== =========== - ------------------------------------------------------------------------------- As of February 28, 1999, net unrealized appreciation for Federal income tax purposes aggregated $52,258,440, all of which related to appreciated securities. The aggregate cost of investments at February 28, 1999 for Federal income tax purposes was $824,877,159. 4. Capital Stock Transactions: Common Stock At February 28, 1999, the Fund had one class of shares of Common Stock, par value $.10 per share, of which 150,000,000 shares were authorized. Shares issued and outstanding during the six months ended February 28, 1999 increased by 223,148 from shares sold and for the year ended August 31, 1998 remained constant. Preferred Stock The Auction Market Preferred Stock ("AMPS") are shares of Preferred Stock of the Fund that entitle their holders to receive cash dividends at an annual rate that may vary for the successive dividend periods for each series. The Fund is authorized to issue 10,000,000 shares of Preferred Stock. The yields in effect February 28, 1999 were as follows: Series A, 2.95%; Series B, 3.05%; Series C, 3.00%; Series D, 3.03%; and Series E, 2.70%. Shares issued and outstanding during the six months ended February 28, 1999 and the year ended August 31, 1998 remained constant. The Fund pays commissions to certain broker-dealers at the end of each auction at an annual rate of approximately one-quarter of 1% calculated on the proceeds of each auction. For the six months ended February 28, 1999, Merrill Lynch, Pierce, Fenner & Smith Incorporated, an affiliate of FAM, received $168,831 as commissions. 5. Capital Loss Carryforward: At August 31, 1998, the Fund had a net capital loss carryforward of approximately $3,631,000, all of which expires in 2004. This amount will be available to offset like amounts of any future taxable gains. 6. Subsequent Event: On March 8, 1999, the Fund's Board of Directors declared an ordinary income dividend to Common Stock shareholders in the amount of $.044139 per share, payable on March 30, 1999 to shareholders of record as of March 24, 1999. 16 & 17 MuniVest Fund, Inc., February 28, 1999 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. 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 shares of Common Stock 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. OFFICERS AND DIRECTORS Terry K. Glenn, President and Director Ronald W. Forbes, Director Cynthia A. Montgomery, Director Charles C. Reilly, Director Kevin A. Ryan, Director Richard R. West, Director Arthur Zeikel, Director Vincent R. Giordano, Senior Vice President Kenneth A. Jacob, Vice President Fred K. Stuebe, Vice President Donald C. Burke, Vice President and Treasurer Patrick D. Sweeney, Secretary - -------------------------------------------------------------------------------- Gerald M. Richard, Treasurer of MuniVest Fund, Inc. has recently retired. His colleagues at Merrill Lynch Asset Management, L.P. join the Fund's Board of Directors in wishing Mr. Richard well in his retirement. - -------------------------------------------------------------------------------- Custodian The Bank of New York 90 Washington Street New York, NY 10286 ASE Symbol MVF Transfer Agents Common Stock: The Bank of New York 101 Barclay Street New York, NY 10286 Preferred Stock: IBJ Whitehall Bank & Trust Company One State Street New York, NY 10004 18 & 19 This report, including the financial information herein, is transmitted to the shareholders of MuniVest Fund, Inc. 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 Stock by issuing Preferred Stock to provide the Common Stock shareholders with a potentially higher rate of return. Leverage creates risks for Common Stock shareholders, including the likelihood of greater volatility of net asset value and market price of shares of the Common Stock, and the risk that fluctuations in the short-term dividend rates of the Preferred Stock may affect the yield to Common Stock shareholders. Statements and other information herein are as dated and are subject to change. MuniVest Fund, Inc. Box 9011 Princeton, NJ 08543-9011 #10787--2/99 [RECYCLE LOGO] Printed on post-consumer recycled paper -----END PRIVACY-ENHANCED MESSAGE-----