MUNIVEST
FUND, INC.
FUND LOGO
Annual Report
August 31, 1996
Officers and Directors
Arthur Zeikel, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Fred K. Stuebe, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
<PAGE>
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 Schroder Bank & Trust Company
One State Street
New York, NY 10004
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 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
Printed on post-consumer recycled paper
MUNIVEST FUND, INC.
<PAGE>
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.
<PAGE>
Important
Tax Information
(unaudited)
All of the net investment income distributions paid monthly by
MuniVest Fund, Inc. during its taxable year ended August 31, 1996
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.
TO OUR SHAREHOLDERS
For the year ended August 31, 1996, the Common Stock of MuniVest
Fund, Inc. earned $0.628 per share income dividends, representing a
net annualized yield of 6.65%, based on a month-end per share net
asset value of $9.45. Over the same period, the Fund's total
investment return was +6.46%, based on a change in per share net
asset value from $9.51 to $9.45, and assuming reinvestment of $0.627
per share income dividends.
For the six months ended August 31, 1996, the Common Stock of
MuniVest Fund, Inc. earned $0.315 per share income dividends,
representing a net annualized yield of 6.61%, based on a month-end
per share net asset value of $9.45. Over the same period, the Fund's
total investment return was -0.40%, based on a change in per share
net asset value from $9.82 to $9.45, and assuming reinvestment of
$0.314 per share income dividends.
For the six months ended August 31, 1996, the Fund's Preferred Stock
had an average dividend yield as follows: Series A, 3.18%; Series B,
3.24%; Series C, 3.71%; Series D, 3.73%; and Series E, 3.48%.
The Municipal Market Environment
Municipal bond yields rose over the six-month period ended August
31, 1996. Investors became increasingly alarmed that earlier
forecasts of continued moderate growth were overly optimistic. As
indications of stronger growth were released, particularly the
strong employment reports released beginning in March, fears of
associated inflationary pressures mounted and yields rose in
response. By May and June, long-term municipal bond yields rose into
the 6.25%--6.30% range.
<PAGE>
However, in early July the combination of the Federal Reserve Board
suggesting that growth was expected to slow later in 1996 and the
temporary stock market correction allowed municipal bond yields to
fall as investors scrambled to purchase relatively scarce
securities. As measured by the Bond Buyer Revenue Bond Index, long-
term, A-rated uninsured tax-exempt bonds yielded 6.09% at August 31,
1996, an increase of over 20 basis points (0.20%) in the last six
months. Long-term US Treasury bond yields rose significantly higher
over the same period. By August 31, 1996, yields on US Treasury
bonds increased almost 65 basis points to end the six-month period
at 7.11%.
The municipal bond market's recent outperformance as compared to its
taxable counterpart was largely the result of two principal factors.
First, much of the concern in the tax-exempt market regarding the
potential loss of the inherent tax-advantage of the municipal bonds
dissipated. For much of 1995, various tax proposals, such as the
flat tax or national sales tax, were put forward either to reduce
the national debt or reform the current tax system. Most of these
proposals would have severely limited the tax advantages enjoyed by
the municipal bond market. However, in February 1996, the Kemp
Commission released its findings regarding various tax reform
proposals. While noting that numerous changes should be made, no
mention of curtailing or stopping municipal bonds' current favored
tax status was made.
The second major factor leading to the municipal bond market's
recent outperformance was the return of a more favorable technical
environment. The rate of increase in new bond issuance recently
slowed. Over the last 12 months, approximately $175 billion in long-
term municipal securities were issued, an increase of over 25% as
compared to the same period a year earlier. Much of this increase
was the result of issuers seeking to refinance their existing higher-
coupon debt as interest rates declined in 1995 and early 1996. As
interest rates rose, these financings became increasingly
economically impractical and issuance declined. Over the last six
months, less than $90 billion in long-term tax-exempt securities
were underwritten, an increase of 12% versus the comparable period a
year earlier. Only $43 billion in tax-exempt securities were issued
in the last three months, a 6% decline in issuance compared to the
August 31, 1995 quarter.
At the same time investor demand remained consistently strong. With
nominal new-issue yields above 6%, retail investor interest was
steady. Additionally, investors received over $50 billion this June
and July in assets derived from coupon income, bond maturities and
proceeds from early redemptions. Annual new bond issuance has
declined in recent years and is expected to remain below levels seen
in the early 1990s. Consequently, as the higher-coupon bonds issued
in the early-to-mid 1980s were redeemed at their first optional call
date, the total number of outstanding tax-exempt bonds has declined.
This combination of a declining net supply and significant amounts
of assets helped maintain investor demand in recent months.
<PAGE>
It is unlikely that the municipal bond market will continue to
significantly outperform US Treasury securities in the near future.
The tax-exempt bond market's recent performance led to the yield
ratio between long-term taxable and tax-exempt securities falling
from in excess of 90% to approximately 85%. While historically still
very attractive, some institutional investors, particularly short-
term traders, began to view the tax-exempt bond market's recent
outperformance as an opportunity to sell a relatively expensive
asset. However, to the long-term investor, such a sale would
represent the loss of an attractively priced asset which may not be
easily replaced given the relative scarcity of municipal bonds under
present supply conditions.
Looking ahead, no clear consensus for the direction of interest
rates currently exists. Perhaps, the primary focus going forward
will be the extent to which the increase in interest rates seen thus
far in 1996 will negatively impact future economic growth. Should
growth slow in the interest rate-sensitive sectors of the economy,
like housing, auto, and consumer spending, as many economists assert
is likely, then bond yields are likely to decline. Under such a
scenario, the municipal bond market's performance is likely to
closely mirror that of the US Treasury bond market.
Portfolio Strategy
Over the last six months, we slowly shifted away from the neutral
posture we adopted in late 1995 and early 1996 toward a more
defensive structuring. This shift largely involved the sale of
interest rate-sensitive issues and the corresponding purchase of
higher-coupon, more income-oriented securities. We increased the
Fund's cash reserve position at times to help preserve the Fund's
principal valuation during periods of significant interest rate
volatility. However, we were reluctant to raise significant cash
reserves or to maintain these reserves for an extended period of
time. While tax-exempt interest rates generally rose over the past
six months, there were a number of episodes of declining interest
rates. Continuously held large cash reserves would impede the Fund
from recouping the short-term price appreciation associated with
these episodes. More important, raising large cash reserves would
have a significant negative impact on the Fund's yield.
<PAGE>
In addition, much of the recent issuance was concentrated in a few
larger issues which somewhat inhibited our ability to diversify the
Fund's holdings. Also, given the strong investor demand noted above,
much of the new bond issuance was structured in favor of individual
retail investors. The resultant current coupon issues were
unattractive given the Fund's current defensive strategy. The Fund's
present strategy, as well as the more aggressive posture it
maintained in late 1995 and early 1996, benefited its total return
for the fiscal year ended August 31, 1996. Despite its present
higher-than-normal cash reserve position, the Fund continued to
provide its shareholders with an attractive yield for the 12 months
ended August 31, 1996.
Looking ahead for the remainder of 1996, we expect to maintain the
Fund's present defensive posture until a clearer consensus regarding
the near-term direction of interest rates can be established. This
strategy may result in some potential limiting of capital appreciation
if tax-exempt bond yields fall suddenly and dramatically. However,
the Fund's present posture should enable it to better preserve
much of its principal valuation and maintain its attractive current
dividend should municipal bond yields either remain stable or
continue to rise.
In Conclusion
We appreciate your ongoing interest in MuniVest Fund, Inc., and we
look forward to serving your investment needs in the months and
years to come.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
<PAGE>
(Fred K. Stuebe)
Fred K. Stuebe
Vice President and Portfolio Manager
September 26, 1996
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.
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
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
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Alabama--2.9% AAA NR* $ 9,740 Alabama, HFA, S/F Mortgage Revenue Bonds, Series A, 7.60%
due 10/01/2022 (d) $ 10,269
BBB Baa1 8,750 Courtland, Alabama, IDB, IDR, Refunding (Champion
International Corporation), Series A, 7.20% due 12/01/2013 9,354
BBB Baa1 5,000 Courtland, Alabama, IDB, Solid Waste Disposal Revenue Bonds
(Champion International Corporation Project), AMT, 7% due
6/01/2022 5,160
<PAGE>
Alaska--4.0% North Slope Boro, Alaska, GO, UT, Series B (c):
AAA Aaa 6,000 5.10%** due 1/01/2002 4,577
AAA Aaa 6,000 5.20%** due 1/01/2003 4,323
AA Aa3 23,250 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds
(Sohio Pipeline--BP Oil), 7.125% due 12/01/2025 25,438
California-- A1+ NR* 400 California, Pollution Control Financing Authority, PCR,
1.4% Refunding (Pacific Gas and Electric), VRDN, Series C,
3.35% due 11/01/2026 (g) 400
AA Aa 7,000 California State, Department of Water Resources Revenue
Bonds (Central Valley Project--Water Systems), Series P,
6.50% due 12/01/2018 7,439
NR* Aa 3,315 University of California, COP (UCLA Central Chiller/Cogeneration),
10.75% due 11/01/1999 3,902
Colorado--2.8% Denver, Colorado, City and County Airport Revenue Bonds:
BBB Baa 11,150 AMT, Series C, 6.75% due 11/15/2013 11,445
BBB Baa 1,905 AMT, Series C, 6.75% due 11/15/2022 1,946
AAA NR* 1,850 Series A, 7.25% due 11/15/2002 (a) 2,104
BBB Baa 5,490 Series A, 7.25% due 11/15/2025 6,089
AAA NR* 980 El Paso County, Colorado, S/F Mortgage Revenue Bonds, AMT,
Series A, 8% due 9/01/2022 (d) 1,030
NR* A 1,335 Larimer County, Colorado, COP (Poudre School District No. R-1),
10% due 12/01/2000 1,604
Connecticut-- A1+ VMIG1++ 100 Connecticut State Development Authority, PCR, Refunding
0.0% (Western Massachusetts Electric Co.), VRDN, Series A, 3.45%
due 9/01/2028 (g) 100
Delaware--0.5% AAA Aaa 3,630 Delaware Transporation Authority, Transporation System Senior
Revenue Bonds, 7% due 7/01/2014 (f) 4,067
Florida--1.2% NR* Aaa 9,535 Florida, HFA, Home Ownership Revenue Bonds, AMT, Series G-1,
7.90% due 3/01/2022 (d) 10,042
NR* VMIG1++ 100 Palm Beach County, Florida, Water and Sewer Revenue Bonds, VRDN,
3.60% due 10/01/2011 (g) 100
Georgia--6.2% A A 5,000 Georgia Municipal Electric Authority, Power Revenue Refunding
Bonds, Series V, 6.60% due 1/01/2018 5,358
Georgia Municipal Electric Authority, Special Obligation Bonds:
A A 4,850 (3rd Crossover Series), Series W, 6.60% due 1/01/2018 5,209
A+ A 12,940 (5th Crossover Series), Project One, 6.50% due 1/01/2017 13,709
Georgia State, GO, Series F:
AA+ Aaa 8,900 6.50% due 12/01/2006 9,915
AA+ Aaa 7,000 6.50% due 12/01/2007 7,811
AA+ Aa 1,550 Georgia State, HFA, S/F Mortgage Revenue Bonds, AMT, Sub-Series
A-2, 6.55% due 12/01/2027 1,574
AA- A1 3,725 Metropolitan Atlanta, Rapid Transit Authority, Sales Tax
Revenue Bonds, Series O, 6.55% due 7/01/2020 3,913
A+ A3 4,785 Monroe County, Georgia, Development Authority, PCR, Refunding
(Oglethorpe Power Scherer), Series A, 6.80% due 1/01/2011 5,290
<PAGE>
Hawaii--0.4% AA+ NR* 3,500 Hawaii State Department of Budget and Finance, Special Purpose
Mortgage Revenue Bonds (Citizens Utility Company), Series 91-A,
6.66% due 11/01/2021 3,624
Idaho--1.1% A+ Aaa 3,325 Idaho Falls, Idaho, Refunding, GO, UT, 9.10% due 4/01/2003 (a) 4,170
NR* Aaa 5,000 Idaho Housing Agency, S/F Mortgage Revenue Bonds, AMT, Series
E-2, 6.90% due 1/01/2027 5,191
Illinois-- AAA Aaa 14,700 Chicago, Illinois, GO, Series A-1, 5.125% due 1/01/2025 (h) 12,956
10.7% AAA Aaa 4,700 Chicago, Illinois, Motor Fuel Tax Revenue Bonds, 7.10% due
1/01/2001 (a)(h) 5,208
AAA Aaa 8,000 Chicago, Illinois, Wastewater Transmission Revenue Refunding
Bonds, 5.125% due 1/01/2025 (f) 7,051
AAA Aaa 16,750 Chicago, Illinois, Water Revenue Bonds, 5% due 11/01/2020 (f) 14,626
AAA Aaa 2,500 Cook County, Illinois, COP (Community College--District No.
508), UT, 8.75% due 1/01/2004 (f) 3,040
BBB Baa2 7,000 Illinois Development Finance Authority, PCR, Refunding
(Commonwealth Edison Company Project), 7.25% due 6/01/2011 7,507
Illinois Educational Facilities Authority Revenue Bonds:
NR* NR* 2,500 (Chicago Osteopathic Health System), 7.25% due 11/15/2019 (a) 2,841
A+ A1 2,000 Refunding (Loyola University--Chicago), Series A, 7.125% due
7/01/2021 2,154
Illinois, HDA, Revenue Bonds (M/F Housing Program):
A+ A1 1,945 Refunding, Series A, 7.375% due 7/01/2017 2,084
A+ A1 7,000 Series 5, 6.75% due 9/01/2023 7,163
Illinois Health Facilities Authority Revenue Bonds:
NR* Baa1 2,650 (Holy Cross Hospital Project), 6.70% due 3/01/2014 2,651
NR* Baa1 2,205 (Ravenswood Hospital Medical Center), 6.85% due 6/01/2012 2,231
NR* Baa1 7,375 (Ravenswood Hospital Medical Center), 6.90% due 6/01/2022 7,397
BBB NR* 2,500 Lansing, Illinois, Tax Increment Revenue Refunding
Bonds (Sales Tax--Landings Redevelopment), 7% due 12/01/2008 2,712
Regional Transportation Authority, Illinois, Revenue Bonds:
AAA Aaa 3,500 Series A, 7.20% due 11/01/2020 (h) 4,097
AAA Aaa 4,000 UT, Series C, 7.75% due 6/01/2020 (f) 4,974
AAA Aaa 2,500 UT, Series C, 7.10% due 6/01/2025 (f) 2,813
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Indiana--7.3% A NR* $ 5,250 Indiana Bond Bank Revenue Bonds (State Revolving Fund Program),
Series A, 6.75% due 2/01/2017 $ 5,698
NR* Aaa 5,290 Indiana State, HFA, S/F Mortgage Revenue Refunding Bonds,
Series A, 6.80% due 1/01/2017 5,477
NR* A 6,000 Indiana Transportation Finance Authority, Airport Facilities
Lease Revenue Bonds(United Air), Series A, 6.75% due 11/01/2011 6,291
A+ A1 7,195 Indiana Transportation Finance Authority, Highway Revenue
Bonds, Series A, 6.80% due 12/01/2016 8,036
Indianapolis, Indiana, Local Public Improvement Bond Bank
Revenue Refunding Bonds:
A+ NR* 15,335 Series D, 6.75% due 2/01/2014 16,882
A+ NR* 18,350 Series O, 6.75% due 2/01/2020 19,560
Iowa--0.4% NR* Aaa 3,600 Iowa Finance Authority, S/F Mortgage Revenue Bonds, AMT,
Series A, 7.90% due 11/01/2022 (d) 3,770
Kentucky--0.5% AA- Aa3 3,900 Boone County, Kentucky, PCR, Refunding (Dayton Power & Light
Co.), Series A, 6.50% due 11/15/2022 4,037
Louisiana-- NR* VMIG1++ 800 Calcasieu Parish Inc., Louisiana, IDB, Environmental Revenue
2.0% Bonds (Citgo Petroleum Corp. Project), VRDN, AMT, 3.70% due
12/01/2024 (g) 800
A- 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 4,097
NR* Baa2 3,000 Lake Charles, Louisiana, Harbor and Terminal District, Port
Facilities Revenue Refunding Bonds (Trunkline Long Company
Project), 7.75% due 8/15/2022 3,354
A- A1 5,000 Louisiana Public Facilities Authority Revenue Bonds (Tulane
University), 6.625% due 11/15/2021 5,303
A1+ VMIG1++ 3,700 Saint Charles Parish, Louisiana, PCR (Shell Oil Company--Norco
Project), VRDN, AMT, 3.65% due 11/01/2021 (g) 3,700
Massachusetts-- AAA Aaa 2,035 Boston, Massachusetts, Water and Sewer Commission Revenue Bonds,
7.9% Series A, 9.25% due 1/01/2011 (b) 2,695
Massachusetts Bay Transportation Authority Revenue Bonds
(Massachusetts General Transportation Systems):
A+ A1 3,010 Refunding, Series A, UT, 7% due 3/01/2019 3,457
A+ A1 7,500 Series C, 6.10% due 3/01/2023 7,540
Massachusetts State, HFA (Residential Development)(e):
AAA Aaa 3,375 Series A, 6.90% due 11/15/2024 3,505
AAA Aaa 2,360 Series D, Section 8, 6.875% due 11/15/2021 2,456
AAA Aaa 7,300 Massachusetts State Health and Educational Facilities Authority
Revenue Bonds, 6.70% due 8/15/2021 (i) 7,744
A A 37,130 Massachusetts State Water Resource Authority, Series A, 6.50%
due 7/15/2019 39,953
<PAGE>
Michigan-- AAA Aaa 2,085 Detroit, Michigan, Sewage Disposal Revenue Refunding Bonds,
10.5% Series B, 5.25% due 7/01/2021 (c) 1,902
AAA Aaa 6,000 Detroit, Michigan, Water Supply Systems, Revenue Refunding
Bonds, 5% due 7/01/2023 (f) 5,247
AAA Aaa 2,700 Flat Rock, Michigan, Community School District, UT, Series 95,
5.25% due 5/01/2021 (c) 2,480
AAA Aaa 2,000 Grand Ledge, Michigan, Public Schools District, UT, 7.875% due
5/01/2004 (a)(c) 2,397
AAA Aaa 5,000 Kent Hospital Financial Authority, Michigan, Health Care Revenue
Bonds(Butterworth Health Systems), Series A, 5.625% due
1/15/2026 (c) 4,782
BBB NR* 4,385 LaPeer, Michigan, Economic Development Corporation, Limited
Obligation Revenue Bonds (LaPeer Health Services Project), 8.50%
due 2/01/2000 (a) 4,984
AA+ NR* 10,915 Michigan State, HDA, S/F Mortgage Revenue Refunding Bonds, AMT,
Series D, 6.85% due 6/01/2026 11,262
Michigan State Hospital Finance Authority Revenue Bonds:
NR* Aaa 2,000 (McLaren Obligated Group), Series A, 7.50% due 9/15/2001 (a) 2,276
A A 3,250 Refunding (Detroit Medical Center Obligation Group), Series A,
6.25% due 8/15/2013 3,290
A A 7,930 Refunding (Detroit Medical Center Obligation Group), Series A,
6.50% due 8/15/2018 8,135
AA Aa 8,500 Refunding (Henry Ford Health Systems), Series A, 5.25% due
11/15/2020 7,681
AA Aa 15,000 Refunding (Henry Ford Health Systems), Series A, 5.25% due
11/15/2025 13,400
NR* VMIG1++ 100 Refunding (Mount Clemens Hospital), VRDN, 3.50% due 8/15/2015 (g) 100
AAA Aaa 2,880 (Saint John Hospital and Medical Center), Series A, 5.25% due
5/15/2026 (h) 2,604
A Aaa 2,000 (Sisters of Mercy Health Corp.), Series J, 7.375% due 2/15/2001 (a) 2,244
Michigan State Strategic Fund, Limited Obligation Revenue Bonds,
VRDN (g):
A1+ P1 3,700 Refunding (Detroit Edison Co. Projects), Series CC, 3.55% due
9/01/2030 3,700
A1+ VMIG1++ 100 (United Waste Systems, Inc. Project), AMT, 3.60% due 4/01/2010 100
AAA Aaa 3,000 Michigan State Strategic Fund, Limited Obligation Revenue
Refunding Bonds(Detroit Edison Co. Plantation Project), 6.875%
due 12/01/2021 (f) 3,272
Royal Oak, Michigan, Hospital Finance Authority Revenue Bonds:
AA- Aa 2,500 Refunding (Beaumont Properties, Inc.), Series E, 6.625% due
1/01/2019 2,623
AA Aa 5,750 (William Beaumont Hospital), Series D, 6.75% due 1/01/2001 (a) 6,284
AAA Aaa 1,000 Sandusky, Michigan, Community School District, Refunding Bonds,
UT, 5.25% due 5/01/2021 (h) 918
<PAGE>
Minnesota-- Minnesota State, HFA, S/F Mortgage Revenue Bonds:
2.7% AA+ Aa 3,720 AMT, Series L, 6.70% due 7/01/2020 3,808
AA+ Aa 5,840 AMT, Series M, 6.70% due 7/01/2026 5,978
AA+ Aa 4,215 Series H, 6.70% due 1/01/2018 4,389
AA+ Aa 2,000 Series Q, 6.70% due 1/01/2017 2,083
AA- A1 500 Red Wing, Minnesota, PCR (Northern States Power Company Project),
VRDN, 3.55% due 3/01/2011 (g) 500
BBB Baa1 5,700 Sartell, Minnesota, PCR, Refunding (Champion International Corp.),
6.95% due 10/01/2012 5,980
Missouri--0.3% AAA Aaa 2,600 Missouri State Regional Convention and Sports Complex Authority,
Series A, 6.90% due 8/15/2003 (a) 2,897
Nebraska--0.5% AAA Aaa 2,065 Nebraska Investment Finance Authority, S/F Mortgage Revenue Bonds,
AMT, Series 1, 8.125% due 8/15/2038 (c)(d) 2,165
AAA Aaa 1,900 Nebraska Public Power District Revenue Bonds, Series A, 5.25% due
1/01/2022 (c) 1,753
Nevada--1.9% AAA Aaa 3,000 Clark County, Nevada, Sanitation District, Series A, 6.80% due
7/01/2002 (a) 3,326
AAA Aaa 5,000 Clark County, Nevada, School District GO, 6.75% due 12/15/2004
(a)(f) 5,610
Nevada State Housing Division, Housing Revenue Bonds:
AAA NR* 1,235 (Multi-Unit), AMT, Issue B, 7.45% due 10/01/2017 (e) 1,318
NR* Aa 2,455 (S/F Program), AMT, Series A, 6.55% due 10/01/2012 2,504
AAA Aaa 3,150 (S/F Program), AMT, Series E, 7% due 10/01/2019 3,284
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
New Jersey-- AAA Aaa $ 3,000 New Jersey State Housing and Mortgage Finance Agency Revenue
0.4% Bonds (Home Buyer), AMT, Series M, 6.95% due 10/01/2022 (c) $ 3,139
New Mexico-- A1+ P1 1,700 Hurley, New Mexico, PCR (Kennecott Santa Fe), VRDN, 3.55% due
0.2% 12/01/2015 (g) 1,700
<PAGE>
New York-- New York City, New York, GO, UT:
6.6% BBB+ Baa1 4,500 Series B, 7% due 6/01/2016 4,698
BBB+ Baa1 1,500 Series B, Sub-Series B-1, 7% due 8/15/2016 1,570
BBB+ Baa1 4,000 Series B, Sub-Series B-1, 7.25% due 8/15/2019 4,314
BBB+ Baa1 5,000 Series D, 9.50% due 8/01/2002 5,873
BBB+ Baa1 6,290 Series F, 8.10% due 11/15/1999 6,874
BBB+ Baa1 1,610 Series I, 7.50% due 8/15/2002 1,713
BBB+ Baa1 5,450 Series I, 7.50% due 8/15/2005 5,844
A1 VMIG1++ 1,500 VRDN, Sub-Series A-4, 3.55% due 8/01/2022 (g) 1,500
A1+ NR* 1,000 New York City, New York, IDA, IDR (Japan Airlines Company
Ltd. Project), VRDN, AMT,3.60% due 11/01/2015 (g) 1,000
BBB Aaa 5,150 New York State, HFA, Service Contract Obligation Revenue Bonds,
Series A, 7.80% due 3/15/2001 (a) 5,901
A A 13,000 New York State Local Government Assistance Corporation Revenue
Bonds, Series C, 7% due 4/01/2010 14,266
AA- A1 2,750 Port Authority of New York and New Jersey, Consolidated Revenue
Bonds, 76th Series, AMT, 6.50% due 11/01/2026 2,851
North Carolina A1+ NR* 3,700 Raleigh--Durham, North Carolina, Airport Authority, Special
- --0.5% Facility Revenue Refunding Bonds (American Airlines), VRDN,
Series A, 3.55% due 11/01/2015 (g) 3,700
Ohio--3.3% Ohio, HFA, S/F Mortgage Revenue Bonds, AMT (d):
AAA NR* 10,525 Series A, 7.65% due 3/01/2029 11,027
AAA Aaa 8,135 Series B, 6.903% due 3/31/2031 8,349
AAA NR* 4,275 Series C, 8.125% due 3/01/2020 4,501
AAA NR* 4,335 Series C, 7.85% due 9/01/2021 4,563
Pennsylvania-- AAA Aaa 5,000 Allegheny County, Pennsylvania, Hospital Development Authority,
4.2% Health Center Revenue Bonds (University of Pittsburgh Medical
Center System), 5.375% due 12/01/2025 (c) 4,616
AA- Aa3 5,000 Delaware County, Pennsylvania, IDA, Revenue Refunding Bonds
(Resource Recovery Project), Series A, 8.10% due 12/01/2013 5,207
Pennsylvania, HFA, S/F Mortgage Revenue Bonds, AMT:
AA+ Aa 5,720 Series R, 8.125% due 10/01/2019 5,754
AA+ Aa 4,890 Series U, 7.80% due 10/01/2020 5,132
NR* Aaa 3,965 Pennsylvania Intergovernmental Cooperative Authority, Special
Tax Revenue Bonds (City of Philadelphia Funding Program), 6.80%
due 6/15/2002 (a) 4,374
AAA Aaa 10,000 Pennsylvania State Higher Educational Assistance Agency,
Student Loan Revenue Bonds, AMT, RIB, 9.774% due 9/03/2026 (h)(j) 11,125
Rhode Island-- AA+ A1 6,000 Rhode Island Housing and Mortgage Finance Corporation, INFLOS,
1.5% AMT, Series B, 10.291% due 4/01/2024 (j) 6,375
AAA Aaa 6,000 Rhode Island State Health and Educational Building Corporation
Revenue Bonds (Rhode Island Hospital), 6.85% due 8/15/2021 (f) 6,384
South Carolina AAA Aaa 2,045 Richland County, South Carolina, Hospital Facilities Revenue
- --0.3% Refunding Bonds(South Carolina Baptist Hospital), Series B, 10%
due 8/01/2001 (h) 2,514
<PAGE>
Texas--7.5% AAA Aaa 6,000 Austin, Texas, Utility System Revenue Bonds (Prior Lien), Series
A, 9.50% due 5/15/2000 (a) 6,980
AAA Aaa 3,040 Copperas Cove, Texas, Independent School District, GO, UT, 6.90%
due 8/15/2004 (a) 3,429
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 6,381
BBB Baa1 4,000 Gulf Coast, Texas, IDA, Revenue Refunding Bonds (Champion
International Corp.), 7.125% due 4/01/2010 4,244
NR* VMIG1++ 2,200 Gulf Coast, Texas, IDA, Solid Waste Disposal Revenue Bonds (CITGO
Petroleum Corp. Project), VRDN, AMT, 3.70% due 5/01/2025 (g) 2,200
Gulf Coast, Texas, Waste Disposal Authority, Solid Waste Disposal
Revenue Bonds (Amoco Oil Co. Project), VRDN, AMT (g):
A1+ VMIG1++ 100 3.65% due 8/01/2023 100
A1+ VMIG1++ 2,300 Refunding, 3.65% due 7/01/2027 2,300
AA Aa 2,400 Harris County, Texas, Certificates of Obligation, Tax and Revenue
Bonds, 10% due 10/01/2002 3,047
Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds:
AAA Aaa 1,485 (Hermann Hospital Project), 6.375% due 10/01/2024 (c) 1,540
A- A 3,500 (Memorial Hospital Systems Project), Series A, 6.60% due
6/01/2014 3,603
A- A 2,500 (Memorial Hospital Systems Project), Series A, 6.625% due
6/01/2024 2,558
AA Aa 5,290 (Saint Luke's Episcopal Hospital Project), Series A, 6.625% due
2/15/2012 5,502
A+ A2 2,500 Matagorda County, Texas, Port of Bay City Authority Revenue Bonds
(Hoechst Celanese Corp. Project), AMT, 6.50% due 5/01/2026 2,527
AA Aa 11,400 North Central, Texas, Health Facility Development Corporation
Revenue Bonds(Baylor University Medical Center), Series A, 6.85%
due 5/15/2001 (a) 12,579
AA Aa 3,500 Texas State, Refunding (Veterans' Land), UT, 6.50% due 12/01/2021 3,635
A1+ Aa3 3,200 West Side Calhoun County, Texas, Navigation District, Sewer and
Solid Waste Disposal Revenue Bonds (BP Chemicals Inc. Project),
VRDN, AMT, 3.70% due 4/01/2031 (g) 3,200
Utah--0.5% AA- Aa 3,150 Intermountain Power Agency, Utah, Power Supply Revenue Bonds,
Series B, 7% due 7/01/2021 3,349
NR* P1 700 Salt Lake County, Utah, PCR, Refunding (Service Station Holdings
Project), VRDN, 3.55% due 2/01/2008 (g) 700
Virginia--2.1% Virginia State, HDA, Commonwealth Mortgage Revenue Bonds:
AA+ NR* 2,950 AMT, Series G, Sub-Series G-2, 6.65% due 1/01/2019 2,998
AA+ Aa1 10,000 Series H, 6.85% due 7/01/2014 10,466
AA+ Aa1 4,400 Series J, Sub-Series J-2, 6.75% due 7/01/2017 4,572
<PAGE>
Washington-- Washington State Housing Finance Commission, S/F Mortgage Revenue
5.2% Refunding Bonds (d):
AAA NR* 7,795 Series A, 7.70% due 7/01/2016 8,233
AAA NR* 2,395 Series D, 6.95% due 7/01/2017 (e) 2,491
Washington State Public Power Supply System, Revenue Refunding
Bonds:
AA- Aa1 3,000 (Nuclear Project No. 1), Series A, 7% due 7/01/2008 3,368
AA- Aa1 5,000 (Nuclear Project No. 1), Series A, 6.875% due 7/01/2017 5,299
AA- Aa1 5,000 (Nuclear Project No. 1), Series B, 7.25% due 7/01/2009 5,688
AA- Aa1 14,320 (Nuclear Project No. 1), Series B, 7.125% due 7/01/2016 16,047
AA- Aa1 2,500 (Nuclear Project No. 2), Series B, 7% due 7/01/2012 2,676
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <S> <S> <C> <S> <C>
Wisconsin-- NR* A $ 4,000 Wisconsin State Health and Educational Facilities Authority,
0.5% Revenue Refunding Bonds (Saint Claire Hospital Project), 7%
due 2/15/2011 $ 4,206
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 7,728
AA Aa 2,500 Wyoming Community Development Authority, S/F Mortgage Revenue
Bonds, AMT, Series H,7.10% due 6/01/2012 2,619
Total Investments (Cost--$814,005)--99.2% 845,418
Other Assets Less Liabilities--0.8% 7,122
--------
Net Assets--100.0% $852,540
========
<FN>
(a)Prerefunded.
(b)Escrowed to maturity.
(c)MBIA Insured.
(d)GNMA Collateralized.
(e)FNMA Collateralized.
(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 August 31, 1996.
(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 August 31, 1996.
*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.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of August 31, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$814,004,863)(Note 1a) $845,418,187
Cash 42,950
Receivables:
Interest $ 12,494,455
Securities sold 470,000 12,964,455
------------
Prepaid expenses and other assets 20,085
------------
Total assets 858,445,677
------------
Liabilities: Payables:
Securities purchased 4,503,558
Dividends to Common Stock shareholders (Note 1e) 843,989
Investment adviser (Note 2) 353,508 5,701,055
------------
Accrued expenses and other liabilities 204,457
------------
Total liabilities 5,905,512
------------
Net Assets: Net assets $852,540,165
============
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; 61,123,140 shares issued and outstanding (Note 4) $ 6,112,314
Paid-in capital in excess of par 563,529,671
Undistributed investment income--net 6,527,951
Accumulated realized capital losses on investments--net (Note 5) (27,742,376)
Accumulated distributions in excess of realized capital gains--
net (Note 1e) (2,300,719)
Unrealized appreciation on investments--net 31,413,324
------------
Total--Equivalent to $9.45 net asset value per share of Common
Stock (market price--$9.125) 577,540,165
------------
Total capital $852,540,165
============
<PAGE>
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Year Ended August 31, 1996
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $ 53,659,362
Income (Note 1d):
Expenses: Investment advisory fees (Note 2) $ 4,303,700
Commission fees (Note 4) 695,760
Accounting services (Note 2) 143,849
Transfer agent fees 122,395
Professional fees 89,188
Custodian fees 57,517
Printing and shareholder reports 52,740
Directors' fees and expenses 32,519
Pricing fees 25,139
Listing fees 15,125
Other 21,330
------------
Total expenses 5,559,262
------------
Investment income--net 48,100,100
------------
Realized & Unreal- Realized loss on investments--net (4,368,437)
ized Gain (Loss) on Change in unrealized appreciation on investments--net 793,429
Investments--Net ------------
(Notes 1b, 1d & 3): Net Increase in Net Assets Resulting from Operations $ 44,525,092
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Year Ended August 31,
Increase (Decrease) in Net Assets: 1996 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 48,100,100 $ 49,422,296
Realized loss on investments--net (4,368,437) (23,373,939)
Change in unrealized appreciation on investments--net 793,429 29,954,817
------------ ------------
Net increase in net assets resulting from operations 44,525,092 56,003,174
------------ ------------
<PAGE>
Dividends & Investment income--net:
Distributions to Common Stock (38,311,006) (38,887,886)
Shareholders Preferred Stock (9,884,670) (10,565,338)
(Note 1e): Realized gain on investments--net, to Common Stock shareholders -- (7,718,708)
In excess of realized gain on investments--net, to Common
Stock shareholders -- (2,300,719)
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (48,195,676) (59,472,651)
------------ ------------
Net Assets: Total decrease in net assets (3,670,584) (3,469,477)
Beginning of year 856,210,749 859,680,226
------------ ------------
End of year* $852,540,165 $856,210,749
============ ============
<FN>
*Undistributed investment income--net $ 6,527,951 $ 6,623,527
============ ============
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 August 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 9.51 $ 9.57 $ 10.65 $ 10.19 $ 9.76
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .79 .81 .84 .92 .97
Realized and unrealized gain (loss) on
investments--net (.06) .10 (.78) .69 .58
-------- -------- -------- -------- --------
Total from investment operations .73 .91 .06 1.61 1.55
-------- -------- -------- -------- --------
Less dividends and distributions to Common
Stock shareholders:
Investment income--net (.63) (.64) (.70) (.78) (.79)
Realized gain on investments--net -- (.12) (.32) (.25) (.16)
In excess of realized gain on investments
--net -- (.04) -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions to Common
Stock shareholders (.63) (.80) (1.02) (1.03) (.95)
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:
Dividends to Preferred Stock shareholders
from investment income--net (.16) (.17) (.12) (.12) (.17)
-------- -------- -------- -------- --------
Net asset value, end of year $ 9.45 $ 9.51 $ 9.57 $ 10.65 $ 10.19
======== ======== ======== ======== ========
Market price per share, end of year $ 9.125 $ 8.563 $ 8.50 $ 11.25 $ 11.25
======== ======== ======== ======== ========
<PAGE>
Total Investment Based on market price per share 14.18% 10.88% (16.29%) 10.39% 20.39%
Return:* ======== ======== ======== ======== ========
Based on net asset value per share 6.46% 9.38% (.44%) 15.38% 14.52%
======== ======== ======== ======== ========
Ratios to Average Expenses .64% .66% .64% .65% .65%
Net Assets:** ======== ======== ======== ======== ========
Investment income--net 5.57% 5.91% 5.76% 6.17% 6.58%
======== ======== ======== ======== ========
Supplemental Net assets, net of Preferred Stock, end of
Data: year (in thousands) $577,540 $581,211 $584,680 $642,530 $601,049
======== ======== ======== ======== ========
Preferred Stock outstanding, end of year
(in thousands) $275,000 $275,000 $275,000 $275,000 $275,000
======== ======== ======== ======== ========
Portfolio turnover 69.87% 71.95% 100.92% 73.38% 112.10%
======== ======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,100 $ 3,113 $ 3,126 $ 3,336 $ 3,186
======== ======== ======== ======== ========
Dividends Per Series A--Investment income--net $ 895 $ 922 $ 633 $ 633 $ 878
Share on ======== ======== ======== ======== ========
Preferred Stock Series B--Investment income--net $ 903 $ 946 $ 637 $ 642 $ 882
Outstanding:++ ======== ======== ======== ======== ========
Series C--Investment income--net $ 900 $ 947 $ 644 $ 624 $ 861
======== ======== ======== ======== ========
Series D--Investment income--net $ 901 $ 1,014 $ 633 $ 644 $ 915
======== ======== ======== ======== ========
Series E--Investment income--net $ 895 $ 968 $ 626 $ 636 $ 884
======== ======== ======== ======== ========
<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 effect of sales loads.
**Do not reflect the effect of dividends to Preferred Stock
shareholders.
++Dividends per share have been adjusted to reflect a four-for-one
stock split on December 1, 1994.
See Notes to Financial Statements.
</TABLE>
<PAGE>
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 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, which are traded on exchanges, are valued
at their last sale price as of the close of such exchanges or,
lacking any sales, at the last available bid price. Securities with
remaining maturities of sixty days or less are valued at amortized
cost, which approximates market value. Securities 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.
* Financial futures contracts--The Fund may purchase or sell interest
rate futures contracts and options on such futures contracts for the
purpose of hedging the market risk on existing securities or the
intended purchase of securities. Futures contracts are contracts for
delayed delivery of securities at a specific future date and at a
specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin
and are recorded by the Fund as unrealized gains or losses. When the
contract is closed, the Fund records a realized gain or loss equal
to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
* 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. Distributions in excess of
realized capital gains are due primarily to differing tax treatments
for futures transactions and/or post-October losses.
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.
<PAGE>
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, Merrill Lynch, Pierce, Fenner & Smith Inc.
("MLPF&S"), and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the year ended August 31, 1996 were $582,648,391 and
$593,402,580, respectively.
Net realized and unrealized gains (losses) as of August 31, 1996
were as follows:
Realized
Gains Unrealized
(Losses) Gains
Long-term investments $ 802,977 $31,413,324
Short-term investments 16,405 --
Financial futures contracts (5,187,819) --
------------ -----------
Total $ (4,368,437) $31,413,324
============ ===========
As of August 31, 1996, net unrealized appreciation for Federal
income tax purposes aggregated $30,794,222, of which $33,111,809
related to appreciated securities and $2,317,587 related to
depreciated securities. The aggregate cost of investments at August
31, 1996 for Federal income tax purposes was $814,623,965.
4. Capital Stock Transactions:
Common Stock
At August 31, 1996, the Fund had one class of shares of Common
Stock, par value $.10 per share, of which 150,000,000 shares were
authorized. For the year ended August 31, 1996 shares issued and
outstanding remained constant at 61,123,140. At August 31, 1996,
total paid-in capital amounted to $569,641,985.
<PAGE>
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 or Preferred Stock having a par value of $.025 per
share. The yields in effect at August 31, 1996 were as follows:
Series A, 3.365%; Series B, 3.45%; Series C, 3.32%; Series D,
3.447%; and Series E, 3.30%.
As of August 31, 1996, there were 11,000 AMPS shares issued and
outstanding with a liquidation preference of $25,000 per share.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate of approximately one-quarter of 1%
calculated on the proceeds of each auction. For the year ended
August 31, 1996, MLPF&S, an affiliate of FAM, received $348,646
as commissions.
5. Capital Loss Carryforward:
At August 31, 1996, the Fund had a net capital loss carryforward of
approximately $16,956,000, of which $5,672,000 expires in 2003 and
$11,284,000 expires in 2004. This amount will be available to offset
like amounts of any future taxable gains.
6. Subsequent Event:
On September 6, 1996, the Fund's Board of Directors declared an
ordinary income dividend to Common Stock shareholders in the amount
of $0.053129 per share, payable on September 27, 1996 to
shareholders of record as of September 17, 1996.
<AUDIT-REPORT>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
MuniVest Fund, Inc.
We have audited the accompanying statement of assets, liabilities
and capital, including the schedule of investments, of MuniVest
Fund, Inc. as of August 31, 1996, 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.
<PAGE>
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 at August
31, 1996 by correspondence with the custodian and broker. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
MuniVest Fund, Inc. as of August 31, 1996, 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
September 30, 1996
</AUDIT-REPORT>
