MUNIVEST
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Annual Report
August 31, 1997
<PAGE>
MUNIVEST FUND, INC.
The Benefits MuniVest Fund, Inc. utilizes leveraging to seek to enhance the
and Risks of yield and net asset value of its Common Stock. However, these
Leveraging 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.
Important All of the net investment income distributions paid monthly by
Tax Information MuniVest Fund, Inc. during its taxable year ended August 31,
(unaudited) 1997 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.
<PAGE>
MuniVest Fund, Inc., August 31, 1997
TO OUR SHAREHOLDERS
For the year ended August 31, 1997, the Common Stock of MuniVest Fund, Inc.
earned $0.614 per share income dividends, which included earned and unpaid
dividends of $0.050. This represents a net annualized yield of 6.21%, based on
a month-end per share net asset value of $9.89. Over the same period, the
total investment return on the Fund's Common Stock was +11.84%, based on a
change in per share net asset value from $9.45 to $9.89, and assuming
reinvestment of $0.617 per share income dividends.
For the six months ended August 31, 1997, the total investment return on the
Fund's Common Stock was +4.86%, based on a change in per share net asset value
from $9.74 to $9.89, and assuming reinvestment of $0.301 per share income
dividends.
For the six months ended August 31, 1997, the Fund's Preferred Stock had an
average yield as follows: Series A, 3.28%; Series B, 3.30%; Series C, 3.76%;
Series D, 3.79%; and Series E, 3.63%.
The Municipal Market Environment
During most of the six-month period ended August 31, 1997, a number of very
favorable factors combined to push both tax-exempt and taxable bond yields
lower. A slowing domestic economy, a continued benign, if not improving,
inflationary environment, a declining Federal budget deficit with resultant
reduced Treasury borrowing needs, and a successful Congressional budget accord
all resulted in significant declines in fixed-income yields. By the end of
July, 30-year US Treasury bond yields had declined approximately 50 basis
points (0.50%) to 6.30%, their lowest level in over a year. Similarly, as
measured by the Bond Buyer Revenue Bond Index, long-term municipal revenue
bond yields fell over 50 basis points to end July at 5.49%, their lowest level
since early 1994.
However, in August the fixed-income markets retraced a part of their earlier
gains. Investors and traders developed new concerns that domestic economic
growth would reaccelerate during the remainder of the calendar year and cause
the Federal Reserve Board to raise interest rates prior to 1998. Long-term US
Treasury bond yields increased by approximately 30 basis points by the end of
August to 6.61%. Long-term tax-exempt revenue bond yields also rose by
approximately 20 basis points by the end of August to 5.60%. Nevertheless,
over the last six months, interest rates generally declined because of the
overall positive combination of moderate economic growth and minimal
inflation, as seen in the decline in US Treasury bond yields of approximately
20 basis points, and the fall in long-term municipal bond yields of
approximately 25 basis points.
The decline in tax-exempt bond yields over the past six months was even more
impressive given that the municipal market has lost much of the technical
support it had enjoyed for over a year. In previous quarters, new tax-exempt
bond issuance declined or remained stable. However, during the six months
ended August 31, 1997, approximately $100 billion in new long-term municipal
securities was underwritten, an increase of over 12% versus the comparable
period in 1996. As tax-exempt bond yields have declined, many municipal bond
issuers took this opportunity to both issue new debt and refinance older,
higher-couponed debt with new, lower-yielding issues. This refinancing has led
to a surge in tax-exempt issuance in recent months. Over the three months
ended August 31, 1997, new long-term tax-exempt bond issuance totaled
approximately $55 billion, an increase of over 25% versus the August 31, 1996
quarter.
The decline in municipal bond yields has also resulted in some reduction in
retail investor demand. In earlier episodes of rapidly declining interest
rates, individual investor demand initially fell until investors became more
acclimated to the current levels. If interest rates stabilize, we expect
investor demand to return to earlier levels. In addition, this past June and
July, municipal bond investors received over $50 billion in assets from coupon
income payments, bond maturities, and the proceeds from early bond
redemptions. Despite the continued allure of the US equity market, most of
these assets are expected to be reallocated to the municipal bond market as
investors adjust to the new investment environment.
Looking forward, given the extent of the recent bond market rally, some
retrenchment or at least a period of consolidation is likely. However, the
positive backdrop of modest economic growth and low inflation suggests that
any such adjustment is not likely to be excessive. Despite recent increases in
new bond issuance, supply for all of 1997 is not expected to be materially
different from earlier estimates of approximately $175 billion. It is likely
that the recent increase in issuance has largely borrowed from issuance
originally scheduled for later this year. Additionally, any significant
increase in tax-exempt bond yields will prevent any further bond refinancings,
reducing future supply. Unless the current positive economic fundamentals
undergo immediate and significant deterioration, any increase in municipal
bond yields is likely to be viewed as an opportunity to purchase more
attractively priced tax-exempt securities.
Portfolio Strategy
During the six months ended August 31, 1997, we maintained the slightly
defensive posture we had adopted in late 1996. Our principal concern was that
the strong economic growth seen in late 1996 would continue into 1997,
eventually causing the Federal Reserve Board to raise interest rates so that
growth would not result in any significant increase in inflation. However, US
economic growth slowed in the second quarter of 1997, allowing interest rates
to decline. We believed that the Fund's structure would allow it to perform
well during periods of market improvement.
We generally maintained the Fund's cash reserves below 5% in order to seek to
enhance the Fund's dividend stream and in response to the continued scarcity
of attractively priced tax-exempt issues. Our strategy served the Fund well,
generating total return performance above industry average.
Looking forward, we expect to maintain our current strategy of waiting for an
environment characterized by higher interest rates before adopting a more
aggressive portfolio structure. In such an environment, we expect to continue
to emphasize higher-couponed issues over more interest rate-sensitive
securities. The generation of an optimal amount of tax-exempt income remains
the primary focus of the Fund. As new bond issuance is estimated to be
approximately $175 billion for all of 1997, we expect to maintain the Fund's
fully invested position.
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/ Arthur Zeikel
Arthur Zeikel
President
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ Fred K. Stuebe
Fred K. Stuebe
Vice President and Portfolio Manager
September 24, 1997
2 & 3
<PAGE>
MuniVest Fund, Inc., August 31, 1997
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
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<S> <C> <C> <C> <C> <C>
Alabama--4.5% AAA Aaa $ 2,500 Alabama Agricultural and Mechanical University, 6.50% due 11/01/2025 (c) $ 2,795
AAA NR* 9,740 Alabama, HFA, S/F Mortgage Revenue Bonds, Series A, 7.60% due 10/01/2022
(d) 10,262
BBB Baa1 8,750 Courtland, Alabama, IDB, IDR, Refunding (Champion International
Corporation), Series A, 7.20% due 12/01/2013 9,689
Courtland, Alabama, IDB, Solid Waste Disposal Revenue Bonds (Champion
International Corporation Project), AMT:
BBB Baa1 5,000 7% due 6/01/2022 5,409
BBB Baa1 6,170 Series A, 6.375% due 3/01/2029 6,421
AAA Aaa 5,000 Jefferson County, Alabama, Sewer Revenue Bonds, Series D, 5.70% due
2/01/2020 (f) 5,109
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Alaska--4.0% North Slope Boro, Alaska, GO, UT, Series B (c):
AAA Aaa 6,000 5.10%** due 1/01/2002 4,896
AAA Aaa 6,000 5.20%** due 1/01/2003 4,648
AA Aa3 23,250 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds (Sohio
Pipeline-BP Oil), 7.125% due 12/01/2025 25,953
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Arizona--0.5% A1+ P1 1,200 Maricopa County, Arizona, PCR, Refunding (Arizona Public Service Co.),
VRDN, Series B, 3.70% due 5/01/2029 (g) 1,200
AAA NR* 3,000 Phoenix, Arizona, Civic Improvement Corporation, Wastewater System, Lease
Revenue Bonds, 6.125% due 7/01/2003 (a) 3,299
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California--1.4% A1+ NR* 4,100 California Pollution Control Financing Authority, PCR, Refunding (Pacific
Gas and Electric), VRDN, Series A, 3.50% due 12/01/2018 (g) 4,100
AA Aaa 7,000 California State Department of Water Resources Revenue Bonds (Central
Valley Project-- Water Systems), Series P, 6.50% due 6/01/2006 (a) 8,007
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Colorado--2.6% Denver, Colorado, City and County Airport Revenue Bonds:
BBB Baa1 11,150 AMT, Series C, 6.75% due 11/15/2013 11,904
BBB Baa1 1,905 AMT, Series C, 6.75% due 11/15/2022 2,027
AAA Baa1 5,490 Series A, 7.25% due 11/15/2002 (a) 6,288
AAA NR* 1,850 Series A, 7.25% due 11/15/2002 (a) 2,119
AAA NR* 875 El Paso County, Colorado, S/F Mortgage Revenue Bonds, AMT, Series A, 8%
due 9/01/2022 (d) 927
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Connecticut--0.0% A1+ VMIG1+ 100 Connecticut State Development Authority, PCR, Refunding (Western
Massachusetts Electric Co.), VRDN, Series A, 3.15% due 9/01/2028 (g) 100
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Delaware--0.5% AAA Aaa 3,630 Delaware Transportation Authority, Transportation System, Senior Revenue
Bonds, 7% due 7/01/2004 (a)(f) 4,191
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Florida--1.1% NR* Aaa 9,000 Florida, HFA, Home Ownership Revenue Bonds, AMT, Series G-1, 7.90% due
3/01/2022 (d) 9,556
NR* VMIG1+ 100 Palm Beach County, Florida, Water and Sewer Revenue Bonds, VRDN, 3.80%
due 10/01/2011 (g) 100
A1+ VMIG1+ 400 Saint Lucie County, Florida, PCR, Refunding (Florida Power & Light
Company Project), VRDN, 3.70% due 1/01/2026 (g) 400
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Georgia--5.2% A1 VMIG1+ 200 Burke County, Georgia, Development Authority, PCR (Georgia Power Company
Plant Vogtle Project), VRDN, 3.70% due 7/01/2024 (g) 200
Georgia Municipal Electric Authority, Special Obligation Bonds:
A A3 4,850 (3rd Crossover Series), Series W, 6.60% due 1/01/2018 5,472
A+ A3 12,940 (5th Crossover Series), Project One, 6.50% due 1/01/2017 14,418
Georgia State, GO, Series F:
AAA Aaa 8,900 6.50% due 12/01/2006 10,126
AAA Aaa 7,000 6.50% due 12/01/2007 8,015
AA+ Aa 1,550 Georgia State, HFA, S/F Mortgage Revenue Bonds, AMT, Sub-Series A-2,
6.55% due 12/01/2027 1,625
A A3 4,785 Monroe County, Georgia, Development Authority, PCR, Refunding (Oglethorpe
Power Scherer), Series A, 6.80% due 1/01/2011 5,491
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Hawaii--1.6% Hawaii State Department of Budget and Finance, Special Purpose Mortgage
Revenue Bonds:
AA+ NR* 3,500 (Citizens Utility Company), AMT, Series 91-A, 6.66% due 11/01/2021 3,736
A A2 10,000 (Kapi'Olani Health Obligations), 6.25% due 7/01/2021 10,514
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Idaho--0.6% NR* Aaa 5,000 Idaho Housing Agency, S/F Mortgage Revenue Bonds, AMT, Series E-2, 6.90%
due 1/01/2027 5,287
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Illinois--9.4% AAA Aaa 4,815 Chicago, Illinois, GO, UT, 5.25% due 1/01/2027 (f) 4,627
AAA Aaa 23,800 Chicago, Illinois, Sales Tax Revenue Bonds, 5.375% due 1/01/2027 (f) 23,266
AAA Aaa 2,500 Cook County, Illinois, COP (Community College--District No. 508), UT,
8.75% due 1/01/2004 (f) 3,033
Illinois Educational Facilities Authority Revenue Bonds (a):
NR* NR* 2,500 (Chicago Osteopathic Health System), 7.25% due 11/15/2019 3,024
A+ A1 2,000 Refunding (Loyola University--Chicago), Series A, 7.125% due 7/01/2001 2,225
Illinois, HDA, Revenue Bonds (M/F Housing Program):
A+ A1 920 Refunding, Series A, 7.375% due 7/01/2017 997
A+ A1 7,000 Series 5, 6.75% due 9/01/2023 7,322
Illinois Health Facilities Authority Revenue Bonds:
NR* Baa1 2,650 (Holy Cross Hospital Project), 6.70% due 3/01/2014 2,797
A1+ VMIG1+ 800 (Northwestern Memorial Hospital), VRDN, 3.55% due 8/15/2025 (g) 800
NR* Baa1 2,205 (Ravenswood Hospital Medical Center), 6.85% due 6/01/2012 2,333
NR* Baa1 7,375 (Ravenswood Hospital Medical Center), 6.90% due 6/01/2022 7,803
AA A1 9,000 Refunding (Advocate Health Care), Series A, 5.875% due 8/15/2022 9,112
BBB NR* 2,500 Lansing, Illinois, Tax Increment Revenue Refunding Bonds (Sales
Tax--Landings Redevelopment), 7% due 12/01/2008 2,769
Regional Transportation Authority, Illinois, Revenue Bonds:
AAA Aaa 3,500 Series A, 7.20% due 11/01/2020 (h) 4,316
AAA Aaa 4,000 UT, Series C, 7.75% due 6/01/2020 (f) 5,210
AAA Aaa 2,500 UT, Series C, 7.10% due 6/01/2025 (f) 2,850
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</TABLE>
Portfolio To simplify the listings of MuniVest Fund, Inc.'s portfolio
Abbreviations 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
4 & 5
<PAGE>
MuniVest Fund, Inc., August 31, 1997
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Indiana--9.4% A NR* $ 5,250 Indiana Bond Bank Revenue Bonds (State Revolving Fund Program), Series A,
6.75% due 2/01/2017 $ 5,862
Indiana Health Facilities Financing Authority, Hospital Revenue Refunding
Bonds:
AA Aa3 10,250 (Clarian Health Partners Inc.), Series A, 6% due 2/15/2021 10,515
BBB+ NR* 3,000 (Hancock Memorial Hospital Health Services), 6.125% due 8/15/2017 3,080
NR* Aaa 5,290 Indiana State, HFA, S/F Mortgage Revenue Refunding Bonds, Series A, 6.80%
due 1/01/2017 5,569
NR* Aaa 6,000 Indiana Transportation Finance Authority, Airport Facilities Lease
Revenue Bonds (United Air), Series A, 6.75% due 11/01/2002 (a) 6,715
A+ A1 7,195 Indiana Transportation Finance Authority, Highway Revenue Bonds, Series
A, 6.80% due 12/01/2016 8,391
Indianapolis, Indiana, Local Public Improvement Bond Bank, Revenue
Refunding Bonds, Series D:
A+ NR* 15,335 6.75% due 2/01/2014 17,716
A+ NR* 20,350 6.75% due 2/01/2020 22,354
AA- Aa2 2,000 Purdue University, Indiana, University Revenue Bonds (Student Fee),
Series B, 6.70% due 7/01/2015 2,218
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Iowa--0.4% NR* Aaa 3,115 Iowa Finance Authority, S/F Mortgage Revenue Bonds, AMT, Series A, 7.90%
due 11/01/2022 (d) 3,262
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Kentucky--0.5% AA- Aa3 3,900 Boone County, Kentucky, PCR, Refunding (Dayton Power & Light Co.), Series
A, 6.50% due 11/15/2022 4,168
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Louisiana--2.1% A1+ NR* 5,100 Ascension Parish, Louisiana, PCR, Refunding (Shell Oil Company Project),
VRDN, 3.75% due 9/01/2023 (g) 5,100
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 4,342
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 3,426
A+ A1 5,000 Louisiana Public Facilities Authority Revenue Bonds (Tulane University),
6.625% due 11/15/2021 5,462
A1+ Aa1 300 Saint Charles Parish, Louisiana, PCR (Shell Oil Company--Norco Project),
VRDN, AMT, 3.80% due 9/02/2023 (g) 300
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Massachusetts--7.6% AAA Aaa 2,035 Boston, Massachusetts, Water and Sewer Commission Revenue Bonds, Series
A, 9.25% due 1/01/2011 (e) 2,793
Massachusetts Bay Transportation Authority Revenue Bonds (Massachusetts
General Transportation Systems), Series A:
AAA Aaa 5,750 5% due 3/01/2023 (f) 5,381
A+ A1 3,010 Refunding, 7% due 3/01/2019 3,614
Massachusetts State, HFA (Residential Development) (b):
AAA Aaa 3,375 Series A, 6.90% due 11/15/2024 3,650
AAA Aaa 2,360 Series D, Section 8, 6.875% due 11/15/2021 2,524
AAA Aaa 7,300 Massachusetts State Health and Educational Facilities Authority Revenue
Bonds, 6.70% due 8/15/2021 (i) 7,890
AA- Aa3 7,000 Massachusetts State Port Authority Revenue Bonds, Series A, 5% due 7/01/2027 6,509
A A 30,000 Massachusetts State Water Resource Authority, Series A, 6.50% due
7/15/2019 34,120
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Michigan--6.7% AAA Aaa 4,600 Godfrey-Lee, Michigan, Public School District, GO, UT, 5.125% due
5/01/2025 (c) 4,368
BBB NR* 4,385 LaPeer, Michigan, Economic Development Corporation, Limited Obligation
Revenue Bonds (LaPeer Health Services Project), 8.50% due 2/01/2000 (a) 4,881
AA+ NR* 10,215 Michigan State, HDA, S/F Mortgage Revenue Refunding Bonds, AMT, Series D,
6.85% due 6/01/2026 10,786
Michigan State Hospital Finance Authority Revenue Bonds:
NR* Aaa 2,000 (McLaren Obligated Group), Series A, 7.50% due 9/15/2001 (a) 2,264
AAA Aaa 1,650 (Mercy Health Services), Series R, 5.375% due 8/15/2016 (h) 1,618
A A2 3,250 Refunding (Detroit Medical Center Obligation Group), Series A, 6.25% due
8/15/2013 3,416
A A2 7,930 Refunding (Detroit Medical Center Obligation Group), Series A, 6.50% due
8/15/2018 8,486
NR* VMIG1+ 100 Refunding (Mount Clemens Hospital), VRDN, 3.35% 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) 2,752
AA- Aaa 2,000 (Sisters of Mercy Health Corp.), Series J, 7.375% due 2/15/2001 (a) 2,229
Michigan State Strategic Fund, Limited Obligation Revenue Bonds:
AAA Aaa 3,000 Refunding (Detroit Edison Company Project), 6.875% due 12/01/2021 (f) 3,291
A1+ VMIG1+ 200 (United Waste Systems Inc. Project), VRDN, AMT, 3.45% due 4/01/2010 (g) 200
AAA Aaa 3,480 Northern Michigan University, Revenue Refunding Bonds, 5.125% due 3,318
12/01/2020 (c)
Royal Oak, Michigan, Hospital Finance Authority Revenue Bonds:
AA- Aa3 2,265 Refunding (Beaumont Properties, Inc.), Series E, 6.625% due 1/01/2019 2,436
AA Aaa 5,750 (William Beaumont Hospital), Series D, 6.75% due 1/01/2001 (a) 6,281
AAA Aaa 2,400 Saint Clair County, Michigan, Building Authority, 5.25% due 4/01/2021 (c) 2,321
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Minnesota--2.7% A1+ NR* 100 Beltrami County, Minnesota, Environmental Control Revenue Refunding Bonds
(Northwood Panelboard Co. Project), VRDN, AMT, 3.75% due 7/01/2025 (g) 100
AA- A1 200 Minneapolis, Minnesota, Community Development Agency, PCR (Northern
System Power Co. Project), VRDN, 3.45% due 3/01/2011 (g) 200
Minnesota State, HFA, S/F Mortgage Revenue Bonds:
AA+ Aa2 3,485 AMT, Series L, 6.70% due 7/01/2020 3,659
AA+ Aa2 5,490 AMT, Series M, 6.70% due 7/01/2026 5,783
AA+ Aa2 4,035 Series H, 6.70% due 1/01/2018 4,286
AA+ Aa2 1,975 Series Q, 6.70% due 1/01/2017 2,088
AA- A1 1,400 Red Wing, Minnesota, PCR (Northern States Power Company Project), VRDN,
3.45% due 3/01/2011 (g) 1,400
BBB Baa1 5,700 Sartell, Minnesota, PCR, Refunding (Champion International Corp.), 6.95%
due 10/01/2012 6,195
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Mississippi--0.0% NR P1 300 Jackson County, Mississippi, Individual Sewer Facilities Revenue Bonds
(Chevron USA, Inc. Project), VRDN, 3.80% due 12/15/2024 (g) 300
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Nevada--1.5% AAA Aaa 5,000 Clark County, Nevada, School District, GO, 6.75% due 12/15/2004 (a)(f) 5,692
AAA Aaa 3,110 Nevada Housing Division, S/F Program, AMT, Series E, 7% due 10/01/2019 3,301
Nevada State Housing Division, Housing Revenue Bonds, AMT:
AAA NR* 1,235 (Multi-Unit), Issue B, 7.45% due 10/01/2017 (b) 1,335
NR* Aa 2,315 (S/F Program), Series A, 6.55% due 10/01/2012 2,414
A1+ P1 100 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra Pacific Power
Co. Project), VRDN, AMT, 3.80% due 12/01/2020 (g) 100
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New Jersey--0.4% AAA Aaa 3,000 New Jersey State Housing and Mortgage Finance Agency Revenue Bonds (Home
Buyer), AMT, Series M, 6.95% due 10/01/2022 (c) 3,239
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</TABLE>
6 & 7
<PAGE>
MuniVest Fund, Inc., August 31, 1997
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
New York--8.4% New York City, New York, GO, UT:
BBB+ Baa1 $ 3,750 Refunding, Series C, 5.875% due 2/01/2016 $ 3,800
BBB+ Baa1 5,000 Refunding, Series F, 5.875% due 8/01/2024 5,042
BBB+ Aaa 3,925 Series B, 7% due 6/01/2001 (a) 4,340
BBB+ Baa1 430 Series B, 7% due 6/01/2016 464
BBB+ Baa1 2,800 Series B, 5.875% due 8/15/2016 2,835
BBB+ Aaa 235 Series B, Sub-Series B-1, 7% due 8/15/2004 (a) 270
BBB+ Baa1 1,265 Series B, Sub-Series B-1, 7% due 8/15/2016 1,420
BBB+ Aaa 2,710 Series B, Sub-Series B-1, 7.25% due 8/15/2004 (a) 3,159
BBB+ Baa1 1,290 Series B, Sub-Series B-1, 7.25% due 8/15/2019 1,466
BBB+ Aaa 265 Series D, 9.50% due 8/01/2001 (a) 317
BBB+ Baa1 2,350 Series D, 9.50% due 8/01/2002 2,762
BBB+ Baa1 2,150 Series D, 6% due 2/15/2020 2,187
New York City, New York, Municipal Water Finance Authority, Water and
Sewer System Revenue Bonds, Series B:
A- A2 16,000 5.75% due 6/15/2026 16,243
A- A2 2,000 5.75% due 6/15/2029 2,030
A Aaa 13,000 New York State Local Government Assistance Corporation Revenue Bonds,
Series C, 7% due 4/01/2001 (a) 14,398
AAA Aaa 7,500 New York State Thruway Authority, Highway and Bridge Trust Fund, Series
B, 6% due 4/01/2004 (c) 8,086
BBB Aaa 2,380 New York State Urban Development Corporation Revenue Bonds (State
Facilities), 7.50% due 4/01/2001 (a) 2,675
AA- A1 2,750 Port Authority of New York and New Jersey, Consolidated Revenue Bonds,
76th Series, AMT, 6.50% due 11/01/2026 2,940
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Ohio--2.4% Ohio, HFA, S/F Mortgage Revenue Bonds, AMT (d):
AAA Aaa 3,650 RIB, Series B-4, 9.751% due 3/31/2031 (j) 4,070
AAA NR* 8,775 Series A, 7.65% due 3/01/2029 9,221
AAA NR* 3,655 Series C, 8.125% due 3/01/2020 3,841
AAA NR* 4,130 Series C, 7.85% due 9/01/2021 4,389
- ------------------------------------------------------------------------------------------------------------------------------------
Pennsylvania--2.5% AAA Aaa 4,500 North Penn, Pennsylvania, Water Authority Revenue Bonds, 7% due
11/01/2004 (a)(f) 5,183
AA+ Aa 4,890 Pennsylvania, HFA, S/F Mortgage Revenue Bonds, AMT, Series U, 7.80% due
10/01/2020 5,151
AAA Aaa 10,000 Pennsylvania State Higher Educational Assistance Agency, Student Loan
Revenue Bonds, AMT, RIB, 9.53% due 9/03/2026 (h)(j) 11,400
- ------------------------------------------------------------------------------------------------------------------------------------
Rhode Island--1.5% AA+ A1 6,000 Rhode Island Housing and Mortgage Finance Corporation, INFLOS, AMT,
Series 8, 10.266% due 4/01/2024 (j) 6,735
AAA Aaa 6,000 Rhode Island State Health and Education Building Corporation Revenue
Bonds (Rhode Island Hospital), 6.85% due 8/15/2021 (e)(f) 6,626
- ------------------------------------------------------------------------------------------------------------------------------------
South Carolina--1.2% A1+ VMIG1+ 900 Berkeley County, South Carolina, PCR, Refunding (Amoco Chemical Co.
Project), VRDN, 3.70% due 7/01/2012 (g) 900
AAA Aaa 6,900 Greer, South Carolina, Combined Utility System Revenue Bonds, 5% due
9/01/2025 (h) 6,438
AAA Aaa 3,300 Spartanburg, South Carolina, Waterworks Revenue Refunding Bonds, 5% due
6/01/2027 (f) 3,073
- ------------------------------------------------------------------------------------------------------------------------------------
Texas--10.1% A1+ VMIG1+ 1,500 Brazos River Authority, Texas, PCR, Refunding (Texas Utilities Electric
Co.), VRDN, AMT, Series C, 3.80% due 6/01/2030 (g) 1,500
AAA Aaa 3,040 Copperas Cove, Texas, Independent School District Revenue Bonds, GO, UT,
6.90% due 8/15/2004 (a) 3,450
AAA Aaa 5,000 Crowley, Texas, Independent School District, GO, UT, 5.125% due 8/01/2027 4,754
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 6,691
BBB Baa1 4,000 Gulf Coast, Texas, IDA, Revenue Refunding Bonds (Champion International
Corp.), 7.125% due 4/01/2010 4,387
NR* VMIG1+ 100 Gulf Coast, Texas, IDA, Solid Waste Disposal Revenue Bonds (CITGO
Petroleum Corp. Project), VRDN, AMT, 3.90% due 5/01/2025 (g) 100
AA Aa2 2,400 Harris County, Texas, Certificates of Obligation, Tax and
Revenue Bonds, 10% due 10/01/2002 (e) 2,982
Harris County, Texas, Health Facilities Development Corporation, Hospital
Revenue Bonds:
AAA Aaa 1,485 (Hermann Hospital Project), 6.375% due 10/01/2024 (c) 1,585
A- A2 3,500 (Memorial Hospital Systems Project), Series A, 6.60% due 6/01/2004 (a) 3,930
A- A2 2,500 (Memorial Hospital Systems Project), Series A, 6.625% due 6/01/2004 (a) 2,811
A1+ NR* 300 (Methodist Hospital), VRDN, 3.70% due 12/01/2025 (g) 300
AA Aa3 24,475 Refunding (School Health Care Systems), Series B, 5.75% due 7/01/2027 24,703
AA Aa3 5,500 Refunding (School Health Care Systems), Series B, 6.25% due 7/01/2027 6,084
AAA Aa3 5,290 (Saint Luke's Episcopal Hospital Project), Series A, 6.625% due
2/15/2001 (a) 5,770
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 5,299
A1+ VMIG1+ 1,500 Matagorda County, Texas, Navigational District No. 1, Revenue Refunding
Bonds (Houston Light & Power Co. Project), VRDN, AMT, Series 1997, 3.75%
due 11/01/2028 (g)(h) 1,500
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 2,697
AA Aa 5,700 North Central, Texas, Health Facility Development Corporation Revenue
Bonds (Baylor University Medical Center), INFLOS, Series A, 9.785% due
5/15/2001 (a)(j) 6,833
AA Aa2 3,500 Texas State Refunding (Veterans' Land), UT, 6.50% due 12/01/2021 3,743
- ------------------------------------------------------------------------------------------------------------------------------------
Utah--0.6% AAA Aaa 5,000 Intermountain Power Agency, Utah, Power Supply Revenue Refunding Bonds,
Series B, 5.75% due 7/01/2019 (c) 5,103
- ------------------------------------------------------------------------------------------------------------------------------------
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 3,116
AA+ Aa1 10,000 Series H, 6.85% due 7/01/2014 10,703
AA+ Aa1 4,400 Series J, Sub-Series J-2, 6.75% due 7/01/2017 4,704
- ------------------------------------------------------------------------------------------------------------------------------------
Washington--5.7% AA+ Aa1 6,955 King County, Washington, GO, Series B, 6.625% due 12/01/2015 7,817
Washington State Housing Finance Commission, S/F Mortgage Revenue
Refunding Bonds (d):
AAA NR* 7,795 Series A, 7.70% due 7/01/2016 8,291
AAA NR* 2,395 Series D, 6.95% due 7/01/2017 (b) 2,510
Washington State Public Power Supply System, Revenue Refunding Bonds
(Nuclear Project No. 1):
AA- Aaa 5,000 Series A, 6.875% due 7/01/2001 (a) 5,519
AA- Aa1 3,000 Series A, 7% due 7/01/2008 3,470
AA- Aa1 5,000 Series B, 7.25% due 7/01/2009 5,863
AA- Aa1 14,320 Series B, 7.125% due 7/01/2016 16,915
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8 & 9
<PAGE>
MuniVest Fund, Inc., August 31, 1997
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Wisconsin--0.5% NR* A3 $ 4,000 Wisconsin State Health and Educational Facilities Authority, Revenue
Refunding Bonds (Saint Claire Hospital Project), 7% due 2/15/2011 $ 4,274
- ------------------------------------------------------------------------------------------------------------------------------------
Wyoming--1.4% A1+ Aaa 1,300 Lincoln County, Wyoming, PCR (Exxon Project), VRDN, AMT, Series C, 3.80%
due 7/01/2017 (g) 1,300
BBB Baa2 7,475 Sweetwater County, Wyoming, Solid Waste Disposal Revenue Bonds (FMC Corp.
Project), AMT, Series B, 6.90% due 9/01/2024 8,174
AA Aa2 2,500 Wyoming Community Development Authority, S/F Mortgage Revenue Bonds, AMT,
Series H, 7.10% due 6/01/2012 2,689
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments (Cost--$816,389)--99.1% 871,596
Other Assets Less Liabilities--0.9% 7,919
--------
Net Assets--100.0% $879,515
========
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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 August 31,
1997.
(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, 1997.
* 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.
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<TABLE>
<CAPTION>
As of August 31, 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$816,389,200) (Note 1a).............. $871,596,053
Cash........................................................................ 26,766
Receivables:
Interest.................................................................. $ 11,992,082
Securities sold........................................................... 5,797,472 17,789,554
------------
Prepaid expenses and other assets........................................... 15,662
------------
Total assets................................................................ 889,428,035
------------
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities: Payables:
Securities purchased...................................................... 8,526,077
Dividends to shareholders (Note 1e)....................................... 831,389
Investment adviser (Note 2)............................................... 386,412 9,743,878
------------
Accrued expenses and other liabilities...................................... 169,283
------------
Total liabilities........................................................... 9,913,161
------------
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets: Net assets.................................................................. $879,514,874
============
- ---------------------------------------------------------------------------------------------------------------------------
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........................................ 6,410,662
Accumulated realized capital losses on investments--net (Note 5)............ (26,744,626)
Unrealized appreciation on investments--net................................. 55,206,853
------------
Total--Equivalent to $9.89 net asset value per share of Common
Stock (market price-- $9.50)................................................ 604,514,874
------------
Total capital............................................................... $879,514,874
============
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Auction Market Preferred Stock.
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended August 31, 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Interest and amortization of premium and discount earned.......... $ 52,776,022
Income (Note 1d):
- -------------------------------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fees (Note 2)................................. $ 4,365,916
Commission fees (Note 4).......................................... 695,400
Transfer agent fees............................................... 147,709
Accounting services (Note 2)...................................... 99,604
Professional fees................................................. 83,683
Custodian fees.................................................... 56,010
Printing and shareholder reports.................................. 49,627
Directors' fees and expenses...................................... 32,783
Pricing fees...................................................... 25,598
Listing fees...................................................... 14,500
Other............................................................. 32,811
-----------
Total expenses.................................................... 5,603,641
------------
Investment income--net............................................. 47,172,381
------------
- -------------------------------------------------------------------------------------------------------------------------------
Realized and Realized gain on investments -- net............................... 3,274,718
Unrealized Gain Change in unrealized appreciation on investments--net............. 23,793,529
on Investments-Net ------------
(Note 1b, 1d & 3): Net Increase in Net Assets Resulting from Operations.............. $ 74,240,628
============
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
10 & 11
<PAGE>
MuniVest Fund, Inc., August 31, 1997
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Year Ended August 31,
-----------------------------
Increase (Decrease) in Net Assets: 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations: Investment income--net............................................... $ 47,172,381 $ 48,100,100
Realized gain (loss) on investments--net............................. 3,274,718 (4,368,437)
Change in unrealized appreciation on investments--net................ 23,793,529 793,429
------------ ------------
Net increase in net assets resulting from operations................. 74,240,628 44,525,092
------------ ------------
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends to Investment income--net:
Shareholders Common Stock....................................................... (37,720,129) (38,311,006)
(Note 1e): Preferred Stock.................................................... (9,545,790) (9,884,670)
------------ ------------
Net decrease in net assets resulting from dividends to shareholders.. (47,265,919) (48,195,676)
------------ ------------
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets: Total increase (decrease) in net assets.............................. 26,974,709 (3,670,584)
Beginning of year.................................................... 852,540,165 856,210,749
------------ ------------
End of year*......................................................... $879,514,874 $852,540,165
============ ============
- ---------------------------------------------------------------------------------------------------------------------------------
Undistributed investment income -- net............................... $ 6,410,662 $ 6,527,951
============ ============
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
<TABLE>
<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: 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Net asset value, beginning of year .......................... $ 9.45 $ 9.51 $ 9.57 $ 10.65 $ 10.19
Performance: -------- -------- -------- -------- --------
Investment income -- net .................................... .77 .79 .81 .84 .92
Realized and unrealized gain (loss) on investments -- net ... .45 (.06) .10 (.78) .69
-------- -------- -------- -------- --------
Total from investment operations ............................ 1.22 .73 .91 .06 1.61
-------- -------- -------- -------- --------
Less dividends and distributions to Common Stock
shareholders:
Investment income -- net ................................... (.62) (.63) (.64) (.70) (.78)
Realized gain on investments -- net ........................ -- -- (.12) (.32) (.25)
In excess of realized gain on investments -- net ........... -- -- (.04) -- --
-------- -------- -------- -------- --------
Total dividends and distributions to Common Stock
shareholders................................................. (.62) (.63) (.80) (1.02) (1.03)
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:
Dividends to Preferred Stock shareholders from investment
income -- net .............................................. (.16) (.16) (.17) (.12) (.12)
-------- -------- -------- -------- --------
Net asset value, end of year ................................ $ 9.89 $ 9.45 $ 9.51 $ 9.57 $ 10.65
======== ======== ======== ======== ========
Market price per share, end of year ......................... $ 9.50 $ 9.125 $ 8.563 $ 8.50 $ 11.25
======== ======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investment Based on market price per share ............................. 11.25% 14.18% 10.88% (16.29%) 10.39%
Return:* ======== ======== ======== ======== ========
Based on net asset value per share .......................... 11.84% 6.46% 9.38% (.44%) 15.38%
======== ======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Expenses .................................................... .64% .64% .66% .64% .65%
Net Assets:** ======== ======== ======== ======== ========
Investment income -- net .................................... 5.40% 5.57% 5.91% 5.76% 6.17%
======== ======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
Supplemental Data: Net assets, net of Preferred Stock, end of year (in
thousands)................................................... $604,515 $577,540 $581,211 $584,680 $642,530
======== ======== ======== ======== ========
Preferred Stock outstanding, end of year (in thousands) ..... $275,000 $275,000 $275,000 $275,000 $275,000
======== ======== ======== ======== ========
Portfolio turnover .......................................... 78.02% 69.87% 71.95% 100.92% 73.38%
======== ======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
Leverage: Asset coverage per $1,000 ................................... $ 3,198 $ 3,100 $ 3,113 $ 3,126 $ 3,336
======== ======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends Per Series A-- Investment income -- net ......................... $ 872 $ 895 $ 922 $ 633 $ 633
Share on Preferred ======== ======== ======== ======== ========
Stock Outstanding:+ Series B-- Investment income -- net ......................... $ 871 $ 903 $ 946 $ 637 $ 642
======== ======== ======== ======== ========
Series C-- Investment income -- net ......................... $ 860 $ 900 $ 947 $ 644 $ 624
======== ======== ======== ======== ========
Series D-- Investment income -- net ......................... $ 868 $ 901 $ 1,014 $ 633 $ 644
======== ======== ======== ======== ========
Series E-- Investment income -- net ......................... $ 868 $ 895 $ 968 $ 626 $ 636
======== ======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* 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.
+ Dividends per share have been adjusted to reflect a four-for-one stock
split on December 1, 1994.
See Notes to Financial Statements.
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.
o 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
12 & 13
<PAGE>
MuniVest Fund, Inc., August 31, 1997
NOTES TO FINANCIAL STATEMENTS (concluded)
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
year ended August 31, 1997 were $656,372,334 and $651,420,394, respectively.
Net realized and unrealized gains (losses) as of August 31, 1997 were as
follows:
- -----------------------------------------------------------------------
Realized
Gains Unrealized
(Losses) Gains
- -----------------------------------------------------------------------
Long-term investments ..................... $ 3,862,218 $55,206,853
Financial futures contracts ............... (587,500) --
------------ -----------
Total ..................................... $ 3,274,718 $55,206,853
============ ===========
- -----------------------------------------------------------------------
As of August 31, 1997, net unrealized appreciation for Federal income tax
purposes aggregated $55,201,101, of which $55,420,286 related to appreciated
securities and $219,185 related to depreciated securities. The aggregate cost of
investments at August 31, 1997 for Federal income tax purposes was $816,394,952.
4. Capital Stock Transactions:
Common Stock
At August 31, 1997, 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, 1997 shares issued and outstanding remained constant at 61,123,140.
At August 31, 1997, total paid-in capital amounted to $569,641,985.
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 having a par value of
$.025 per share. The yields in effect August 31, 1997 were as follows: Series A,
3.50%; Series B, 3.525%; Series C, 3.518%; Series D, 3.505%; and Series E,
3.38%.
As of August 31, 1997, 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, 1997, MLPF&S, an affiliate of
FAM, received $337,625 as commissions.
5. Capital Loss Carryforward:
At August 31, 1997, the Fund had a net capital loss carryforward of
approximately $15,372,000, of which $5,290,000 expires in 2003 and $10,082,000
expires in 2004. This amount will be available to offset like amounts of any
future taxable gains.
6. Subsequent Event:
On September 8, 1997, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.050248 per share,
payable on September 29, 1997 to shareholders of record as of September 18,
1997.
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,
1997, the related statements of operations for the year then ended and changes
in net assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years in the five-year period then ended.
These financial statements and the financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at August
31, 1997 by correspondence with the custodian and brokers. 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, 1997, 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 26, 1997
14 & 15
<PAGE>
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
Patrick D. Sweeney, Secretary
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 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--8/97
Printed on post-consumer recycled paper
