MUNIVEST
FUND, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Annual Report
August 31, 1998
<PAGE>
MUNIVEST FUND, INC.
The Benefits and Risks of Leveraging
MuniVest Fund, Inc. utilizes leveraging to seek to enhance the yield and net
asset value of its Common Stock. However, these objectives cannot be achieved in
all interest rate environments. To leverage, the Fund issues Preferred Stock,
which pays dividends at prevailing short-term interest rates, and invests the
proceeds in long-term municipal bonds. The interest earned on these investments
is paid to Common Stock shareholders in the form of dividends, and the value of
these portfolio holdings is reflected in the per share net asset value of the
Fund's Common Stock. However, in order to benefit Common Stock shareholders, the
yield curve must be positively sloped; that is, short-term interest rates must
be lower than long-term interest rates. At the same time, a period of generally
declining interest rates will benefit Common Stock shareholders. If either of
these conditions change, then the risks of leveraging will begin to outweigh the
benefits.
To illustrate these concepts, assume a fund's Common Stock capitalization of
$100 million and the issuance of Preferred Stock for an additional $50 million,
creating a total value of $150 million available for investment in long-term
municipal bonds. If prevailing short-term interest rates are approximately 3%
and long-term interest rates are approximately 6%, the yield curve has a
strongly positive slope. The fund pays dividends on the $50 million of Preferred
Stock based on the lower short-term interest rates. At the same time, the fund's
total portfolio of $150 million earns the income based on long-term interest
rates. Of course, increases in short-term interest rates would reduce (and even
eliminate) the dividends on the Common Stock.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term investments,
and therefore the Common Stock shareholders are the beneficiaries of the
incremental yield. However, if short-term interest rates rise, narrowing the
differential between short-term and long-term interest rates, the incremental
yield pick-up on the Common Stock will be reduced or eliminated completely. At
the same time, the market value on the fund's Common Stock (that is, its price
as listed on the American Stock Exchange), may, as a result, decline.
Furthermore, if long-term interest rates rise, the Common Stock's net asset
value will reflect the full decline in the price of the portfolio's investments,
since the value of the fund's Preferred Stock does not fluctuate. In addition to
the decline in net asset value, the market value of the fund's Common Stock may
also decline.
As a part of its investment strategy, the Fund may invest in certain securities
whose potential income return is inversely related to changes in a floating
interest rate ("inverse floaters"). In general, interest rates on inverse
floaters will decrease when short-term interest rates increase and increase when
short-term interest rates decrease. Investments in inverse floaters may be
characterized as derivative securities and may subject the Fund to the risks of
reduced or eliminated interest payments and losses of invested principal. In
addition, inverse floaters have the effect of providing investment leverage and,
as a result, the market value of such securities will generally be more volatile
than that of fixed-rate, tax-exempt securities. To the extent the Fund invests
in inverse floaters, the market value of the Fund's portfolio and the net asset
value of the Fund's shares may also be more volatile than if the Fund did not
invest in such securities.
Important Tax Information (unaudited)
All of the net investment income distributions paid monthly by MuniVest Fund,
Inc. during its taxable year ended August 31, 1998 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, 1998
DEAR SHAREHOLDER
For the year ended August 31, 1998, the Common Stock of MuniVest Fund, Inc.
earned $0.592 per share income dividends, which included earned and unpaid
dividends of $0.051. This represents a net annualized yield of 5.80%, based on a
month-end per share net asset value of $10.20. Over the same period, the total
investment return on the Fund's Common Stock was +9.52%, based on a change in
per share net asset value from $9.89 to $10.20, and assuming reinvestment of
$0.592 per share income dividends.
For the six months ended August 31, 1998, the total investment return on the
Fund's Common Stock was +3.94%, based on a change in per share net asset value
from $10.11 to $10.20, and assuming reinvestment of $0.292 per share income
dividends.
For the six months ended August 31, 1998, the Fund's Preferred Stock had an
average yield as follows: Series A, 3.24%; Series B, 3.32%; Series C, 3.75%;
Series D, 3.74%; and Series E, 3.51%.
The Municipal Market Environment
Long-term tax-exempt bond yields declined slightly during the six months ended
August 31, 1998. Throughout most of this year, foreign economic factors have
continued to outweigh US domestic fundamentals. Thus far this year, the near
absence of inflationary pressures in the United States continued to support low
interest rates. Consistently strong domestic economic growth has caused some
investors to fear that the Federal Reserve Board would be forced eventually to
raise short-term interest rates. This action would be taken to ensure that the
US economy's present rate of growth would decelerate before any inflationary
pressures could develop. However, the weakening financial conditions in many
Asian countries, combined with the currency devaluation in Russia, calmed
investor concerns of Federal Reserve Board intervention, and fixed-income bond
prices have moved higher. As measured by the Bond Buyer Revenue Bond Index,
long-term uninsured municipal bond yields fell approximately 10 basis points
(0.10%) to end the six-month period at 5.26%. As in late 1997 and early 1998, US
Treasury bond yields benefited from a "flight to quality" as foreign investors
were drawn to the relative safe haven of US Government securities. Additionally,
the sharp US equity market correction at the end of August triggered an
additional flight into US Treasury securities. Long-term US Treasury bond yields
declined approximately 70 basis points to end the six-month period at 5.21%.
Thus far in 1998, the municipal bond market has experienced unexpectedly strong
supply pressures. To a large extent, these supply pressures have prevented
tax-exempt bond yields from declining as much as US Treasury bond yields. During
the first eight months of 1998, almost $150 billion in new tax-exempt bonds were
underwritten, an increase of about 40% compared to the same period a year ago.
During the most recent three months, municipalities issued almost $75 billion in
new securities, an increase of nearly 25% compared to the same three-month
period in 1997.
However, the recent pace of new municipal bond issuance is unlikely to be
maintained. Continued increases in bond issuance will require lower and lower
tax-exempt bond yields to generate the economic savings necessary for additional
municipal bond refinancings. Preliminary estimates for 1998 total municipal bond
issuance are in the $200 billion-$225 billion range. These estimates suggest
that recent supply pressures, which have lessened recently, are likely to abate
further later in the year.
The continued impact of the Asian financial crisis on the US domestic economy's
future growth remains unclear. Current Asian economic conditions continue to
reflect ongoing weakness. Recent trade data indicated that reduced US exports to
these countries might have lowered US economic growth in the first half of 1998
by as much as 2%. Since further trade deterioration is likely in the coming
months, we do not believe the Federal Reserve Board will be willing to raise
interest rates, barring a dramatic and unexpected resurgence of domestic
inflation.
These factors suggest that over the near term, interest rates in general are
unlikely to rise by any appreciable amount. Recent supply pressures have caused
municipal bond yield ratios to rise relative to US Treasury bond yields. At
August 31, 1998, long-term tax-exempt bond yields were at attractive yield
ratios relative to US Treasury securities of comparable maturities (over 90%),
well in excess of their expected range of 85%-88%. Tax-exempt bond yield ratios
have rarely exceeded 90% in the 1980s and 1990s. Previous instances have usually
been associated with potential changes in Federal tax codes that would have
adversely affected the tax-favored status of municipal bonds. The present
situation has developed largely because of a temporary supply imbalance. These
imbalances should soon be corrected as tax-exempt bond issuance slows from its
current rapid pace later this year. Any further pressure on the municipal market
may well represent a very attractive investment opportunity.
Portfolio Strategy
During the six-month period ended August 31, 1998, we maintained our
constructive approach to the municipal bond market that we adopted earlier this
year. The combination of moderate US economic growth and continued financial
turmoil in Asia has produced a very beneficial environment for fixed-income
securities. As the economic contraction in Asia appears to be spreading to much
of the rest of the world, it became unlikely that the Federal Reserve Board
would change short-term interest rates during the period. Consequently, we
maintained a fully invested position for the Fund in order to seek to enhance
shareholder income, and placed an emphasis on interest rate-sensitive issues so
as to fully participate in recent market price appreciation.
Looking ahead, we expect to maintain our constructive approach toward the
municipal market, taking into account the prospect of a significant US equity
market correction. It is our opinion that the US economy will continue to slow
in response to weak economic conditions in Asia and, more importantly, in the
major US trading partners of Canada and Mexico. Should international economic
weakness seriously jeopardize US economic growth, we would expect the Federal
Reserve Board to lower short-term interest rates to prevent the United States
from suffering similar declines. At that time, we would begin to reduce our
position in aggressively structured securities while remaining fully invested in
an effort to seek to maintain the Fund's current attractive dividend.
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 28, 1998
Quality Profile
The quality ratings of securities in the Fund as of August 31, 1998 were as
follows:
- --------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
- --------------------------------------------------------------------------------
AAA/Aaa .................................................. 40.6%
AA/Aa .................................................... 28.1
A/A ...................................................... 18.9
BBB/Baa .................................................. 9.5
NR (Not Rated) ........................................... 0.3
Other* ................................................... 4.6
- --------------------------------------------------------------------------------
* Temporary investments in short-term municipal securities.
2 & 3
<PAGE>
MuniVest Fund, Inc., August 31, 1998
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
================================================================================================================================
<S> <C> <C> <C> <C> <C>
Alabama--5.5% Alabama HFA, S/F Mortgage Revenue Bonds (d):
NR* Aaa $ 4,165 (College Home Mortgage), Series A-1, 5.20% due
4/01/2017 (b) $ 4,219
AAA NR* 9,740 Series A, 7.60% due 10/01/2022 10,220
BBB Baa1 8,750 Courtland, Alabama, IDB, IDR, Refunding (Champion
International Corporation), Series A, 7.20% due
12/01/2013 9,701
Courtland, Alabama, IDB, Solid Waste Disposal
Revenue Bonds (Champion International Corporation
Project), AMT:
BBB Baa1 5,000 7% due 6/01/2022 5,463
BBB Baa1 6,170 Series A, 6.375% due 3/01/2029 6,577
AAA Aaa 12,500 Jefferson County, Alabama, Sewer Revenue Bonds,
RITR, Series 7, 6.82% due 2/01/2027 (f)(j) 13,309
================================================================================================================================
Alaska--2.4% North Slope Boro, Alaska, GO, UT, Series B (c):
AAA Aaa 6,000 5.10%** due 1/01/2002 5,237
AAA Aaa 6,000 5.20%** due 1/01/2003 5,017
Valdez, Alaska, Marine Terminal Revenue Refunding
Bonds:
A1+ P1 3,100 (Exxon Pipeline Company Project), VRDN, Series A,
3.65% due 12/01/2033 (g) 3,100
AA Aa3 7,250 (Sohio Pipeline--BP Oil), 7.125% due 12/01/2025 8,082
================================================================================================================================
Arizona--1.5% A1+ VMIG1+ 9,500 Maricopa County, Arizona, IDA, Hospital Facilities
Revenue Bonds (Samaritan Health Service Hospital),
VRDN, Series B-2, 3.25% due 12/01/2008 (g) 9,500
A1+ P1 200 Maricopa County, Arizona, Pollution Control
Corporation, PCR, Refunding (Arizona Public Service
Co.), VRDN, Series E, 3.70% due 5/01/2029 (g) 200
AAA NR* 3,000 Phoenix, Arizona, Civic Improvement Corporation,
Wastewater System, Lease Revenue Bonds, 6.125% due
7/01/2003 (a) 3,345
================================================================================================================================
California--2.0% 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) 8,207
AAA Aaa 8,500 University of California Revenue Bonds (Multiple
Purpose Projects), Series D, 6.375% due 9/01/2002 (a)(c) 9,482
================================================================================================================================
Colorado--3.3% NR* Aaa 5,000 Arapahoe County, Colorado, Capital Improvement Trust
Fund, Highway Revenue Bonds (SR-E-470 Project),
Series B, 7% due 8/31/2005 (a) 6,001
Denver, Colorado, City and County Airport Revenue
Bonds:
BBB Aaa 1,720 AMT, Series C, 6.75% due 11/15/2002 (a) 1,937
BBB Baa1 9,850 AMT, Series C, 6.75% due 11/15/2013 10,837
BBB Baa1 1,485 AMT, Series C, 6.75% due 11/15/2022 1,625
AAA Baa1 5,490 Series A, 7.25% due 11/15/2002 (a) 6,297
AAA NR* 1,850 Series A, 7.25% due 11/15/2002 (a) 2,119
AAA NR* 680 El Paso County, Colorado, Local S/F Mortgage Revenue
Bonds, AMT, Series A, 8% due 9/01/2022 (d) 716
================================================================================================================================
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
================================================================================================================================
Delaware--0.5% AAA Aaa 3,630 Delaware Transportation Authority, Transportation
System, Senior Revenue Bonds, 7% due 7/01/2004 (a)(f) 4,251
================================================================================================================================
Florida--1.4% NR* Aaa 7,345 Florida HFA, Home Ownership Revenue Bonds, AMT,
Series G-1, 7.90% due 3/01/2022 (d) 7,755
AAA Aaa 4,800 Miami-Dade County, Florida, Professional Sports
Franchise Facilities Tax Revenue Refunding Bonds,
4.75% due 10/01/2030 (c) 4,591
A1+ VMIG1+ 100 Saint Lucie County, Florida, PCR, Refunding (Florida
Power & Light Company Project), VRDN, 3.70% due
1/01/2026 (g) 100
================================================================================================================================
Georgia--5.7% Georgia Municipal Electric Authority, Power Revenue
Bonds:
A+ A3 12,940 Series Y, 6.50% due 1/01/2017 15,114
A A3 4,850 UT, Series W, 6.60% due 1/01/2018 5,744
Georgia State, GO:
AAA Aaa 8,410 Series C, UT, 5.75% due 9/01/2007 9,432
AAA Aaa 6,400 Series F, 6.50% due 12/01/2006 7,475
AAA Aaa 5,000 Series F, 6.50% due 12/01/2007 5,903
AAA Aa 1,550 Georgia State, HFA, S/F Mortgage Revenue Bonds,
AMT, Sub-Series A-2, 6.55% due 12/01/2027 1,668
A A3 4,785 Monroe County, Georgia, Development Authority, PCR,
Refunding (Oglethorpe Power Scherer), Series A, 6.80%
due 1/01/2011 5,741
================================================================================================================================
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 3,777
A A2 10,000 (Kapi'Olani Health Obligations), 6.25% due
7/01/2021 10,910
================================================================================================================================
Idaho--0.6% NR* Aaa 4,695 Idaho Housing Agency, S/F Mortgage, AMT, Series E-2,
6.90% due 1/01/2027 5,043
================================================================================================================================
Illinois--7.0% AAA Aaa 6,950 Chicago, Illinois, Sales Tax Revenue Bonds, RITR,
Series 24, 6.87% due 1/01/2027 (f)(j) 7,432
Illinois Educational Facilities Authority Revenue Bonds
(a):
NR* NR* 2,500 (Chicago Osteopathic Health System), 7.25% due
11/15/2019 3,160
NR* A1 2,000 Refunding (Loyola University--Chicago), Series A,
7.125% due 7/01/2001 2,211
Illinois HDA, Revenue Bonds (M/F Housing Program):
A+ A1 660 Refunding, Series A, 7.375% due 7/01/2017 722
A+ A1 7,000 Series 5, 6.75% due 9/01/2023 7,584
Illinois Health Facilities Authority Revenue Bonds:
NR* Baa1 2,650 (Holy Cross Hospital Project), 6.70% due 3/01/2014 2,904
A1+ VMIG1+ 1,800 (Northwestern Memorial Hospital), VRDN, 3.65%
due 8/15/2025 (g) 1,800
NR* Baa1 2,205 (Ravenswood Hospital Medical Center), 6.85% due
6/01/2012 2,374
NR* Baa1 7,375 (Ravenswood Hospital Medical Center), 6.90% due
6/01/2022 7,960
AA A1 9,000 Refunding (Advocate Health Care), Series A, 5.875%
due 8/15/2022 9,674
A1+ P1 1,900 Joliet, Illinois, Regional Port District, Marine Terminal
Revenue Refunding Bonds (Exxon Corporation),
VRDN, 3.65% due 10/01/2024 (g) 1,900
BBB NR* 2,500 Lansing, Illinois, Tax Increment Revenue Refunding
Bonds (Sales Tax--Landings Redevelopment), 7% due
12/01/2008 2,786
================================================================================================================================
</TABLE>
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)
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue Bonds
INFLOS Inverse Floating Rate Municipal Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
4 & 5
<PAGE>
MuniVest Fund, Inc., August 31, 1998
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>
Illinois Regional Transportation Authority, Illinois:
(concluded) AAA Aaa $ 3,500 Series A, 7.20% due 11/01/2020 (h) $ 4,569
AAA Aaa 4,000 UT, Series C, 7.75% due 6/01/2020 (f) 5,521
AAA Aaa 2,500 UT, Series C, 7.10% due 6/01/2025 (f) 2,877
================================================================================================================================
Indiana--9.6% AAA NR* 5,250 Indiana Bond Bank Revenue Bonds (Guarantee State
Revolving Fund Program), Series A, 6.75% due
2/01/2017 5,984
Indiana Health Facilities Financing Authority, Hospital
Revenue Refunding Bonds:
AA Aa3 10,250 (Clarian Health Partners Inc.), Series A, 6% due
2/15/2021 11,120
BBB+ NR* 3,000 (Hancock Memorial Hospital Health Services),
6.125% due 8/15/2017 3,241
NR* Aaa 5,290 Indiana State, HFA, S/F Mortgage Revenue Refunding
Bonds, Series A, 6.80% due 1/01/2017 5,610
NR* Aaa 6,905 Indiana Transportation Finance Authority, Airport
Facilities Lease Revenue Bonds, Series A, 6.50% due
11/01/2002 (a) 7,721
AA- Aa2 7,195 Indiana Transportation Finance Authority, Highway
Revenue Bonds, Series A, 6.80% due 12/01/2016 8,792
Indianapolis, Indiana, Local Public Improvement Bond
Bank, Revenue Refunding Bonds, Series D:
AA NR* 15,335 6.75% due 2/01/2014 18,403
AA NR* 20,350 6.75% due 2/01/2020 22,577
A1 VMIG1+ 400 Jasper County, Indiana, PCR, Refunding (Northern
Indiana Public Service), VRDN, Series C, 3.70% due
4/01/2019 (g) 400
AA- Aa2 2,000 Purdue University, Indiana, University Revenue Bonds
(Student Fee), Series B, 6.70% due 1/01/2005 (a) 2,334
================================================================================================================================
Iowa--0.3% NR* Aaa 2,790 Iowa Finance Authority, S/F Mortgage Revenue Bonds,
AMT, Series A, 7.90% due 11/01/2022 (d) 2,928
================================================================================================================================
Louisiana--1.5% BBB+ A3 4,000 De Soto Parish, Louisiana, Environmental Improvement
Revenue Refunding Bonds (International Paper Co.
Project), AMT, Series B, 6.55% due 4/01/2019 4,417
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 3,448
A+ A1 5,000 Louisiana Public Facilities Authority Revenue Bonds
(Tulane University), 6.625% due 11/15/2002 (a) 5,604
================================================================================================================================
Massachusetts--6.1% AAA Aaa 2,035 Boston, Massachusetts, Water and Sewer Commission
Revenue Bonds, Series A, 9.25% due 1/01/2011 (e) 2,872
AA- Aa3 3,010 Massachusetts Bay Transportation Authority Refunding
(Massachusetts General Transportation Systems), Series
A, 7% due 3/01/2019 3,777
Massachusetts State Health and Educational Facilities
Authority Revenue Bonds (i):
AAA Aaa 7,300 6.70% due 8/15/2021 7,945
AAA Aaa 5,000 (Harvard Pilgrim Health), Series A, 4.75% due
7/01/2022 4,786
A A1 30,000 Massachusetts State Water Resource Authority, Series A,
6.50% due 7/15/2019 36,033
================================================================================================================================
Michigan--5.0% AA+ NR* 8,555 Michigan State, HDA, S/F Mortgage Revenue Refunding
Bonds, AMT, Series D, 6.85% due 6/01/2026 9,200
Michigan State Hospital Finance Authority Revenue
Refunding Bonds:
A- A3 3,250 (Detroit Medical Center Obligation Group), Series A,
6.25% due 8/15/2013 3,552
A- A3 7,930 (Detroit Medical Center Obligation Group), Series A,
6.50% due 8/15/2018 8,680
NR* A1 2,500 (McLaren Health Care Corp.), Series A, 5% due
6/01/2028 2,412
NR* VMIG1+ 100 (Mount Clemens Hospital), VRDN, 3.45% due
8/15/2015 (g) 100
AAA Aaa 3,000 Michigan State Strategic Fund, Limited Obligation
Revenue Refunding Bonds (Detroit Edison Company
Plantation Project), 6.875% due 12/01/2021 (f) 3,288
NR* P1 4,300 Michigan State Strategic Fund, PCR, Refunding
(Consumers Power Project), VRDN, Series A, 3.70% due
4/15/2018 (g) 4,300
AA- Aa3 2,265 Royal Oak, Michigan, Hospital Finance Authority,
Revenue Refunding Bonds (Beaumont Properties, Inc.),
Series E, 6.625% due 1/01/2019 2,464
Wayne Charter County, Michigan, Airport Revenue
Bonds (Detroit Metropolitan--Wayne County) (c):
AAA Aaa 2,500 Series A, 5.375% due 12/01/2015 2,606
AAA Aaa 5,000 Series A, 5% due 12/01/2028 4,870
AAA Aaa 3,365 Series B, 5% due 12/01/2028 3,308
================================================================================================================================
Minnesota--2.5% Minnesota State, HFA, S/F Mortgage Revenue Bonds:
AA Aa2 3,425 AMT, Series L, 6.70% due 7/01/2020 3,657
AA Aa2 5,390 AMT, Series M, 6.70% due 7/01/2026 5,755
AA Aa2 4,005 Series H, 6.70% due 1/01/2018 4,305
AA Aa2 1,960 Series Q, 6.70% due 1/01/2017 2,099
BBB Baa1 5,700 Sartell, Minnesota, PCR, Refunding (Champion
International Corp.), 6.95% due 10/01/2012 6,252
================================================================================================================================
Mississippi--0.3% NR* P1 3,000 Jackson County, Mississippi, PCR, Refunding (Chevron
USA, Inc. Project), VRDN, 3.70% due 6/01/2023 (g) 3,000
================================================================================================================================
Nebraska--0.6% AAA NR* 5,100 Nebraska, Higher Education Loan Program, Inc. (Student
Loan Program), VRDN, AMT, Series C, 3.45% due
12/01/2016 (g) 5,100
================================================================================================================================
Nevada--1.5% AAA Aaa 5,000 Clark County, Nevada, School District, GO, 6.75% due
12/15/2004 (a)(f) 5,790
Nevada Housing Division,
S/F Program, AMT:
NR* Aa 2,230 (Mezzanine), Series A, 6.55% due 10/01/2012 2,395
AAA Aaa 3,070 Series E, 7% due 10/01/2019 3,319
AAA NR* 1,235 Nevada State Housing Division, Housing Revenue Bonds
(Multi-Unit), AMT, Issue B, 7.45% due 10/01/2017 (b) 1,363
A1+ P1 700 Washoe County, Nevada, Water Facility Revenue Bonds
(Sierra Pacific Power Co. Project), VRDN, AMT, 3.75%
due 12/01/2020 (g) 700
================================================================================================================================
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) 3,269
================================================================================================================================
New Mexico--0.3% Farmington, New Mexico, PCR, Refunding (Arizona
Public Service Company), VRDN (g):
A1+ P1 1,900 Series A, 3.60% due 5/01/2024 1,900
A1+ P1 400 Series B, 3.70% due 9/01/2024 400
================================================================================================================================
New York--15.6% AAA Aaa 13,345 Long Island Power Authority, New York, Electric
System, General Revenue Bonds, Series A, 5.50% due
12/01/2029 (c) 13,809
AAA Aaa 11,000 Metropolitan Transportation Authority of New York,
Commuter Facilities Revenue Bonds, Series C-1, 5.375%
due 7/01/2027 (f) 11,397
AAA Aaa 14,355 Metropolitan Transportation Authority of New York,
Transportation Facilities Revenue Bonds, Series B, 4.75%
due 7/01/2026 (f) 13,839
New York City, New York, GO, UT:
A- A3 3,750 Refunding, Series C, 5.875% due 2/01/2016 4,023
A- A3 5,000 Refunding, Series F, 5.875% due 8/01/2024 5,354
A- A3 430 Series B, 7% due 6/01/2016 467
A- A3 2,800 Series B, 5.875% due 8/15/2016 3,003
A- Aaa 4,000 Series B, Sub-Series B-1, 7.25% due 8/15/2004 (a) 4,719
A- Aaa 960 Series D, 9.50% due 8/01/2001 (a) 1,124
A- A3 430 Series D, 6% due 2/15/2005 (a) 479
A- A3 1,720 Series D, 6% due 2/15/2020 1,840
</TABLE>
6 & 7
<PAGE>
MuniVest Fund, Inc., August 31, 1998
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 New York City, New York, Municipal Water Finance
(concluded) Authority, Water and Sewer System Revenue Bonds:
AAA Aaa $11,920 RITR, Series 10, 6.82% due 6/15/2026 (j) $ 12,667
A- A2 5,750 Series A, 5.50% due 6/15/2023 5,890
A- A2 6,000 Series B, 5.75% due 6/15/2026 6,397
New York State Dormitory Authority Revenue Bonds
(State University Educational Facilities):
AAA Aaa 9,075 Series A, 4.75% due 5/15/2025 (c) 8,755
A- A3 16,700 Series B, 4.75% due 5/15/2028 15,809
AAA Aaa 9,000 New York State Energy, Research and Development
Authority, Gas Facilities Revenue Bonds, RITR, Series 9,
7.07% due 1/01/2021 (c)(j) 9,868
NR* VMIG1+ 400 New York State, HFA, Revenue Bonds (East 84th
Street), VRDN, AMT, Series A, 2.95% due 11/01/2028
(g) 400
A+ Aaa 8,535 New York State Local Government Assistance
Corporation, Series B, 6.25% due 4/01/2002 (a) 9,375
AAA Baa1 6,000 New York State Thruway Authority, Service Contract
Revenue Bonds (Local Highway and Bridge), 6.375%
due 4/01/2002 (a) 6,563
AA- A1 2,750 Port Authority of New York and New Jersey,
Consolidated Revenue Bonds, 76th Series, AMT, 6.50%
due 11/01/2026 2,953
A1 VMIG1+ 1,600 Port Authority of New York and New Jersey, Special
Obligation Revenue Refunding Bonds (Versatile
Structure Obligation), VRDN, AMT, Series 1R, 3.75%
due 8/01/2028 (g) 1,600
================================================================================================================================
North Carolina--1.2% AA Aa3 5,000 North Carolina Medical Care Commission, Health Care
Facilities Revenue Bonds (Duke University Health
System), Series A, 4.75% due 6/01/2028 4,763
AA- Aa3 6,800 North Carolina Medical Care Commission, Hospital
Revenue Bonds (Pitt County Memorial Hospital), Series
A, 4.75% due 12/01/2028 6,405
================================================================================================================================
Ohio--1.2% A1+ VMIG1+ 900 Cuyahoga County, Ohio, Hospital Revenue Bonds (The
Cleveland Clinic), VRDN,
Series D, 3.60% due
1/01/2026 (g) 900
Ohio HFA, S/F Mortgage Revenue Bonds, AMT (d):
AAA Aaa 2,925 RIB, Series B-4, 9.842% due 3/31/2031 (j) 3,283
AAA NR* 2,935 Series C, 8.125% due 3/01/2020 3,055
AAA NR* 3,350 Series C, 7.85% due 9/01/2021 3,540
================================================================================================================================
Pennsylvania--2.7% AA- A1 5,000 Chester County, Pennsylvania, Health and Educational
Facilities Authority, Health System Revenue Bonds
(Jefferson Health System), Series B, 5.375% due
5/15/2027 5,062
AA+ Aa 4,005 Pennsylvania HFA, S/F Mortgage, AMT, Series U, 7.80%
due 10/01/2020 4,192
AAA Aaa 3,140 Pennsylvania State Turnpike Commission, Oil Franchise
Tax Revenue Bonds, Senior Series A, 4.75% due
12/01/2027 (h) 3,008
AAA Aaa 10,000 Pennsylvania State Higher Educational Assistance
Agency, Student Loan Revenue Bonds, AMT, RIB,
9.723% due 9/03/2026 (h)(j) 11,638
================================================================================================================================
Rhode Island--1.5% AA+ A1 6,000 Rhode Island Housing and Mortgage Finance
Corporation, INFLOS, AMT, Series 8, 10.967% due
4/01/2024 (j) 6,810
AAA Aaa 6,000 Rhode Island State Health and Education Building
Corporation Revenue Bonds (Rhode Island Hospital),
INFLOS, 6.85% due 8/15/2021 (e)(f)(j) 6,612
================================================================================================================================
South Carolina--0.6% AAA Aaa 5,000 South Carolina State Public Service Authority, Revenue
Refunding Bonds, Series A, 5.75% due 1/01/2022 (c) 5,358
================================================================================================================================
Texas--8.6% AAA Aaa 3,040 Copperas Cove, Texas, Independent School District, GO,
UT, 6.90% due 8/15/2004 (a) 3,501
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 6,928
BBB Baa1 4,000 Gulf Coast, Texas, IDA, IDR, Refunding (Champion
International Corp.), 7.125% due 4/01/2010 4,428
NR* VMIG1+ 200 Gulf Coast, Texas, IDA, Solid Waste Disposal Revenue
Bonds (CITGO Petroleum Corp. Project), VRDN, AMT,
3.80% due 5/01/2025 (g) 200
BBB- Baa3 3,250 Gulf Coast, Texas, Waste Disposal Authority,
Environmental Improvement Revenue Refunding Bonds
(UXS Corp. Projects), 5.50% due 9/01/2017 3,288
AA Aa2 2,400 Harris County, Texas, Certificates of Obligation, Tax and
Revenue Bonds, 10% due 10/01/2002 (e) 2,938
Harris County, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds:
AAA Aaa 1,485 (Hermann Hospital Project), 6.375% due 10/01/2004
(a)(c) 1,682
NR* A3 3,500 (Memorial Hospital Systems Project), Series A,
.60% due 6/01/2004 (a) 3,997
NR* A3 2,500 (Memorial Hospital Systems Project), Series A,
.625% due 6/01/2004 (a) 2,858
A1+ NR* 2,050 (Methodist Hospital), VRDN, 3.65% due 12/01/2025
(g) 2,050
AA Aa3 5,500 Refunding (School Health Care Systems), Series B,
6.25% due 7/01/2027 6,606
AAA Aa3 5,290 (Saint Luke's Episcopal Hospital Project), Series A,
6.625% due 2/15/2012 (e) 5,714
AA Aa3 10,385 Harris County, Texas, Health Facilities Development
Corporation Revenue Bonds, RITR, Series 6, 7.495% due
12/01/2027 (j) 11,781
AAA Aaa 6,000 Houston, Texas, Water and Sewer System Revenue
Bonds, RITR, Series 5, 6.82% due 12/01/2027 (f)(j) 6,293
AA Aa2 5,000 Lower Neches Valley Authority, Texas, Industrial
Development Corporation, Sewer Facilities Revenue
Bonds (Mobil Oil Refining Corp. Project), AMT, 6.40%
due 3/01/2030 5,489
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 2,786
AA Aa 5,700 North Central Texas, Health Facility Development
Corporation Revenue Bonds (Baylor University Medical
Center), INFLOS, Series A, 9.979% due 5/15/2001 (a)(j) 6,783
================================================================================================================================
Virginia--3.1% BBB- Baa3 10,000 Pocahontas Parkway Association, Virginia, Connector
Toll Road Revenue Bonds (Route 895), Senior Series A,
5.50% due 8/15/2028 10,035
Virginia State, HDA, Commonwealth Mortgage Bonds:
AA+ NR* 2,950 AMT, Series G, Sub-Series G-2, 6.65% due 1/01/2019 3,139
AA+ Aa1 10,000 Series H, 6.85% due 7/01/2014 10,309
AA+ Aa1 4,400 Series J, Sub-Series J-2, 6.75% due 7/01/2017 4,727
================================================================================================================================
Washington--5.1% AA+ Aa1 6,955 King County, Washington, GO, Series B, 6.625% due
12/01/2015 8,207
Washington State Housing Finance Commission, S/F
Mortgage Revenue Refunding Bonds (d):
AAA NR* 5,930 Series A, 7.70% due 7/01/2016 6,277
AAA NR* 2,395 Series D, 6.95% due 7/01/2017 (b) 2,513
NR* Aaa 1,540 Washington State Housing Finance Commission, S/F
Program, Series 3-N, 5.25% due 12/01/2017 (b)(d) 1,555
Washington State Public Power Supply System,
Revenue Refunding Bonds (Nuclear Project No. 1):
AA- Aa1 3,000 Series A, 7% due 7/01/2008 3,580
AA- Aa1 5,000 Series B, 7.25% due 7/01/2009 5,964
AA- Aa1 14,320 Series B, 7.125% due 7/01/2016 17,960
================================================================================================================================
Wisconsin--1.2% AA Aa2 6,000 Wisconsin State, GO, Series A, 6% due 5/01/2004 6,590
NR* A3 4,000 Wisconsin State Health and Educational Facilities
Authority, Revenue Refunding Bonds (Saint Claire
Hospital Project), 7% due 2/15/2011 4,349
================================================================================================================================
</TABLE>
8 & 9
<PAGE>
MuniVest Fund, Inc., August 31, 1998
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>
Wyoming--1.6% BBB- Baa2 $ 7,475 Sweetwater County, Wyoming, Solid Waste Disposal
Revenue Bonds (FMC Corp. Project), AMT, Series B,
6.90% due 9/01/2024 $ 8,269
NR* Aa2 3,600 Uinta County, Wyoming, PCR, Refunding (Chevron
USA Inc. Project), VRDN, 3.25% due 8/15/2020 (g) 3,600
AA Aa2 2,500 Wyoming Community Development Authority, S/F
Mortgage, AMT, Series H, 7.10% due 6/01/2012 2,693
================================================================================================================================
Total Investments (Cost--$850,753)--102.0% 916,391
Liabilities in Excess of Other Assets--(2.0%) (18,121)
--------
Net Assets--100.0% $898,270
========
================================================================================================================================
</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, 1998.
(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, 1998.
* 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, 1998
=============================================================================================================================
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$850,752,944) (Note 1a) ........... $ 916,390,708
Receivables:
Securities sold ...................................................... $ 19,976,715
Interest ............................................................. 11,367,086 31,343,801
-------------
Prepaid expenses and other assets ......................................... 22,504
-------------
Total assets .............................................................. 947,757,013
-------------
=============================================================================================================================
Liabilities: Payables:
Securities purchased ................................................. 48,304,336
Dividends to shareholders (Note 1e) .................................. 656,195
Investment adviser (Note 2) .......................................... 354,226 49,314,757
-------------
Accrued expenses and other liabilities .................................... 172,266
-------------
Total liabilities ......................................................... 49,487,023
-------------
=============================================================================================================================
Net Assets: Net assets ................................................................ $ 898,269,990
=============
=============================================================================================================================
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 ...................................... 6,460,640
Accumulated realized capital losses on investments--net (Note 5) .......... (18,470,399)
Unrealized appreciation on investments--net ............................... 65,637,764
-------------
Total--Equivalent to $10.20 net asset value per share of Common Stock
(market price--$10.00) .................................................... 623,269,990
-------------
Total capital ............................................................. $ 898,269,990
=============
=============================================================================================================================
</TABLE>
* Auction Market Preferred Stock.
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended August 31, 1998
===============================================================================================================================
<S> <C> <C> <C>
Investment Interest and amortization of premium and discount earned .................. $ 51,628,584
Income (Note 1d):
===============================================================================================================================
Expenses: Investment advisory fees (Note 2) ......................................... $ 4,431,767
Commission fees (Note 4) .................................................. 708,990
Transfer agent fees ....................................................... 140,275
Accounting services (Note 2) .............................................. 111,575
Professional fees ......................................................... 81,404
Custodian fees ............................................................ 57,749
Printing and shareholder reports .......................................... 35,885
Pricing fees .............................................................. 26,305
Directors' fees and expenses .............................................. 25,951
Listing fees .............................................................. 14,500
Other ..................................................................... 21,580
-------------
Total expenses ............................................................ 5,655,981
-------------
Investment income--net .................................................... 45,972,603
-------------
===============================================================================================================================
Realized & Realized gain on investments--net ......................................... 8,274,227
Unrealized Gain on Change in unrealized appreciation on investments--net ..................... 10,430,911
Investments--Net -------------
(Notes 1b, 1d & 3): Net Increase in Net Assets Resulting from Operations ...................... $ 64,677,741
=============
===============================================================================================================================
</TABLE>
See Notes to Financial Statements
10 & 11
<PAGE>
MuniVest Fund, Inc., August 31, 1998
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Year Ended August 31,
-----------------------------
Increase (Decrease) in Net Assets: 1998 1997
===============================================================================================================================
<S> <C> <C> <C>
Operations: Investment income--net .................................................... $ 45,972,603 $ 47,172,381
Realized gain on investments--net ......................................... 8,274,227 3,274,718
Change in unrealized appreciation on investments--net ..................... 10,430,911 23,793,529
------------- -------------
Net increase in net assets resulting from operations ...................... 64,677,741 74,240,628
------------- -------------
===============================================================================================================================
Dividends to Investment income--net:
Shareholders Common Stock ............................................................ (36,155,315) (37,720,129)
(Note 1e): Preferred Stock ......................................................... (9,767,310) (9,545,790)
------------- -------------
Net decrease in net assets resulting from dividends to shareholders ....... (45,922,625) (47,265,919)
------------- -------------
===============================================================================================================================
Net Assets: Total increase in net assets .............................................. 18,755,116 26,974,709
Beginning of year ......................................................... 879,514,874 852,540,165
------------- -------------
End of year* .............................................................. $ 898,269,990 $ 879,514,874
============= =============
===============================================================================================================================
*Undistributed investment income--net ...................................... $ 6,460,640 $ 6,410,662
============= =============
===============================================================================================================================
</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: .......... 1998 1997 1996 1995 1994
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Net asset value, beginning of year ............... $ 9.89 $ 9.45 $ 9.51 $ 9.57 $ 10.65
Performance: -------- -------- -------- -------- --------
Investment income--net ........................... .76 .77 .79 .81 .84
Realized and unrealized gain (loss) on investments
--net ............................................ .30 .45 (.06) .10 (.78)
-------- -------- -------- -------- --------
Total from investment operations ................. 1.06 1.22 .73 .91 .06
-------- -------- -------- -------- --------
Less dividends and distributions to Common Stock
shareholders:
Investment income--net .......................... (.59) (.62) (.63) (.64) (.70)
Realized gain on investments--net ............... -- -- -- (.12) (.32)
In excess of realized gain on investments--net .. -- -- -- (.04) --
-------- -------- -------- -------- --------
Total dividends and distributions to Common Stock
shareholders ..................................... (.59) (.62) (.63) (.80) (1.02)
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:
Dividends to Preferred Stock shareholders from
investment income--net .......................... (.16) (.16) (.16) (.17) (.12)
-------- -------- -------- -------- --------
Net asset value, end of year ..................... $ 10.20 $ 9.89 $ 9.45 $ 9.51 $ 9.57
======== ======== ======== ======== ========
Market price per share, end of year .............. $ 10.00 $ 9.50 $ 9.125 $ 8.563 $ 8.50
======== ======== ======== ======== ========
=================================================================================================================================
Total Investment Based on market price per share .................. 11.78% 11.25% 14.18% 10.88% (16.29%)
Return:* ======== ======== ======== ======== ========
Based on net asset value per share ............... 9.52% 11.84% 6.46% 9.38% (.44%)
======== ======== ======== ======== ========
=================================================================================================================================
Ratios to Average Expenses ......................................... .64% .64% .64% .66% .64%
Net Assets:** ======== ======== ======== ======== ========
Investment income--net ........................... 5.19% 5.40% 5.57% 5.91% 5.76%
======== ======== ======== ======== ========
=================================================================================================================================
Supplemental Data: Net assets, net of Preferred Stock, end of year
(in thousands) ................................... $623,270 $604,515 $577,540 $581,211 $584,680
======== ======== ======== ======== ========
Preferred Stock outstanding, end of year (in
thousands) ....................................... $275,000 $275,000 $275,000 $275,000 $275,000
======== ======== ======== ======== ========
Portfolio turnover ............................... 102.77% 78.02% 69.87% 71.95% 100.92%
======== ======== ======== ======== ========
=================================================================================================================================
Leverage: Asset coverage per $1,000 ........................ $ 3,266 $ 3,198 $ 3,100 $ 3,113 $ 3,126
======== ======== ======== ======== ========
=================================================================================================================================
Dividends Per Series A--Investment income--net ................. $ 890 $ 872 $ 895 $ 922 $ 633
Share on Preferred ======== ======== ======== ======== ========
Stock Outstanding:+ Series B--Investment income--net ................. $ 902 $ 871 $ 903 $ 946 $ 637
======== ======== ======== ======== ========
Series C--Investment income--net ................. $ 886 $ 860 $ 900 $ 947 $ 644
======== ======== ======== ======== ========
Series D--Investment income--net ................. $ 880 $ 868 $ 901 $ 1,014 $ 633
======== ======== ======== ======== ========
Series E--Investment income--net ................. $ 884 $ 868 $ 895 $ 968 $ 626
======== ======== ======== ======== ========
=================================================================================================================================
</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 financial futures
contracts and options on such futures contracts for the purpose of hedging the
market risk on existing securities or the intended purchase of securities.
Futures contracts are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a contract, the
Fund deposits and maintains as collateral such initial margin as required by the
exchange on which the transaction is effected. Pursuant to the contract, the
Fund agrees to receive from or pay to the broker an
12 & 13
<PAGE>
MuniVest Fund, Inc., August 31, 1998
NOTES TO FINANCIAL STATEMENTS (concluded)
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 securi-ties, for the
year ended August 31, 1998 were $879,645,500 and $878,895,358, respectively.
Net realized gains (losses) for the year ended August 31, 1998 and net
unrealized gains as of August 31, 1998 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains (Losses) Gains
- --------------------------------------------------------------------------------
Long-term investments ................... $ 12,835,729 $ 65,637,764
Financial futures contracts ............. (4,561,502) --
------------ ------------
Total ................................... $ 8,274,227 $ 65,637,764
============ ============
- --------------------------------------------------------------------------------
As of August 31, 1998, net unrealized appreciation for Federal income tax
purposes aggregated $65,637,459, of which $66,041,736 related to appreciated
securities and $404,277 related to depreciated securities. The aggregate cost of
investments at August 31, 1998 for Federal income tax purposes was $850,753,249.
4. Capital Stock Transactions:
Common Stock
At August 31, 1998, the Fund had one class of shares of Common Stock, par value
$.10 per share, of which 150,000,000 shares were authorized. Shares issued and
outstanding during the years ended August 31, 1998 and August 31, 1997 remained
constant.
Preferred Stock
The Auction Market Preferred Stock ("AMPS") are shares of Preferred Stock of the
Fund, with a par value of $.025 per share and a liquidation preference of
$25,000 per share, that entitle their holders to receive cash dividends at an
annual rate that may vary for the successive dividend periods for each series.
The Fund is authorized to issue 10,000,000 shares of Preferred Stock. The yields
in effect August 31, 1998 were as follows: Series A, 3.38%; Series B, 3.39%;
Series C, 3.43%; Series D, 3.43%; and Series E, 3.25%.
Shares issued and outstanding during the years ended August 31, 1998 and August
31, 1997 remained constant.
The Fund pays commissions to certain broker-dealers at the end of each auction
at an annual rate of approximately one-quarter of 1% calculated on the proceeds
of each auction. For the year ended August 31, 1998, MLPF&S, an affiliate of
FAM, received $325,194 as commissions.
5. Capital Loss Carryforward:
At August 31, 1998, the Fund had a net capital loss carryforward of
approximately $3,631,000, all of which expires in 2004. This amount will be
available to offset like amounts of any future taxable gains.
6. Subsequent Event:
On September 8, 1998, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.050732 per share,
payable on September 29, 1998 to shareholders of record as of September 22,
1998.
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,
1998, 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, 1998 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, 1998, 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
October 6, 1998
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute substantially all of its net
investment income to its shareholders on a monthly basis. However, in order to
provide shareholders with a more consistent yield to the current trading price
of shares of Common Stock of the Fund, the Fund may at times pay out less than
the entire amount of net investment income earned in any particular month and
may at times in any particular month pay out such accumulated but undistributed
income in addition to net investment income earned in that month. As a result,
the dividends paid by the Fund for any particular month may be more or less than
the amount of net investment income earned by the Fund during such month. The
Fund's current accumulated but undistributed net investment income, if any, is
disclosed in the Statement of Assets, Liabilities and Capital, which comprises
part of the financial information included in this report.
14 & 15
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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--8/98
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