UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-05611
Name of Fund: MuniVest Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Robert C. Doll, Jr., Chief Executive
Officer, MuniVest Fund, Inc., 800 Scudders Mill Road, Plainsboro, NJ
08536. Mailing address: P.O. Box 9011, Princeton, NJ 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 08/31/05
Date of reporting period: 09/01/04 - 02/28/05
Item 1 - Report to Stockholders
MuniVest Fund, Inc.
Semi-Annual Report
February 28, 2005
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,
net of dividends to Preferred Stock, 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 pickup on the Common Stock will be reduced or eliminated completely. At
the same time, the market value of the fund's Common Stock (that is, its price
as listed on the American Stock Exchange) may, as a result, decline.
Furthermore, if long-term interest rates rise, the Common Stock's net asset
value will reflect the full decline in the price of the portfolio's investments,
since the value of the fund's Preferred Stock does not fluctuate. In addition to
the decline in net asset value, the market value of the fund's Common Stock may
also decline.
As a part of its investment strategy, the Fund may invest in certain securities
whose potential income return is inversely related to changes in a floating
interest rate ("inverse floaters"). In general, income on inverse floaters will
decrease when short-term interest rates increase and increase when short-term
interest rates decrease. Investments in inverse floaters may be characterized as
derivative securities and may subject the Fund to the risks of reduced or
eliminated interest payments and losses of invested principal. In addition,
inverse floaters have the effect of providing investment leverage and, as a
result, the market value of such securities will generally be more volatile than
that of fixed-rate, tax-exempt securities. To the extent the Fund invests in
inverse floaters, the market value of the Fund's portfolio and the net asset
value of the Fund's shares may also be more volatile than if the Fund did not
invest in these securities. As of February 28, 2005, the percentage of the
Fund's total net assets invested in inverse floaters was 11.36%, before the
deduction of Preferred Stock.
Swap Agreements
The Fund may also invest in swap agreements, which are over-the-counter
contracts in which one party agrees to make periodic payments based on the
change in market value of a specified bond, basket of bonds, or index in return
for periodic payments based on a fixed or variable interest rate or the change
in market value of a different bond, basket of bonds or index. Swap agreements
may be used to obtain or reduce exposure to a bond or market without owning or
taking physical custody of securities. Swap agreements involve the risk that the
party with whom the Fund has entered into the swap will default on its
obligation to pay the Fund and the risk that the Fund will not be able to meet
its obligations to pay the other party to the agreement.
2 MUNIVEST FUND, INC. FEBRUARY 28, 2005
A Letter From the President
Dear Shareholder
Financial markets broadly posted positive returns over the most recent reporting
period, with international equities providing some of the most impressive
results.
Total Returns as of February 28, 2005 6-month 12-month
======================================================================================
U.S. equities (Standard & Poor's 500 Index) + 9.99% + 6.98%
--------------------------------------------------------------------------------------
International equities (MSCI Europe Australasia Far East Index) +21.18 +18.68
--------------------------------------------------------------------------------------
Fixed income (Lehman Brothers Aggregate Bond Index) + 1.26 + 2.43
--------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 2.40 + 2.96
--------------------------------------------------------------------------------------
High yield bonds (Credit Suisse First Boston High Yield Index) + 7.53 +11.21
--------------------------------------------------------------------------------------
The U.S. economy has continued to show resilience in the face of the Federal
Reserve Board's (the Fed) continued interest rate hikes and, more recently,
higher oil prices. The Fed's measured tightening program recently brought the
federal funds rate to 2.75% en route to a more "neutral" short-term interest
rate target (relative to inflation). Since the U.S. presidential election,
progress has been monitored on many fronts in Washington, although concerns
remain about the structural problems of debt and deficits, as reflected by a
significant decline in the U.S. dollar.
U.S. equities ended 2004 in a strong rally, but remained in a fairly narrow
trading range for the first two months of 2005. Divergences were notable among
sectors, with energy emerging as a clear leader. On the positive side,
corporations have accelerated their hiring plans, capital spending remains
reasonably robust and merger-and-acquisition activity has increased. Offsetting
the positives are slowing corporate earnings growth, renewed energy price
concerns and the potential for an economic slowdown. International equities,
particularly in Asia, have benefited from higher economic growth rates (China
recorded growth of 9.3% in 2004), stronger currencies and relatively reasonable
valuations.
The major action in the bond market has been a flattening of the yield curve. As
short-term interest rates continued to rise, yields on the long end of the curve
remained relatively stable -- even declining at certain points since the Fed's
monetary tightening program began in June 2004. This phenomenon has been largely
attributed to continued foreign interest in U.S. bonds, which has served to
absorb much of the excess supply. By period-end, many believed long-term yields
were long overdue for a rise.
Looking ahead, the environment is likely to be a challenging one for investors,
with diversification and selectivity becoming increasingly important themes.
With this in mind, we encourage you to meet with your financial advisor to
review your goals and asset allocation and to rebalance your portfolio, as
necessary, to ensure it remains aligned with your objectives and risk tolerance.
As always, we thank you for trusting Merrill Lynch Investment Managers with your
investment assets, and we look forward to serving you in the months and years
ahead.
Sincerely,
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
President and Director
MUNIVEST FUND, INC. FEBRUARY 28, 2005 3
A Discussion With Your Fund's Portfolio Manager
Fund performance exceeded its comparable Lipper category average for the
period, benefiting from a focus on lower-rated, higher-yielding securities -- an
area of the municipal market that continued to outperform.
Describe the recent market environment relative to municipal bonds.
Despite broadly positive economic conditions, long-term bond yields declined
during the past six months as bond prices, which move opposite yields, generally
rose. Gross domestic product (GDP) growth was recently revised to 3.8% for the
fourth quarter of 2004, similar to the 4% rate recorded in the third quarter.
For 2004 as a whole, real GDP grew at a 4.4% rate, well ahead of 2003's annual
rate of 3%. The improving economic activity was largely offset by inflationary
trends remaining in the 1.5% - 2% range. Also helping to boost bond prices was
strong currency-related demand for long-term U.S. Treasury issues on the part of
many foreign governments.
Over the past six months, long-term U.S. Treasury bond yields declined 21 basis
points (.21%) to 4.72% at February 28, 2005. However, the Federal Reserve Board
(the Fed) continued to raise short-term interest rates, moving its federal funds
target rate recently to 2.75%. The Fed's series of interest rate hikes, and the
expectation for a continuation of the monetary tightening program, pressured
shorter-maturity bond yields higher throughout the period. The yield on the
10-year Treasury note stood at 4.36% at the end of February, an increase of 26
basis points over the six-month period.
A generally positive technical environment supported higher bond prices in the
long end of the municipal bond market. Recent bond issuance has been heavily
weighted in the 10-year - 20-year maturity range, leading to a moderate scarcity
of bonds maturing in 30 years - 35 years. Investor demand was solid throughout
the period and increased in the latter months. The most current statistics from
the Investment Company Institute indicate that long-term municipal bond funds
saw net new cash flows of $870 million in January 2005. This represented a
considerable improvement from January 2004, which experienced net cash outflows
of $224 million. As measured by the Bond Buyer Revenue Bond Index, the yield on
A-rated revenue bonds maturing in 30 years declined 16 basis points to 4.93% at
the end of February. AAA-rated issues maturing in 30 years, as reported by
Municipal Market Data, declined 19 basis points to 4.51%. Conversely,
shorter-maturity municipal bond yields increased, responding to rising U.S.
Treasury note yields and increased supply pressures. AAA-rated tax-exempt bonds
maturing in 10 years yielded 3.65% at the end of February, representing an
increase of 15 basis points over the period.
During the past six months, more than $175 billion in new long-term tax-exempt
bonds was underwritten, essentially unchanged versus the same period a year ago.
In the last three months, the pace of new issuance increased. Approximately $91
billion in long-term tax-exempt bonds was issued during that time, an increase
of 12% compared to the same three months a year ago. New-issue municipal volume
is expected to be easily manageable in early 2005, continuing to support the
tax-exempt market's favorable technical position.
Finally, long-term tax-exempt bond yield ratios have remained in the 88% - 95%
range relative to taxable bonds, at or above their recent historic average of
85% - 88%. These attractive yield ratios should continue to attract both
traditional and non-traditional investors to the municipal market.
How did the Fund perform during the period in light of the existing market
conditions?
For the six-month period ended February 28, 2005, the Common Stock of MuniVest
Fund, Inc. had net annualized yields of 6.72% and 7.09%, based on a period-end
per share net asset value of $10.09 and a per share market price of $9.55,
respectively, and $.336 per share income dividends. Over the same period, the
total investment return on the Fund's Common Stock was +5.46%, based on a change
in per share net asset value from $9.91 to $10.09, and assuming reinvestment of
all distributions.
The Fund's total return, based on net asset value, exceeded the +4.96% average
return of the Lipper General Municipal Debt Funds (Leveraged) category for the
six-month period. (Funds in this Lipper category invest primarily in municipal
debt issues rated in the top four credit-rating categories. These funds can be
leveraged via use of debt, preferred equity and/or reverse repurchase
agreements.) The Fund was able to achieve the outperformance despite its modest
defensive positioning during a period when long-term tax-exempt bond yields
declined slightly. Benefiting performance over the past six months was the
Fund's above-average yield and the continued outperformance of our lower-rated
holdings, such as A-rated hospital or corporate-backed debt.
4 MUNIVEST FUND, INC. FEBRUARY 28, 2005
For a description of the Fund's total investment return based on a change in the
per share market value of the Fund's Common Stock (as measured by the trading
price of the Fund's shares on the American Stock Exchange), and assuming
reinvestment of dividends, please refer to the Financial Highlights section of
this report. As a closed-end fund, the Fund's shares may trade in the secondary
market at a premium or discount to the Fund's net asset value. As a result,
total investment returns based on changes in the market value of the Fund's
Common Stock can vary significantly from total investment returns based on
changes in the Fund's net asset value.
What changes were made to the portfolio during the period?
Along with a rise in long-term municipal bond prices, we have seen increased
demand for higher-yielding tax-exempt securities. In recent months, much of the
new net cash flows into municipal bond funds has been directed into "high yield"
tax-exempt funds. The demand in this area of the market has helped generate
significant price appreciation for the Fund's lower-rated issues. We will be
monitoring the price improvement of these lower-rated issues. Should it continue
and/or intensify, we would look to reduce some of the Fund's exposure to
lower-rated issues. Higher-quality securities could then be purchased at
historically attractive yield differentials.
During the period, we also took advantage of the continued appreciation in
California state-related issues. Overall exposure to these bonds was reduced by
approximately 2.5%, allowing the Fund to benefit from the recent price
improvements. The proceeds from the sales were largely invested in New Jersey
securities, where we found an attractive buying opportunity as supply increased
and prices fell. Specifically, a number of large New Jersey issues were marketed
in early October 2004, resulting in a temporary increase in New Jersey municipal
bond yields.
For the six-month period ended February 28, 2005, the Fund's Auction Market
Preferred Stock (AMPS) had average yields as follows: Series A, 1.38%; Series B,
1.60%; Series C, 1.71%; Series D, 1.36%; Series E, 1.53%; and Series F, 1.60%.
Continued short-term interest rate increases by the Fed have modestly boosted
the Fund's borrowing costs throughout the past six months. While we believe the
majority of the Fed's monetary tightening actions have already occurred, we
expect additional increases in the federal funds rate until at least midyear.
Despite Despite the recent rate hikes, the Fund's borrowing costs remain quite
low on a historical basis and the leveraging of the Preferred Stock has
continued to generate a material income benefit to the Fund's Common Stock
shareholders. However, should the spread between short-term and long-term
interest rates narrow, the benefits of leverage will decline and, as a result,
reduce the yield on the Fund's Common Stock. At the end of the period, the
Fund's leverage amount, due to AMPS, was 35.04% of total net assets. (For a more
complete explanation of the benefits and risks of leveraging, see page 2 of this
report to shareholders.)
How would you characterize the Fund's position at the close of the period?
The Fund ended the period with a defensive posture, and we expect to maintain
that structure in the coming months. Rising short-term interest rates, an
expanding domestic economy, and increasing commodity prices (especially oil) are
all textbook indicators for rising long-term interest rates.
Nevertheless, bond yields are still near their historic lows and, under the
circumstances, we believe the more prudent strategy is to maintain our emphasis
on higher-yielding issues rather than more interest rate-sensitive securities.
The Fund also will remain fully invested in order to enhance shareholder income.
Given the municipal bond market's strong technical position, including favorable
supply/demand dynamics, we expect the tax-exempt market to perform well relative
to its taxable counterpart.
Fred K. Stuebe
Vice President and Portfolio Manager
March 24, 2005
MUNIVEST FUND, INC. FEBRUARY 28, 2005 5
Schedule of Investments (in Thousands)
Face
State Amount Municipal Bonds Value
==========================================================================================================================
Alabama--4.0% $ 2,550 Camden, Alabama, IDB, Exempt Facilities Revenue Bonds (Weyerhaeuser
Company), Series A, 6.125% due 12/01/2024 $ 2,762
7,500 Courtland, Alabama, IDB, Solid Waste Disposal Revenue Bonds (Champion
International Corporation Project), AMT, Series A, 6.50% due 9/01/2025 7,786
Huntsville, Alabama, Health Care Authority Revenue Bonds:
3,500 Series A, 5.75% due 6/01/2031 3,683
5,000 Series B, 5.75% due 6/01/2032 5,326
5,000 Selma, Alabama, IDB, Environmental Improvement Revenue Refunding Bonds
(International Paper Company Project), Series B, 5.50% due 5/01/2020 5,308
==========================================================================================================================
Alaska--1.4% Anchorage, Alaska, Lease Revenue Bonds (Correctional Facility) (i):
3,575 6% due 2/01/2014 4,026
3,830 6% due 2/01/2016 4,300
500 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds (BP Pipelines Inc.
Project), VRDN, Series B, 1.77% due 7/01/2037 (l) 500
==========================================================================================================================
Arizona--1.6% 4,375 Maricopa County, Arizona, IDA, Education Revenue Bonds (Arizona Charter
Schools Project 1), Series A, 6.75% due 7/01/2029 4,328
Pima County, Arizona, IDA, Education Revenue Bonds (Arizona Charter Schools
Project):
2,100 Series E, 7.25% due 7/01/2031 2,238
500 Series I, 6.10% due 7/01/2024 507
1,000 Series I, 6.30% due 7/01/2031 1,011
1,610 Pima County, Arizona, IDA, Education Revenue Refunding Bonds (Arizona
Charter Schools Project II), Series A, 6.75% due 7/01/2021 1,687
==========================================================================================================================
California--20.3% 4,000 California State, GO, Refunding, 5% due 3/01/2034 (h) 4,150
California State Public Works Board, Lease Revenue Bonds:
5,000 (Department of Corrections), Series C, 5.50% due 6/01/2022 5,487
6,000 (Department of Corrections), Series C, 5.50% due 6/01/2023 6,562
10,775 (Department of Mental Health--Coalinga State Hospital), Series A,
5.125% due 6/01/2029 11,197
California State, Various Purpose, GO:
13,570 5.50% due 4/01/2030 14,816
16,250 5.50% due 11/01/2033 17,648
5,240 California Statewide Communities Development Authority, Health Facility
Revenue Bonds (Memorial Health Services), Series A, 6% due 10/01/2023 5,954
Golden State Tobacco Securitization Corporation of California, Tobacco
Settlement Revenue Bonds:
7,280 Series A-3, 7.875% due 6/01/2042 8,352
3,750 Series A-4, 7.80% due 6/01/2042 4,284
1,375 Series A-5, 7.875% due 6/01/2042 1,577
13,900 Series B, 5.375% due 6/01/2028 14,576
8,850 Series B, 5.50% due 6/01/2033 9,530
15,000 Series B, 5.50% due 6/01/2033 (f) 16,370
5,000 Series B, 5.50% due 6/01/2043 (f) 5,420
==========================================================================================================================
Colorado--2.6% Arapahoe County, Colorado, School District Number 005, GO (Cherry Creek):
5,750 6% due 12/15/2013 6,470
4,165 6% due 12/15/2014 4,687
Colorado HFA, Revenue Refunding Bonds (S/F Program), AMT, Senior Series
A-2:
1,175 6.60% due 5/01/2028 1,197
385 7.50% due 4/01/2031 393
3,000 Colorado Health Facilities Authority Revenue Bonds (Lutheran Medical
Center), Series A, 5.25% due 6/01/2034 3,079
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)
DRIVERS Derivative Inverse Tax-Exempt Receipts
EDA Economic Development Authority
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
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
VRDN Variable Rate Demand Notes
6 MUNIVEST FUND, INC. FEBRUARY 28, 2005
Schedule of Investments (continued) (in Thousands)
Face
State Amount Municipal Bonds Value
==========================================================================================================================
Connecticut--0.5% $ 2,810 Mohegan Tribe Indians Gaming Authority, Connecticut, Public Improvement
Revenue Refunding Bonds (Priority Distribution), 6.25% due 1/01/2031 $ 2,971
==========================================================================================================================
Florida--2.8% 6,000 Highlands County, Florida, Health Facilities Authority, Hospital Revenue
Bonds (Adventist Health System), Series D, 5.375% due 11/15/2035 6,263
10,320 Orange County, Florida, Health Facilities Authority, Hospital Revenue Bonds
(Adventist Health System), 5.625% due 11/15/2032 10,996
==========================================================================================================================
Georgia--3.2% 1,100 Atlanta, Georgia, Water and Wastewater Revenue Bonds, VRDN, Series C, 1.73%
due 11/01/2041 (i)(l) 1,100
Georgia Municipal Electric Authority, Power Revenue Refunding Bonds:
4,600 Series W, 6.60% due 1/01/2018 5,526
250 Series W, 6.60% due 1/01/2018 (e) 302
250 Series Y, 10% due 1/01/2010 (e) 326
Milledgeville-Baldwin County, Georgia, Development Authority Revenue Bonds
(Georgia College and State University Foundation):
4,390 5.50% due 9/01/2024 4,630
2,000 5.625% due 9/01/2030 2,092
4,785 Monroe County, Georgia, Development Authority, PCR, Refunding (Oglethorpe
Power Corporation--Scherer), Series A, 6.80% due 1/01/2011 5,558
==========================================================================================================================
Idaho--0.2% 915 Idaho Housing Agency, S/F Mortgage Revenue Refunding Bonds, AMT, Series E-2,
6.90% due 1/01/2027 924
==========================================================================================================================
Illinois--21.5% 3,005 Chicago, Illinois, GO (Neighborhoods Alive 21 Program), Series A, 6%
due 1/01/2016 (f) 3,424
5,000 Chicago, Illinois, O'Hare International Airport, General Airport Revenue
Refunding Bonds, Third Lien, AMT, Series A, 5.75% due 1/01/2019 (c) 5,503
Chicago, Illinois, O'Hare International Airport Revenue Bonds, AMT:
11,200 3rd Lien, Series B-2, 6% due 1/01/2029 (n) 12,561
8,540 Series 368, DRIVERS, 9.793% due 7/01/2011 (c)(m) 10,696
7,000 Chicago, Illinois, O'Hare International Airport Revenue Refunding Bonds,
DRIVERS, AMT, Series 253, 9.299% due 1/01/2020 (c)(m) 8,409
130 Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT, Series C, 7%
due 3/01/2032 (b)(d)(k) 132
5,000 Cook County, Illinois, Community High School District Number 219, Niles
Township, GO, 6% due 12/01/2010 (a)(f) 5,703
10,000 Hodgkins, Illinois, Environmental Improvement Revenue Bonds (Metro
Biosolids Management LLC Project), AMT, 6% due 11/01/2023 10,457
2,140 Illinois Development Finance Authority Revenue Bonds (Community
Rehabilitation Providers Facility), Series A, 6.50% due 7/01/2022 2,278
1,365 Illinois Development Finance Authority, Revenue Refunding Bonds (Community
Rehabilitation Providers), Series A, 6% due 7/01/2015 1,418
3,690 Illinois HDA, Revenue Refunding Bonds (M/F Program), Series 5, 6.75%
due 9/01/2023 3,772
4,000 Illinois State Finance Authority Revenue Bonds (Northwestern University),
VRDN, Sub-Series A, 1.83% due 12/01/2034 (l) 4,000
2,500 Kane, Cook and Du Page Counties, Illinois, School District 46, Elgin, GO,
6.375% due 1/01/2011 (a)(i) 2,915
5,245 Kane and De Kalb Counties, Illinois, Community Unit School District
Number 302, GO, DRIVERS, Series 283, 9.329% due 2/01/2018 (f)(m) 6,709
McLean and Woodford Counties, Illinois, Community Unit, School District
Number 005, GO, Refunding (i):
5,000 6.25% due 12/01/2014 5,843
4,000 6.375% due 12/01/2016 4,697
Metropolitan Pier and Exposition Authority, Illinois, Dedicated State Tax
and Capital Appreciation Revenue Bonds (McCormick Place Expansion Project),
Series A (c):
16,000 5.05%** due 12/15/2038 2,809
26,800 5.06%** due 12/15/2039 4,455
18,550 Metropolitan Pier and Exposition Authority, Illinois, Dedicated State Tax
Revenue Refunding Bonds (McCormick Place Expansion Project), Series B,
5.75% due 6/15/2023 (c) 21,091
MUNIVEST FUND, INC. FEBRUARY 28, 2005 7
Schedule of Investments (continued) (in Thousands)
Face
State Amount Municipal Bonds Value
==========================================================================================================================
Illinois Regional Transportation Authority, Illinois, Revenue Bonds:
(concluded) $ 3,500 Series A, 7.20% due 11/01/2020 (h) $ 4,556
4,000 Series C, 7.75% due 6/01/2020 (f) 5,599
3,000 Will County, Illinois, Environmental Revenue Bonds (Mobil Oil Refining
Corporation Project), AMT, 6.40% due 4/01/2026 3,167
Will County, Illinois, School District Number 122 (New Lenox Elementary),
GO, Series A (i):
1,475 6.50% due 11/01/2010 (a) 1,728
505 6.50% due 11/01/2013 586
395 6.50% due 11/01/2015 458
==========================================================================================================================
Indiana--6.7% 1,700 Fort Wayne, Indiana, PCR, Refunding (General Motors Corporation Project),
6.20% due 10/15/2025 1,857
6,500 Indiana Health Facility Financing Authority, Hospital Revenue Refunding
Bonds (Clarian Health Partners Inc.), Series A, 6% due 2/15/2021 6,866
4,290 Indiana State, HFA, S/F Mortgage Revenue Refunding Bonds, Series A, 6.80%
due 1/01/2017 (j) 4,298
8,195 Indiana Transportation Finance Authority, Highway Revenue Bonds, Series A,
6.80% due 12/01/2016 10,054
15,335 Indianapolis, Indiana, Local Public Improvement Bond, Bank Revenue
Refunding Bonds, Series D, 6.75% due 2/01/2014 (e) 18,278
==========================================================================================================================
Kansas--0.7% 3,805 Sedgwick and Shawnee Counties, Kansas, S/F Mortgage Revenue Bonds
(Mortgage-Backed Securities Program), AMT, Series A-4, 5.95%
due 12/01/2033 (b)(d) 4,011
==========================================================================================================================
Louisiana--2.5% 4,000 De Soto Parish, Louisiana, Environmental Improvement Revenue Refunding
Bonds (International Paper Co. Project), AMT, Series B, 6.55% due 4/01/2019 4,117
10,575 Louisiana Local Government, Environmental Facilities, Community Development
Authority Revenue Bonds (Capital Projects and Equipment Acquisition),
Series A, 6.30% due 7/01/2030 (h) 11,597
==========================================================================================================================
Maine--0.3% Portland, Maine, Housing Development Corporation, Senior Living Revenue
Bonds (Avesta Housing Development Corporation Project), Series A:
775 5.70% due 8/01/2021 771
1,190 6% due 2/01/2034 1,182
==========================================================================================================================
Massachusetts--7.6% 2,035 Boston, Massachusetts, Water and Sewer Commission Revenue Bonds, 9.25%
due 1/01/2011 (e) 2,624
3,010 Massachusetts Bay Transportation Authority, Revenue Refunding Bonds
(General Transportation System), Series A, 7% due 3/01/2019 3,825
30,000 Massachusetts State Water Resource Authority Revenue Bonds, Series A, 6.50%
due 7/15/2019 36,512
Massachusetts State Water Resource Authority, Revenue Refunding Bonds,
Series A (f):
1,000 6% due 8/01/2014 1,144
2,480 6% due 8/01/2017 2,832
--------------------------------------------------------------------------------------------------------------------------------
Michigan--4.1% 7,695 Delta County, Michigan, Economic Development Corporation, Environmental
Improvement Revenue Refunding Bonds (Mead Westvaco-Escanaba), Series A,
6.25% due 4/15/2027 8,751
Macomb County, Michigan, Hospital Finance Authority, Hospital Revenue Bonds
(Mount Clemens General Hospital), Series B:
3,715 5.75% due 11/15/2025 3,571
5,250 5.875% due 11/15/2034 4,992
1,900 Michigan State Hospital Finance Authority, Hospital Revenue Refunding Bonds
(Crittenton Hospital), Series A, 5.625% due 3/01/2027 2,023
Michigan State Hospital Finance Authority, Revenue Refunding Bonds:
390 (Ascension Health Credit), Series A, 6.125% due 11/15/2009 (a) 445
3,000 (Ascension Health Credit), Series A, 6.125% due 11/15/2009 (a)(c) 3,420
1,300 (Detroit Medical Center Obligation Group), Series A, 6.25%
due 8/15/2013 1,300
1,000 (Sinai Hospital), 6.70% due 1/01/2026 1,011
8 MUNIVEST FUND, INC. FEBRUARY 28, 2005
Schedule of Investments (continued) (in Thousands)
Face
State Amount Municipal Bonds Value
==========================================================================================================================
Minnesota--1.5% $ 7,235 Minneapolis, Minnesota, Health Care System Revenue Bonds (Allina Health
System), Series A, 5.75% due 11/15/2032 $ 7,674
1,405 Saint Cloud, Minnesota, Health Care Revenue Refunding Bonds (Saint Cloud
Hospital Obligation Group), Series A, 6.25% due 5/01/2017 (i) 1,608
==========================================================================================================================
Mississippi--4.9% Lowndes County, Mississippi, Solid Waste Disposal and PCR, Refunding
(Weyerhaeuser Company Project):
3,900 Series A, 6.80% due 4/01/2022 4,718
4,000 Series B, 6.70% due 4/01/2022 4,793
20,705 Mississippi Business Finance Corporation, Mississippi, PCR, Refunding
(System Energy Resources Inc. Project), 5.875% due 4/01/2022 20,882
==========================================================================================================================
Missouri--0.5% 2,600 Missouri State Development Finance Board, Infrastructure Facilities Revenue
Refunding Bonds (Branson), Series A, 5.50% due 12/01/2032 2,722
340 Missouri State Housing Development Commission, S/F Mortgage Revenue Bonds
(Homeowner Loan), AMT, Series A, 7.50% due 3/01/2031 (b)(d) 346
==========================================================================================================================
Montana--1.0% 6,000 Forsyth, Montana, PCR, Refunding (Portland General Electric Company),
Series A, 5.20% due 5/01/2033 6,336
==========================================================================================================================
Nebraska--0.1% 810 Nebraska Investment Finance Authority, S/F Housing Revenue Bonds, AMT,
Series C, 6.30% due 9/01/2028 (b)(d)(k) 829
==========================================================================================================================
Nevada--2.2% 6,700 Clark County, Nevada, IDR (Power Company Project), AMT, Series A, 6.70%
due 6/01/2022 (f) 6,821
1,600 Clark County, Nevada, Public Safety, GO, 6% due 3/01/2010 (a) 1,818
Nevada Housing Division, Multi-Unit Housing Revenue Bonds, AMT, 6.60%
due 10/01/2023 (b):
3,475 (Arville Electric Project), 6.60% due 10/01/2023 3,593
1,235 Issue B, 7.45% due 10/01/2017 1,262
Nevada Housing Division Revenue Bonds (S/F Program), AMT (j):
265 Senior Series E, 7% due 10/01/2019 271
95 Series A, 6.55% due 10/01/2012 95
==========================================================================================================================
New Hampshire--0.5% 2,675 New Hampshire Health and Education Facilities Authority, Revenue Refunding
Bonds (Elliot Hospital), Series B, 5.60% due 10/01/2022 2,789
==========================================================================================================================
New Jersey--5.1% New Jersey EDA, Cigarette Tax Revenue Bonds:
9,080 5.50% due 6/15/2024 9,552
2,885 5.75% due 6/15/2029 3,066
2,855 5.50% due 6/15/2031 2,960
6,695 5.75% due 6/15/2034 7,095
8,480 Tobacco Settlement Financing Corporation of New Jersey Revenue Bonds, 7%
due 6/01/2041 9,099
==========================================================================================================================
New Mexico--0.5% 3,300 Farmington, New Mexico, PCR, Refunding (Public Service Company--San Juan
Project), Series A, 5.80% due 4/01/2022 3,380
==========================================================================================================================
New York--11.8% New York City, New York, City Municipal Water Finance Authority, Water and
Sewer System Revenue Refunding Bonds, Series B:
13,405 5% due 6/15/2036 13,867
7,000 5% due 6/15/2036 (i) 7,275
7,875 New York City, New York, City Transitional Finance Authority Revenue Bonds,
RIB, Series 283, 5% due 5/15/2010 (a)(m) 10,271
New York City, New York, GO:
760 Series D, 5% due 11/01/2034 785
7,150 Series F, 5.25% due 1/15/2033 7,551
2,200 Series I, 6.25% due 4/15/2007 (a)(n) 2,387
380 Series I, 6.25% due 4/15/2017 (n) 411
630 Series I, 6.25% due 4/15/2027 (n) 679
New York City, New York, GO, Refunding:
7,035 Series A, 6.375% due 5/15/2010 (a)(f) 8,211
965 Series A, 6.375% due 5/15/2014 (f) 1,118
4,000 Series G, 5% due 12/01/2033 4,134
New York State Dormitory Authority, Revenue Refunding Bonds:
1,000 (Mount Sinai Health), Series A, 6.50% due 7/01/2025 1,048
11,875 RIB, Series 305, 9.84% due 5/15/2015 (c)(m) 15,208
200 New York State Local Government Assistance Corporation, Revenue Refunding
Bonds, Sub-Lien, VRDN, Series A-5V, 1.80% due 4/01/2020 (i)(l) 200
MUNIVEST FUND, INC. FEBRUARY 28, 2005 9
Schedule of Investments (continued) (in Thousands)
Face
State Amount Municipal Bonds Value
==========================================================================================================================
Oregon--1.0% $ 2,000 Portland, Oregon, Airport Way, Urban Renewal and Redevelopment Tax
Allocation Refunding Bonds, Series A, 6% due 6/15/2015 (h) $ 2,267
3,305 Portland, Oregon, Sewer System Revenue Bonds, RIB, Series 386, 9.96%
due 8/01/2020 (f)(m) 4,068
==========================================================================================================================
Pennsylvania--4.1% 2,440 Pennsylvania State Higher Education Assistance Agency Revenue Bonds, Capital
Acquisition, 6.125% due 12/15/2010 (a)(c) 2,820
6,250 Pennsylvania State Higher Educational Facilities Authority Revenue Bonds
(University of Pennsylvania Medical Center Health System), Series A, 6%
due 1/15/2031 6,853
Philadelphia, Pennsylvania, Authority for Industrial Development, Senior
Living Revenue Bonds:
1,000 (Arbor House Inc. Project), Series E, 6.10% due 7/01/2033 970
1,355 (Rieder House Project), Series A, 6.10% due 7/01/2033 1,314
700 Philadelphia, Pennsylvania, Water and Wastewater Revenue Refunding Bonds,
VRDN, 1.85% due 6/15/2023 (i)(l) 700
9,280 Sayre, Pennsylvania, Health Care Facilities Authority Revenue Bonds
(Guthrie Health Issue), Series B, 7.125% due 12/01/2031 10,973
1,750 Sayre, Pennsylvania, Health Care Facilities Authority, Revenue Refunding
Bonds (Guthrie Healthcare System), Series A, 6.25% due 12/01/2018 1,920
==========================================================================================================================
South Carolina--1.9% 3,500 Lexington County, South Carolina, Health Services District Inc., Hospital
Revenue Refunding and Improvement Bonds, 5.50% due 11/01/2032 3,660
2,450 Medical University Hospital Authority, South Carolina, Hospital Facilities
Revenue Refunding Bonds, 6.50% due 8/15/2012 (a) 2,942
5,000 Richland County, South Carolina, Environmental Improvement Revenue
Refunding Bonds (International Paper), AMT, 6.10% due 4/01/2023 5,367
==========================================================================================================================
Tennessee--1.6% 2,000 McMinn County, Tennessee, IDB, Solid Waste Revenue Bonds (Recycling
Facility--Calhoun Newsprint), AMT, 7.40% due 12/01/2022 2,011
Shelby County, Tennessee, Health, Educational and Housing Facility Board,
Hospital Revenue Refunding Bonds (Methodist Healthcare):
4,120 6.50% due 9/01/2012 (a) 4,932
2,380 6.50% due 9/01/2026 (e) 2,848
==========================================================================================================================
Texas--19.9% Austin, Texas, Convention Center Revenue Bonds (Convention Enterprises
Inc.), First Tier, Series A:
6,000 6.70% due 1/01/2028 6,407
1,290 6.70% due 1/01/2032 1,368
Brazos River Authority, Texas, PCR, Refunding, AMT:
3,000 (Texas Utilities Electric Company Project), Series B, 5.40%
due 5/01/2029 3,081
3,055 (Texas Utility Company), Series A, 7.70% due 4/01/2033 3,605
11,870 (Utilities Electric Company), Series B, 5.05% due 6/01/2030 12,100
11,460 Brazos River, Texas, Harbor Navigation District, Brazoria County
Environmental Revenue Refunding Bonds (Dow Chemical Company Project), AMT,
Series A-7, 6.625% due 5/15/2033 12,614
5,750 Dallas, Texas, Independent School District, GO, Refunding, Series A, 5%
due 8/15/2031 5,969
3,000 Gregg County, Texas, Health Facilities Development Corporation, Hospital
Revenue Bonds (Good Shepherd Medical Center Project), 6.875%
due 10/01/2020 (g) 3,480
10,250 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 10,774
3,000 Gulf Coast, Texas, Waste Disposal Authority, Revenue Refunding Bonds
(International Paper Company), AMT, Series A, 6.10% due 8/01/2024 3,190
5,500 Harris County, Houston, Texas, Sports Authority, Revenue Refunding Bonds,
Senior Lien, Series G, 5.75% due 11/15/2020 (c) 6,120
10,385 Harris County, Texas, Health Facilities Development Corporation, Revenue
Refunding Bonds, RITR, Series 6, 8.965% due 12/01/2027 (e)(m) 14,267
1,795 Houston, Texas, Industrial Development Corporation Revenue Bonds (Air
Cargo), AMT, 6.375% due 1/01/2023 1,848
10 MUNIVEST FUND, INC. FEBRUARY 28, 2005
Schedule of Investments (continued) (in Thousands)
Face
State Amount Municipal Bonds Value
==========================================================================================================================
Texas $ 1,500 Katy, Texas, Independent School District, GO, Refunding, Series A, 5%
(concluded) due 2/15/2032 $ 1,554
2,030 Mansfield, Texas, Independent School District, GO, Refunding, 6.625%
due 2/15/2015 2,332
9,355 Matagorda County, Texas, Navigation District Number 1, Revenue Refunding
Bonds (Centerpoint Energy Project), 5.60% due 3/01/2027 9,675
5,225 Midway, Texas, Independent School District, GO, Refunding, 6.125%
due 8/15/2014 5,955
5,400 Port Corpus Christi, Texas, Revenue Refunding Bonds (Celanese Project),
Series A, 6.45% due 11/01/2030 5,596
5,000 Red River Authority, Texas, PCR, Refunding (Celanese Project), AMT,
Series B, 6.70% due 11/01/2030 5,301
6,250 San Antonio, Texas, Electric and Gas Revenue Bonds, RIB, Series 469x, 9.37%
due 2/01/2014 (m) 7,798
==========================================================================================================================
Vermont--0.2% 1,000 Vermont Educational and Health Buildings Financing Agency, Developmental
and Mental Health Revenue Bonds (Howard Center for Human Services),
Series A, 6.375% due 6/15/2022 1,056
==========================================================================================================================
Virginia--0.9% 1,425 Chesterfield County, Virginia, IDA, PCR (Virginia Electric and Power
Company), Series A, 5.875% due 6/01/2017 1,564
1,500 Isle of Wight County, Virginia, IDA, Solid Waste Disposal Facilities
Revenue Bonds (Union Camp Corporation Project), AMT, 6.55% due 4/01/2024 1,535
2,440 Virginia State, HDA, Commonwealth Mortgage Revenue Bonds, Series J,
Sub-Series J-1, 5.20% due 7/01/2019 (c) 2,479
==========================================================================================================================
Washington--8.3% Energy Northwest, Washington, Electric Revenue Refunding Bonds,
DRIVERS (m):
5,330 Series 248, 9.329% due 7/01/2018 (c) 6,730
3,510 Series 255, 9.825% due 7/01/2018 (h) 4,544
7,350 Series 256, 9.829% due 7/01/2017 (c) 9,546
2,440 Seattle, Washington, Housing Authority Revenue Bonds (Replacement Housing
Project), 6.125% due 12/01/2032 2,416
8,100 Washington State, GO, Trust Receipts, Class R, Series 6, 9.744%
due 1/01/2014 (i)(m) 10,064
14,320 Washington State Public Power Supply System, Revenue Refunding Bonds
(Nuclear Project Number 1), Series B, 7.125% due 7/01/2016 18,254
==========================================================================================================================
Wisconsin--2.7% 4,465 Badger Tobacco Asset Securitization Corporation, Wisconsin, Asset-Backed
Revenue Bonds, 6.125% due 6/01/2027 4,588
1,765 Milwaukee, Wisconsin, Revenue Bonds (Air Cargo), AMT, 6.50% due 1/01/2025 1,788
5,000 Wisconsin State Health and Educational Facilities Authority, Mortgage
Revenue Bonds (Hudson Memorial Hospital), 5.70% due 1/15/2029 (j) 5,316
4,540 Wisconsin State Health and Educational Facilities Authority Revenue Bonds
(Synergyhealth Inc.), 6% due 11/15/2032 4,760
==========================================================================================================================
Wyoming--2.1% Sweetwater County, Wyoming, Solid Waste Disposal Revenue Bonds (FMC
Corporation Project), AMT:
5,425 Series A, 7% due 6/01/2024 5,511
7,475 Series B, 6.90% due 9/01/2024 7,577
==========================================================================================================================
MUNIVEST FUND, INC. FEBRUARY 28, 2005 11
Schedule of Investments (concluded) (in Thousands)
Face
Amount Municipal Bonds Value
==========================================================================================================================
U.S. Virgin Islands--1.4% $ 8,000 Virgin Islands Government Refinery Facilities, Revenue Refunding Bonds
(Hovensa Coker Project), AMT, 6.50% due 7/01/2021 $ 8,756
==========================================================================================================================
Total Investments (Cost--$865,623*)--152.2% 942,363
Other Assets Less Liabilities--1.7% 10,757
Preferred Stock, at Redemption Value--(53.9%) (334,021)
---------
Net Assets Applicable to Common Stock--100.0% $ 619,099
=========
* The cost and unrealized appreciation (depreciation) of investments as of
February 28, 2005, as computed for federal income tax purposes, were as
follows:
(in Thousands)
-------------------------------------------------------------------------
Aggregate cost $ 865,633
=========
Gross unrealized appreciation $ 77,823
Gross unrealized depreciation (1,093)
---------
Net unrealized appreciation $ 76,730
=========
** Represents a zero coupon bond; the interest rate shown reflects the
effective yield at the time of purchase by the Fund.
(a) Prerefunded.
(b) FNMA Collateralized.
(c) MBIA Insured.
(d) GNMA Collateralized.
(e) Escrowed to maturity.
(f) FGIC Insured.
(g) Radian Insured.
(h) AMBAC Insured.
(i) FSA Insured.
(j) FHA Insured.
(k) FHLMC Collateralized.
(l) Security has a maturity of more than one year, but has variable rate and
demand features which qualify it as a short-term security. The rate
disclosed is that currently in effect. This rate changes periodically
based upon prevailing market rates.
(m) The rate disclosed is that currently in effect. This rate changes
periodically and inversely based upon prevailing market rates.
(n) XL Capital Insured.
Investments in companies considered to be an affiliate of the Fund (such
companies are defined as "Affiliated Companies" in Section 2(a)(3) of the
Investment Company Act of 1940) were as follows:
(in Thousands)
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
Merrill Lynch Institutional
Tax-Exempt Fund (37,658) $ 96
--------------------------------------------------------------------------
Forward interest rate swaps outstanding as of February 28, 2005 were as
follows:
(in Thousands)
--------------------------------------------------------------------------
Notional Unrealized
Amount Appreciation
--------------------------------------------------------------------------
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate and
pay a fixed rate of 3.63%
Broker, JPMorgan Chase Bank
Expires March 2015 $ 7,000 $ 28
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate and
pay a fixed rate of 3.688%
Broker, JPMorgan Chase Bank
Expires April 2015 $24,000 9
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate and
pay a fixed rate of 3.565%
Broker, JPMorgan Chase Bank
Expires April 2015 $43,500 483
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate and
pay a fixed rate of 3.567%
Broker, JPMorgan Chase Bank
Expires May 2015 $20,200 244
--------------------------------------------------------------------------
Total $ 764
=======
See Notes to Financial Statements.
12 MUNIVEST FUND, INC. FEBRUARY 28, 2005
Statement of Net Assets
As of February 28, 2005
==============================================================================================================================
Assets
------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value (identified
cost--$865,622,979) ............................................... $ 942,362,896
Cash ............................................................... 7,457,275
Unrealized appreciation on forward interest rate swaps ............. 763,744
Receivables:
Securities sold ................................................. $ 20,035,396
Interest ........................................................ 13,441,438 33,476,834
-------------
Prepaid expenses ................................................... 21,931
-------------
Total assets ....................................................... 984,082,680
-------------
==============================================================================================================================
Liabilities
------------------------------------------------------------------------------------------------------------------------------
Payables:
Securities purchased ............................................ 30,089,176
Dividends to Common Stock shareholders .......................... 417,445
Investment adviser .............................................. 289,130
Other affiliates ................................................ 8,405 30,804,156
-------------
Accrued expenses and other liabilities ............................. 158,573
-------------
Total liabilities .................................................. 30,962,729
-------------
==============================================================================================================================
Preferred Stock
------------------------------------------------------------------------------------------------------------------------------
Preferred Stock, at redemption value, par value $.025 per share;
10,000,000 shares authorized (2,000 Series A Shares, 2,000
Series B Shares, 2,000 Series C Shares, 2,000 Series D Shares,
3,000 Series E Shares and 2,360 Series F Shares of AMPS*, issued
and outstanding at $25,000 per share liquidation preference) ...... 334,020,815
-------------
==============================================================================================================================
Net Assets Applicable to Common Stock
------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock .............................. $ 619,099,136
=============
==============================================================================================================================
Analysis of Net Assets Applicable to Common Stock
------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.10 per share; 150,000,000 shares
authorized (61,346,288 shares issued and outstanding) ............. $ 6,134,629
Paid-in capital in excess of par ................................... 564,457,899
Undistributed investment income--net ............................... $ 10,345,347
Accumulated realized capital losses--net ........................... (39,342,400)
Unrealized appreciation--net ....................................... 77,503,661
-------------
Total accumulated earnings--net .................................... 48,506,608
-------------
Total--Equivalent to $10.09 net asset value per share of Common
Stock (market price--$9.55) ....................................... $ 619,099,136
=============
* Auction Market Preferred Stock.
See Notes to Financial Statements.
MUNIVEST FUND, INC. FEBRUARY 28, 2005 13
Statement of Operations
For the Six Months Ended February 28, 2005
==============================================================================================================================
Investment Income
------------------------------------------------------------------------------------------------------------------------------
Interest ........................................................... $ 25,893,265
Dividends from affiliates .......................................... 96,058
-------------
Total income ....................................................... 25,989,323
-------------
==============================================================================================================================
Expenses
------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ........................................... $ 2,352,467
Commission fees .................................................... 419,551
Accounting services ................................................ 133,594
Transfer agent fees ................................................ 58,551
Professional fees .................................................. 27,791
Printing and shareholder reports ................................... 23,816
Custodian fees ..................................................... 22,966
Directors' fees and expenses ....................................... 16,456
Pricing fees ....................................................... 15,693
Listing fees ....................................................... 12,273
Other .............................................................. 22,711
-------------
Total expenses before reimbursement ................................ 3,105,869
Reimbursement of expenses .......................................... (13,941)
-------------
Total expenses after reimbursement ................................. 3,091,928
-------------
Investment income--net ............................................. 22,897,395
-------------
==============================================================================================================================
Realized & Unrealized Gain (Loss)--Net
------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on:
Investments--net ................................................ 2,189,716
Forward interest rate swaps--net ................................ (2,505,950) (316,234)
-------------
Change in unrealized appreciation (depreciation) on:
Investments--net ................................................ 9,476,438
Forward interest rate swaps--net ................................ 2,350,506 11,826,944
-------------------------------
Total realized and unrealized gain--net ............................ 11,510,710
-------------
==============================================================================================================================
Dividends to Preferred Stock Shareholders
------------------------------------------------------------------------------------------------------------------------------
Investment income--net ............................................. (2,538,250)
-------------
Net Increase in Net Assets Resulting from Operations ............... $ 31,869,855
=============
See Notes to Financial Statements.
14 MUNIVEST FUND, INC. FEBRUARY 28, 2005
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
February 28, August 31,
Increase (Decrease) in Net Assets: 2005 2004
==============================================================================================================================
Operations
------------------------------------------------------------------------------------------------------------------------------
Investment income--net ............................................. $ 22,897,395 $ 44,466,102
Realized gain (loss)--net .......................................... (316,234) 2,139,538
Change in unrealized appreciation (depreciation)--net .............. 11,826,944 19,875,698
Dividends to Preferred Stock shareholders .......................... (2,538,250) (2,612,850)
-------------------------------
Net increase in net assets resulting from operations ............... 31,869,855 63,868,488
-------------------------------
==============================================================================================================================
Dividends to Common Stock Shareholders
------------------------------------------------------------------------------------------------------------------------------
Investment income--net ............................................. (20,612,353) (40,304,511)
-------------------------------
Net decrease in net assets resulting from dividends to Common
Stock shareholders ................................................ (20,612,353) (40,304,511)
-------------------------------
==============================================================================================================================
Capital Stock Transactions
------------------------------------------------------------------------------------------------------------------------------
Offering and underwriting costs resulting from issuance of Preferred
Stock ............................................................. -- (744,726)
-------------------------------
Net decrease in net assets resulting from capital stock transactions -- (744,726)
-------------------------------
==============================================================================================================================
Net Assets Applicable to Common Stock
------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets applicable to Common Stock ............ 11,257,502 22,819,251
Beginning of period ................................................ 607,841,634 585,022,383
-------------------------------
End of period* ..................................................... $ 619,099,136 $ 607,841,634
===============================
* Undistributed investment income--net .......................... $ 10,345,347 $ 10,598,555
===============================
See Notes to Financial Statements.
MUNIVEST FUND, INC. FEBRUARY 28, 2005 15
Financial Highlights
For the Six
Months Ended For the Year Ended August 31,
The following per share data and ratios have been derived February 28, -----------------------------------------------
from information provided in the financial statements. 2005 2004 2003 2002 2001
=================================================================================================================================
Per Share Operating Performance
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period .... $ 9.91 $ 9.54 $ 9.76 $ 9.71 $ 9.07
-------------------------------------------------------------
Investment income--net .................. .37+ .72+ .72+ .69 .69
Realized and unrealized gain (loss)--net .19 .36 (.26) .02 .65
Dividends to Preferred Stock shareholders
from investment income--net ............ (.04) (.04) (.05) (.07) (.16)
-------------------------------------------------------------
Total from investment operations ........ .52 1.04 .41 .64 1.18
-------------------------------------------------------------
Less dividends to Common Stock
shareholders from investment income--net (.34) (.66) (.63) (.59) (.54)
-------------------------------------------------------------
Offering costs resulting from the
issuance of Preferred Stock ............ -- (.01) -- -- --
-------------------------------------------------------------
Net asset value, end of period .......... $ 10.09 $ 9.91 $ 9.54 $ 9.76 $ 9.71
=============================================================
Market price per share, end of period ... $ 9.55 $ 9.30 $ 8.80 $ 9.11 $ 9.30
=============================================================
=================================================================================================================================
Total Investment Return++
---------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ...... 5.46%@ 11.60% 4.79% 7.28% 13.89%
=============================================================
Based on market price per share ......... 6.37%@ 13.53% 3.56% 4.55% 19.92%
=============================================================
=================================================================================================================================
Ratios Based on Average Net Assets of Common Stock
---------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of reimbursement** .. 1.01%* .94% .95% .95% .98%
=============================================================
Total expenses** ........................ 1.02%* .95% .96% .95% .98%
=============================================================
Total investment income--net** .......... 7.51%* 7.37% 7.33% 7.33% 7.37%
=============================================================
Amount of dividends to Preferred Stock
shareholders ........................... .83%* .43% .50% .75% 1.70%
=============================================================
Investment income--net, to Common Stock
shareholders ........................... 6.68%* 6.94% 6.83% 6.58% 5.67%
=============================================================
16 MUNIVEST FUND, INC. FEBRUARY 28, 2005
Financial Highlights (concluded)
For the Six
Months Ended For the Year Ended August 31,
The following per share data and ratios have been derived February 28, -----------------------------------------------
from information provided in the financial statements. 2005 2004 2003 2002 2001
=================================================================================================================================
Ratios Based on Average Net Assets of Common & Preferred Stock**
---------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of reimbursement .... .66%* .65% .65% .65% .66%
=============================================================
Total expenses .......................... .66%* .65% .66% .65% .66%
=============================================================
Total investment income--net ............ 4.87%* 5.06% 5.03% 4.98% 4.98%
=============================================================
=================================================================================================================================
Ratios Based on Average Net Assets of Preferred Stock
---------------------------------------------------------------------------------------------------------------------------------
Dividends to Preferred Stock shareholders 1.53%* .95% 1.11% 1.59% 3.53%
=============================================================
=================================================================================================================================
Supplemental Data
---------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock,
end of period (in thousands) ........... $619,099 $607,842 $585,022 $598,816 $595,908
=============================================================
Preferred Stock outstanding, end of
period (in thousands) .................. $334,000 $334,000 $275,000 $275,000 $275,000
=============================================================
Portfolio turnover ...................... 23.98% 45.33% 44.30% 74.00% 74.80%
=============================================================
=================================================================================================================================
Leverage
---------------------------------------------------------------------------------------------------------------------------------
Asset coverage per $1,000 ............... $ 2,854 $ 2,820 $ 3,127 $ 3,178 $ 3,167
=============================================================
=================================================================================================================================
Dividends Per Share on Preferred Stock Outstanding
---------------------------------------------------------------------------------------------------------------------------------
Series A--Investment income--net ........ $ 171 $ 244 $ 266 $ 388 $ 909
=============================================================
Series B--Investment income--net ........ $ 199 $ 238 $ 278 $ 394 $ 923
=============================================================
Series C--Investment income--net ........ $ 212 $ 239 $ 269 $ 391 $ 906
=============================================================
Series D--Investment income--net ........ $ 169 $ 242 $ 306 $ 445 $ 877
=============================================================
Series E--Investment income--net ........ $ 190 $ 229 $ 269 $ 372 $ 851
=============================================================
Series F***--Investment income--net ..... $ 198 -- -- -- --
=============================================================
* Annualized
** Do not reflect the effect of dividends to Preferred Stock shareholders.
*** Series F was issued on August 31, 2004.
+ Based on average shares outstanding.
++ Total investment returns based on market value, which can be significantly
greater or lesser than the net asset value, may result in substantially
different returns. Total investment returns exclude the effects of sales
charges.
@ Aggregate total investment return.
See Notes to Financial Statements.
MUNIVEST FUND, INC. FEBRUARY 28, 2005 17
Notes to Financial Statements
1. Significant Accounting Policies:
MuniVest Fund, Inc. (the "Fund") is registered under the Investment Company Act
of 1940, as amended, as a non-diversified, closed-end management investment
company. The Fund's financial statements are prepared in conformity with U.S.
generally accepted accounting principles, which may require the use of
management accruals and estimates. Actual results may differ from these
estimates. These unaudited financial statements reflect all adjustments, which
are, in the opinion of management, necessary to present a fair statement of the
results for the interim period. All such adjustments are of a normal, recurring
nature. The Fund determines and makes available for publication the net asset
value of its Common Stock on a daily 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 last available bid price in the
over-the-counter market or on the basis of values as obtained by a pricing
service. Pricing services use valuation matrixes that incorporate both
dealer-supplied valuations and valuation models. The procedures of the pricing
service and its valuations are reviewed by the officers of the Fund under the
general direction of the Board of Directors. Such valuations and procedures are
reviewed periodically by the Board of Directors of the Fund. Financial futures
contracts and options thereon, which are traded on exchanges, are valued at
their closing prices as of the close of such exchanges. Options written or
purchased are valued at the last sale price in the case of exchange-traded
options. In the case of options traded in the over-the-counter market, valuation
is the last asked price (options written) or the last bid price (options
purchased). Swap agreements are valued by quoted fair values received daily by
the Fund's pricing service. Short-term investments with a remaining maturity of
60 days or less are valued at amortized cost, which approximates market value,
under which method the investment is valued at cost and any premium or discount
is amortized on a straight line basis to maturity. Investments in open-end
investment companies are valued at their net asset value each business day.
Securities and other 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.
(b) Derivative financial instruments -- The Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge, or
protect its exposure to interest rate movements and movements in the securities
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. Futures contracts
are contracts for delayed delivery of securities at a specific future date
and at a specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required by
the exchange on which the transaction is effected. Pursuant to the
contract, the Fund agrees to receive from or pay to the broker an amount
of cash equal to the daily fluctuation in value of the contract. Such
receipts or payments are known as variation margin and are recorded by the
Fund as unrealized gains or losses. When the contract is closed, the Fund
records a realized gain or loss equal to the difference between the value
of the contract at the time it was opened and the value at the time it was
closed.
o Options -- The Fund may purchase and write call and 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.
o Forward interest rate swaps -- The Fund may enter into forward interest
rate swaps. In a forward interest rate swap, the Fund and the counterparty
agree to make periodic net payments on a specified notional contract
amount, commencing on a specified future effective date, unless terminated
earlier. When the agreement is closed, the Fund records a realized gain or
loss in an amount equal to the value of the agreement.
18 MUNIVEST FUND, INC. FEBRUARY 28, 2005
Notes to Financial Statements (concluded)
(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).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend dates.
Interest income is recognized on the accrual basis. The Fund amortizes all
premiums and discounts on debt securities.
(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 daily net assets, including assets
acquired from the sale of Preferred Stock. The Investment Adviser has agreed to
waive its management fee by the amount of management fees the Fund pays to FAM
indirectly through its investment in the Merrill Lynch Institutional Tax-Exempt
Fund. For the six months ended February 28, 2005, FAM reimbursed the Fund in the
amount of $13,941.
For the six months ended February 28, 2005, the Fund reimbursed FAM $9,886 for
certain accounting services.
Certain officers and/or directors of the Fund are officers and/or directors of
FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended February 28, 2005, were $252,223,863 and $221,777,394 respectively.
4. Capital Stock Transactions:
Common Stock
At February 28, 2005, the Fund had one class of shares of Common Stock, par
value $.10 per share, of which 150,000,000 shares were authorized.
Preferred Stock
Auction Market Preferred Stock are redeemable shares of Preferred Stock of the
Fund with a par value of $.025 per share and a liquidation preference of $25,000
per share plus accrued and unpaid dividends, 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 at February 28, 2005 were as
follows: Series A,1.85%; Series B,1.84%; Series C, 1.859%; Series D, 1.809%;
Series E, 1.80%; and Series F, 1.84%.
Shares issued and outstanding for the six months ended February 28, 2005
remained constant. During the year ended August 31, 2004, shares increased by
2,360 shares from the issuance of an additional series of Preferred Stock.
The Fund pays commissions to certain broker-dealers at the end of each auction
at an annual rate ranging from .25% to .375% calculated on the proceeds of each
auction. For the six months ended February 28, 2005, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, an affiliate of FAM, received $207,835 as
commissions.
5. Capital Loss Carryforward:
On August 31, 2004, the Fund had a net capital loss carryforward of $25,236,756,
of which $7,556,873 expires in 2008 and $17,679,883 expires in 2009. This amount
will be available to offset like amounts of any future taxable gains.
6. Subsequent Event:
The Fund paid a tax-exempt income dividend to holders of Common Stock in the
amount of $.056000 per share payable on March 30, 2005 to shareholders of record
on March 15, 2005.
MUNIVEST FUND, INC. FEBRUARY 28, 2005 19
Portfolio Information as of February 28, 2005
Quality Ratings by Percent of
S&P/Moody's Total Investments
--------------------------------------------------------------------------------
AAA/Aaa ................................................. 34.6%
AA/Aa ................................................... 15.1
A/A ..................................................... 20.7
BBB/Baa ................................................. 23.9
BB/Ba ................................................... 4.8
NR (Not Rated) .......................................... 0.9
--------------------------------------------------------------------------------
Dividend Policy
The Fund's dividend policy is to distribute all or a portion of its net
investment income to its shareholders on a monthly basis. In order to provide
shareholders with a more stable level of dividend distributions, 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 Net Assets, which
comprises part of the financial information included in this report.
20 MUNIVEST FUND, INC. FEBRUARY 28, 2005
Proxy Results
During the six-month period ended February 28, 2005, MuniVest Fund, Inc.'s
Common Stock shareholders voted on the following proposal. The proposal was
approved at a shareholders' meeting on January 27, 2005. A description of the
proposal and number of shares voted are as follows:
--------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
--------------------------------------------------------------------------------------------------------------------
1. To elect the Fund's Directors: Robert C. Doll, Jr. 57,862,025 1,402,303
Cynthia A. Montgomery 57,924,601 1,339,727
Jean Margo Reid 57,923,489 1,340,839
Roscoe S. Suddarth 57,878,125 1,386,203
Edward D. Zinbarg 57,865,181 1,399,147
--------------------------------------------------------------------------------------------------------------------
During the six-month period ended February 28, 2005, MuniVest Fund, Inc.'s
Preferred Stock shareholders (Series A-F) voted on the following proposal. The
proposal was approved at a shareholders' meeting on January 27, 2005. A
description of the proposal and number of shares voted are as follows:
--------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
--------------------------------------------------------------------------------------------------------------------
1. To elect the Fund's Directors: Ronald W. Forbes and Richard R. West 11,143 1
--------------------------------------------------------------------------------------------------------------------
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's Web site at
http://www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the
SEC's Public Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330.
MUNIVEST FUND, INC. FEBRUARY 28, 2005 21
Officers and Directors
Robert C. Doll, Jr., President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Jean Margo Reid, Director
Roscoe S. Suddarth, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Kenneth A. Jacob, Senior Vice President
John M. Loffredo, Senior Vice President
Fred K. Stuebe, Vice President
Donald C. Burke, Vice President and Treasurer
Jeffrey Hiller, Chief Compliance Officer
Alice A. Pellegrino, Secretary
Custodian
The Bank of New York
100 Church Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street -- 11 East
New York, NY 10286
Preferred Stock:
The Bank of New York
101 Barclay Street -- 7 West
New York, NY 10286
Amex Symbol
MVF
--------------------------------------------------------------------------------
Effective January 1, 2005, Terry K. Glenn, President and Director and Kevin A.
Ryan, Director of MuniVest Fund, Inc. retired. The Fund's Board of Directors
wishes Messrs. Glenn and Ryan well in their retirements.
Effective January 1, 2005, Robert C. Doll, Jr. became President and Director of
the Fund.
--------------------------------------------------------------------------------
22 MUNIVEST FUND, INC. FEBRUARY 28, 2005
Electronic Delivery
The Fund offers electronic delivery of communications to its shareholders. In
order to receive this service, you must register your account and provide us
with e-mail information. To sign up for this service, simply access this Web
site at http://www.icsdelivery.com/live and follow the instructions. When you
visit this site, you will obtain a personal identification number (PIN). You
will need this PIN should you wish to update your e-mail address, choose to
discontinue this service and/or make any other changes to the service. This
service is not available for certain retirement accounts at this time.
MUNIVEST FUND, INC. FEBRUARY 28, 2005 23
[LOGO] Merrill Lynch Investment Managers
www.mlim.ml.com
--------------------------------------------------------------------------------
Mercury Advisors
A Division of Merrill Lynch Investment Managers
www.mercury.ml.com
MuniVest Fund, Inc. seeks to provide shareholders with as high a level of
current income exempt from federal income taxes as is consistent with its
investment policies and prudent investment management by investing primarily in
a portfolio of long-term, investment grade municipal obligations, the interest
on which is exempt from federal income taxes in the opinion of bond counsel to
the issuer.
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 and intends to remain
leveraged 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.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free 1-800-MER-FUND (1-800-637-3863); (2)
at www.mutualfunds.ml.com; and (3) on the Securities and Exchange Commission's
Web site at http://www.sec.gov. Information about how the Fund voted proxies
relating to securities held in the Fund's portfolio during the most recent
12-month period ended June 30 is available (1) at www.mutualfunds.ml.com and (2)
on the Securities and Exchange Commission's Web site at http://www.sec.gov.
MuniVest Fund, Inc.
Box 9011
Princeton, NJ 08543-9011
#10787 -- 2/05
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this semi-annual
report
Item 4 - Principal Accountant Fees and Services - Not Applicable to this
semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable to this
semi-annual report
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable to this semi-annual
report
Item 8 - Portfolio Managers of Closed-End Management Investment Companies - Not
Applicable to this semi-annual report
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 10 - Submission of Matters to a Vote of Security Holders - Not Applicable
Item 11 - Controls and Procedures
11(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others particularly
during the period in which this report is being prepared. The
registrant's certifying officers have determined that the registrant's
disclosure controls and procedures are effective based on our evaluation
of these controls and procedures as of a date within 90 days prior to
the filing date of this report.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR
270.30a-3(d)) that occurred during the last fiscal half-year of the
period covered by this report that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - Not Applicable to this semi-annual report
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
MuniVest Fund, Inc.
By: /s/ Robert C. Doll, Jr.
---------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
MuniVest Fund, Inc.
Date: April 22, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Robert C. Doll, Jr.
---------------------------
Robert C. Doll, Jr.,
Chief Executive Officer of
MuniVest Fund, Inc.
Date: April 22, 2005
By: /s/ Donald C. Burke
---------------------------
Donald C. Burke,
Chief Financial Officer of
MuniVest Fund, Inc.
Date: April 22, 2005