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: 08/31/06
Date of reporting period: 09/01/05 - 02/28/06
Item 1 - Report to Stockholders
Semi-Annual Report
February 28, 2006
MuniVest Fund, Inc.
MuniVest Fund, Inc.
Announcement to Shareholders
On February 15, 2006, BlackRock, Inc. ("BlackRock") and Merrill Lynch & Co.,
Inc. ("Merrill Lynch") entered into an agreement to contribute Merrill Lynch's
investment management business, Merrill Lynch Investment Managers, L.P. and
certain affiliates (including Fund Asset Management, L.P. and Merrill Lynch
Investment Managers International Limited), to BlackRock to create a new
independent company that will be one of the world's largest asset management
firms with nearly $1 trillion in assets under management (based on combined
assets under management as of December 31, 2005). The transaction is expected to
close in the third quarter of 2006, at which time the new company will operate
under the BlackRock name. If approved by the Fund's Board of Directors and Fund
shareholders, the combined company that results from the transaction is expected
to become the investment adviser of the Fund.
Portfolio Information as of February 28, 2006
Quality Ratings by Percent of
S&P/Moody's Total Investments
--------------------------------------------------------------------------------
AAA/Aaa ................................................. 30.3%
AA/Aa ................................................... 17.6
A/A ..................................................... 23.5
BBB/Baa ................................................. 22.9
BB/Ba ................................................... 2.0
B/B ..................................................... 1.2
NR (Not Rated) .......................................... 0.7
Other* .................................................. 1.8
--------------------------------------------------------------------------------
* Includes portfolio holdings in variable rate demand notes.
2 MUNIVEST FUND, INC. FEBRUARY 28, 2006
A Letter From the President
Dear Shareholder
Financial markets began 2006 with a return to volatility following a fairly
uninspiring 2005. For the six- and 12-month periods ended February 28, 2006,
most major market indexes landed in positive territory:
Total Returns as of February 28, 2006 6-month 12-month
============================================================================================
U.S. equities (Standard & Poor's 500 Index) + 5.93% + 8.40%
--------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) +10.24 +16.59
--------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) +15.14 +17.41
--------------------------------------------------------------------------------------------
Fixed income (Lehman Brothers Aggregate Bond Index) - 0.11 + 2.74
--------------------------------------------------------------------------------------------
Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 0.99 + 3.87
--------------------------------------------------------------------------------------------
High yield bonds (Credit Suisse High Yield Index) + 1.89 + 3.27
--------------------------------------------------------------------------------------------
The Federal Reserve Board (the Fed) increased interest rates 200 basis points
(2.00%) over the past 12 months, bringing the target federal funds rate to 4.5%.
Notably, Ben Bernanke replaced Alan Greenspan as Fed chairman in January, a
month after the central bank removed the critical word "measured" from the
description of its rate-hiking program. Still, most observers expect at least
one more interest rate hike before the Fed pauses in its tightening campaign.
U.S. economic growth, which came in at 4.1% in the third quarter of 2005, fell
to 1.6% in the fourth quarter. Growth is expected to reaccelerate in the first
quarter of 2006, although the economy is likely to feel some pressure in the
quarters ahead as the consumer sector seems to be softening. Capital spending by
businesses, however, appears relatively strong. Overall corporate health,
including strong company balance sheets, helped prompt robust
dividend-distribution, share-buyback and merger-and-acquisition activity in
2005, a trend that has continued in 2006. This, as well as reasonably good
company earnings and low core inflation, has been supportive of U.S. stocks
despite the headwinds of rising interest rates and high energy prices. Many
international equity markets have fared even better, thanks in part to higher
economic growth rates and low inflation.
In the U.S. bond market, short-term interest rates continued to move higher as
longer-term interest rates advanced more moderately. After flattening
dramatically in 2005, the Treasury curve recently has been toying with bouts of
inversion, whereby short-term yields have surpassed long-term yields. At
period-end, the six-month Treasury bill offered the highest yield on the curve
at 4.74%.
Amid the uncertainty inherent in the financial markets, we encourage you to
review your goals periodically with your financial advisor and to make portfolio
changes, as needed. For timely "food for thought" for investors, we also invite
you to visit Shareholder magazine at www.mlim.ml.com/shareholdermagazine. As
always, we thank you for trusting Merrill Lynch Investment Managers with your
investment assets, and we look forward to continuing to serve your investment
needs.
Sincerely,
/s/ Robert C. Doll, Jr.
Robert C. Doll, Jr.
President and Director
MUNIVEST FUND, INC. FEBRUARY 28, 2006 3
A Discussion With Your Fund's Portfolio Manager
The Fund maintained an above-average distribution rate throughout the
period, and our commitment to providing shareholders with attractive income
continues to drive portfolio activity.
Describe the recent market environment relative to municipal bonds.
Over the past six months, long-term bond yields generally rose as their prices,
which move in the opposite direction, declined. Investors appeared to disregard
signs of slowing economic growth, reflected in gross domestic product growth of
just 1.6% in the fourth quarter of 2005, and instead focused on potential
inflationary pressures and continued short-term interest rate increases by the
Federal Reserve Board (the Fed). In addition to inflationary fears sparked by
elevated commodity prices, national hourly wage levels rose recently. This led
some economic analysts to suggest that recent declines in the national
unemployment rate will result in escalating wage inflation. The resurgent
inflationary fears helped push bond yields higher over the past six months.
For its part, the Fed has continued to raise short-term interest rates at each
of its meetings during the period, bringing the federal funds rate to 4.5%.
Given little expectation that the Fed's monetary tightening cycle will end in
early 2006, the yield curve continued to flatten with shorter interest rates
increasing more than longer ones. At the end of February 2006, 30-year U.S.
Treasury bond yields had risen 25 basis points (.25%) to 4.51%, while 10-year
Treasury yields rose 53 basis points to 4.55% and two-year Treasury yields rose
85 basis points to 4.69%. The result was an inverted Treasury yield curve.
Notably, the municipal yield curve has maintained a positive slope. According to
Municipal Market Data, AAA-rated tax-exempt bonds maturing in 30 years saw their
yields increase eight basis points to 4.30%, while yields on AAA-rated issues
maturing in 10 years increased 25 basis points to end the period at 3.75%. The
tax-exempt market's positive technical position has allowed municipal bond
prices to decline less than those of taxable bonds.
Supporting the recent outperformance of the municipal bond market has been a
dramatic slowdown in the issuance of new long-term tax-exempt bonds. During
calendar year 2005, more than $408 billion in new long-term tax-exempt bonds was
underwritten, representing a new annual record and an increase of over 13%
compared to 2004. For the six-month period ended February 28, 2006, $172 billion
in long-term municipal bonds was issued, a decline of 1.5% compared to the same
period a year ago. More recently, new-issue volume has declined at an even
faster rate. In the past three months, $76 billion in new long-term tax-exempt
bonds were marketed, a decline of 16% compared to the same three months a year
ago. The record level of new issuance in 2005 was largely triggered by a 47%
increase in refunding activity as issuers took advantage of historically low
bond yields and a flattening yield curve to refinance outstanding
higher-couponed debt. So far in 2006, refunding issuance has declined more than
55% relative to the first two months of 2005. It remains to be seen if this
decline is the beginning of a sustained trend toward a significant decline in
refunding issuance. This is important, as analysts' estimates for new-issue
supply for 2006, currently in the $340 billion - $370 billion range, are largely
dependant on modest declines in refunding activity. Should the current trend
continue, new-issue supply projections for this year could be adjusted lower.
Investor demand for municipal product has remained strong in recent quarters. As
reported by the Investment Company Institute (ICI), for all of 2005, long-term
municipal bond funds received net new monies of $5.04 billion. This represented
a sharp reversal from the $3.67 billion outflow seen in 2004. January 2006 data
from ICI indicates that tax-exempt mutual funds have continued to experience
positive cash flows, receiving over $2 billion for the month, more than twice
the net new monies received in January 2005.
Looking ahead, the fundamentals for the tax-exempt bond market appear favorable,
and continued positive cash flows are anticipated. Given their attractive yields
relative to comparable U.S. Treasury bonds, and the prospects for reduced
issuance in 2006, we believe municipal bonds could enjoy solid results in the
coming months.
How did the Fund perform during the period in light of the existing market
conditions?
For the six-month period ended February 28, 2006, the Common Stock of MuniVest
Fund, Inc. had net annualized yields of 6.30% and 6.62%, based on a period-end
per share net asset value of $9.99 and a per share market price of $9.50,
respectively, and $.312 per share income dividends. Over the same period, the
total investment return on the Fund's Common Stock was +.90%, based on a change
in per share net asset value from $10.23 to $9.99, and assuming reinvestment of
all distributions.
4 MUNIVEST FUND, INC. FEBRUARY 28, 2006
The Fund's total return, based on net asset value, lagged the +1.44% 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.) However, the Fund's six-month annualized distribution yield of
6.56% was well above the 5.76% median of its peers in the Lipper category.
Despite the attractive yield, the Fund's underperformance on a total return
basis is largely attributable to the portfolio's considerable exposure to the
intermediate sector of the municipal yield curve, an area that underperformed as
the curve flattened. The Fund's exposure to the intermediate sector largely
results from both its derivative position and the natural maturation of the
portfolio. That is, as time progresses, many of the Fund's holdings are
prerefunded to shorter call dates while other issues become priced to shorter
and shorter call dates, resulting in the increased exposure to intermediate
maturities.
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 New York 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?
Despite the Fund's considerable exposure to bonds in the intermediate maturity
range, we opted to avoid a wholesale restructuring of the portfolio. While such
a restructuring would have resulted in a longer average portfolio maturity and
greater exposure to the long end of the tax-exempt yield curve, it also would
likely have entailed the sale of older prerefunded bonds and other
larger-couponed issues that were acquired in much higher interest rate
environments. These bonds provide a meaningful income benefit to the portfolio,
and their sale could result in material taxable gains as well as declines in the
Fund's dividend stream -- and, eventually, a reduced dividend payout.
We believe that, with the Fed potentially ending its monetary tightening cycle
by mid-2006, the flattening of the tax-exempt yield curve should subside and the
curve should begin to steepen. Under this scenario, the Fund's exposure to the
intermediate sector could once again become a positive contributor to overall
performance as well as generate significant incremental income.
For the six-month period ended February 28, 2006, the Fund's Auction Market
Preferred Stock (AMPS) had average yields as follows: Series A, 2.72%; Series B,
3.14%; Series C, 2.94%; Series D, 2.84%; Series E, 2.82%; and Series F, 2.83%.
The Fed's four quarter point interest rate hikes during the period resulted in a
concurrent increase in the Fund's borrowing costs. Given that the Fed may be
nearing the end of its interest rate tightening cycle, additional increases in
the portfolio's borrowing costs are likely to be limited. Despite the most
recent interest rate increases, the tax-exempt yield curve has maintained its
positive slope, thereby continuing to generate an income benefit to the holders
of Common Stock from the leveraging of Preferred Stock. Of course, should the
spread between short-term and long-term interest rates narrow, the benefits of
leveraging 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
35.29% of total net assets, before the deduction of Preferred Stock. (For a more
complete explanation of the benefits and risks of leveraging, see page 6 of this
report to shareholders.)
How would you characterize the Fund's position at the close of the period?
By period-end, we had adopted a more positive outlook on the municipal market.
In our view, the end of the Fed's long interest rate-hiking campaign, combined
with continued modest economic growth and inflationary pressures, should promote
a gradual improvement in tax-exempt bond prices later this year. Having said
that, we would view signs of accelerated economic activity and/or rising wage
pressures as a signal to return to a more defensive positioning.
We intend to maintain the Fund's fully invested stance in an effort to enhance
shareholders' income stream. Our commitment to maintaining the Fund's already
attractive distribution yield is likely to be the main driver of portfolio
activity in the coming months.
Fred K. Stuebe
Vice President and Portfolio Manager
March 10, 2006
MUNIVEST FUND, INC. FEBRUARY 28, 2006 5
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, 2006, the percentage of the
Fund's total net assets invested in inverse floaters was 12.23%, before the
deduction of Preferred Stock.
Swap Agreements
The Fund may 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.
6 MUNIVEST FUND, INC. FEBRUARY 28, 2006
Schedule of Investments (in Thousands)
Face
Amount Municipal Bonds Value
=======================================================================================
Alabama--2.8%
$ 2,550 Camden, Alabama, IDB, Exempt Facilities Revenue
Bonds (Weyerhaeuser Company), Series A, 6.125%
due 12/01/2024 $ 2,823
Huntsville, Alabama, Health Care Authority
Revenue Bonds:
3,500 Series A, 5.75% due 6/01/2031 3,703
5,000 Series B, 5.75% due 6/01/2032 5,330
5,000 Selma, Alabama, IDB, Environmental Improvement
Revenue Refunding Bonds (International Paper
Company Project), Series B, 5.50% due 5/01/2020 5,270
=======================================================================================
Alaska--1.3%
7,405 Anchorage, Alaska, Lease Revenue Bonds (Correctional
Facility), 6% due 2/01/2010 (a)(i) 8,073
=======================================================================================
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 4,392
Pima County, Arizona, IDA, Education Revenue Bonds
(Arizona Charter Schools Project):
2,100 Series E, 7.25% due 7/01/2031 2,272
500 Series I, 6.10% due 7/01/2024 517
1,000 Series I, 6.30% due 7/01/2031 1,036
1,610 Pima County, Arizona, IDA, Education Revenue
Refunding Bonds (Arizona Charter Schools Project II),
Series A, 6.75% due 7/01/2021 1,707
=======================================================================================
California--16.3%
7,500 California State, GO, 5% due 8/01/2035 7,791
California State Public Works Board, Lease
Revenue Bonds:
5,000 (Department of Corrections), Series C, 5.50%
due 6/01/2022 5,510
6,000 (Department of Corrections), Series C, 5.50%
due 6/01/2023 6,595
11,075 (Department of Mental Health--Coalinga State
Hospital), Series A, 5.125% due 6/01/2029 11,563
California State, Various Purpose, GO:
13,570 5.50% due 4/01/2030 15,062
11,250 5.50% due 11/01/2033 12,420
5,240 California Statewide Communities Development
Authority, Health Facility Revenue Bonds (Memorial
Health Services), Series A, 6% due 10/01/2023 5,816
1,250 Chula Vista, California, IDR (San Diego Gas and Electric
Company), AMT, Series B, 5% due 12/01/2027 1,295
Golden State Tobacco Securitization Corporation of
California, Tobacco Settlement Revenue Bonds:
10,725 Series A-3, 7.875% due 6/01/2042 12,907
3,750 Series A-4, 7.80% due 6/01/2042 4,496
1,425 Series A-5, 7.875% due 6/01/2042 1,715
13,900 Series B, 5.375% due 6/01/2010 (a) 14,901
=======================================================================================
Colorado--1.6%
Colorado HFA, Revenue Refunding Bonds (S/F Program),
AMT, Senior Series A-2:
880 6.60% due 5/01/2028 912
295 7.50% due 4/01/2031 308
3,000 Colorado Health Facilities Authority Revenue Bonds
(Lutheran Medical Center), Series A, 5.25%
due 6/01/2034 3,091
5,500 Moffat County, Colorado, PCR, Refunding (PacifiCorp
Projects), VRDN, 2.95% due 5/01/2013 (h)(l) 5,500
=======================================================================================
Connecticut--0.5%
2,810 Mohegan Tribe Indians Gaming Authority, Connecticut,
Public Improvement Revenue Refunding Bonds
(Priority Distribution), 6.25% due 1/01/2031 3,013
=======================================================================================
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 6,271
10,320 Orange County, Florida, Health Facilities Authority,
Hospital Revenue Bonds (Adventist Health System),
5.625% due 11/15/2032 11,068
=======================================================================================
Georgia--3.0%
Georgia Municipal Electric Authority, Power Revenue
Refunding Bonds:
4,600 Series W, 6.60% due 1/01/2018 5,420
250 Series W, 6.60% due 1/01/2018 (e) 294
250 Series Y,10% due 1/01/2010 (e) 306
Milledgeville-Baldwin County, Georgia, Development
Authority Revenue Bonds (Georgia College and
State University Foundation):
4,390 5.50% due 9/01/2024 4,684
2,000 5.625% due 9/01/2030 2,128
4,785 Monroe County, Georgia, Development Authority, PCR,
Refunding (Oglethorpe Power Corporation--Scherer),
Series A, 6.80% due 1/01/2011 5,394
=======================================================================================
Idaho--0.1%
675 Idaho Housing Agency, S/F Mortgage Revenue
Refunding Bonds, AMT, Series E-2, 6.90%
due 1/01/2027 681
=======================================================================================
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
S/F Single-Family
VRDN Variable Rate Demand Notes
MUNIVEST FUND, INC. FEBRUARY 28, 2006 7
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
=======================================================================================
Illinois--17.1%
$ 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) $ 5,414
Chicago, Illinois, O'Hare International Airport Revenue
Bonds, AMT:
11,200 3rd Lien, Series B-2, 6% due 1/01/2029 (n) 12,550
8,540 DRIVERS, Series 368, 8.462% due 7/01/2011 (c)(m) 10,636
7,000 Chicago, Illinois, O'Hare International Airport, Revenue
Refunding Bonds, DRIVERS, AMT, Series 253, 7.968%
due 1/01/2020 (c)(m) 8,158
80 Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT,
Series C, 7% due 3/01/2032 (d)(k) 81
10,000 Hodgkins, Illinois, Environmental Improvement Revenue
Bonds (Metro Biosolids Management LLC Project),
AMT, 6% due 11/01/2023 10,546
2,140 Illinois Development Finance Authority Revenue Bonds
(Community Rehabilitation Providers Facilities),
Series A, 6.50% due 7/01/2022 2,339
1,365 Illinois Development Finance Authority, Revenue
Refunding Bonds (Community Rehabilitation
Providers Facilities), Series A, 6% due 7/01/2015 1,402
545 Illinois HDA, Revenue Refunding Bonds (M/F Program),
Series 5, 6.75% due 9/01/2023 551
300 Illinois State Finance Authority Revenue Bonds
(Northwestern University), VRDN, Sub-Series A,
3.18% due 12/01/2034 (l) 300
5,245 Kane and De Kalb Counties, Illinois, Community Unit
School District Number 302, GO, DRIVERS, Series 283,
7.999% due 2/01/2018 (f)(m) 6,576
McLean and Woodford Counties, Illinois, Community
Unit, School District Number 005, GO, Refunding (i):
5,000 6.25% due 12/01/2014 5,657
4,000 6.375% due 12/01/2016 4,555
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) 20,628
Regional Transportation Authority, Illinois,
Revenue Bonds:
3,500 Series A, 7.20% due 11/01/2020 (h) 4,387
4,000 Series C, 7.75% due 6/01/2020 (f) 5,538
3,000 Will County, Illinois, Environmental Revenue Bonds
(Mobil Oil Refining Corporation Project), AMT,
6.40% due 4/01/2026 3,067
Will County, Illinois, School District Number 122 (New
Lenox Elementary), GO, Series A (i):
1,475 6.50% due 11/01/2010 (a) 1,660
505 6.50% due 11/01/2013 564
395 6.50% due 11/01/2015 442
=======================================================================================
Indiana--6.3%
1,700 Fort Wayne, Indiana, PCR, Refunding (General Motors
Corporation Project), 6.20% due 10/15/2025 1,343
5,350 Indiana Health and Educational Facilities Financing
Authority, Hospital Revenue Bonds (Clarian Health
Obligation), Series A, 5.25% due 2/15/2040 5,538
4,290 Indiana State HFA, S/F Mortgage Revenue Refunding
Bonds, Series A, 6.80% due 1/01/2017 (j) 4,326
8,195 Indiana Transportation Finance Authority, Highway
Revenue Bonds, Series A, 6.80% due 12/01/2016 9,828
15,335 Indianapolis, Indiana, Local Public Improvement
Bond Bank Revenue Refunding Bonds, Series D,
6.75% due 2/01/2014 17,778
=======================================================================================
Kansas--0.6%
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 (d) 3,909
=======================================================================================
Louisiana--4.7%
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) 11,659
Louisiana Public Facilities Authority, Hospital Revenue
Bonds (Franciscan Missionaries of Our Lady Health
System, Inc.), Series A:
4,775 5% due 8/15/2033 4,825
11,660 5.25% due 8/15/2036 12,073
=======================================================================================
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 808
1,190 6% due 2/01/2034 1,245
=======================================================================================
Maryland--1.0%
5,615 Baltimore, Maryland, Convention Center Hotel
Revenue Bonds, Senior Series A, 5.25%
due 9/01/2039 (n) 6,052
=======================================================================================
Massachusetts--9.3%
2,035 Boston, Massachusetts, Water and Sewer Commission
Revenue Bonds, 9.25% due 1/01/2011 (e) 2,488
3,010 Massachusetts Bay Transportation Authority Revenue
Refunding Bonds (General Transportation System),
Series A, 7% due 3/01/2019 3,750
10,000 Massachusetts State School Building Authority,
Dedicated Sales Tax Revenue Bonds, DRIVERS,
Series 1052, 6.515% due 8/15/2013 (i)(m) 11,190
30,000 Massachusetts State Water Resource Authority
Revenue Bonds, Series A, 6.50% due 7/15/2019 35,952
3,480 Massachusetts State Water Resource Authority,
Revenue Refunding Bonds, Series A, 6%
due 8/01/2010 (a)(f) 3,845
=======================================================================================
Michigan--3.4%
7,695 Delta County, Michigan, Economic Development
Corporation, Environmental Improvement Revenue
Refunding Bonds (Mead Westvaco-Escanaba),
Series A, 6.25% due 4/15/2012 (a) 8,779
Macomb County, Michigan, Hospital Finance
Authority, Hospital Revenue Bonds (Mount
Clemens General Hospital), Series B:
3,715 5.75% due 11/15/2025 3,751
5,250 5.875% due 11/15/2034 5,331
1,900 Michigan State Hospital Finance Authority, Hospital
Revenue Refunding Bonds (Crittenton Hospital),
Series A, 5.625% due 3/01/2027 2,030
1,000 Michigan State Hospital Finance Authority, Revenue
Refunding Bonds (Sinai Hospital), 6.70% due 1/01/2026 1,010
=======================================================================================
8 MUNIVEST FUND, INC. FEBRUARY 28, 2006
Schedule of Investments (continued) (in Thousands)
Face
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 $ 7,762
1,405 Saint Cloud, Minnesota, Health Care Revenue
Refunding Bonds (Saint Cloud Hospital Obligation
Group), Series A, 6.25% due 5/01/2017 (i) 1,556
=======================================================================================
Mississippi--6.1%
Lowndes County, Mississippi, Solid Waste Disposal and
PCR, Refunding (Weyerhaeuser Company Project):
9,160 Series A, 6.80% due 4/01/2022 11,070
4,500 Series B, 6.70% due 4/01/2022 5,389
20,705 Mississippi Business Finance Corporation, Mississippi,
PCR, Refunding (System Energy Resources Inc.
Project), 5.875% due 4/01/2022 20,970
=======================================================================================
Missouri--0.5%
2,600 Missouri State Development Finance Board,
Infrastructure Facilities Revenue Refunding Bonds
(Branson), Series A, 5.50% due 12/01/2032 2,716
250 Missouri State Housing Development Commission, S/F
Mortgage Revenue Bonds (Homeowner Loan), AMT,
Series A, 7.50% due 3/01/2031 (d) 263
=======================================================================================
Montana--1.0%
6,000 Forsyth, Montana, PCR, Refunding (Portland General
Electric Company), Series A, 5.20% due 5/01/2033 6,182
=======================================================================================
Nebraska--0.1%
490 Nebraska Investment Finance Authority, S/F Housing
Revenue Bonds, AMT, Series C, 6.30%
due 9/01/2028 (d)(k) 495
=======================================================================================
Nevada--1.9%
6,700 Clark County, Nevada, IDR (Power Company Project),
AMT, Series A, 6.70% due 6/01/2022 (f) 6,843
Nevada Housing Division, Multi-Unit Housing Revenue
Bonds, AMT (b):
3,475 (Arville Electric Project), 6.60% due 10/01/2023 3,549
1,235 Issue B, 7.45% due 10/01/2017 1,250
Nevada Housing Division Revenue Bonds (S/F Program),
AMT (j):
185 Senior Series E, 7% due 10/01/2019 185
35 Series A, 6.55% due 10/01/2012 35
=======================================================================================
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 2,846
=======================================================================================
New Jersey--8.9%
New Jersey EDA, Cigarette Tax Revenue Bonds:
9,080 5.50% due 6/15/2024 9,512
2,885 5.75% due 6/15/2029 3,077
2,855 5.50% due 6/15/2031 2,974
6,695 5.75% due 6/15/2034 7,116
New Jersey EDA, School Facilities Construction
Revenue Bonds:
9,705 Series O, 5.125% due 3/01/2028 10,268
8,525 Series O, 5.125% due 3/01/2030 8,981
2,675 Series P, 5.25% due 9/01/2026 2,891
8,480 Tobacco Settlement Financing Corporation of New
Jersey, Asset-Backed Revenue Bonds, 7%
due 6/01/2041 9,701
=======================================================================================
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 3,341
=======================================================================================
New York--15.6%
6,000 Metropolitan Transportation Authority, New York,
Revenue Refunding Bonds, Series A, 5.125%
due 11/15/2031 6,387
7,600 Metropolitan Transportation Authority, New York,
Transportation Revenue Refunding Bonds, Series F,
5% due 11/15/2030 7,933
1,025 Nassau County, New York, IDA, Civic Facility Revenue
Refunding and Improvement Bonds (Cold Spring
Harbor), VRDN, 2.90% due 1/01/2034 (l) 1,025
5,000 New York City, New York, City Municipal Financing
Authority, Water and Sewer Systems Revenue Bonds,
Series B, 5% due 6/15/2036 5,271
7,875 New York City, New York, City Transitional Finance
Authority Revenue Bonds, RIB, Series 283, 5%
due 5/15/2010 (m) 9,720
New York City, New York, GO:
7,150 Series F, 5.25% due 1/15/2033 7,568
360 Series I, 6.25% due 4/15/2007 (a)(n) 375
20 Series I, 6.25% due 4/15/2017 (n) 21
965 New York City, New York, GO, Refunding, Series A,
6.375% due 5/15/2014 (f) 1,078
18,600 New York Liberty Development Corporation Revenue
Bonds (Goldman Sachs Headquarters), 5.25%
due 10/01/2035 21,067
New York State Dormitory Authority, Revenue
Refunding Bonds:
1,000 (Mount Sinai Health), Series A, 6.50%
due 7/01/2025 1,079
11,875 RIB, Series 305, 8.52% due 5/15/2015 (c)(m) 14,317
18,130 New York State Dormitory Authority, State Personal
Income Tax Revenue Bonds (Education), Series F,
5% due 3/15/2035 19,073
400 New York State Local Government Assistance
Corporation, Revenue Refunding Bonds, Sub-Lien,
VRDN, Series 4V, 3.19% due 4/01/2022 (i)(l) 400
700 Triborough Bridge and Tunnel Authority, New York,
General Purpose Revenue Refunding Bonds, VRDN,
Series C, 3.15% due 1/01/2032 (h)(l) 700
=======================================================================================
North Carolina--0.7%
4,105 Gaston County, North Carolina, Industrial Facilities
and Pollution Control Financing Authority Revenue
Bonds (National Gypsum Company Project), AMT,
5.75% due 8/01/2035 4,312
=======================================================================================
Ohio--0.0%
150 Montgomery County, Ohio, Revenue Refunding Bonds
(Miami Valley Hospital), VRDN, Series A, 2.95%
due 11/15/2022 (l) 150
=======================================================================================
Oklahoma--0.5%
3,100 Oklahoma State Industries Authority, Revenue
Refunding Bonds (Integris Baptist), VRDN, Series B,
3.05% due 8/15/2029 (c)(l) 3,100
=======================================================================================
Oregon--0.6%
3,305 Portland, Oregon, Sewer System Revenue Bonds, RIB,
Series 386, 8.01% due 8/01/2020 (f)(m) 3,900
=======================================================================================
MUNIVEST FUND, INC. FEBRUARY 28, 2006 9
Schedule of Investments (continued) (in Thousands)
Face
Amount Municipal Bonds Value
=======================================================================================
Pennsylvania--4.1%
$ 2,440 Pennsylvania State Higher Education Assistance Agency
Revenue Bonds, Capital Acquisition, 6.125%
due 12/15/2010 (a)(c) $ 2,714
6,250 Pennsylvania State Higher Educational Facilities
Authority Revenue Bonds (University of Pennsylvania
Medical Center Health System), Series A, 6%
due 1/15/2031 6,833
Philadelphia, Pennsylvania, Authority for Industrial
Development, Senior Living Revenue Bonds:
1,000 (Arbor House Inc. Project), Series E, 6.10%
due 7/01/2033 1,052
1,355 (Rieder House Project), Series A, 6.10%
due 7/01/2033 1,426
9,280 Sayre, Pennsylvania, Health Care Facilities Authority
Revenue Bonds (Guthrie Healthcare System),
Series B, 7.125% due 12/01/2031 11,039
1,750 Sayre, Pennsylvania, Health Care Facilities Authority,
Revenue Refunding Bonds (Guthrie Healthcare
System), Series A, 6.25% due 12/01/2018 1,941
=======================================================================================
South Carolina--2.1%
1,000 Georgetown County, South Carolina, Environmental
Improvement Revenue Refunding Bonds
(International Paper Company Project), AMT, Series A,
5.55% due 12/01/2029 1,021
3,500 Lexington County, South Carolina, Health Services
District Inc., Hospital Revenue Refunding and
Improvement Bonds, 5.50% due 11/01/2032 3,681
2,450 Medical University Hospital Authority, South Carolina,
Hospital Facilities Revenue Refunding Bonds, 6.50%
due 8/15/2012 (a) 2,850
5,000 Richland County, South Carolina, Environmental
Improvement Revenue Refunding Bonds
(International Paper), AMT, 6.10% due 4/01/2023 5,368
=======================================================================================
Tennessee--1.6%
2,000 McMinn County, Tennessee, IDB, Solid Waste Revenue
Bonds (Recycling Facility--Calhoun Newsprint),
AMT, 7.40% due 12/01/2022 2,017
6,500 Shelby County, Tennessee, Health, Educational and
Housing Facility Board, Hospital Revenue Refunding
Bonds (Methodist Healthcare), 6.50%
due 9/01/2012 (a) 7,562
=======================================================================================
Texas--21.3%
Austin, Texas, Convention Center Revenue Bonds
(Convention Enterprises Inc.), First Tier, Series A:
6,000 6.70% due 1/01/2028 6,413
1,290 6.70% due 1/01/2032 1,363
Bell County, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds (Scott & White
Memorial Hospital), VRDN (c)(l):
2,700 Series 2001-1, 2.95% due 8/15/2031 2,700
3,270 Series B-1, 2.95% due 8/15/2029 3,270
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 12,709
Brazos River Authority, Texas, PCR, Refunding, AMT:
3,000 (Texas Utilities Electric Company Project), Series B,
5.40% due 5/01/2029 3,009
3,055 (Texas Utility Company), Series A, 7.70%
due 4/01/2033 3,577
11,870 (Utilities Electric Company), Series B, 5.05%
due 6/01/2030 11,919
3,000 Gregg County, Texas, Health Facilities Development
Corporation, Hospital Revenue Bonds (Good
Shepherd Medical Center Project), 6.875%
due 10/01/2020 (g) 3,375
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 10,476
8,000 Gulf Coast, Texas, Waste Disposal Authority, Revenue
Refunding Bonds (International Paper Company),
AMT, Series A, 6.10% due 8/01/2024 8,501
5,500 Harris County, Houston, Texas, Sports Authority,
Revenue Refunding Bonds, Senior Lien, Series G,
5.75% due 11/15/2020 (c) 6,011
10,485 Harris County, Texas, Health Facilities Development
Corporation, Revenue Refunding Bonds, DRIVERS,
Series 1018, 7.993% due 7/01/2010 (m) 14,642
1,795 Houston, Texas, Industrial Development Corporation
Revenue Bonds (Air Cargo), AMT, 6.375%
due 1/01/2023 1,889
2,030 Mansfield, Texas, Independent School District, GO,
Refunding, 6.625% due 2/15/2015 2,255
9,355 Matagorda County, Texas, Navigation District
Number 1, Revenue Refunding Bonds (Centerpoint
Energy Project), 5.60% due 3/01/2027 9,822
5,225 Midway, Texas, Independent School District, GO,
Refunding, 6.125% due 8/15/2014 5,745
2,700 Port Corpus Christi, Texas, Revenue Refunding
Bonds (Celanese Project), Series A, 6.45%
due 11/01/2030 2,851
5,000 Red River Authority, Texas, PCR, Refunding (Celanese
Project), AMT, Series B, 6.70% due 11/01/2030 5,307
7,280 Sabine River Authority, Texas, PCR, Refunding (TXU
Electric Company Project/TXU Energy Company
LLC), Series C, 5.20% due 5/01/2028 7,384
6,250 San Antonio, Texas, Electric and Gas Revenue Bonds,
RIB, Series 469x, 8.06% due 2/01/2014 (m) 7,262
=======================================================================================
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 1,066
=======================================================================================
Virginia--0.3%
1,425 Chesterfield County, Virginia, IDA, PCR (Virginia
Electric and Power Company), Series A, 5.875%
due 6/01/2017 1,555
=======================================================================================
Washington--8.1%
Energy Northwest, Washington, Electric Revenue
Refunding Bonds, DRIVERS (m):
5,330 Series 248, 7.999% due 7/01/2018 (c) 6,478
3,510 Series 255, 8.496% due 7/01/2018 (h) 4,381
7,350 Series 256, 8.498% due 7/01/2017 (c) 9,218
10 MUNIVEST FUND, INC. FEBRUARY 28, 2006
Schedule of Investments (concluded) (in Thousands)
Face
Amount Municipal Bonds Value
=======================================================================================
Washington (concluded)
$ 2,400 Seattle, Washington, Housing Authority Revenue
Bonds (Replacement Housing Project), 6.125%
due 12/01/2032 $ 2,404
8,100 Washington State, GO, Trust Receipts, Class R, Series 6,
8.484% due 1/01/2014 (i)(m) 9,537
14,320 Washington State Public Power Supply System,
Revenue Refunding Bonds (Nuclear Project
Number 1), Series B, 7.125% due 7/01/2016 17,920
=======================================================================================
Wisconsin--2.4%
4,200 Badger Tobacco Asset Securitization Corporation,
Wisconsin, Asset-Backed Revenue Bonds, 6.125%
due 6/01/2027 4,467
1,765 Milwaukee, Wisconsin, Revenue Bonds (Air Cargo),
AMT, 6.50% due 1/01/2025 1,858
5,000 Wisconsin State Health and Educational Facilities
Authority, Mortgage Revenue Bonds (Hudson
Memorial Hospital), 5.70% due 1/15/2029 (j) 5,324
3,040 Wisconsin State Health and Educational Facilities
Authority Revenue Bonds (Synergyhealth Inc.), 6%
due 11/15/2032 3,293
=======================================================================================
Wyoming--0.5%
2,750 Sweetwater County, Wyoming, Solid Waste Disposal,
Revenue Refunding Bonds (FMC Corporation Project),
AMT, 5.60% due 12/01/2035 2,836
=======================================================================================
U.S. Virgin Islands--1.5%
8,000 Virgin Islands Government Refinery Facilities, Revenue
Refunding Bonds (Hovensa Coker Project), AMT,
6.50% due 7/01/2021 9,051
=======================================================================================
Total Investments (Cost--$875,612*)--153.2% 940,645
Other Assets Less Liabilities--1.2% 7,103
Preferred Stock, at Redemption Value--(54.4%) (334,035)
----------
Net Assets Applicable to Common Stock--100.0% $ 613,713
==========
* The cost and unrealized appreciation (depreciation) of investments as of
February 28, 2006, as computed for federal income tax purposes, were as
follows:
Aggregate cost ............................................. $875,636
========
Gross unrealized appreciation .............................. $ 65,536
Gross unrealized depreciation .............................. (527)
--------
Net unrealized appreciation ................................ $ 65,009
========
(a) Prerefunded.
(b) FNMA Collateralized.
(c) MBIA Insured.
(d) FNMA/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 may have a maturity of more than one year at time of issuance,
but has variable rate and demand features that 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.
See Notes to Financial Statements.
MUNIVEST FUND, INC. FEBRUARY 28, 2006 11
Statement of Net Assets
As of February 28, 2006
==============================================================================================================================
Assets
------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value (identified cost--$875,611,513) $940,644,700
Cash ........................................................................... 35,063
Receivables:
Interest .................................................................... $ 12,618,531
Securities sold ............................................................. 2,143,931 14,762,462
------------
Prepaid expenses ............................................................... 2,996
------------
Total assets ................................................................... 955,445,221
------------
==============================================================================================================================
Liabilities
------------------------------------------------------------------------------------------------------------------------------
Payables:
Securities purchased ........................................................ 6,754,075
Dividends to Common Stock shareholders ...................................... 557,154
Investment adviser .......................................................... 297,821
Other affiliates ............................................................ 8,301 7,617,351
------------
Accrued expenses ............................................................... 79,657
------------
Total liabilities .............................................................. 7,697,008
------------
==============================================================================================================================
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) ...................................................... 334,035,305
------------
==============================================================================================================================
Net Assets Applicable to Common Stock
------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock .......................................... $613,712,908
============
==============================================================================================================================
Analysis of Net Assets Applicable to Common Stock
------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.10 per share; 150,000,000 shares authorized
(61,417,932 shares issued and outstanding) ................................... $ 6,141,793
Paid-in capital in excess of par ............................................... 565,156,883
Undistributed investment income--net ........................................... $ 5,690,353
Accumulated realized capital losses--net ....................................... (28,309,308)
Unrealized appreciation--net ................................................... 65,033,187
------------
Total accumulated earnings--net ................................................ 42,414,232
------------
Total--Equivalent to $9.99 net asset value per share of Common Stock
(market price--$9.50) ........................................................ $613,712,908
============
* Auction Market Preferred Stock.
See Notes to Financial Statements.
12 MUNIVEST FUND, INC. FEBRUARY 28, 2006
Statement of Operations
For the Six Months Ended February 28, 2006
==============================================================================================================================
Investment Income
------------------------------------------------------------------------------------------------------------------------------
Interest ....................................................................... $ 24,607,418
==============================================================================================================================
Expenses
------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ....................................................... $ 2,345,995
Commission fees ................................................................ 414,753
Accounting services ............................................................ 134,344
Transfer agent fees ............................................................ 62,981
Professional fees .............................................................. 25,496
Custodian fees ................................................................. 22,635
Printing and shareholder reports ............................................... 21,143
Directors' fees and expenses ................................................... 15,909
Pricing fees ................................................................... 15,463
Listing fees ................................................................... 13,234
Other .......................................................................... 37,909
------------
Total expenses ................................................................. 3,109,862
------------
Investment income--net ......................................................... 21,497,556
------------
==============================================================================================================================
Realized & Unrealized Gain (Loss)--Net
------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on:
Investments--net ............................................................ 5,351,777
Forward interest rate swaps--net ............................................ (783,263) 4,568,514
------------
Change in unrealized appreciation/depreciation on:
Investments--net ............................................................ (18,305,121)
Forward interest rate swaps--net ............................................ 2,083,744 (16,221,377)
----------------------------
Total realized and unrealized loss--net ........................................ (11,652,863)
------------
==============================================================================================================================
Dividends to Preferred Stock Shareholders
------------------------------------------------------------------------------------------------------------------------------
Investment income--net ......................................................... (4,763,613)
------------
Net Increase in Net Assets Resulting from Operations ........................... $ 5,081,080
============
See Notes to Financial Statements.
MUNIVEST FUND, INC. FEBRUARY 28, 2006 13
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
February 28, August 31,
Increase (Decrease) in Net Assets: 2006 2005
==============================================================================================================================
Operations
------------------------------------------------------------------------------------------------------------------------------
Investment income--net ......................................................... $ 21,497,556 $ 45,562,205
Realized gain--net ............................................................. 4,568,514 6,148,344
Change in unrealized appreciation/depreciation--net ............................ (16,221,377) 15,577,847
Dividends to Preferred Stock shareholders ...................................... (4,763,613) (6,333,975)
----------------------------
Net increase in net assets resulting from operations ........................... 5,081,080 60,954,421
----------------------------
==============================================================================================================================
Dividends to Common Stock Shareholders
------------------------------------------------------------------------------------------------------------------------------
Investment income--net ......................................................... (19,645,669) (41,224,706)
----------------------------
Net decrease in net assets resulting from dividends to Common Stock shareholders (19,645,669) (41,224,706)
----------------------------
==============================================================================================================================
Capital Stock Transactions
------------------------------------------------------------------------------------------------------------------------------
Value of shares issued to Common Stock shareholders in reinvestment of dividends 715,039 --
Offering costs resulting from issuance of Preferred Stock ...................... -- (8,891)
----------------------------
Net increase (decrease) in net assets resulting from capital stock transactions 715,039 (8,891)
----------------------------
==============================================================================================================================
Net Assets Applicable to Common Stock
------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets applicable to Common Stock ............. (13,849,550) 19,720,824
Beginning of period ............................................................ 627,562,458 607,841,634
----------------------------
End of period* ................................................................. $613,712,908 $627,562,458
============================
* Undistributed investment income--net ...................................... $ 5,690,353 $ 8,602,079
============================
See Notes to Financial Statements.
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. 2006 2005 2004 2003 2002
=================================================================================================================================
Per Share Operating Performance
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period .............. $ 10.23 $ 9.91 $ 9.54 $ 9.76 $ 9.71
-----------------------------------------------------------
Investment income--net ............................ .35+ .74+ .72+ .72+ .69
Realized and unrealized gain (loss)--net .......... (.19) .35 .36 (.26) .02
Less dividends to Preferred Stock shareholders from
investment income--net ......................... (.08) (.10) (.04) (.05) (.07)
-----------------------------------------------------------
Total from investment operations .................. .08 .99 1.04 .41 .64
-----------------------------------------------------------
Less dividends to Common Stock shareholders from
investment income--net ......................... (.32) (.67) (.66) (.63) (.59)
-----------------------------------------------------------
Offering costs resulting from the issuance of
Preferred Stock ................................ -- --+++ (.01) -- --
-----------------------------------------------------------
Net asset value, end of period .................... $ 9.99 $ 10.23 $ 9.91 $ 9.54 $ 9.76
===========================================================
Market price per share, end of period ............. $ 9.50 $ 10.15 $ 9.30 $ 8.80 $ 9.11
===========================================================
14 MUNIVEST FUND, INC. FEBRUARY 28, 2006
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. 2006 2005 2004 2003 2002
==================================================================================================================================
Total Investment Return++
----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value per share ...................... .90%@ 10.64% 11.60% 4.79% 7.28%
========================================================
Based on market price per share ......................... (3.30%)@ 16.97% 13.53% 3.56% 4.55%
========================================================
==================================================================================================================================
Ratios Based on Average Net Assets of Common Stock
----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of reimbursement** ........................ 1.02%* 1.02% .94% .95% .95%
========================================================
Total expenses** ........................................ 1.02%* 1.02% .95% .96% .95%
========================================================
Total investment income--net** .......................... 7.08%* 7.38% 7.37% 7.33% 7.33%
========================================================
Amount of dividends to Preferred Stock shareholders ..... 1.57%* 1.02% .43% .50% .75%
========================================================
Investment income--net, to Common Stock shareholders .... 5.51%* 6.36% 6.94% 6.83% 6.58%
========================================================
==================================================================================================================================
Ratios Based on Average Net Assets of Preferred Stock
----------------------------------------------------------------------------------------------------------------------------------
Dividends to Preferred Stock shareholders ............... 2.88%* 1.90% .95% 1.11% 1.59%
========================================================
==================================================================================================================================
Supplemental Data
----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock, end of period
(in thousands) ........................................ $ 613,713 $627,562 $607,842 $585,022 $598,816
========================================================
Preferred Stock outstanding, end of period (in thousands) $ 334,000 $334,000 $334,000 $275,000 $275,000
========================================================
Portfolio turnover ...................................... 25.50% 59.14% 45.33% 44.30% 74.00%
========================================================
==================================================================================================================================
Leverage
----------------------------------------------------------------------------------------------------------------------------------
Asset coverage per $1,000 ............................... $ 2,837 $ 2,879 $ 2,820 $ 3,127 $ 3,178
========================================================
==================================================================================================================================
Dividends Per Share on Preferred Stock Outstanding
----------------------------------------------------------------------------------------------------------------------------------
Series A--Investment income--net ........................ $ 338 $ 477 $ 244 $ 266 $ 388
========================================================
Series B--Investment income--net ........................ $ 389 $ 458 $ 238 $ 278 $ 394
========================================================
Series C--Investment income--net ........................ $ 364 $ 485 $ 239 $ 269 $ 391
========================================================
Series D--Investment income--net ........................ $ 352 $ 478 $ 242 $ 306 $ 445
========================================================
Series E--Investment income--net ........................ $ 350 $ 464 $ 229 $ 269 $ 372
========================================================
Series F***--Investment income--net ..................... $ 351 $ 485 -- -- --
========================================================
* 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.
+++ Amount is less than $(.01) per share.
@ Aggregate total investment return.
See Notes to Financial Statements.
MUNIVEST FUND, INC. FEBRUARY 28, 2006 15
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 shares are
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 ("OTC") markets and are valued at the last available bid price
in the OTC 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 OTC 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.
16 MUNIVEST FUND, INC. FEBRUARY 28, 2006
Notes to Financial Statements (continued)
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.
(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.
(f) Offering costs -- Direct expenses relating to the public offering of the
Fund's Preferred Stock were charged to capital.
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., Inc. ("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.
In addition, Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S")
received $875 in commissions on the execution of portfolio security transactions
for the Fund for the six months ended February 28, 2006.
For the six months ended February 28, 2006, the Fund reimbursed FAM $10,278 for
certain accounting services.
Certain officers and/or directors of the Fund are officers and/or directors of
FAM, PSI, and/or ML & Co.
In February 2006, ML & Co. and BlackRock, Inc. entered into an agreement to
merge ML & Co.'s investment management business, including FAM, with the
investment management business of BlackRock, Inc. The transaction is expected to
close in the third quarter of 2006.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the six
months ended February 28, 2006 were $237,057,563 and $241,888,146, respectively.
4. Capital Stock Transactions:
Common Stock
At February 28, 2006, 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 for the six months ended February 28, 2006
increased by 71,644 as a result of dividend reinvestment. Shares issued and
outstanding for the year ended August 31, 2005 remained constant.
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, 2006 were as
follows: Series A, 3.13%; Series B, 3.28%; Series C, 3.08%; Series D, 2.95%;
Series E, 2.85%; and Series F, 3.12%.
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, 2006, MLPF&S received $181,475 as
commissions.
MUNIVEST FUND, INC. FEBRUARY 28, 2006 17
Notes to Financial Statements (concluded)
5. Capital Loss Carryforward:
On August 31, 2005, the Fund had a net capital loss carryforward of $20,303,047,
of which $2,623,164 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 $.048000 per share on March 30, 2006 to shareholders of record on
March 14, 2006.
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.
18 MUNIVEST FUND, INC. FEBRUARY 28, 2006
Disclosure of Investment Advisory Agreement
Activities of and Composition of the Board of Directors
All but one member of the Board of Directors is an independent director whose
only affiliation with Fund Asset Management, L.P. (the "Investment Adviser") or
other Merrill Lynch affiliates is as a director of the Fund and certain other
funds advised by the Investment Adviser or its affiliates. The Chairman of the
Board is also an independent director. New director nominees are chosen as
nominees by a Nominating Committee comprised of independent directors. All
independent directors also are members of the Board's Audit Committee and the
independent directors meet in executive session at each in-person Board meeting.
The Board and the Audit Committee meet in person for at least two days each
quarter and conduct other in-person and telephone meetings throughout the year,
some of which are formal board meetings, and some of which are informational
meetings. The independent counsel to the independent directors attends all
in-person Board and Audit Committee meetings and other meetings at the
independent directors' request.
Investment Advisory Agreement -- Matters Considered by the Board
Every year, the Board considers approval of the Fund's investment advisory
agreement (the "Investment Advisory Agreement"). The Board assesses the nature,
scope and quality of the services provided to the Fund by the personnel of the
Investment Adviser and its affiliates, including administrative services,
shareholder services, oversight of fund accounting, marketing services and
assistance in meeting legal and regulatory requirements. The Board also receives
and assesses information regarding the services provided to the Fund by certain
unaffiliated service providers.
At various times throughout the year, the Board also considers a range of
information in connection with its oversight of the services provided by the
Investment Adviser and its affiliates. Among the matters considered are: (a)
fees (in addition to management fees) paid to the Investment Adviser and its
affiliates by the Fund; (b) Fund operating expenses paid to third parties; (c)
the resources devoted to and compliance reports relating to the Fund's
investment objective, policies and restrictions, and its compliance with its
Code of Ethics and the Investment Adviser's compliance policies and procedures;
and (d) the nature, cost and character of non-investment management services
provided by the Investment Adviser and its affiliates.
The Board believes that the Investment Adviser is one of the most experienced
global asset management firms and considers the overall services provided by the
Investment Adviser to be of high quality. The Board also believes that the
Investment Adviser is financially sound and well managed and notes that the
Investment Adviser is affiliated with one of America's largest financial firms.
The Board works closely with the Investment Adviser in overseeing the Investment
Adviser's efforts to achieve good performance. As part of this effort, the Board
discusses portfolio manager effectiveness and, when performance is not
satisfactory, discusses with the Investment Adviser taking steps such as
changing investment personnel.
Annual Consideration of Approval by the Board of Directors
In the period prior to the Board meeting to consider renewal of the Investment
Advisory Agreement, the Board requests and receives materials specifically
relating to the Fund's Investment Advisory Agreement. These materials include
(a) information compiled by Lipper Inc. ("Lipper") on the fees and expenses,
investment performance, and leverage of the Fund as compared to a comparable
group of funds as classified by Lipper; (b) information comparing the Fund's
market price with its net asset value per share; (c) a discussion by the Fund's
portfolio management team of investment strategies used by the Fund during its
most recent fiscal year; (d) information on the profitability to the Investment
Adviser and its affiliates of the Investment Advisory Agreement and other
relationships with the Fund; and (e) information provided by the Investment
Adviser concerning investment advisory fees charged to other retail closed-end
funds under similar investment mandates. The Board also considers other matters
it deems important to the approval process such as payments made to the
Investment Adviser or its affiliates in connection with services related to the
valuation and pricing of Fund portfolio holdings, the Fund's portfolio turnover
statistics, and direct and indirect benefits to the Investment Adviser and its
affiliates from their relationship with the Fund. The Board did not identify any
particular information as controlling, and each member of the Board may have
attributed different weights to the various items considered.
Certain Specific Renewal Data
In connection with the most recent renewal of the Fund's Investment Advisory
Agreement in February, 2006, the independent directors' and Board's review
included the following:
Services Provided by the Investment Adviser -- The Board reviewed the nature,
extent and quality of services provided by the Investment Adviser, including the
investment advisory services and the resulting performance of the Fund. The
MUNIVEST FUND, INC. FEBRUARY 28, 2006 19
Disclosure of Investment Advisory Agreement (concluded)
Board focused primarily on the Investment Adviser's investment advisory services
and the Fund's investment performance. The Board compared Fund performance --
both including and excluding the effects of the Fund's fees and expenses -- to
the performance of a comparable group of funds. While the Board reviews
performance data at least quarterly, consistent with the Investment Adviser's
investment goals, the Board attaches more importance to performance over
relatively long periods of time, typically three to five years. Relative to
closed-end leveraged general municipal debt funds deemed comparable by the
Investment Adviser, the Fund's performance after fees and expenses ranked in the
second quintile for each of the one- and three-year periods ended November 30,
2005 and in the first quintile for the five-year period ended November 30, 2005.
The Board also considered the Fund's performance based on annualized yields and
noted that the Fund's yield for the year ended November 30, 2005 was in the
first quintile, in the second quintile for 2004, and in the third quintile for
2001 - 2003. Considering these factors, the Board concluded that the Fund's
performance supported the continuation of the Investment Advisory Agreement.
The Investment Adviser's Personnel and Investment Process -- The Board reviews
at least annually the Fund's investment objectives and strategies. The Board
discusses with senior management of the Investment Adviser responsible for
investment operations and the senior management of the Investment Adviser's
municipal investing group the strategies being used to achieve the stated
objectives. Among other things, the Board considers the size, education and
experience of the Investment Adviser's investment staff, its use of technology,
and the Investment Adviser's approach to training and retaining portfolio
managers and other research, advisory and management personnel. The Board also
reviews the Investment Adviser's compensation policies and practices with
respect to the Fund's portfolio managers. The Board also considered the
experience of the Fund's portfolio manager and noted that Mr. Stuebe has more
than 15 years of experience in portfolio management. The Investment Adviser and
its investment staff have extensive experience in analyzing and managing the
types of investments used by the Fund. The Board concluded that the Fund
benefits from that expertise.
Management Fees and Other Expenses -- The Board reviews the Fund's contractual
management fee rate and actual management fee rate as a percentage of total
assets at common asset levels -- the actual rate includes advisory and
administrative service fees and the effects of any fee waivers -- compared to
the other funds considered comparable by Lipper. It also compares the Fund's
total expenses to those of other comparable funds. The Board considered the
services provided to and the fees charged by the Investment Adviser to other
retail closed-end funds with similar investment mandates and noted that the fees
charged by the Investment Adviser in those cases typically exceeded those being
charged to the Fund. The Fund's contractual and actual management fee rates as
well as its actual total expense ratio, including investment-related expenses,
were below the median of management fees charged by comparable funds as
determined by Lipper. The Board has concluded that the Fund's management fee and
fee rate and overall expense ratio are reasonable compared to those of other
comparable funds.
Profitability -- The Board considers the cost of the services provided to the
Fund by the Investment Adviser, and the Investment Adviser's and its affiliates'
profits relating to the management of the Fund and the MLIM/FAM-advised funds.
As part of its analysis, the Board reviewed the Investment Adviser's methodology
in allocating its costs to the management of the Fund and concluded that there
was a reasonable basis for the allocation. The Board also considered the federal
court decisions discussing an investment adviser's profitability and
profitability levels considered to be reasonable in those decisions. The Board
concluded that the Investment Adviser's profits are acceptable in relation to
the nature and quality of services provided and given the level of fees and
expenses overall.
Economies of Scale -- The Board considered the extent to which economies of
scale might be realized as the assets of the Fund increase and whether there
should be changes in the management fee rate or structure in order to enable the
Fund to participate in these economies of scale. The Board considered economies
of scale to the extent applicable to the Fund's closed-end structure and
determined that the Fund appropriately benefits from any economies of scale and
no changes were currently necessary.
Conclusion
After the independent directors deliberated in executive session, the entire
Board, including all of the independent directors, approved the renewal of the
existing Investment Advisory Agreement, concluding that the advisory fee was
reasonable in relation to the services provided and that a contract renewal was
in the best interests of the shareholders.
20 MUNIVEST FUND, INC. FEBRUARY 28, 2006
Proxy Results
During the six-month period ended February 28, 2006, MuniVest Fund, Inc.'s
Common Stock shareholders voted on the following proposals. Proposal 1 was
approved at a shareholders' meeting on January 26, 2006. With respect to
Proposal 2, the proposal was adjourned until February 16, 2006, at which time it
was approved. A description of the proposals and number of shares voted were as
follows:
----------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
----------------------------------------------------------------------------------------------------
1. To elect the Fund's Directors: Robert C. Doll, Jr. 58,364,384 1,057,169
Cynthia A. Montgomery 58,339,284 1,082,269
Jean Margo Reid 58,384,200 1,037,353
Roscoe S. Suddarth 58,299,905 1,121,648
Edward D. Zinbarg 58,336,401 1,085,152
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
----------------------------------------------------------------------------------------------------
2. To approve an amendment to Fundamental
Investment Restriction. 31,228,835 935,040 1,101,217
----------------------------------------------------------------------------------------------------
During the six-month period ended February 28, 2006, MuniVest Fund, Inc.'s
Preferred Stock shareholders (Series A-F) voted on the following proposals.
Proposal 1 was approved at a shareholders' meeting on January 26, 2006. With
respect to Proposal 2, the proposal was adjourned until February 16, 2006, at
which time it was approved. A description of the proposals and number of shares
voted were as follows:
----------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
----------------------------------------------------------------------------------------------------
1. To elect the Fund's Directors: Ronald W. Forbes 12,759 63
Richard R. West 12,785 37
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
Shares Voted Shares Voted Shares Voted
For Against Abstain
----------------------------------------------------------------------------------------------------
2. To approve an amendment to Fundamental
Investment Restriction. 12,006 190 286
----------------------------------------------------------------------------------------------------
MUNIVEST FUND, INC. FEBRUARY 28, 2006 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
Donald C. Burke, Vice President and Treasurer
Kenneth A. Jacob, Senior Vice President
John M. Loffredo, Senior Vice President
Fred K. Stuebe, Vice President
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
22 MUNIVEST FUND, INC. FEBRUARY 28, 2006
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.
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, 2006 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 1-800-637-3863; (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 -- 2/06
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 20, 2006
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 20, 2006
By: /s/ Donald C. Burke
---------------------------
Donald C. Burke,
Chief Financial Officer of
MuniVest Fund, Inc.
Date: April 20, 2006