UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-5611
Name of Fund: MuniVest Fund, Inc.
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Terry K. Glenn, President, 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: 08/31/04
Date of reporting period: 09/01/03 - 08/31/04
Item 1 - Report to Stockholders
[LOGO] Merrill Lynch Investment Managers www.mlim.ml.com
MuniVest Fund, Inc.
Annual Report
August 31, 2004
[LOGO] Merrill Lynch Investment Managers
MuniVest Fund, Inc.
The Benefits and Risks of Leveraging
MuniVest Fund, Inc. utilizes leveraging to seek to enhance the yield and net
asset value of its Common Stock. However, these objectives cannot be achieved in
all interest rate environments. To leverage, the Fund issues Preferred Stock,
which pays dividends at prevailing short-term interest rates, and invests the
proceeds in long-term municipal bonds. The interest earned on these investments,
net of dividends to Preferred Stock, is paid to Common Stock shareholders in the
form of dividends, and the value of these portfolio holdings is reflected in the
per share net asset value of the Fund's Common Stock. However, in order to
benefit Common Stock shareholders, the yield curve must be positively sloped;
that is, short-term interest rates must be lower than long-term interest rates.
At the same time, a period of generally declining interest rates will benefit
Common Stock shareholders. If either of these conditions change, then the risks
of leveraging will begin to outweigh the benefits.
To illustrate these concepts, assume a fund's Common Stock capitalization of
$100 million and the issuance of Preferred Stock for an additional $50 million,
creating a total value of $150 million available for investment in long-term
municipal bonds. If prevailing short-term interest rates are approximately 3%
and long-term interest rates are approximately 6%, the yield curve has a
strongly positive slope. The fund pays dividends on the $50 million of Preferred
Stock based on the lower short-term interest rates. At the same time, the fund's
total portfolio of $150 million earns the income based on long-term interest
rates. Of course, increases in short-term interest rates would reduce (and even
eliminate) the dividends on the Common Stock.
In this case, the dividends paid to Preferred Stock shareholders are
significantly lower than the income earned on the fund's long-term investments,
and therefore the Common Stock shareholders are the beneficiaries of the
incremental yield. However, if short-term interest rates rise, narrowing the
differential between short-term and long-term interest rates, the incremental
yield pickup on the Common Stock will be reduced or eliminated completely. At
the same time, the market value of the fund's Common Stock (that is, its price
as listed on the American Stock Exchange) may, as a result, decline.
Furthermore, if long-term interest rates rise, the Common Stock's net asset
value will reflect the full decline in the price of the portfolio's investments,
since the value of the fund's Preferred Stock does not fluctuate. In addition to
the decline in net asset value, the market value of the fund's Common Stock may
also decline.
As a part of its investment strategy, the Fund may invest in certain securities
whose potential income return is inversely related to changes in a floating
interest rate ("inverse floaters"). In general, income on inverse floaters will
decrease when short-term interest rates increase and increase when short-term
interest rates decrease. Investments in inverse floaters may be characterized as
derivative securities and may subject the Fund to the risks of reduced or
eliminated interest payments and losses of invested principal. In addition,
inverse floaters have the effect of providing investment leverage and, as a
result, the market value of such securities will generally be more volatile than
that of fixed-rate, tax-exempt securities. To the extent the Fund invests in
inverse floaters, the market value of the Fund's portfolio and the net asset
value of the Fund's shares may also be more volatile than if the Fund did not
invest in these securities. As of August 31, 2004, the percentage of the Fund's
total net assets invested in inverse floaters was 13.75%, before the deduction
of Preferred Stock.
Swap Agreements
The Fund may also invest in swap agreements, which are over-the-counter
contracts in which one party agrees to make periodic payments based on the
change in market value of a specified bond, basket of bonds, or index in return
for periodic payments based on a fixed or variable interest rate or the change
in market value of a different bond, basket of bonds or index. Swap agreements
may be used to obtain or reduce exposure to a bond or market without owning or
taking physical custody of securities. Swap agreements involve the risk that the
party with whom the Fund has entered into the swap will default on its
obligation to pay the Fund and the risk that the Fund will not be able to meet
its obligations to pay the other party to the agreement.
2 MUNIVEST FUND, INC. AUGUST 31, 2004
A Letter From the President
Dear Shareholder
In recent months, the Federal Reserve Board (the Fed) has taken center stage as
it shifts away from its long-accommodative monetary stance. The Fed raised the
Federal Funds rate 75 basis points (.75%) in three separate moves since June,
bringing the target short-term interest rate to 1.75% -- still low by historical
standards. The Fed has been deliberate in telegraphing its intention to take a
"measured" approach to interest rate increases in order to avoid upsetting the
economy or the financial markets, while still leaving room to move more
aggressively if inflation and economic growth accelerate more than anticipated.
The forward curve currently projects further increases in short-term interest
rates before year-end. In addition to the Fed policy change, the financial
markets recently have had to grapple with a tense geopolitical environment,
higher oil prices and the worry and anticipation that accompanies a presidential
election.
The transition to higher rates can cause concern among equity and fixed income
investors alike. For bond investors, rising interest rates means the value of
older issues declines because they bear the former lower interest rates. In
addition, increasing inflation erodes the purchasing power of fixed income
securities. However, because municipal bonds offer the advantage of tax-exempt
income, they continue to be an attractive alternative for many fixed income
investors. For the 12-month period ended August 31, 2004, municipal bonds posted
a return of +7.11%, as measured by the Lehman Brothers Municipal Bond Index.
As always, our investment professionals are closely monitoring the markets, the
economy and the overall environment in an effort to make well-informed decisions
for the portfolios they manage. Our goal is to provide shareholders with
competitive returns, while always keeping one eye on managing the unavoidable
risk inherent in investing.
We thank you for trusting Merrill Lynch Investment Managers with your investment
assets, and we look forward to serving you in the months and years ahead.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Director
MUNIVEST FUND, INC. AUGUST 31, 2004 3
[LOGO] Merrill Lynch Investment Managers
A Discussion With Your Fund's Portfolio Manager
The Fund was able to outperform its Lipper category average for the
period, as we remained focused on enhancing yield and preserving net asset value
in a volatile interest rate environment.
Describe the recent market environment relative to municipal bonds.
Amid considerable monthly volatility, long-term U.S. Treasury bond yields
finished the 12-month period ended August 31, 2004 lower than where they began.
At the start of the period, bond yields declined as bond prices -- which move in
the opposite direction -- rose. Despite continued improvement in U.S. economic
conditions, solid job creation remained elusive. Consumer confidence faltered,
and investors became increasingly convinced that the Federal Reserve Board (the
Fed) would hold short-term interest rates at their historic lows. Under the
circumstances, 30-year U.S. Treasury bond yields declined to 4.65% by mid-March.
In early April, however, monthly employment reports began to show unexpectedly
large gains. In response, bond yields increased as their prices fell. Associated
improvements in consumer confidence and spending led some investors to reverse
their earlier expectations, believing instead that the Fed would soon be forced
to raise short-term interest rates to ward off potential inflation. By early
June, long-term U.S. Treasury bond yields had risen above 5.50%.
For the remainder of the period, bond yields generally declined. Payroll growth
had begun to wane and inflationary measures continued to be negligible. Although
the Fed began raising interest rates (.25% in June, .25% in August and another
.25% in September, bringing the target rate to 1.75%), it seemed committed to a
measured tightening policy. This effectively removed much of the earlier concern
over the potential for a prolonged series of interest rate increases. The
prospect for a measured, moderate tightening sequence helped support higher bond
prices (and lower yields) for the remainder of the Fund's fiscal year. By the
end of August 2004, long-term U.S. Treasury bond yields stood at 4.93%, a
decline of almost 30 basis points (.30%) over the past year. The 10-year U.S.
Treasury note yield ended the period at 4.12%, a decrease of 35 basis points
during the 12-month period.
Tax-exempt issues, supported by a favorable technical backdrop, exhibited less
volatility than their taxable counterparts during the year. Declining supply
trends allowed tax-exempt bond prices to register moderate gains. As measured by
the Bond Buyer Revenue Bond Index, yields on long-term revenue bonds fell
approximately 30 basis points over the past year. According to Municipal Market
Data, yields on Aaa-rated issues maturing in 30 years declined more than 30
basis points to 4.70%, and yields on 10-year Aaa-rated issues fell more than 40
basis points to 3.50%.
In terms of new issuance, more than $360 billion in new long-term tax-exempt
bonds was underwritten in the past 12 months, a decline of approximately 6%
compared to last year. Approximately $95 billion in long-term tax-exempt bonds
was issued in the last three months of the fiscal year, a decline of nearly 15%
versus the same period a year ago. The tax-exempt bond market maintained a
positive supply/demand position throughout the reporting period, allowing
municipal issues to outperform their taxable counterparts. New-issue volume is
expected to remain manageable, continuing to support the tax-exempt market's
favorable technical position for the remainder of the year. In addition,
attractive yield ratios compared to taxable securities should continue to draw
both traditional and non-traditional investors to the tax-exempt market.
How did the Fund perform during the fiscal year in light of the existing market
conditions?
For the fiscal year ended August 31, 2004, the Common Stock of MuniVest Fund,
Inc. had net annualized yields of 6.66% and 7.10%, based on a period-end per
share net asset value of $9.91 and a per share market price of $9.30,
respectively, and $.660 per share income dividends. Over the same period, the
total investment return on the Fund's Common Stock was +11.60%, based on a
change in per share net asset value from $9.54 to $9.91, and assuming
reinvestment of $.657 per share ordinary income dividends.
The Fund's total return, based on net asset value, exceeded the +11.01% average
return of the Lipper General Municipal Debt Funds (Leveraged) category for the
12 months ended August 31, 2004. (Funds in this Lipper category invest primarily
in municipal debt issues rated in the top four credit-rating categories. These
funds can be leveraged via use of debt, preferred equity and/or reverse
repurchase agreements.) The Fund was able to achieve this favorable result
despite maintaining a modest defensive position throughout most of the reporting
period. Recently, performance has been
4 MUNIVEST FUND, INC. AUGUST 31, 2004
aided both by the Fund's above-average dividend yield and positive security
selection.
For the six-month period ended August 31, 2004, the total investment return on
the Fund's Common Stock was +0.54%, based on a change in per share net asset
value from $10.23 to $9.91, and assuming reinvestment of $.336 per share income
dividends.
For a description of the Fund's total investment return based on a change in the
per share market value of the Fund's Common Stock (as measured by the trading
price of the Fund's shares on the American Stock Exchange), and assuming
reinvestment of dividends, please refer to the Financial Highlights section of
this report. As a closed-end fund, the Fund's shares may trade in the secondary
market at a premium or discount to the Fund's net asset value. As a result,
total investment returns based on changes in the market value of the Fund's
Common Stock can vary significantly from total investment returns based on
changes in the Fund's net asset value.
What changes were made to the portfolio during the period?
In general, we continued to focus on adding higher-yielding, lower-rated bonds
to the portfolio whenever they were attractively priced. These issues allowed
the Fund to distribute an above-average market yield and performed well as the
municipal bond market improved in the latter months of the Fund's fiscal year.
In addition, we significantly increased the Fund's holdings in California
general obligation (GO) bonds and other state-related issues. Earlier this year,
in response to the negative publicity surrounding the state's budgetary
difficulties, prices of California GO bonds materially weakened relative to the
rest of the tax-exempt market. We viewed this as an attractive opportunity to
add fundamentally strong credit issues at distressed levels. This proved to be a
beneficial decision, as California state issues were recently upgraded by the
major credit-rating agencies. The resultant market price improvement for these
bonds positively impacted the Fund's performance.
For the six-month period ended August 31, 2004, the Fund's Auction Market
Preferred Stock (AMPS) had average yields as follows: Series A, 1.10%; Series B,
.94%; Series C, 1.00%; Series D, 1.13%; and Series E, .97%. These attractive
funding levels, even after the recent interest rate increases, continued to
generate a significant income benefit to the Fund's Common Stock shareholders.
While additional interest rate hikes are anticipated, future increases are not
expected to be sizeable or protracted. Most importantly, the spread between
short-term and long-term tax-exempt interest rates has remained historically
wide. In fact, the spread at period-end was wider than it was at the end of
August 2000 and August 2001. 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 35.45% of total net assets, before
the deduction of Preferred Stock. (For a more complete explanation of the
benefits and risks of leveraging, see page 2 of this report to shareholders.)
How would you characterize the Fund's position at the close of the period?
We ended the period in a defensive position with respect to future interest rate
movements. Low historic bond yields suggest that an emphasis on higher-yielding
instruments over more interest rate sensitive issues is the more prudent
long-term strategy. Consequently, the Fund is structured to perform better in
stable-to-rising interest rate environments. We intend to keep limited cash
reserves in an effort to enhance the Fund's dividend income stream.
Looking ahead, we believe that economic growth will remain moderate and should
eventually translate into modestly higher interest rate levels. The strong
technical environment municipal bonds have enjoyed is expected to continue in
the coming months, insulating the tax-exempt market from much of the anticipated
interest rate volatility.
Fred K. Stuebe
Vice President and Portfolio Manager
September 22, 2004
MUNIVEST FUND, INC. AUGUST 31, 2004 5
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Schedule of Investments (in Thousands)
S&P Moody's Face
State Ratings+ Ratings+ Amount Municipal Bonds Value
===================================================================================================================================
Alabama--4.4% BBB NR* $ 2,550 Camden, Alabama, IDB, Exempt Facilities Revenue Bonds (Weyerhaeuser
Company), Series A, 6.125% due 12/01/2024 $ 2,725
BBB Baa2 7,500 Courtland, Alabama, IDB, Solid Waste Disposal Revenue Bonds
(Champion International Corporation Project), AMT, Series A, 6.50%
due 9/01/2025 7,895
Huntsville, Alabama, Health Care Authority Revenue Bonds:
NR* A2 3,500 Series A, 5.75% due 6/01/2031 3,621
NR* A2 7,000 Series B, 5.75% due 6/01/2032 7,262
BBB Baa2 5,000 Selma, Alabama, IDB, Environmental Improvement Revenue Refunding
Bonds (International Paper Company Project), Series B, 5.50%
due 5/01/2020 5,228
===================================================================================================================================
Alaska--1.4% Anchorage, Alaska, Lease Revenue Bonds (Correctional Facility) (i):
AAA Aaa 3,575 6% due 2/01/2014 4,087
AAA Aaa 3,830 6% due 2/01/2016 4,347
===================================================================================================================================
Arizona--1.0% NR* Baa3 4,375 Maricopa County, Arizona, IDA, Education Revenue Bonds (Arizona
Charter Schools Project 1), Series A, 6.75% due 7/01/2029 4,312
Pima County, Arizona, IDA, Education Revenue Bonds (Arizona Charter
Schools Project), Series I:
NR* Baa3 500 6.10% due 7/01/2024 493
NR* Baa3 1,000 6.30% due 7/01/2031 997
===================================================================================================================================
California--25.3% California State, GO, Refunding:
AAA Aaa 10,000 5% due 2/01/2031 (c) 10,171
A A3 9,600 5.125% due 6/01/2031 9,750
California State Public Works Board, Lease Revenue Bonds:
A- Baa1 3,170 (California Community Colleges), Series B, 5.125% due 6/01/2029 3,215
A- Baa1 5,000 (Department of Corrections), Series C, 5.50% due 6/01/2022 5,328
A- Baa1 6,000 (Department of Corrections), Series C, 5.50% due 6/01/2023 6,361
A- Baa1 19,415 (Department of Mental Health--Coalinga State Hospital),
Series A, 5.125% due 6/01/2029 19,524
California State, Various Purpose, GO:
A Aaa 13,570 5.50% due 4/01/2030 14,399
A A3 21,250 5.50% due 11/01/2033 22,470
A A3 5,240 California Statewide Communities Development Authority, Health
Facility Revenue Bonds (Memorial Health Services), Series A, 6%
due 10/01/2023 5,598
Golden State Tobacco Securitization Corporation of California,
Tobacco Settlement Revenue Bonds:
BBB Baa3 7,280 Series A-3, 7.875% due 6/01/2042 7,666
BBB Baa3 3,250 Series A-4, 7.80% due 6/01/2042 3,407
BBB Baa3 1,125 Series A-5, 7.875% due 6/01/2042 1,185
A- Baa1 13,900 Series B, 5.375% due 6/01/2028 14,080
A- Baa1 8,850 Series B, 5.50% due 6/01/2033 9,090
AAA Aaa 15,000 Series B, 5.50% due 6/01/2033 (f) 16,041
AAA Aaa 5,000 Series B, 5.50% due 6/01/2043 (f) 5,280
===================================================================================================================================
Colorado--2.7% Arapahoe County, Colorado, School District Number 005, GO
(Cherry Creek):
AA Aa2 5,750 6% due 12/15/2013 6,589
AA Aa2 4,165 6% due 12/15/2014 4,773
Colorado HFA, Revenue Refunding Bonds (S/F Program), AMT, Senior
Series A-2:
NR* Aa2 1,465 6.60% due 5/01/2028 1,474
NR* Aa2 550 7.50% due 4/01/2031 552
A- A3 3,000 Colorado Health Facilities Authority Revenue Bonds (Lutheran Medical
Center), Series A, 5.25% due 6/01/2034 2,964
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
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
6 MUNIVEST FUND, INC. AUGUST 31, 2004
Schedule of Investments (continued) (in Thousands)
S&P Moody's Face
State Ratings+ Ratings+ Amount Municipal Bonds Value
===================================================================================================================================
Connecticut--0.5% BBB- NR* $ 2,810 Mohegan Tribe Indians, Connecticut, Gaming Authority, Public
Improvement Revenue Refunding Bonds (Priority Distribution), 6.25%
due 1/01/2031 $ 2,965
===================================================================================================================================
Florida--1.1% A A2 5,000 Highlands County, Florida, Health Facilities Authority, Hospital
Revenue Bonds (Adventist Health System), Series D, 5.375% due
11/15/2035 5,065
A A2 1,880 Orange County, Florida, Health Facilities Authority, Hospital
Revenue Bonds (Adventist Health System), 5.625% due 11/15/2032 1,944
===================================================================================================================================
Georgia--2.5% Georgia Municipal Electric Authority, Power Revenue Refunding Bonds:
A+ A2 4,600 Series W, 6.60% due 1/01/2018 5,558
A A2 250 Series W, 6.60% due 1/01/2018 (e) 306
A A2 250 Series Y, 10% due 1/01/2010 (e) 336
Milledgeville-Baldwin County, Georgia, Development Authority
Revenue Bonds (Georgia College and State University Foundation):
BBB NR* 1,250 5.50% due 9/01/2024 1,289
BBB NR* 2,000 5.625% due 9/01/2030 2,050
A A3 4,785 Monroe County, Georgia, Development Authority, PCR, Refunding
(Oglethorpe Power Corporation--Scherer), Series A, 6.80%
due 1/01/2011 5,666
===================================================================================================================================
Idaho--0.2% NR* Aaa 1,145 Idaho Housing Agency, S/F Mortgage Revenue Refunding Bonds, AMT,
Series E-2, 6.90% due 1/01/2027 1,159
===================================================================================================================================
Illinois--19.7% AAA Aaa 3,005 Chicago, Illinois, GO (Neighborhoods Alive 21 Program), Series A,
6% due 1/01/2016 (f) 3,452
AAA Aaa 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) 5,543
Chicago, Illinois, O'Hare International Airport Revenue Bonds, AMT:
AAA Aaa 11,200 3rd Lien, Series B-2, 6% due 1/01/2029 (n) 12,254
AAA NR* 8,540 Series 368, DRIVERS, 9.338% due 7/01/2011 (c)(j) 10,269
AAA NR* 7,000 Chicago, Illinois, O'Hare International Airport Revenue Refunding
Bonds, DRIVERS, AMT, Series 253, 9.854% due 1/01/2020 (c)(j) 8,511
AAA Aaa 135 Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT, Series C, 7%
due 3/01/2032 (b)(d)(l) 136
AAA Aaa 5,000 Cook County, Illinois, Community High School District Number 219,
Niles Township, GO, 6% due 12/01/2017 (f) 5,763
BBB Baa1 10,000 Hodgkins, Illinois, Environmental Improvement Revenue Bonds (Metro
Biosolids Management LLC Project), AMT, 6% due 11/01/2023 10,050
BBB NR* 2,140 Illinois Development Finance Authority Revenue Bonds (Community
Rehabilitation Providers Facility), Series A, 6.50% due 7/01/2022 2,247
BBB NR* 1,365 Illinois Development Finance Authority, Revenue Refunding Bonds
(Community Rehabilitation Providers), Series A, 6% due 7/01/2015 1,411
A+ A1 6,040 Illinois HDA, Revenue Refunding Bonds (M/F Program), Series 5,
6.75% due 9/01/2023 6,174
AA+ Aa2 5,500 Illinois State Finance Authority Revenue Bonds (Northwestern
Memorial Hospital), Series A, 5.50% due 8/15/2043 5,630
NR* Aaa 2,500 Kane, Cook and Du Page Counties, Illinois, School District 46,
Elgin, GO, 6.375% due 1/01/2019 (i) 2,916
NR* Aaa 5,245 Kane and De Kalb Counties, Illinois, Community Unit School District
Number 302, GO, DRIVERS, Series 283, 9.885% due 2/01/2018 (f)(j) 6,695
Mc Lean and Woodford Counties, Illinois, Community Unit, School
District Number 005, GO, Refunding (i):
NR* Aaa 5,000 6.25% due 12/01/2014 5,908
NR* Aaa 4,000 6.375% due 12/01/2016 4,750
AAA NR* 18,550 Metropolitan Pier and Exposition Authority, Illinois, Dedicated
State Tax Revenue Refunding Bonds, DRIVERS, Series 269, 9.885%
due 6/15/2023 (c)(f)(j) 20,865
Regional Transportation Authority, Illinois, Revenue Bonds,:
AAA Aaa 3,500 Series A, 7.20% due 11/01/2020 (h) 4,616
AAA Aaa 4,000 Series C, 7.75% due 6/01/2020 (f) 5,607
AAA Aaa 3,000 Will County, Illinois, Environmental Revenue Bonds (Mobil Oil
Refining Corporation Project), AMT, 6.40% due 4/01/2026 3,230
Will County, Illinois, School District Number 122 (New Lenox
Elementary), GO, Series A (i):
NR* Aaa 55 6.50% due 11/01/2010 (a) 66
NR* Aaa 945 6.50% due 11/01/2013 1,115
NR* Aaa 1,375 6.50% due 11/01/2015 1,623
MUNIVEST FUND, INC. AUGUST 31, 2004 7
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (continued) (in Thousands)
S&P Moody's Face
State Ratings+ Ratings+ Amount Municipal Bonds Value
===================================================================================================================================
Indiana--6.9% BBB Baa1 $ 1,700 Fort Wayne, Indiana, PCR, Refunding (General Motors Corporation
Project), 6.20% due 10/15/2025 $ 1,802
AA- A1 6,500 Indiana Health Facility Financing Authority, Hospital Revenue
Refunding Bonds (Clarian Health Partners Inc.), Series A, 6%
due 2/15/2021 6,891
NR* Aaa 4,290 Indiana State, HFA, S/F Mortgage Revenue Refunding Bonds, Series A,
6.80% due 1/01/2017 (k) 4,298
AA- NR* 8,195 Indiana Transportation Finance Authority, Highway Revenue Bonds,
Series A, 6.80% due 12/01/2016 10,223
AA NR* 15,335 Indianapolis, Indiana, Local Public Improvement Bond Bank Revenue
Refunding Bonds, Series D, 6.75% due 2/01/2014 18,594
===================================================================================================================================
Kansas--0.7% NR* Aaa 3,805 Sedgwick and Shawnee Counties, Kansas, S/F Mortgage Revenue Bonds
(Mortgage Backed Securities Program), AMT, Series A-4, 5.95%
due 12/01/2033 (b)(d) 4,089
===================================================================================================================================
Louisiana--2.7% BBB Baa2 4,000 De Soto Parish, Louisiana, Environmental Improvement Revenue
Refunding Bonds (International Paper Co. Project), AMT, Series B,
6.55% due 4/01/2019 4,179
AAA Aaa 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) 12,198
===================================================================================================================================
Maine--0.3% Portland, Maine, Housing Development Corporation, Senior Living
Revenue Bonds (Avesta Housing Development Corporation Project),
Series A:
NR* Baa2 775 5.70% due 8/01/2021 769
NR* Baa2 1,190 6% due 2/01/2034 1,179
===================================================================================================================================
Massachusetts--7.8% AAA Aaa 2,035 Boston, Massachusetts, Water and Sewer Commission Revenue Bonds,
9.25% due 1/01/2011 (e) 2,691
AA Aa2 3,010 Massachusetts Bay Transportation Authority, Revenue Refunding Bonds
(General Transportation System), Series A, 7% due 3/01/2019 3,869
AA Aa3 30,000 Massachusetts State Water Resource Authority Revenue Bonds,
Series A, 6.50% due 7/15/2019 36,892
Massachusetts State Water Resource Authority, Revenue Refunding
Bonds, Series A (f):
AAA Aaa 1,000 6% due 8/01/2014 1,162
AAA Aaa 2,480 6% due 8/01/2017 2,860
===================================================================================================================================
Michigan--3.7% BBB Baa2 7,695 Delta County, Michigan, Economic Development Corporation,
Environmental Improvement Revenue Refunding Bonds (Mead
Westvaco-Escanaba), Series A, 6.25% due 4/15/2027 8,109
Macomb County, Michigan, Hospital Finance Authority, Hospital
Revenue Bonds (Mount Clemens General Hospital), Series B:
BBB- NR* 3,715 5.75% due 11/15/2025 3,506
BBB- NR* 5,250 5.875% due 11/15/2034 4,929
Michigan State Hospital Finance Authority, Revenue Refunding Bonds:
AAA Aa2 390 (Ascension Health Credit), Series A, 6.125% due 11/15/2009 (a) 456
AAA Aaa 3,000 (Ascension Health Credit), Series A, 6.125% due
11/15/2009 (a)(c) 3,507
B Ba1 1,300 (Detroit Medical Center Obligation Group), Series A, 6.25%
due 8/15/2013 1,180
NR* Ba3 1,000 (Sinai Hospital), 6.70% due 1/01/2026 896
===================================================================================================================================
Minnesota--1.5% NR* A3 7,235 Minneapolis, Minnesota, Health Care System Revenue Bonds (Allina
Health System), Series A, 5.75% due 11/15/2032 7,522
NR* Aaa 1,405 Saint Cloud, Minnesota, Health Care Revenue Refunding Bonds (Saint
Cloud Hospital Obligation Group), Series A, 6.25% due 5/01/2017 (i) 1,626
===================================================================================================================================
Mississippi--4.8% Lowndes County, Mississippi, Solid Waste Disposal and PCR, Refunding
(Weyerhaeuser Company Project):
BBB Baa2 3,650 Series A, 6.80% due 4/01/2022 4,178
BBB Baa2 4,000 Series B, 6.70% due 4/01/2022 4,546
BBB- Ba1 20,705 Mississippi Business Finance Corporation, Mississippi, PCR,
Refunding (System Energy Resources Inc. Project), 5.875%
due 4/01/2022 20,787
===================================================================================================================================
Missouri--0.5% BBB+ Baa1 2,600 Missouri State Development Finance Board, Infrastructure Facilities
Revenue Refunding Bonds (Branson), Series A, 5.50% due 12/01/2032 2,657
AAA NR* 450 Missouri State Housing Development Commission, S/F Mortgage Revenue
Bonds (Homeowner Loan), AMT, Series A, 7.50% due 3/01/2031 (b)(d) 455
===================================================================================================================================
Montana--1.0% BBB+ Baa2 6,000 Forsyth, Montana, PCR, Refunding (Portland General Electric
Company), Series A, 5.20% due 5/01/2033 6,369
===================================================================================================================================
Nebraska--0.2% AAA NR* 960 Nebraska Investment Finance Authority, S/F Housing Revenue Bonds,
AMT, Series C, 6.30% due 9/01/2028 (b)(d)(l) 976
8 MUNIVEST FUND, INC. AUGUST 31, 2004
Schedule of Investments (continued) (in Thousands)
S&P Moody's Face
State Ratings+ Ratings+ Amount Municipal Bonds Value
===================================================================================================================================
Nevada--2.4% AAA Aaa $ 6,700 Clark County, Nevada, IDR (Power Company Project), AMT, Series A,
6.70% due 6/01/2022 (f) $ 7,000
AA Aa2 1,600 Clark County, Nevada, Public Safety, GO, 6% due 3/01/2014 1,846
Nevada Housing Division Revenue Bonds, Multi-Unit Housing (b):
AAA NR* 3,475 (Arville Electric Project), AMT, 6.60% due 10/01/2023 3,607
AAA Aa2 1,235 Issue B, 7.45% due 10/01/2017 1,262
Nevada Housing Division Revenue Bonds, (S/F Program), AMT (k):
AAA Aaa 445 Senior Series E, 7% due 10/01/2019 455
NR* Aa2 225 Series A, 6.55% due 10/01/2012 226
===================================================================================================================================
New Hampshire--0.4% BBB+ Baa1 2,425 New Hampshire Health and Education Facilities Authority, Revenue
Refunding Bonds (Elliot Hospital), Series B, 5.60% due 10/01/2022 2,465
===================================================================================================================================
New Jersey--1.7% AAA Aaa 800 New Jersey State Housing and Mortgage Finance Agency, Home Buyer
Revenue Bonds, AMT, Series M, 6.95% due 10/01/2022 (c) 817
BBB Baa3 10,230 Tobacco Settlement Financing Corporation of New Jersey Revenue
Bonds, 7% due 6/01/2041 9,860
===================================================================================================================================
New Mexico--0.5% BBB- Baa2 3,300 Farmington, New Mexico, PCR, Refunding (Public Service Company--San
Juan Project), Series A, 5.80% due 4/01/2022 3,325
===================================================================================================================================
New York--9.2% NR* Aa2 7,875 New York City, New York, City Transitional Finance Authority Revenue
Bonds, RIB, Series 283, 10.88% due 11/15/2015 (j) 10,526
New York City, New York, GO:
A A2 7,150 Series F, 5.25% due 1/15/2033 7,344
AAA A2 520 Series I, 6.25% due 4/15/2007 (a)(m) 582
AAA Aaa 380 Series I, 6.25% due 4/15/2017 (m) 420
AAA A2 1,680 Series I, 6.25% due 4/15/2017 (a)(m) 1,879
AAA Aaa 630 Series I, 6.25% due 4/15/2027 (m) 692
A A2 5,110 Sub-Series C-1, 5.25% due 8/15/2026 5,315
A A2 3,410 Sub-Series C-1, 5.10% due 8/15/2027 3,476
New York City, New York, GO, Refunding, Series A (f):
AAA A2 4,550 6.375% due 5/15/2010 (a) 5,429
AAA A2 3,450 6.375% due 5/15/2014 4,059
New York State Dormitory Authority, Revenue Refunding Bonds:
BB Ba1 1,000 (Mount Sinai Health), Series A, 6.50% due 7/01/2025 1,015
AAA NR* 11,875 RIB, Series 305, 10.38% due 5/15/2015 (c)(j) 15,461
===================================================================================================================================
Oregon--1.1% NR* Aaa 2,000 Portland, Oregon, Airport Way, Urban Renewal and Redevelopment Tax
Allocation Refunding Bonds, Series A, 6% due 6/15/2015 (h) 2,288
NR* Aaa 3,305 Portland, Oregon, Sewer System Revenue Bonds, RIB, Series 386, 9.96%
due 8/01/2020 (f)(j) 4,147
===================================================================================================================================
Pennsylvania--4.2% AAA Aaa 2,440 Pennsylvania State Higher Education Assistance Agency Revenue Bonds,
Capital Acquisition, 6.125% due 12/15/2010 (a)(c) 2,871
A NR* 6,250 Pennsylvania State Higher Educational Facilities Authority Revenue
Bonds (University of Pennsylvania Medical Center Health System),
Series A, 6% due 1/15/2031 6,588
Philadelphia, Pennsylvania, Authority for Industrial Development,
Senior Living Revenue Bonds:
NR* Baa2 1,000 (Arbor House Inc. Project), Series E, 6.10% due 7/01/2033 967
NR* Baa2 1,355 (Rieder House Project), Series A, 6.10% due 7/01/2033 1,310
A- NR* 9,280 Sayre, Pennsylvania, Health Care Facilities Authority Revenue Bonds
(Guthrie Health Issue), Series B, 7.125% due 12/01/2031 10,696
Sayre, Pennsylvania, Health Care Facilities Authority, Revenue
Refunding Bonds (Guthrie Healthcare System), Series A:
A- NR* 1,750 6.25% due 12/01/2018 1,902
A- NR* 1,000 5.75% due 12/01/2021 1,047
===================================================================================================================================
South Carolina--1.6% BBB+ Baa2 2,450 Medical University, South Carolina, Hospital Authority, Hospital
Facility Revenue Refunding Bonds, 6.50% due 8/15/2032 2,571
BBB Baa2 5,000 Richland County, South Carolina, Environmental Improvement Revenue
Refunding Bonds (International Paper), AMT, 6.10% due 4/01/2023 5,289
B- B1 2,000 York County, South Carolina, Industrial Revenue Bonds (Hoechst
Celanese Corporation), AMT, 5.70% due 1/01/2024 1,773
===================================================================================================================================
Tennessee--1.5% BB Ba2 2,000 McMinn County, Tennessee, IDB, Solid Waste Revenue Bonds (Recycling
Facility--Calhoun Newsprint), AMT, 7.40% due 12/01/2022 2,005
A- A3 6,500 Shelby County, Tennessee, Health, Educational and Housing Facility
Board, Hospital Revenue Refunding Bonds (Methodist Healthcare),
6.50% due 9/01/2026 7,120
MUNIVEST FUND, INC. AUGUST 31, 2004 9
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (continued) (in Thousands)
S&P Moody's Face
State Ratings+ Ratings+ Amount Municipal Bonds Value
===================================================================================================================================
Texas--19.6% Austin, Texas, Convention Center Revenue Bonds (Convention
Enterprises Inc.), First Tier, Series A:
BBB- Baa3 $ 6,000 6.70% due 1/01/2028 $ 6,268
BBB- Baa3 1,290 6.70% due 1/01/2032 1,356
Brazos River Authority, Texas, PCR, Refunding, AMT:
BBB Baa2 3,000 (Texas Utilities Electric Company Project), Series B, 5.40%
due 5/01/2029 3,100
BBB Baa2 3,055 (Texas Utility Company), Series A, 7.70% due 4/01/2033 3,565
BBB Baa2 12,300 (Utilities Electric Company), Series B, 5.05% due 6/01/2030 12,668
A- A3 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 12,554
AA NR* 3,000 Gregg County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds (Good Shepherd Medical Center Project),
6.875% due 10/01/2020 (g) 3,508
AA- Aa3 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 10,962
BBB Baa2 4,000 Gulf Coast, Texas, IDA (Champion International Corp.), Refunding,
7.125% due 4/01/2010 4,054
BBB Baa2 3,000 Gulf Coast, Texas, Waste Disposal Authority, Revenue Refunding Bonds
(International Paper Company), AMT, Series A, 6.10% due 8/01/2024 3,126
AAA Aaa 5,500 Harris County, Houston, Texas, Sports Authority, Revenue Refunding
Bonds, Senior Lien, Series G, 5.75% due 7/1/2007 (c) 6,143
NR* Aa3 10,385 Harris County, Texas, Health Facilities Development Corporation,
Revenue Refunding Bonds, RITR, Series 6, 9.595% due 12/01/2027 (e)(j) 13,558
NR* Baa3 1,800 Houston, Texas, Industrial Development Corporation Revenue Bonds
(Air Cargo), AMT, 6.375% due 1/01/2023 1,824
AAA Aaa 2,030 Mansfield, Texas, Independent School District, GO, Refunding,
6.625% due 2/15/2015 2,373
BBB Baa2 9,855 Matagorda County, Texas, Navigation District Number 1, Revenue
Refunding Bonds (Centerpoint Energy Project), 5.60% due 3/01/2027 10,018
NR* Aaa 5,225 Midway, Texas, Independent School District, GO, Refunding, 6.125%
due 8/15/2014 6,052
B- Ba3 5,400 Port Corpus Christi, Texas, Revenue Refunding Bonds (Celanese
Project), Series A, 6.45% due 11/01/2030 5,189
B- Ba3 5,000 Red River Authority, Texas, PCR, Refunding (Celanese Project), AMT,
Series B, 6.70% due 11/01/2030 4,963
NR* Aa1 6,250 San Antonio, Texas, Electric and Gas Revenue Bonds, RIB,
Series 469x, 9.91% due 2/01/2014 (j) 8,050
===================================================================================================================================
Vermont--0.2% BBB+ NR* 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 1,040
===================================================================================================================================
Virginia--1.1% BBB+ A3 1,425 Chesterfield County, Virginia, IDA, PCR (Virginia Electric and Power
Company), Series A, 5.875% due 6/01/2017 1,565
BBB Baa2 1,500 Isle of Wight County, Virginia, IDA, Solid Waste Disposal Facilities
Revenue Bonds (Union Camp Corporation Project), AMT, 6.55%
due 4/01/2024 1,535
AAA Aaa 3,320 Virginia State, HDA, Commonwealth Mortgage Revenue Bonds, Series J,
Sub-Series J-1, 5.20% due 7/01/2019 (c) 3,389
===================================================================================================================================
Washington--8.6% Energy Northwest, Washington, Electric Revenue Refunding Bonds,
DRIVERS (j):
AAA NR* 5,330 Series 248, 9.885% due 7/01/2018 (c) 6,809
AAA NR* 3,510 Series 255, 10.38% due 7/01/2018 (h) 4,614
AAA NR* 7,350 Series 256, 10.384% due 7/01/2017 (c) 9,663
NR* NR* 2,460 Seattle, Washington, Housing Authority Revenue Bonds (Replacement
Housing Project), 6.125% due 12/01/2032 2,429
AAA Aaa 8,100 Washington State, GO, Trust Receipts, Class R, Series 6, 10.256%
due 1/01/2014 (i)(j) 10,296
AA- Aa1 14,320 Washington State Public Power Supply System, Revenue Refunding Bonds
(Nuclear Project Number 1), Series B, 7.125% due 7/01/2016 18,450
===================================================================================================================================
Wisconsin--2.6% BBB Baa3 4,505 Badger Tobacco Asset Securitization Corporation, Wisconsin,
Asset-Backed Revenue Bonds, 6.125% due 6/01/2027 4,280
NR* Baa3 1,770 Milwaukee, Wisconsin, Revenue Bonds (Air Cargo), AMT, 6.50%
due 1/01/2025 1,788
NR* Aa2 5,000 Wisconsin State Health and Educational Facilities Authority,
Mortgage Revenue Bonds (Hudson Memorial Hospital), 5.70%
due 1/15/2029 (k) 5,199
BBB+ NR* 4,540 Wisconsin State Health and Educational Facilities Authority Revenue
Bonds (Synergyhealth Inc.), 6% due 11/15/2032 4,643
10 MUNIVEST FUND, INC. AUGUST 31, 2004
Schedule of Investments (concluded) (in Thousands)
S&P Moody's Face
State Ratings+ Ratings+ Amount Municipal Bonds Value
===================================================================================================================================
Wyoming--2.2% Sweetwater County, Wyoming, Solid Waste Disposal Revenue Bonds (FMC
Corporation Project), AMT:
BB+ Ba3 $ 5,425 Series A, 7% due 6/01/2024 $ 5,516
BB+ Ba3 7,475 Series B, 6.90% due 9/01/2024 7,604
===================================================================================================================================
Virgin Islands--1.4% BBB- Baa3 8,000 Virgin Islands Government Refinery Facilities, Revenue Refunding
Bonds (Hovensa Coker Project), AMT, 6.50% due 7/01/2021 8,695
-------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost--$836,666)--148.7% 903,929
===================================================================================================================================
Shares
Held Short-Term Securities
===================================================================================================================================
37,658 Merrill Lynch Institutional Tax-Exempt Fund (n) 37,658
-------------------------------------------------------------------------------------------------------------
Total Short-Term Securities (Cost--$37,658)--6.2% 37,658
===================================================================================================================================
Total Investments (Cost--$874,324**)--154.9% 941,587
Other Assets Less Liabilities--0.0% 255
Preferred Stock, at Redemption Value--(54.9%) (334,000)
---------
Net Assets Applicable to Common Stock--100.0% $ 607,842
=========
* Not Rated.
** The cost and unrealized appreciation/depreciation of investments as of
August 31, 2004, as computed for federal income tax purposes, were as
follows:
(in Thousands)
-------------------------------------------------------------------------
Aggregate cost ................................................ $874,336
========
Gross unrealized appreciation ................................. $ 68,939
Gross unrealized depreciation ................................. (1,688)
--------
Net unrealized appreciation ................................... $ 67,251
========
+ Ratings shown are unaudited.
(a) Prerefunded.
(b) FNMA Collateralized.
(c) MBIA Insured.
(d) GNMA Collateralized.
(e) Escrowed to maturity.
(f) FGIC Insured.
(g) Radian Insured.
(h) AMBAC Insured.
(i) FSA Insured.
(j) The interest rate is subject to change periodically and inversely based
upon prevailing market rates. The interest rate shown is the rate in
effect at August 31, 2004.
(k) FHA Insured.
(l) FHLMC Collateralized.
(m) XL Capital Insured.
(n) Investments in companies considered to be an affiliate of the Fund (such
companies are defined as "Affiliated Companies" in Section 2 (a)(3) of the
Investment Company Act of 1940) were as follows:
(in Thousands)
--------------------------------------------------------------------------
Net Dividend
Affiliate Activity Income
--------------------------------------------------------------------------
Merrill Lynch Institutional
Tax-Exempt Fund 14,300 $190
--------------------------------------------------------------------------
Forward interest rate swaps as of August 31, 2004 were as follows:
(in Thousands)
--------------------------------------------------------------------------
Notional Unrealized
Amount Depreciation
--------------------------------------------------------------------------
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate and pay
a fixed rate of 3.885%
Broker, J.P. Morgan Chase Bank
Expires October 2014 $43,500 $(1,359)
Receive a variable rate equal to
7-Day Bond Market Association
Municipal Swap Index Rate and pay
a fixed rate of 3.671%
Broker, J.P. Morgan Chase Bank
Expires November 2014 $20,200 (228)
--------------------------------------------------------------------------
Total $(1,587)
=======
See Notes to Financial Statements.
MUNIVEST FUND, INC. AUGUST 31, 2004 11
[LOGO] Merrill Lynch Investment Managers
Statement of Net Assets
As of August 31, 2004
==================================================================================================================================
Assets
----------------------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value (identified cost--$836,665,909) $ 903,929,388
Investments in affiliated securities, at value (identified cost--$37,657,683) 37,657,683
Cash ....................................................................... 1,950,492
Receivables:
Interest ................................................................ $ 13,523,315
Securities sold ......................................................... 12,605,482
Dividends from affiliates ............................................... 1,142 26,129,939
-------------
Prepaid expenses ........................................................... 21,931
-------------
Total assets ............................................................... 969,689,433
-------------
==================================================================================================================================
Liabilities
----------------------------------------------------------------------------------------------------------------------------------
Unrealized depreciation on forward interest rate swaps ..................... 1,586,762
Payables:
Securities purchased .................................................... 25,578,997
Dividends to Common Stock shareholders .................................. 426,690
Offering cost ........................................................... 154,726
Investment adviser ...................................................... 24,069
Other affiliates ........................................................ 7,543 26,192,025
-------------
Accrued expenses ........................................................... 69,012
-------------
Total liabilities .......................................................... 27,847,799
-------------
==================================================================================================================================
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) ................. 334,000,000
-------------
==================================================================================================================================
Net Assets Applicable to Common Stock
----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock ...................................... $ 607,841,634
=============
==================================================================================================================================
Analysis of Net Assets Applicable to Common Stock
----------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.10 per share; 150,000,000 shares authorized
(61,346,288 shares issued and outstanding) ............................... $ 6,134,629
Paid-in capital in excess of par ........................................... 564,457,899
Undistributed investment income--net ....................................... $ 10,598,555
Accumulated realized capital losses--net ................................... (39,026,166)
Unrealized appreciation--net ............................................... 65,676,717
-------------
Total accumulated earnings--net ............................................ 37,249,106
-------------
Total--Equivalent to $9.91 net asset value per share of Common Stock
(market price--$9.30) .................................................... $ 607,841,634
=============
* Auction Market Preferred Stock.
See Notes to Financial Statements.
12 MUNIVEST FUND, INC. AUGUST 31, 2004
Statement of Operations
For the Year Ended August 31, 2004
==================================================================================================================================
Investment Income
----------------------------------------------------------------------------------------------------------------------------------
Interest ................................................................... $ 49,974,839
Dividends from affiliates .................................................. 189,555
-------------
Total income ............................................................... 50,164,394
-------------
==================================================================================================================================
Expenses
----------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ................................................... $ 4,385,808
Commission fees ............................................................ 699,240
Accounting services ........................................................ 253,406
Transfer agent fees ........................................................ 123,180
Professional fees .......................................................... 58,959
Custodian fees ............................................................. 44,602
Printing and shareholder reports ........................................... 41,894
Directors' fees and expenses ............................................... 35,499
Pricing fees ............................................................... 25,812
Listing fees ............................................................... 24,911
Other ...................................................................... 49,280
-------------
Total expenses before reimbursement ........................................ 5,742,591
Reimbursement of expenses .................................................. (44,299)
-------------
Total expenses after reimbursement ......................................... 5,698,292
-------------
Investment income--net ..................................................... 44,466,102
-------------
==================================================================================================================================
Realized & Unrealized Gain (Loss)--Net
----------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on:
Investments--net ........................................................ 6,327,198
Forward interest rate swaps--net ........................................ (4,187,660) 2,139,538
-------------
Change in unrealized appreciation/depreciation on:
Investments--net ........................................................ 21,943,997
Forward interest rate swaps--net ........................................ (2,068,299) 19,875,698
-------------------------------
Total realized and unrealized gain--net .................................... 22,015,236
-------------
==================================================================================================================================
Dividends to Preferred Stock Shareholders
----------------------------------------------------------------------------------------------------------------------------------
Investment income--net ..................................................... (2,612,850)
-------------
Net Increase in Net Assets Resulting from Operations ....................... $ 63,868,488
=============
See Notes to Financial Statements.
MUNIVEST FUND, INC. AUGUST 31, 2004 13
[LOGO] Merrill Lynch Investment Managers
Statements of Changes in Net Assets
For the Year Ended
August 31,
-------------------------------
Increase (Decrease) in Net Assets: 2004 2003
==================================================================================================================================
Operations
----------------------------------------------------------------------------------------------------------------------------------
Investment income--net ..................................................... $ 44,466,102 $ 44,032,855
Realized gain--net ......................................................... 2,139,538 8,263,901
Change in unrealized appreciation/depreciation--net ........................ 19,875,698 (24,459,149)
Dividends to Preferred Stock Shareholders .................................. (2,612,850) (3,044,590)
-------------------------------
Net increase in net assets resulting from operations ....................... 63,868,488 24,793,017
-------------------------------
==================================================================================================================================
Dividends to Common Stock Shareholders
----------------------------------------------------------------------------------------------------------------------------------
Investment income--net ..................................................... (40,304,511) (38,586,815)
-------------------------------
Net decrease in net assets resulting from dividends to Common Stock
shareholders ............................................................. (40,304,511) (38,586,815)
-------------------------------
==================================================================================================================================
Capital Stock Transactions
----------------------------------------------------------------------------------------------------------------------------------
Offering and underwriting costs resulting from issuance of Preferred
Stock .................................................................... (744,726) --
-------------------------------
Net decrease in net assets resulting from capital stock transactions ....... (744,726) --
-------------------------------
==================================================================================================================================
Net Assets Applicable to Common Stock
----------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets applicable to Common Stock ......... 22,819,251 (13,793,798)
Beginning of year .......................................................... 585,022,383 598,816,181
-------------------------------
End of year* ............................................................... $ 607,841,634 $ 585,022,383
===============================
* Undistributed investment income--net .................................. $ 10,598,555 $ 9,049,814
===============================
See Notes to Financial Statements.
14 MUNIVEST FUND, INC. AUGUST 31, 2004
Financial Highlights
The following per share data and ratios have been derived
from information provided in the financial statements. For the Year Ended August 31,
---------------------------------------------------------
Increase (Decrease) in Net Asset Value: 2004 2003 2002 2001++ 2000++
===================================================================================================================================
Per Share Operating Performance
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year .................. $ 9.54 $ 9.76 $ 9.71 $ 9.07 $ 9.15
---------------------------------------------------------
Investment income--net .............................. .72+ .72+ .69 .69 .70
Realized and unrealized gain (loss)--net ............ .36 (.26) .02 .65 (.05)
Dividends to Preferred Stock shareholders from
investment income--net ........................... (.04) (.05) (.07) (.16) (.18)
---------------------------------------------------------
Total from investment operations .................... 1.04 .41 .64 1.18 .47
---------------------------------------------------------
Less dividends to Common Stock shareholders from
investment income--net ........................... (.66) (.63) (.59) (.54) (.55)
---------------------------------------------------------
Offering costs resulting from the issuance of
Preferred Stock ................................... (.01) -- -- -- --
---------------------------------------------------------
Net asset value, end of year ........................ $ 9.91 $ 9.54 $ 9.76 $ 9.71 $ 9.07
=========================================================
Market price per share, end of year ................. $ 9.30 $ 8.80 $ 9.11 $ 9.30 $ 8.25
=========================================================
===================================================================================================================================
Total Investment Return*
-----------------------------------------------------------------------------------------------------------------------------------
Based on market price per share ..................... 13.53% 3.56% 4.55% 19.92% 1.75%
=========================================================
Based on net asset value per share .................. 11.60% 4.79% 7.28% 13.89% 6.21%
=========================================================
===================================================================================================================================
Ratios Based on Average Net Assets of Common Stock
-----------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of reimbursement** .............. .94% .95% .95% .98% 1.01%
=========================================================
Total expenses** .................................... .95% .96% .95% .98% 1.01%
=========================================================
Total investment income--net** ...................... 7.37% 7.33% 7.33% 7.37% 7.95%
=========================================================
Amount of dividends to Preferred Stock shareholders . .43% .50% .75% 1.70% 2.01%
=========================================================
Investment income--net, to Common Stock shareholders 6.94% 6.83% 6.58% 5.67% 5.94%
=========================================================
MUNIVEST FUND, INC. AUGUST 31, 2004 15
[LOGO] Merrill Lynch Investment Managers
Financial Highlights (concluded)
For the Year Ended August 31,
The following per share data and ratios have been derived ---------------------------------------------------------
from information provided in the financial statements. 2004 2003 2002 2001++ 2000++
===================================================================================================================================
Ratios Based on Average Net Assets of Common & Preferred Stock**
-----------------------------------------------------------------------------------------------------------------------------------
Total expenses, net of reimbursement ................ .65% .65% .65% .66% .67%
=========================================================
Total expenses ...................................... .65% .66% .65% .66% .67%
=========================================================
Total investment income--net ........................ 5.06% 5.03% 4.98% 4.98% 5.26%
=========================================================
===================================================================================================================================
Ratios Based on Average Net Assets of Preferred Stock
-----------------------------------------------------------------------------------------------------------------------------------
Dividends to Preferred Stock shareholders ........... .95% 1.11% 1.59% 3.53% 3.93%
=========================================================
===================================================================================================================================
Supplemental Data
-----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Stock, end of
year (in thousands) ............................... $607,842 $585,022 $598,816 $595,908 $556,105
=========================================================
Preferred Stock outstanding, end of year
(in thousands) .................................... $334,000 $275,000 $275,000 $275,000 $275,000
=========================================================
Portfolio turnover .................................. 45.33% 44.30% 74.00% 74.80% 121.76%
=========================================================
===================================================================================================================================
Leverage
-----------------------------------------------------------------------------------------------------------------------------------
Asset coverage per $1,000 ........................... $ 2,820 $ 3,127 $ 3,178 $ 3,167 $ 3,022
=========================================================
===================================================================================================================================
Dividends Per Share on Preferred Stock Outstanding
-----------------------------------------------------------------------------------------------------------------------------------
Series A--Investment income--net .................... $ 244 $ 266 $ 388 $ 909 $ 1,030
=========================================================
Series B--Investment income--net .................... $ 238 $ 278 $ 394 $ 923 $ 991
=========================================================
Series C--Investment income--net .................... $ 239 $ 269 $ 391 $ 906 $ 952
=========================================================
Series D--Investment income--net .................... $ 242 $ 306 $ 445 $ 877 $ 978
=========================================================
Series E--Investment income--net .................... $ 229 $ 269 $ 372 $ 851 $ 977
=========================================================
Series F***--Investment income--net ................. -- -- -- -- --
=========================================================
* 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.
** Do not reflect the effect of dividends to Preferred Stock shareholders.
*** Series F was issued on August 31, 2004.
+ Based on average shares outstanding.
++ Certain prior year amounts have been reclassified to conform with current
year presentation.
See Notes to Financial Statements.
16 MUNIVEST FUND, INC. AUGUST 31, 2004
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. The Fund determines and makes available for publication the net asset
value of its Common Stock on a daily basis. The Fund's Common Stock is listed on
the American Stock Exchange under the symbol MVF. The following is a summary of
significant accounting policies followed by the Fund.
(a) Valuation of investments -- Municipal bonds are traded primarily in the
over-the-counter markets and are valued at the last available bid price in the
over-the-counter market or on the basis of values as obtained by a pricing
service. Pricing services use valuation matrixes that incorporate both
dealer-supplied valuations and valuation models. The procedures of the pricing
service and its valuations are reviewed by the officers of the Fund under the
general direction of the Board of Directors. Such valuations and procedures will
be reviewed periodically by the Board of Directors of the Fund. Financial
futures contracts and options thereon, which are traded on exchanges, are valued
at their closing prices as of the close of such exchanges. Options written or
purchased are valued at the last sale price in the case of exchange-traded
options. In the case of options traded in the over-the-counter market, valuation
is the last asked price (options written) or the last bid price (options
purchased). Swap agreements are valued by quoted fair values received daily by
the Fund from the counterparty. 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).
MUNIVEST FUND, INC. AUGUST 31, 2004 17
[LOGO] Merrill Lynch Investment Managers
Notes to Financial Statements (continued)
Written and purchased options are non-income producing investments.
o Forward interest rate swaps -- The Fund may enter into forward interest
rate swaps. In a forward interest rate swap, the Fund and the counterparty
agree to make periodic net payments on a specified notional contract
amount, commencing on a specified future effective date, unless terminated
earlier. When the agreement is closed, the Fund records a realized gain or
loss in an amount equal to the value of the agreement.
(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 at the time of issuance of the
shares.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund Asset
Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc.
("PSI"), an indirect, wholly-owned subsidiary of Merrill Lynch & Co. ("ML &
Co."), which is the limited partner.
FAM is responsible for the management of the Fund's portfolio and provides the
necessary personnel, facilities, equipment and certain other services necessary
to the operations of the Fund. For such services, the Fund pays a monthly fee at
an annual rate of .50% of the Fund's average daily net assets, including assets
acquired from the sale of Preferred Stock. The Investment Adviser has agreed to
waive its management fee by the amount of management fees the Fund pays to FAM
indirectly through its investment in the Merrill Lynch Institutional Tax-Exempt
Fund. For the year ended August 31, 2004, FAM reimbursed the Fund in the amount
of $44,299.
For the year ended August 31, 2004, Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("MLPF&S"), an affiliate of FAM, received underwriting fees of
$590,000 in connection with issuance of the Fund's Preferred Stock.
For the year ended August 31, 2004, the Fund reimbursed FAM $17,078 for certain
accounting services.
Certain officers and/or directors of the Fund are officers and/or directors of
FAM, PSI, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended August 31, 2004, were $429,923,492 and $385,909,717, respectively.
4. Capital Stock Transactions:
Common Stock
At August 31, 2004, the Fund had one class of shares of Common Stock, par value
$.10 per share, of which 150,000,000 shares were authorized.
Preferred Stock
Auction Market Preferred Stock are redeemable shares of Preferred Stock of the
Fund with a par value of $.025 per share and a liquidation preference of $25,000
per share plus accrued and unpaid dividends, that entitle their holders to
receive cash dividends at an annual rate that may vary for the successive
dividend periods for each series. The Fund is authorized to issue 10,000,000
shares of Preferred Stock. The yields in effect at August 31, 2004 were as
follows: Series A, 1.158%; Series B, 1.20%; Series C, 1.30%; Series D, 1.20%;
Series E, 1.15% and Series F, 1.20%.
Shares issued and outstanding for the year ended August 31, 2004 increased by
2,360 shares from the issuance of an additional series of Preferred Stock.
The Fund pays commissions to certain broker-dealers at the end of each auction
at an annual rate ranging from .25% to .375% calculated on the proceeds of each
auction. For the year ended August 31, 2004, MLPF&S received $272,251 as
commissions.
18 MUNIVEST FUND, INC. AUGUST 31, 2004
Notes to Financial Statements (concluded)
5. Distributions to Shareholders:
The Fund paid a tax-exempt income dividend to holders of Common Stock in the
amount of $.056000 per share on September 29, 2004 to shareholders of record on
September 14, 2004.
The tax character of distributions paid during the fiscal years ended August 31,
2004 and August 31, 2003 was as follows:
--------------------------------------------------------------------------------
8/31/2004 8/31/2003
--------------------------------------------------------------------------------
Distributions paid from:
Tax-exempt income ................... $42,917,361 $41,631,405
-------------------------------
Total distributions .................... $42,917,361 $41,631,405
===============================
As of August 31, 2004, the components of accumulated earnings on a tax basis
were as follows:
-----------------------------------------------------------------------------
Undistributed tax-exempt income--net .................... $ 10,571,192
Undistributed long-term capital gains--net .............. --
------------
Total undistributed earnings--net ....................... 10,571,192
Capital loss carryforward ............................... (25,239,493)*
Unrealized gains--net ................................... 51,917,407**
------------
Total accumulated earnings--net ......................... $ 37,249,106
============
* On August 31, 2004, the Fund had a net capital loss carryforward of
$25,239,493, of which $7,559,610 expires in 2008 and $17,679,883 expires
in 2009. This amount will be available to offset like amounts of any
future taxable gains.
** The difference between book-basis and tax-basis net unrealized gains is
attributable primarily to the tax deferral of losses on wash sales, the
tax deferral of losses on straddles, and the difference between book and
tax amortization methods for premiums and discounts on fixed income
securities.
MUNIVEST FUND, INC. AUGUST 31, 2004 19
[LOGO] Merrill Lynch Investment Managers
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
MuniVest Fund, Inc.:
We have audited the accompanying statement of net assets, including the schedule
of investments, of MuniVest Fund, Inc. as of August 31, 2004, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of August 31, 2004, by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
MuniVest Fund, Inc. as of August 31, 2004, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and its financial highlights for each of the five years in
the period then ended, in conformity with U.S. generally accepted accounting
principles.
Deloitte & Touche LLP
Princeton, New Jersey
October 15, 2004
20 MUNIVEST FUND, INC. AUGUST 31, 2004
Quality Profile (unaudited)
The quality ratings of securities in the Fund as of August 31, 2004 were as
follows:
--------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Total Investments
--------------------------------------------------------------------------------
AAA/Aaa ................................................. 32.5%
AA/Aa ................................................... 15.9
A/A ..................................................... 21.3
BBB/Baa ................................................. 21.8
BB/Ba ................................................... 4.0
B/B ..................................................... 0.2
NR (Not Rated) .......................................... 0.3
Other* .................................................. 4.0
--------------------------------------------------------------------------------
* Includes portfolio holdings in short-term investments.
MUNIVEST FUND, INC. AUGUST 31, 2004 21
[LOGO] Merrill Lynch Investment Managers
Automatic Dividend Reinvestment Plan
The following description of the Fund's Automatic Dividend Reinvestment Plan
(the "Plan") is sent to you annually as required by federal securities laws.
Pursuant to the Fund's Plan, unless a holder of Common Stock otherwise elects,
all dividend and capital gains distributions will be automatically reinvested by
The Bank of New York (the "Plan Agent"), as agent for shareholders in
administering the Plan, in additional shares of Common Stock of the Fund.
Holders of Common Stock who elect not to participate in the Plan will receive
all distributions in cash paid by check mailed directly to the shareholder of
record (or, if the shares are held in street or other nominee name then to such
nominee) by The Bank of New York, as dividend paying agent. Such participants
may elect not to participate in the Plan and to receive all distributions of
dividends and capital gains in cash by sending written instructions to The Bank
of New York, as dividend paying agent, at the address set forth below.
Participation in the Plan is completely voluntary and may be terminated or
resumed at any time without penalty by written notice if received by the Plan
Agent not less than ten days prior to any dividend record date; otherwise such
termination will be effective with respect to any subsequently declared dividend
or distribution.
Whenever the Fund declares an income dividend or capital gains distribution
(collectively referred to as "dividends") payable either in shares or in cash,
non-participants in the Plan will receive cash and participants in the Plan will
receive the equivalent in shares of Common Stock. The shares will be acquired by
the Plan Agent for the participant's account, depending upon the circumstances
described below, either (i) through receipt of additional unissued but
authorized shares of Common Stock from the Fund ("newly issued shares") or (ii)
by purchase of outstanding shares of Common Stock on the open market
("open-market purchases") on the American Stock Exchange or elsewhere. If on the
payment date for the dividend, the net asset value per share of the Common Stock
is equal to or less than the market price per share of the Common Stock plus
estimated brokerage commissions (such conditions being referred to herein as
"market premium"), the Plan Agent will invest the dividend amount in newly
issued shares on behalf of the participant. The number of newly issued shares of
Common Stock to be credited to the participant's account will be determined by
dividing the dollar amount of the dividend by the net asset value per share on
the date the shares are issued, provided that the maximum discount from the then
current market price per share on the date of issuance may not exceed 5%. If on
the dividend payment date the net asset value per share is greater than the
market value (such condition being referred to herein as "market discount"), the
Plan Agent will invest the dividend amount in shares acquired on behalf of the
participant in open-market purchases.
In the event of a market discount on the dividend payment date, the Plan Agent
will have until the last business day before the next date on which the shares
trade on an "ex-dividend" basis or in no event more than 30 days after the
dividend payment date (the "last purchase date") to invest the dividend amount
in shares acquired in open-market purchases. It is contemplated that the Fund
will pay monthly income dividends. Therefore, the period during which
open-market purchases can be made will exist only from the payment date on the
dividend through the date before the next "ex-dividend" date, which typically
will be approximately 10 days. If, before the Plan Agent has completed its
open-market purchases, the market price of a share of Common Stock exceeds the
net asset value per share, the average per share purchase price paid by the Plan
Agent may exceed the net asset value of the Fund's shares, resulting in the
acquisitions of fewer shares than if the dividend had been paid in newly issued
shares on the dividend payment date. Because of the foregoing difficulty with
respect to open-market purchases, the Plan provides that if the Plan Agent is
unable to invest the full dividend amount in open-market purchases during the
purchase period or if the market discount shifts to a market premium during the
purchase period, the Plan Agent will cease making open-market purchases and will
invest the uninvested portion of the dividend amount in newly issued shares at
the close of business on the last purchase date determined by dividing the
uninvested portion of the dividend by the net asset value per share.
The Plan Agent maintains all shareholders' accounts in the Plan and furnishes
written confirmation of all transactions in the account, including information
needed by shareholders for tax records. Shares in the account of each Plan
participant will be held by the Plan Agent in non-certificated form in the name
of the participant, and each shareholder's proxy will include those shares
purchased or received pursuant to the Plan. The Plan Agent will forward all
proxy solicitation materials to participants and vote proxies for shares held
pursuant to the Plan in accordance with the instructions of the participants.
22 MUNIVEST FUND, INC. AUGUST 31, 2004
In the case of shareholders such as banks, brokers or nominees which hold shares
of others who are the beneficial owners, the Plan Agent will administer the Plan
on the basis of the number of shares certified from time to time by the record
shareholders as representing the total amount registered in the record
shareholder's name and held for the account of beneficial owners who are to
participate in the Plan.
There will be no brokerage charges with respect to shares issued directly by the
Fund as a result of dividends or capital gains distributions payable either in
shares or in cash. However, each participant will pay a pro rata share of
brokerage commissions incurred with respect to the Plan Agent's open-market
purchases in connection with the reinvestment of dividends.
The automatic reinvestment of dividends and distributions will not relieve
participants of any federal, state or local income tax that may be payable (or
required to be withheld) on such dividends.
Shareholders participating in the Plan may receive benefits not available to
shareholders not participating in the Plan. If the market price plus commissions
of the Fund's shares is above the net asset value, participants in the Plan will
receive shares of the Fund at less than they could otherwise purchase them and
will have shares with a cash value greater than the value of any cash
distribution they would have received on their shares. If the market price plus
commissions is below the net asset value, participants will receive
distributions in shares with a net asset value greater than the value of any
cash distribution they would have received on their shares. However, there may
be insufficient shares available in the market to make distributions in shares
at prices below the net asset value. Also, since the Fund does not redeem
shares, the price on resale may be more or less than the net asset value.
The value of shares acquired pursuant to the Plan will generally be excluded
from gross income to the extent that the cash amount reinvested would be
excluded from gross income. If, when the Fund's shares are trading at a premium
over net asset value, the Fund issues shares pursuant to the Plan that have a
greater fair market value than the amount of cash reinvested, it is possible
that all or a portion of such discount (which may not exceed 5% of the fair
market value of the Fund's shares) could be viewed as a taxable distribution. If
the discount is viewed as a taxable distribution, it is also possible that the
taxable character of this discount would be allocable to all the shareholders,
including shareholders who do not participate in the Plan. Thus, shareholders
who do not participate in the Plan might be required to report as ordinary
income a portion of their distributions equal to their allocable share of the
discount.
Experience under the Plan may indicate that changes are desirable. Accordingly,
the Fund reserves the right to amend or terminate the Plan. There is no direct
service charge to participants in the Plan; however, the Fund reserves the right
to amend the Plan to include a service charge payable by the participants.
All correspondence concerning the Plan should be directed to the Plan Agent at
The Bank of New York, Church Street Station, P.O. Box 11258, New York, NY
10286-1258, Telephone: 800-432-8224.
MUNIVEST FUND, INC. AUGUST 31, 2004 23
[LOGO] Merrill Lynch Investment Managers
Officers and Directors (unaudited)
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
====================================================================================================================================
Interested Director
------------------------------------------------------------------------------------------------------------------------------------
Terry K. P.O. Box 9011 President 1999 to President of the Merrill Lynch Investment Managers, 124 Funds None
Glenn* Princeton, NJ and present L.P. ("MLIM")/Fund Asset Management, L.P. 157 Portfolios
08543-9011 Director ("FAM")--Advised Funds since 1999; Chairman
Age: 63 (Americas Region) of MLIM from 2000 to 2002;
Executive Vice President of MLIM and FAM (which
terms as used herein include their corporate
predecessors) from 1983 to 2002; President of
FAM Distributors, Inc. ("FAMD") from 1986 to 2002
and Director thereof from 1991 to 2002; Executive
Vice President and Director of Princeton Services,
Inc. ("Princeton Services") from 1993 to 2002;
President of Princeton Administrators, L.P. from
1989 to 2002; Director of Financial Data Services,
Inc. since 1985.
------------------------------------------------------------------------------------------------------------------------
* Mr. Glenn is a director, trustee or member of an advisory board of certain other investment companies for which MLIM
or FAM acts as investment adviser. Mr. Glenn is an "interested person," as described in the Investment Company Act, of
the Fund based on his present and former positions with MLIM, FAM, FAMD, Princeton Services and Princeton
Administrators, L.P. The Director's term is unlimited. Directors serve until their resignation, removal or death, or
until December 31 of the year in which they turn 72. As Fund President, Mr. Glenn serves at the pleasure of the Board
of Directors.
====================================================================================================================================
Independent Directors*
------------------------------------------------------------------------------------------------------------------------------------
Ronald W. P.O. Box 9095 Director 1988 to Professor Emeritus of Finance, School of Business, 48 Funds None
Forbes Princeton, NJ present State University of New York at Albany since 2000 48 Portfolios
08543-9095 and Professor thereof from 1989 to 2000; Interna-
Age: 63 tional Consultant, Urban Institute, Washington, D.C.
from 1995 to 1999.
------------------------------------------------------------------------------------------------------------------------------------
Cynthia A. P.O. Box 9095 Director 1993 to Professor, Harvard Business School since 1989; 48 Funds Newell
Montgomery Princeton, NJ present Associate Professor, J.L. Kellogg Graduate School of 48 Portfolios Rubbermaid,
08543-9095 Management, Northwestern University from 1985 to Inc.
Age: 52 1989; Associate Professor, Graduate School of
Business Administration, University of Michigan from
1979 to 1985.
------------------------------------------------------------------------------------------------------------------------------------
Jean Margo P.O. Box 9095 Director 2004 to Self-employed consultant since 2001; Counsel of 48 Funds None
Reid Princeton, NJ present Alliance Capital Management (investment adviser) 48 Portfolios
08543-9095 in 2000; General Counsel, Director and Secretary of
Age: 59 Sanford C. Bernstein & Co., Inc. (investment adviser/
broker-dealer) from 1997 to 2000; Secretary,
Sanford C. Bernstein Fund, Inc. from 1994 to 2000;
Director and Secretary of SCB, Inc. since 1998;
Director and Secretary of SCB Partners, Inc. since 2000;
Director of Covenant House from 2001 to 2004.
------------------------------------------------------------------------------------------------------------------------------------
Kevin A. P.O. Box 9095 Director 1992 to Founder and currently Director Emeritus of Boston 48 Funds None
Ryan Princeton, NJ present University Center for the Advancement of Ethics and 48 Portfolios
08543-9095 Character and Director thereof from 1989 to 1999;
Age: 71 Professor from 1982 to 1999 and currently Professor
Emeritus of Education of Boston University; formerly
taught on the faculties of The University of Chicago,
Stanford University and Ohio State University.
------------------------------------------------------------------------------------------------------------------------------------
Roscoe S. P.O. Box 9095 Director 2000 to President, Middle East Institute from 1995 to 2001; 48 Funds None
Suddarth Princeton, NJ present Foreign Service Officer, United States Foreign 48 Portfolios
08543-9095 Service from 1961 to 1995; Career Minister from 1989
Age: 69 to 1995; Deputy Inspector General, U.S. Department of
State from 1991 to 1994; U.S. Ambassador to The
Hashemite Kingdom of Jordan from 1987 to 1990.
24 MUNIVEST FUND, INC. AUGUST 31, 2004
Officers and Directors (unaudited) (concluded)
Number of
Portfolios in Other Public
Position(s) Length of Fund Complex Directorships
Held with Time Overseen by Held by
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years Director Director
====================================================================================================================================
Independent Directors* (concluded)
------------------------------------------------------------------------------------------------------------------------------------
Richard R. P.O. Box 9095 Director 1988 to Professor of Finance since 1984, Dean from 48 Funds Bowne &
West Princeton, NJ present 1984 to 1993 and currently Dean Emeritus of 48 Portfolios Co., Inc.;
08543-9095 New York University Leonard N. Stern School of Vornado
Age: 66 Business Administration, New York University from Realty Trust;
1994 to present; Professor of Finance thereof from Vornado
1982 to 1994. Operating
Company;
Alexander's,
Inc.
------------------------------------------------------------------------------------------------------------------------------------
Edward D. P.O. Box 9095 Director 2000 to Self-employed financial consultant since 1994; 48 Funds None
Zinbarg Princeton, NJ present Executive Vice President of The Prudential Insurance 48 Portfolios
08543-9095 Company of America from 1988 to 1994; former
Age: 69 Director of Prudential Reinsurance Company and
former Trustee of the Prudential Foundation.
------------------------------------------------------------------------------------------------------------------------
* The Director's term is unlimited. Directors serve until their resignation, removal or death, or until December 31 of
the year in which they turn 72.
------------------------------------------------------------------------------------------------------------------------------------
Position(s) Length of
Held with Time
Name Address & Age Fund Served Principal Occupation(s) During Past 5 Years
====================================================================================================================================
Fund Officers*
------------------------------------------------------------------------------------------------------------------------------------
Donald C. P.O. Box 9011 Vice 1993 to First Vice President of MLIM and FAM since 1997 and Treasurer thereof since 1999;
Burke Princeton, NJ President present Senior Vice President, Director and Treasurer of Princeton Services since 1999;
08543-9011 and and Vice President of FAMD since 1999; Director of MLIM Taxation since 1990.
Age: 44 Treasurer 1999 to
present
------------------------------------------------------------------------------------------------------------------------------------
Kenneth A. P.O. Box 9011 Senior 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
Jacob Princeton, NJ Vice present Management) of MLIM from 1997 to 2000.
08543-9011 President
Age: 53
------------------------------------------------------------------------------------------------------------------------------------
John M. P.O. Box 9011 Senior 2002 to Managing Director of MLIM since 2000; Director (Municipal Tax-Exempt Fund
Loffredo Princeton, NJ Vice present Management) of MLIM from 1998 to 2000.
08543-9011 President
Age: 40
------------------------------------------------------------------------------------------------------------------------------------
Fred K. P.O. Box 9011 Vice 1990 to Director (Municipal Tax-Exempt Fund Management) of MLIM since 2000; Vice President
Stuebe Princeton, NJ President present of MLIM from 1994 to 2000.
08543-9011
Age: 53
------------------------------------------------------------------------------------------------------------------------------------
Jeffrey P.O. Box 9011 Chief 2004 to Chief Compliance Officer of the MLIM/FAM-advised funds and First Vice President and
Hiller Princeton, NJ Compliance present Chief Compliance Officer of MLIM since 2004; Global Director of Compliance at
08543-9011 Officer Morgan Stanley Investment Management from 2002 to 2004; Managing Director and
Age: 53 Global Director of Compliance at Citigroup Asset Management from 2000 to 2002;
Chief Compliance Officer at Soros Fund Management in 2000; Chief Compliance Officer
at Prudential Financial from 1995 to 2000.
------------------------------------------------------------------------------------------------------------------------------------
Alice A. P.O. Box 9011 Secretary 2004 to Director (Legal Advisory) of MLIM since 2002; Vice President of MLIM from 1999 to
Pellegrino Princeton, NJ present 2002; Attorney associated with MLIM since 1997.
08543-9011
Age: 44
------------------------------------------------------------------------------------------------------------------------
* Officers of the Fund serve at the pleasure of the Board of Directors.
------------------------------------------------------------------------------------------------------------------------------------
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
New York, NY 10286
Preferred Stock:
The Bank of New York
101 Barclay Street -- 7 West
New York, NY 10286
AMEX Symbol
MVF
MUNIVEST FUND, INC. AUGUST 31, 2004 25
[LOGO] Merrill Lynch Investment Managers
Important Tax Information (unaudited)
All of the net investment income distributions paid by MuniVest Fund, Inc.
during the taxable year ended August 31, 2004 qualify as tax-exempt interest
dividends for federal income tax purposes.
Please retain this information for your records.
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.
26 MUNIVEST FUND, INC. AUGUST 31, 2004
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 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. AUGUST 31, 2004 27
[LOGO] Merrill Lynch Investment Managers www.mlim.ml.com
MuniVest Fund, Inc. seeks to provide shareholders with as high a level of
current income exempt from federal income taxes as is consistent with its
investment policies and prudent investment management by investing primarily in
a portfolio of long-term, investment grade municipal obligations, the interest
on which is exempt from federal income taxes in the opinion of bond counsel to
the issuer.
This report, including the financial information herein, is transmitted to the
shareholders of MuniVest Fund, Inc. for their information. It is not a
prospectus, circular or representation intended for use in the purchase of
shares of the Fund or any securities mentioned in the report. Past performance
results shown in this report should not be considered a representation of future
performance. The Fund has leveraged its Common Stock and intends to remain
leveraged by issuing Preferred Stock to provide the Common Stock shareholders
with a potentially higher rate of return. Leverage creates risks for Common
Stock shareholders, including the likelihood of greater volatility of net asset
value and market price of shares of the Common Stock, and the risk that
fluctuations in the short-term dividend rates of the Preferred Stock may affect
the yield to Common Stock shareholders. Statements and other information herein
are as dated and are subject to change.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free 1-800-MER-FUND (1-800-637-3863); (2)
at www.mutualfunds.ml.com; and (3) on the Securities and Exchange Commission's
Web site at http://www.sec.gov. Information about how the Fund voted proxies
relating to securities held in the Fund's portfolio during the most recent
12-month period ended June 30 is available (1) at www.mutualfunds.ml.com and (2)
on the Securities and Exchange Commission's Web site at http://www.sec.gov.
MuniVest Fund, Inc.
Box 9011
Princeton, NJ 08543-9011
#10787 -- 8/04
Item 2 - Code of Ethics - The registrant has adopted a code of ethics, as of the
end of the period covered by this report, that applies to the
registrant's principal executive officer, principal financial officer
and principal accounting officer, or persons performing similar
functions. A copy of the code of ethics is available without charge
upon request by calling toll-free 1-800-MER-FUND (1-800-637-3863).
Item 3 - Audit Committee Financial Expert - The registrant's board of directors
has determined that (i) the registrant has the following audit
committee financial experts serving on its audit committee and (ii)
each audit committee financial expert is independent: (1) Ronald W.
Forbes, (2) Richard R. West, and (3) Edward D. Zinbarg.
Item 4 - Principal Accountant Fees and Services
(a) Audit Fees - Fiscal Year Ending August 31, 2004 - $28,000
Fiscal Year Ending August 31, 2003 - $26,000
(b) Audit-Related Fees - Fiscal Year Ending August 31, 2004 - $3,000
Fiscal Year Ending August 31, 2003 - $5,600
The nature of the services related to compliance for AMPS.
(c) Tax Fees - Fiscal Year Ending August 31, 2004 - $5,610
Fiscal Year Ending August 31, 2003 - $4,800
The nature of the services include tax compliance, tax advice and tax
planning.
(d) All Other Fees - Fiscal Year Ending August 31, 2004 - $0
Fiscal Year Ending August 31, 2003 - $0
(e)(1) The registrant's audit committee (the "Committee") has adopted
policies and procedures with regard to the pre-approval of services.
Audit, audit-related and tax compliance services provided to the
registrant on an annual basis require specific pre-approval by the
Committee. The Committee also must approve other non-audit services
provided to the registrant and those non-audit services provided to the
registrant's affiliated service providers that relate directly to the
operations and the financial reporting of the registrant. Certain of
these non-audit services that the Committee believes are a) consistent
with the SEC's auditor independence rules and b) routine and recurring
services that will not impair the independence of the independent
accountants may be approved by the Committee without consideration on a
specific case-by-case basis ("general pre-approval"). However, such
services will only be deemed pre-approved provided that any individual
project does not exceed $5,000 attributable to the registrant or
$50,000 for all of the registrants the Committee oversees. Any proposed
services exceeding the pre-approved cost levels will require specific
pre-approval by the Committee, as will any other services not subject
to general pre-approval (e.g., unanticipated but permissible services).
The Committee is informed of each service approved subject to general
pre-approval at the next regularly scheduled in-person board meeting.
(e)(2) 0%
(f) Not Applicable
(g) Fiscal Year Ending August 31, 2004 - $14,913,836
Fiscal Year Ending August 31, 2003 - $18,318,444
(h) The registrant's audit committee has considered and determined that
the provision of non-audit services that were rendered to the
registrant's investment adviser and any entity controlling, controlled
by, or under common control with the investment adviser that provides
ongoing services to the registrant that were not pre-approved pursuant
to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible
with maintaining the principal accountant's independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $945,000, 0%
Item 5 - Audit Committee of Listed Registrants - The following individuals are
members of the registrant's separately-designated standing audit
committee established in accordance with Section 3(a)(58)(A) of the
Exchange Act (15 U.S.C. 78c(a)(58)(A)):
Ronald W. Forbes
Cynthia A. Montgomery
Charles C. Reilly (retired as of December 31, 2003)
Kevin A. Ryan
Roscoe S. Suddarth
Richard R. West
Edward D. Zinbarg
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies -
Proxy Voting Policies and Procedures
Each Fund's Board of Directors/Trustees has delegated to Merrill Lynch
Investment Managers, L.P. and/or Fund Asset Management, L.P. (the
"Investment Adviser") authority to vote all proxies relating to the
Fund's portfolio securities. The Investment Adviser has adopted
policies and procedures ("Proxy Voting Procedures") with respect to the
voting of proxies related to the portfolio securities held in the
account of one or more of its clients, including a Fund. Pursuant to
these Proxy Voting Procedures, the Investment Adviser's primary
objective when voting proxies is to make proxy voting decisions solely
in the best interests of each Fund and its shareholders, and to act in
a manner that the Investment Adviser believes is most likely to enhance
the economic value of the securities held by the Fund. The Proxy Voting
Procedures are designed to ensure that that the Investment Adviser
considers the interests of its clients, including the Funds, and not
the interests of the Investment Adviser, when voting proxies and that
real (or perceived) material conflicts that may arise between the
Investment Adviser's interest and those of the Investment Adviser's
clients are properly addressed and resolved.
In order to implement the Proxy Voting Procedures, the Investment
Adviser has formed a Proxy Voting Committee (the "Committee"). The
Committee is comprised of the Investment Adviser's Chief Investment
Officer (the "CIO"), one or more other senior investment professionals
appointed by the CIO, portfolio managers and investment analysts
appointed by the CIO and any other personnel the CIO deems appropriate.
The Committee will also include two non-voting representatives from the
Investment Adviser's Legal department appointed by the Investment
Adviser's General Counsel. The Committee's membership shall be limited
to full-time employees of the Investment Adviser. No person with any
investment banking, trading, retail brokerage or research
responsibilities for the Investment Adviser's affiliates may serve as a
member of the Committee or participate in its decision making (except
to the extent such person is asked by the Committee to present
information to the Committee, on the same basis as other interested
knowledgeable parties not affiliated with the Investment Adviser might
be asked to do so). The Committee determines how to vote the proxies of
all clients, including a Fund, that have delegated proxy voting
authority to the Investment Adviser and seeks to ensure that all votes
are consistent with the best interests of those clients and are free
from unwarranted and inappropriate influences. The Committee
establishes general proxy voting policies for the Investment Adviser
and is responsible for determining how those policies are applied to
specific proxy votes, in light of each issuer's unique structure,
management, strategic options and, in certain circumstances, probable
economic and other anticipated consequences of alternate actions. In so
doing, the Committee may determine to vote a particular proxy in a
manner contrary to its generally stated policies. In addition, the
Committee will be responsible for ensuring that all reporting and
recordkeeping requirements related to proxy voting are fulfilled.
The Committee may determine that the subject matter of a recurring
proxy issue is not suitable for general voting policies and requires a
case-by-case determination. In such cases, the Committee may elect not
to adopt a specific voting policy applicable to that issue. The
Investment Adviser believes that certain proxy voting issues require
investment analysis - such as approval of mergers and other significant
corporate transactions - akin to investment decisions, and are,
therefore, not suitable for general guidelines. The Committee may elect
to adopt a common position for the Investment Adviser on certain proxy
votes that are akin to investment decisions, or determine to permit the
portfolio manager to make individual decisions on how best to maximize
economic value for a Fund (similar to normal buy/sell investment
decisions made by such portfolio managers). While it is expected that
the Investment Adviser will generally seek to vote proxies over which
the Investment Adviser exercises voting authority in a uniform manner
for all the Investment Adviser's clients, the Committee, in conjunction
with a Fund's portfolio manager, may determine that the Fund's specific
circumstances require that its proxies be voted differently.
To assist the Investment Adviser in voting proxies, the Committee has
retained Institutional Shareholder Services ("ISS"). ISS is an
independent adviser that specializes in providing a variety of
fiduciary-level proxy-related services to institutional investment
managers, plan sponsors, custodians, consultants, and other
institutional investors. The services provided to the Investment
Adviser by ISS include in-depth research, voting recommendations
(although the Investment Adviser is not obligated to follow such
recommendations), vote execution, and recordkeeping. ISS will also
assist the Fund in fulfilling its reporting and recordkeeping
obligations under the Investment Company Act.
The Investment Adviser's Proxy Voting Procedures also address special
circumstances that can arise in connection with proxy voting. For
instance, under the Proxy Voting Procedures, the Investment Adviser
generally will not seek to vote proxies related to portfolio securities
that are on loan, although it may do so under certain circumstances. In
addition, the Investment Adviser will vote proxies related to
securities of foreign issuers only on a best efforts basis and may
elect not to vote at all in certain countries where the Committee
determines that the costs associated with voting generally outweigh the
benefits. The Committee may at any time override these general policies
if it determines that such action is in the best interests of a Fund.
From time to time, the Investment Adviser may be required to vote proxies in
respect of an issuer where an affiliate of the Investment Adviser (each, an
"Affiliate"), or a money management or other client of the Investment Adviser
(each, a "Client") is involved. The Proxy Voting Procedures and the Investment
Adviser's adherence to those procedures are designed to address such conflicts
of interest. The Committee intends to strictly adhere to the Proxy Voting
Procedures in all proxy matters, including matters involving Affiliates and
Clients. If, however, an issue representing a non-routine matter that is
material to an Affiliate or a widely known Client is involved such that the
Committee does not reasonably believe it is able to follow its guidelines (or if
the particular proxy matter is not addressed by the guidelines) and vote
impartially, the Committee may, in its discretion for the purposes of ensuring
that an independent determination is reached, retain an independent fiduciary to
advise the Committee on how to vote or to cast votes on behalf of the Investment
Adviser's clients.
In the event that the Committee determines not to retain an independent
fiduciary, or it does not follow the advice of such an independent
fiduciary, the powers of the Committee shall pass to a subcommittee,
appointed by the CIO (with advice from the Secretary of the Committee),
consisting solely of Committee members selected by the CIO. The CIO
shall appoint to the subcommittee, where appropriate, only persons
whose job responsibilities do not include contact with the Client and
whose job evaluations would not be affected by the Investment Adviser's
relationship with the Client (or failure to retain such relationship).
The subcommittee shall determine whether and how to vote all proxies on
behalf of the Investment Adviser's clients or, if the proxy matter is,
in their judgment, akin to an investment decision, to defer to the
applicable portfolio managers, provided that, if the subcommittee
determines to alter the Investment Adviser's normal voting guidelines
or, on matters where the Investment Adviser's policy is case-by-case,
does not follow the voting recommendation of any proxy voting service
or other independent fiduciary that may be retained to provide research
or advice to the Investment Adviser on that matter, no proxies relating
to the Client may be voted unless the Secretary, or in the Secretary's
absence, the Assistant Secretary of the Committee concurs that the
subcommittee's determination is consistent with the Investment
Adviser's fiduciary duties
In addition to the general principles outlined above, the Investment
Adviser has adopted voting guidelines with respect to certain recurring
proxy issues that are not expected to involve unusual circumstances.
These policies are guidelines only, and the Investment Adviser may
elect to vote differently from the recommendation set forth in a voting
guideline if the Committee determines that it is in a Fund's best
interest to do so. In addition, the guidelines may be reviewed at any
time upon the request of a Committee member and may be amended or
deleted upon the vote of a majority of Committee members present at a
Committee meeting at which there is a quorum.
The Investment Adviser has adopted specific voting guidelines with
respect to the following proxy issues:
o Proposals related to the composition of the Board of Directors of issuers
other than investment companies. As a general matter, the Committee
believes that a company's Board of Directors (rather than shareholders) is
most likely to have access to important, nonpublic information regarding a
company's business and prospects, and is therefore best-positioned to set
corporate policy and oversee management. The Committee, therefore,
believes that the foundation of good corporate governance is the election
of qualified, independent corporate directors who are likely to diligently
represent the interests of shareholders and oversee management of the
corporation in a manner that will seek to maximize shareholder value over
time. In individual cases, the Committee may look at a nominee's history
of representing shareholder interests as a director of other companies or
other factors, to the extent the Committee deems relevant.
o Proposals related to the selection of an issuer's independent auditors. As
a general matter, the Committee believes that corporate auditors have a
responsibility to represent the interests of shareholders and provide an
independent view on the propriety of financial reporting decisions of
corporate management. While the Committee will generally defer to a
corporation's choice of auditor, in individual cases, the Committee may
look at an auditors' history of representing shareholder interests as
auditor of other companies, to the extent the Committee deems relevant.
o Proposals related to management compensation and employee benefits. As a
general matter, the Committee favors disclosure of an issuer's
compensation and benefit policies and opposes excessive compensation, but
believes that compensation matters are normally best determined by an
issuer's board of directors, rather than shareholders. Proposals to
"micro-manage" an issuer's compensation practices or to set arbitrary
restrictions on compensation or benefits will, therefore, generally not be
supported.
o Proposals related to requests, principally from management, for approval
of amendments that would alter an issuer's capital structure. As a general
matter, the Committee will support requests that enhance the rights of
common shareholders and oppose requests that appear to be unreasonably
dilutive.
o Proposals related to requests for approval of amendments to an issuer's
charter or by-laws. As a general matter, the Committee opposes poison pill
provisions.
o Routine proposals related to requests regarding the formalities of
corporate meetings.
o Proposals related to proxy issues associated solely with holdings of
investment company shares. As with other types of companies, the Committee
believes that a fund's Board of Directors (rather than its shareholders)
is best-positioned to set fund policy and oversee management. However, the
Committee opposes granting Boards of Directors authority over certain
matters, such as changes to a fund's investment objective, that the
Investment Company Act envisions will be approved directly by
shareholders.
o Proposals related to limiting corporate conduct in some manner that
relates to the shareholder's environmental or social concerns. The
Committee generally believes that annual shareholder meetings are
inappropriate forums for discussion of larger social issues, and opposes
shareholder resolutions "micromanaging" corporate conduct or requesting
release of information that would not help a shareholder evaluate an
investment in the corporation as an economic matter. While the Committee
is generally supportive of proposals to require corporate disclosure of
matters that seem relevant and material to the economic interests of
shareholders, the Committee is generally not supportive of proposals to
require disclosure of corporate matters for other purposes.
Item 8 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 9 - Submission of Matters to a Vote of Security Holders - Not Applicable
Item 10 - Controls and Procedures
10(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.
10(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 second 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 11 - Exhibits attached hereto
11(a)(1) - Code of Ethics - See Item 2
11(a)(2) - Certifications - Attached hereto
11(a)(3) - Not Applicable
11(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/ Terry K. Glenn
-------------------------------
Terry K. Glenn,
President of
MuniVest Fund, Inc.
Date: October 18, 2004
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/ Terry K. Glenn
-------------------------------
Terry K. Glenn,
President of
MuniVest Fund, Inc.
Date: October 18, 2004
By: /s/ Donald C. Burke
-------------------------------
Donald C. Burke,
Chief Financial Officer of
MuniVest Fund, Inc.
Date: October 18, 2004