-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RxxFTwb7tUpj+SWX/HkEmSd7OqkQpHEkQKJ2ojlbKlWosNN1BRKAq8xBfhzpNXhE l3Abq5yvtQd83oRa3j2Z5A== 0001005477-98-003577.txt : 19981216 0001005477-98-003577.hdr.sgml : 19981216 ACCESSION NUMBER: 0001005477-98-003577 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981031 FILED AS OF DATE: 19981215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MUNIVEST FLORIDA FUND CENTRAL INDEX KEY: 0000899177 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07580 FILM NUMBER: 98769429 BUSINESS ADDRESS: STREET 1: 800 SCUDDERS MILL RD CITY: PLAINSBORO STATE: NJ ZIP: 08536 BUSINESS PHONE: 6092822800 MAIL ADDRESS: STREET 1: PO BOX 9011 CITY: PRINCETON STATE: NJ ZIP: 08543-9011 N-30D 1 ANNUAL REPORT MUNIVEST FLORIDA FUND [GRAPHIC OMITTED] STRATEGIC Performance Annual Report October 31, 1998 MUNIVEST FLORIDA FUND The Benefits and Risks of Leveraging MuniVest Florida Fund utilizes leveraging to seek to enhance the yield and net asset value of its Common Shares. However, these objectives cannot be achieved in all interest rate environments. To leverage, the Fund issues Preferred Shares, which pay dividends at prevailing short-term interest rates, and invests the proceeds in long-term municipal bonds. The interest earned on these investments is paid to Common 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 Shares. However, in order to benefit Common 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 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 Share capitalization of $100 million and the issuance of Preferred Shares 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 Shares 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 Shares. In this case, the dividends paid to Preferred Share holders are significantly lower than the income earned on the fund's long-term investments, and therefore the Common 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 Shares will be reduced or eliminated completely. At the same time, the market value of the fund's Common Shares (that is, its price as listed on the New York Stock Exchange) may, as a result, decline. Furthermore, if long-term interest rates rise, the Common Shares' net asset value will reflect the full decline in the price of the portfolio's investments, since the value of the fund's Preferred Shares does not fluctuate. In addition to the decline in net asset value, the market value of the fund's Common Shares may also decline. As a part of its investment strategy, the Fund may invest in certain securities whose potential income return is inversely related to changes in a floating interest rate ("inverse floaters"). In general, interest rates on inverse floaters will decrease when short-term interest rates increase and increase when short-term interest rates decrease. Investments in inverse floaters may be characterized as derivative securities and may subject the Fund to the risks of reduced or eliminated interest payments and losses of invested principal. In addition, inverse floaters have the effect of providing investment leverage and, as a result, the market value of such securities will generally be more volatile than that of fixed-rate, tax-exempt securities. To the extent the Fund invests in inverse floaters, the market value of the Fund's portfolio and the net asset value of the Fund's shares may also be more volatile than if the Fund did not invest in such securities. MuniVest Florida Fund, October 31, 1998 DEAR SHAREHOLDER For the year ended October 31, 1998, the Common Shares of MuniVest Florida Fund earned $0.763 per share income dividends, which included earned and unpaid dividends of $0.066. This represents a net annualized yield of 5.38%, based on a month-end net asset value of $14.20 per share. Over the same period, the total investment return on the Fund's Common Shares was +8.16%, based on a change in per share net asset value from $13.87 to $14.20, and assuming reinvestment of $0.762 per share income dividends. For the six months ended October 31, 1998, the total investment return on the Fund's Common Shares was +5.96%, based on a change in per share net asset value from $13.77 to $14.20, and assuming reinvestment of $0.378 per share income dividends. For the six-month period ended October 31, 1998, the Fund's Auction Market Preferred Shares had an average yield of 3.15%. The Municipal Market Environment During the six months ended October 31, 1998, long-term bond yields declined significantly. The near absence of any inflationary pressures in the United States continued to support historic low interest rates. Additionally, foreign economic factors have continued to outweigh US domestic fundamentals, as they have for much of 1998. The economic crisis that began in Asia over a year ago has spread both to Russia and South America. However, economic factors in these countries have begun to negatively impact US growth. For example, employment in the US manufacturing sector declined in recent months as a result of reduced demand for export goods. Concern that the modest decline in US economic growth seen thus far would spread and intensify led the Federal Reserve Board to lower short-term interest rates in late September, in mid-October and in mid-November. These actions were taken to offset the drag of foreign economies on future US growth. US Treasury bond yields continued to benefit from a strong "flight to quality" as foreign investors were drawn to the relative safe haven of US Government securities. Additionally, the sharp equity market correction, which began at the end of August, triggered a further flight into US Treasury securities. Long-term US Treasury bond yields fell over 90 basis points (0.90%) to approximately 5% by the end of September. This is the lowest level since the US Treasury reintroduced 30-year maturity bond auctions in 1977. By early October, worldwide investor confidence began to rise, reducing the demand for the safety and liquidity of US Treasury securities. Investor confidence was restored by the belief that major world governments, as well as the International Monetary Fund, would take the necessary action to support weak domestic economies in Asia and Latin America. Additionally, rapid recovery in US and world equity markets caused some investors to reallocate funds from US debt instruments back to various world equity markets. US Treasury security yields rose for the remainder of the month to end October at 5.15%. During the six-month period ended October 31, 1998, long-term Treasury security yields declined approximately 80 basis points. During the past 12 months, the tax-exempt bond market has contended with significant new-issue supply pressures. Over the past year, more than $277 billion in new long-term tax-exempt bonds were underwritten, an increase of almost 30% compared to the same period a year ago. During the most recent six-month period, approximately $140 billion in new long-term municipal bonds were underwritten, representing an increase of more than 15% over the same six-month period last year. This increased supply, coupled with the high returns the US equity market generated for much of 1998, was one of the major reasons municipal bond yields declined less than their taxable counterparts during the period. The continued increase in new bond issuance has required ever-lower tax-exempt bond yields to generate the economic savings necessary for additional municipal bond financings. Consequently, the pace of new bond issuance has slowed in recent months. In fact, the trend may be reversing. During the three months ended October 31, 1998, just over $60 billion in new long-term municipal bonds were underwritten, a decline of 4% compared to the same quarter a year ago. During the month of October, there were less than $20 billion in new municipal bond securities issued, a decline of over 10% compared to October 1997. We will monitor this trend closely in the coming months to determine if the supply pressures exerted thus far in 1998 are abating and fostering a more balanced supply/demand environment. Throughout the six-month period ended October 31, 1998, municipal bond yields followed a pattern that was similar to US Treasury securities, although the yield declines were more muted. As measured by the unmanaged Bond Buyer Revenue Bond Index, long-term, uninsured tax-exempt revenue bond yields declined over 40 basis points to 5.09% by the end of September, their lowest level since the early 1970s. Municipal bond yields rose during October to end the period at 5.24%. Over the past six months, long-term tax-exempt bond yields declined almost 30 basis points. Although municipal bond yields declined during the six-month period, recent supply pressures and the absence of the safe haven status enjoyed by US securities caused municipal bond yields to rise relative to US Treasury bond yields. At October 31, 1998, long-term tax-exempt bond yield spreads were attractive relative to US Treasury securities of comparable maturities (over 100%), well in excess of their historic range of 85%-88%. Tax-exempt bond yield ratios have rarely exceeded 90% in the 1980s and 1990s. Historically, yield spreads have been wider than these levels when there have been potential changes in Federal tax codes that would have adversely affected the tax-favored status of municipal bonds. Currently, municipal bond investors find themselves in a unique investment environment. Previous opportunities to purchase tax-exempt bonds with yields exceeding that of comparable US Treasury issues have been limited to relatively brief episodes and then further limited to a few municipal credits undergoing specific financial pressures. At present, almost the entire municipal bond universe, across nearly all maturity and credit sectors, can be purchased at yields greater than their taxable counterparts. However, the current opportunity may quickly disappear should tax-exempt bond supply pressures diminish or the safe-haven status of US Treasury securities become less desirable. Under these conditions, municipal bond ratios should quickly revert to more normal historic per centages, certainly well below their presently attractive levels. Portfolio Strategy During the six-month period ended October 31, 1998, we maintained our constructive investment strategy. The Asian equity market turmoil created an increase in demand for US Treasury securities, sending both taxable and tax-exempt bond yields lower. We believed a continuation of equity market declines would have a negative impact on economic growth, further constraining global inflation and allowing for further declines in long-term interest rates. This proved to be true as the increase in financial market volatility caused a flight to quality into US Treasury bonds, pushing interest rates to historic lows. Our constructive strategy enabled the Fund to fully participate in the bond market rally and realize an attractive total return. We believe that interest rates are likely to continue to trend lower in the months ahead. Global economic growth appears to be slowing substantially. Central banks throughout the world, including the US Federal Reserve Board, are trying to stimulate economic growth by easing monetary policy. However, these actions are likely to have a delayed impact. Consequently, our investment outlook will remain constructive until there are signs that the economy has started responding to the monetary stimulus. During the six-month period ended October 31, 1998, the yield on the Fund's Auction Market Preferred Shares traded between 2.35% and 4.00%. Leverage continues to benefit the Common Shareholders by significantly augmenting their yield. However, should the spread between short-term and long-term tax-exempt rates narrow, the benefits of leverage will decline and, as a result, reduce the yield to the Fund's Common Shares. (For a complete explanation of the benefits and risks of leveraging, see page 1 of this report to shareholders.) In Conclusion We thank you for your support of MuniVest Florida Fund, and we look forward to serving your investment needs in the months and years ahead. Sincerely, /s/ Arthur Zeikel Arthur Zeikel President /s/ Vincent R. Giordano Vincent R. Giordano Senior Vice President /s/ William R. Bock William R. Bock Vice President and Portfolio Manager December 2, 1998 - -------------------------------------------------------------------------------- We are pleased to announce that William R. Bock is responsible for the day-to-day management of MuniVest Florida Fund. Mr. Bock has been employed by Merrill Lynch Asset Management, L.P. (an affiliate of the Fund's investment adviser) since 1989 as Vice President. - -------------------------------------------------------------------------------- 2 & 3 MuniVest Florida Fund, October 31, 1998 PROXY RESULTS During the six-month period ended October 31, 1998, MuniVest Florida Fund Common Shareholders voted on the following proposals. The proposals were approved at a shareholders' meeting on September 14, 1998. The description of each proposal and number of shares voted are as follows:
- ----------------------------------------------------------------------------------------------------------------------- Shares Voted Shares Withheld For From Voting - ----------------------------------------------------------------------------------------------------------------------- 1. To elect the Fund's Board of Trustees: Edward H. Meyer 5,711,241 97,170 Jack B. Sunderland 5,711,241 97,170 J. Thomas Touchton 5,711,241 97,170 Fred G. Weiss 5,711,241 97,170 Arthur Zeikel 5,711,241 97,170
- ----------------------------------------------------------------------------------------------------------------------- Shares Voted Shares Voted Shares Voted For Against Abstain - ----------------------------------------------------------------------------------------------------------------------- 2. To select Deloitte & Touche LLP as the Fund's independent auditors. 5,711,075 12,954 91,502 - -----------------------------------------------------------------------------------------------------------------------
During the six-month period ended October 31, 1998, MuniVest Florida Fund Preferred Shareholders voted on the following proposals. The proposals were approved at a shareholders' meeting on September 14, 1998. The description of each proposal and number of shares voted are as follows:
- ----------------------------------------------------------------------------------------------------------------------- Shares Voted Shares Withheld For From Voting - ----------------------------------------------------------------------------------------------------------------------- 1. To elect the Fund's Board of Trustees: Donald Cecil 1,342 18 M. Colyer Crum 1,342 18 Edward H. Meyer 1,342 18 Jack B. Sunderland 1,342 18 J. Thomas Touchton 1,342 18 Fred G. Weiss 1,342 18 Arthur Zeikel 1,342 18
- ----------------------------------------------------------------------------------------------------------------------- Shares Voted Shares Voted Shares Voted For Against Abstain - ----------------------------------------------------------------------------------------------------------------------- 2. To select Deloitte & Touche LLP as the Fund's independent auditors. 1,361 0 0 - -----------------------------------------------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face Value STATE Ratings Ratings Amount Issue (Note 1a) ================================================================================================================================== Alaska--1.6% A1+ P1 $ 2,000 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds (Exxon Pipeline Co. Project), VRDN, Series C, 3.70% due 12/01/2033 (a) $ 2,000 ================================================================================================================================== Colorado--2.7% A1+ VMIG1+ 3,350 Moffat County, Colorado, PCR, Refunding (Pacificorp Projects), VRDN, 3.75% due 5/01/2013 (a)(b) 3,350 ================================================================================================================================== Florida--97.2% AAA Aaa 1,000 Bay Medical Center, Florida, Hospital Revenue Bonds (Bay Medical Center Project), 5% due 10/01/2027 (b) 984 AAA Aaa 5,000 Brevard County, Florida, IDR (NUI Corporation Project), AMT, 6.40% due 10/01/2024 (b) 5,568 AAA NR* 1,195 Broward County, Florida, HFA, Revenue Bonds, AMT, Series A, 7.35% due 3/01/2023 (e)(f) 1,261 AAA Aaa 8,200 Citrus County, Florida, PCR, Refunding (Florida Power Corp.--Crystal River), Series B, 6.35% due 2/01/2022 (c) 8,991 AAA Aaa 1,125 Dade County, Florida, Educational Facilities Authority, Exchangeable Revenue Bonds (University of Miami), 7.65% due 4/01/2010 (c) 1,208 AA- Aa3 2,250 Dade County, Florida, IDA, Solid Waste Disposal Revenue Bonds (Florida Power & Light Co. Project), AMT, 7.15% due 2/01/2023 2,436 A1+ VMIG1+ 200 Dade County, Florida, Water and Sewer System Revenue Bonds, VRDN, 3.05% due 10/05/2022 (a)(d) 200 Escambia County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT (f): AAA Aaa 3,000 Refunding (Multi-County Program), 7% due 4/01/2028 (e) 3,312 NR* Aaa 2,075 Series A, 7.40% due 10/01/2023 2,185 BBB Baa1 4,045 Escambia County, Florida, PCR (Champion International Corporation Project), AMT, 6.90% due 8/01/2022 4,444 NR* Aaa 1,355 Florida HFA, Home Ownership Revenue Bonds, AMT, Series G-1, 7.90% due 3/01/2022 (f) 1,428 AAA Aaa 1,155 Florida Ports Financing Commission Revenue Bonds (State Transportation Trust Fund), AMT, 5.375% due 6/01/2027 (c) 1,178 AAA Aaa 5,000 Florida State Board of Education, Public Education Revenue Bonds (Capital Outlay), Series B, 4.50% due 6/01/2028 (c) 4,623 AAA Aaa 2,075 Florida State Department of General Services, Division of Facilities Management Revenue Bonds (Florida Facilities Pool), Series B, 4.50% due 9/01/2023 (i) 1,931 AAA Aaa 4,700 Florida State Mid-Bay Bridge Authority, Crossover Revenue Refunding Bonds, Series A, 5.95% due 10/01/2022 (b) 5,150 AAA Aaa 2,775 Florida State Turnpike Authority, Turnpike Revenue Bonds (Department of Transportation), Series B, 5% due 7/01/2016 (c) 2,809 AAA Aaa 5,000 Fort Myers, Florida, Improvement Revenue Refunding Bonds, Series A, 5% due 12/01/2022 (b) 4,986 AA Aa3 1,900 Gainesville, Florida, Utilities System Revenue Bonds, Series A, 6.50% due 10/01/2002 (h) 2,127 A A3 5,400 Hillsborough County, Florida, Capital Improvement Revenue Bonds (County Center Project), Second Series, 6.75% due 7/01/2002 (h) 6,053 AAA Aaa 2,000 Hillsborough County, Florida, Utility Revenue Refunding Bonds, Series B, 6.50% due 8/01/2016 (c) 2,171 ==================================================================================================================================
Portfolio Abbreviations To simplify the listings of MuniVest Florida Fund's portfolio holdings in the Schedule of Investments, we have abbreviated the names of many of the securities according to the list below and at right. AMT Alternative Minimum Tax (subject to) DATES Daily Adjustable Tax-Exempt Securities HFA Housing Finance Agency IDA Industrial Development Authority IDR Industrial Development Revenue Bonds PCR Pollution Control Revenue Bonds S/F Single-Family VRDN Variable Rate Demand Notes 4 & 5 MuniVest Florida Fund, October 31, 1998 SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
S&P Moody's Face Value STATE Ratings Ratings Amount Issue (Note 1a) ================================================================================================================================== Florida AAA Aaa $ 5,065 Jacksonville, Florida, Capital Improvement Revenue Refunding Bonds (concluded) (Stadium Project), 4.75% due 10/01/2025 (b) $ 4,857 AA Aa2 4,000 Jacksonville, Florida, Electric Authority Revenue Bonds (Electric System), Series 3-A, 5.10% due 10/01/2032 3,987 Jacksonville, Florida, Health Facilities Authority, Hospital Revenue Refunding Bonds: NR* VMIG1+ 100 (Genesis Rehabilitation Hospital), VRDN, 3.75% due 5/01/2021 (a) 100 AA+ NR* 2,000 (Saint Luke's Hospital Association Project), 7.125% due 11/15/2020 2,190 NR* Baa1 345 Jacksonville, Florida, Health Facilities Authority, IDR (National Benevolent Cypress Village), Series A, 6.125% due 12/01/2016 368 NR* Aaa 3,030 Manatee County, Florida, HFA, S/F Mortgage Revenue Bonds, AMT, Sub-Series 2, 7.75% due 5/01/2026 (f) 3,544 A1+ VMIG1+ 2,500 Martin County, Florida, PCR, Refunding (Florida Power & Light Co. Project), VRDN, 3.70% due 9/01/2024 (a) 2,500 Miami-Dade County, Florida, Special Obligation Revenue Bonds (c): AAA Aaa 2,000 Refunding, Series A, 5.10%** due 10/01/2015 856 AAA Aaa 5,685 Refunding, Series A, 5.461%** due 10/01/2018 2,025 AAA Aaa 5,000 Series B, 5.66%** due 10/01/2032 807 BBB+ Baa 2,890 Nassau County, Florida, PCR, Refunding (ITT Rayonier, Inc. Project), 6.20% due 7/01/2015 3,049 AAA Aaa 1,000 Ocoee, Florida, Revenue Refunding and Improvement Bonds (Transportation), 4.50% due 10/01/2028 (c) 924 AAA Aaa 1,150 Okaloosa County, Florida, Gas District Revenue Bonds (Gas System), Series A, 5.125% due 10/01/2016 (c) 1,181 AAA Aaa 5,000 Orlando & Orange County, Florida, Expressway Authority, Revenue Refunding Bonds (Junior Lien), 5% due 7/01/2021 (d) 4,986 AAA Aaa 1,890 Palm Beach County, Florida, Criminal Justice Facilities Revenue Bonds, 7.20% due 6/01/2015 (d) 2,424 AAA Aaa 2,000 Palm Beach County, Florida, Solid Waste Authority, Revenue Refunding Bonds, Series A, 4.60%** due 10/01/2012 (b) 1,039 AAA Aaa 2,500 Peace River/Manasota, Florida, Regional Water Supply Authority Revenue Bonds (Peace River Option Project), Series A, 5% due 10/01/2028 (c) 2,492 A1+ VMIG1+ 300 Pinellas County, Florida, Health Facilities Authority, Revenue Refunding Bonds (Pooled Hospital Loan Program), DATES, 3.70% due 12/01/2015 (a) 300 AAA Aaa 1,200 Port Everglades Authority, Florida, Port Improvement Revenue Bonds, 7.125% due 11/01/2016 (g) 1,508 A1+ VMIG1+ 100 Saint Lucie County, Florida, PCR, Refunding (Florida Power & Light Co. Project), VRDN, 3.30% due 3/01/2027 (a) 100 AA- Aa3 1,000 Saint Lucie County, Florida, Solid Waste Disposal Revenue Bonds (Florida Power & Light Co. Project), AMT, 6.70% due 5/01/2027 1,091 AAA Aaa 5,000 Sarasota County, Florida, Public Hospital Board, Hospital Revenue Refunding Bonds (Sarasota Memorial Hospital), Series B, 5.50% due 7/01/2028(c) 5,392 AAA Aaa 3,000 Tallahassee, Florida, Energy System Revenue Refunding Bonds, Series A, 4.75% due 10/01/2026 (i) 2,875 AAA Aaa 6,000 Tampa Bay, Florida, Water Utility System, Revenue Refunding Bonds, Series A, 4.75% due 10/01/2027 (d) 5,745 Tampa, Florida, Sports Authority Revenue Bonds: AAA Aaa 1,500 Refunding (County Interlocal Payments), 5% due 10/01/2028 (b) 1,495 AAA Aaa 2,500 (Sales Tax Payments--Stadium Project), 5.25% due 1/01/2027 (c) 2,559 ================================================================================================================================== Texas--1.8% A1+ NR* 2,200 Harris County, Texas, Health Facilities Development Corporation, Hospital Revenue Bonds (Methodist Hospital), VRDN, 3.70% due 12/01/2025 (a) 2,200 ================================================================================================================================== Puerto Rico--3.1% A Baa1 4,000 Puerto Rico Commonwealth Highway and Transportation Authority, Transportation Revenue Bonds, Series A, 5% due 7/01/2038 3,905 ================================================================================================================================== Total Investments (Cost--$127,554)--106.4% 132,894 Liabilities in Excess of Other Assets--(6.4%) (7,945) -------- Net Assets--100.0% $124,949 ======== ==================================================================================================================================
(a) The interest rate is subject to change periodically based upon prevailing market rates. The interest rate shown is the rate in effect at October 31, 1998. (b) AMBAC Insured. (c) MBIA Insured. (d) FGIC Insured. (e) FNMA Collateralized. (f) GNMA Collateralized. (g) Escrowed to maturity. (h) Prerefunded. (i) FSA Insured. * Not Rated. ** Represents a zero coupon bond; the interest rate shown is the effective yield at the time of purchase by the Fund. + Highest short-term rating by Moody's Investors Service, Inc. Ratings of issues shown have not been audited by Deloitte & Touche LLP. See Notes to Financial Statements. Quality Profile The quality ratings of securities in the Fund as of October 31, 1998 were as follows: - -------------------------------------------------------------------------------- Percent of S&P Rating/Moody's Rating Net Assets - -------------------------------------------------------------------------------- AAA/Aaa.............................................................. 70.3% AA/Aa ............................................................... 13.2 A/A.................................................................. 8.0 BBB/Baa.............................................................. 6.3 Other+............................................................... 8.6 - -------------------------------------------------------------------------------- + Temporary investments in short-term municipal securities. 6 & 7 MuniVest Florida Fund, October 31, 1998 STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
As of October 31, 1998 ============================================================================================================================== Assets: Investments, at value (identified cost--$127,553,548) (Note 1a) ............. $132,894,252 Cash ........................................................................ 39,957 Receivables: Interest .................................................................. $ 1,610,500 Securities sold ........................................................... 45,000 1,655,500 ------------ Prepaid expenses and other assets ........................................... 6,657 ------------ Total assets ................................................................ 134,596,366 ------------ ============================================================================================================================== Liabilities: Payables: Securities purchased ...................................................... 9,485,909 Investment adviser (Note 2) ............................................... 55,103 Dividends to shareholders (Note 1f) ....................................... 46,767 9,587,779 ------------ Accrued expenses and other liabilities ...................................... 59,774 ------------ Total liabilities ........................................................... 9,647,553 ------------ ============================================================================================================================== Net Assets: Net assets .................................................................. $124,948,813 ============ ============================================================================================================================== Capital: Capital Shares (unlimited number of shares of beneficial interest authorized) (Note 4): Preferred Shares, par value $.05 per share (1,600 shares of AMPS* issued and outstanding at $25,000 per share liquidation preference) .............. $ 40,000,000 Common Shares, par value $.10 per share (5,982,149 shares issued and outstanding) .............................................................. $ 598,215 Paid-in capital in excess of par ............................................ 83,246,930 Undistributed investment income--net ........................................ 544,924 Accumulated realized capital losses on investments--net (Note 5) ............ (4,781,960) Unrealized appreciation on investments--net ................................. 5,340,704 ------------ Total--Equivalent to $14.20 net asset value per Common Share (market price--$14.125) ............................................................. 84,948,813 ------------ Total capital ............................................................... $124,948,813 ============ ==============================================================================================================================
* Auction Market Preferred Shares. See Notes to Financial Statements. STATEMENT OF OPERATIONS
For the Year Ended October 31, 1998 ============================================================================================================================== Investment Interest and amortization of premium and discount earned .................... $ 6,895,752 Income (Note 1d): ============================================================================================================================== Expenses: Investment advisory fees (Note 2) ........................................... $ 618,817 Commission fees (Note 4) .................................................... 101,472 Professional fees ........................................................... 72,660 Accounting services (Note 2) ................................................ 39,393 Trustees' fees and expenses ................................................. 26,147 Transfer agent fees ......................................................... 24,641 Printing and shareholder reports ............................................ 20,353 Listing fees ................................................................ 15,856 Custodian fees .............................................................. 10,288 Pricing fees ................................................................ 7,090 Amortization of organization expenses (Note 1e) ............................. 2,642 Other ....................................................................... 12,728 ------------ Total expenses .............................................................. 952,087 ------------ Investment income--net ...................................................... 5,943,665 ------------ ============================================================================================================================== Realized & Realized gain on investments--net ........................................... 3,590,397 Unrealized Gain Change in unrealized appreciation on investments--net ....................... (1,665,313) (Loss) on ------------ Investments--Net Net Increase in Net Assets Resulting from Operations ........................ $ 7,868,749 (Notes 1b, 1d & 3): ============ ==============================================================================================================================
See Notes to Financial Statements. STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ended October 31, ------------------------------ Increase (Decrease) in Net Assets: 1998 1997 ============================================================================================================================== Operations: Investment income--net ...................................................... $ 5,943,665 $ 6,012,077 Realized gain on investments--net ........................................... 3,590,397 1,216,839 Change in unrealized appreciation/depreciation on investments--net .......... (1,665,313) 1,616,148 ------------ ------------ Net increase in net assets resulting from operations ........................ 7,868,749 8,845,064 ------------ ------------ ============================================================================================================================== Dividends to Investment income--net: Shareholders Common Shares ............................................................. (4,560,158) (4,635,108) (Note 1f): Preferred Shares .......................................................... (1,326,560) (1,349,984) ------------ ------------ Net decrease in net assets resulting from dividends to shareholders ......... (5,886,718) (5,985,092) ------------ ------------ ============================================================================================================================== Beneficial Interest Value of shares issued to Common Shareholders in reinvestment of dividends .. 49,203 -- Transactions ------------ ------------ (Note 4): ============================================================================================================================== Net Assets: Total increase in net assets ................................................ 2,031,234 2,859,972 Beginning of year ........................................................... 122,917,579 120,057,607 ------------ ------------ End of year* ................................................................ $124,948,813 $122,917,579 ============ ============ ============================================================================================================================== *Undistributed investment income--net ........................................ $ 544,924 $ 487,977 ============ ============ ==============================================================================================================================
See Notes to Financial Statements. 8 & 9 MuniVest Florida Fund, October 31, 1998 FINANCIAL HIGHLIGHTS
The following per share data and ratios have been derived from information provided in the financial statements. For the Year Ended October 31, ------------------------------------------- Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994 ================================================================================================================================= Per Share Net asset value, beginning of year .............................. $ 13.87 $ 13.39 $ 13.16 $ 11.82 $ 14.99 Operating ------- ------- ------- ------- ------- Performance: Investment income--net .......................................... .99 1.01 .99 1.01 1.00 Realized and unrealized gain (loss) on investments--net ......... .32 .48 .23 1.34 (3.05) ------- ------- ------- ------- ------- Total from investment operations ................................ 1.31 1.49 1.22 2.35 (2.05) ------- ------- ------- ------- ------- Less dividends and distributions to Common Shareholders: Investment income--net ........................................ (.76) (.78) (.76) (.76) (.84) Realized gain on investments--net ............................. -- -- -- -- (.11) ------- ------- ------- ------- ------- Total dividends and distributions to Common Shareholders ........ (.76) (.78) (.76) (.76) (.95) ------- ------- ------- ------- ------- Effect of Preferred Share activity: Dividends and distributions to Preferred Shareholders: Investment income--net ...................................... (.22) (.23) (.23) (.25) (.15) Realized gain on investments--net ........................... -- -- -- -- (.02) ------- ------- ------- ------- ------- Total effect of Preferred Share activity ........................ (.22) (.23) (.23) (.25) (.17) ------- ------- ------- ------- ------- Net asset value, end of year .................................... $ 14.20 $ 13.87 $ 13.39 $ 13.16 $ 11.82 ======= ======= ======= ======= ======= Market price per share, end of year ............................. $14.125 $ 13.00 $ 12.75 $ 11.50 $ 10.00 ======= ======= ======= ======= ======= ================================================================================================================================= Total Investment Based on market price per share ................................. 14.78% 8.21% 17.87% 22.93% (28.20%) Return:* ======= ======= ======= ======= ======= Based on net asset value per share .............................. 8.16% 9.93% 8.17% 19.02% (15.07%) ======= ======= ======= ======= ======= ================================================================================================================================= Ratios to Average Expenses, net of reimbursement .................................. .77% .78% .82% .85% .75% Net Assets:** ======= ======= ======= ======= ======= Expenses ........................................................ .77% .78% .82% .85% .78% ======= ======= ======= ======= ======= Investment income--net .......................................... 4.80% 4.96% 4.96% 5.38% 4.94% ======= ======= ======= ======= ======= ================================================================================================================================= Supplemental Net assets, net of Preferred Shares, end of year (in thousands).. $84,949 $82,918 $80,058 $78,695 $70,674 Data: ======= ======= ======= ======= ======= Preferred Shares outstanding, end of year (in thousands) ........ $40,000 $40,000 $40,000 $40,000 $40,000 ======= ======= ======= ======= ======= Portfolio turnover .............................................. 92.75% 89.21% 116.82% 92.54% 100.98% ======= ======= ======= ======= ======= ================================================================================================================================= Leverage: Asset coverage per $1,000 ....................................... $ 3,124 $ 3,073 $ 3,001 $ 2,967 $ 2,767 ======= ======= ======= ======= ======= ================================================================================================================================= Dividends Investment income--net .......................................... $ 829 $ 844 $ 861 $ 940 $ 569 Per Share on ======= ======= ======= ======= ======= Preferred Shares Outstanding:+ =================================================================================================================================
* Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Total investment returns exclude the effects of sales loads. ** Do not reflect the effect of dividends to Preferred Shareholders. + Dividends per share have been adjusted to reflect a two-for-one stock split that occurred on December 1, 1994. See Notes to Financial Statements. NOTES TO FINANCIAL STATEMENTS 1. Significant Accounting Policies: MuniVest Florida Fund (the "Fund") is registered under the Investment Company Act of 1940 as a non-diversified, closed-end management investment company. The Fund determines and makes available for publication the net asset value of its Common Shares on a weekly basis. The Fund's Common Shares are listed on the New York Stock Exchange under the symbol MVS. The following is a summary of significant accounting policies followed by the Fund. (a) Valuation of investments--Municipal bonds are traded primarily in the over-the-counter markets and are valued at the most recent bid price or yield equivalent as obtained by the Fund's pricing service from dealers that make markets in such securities. Financial futures contracts and options thereon, which are traded on exchanges, are valued at their closing prices as of the close of such exchanges. Options 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). Securities with remaining maturities of sixty days or less are valued at amortized cost, which approximates market value. Securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Board of Trustees of the Fund, including valuations furnished by a pricing service retained by the Fund, which may utilize a matrix system for valuations. The procedures of the pricing service and its valuations are reviewed by the officers of the Fund under the general supervision of the Board of Trustees. (b) Derivative financial instruments--The Fund may engage in various portfolio strategies to seek to increase its return by hedging its portfolio against adverse movements in the debt markets. Losses may arise due to changes in the value of the contract or if the counterparty does not perform under the contract. o Financial futures contracts--The Fund may purchase or sell financial futures contracts and options on such futures contracts for the purpose of hedging the market risk on existing securities or the intended purchase of securities. Futures contracts are contracts for delayed delivery of securities at a specific future date and at a specific price or yield. Upon entering into a contract, the Fund deposits and maintains as collateral such initial margin as required by the exchange on which the transaction is effected. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. o Options--The Fund is authorized to write covered call options and purchase put options. When the Fund writes an option, an amount equal to the premium received by the Fund is reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market to reflect the current market value of the option written. When a security is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the security acquired, or deducted from (or added to) the proceeds of the security sold. When an option expires (or the Fund enters into a closing transaction), the Fund realizes a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction exceeds the premium paid or received). Written and purchased options are non-income producing investments. (c) Income taxes--It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to reg- 10 & 11 MuniVest Florida Fund, October 31, 1998 NOTES TO FINANCIAL STATEMENTS (concluded) ulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no Federal income tax provision is required. (d) Security transactions and investment income--Security transactions are recorded on the dates the transactions are entered into (the trade dates). Interest income is recognized on the accrual basis. Discounts and market premiums are amortized into interest income. Realized gains and losses on security transactions are determined on the identified cost basis. (e) Deferred organization expenses--Deferred organization expenses are amortized on a straight-line basis over a period not exceeding five years. (f) Dividends and distributions--Dividends from net investment income are declared and paid monthly. Distributions of capital gains are recorded on the ex-dividend dates. 2. Investment Advisory Agreement and Transactions with Affiliates: The Fund has entered into an Investment Advisory Agreement with Fund Asset Management, L.P. ("FAM"). The general partner of FAM is Princeton Services, Inc. ("PSI"), an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the limited partner. FAM is responsible for the management of the Fund's portfolio and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Fund. For such services, the Fund pays a monthly fee at an annual rate of 0.50% of the Fund's average weekly net assets, including proceeds from the issuance of Preferred Shares. Accounting services are provided to the Fund by FAM at cost. Certain officers and/or trustees 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 October 31, 1998 were $111,836,787 and $112,260,791, respectively. Net realized gains for the year ended October 31, 1998 and net unrealized gains as of October 31, 1998 were as follows: - -------------------------------------------------------------------------------- Realized Unrealized Gains Gains - -------------------------------------------------------------------------------- Long-term investments ......................... $3,590,397 $5,340,704 ---------- ---------- Total ......................................... $3,590,397 $5,340,704 ========== ========== - -------------------------------------------------------------------------------- As of October 31, 1998, net unrealized appreciation for Federal income tax purposes aggregated $5,339,077, of which $5,602,595 related to appreciated securities and $263,518 related to depreciated securities. The aggregate cost of investments at October 31, 1998 for Federal income tax purposes was $127,555,175. 4. Beneficial Interest Transactions: The Fund is authorized to issue an unlimited number of shares of beneficial interest, including Preferred Shares, par value $.10 per share, all of which were initially classified as Common Shares. The Board of Trustees is authorized, however, to reclassify any unissued shares of beneficial interest without approval of holders of Common Shares. Common Shares Shares issued and outstanding during the year ended October 31, 1998 increased by 3,487 as a result of dividend reinvestment and during the year ended October 31, 1997 remained constant. Preferred Shares Auction Market Preferred Shares ("AMPS") are Preferred Shares of the Fund, with a par value of $.05 per share and a liquidation preference of $25,000 per share, that entitle their holders to receive cash dividends at an annual rate that may vary for the successive dividend periods. The yield in effect at October 31, 1998 was 3.35%. Shares issued and outstanding during the years ended October 31, 1998 and October 31, 1997 remained constant. The Fund pays commissions to certain broker-dealers at the end of each auction at an annual rate ranging from 0.25% to 0.375%, calculated on the proceeds of each auction. For the year ended October 31, 1998, Merrill Lynch, Pierce, Fenner & Smith Inc., an affiliate of FAM, earned $73,287 as commissions. 5. Capital Loss Carryforward: At October 31, 1998, the Fund had a capital loss carryforward of approximately $2,726,000, of which $472,000 expires in 2002 and $2,254,000 expires in 2003. This amount will be available to offset like amounts of any future taxable gains. 6. Subsequent Event: On November 5, 1998, the Fund's Board of Trustees declared an ordinary income dividend to Common Shareholders in the amount of $.065566 per share, payable on November 27, 1998 to shareholders of record as of November 20, 1998. INDEPENDENT AUDITORS' REPORT The Board of Trustees and Shareholders, MuniVest Florida Fund: We have audited the accompanying statement of assets, liabilities and capital, including the schedule of investments, of MuniVest Florida Fund as of October 31, 1998, the related statements of operations for the year then ended and changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and the financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and the financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned at October 31, 1998 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of MuniVest Florida Fund as of October 31, 1998, the results of its operations, the changes in its net assets, and the financial highlights for the respective stated periods in conformity with generally accepted accounting principles. Deloitte & Touche LLP Princeton, New Jersey December 4, 1998 12 & 13 MuniVest Florida Fund, October 31, 1998 IMPORTANT TAX INFORMATION (unaudited) All of the net investment income distributions paid by MuniVest Florida Fund during its taxable year ended October 31, 1998 qualify as tax-exempt interest dividends for Federal income tax purposes. Additionally, there were no capital gains distributed by the Fund during the year. Please retain this information for your records. MANAGED DIVIDEND POLICY The Fund's dividend policy is to distribute substantially all of its net investment income to its shareholders on a monthly basis. However, in order to provide shareholders with a more consistent yield to the current trading price of Common Shares of the Fund, the Fund may at times pay out less than the entire amount of net investment income earned in any particular month and may at times in any particular month pay out such accumulated but undistributed income in addition to net investment income earned in that month. As a result, the dividends paid by the Fund for any particular month may be more or less than the amount of net investment income earned by the Fund during such month. The Fund's current accumulated but undistributed net investment income, if any, is disclosed in the Statement of Assets, Liabilities and Capital, which comprises part of the financial information included in this report. OFFICERS AND TRUSTEES Arthur Zeikel, President and Trustee Donald Cecil, Trustee M. Colyer Crum, Trustee Edward H. Meyer, Trustee Jack B. Sunderland, Trustee J. Thomas Touchton, Trustee Fred G. Weiss, Trustee Terry K. Glenn, Executive Vice President Vincent R. Giordano, Senior Vice President William R. Bock, Vice President Donald C. Burke, Vice President Kenneth A. Jacob, Vice President Gerald M. Richard, Treasurer Patrick D. Sweeney, Secretary Custodian The Bank of New York 90 Washington Street New York, NY 10286 Transfer Agents Common Shares: The Bank of New York 101 Barclay Street New York, NY 10286 Preferred Shares: IBJ Schroder Bank & Trust Company One State Street New York, NY 10004 NYSE Symbol MVS 14 & 15 This report, including the financial information herein, is transmitted to the shareholders of MuniVest Florida Fund 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 Shares by issuing Preferred Shares to provide the Common Shareholders with a potentially higher rate of return. Leverage creates risks for Common Shareholders, including the likelihood of greater volatility of net asset value and market price of the Common Shares, and the risk that fluctuations in the short-term dividend rates of the Preferred Shares may affect the yield to Common Shareholders. Statements and other information herein are as dated and are subject to change. MuniVest Florida Fund Box 9011 Princeton, NJ 08543-9011 #16636-10/98 [RECYCLE LOGO] Printed on post-consumer recycled paper -----END PRIVACY-ENHANCED MESSAGE-----