##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
   Form 10-K
   (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    October 31, 2010oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    814-00201
 MVC
    Capital, Inc.
 (Exact name of registrant as
    specified in its charter)
  DELAWARE(State or other jurisdiction
    of
    incorporation or organization)

94-3346760(I.R.S. Employer
    Identification No.)287 Bowman Avenue,
    Purchase, New York(Address of principal
    executive offices)

10577   Registrants telephone number, including area code
 (914) 701-0310
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock

New York Stock Exchange   Securities registered pursuant to section 12(g) of the
    Act:
 None
   (Title of each class)
    (Title of each class)
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  12b-2
  o  Large
    accelerated filer
    þ  Accelerated
    filer
    oNon-accelerated
    filer
    o  Smaller
    reporting company   Rule 12b-2 o þ
      DOCUMENT
    INCORPORATED BY REFERENCE:




---



##### 





MVC
    Capital, Inc.
  (A
    Delaware Corporation)
  Index
   
 PagePart IItem 1.

Business


3Item 1A.

Risk Factors


16Item 1B.

Unresolved Staff Comments


26Item 2.

Properties


26Item 3.

Legal Proceedings


26Item 4.

(Removed and Reserved)


26Part IIItem 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


26Item 6.

Selected Consolidated Financial Data


32Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


33Item 8.

Financial Statements and Supplementary Data


69Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


109Item 9A.

Controls and Procedures


109Item 9B.

Other Information


111Part IIIItem 10.

Directors and Executive Officers of the
    Registrant


111Item 11.

Executive Compensation


111Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


111Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


111Item 14.

Principal Accounting Fees and Services


111Part IVItem 15.

Exhibits, Financial Statements, Schedules


112EX-10.14EX-10.15EX-31EX-32




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Part I  Factors
    That May Affect Future Results
  This Annual Report on
    Form 10-K
    contains certain forward-looking statements within the meaning
    of the federal securities laws that involve substantial
    uncertainties and risks. The Companys future results may
    differ materially from its historical results and actual results
    could differ materially from those projected in the
    forward-looking statements as a result of certain risk factors.
    These factors are described in the Risk Factors
    section below. Readers should pay particular attention to the
    considerations described in the section of this report entitled
    Managements Discussion and Analysis of Financial
    Condition and Results of Operations. Readers should also
    carefully review the risk factors described in the other
    documents the Company files, or has filed, from time to time
    with the United States Securities and Exchange Commission (the
    SEC).
  In this Annual Report on
    Form 10-K,
    unless otherwise indicated, MVC Capital,
    we, us, our or the
    Company refer to MVC Capital, Inc. and its
    wholly-owned subsidiary, MVC Financial Services, Inc. and
    TTG Advisers or the Adviser refers to
    The Tokarz Group Advisers LLC. Unless the context dictates
    otherwise, we also refers to TTG Advisers acting on
    behalf of MVC Capital.
  Item 1.
    Business  General
         3




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and/or
              Corporate
    History And Offices
   4




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and/or
    (914) 701-0310. http://www.mvccapital.com. Form 10-K, Form 10-Q, Form 8-K,
  Our
    Investment Strategy
  and/or
   5




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and/or
  and/or and/or
          Fair Value as a Percentage of Our Net AssetsAs of

As of

As ofOctober 31,

October 31,

October 31,Type of Investment

2010

2009

2008Senior/Subordinated Loans and credit facilities


26.17
%


36.16
%


39.75
%Common Stock


18.56
%


20.33
%


22.59
%Warrants


0.00
%


0.90
%


0.89
%Preferred Stock


35.06
%


38.86
%


29.60
%Other Equity Investments


22.30
%


22.21
%


23.51
%  6




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Market.
  Investment Criteria.
  
    Opportunity to revitalize and redirect a companys
    resources and strategy;
    Stable free cash flow of the business;
    Businesses with secure market niches and predictable profit
    margins;
    The presence or availability of highly qualified management
    teams;
    The line of products or services offered and their market
    potential;
    The presence of a sustainable competitive advantage; and
    Favorable industry and competitive dynamics.  and/or
  Investment Sourcing.
  
    Private mezzanine and equity investors;
    Investment banks;
    Industry executives;
    Business brokers;
    Merger and acquisition advisors;
    Financial services companies; and
    Banks, law firms and accountants.  Allocation of Investment
    Opportunities.
 7




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Investment Structure.
  and/or
            (payment-in-kind
 8




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Providing Management Assistance.
  Portfolio Company Monitoring.
      Investment Approval
    Procedures.
    
    Initial investment screening by deal person or investment team;
    Investment professionals present an investment proposal
    containing key terms and understandings (verbal and written) to
    the entire investment team;
    Our Chief Compliance Officer reviews the proposed investment for
    compliance with the 1940 Act, the Code and all other relevant
    rules and regulations;
    Investment professionals are provided with authorization to
    commence due diligence;
    Any investment professional can call a meeting, as deemed
    necessary, to: (i) review the due diligence reports;
    (ii) review the investment structure and terms;
    (iii) or to obtain any other information deemed relevant;
    Once all due diligence is completed, the proposed investment is
    rated using a rating system, which tests several factors
    including, but not limited to, cash flow, EBITDA growth,
    management and business stability. We use this rating system as
    the base line for tracking the investment in the future;
    Our Chief Compliance Officer confirms that the proposed
    investment will not cause us to violate the 1940 Act, the Code
    or any other applicable rule or regulation;
    Mr. Tokarz approves the transaction; and
    The investment is funded. 9




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Employees
    Operating
    Expenses
    out-of-pocket provided
    that
 10




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out-of-pocket
  Valuation
    of Portfolio Securities
            Valuation
    Methodology
  and/or
   11




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Fair Value Measurements and Disclosures
      Determining Fair Value When the
    Volume and Level of Activity for the Asset or Liability Have
    Significantly Decreased and Identifying Transactions That Are
    Not Orderly
  2010-06, 2010-06 ASC 820-10, 2010-06
   12




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and/or
 13




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payment-in-kind payment-in-kind payment-in-kind payment-in-kind payment-in-kind
    Custodian
      Transfer
    Agent and Plan Agent
    Certain
    Government Regulations
    Business Development Company.
            
    does not have any class of securities with respect to which a
    broker or dealer may extend margin credit; 14




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
    is controlled by a business development company or a group of
    companies including a business development company and the
    business development company has an affiliated person who is a
    director of the eligible portfolio company; or
    is a small and solvent company having total assets of not more
    than $4.0 million and capital and surplus of not less than
    $2.0 million.  Rules 2a-46 55a-1
                   15




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##### Table of Contents



(202) 942-8090. http://www.sec.gov. http://www.mvccapital.com.
      Item 1A.
    Risk
    Factors    BUSINESS
    RISKS
    We
    depend on key personnel of TTG Advisers, especially
    Mr. Tokarz, in seeking to achieve our investment
    objective.
    Our
    returns may be substantially lower than the average returns
    historically realized by the private equity industry as a
    whole.
    
    The lower return we are likely to realize on short-term liquid
    investments during the period in which we are identifying
    potential investments, and
    The periodic disclosure required of business development
    companies, which could result in the Company being less
    attractive as an investor to certain potential portfolio
    companies.  Substantially
    all of our portfolio investments are recorded at fair
    value and, as a result, there is a degree of uncertainty
    regarding the carrying values of our portfolio
    investments.
   16




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Economic
    recessions or downturns could impair our portfolio companies and
    have a material adverse impact on our business, financial
    condition and results of operations.
        We may
    not realize gains from our equity investments.
   17




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The
    market for private equity investments can be highly competitive.
    In some cases, our status as a regulated business development
    company may hinder our ability to participate in certain
    investment opportunities.
    Our
    ability to use our capital loss carry forwards may be subject to
    limitations.
    Loss
    of pass-through tax treatment would substantially reduce net
    assets and income available for dividends.
    Our
    ability to grow depends on our ability to raise
    capital.
   18




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Complying
    with the RIC requirements may cause us to forego otherwise
    attractive opportunities.
    Regulations
    governing our operation as a business development company affect
    our ability to, and the way in which we, raise additional
    capital.
    Any
    failure on our part to maintain our status as a business
    development company would reduce our operating
    flexibility.
  and/or
  Changes
    in the law or regulations that govern business development
    companies and RICs, including changes in tax regulations, may
    significantly impact our business.
   19




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Results
    may fluctuate and may not be indicative of future
    performance.
    Our
    common stock price can be volatile.
    
    Price and volume fluctuations in the overall stock market from
    time to time;
    Significant volatility in the market price and trading volume of
    securities of business development companies or other financial
    services companies;
    Volatility resulting from trading in derivative securities
    related to our common stock including puts, calls, long-term
    equity participation securities, or LEAPs, or short trading
    positions;
    Changes in regulatory policies or tax guidelines with respect to
    business development companies or RICs;
    Our adherence to applicable regulatory and tax requirements,
    including the current restriction on our ability to make
    Non-Diversified Investments;
    Actual or anticipated changes in our earnings or fluctuations in
    our operating results or changes in the expectations of
    securities analysts;
    General economic conditions and trends;
    Loss of a major funding source, which would limit our liquidity
    and our ability to finance transactions; or
    Departures of key personnel of TTG Advisers.  We are
    subject to market discount risk.
    We
    have not established a minimum dividend payment level and we
    cannot assure you of our ability to make distributions to our
    shareholders in the future.
  year-to-year
 20




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We
    have borrowed and may continue to borrow money, which magnifies
    the potential for gain or loss on amounts invested and may
    increase the risk of investing in us.
        Changes
    in interest rates may affect our cost of capital and net
    operating income and our ability to obtain additional
    financing.
    We may
    be unable to meet our covenant obligations under our credit
    facility, which could adversely affect our
    business.
   21




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and/or
  A
    portion of our existing investment portfolio was not selected by
    the investment team of TTG Advisers.
    Under
    the Advisory Agreement, TTG Advisers is entitled to compensation
    based on our portfolios performance. This arrangement may
    result in riskier or more speculative investments in an effort
    to maximize incentive compensation.
    There
    are potential conflicts of interest that could impact our
    investment returns.
      Wars,
    terrorist attacks, and other acts of violence may affect any
    market for our common stock, impact the businesses in which we
    invest and harm our operations and our
    profitability.
   22




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Our
    financial condition and results of operations will depend on our
    ability to effectively manage our future growth.
    INVESTMENT
    RISKS
    Investing
    in private companies involves a high degree of
    risk.
    Our
    investments in portfolio companies are generally
    illiquid.
    Our
    investments in small and middle-market privately-held companies
    are extremely risky and the Company could lose its entire
    investment.
    
    Small and middle-market companies may have limited financial
    resources and may not be able to repay the loans we make to
    them. Our strategy includes providing financing to companies
    that typically do not have capital sources readily available to
    them. While we believe that this provides an attractive
    opportunity for us to generate profits, this may make it
    difficult for the borrowers to repay their loans to us upon
    maturity.
    Small and middle-market companies typically have narrower
    product lines and smaller market shares than large companies.
    Because our target companies are smaller businesses, they may be
    more vulnerable to competitors actions and market
    conditions, as well as general economic downturns. In addition,
    smaller companies may face intense competition, including
    competition from companies with greater financial resources,
    more extensive development, manufacturing, marketing and other
    capabilities, and a larger number of qualified managerial and
    technical personnel.
    There is generally little or no publicly available information
    about these privately-held companies. There is generally little
    or no publicly available operating and financial information
    about privately-held 23




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companies. As a result, we rely on our investment professionals
    to perform due diligence investigations of these privately-held
    companies, their operations and their prospects. We may not
    learn all of the material information we need to know regarding
    these companies through our investigations. It is difficult, if
    not impossible, to protect the Company from the risk of fraud,
    misrepresentation or poor judgment by our portfolio companies.  
    Small and middle-market companies generally have less
    predictable operating results. We expect that our portfolio
    companies may have significant variations in their operating
    results, may from time to time be parties to litigation, may be
    engaged in rapidly changing businesses with products subject to
    a substantial risk of obsolescence, may require substantial
    additional capital to support their operations, finance
    expansion or maintain their competitive position, may otherwise
    have a weak financial position or may be adversely affected by
    changes in the business cycle. Our portfolio companies may not
    meet net income, cash flow and other coverage tests typically
    imposed by their senior lenders.
    Small and middle-market businesses are more likely to be
    dependent on one or two persons. Typically, the success of a
    small or middle-market company also depends on the management
    talents and efforts of one or two persons or a small group of
    persons. The death, disability or resignation of one or more of
    these persons could have a material adverse impact on our
    portfolio company and, in turn, on us.
    Small and middle-market companies are likely to have greater
    exposure to economic downturns than larger companies. We expect
    that our portfolio companies will have fewer resources than
    larger businesses and an economic downturn may thus more likely
    have a material adverse effect on them.
    Small and middle-market companies may have limited operating
    histories. We may make debt or equity investments in new
    companies that meet our investment criteria. Portfolio companies
    with limited operating histories are exposed to the operating
    risks that new businesses face and may be particularly
    susceptible to, among other risks, market downturns, competitive
    pressures and the departure of key executive officers.  Our
    borrowers may default on their payments, which may have an
    effect on our financial performance.
    Our
    investments in mezzanine and other debt securities may involve
    significant risks.
  and/or
  When
    we are a debt or minority equity investor in a portfolio
    company, we may not be in a position to control the entity, and
    management of the company may make decisions that could decrease
    the value of our portfolio holdings.
   24




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We may
    choose to waive or defer enforcement of covenants in the debt
    securities held in our portfolio, which may cause us to lose all
    or part of our investment in these companies.
    Our
    portfolio companies may incur obligations that rank equally
    with, or senior to, our investments in such companies. As a
    result, the holders of such obligations may be entitled to
    payments of principal or interest prior to us, preventing us
    from obtaining the full value of our investment in the event of
    an insolvency, liquidation, dissolution, reorganization,
    acquisition, merger or bankruptcy of the relevant portfolio
    company.
    Investments
    in foreign debt or equity may involve significant risks in
    addition to the risks inherent in U.S.
    investments.
    Investing
    in our securities may involve a high degree of
    risk.
   25




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##### Table of Contents



Item 1B.
    UNRESOLVED
    STAFF COMMENTS    Item 2.
    PROPERTIES    Item 3.
    LEGAL
    PROCEEDINGS    Item 4.
    (REMOVED
    AND RESERVED) Part II  Item 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES      Quarter Ended

High


LowFISCAL YEAR 201010/31/10

$
13.44


$
12.3207/31/10

$
14.80


$
12.5504/30/10

$
14.71


$
10.9801/31/10

$
12.27


$
9.22FISCAL YEAR 200910/31/09

$
9.69


$
8.6707/31/09

$
9.41


$
7.7904/30/09

$
10.86


$
6.3801/31/09

$
12.59


$
9.15  26




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##### Table of Contents



Performance
    Graph
    Shareholder
    Return Performance Graph
    Five-Year Cumulative Total
    Return1(Through October 31, 2010)
  
  Dividends
    and Distributions to Shareholders
  12-month
      1
 27




---



##### Table of Contents



For
    the Quarter Ended January 31, 2009
     28




---



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For
    the Quarter Ended April 30, 2009
      For
    the Quarter Ended July 31, 2009
      For
    the Quarter Ended October 31, 2009
      For
    the Quarter Ended January 31, 2010
      For
    the Quarter Ended April 30, 2010
      For
    the Quarter Ended July 31, 2010
   29




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For
    the Quarter Ended October 31, 2010
        form 1099-DIV,
    Purchases
    of Common Stock
    Average PriceTotal Number of

Paid Per ShareQuarter Ended

Shares Purchased

Including Commission10/31/10


1,337


$
13.4307/31/10


1,377


$
12.9304/30/10


1,315


$
14.7501/31/10


1,890


$
12.27   Share
    Repurchase Program
   30




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##### Table of Contents



Total Number of Shares


Approximate Dollar ValueAverage Price Paid per


Purchased as Part of


of Shares that May Yet BeTotal Number of


Share Including


Publicly Announced


Purchased Under thePeriod

Shares Purchased


Commission


Program


ProgramMay 1, 2010  May 31, 2010













$
5,000,000June 1, 2010  June 30, 2010


175,000


$
13.09



175,000


$
2,708,461July 1, 2010  July 31, 2010


83,000


$
13.03



83,000


$
1,627,035Aug. 1, 2010  Aug. 31, 2010













$
1,627,035Sept. 1, 2010  Sept. 30, 2010













$
1,627,035Oct. 1, 2010  Oct. 31, 2010


48,100


$
13.02



48,100


$
1,000,872Total


306,100


$
13.06



306,100


$
1,000,872  31




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##### Table of Contents



Item 6.
    SELECTED
    CONSOLIDATED FINANCIAL DATA    Selected
    Consolidated Financial Data
  Year Ended October 31,2010


2009


2008


2007


2006(In thousands, except per share data)Operating Data:Interest and related portfolio income:Interest and dividend income

$
19,315


$
21,755


$
26,047


$
22,826


$
13,909Fee income


3,696



4,099



3,613



3,750



3,828Other income


510



255



367



374



771Total operating income


23,521



26,109



30,027



26,950



18,508Expenses:Management fee


9,330



9,843



8,989



7,034



Administrative


3,395



3,519



3,620



2,559



3,420Interest and other borrowing costs


2,825



3,128



4,464



4,859



1,594Incentive compensation (Note 5)


2,479



3,717



10,822



10,813



6,055Employee compensation and benefits


















3,499Total operating expenses


18,029



20,207



27,895



25,265



14,568Expense Waiver by Adviser


(150
)














Total net operating expenses


17,879



20,207



27,895



25,265



14,568Net operating income before taxes


5,642



5,902



2,132



1,685



3,940Tax expense (benefit), net


8



1,377



(936
)


(375
)


159Net operating income


5,634



4,525



3,068



2,060



3,781Net realized and unrealized gain (loss):Net realized gain (loss) on investments and foreign currency


32,188



(25,082
)


1,418



66,944



5,221Net change in unrealized appreciation (depreciation) on
    investments


(21,689
)


34,804



59,465



(3,302
)


38,334Net realized and unrealized gain on investments and foreign
    currency


10,499



9,722



60,883



63,642



43,555Net increase in net assets resulting from operations

$
16,133


$
14,247


$
63,951


$
65,702


$
47,336Per Share:Net increase in net assets per share resulting from operations

$
0.66


$
0.59


$
2.63


$
2.92


$
2.48Dividends per share

$
0.48


$
0.48


$
0.48


$
0.54


$
0.48Balance Sheet Data:Portfolio at value

$
433,901


$
502,803


$
490,804


$
379,168


$
275,892Portfolio at cost


375,582



422,794



445,600



393,428



286,851Total assets


500,373



510,846



510,711



470,491



347,047Shareholders equity


424,994



424,456



421,871



369,097



236,993Shareholders equity per share (net asset value)

$
17.71


$
17.47


$
17.36


$
15.21


$
12.41Common shares outstanding at period end


23,991



24,297



24,297



24,265



19,094Other Data:Number of Investments funded in period


5



6



15



26



24Investments funded($) in period

$
8,332


$
6,293


$
126,300


$
167,134


$
166,300   32




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##### Table of Contents



2010


2009


2008Qtr 4


Qtr 3


Qtr 2


Qtr 1


Qtr 4


Qtr 3


Qtr 2


Qtr 1


Qtr 4


Qtr 3


Qtr 2


Qtr 1(In thousands, except per share data)Quarterly Data (Unaudited):Total operating income


5,130



5,257



5,336



7,798



6,354



7,410



5,757



6,588



6,246



6,804



8,081



8,896Management fee


2,232



2,176



2,467



2,455



2,560



2,379



2,421



2,483



2,510



2,276



2,185



2,018Administrative


777



910



938



770



879



894



865



881



1,299



887



753



681Interest, fees and other borrowing costs


770



767



647



641



642



660



736



1,090



1,190



1,022



1,081



1,171Incentive compensation


2,504



(3,270
)


2,225



1,020



6,756



(2,550
)


(335
)


(154
)


1,496



3,929



3,740



1,657Expense Waiver by Adviser


(50
)


(50
)


(50
)


































Tax expense (benefit)


2







1



5



1,377







359



(359
)


(830
)


58



(186
)


22Net operating income (loss) before net realized and unrealized
    gains


(1,105
)


4,724



(892
)


2,907



(5,860
)


6,027



1,711



2,647



581



(1,368
)


508



3,347Net increase in net assets resulting from operations


11,307



(11,281
)


8,969



7,138



27,499



(6,297
)


(7,809
)


854



7,357



18,623



17,158



20,813Net increase in net assets resulting from operations per share


0.47



(0.47
)


0.37



0.29



1.13



(0.26
)


(0.32
)


0.04



0.30



0.77



0.70



0.86Net asset value per share


17.71



17.35



17.89



17.64



17.47



16.46



16.84



17.28



17.36



17.18



16.53



15.95   Item 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS    Overview
  and/or
  and/or
   33




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##### Table of Contents



and/or
  and/or and/or
        Operating
    Income
  For the Fiscal Years Ended October 31, 2010, 2009 and
    2008.
  For
    the Fiscal Year Ended October 31, 2010
   34




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##### Table of Contents



For
    the Fiscal Year Ended October 31, 2009
    For
    the Fiscal Year Ended October 31, 2008
    Operating
    Expenses
  For the Fiscal Years Ended October 31, 2010, 2009 and
    2008.
  For
    the Fiscal Year Ended October 31, 2010
   35




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##### Table of Contents



For
    the Fiscal Year Ended October 31, 2009
     36




---



##### Table of Contents



For
    the Fiscal Year Ended October 31, 2008
         37




---



##### Table of Contents



Realized
    Gains and Losses on Portfolio Securities
  For the Fiscal Years Ended October 31, 2010, 2009 and
    2008.
  For
    the Fiscal Year Ended October 31, 2010
       38




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##### Table of Contents



For
    the Fiscal Year Ended October 31, 2009
      For
    the Fiscal Year Ended October 31, 2008
      Unrealized
    Appreciation and Depreciation on Portfolio Securities
  For the Fiscal Years Ended October 31, 2010, 2009 and
    2008.
  For
    the Fiscal Year Ended October 31, 2010
   39




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##### Table of Contents



For
    the Fiscal Year Ended October 31, 2009
    For
    the Fiscal Year Ended October 31, 2008
   40




---



##### Table of Contents



Portfolio
    Investments
  For the Fiscal Years Ended October 31, 2010 and
    2009.
  For
    the Fiscal Year Ended October 31, 2010
         41




---



##### Table of Contents



42




---



##### Table of Contents



43




---



##### Table of Contents



44




---



##### Table of Contents



For
    the Fiscal Year Ended October 31, 2009
           45




---



##### Table of Contents



46




---



##### Table of Contents



Portfolio
    Companies
    Actelis
    Networks, Inc.
  e-business
    Amersham
    Corporation
             47




---



##### Table of Contents



BP
    Clothing, LLC
  ®
          Custom
    Alloy Corporation
       48




---



##### Table of Contents



Dakota
    Growers Pasta Company, Inc.
            DPHI,
    Inc. (formerly DataPlay, Inc.)
    Series A-1
  Foliofn,
    Inc.
  fn
  fn
  fn.
  GDC
    Acquisitions, LLC d/b/a JDC Lighting, LLC
     49




---



##### Table of Contents



Harmony
    Pharmacy & Health Center, Inc.
                Henry
    Company
         50




---



##### Table of Contents



HuaMei
    Capital Company, Inc.
  Chinese-American,
      Innovative
    Brands, LLC
          Integrated
    Packaging Corporation
        LHD
    Europe Holding Inc.
             51




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##### Table of Contents



Lockorder
    Limited (formerly Safestone Technologies PLC)
  e-business
    Mainstream
    Data, Inc.
      Marine
    Exhibition Corporation
            MVC
    Automotive Group B.V.
       52




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##### Table of Contents



MVC
    Partners LLC
        Octagon
    Credit Investors, LLC
              Ohio
    Medical Corporation
       53




---



##### Table of Contents



Phoenix
    Coal Corporation
          PreVisor,
    Inc.
            SafeStone
    Technologies Limited (formerly Safestone Technologies
    PLC)
  e-business
    Security
    Holdings, B.V.
   54




---



##### Table of Contents



SGDA
    Europe B.V.
                SGDA
    Sanierungsgesellschaft fur Deponien und Altasten
    GmbH
           55




---



##### Table of Contents



SIA
    Tekers Invest
        Sonexis,
    Inc.
      SP
    Industries, Inc.
  configured-to-order
        Storage
    Canada, LLC
          Summit
    Research Labs, Inc.
   56




---



##### Table of Contents



Total
    Safety U.S., Inc.
            Turf
    Products, LLC
           57




---



##### Table of Contents



U.S.
    Gas & Electric, Inc.
                Velocitius
    B.V.
            Vendio
    Services, Inc.
     58




---



##### Table of Contents



Vestal
    Manufacturing Enterprises, Inc.
            Vitality
    Foodservice, Inc.
       59




---



##### Table of Contents



WBS
    Carbons Acquisitions Corp.
          Liquidity
    and Capital Resources
            Commitments
    to/for Portfolio Companies
    Commitments
    of MVC Capital, Inc.
  Portfolio Company

Amount Committed


Amount Funded at October 31, 2010Octagon Revolving Credit Facility

$
7.0 million



Harmony Pharmacy Revolving Credit Facility

$
4.0 million


$
4.0 millionTurf Junior Revolver

$
1.0 million


$
1.0 millionHarmony Pharmacy Note

$
1.3 million


$
600,000MVC Partners

$
20.0 million



Total

$
33.3 million


$
5.6 million  60




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##### Table of Contents



Off-Balance
    Sheet Arrangements
    Off-Balance
    Sheet Arrangements
  Guarantee

Amount Committed


Amount Funded at October 31, 2010MVC Automotive

$
9.1 million



MVC Automotive

$
5.6 million



Tekers

$
2.0 million



MVC Automotive

$
2.0 million



Total

$
18.7 million



                  61




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##### Table of Contents



Commitments
    of the Company
     62




---



##### Table of Contents



Payments Due by PeriodLess Than








AfterTotal


1 Year


1-3 Years


4-5 Years


5 YearsCredit Facility I

$
50,000,000



N/A


$
50,000,000



N/A



N/ATotal Debt

$
50,000,000



N/A


$
50,000,000



N/A



N/A   Subsequent
    Events
         63




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##### Table of Contents



SIGNIFICANT
    ACCOUNTING POLICIES
      Recent
    Accounting Pronouncements
  Determining Fair Value When the
    Volume and Level of Activity for the Asset or Liability Have
    Significantly Decreased and Identifying Transactions That Are
    Not Orderly
  Subsequent Events Subsequent Events
  2010-06, Improving Disclosure about Fair Value Measurements 2010-06 ASC 820-10 2010-06
  Tax
    Status and Capital Loss Carryforwards
    Valuation
    of Portfolio Securities
   64




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##### Table of Contents



and/or
       65




---



##### Table of Contents



and/or
 66




---



##### Table of Contents



payment-in-kind payment-in-kind payment-in-kind payment-in-kind payment-in-kind
    Investment
    Classification
    Investment
    Transactions and Related Operating Income
  first-in,
  Cash
    Equivalents
   67




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##### Table of Contents



Restricted
    Securities
    Distributions
    to Shareholders
    Income
    Taxes
       68




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##### Table of Contents



Item 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  CONSOLIDATED
    FINANCIAL STATEMENTS
  MVC
    Capital, Inc.
  Consolidated Balance Sheets
  October 31,


October 31,2010


2009ASSETSAssetsCash and cash equivalents

$
56,390,628


$
1,007,873Investments at fair valueNon-control/Non-affiliated investments (cost $113,688,332 and
    $122,320,550)


56,704,561



85,451,605Affiliate investments (cost $119,874,343 and $141,186,185)


167,106,213



210,519,609Control investments (cost $142,019,459 and $159,287,686)


210,090,715



206,832,059Total investments at fair value (cost $375,582,134 and
    $422,794,421)


433,901,489



502,803,273Dividends, interest and fee receivables, net of reserves


6,374,314



5,385,333Escrow receivables


2,063,420



Prepaid expenses


1,564,306



1,271,353Prepaid taxes


78,463



377,883Total assets

$
500,372,620


$
510,845,715LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesTerm loan

$
50,000,000


$
50,000,000Revolving credit facility






12,300,000Provision for incentive compensation (Note 5)


21,990,314



19,511,147Management fee payable


2,232,295



2,560,120Other accrued expenses and liabilities


599,843



1,300,490Professional fees payable


515,651



650,981Consulting fees payable


38,054



67,278Taxes payable


2,039



Total liabilities


75,378,196



86,390,016Shareholders equityCommon stock, $0.01 par value; 150,000,000 shares
    authorized; 23,990,987 and 24,297,087 shares outstanding,
    respectively


283,044



283,044Additional
    paid-in-capital


429,461,516



429,400,261Accumulated earnings


40,218,844



34,768,686Dividends paid to stockholders


(68,682,836
)


(57,087,927
)Accumulated net realized gain (loss)


2,197,091



(30,113,755
)Net unrealized appreciation


58,319,355



80,008,852Treasury stock, at cost, 4,313,461 and 4,007,361 shares
    held, respectively


(36,802,590
)


(32,803,462
)Total shareholders equity


424,994,424



424,455,699Total liabilities and shareholders equity

$
500,372,620


$
510,845,715Net asset value per share

$
17.71


$
17.47    69




---



##### Table of Contents



MVC
    Capital, Inc.



Consolidated
    Schedule of Investments

October 31,
    2010  Company

Industry

Investment

Principal


Cost


Fair ValueNon-control/Non-affiliated investments  13.34% (a,
    c, f, g)Actelis Networks, Inc.

Technology Investments

Preferred Stock (150,602 shares) (d, j)





$
5,000,003


$
Amersham Corp.

Manufacturer of Precision - Machined Components

Second Lien Seller Note 10.0000%, 06/29/2010 (h, i)

$
2,473,521



2,473,521



Second Lien Seller Note 17.0000%, 06/30/2013 (b, h, i)


4,066,463



4,066,463



6,539,984



BP Clothing, LLC

Apparel

Second Lien Loan 16.5000%, 07/18/2012 (b, h, i)


19,554,187



19,452,605



3,917,417Term Loan A 8.0000%, 07/18/2011 (h)


1,987,500



1,981,798



1,727,423Term Loan B 11.0000%, 07/18/2011   (h, i)


2,000,000



1,994,690



1,749,48623,429,093



7,394,326DPHI, Inc.

Technology Investments

Preferred Stock (602,131 shares) (d, j)






4,520,355



FOLIOfn,Inc.

Technology Investments

Preferred Stock (5,802,259 shares) (d, j)






15,000,000



10,790,000GDC Acquisition, LLC

Electrical Distribution

Senior Subordinated Debt 17.0000%, 08/31/2011 (b, h, i)


3,237,952



3,237,952



Warrants (d)










3,237,952



Integrated Packaging Corporation

Manufacturer of Packaging Material

Warrants (d)










Lockorder Limited

Technology Investments

Common Stock (21,064 shares) (d, e, j)






2,007,701



MainStream Data, Inc.

Technology Investments

Common Stock (5,786 shares) (d, j)






3,750,000



SafeStone Technologies Limited

Technology Investments

Common Stock (21,064 shares) (d, e, j)






2,007,701



SGDA Sanierungsgesellschaft fur Deponien und Altlasten GmbH

Soil Remediation

Term Loan 7.0000%, 08/31/2012 (e, h)


6,187,350



6,187,350



6,187,350Sonexis, Inc.

Technology Investments

Common Stock (131,615 shares) (d, j)






10,000,000



SP Industries, Inc.

Laboratory Research Equipment

First Lien Loan 7.5000%, 12/31/2012 (h)


732,054



597,890



732,054Second Lien Loan 15.0000%, 12/31/2013 (b, h)


26,226,421



25,959,855



26,226,42126,557,745



26,958,475Storage Canada, LLC

Self Storage

Term Loan 8.7500%, 03/30/2013 (h)


1,002,500



1,004,096



1,002,500Total Safety U.S., Inc.

Engineering Services

First Lien Seller Note 6.2500%, 12/08/2012 (h)


946,352



946,352



871,910Second Lien Seller Note 6.7880%, 12/08/2013 (h)


3,500,000



3,500,000



3,500,0004,446,352



4,371,910Sub Total Non-control/Non-affiliated investments








113,688,332



56,704,561Affiliate investments  39.32% (a, c, f, g)Custom Alloy Corporation

Manufacturer of Pipe Fittings

Unsecured Subordinated Loan 14.0000%, 09/18/2012 (b, h)


13,570,193



13,412,262



13,570,193Convertible Series A Preferred Stock (9 shares) (d)






44,000



44,000Convertible Series B Preferred Stock (1,991 shares) (d)






9,956,000



9,956,00023,412,262



23,570,193Harmony Pharmacy & Health Center, Inc.

Healthcare - Retail

Revolving Credit Facility 10.0000%,
    12/31/2010  (b, h)


5,248,696



5,248,696



5,100,000Demand Note 10.0000% (h, i)


500,000



500,000



Demand Note 10.0000% (h, i)


800,000



800,000



Demand Note 10.0000% (h, i)


600,000



600,000



600,000Demand Note 10.0000% (h, i)


700,000



700,000



Demand Note 10.0000% (h, i)


3,300,000



3,300,000



Demand Note 10.0000% (h, i)


2,200,000



2,200,000



Common Stock (2,000,000 shares) (d)






750,000



14,098,696



5,700,000HuaMei Capital Company, Inc.

Financial Services

Common Stock (120,000 shares) (d)






2,000,000



1,525,000LHD Europe Holding, Inc.

Non-Alcoholic Beverages

Common Stock, Series A (960 shares) (d, e)






165,682



332,144Convertible Common Stock, Series B (344 shares) (d, e)






59,369



117,856225,051



450,000Marine Exhibition Corporation

Theme Park

Senior Subordinated Debt 11.0000%, 10/26/2017 (b, h)


11,927,605



11,865,567



11,927,605Convertible Preferred Stock (20,000 shares) (b)






2,794,514



2,794,51414,660,081



14,722,119   70




---



##### Table of Contents



MVC
    Capital, Inc.
  Consolidated
    Schedule of Investments  (Continued)
 October 31,
    2010
  Company

Industry

Investment

Principal


Cost


Fair ValueOctagon Credit Investors, LLC

Financial Services

Limited Liability Company Interest





$
1,587,236


$
4,542,141PreVisor, Inc.

Human Capital Management

Common Stock (9 shares) (d)






6,000,000



10,400,000Security Holdings B.V.

Electrical Engineering

Common Stock (900 shares) (d, e)






29,885,900



5,300,000SGDA Europe B.V.

Soil Remediation

Common Equity Interest (d, e)






17,388,551



12,100,000Senior Secured Loan 10.0000%, 6/23/2012 (e, h)

$
1,500,000



1,500,000



1,500,00018,888,551



13,600,000U.S. Gas & Electric, Inc.

Energy Services

Second Lien Loan 14.0000%, 07/26/2012 (b, h)


8,692,789



8,616,566



8,692,789Convertible Series B Preferred Stock (32,200 shares) (d)






500,000



76,127,069Convertible Series C Preferred Stock (8,216 shares) (d)










2,476,9029,116,566



87,296,760Sub Total Affiliate investments










119,874,343



167,106,213Control Investments  49.43% (a, c, f, g)MVC Automotive Group B.V.

Automotive Dealerships

Common Equity Interest (d, e)





$
34,736,939


$
44,100,000Bridge Loan 10.0000%, 12/31/2010 (e, h)

$
3,643,557



3,643,557



3,643,55738,380,496



47,743,557MVC Partners, LLC

Private Equity Firm

Limited Liability Company Interest (d)






1,350,253



1,133,729Ohio Medical Corporation

Medical Device Manufacturer

Common Stock (5,620 shares) (d)






17,000,000



500,000Series A Convertible Preferred Stock (15,473 shares) (b, h)






30,000,000



46,806,54047,000,000



47,306,540SIA Tekers Invest

Port Facilities

Common Stock (68,800 shares) (d, e)






2,300,000



3,790,000Summit Research Labs, Inc.

Specialty Chemicals

Second Lien Loan 14.0000%, 08/31/2013 (b, h)


10,299,834



10,213,333



10,299,834Common Stock (1,115 shares) (d)






16,000,000



60,000,00026,213,333



70,299,834Turf Products, LLC

Distributor - Landscaping and Irrigation Equipment

Senior Subordinated Debt 15.0000%, 11/30/2010 (b, h)


8,395,261



8,394,368



8,395,261Junior Revolving Note 6.0000%, 5/1/2011 (h)


1,000,000



1,000,000



1,000,000Limited Liability Company Interest (d)






3,535,694



2,721,794Warrants (d)










12,930,062



12,117,055Velocitius B.V.

Renewable Energy

Common Equity Interest (d, e)






11,395,315



24,900,000Vestal Manufacturing Enterprises, Inc.

Iron Foundries

Senior Subordinated Debt 12.0000%, 04/29/2011 (h)


600,000



600,000



600,000Common Stock (81,000 shares) (d)






1,850,000



2,200,0002,450,000



2,800,000Sub Total Control Investments










142,019,459



210,090,715TOTAL INVESTMENT ASSETS  102.09% (f)







$
375,582,134


$
433,901,489     (a)
    
    These securities are restricted
    from public sale without prior registration under the Securities
    Act of 1933. The Company negotiates certain aspects of the
    method and timing of the disposition of these investments,
    including registration rights and related costs.(b)
    
    These securities accrue a portion
    of their interest/dividends in payment in kind
    interest/dividends which is capitalized to the investment.(c)
    
    All of the Companys equity
    and debt investments are issued by eligible portfolio companies,
    as defined in the Investment Company Act of 1940, except LHD
    Europe Holding Inc., Lockorder Limited, MVC Automotive Group
    B.V., SafeStone Technologies Limited, Security Holdings B.V.,
    SGDA Europe B.V., SGDA Sanierungsgesellschaft fur Deponien und
    Altlasten mbH, SIA Tekers Invest, and Velocitius B.V. The
    Company makes available significant managerial assistance to all
    of the portfolio companies in which it has invested.(d)
    
    Non-income producing assets.(e)
    
    The principal operations of these
    portfolio companies are located outside of the United States.(f)
    
    Percentages are based on net assets
    of $424,994,424 as of October 31, 2010.(g)
    
    See Note 3 for further
    information regarding Investment Classification.(h)
    
    All or a portion of these
    securities have been committed as collateral for the Guggenheim
    Corporate Funding, LLC Credit Facility.(i)
    
    All or a portion of the accrued
    interest on these securities have been reserved against.(j)
    
    Legacy Investments.
    
    Denotes zero cost or fair value.   71




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##### Table of Contents



MVC
    Capital, Inc.
  Consolidated
    Schedule of Investments
 October 31,
    2009
   Company

Industry

Investment

Principal


Cost


Fair ValueNon-control/Non-affiliated investments  20.13% (c,
    f, g)Actelis Networks, Inc.

Technology Investments

Preferred Stock (150,602 shares) (a, d, j)





$
5,000,003


$
Amersham Corp.

Manufacturer of Precision - Machined Components

Senior Secured Loan 6.0000%, 12/31/2009 (a, h)

$
375,000



375,000



375,000Second Lien Seller Note 10.0000%, 
    06/29/2010 (a, h, i)


2,473,521



2,473,521



775,000Second Lien Seller Note 17.0000%, 
    06/30/2013 (a, b, h, i)


3,793,841



3,793,841



1,625,0006,642,362



2,775,000BP Clothing, LLC

Apparel

Second Lien Loan 16.5000%, 07/18/2012 (a, b, h)


18,778,308



18,617,403



17,503,916Term Loan A 6.0000%, 07/18/2011  (a, h)


1,987,500



1,973,763



1,719,388Term Loan B 9.0000%, 07/18/2011   (a, h)


2,000,000



1,987,208



1,742,00422,578,374



20,965,308DPHI, Inc.

Technology Investments

Preferred Stock (602,131 shares) (a, d, j)






4,520,355



FOLIOfn,Inc.

Technology Investments

Preferred Stock (5,802,259 shares)  (a, d, j)






15,000,000



10,790,000GDC Acquisition, LLC

Electrical Distribution

Senior Subordinated Debt 17.0000%, 08/31/2011 (a, b, h)


3,096,252



3,096,252



3,096,252Warrants (a, d)










3,096,252



3,096,252Henry Company

Building Products / Specialty Chemicals

Term Loan A 3.7429%, 04/06/2011  (a, h)


1,709,921



1,709,921



1,650,642Term Loan B 7.9929%, 04/06/2011  (a, h)


2,000,000



2,000,000



2,000,0003,709,921



3,650,642Innovative Brands, LLC

Consumer Products

Term Loan 15.5000%, 09/25/2011  (a, h)


10,414,976



10,414,976



10,414,976Lockorder Limited

Technology Investments

Common Stock (21,064 shares) (a, d, e, j)






2,007,701



MainStream Data, Inc.

Technology Investments

Common Stock (5,786 shares) (a, d, j)






3,750,000



Phoenix Coal Corporation

Coal Processing and Production

Common Stock (666,667 shares) (d)






500,000



148,000SafeStone Technologies Limited

Technology Investments

Common Stock (21,064 shares) (a, d, e, j)






2,007,701



Sonexis, Inc.

Technology Investments

Common Stock (131,615 shares)  (a, d, j)






10,000,000



SP Industries, Inc.

Laboratory Research Equipment

First Lien Loan 7.5000%, 12/28/2012 (a, h)


901,435



656,357



901,435Second Lien Loan 15.0000%, 12/31/2013  (a, b, h)


25,443,638



25,092,905



25,443,63825,749,262



26,345,073Storage Canada, LLC

Self Storage

Term Loan 8.7500%, 03/30/2013 (a, h)


1,108,500



1,111,347



1,108,500Total Safety U.S., Inc.

Engineering Services

First Lien Seller Note 3.0038%, 12/08/2012 (a, h)


972,500



972,500



898,058Second Lien Seller Note 6.7538%,
    12/08/2013 (a, h)


3,500,000



3,500,000



3,500,0004,472,500



4,398,058WBS Carbons Acquisitions Corp.

Specialty Chemicals

Bridge Loan 6.0000%, 12/30/2011 (a, h)


1,759,796



1,759,796



1,759,796Sub Total Non-control/Non-affiliated investments








122,320,550



85,451,605Affiliate investments  49.60% (c, f, g)Custom Alloy Corporation

Manufacturer of Pipe Fittings

Unsecured Subordinated Loan 14.0000%, 09/18/2012 (a, b, h)


12,648,338



12,406,499



12,648,338Convertible Series A Preferred Stock (9 shares) (a)






44,000



44,000Convertible Series B Preferred Stock (1,991 shares) (a)






9,956,000



9,956,00022,406,499



22,648,338Dakota Growers Pasta Company, Inc.

Manufacturer of Packaged Foods

Common Stock (1,016,195 shares)






5,521,742



15,044,698Convertible Preferred Stock (1,065,000 shares)






10,357,500



15,767,25215,879,242



30,811,950Harmony Pharmacy & Health Center, Inc.

Healthcare - Retail

Revolving Credit Facility 10.0000%, 
    12/01/2009 (a, b, h)


4,755,060



4,755,060



4,000,000Demand Note 10.0000%  (a, h, i)


500,000



500,000



500,000Demand Note 10.0000%  (a, h, i)


700,000



700,000



700,000Demand Note 10.0000%  (a, h, i)


3,300,000



3,300,000



3,300,000Demand Note 10.0000% (a, h, i)


2,200,000



2,200,000



2,200,000Common Stock (2,000,000 shares) (a, d)






750,000



12,205,060



10,700,000HuaMei Capital Company, Inc.

Financial Services

Common Stock (120,000 shares) (a, d)






2,000,000



1,525,000Marine Exhibition Corporation

Theme Park

Senior Subordinated Debt 11.0000%, 06/30/2013 (a, b, h)


10,765,878



10,667,415



10,765,878Secured Revolving Note 1.2463%, 06/30/2013 (a, h)


900,000



900,000



900,000Convertible Preferred Stock (20,000 shares) (a, b)






2,581,699



2,581,69914,149,114



14,247,577   72




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##### Table of Contents



MVC
    Capital, Inc.
  Consolidated
    Schedule of Investments  (Continued)
 October 31,
    2009
  Company

Industry

Investment

Principal


Cost


Fair ValueOctagon Credit Investors, LLC

Financial Services

Term Loan 4.4963%, 12/31/2011 (a, h)

$
5,000,000


$
4,971,138


$
5,000,000Limited Liability Company Interest(a)






1,289,178



2,744,0836,260,316



7,744,083PreVisor, Inc.

Human Capital Management

Common Stock (9 shares) (a, d)






6,000,000



7,000,000Security Holdings B.V.

Electrical Engineering

Common Stock (900 shares) (a, d, e)






28,154,200



10,000,000SGDA Europe B.V.

Soil Remediation

Common Equity Interest (a, d, e)






7,450,000



7,450,000Senior Secured Loan 10.0000%, 6/23/2012 (a, e, h)


1,500,000



1,500,000



1,500,0008,950,000



8,950,000U.S. Gas & Electric, Inc.

Energy Services

Second Lien Loan 14.0000%, 07/26/2012 (a, b, h)


8,263,979



8,143,804



8,263,979Convertible Series I Preferred Stock (32,200 shares) (a, d)






500,000



58,907,092Convertible Series J Preferred Stock (8,216 shares) (a, d)










1,921,5708,643,804



69,092,641Vitality Foodservice, Inc.

Non-Alcoholic Beverages

Common Stock (556,472 shares) (a, d)






5,564,716



10,089,957Preferred Stock (1,000,000 shares) (a, b, h)






10,973,234



13,875,005Warrants (a, d)










3,835,05816,537,950



27,800,020Sub Total Affiliate investments










141,186,185



210,519,609Control Investments  48.73% (a, c, f, g)MVC Automotive Group B.V.

Automotive Dealerships

Common Equity Interest (d, e)






34,736,939



46,500,000Bridge Loan 10.0000%, 12/31/2009 (e, h)


3,643,557



3,643,557



3,643,55738,380,496



50,143,557MVC Partners, LLC

Private Equity Firm

Limited Liability Company Interest (d)






1,350,253



1,133,729Ohio Medical Corporation

Medical Device Manufacturer

Common Stock (5,620 shares) (d)






17,000,000



9,100,000Series A Convertible Preferred Stock (13,227 shares) (b, h)






30,000,000



40,010,42947,000,000



49,110,429SGDA Sanierungsgesellschaft

Soil Remediation

Term Loan 7.0000%, 08/31/2012 (e, h)


6,187,350



6,187,350



6,187,350fur Deponien und Altlasten GmbH



Common Equity Interest (d, e)






438,551



1Preferred Equity Interest (d, e)






5,000,000



6,600,00011,625,901



12,787,351SIA Tekers Invest

Port Facilities

Common Stock (68,800 shares) (d, e)






2,300,000



3,790,000Summit Research Labs, Inc.

Specialty Chemicals

Second Lien Loan 14.0000%, 08/15/2012  (b, h)


9,596,177



9,479,142



9,596,177Common Stock (1,115 shares) (d)






16,000,000



38,000,00025,479,142



47,596,177Turf Products, LLC

Distributor - Landscaping and Irrigation Equipment

Senior Subordinated Debt 15.0000%, 11/30/2010 (b, h)


8,149,021



8,136,884



8,149,021Junior Revolving Note 6.0000%, 5/1/2011 (h)


1,000,000



1,000,000



1,000,000Limited Liability Company Interest (d)






3,535,694



3,221,794Warrants (d)










12,672,578



12,370,815Velocitius B.V.

Renewable Energy

Common Equity Interest (d, e)






11,395,315



23,200,000Vendio Services, Inc.

Technology Investments

Common Stock (10,476 shares) (d, j)






5,500,000



9,687Preferred Stock (6,443,188 shares) (d, j)






1,134,001



4,490,3146,634,001



4,500,001Vestal Manufacturing Enterprises, Inc.

Iron Foundries

Senior Subordinated Debt 12.0000%, 04/29/2011 (h)


600,000



600,000



600,000Common Stock (81,000 shares) (d)






1,850,000



1,600,0002,450,000



2,200,000Sub Total Control Investments










159,287,686



206,832,059TOTAL INVESTMENT ASSETS  118.46% (f)





$
422,794,421


$
502,803,273     (a)
    
    These securities are restricted
    from public sale without prior registration under the Securities
    Act of 1933. The Company negotiates certain aspects of the
    method and timing of the disposition of these investments,
    including registration rights and related costs.(b)
    
    These securities accrue a portion
    of their interest/dividends in payment in kind
    interest/dividends which is capitalized to the investment.(c)
    
    All of the Companys equity
    and debt investments are issued by eligible portfolio companies,
    as defined in the Investment Company Act of 1940, except
    Lockorder Limited, MVC Automotive Group B.V., SafeStone
    Technologies Limited, Security Holdings B.V., SGDA Europe B.V.,
    SGDA Sanierungsgesellschaft fur Deponien und Altlasten mbH, SIA
    Tekers Invest, and Velocitius B.V. The Company makes available
    significant managerial assistance to all of the portfolio
    companies in which it has invested.   73




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##### Table of Contents



MVC
    Capital, Inc.
  Consolidated
    Schedule of Investments  (Continued)
 October 31,
    2009
   (d)
    
    Non-income producing assets.(e)
    
    The principal operations of these
    portfolio companies are located outside of the United States.(f)
    
    Percentages are based on net assets
    of $424,455,699 as of October 31, 2009.(g)
    
    See Note 3 for further
    information regarding Investment Classification.(h)
    
    All or a portion of these
    securities have been committed as collateral for the Guggenheim
    Corporate Funding, LLC Credit Facility.(i)
    
    All or a portion of the accrued
    interest on these securities have been reserved against.(j)
    
    Legacy Investments.
    
    Denotes zero cost or fair value.   74




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##### Table of Contents



MVC
    Capital, Inc.
  Consolidated Statements of
    Operations
  For the Year Ended


For the Year Ended


For the Year EndedOctober 31, 2010


October 31, 2009


October 31, 2008Operating Income:Dividend incomeAffiliate investments

$
2,275,531


$
2,459,914


$
3,505,332Total dividend income


2,275,531



2,459,914



3,505,332Interest incomeNon-control/Non-affiliated investments


8,693,240



10,294,769



11,608,730Affiliate investments


5,007,696



5,070,990



5,838,181Control investments


3,338,769



3,929,470



5,095,015Total interest income


17,039,705



19,295,229



22,541,926Fee incomeNon-control/Non-affiliated investments


352,679



621,252



1,037,745Affiliate investments


2,717,090



2,615,151



1,022,733Control investments


626,780



862,253



1,552,257Total fee income


3,696,549



4,098,656



3,612,735Other income


509,712



254,945



366,818Total operating income


23,521,497



26,108,744



30,026,811Operating Expenses:Management fee


9,329,809



9,843,427



8,989,491Interest and other borrowing costs


2,824,788



3,127,594



4,463,822Incentive compensation (Note 5)


2,479,167



3,716,852



10,822,127Other expenses


832,391



904,695



791,789Audit fees


548,500



659,400



473,500Legal fees


487,000



594,000



938,000Consulting fees


366,200



164,700



162,600Insurance


353,135



377,400



379,725Directors fees


346,800



272,100



249,300Administration


273,986



290,362



330,680Printing and postage


103,396



178,875



195,245Public relations fees


84,000



77,800



98,600Total operating expenses


18,029,172



20,207,205



27,894,879Less: Expense Waiver by Adviser (1)


(150,000
)






Total net operating expenses


17,879,172



20,207,205



27,894,879Net operating income before taxes


5,642,325



5,901,539



2,131,932Tax (Benefit) Expenses:Deferred tax expense (benefit)






1,443,765



(640,482
)Current tax expense (benefit)


8,476



(66,946
)


(295,914
)Total tax expense (benefit)


8,476



1,376,819



(936,396
)Net operating income


5,633,849



4,524,720



3,068,328Net Realized and Unrealized Gain (Loss) on Investments and
    Foreign Currency:Net realized gain (loss) on investments and foreign currencyNon-control/Non-affiliated investments


(205,245
)


(324
)


(36,140
)Affiliate investments


36,111,253



(7,000,000
)


1,116,952Control investments


(3,717,209
)


(18,081,404
)


283,118Foreign currency


(389
)






54,211Total net realized gain (loss) on investments and foreign
    currency


32,188,410



(25,081,728
)


1,418,141Net change in unrealized appreciation (depreciation) on
    investments


(21,689,497
)


34,804,497



59,465,174Net realized and unrealized gain on investments and foreign
    currency


10,498,913



9,722,769



60,883,315Net increase in net assets resulting from operations

$
16,132,762


$
14,247,489


$
63,951,643Net increase in net assets per share resulting from
    operations

$
0.66


$
0.59


$
2.63Dividends declared per share

$
0.48


$
0.48


$
0.48     (1)
    
    Reflects waiver by TTG Advisers, pursuant to its voluntary
    waiver of $150,000 of expenses (for the 2010 fiscal year) that
    the Company is obligated to reimburse to TTG Advisers under the
    Advisory Agreement (the Voluntary Waiver). Please
    see Note 4 Management for more information.   75




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##### Table of Contents



MVC
    Capital, Inc.
  Consolidated Statements of Cash
    Flows
  For the Year Ended


For the Year Ended


For the Year EndedOctober 31, 2010


October 31, 2009


October 31, 2008Cash flows from Operating Activities:Net increase in net assets resulting from operations

$
16,132,762


$
14,247,489


$
63,951,643Adjustments to reconcile net increase in net assets resulting
    from operations to net cash provided by (used) in operating
    activities:Net realized (gain) loss


(32,188,410
)


25,081,728



(1,418,141
)Net change in unrealized (appreciation) depreciation


21,689,497



(34,804,497
)


(59,465,174
)Amortization of discounts and fees


(15,517
)


(73,434
)


(103,428
)Increase in accrued
    payment-in-kind
    dividends and interest


(5,561,308
)


(6,354,807
)


(5,390,885
)Increase in allocation of flow through income


(298,058
)


(156,742
)


(22,067
)Changes in assets and liabilities:Dividends, interest and fees receivable


(988,981
)


(2,743,339
)


463,106Escrow receivables


(2,063,420
)






Prepaid expenses


(292,953
)


1,026,081



151,427Prepaid taxes


299,420



381,142



(530,866
)Deferred tax






1,443,765



(640,482
)Deposits










25,156Other assets










20,993Incentive compensation (Note 5)


2,479,167



3,716,852



(2,081,201
)Other Liabilities


(1,190,987
)


533,176



490,939Purchases of equity investments


(6,456,751
)


(1,017,554
)


(79,196,164
)Purchases of debt instruments


(2,500,000
)


(11,652,248
)


(77,940,026
)Purchases of short term investments










(49,881,375
)Proceeds from equity investments


71,987,346



286,100



7,312,817Proceeds from debt instruments


22,244,985



16,692,298



104,614,110Sales/maturities of short term investments










49,853,750Net cash provided by (used) in operating activities


83,276,792



6,606,010



(49,785,868
)Cash flows from Financing Activities:Repurchase of common stock


(3,999,128
)






Distributions to shareholders paid


(11,594,909
)


(11,662,602
)


(11,177,600
)Net repayments on revolving credit facility


(12,300,000
)


(6,700,000
)


(11,000,000
)Net cash used in financing activities


(27,894,037
)


(18,362,602
)


(22,177,600
)Net change in cash and cash equivalents for the year


55,382,755



(11,756,592
)


(71,963,468
)Cash and cash equivalents, beginning of year


1,007,873



12,764,465



84,727,933Cash and cash equivalents, end of year

$
56,390,628


$
1,007,873


$
12,764,465    76




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##### Table of Contents



MVC
    Capital, Inc.
  Consolidated
    Statements of Cash Flows  (continued)
      Non-cash activity:
  payment-in-kind
                     77




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##### Table of Contents



MVC
    Capital, Inc.
  Consolidated
    Statements of Changes in Net Assets
  For the Year Ended


For the Year Ended


For the Year EndedOctober 31, 2010


October 31, 2009


October 31, 2008Operations:Net operating income

$
5,633,849


$
4,524,720


$
3,068,328Net realized gain (loss) on investments and foreign currencies


32,188,410



(25,081,728
)


1,418,141Net change in unrealized appreciation (depreciation) on
    investments


(21,689,497
)


34,804,497



59,465,174Net increase in net assets from operations


16,132,762



14,247,489



63,951,643Shareholder Distributions:Distributions to shareholders


(11,594,909
)


(11,662,602
)


(11,660,691
)Net decrease in net assets from shareholder distributions


(11,594,909
)


(11,662,602
)


(11,660,691
)Capital Share Transactions:Reissuance of treasury stock in lieu of cash dividend










483,091Repurchase of common stock


(3,999,128
)






Net increase (decrease) in net assets from capital share
    transactions


(3,999,128
)






483,091Total increase in net assets


538,725



2,584,887



52,774,043Net assets, beginning of year


424,455,699



421,870,812



369,096,769Net assets, end of year

$
424,994,424


$
424,455,699


$
421,870,812Common shares outstanding, end of year


23,990,987



24,297,087



24,297,087    78




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##### Table of Contents



MVC
    Capital, Inc.
  Consolidated
    Selected Per Share Data and Ratios
  For the


For the


For the


For the


For theYear Ended


Year Ended


Year Ended


Year Ended


Year EndedOctober 31,


October 31,


October 31,


October 31,


October 31,2010


2009


2008


2007


2006Net asset value, beginning of year

$
17.47


$
17.36


$
15.21


$
12.41


$
10.41Gain from operations:Net operating income


0.23



0.19



0.24



0.13



0.20Net realized and unrealized gain on investments


0.43



0.40



2.39



2.79



2.28Total gain from investment operations


0.66



0.59



2.63



2.92



2.48Less distributions from:Income


(0.23
)


(0.19
)


(0.09
)


(0.08
)


(0.21
)Return of capital


(0.25
)


(0.29
)


(0.39
)


(0.46
)


(0.27
)Total distributions


(0.48
)


(0.48
)


(0.48
)


(0.54
)


(0.48
)Capital share transactionsAnti-dilutive effect of share issuance














0.42



Anti-dilutive effect of share repurchase program


0.06















Total capital share transactions


0.06











0.42



Net asset value, end of year

$
17.71


$
17.47


$
17.36


$
15.21


$
12.41Market value, end of year

$
13.35


$
9.18


$
12.30


$
17.06


$
13.08Market premium (discount)


(24.62
)%


(47.45
)%


(29.15
)%


12.16
%


5.40
%Total Return  At NAV(a)


4.16
%


3.50
%


17.49
%


27.39
%


24.23
%Total Return  At Market(a)


50.86
%


(21.48
)%


(25.44
)%


35.02
%


20.75
%Ratios and Supplemental Data:Net assets, end of year (in thousands)

$
424,994


$
424,456


$
421,871


$
369,097


$
236,993Ratios to average net assets:Expenses excluding tax expense (benefit)


4.19
%


4.88
%


7.00
%


7.89
%


6.78
%Expenses including tax expense (benefit)


4.19
%


5.21
%


6.77
%


7.78
%


6.85
%Expenses excluding incentive compensation


3.61
%


4.31
%


4.05
%


4.40
%


4.03
%Expenses excluding incentive compensation, interest and other
    borrowing costs


2.95
%


3.56
%


2.93
%


2.88
%


3.29
%Net operating income before tax expense (benefit)


1.32
%


1.42
%


0.54
%


0.53
%


1.83
%Net operating income after tax expense (benefit)


1.32
%


1.09
%


0.77
%


0.64
%


1.76
%Net operating income before incentive compensation


1.90
%


1.99
%


3.49
%


4.02
%


4.58
%Net operating income before incentive compensation, interest and
    other borrowing costs


2.56
%


2.74
%


4.61
%


5.54
%


5.32
%Ratios to average net assets excluding waivers:Expenses excluding tax expense (benefit)


4.22
%


N/A



N/A



N/A



N/AExpenses including tax expense (benefit)


4.22
%


N/A



N/A



N/A



N/AExpenses excluding incentive compensation


3.64
%


N/A



N/A



N/A



N/AExpenses excluding incentive compensation, interest and other
    borrowing costs


2.98
%


N/A



N/A



N/A



N/ANet operating income before tax expense (benefit)


1.29
%


N/A



N/A



N/A



N/ANet operating income after tax expense (benefit)


1.29
%


N/A



N/A



N/A



N/ANet operating income before incentive compensation


1.87
%


N/A



N/A



N/A



N/ANet operating income before incentive compensation, interest and
    other borrowing costs


2.53
%


N/A



N/A



N/A



N/A     (a)
    
    Total annual return is historical and assumes changes in share
    price, reinvestments of all dividends and distributions, and no
    sales charge for the year.   79




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##### Table of Contents



MVC
    Capital, Inc.Notes to Consolidated Financial Statements
    October 31, 2010
  1.
    Organization
    and Business Purpose  and/or
    sub-advisory Sub-Advisor). Sub-Advisor
             80




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      2.
    Consolidation    3.
    Significant
    Accounting Policies      Recent Accounting Pronouncements Determining Fair Value When the
    Volume and Level of Activity for the Asset or Liability Have
    Significantly Decreased and Identifying Transactions That Are
    Not Orderly
  Subsequent Events Subsequent Events
  2010-06, Improving Disclosure about Fair Value Measurements 2010-06 ASC 820-10 2010-06
 81




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Valuation of Portfolio Securities
          and/or
 82




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
                 83




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
          and/or
  payment-in-kind payment-in-kind payment-in-kind payment-in-kind payment-in-kind
    Investment Classification
  Investment Transactions and Related Operating
    Income first-in,
 84




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Cash Equivalents
  Restricted Securities
  Distributions to Shareholders
  Income Taxes and/or
      4.
    Management   85




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      and/or
  5.
    Incentive
    Compensation     86




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
       87




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    6.
    Dividends
    and Distributions to Shareholders  12-month
     88




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  For
    the Fiscal Year Ended October 31, 2010
                  For
    the Fiscal Year Ended October 31, 2009
         89




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
          For
    the Fiscal Year Ended October 31, 2008
                7.
    Transactions
    with Other Parties   90




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Regulation S-K)
  Form 10-K.
  8.
    Concentration
    of Market and Credit Risk  90-day 90-day
  9.
    Portfolio
    Investments      
    Level 1:  Level 1 inputs are
    unadjusted quoted prices in active markets that are accessible
    at the measurement date for identical, unrestricted assets or
    liabilities. We use Level 1 inputs for investments in
    publicly traded unrestricted securities for which we do not have
    a controlling interest. Such investments 91




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    
    Level 2:  Level 2 inputs are
    inputs other than quoted prices included within Level 1
    that are observable for the asset or liability, either directly
    or indirectly or other inputs that are observable or can be
    corroborated by observable market data. We did not value any of
    our investments using Level 2 inputs as of October 31,
    2010.
    Level 3:  Level 3 inputs are
    unobservable and cannot be corroborated by observable market
    data. We use Level 3 inputs for measuring the fair value of
    substantially all of our investments. See Note 3 for the
    investment valuation policies used to determine the fair value
    of these investments.    October 31, 2010Level 1


Level 2


Level 3


TotalSenior/Subordinated Loans and credit facilities

$



$



$
111,244


$
111,244Common Stock










78,865



78,865Preferred Stock










148,995



148,995Other Equity Investments










94,798



94,798Escrow receivables










2,063



2,063Total Investments, net

$



$



$
435,965


$
435,965   October 31, 2009Level 1


Level 2


Level 3


TotalSenior/Subordinated Loans and credit facilities

$



$



$
153,468


$
153,468Common Stock


148







86,159



86,307Preferred Stock










164,943



164,943Warrants










3,835



3,835Other Equity Investments










94,250



94,250Total Investments, net

$
148


$



$
502,655


$
502,803     Reversal ofPrior PeriodBalances,


Realized


Appreciation


Unrealized








Transfers


Balances,November 1,


Gains


(Depreciation) on


Appreciation








In & Out


October 31,2009


(Losses)(1)


Realization(2)


(Depreciation)(3)


Purchases(4)


Sales(5)


of Level 3


2010Senior/Subordinated Loans and credit facilities

$
153,468


$



$



$
(27,595
)

$
8,182


$
(22,811
)

$



$
111,244Common Stock


86,159



12,306



(11,970
)


21,039



223



(28,892
)






78,865Preferred Stock


164,943



13,703



(13,355
)


23,857



385



(40,538
)






148,995Warrants


3,835



3,800



(3,835
)










(3,800
)






Other Equity Investments


94,250











(10,182
)


10,730











94,798Escrow receivables






2,585















(522
)






2,063Total

$
502,655


$
32,394


$
(29,160
)

$
7,119


$
19,520


$
(96,563
)

$



$
435,965   92




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Reversal ofPrior PeriodBalances,


Realized


Appreciation


Unrealized








Transfers


Balances,November 1,


Gains


(Depreciation) on


Appreciation








In & Out


October 31,2008


(Losses)(1)


Realization(2)


(Depreciation)(3)


Purchases(4)


Sales(5)


of Level 3


2009Senior/Subordinated Loans and credit facilities

$
167,703


$
(12,662
)

$
12,662


$
(14,469
)

$
3,688


$
(3,454
)

$



$
153,468Common Stock


87,741



(5,420
)


5,420



(1,582
)














86,159Preferred Stock


124,874



(7,000
)


7,000



39,201



868











164,943Warrants


3,735











100















3,835Other Equity Investments


106,646











(13,570
)


1,174











94,250Total

$
490,699


$
(25,082
)

$
25,082


$
9,680


$
5,730


$
(3,454
)

$



$
502,655   (1)
    
    Included in net realized gain (loss) on investments in the
    Consolidated Statement of Operations.(2)
    
    Included in net unrealized appreciation (depreciation) of
    investments in the Consolidated Statement of Operations related
    to securities disposed of during the fiscal years ended
    October 31, 2010 and 2009, respectively.(3)
    
    Included in net unrealized appreciation (depreciation) of
    investments in the Consolidated Statement of Operations related
    to securities held at October 31, 2010 and 2009,
    respectively.(4)
    
    Includes increases in the cost basis of investments resulting
    from new portfolio investments, PIK interest or dividends, the
    amortization of discounts, premiums and closing fees and the
    exchange of one or more existing securities for one or more new
    securities.(5)
    
    Includes decreases in the cost basis of investments resulting
    from principal repayments or sales.  For
    the Fiscal Year Ended October 31, 2010
         93




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
               94




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
                   95




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
         96




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      For
    the Fiscal Year Ended October 31, 2009
         97




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
                           98




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      10.
    Commitments
    and Contingencies  Commitments
    to/for Portfolio Companies:
    Commitments
    of MVC Capital, Inc.
  Portfolio Company

Amount Committed


Amount Funded at October 31, 2010Octagon Revolving Credit Facility

$
7.0 million



Harmony Pharmacy Revolving Credit Facility

$
4.0 million


$
4.0 millionTurf Junior Revolver

$
1.0 million


$
1.0 millionHarmony Pharmacy Note

$
1.3 million


$
600,000MVC Partners

$
20.0 million



Total

$
33.3 million


$
5.6 million  99




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Off-Balance
    Sheet Arrangements
    Off-Balance
    Sheet Arrangements
  Guarantee

Amount Committed


Amount Funded at October 31, 2010MVC Automotive

$
9.1 million



MVC Automotive

$
5.6 million



Tekers

$
2.0 million



MVC Automotive

$
2.0 million



Total

$
18.7 million



                  100




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
                    Commitments
    of the Company:
     101




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
          Payments Due by PeriodLess Than








AfterTotal


1 Year


1-3 Years


4-5 Years


5 YearsCredit Facility I

$
50,000,000



N/A


$
50,000,000



N/A



N/ATotal Debt

$
50,000,000



N/A


$
50,000,000



N/A



N/A   11.
    Certain
    Issuances of Equity Securities by the Issuer and Share
    Repurchase Program     102




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Total Number of Shares


Approximate Dollar ValueAverage Price Paid per


Purchased as Part of


of Shares that May Yet BeTotal Number of


Share Including


Publicly Announced


Purchased Under thePeriod

Shares Purchased


Commission


Program


ProgramMay 1, 2010  May 31, 2010













$
5,000,000June 1, 2010  June 30, 2010


175,000


$
13.09



175,000


$
2,708,461July 1, 2010  July 31, 2010


83,000


$
13.03



83,000


$
1,627,035Aug. 1, 2010  Aug. 31, 2010













$
1,627,035Sept. 1, 2010  Sept. 30, 2010













$
1,627,035Oct. 1, 2010  Oct. 31, 2010


48,100


$
13.02



48,100


$
1,000,872Total


306,100


$
13.06



306,100


$
1,000,872   30-day
      12.
    Tax
    Matters  Return of Capital Statement of Position (ROCSOP)
    Adjustment:
 103




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Distributions to Shareholders:
  Tax Basis Accumulated Earnings (Deficit)Accumulated capital and other losses

$
Undistributed Net investment Income


3,607,663Undistributed Long-Term Capital Gain


2,200,450Gross unrealized appreciation


168,452,770Gross unrealized depreciation


(115,248,966
)Net unrealized appreciation

$
53,203,804Total tax basis accumulated earnings


59,027,881Tax cost of investments


380,681,721Current year distributions to shareholders on a tax basisOrdinary income


11,594,910Prior year distributions to shareholders on a tax basisOrdinary income


11,662,602     Qualified
    Dividend Income Percentage
    Corporate
    Dividends Received Deduction Percentage
   104




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  13.
    Income
    Taxes    Fiscal Year EndedOctober 31,


October 31,


October 31,2010


2009


2008Current tax (benefit) expense:Federal

$



$
(67,101
)

$
(296,850
)State


8,476



155



936Total current tax (benefit) expense


8,476



(66,946
)


(295,914
)Deferred tax expense (benefit):Federal






1,173,420



(513,849
)State






270,345



(126,633
)Total deferred tax expense (benefit)






1,443,765



(640,482
)Total tax (benefit) provision

$
8,476


$
1,376,819


$
(936,396
)     Fiscal Year EndedOctober 31,


October 31,


October 31,2010


2009


2008Federal income tax benefit at statutory rate

$
(940,558
)

$
(1,035,500
)

$
(810,550
)State income taxes, net of federal benefit


(152,979
)


(168,239
)


(131,834
)Other


5,593



408



5,988Net change to valuation allowance


1,096,420



2,580,150



$
8,476


$
1,376,819


$
(936,396
)     NOL  Federal


NOL  New York State


Fiscal Year of NOL


Expiration$



$
327,526



October 31, 2007



October 31, 2027$
1,410,449


$
2,282,601



October 31, 2008



October 31, 2028$
2,583,661


$
2,780,861



October 31, 2009



October 31, 2029$
3,976,611


$
3,968,135



October 31, 2010



October 31, 2030    105




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    October 31,


October 31,


October 31,2010


2009


2008Deferred tax assets:Deferred revenues

$
362,391


$
922,566


$
817,700Net operating loss


3,229,077



1,657,584



625,364Others


85,102







701Total deferred tax assets

$
3,676,570


$
2,580,150


$
1,443,765Valuation allowance on Deferred revenues and Net operating loss

$
(3,676,570
)

$
(2,580,150
)

$
Net deferred tax assets

$



$



$
1,443,765Deferred tax liabilities:Deferred tax liabilities










Total deferred tax liabilities










Net deferred taxes

$



$



$
1,443,765   14.
    Segment
    Data      MVC


MVCFS


ConsolidatedInterest and dividend income

$
19,315,058


$
178


$
19,315,236Fee income


39,943



3,656,606



3,696,549Other income


509,712







509,712Total operating income


19,864,713



3,656,784



23,521,497Total operating expenses


11,606,040



6,423,132



18,029,172Less: Expense waiver by Adviser


(150,000
)






(150,000
)Total net operating expenses


11,456,040



6,423,132



17,879,172Net operating income (loss) before taxes


8,408,673



(2,766,348
)


5,642,325Tax expense






8,476



8,476Net operating income (loss)


8,408,673



(2,774,824
)


5,633,849Net realized gain on investments and foreign currency


32,188,410







32,188,410Net change in unrealized depreciation on investments


(21,689,497
)






(21,689,497
)Net increase (decrease) in net assets resulting from operations


18,907,586



(2,774,824
)


16,132,762    106




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  15.
    Subsequent
    Events         107




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm            
    108




---



##### Table of Contents



Item 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    Item 9A.
    CONTROLS
    AND PROCEDURES  Form 10-K,
      Rule 13a-15(f)
 109




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
                    110




---



##### Table of Contents



Rule 13a-15(f)
  Item 9b.
    OTHER
    INFORMATION   Part III  Item 10.
    DIRECTORS
    AND EXECUTIVE OFFICERS OF THE REGISTRANT    http://www.mvccapital.com.
  Form 10-K Form 10-K.
  Item 11.
    EXECUTIVE
    COMPENSATION    Item 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    Item 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE    Item 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES   111




---



##### 



Part IV  Item 15.
    EXHIBITS,
    FINANCIAL STATEMENTS, SCHEDULES   
  Page(s)(a)(1)

Financial StatementsConsolidated Balance SheetsOctober 31, 2010 and October 31, 2009


69Consolidated Schedule of InvestmentsOctober 31, 2010


70October 31, 2009


72-74Consolidated Statement of OperationsFor the Year Ended October 31, 2010,the Year Ended October 31, 2009 andthe Year Ended October 31, 2008


75Consolidated Statement of Cash FlowsFor the Year Ended October 31, 2010,the Year Ended October 31, 2009 andthe Year Ended October 31, 2008


76Consolidated Statement of Changes in Net
    AssetsFor the Year Ended October 31, 2010,the Year Ended October 31, 2009 andthe Year Ended October 31, 2008


78Consolidated Selected Per Share Data and
    RatiosFor the Year Ended October 31, 2010,the Year Ended October 31, 2009,the Year Ended October 31, 2008,the Year Ended October 31, 2007 andthe Year Ended October 31, 2006


79Notes to Consolidated Financial Statements


80-107Report of Independent Registered Public
    Accounting Firm


108-110(a)(2)

The following financial statement schedules are filed here with:Schedule 12-14
    of Investments in and Advances to Affiliates


115-116        ExhibitNumber

Description3
.1

Certificate of Incorporation. (Incorporated by reference to
    Exhibit 99.a filed with the Registrants initial
    Registration Statement on
    Form N-2
    (File
    No. 333-92287)
    filed on December 8, 1999)3
.2

Certificate of Amendment of Certificate of Incorporation.
    (Incorporated by reference to Exhibit 99.a.2 filed with
    the Registrants Pre-Effective Amendment No. 1 to the
    Registration Statement on
    Form N-2
    (File
    No. 333-119625)
    filed on November 23, 2004)3
.3

Fifth Amended and Restated Bylaws. (Incorporated by reference
    to Exhibit 99.b. filed with Registrants Pre-Effective
    Amendment No. 1 to the Registration Statement on
    Form N-2
    (File
    No. 333-125953)
    filed on August 29, 2005)4
.1

Form of Share Certificate. (Incorporated by reference to
    Exhibit 99.d.1 filed with the Registrants
    Pre-Effective Amendment No. 1 to the Registration Statement
    on
    Form N-2
    (File
    No. 333-119625)
    filed on November 23, 2004) 112




---



##### Table of Contents



ExhibitNumber

Description10
.1

Dividend Reinvestment Plan, as amended. (Incorporated by
    reference to Exhibit 99.e filed with the Registrants
    Pre-Effective Amendment No. 1 to the Registration Statement
    on
    Form N-2
    (File
    No. 333-119625)
    filed on November 23, 2004)10
.2

Amended and Restated Investment Advisory and Management
    Agreement between the Registrant and The Tokarz Group Advisers
    LLC. (Incorporated by reference to Exhibit 10.1 filed
    with Registrants Quarterly Report on
    Form 10-Q
    (File
    No. 814-00201)
    filed on June 4, 2009)10
.3

Form of Custody Agreement between Registrant and U.S. Bank
    National Association. (Incorporated by reference to
    Exhibit 99.j.1 filed with the Registrants
    Pre-Effective Amendment No. 1 to the Registration Statement
    on
    Form N-2
    (File
    No. 333-119625)
    filed on November 23, 2004)10
.4

Form of Amendment to Custody Agreement between Registrant and
    U.S. Bank National Association. (Incorporated by reference to
    Exhibit 99.j.2 filed with the Registrants
    Pre-Effective Amendment No. 1 to the Registration Statement
    on
    Form N-2
    (File
    No. 333-119625)
    filed on February 21, 2006)10
.5

Form of Amendment to Custody Agreement between Registrant and
    U.S. Bank National Association. (Incorporated by reference to
    Exhibit 10.4 filed with Registrants Quarterly Report
    on
    Form 10-Q
    (File
    No. 814-00201)
    filed on June 4, 2009)10
.6

Form of Transfer Agency Letter Agreement with Registrant and
    EquiServe Trust Company, N.A. (Incorporated by reference
    to Exhibit 99.k.2 filed with the Registrants
    Pre-Effective Amendment No. 1 to the Registration Statement
    on
    Form N-2
    (File
    No. 333-119625)
    filed on November 23, 2004)10
.7

Form of Fee and Service Schedule Amendment to Transfer
    Agency Agreement with Registrant and Computershare
    Trust Company, N.A. (Incorporated by reference to
    Exhibit 10.1 filed with Registrants Quarterly Report
    on
    Form 10-Q
    (File
    No. 814-00201)
    filed on September 8, 2009)10
.8

Form of Fund Administration Servicing Agreement with
    Registrant and U.S. Bancorp Fund Services, LLC.
    (Incorporated by reference to Exhibit 99.k.6 filed with
    the Registrants Pre-Effective Amendment No. 1 to the
    Registration Statement on
    Form N-2
    (File
    No. 333-119625)
    filed on February 21, 2006)10
.9

Form of Fund Accounting Servicing Agreement with Registrant
    and U.S. Bancorp Fund Services, LLC. (Incorporated by
    reference to Exhibit 99.k.7 filed with Registrants
    Pre-Effective Amendment No. 1 to the Registration Statement
    on
    Form N-2
    (File
    No. 333-119625)
    filed on February 21, 2006)10
.10

Form of First Amendment to Fund Administration Servicing
    Agreement with Registrant and U.S. Bancorp Fund Services,
    LLC. (Incorporated by reference to Exhibit 10.2 filed
    with Registrants Quarterly Report on
    Form 10-Q
    (File
    No. 814-00201)
    filed on June 4, 2009)10
.11

Form of First Amendment to Fund Accounting Servicing
    Agreement with Registrant and U.S. Bancorp Fund Services,
    LLC. (Incorporated by reference to Exhibit 10.3 filed
    with Registrants Quarterly Report on
    Form 10-Q
    (File
    No. 814-00201)
    filed on June 4, 2009)10
.12

Form of Credit Agreement with Registrant and Guggenheim
    Corporate Funding, LLC et al. (Incorporated by reference to
    Exhibit 10 filed with Registrants Quarterly Report on
    Form 10-Q
    (File
    No. 814-00201)
    filed on June 9, 2006)10
.13

Form of Amendments to Credit Agreement with Registrant and
    Guggenheim Corporate Funding, LLC et al. (Incorporated
    by reference to Exhibit 10 filed with Registrants
    Annual Report on
    Form 10-K
    (File
    No. 814-00201)
    filed on December 29, 2008)10
.14*

Form of Amendments to Credit Agreement with Registrant and
    Guggenheim Corporate Funding, LLC et al., filed herewith.10
.15*

Form of Custody Agreement between Registrant and JP Morgan Chase
    Bank, N.A., filed herewith.14


Joint Code of Ethics of the Registrant and The Tokarz Group LLC.
    (Incorporated by reference to Exhibit 99r filed with the
    Registrants Post-Effective Amendment No. 2 to the
    Registration Statement on
    Form N-2
    (File
    No. 333-119625)
    filed on November 29, 2006)31*


Certifications of the Chief Executive Officer and the Chief
    Financial Officer pursuant to
    Rule 13a-14(a)
    of the Securities Exchange Act of 193432*


Certifications of the Chief Executive Officer and the Chief
    Financial Officer pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350     *
    
    Filed herewith 113




---



##### Table of Contents



Exhibit No.

Exhibit10
.14

Form of Amendment to Credit Agreement between Registrant and
    Guggenheim10
.15

Form of Custody Agreement between Registrant and JP Morgan31


Certifications pursuant to Rule 13a-14(a) of the Securities
    Exchange Act of 193432


Certifications pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002, 18 U.S.C. Section 1350    114




---



##### Table of Contents



Schedule 12-14
  MVC Capital, Inc. and Subsidiaries
  Schedule of Investments in and Advances to Affiliaties
  Amount of Interest


October 31,








October 31,or Dividends Credited


2009


Gross


Gross


2010Portfolio Company

Investment(1)

to Income(5)


Other(2)


Fair Value


Additions(3)


Reductions(4)


Fair ValueCompanies More than 25% ownedMVC Automotive Group

Common Stock










46,500,000







(2,400,000
)


44,100,000(Automotive Dealership)

Bridge Loan


362,397







3,643,557











3,643,557MVC Partners, LLC

Common Equity Interest










1,133,729











1,133,729(Private Equity Firm)Ohio Medical Corporation

Common Stock










9,100,000







(8,600,000
)


500,000(Medical Device Manufacturer)

Preferred Stock










40,010,428



6,796,112







46,806,540SIA Tekers Invest

Common Stock










3,790,000











3,790,000(Port Facilities)SGDA Sanierungsgesellschaft fur Deponien und Altlasten

Loan


183,628







6,187,350







(6,187,350
)


(Soil Remediation)

Common Equity Interest










1







(1
)


Preferred Equity Interest










6,600,000







(6,600,000
)


Summit Research Labs, Inc.

Loan


1,415,797







9,596,178



703,656







10,299,834(Specialty Chemical)

Preferred Stock










38,000,000



22,000,000







60,000,000Turf Products, LLC

Loan


1,243,947







8,149,021



246,240







8,395,261(Distributor  Landscaping & Irrigation
    Equipment)

LLC Interest










3,221,794







(500,000
)


2,721,794Revolver


60,000







1,000,000











1,000,000Warrant






















Velocitius B.V.

Common Equity Interest










23,200,000



1,700,000







24,900,000(Renewable Energy)Vendio Services, Inc.

Common Stock










9,687







(9,687
)


(Technology)

Preferred Stock










4,490,314







(4,490,314
)


Vestal Manufacturing Enterprises, Inc.

Loan


73,000







600,000











600,000(Iron Foundries)

Common Stock










1,600,000



600,000







2,200,000Total companies more than 25% owned



$
3,338,769


















$
210,090,715Companies More than 5% owned, but less than 25%Custom Alloy Corporation

Loan


1,856,145







12,648,338



921,855







13,570,193(Manufacturer of Tubular Goods for the Energy Industry)

Preferred Stock










44,000











44,000Preferred Stock










9,956,000











9,956,000Dakota Growers Pasta Company, Inc.

Common Stock


1,290,341







15,044,698







(15,044,698
)


(Manufacturer of Packaged Food)

Preferred Stock










15,767,252







(15,767,252
)


Harmony Pharmacy & Health Center, Inc.

Revolver


493,636







4,000,000



1,100,000







5,100,000(Healthcare  Retail)

Demand Note










3,300,000







(3,300,000
)


Demand Note










2,200,000







(2,200,000
)


Demand Note










700,000







(700,000
)


Demand Note










500,000







(500,000
)


Demand Note














800,000



(800,000
)


Demand Note














600,000







600,000Common Stock






















HuaMei Capital Company, Inc.

Common Stock










1,525,000











1,525,000(Financial Services)LHD Europe Holdings, Inc.

Common Stock














332,144







332,144(Non-Alcoholic Beverages)

Convertible Common Stock














117,856







117,856Marine Exhibition Corporation

Loan


1,127,364







10,765,878



2,411,727



(1,250,000
)


11,927,605(Theme Park)

Preferred Stock*


319,223







2,581,699



212,815







2,794,514Revolver


23,104







900,000



1,100,000



(2,000,000
)


Octagon Credit Investors, LLC

Loan


151,611







5,000,000







(5,000,000
)


(Financial Services)

Revolver






















LLC Interest










2,744,083



298,058



1,500,000



4,542,141   115




---



##### Table of Contents



MVC
    Capital, Inc. and Subsidiaries
  Schedule of Investments in and Advances to
    Affiliaties  (Continued)
  Amount of Interest


October 31,








October 31,or Dividends Credited


2009


Gross


Gross


2010Portfolio Company

Investment(1)

to Income(5)


Other(2)


Fair Value


Additions(3)


Reductions(4)


Fair ValuePrevisor, Inc.

Common Stock










7,000,000



3,400,000







10,400,000(Human Capital Management)Security Holdings, B.V.

Common Equity Interest










10,000,000



1,731,700



(6,431,700
)


5,300,000(Technology Services)SGDA Europe B.V.

Common Equity Interest










7,450,000



8,700,001



(4,050,001
)


12,100,000(Soil Remediation)

Loan


150,000







1,500,000











1,500,000U.S. Gas & Electric, Inc.

Loan


1,205,836







8,263,979



428,810







8,692,789(Energy Services)

Credit Facility






















Credit Facility






















Preferred Stock










58,907,092



17,219,977







76,127,069Preferred Stock










1,921,570



555,332







2,476,902Vitality Foodservice, Inc.

Common Stock










10,089,957







(10,089,957
)


(Non-Alcoholic Beverages)

Preferred Stock


665,967







13,875,005



169,583



(14,044,588
)


Warrants










3,835,058







(3,835,058
)


Total companies more than 5% owned, but less than 25%



$
7,283,227


















$
167,106,213       (1)
    
    Common stock, preferred stock, warrants, options and equity
    interests are generally non-income producing and restricted. The
    principal amount for loans and debt securities and the number of
    shares of common and preferred stock are shown in the
    consolidated schedule of investments as of October 31, 2010.(2)
    
    Other includes interest, dividend, or other income which was
    applied to the principal of the investment and therefore reduced
    the total investment. These reductions are also included in the
    Gross Reductions for the investment, as applicable.(3)
    
    Gross additions include increases in the cost basis of
    investments resulting from new portfolio investments,
    paid-in-kind
    interest or dividends, the amortization of discounts and closing
    fees, and the exchange of one or more existing securities for
    one or more new securities. Gross additions also include net
    increases in unrealized appreciation or net decreases in
    unrealized depreciation.(4)
    
    Gross reductions include decreases in the cost basis of
    investments resulting from principal collections related to
    investment repayments or sales and the exchange of one or more
    existing securities for one or more new securities. Gross
    reductions also include net increases in unrealized depreciation
    or net decreases in unrealized appreciation.(5)
    
    Represents the total amount of interest or dividends credited to
    income for a portion of the year an investment was included in
    the companies more than 25% owned.*
    
    All or a portion of the dividend income on this investment was
    or will be paid in the form of additional securities or by
    increasing the liquidation preference. Dividends
    paid-in-kind
    are also included in the Gross Additions for the investment, as
    applicable.   116




---



##### Table of Contents



Signature

Title

Date/s/  Michael
    Tokarz(Michael
    Tokarz)

Chairman
    (Principal Executive Officer)
    and Director

Date: December 21, 2010/s/  Peter
    Seidenberg
    (Peter Seidenberg)

Chief Financial Officer

Date: December 21, 2010/s/  Emilio
    Dominianni(Emilio
    Dominianni)

Director

Date: December 21, 2010/s/  Gerald
    Hellerman
    (Gerald Hellerman)

Director

Date: December 21, 2010/s/  Warren
    Holtsberg(Warren
    Holtsberg)

Director

Date: December 21, 2010/s/  Robert
    C. Knapp(Robert
    C. Knapp)

Director

Date: December 21, 2010/s/  William
    E. Taylor(William
    E. Taylor)

Director

Date: December 21, 2010  117