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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, 2008oro

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(Zip Code)   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
  Rule 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:




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##### 





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


Business


3Item 1A.


Risk Factors


15Item 1B.


Unresolved Staff Comments


25Item 2.


Properties


25Item 3.


Legal Proceedings


25Item 4.


Submission of Matters to a Vote of Security
    Holders


25Part IIItem 5.


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


25Item 6.


Selected Consolidated Financial Data


30Item 7.


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


31Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


68Item 8.


Financial Statements and Supplementary Data


69Item 9.


Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


107Item 9A.


Controls and Procedures


107Item 9B.


Other Information


109Part IIIItem 10.


Directors and Executive Officers of the
    Registrant


109Item 11.


Executive Compensation


109Item 12.


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


109Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


109Item 14.


Principal Accounting Fees and Services


109Part IVItem 15.


Exhibits, Financial Statements, Schedules


110SIGNATURES


114EX-10.11EX-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
    and/or
 3




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and/or
       4




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Corporate
    History And Offices
        (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

2008


2007


2006Senior/Subordinated Loans and credit facilities


39.75
%


53.56
%


55.98
%Common Stock


22.59
%


18.31
%


39.40
%Warrants


0.89
%


0.30
%


0.46
%Preferred Stock


29.60
%


19.18
%


13.79
%Other Equity Investments


23.51
%


11.38
%


6.77
%      6




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##### Table of Contents



Market.
  Investment Criteria.
    
    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;
    Favorable industry and competitive dynamics; and
    Stable free cash flow of the business.  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.
  Co-Investments.
 7




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




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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 out-of-pocket
 10




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Valuation
    of Portfolio Securities
            Valuation
    Methodology
  and/or
     11




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12




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and/or
  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.
         13




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
    does not have any class of securities with respect to which a
    broker or dealer may extend margin credit;
    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
                  (202) 942-8090. http://www.sec.gov.
 14




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http://www.mvccapital.com.
      Item 1A.
    Risk
    Factors    BUSINESS
    RISKS
  Business risks are risks that are associated with general
    business conditions, the economy, and the operations of the
    Company. Business risks are not risks associated with our
    specific investments or an offering of our securities.
  We
    depend on key personnel of TTG Advisers, especially
    Mr. Tokarz, in seeking to achieve our investment
    objective.
    Our
    investment adviser, TTG Advisers, is a recently-formed
    entity.
    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. 15




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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.
          Economic
    recessions or downturns could impair our portfolio companies and
    harm our operating results.
        We may
    not realize gains from our equity investments.
   16




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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.
    Complying
    with the RIC requirements may cause us to forego otherwise
    attractive opportunities.
   17




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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 us could have a material
    impact on our business.
    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; 18




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
    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; 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
  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.
       19




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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.
        A
    portion of our existing investment portfolio was not selected by
    the investment team of TTG Advisers.
   20




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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.
    Allocation of
    Investment Opportunities
  Our
    relationship with MVC Acquisition Corp., which has not commenced
    operations, could give rise to conflicts of interest with
    respect to the allocation of investment opportunities between us
    and MVC Acquisition Corp.
   21




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The
    war with Iraq, terrorist attacks, and other acts of violence or
    war may affect any market for our common stock, impact the
    businesses in which we invest and harm our operations and our
    profitability.
    Our
    financial condition and results of operations will depend on our
    ability to effectively manage our future growth.
    INVESTMENT
    RISKS
  Investment risks are risks associated with our
    determination to execute on our business objective. These risks
    are not risks associated with general business conditions or
    those relating to an offering of our securities.
  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. 22




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
    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
    them. 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.
    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
 23




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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.
    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.
   24




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Investing
    in our securities may involve a high degree of
    risk.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   Part II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities      Quarter Ended

High


LowFISCAL YEAR 200810/31/08

$
15.29


$
10.5607/31/08

$
15.73


$
13.2904/30/08

$
15.98


$
14.2801/31/08

$
17.44


$
13.93FISCAL YEAR 200710/31/07

$
19.01


$
15.7007/31/07

$
19.93


$
15.8304/30/07

$
17.89


$
15.3801/31/07

$
15.26


$
13.11  25




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Performance
    Graph
    Shareholder
    Return Performance Graph
    Five-Year Cumulative Total
    Return1(Through October 31, 2008)
  
  Dividends
  12-month
      1
 26




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For
    the Quarter Ended January 31, 2007
    For
    the Quarter Ended April 30, 2007
   27




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For
    the Quarter Ended July 31, 2007
    For
    the Quarter Ended October 31, 2007
    For
    the Quarter Ended January 31, 2008
    For
    the Quarter Ended April 30, 2008
    For
    the Quarter Ended July 31, 2008
    For
    the Quarter Ended October 31, 2008
      * form 1099-DIV,
     28




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Issuer
    Purchases of Equity Securities
    Total Number of


Average PriceQuarter Ended

Shares Purchased


Paid per Share10/31/08


5,699


$
12.4707/31/08


3,464


$
14.3504/30/08


6,546


$
15.6801/31/08






  29




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Item 6.
    Selected
    Consolidated Financial Data  See Managements Discussion and Analysis
    of Financial Condition and Results of Operations on
    page 36 for more information.
  Selected
    Consolidated Financial Data
  Year Ended October 31,2008


2007


2006


2005


2004(In thousands, except per share data)Operating Data:Interest and related portfolio income:Interest and dividend income

$
26,047


$
22,826


$
13,909


$
9,457


$
2,996Fee income


3,613



3,750



3,828



1,809



926Other income


367



374



771



933



64Total operating income


30,027



26,950



18,508



12,199



3,986Expenses:Incentive compensation (Note 5)


10,822



10,813



6,055



1,117



Management fee


8,989



7,034











Interest and other borrowing costs


4,464



4,859



1,594



31



2Administrative


3,620



2,559



3,420



3,021



2,891Employee compensation and benefits










3,499



2,336



1,366Total operating expenses


27,895



25,265



14,568



6,505



4,259Litigation recovery of management fees


















370Net operating income (loss) before taxes


2,132



1,685



3,940



5,694



97Tax expense (benefit), net


(936
)


(375
)


159



(101
)


79Net operating income (loss)


3,068



2,060



3,781



5,795



18Net realized and unrealized gain (loss):Net realized gain (loss) on investments and foreign currency


1,418



66,944



5,221



(3,295
)


(37,795
)Net change in unrealized appreciation (depreciation) on
    investments


59,465



(3,302
)


38,334



23,768



49,382Net realized and unrealized gain on investments and foreign
    currency


60,883



63,642



43,555



20,473



11,587Net increase in net assets resulting from operations

$
63,951


$
65,702


$
47,336


$
26,268


$
11,605Per Share:Net increase in net assets per share resulting from operations

$
2.63


$
2.92


$
2.48


$
1.45


$
0.91Dividends per share

$
0.48


$
0.54


$
0.48


$
0.24


$
0.12Balance Sheet Data:Portfolio at value

$
490,804


$
379,168


$
275,892


$
122,298


$
78,520Portfolio at cost


445,600



393,428



286,851



171,591



151,582Total assets


510,711



470,527



347,047



201,379



126,577Shareholders equity


421,871



369,097



236,993



198,707



115,567Shareholders equity per share (net asset value)

$
17.36


$
15.21


$
12.41


$
10.41


$
9.40Common shares outstanding at period end


24,297



24,265



19,094



19,087



12,293Other Data:Number of Investments funded in period


15



26



24



9



7Investments funded ($) in period

$
126,300


$
167,134


$
166,300


$
53,836


$
60,710   30




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2008


2007


2006Qtr 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


6,246



6,804



8,081



8,896



8,438



7,030



6,073



5,409



6,104



4,607



3,915



3,882Incentive compensation


1,496



3,929



3,740



1,657



771



1,618



4,898



3,526



1,338



1,161



2,005



1,551Interest, fees and other borrowing costs


1,190



1,022



1,081



1,171



1,223



1,252



1,256



1,128



910



636



39



9Management fee


2,510



2,276



2,185



2,018



1,929



1,616



1,854



1,635















Administrative


1,299



887



753



681



630



608



652



669



2,117



1,676



1,739



1,387Tax expense (benefit)


(830
)


58



(186
)


22



77



(78
)


(394
)


20



16



62



(24
)


105Net operating income (loss) before net realized and unrealized
    gains


581



(1,368
)


508



3,347



3,808



2,014



(2,193
)


(1,569
)


1,723



1,072



156



830Net increase in net assets resulting from operations


7,357



18,623



17,158



20,813



8,514



13,788



24,323



19,077



15,866



8,046



11,117



12,307Net increase in net assets resulting from operations per share


0.30



0.77



0.70



0.86



0.35



0.57



1.00



1.00



0.83



0.42



0.58



0.65Net asset value per share


17.36



17.18



16.53



15.95



15.21



14.98



14.53



13.23



12.41



11.70



11.40



10.94   Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  may, will, expect, believe,
    anticipate, intend, could, estimate, might continue,
  Overview
  and/or
  and/or
   31




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i.e.
  and/or
  and/or and/or
    Operating
    Income
  For the Fiscal Years Ended October 31, 2008, 2007 and
    2006.
  For
    the Fiscal Year Ended October 31, 2008
    For
    the Fiscal Year Ended October 31, 2007
   32




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For
    the Fiscal Year Ended October 31, 2006
  interest/dividend
  Operating
    Expenses
  For the Fiscal Years Ended October 31, 2008, 2007 and
    2006.
  For
    the Fiscal Year Ended October 31, 2008
     33




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For
    the Fiscal Year Ended October 31, 2007
       34




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For
    the Fiscal Year Ended October 31, 2006
         35




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Realized
    Gains and Losses On Portfolio Securities
  For the Fiscal Years Ended October 31, 2008, 2007 and
    2006.
  For
    the Fiscal Year Ended October 31, 2008
      For
    the Fiscal Year Ended October 31, 2007
   36




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For
    the Fiscal Year Ended October 31, 2006
               37




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Unrealized
    Appreciation and Depreciation on Portfolio Securities
  For the Fiscal Years Ended October 31, 2008, 2007 and
    2006.
  For
    the Fiscal Year Ended October 31, 2008
    For
    the Fiscal Year Ended October 31, 2007
    For
    the Fiscal Year Ended October 31, 2006
   38




---



##### Table of Contents



Portfolio
    Investments
  For the Fiscal Years Ended October 31, 2008 and
    2007.
  For
    the Fiscal Year Ended October 31, 2008
       39




---



##### Table of Contents



40




---



##### Table of Contents



41




---



##### Table of Contents



For
    the Fiscal Year Ended October 31, 2007
           42




---



##### Table of Contents



43




---



##### Table of Contents



44




---



##### Table of Contents



Portfolio
    Companies
    Actelis
    Networks, Inc.
  e-business
    Amersham
    Corporation
                    Auto
    MOTOL BENI
     45




---



##### Table of Contents



BP
    Clothing, LLC
  ®
          Custom
    Alloy Corporation
         46




---



##### Table of Contents



Dakota
    Growers Pasta Company, Inc.
        DPHI,
    Inc. (formerly DataPlay, Inc.)
    Series A-1
  Endymion
    Systems, Inc.
      Foliofn,
    Inc.
  fn
          47




---



##### Table of Contents



GDC
    Acquisitions, LLC d/b/a JDC Lighting, LLC
          Genevac
    U.S. Holdings, Inc.
          Harmony
    Pharmacy & Health Center, Inc.
           48




---



##### Table of Contents



Henry
    Company
          HuaMei
    Capital Company, Inc.
  Chinese-American,
      Impact
    Confections, Inc.
          Innovative
    Brands, LLC
         49




---



##### Table of Contents



Lockorder
    Limited (formerly Safestone Technologies PLC)
  e-business
    Mainstream
    Data, Inc.
      Marine
    Exhibition Corporation
          MVC
    Automotive Group B.V.
         50




---



##### Table of Contents



MVC
    Partners LLC
            Octagon
    Credit Investors, LLC
         51




---



##### Table of Contents



Ohio
    Medical Corporation
              Phoenix
    Coal Corporation
             52




---



##### Table of Contents



PreVisor,
    Inc.
            SafeStone
    Technologies Limited (formerly Safestone Technologies
    PLC)
  e-business
    Security
    Holdings, B.V.
          SGDA
    Europe B.V.
             53




---



##### Table of Contents



SGDA
    Sanierungsgesellschaft fur Deponien und Altasten
    mbH
          SIA
    Tekers Invest
          Sonexis,
    Inc.
      SP
    Industries, Inc.
       54




---



##### Table of Contents



Storage
    Canada, LLC
          Summit
    Research Labs, Inc.
           55




---



##### Table of Contents



TerraMark,
    L.P.
        Timberland
    Machines & Irrigation, Inc.
                Total
    Safety U.S., Inc.
     56




---



##### Table of Contents



Turf
    Products, LLC
              U.S.
    Gas & Electric, Inc.
           57




---



##### Table of Contents



Velocitius
    B.V.
                Vendio
    Services, Inc.
         58




---



##### Table of Contents



Vestal
    Manufacturing Enterprises, Inc.
              Vitality
    Foodservice, Inc.
            WBS
    Carbons Acquisitions Corp.
       59




---



##### Table of Contents



Liquidity
    and Capital Resources
       60




---



##### Table of Contents



Commitments
    to/for Portfolio Companies:
    Commitments
    of MVC Capital, Inc.
  Portfolio Company

Amount Committed


Amount Funded at October 31, 2008Timberland Junior Revolver

$
5.0 million


$
5.0 millionStorage Canada Loan

$
6.0 million


$
1.2 millionMarine Revolving Loan Facility

$
2.0 million


$
700,000Octagon Revolving Credit Facility

$
12.0 million


$
650,000Velocitius Revolving Line I

$
260,000



Harmony Pharmacy Revolving Credit Facility

$
4.0 million


$
4.0 millionVelocitius Revolving Line II

$
650,000



Tekers Guarantee

$
2.0 million



U.S. Gas Revolving Credit Facility

$
10.0 million


$
4.9 millionMVC Automotive Guarantee

$
8.5 million



MVC Automotive Guarantee

$
5.2 million



MVC Automotive Guarantee

$
1.9 million



Turf Junior Revolver

$
1.0 million


$
1.0 millionTotal

$
58.5 million


$
17.5 million          61




---



##### 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 YearsTerm Debt Portion of Credit Facility

$
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 Accounting for Uncertainty in Income
    Taxes  an interpretation of FASB Statement
    No. 109 Accounting for Income Taxes
  Fair Value Measurements
  Tax Status and Capital Loss
    Carryforwards
 64




---



##### Table of Contents



Valuation of Portfolio Securities
          and/or
   65




---



##### Table of Contents



66




---



##### Table of Contents



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,
  Cash Equivalents
  Restricted Securities
 67




---



##### Table of Contents



Distributions to Shareholders
  Income Taxes
    Reclassifications
 Item 7A.Quantitative
    and Qualitative Disclosures about Market Risk    90-day 90-day
   68




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  CONSOLIDATED
    FINANCIAL STATEMENTS
  MVC
    Capital, Inc.
  Consolidated
    Balance Sheets
  October 31,


October 31,2008


2007ASSETSAssetsCash and cash equivalents

$
12,764,465


$
84,727,933Investments at fair valueNon-control/Non-affiliated investments (cost $124,471,466 and
    $119,646,416)


95,781,109



85,543,666Affiliate investments (cost $138,694,946 and $116,118,374)


181,092,250



127,959,158Control investments (cost $182,433,350 and $157,663,563)


213,930,758



165,664,710Total investments at fair value (cost $445,599,762 and
    $393,428,353 )


490,804,117



379,167,534Dividends, interest and fees receivable


2,641,994



3,105,100Prepaid expenses


2,297,434



2,448,861Prepaid taxes


759,025



228,159Deferred tax


1,443,765



803,283Deposits






25,156Other assets






20,993Total assets

$
510,710,800


$
470,527,019LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesRevolving credit facility

$
19,000,000


$
30,000,000Term loan


50,000,000



50,000,000Provision for incentive compensation (Note 5)


15,794,295



17,875,496Management fee payable


2,485,580



1,929,258Other accrued expenses and liabilities


1,106,256



977,953Professional fees


425,035



558,091Consulting fees


28,822



89,452Total liabilities


88,839,988



101,430,250Shareholders equityCommon stock, $0.01 par value; 150,000,000 shares
    authorized; 24,297,087 and 24,265,336 shares outstanding,
    respectively


283,044



283,044Additional
    paid-in-capital


429,400,261



431,814,990Accumulated earnings


30,144,990



24,375,844Dividends paid to stockholders


(45,425,325
)


(33,764,634
)Accumulated net realized loss


(4,933,051
)


(6,283,708
)Net unrealized appreciation (depreciation)


45,204,355



(14,260,819
)Treasury stock, at cost, 4,007,361 and 4,039,112 shares
    held, respectively


(32,803,462
)


(33,067,948
)Total shareholders equity


421,870,812



369,096,769Total liabilities and shareholders equity

$
510,710,800


$
470,527,019Net asset value per share

$
17.36


$
15.21    69




---



##### Table of Contents



MVC
    Capital, Inc.
 Consolidated
    Schedule of Investments
    October 31, 2008  Company

Industry

Investment

Principal


Cost


Fair ValueNon-control/Non-affiliated investments - 22.70% (a, c,
    g, f)Actelis Networks, Inc.

Technology Investments

Preferred Stock (150,602 shares) (d)





$
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



2,250,000Second Lien Seller Note 17.0000%, 06/30/2013 (b, h, i)


3,539,496



3,539,496



3,275,0006,013,017



5,525,000BP Clothing, LLC

Apparel

Second Lien Loan 14.0000%, 07/18/2012 (b, h)


18,229,090



18,008,868



18,229,090Term Loan A 8.0000%, 07/18/2011 (h)


2,133,750



2,111,978



2,111,978Term Loan B 10.4000%, 07/18/2011 (h)


2,000,000



1,979,725



1,952,62822,100,571



22,293,696DPHI, Inc.

Technology Investments

Preferred Stock (602,131 shares) (d)






4,520,355



FOLIOfn,Inc.

Technology Investments

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






15,000,000



13,600,000GDC Acquisition, LLC

Electrical Distribution

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


2,960,753



2,956,638



2,960,753Henry Company

Building Products / Specialty Chemicals

Term Loan A 6.6175%, 04/06/2011 (h)


1,837,309



1,837,309



1,778,031Term Loan B 10.8675%, 04/06/2011 (h)


2,000,000



2,000,000



2,000,0003,837,309



3,778,031Innovative Brands, LLC

Consumer Products

Term Loan 11.7500%, 09/25/2011 (h)


13,033,333



13,033,333



13,033,333Lockorder Limited

Technology Investments

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






2,007,701



MainStream Data, Inc.

Technology Investments

Common Stock (5,786 shares) (d)






3,750,000



Phoenix Coal Corporation

Coal Processing and Production

Common Stock (666,667 shares) (d)






500,000



104,667SafeStone Technologies Limited

Technology Investments

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






2,007,701



Sonexis, Inc.

Technology Investments

Common Stock (131,615 shares) (d)






10,000,000



SP Industries, Inc.

Laboratory Research Equipment

First Lien Loan 8.7038%, 12/28/2012 (h)


997,741



638,401



997,741Second Lien Loan 15.0000%, 12/31/2013 (b, h)


24,684,219



24,249,319



24,684,21924,887,720



25,681,960Storage Canada, LLC

Self Storage

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


1,214,500



1,218,697



1,214,500TerraMark, L.P.

Specialty Chemicals

Senior Secured Loan 10.0000%, 2/12/2009 (h)


1,500,000



1,474,810



1,500,000Total Safety U.S., Inc.

Engineering Services

First Lien Seller Note 6.5119%, 12/08/2012 (h)


982,500



982,500



908,058Second Lien Seller Note 9.6713%, 12/08/2013 (h)


3,500,000



3,500,000



3,500,0004,482,500



4,408,058WBS Carbons Acquistions Corp.

Specialty Chemicals

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


1,681,111



1,681,111



1,681,111Sub Total Non-control/Non-affiliated investments








124,471,466



95,781,109Affiliate investments  42.93% (a, c, g, f)Custom Alloy Corporation

Manufacturer of Pipe Fittings

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


12,000,000



11,674,253



12,000,000Convertible Series A Preferred Stock (9 shares)






44,000



143,000Convertible Series B Preferred Stock (1,991 shares)






9,956,000



32,357,00021,674,253



44,500,000Dakota Growers Pasta Company, Inc.

Manufacturer of Packaged Foods

Common Stock (1,016,195 shares)






5,521,742



10,161,950Convertible Preferred Stock (1,065,000 shares) (d)






10,357,500



10,650,00015,879,242



20,811,950Endymion Systems, Inc.

Technology Investments

Preferred Stock (7,156,760 shares) (d)






7,000,000



Harmony Pharmacy & Health Center, Inc.

Healthcare  Retail

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


4,307,850



4,307,850



4,000,000Demand Note 10.0000% 12/01/2009 (h, i)


3,300,000



3,300,000



3,300,000Common Stock (2,000,000 shares) (d)






750,000



750,0008,357,850



8,050,000HuaMei Capital Company, Inc.

Financial Services

Common Stock (500 shares) (d)






2,000,000



2,000,000Marine Exhibition Corporation

Theme Park

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


10,940,457



10,806,757



10,940,457Secured Revolving Note  4.7038%, 06/30/2013 (h)


700,000



700,000



700,000Convertible Preferred Stock (20,000 shares) (b)






2,385,091



2,385,09113,891,848



14,025,548   70




---



##### Table of Contents



MVC
    Capital, Inc.
  Consolidated
    Schedule of Investments  (Continued)
    October 31, 2008
  Company

Industry

Investment

Principal


Cost


Fair ValueOctagon Credit Investors, LLC

Financial Services

Term Loan 7.9538%, 12/31/2011 (h)

$
5,000,000


$
4,957,803


$
5,000,000Revolving Line of Credit 7.9538%, 12/31/2011 (h)


650,000



650,000



650,000Limited Liability Company Interest






1,132,437



2,587,3426,740,240



8,237,342PreVisor, Inc.

Human Capital Management

Common Stock (9 shares) (d)






6,000,000



10,100,000Security Holdings, B.V

Electrical Engineering

Common Equity Interest (d, e)






28,154,200



28,154,200U.S. Gas & Electric, Inc.

Energy Services

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


7,856,322



7,692,195



7,856,322Senior Credit Facility 8.5000% 07/26/2010 (h)


4,368,340



4,368,340



4,368,340Senior Credit Facility 9.7200% 07/26/2010 (h)


571,429



571,429



571,429Convertible Series B Preferred Stock
    (32,200 shares) (d)






500,000



5,300,000Convertible Series C Preferred Stock (8,216 shares) (d)










350,00013,131,964



18,446,091Vitality Foodservice, Inc.

Non-Alcoholic Beverages

Common Stock (556,472 shares) (d)






5,564,716



9,829,657Preferred Stock (1,000,000 shares) (b, h)






10,300,633



13,202,404Warrants(d)










3,735,05815,865,349



26,767,119Sub Total Affiliate investments










138,694,946



181,092,250Control Investments  50.71% (a, c, g, f)MVC Automotive Group B.V.

Automotive Dealerships

Common Equity Interest (d, e)






34,736,939



41,500,000Bridge Loan 10.0000%, 12/31/2008 (e, h)


3,643,557



3,643,557



3,643,55738,380,496



45,143,557MVC Partners, LLC

Private Equity Firm

Limited Liability Company Interest(d)






332,698



132,698Ohio Medical Corporation

Medical Device Manufacturer

Common Stock (5,620 shares) (d)






17,000,000



17,200,000Series A Convertible Preferred Stock (11,306 shares) (b, h)






30,000,000



34,201,08147,000,000



51,401,081SGDA Europe B.V.

Soil Remediation

Common Equity Interest (d, e)






7,450,000



7,450,000SGDA Sanierungsgesellschaft

Soil Remediation

Term Loan 7.0000%, 08/25/2009 (e, h)


6,187,350



6,129,434



6,129,434fur Deponien und Altlasten mbH



Common Equity Interest  (d, e)






438,551



560,000Preferred Equity Interest  (d, e)






5,000,000



6,100,00011,567,985



12,789,434SIA Tekers Invest

Port Facilities

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






2,300,000



3,175,000Summit Research Labs, Inc.

Specialty Chemicals

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


8,940,592



8,793,022



8,940,592Common Stock (1,115 shares) (d)






16,000,000



33,000,00024,793,022



41,940,592Timberland Machines & Irrigation, Inc.

Distributor  Landscaping and

Senior Subordinated Debt 14.5500%, 08/04/2009 (b, h)


7,250,271



7,234,799



7,250,271Irrigation Equipment

Junior Revolving Line of Credit 12.5000%, 07/07/2009 (h, i)


5,000,000



5,000,000



1,000,000Common Stock (542 shares) (d)






5,420,291



Warrants (d)










17,655,090



8,250,271Turf Products, LLC

Distributor  Landscaping and

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


7,676,330



7,652,949



7,676,330Irrigation Equipment

Junior Revolving Note 6.0000%, 05/01/2011(h)


1,000,000



1,000,000



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






3,821,794



5,821,794Warrants (d)










12,474,743



14,498,124Velocitius B.V

Renewable Energy

Common Equity Interest (d, e)






11,395,315



21,000,000Vendio Services, Inc.

Technology Investments

Common Stock (10,476 shares) (d)






5,500,000



14,447Preferred Stock (6,443,188 shares) (d)






1,134,001



6,585,5546,634,001



6,600,001Vestal 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



950,0002,450,000



1,550,000Sub Total Control Investments










182,433,350



213,930,758TOTAL INVESTMENT ASSETS  116.34%(f)







$
445,599,762


$
490,804,117    71




---



##### Table of Contents



MVC
    Capital, Inc.
  Consolidated
    Schedule of Investments  (Continued)
    October 31, 2008
    (a)
    
    These securities are restricted
    from public sale without prior registration under the Securities
    Act of 1933. The Fund 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 Fund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 Fund 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 $421,870,812 as of October 31, 2008.(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.
    
    Denotes zero cost or fair value.   72




---



##### Table of Contents



MVC
    Capital, Inc.
  Consolidated
    Schedule of Investments
 October 31,
    2007
  Company

Industry

Investment

Principal


Cost


Fair ValueNon-control/Non-affiliated investments  23.18% (a,
    c, g, f)Actelis Networks, Inc.

Technology Investments

Preferred Stock (150,602 shares) (d)





$
5,000,003


$
Amersham Corp.

Manufacturer of Precision - Machined Components

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

$
2,659,035



2,659,035



2,659,035Second Lien Seller Note 16.0000%, 06/30/2013 (b, h)


3,090,594



3,090,594



3,090,5945,749,629



5,749,629BP Clothing, LLC

Apparel

Second Lien Loan 14.0000%, 07/18/2012 (b, h)


17,829,579



17,549,872



17,829,580Term Loan A 9.3800%, 07/18/2011 (h)


2,550,000



2,514,351



2,514,351Term Loan B 11.5300%, 07/18/2011 (h)


2,000,000



1,972,222



1,972,22222,036,445



22,316,153DPHI, Inc.

Technology Investments

Preferred Stock (602,131 shares) (d)






4,520,355



FOLIOfn,Inc.

Technology Investments

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






15,000,000



7,600,000Henry Company

Building Products / Specialty Chemicals

Term Loan A 8.6280%, 04/06/2011 (h)


1,837,309



1,837,309



1,837,309Term Loan B 12.5025%, 04/06/2011(h)


2,000,000



2,000,000



2,000,0003,837,309



3,837,309Innovative Brands, LLC

Consumer Products

Term Loan 11.1250%, 09/25/2011 (h)


14,850,000



14,850,000



14,850,000JDC Lighting, LLC

Electrical Distribution

Senior Subordinated Debt 17.0000%, 01/31/2009 (b, h)


3,175,371



3,147,234



3,175,371Lockorder Limited

Technology Investments

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






2,007,701



MainStream Data, Inc.

Technology Investments

Common Stock (5,786 shares) (d)






3,750,000



SafeStone Technologies Limited

Technology Investments

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






2,007,701



Sonexis, Inc.

Technology Investments

Common Stock (131,615 shares) (d)






10,000,000



SP Industries, Inc.

Laboratory Research Equipment

Term Loan B 13.1300%, 03/31/2011 (h)


7,392,634



7,361,420



7,392,634Senior Subordinated Debt 16.0000%, 03/31/2012 (b, h)


13,485,570



13,236,072



13,485,57020,597,492



20,878,204Storage Canada, LLC

Self Storage

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


1,320,500



1,326,047



1,320,500Term Loan 8.7500%, 10/06/2013 (h)


619,000



619,000



619,000Term Loan 8.7500%, 01/19/2014 (h)


705,000



705,000



705,0002,650,047



2,644,500Total Safety U.S., Inc.

Engineering Services

First Lien Seller Note 8.1425%, 12/08/2012 (h)


992,500



992,500



992,500Second Lien Seller Note 11.3318%, 12/08/2013 (h)


3,500,000



3,500,000



3,500,0004,492,500



4,492,500Sub Total Non-control/Non-affiliated investments








119,646,416



85,543,666Affiliate investments  34.67% (a, c, g,
    f)Custom Alloy Corporation

Manufacturer of Pipe Fittings

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


14,035,389



13,557,190



14,035,389Convertible Series A Preferred Stock (9 shares) (d)






44,000



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






9,956,000



9,956,00023,557,190



24,035,389Dakota Growers Pasta Company, Inc.

Manufacturer of Packaged Foods

Common Stock (1,016,195 shares)






5,521,742



10,161,950Convertible Preferred Stock (1,065,000) (d)






10,357,500



10,650,00015,879,242



20,811,950Endymion Systems, Inc.

Technology Investments

Preferred Stock (7,156,760 shares) (d)






7,000,000



Genevac U.S. Holdings, Inc.

Laboratory Research Equipment

Senior Subordinated Debt 12.5000%, 01/03/2008 (e, h)


12,962,963



12,962,963



12,962,963Common Stock (140 shares) (b, e)






1,103,002



1,103,00214,065,965



14,065,965   73




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##### Table of Contents



MVC
    Capital, Inc.
  Consolidated
    Schedule of Investments
 October 31,
    2007  (Continued)
  Company

Industry

Investment

Principal


Cost


Fair ValueHuaMei Capital Company, Inc.

Financial Services

Common Stock (500 shares) (d)





$
2,000,000


$
2,000,000Impact Confections, Inc.

Confections Manufacturing and Distribution

Senior Subordinated Debt 17.0000%, 07/30/2009 (b, h)

$
5,718,372



5,664,803



5,718,372Senior Subordinated Debt 9.1287%, 07/29/2008 (h)


325,000



323,388



325,000Common Stock (252 shares) (d)






2,700,000



2,700,0008,688,191



8,743,372Marine Exhibition Corporation

Theme Park

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


10,506,628



10,344,177



10,506,628Convertible Preferred Stock (20,000 shares) (b)






2,203,455



2,203,45512,547,632



12,710,083Octagon Credit Investors, LLC

Financial Services

Term Loan 9.3790%, 12/31/2011 (h)


5,000,000



4,944,431



5,000,000Revolving Line of Credit 9.3790%, 12/31/2011 (h)


4,100,000



4,100,000



4,100,000Limited Liability Company Interest






1,110,370



3,765,27510,154,801



12,865,275Phoenix Coal Corporation

Coal Processing and Production

Common Stock (1,666,667 shares) (d)






1,000,000



1,000,000PreVisor, Inc.

Human Capital Management

Common Stock (9 shares) (d)






6,000,000



9,000,000Vitality Foodservice, Inc.

Non-Alcoholic Beverages

Common Stock (556,472 shares) (d)






5,564,716



9,064,716Preferred Stock (1,000,000 shares) (b, h)






9,660,637



12,562,408Warrants (d)










1,100,00015,225,353



22,727,124Sub Total Affiliate investments










116,118,374



127,959,158Control Investments  44.88% (a, c, g, f)auto MOTOL BENI

Automotive Dealership

Bridge Loan 12.0000%, 12/31/2007 (e, h)


2,000,000



2,000,000



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






2,000,000



2,700,0004,000,000



4,700,000Harmony Pharmacy & Health Center, Inc.

Healthcare  Retail

Revolving Credit Facility 10.0000%, 12/01/09 (h)


4,000,000



4,000,000



4,000,000Common Stock (2,000,000 shares) (d)






750,000



750,0004,750,000



4,750,000MVC Automotive Group B.V.

Automotive Dealership

Common Equity Interest (d,e)






20,911,500



20,911,500Bridge Loan 10.0000%, 03/17/2008 (e,h)


19,088,500



19,088,500



19,088,50040,000,000



40,000,000MVC Partners, LLC

Private Equity Firm

Limited Liability Company Interest (d)






116,173



116,173Ohio Medical Corporation

Medical Device Manufacturer

Common Stock (5,620 shares) (d)






17,000,000



17,200,000Convertible Unsecured Subordinated PromissaryNote 17.1288%, 07/30/2008 (h)


3,250,000



3,250,000



3,250,00020,250,000



20,450,000SIA Tekers Invest

Port Facilities

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






2,300,000



2,600,000SGDA Sanierungsgesellschaft

Soil Remediation

Term Loan 7.0000%, 08/25/2009 (e, h)


6,187,350



6,059,477



6,059,477fur Deponien und Altlasten



Common Equity Interest  (d, e)






438,551



560,000Preferred Equity Interest  (d, e)






5,000,000



5,600,00011,498,028



12,219,477Summit Research Labs, Inc.

Specialty Chemicals

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


5,414,733



5,334,906



5,414,733Common Stock (800 shares) (d)






11,200,000



12,200,00016,534,906



17,614,733   74




---



##### Table of Contents



MVC
    Capital, Inc.
  Consolidated
    Schedule of Investments
 October 31,
    2007  (Continued)
  Company

Industry

Investment

Principal


Cost


Fair ValueTimberland Machines & Irrigation, Inc.

Distributor  Landscaping and

Senior Subordinated Debt 14.5500%, 08/04/2009 (b, h)

$
6,860,431


$
6,824,441


$
6,860,431Irrigation Equipment

Junior Revolving Line of Credit 12.5000%, 07/07/2009 (h)


4,000,000



4,000,000



4,000,000Common Stock (542 shares) (d)






5,420,291



3,420,291Warrants (d)










16,244,732



14,280,722Turf Products, LLC

Distributor  Landscaping and

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


7,676,330



7,636,647



7,676,330Irrigation Equipment

Limited Liability Company Interest (d)






3,821,794



5,821,794Warrants (d)










11,458,441



13,498,124U.S. Gas & Electric, Inc.

Energy Services

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


5,551,318



5,343,119



5,551,318Senior Credit Facility 12.2500% 7/26/2010 (h)


84,882



84,882



84,882Convertible Series B Preferred Stock
    (32,200 shares) (d)






500,000



500,000Convertible Series C Preferred Stock (8,216 shares) (d)










Convertible Series F Preferred Stock (1,535 shares) (d)










5,928,001



6,136,200Velocitius B.V.

Renewable Energy

Revolving Credit Facility I, 8.0000%, 10/31/2009 (e, h)


191,084



191,084



191,084Revolving Credit Facility II, 8.0000%, 04/30/2010 (e, h)


612,882



612,882



612,882Common Equity Interest (d, e)






11,395,315



11,395,31512,199,281



12,199,281Vendio Services, Inc.

Technology Investments

Common Stock (10,476 shares) (d)






5,500,000



15,421Preferred Stock (6,443,188 shares) (d)






1,134,001



9,484,5796,634,001



9,500,000Vestal Manufacturing Enterprises, Inc.

Iron Foundries

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


700,000



700,000



700,000Common Stock (81,000 shares) (d)






1,850,000



3,700,0002,550,000



4,400,000WBS Carbons Acquistions Corp.

Specialty Chemicals

Bridge Loan 5.0000%, 11/22/2011 (b, h)


1,600,000



1,600,000



1,600,000Common Stock (400 shares) (d)






1,600,000



1,600,0003,200,000



3,200,000Sub Total Control Investments










157,663,563



165,664,710TOTAL INVESTMENT ASSETS 102.73% (f)







$
393,428,353


$
379,167,534     (a)
    
    These securities are restricted
    from public sale without prior registration under the Securities
    Act of 1933. The Fund 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 Funds equity and
    debt investments are issued by eligible portfolio companies, as
    defined in the Investment Company Act of 1940, except auto MOTOL
    BENI, Genevac U.S. Holdings, Inc., Lockorder Limited, MVC
    Automotive, SafeStone Technologies Limited, SGDA
    Sanierungsgesellschaft fur Deponien und Altlasten, SIA Tekers
    Invest and Velocitius B.V. The Fund 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 $369,096,769 as of October 31, 2007.(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.
    
    Denotes zero Cost/fair value.   75




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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, 2008


October 31, 2007


October 31, 2006Operating Income:Dividend incomeAffiliate investments

$
3,505,332


$
469,037


$
89,842Control investments










132,545Total dividend income


3,505,332



469,037



222,387Interest income (net of foreign taxes withheld of $0, $0, and
    $18,433, respectively)Non-control/Non-affiliated investments


11,608,730



12,091,574



6,930,733Affiliate investments


5,838,181



5,011,527



2,922,372Control investments


5,095,015



5,254,144



3,833,499Total interest income


22,541,926



22,357,245



13,686,604Fee incomeNon-control/Non-affiliated investments


1,037,745



921,311



1,187,954Affiliate investments


1,022,733



1,671,940



470,530Control investments


1,552,257



1,157,022



2,169,236Total fee income


3,612,735



3,750,273



3,827,720Other income


366,818



373,912



771,405Total operating income


30,026,811



26,950,467



18,508,116Operating Expenses:Incentive compensation (Note 5)


10,822,127



10,813,362



6,055,024Management fee


8,989,491



7,034,287



Interest and other borrowing costs


4,463,822



4,859,429



1,594,009Other expenses


791,789



500,288



334,212Legal fees


938,000



468,000



685,396Insurance


379,725



408,606



471,711Audit fees


473,500



345,000



381,944Administration


330,680



287,573



194,826Directors fees


249,300



234,000



205,071Consulting fees


162,600



111,500



344,576Printing and postage


195,245



107,700



129,438Public relations fees


98,600



95,701



70,316Employee compensation and benefits










3,498,571Facilities










603,328Total operating expenses


27,894,879



25,265,446



14,568,422Net operating income before taxes


2,131,932



1,685,021



3,939,694Tax (Benefit) Expenses:Deferred tax benefit


(640,482
)


(255,163
)


(244,865
)Current tax (benefit) expense


(295,914
)


(119,529
)


403,937Total tax (benefit) expense


(936,396
)


(374,692
)


159,072Net operating income


3,068,328



2,059,713



3,780,622Net Realized and Unrealized Gain (Loss) on Investments and
    Foreign Currency:Net realized gain (loss) on investments and foreign currencyNon-control/Non-affiliated
    investments


(36,140
)


(73,842
)


(151,877
)Affiliate investments


1,116,952



451,461



5,373,267Control investments


283,118



66,516,647



Foreign currency


54,211



49,279



Total net realized gain on investments and foreign currency


1,418,141



66,943,545



5,221,390Net change in unrealized appreciation (depreciation) on
    investments


59,465,174



(3,301,612
)


38,334,356Net realized and unrealized gain on investments and foreign
    currency


60,883,315



63,641,933



43,555,746Net increase in net assets resulting from operations

$
63,951,643


$
65,701,646


$
47,336,368Net increase in net assets per share resulting from
    operations

$
2.63


$
2.92


$
2.48Dividends declared per share

$
0.48


$
0.54


$
0.48    76




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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, 2008


October 31, 2007


October 31, 2006Cash flows from Operating Activities:Net increase in net assets resulting from operations

$
63,951,643


$
65,701,646


$
47,336,368Adjustments to reconcile net increase in net assets resulting
    from operations to net cash provided (used) by operating
    activities:Realized gain


(1,418,141
)


(66,943,545
)


(5,221,390
)Net change in unrealized (appreciation) depreciation


(59,465,174
)


3,301,612



(38,334,356
)Amortization of discounts and fees


(103,428
)


(93,902
)


(505,428
)Increase in accrued
    payment-in-kind
    dividends and interest


(5,390,885
)


(2,850,999
)


(2,183,786
)Increase in allocation of flow through income


(22,067
)


(216,275
)


(279,422
)Changes in assets and liabilities:Interest and fees receivable


463,106



(1,487,589
)


(715,013
)Prepaid expenses


151,427



184,720



(2,232,767
)Prepaid taxes


(530,866
)


(228,159
)


98,374Deferred tax


(640,482
)


(255,163
)


(244,865
)Deposits


25,156



94,844



(120,000
)Other assets


20,993



33,803



33,804Payable for investment purchased










(79,708
)Incentive compensation (Note 5)


(2,081,201
)


10,703,144



Other Liabilities


490,939



637,797



7,492,705Purchases of equity investments


(79,196,164
)


(57,357,976
)


(45,913,914
)Purchases of debt instruments


(77,940,026
)


(114,538,723
)


(111,105,943
)Purchases of short term investments


(49,881,375
)


(9,902,105
)


(406,066,963
)Proceeds from equity investments


7,312,817



83,022,172



10,593,459Proceeds from debt instruments


104,614,110



52,303,760



37,895,884Sales/maturities of short term investments


49,853,750



10,000,000



458,554,888Net cash used by operating activities


(49,785,868
)


(27,890,939
)


(50,998,073
)Cash flows from Financing Activities:Issuance of common stock






83,825,625



Offering expenses






(5,431,091
)


Distributions to shareholders paid


(11,177,600
)


(11,992,785
)


(9,081,994
)Net borrowings under (repayments on) revolving credit facility


(11,000,000
)


(20,000,000
)


100,000,000Net cash provided (used) by financing activities


(22,177,600
)


46,401,749



90,918,006Net change in cash and cash equivalents for the year


(71,963,468
)


18,510,810



39,919,933Cash and cash equivalents, beginning of year


84,727,933



66,217,123



26,297,190Cash and cash equivalents, end of year

$
12,764,465


$
84,727,933


$
66,217,123    77




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##### Table of Contents



Non-cash activity:
  payment-in-kind
                             78




---



##### Table of Contents



79




---



##### 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, 2008


October 31, 2007


October 31, 2006Operations:Net operating income

$
3,068,328


$
2,059,713


$
3,780,622Net realized gain on investments and foreign currencies


1,418,141



66,943,545



5,221,390Net change in unrealized appreciation (depreciation) on
    investments


59,465,174



(3,301,612
)


38,334,356Net increase in net assets from operations


63,951,643



65,701,646



47,336,368Shareholder Distributions:Distributions to shareholders


(11,660,691
)


(12,171,688
)


(9,163,765
)Net decrease in net assets from shareholder distributions


(11,660,691
)


(12,171,688
)


(9,163,765
)Capital Share Transactions:Issuance of common stock






83,825,625



Offering expenses






(5,431,091
)


Reissuance of treasury stock in lieu of cash dividend


483,091



178,903



81,771Net increase in net assets from capital share transactions


483,091



78,573,437



81,771Total increase in net assets


52,774,043



132,103,395



38,254,374Net assets, beginning of year


369,096,769



236,993,374



198,739,000Net assets, end of year

$
421,870,812


$
369,096,769


$
236,993,374Common shares outstanding, end of year


24,297,087



24,265,336



19,093,929    80




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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 31,2008


2007


2006


2005


2004Net asset value, beginning of year

$
15.21


$
12.41


$
10.41


$
9.40


$
8.48Gain from operations:Net operating income


0.24



0.13



0.20



0.32



Net realized and unrealized gain on investments


2.39



2.79



2.28



1.13



0.91Total gain from investment operations


2.63



2.92



2.48



1.45



0.91Less distributions from:Income


(0.09
)


(0.08
)


(0.21
)


(0.24
)


Return of capital


(0.39
)


(0.46
)


(0.27
)






(0.12
)Total distributions


(0.48
)


(0.54
)


(0.48
)


(0.24
)


(0.12
)Capital share transactionsAnit-dilutive (Dilutive) effect of share issuance






0.42







(0.20
)


Anti-dilutive effect of share repurchase program


















0.13Total capital share transactions






0.42







(0.20
)


0.13Net asset value, end of year

$
17.36


$
15.21


$
12.41


$
10.41


$
9.40Market value, end of year

$
12.30


$
17.06


$
13.08


$
11.25


$
9.24Market premium (discount)


(29.15
)%


12.16
%


5.40
%


8.07
%


(1.70
)%Total Return  At NAV(a)


17.49
%


27.39
%


24.23
%


13.36
%


12.26
%Total Return  At Market(a)


(25.44
)%


35.02
%


20.75
%


24.38
%


15.56
%Ratios and Supplemental Data:Net assets, end of year (in thousands)

$
421,871


$
369,097


$
236,993


$
198,739


$
115,567Ratios to average net assets:Expenses excluding tax expense (benefit)


7.00
%


7.89
%


6.78
%


3.75
%


3.68
%(b)Expenses including tax expense (benefit)


6.77
%


7.78
%


6.85
%


3.69
%


3.74
%(b)Expenses excluding incentive compensation


4.05
%


4.40
%


4.03
%


3.05
%


3.74
%(b)Expenses excluding incentive compensation, interest and other
    borrowing costs


2.93
%


2.88
%


3.29
%


3.03
%


3.74
%(b)Net operating income (loss) before tax expense (benefit)


0.54
%


0.53
%


1.83
%


3.28
%


0.08
%Net operating income (loss) after tax expense (benefit)


0.77
%


0.64
%


1.76
%


3.34
%


0.02
%Net operating income (loss) before incentive compensation


3.49
%


4.02
%


4.58
%


3.98
%


0.02
%Net operating income (loss) before incentive compensation,
    interest and other borrowing costs


4.61
%


5.54
%


5.32
%


4.00
%


0.02
%     (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.(b)
    
    The expense ratio for the year ended October 31, 2004,
    included a one-time expense recovery of approximately $250,000.
    For the year ended October 31, 2004, without this one-time
    recovery, the expense ratio, excluding and including tax expense
    would have been 3.89% and 3.95%, respectively.   81




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes
    to Consolidated Financial Statements
 October 31, 2008
  1.
    Organization
    and Business Purpose  and/or
                 82




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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 Fair
    Value Measurements
  Valuation of Portfolio Securities
     83




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      and/or
           84




---



##### 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
 85




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Investment Classification
  Investment Transactions and Related Operating
    Income first-in,
  Cash Equivalents
  Restricted Securities
  Distributions to Shareholders
  Income Taxes and/or
   86




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Accounting
    for Uncertainty in Income Taxes FSP 48-2. Accounting for
    Income Taxes and/or
  Reclassifications
  4.
    Management      and/or
 87




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    5.
    Incentive
    Compensation     88




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
         89




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    6.
    Dividends
    and Distributions to Shareholders  12-month
    For
    the Fiscal Year Ended October 31, 2008
          For
    the Fiscal Year Ended October 31, 2007
     90




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        For
    the Fiscal Year Ended October 31, 2006
          7.
    Transactions
    with Other Parties  Regulation S-K)
 91




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Form 10-K
  8.
    Concentration
    of Market and Credit Risk  90-day 90-day
  9.
    Portfolio
    Investments  For
    the Fiscal Year Ended October 31, 2008
     92




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
                     93




---



##### 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)
      For
    the Fiscal Year Ended October 31, 2007
     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)
                     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, 2008Timberland Junior Revolver

$
5.0 million


$
5.0 millionStorage Canada Loan

$
6.0 million


$
1.2 millionMarine Revolving Loan Facility

$
2.0 million


$
700,000Octagon Revolving Credit Facility

$
12.0 million


$
650,000Velocitius Revolving Line I

$
260,000



Harmony Pharmacy Revolving Credit Facility

$
4.0 million


$
4.0 millionVelocitius Revolving Line II

$
650,000



Tekers Guarantee

$
2.0 million



U.S. Gas Revolving Credit Facility

$
10.0 million


$
4.9 millionMVC Automotive Guarantee

$
8.5 million



MVC Automotive Guarantee

$
5.2 million



MVC Automotive Guarantee

$
1.9 million



Turf Junior Revolver

$
1.0 million


$
1.0 millionTotal

$
58.5 million


$
17.5 million          99




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
                       100




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Commitments
    of the Company:
          11.
    Certain
    Issuances of Equity Securities by the Issuer  30-day
 101




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        12.
    Tax
    Matters  Return of Capital Statement of Position (ROCSOP)
    Adjustment: book-to-tax
  Distributions to Shareholders:
  Tax Basis Accumulated Earnings (Deficit)Accumulated capital and other losses

$
(4,759,142
)Gross unrealized appreciation


98,066,931Gross unrealized depreciation


(55,704,546
)Net unrealized appreciation

$
42,362,385Total tax basis accumulated earnings


38,747,447Tax cost of investments


448,441,732Current year distributions to shareholders on a tax basisOrdinary income


10,971,153Return of Capital


689,538Prior year distributions to shareholders on a tax basisOrdinary income


12,171,688    102




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Qualified
    Dividend Income Percentage
    Corporate
    Dividends Received Deduction Percentage
    13.
    Income
    Taxes    Fiscal Year EndedOctober 31,


October 31,


October 31,2008


2007


2006Current tax (benefit) expense:Federal

$
(296,850
)

$
(119,529
)

$
314,859State


936







89,078Total current tax expense


(295,914
)


(119,529
)


403,937Deferred tax benefit:Federal


(513,849
)


(191,210
)


(203,645
)State


(126,633
)


(63,953
)


(41,220
)Total deferred tax benefit


(640,482
)


(255,163
)


(244,865
)Total tax (benefit) provision

$
(936,396
)

$
(374,692
)

$
159,072     Fiscal YearEndedOctober 31,2008Federal statutory tax rate


34.00%Permanent difference


(0.00)%State taxes, net of federal tax benefit


5.28%Valuation allowance for deferred tax assets


Other, net


Effective income tax rate


39.28%    103




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##### Table of Contents



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


October 31,


October 31,2008


2007


2006Deferred tax assets:Deferred revenues

$
817,700


$
781,935


$
548,120New York State NOL


625,364



19,584



Others


701



1,763



2,822Total deferred tax assets

$
1,443,765


$
803,283


$
548,120Valuation allowance










Net deferred tax assets

$
1,443,765


$
803,283


$
548,120Deferred tax liabilities:Deferred tax liabilities










Total deferred tax liabilities










Net deferred taxes

$
1,443,765


$
803,283


$
548,120   Valuation
    Allowance
    14.
    Segment
    Data   104




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##### Table of Contents



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


MVCFS


ConsolidatedInterest and dividend income

$
25,934,658


$
112,600


$
26,047,258Fee income


212,098



3,400,637



3,612,735Other income


366,818







366,818Total operating income


26,513,574



3,513,237



30,026,811Total operating expenses


21,997,671



5,897,208



27,894,879Net operating income (loss) before taxes


4,515,903



(2,383,971
)


2,131,932Tax expense (benefit)






(936,396
)


(936,396
)Net operating income (loss)


4,515,903



(1,447,575
)


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


1,419,838



(1,697
)


1,418,141Net change in unrealized appreciation on investments


59,465,174







59,465,174Net increase (decrease) in net assets resulting from operations


65,400,915



(1,449,272
)


63,951,643     15.
    Subsequent
    Events           105




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
            
    106




---



##### 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) Internal Control 
    Integrated Framework Internal Control  Integrated Framework
 107




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
                
    108




---



##### 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   109




---



##### Table of Contents



Part IV  Item 15.
    Exhibits,
    Financial Statements, Schedules  Page(s)(a)(1)

Financial StatementsConsolidated Balance SheetsOctober 31, 2008 and October 31, 2007


69Consolidated Schedule of InvestmentsOctober 31, 2008


70-72October 31, 2007


73-75Consolidated Statement of OperationsFor the Year Ended October 31, 2008,the Year Ended October 31, 2007 andthe Year Ended October 31, 2006


76Consolidated Statement of Cash FlowsFor the Year Ended October 31, 2008,the Year Ended October 31, 2007 andthe Year Ended October 31, 2006


77Consolidated Statement of Changes in Net AssetsFor the Year Ended October 31, 2008,the Year Ended October 31, 2007 andthe Year Ended October 31, 2006


80Consolidated Selected Per Share Data and RatiosFor the Year Ended October 31, 2008,the Year Ended October 31, 2007,the Year Ended October 31, 2006,the Year Ended October 31, 2005 andthe Year Ended October 31, 2004


81Notes to Consolidated Financial Statements


82-105Report of Independent Registered Public Accounting Firm


106-111(a)(2)

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


112       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) 110




---



##### 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

Investment Advisory and Management Agreement between the
    Registrant and The Tokarz Group Advisers LLC. (Incorporated
    by reference to Exhibit 99.g 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)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 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
.6

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
.7

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
.8

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
.9

Form of Credit Agreement with Registrant and Branch Banking and
    Trust Company, et al. (Incorporated by reference to
    Exhibit 10(a) filed with Registrants Quarterly Report
    on
    Form 10-Q
    (File
    No. 814-00201)
    filed on June 6, 2008)10
.10

Form of Custody Agreement between Registrant and Branch Banking
    and Trust Company (Incorporated by reference to
    Exhibit 10 filed with Registrants Quarterly Report on
    Form 10Q (File
    No. 814-00201)
    filed on June 6, 2008)10
.11*

Form of Amendments to Credit Agreement with Registrant and
    Guggenheim Corporate Funding, LLC et al.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    Exhibit No.

Exhibit10
.11

Form of Amendments to Credit Agreement with Registrant and
    Guggenheim Corporate Funding, LLC et al.31


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    111




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##### 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


2007


Gross


Gross


2008Portfolio Company

Investment(1)

to Income(5)


Other(2)


Fair Value


Additions(3)


Reductions(4)


Fair ValueCompanies More than 25% ownedauto MOTOL BENI

Common Stock










2,700,000



11,800,000



(14,500,000
)


(Automotive Dealership)

Loan


39,333







2,000,000







(2,000,000
)


MVC Automotive Group

Common Stock










20,911,500



20,588,500







41,500,000(Automotive Dealership)

Bridge Loan


695,116







19,088,500



2,000,000



(17,444,943
)


3,643,557MVC Partners, LLC

Common Equity Interest










116,173



216,525



(200,000
)


132,698(Private Equity Firm)Ohio Medical Corporation

Common Stock










17,200,000











17,200,000(Medical Device Manufacturer)

Preferred Stock














34,201,081







34,201,081Note


57,778











10,000,000



(10,000,000
)


Note


43,868







3,250,000







(3,250,000
)


SGDA Europe B.V

Common Equity Interest














7,450,000







7,450,000(Soil Remediation)SGDA Sanierungsgesellschaft fur Deponien und Altlasten

Loan


510,291







6,059,477



69,957







6,129,434(Soil Remediation)

Common Equity Interest










560,000











560,000Preferred Equity Interest










5,600,000



500,000







6,100,000SIA Tekers Invest

Common Stock










2,600,000



575,000







3,175,000(Port Facilities)Summit Research Labs, Inc.

Loan


1,097,834







5,414,733



3,525,859







8,940,592(Specialty Chemical)

Preferred Stock










12,200,000



20,800,000







33,000,000Timberland Machines & Irrigation, Inc.

Loan


770,991







6,860,431



389,840







7,250,271(Distributor  Landscaping & Irrigation
    Equipment)

Revolver


597,602







4,000,000



1,000,000



(4,000,000
)


1,000,000Common Stock










3,420,291







(3,420,291
)


Warrants






















Turf Products, LLC

Loan


1,136,370







7,676,330











7,676,330(Distributor  Landscaping & Irrigation
    Equipment)

LLC Interest










5,821,794











5,821,794Revolver


49,247











1,000,000







1,000,000Warrant






















Velocitius B.V

Revolver I










191,084







(191,084
)


(Renewable Energy)

Revolver II


24,651







612,882







(612,882
)


Common Equity Interest










11,395,315



9,604,685







21,000,000Vendio Services, Inc.

Common Stock










15,421







(974
)


14,447(Technology)

Preferred Stock










9,484,579







(2,899,025
)


6,585,554Vestal Manufacturing Enterprises, Inc.

Loan


71,934







700,000







(100,000
)


600,000(Iron Foundries)

Common Stock










3,700,000







(2,750,000
)


950,000Total companies more than 25% owned



$
5,095,015


















$
213,930,758Companies More than 5% owned, but less than 25%Custom Alloy Corporation

Loan


1,954,284







14,035,389







(2,035,389
)


12,000,000(Manufacturer of Tubular Goods for the Energy Industry)

Preferred Stock










44,000



99,000







143,000Preferred Stock


1,200,000







9,956,000



22,401,000







32,357,000Dakota Growers Pasta Company, Inc.

Common Stock


332,991







10,161,950











10,161,950(Manufacturer of Packaged Food)

Preferred Stock










10,650,000











10,650,000Endymion Systems, Inc.

Preferred Stock






















(Technology Investments)Genevac U.S. Holdings, Inc.

Loan


261,240







12,962,963







(12,962,963
)


(Laboratory Research Equipment)

Common Stock


35,898







1,103,002







(1,103,002
)


   112




---



##### 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


2007


Gross


Gross


2008Portfolio Company

Investment(1)

to Income(5)


Other(2)


Fair Value


Additions(3)


Reductions(4)


Fair ValueHarmony Pharmacy & Health Center, Inc.

Revolver


411,287







4,000,000











4,000,000(Healthcare  Retail)

Demand Note














3,300,000







3,300,000Common Stock










750,000











750,000HuaMei Capital Company, Inc.

Common Stock










2,000,000











2,000,000(Financial Services)Impact Confections, Inc.

Loan


200,174







5,718,372



74,842



(5,793,214
)


(Confections Manufacturing & Distribution)

Loan


5,877







325,000







(325,000
)


Common Stock










2,700,000







(2,700,000
)


Marine Exhibition Corporation

Loan


1,197,140







10,506,628



433,829







10,940,457(Theme Park)

Preferred Stock*


272,453







2,203,455



181,636







2,385,091Revolver


1,725











700,000







700,000Octagon Credit Investors, LLC

Loan


372,491







5,000,000











5,000,000(Financial Services)

Revolver


316,657







4,100,000



12,750,000



(16,200,000
)


650,000LLC Interest










3,765,275







(1,177,933
)


2,587,342Previsor, Inc.

Common Stock










9,000,000



1,100,000







10,100,000(Human Capital Management)Security Holdings, B.V.

Common Equity Interest














28,154,200







28,154,200(Technology Services)U.S. Gas & Electric, Inc.

Loan


881,799







5,551,318



2,305,004







7,856,322(Energy Services)

Credit Facility


213,272







84,882



8,946,693



(4,663,235
)


4,368,340Credit Facility


22,235











571,429







571,429Preferred Stock










500,000



4,800,000







5,300,000Preferred Stock














350,000







350,000Vitality Foodservice, Inc.

Common Stock










9,064,716



764,941







9,829,657(Non-Alcoholic Beverages)

Preferred Stock


1,663,990







12,562,408



639,996







13,202,404Warrants










1,100,000



2,635,058







3,735,058Total companies more than 5% owned, but less than 25%



$
9,343,513


















$
181,092,250       (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, 2008.(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.   113




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##### Table of Contents



Signature

Title

Date/s/  Michael
    Tokarz(Michael
    Tokarz)

Chairman
    (Principal Executive Officer)
    and Director

Date: December 29, 2008/s/  Peter
    Seidenberg(Peter
    Seidenberg)

Chief Financial Officer

Date: December 29, 2008/s/  Gerald
    Hellerman(Gerald
    Hellerman)

Director

Date: December 29, 2008/s/  Robert
    C. Knapp(Robert
    C. Knapp)

Director

Date: December 29, 2008/s/  William
    E. Taylor(William
    E. Taylor)

Director

Date: December 29, 2008/s/  Emilio
    Dominianni(Emilio
    Dominianni)

Director

Date: December 29, 2008/s/  Warren
    Holtsberg(Warren
    Holtsberg)

Director

Date: December 29, 2008  114