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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, 2009oro

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
   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


65Item 8.

Financial Statements and Supplementary Data


66Item 9.

Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


105Item 9A.

Controls and Procedures


105Item 9B.

Other Information


107Part IIIItem 10.

Directors and Executive Officers of the
    Registrant


107Item 11.

Executive Compensation


107Item 12.

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


107Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


107Item 14.

Principal Accounting Fees and Services


107Part IVItem 15.

Exhibits, Financial Statements, Schedules


108SIGNATURES


113EX-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 25-30%)
    Fair Value as a Percentage of Our Net AssetsAs of

As of

As ofOctober 31,

October 31,

October 31,Type of Investment

2009

2008

2007Senior/Subordinated Loans and credit facilities


36.16
%


39.75
%


53.56
%Common Stock


20.33
%


22.59
%


18.31
%Warrants


0.90
%


0.89
%


0.30
%Preferred Stock


38.86
%


29.60
%


19.18
%Other Equity Investments


22.21
%


23.51
%


11.38
%      6




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Market.
  Investment Criteria.
  
    Opportunity to revitalize and redirect a companys
    resources and strategy;
    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.
  Investment Structure.
 7




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




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Portfolio Company Monitoring. follow-on
      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.  Employees
   9




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Operating
    Expenses
    out-of-pocket provided
    that out-of-pocket
  Valuation
    of Portfolio Securities
   10




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Valuation
    Methodology
  and/or
    Fair Value Measurements Fair Value Measurements
   11




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and/or
 12




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payment-in-kind payment-in-kind payment-in-kind payment-in-kind payment-in-kind
  Custodian
    Transfer
    Agent and Plan Agent
    Certain
    Government Regulations
    Business Development Company.
         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
                 14




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(202) 942-8090. http://www.sec.gov. 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.
   15




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
    The lower return we are likely to realize on short-term liquid
    investments during the period in which we are identifying
    potential investments, and
    The periodic disclosure required of business development
    companies, which could result in the Company being less
    attractive as an investor to certain potential portfolio
    companies.  Substantially
    all of our portfolio investments are recorded at fair
    value and, as a result, there is a degree of uncertainty
    regarding the carrying values of our portfolio
    investments.
          Economic
    recessions or downturns could impair our portfolio companies and
    harm our operating results.
       16




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We may
    not realize gains from our equity investments.
    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.
   18




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




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and/or
  A
    portion of our existing investment portfolio was not selected by
    the investment team of TTG Advisers.
    Under
    the Advisory Agreement, TTG Advisers is entitled to compensation
    based on our portfolios performance. This arrangement may
    result in riskier or more speculative investments in an effort
    to maximize incentive compensation.
    There
    are potential conflicts of interest that could impact our
    investment returns.
     21




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The
    wars in Iraq and Afghanistan, 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 200910/31/09

$
9.69


$
8.6707/31/09

$
9.41


$
7.7904/30/09

$
10.86


$
6.3801/31/09

$
12.59


$
9.15FISCAL YEAR 200810/31/08

$
15.29


$
10.5607/31/08

$
15.73


$
13.2904/30/08

$
15.98


$
14.2801/31/08

$
17.44


$
13.93  25




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Performance
    Graph
    Shareholder
    Return Performance Graph
    Five-Year Cumulative Total
    Return1(Through October 31, 2009)
  
  Dividends
  12-month
      1
 26




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For
    the Quarter Ended January 31, 2008
    For
    the Quarter Ended April 30, 2008
   27




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For
    the Quarter Ended July 31, 2008
    For
    the Quarter Ended October 31, 2008
    For
    the Quarter Ended January 31, 2009
    For
    the Quarter Ended April 30, 2009
    For
    the Quarter Ended July 31, 2009
    For
    the Quarter Ended October 31, 2009
      form 1099-DIV,
       28




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Purchases
    of MVC Common Stock
    Average PriceTotal Number of

Paid Per ShareQuarter Ended

Shares Purchased

Including Commission10/31/09


6,806


$
9.3407/31/09


6,395


$
9.4904/30/09


2,705


$
8.7401/31/09


4,833


$
11.00  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 31 for more information.
  Selected
    Consolidated Financial Data
  Year Ended October 31,2009


2008


2007


2006


2005(In thousands, except per share data)Operating Data:Interest and related portfolio income:Interest and dividend income

$
21,755


$
26,047


$
22,826


$
13,909


$
9,457Fee income


4,099



3,613



3,750



3,828



1,809Other income


255



367



374



771



933Total operating income


26,109



30,027



26,950



18,508



12,199Expenses:Incentive compensation (Note 5)


3,717



10,822



10,813



6,055



1,117Management fee


9,843



8,989



7,034







Interest and other borrowing costs


3,128



4,464



4,859



1,594



31Administrative


3,519



3,620



2,559



3,420



3,021Employee compensation and benefits














3,499



2,336Total operating expenses


20,207



27,895



25,265



14,568



6,505Net operating income before taxes


5,902



2,132



1,685



3,940



5,694Tax expense (benefit), net


1,377



(936
)


(375
)


159



(101
)Net operating income


4,525



3,068



2,060



3,781



5,795Net realized and unrealized gain (loss):Net realized gain (loss) on investments and foreign currency


(25,082
)


1,418



66,944



5,221



(3,295
)Net change in unrealized appreciation (depreciation) on
    investments


34,804



59,465



(3,302
)


38,334



23,768Net realized and unrealized gain on investments and foreign
    currency


9,722



60,883



63,642



43,555



20,473Net increase in net assets resulting from operations

$
14,247


$
63,951


$
65,702


$
47,336


$
26,268Per Share:Net increase in net assets per share resulting from operations

$
0.59


$
2.63


$
2.92


$
2.48


$
1.45Dividends per share

$
0.48


$
0.48


$
0.54


$
0.48


$
0.24Balance Sheet Data:Portfolio at value

$
502,803


$
490,804


$
379,168


$
275,892


$
122,298Portfolio at cost


422,794



445,600



393,428



286,851



171,591Total assets


510,846



510,711



470,491



347,047



201,379Shareholders equity


424,456



421,871



369,097



236,993



198,707Shareholders equity per share (net asset value)

$
17.47


$
17.36


$
15.21


$
12.41


$
10.41Common shares outstanding at period end


24,297



24,297



24,265



19,094



19,087Other Data:Number of Investments funded in period


6



15



26



24



9Investments funded ($) in period

$
6,293


$
126,300


$
167,134


$
166,300


$
53,836   30




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2009


2008


2007Qtr 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


6,354



7,410



5,757



6,588



6,246



6,804



8,081



8,896



8,438



7,030



6,073



5,409Incentive compensation


6,756



(2,550
)


(335
)


(154
)


1,496



3,929



3,740



1,657



771



1,618



4,898



3,526Interest, fees and other borrowing costs


642



660



736



1,090



1,190



1,022



1,081



1,171



1,223



1,252



1,256



1,128Management fee


2,560



2,379



2,421



2,483



2,510



2,276



2,185



2,018



1,929



1,616



1,854



1,635Administrative


879



894



865



881



1,299



887



753



681



630



608



652



669Tax expense (benefit)


1,377







359



(359
)


(830
)


58



(186
)


22



77



(78
)


(394
)


20Net operating income (loss) before net realized and unrealized
    gains


(5,860
)


6,027



1,711



2,647



581



(1,368
)


508



3,347



3,808



2,014



(2,193
)


(1,569
)Net increase in net assets resulting from operations


27,499



(6,297
)


(7,809
)


854



7,357



18,623



17,158



20,813



8,514



13,788



24,323



19,077Net increase in net assets resulting from operations per share


1.13



(0.26
)


(0.32
)


0.04



0.30



0.77



0.70



0.86



0.35



0.57



1.00



1.00Net asset value per share


17.47



16.46



16.84



17.28



17.36



17.18



16.53



15.95



15.21



14.98



14.53



13.23   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
  25-30%)
  Operating
    Income
  For the Fiscal Years Ended October 31, 2009, 2008 and
    2007.
  For
    the Fiscal Year Ended October 31, 2009
   32




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For
    the Fiscal Year Ended October 31, 2008
    For
    the Fiscal Year Ended October 31, 2007
    Operating
    Expenses
  For the Fiscal Years Ended October 31, 2009, 2008 and
    2007.
  For
    the Fiscal Year Ended October 31, 2009
       33




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For
    the Fiscal Year Ended October 31, 2008
         34




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For
    the Fiscal Year Ended October 31, 2007
       35




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Realized
    Gains and Losses On Portfolio Securities
  For the Fiscal Years Ended October 31, 2009, 2008 and
    2007.
  For
    the Fiscal Year Ended October 31, 2009
      For
    the Fiscal Year Ended October 31, 2008
      For
    the Fiscal Year Ended October 31, 2007
   36




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Unrealized
    Appreciation and Depreciation on Portfolio Securities
  For the Fiscal Years Ended October 31, 2009, 2008 and
    2007.
  For
    the Fiscal Year Ended October 31, 2009
   37




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##### Table of Contents



For
    the Fiscal Year Ended October 31, 2008
    For
    the Fiscal Year Ended October 31, 2007
    Portfolio
    Investments
  For the Fiscal Years Ended October 31, 2009 and
    2008.
 38




---



##### Table of Contents



For
    the Fiscal Year Ended October 31, 2009
                     39




---



##### Table of Contents



40




---



##### Table of Contents



For
    the Fiscal Year Ended October 31, 2008
                 41




---



##### Table of Contents



42




---



##### Table of Contents



43




---



##### Table of Contents



Portfolio
    Companies
    Actelis
    Networks, Inc.
  e-business
    Amersham
    Corporation
            BP
    Clothing, LLC
  ®
     44




---



##### Table of Contents



Custom
    Alloy Corporation
            Dakota
    Growers Pasta Company, Inc.
            DPHI,
    Inc. (formerly DataPlay, Inc.)
   45




---



##### Table of Contents



Series A-1
  Endymion
    Systems, Inc.
            Foliofn,
    Inc.
  fn
  fn
    fn
  fn.
  GDC
    Acquisitions, LLC d/b/a JDC Lighting, LLC
        Harmony
    Pharmacy & Health Center, Inc.
     46




---



##### Table of Contents



Henry
    Company
          HuaMei
    Capital Company, Inc.
  Chinese-American,
          Innovative
    Brands, LLC
   47




---



##### Table of Contents



Lockorder
    Limited (formerly Safestone Technologies PLC)
  e-business
    Mainstream
    Data, Inc.
      Marine
    Exhibition Corporation
            MVC
    Automotive Group B.V.
   48




---



##### Table of Contents



MVC
    Partners LLC
            Octagon
    Credit Investors, LLC
             49




---



##### Table of Contents



Ohio
    Medical Corporation
            Phoenix
    Coal Corporation
          PreVisor,
    Inc.
           50




---



##### Table of Contents



SafeStone
    Technologies Limited (formerly Safestone Technologies
    PLC)
  e-business
    Security
    Holdings, B.V.
            SGDA
    Europe B.V.
            SGDA
    Sanierungsgesellschaft fur Deponien und Altasten
    GmbH
           51




---



##### Table of Contents



SIA
    Tekers Invest
          Sonexis,
    Inc.
      SP
    Industries, Inc.
          Storage
    Canada, LLC
     52




---



##### Table of Contents



Summit
    Research Labs, Inc.
            TerraMark,
    L.P.
            Timberland
    Machines & Irrigation, Inc.
       53




---



##### Table of Contents



Total
    Safety U.S., Inc.
          Turf
    Products, LLC
            U.S.
    Gas & Electric, Inc.
   54




---



##### Table of Contents



Velocitius
    B.V.
            Vendio
    Services, Inc.
     55




---



##### Table of Contents



Vestal
    Manufacturing Enterprises, Inc.
            Vitality
    Foodservice, Inc.
              WBS
    Carbons Acquisitions Corp.
     56




---



##### Table of Contents



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

Amount Committed

Amount Funded at October 31, 2009Marine Revolving Loan Facility

$
2.0 million


$
900,000Octagon Revolving Credit Facility

$
7.0 million



Harmony Pharmacy Revolving Credit Facility

$
4.0 million


$
4.0 millionVelocitius Revolving Line II

$
650,000



Tekers Guarantee

$
2.1 million



U.S. Gas Revolving Credit Facility Guarantee

$
10.0 million



MVC Automotive Guarantee

$
9.6 million



MVC Automotive Guarantee

$
5.9 million



Turf Junior Revolver

$
1.0 million


$
1.0 millionMVC Automotive Guarantee

$
1.9 million



U.S. Gas Guarantee

$
10.0 million



Total

$
54.2 million


$
5.9 million      57




---



##### Table of Contents



58




---



##### Table of Contents



Commitments
    of the Company:
       59




---



##### Table of Contents



We may be unable
    to meet our covenant obligations under our credit facility or
    renew such facility, which could adversely affect our
    business
      Payments Due by PeriodLess Than





AfterTotal

1 Year

1-3 Years

4-5 Years

5 YearsTerm Debt Portion of Credit Facility

$
50,000,000


$
50,000,000



N/A



N/A



N/ATotal Debt

$
50,000,000


$
50,000,000



N/A



N/A



N/A   Subsequent
    Events
  Subsequent Events Subsequent Events
          Significant
    Accounting Policies
      Recent Accounting Pronouncements  The FASB
    Accounting Standards
    Codificationtm and the Hierarchy of Generally Accepted Accounting
    Principles  a replacement of FASB Statement
    No. 162 Generally Accepted Accounting Principles
 60




---



##### Table of Contents



FSP 157-4, Determining Fair Value When the Volume and Level of Activity
    for the Asset or Liability Have Significantly Decreased and
    Identifying Transactions That Are Not Orderly 820-10-65, 820-10-65). 820-10-65 820-10-65 states 820-10-65 820-10-65
  Subsequent Events Subsequent Events Subsequent Events
  Amendments to FASB Interpretation No. 46(R) Consolidation of Variable Interest Entities  an
    interpretation of ARB No. 51 Consolidation Financial Services 
    Investment Companies
  Tax Status and Capital Loss Carryforwards 
   61




---



##### Table of Contents



Valuation of Portfolio Securities 
          and/or
   62




---



##### Table of Contents



63




---



##### 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,
 64




---



##### Table of Contents



Cash Equivalents 
  Restricted Securities
  Distributions to Shareholders 
  Income Taxes 
    Accounting for Uncertainty
    in Income Taxes  an interpretation of FASB Statement
    No. 109,
  Reclassifications 
  Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk    90-day 90-day
   65




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##### Table of Contents



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


October 31,2009


2008ASSETSAssetsCash and cash equivalents

$
1,007,873


$
12,764,465Investments at fair valueNon-control/Non-affiliated investments (cost $122,320,550 and
    $124,471,466)


85,451,605



95,781,109Affiliate investments (cost $141,186,185 and $138,694,946)


210,519,609



181,092,250Control investments (cost $159,287,686 and $182,433,350)


206,832,059



213,930,758Total investments at fair value (cost $422,794,421 and
    $445,599,762 )


502,803,273



490,804,117Dividends, interest and fees receivable, net of reserve


5,385,333



2,641,994Prepaid expenses


1,271,353



2,297,434Prepaid taxes


377,883



759,025Deferred tax, net of allowance






1,443,765Total assets

$
510,845,715


$
510,710,800LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesRevolving credit facility

$
12,300,000


$
19,000,000Term loan


50,000,000



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


19,511,147



15,794,295Management fee payable


2,560,120



2,485,580Other accrued expenses and liabilities


1,300,490



1,106,256Professional fees


650,981



425,035Consulting fees


67,278



28,822Total liabilities


86,390,016



88,839,988Shareholders equityCommon stock, $0.01 par value; 150,000,000 shares
    authorized; 24,297,087 and 24,297,087 shares outstanding,
    respectively


283,044



283,044Additional
    paid-in-capital


429,400,261



429,400,261Accumulated earnings


34,768,686



30,144,990Dividends paid to stockholders


(57,087,927
)


(45,425,325
)Accumulated net realized loss


(30,113,755
)


(4,933,051
)Net unrealized appreciation


80,008,852



45,204,355Treasury stock, at cost, 4,007,361 and 4,007,361 shares
    held, respectively


(32,803,462
)


(32,803,462
)Total shareholders equity


424,455,699



421,870,812Total liabilities and shareholders equity

$
510,845,715


$
510,710,800Net asset value per share

$
17.47


$
17.36    66




---



##### Table of Contents



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

Industry

Investment

Principal


Cost


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

Technology Investments

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





$
5,000,003


$
Amersham Corp.

Manufacturer of Precision - Machined Components

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

$
375,000



375,000



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


2,473,521



2,473,521



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


3,793,841



3,793,841



1,625,0006,642,362



2,775,000BP Clothing, LLC

Apparel

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


18,778,308



18,617,403



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


1,987,500



1,973,763



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


2,000,000



1,987,208



1,742,00422,578,374



20,965,308DPHI, Inc.

Technology Investments

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






4,520,355



FOLIOfn, Inc.

Technology Investments

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






15,000,000



10,790,000GDC Acquisition, LLC

Electrical Distribution

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


3,096,252



3,096,252



3,096,252Warrants (d)










3,096,252



3,096,252Henry Company

Building Products / Specialty Chemicals

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


1,709,921



1,709,921



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


2,000,000



2,000,000



2,000,0003,709,921



3,650,642Innovative Brands, LLC

Consumer Products

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


10,414,976



10,414,976



10,414,976Lockorder Limited

Technology Investments

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






2,007,701



MainStream Data, Inc.

Technology Investments

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






3,750,000



Phoenix Coal Corporation

Coal Processing and Production

Common Stock (666,667 shares) (d)






500,000



148,000SafeStone Technologies Limited

Technology Investments

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






2,007,701



Sonexis, Inc.

Technology Investments

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






10,000,000



SP Industries, Inc.

Laboratory Research Equipment

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


901,435



656,357



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


25,443,638



25,092,905



25,443,63825,749,262



26,345,073Storage Canada, LLC

Self Storage

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


1,108,500



1,111,347



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

Engineering Services

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


972,500



972,500



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


3,500,000



3,500,000



3,500,0004,472,500



4,398,058WBS Carbons Acquisitions Corp.

Specialty Chemicals

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


1,759,796



1,759,796



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








122,320,550



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

Manufacturer of Pipe Fittings

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


12,648,338



12,406,499



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






44,000



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






9,956,000



9,956,00022,406,499



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

Manufacturer of Packaged Foods

Common Stock (1,016,195 shares)






5,521,742



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






10,357,500



15,767,25215,879,242



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

Healthcare  Retail

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


4,755,060



4,755,060



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


500,000



500,000



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


700,000



700,000



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


3,300,000



3,300,000



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


2,200,000



2,200,000



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






750,000



12,205,060



10,700,000HuaMei Capital Company, Inc.

Financial Services

Common Stock (500 shares) (d)






2,000,000



1,525,000   67




---



##### Table of Contents



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

Industry

Investment

Principal


Cost


Fair ValueMarine Exhibition Corporation

Theme Park

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

$
10,765,878


$
10,667,415


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


900,000



900,000



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






2,581,699



2,581,69914,149,114



14,247,577Octagon Credit Investors, LLC

Financial Services

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


5,000,000



4,971,138



5,000,000Limited Liability Company Interest






1,289,178



2,744,0836,260,316



7,744,083PreVisor, Inc.

Human Capital Management

Common Stock (9 shares) (d)






6,000,000



7,000,000Security Holdings, B.V.

Electrical Engineering

Common Stock (900 shares) (d, e)






28,154,200



10,000,000SGDA Europe B.V.

Soil Remediation

Common Equity Interest (d, e)






7,450,000



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


1,500,000



1,500,000



1,500,0008,950,000



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

Energy Services

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


8,263,979



8,143,804



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






500,000



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










1,921,5708,643,804



69,092,641Vitality Foodservice, Inc.

Non-Alcoholic Beverages

Common Stock (556,472 shares) (d)






5,564,716



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






10,973,234



13,875,005Warrants (d)










3,835,05816,537,950



27,800,020Sub Total Affiliate investments










141,186,185



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

Automotive Dealerships

Common Equity Interest (d, e)






34,736,939



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


3,643,557



3,643,557



3,643,55738,380,496



50,143,557MVC Partners, LLC

Private Equity Firm

Limited Liability Company Interest (d)






1,350,253



1,133,729Ohio Medical Corporation

Medical Device Manufacturer

Common Stock (5,620 shares) (d)






17,000,000



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






30,000,000



40,010,42947,000,000



49,110,429SGDA Sanierungsgesellschaft

Soil Remediation

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


6,187,350



6,187,350



6,187,350fur Deponien und Altlasten GmbH



Common Equity Interest (d, e)






438,551



1Preferred Equity Interest (d, e)






5,000,000



6,600,00011,625,901



12,787,351SIA Tekers Invest

Port Facilities

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






2,300,000



3,790,000Summit Research Labs, Inc.

Specialty Chemicals

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


9,596,177



9,479,142



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






16,000,000



38,000,00025,479,142



47,596,177Turf Products, LLC

Distributor - Landscaping and Irrigation Equipment

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


8,149,021



8,136,884



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


1,000,000



1,000,000



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






3,535,694



3,221,794Warrants (d)










12,672,578



12,370,815Velocitius B.V.

Renewable Energy

Common Equity Interest (d, e)






11,395,315



23,200,000Vendio Services, Inc.

Technology Investments

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






5,500,000



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






1,134,001



4,490,3146,634,001



4,500,001Vestal Manufacturing Enterprises, Inc.

Iron Foundries

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


600,000



600,000



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






1,850,000



1,600,0002,450,000



2,200,000Sub Total Control Investments










159,287,686



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







$
422,794,421


$
502,803,273    68




---



##### Table of Contents



MVC
    Capital, Inc.
  Consolidated
    Schedule of Investments  (Continued)
    October 31, 2009
    (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 $424,455,699 as of October 31, 2009.(g)
    
    See Note 3 for further
    information regarding Investment Classification.(h)
    
    All or a portion of these
    securities have been committed as collateral for the Guggenheim
    Corporate Funding, LLC Credit Facility.(i)
    
    All or a portion of the accrued
    interest on these securities have been reserved against.(j)
    
    Legacy Investments.
    
    Denotes zero cost or fair value.   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, f, g)Actelis Networks, Inc.

Technology Investments

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





$
5,000,003


$
Amersham Corp.

Manufacturer of Precision - Machined Components

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

$
2,473,521



2,473,521



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, j)






4,520,355



FOLIOfn, Inc.

Technology Investments

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






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, j)






2,007,701



MainStream Data, Inc.

Technology Investments

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






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, j)






2,007,701



Sonexis, Inc.

Technology Investments

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






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 Acquisitions 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, f, g)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



44,500,000   70




---



##### Table of Contents



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

Industry

Investment

Principal


Cost


Fair ValueDakota 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% (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



14,025,548Octagon 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 I Preferred Stock (32,200 shares) (d)






500,000



5,300,000Convertible Series J 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, f, g)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 GmbH



Common Equity Interest (d, e)






438,551



560,000Preferred Equity Interest (d, e)






5,000,000



6,100,00011,567,985



12,789,434   71




---



##### Table of Contents



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

Industry

Investment

Principal


Cost


Fair ValueSIA 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 Irrigation Equipment

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


7,676,330



7,652,949



7,676,330Junior 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, j)






5,500,000



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






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     (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.(j)
    
    Legacy Investments.
    
    Denotes zero cost or fair value.   72




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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, 2009


October 31, 2008


October 31, 2007Operating Income:Dividend incomeAffiliate investments

$
2,459,914


$
3,505,332


$
469,037Total dividend income


2,459,914



3,505,332



469,037Interest incomeNon-control/Non-affiliated investments


10,294,769



11,608,730



12,091,574Affiliate investments


5,070,990



5,838,181



5,011,527Control investments


3,929,470



5,095,015



5,254,144Total interest income


19,295,229



22,541,926



22,357,245Fee incomeNon-control/Non-affiliated investments


621,252



1,037,745



921,311Affiliate investments


2,615,151



1,022,733



1,671,940Control investments


862,253



1,552,257



1,157,022Total fee income


4,098,656



3,612,735



3,750,273Other income


254,945



366,818



373,912Total operating income


26,108,744



30,026,811



26,950,467Operating Expenses:Management fee


9,843,427



8,989,491



7,034,287Incentive compensation (Note 5)


3,716,852



10,822,127



10,813,362Interest and other borrowing costs


3,127,594



4,463,822



4,859,429Other expenses


904,695



791,789



500,288Audit fees


659,400



473,500



345,000Legal fees


594,000



938,000



468,000Insurance


377,400



379,725



408,606Administration


290,362



330,680



287,573Directors fees


272,100



249,300



234,000Printing and postage


178,875



195,245



107,700Consulting fees


164,700



162,600



111,500Public relations fees


77,800



98,600



95,701Total operating expenses


20,207,205



27,894,879



25,265,446Net operating income before taxes


5,901,539



2,131,932



1,685,021Tax (Benefit) Expenses:Deferred tax (benefit)


1,443,765



(640,482
)


(255,163
)Current tax (benefit) expense


(66,946
)


(295,914
)


(119,529
)Total tax (benefit) expense


1,376,819



(936,396
)


(374,692
)Net operating income


4,524,720



3,068,328



2,059,713Net Realized and Unrealized Gain (Loss) on Investments and
    Foreign Currency:Net realized gain (loss) on investments and foreign currencyNon-control/Non-affiliated investments


(324
)


(36,140
)


(73,842
)Affiliate investments


(7,000,000
)


1,116,952



451,461Control investments


(18,081,404
)


283,118



66,516,647Foreign currency






54,211



49,279Total net realized gain (loss) on investments and foreign
    currency


(25,081,728
)


1,418,141



66,943,545Net change in unrealized appreciation (depreciation) on
    investments


34,804,497



59,465,174



(3,301,612
)Net realized and unrealized gain on investments and foreign
    currency


9,722,769



60,883,315



63,641,933Net increase in net assets resulting from operations

$
14,247,489


$
63,951,643


$
65,701,646Net increase in net assets per share resulting from
    operations

$
0.59


$
2.63


$
2.92Dividends declared per share

$
0.48


$
0.48


$
0.54    73




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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, 2009


October 31, 2008


October 31, 2007Cash flows from Operating Activities:Net increase in net assets resulting from operations

$
14,247,489


$
63,951,643


$
65,701,646Adjustments to reconcile net increase in net assets resulting
    from operations to net cash provided (used) by operating
    activities:Realized (gain) loss


25,081,728



(1,418,141
)


(66,943,545
)Net change in unrealized (appreciation) depreciation


(34,804,497
)


(59,465,174
)


3,301,612Amortization of discounts and fees


(73,434
)


(103,428
)


(93,902
)Increase in accrued
    payment-in-kind
    dividends and interest


(6,354,807
)


(5,390,885
)


(2,850,999
)Increase in allocation of flow through income


(156,742
)


(22,067
)


(216,275
)Changes in assets and liabilities:Dividends, interest and fees receivable


(2,743,339
)


463,106



(1,487,589
)Prepaid expenses


1,026,081



151,427



184,720Prepaid taxes


381,142



(530,866
)


(228,159
)Deferred tax


1,443,765



(640,482
)


(255,163
)Deposits






25,156



94,844Other assets






20,993



33,803Incentive compensation (Note 5)


3,716,852



(2,081,201
)


10,703,144Other Liabilities


533,176



490,939



637,797Purchases of equity investments


(1,017,554
)


(79,196,164
)


(57,357,976
)Purchases of debt instruments


(11,652,248
)


(77,940,026
)


(114,538,723
)Purchases of short term investments






(49,881,375
)


(9,902,105
)Proceeds from equity investments


286,100



7,312,817



83,022,172Proceeds from debt instruments


16,692,298



104,614,110



52,303,760Sales/maturities of short term investments






49,853,750



10,000,000Net cash provided (used) by operating activities


6,606,010



(49,785,868
)


(27,890,939
)Cash flows from Financing Activities:Issuance of common stock










83,825,625Offering expenses










(5,431,091
)Distributions to shareholders paid


(11,662,602
)


(11,177,600
)


(11,992,785
)Net borrowings under (repayments on) revolving credit facility


(6,700,000
)


(11,000,000
)


(20,000,000
)Net cash provided (used) by financing activities


(18,362,602
)


(22,177,600
)


46,401,749Net change in cash and cash equivalents for the year


(11,756,592
)


(71,963,468
)


18,510,810Cash and cash equivalents, beginning of year


12,764,465



84,727,933



66,217,123Cash and cash equivalents, end of year

$
1,007,873


$
12,764,465


$
84,727,933    74




---



##### Table of Contents



MVC
    Capital, Inc
  Consolidated
    Statements of Cash Flows  (continued)
      Non-cash activity:
  payment-in-kind
                           75




---



##### 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, 2009


October 31, 2008


October 31, 2007Operations:Net operating income

$
4,524,720


$
3,068,328


$
2,059,713Net realized gain (loss) on investments and foreign currencies


(25,081,728
)


1,418,141



66,943,545Net change in unrealized appreciation (depreciation) on
    investments


34,804,497



59,465,174



(3,301,612
)Net increase in net assets from operations


14,247,489



63,951,643



65,701,646Shareholder Distributions:Distributions to shareholders


(11,662,602
)


(11,660,691
)


(12,171,688
)Net decrease in net assets from shareholder distributions


(11,662,602
)


(11,660,691
)


(12,171,688
)Capital Share Transactions:Issuance of common stock










83,825,625Offering expenses










(5,431,091
)Reissuance of treasury stock in lieu of cash dividend






483,091



178,903Net increase in net assets from capital share transactions






483,091



78,573,437Total increase in net assets


2,584,887



52,774,043



132,103,395Net assets, beginning of year


421,870,812



369,096,769



236,993,374Net assets, end of year

$
424,455,699


$
421,870,812


$
369,096,769Common shares outstanding, end of year


24,297,087



24,297,087



24,265,336    76




---



##### 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 31,2009


2008


2007


2006


2005Net asset value, beginning of year

$
17.36


$
15.21


$
12.41


$
10.41


$
9.40Gain from operations:Net operating income


0.19



0.24



0.13



0.20



0.32Net realized and unrealized gain on investments


0.40



2.39



2.79



2.28



1.13Total gain from investment operations


0.59



2.63



2.92



2.48



1.45Less distributions from:Income


(0.19
)


(0.09
)


(0.08
)


(0.21
)


(0.24
)Return of capital


(0.29
)


(0.39
)


(0.46
)


(0.27
)


Total distributions


(0.48
)


(0.48
)


(0.54
)


(0.48
)


(0.24
)Capital share transactionsAnit-dilutive (Dilutive) effect of share issuance










0.42







(0.20
)Anti-dilutive effect of share repurchase program


















Total capital share transactions










0.42







(0.20
)Net asset value, end of year

$
17.47


$
17.36


$
15.21


$
12.41


$
10.41Market value, end of year

$
9.18


$
12.30


$
17.06


$
13.08


$
11.25Market premium (discount)


(47.45
)%


(29.15
)%


12.16
%


5.40
%


8.07
%Total Return  At NAV(a)


3.50
%


17.49
%


27.39
%


24.23
%


13.36
%Total Return  At Market(a)


(21.48
)%


(25.44
)%


35.02
%


20.75
%


24.38
%Ratios and Supplemental Data:Net assets, end of year (in thousands)

$
424,456


$
421,871


$
369,097


$
236,993


$
198,739Ratios to average net assets:Expenses excluding tax expense (benefit)


4.88
%


7.00
%


7.89
%


6.78
%


3.75
%Expenses including tax expense (benefit)


5.21
%


6.77
%


7.78
%


6.85
%


3.69
%Expenses excluding incentive compensation


4.31
%


4.05
%


4.40
%


4.03
%


3.05
%Expenses excluding incentive compensation, interest and other
    borrowing costs


3.56
%


2.93
%


2.88
%


3.29
%


3.03
%Net operating income (loss) before tax expense (benefit)


1.42
%


0.54
%


0.53
%


1.83
%


3.28
%Net operating income (loss) after tax expense (benefit)


1.09
%


0.77
%


0.64
%


1.76
%


3.34
%Net operating income (loss) before incentive compensation


1.99
%


3.49
%


4.02
%


4.58
%


3.98
%Net operating income (loss) before incentive compensation,
    interest and other borrowing costs


2.74
%


4.61
%


5.54
%


5.32
%


4.00
%     (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.   77




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##### Table of Contents



MVC
    Capital, Inc.
  Notes
    to Consolidated Financial Statements
 October 31,
    2009
  1.
    Organization
    and Business Purpose  and/or
    sub-advisory Sub-Advisor). Sub-Advisor
             78




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2.
    Consolidation    3.
    Significant
    Accounting Policies      Recent Accounting Pronouncements The FASB
    Accounting Standards
    Codification tm and the Hierarchy of Generally Accepted Accounting
    Principles  a replacement of FASB Statement
    No. 162 Generally Accepted
    Accounting Principles
  FSP 157-4, Determining Fair Value When the Volume and Level of Activity
    for the Asset or Liability Have Significantly Decreased and
    Identifying Transactions That Are Not Orderly 820-10-65, 820-10-65). 820-10-65 820-10-65 states 820-10-65 820-10-65
 79




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Subsequent Events Subsequent Events Subsequent Events
  Amendments to FASB Interpretation No. 46(R) Consolidation of Variable Interest Entities  an
    interpretation of ARB No. 51 Consolidation Financial Services 
    Investment Companies
  Valuation of Portfolio Securities
     80




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      and/or
           81




---



##### 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
 82




---



##### 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
   83




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Accounting for Uncertainty
    in Income Taxes  an interpretation of FASB Statement
    No. 109, and/or
  Reclassifications
  4.
    Management       84




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  and/or
  5.
    Incentive
    Compensation     85




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
       86




---



##### 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, 2009
       87




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    For
    the Fiscal Year Ended October 31, 2008
          For
    the Fiscal Year Ended October 31, 2007
          7.
    Transactions
    with Other Parties   88




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Regulation S-K)
  Form 10-K
  8.
    Concentration
    of Market and Credit Risk  90-day 90-day
  9.
    Portfolio
    Investments      
    Level 1:  Level 1 inputs are
    unadjusted quoted prices in active markets that are accessible
    at the measurement date for identical, unrestricted assets or
    liabilities. We use Level 1 inputs for investments in
    publicly traded unrestricted securities for which we do not have
    a controlling interest. Such investments 89




---



##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    
    Level 2:  Level 2 inputs are inputs
    other than quoted prices included within Level 1 that are
    observable for the asset or liability, either directly or
    indirectly. We did not value any of our investments using
    Level 2 inputs as of October 31, 2009.
    Level 3:  Level 3 inputs are
    unobservable and cannot be corroborated by observable market
    data. We use Level 3 inputs for measuring the fair value of
    substantially all of our investments. See Note 3 for the
    investment valuation policies used to determine the fair value
    of these investments.    Level 1


Level 2


Level 3


TotalSenior/Subordinated Loans and credit facilities

$



$



$
153,468


$
153,468Common Stock


148







86,159



86,307Preferred Stock










164,943



164,943Warrants










3,835



3,835Other Equity Investments










94,250



94,250Total Investments, net

$
148


$



$
502,655


$
502,803     Reversal of





Purchases,Prior Period





Sales,Balances,


Realized


(Appreciation)


Unrealized


Issuances &


Transfers


Balances,November 1,


Gains


Depreciation on


Appreciation


Settlements,


In & Out


October 31,2008


(Losses)(1)


Realization(2)


(Depreciation)(3)


Net(4)


of Level 3


2009Senior/Subordinated Loans and credit facilities

$
167,703


$
(12,662
)

$
12,662


$
(14,469
)

$
234


$



$
153,468Common Stock


87,741



(5,420
)


5,420



(1,582
)










86,159Preferred Stock


124,874



(7,000
)


7,000



39,201



868







164,943Warrants


3,735











100











3,835Other Equity Investments


106,646











(13,570
)


1,174







94,250Total

$
490,699


$
(25,082
)

$
25,082


$
9,680


$
2,276


$



$
502,655   (1)
    
    Included in net realized gain (loss) on investments in the
    Consolidated Statement of Operations.(2)
    
    Included in net unrealized appreciation (depreciation) of
    investments in the Consolidated Statement of Operations related
    to securities disposed of during the fiscal year ended
    October 31, 2009.(3)
    
    Included in net unrealized appreciation (depreciation) of
    investments in the Consolidated Statement of Operations related
    to securities held at October 31, 2009.(4)
    
    Includes increases in the cost basis of investments resulting
    from new portfolio investments, PIK interest or dividends, the
    amortization of discounts, premiums and closing fees and the
    exchange of one or more existing securities for one or more new
    securities as well as decreases in the cost basis of investments
    resulting from principal repayments or sales and the exchange of
    one or more existing securities for one or more new securities. 90




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MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  For
    the Fiscal Year Ended October 31, 2009
                   91




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
              
   92




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    For
    the Fiscal Year Ended October 31, 2008
         93




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##### Table of Contents



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




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##### Table of Contents



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




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##### 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, 2009Marine Revolving Loan Facility

$
2.0 million


$
900,000Octagon Revolving Credit Facility

$
7.0 million



Harmony Pharmacy Revolving Credit Facility

$
4.0 million


$
4.0 millionVelocitius Revolving Line II

$
650,000



Tekers Guarantee

$
2.1 million



U.S. Gas Revolving Credit Facility Guarantee

$
10.0 million



MVC Automotive Guarantee

$
9.6 million



MVC Automotive Guarantee

$
5.9 million



Turf Junior Revolver

$
1.0 million


$
1.0 millionMVC Automotive Guarantee

$
1.9 million



U.S. Gas Guarantee

$
10.0 million



Total

$
54.2 million


$
5.9 million      96




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
                     97




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
          Commitments
    of the Company:
       98




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      11.
    Certain
    Issuances of Equity Securities by the Issuer  30-day
      12.
    Tax
    Matters  Return of Capital Statement of Position (ROCSOP)
    Adjustment: book-to-tax
 99




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##### Table of Contents



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

$
(29,988,349
)Undistributed Net investment Income


2,104,233Gross unrealized appreciation


151,011,258Gross unrealized depreciation


(74,283,524
)Net unrealized appreciation

$
76,727,734Total tax basis accumulated earnings


48,843,618Tax cost of investments


426,075,539Current year distributions to shareholders on a tax basisOrdinary income


11,662,602Prior year distributions to shareholders on a tax basisOrdinary income


10,971,153Return of Capital


689,538     Qualified
    Dividend Income Percentage
    Corporate
    Dividends Received Deduction Percentage
   100




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##### Table of Contents



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


October 31,


October 31,2009


2008


2007Current tax (benefit) expense:Federal

$
(67,101
)

$
(296,850
)

$
(119,529
)State


155



936



Total current tax (benefit) expense


(66,946
)


(295,914
)


(119,529
)Deferred tax expense (benefit):Federal


1,173,420



(513,849
)


(191,210
)State


270,345



(126,633
)


(63,953
)Total deferred tax expense (benefit)


1,443,765



(640,482
)


(255,163
)Total tax (benefit) provision

$
1,376,819


$
(936,396
)

$
(374,692
)     Fiscal Year EndedOctober 31,


October 31,


October 31,2009


2008


2007Federal income tax benefit at statutory rate

$
(1,035,500
)

$
(810,550
)

$
(313,309
)State income taxes, net of federal benefit


(168,239
)


(131,834
)


(53,355
)Other


408



5,988



(8,028
)Net change to valuation allowance


2,580,150







$
1,376,819


$
(936,396
)

$
(374,692
)     NOL  Federal

NOL  New York State

Fiscal Year of NOL

Expiration$



$
327,526



October 31, 2007



October 31, 2027$
1,410,449


$
2,282,601



October 31, 2008



October 31, 2028$
2,583,661


$
2,780,861



October 31, 2009



October 31, 2029    101




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##### Table of Contents



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


October 31,


October 31,2009


2008


2007Deferred tax assets:Deferred revenues

$
922,566


$
817,700


$
781,935Net operating loss

$
1,657,584



625,364



19,584Others






701



1,763Total deferred tax assets

$
2,580,150


$
1,443,765


$
803,282Valuation allowance onDeferred revenues and Net operating loss

$
(2,580,150
)






Net deferred tax assets

$



$
1,443,765


$
803,282Deferred tax liabilities:Deferred tax liabilities










Total deferred tax liabilities










Net deferred taxes

$



$
1,443,765


$
803,282   14.
    Segment
    Data      MVC


MVCFS


ConsolidatedInterest and dividend income

$
21,752,680


$
2,463


$
21,755,143Fee income


147,432



3,951,224



4,098,656Other income


254,945







254,945Total operating income


22,155,057



3,953,687



26,108,744Total operating expenses


13,207,929



6,999,276



20,207,205Net operating income (loss) before taxes


8,947,128



(3,045,589
)


5,901,539Tax expense






1,376,819



1,376,819Net operating income (loss)


8,947,128



(4,422,408
)


4,524,720Net realized loss on investments and foreign currency


(25,081,728
)






(25,081,728
)Net change in unrealized appreciation on investments


34,804,497







34,804,497Net increase (decrease) in net assets resulting from operations


18,669,897



(4,422,408
)


14,247,489    102




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##### Table of Contents



MVC
    Capital, Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   15.
    Subsequent
    Events  Subsequent Events Subsequent Events
         103




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm            
    104




---



##### 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
 105




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
                
    106




---



##### 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   107




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##### Table of Contents



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

Financial StatementsConsolidated Balance SheetsOctober 31, 2009 and October 31, 2008


66Consolidated Schedule of InvestmentsOctober 31, 2009


67-69October 31, 2008


70-72Consolidated Statement of OperationsFor the Year Ended October 31, 2009,the Year Ended October 31, 2008 andthe Year Ended October 31, 2007


73Consolidated Statement of Cash FlowsFor the Year Ended October 31, 2009,the Year Ended October 31, 2008 andthe Year Ended October 31, 2007


74Consolidated Statement of Changes in Net AssetsFor the Year Ended October 31, 2009,the Year Ended October 31, 2008 andthe Year Ended October 31, 2007


76Consolidated Selected Per Share Data and RatiosFor the Year Ended October 31, 2009,the Year Ended October 31, 2008,the Year Ended October 31, 2007,the Year Ended October 31, 2006 andthe Year Ended October 31, 2005


77Notes to Consolidated Financial Statements


78-103Report of Independent Registered Public Accounting Firm


104-106(a)(2)

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


111-112       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)10
.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) 108




---



##### Table of Contents



ExhibitNumber

Description10
.2

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

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

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

Form of Amendment to Custody Agreement between Registrant and
    U.S. Bank National Association. (Incorporated by reference to
    Exhibit10.4 filed with Registrants Quarterly Report on
    Form 10-Q (File No. 814-00201) filed on June 4,
    2009)10
.6

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

Form of Fee and Service Schedule Amendment to Transfer Agency
    Agreement with Registrant and Computershare Trust Company, N.A.
    (Incorporated by reference to Exhibit10.1 filed with
    Registrants Quarterly Report on Form 10-Q (File No.
    814-00201) filed on September 8, 2009)10
.8

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

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

Form of First Amendment to Fund Administration Servicing
    Agreement with Registrant and U.S. Bancorp Fund Services, LLC.
    (Incorporated by reference to Exhibit10.2 filed with
    Registrants Quarterly Report on Form 10-Q (File No.
    814-00201) filed on June 4, 2009)10
.11

Form of First Amendment to Fund Accounting Servicing Agreement
    with Registrant and U.S. Bancorp Fund Services, LLC.
    (Incorporated by reference to Exhibit10.3 filed with
    Registrants Quarterly Report on Form 10-Q (File No.
    814-00201) filed on June 4, 2009)10
.12

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

Form of 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
.14

Form of Custody Agreement between Registrant and Branch Banking
    and Trust Company (Incorporated by reference to Exhibit10
    filed with Registrants Quarterly Report on Form 10-Q (File
    No. 814-00201) filed on June 6, 2008)10
.15

Form of Amendments to Credit Agreement with Registrant and
    Guggenheim Corporate Funding, LLC et al. (Incorporated by
    reference to Exhibit 10  filed with Registrants Annual
    Report on Form 10-K (File No. 814-00201) filed on
    December 29, 2008)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 109




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##### Table of Contents



Exhibit No.

Exhibit31


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    110




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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


2008


Gross


Gross


2009Portfolio Company

Investment(1)

to Income(5)


Other(2)


Fair Value


Additions(3)


Reductions(4)


Fair ValueCompanies More than 25% ownedMVC Automotive Group

Common Stock










41,500,000



5,000,000







46,500,000(Automotive Dealership)

Bridge Loan


364,356







3,643,557











3,643,557MVC Partners, LLC

Common Equity Interest










132,698



1,017,555



(16,524
)


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

Common Stock










17,200,000







(8,100,000
)


9,100,000(Medical Device Manufacturer)

Preferred Stock










34,201,081



5,809,347







40,010,428SGDA Sanierungsgesellschaft fur Deponien und Altlasten

Loan


497,045







6,129,434



57,916







6,187,350(Soil Remediation)

Common Equity Interest










560,000







(559,999
)


1Preferred Equity Interest










6,100,000



500,000







6,600,000SIA Tekers Invest

Common Stock










3,175,000



615,000







3,790,000(Port Facilities)Summit Research Labs, Inc.

Loan


1,319,074







8,940,592



655,586







9,596,178(Specialty Chemical)

Preferred Stock










33,000,000



5,000,000







38,000,000Timberland Machines & Irrigation, Inc.

Loan


410,842







7,250,271







(7,250,271
)


(Distributor  Landscaping & Irrigation
    Equipment)

Revolver










1,000,000







(1,000,000
)


Common Stock






















Warrants






















Turf Products, LLC

Loan


1,205,153







7,676,330



472,691







8,149,021(Distributor  Landscaping & Irrigation
    Equipment)

LLC Interest










5,821,794







(2,600,000
)


3,221,794Revolver


60,000







1,000,000











1,000,000Warrant






















Velocitius B.V.

Common Equity Interest










21,000,000



2,200,000







23,200,000(Renewable Energy)Vendio Services, Inc.

Common Stock










14,447







(4,760
)


9,687(Technology)

Preferred Stock










6,585,554







(2,095,240
)


4,490,314Vestal Manufacturing Enterprises, Inc.

Loan


73,000







600,000











600,000(Iron Foundries)

Common Stock










950,000



650,000







1,600,000Total companies more than 25% owned



$
3,929,470


















$
206,832,059Companies More than 5% owned, but less than 25%Custom Alloy Corporation

Loan


1,733,824







12,000,000



648,338







12,648,338(Manufacturer of Tubular Goods for the Energy Industry)

Preferred Stock










143,000







(99,000
)


44,000Preferred Stock










32,357,000







(22,401,000
)


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

Common Stock


416,239







10,161,950







4,882,748



15,044,698(Manufacturer of Packaged Food)

Preferred Stock










10,650,000







5,117,252



15,767,252Endymion Systems, Inc.

Preferred Stock






















(Technology Investments)Harmony Pharmacy & Health Center, Inc.

Revolver


451,007







4,000,000











4,000,000(Healthcare  Retail)

Demand Note










3,300,000











3,300,000Demand Note














2,200,000







2,200,000Demand Note














700,000







700,000Demand Note














500,000







500,000Common Stock










750,000







(750,000
)


HuaMei Capital Company, Inc.

Common Stock










2,000,000







(475,000
)


1,525,000(Financial Services)Marine Exhibition Corporation

Loan


1,237,002







10,940,457



450,421



(625,000
)


10,765,878(Theme Park)

Preferred Stock*


294,913







2,385,091



196,608







2,581,699Revolver


12,004







700,000



200,000







900,000   111




---



##### 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


2008


Gross


Gross


2009Portfolio Company

Investment(1)

to Income(5)


Other(2)


Fair Value


Additions(3)


Reductions(4)


Fair ValueOctagon Credit Investors, LLC

Loan


250,302







5,000,000











5,000,000(Financial Services)

Revolver


18,382







650,000







(650,000
)


LLC Interest










2,587,342



156,741







2,744,083Previsor, Inc.

Common Stock










10,100,000







(3,100,000
)


7,000,000(Human Capital Management)Security Holdings, B.V.

Common Equity Interest










28,154,200







(18,154,200
)


10,000,000(Technology Services)SGDA Europe B.V.

Common Equity Interest










7,450,000











7,450,000(Soil Remediation)

Loan


54,584











1,500,000







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

Loan


1,146,353







7,856,322



407,657







8,263,979(Energy Services)

Credit Facility


136,102







4,368,340







(4,368,340
)


Credit Facility


31,430







571,429







(571,429
)


Preferred Stock










5,300,000



53,607,092







58,907,092Preferred Stock










350,000



1,571,570







1,921,570Vitality Foodservice, Inc.

Common Stock










9,829,657



260,300







10,089,957(Non-Alcoholic Beverages)

Preferred Stock*


1,748,762







13,202,404



672,601







13,875,005Warrants










3,735,058



100,000







3,835,058Total companies more than 5% owned, but less than 25%



$
7,530,904


















$
210,519,609       (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, 2009.(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.   112




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##### Table of Contents



Signature

Title

Date/s/  Michael
    Tokarz(Michael
    Tokarz)

Chairman 
    (Principal Executive Officer) 
    and Director

Date: December 21, 2009/s/  Peter
    Seidenberg(Peter
    Seidenberg)

Chief Financial Officer

Date: December 21, 2009/s/  Emilio
    Dominianni(Emilio
    Dominianni)

Director

Date: December 21, 2009/s/  Gerald
    Hellerman(Gerald
    Hellerman)

Director

Date: December 21, 2009/s/  Warren
    Holtsberg(Warren
    Holtsberg)

Director

Date: December 21, 2009/s/  Robert
    C. Knapp(Robert
    C. Knapp)

Director

Date: December 21, 2009/s/  William
    E. Taylor(William
    E. Taylor)

Director

Date: December 21, 2009  113