Selected Consolidated Financial Data

                                                         Nine Month           Nine Month
                                                        Period Ended         Period Ended          Year Ended
                                                          July 31,             July 31,           October 31,
                                                            2009                 2008                 2008
                                                         (Unaudited)          (Unaudited)
                                                                (In thousands, except per share data)
Operating Data:
Interest and related portfolio income:
Interest and dividend income                            $      16,348        $      20,458        $     26,047
Fee income                                                      3,232                2,888               3,613
Other income                                                      175                  435                 367


Total operating income                                         19,755               23,781              30,027

Expenses:
Incentive compensation (Note 9)                                (3,039 )              9,326              10,822
Administrative                                                  2,640                2,321               8,989
Interest, fees and other borrowing costs                        2,486                3,274               4,464
Management fee                                                  7,283                6,479               3,620


Total operating expenses                                        9,370               21,400              27,895


Net operating income before taxes                              10,385                2,381               2,132

Tax benefit                                                         -                 (106 )              (936 )


Net operating income                                           10,385                2,487               3,068

Net realized and unrealized gains (losses):
Net realized gains                                                  -                1,419               1,418
Net change in unrealized appreciation
(depreciation)                                                (23,637 )             52,689              59,465


Net realized and unrealized (losses) gains on
investments                                                   (23,637 )             54,108              60,883


Net increase (decrease) in net assets resulting
from operations                                         $     (13,252 )      $      56,595        $     63,951


Per Share:
Net increase (decrease) in net assets per share
resulting from operations                               $       (0.54 )      $        2.33        $       2.63
Dividends per share                                     $        0.36        $        0.36        $       0.48

Balance Sheet Data:
Portfolio at fair value                                 $     467,550        $     453,301        $    490,804
Portfolio at cost                                             445,983              414,874             445,600
Total assets                                                  482,444              585,051             510,711
Shareholders' equity                                          399,872              417,429             421,871
Shareholders' equity per share (net asset value)        $       16.46        $       17.18        $      17.36
Common shares outstanding at period end                        24,297               24,297              24,297
Other Data:
Number of Investments funded in period                              5                   11                  15
Investments funded ($) in period                        $       5,668        $      93,471        $    126,300

                                               2009                                                       2008                                                               2007
                              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         7,410            5,757           6,588           6,246            6,804            8,081            8,896           8,438            7,030            6,073            5,409

Incentive compensation        (2,550 )           (335 )          (154 )         1,496            3,929            3,740            1,657             771            1,618            4,898            3,526
Interest, fees and
other borrowing costs            660              736           1,090           1,190            1,022            1,081            1,171           1,223            1,252            1,256            1,128
Management fee                 2,379            2,421           2,483           2,510            2,276            2,185            2,018           1,929            1,616            1,854            1,635
Administrative                   894              865             881           1,299              887              753              681             630              608              652              669
Tax expense (benefit)              -              359            (359 )          (830 )             58             (186 )             22              77              (78 )           (394 )             20
Net operating income
(loss) before net
realized and
unrealized gains               6,027            1,711           2,647             581           (1,368 )            508            3,347           3,808            2,014           (2,193 )         (1,569 )
Net increase
(decrease) in net
assets resulting from
operations                    (6,297 )         (7,809 )           854           7,357           18,623           17,158           20,813           8,514           13,788           24,323           19,077
Net increase
(decrease) in net
assets resulting from
operations per share           (0.26 )          (0.32 )          0.04            0.30             0.77             0.70             0.86            0.35             0.57             1.00             1.00
Net asset value per
share                          16.46            16.84           17.28           17.36            17.18            16.53            15.95           15.21            14.98            14.53            13.23

OVERVIEW
The Company is an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development company under the 1940 Act. The Company's investment objective is to seek to maximize total return from capital appreciation and/or income.
On November 6, 2003, Mr. Tokarz assumed his positions as Chairman and Portfolio Manager of the Company. He and the Company's investment professionals (who, effective November 1, 2006, provide their services to the Company through the Company's investment adviser, TTG Advisers) are seeking to implement our investment objective (i.e., to maximize total return from capital appreciation and/or income) through making a broad range of private investments in a variety of industries.
The investments can include senior or subordinated loans, convertible debt and convertible preferred securities, common or preferred stock, equity interests, warrants or rights to acquire equity interests, and other private equity transactions. During the year ended October 31, 2008, the Company made four new investments and 11 follow-on investments in existing portfolio companies, committing capital totaling approximately $126.3 million pursuant to our current investment objective. During the nine month period ended July 31, 2009, the Company made no new investments and five follow-on investments in existing portfolio companies, committing capital totaling $5.7 million.
Prior to the adoption of our current investment objective, the Company's investment objective had been to achieve long-term capital appreciation from venture capital investments in information technology companies. The Company's investments had thus previously focused on investments in equity and debt securities of information technology companies. As of July 31, 2009, 3.23% of the current fair value of our assets consisted of Legacy Investments. We are, however, seeking to manage these Legacy Investments to try and realize maximum returns. We generally seek to capitalize on opportunities to realize cash returns on these investments when presented with a potential "liquidity event,"
i.e., a sale, public offering, merger or other reorganization. Our new portfolio investments are made pursuant to our current objective and strategy. We are concentrating our investment efforts on small and middle-market companies that, in our view, provide opportunities to maximize total return from capital appreciation and/or income. Under our investment approach, we are permitted to invest, without limit, in any one portfolio company, subject to any diversification limits required in order for us to continue to qualify as a RIC under Subchapter M of the Code. Due to our asset growth and composition, compliance with the RIC requirements currently restricts our ability to make additional investments that represent more than 5% of our total assets or more than 10% of the outstanding voting securities of the issuer ("Non-Diversified Investments"). We participate in the private equity business generally by providing privately negotiated long-term equity and/or debt investment capital to small and middle-market companies. Our financing is generally used to fund growth, buyouts, acquisitions, recapitalizations, note purchases, and/or bridge financings. We generally invest in private companies, though, from time to time, we may invest in public companies that may lack adequate access to public capital. We may also seek to achieve our investment objective by establishing a subsidiary or subsidiaries that would serve as a general partner or managing member to a private equity or other investment vehicle(s). In fact,

during fiscal year 2006, we established MVC Partners for this purpose. Furthermore, our board of directors has authorized the establishment of a private equity fund (a "PE Fund") that would have the ability, among other things, to make Non-Diversified Investments. A subsidiary of the Company would serve as the general partner (or managing member) of the PE Fund. Our board of directors also authorized the subsidiary's retention of TTG Advisers to serve as portfolio manager of the PE Fund. The general partner and MVC Partners are anticipated to earn (before their respective expenses) a portion (approximately 25-30%) of the revenue and carried interest generated by the PE Fund (which, if launched, may have an asset size of up to $250 million). Additionally, in pursuit of our objective, we may acquire a portfolio of existing private equity or debt investments held by financial institutions or other investment funds should such opportunities arise.
Additionally, in pursuit of our objective, MVC Partners may acquire a portfolio of existing private equity or debt investments held by financial institutions or other investment funds should such opportunities arise.
OPERATING INCOME
For the Nine Month Periods Ended July 31, 2009 and 2008. Total operating income was $19.8 million for the nine month period ended July 31, 2009 and $23.8 million for the nine month period ended July 31, 2008, a decrease of $4.0 million.
For the Nine Month Period Ended July 31, 2009 Total operating income was $19.8 million for the nine month period ended July 31, 2009. The decrease in operating income over the same period last year was primarily due to the repayment of investments that provide the Company with current income, a decrease in the LIBOR rate which impacts our variable rate loans, and reserves against non-performing loans. The main components of investment income were the interest earned on loans and dividend income from portfolio companies and the receipt of closing and monitoring fees from certain portfolio companies by the Company and MVCFS. The Company earned approximately $16.3 million in interest and dividend income from investments in portfolio companies. Of the $16.3 million recorded in interest/dividend income, approximately $4.5 million was "payment in kind" interest/dividends. The "payment in kind" interest/dividends are computed at the contractual rate specified in each investment agreement and added to the principal balance of each investment. The Company's debt investments yielded rates from 1.3% to 17%. Also, the Company earned approximately $7,100 in interest income on its cash equivalents and short-term investments. The Company received fee income and other income from portfolio companies and other entities totaling approximately $3.4 million.
For the Nine Month Period Ended July 31, 2008 Total operating income was $23.8 million for the nine month period ended July 31, 2008. The increase in operating income over the same period last year was primarily due to the increase in the number of investments that provide the Company with current income. The main components of investment income were the interest earned on loans and dividend income from portfolio companies and the receipt of closing and monitoring fees from certain portfolio companies by the Company and MVCFS. The Company earned approximately $19.6 million in interest and dividend income from investments in portfolio companies. Of the $19.6 million recorded in interest/dividend income, approximately $4.2 million was "payment in kind" interest/dividends. The "payment in kind" interest/dividends are computed at the contractual rate specified in each investment agreement and added to the principal balance of each investment. The Company's debt investments yielded rates from 2% to 17%. Also, the Company earned approximately $830,000 in interest income on its cash equivalents and short-term investments. The Company received fee income and other income from portfolio companies and other entities totaling approximately $2.9 million and $436,000, respectively.
OPERATING EXPENSES
For the Nine Month Period Ended July 31, 2009 and 2008. Operating expenses were $9.4 million for the nine month period ended July 31, 2009 and $21.4 million for the nine month period ended July 31, 2008, a decrease of $12.0 million.

For the Nine Month Period Ended July 31, 2009 Operating expenses were $9.4 million or 3.01% of the Company's average net assets, when annualized, for the nine month period ended July 31, 2009. Significant components of operating expenses for the nine month period ended July 31, 2009, included the management fee of $7.3 million and interest expense and other borrowing costs of $2.5 million.
The $12.0 million decrease in the Company's operating expenses for the nine month period ended July 31, 2009 compared to the nine month period ended July 31, 2008, was primarily due to the $12.4 million decrease in the estimated provision for incentive compensation expense and the approximately $787,000 decrease in interest and other borrowing costs offset by the increase of approximately $804,000 in the management fee expense. The Amended Agreement extended the expense cap applicable to the Company for an additional two fiscal years (fiscal years 2009 and 2010) and increased the expense cap from 3.25% to 3.5%. For fiscal year 2008 and for the nine month period ended July 31, 2009 annualized, the Company's expense ratio was 2.93% and 3.19% , respectively, (taking into account the same carve outs as those applicable to the expense cap).
Pursuant to the terms of the Amended Agreement, during the nine month period ended July 31, 2009, the provision for incentive compensation was decreased by a net amount of $3,039,385 to $12,754,910. The amount of the provision reflects the Valuation Committee's determination to increase the fair values of six of the Company's portfolio investments (U.S. Gas, Tekers, SGDA, Velocitius, Vestal and Dakota Growers) by a total of $21.0 million. The Valuation Committee also increased the fair value of the Ohio Medical preferred stock by approximately $4.3 million due to a PIK distribution, which was treated as a return of capital. The net decrease in the provision reflects the Valuation Committee's determination to decrease the fair values of eleven of the Company's portfolio investments (Timberland, Amersham, Turf, PreVisor, Ohio Medical, Custom Alloy, Harmony Pharmacy, HuaMei, Security Holdings, Tekers and BP) by a total of $43.6 million and the Valuation Committee determination not to increase the fair values of the Harmony Pharmacy revolving credit facility, Timberland senior subordinated loan and the Amersham loan for the accrued PIK totaling $824,000. During the nine month period ended July 31, 2009, there was no provision recorded for the net operating income portion of the incentive fee as pre-incentive fee net operating income did not exceed the hurdle rate. Please see Note 9 "Incentive Compensation" for more information. For the Nine Month Period Ended July 31, 2008 Operating expenses were $21.4 million or 7.30% of the Company's average net assets, when annualized, for the nine month period ended July 31, 2008. Significant components of operating expenses for the nine month period ended July 31, 2008, included the estimated provision for incentive compensation expense of approximately $9.3 million, the management fee of $6.5 million, and interest expense and other borrowing costs of $3.3 million. The estimated provision for incentive compensation expense is a non-cash, not yet payable, provisional expense relating to the Prior Advisory Agreement.
The $700,000 increase in the Company's operating expenses for the nine month period ended July 31, 2008 compared to the nine month period ended July 31, 2007, was primarily due to the $1.4 million increase in the management fee expense offset by the decrease of $700,000 in the provision for estimated incentive compensation. It should be noted, in this regard, that the Prior Advisory Agreement provided for an expense cap pursuant to which TTG Advisers agreed to absorb or reimburse operating expenses of the Company to the extent necessary to limit the Company's expense ratio (the consolidated expenses of the Company, including any amounts payable to TTG Advisers under the base management fee, but excluding the amount of any interest and other direct borrowing costs, taxes, incentive compensation and extraordinary expenses taken as a percentage of the Company's average net assets) to 3.25% in each of the 2007 and 2008 fiscal years. For fiscal year 2007, the expense ratio was 3.0% (taking into account the same carve outs as those applicable to the expense cap).
Pursuant to the terms of the Prior Advisory Agreement, during the nine month period ended July 31, 2008, the estimated provision for incentive compensation on the balance sheet, was decreased by a net amount of $3,576,743 to $14,298,753. The amount of the provision reflects the Valuation Committee's determination to increase the fair values of nine of the Company's portfolio investments: U.S. Gas, Vitality, Summit, Tekers, SGDA, Custom Alloy, MVC Automotive, PreVisor and Velocitius by a total of $50.3 million. The provision also reflects the Valuation Committee's determination to increase the fair value of the Ohio Medical preferred

stock by approximately $2.9 million due to a PIK distribution which was treated as a return of capital. The net decrease in the provision for incentive compensation during the nine month period ended July 31, 2008 was a result of the incentive compensation payment to TTG Advisers of $12.9 million due to the sale of Baltic Motors and BM Auto (20% of the realized gain from the sale less unrealized depreciation on the portfolio). Under the Prior Advisory Agreement, incentive compensation payments were made only upon the occurrence of a realization event (such as the sale of shares of Baltic Motors and BM Auto). Without this reserve for incentive compensation, operating expenses would have been approximately $12.1 million or 4.06% of average net assets when annualized as compared to 7.24%, which is reported on the Consolidated Per Share Data and Ratios, for the nine month period ended July 31, 2008. The net decrease also reflects the Valuation Committee's determination to decrease the fair values of two of the Company's portfolio investments (Timberland and Vestal) by a total of $4.6 million. During the nine month period ended July 31, 2008, there was no provision recorded for the net operating income portion of the incentive fee as pre-incentive fee net operating income did not exceed the hurdle rate. Please see Note 9 "Incentive Compensation" for more information.
In February 2008, the Company renewed its Directors & Officers/Professional Liability Insurance policies at an annual premium expense of approximately $362,000, which is amortized over the twelve month life of the policy. The prior policy premium was $381,000.
REALIZED GAINS AND LOSSES ON PORTFOLIO SECURITIES For the Nine Month Period Ended July 31, 2009 and 2008. Net realized losses for the nine month period ended July 31, 2009 were immaterial. Net realized gains for the nine month period ended July 31, 2008, were $1.4 million. For the Nine Month Period Ended July 31, 2009 There were no material net realized losses or gains for the nine month period ended July 31, 2009.
For the Nine Month Period Ended July 31, 2008 Net realized gains for the nine month period ended July 31, 2008 were $1.4 million. The significant component of the Company's net realized gains for the nine month period ended July 31, 2008 was primarily due to the gain on the sale of Genevac common stock and Phoenix Coal common stock. On January 2, 2008, Genevac repaid its senior subordinated loan in full including all accrued interest. The total amount received was $11.9 million. The Company, at this time, sold 140 shares of Genevac common stock for $1.7 million, resulting in a capital gain of $595,000. On July 23, 2008, the Company sold 500,000 shares of Phoenix Coal. The total amount received from the sale net of commission was approximately $512,000, resulting in a realized gain of approximately $262,000. On July 29, 2008, the Company sold 500,000 more shares of Phoenix Coal. The total amount received from the sale net of commission was approximately $484,000, resulting in a realized gain of approximately $234,000. The Company also received a distribution related to the sale of Baltic of approximately $283,000.
The Company also realized a gain on foreign currency of approximately $60,000.
UNREALIZED APPRECIATION AND DEPRECIATION OF PORTFOLIO SECURITIES
For the Nine Month Period Ended July 31, 2009 and 2008. The Company had a net change in unrealized depreciation on portfolio investments of $23.6 million for the nine month period ended July 31, 2009 and unrealized appreciation of $52.7 million for the nine month period ended July 31, 2008, a decrease of approximately $76.3 million.
For the Nine Month Period Ended July 31, 2009 The Company had a net change in unrealized depreciation on portfolio investments of $23.6 million for the nine month period ended July 31, 2009. The change in unrealized depreciation on investment transactions for

the nine month period ended July 31, 2009 primarily resulted from the Valuation Committee's decision to decrease the fair value of the Company's investments in Ohio Medical common stock by $6.5 million, Foliofn preferred stock by $2.8 million, Vendio preferred stock by $1.8 million and common stock by $4,000, PreVisor common stock by $3.1 million, Custom Alloy preferred stock by $11.5 million, Timberland senior subordinated loan by approximately $7.3 million and junior revolving line of credit by $1.0 million, Amersham second lien notes by $1.4 million, Turf equity interest by $2.6 million, Harmony Pharmacy common stock by $750,000, Security Holdings common equity interest by $7.2 million, HuaMei common stock by $475,000 and BP term loan B by approximately $219,000, term loan A by approximately $255,000 and second lien loan by approximately $1.3 million. The Valuation Committee also determined not to increase the fair values of the Harmony Pharmacy revolving credit facility, Timberland senior subordinated loan and the Amersham loan for the accrued PIK totaling approximately $824,000. The Valuation Committee also increased the fair value of the Company's investments in U.S. Gas preferred stock by $6.0 million, SGDA preferred equity interest by $375,000 and common equity interest by $1.2 million, Tekers common stock by $615,000, Velocitius equity interest by $2.2 million, Vestal common stock by $650,000, Dakota Growers common stock by approximately $4.9 million and preferred stock by approximately $5.1 million, Turf membership interest by approximately $286,000 due to a return of capital and Ohio Medical preferred stock by approximately $4.3 million due to a PIK . . .