MUNIVEST
FUND II, INC.
FUND LOGO
Semi-Annual Report
April 30, 1996
This report, including the financial information herein,
is transmitted to the shareholders of MuniVest Fund II,
Inc. for their information. It is not a prospectus, circular
or representation intended for use in the purchase of
shares of the Fund or any securities mentioned in the
report. Past performance results shown in this report
should not be considered a representation of future
performance. The Fund has leveraged its Common Stock
by issuing Preferred Stock to provide the Common Stock
shareholders with a potentially higher rate of return.
Leverage creates risks for Common Stock shareholders,
including the likelihood of greater volatility of net asset
value and market price of shares of the Common Stock,
and the risk that fluctuations in the short-term dividend
rates of the Preferred Stock may affect the yield to
Common Stock shareholders. Statements and other
information herein are as dated and are subject to change.
<PAGE>
MuniVest Fund II, Inc.
Box 9011
Princeton, NJ
08543-9011
MUNIVEST FUND II, INC.
<PAGE>
The Benefits and
Risks of
Leveraging
MuniVest Fund II, Inc. utilizes leveraging to seek to enhance the
yield and net asset value of its Common Stock. However, these
objectives cannot be achieved in all interest rate environments.
To leverage, the Fund issues Preferred Stock, which pays divi-
dends at prevailing short-term interest rates, and invests the
proceeds in long-term municipal bonds. The interest earned on
these investments is paid to Common Stock shareholders in the
form of dividends, and the value of these portfolio holdings is
reflected in the per share net asset value of the Fund's Common
Stock. However, in order to benefit Common Stock shareholders,
the yield curve must be positively sloped; that is, short-term
interest rates must be lower than long-term interest rates. At
the same time, a period of generally declining interest rates
will benefit Common Stock shareholders. If either of these
conditions change, then the risks of leveraging will begin to
outweigh the benefits.
To illustrate these concepts, assume a fund's Common Stock cap-
italization of $100 million and the issuance of Preferred Stock
for an additional $50 million, creating a total value of $150
million available for investment in long-term municipal bonds.
If prevailing short-term interest rates are approximately 3%
and long-term interest rates are approximately 6%, the yield
curve has a strongly positive slope. The fund pays dividends on
the $50 million of Preferred Stock based on the lower short-term
interest rates. At the same time, the fund's total portfolio of
$150 million earns the income based on long-term interest rates.
Of course, increases in short-term interest rates would reduce
(and even eliminate) the dividends on the Common Stock.
In this case, the dividends paid to Preferred Stock shareholders
are significantly lower than the income earned on the fund's
long-term investments, and therefore the Common Stock share-
holders are the beneficiaries of the incremental yield. However,
if short-term interest rates rise, narrowing the differential be-
tween short-term and long-term interest rates, the incremental
yield pick-up on the Common Stock will be reduced or elimi-
nated completely. At the same time, the market value on the
fund's Common Stock (that is, its price as listed on the New York
Stock Exchange) may, as a result, decline. Furthermore, if long-
term interest rates rise, the Common Stock's net asset value
will reflect the full decline in the price of the portfolio's invest-
ments, since the value of the fund's Preferred Stocks does not
fluctuate. In addition to the decline in net asset value, the
market value of the fund's Common Stock may also decline.
<PAGE>
DEAR SHAREHOLDER
For the six-month period ended
April 30, 1996, the Common Stock of
MuniVest Fund II, Inc. earned $0.424
per share income dividends, which
included earned and unpaid dividends
of $0.070. This represents a net
annualized yield of 6.22%, based on a
month-end per share net asset value
of $13.68. Over the same period, the
total investment return on the Fund's
Common Stock was +1.59%, based
on a change in per share net asset
value from $13.93 to $13.68, and
assuming reinvestment of $0.427 per
share income dividends.
For the six-month period ended April
30, 1996, the Fund's Auction Market
Preferred Stock had an average yield
as follows: Series A, 3.94%; Series B,
3.83%; and Series C, 3.66%.
The Environment
Investor perceptions regarding the US
economy changed over the course of
the six-month period ended April 30,
1996. As 1995 drew to a close and
1996 began, it appeared that the US
economy was losing momentum. Lack-
luster retail sales, increases in initial
unemployment claims (along with
weak job and income growth), and
evidence of slowing in the manufac-
turing sector all suggested that the
rate of economic growth was deceler-
ating, with some forecasters even
suggesting the possibility of an immi-
nent recession.
<PAGE>
However, the consensus outlook for
the rate of future economic growth
changed dramatically with the report
of stronger-than-expected employ-
ment data for February and March.
As a result, investors began to antici-
pate renewed economic growth. Long-
term interest rates rose, and the
Federal Reserve Board left monetary
policy on hold. Adding to investor
concerns was the report that the
Knight Ridder-Commodity Research
Bureau Index was near an eight-year
high, largely because of an increase
in agricultural prices and an upward
spike in the price of crude oil.
Investors are likely to continue to
focus on the probable direction of
economic activity and Federal Reserve
Board monetary policy in the weeks
ahead. At this time, inflationary pres-
sures do not seem to be building and
the capital spending, housing and
consumption sectors are still relatively
weak, which suggest that the economy
is not on the verge of overheating.
Nevertheless, it is unlikely that further
indications of stronger economic activ-
ity in the weeks ahead may add to
investor concerns that accelerating
economic activity could lead to higher
inflation and interest rates.
The Municipal Market
During the six months ended April 30,
1996, tax-exempt bond yields rose
as investors became increasingly
concerned that recent economic
growth would reignite inflationary
pressures. Through early February
1996, municipal bond yields contin-
ued their earlier declines supported
by continued moderate economic
growth and favorable inflationary ex-
pectations. As measured by the Bond
Buyer Revenue Bond Index, yields on
uninsured, A-rated municipal revenue
bonds declined an additional 30 basis
points (0.30%) to 5.70% by early
February. As signs of emerging eco-
nomic growth became more numerous,
particularly with the release of the
strong March employment figures,
inflation fears increased and bond
yields rose in response for the remain-
der of the six-month period ended
April 30, 1996. At April 30, 1996, long-
term municipal bond yields were
approximately 6.30%, an increase of
approximately 30 basis points over the
last six months. The rise in US Treasury
bond yields was more substantial.
Over the last six months, yields on
US Treasury securities rose approxi-
mately 60 basis points to 6.90%.
During the April period, the municipal
bond market reversed the trend seen
throughout much of 1995 and signifi-
cantly outperformed the US Treasury
bond market.
<PAGE>
The municipal bond market's recent
outperformance was largely the result
of two principal factors. First, and
perhaps more important, much of the
earlier concern regarding proposed
changes in Federal income tax codes
and their effect on the tax treatment
of tax-exempt bond income has dissi-
pated. As the negative revenue impact
of the various proposals, such as the
flat tax, became apparent, the likeli-
hood of immediate reform quickly
diminished. When the Kemp Commis-
sion dealing with Federal income tax
reform released its findings early in
1996, the obvious need for reform was
highlighted. However, no specific
recommendations of a flat tax, value-
added tax or any other reform were
made. Consequently, fears of losing
the favored tax treatment of munici-
pal bond income declined even further.
As a percentage of Treasury bond
yields, tax-exempt bond yield ratios
quickly declined from 95% to approxi-
mately 90%. This allowed the munici-
pal bond market to maintain much
of the gains made since early 1995.
<PAGE>
The second major factor leading to the
municipal bond market's recent
improvement was the return of a more
favorable technical environment. Over
the past six months, approximately
$90 billion in municipal securities
were underwritten, an increase of
approximately 45% versus the compa-
rable period a year earlier. However,
much of this increase was biased by
recent underwritings dedicated
toward refinancing. Like individual
homeowners, municipal issuers sought
to refinance their existing higher-
couponed debt as tax-exempt bond
yields declined from their highs in
1995. In recent months such refinanc-
ings were estimated to represent at
least 50% of total issuance. However,
the recent rise in tax-exempt interest
rates slowed the pace of such refinanc-
ings. Over the last three months
approximately $40 billion in long-
term tax-exempt securities were
underwritten, an increase of 35%
compared to the same period a year
ago. At current interest rate levels
large amounts of refundings are
unlikely and the rate of new bond
issuance should continue to decline.
Additionally, investors continue to
receive significant amounts of assets
derived from coupon income, bond
maturities, and proceeds from early
redemptions. In recent months
investors received over $30 billion
in such assets. These cash flows
helped maintain individual retail
investor demand in recent months.
Additionally, major institutional
investors, such as certain insurance
companies whose underwriting profits
were cyclically high, demonstrated
significant ongoing interest in the
tax-exempt bond market, particularly
on higher-quality securities. Individual
and institutional investor demand was
strong enough during the six-month
period ended April 30, 1996 to absorb
the relative increase in bond issuance.
<PAGE>
Looking ahead, we believe the munici-
pal bond market is likely to continue
to outperform the US Treasury market.
Investor demand should remain ade-
quate to absorb new bond issuance.
It is also unlikely that the rapid pace
of issuance seen thus far in 1996 will
be maintained. The recent rise in
yields made further bond refinancings
economically unfeasible. Since these
refinancings were the driving force of
recent bond issuance, as the amount
of these refundings decline, overall
issuance should decline. This should
allow the current demand/supply
balance to be easily maintained in
upcoming months.
Additionally, as a percentage of US
Treasury bond yields, long-term
municipal bond yields remain histor-
ically attractive. It is likely that recent
interest rate increases will have a
negative impact on economic growth,
perhaps as early as late summer 1996.
With long-term mortgage rates above
8%, the domestic housing sector has
already indicated signs of slower
growth. If other interest rate sectors
of the economy, such as the automo-
bile industry, begin to show similar
adverse effects, taxable interest rates
would be poised to resume their
decline. With long-term tax-exempt
revenue bonds yielding approximately
90% of their taxable counterparts,
municipal bond yields are poised to
decline further.
Portfolio Strategy
Throughout most of the six-month
period ended April 30, 1996, we
maintained the neutral investment
strategy that we had adopted toward
the end of 1995. While economic
growth was stronger than expected
and interest rates are correspond-
ingly higher, we expect that growth
will prove short-lived and interest
rates may return to lower levels
toward the end of 1996. The Fund
remains well positioned to partici-
pate in any market improvement. We
expect to maintain the Fund's cash
reserves at low levels to seek to
enhance the Fund's current dividend
yield. We used the recent rise in
interest rates to add higher-yielding
securities to the Fund's portfolio.
We expect to view any period of
volatility as an opportunity to add
similar issues to the Fund.
<PAGE>
Short-term tax-exempt interest rates
traded in the 3.25%--4.00% range
throughout most of the six-month
period ended April 30, 1996. This
scenario continued to generate signi-
ficant beneficial impact upon the
yield to the Fund's Common Stock
shareholders. However, should the
spread between short-term and long-
term interest rates narrow, the bene-
fits of the leverage will decline and,
as a result, reduce the yield on the
Fund's Common Stock. (For a com-
plete explanation of the benefits and
risks of leveraging, see page 1 of this
report to shareholders.)
In Conclusion
We appreciate your ongoing interest
in MuniVest Fund II, Inc., and we look
forward to assisting you with your
financial needs in the months and
years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Fred K. Stuebe)
Fred K. Stuebe
Vice President and Portfolio Manager
June 5, 1996
<PAGE>
Portfolio
Abbreviations
To simplify the listings of MuniVest Fund II, Inc.'s
portfolio holdings in the Schedule of Investments, we
have abbreviated the names of many of the securities
according to the list below and at right.
AMT Alternative Minimum Tax (subject to)
DATES Daily Adjustable Tax-Exempt Securities
EDA Economic Development Authority
GO Government Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
M/F Multi-Family
PCR Pollution Control Revenue Bonds
S/F Single-Family
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <S> <C>
Alaska--4.0% AA- Aa3 $15,000 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds (Sohio
Pipeline), 7.125% due 12/01/2025 $ 16,194
Arizona--1.0% A1+ P1 1,300 Maricopa County, Arizona, Pollution Control Corp., PCR, Refunding
(Arizona Public Service Co.), VRDN, Series B, 4.10% due 5/01/2029 (a) 1,300
AAA Aaa 2,315 Maricopa County, Arizona, School District No. 3, Refunding and
Improvement Bonds (Tempe Elementary School), UT, 7.50% due 7/01/2010 (c) 2,766
Arkansas--0.1% NR* P1 300 Crosset, Arkansas, PCR (Georgia-Pacific Corp. Project), VRDN, 4.20% due
10/01/2007 (a) 300
California--0.5% A- A 2,000 California State Public Works Board, Lease Revenue Bonds (Various
Community College Projects), Series B, 7% due 3/01/2014 2,168
<PAGE>
Colorado--4.2% NR* Aa 3,780 Colorado HFA, S/F Program Revenue Bonds, AMT, Senior Series F, 8.625%
due 6/01/2025 (h) 4,303
Denver, Colorado, City and County Airport Revenue Bonds:
BBB Baa 7,500 AMT, Series C, 6.75% due 11/15/2022 7,592
AAA Aaa 4,350 Series A, 7.25% due 11/15/2025 (d) 4,927
Delaware--0.6% AAA Aaa 2,250 Delaware Transportation Authority, Transportation System, Senior
Revenue Bonds, 7% due 7/01/2014 (c) 2,481
District of A1+ VMIG1++ 200 District of Columbia, General Fund Recovery Revenue Bonds, VRDN, UT,
Columbia--0.3% Series B-1, 4.30% due 6/01/2003 (a) 200
A1 VMIG1++ 1,400 District of Columbia Revenue Bonds (American Association for the
Advancement of Science Issues Project), VRDN, 4.15% due 10/01/2022 (a) 1,400
Florida--1.0% BBB Baa1 3,655 Escambia County, Florida, PCR (Champion International Corp. Project),
AMT, 6.90% due 8/01/2022 3,818
A1 VMIG1++ 400 Pinellas County, Florida, Health Facilities Authority, Revenue
Refunding Bonds (Pooled Hospital Loan Program), DATES, 4.05% due
12/01/2015 (a) 400
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <S> <C>
Georgia--7.4% A1 VMIG1++ $ 1,400 Burke County, Georgia, Development Authority, PCR (Georgia Power
Company--Plant Vogtle Project), VRDN, 3rd Series, 4.10% due
7/01/2024 (a) $ 1,400
Georgia Municipal Electric Authority, Special Obligation
Revenue Bonds:
A A 6,000 (3rd Crossover Series), 6.60% due 1/01/2018 6,372
A A 1,250 (4th Crossover Series), Project One, 6.50% due 1/01/2020 1,315
A+ A 11,035 (5th Crossover Series), Project One, 6.50% due 1/01/2017 11,696
Georgia State, GO, Series F:
AA+ Aaa 5,000 6.50% due 12/01/2006 5,602
AA+ Aaa 3,150 6.50% due 12/01/2007 3,523
Idaho--0.6% NR* Aaa 2,500 Idaho Housing Agency, S/F Mortgage Revenue Bonds, AMT, Series
E-2, 6.90% due 1/01/2027 2,566
<PAGE>
Illinois--15.2% AA- Aa3 6,925 Chicago, Illinois, Gas Supply Revenue Bonds (People's Gas), Series A,
6.875% due 3/01/2015 7,321
AAA Aaa 5,000 Chicago, Illinois, Water Revenue Bonds, 5% due 11/01/2025 (c) 4,276
Illinois HDA, M/F Program Revenue Bonds:
A+ A1 9,090 Refunding, Series A, 7.375% due 7/01/2017 9,694
A+ A1 6,500 Series 5, 6.75% due 9/01/2023 6,591
A+ Aa 2,550 Illinois HDA, Residential Mortgage Revenue Bonds, AMT, Series C-1,
6.874% due 2/01/2018 2,596
NR* Baa1 3,235 Illinois Health Facilities Authority Revenue Bonds (Holy Cross
Hospital Project), 6.75% due 3/01/2024 3,179
Illinois Regional Transportation Authority Revenue Bonds:
AAA Aaa 6,650 Refunding, 5.60% due 6/01/2025 (d) 6,242
AAA Aaa 4,815 Series A, 6.50% due 6/01/2015 (b) 4,986
AAA Aaa 1,500 Series A, 7.20% due 11/01/2020 (b) 1,747
AAA Aaa 7,000 Series A, 6.70% due 11/01/2021 (c) 7,714
AAA Aaa 2,500 UT, Series C, 7.75% due 6/01/2020 (c) 3,102
AAA Aaa 1,000 UT, Series C, 7.10% due 6/01/2025 (c) 1,104
AAA A1 3,500 Illinois State Sales Tax Revenue Bonds, Series O, 6.50% due
6/15/2013 3,708
Indiana--13.9% Indiana Bond Bank Revenue Bonds (State Revolving Fund Program),
Series A:
A NR* 2,750 6.875% due 2/01/2012 2,972
A NR* 5,750 6.75% due 2/01/2017 6,187
NR* Aaa 7,350 Indiana State HFA, S/F Mortgage Revenue Refunding Bonds, Series A,
6.80% due 1/01/2017 7,581
AAA Aaa 2,050 Indiana State Toll Road Commission, Toll Road Revenue Bonds (East-West
Toll Road), 9% due 1/01/2015 (e) 2,743
NR* A 1,915 Indiana Transportation Finance Authority, Airport Facilities Lease
Revenue Bonds (United Air), Series A, 6.75% due 11/01/2011 1,998
Indiana Transportation Finance Authority, Highway Revenue Bonds,
Series A:
A+ A1 2,000 7.25% due 6/01/2015 2,284
A+ A1 3,775 6.80% due 12/01/2016 4,196
Indianapolis, Indiana, Local Public Improvement Bond Bank Revenue
Bonds:
A+ NR* 8,750 Refunding, Series D, 6.75% due 2/01/2014 9,524
A+ NR* 11,800 Refunding, Series D, 6.75% due 2/01/2020 12,510
NR* Aaa 2,365 Series C, 6.70% due 1/01/2002 (i) 2,624
AAA Aaa 3,770 South Newton, Indiana, First Mortgage Revenue Bonds (School Building
Corp.), UT, 7% due 1/15/2017 (d) 4,159
Louisiana--1.0% A- A3 2,000 De Soto Parish, Louisiana, Environmental Improvement Revenue
Refunding Bonds (International Paper Co. Project), AMT, Series B,
6.55% due 4/01/2019 2,025
NR* Baa2 2,000 Lake Charles, Louisiana, Harbor and Terminal District, Port Facilities
Revenue Refunding Bonds (Trunkline Long Co. Project), 7.75% due
8/15/2022 2,224
Maine--1.7% AA- A1 6,790 Maine State Housing Authority, Mortgage Purchase Revenue Bonds, AMT,
Series C-2, 6.875% due 11/15/2023 6,918
<PAGE>
Maryland--0.3% AAA Aaa 1,000 Maryland State Health and Higher Educational Facilities Authority
Revenue Bonds (University of Maryland Medical Systems), Series B,
7% due 7/01/2022 (c) 1,157
Massachusetts-- A+ A1 2,450 Massachusetts State Consolidated Loan, Series A, 4.50% due 1/01/2003 2,382
2.8% AAA Aaa 1,000 Massachusetts State HFA, Residential Development Revenue Bonds,
Series C, 6.90% due 11/15/2021 (f) 1,041
A+ A1 1,000 Massachusetts State Revenue Refunding Bonds (College Building
Authority Project), Series A, 7.50% due 5/01/2011 1,184
A A 6,000 Massachusetts State Water Resource Authority Revenue Bonds, Series A,
6.50% due 7/15/2019 6,443
Michigan--7.8% AAA Aaa 2,500 Detroit, Michigan, Sewage Disposal Revenue Bonds, 6.625% due
7/01/2001 (c) (i) 2,759
BBB Baa1 3,500 Dickinson County, Michigan, Economic Development Corp., Solid Waste
Disposal, Revenue Refunding Bonds (Champion International), 6.55% due
3/01/2007 3,658
AA Aa 1,250 Michigan Municipal Bond Authority, Revenue Refunding Bonds (Local
Government--Qualified School), Series A, 6.50% due 5/01/2016 1,301
AA Aa 3,500 Michigan State Environmental Protection Program, Refunding, 5.40% due
11/01/2019 3,266
A+ NR* 3,000 Michigan State HDA, Rental Housing Revenue Refunding Bonds, Series A,
6.65% due 4/01/2023 3,064
Michigan State HDA, S/F Mortgage Revenue Bonds:
AA+ NR* 3,715 Refunding, AMT, Series D, 6.85% due 6/01/2026 3,802
AA+ NR* 4,885 Series A, 6.875% due 6/01/2023 5,045
A A 3,500 Michigan State Hospital Finance Authority, Revenue Refunding Bonds
(Detroit Medical Center Obligation Group), Series A, 6.50% due
8/15/2018 3,536
A+ A1 2,500 Michigan State Strategic Fund, Limited Obligation Revenue Bonds
(Ford Motor Co. Project), AMT, Series A, 6.55% due 10/01/2022 2,565
NR* P1 200 Michigan State Strategic Fund, PCR, Refunding (Consumers Power
Project), VRDN, Series A, 4.10% due 4/15/2018 (a) 200
AA- Aa 2,585 Royal Oak, Michigan, Hospital Finance Authority, Revenue Refunding
Bonds (Beaumont Properties, Inc.), Series E, 6.625% due 1/01/2019 2,688
Minnesota--1.7% Minnesota State HFA, S/F Mortgage Revenue Bonds, AMT:
AA+ Aa 2,750 Series L, 6.70% due 7/01/2020 2,797
AA+ Aa 3,960 Series M, 6.70% due 7/01/2026 4,027
Mississippi--0.7% NR* P1 2,900 Perry County, Mississippi, PCR, Refunding (Leaf River Forest Project),
VRDN, 4.10% due 3/01/2002 (a) 2,900
Missouri--0.2% A1+ VMIG1++ 900 Missouri State Health and Educational Facilities Authority, Revenue
Refunding Bonds (Washington University), VRDN, Series A, 4.10% due
9/01/2030 (a) 900
Nebraska--0.6% AAA Aaa 2,200 Lancaster County, Nebraska, Hospital Authority No. 1, Hospital
Revenue Bonds (Bryan Memorial Hospital Project), 6.70% due
6/01/2022 (d) 2,317
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
<S> <C> <C> <C> <S> <C>
Nevada--4.7% AAA Aaa $ 4,055 Clark County, Nevada, Sanitation District, Series A, 6.70% due
7/01/2002 (i) $ 4,500
AAA Aaa 2,500 Clark County, Nevada, School District Revenue Bonds, 6.75% due
12/15/2004 (c) (i) 2,827
AA Aaa 1,825 Nevada State Colorado River Community Revenue Bonds, 6.50% due
7/01/2004 (i) 2,019
AAA Aaa 1,450 Nevada State Housing Division Revenue Bonds (S/F Program), AMT,
Series E, 7% due 10/01/2019 1,498
AA Aa 5,430 Nevada State Revenue Refunding Bonds (Colorado River Commission--
Hoover), 6.60% due 10/01/2016 5,733
AAA Aaa 2,500 Washoe County, Nevada, Gas Facilities Revenue Bonds (Sierra Pacific
Power Co.), AMT, 6.65% due 12/01/2017 (b) 2,597
New Jersey--1.7% AAA Aaa 4,435 New Jersey State Housing and Mortgage Finance Agency Revenue Bonds
(Home Buyer), AMT, Series M, 6.95% due 10/01/2022 (d) 4,557
AAA Aaa 2,300 Washington Township, New Jersey, Board of Education (Gloucester
County), UT, 5% due 2/01/2005 (d) 2,300
New Mexico--0.5% A1+ P1 2,100 Farmington, New Mexico, PCR (Arizona Public Service Co.), VRDN, AMT,
Series C, 4.25% due 9/01/2024 (a) 2,100
A1+ P1 200 Hurley, New Mexico, PCR (Kennecott Santa Fe), VRDN, 4.10% due
12/01/2015 (a) 200
New York--5.0% New York City, New York, GO, UT:
BBB+ Baa1 2,425 Series B, 7% due 6/01/2016 2,511
BBB+ Baa1 5,000 Series B, Sub-Series B-1, 7% due 8/15/2016 5,230
BBB+ Baa1 4,000 Series B, Sub-Series B-1, 7.25% due 8/15/2019 4,274
BBB+ Baa1 3,000 Series F, 5.75% due 2/01/2015 2,761
A Aaa 5,000 New York State Local Government Assistance Corporation Revenue Bonds,
Series A, 7.125% due 4/01/2002 (i) 5,671
North Carolina-- AAA Aaa 2,500 North Carolina Municipal Power Agency No. 1, Revenue Refunding Bonds
0.6% (Catawba Electric), Series A, 5.375% due 1/01/2020 (b) 2,318
Ohio--0.7% AAA Aaa 1,300 Adams County, Ohio, Valley Local School District Improvement Bonds, UT,
5.25% due 12/01/2021 (d) 1,202
AAA Aaa 1,500 Cleveland, Ohio, Water Works, Revenue Refunding Bonds (First Mortgage),
Series F-92B, 6.50% due 1/01/2011 (b) 1,602
<PAGE>
Oregon--0.3% A-1 VMIG1++ 1,000 Medford, Oregon, Hospital Facilities Authority Revenue Bonds
(Gross-Rogue Valley Health Services), VRDN, 4.25% due 10/01/2016 (a) 1,000
A1+ A3 500 Port Saint Helens, Oregon, PCR (Portland General Electric Company
Project), VRDN, AMT, Series A, 4.30% due 8/01/2014 (a) 500
Pennsylvania--0.3% AA+ Aa 1,250 Pennsylvania HFA, S/F Mortgage Revenue Bonds, AMT, Series 43, 7.40%
due 10/01/2014 1,278
South Carolina-- A- A1 3,000 Richland County, South Carolina, Solid Waste Disposal Facilities
1.4% Revenue Bonds (Union Camp Corp. Project), AMT, Series B, 7.125%
due 9/01/2021 3,212
NR* Aa 1,000 South Carolina State Housing Finance and Development Authority,
Mortgage Revenue Bonds, AMT, Series A, 6.70% due 7/01/2027 (h) 1,014
AAA Aaa 1,500 South Carolina State Public Service Authority, Revenue Refunding
Bonds, Series A, 6.25% due 1/01/2022 (b) 1,539
Texas--4.2% AA- Aa3 2,500 Guadalupe-Blanco River Authority, Texas, Sewage and Solid Waste
Disposal Facility Revenue Bonds (du Pont (E.I.) de Nemours and
Co. Project), AMT, 6.40% due 4/01/2026 2,537
Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds, Series A:
A- A 1,500 (Memorial Hospital Systems Project), 6.60% due 6/01/2014 1,517
A- A 1,500 (Memorial Hospital Systems Project), 6.625% due 6/01/2024 1,527
AA Aa 2,500 (Saint Luke's Episcopal Hospital Project), 6.625% due 2/15/2012 2,582
AA Aa 8,000 North Central, Texas, Health Facility Development Corporation Revenue
Bonds (Baylor University Medical Center), Series A, 6.85% due 5/15/2016 8,859
Virginia--4.3% A-- A1 3,115 Isle Wight County, Virginia, IDA, Solid Waste Disposal Facilities
Revenue Bonds (Union Camp Corp. Project), AMT, 6.55% due 4/01/2024 3,201
AAA Aaa 2,410 Portsmouth, Virginia, UT, 5% due 8/01/2006 (c) 2,391
Virginia State HDA, Commonwealth Mortgage Revenue Bonds:
AA+ Aa1 2,000 AMT, Series B, Sub-Series B-2, 6.85% due 1/01/2027 2,037
AA+ NR* 2,500 AMT, Series G, Sub-Series G-2, 6.65% due 1/01/2019 2,519
AA+ Aa1 2,000 Series B, Sub-Series B-5, 6.90% due 7/01/2013 2,062
AA+ Aa1 5,100 Series H, 6.85% due 7/01/2014 5,303
Washington--4.6% AAA NR* 2,395 Washington State Housing Finance Commission, S/F Mortgage Revenue
Refunding Bonds, Series D, 6.95% due 7/01/2017 (f) (g) 2,485
Washington State Public Power Supply System, Revenue Refunding Bonds,
Series B:
AA Aa 4,950 (Nuclear Project No. 1), 7.25% due 7/01/2009 5,575
AA Aa 5,000 (Nuclear Project No. 1), 7.125% due 7/01/2016 5,521
AA Aa 2,500 (Nuclear Project No. 2), 7% due 7/01/2012 2,655
AAA Aaa 1,900 (Nuclear Project No. 3), 7.125% due 7/01/2016 (d) 2,202
Wisconsin--1.1% NR* A 2,000 Wisconsin State Health and Educational Facilities Authority, Revenue
Refunding Bonds (Saint Claire Hospital Project), 7% due 2/15/2011 2,080
AA Aa 2,250 Wisconsin State Housing and EDA, Home Ownership Revenue Bonds, AMT,
Series D, 6.65% due 7/01/2025 2,280
<PAGE>
Wyoming--3.2% BBB Baa2 5,000 Sweetwater County, Wyoming, Solid Waste Disposal Revenue Bonds
(FMC Corp. Project), AMT, Series B, 6.90% due 9/01/2024 5,138
Wyoming Community Development Authority, S/F Mortgage Revenue Bonds:
AA Aa 1,500 AMT, Series H, 7.10% due 6/01/2012 1,568
AA Aa 5,740 Series B, 6.70% due 6/01/2017 5,918
Total Investments (Cost--$385,131)--98.2% 399,960
Other Assets Less Liabilities--1.8% 7,416
--------
Net Assets--100.0% $407,376
========
<FN>
(a)The interest rate is subject to change periodically based
upon prevailing market rates. The interest rate shown is the
rate in effect at April 30, 1996.
(b)AMBAC Insured.
(c)FGIC Insured.
(d)MBIA Insured.
(e)Escrowed to Maturity.
(f)FNMA Collateralized.
(g)GNMA Collateralized.
(h)FHA Insured.
(i)Prerefunded.
*Not Rated.
++Highest short-term rating by Moody's Investors Service, Inc.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<CAPTION>
As of April 30, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$385,130,524) (Note 1a) $399,959,546
Cash 41,326
Receivables:
Interest $ 7,691,782
Securities sold 416,455 8,108,237
------------
Deferred organization expense (Note 1e) 19,937
Prepaid expenses and other assets 20,555
------------
Total assets 408,149,601
------------
<PAGE>
Liabilities: Payables:
Dividends to shareholders (Note 1f) 527,445
Investment adviser (Note 2) 167,899 695,344
------------
Accrued expenses and other liabilities 78,675
------------
Total liabilities 774,019
------------
Net Assets: Net assets $407,375,582
============
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.10 per share (5,400 shares of AMPS* issued and
outstanding at $25,000 per share liquidation preference) $135,000,000
Common Stock, par value $.10 per share (19,907,055 shares issued and
outstanding) $ 1,990,705
Paid-in capital in excess of par 277,543,484
Undistributed investment income--net 2,160,165
Accumulated realized capital losses on investments--net (Note 5) (24,147,794)
Unrealized appreciation on investments--net 14,829,022
------------
Total--Equivalent to $13.68 net asset value per share of Common Stock
(market price--$12.50) 272,375,582
------------
Total capital $407,375,582
============
<FN>
*Auction Market Preferred Stock.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended April 30, 1996
<S> <S> <C> <C>
Investment Interest and amortization of premium and discount earned $12,282,449
Income
(Note 1d):
<PAGE>
Expenses: Investment advisory fees (Note 2) $1,036,216
Commission fees (Note 4) 169,505
Professional fees 40,181
Accounting services (Note 2) 37,438
Transfer agent fees 31,629
Printing and shareholder reports 26,226
Custodian fees 15,901
Listing fees 12,286
Directors' fees and expenses 12,172
Pricing fees 6,510
Amortization of organization expenses (Note 1e) 4,124
Other 17,321
----------
Total expenses 1,409,509
-----------
Investment income--net 10,872,940
-----------
Realized & Realized loss on investments--net (502,272)
Unrealized Change in unrealized appreciation on investments--net (4,162,895)
Loss on -----------
Investments Net Increase in Net Assets Resulting from Operations $ 6,207,773
- --Net ===========
(Notes 1b,
1d & 3):
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
April 30, October 31,
Increase (Decrease) in Net Assets: 1996 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 10,872,940 $ 22,112,540
Realized loss on investments--net (502,272) (17,641,284)
Change in unrealized appreciation/depreciation on investments--net (4,162,895) 44,786,134
------------ ------------
Net increase in net assets resulting from operations 6,207,773 49,257,390
------------ ------------
Dividends to Investment income--net:
Shareholders Common Stock (8,497,684) (16,834,919)
(Note 1f): Preferred Stock (2,564,928) (5,271,525)
------------ ------------
Net decrease in net assets resulting from dividends to shareholders (11,062,612) (22,106,444)
------------ ------------
<PAGE>
Net Assets: Total increase (decrease) in net assets (4,854,839) 27,150,946
Beginning of period 412,230,421 385,079,475
------------ ------------
End of period* $407,375,582 $412,230,421
============ ============
<FN>
*Undistributed investment income--net $ 2,160,165 $ 2,349,837
============ ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
For the For the Period
The following per share data and ratios have been derived Six Months March 29,
from information provided in the financial statements. Ended For the Year Ended 1993++ to
April 30, October 31, Oct. 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1994 1993
<S> <S> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 13.93 $ 12.56 $ 15.15 $ 14.18
Operating -------- -------- -------- --------
Performance: Investment income--net .55 1.11 1.08 .62
Realized and unrealized gain (loss) on investments--net (.24) 1.37 (2.53) 1.02
-------- -------- -------- --------
Total from investment operations .31 2.48 (1.45) 1.64
-------- -------- -------- --------
Less dividends and distributions to Common Stock shareholders:
Investment income--net (.43) (.85) (.87) (.45)
Realized gain on investments--net -- -- (.08) --
-------- -------- -------- --------
Total dividends and distributions to Common Stock shareholders (.43) (.85) (.95) (.45)
-------- -------- -------- --------
Capital charge resulting from issuance of Common Stock -- -- -- (.02)
-------- -------- -------- --------
Effect of Preferred Stock activity:++++
Dividends and distributions to Preferred Stock shareholders:
Investment income--net (.13) (.26) (.18) (.09)
Realized gain on investments--net -- -- (.01) --
Capital charge resulting from issuance of Preferred Stock -- -- -- (.11)
-------- -------- -------- --------
Total effect of Preferred Stock activity (.13) (.26) (.19) (.20)
-------- -------- -------- --------
Net asset value, end of period $ 13.68 $ 13.93 $ 12.56 $ 15.15
======== ======== ======== ========
Market price per share, end of period $ 12.50 $ 12.125 $ 10.375 $ 14.625
======== ======== ======== ========
<PAGE>
Total Based on market price per share 6.65%+++ 25.68% (23.56%) .53%+++
Investment ======== ======== ======== ========
Return:** Based on net asset value per share 1.59%+++ 19.27% (10.67%) 10.16%+++
======== ======== ======== ========
Ratios to Expenses, net of reimbursement .68%* .69% .68% .35%*
Average ======== ======== ======== ========
Net Expenses .68%* .69% .68% .49%*
Assets:*** ======== ======== ======== ========
Investment income--net 5.23%* 5.55% 5.17% 5.17%*
======== ======== ======== ========
Supplemental Net assets, net of Preferred Stock, end of period
Data: (in thousands) $272,376 $277,230 $250,079 $301,507
======== ======== ======== ========
Preferred Stock outstanding, end of period (in thousands) $135,000 $135,000 $135,000 $135,000
======== ======== ======== ========
Portfolio turnover 24.25% 95.62% 114.56% 25.00%
======== ======== ======== ========
Leverage: Asset coverage per $1,000 $ 3,018 $ 3,054 $ 2,852 $ 3,233
======== ======== ======== ========
Dividends Series A--Investment income--net $ 491 $ 967 $ 644 $ 292
Per Share On ======== ======== ======== ========
Preferred Series B--Investment income--net $ 478 $ 891 $ 693 $ 352
Stock ======== ======== ======== ========
Outstand- Series C--Investment income--net $ 456 $ 1,070 $ 634 $ 302
ing:++++++ ======== ======== ======== ========
<FN>
*Annualized.
**Total investment returns based on market value, which can be
significantly greater or lesser than the net asset value, may
result in substantially different returns. Total investment
returns exclude the effects of sales loads.
***Do not reflect the effect of dividends to Preferred Stock shareholders.
++Commencement of Operations.
++++The Fund's Preferred Stock was issued on April 26, 1993.
++++++Dividends per share have been adjusted to reflect a two-for-one
stock split that occurred on December 1, 1994.
++++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniVest Fund II, Inc. (the "Fund") is registered under the Invest-
ment Company Act of 1940 as a non-diversified, closed-end manage-
ment investment company. These unaudited financial statements
reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the interim period
presented. All such adjustments are of a normal recurring nature.
The Fund determines and makes available for publication the net
asset value of its Common Stock on a weekly basis. The Fund's
Common Stock is listed on the New York Stock Exchange under the
symbol MVT. The following is a summary of significant accounting
policies followed by the Fund.
(a) Valuation of investments--Municipal bonds are traded primarily
in the over-the-counter markets and are valued at the most recent bid
price or yield equivalent as obtained by the Fund's pricing service
from dealers that make markets in such securities. Financial futures
contracts and options thereon, which are traded on exchanges, are
valued at their closing prices as of the close of such exchanges.
Options, which are traded on exchanges, are valued at their last sale
price as of the close of such exchanges or, lacking any sales, at the
last available bid price. Securities with remaining maturities of sixty
days or less are valued at amortized cost, which approximates market
value. Securities for which market quotations are not readily avail-
able are valued at fair value as determined in good faith by or under
the direction of the Board of Directors of the Fund, including valua-
tions furnished by a pricing service retained by the Fund, which
may utilize a matrix system for valuations. The procedures of the
pricing service and its valuations are reviewed by the officers of the
Fund under the general supervision of the Board of Directors.
(b) Derivative financial instruments--The Fund may engage in vari-
ous portfolio strategies to seek to increase its return by hedging its
portfolio against adverse movements in the debt markets. Losses may
arise due to changes in the value of the contract or if the counterparty
does not perform under the contract.
* Financial futures contracts--The Fund may purchase or sell inter-
est rate futures contracts and options on such futures contracts
for the purpose of hedging the market risk on existing securities or
the intended purchase of securities. Futures contracts are contracts
for delayed delivery of securities at a specific future date and at a
specific price or yield. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund agrees to receive from or pay to the broker an
amount of cash equal to the daily fluctuation in value of the contract.
Such receipts or payments are known as variation margin and are
recorded by the Fund as unrealized gains or losses. When the con-
tract is closed, the Fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was
opened and the value at the time it was closed.
<PAGE>
* Options--The Fund is authorized to write covered call options
and purchase put options. When the Fund writes an option, an
amount equal to the premium received by the Fund is reflected as an
asset and an equivalent liability. The amount of the liability is sub-
sequently marked to market to reflect the current market value of
the option written.
When a security is purchased or sold through an exercise of an
option, the related premium paid (or received) is added to (or
deducted from) the basis of the security acquired or deducted from
(or added to) the proceeds of the security sold. When an option
expires (or the Fund enters into a closing transaction), the Fund
realizes a gain or loss on the option to the extent of the premiums
received or paid (or gain or loss to the extent the cost of the closing
transaction exceeds the premium paid or received).
Written and purchased options are non-income producing investments.
(c) Income taxes--It is the Fund's policy to comply with the require-
ments of the Internal Revenue Code applicable to regulated invest-
ment companies and to distribute substantially all of its taxable
income to its shareholders. Therefore, no Federal income tax provi-
sion is required.
(d) Security transactions and investment income--Security trans-
actions are recorded on the dates the transactions are entered into
(the trade dates). Interest income is recognized on the accrual basis.
Discounts and market premiums are amortized into interest income.
Realized gains and losses on security transactions are determined
on the identified cost basis.
NOTES TO FINANCIAL STATEMENTS (concluded)
(e) Deferred organization expenses--Deferred organization expenses
are amortized on a straight-line basis over a five-year period.
(f) Dividends and distributions--Dividends from net investment
income are declared and paid monthly. Distributions of capital gains
are recorded on the ex-dividend dates.
<PAGE>
2. Investment Advisory Agreement and Transactions
with Affiliates:
The Fund has entered into an Investment Advisory Agreement
with Fund Asset Management, L.P. ("FAM"). The general partner of
FAM is Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee at an annual rate of 0.50% of
the Fund's average weekly net assets.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of FAM, PSI, Merrill Lynch, Pierce, Fenner & Smith Inc.
("MLPF&S"), and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended April 30, 1996 were $98,099,902 and
$109,034,762, respectively.
Net realized and unrealized gains (losses) as of April 30, 1996 were
as follows:
Realized Unrealized
Gains (Losses) Gains
Long-term investments $ 293,515 $14,829,022
Financial futures contracts (795,787) --
----------- -----------
Total $ (502,272) $14,829,022
=========== ===========
As of April 30, 1996, net unrealized appreciation for Federal income
tax purposes aggregated $14,829,022, of which $15,337,712 related
to appreciated securities and $508,690 related to depreciated
securities. The aggregate cost of investments at April 30, 1996 for
Federal income tax purposes was $385,130,524.
4. Capital Share Transactions:
The Fund is authorized to issue 200,000,000 shares of capital stock,
including Preferred Stock, par value $.10 per share, all of which were
initially classified as Common Stock. The Board of Directors is
authorized, however, to reclassify any unissued shares of capital
stock without approval of holders of Common Stock.
<PAGE>
Common Stock
For the six months ended April 30, 1996, shares issued and out-
standing remained constant at 19,907,055. At April 30, 1996, total
paid-in capital amounted to $279,534,189.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred
Stock of the Fund that entitle their holders to receive cash dividends
at an annual rate that may vary for the successive dividend periods.
The yields in effect at April 30, 1996 were as follows: Series A, 3.847%;
Series B, 3.446%; and Series C, 3.70%.
As of April 30, 1996, there were 5,400 AMPS authorized, issued and
outstanding with a liquidation preference of $25,000 per share.
The Fund pays commissions to certain broker-dealers at the end of
each auction at an annual rate ranging from 0.25% to 0.375%,
calculated on the proceeds of each auction. For the six months ended
April 30, 1996, MLPF&S, an affiliate of FAM, earned $88,473
as commissions.
5. Capital Loss Carryforward:
At October 31, 1995, the Fund had a net capital loss carryforward of
approximately $20,052,000, of which $6,004,000 expires in 2002 and
$14,048,000 expires in 2003. This amount will be available to offset
like amounts of any future taxable gains.
6. Subsequent Event:
On May 10, 1996, the Fund's Board of Directors declared an ordinary
income dividend to Common Stock shareholders in the amount of
$0.069619 per share, payable on May 30, 1996 to shareholders of
record as of May 21, 1996.
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Terry K. Glenn, Executive Vice President
Vincent R. Giordano, Senior Vice President
Donald C. Burke, Vice President
Kenneth A. Jacob, Vice President
Fred K. Stuebe, Vice President
Gerald M. Richard, Treasurer
Mark B. Goldfus, Secretary
<PAGE>
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, New York 10286
Preferred Stock:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Custodian
The Bank of New York
90 Washington Street
New York, New York 10286
NYSE Symbol
MVT
