MUNIVEST
FUND II, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Annual Report
October 31, 1999
<PAGE>
MUNIVEST FUND II, INC.
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 dividends 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 capitalization 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 shareholders are the beneficiaries of the
incremental yield. However, if short-term interest rates rise, narrowing the
differential between short-term and long-term interest rates, the incremental
yield pickup on the Common Stock will be reduced or eliminated 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 investments,
since the value of the fund's Preferred Stock does not fluctuate. In addition to
the decline in net asset value, the market value of the fund's Common Stock may
also decline.
As a part of its investment strategy, the Fund may invest in certain securities
whose potential income return is inversely related to changes in a floating
interest rate ("inverse floaters"). In general, income on inverse floaters will
decrease when short-term interest rates increase and increase when short-term
interest rates decrease. Investments in inverse floaters may be characterized
as derivative securities and may subject the Fund to the risks of reduced or
eliminated interest payments and losses of invested principal. In addition,
inverse floaters have the effect of providing investment leverage and, as a
result, the market value of such securities will generally be more volatile than
that of fixed-rate, tax-exempt securities. To the extent the Fund invests in
inverse floaters, the market value of the Fund's portfolio and the net asset
value of the Fund's shares may also be more volatile than if the Fund did not
invest in these securities.
<PAGE>
MuniVest Fund II, Inc., October 31, 1999
DEAR SHAREHOLDER
For the year ended October 31, 1999, the Common Stock of MuniVest Fund II, Inc.
earned $0.823 per share income dividends, which included earned and unpaid
dividends of $0.069. This represents a net annualized yield of 6.43%, based on a
month-end net asset value of $12.81 per share. Over the same period, the total
investment return on the Fund's Common Stock was - 8.31%, based on a change in
per share net asset value from $14.85 to $12.81, and assuming reinvestment of
$0.825 per share income dividends.
For the six-month period ended October 31, 1999, the total investment return on
the Fund's Common Stock was -9.38%, based on a change in per share net asset
value from $14.60 to $12.81, and assuming reinvestment of $0.410 per share
income dividends.
For the six-month period ended October 31, 1999, the Fund's Auction Market
Preferred Stock had an average yield of 3.02% for Series A, 3.07% for Series B
and 3.25% for Series C.
The Municipal Market Environment
The combination of steady strong domestic economic growth, improvement in
foreign economies (most notably in Japan) and increasing investor concerns
regarding potential increases in US inflation put upward pressure on bond yields
throughout the 12-month period ended October 31, 1999. Continued strong US
employment growth, particularly the decline in the US unemployment rate to 4.2%
in early June, was among the reasons the Federal Reserve Board cited for raising
short-term interest rates in late June and again in late August. US Treasury
bond yields reacted by climbing above 6.375% by late October. However, by
October 31, 1999, economic indicators were released suggesting that despite
strong economic and employment growth in the third fiscal quarter of 1999,
inflationary pressures have remained extremely well-contained. This resulted in
a significant rally in the US Treasury bond market, pushing US Treasury bond
yields downward to approximately 6.15% by October 31, 1999. During the last six
months, yields on 30-year US Treasury bonds increased more than 50 basis points
(0.50%).
Long-term tax-exempt bond yields also rose during the six months ended October
31, 1999. Until early May, the municipal bond market was able to withstand much
of the upward pressure on bond yields. However, investor concerns of additional
moves by the Federal Reserve Board to moderate US economic growth and, more
importantly, the loss of the strong technical support that the tax-exempt market
enjoyed in early 1999 helped push municipal bond yields significantly higher for
the remainder of the period. The yields on long-term tax-exempt revenue bonds
rose almost 90 basis points to 6.18% by October 31, 1999, as measured by the
Bond Buyer Revenue Bond Index.
In recent months, the significant decline in new tax-exempt bond issuance has
remained a positive factor within the municipal bond market, as it had been for
much of the past year. During the last six months, more than $110 billion in
long-term municipal bonds was issued, a decline of almost 20% compared to the
same period a year ago. During the past three months, $55 billion in municipal
bonds was underwritten, representing a decline of nearly 10% compared to the
corresponding period in 1998. Additionally, in June and July, investors received
more than $40 billion in coupon income and proceeds from bond maturities and
early bond redemptions. These proceeds have generated considerable retail
investor interest, which has helped absorb the recent diminished supply.
Although tax-exempt bond yields are at their highest level in over two years and
have attracted significant retail investor interest, institutional demand has
declined sharply. Long-term municipal mutual funds have seen consistent outflows
in recent months as the yields of individual securities have risen faster than
those of larger, more diverse mutual funds. In addition, the demand from
property/casualty insurance companies has weakened as a result of the losses,
and anticipated losses, incurred as a result of the series of damaging storms
across much of the eastern United States. Additionally, many institutional
investors who were attracted to the municipal bond market in recent years by
historically attractive tax-exempt bond yield ratios of over 90% have found
other asset classes even more attractive. Even with a reduced supply position,
tax-exempt issuers have been forced to repeatedly raise municipal bond yields in
the attempt to attract adequate demand.
The recent relative underperformance of the municipal bond market has resulted
in an opportunity for long-term investors to purchase tax-exempt issues whose
yields are nearly identical to taxable US Treasury securities. At October 31,
1999, long-term uninsured municipal revenue bond yields were 100% of comparable
US Treasury securities. In recent months, many taxable asset classes, such as
corporate bonds, mortgage-backed securities and US agency debt, have all
accelerated debt issuance. This acceleration was initiated largely to avoid
issuing securities at year-end and to minimize any associated Year 2000 (Y2K)
problems that may develop. However, this increased issuance has also resulted in
higher yield levels in the various asset classes as lower bond prices became
necessary to attract sufficient investor demand. Going forward, it is believed
that the pace of non-US Government debt issuance is likely to slow
significantly. As the supply of this debt declines, we would expect many
institutional investors to return to the municipal bond market and the
attractive yield ratios available.
Looking ahead, it appears to us that long-term municipal bond yields will remain
under pressure, trading in a broad range centered near current levels. Investors
are likely to remain concerned about future action by the Federal Reserve Board.
Y2K considerations may prohibit any further Federal Reserve Board moves through
the end of the year and the beginning of 2000. Any improvement in bond prices
will probably be contingent upon weakening in both US employment growth and
consumer spending. The 100 basis point rise in US Treasury bond yields seen thus
far this year may negatively affect US economic growth. The US housing market
will be among the first sectors likely to be affected, as some declines have
already been evidenced in response to higher mortgage rates. We believe that it
is also unrealistic to expect double-digit returns in US equity markets to
continue indefinitely. Much of the US consumer's wealth is tied to recent stock
market appreciation. Any slowing in these incredible growth rates is likely to
reduce consumer spending. We believe that these factors suggest that the worst
of the recent increase in bond yields has passed and stable, if not slightly
improving, bond prices may be expected.
Portfolio Strategy
With tax-exempt bond yields at their highest levels in more than two years, we
viewed the recent rise in tax-exempt interest rates as an opportunity to add
higher-yielding issues to the portfolio and to seek to enhance the Fund's
dividend into the coming years. The ability to purchase municipal bonds at
yields equal to, or in some cases above, taxable US Treasury yields has not been
available since late 1994. History suggests that whenever tax-exempt bond yields
rise near or above US Treasury bond yields for an extended period of time,
municipal bond portfolios generate significant total returns during the
following six months-twelve months.
Recent interest rate increases by the Federal Reserve Board have largely
restored investor confidence that US inflation will not be allowed to rise
significantly. Some decline in economic growth, particularly in the housing and
retail sectors, can already be seen in response to interest rate increases in
recent months. Consequently, we adopted a slightly above neutral portfolio
structure in an effort to take advantage of the expected decline in interest
rates in the coming months and to recapture much of the losses incurred
recently.
During most of the period, short-term tax-exempt bond yields averaged
approximately 3.375%. Short-term municipal bond yields have been much more
stable than those associated with 25-year--30-year maturity issues. This has
resulted in a significant incremental yield paid to Common Stock shareholders.
As the Federal Reserve Board is believed to be near the end of its current
interest rate tightening cycle, short-term tax-exempt bond rates are expected to
remain near their current levels. However, should the spread between long-term
and short-term tax-exempt
2 & 3
<PAGE>
interest rates narrow, the benefits of the leverage will decline and the yield
on the Common Stock will decline. (For a complete 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,
/s/ Terry K. Glenn
Terry K. Glenn
President and Trustee
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ Fred K. Stuebe
Fred K. Stuebe
Vice President and Portfolio Manager
December 8, 1999
PROXY RESULTS
During the six-month period ended October 31, 1999, MuniVest Fund II, Inc.'s
Common Stock shareholders voted on the following proposals. Proposals 1 and 2
were approved at a shareholders' meeting on May 26, 1999, and Proposal 3 was
approved at a shareholders' meeting on July 21, 1999. The description of each
proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. To elect the Fund's Board of Directors: Terry K. Glenn 17,799,194 550,533
Cynthia A. Montgomery 17,793,444 556,283
Charles C. Reilly 17,795,998 553,729
Kevin A. Ryan 17,797,382 552,345
Arthur Zeikel 17,793,335 556,392
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's independent
auditors for the current fiscal year. 17,853,703 146,628 349,398
- ------------------------------------------------------------------------------------------------------------------------------------
3. To approve an amendment to the Articles Supplementary of the Fund. 10,129,993 720,915 562,513
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
During the six-month period ended October 31, 1999, MuniVest Fund II, Inc.'s
Preferred Stock shareholders (Series A, B and C) voted on the following
proposals. Proposals 1 and 2 were approved at a shareholders' meeting on June
23, 1999, and Proposal 3 was approved at a shareholders' meeting on July 21,
1999. The description of each proposal and number of shares voted are as
follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. To elect the Fund's Board of Directors:
Ronald W. Forbes, Terry K. Glenn, Cynthia A. Montgomery, Charles C. Reilly,
Kevin A. Ryan, Richard R. West and Arthur Zeikel as follows:
Series A 1,731 28
Series B 1,539 8
Series C 1,477 127
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2. To ratify the selection of Deloitte & Touche LLP as the Fund's independent
auditors for the current fiscal year as follows:
Series A 1,498 258 3
Series B 1,441 0 105
Series C 1,477 0 127
- ------------------------------------------------------------------------------------------------------------------------------------
3. To approve an amendment to the Articles Supplementary of the Fund as
follows:
Series A 3,790 1,091 29
Series B 3,790 1,091 29
Series C 3,790 1,091 29
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</TABLE>
4 & 5
<PAGE>
MuniVest Fund II, Inc., October 31, 1999
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Alabama--2.1% Jefferson County, Alabama, Sewer Revenue Bonds (c):
AAA NR* $ 7,500 RIB, Series 124, 6.93% due 2/01/2036 (e) $ 5,828
AAA Aaa 2,500 Series D, 5.75% due 2/01/2022 2,418
====================================================================================================================================
Arizona--2.1% A1 P1 2,400 Coconino County, Arizona, Pollution Control Corporation
Revenue Bonds (Arizona Public Service Co.-- Navajo Project),
VRDN, AMT, Series A, 3.55% due 10/01/2029 (a) 2,400
AAA Aaa 2,315 Maricopa County, Arizona, Unified School District Number 3,
GO, Refunding (Tempe Elementary), 7.50% due 7/01/2010 (c) 2,728
A1+ P1 3,100 Pinal County, Arizona, IDA, PCR (Newmont Mining), DATES,
3.55% due 12/01/2009 (a) 3,100
====================================================================================================================================
California--1.1% AAA Aaa 5,000 San Francisco, California, City and County Airport
Commission, International Airport Revenue Refunding
Bonds, Second Series, Issue 16B, 5% due 5/01/2024 (h) 4,362
====================================================================================================================================
Colorado--6.0% NR* Aaa 7,500 Arapahoe County, Colorado, Capital Improvement Trust Fund,
Highway Revenue Bonds (SR-E-470 Project), 7% due 8/31/2005 (g) 8,509
NR* Aa2 945 Colorado HFA, Revenue Bonds (S/F Program), AMT, Senior-Series
F, 8.625% due 6/01/2025 990
AA Aa2 2,500 Colorado Springs, Colorado, Utilities Revenue Bonds, Sub-Lien
Improvement, Series A, 5.75% due 11/15/2028 2,428
BBB+ Baa1 5,940 Denver, Colorado, City and County Airport Revenue Bonds, AMT,
Series C, 6.75% due 11/15/2022 5,988
A1+ VMIG1@ 4,200 Moffat County, Colorado, PCR, Refunding (Pacificorp Projects),
VRDN, 3.50% due 5/01/2013 (a)(b) 4,200
A1+ NR* 1,400 Pitkin County, Colorado, IDR, Refunding (Aspen Skiing Company
Project), VRDN, AMT, Series B, 3.60% due 4/01/2014 (a) 1,400
====================================================================================================================================
District of District of Columbia, GO, Refunding, Series B (h):
Columbia--2.5% AAA Aaa 5,000 5.50% due 6/01/2013 4,901
AAA Aaa 5,000 5.50% due 6/01/2014 4,839
====================================================================================================================================
Florida--2.2% BBB Baa1 3,655 Escambia County, Florida, PCR (Champion International
Corporation Project), AMT, 6.90% due 8/01/2022 3,812
AAA Aaa 5,500 Lee County, Florida, Water and Sewer Revenue Bonds, Series A,
4.75% due 10/01/2023 (b) 4,608
====================================================================================================================================
Georgia--2.6% Georgia Municipal Electric Authority, Power Revenue Refunding Bonds:
A A3 6,000 (Crossover), Series W, 6.60% due 1/01/2018 6,351
A A3 1,250 Series X, 6.50% due 1/01/2020 1,309
AAA Aaa 2,500 Metropolitan Atlanta, Georgia, Rapid Transit Authority, Sales
Tax Revenue Refunding Bonds, Second Indenture, Series A, 5.625%
due 7/01/2020 (d) 2,401
====================================================================================================================================
Hawaii--0.5% A A 2,000 Hawaii State Department of Budget and Finance, Special Purpose
Revenue Bonds, 6.25% due 7/01/2021 1,979
====================================================================================================================================
Idaho--0.6% NR* Aaa 2,140 Idaho Housing Agency, S/F Mortgage Revenue Refunding Bonds,
AMT, Series E-2, 6.90% due 1/01/2027 2,211
====================================================================================================================================
Illinois--13.6% AAA Aaa 2,500 Chicago, Illinois, Board of Education, GO (Chicago School Reform
Project), Series A, 5.25% due 12/01/2030 (b) 2,180
AA- Aa3 6,925 Chicago, Illinois, Gas Supply Revenue Bonds (Peoples Gas), Series A,
6.875% due 3/01/2015 7,293
NR* Aaa 3,000 Chicago, Illinois, Sales Tax Revenue Bonds, RITR, Series 24,
6.72% due 1/01/2027 (c)(e) 2,375
AAA Aaa 10,000 Cook County, Illinois, GO, Refunding, Series B, 5.375% due
11/15/2018 (d) 9,137
AAA NR* 1,790 Illinois Development Finance Authority Revenue Bonds
(Bradley University Project), 5.375% due 8/01/2024 (b) 1,619
AA Aa1 2,550 Illinois HDA, Residential Mortgage Revenue Bonds, RIB, AMT, 6.874%
due 2/01/2018 (e) 2,642
Illinois HDA, Revenue Refunding Bonds:
A+ A1 6,900 (M/F Housing), Series A, 7.375% due 7/01/2017 7,281
A+ A1 6,500 (M/F Program), Series 5, 6.75% due 9/01/2023 6,810
Regional Transportation Authority, Illinois, Revenue Bonds,
Series A:
AAA Aaa 1,500 7.20% due 11/01/2020 (b) 1,721
AAA Aaa 7,000 6.70% due 11/01/2021 (c) 7,658
Regional Transportation Authority, Illinois, Revenue Bonds,
Series C (c):
AAA Aaa 1,000 7.10% due 6/01/2004 (g) 1,115
AAA Aaa 2,500 7.75% due 6/01/2020 3,037
====================================================================================================================================
Indiana--11.8% Indiana Bond Bank Revenue Bonds (State Revolving Fund Program),
Series A:
AAA NR* 2,750 6.875% due 2/01/2012 3,010
AAA NR* 5,750 6.75% due 2/01/2017 6,179
AA Aa3 2,500 Indiana Health Facility Financing Authority, Hospital Revenue
Refunding Bonds (Clarian Health Partners Inc.), Series A, 6%
due 2/15/2021 2,427
NR* Aaa 5,545 Indiana State, HFA, S/F Mortgage Revenue Refunding Bonds,
Series A, 6.80% due 1/01/2017 (f) 5,700
Indiana Transportation Finance Authority, Highway Revenue
Bonds, Series A:
AA- Aa2 2,000 7.25% due 6/01/2015 2,320
AA- Aa3 3,775 6.80% due 12/01/2016 4,190
Indianapolis, Indiana, Local Public Improvement Bond Bank
Revenue Refunding Bonds, Series D:
AA NR* 8,750 6.75% due 2/01/2014 9,678
AA NR* 11,800 6.75% due 2/01/2020 12,463
====================================================================================================================================
Louisiana--3.0% NR* A3 2,000 Lake Charles, Louisiana, Harbor and Terminal District,
Port Facilities Revenue Refunding Bonds (Trunkline Long
Company Project), 7.75% due 8/15/2022 2,187
CC NR* 10,000 Port New Orleans, Louisiana, IDR, Refunding (Continental
Grain Company Project), 6.50% due 1/01/2017 9,500
====================================================================================================================================
Maine--1.0% AA Aa2 3,900 Maine State Housing Authority, Mortgage Purchase Revenue
Bonds, AMT, Series C-2, 6.875% due 11/15/2023 4,064
====================================================================================================================================
</TABLE>
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)
COP Certificates of Participation
DATES Daily Adjustable Tax-Exempt Securities
GO General Obligation Bonds
HDA Housing Development Authority
HFA Housing Finance Agency
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RIB Residual Interest Bonds
RITR Residual Interest Trust Receipts
S/F Single-Family
VRDN Variable Rate Demand Notes
6 & 7
<PAGE>
MuniVest Fund II, Inc., October 31, 1999
SCHEDULE OF INVESTMENTS (continued)
<TABLE>
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Maryland--0.8% A- NR* $ 2,000 Maryland State Energy Financing Administration,
Solid Waste Disposal Revenue Bonds, Limited Obligation
(Wheelabrator Water Projects), AMT, 6.45% due 12/01/2016 $ 2,054
AAA Aaa 1,000 Maryland State Health and Higher Educational Facilities
Authority Revenue Bonds (University of Maryland Medical
System), Series B, 7% due 7/01/2022 (c) 1,135
====================================================================================================================================
Massachusetts--1.9% AA- Aa3 1,000 Massachusetts State College Building Authority Project,
Revenue Refunding Bonds, Senior-Series A, 7.50% due 5/01/2011 1,183
A+ A1 6,000 Massachusetts State Water Resource Authority Revenue Bonds,
Series A, 6.50% due 7/15/2019 6,412
====================================================================================================================================
Michigan--4.9% AA- NR* 2,355 Michigan State, HDA, Rental Housing Revenue Refunding Bonds,
Series A, 6.65% due 4/01/2023 2,477
Michigan State, HDA Revenue Refunding Bonds:
AA+ NR* 3,580 AMT, Series D, 6.85% due 6/01/2026 (f) 3,695
AA+ NR* 1,480 Series A, 6.875% due 6/01/2023 1,498
A1+ P1 1,600 Michigan State Strategic Fund, Limited Obligation Revenue
Refunding Bonds (Detroit Edison Company), VRDN, Series CC,
3.50% due 9/01/2030 (a) 1,600
AA VMIG1@ 1,500 Royal Oak, Michigan, Hospital Finance Authority, Hospital
Revenue Bonds (William Beaumont Hospital), VRDN, Series L,
3.60% due 1/01/2027 (a) 1,500
A1+ VMIG1@ 6,900 University of Michigan, University Hospital Revenue Refunding
Bonds, VRDN, Series A, 3.50% due 12/01/2019 (a) 6,900
A1+ VMIG1@ 600 University of Michigan, University Revenue Bonds (Medical
Service Plan), VRDN, Series A, 3.50% due 12/01/2027 (a) 600
A1+ VMIG1@ 800 University of Michigan, University Revenue Refunding Bonds
(Medical Service Plan), VRDN, Series A-1, 3.50% due 12/01/2021 (a) 800
====================================================================================================================================
Minnesota--1.3% Minnesota State, HFA, S/F Mortgage Revenue Bonds, AMT:
AA+ Aa2 2,055 Series L, 6.70% due 7/01/2020 2,104
AA+ Aa2 3,005 Series M, 6.70% due 7/01/2026 3,076
====================================================================================================================================
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)(i) 2,271
====================================================================================================================================
Nevada--2.2% BBB+ Baa1 5,000 Henderson, Nevada, Health Care Facilities Revenue Bonds
(Catholic Healthcare West), 5.375% due 7/01/2026 4,133
AAA Aaa 1,215 Nevada Housing Division Revenue Bonds (S/F Program), AMT, Senior
Series E, 7% due 10/01/2019 (f) 1,259
AAA Aaa 2,500 Washoe County, Nevada, Gas Facilities Revenue Bonds (Sierra
Pacific Power Company), AMT, 6.65% due 12/01/2017 (b) 2,628
A1+ P1 500 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra
Pacific Power Company Project), AMT, VRDN, 3.60% due 12/01/2020 (a) 500
====================================================================================================================================
New Jersey--0.9% AAA Aaa 3,435 New Jersey State Housing and Mortgage Finance Agency Revenue
Bonds, Home Buyer, AMT, Series M, 6.95% due 10/01/2022 (d) 3,635
====================================================================================================================================
New York--18.7% AAA Aaa 2,500 Long Island Power Authority, New York, Electric System Revenue
Refunding Bonds, Series A, 5.50% due 12/01/2029 (d) 2,314
AAA Aaa 3,750 Metropolitan Transportation Authority, New York, Dedicated Tax
Fund Revenue Bonds, Series A, 5% due 4/01/2023 (c) 3,243
New York City, New York, City Municipal Water Finance Authority,
Water and Sewer System Revenue Bonds:
NR* Aaa 6,250 RITR, Series 10, 6.72% due 6/15/2026 (e)(h) 5,109
AAA Aaa 6,225 Series A, 5.75% due 6/15/2031 (c) 5,982
New York City, New York, City Transitional Finance Authority
Revenue Bonds, Future Tax Secured, Series C:
AA Aa3 5,000 4.75% due 5/01/2023 4,136
AA Aa3 12,480 5.50% due 5/01/2025 11,578
NR* VMIG1@ 8,500 VRDN, 3.50% due 5/01/2028 (a) 8,500
New York City, New York, GO (d):
AAA Aaa 5,745 Series I, 5% due 4/15/2029 4,865
AAA Aaa 2,500 Series J, 5.125% due 5/15/2029 2,159
New York City, New York, GO, Refunding:
A- A3 2,500 Series C, 5.875% due 2/01/2016 2,462
A- A3 2,000 Series K, 5.375% due 8/01/2021 1,822
AAA Aaa 3,250 New York State Dormitory Authority, Lease Revenue Bonds
(State University Dormitory Facilities), Series C, 5.50% due
7/01/2029 (d) 3,009
AAA NR* 2,500 New York State Dormitory Authority Revenue Bonds (Mental
Health Services Facilities Improvement), Series D, 5.25% due
8/15/2024 (d) 2,235
New York State Dormitory Authority, Revenue Refunding Bonds (d):
AAA Aaa 5,000 (Consolidated City University System), Series 1, 5.125%
due 7/01/2027 4,352
AAA Aaa 2,000 (Mental Health Services Facilities Improvement), Series D,
5% due 2/15/2023 1,719
NR* NR* 4,000 New York State Energy Research and Development Authority, Gas
Facilities Revenue Bonds, RITR, Series 9, 7.02% due 1/01/2021 (d)(e) 3,551
AA- Aa3 3,750 New York State Thruway Authority, Revenue Refunding Bonds,
Series E, 5% due 1/01/2025 3,214
AAA Aaa 2,500 New York State Urban Development Corporation Revenue Bonds
(Correctional Facilities Service Contract), Series C, 6%
due 1/01/2029 (b) 2,496
====================================================================================================================================
North Carolina--0.8% Raleigh-Durham, North Carolina, Airport Authority, Special
Facility Revenue Refunding Bonds (American Airlines Inc.), VRDN (a):
A1+ NR* 100 Series A, 3.55% due 11/01/2005 100
A1+ NR* 1,900 Series A, 3.55% due 11/01/2015 1,900
A1+ NR* 1,000 Series B, 3.55% due 11/01/2015 1,000
====================================================================================================================================
Ohio--1.2% NR* Aaa 1,700 Aurora, Ohio, City School District, COP, 6.15% due 12/01/2024 (d) 1,713
AAA NR* 3,000 Ohio HFA, Mortgage Revenue Refunding Bonds (Residential), AMT,
Series C, 5.75% due 9/01/2030 (j) 2,790
====================================================================================================================================
Pennsylvania--2.7% AAA Aaa 2,500 Allegheny County, Pennsylvania, Port Authority, Special
Transportation Revenue Bonds, 6% due 3/01/2024 (d) 2,500
A1+ VMIG1@ 1,800 Geisinger Authority, Pennsylvania, Health System Revenue
Refunding Bonds (Penn State -- Geisinger Health), VRDN,
Series B, 3.60% due 8/15/2028 (a) 1,800
Philadelphia, Pennsylvania, Hospitals and Higher Education
Facilities Authority, Hospital Revenue Bonds (Children's
Hospital of Philadelphia Project), VRDN (a):
A1+ VMIG1@ 440 3.60% due 3/01/2027 440
A1+ VMIG1@ 3,500 Series A, 3.60% due 3/01/2027 3,500
Schuylkill County, Pennsylvania, IDA, Resource Recovery
Revenue Refunding Bonds (Northeastern Power Company), VRDN (a):
A1+ NR* 200 AMT, Series B, 3.55% due 12/01/2022 200
A1+ NR* 2,000 Series A, 3.50% due 12/01/2022 2,000
====================================================================================================================================
</TABLE>
8 & 9
<PAGE>
MuniVest Fund II, Inc., October 31, 1999
SCHEDULE OF INVESTMENTS (concluded)
<TABLE>
<CAPTION>
S&P Moody's Face Value
STATE Ratings Ratings Amount Issue (Note 1a)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
South Carolina--1.7% AAA Aaa $ 2,675 Lexington County, South Carolina, School District Number 4,
GO, 5.875% due 3/01/2029 (c) $ 2,614
BBB+ A3 3,000 Richland County, South Carolina, Solid Waste Disposal
Facilities Revenue Bonds (Union Camp Corporation Project),
AMT, Series B, 7.125% due 9/01/2021 3,154
NR* Aa2 805 South Carolina Housing Finance and Development Authority,
Mortgage Revenue Bonds, AMT, Series A, 6.70% due 7/01/2027 828
====================================================================================================================================
Tennessee--1.1% AAA Aaa 5,355 Metropolitan Government, Nashville and Davidson County,
Tennessee, Water and Sewer Revenue Refunding Bonds, Series A, 4.75%
due 1/01/2022 (c) 4,459
====================================================================================================================================
Texas--6.3% AAA Aaa 2,290 Austin, Texas, Revenue Bonds, Series A, 4.62%** due 5/15/2013 (d) 1,045
AA- Aa3 2,500 Guadalupe-- Blanco River Authority, Texas, Sewage and Solid Waste
Disposal Facility Revenue Bonds (E. I. du Pont de Nemours and
Company Project), AMT, 6.40% due 4/01/2026 2,529
Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds (Memorial Hospital System Project),
Series A (g):
NR* NR* 1,500 6.60% due 6/01/2004 1,633
NR* NR* 1,500 6.625% due 6/01/2004 1,634
NR* Aa3 5,000 Harris County, Texas, Health Facilities Development Corporation
Revenue Refunding Bonds, RITR, Series 6, 7.395% due 12/01/2027
(e)(i) 4,809
AAA Aaa 13,000 Lower Colorado River Authority, Texas, Revenue Refunding Bonds,
Series A, 5.875% due 5/15/2017 (b) 12,908
====================================================================================================================================
Virginia--1.9% BBB+ A3 3,115 Isle of Wight County, Virginia, IDA, Solid Waste Disposal
Facilities Revenue Bonds (Union Camp Corporation Project),
AMT, 6.55% due 4/01/2024 3,146
BBB- Baa3 5,000 Pocahontas Parkway Association, Virginia, Toll Road Revenue Bonds,
Senior-Series A, 5.50% due 8/15/2028 4,278
====================================================================================================================================
Washington--7.9% AAA Aaa 5,300 Central Puget Sound, Washington, Regional Transit Authority,
Sales Tax and Motor Revenue Bonds, 4.75% due 2/01/2028 (c) 4,287
AAA Aaa 3,245 Douglas County, Washington, Public Utility District Number 001,
Wells Hydroelectric Revenue Bonds, Series B, 6% due 9/01/2029 (d) 3,227
AAA Aaa 7,500 Seattle, Washington, Water System Revenue Bonds, Series B, 6% due
7/01/2029 (c) 7,458
AAA Aaa 3,000 Snohomish County, Washington, Public Utility District Number 001,
Electric Revenue Refunding Bonds, 5.375% due 12/01/2024 (h) 2,719
Washington State Public Power Supply System, Revenue Refunding Bonds
(Nuclear Project No. 1), Series B:
AA- Aa1 4,950 7.25% due 7/01/2009 5,544
AA- Aa1 5,000 7.125% due 7/01/2016 5,598
AAA Aaa 1,900 Washington State Public Power Supply System, Revenue Refunding
Bonds (Nuclear Project No. 3), Series B, 7.125% due 7/01/2016 (d) 2,153
====================================================================================================================================
Wisconsin--0.4% AA Aa2 1,410 Wisconsin Housing and Economic Development Authority,
Home Ownership Revenue Refunding Bonds, AMT, Series D, 6.65%
due 7/01/2025 1,437
====================================================================================================================================
Wyoming--2.3% BBB- Baa2 5,000 Sweetwater County, Wyoming, Solid Waste Disposal Revenue Bonds
(FMC Corp. Project), AMT, Series B, 6.90% due 9/01/2024 5,080
AA Aa2 1,500 Wyoming Community Development Authority Revenue Bonds,
S/F Mortgage, AMT, Series H, 7.10% due 6/01/2012 (f) 1,578
AA Aa2 2,395 Wyoming Community Development Authority, Revenue Refunding Bonds,
S/F Mortgage, Series B, 6.70% due 6/01/2017 2,434
====================================================================================================================================
Puerto Rico--0.0% A1+ VMIG1@ 100 Puerto Rico Commonwealth, Highway and Transportation Authority,
Transportation Revenue Refunding Bonds, VRDN, Series A,
3.10% due 7/01/2028 (a)(b) 100
====================================================================================================================================
Total Investments (Cost--$420,592)--106.7% 416,149
Liabilities in Excess of Other Assets--(6.7%) (26,174)
--------
Net Assets--100.0% $389,975
========
====================================================================================================================================
</TABLE>
(a) The interest rate is subject to change periodically
based upon prevailing market rates. The interest rate
shown is the rate in effect at October 31, 1999.
(b) AMBAC Insured.
(c) FGIC Insured.
(d) MBIA Insured.
(e) The interest rate is subject to change periodically and
inversely based upon prevailing market rates. The
interest rate shown is the rate in effect at October
31, 1999.
(f) FHA Insured.
(g) Prerefunded.
(h) FSA Insured.
(i) Escrowed to maturity.
(j) GNMA Collateralized.
* Not Rated.
** Represents a zero coupon bond; the interest rate shown
is the effective yield at the time of purchase by the
Fund.
@ Highest short-term rating by Moody's Investors Service, Inc.
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
10 & 11
<PAGE>
MuniVest Fund II, Inc., October 31, 1999
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<TABLE>
<CAPTION>
As of October 31, 1999
===========================================================================================================================
<S> <C> <C> <C>
Assets: Investments, at value (identified cost-- $420,591,755) (Note 1a) . $416,149,424
Cash ............................................................. 61,686
Receivables:
Interest ....................................................... $ 6,839,566
Securities sold ................................................ 3,969,541 10,809,107
------------
Prepaid expenses and other assets ................................ 11,054
------------
Total assets ..................................................... 427,031,271
------------
===========================================================================================================================
Liabilities: Payables:
Securities purchased ........................................... 36,515,260
Dividends to shareholders (Note 1e) ............................ 284,758
Investment adviser (Note 2) .................................... 188,564 36,988,582
------------
Accrued expenses and other liabilities ......................... 67,344
------------
Total liabilities .......................................... 37,055,926
------------
===========================================================================================================================
Net Assets: Net assets ....................................................... $389,975,345
============
===========================================================================================================================
Capital: Capital Stock (200,000,000 shares authorized) (Note 4):
Preferred Stock, par value $.05 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 ............................. 2,966,004
Accumulated realized capital losses on investments--net (Note 5) . (23,082,517)
Unrealized depreciation on investments--net ...................... (4,442,331)
------------
Total -- Equivalent to $12.81 net asset value per
share of Common Stock (market price -- $11.75) ................... 254,975,345
------------
Total capital .................................................... $389,975,345
============
===========================================================================================================================
</TABLE>
* Auction Market Preferred Stock.
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended October 31, 1999
===========================================================================================================================
<S> <C> <C> <C>
Investment Interest and amortization of premium and discount earned ......... $ 23,696,023
Income (Note 1d):
===========================================================================================================================
Expenses: Investment advisory fees (Note 2) ................................ $ 2,085,068
Commission fees (Note 4) ......................................... 341,622
Transfer agent fees .............................................. 104,820
Accounting services (Note 2) ..................................... 79,130
Professional fees ................................................ 78,333
Custodian fees ................................................... 32,268
Listing fees ..................................................... 24,259
Printing and shareholder reports ................................. 24,013
Directors' fees and expenses ..................................... 20,040
Pricing fees ..................................................... 16,213
Other ............................................................ 46,852
-----------
Total expenses ................................................... 2,852,618
------------
Investment income--net ........................................... 20,843,405
------------
===========================================================================================================================
Realized & Realized loss on investments-- net ............................... (7,450,489)
Unrealized Loss on Change in unrealized appreciation/depreciation on
Investments--Net investments-- net ................................................ (33,277,841)
(Notes 1b, 1d & 3): ------------
Net Decrease in Net Assets Resulting from Operations ............. $(19,884,925)
============
===========================================================================================================================
</TABLE>
See Notes to Financial Statements.
12 & 13
<PAGE>
MuniVest Fund II, Inc., October 31, 1999
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Year Ended October 31,
------------------------------
Increase (Decrease) in Net Assets: 1999 1998
=========================================================================================================================
<S> <C> <C> <C>
Operations: Investment income--net ........................................... $ 20,843,405 $ 21,617,028
Realized gain (loss) on investments--net ......................... (7,450,489) 9,035,426
Change in unrealized appreciation/depreciation on
investments--net ................................................. (33,277,841) (3,923,226)
------------ ------------
Net increase (decrease) in net assets resulting from operations .. (19,884,925) 26,729,228
------------ ------------
=========================================================================================================================
Dividends to Investment income--net:
Shareholders Common Stock ................................................... (16,419,996) (16,701,482)
(Note 1e): Preferred Stock ................................................ (4,340,484) (4,752,270)
------------ ------------
Net decrease in net assets resulting from dividends to
shareholders ..................................................... (20,760,480) (21,453,752)
------------ ------------
=========================================================================================================================
Net Assets: Total increase (decrease) in net assets .......................... (40,645,405) 5,275,476
Beginning of year ................................................ 430,620,750 425,345,274
------------ ------------
End of year* ..................................................... $389,975,345 $430,620,750
============ ============
=========================================================================================================================
*Undistributed investment income--net ............................. $ 2,966,004 $ 2,883,079
============ ============
=========================================================================================================================
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. For the Year Ended October 31,
------------------------------
Increase (Decrease) in Net Asset Value: 1999 1998
====================================================================================================================================
<S> <C> <C> <C>
Per Share Net asset value, beginning of year .......................................... $ 14.85 $ 14.59
-------- --------
Operating
Performance: Investment income--net ...................................................... 1.05 1.08
Realized and unrealized gain (loss) on investments--net ..................... (2.05) .26
-------- --------
Total from investment operations ............................................ (1.00) 1.34
-------- --------
Less dividends to Common Stock shareholders from investment income--net ..... (.82) (.84)
-------- --------
Effect of Preferred Stock activity:
Dividends to Preferred Stock shareholders from investment income--net .... (.22) (.24)
-------- --------
Net asset value, end of year ................................................ $ 12.81 $ 14.85
======== ========
Market price per share, end of year ......................................... $ 11.75 $14.4375
======== ========
====================================================================================================================================
Total Investment Based on market price per share ............................................. (13.49%) 10.37%
Return:* ======== ========
Based on net asset value per share .......................................... (8.31%) 7.96%
======== ========
====================================================================================================================================
Ratios Based on Total expenses** ............................................................ 1.01% .96%
Average Net Assets ======== ========
Of Common Stock: Total investment income -- net** ............................................. 7.36% 7.32%
======== ========
Amount of dividends to Preferred Stock shareholders ......................... 1.53% 1.61%
======== ========
Investment income -- net, to Common Stock shareholders ...................... 5.83% 5.71%
======== ========
====================================================================================================================================
Ratios Based on Total expenses .............................................................. .68% .66%
Total Average Total investment income -- net ............................................... 4.99% 5.06%
Net Assets:@**
====================================================================================================================================
Ratios Based on Dividends to Preferred Stock shareholders ................................... 3.22% 3.52%
Average Net Assets
Of Preferred Stock:
====================================================================================================================================
Supplemental Net assets, net of Preferred Stock, end of year (in thousands) .............. $254,975 $295,621
Data: Preferred Stock outstanding, end of year (in thousands) ..................... $135,000 $135,000
Portfolio turnover .......................................................... 114.06% 140.55%
====================================================================================================================================
Leverage: Asset coverage per $1,000 ................................................... $ 2,889 $ 3,190
====================================================================================================================================
Dividends Series A--Investment income -- net .......................................... $ 816 $ 897
Per Share on Series B--Investment income -- net .......................................... $ 810 $ 875
Preferred Stock Series C--Investment income -- net .......................................... $ 786 $ 869
Outstanding:
====================================================================================================================================
<CAPTION>
For the Year Ended October 31,
------------------------------
1997 1996 1995
<S> <C> <C> <C>
Per Share Net asset value, beginning of year .......................................... $ 14.12 $ 13.93 $ 12.56
Operating ------- -------- --------
Performance: Investment income--net ...................................................... 1.13 1.10 1.11
Realized and unrealized gain (loss) on investments--net ..................... .46 .18 1.37
------- -------- --------
Total from investment operations ............................................ 1.59 1.28 2.48
------- -------- --------
Less dividends to Common Stock shareholders from investment income--net ..... (.88) (.85) (.85)
------- -------- --------
Effect of Preferred Stock activity: ......................................... (.24) (.24) (.26)
------- -------- --------
Dividends to Preferred Stock shareholders from investment income--net .... $ 14.59 $ 14.12 $ 13.93
======== ======== ========
Net asset value, end of year ................................................ $ 13.875 $ 12.625 $ 12.125
======== ======== ========
Market price per share, end of year
====================================================================================================================================
Total Investment Based on market price per share ............................................. 17.32% 11.43% 25.68%
Return:* ======== ======== ========
Based on net asset value per share .......................................... 10.31% 8.47% 19.27%
======== ======== ========
====================================================================================================================================
Ratios Based on Total expenses** ............................................................ 1.00% 1.01% 1.05%
Average Net Assets ======== ======== ========
Of Common Stock: Total investment income-- net** ............................................. 7.78% 7.93% 8.46%
======== ======== ========
Amount of dividends to Preferred Stock shareholders ......................... 1.64% 1.73% 2.02%
======== ======== ========
Investment income-- net, to Common Stock shareholders ....................... 6.14% 6.20% 6.44%
======== ======== ========
====================================================================================================================================
Ratios Based on Total expenses .............................................................. .68% .68% .69%
Total Average ======== ======== ========
Net Assets:@** Total investment income-- net ............................................... 5.30% 5.30% 5.55%
======== ======== ========
====================================================================================================================================
Ratios Based on Dividends to Preferred Stock shareholders ................................... 3.50% 3.55% 3.90%
Average Net Assets ======== ======== ========
Of Preferred Stock:
====================================================================================================================================
Supplemental Net assets, net of Preferred Stock, end of year (in thousands) .............. $290,345 $281,036 $277,230
Data: ======== ======== ========
Preferred Stock outstanding, end of year (in thousands) ..................... $135,000 $135,000 $135,000
======== ======== ========
Portfolio turnover .......................................................... 57.80% 46.58% 95.62%
======== ======== ========
====================================================================================================================================
Leverage: Asset coverage per $1,000 ................................................... $ 3,151 $ 3,082 $ 3,054
======== ======== ========
====================================================================================================================================
Dividends Series A--Investment income -- net .......................................... $ 880 $ 898 $ 967
Per Share on ======== ======== ========
Preferred Stock Series B--Investment income -- net .......................................... $ 872 $ 879 $ 891
Outstanding: ======== ======== ========
Series C--Investment income -- net .......................................... $ 869 $ 886 $ 1,070
======== ======== ========
====================================================================================================================================
</TABLE>
* 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 charges.
** Do not reflect the effect of dividends to Preferred
Stock shareholders.
@ Includes Common and Preferred Stock average net assets.
See Notes to Financial Statements.
14 & 15
<PAGE>
MuniVest Fund II, Inc., October 31, 1999
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
MuniVest Fund II, Inc. (the "Fund") is registered under the Investment Company
Act of 1940 as a non-diversified, closed-end management investment company. The
Fund's financial statements are prepared in accordance with generally accepted
accounting principles, which may require the use of management accruals and
estimates. 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 written or purchased are valued at the last
sale price in the case of exchange-traded options. In the case of options traded
in the over-the-counter market, valuation is the last asked price option
(options written) or the last bid price (options purchased ). Securities with
remaining maturities of sixty days or less are valued at amortized cost, which
approximates market value. Securities and assets for which market quotations are
not readily available are valued at fair value as determined in good faith by or
under the direction of the Board of Directors of the Fund, including valuations
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 instrument -- The Fund may engage in various 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.
o Financial futures contracts -- The Fund may purchase or sell financial 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 contract 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.
o 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 subsequently 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 requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no Federal income tax provision is required.
(d) Security transactions and investment income -- Security transactions 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.
(e) Dividends and distributions -- Dividends from net investment income are
declared and paid monthly. Distributions of capital gains are recorded on the
ex-dividend dates.
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 .50% of the Fund's average weekly net assets, including
proceeds from the issuance of Preferred Stock.
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, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended October 31, 1999 were $454,436,734 and $448,215,125, respectively.
Net realized gains (losses) for the year ended October 31, 1999 and net
unrealized losses as of October 31, 1999 were as follows:
- --------------------------------------------------------------------------------
Realized Unrealized
Gains (Losses) Gains
- --------------------------------------------------------------------------------
Long-term investments ....................... $(9,026,390) $(4,442,331)
Financial futures contracts ................. 1,575,901 --
----------- -----------
Total ....................................... $(7,450,489) $(4,442,331)
=========== ===========
- --------------------------------------------------------------------------------
As of October 31, 1999, net unrealized depreciation for Federal income tax
purposes aggregated $4,557,892, of which $9,200,792 related to appreciated
securities and $13,758,684 related to depreciated securities. The aggregate cost
of investments at October 31, 1999 for Federal income tax purposes was
$420,707,316.
4. Capital Stock 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.
Common Stock
Shares issued and outstanding during the years ended October 31, 1999 and
October 31, 1998 remained constant.
Preferred Stock
Auction Market Preferred Stock ("AMPS") are shares of Preferred Stock of the
Fund, with a par value of $.05 per share and a liquidation preference of $25,000
per share, 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
October 31, 1999 were as follows: Series A, 3.60%; Series B, 3.43%; and Series
C, 3.30%.
Shares issued and outstanding during the years ended October 31, 1999 and
October 31, 1998 remained constant.
The Fund pays commissions to certain broker-dealers at the end of each auction
at an annual rate ranging from .25% to .375%, calculated on the proceeds of each
auction. For the year ended October 31, 1999, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, an affiliate of FAM, earned $137,899 as commissions.
5. Capital Loss Carryforward:
At October 31, 1999, the Fund had a net capital loss carryforward of
approximately $20,453,000, of which 9,489,000 expires in 2003 and 10,964,000
expires in 2007. These amounts will be available to offset like amounts of any
future taxable gains.
6. Subsequent Event:
On November 8, 1999, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.069000 per share,
payable on November 29, 1999 to shareholders of record as of November 22,
1999.
16 & 17
<PAGE>
MuniVest Fund II, Inc., October 31, 1999
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders,
MuniVest Fund II, Inc.:
We have audited the accompanying statement of assets, liabilities and capital,
including the schedule of investments, of MuniVest Fund II, Inc. as of October
31, 1999, the related statements of operations for the year then ended and
changes in net assets for each of the years in the two-year period then ended,
and the financial highlights for each of the years in the five-year period then
ended. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at October
31, 1999 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of MuniVest Fund II,
Inc. as of October 31, 1999, the results of its operations, the changes in its
net assets, and the financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
December 10, 1999
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by MuniVest Fund II, Inc.
during its taxable year ended October 31, 1999 qualify as tax-exempt interest
dividends for Federal income tax purposes. Additionally, there were no capital
gains distributions by the Fund during the year.
Please retain this information for your records.
QUALITY PROFILE (unaudited)
The quality ratings of securities in the Fund as of October 31, 1999 were as
follows:
- --------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
- --------------------------------------------------------------------------------
AAA/Aaa ........................................................... 46.9%
AA/Aa ............................................................. 27.2
A/A ............................................................... 11.5
BBB/Baa ........................................................... 6.0
CC/CA ............................................................. 2.4
NR (Not Rated) .................................................... 1.8
Other@ ............................................................ 10.9
- --------------------------------------------------------------------------------
@ Temporary investments in short-term municipal securities.
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute substantially all of its net
investment income to its shareholders on a monthly basis. However, in order to
provide shareholders with a more consistent yield to the current trading price
of shares of Common Stock of the Fund, the Fund may at times pay out less than
the entire amount of net investment income earned in any particular month and
may at times in any particular month pay out such accumulated but undistributed
income in addition to net investment income earned in that month. As a result,
the dividends paid by the Fund for any particular month may be more or less than
the amount of net investment income earned by the Fund during such month. The
Fund's current accumulated but undistributed net investment income, if any, is
disclosed in the Statement of Assets, Liabilities and Capital, which comprises
part of the financial information included in this report.
YEAR 2000 ISSUES
Many computer systems were designed using only two digits to designate years.
These systems may not be able to distinguish the Year 2000 from the Year 1900
(commonly known as the "Year 2000 Problem"). The Fund could be adversely
affected if the computer systems used by the Fund's management or other Fund
service providers do not properly address this problem before January 1, 2000.
The Fund's management expects to have addressed this problem before then, and
does not anticipate that the services it provides will be adversely affected.
The Fund's other service providers have told the Fund's management that they
also expect to resolve the Year 2000 Problem, and the Fund's management will
continue to monitor the situation as the Year 2000 approaches. However, if the
problem has not been fully addressed, the Fund could be negatively affected. The
Year 2000 Problem could also have a negative impact on the securities in which
the Fund invests and this could hurt the Fund's investment returns.
18 & 19
<PAGE>
Officers and Directors
Terry K. Glenn, President and Director
Ronald W. Forbes, Director
Cynthia A. Montgomery, Director
Charles C. Reilly, Director
Kevin A. Ryan, Director
Richard R. West, Director
Arthur Zeikel, Director
Vincent R. Giordano, Senior Vice President
Kenneth A. Jacob, Vice President
Fred K. Stuebe, Vice President
Donald C. Burke, Vice President and Treasurer
William E. Zitelli, Secretary
Custodian
The Bank of New York
90 Washington Street
New York, NY 10286
Transfer Agents
Common Stock:
The Bank of New York
101 Barclay Street
New York, NY 10286
Preferred Stock:
The Bank of New York
100 Church Street
New York, NY 10286
NYSE Symbol
MVT
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.
MuniVest
Fund II, Inc.
Box 9011
Princeton, NJ
08543-9011 #16807--10/99
[RECYCLE LOGO] Printed on post-consumer recycled paper.
