MUNIVEST
FUND II, INC.
[GRAPHIC OMITTED]
STRATEGIC
Performance
Annual Report
October 31, 2000
<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, 2000
DEAR SHAREHOLDER
For the year ended October 31, 2000, the Common Stock of MuniVest Fund II, Inc.
earned $0.786 per share income dividends, which included earned and unpaid
dividends of $0.065. This represents a net annualized yield of 5.90%, based on a
month-end net asset value of $13.32 per share. Over the same period, the total
investment return on the Fund's Common Stock was +11.33%, based on a change in
per share net asset value from $12.81 to $13.32, and assuming reinvestment of
$0.790 per share income dividends.
For the six-month period ended October 31, 2000, the total investment return on
the Fund's Common Stock was +7.40%, based on a change in per share net asset
value from $12.82 to $13.32, and assuming reinvestment of $0.390 per share
income dividends.
For the six-month period ended October 31, 2000, the Fund's Auction Market
Preferred Stock had an average yield of 4.46% for Series A, 3.83% for Series B
and 4.32% for Series C.
The Municipal Market Environment
During the six months ended October 31, 2000, long-term US Treasury bond yields
generally drifted lower. A number of economic indicators, particularly
employment, new home sales and consumer spending, have suggested that US
economic growth, while still strong, has moderated from 1999's robust levels.
Preliminary estimates for third-quarter 2000 US gross domestic product growth
were recently released at 2.7%, well below the first-quarter 2000 rate of 4.8%
and the second-quarter 2000 rate of 5.6%. This decline in economic growth
suggests to some analysts that the Federal Reserve Board has finished raising
interest rates for its current interest rate cycle. The Federal Reserve Board
increased short-term interest rates at its May meeting and has since kept
monetary policy steady at its subsequent meetings. Given the potential for
stable short-term interest rates in the coming months, investor emphasis focused
on the continuing US Treasury debt reduction program and forecasts of sizeable
Federal budgetary surpluses going forward. Many investors have concluded that
there will be a significant future shortage of longer-dated maturity US Treasury
securities. By late August, US Treasury bond yields declined 30 basis points
(0.30%) to 5.66%, their lowest level in more than a year.
However, for the remainder of the period, bond yields were unable to maintain
their earlier gains. Rising oil prices were the major focus behind the decline
in bond prices, as many investors feared that higher oil prices would result in
increased inflationary pressures. Additionally, US corporations issued large
amounts of taxable debt in order to take advantage of the current low interest
rate environment. During the last three months, US corporations issued more than
$100 billion in investment-grade securities, offering yields in the 7.25%-9%
range. Many investors found these taxable issues an attractive and more
plentiful alternative to US Treasury bonds. As the demand for US Treasury issues
weakened, US bond yields rose. Although US Treasury bond yields rose to 5.78% by
the end of October 2000, overall they declined almost 20 basis points during the
last six months.
The six-month period ended October 31, 2000 was one of the few periods in recent
years in which the tax-exempt bond market outperformed its taxable counterpart,
the US Treasury bond market. While municipal bond yields followed the similar
seesaw pattern of Treasury bond yields, tax-exempt bond price volatility was
significantly reduced. Municipal bond yields traded in a relatively narrow range
during much of October 2000. Overall investor demand for municipal bonds
remained strong, allowing tax-exempt bond yields, as measured by the Bond Buyer
Revenue Bond Index, to decline 30 basis points to end the period at 5.75%.
In the past three months, new long-term municipal bond issuance has continued to
decline, albeit at a slower rate than earlier this year. Over this period, more
than $53 billion in new long-term municipal bonds was issued, a decline of 3%
compared to the same three-month period in 1999. During the last six months,
more than $105 billion in tax-exempt bonds was underwritten, a decline of 8%
compared to the same six-month period in 1999. Just under $200 billion in new
municipal securities was marketed during the past year, a decline of more than
16% compared to the same 12-month period in 1999.
The demand for municipal bonds came from a number of non-traditional and
conventional sources. Derivative/arbitrage programs and insurance companies
remained the dominant institutional buyers, while individual retail purchases
also remained strong. Traditional, open-end tax-exempt mutual funds have
continued to see significant disintermediation. It was recently reported that
thus far during the 2000 calendar year, long-term municipal bond mutual funds
experienced net cash outflows of more than $15 billion. Fortunately, the
combination of reduced new bond issuance and ongoing demand from non-traditional
sources has been able to more than offset the decline in demand from tax-exempt
mutual funds. This favorable balance has fostered a significant decline in
municipal bond yields in recent months.
Currently, there is no reason to expect that the positive technical position of
the municipal bond market will significantly deteriorate. The steeply positive
yield curve and the relatively high credit quality that the tax-exempt bond
market offers should continue to attract different classes of institutional
buyers. Strong state and local governmental financial conditions also suggest
that issuance should remain manageable into next year.
However, the results of the presidential election may affect the tax-exempt bond
market. Various tax and spending programs proposed by both candidates have
obvious implications for state and local governments as well as corporate and
individual taxpayers. Political history has shown that the enactment of campaign
promises, both Republican and Democratic, has very often been a long, laborious
process. This suggests that over the next few months US economic factors will
most likely have a greater effect on bond yields than political considerations.
Portfolio Strategy
During the six months ended October 31, 2000, the reduction in overall bond
issuance and declining bond yields limited portfolio activity. We attempted to
maintain the market neutral position we adopted late last year by adding some
interest rate-sensitive issues to the Fund. As tax-exempt bond yields declined
in recent months, the market value of many of the Fund's holdings appreciated to
such an extent that additional market gains were limited. Some of these issues
were sold both to capture recent gains to the Fund's net asset value and prevent
the Fund from developing an overtly defensive structure. The purchase of the
more aggressively structured securities returned the Fund to a more neutral
market position.
The Fund remained fully invested throughout the six-month period ended October
31, 2000. A strategy of maintaining significant cash reserves remains
undesirable as it reduces shareholder income and, given recent and expected
future declines in tax-exempt bond issuance, becomes problematic to quickly
reinvest. We do not expect any additional tightening actions by the Federal
Reserve Board. Furthermore, recent signs of a moderating US economy suggest that
a significant and protracted increase in fixed-income bond yields is unlikely
before year end. In such an environment, we expect to remain fully invested and
use any periods of volatility as opportunities to seek to enhance the Fund's
dividend yield.
The 125 basis point increase in short-term interest rates engineered by the
Federal Reserve Board during the past year resulted in an increase in the Fund's
borrowing cost into the 4%-4.125% range. However, despite this increase, the
tax-exempt yield curve remained steeply positive, generating a material income
benefit to the Fund's Common Stock shareholders from leveraging of the Preferred
Stock. However, should the spread between short-term and long-term tax-exempt
interest rates narrow,
2 & 3
<PAGE>
MuniVest Fund II, Inc., October 31, 2000
the benefits of the leverage will decline and, as a result, reduce the yield on
the Fund's Common Stock. (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 Director
/s/ Vincent R. Giordano
Vincent R. Giordano
Senior Vice President
/s/ Fred K. Stuebe
Fred K. Stuebe
Vice President and Portfolio Manager
December 6, 2000
PROXY RESULTS
During the six-month period ended October 31, 2000, MuniVest Fund II, Inc.'s
Common Stock shareholders voted on the following proposals. The proposals were
approved at a shareholders' meeting on June 27, 2000. The description of each
proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
Shares Voted Shares Voted
For Abstain
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. To elect the Fund's Directors: Terry K. Glenn 19,272,194 336,465
Cynthia A. Montgomery 19,272,159 336,500
Charles C. Reilly 19,284,598 324,061
Kevin A. Ryan 19,273,200 335,459
Roscoe S. Suddarth 19,269,650 339,009
Arthur Zeikel 19,258,881 349,778
Edward D. Zinbarg 19,265,385 343,274
--------------------------------------------------------------------------------------------
<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. 19,317,671 106,295 184,693
---------------------------------------------------------------------------------------------------------------
</TABLE>
During the six-month period ended October 31, 2000, MuniVest Fund II, Inc.'s
Preferred Stock (Series A, B and C) shareholders voted on the following
proposals. The proposals were approved at a shareholders' meeting on June 27,
2000. The description of each proposal and number of shares voted are as
follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
Shares Voted Shares Voted
For Abstain
------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. To elect the Fund's Board of Directors:
Terry K. Glenn, Ronald W. Forbes, Cynthia A. Montgomery, Charles C.
Reilly, Kevin A. Ryan, Roscoe S. Suddarth, Richard R. West, Arthur
Zeikel and Edward D. Zinbarg as follows:
Series A 1,724 4
Series B 1,597 14
Series C 1,707 82
--------------------------------------------------------------------------------------------------------
<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
as follows:
Series A 1,725 0 3
Series B 1,603 8 0
Series C 1,714 52 22
--------------------------------------------------------------------------------------------------------
</TABLE>
4 & 5
<PAGE>
MuniVest Fund II, Inc., October 31, 2000
SCHEDULE OF INVESTMENTS (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Alabama--0.6% BBB+ Baa1 $ 2,500 Courtland, Alabama, IDB, Solid Waste Disposal Revenue Bonds (Champion
International Corporation Project), AMT, Series A, 6.50% due 9/01/2025 $ 2,507
====================================================================================================================================
Alaska--1.0% AAA Aaa 3,795 Anchorage, Alaska, Lease Revenue Bonds (Correctional Facility), 6%
due 2/01/2015 (h) 4,010
====================================================================================================================================
Arizona--2.0% A1+ P1 1,610 Coconino County, Arizona, Pollution Control Corporation Revenue Bonds
(Arizona Public Service Co. Project), VRDN, AMT, Series A, 4.60% due
12/01/2031 (a) 1,610
A1 VMIG1@ 3,700 Maricopa County, Arizona, Pollution Control Corporation, PCR, Refunding
(Southern California Edison Company), VRDN, Series B, 4.60% due
6/01/2035 (a) 3,700
AAA Aaa 2,315 Maricopa County, Arizona, Tempe Elementary Unified School District Number
3, GO, Refunding, 7.50% due 7/01/2010 (c) 2,803
A1+ P1 200 Pinal County, Arizona, IDA, PCR (Newmont Mining), DATES, 4.55% due
12/01/2009 (a) 200
====================================================================================================================================
California--0.6% AAA Aaa 2,165 California Statewide Communities Development Authority, COP, Refunding,
6% due 8/15/2016 (h) 2,333
====================================================================================================================================
Colorado--2.4% NR* Aa2 640 Colorado HFA, Revenue Bonds (S/F Program), AMT, Senior-Series F, 8.625%
due 6/01/2025 686
NR* Aa2 2,250 Colorado HFA, Revenue Refunding Bonds (S/F Program), AMT, Senior Series
A-2, 7.50% due 4/01/2031 2,605
A A2 5,940 Denver, Colorado, City and County Airport Revenue Bonds, AMT, Series C,
6.75% due 11/15/2022 6,198
====================================================================================================================================
District of District of Columbia, GO, Refunding:
Columbia--1.8% AAA Aaa 5,000 Series A, 5.25% due 6/01/2027 (d) 4,691
AAA Aaa 2,500 Series B, 5.25% due 6/01/2026 (h) 2,349
====================================================================================================================================
Florida--1.3% BBB+ Baa1 5,155 Escambia County, Florida, PCR (Champion International Corporation
Project), AMT, 6.90% due 8/01/2022 5,314
====================================================================================================================================
Georgia--2.0% Georgia Municipal Electric Authority, Power Revenue Refunding Bonds:
A A3 6,000 Series W, 6.60% due 1/01/2018 6,734
A A3 1,250 Series X, 6.50% due 1/01/2020 1,389
====================================================================================================================================
Idaho--0.5% NR* Aaa 1,965 Idaho Housing Agency, S/F Mortgage Revenue Refunding Bonds, AMT, Series
E-2, 6.90% due 1/01/2027 2,069
====================================================================================================================================
Illinois--14.5% AA- Aa3 6,925 Chicago, Illinois, Gas Supply Revenue Bonds (Peoples Gas), Series A,
6.875% due 3/01/2015 7,232
AAA Aaa 2,385 Cook County, Illinois, Community High School District Number 219, Niles
Township, GO, 6% due 12/01/2017 (c) 2,514
AA Aa1 2,400 Illinois HDA, Residential Mortgage Revenue Bonds, RIB, AMT, 6.874% due
2/01/2018 (e) 2,467
Illinois HDA, Revenue Refunding Bonds (M/F Program):
A+ A1 6,900 Series A, 7.375% due 7/01/2017 7,241
A+ A1 6,500 Series 5, 6.75% due 9/01/2023 6,814
A1 VMIG1@ 1,400 Illinois Health Facilities Authority, Revenue Refunding Bonds (University
of Chicago Hospitals), VRDN, 4.60% due 8/01/2026 (a)(d) 1,400
AAA Aa2 2,000 Illinois State Sales Tax Revenue Bonds, 6.25% due 6/15/2015 2,164
NR* Aaa 3,850 Kane, Cook and Du Page Counties, Illinois, Elgin School District Number
46, GO, 6.375% due 1/01/2018 (h) 4,159
Mc Lean and Woodford Counties, Illinois, Community Unit, School District
Number 005, GO, Refunding (h):
NR* Aaa 2,345 6.25% due 12/01/2014 2,569
NR* Aaa 2,000 6.375% due 12/01/2016 2,192
AAA Aaa 5,400 Metropolitan Pier and Exposition Authority, Illinois, Dedicated State Tax
Revenue Refunding Bonds (McCormick Plant Expansion Project), 5.25% due
12/15/2028 (c) 5,075
Regional Transportation Authority, Illinois, Revenue Bonds:
AAA Aaa 1,500 Series A, 7.20% due 11/01/2020 (b) 1,803
AAA Aaa 7,000 Series A, 6.70% due 11/01/2021 (c) 8,127
AAA Aaa 1,000 Series C, 7.10% due 6/01/2004 (c)(g) 1,101
AAA Aaa 2,500 Series C, 7.75% due 6/01/2020 (c) 3,190
====================================================================================================================================
Indiana--11.0% Indiana Bond Bank Revenue Bonds (State Revolving Fund Program), Series A:
AAA NR* 2,750 6.875% due 2/01/2012 2,998
AAA NR* 5,750 6.75% due 2/01/2017 6,256
NR* Aaa 5,545 Indiana State, HFA, S/F Mortgage Revenue Refunding Bonds, Series A, 6.80%
due 1/01/2017 (f) 5,672
Indiana Transportation Finance Authority, Highway Revenue Bonds, Series A:
AA Aa2 2,000 7.25% due 6/01/2015 2,391
AA Aa2 3,775 6.80% due 12/01/2016 4,363
Indianapolis, Indiana, Local Public Improvement Bond Bank Revenue
Refunding Bonds, Series D:
AA NR* 8,750 6.75% due 2/01/2014 9,993
AA NR* 11,800 6.75% due 2/01/2020 (i) 12,449
====================================================================================================================================
Kentucky--0.7% Kentucky Economic Development Finance Authority, Health System Revenue
Refunding Bonds (Norton Healthcare Inc.), Series A:
NR* NR* 1,500 6.25% due 10/01/2012 1,476
NR* NR* 1,400 6.625% due 10/01/2028 1,356
====================================================================================================================================
Louisiana--4.3% 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 2,138
AAA Aaa 5,000 Louisiana Local Government, Environmental Facilities, Community
Development Authority Revenue Bonds (Capital Projects and Equipment
Acquisition), Series A, 6.30% due 7/01/2030 (b) 5,526
BB- NR* 10,000 Port New Orleans, Louisiana, IDR, Refunding (Continental Grain Company
Project), 6.50% due 1/01/2017 9,425
====================================================================================================================================
</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
IDB Industrial Development Board
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, 2000
SCHEDULE OF INVESTMENTS (continued) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Maine--1.0% AA Aa2 $ 3,785 Maine State Housing Authority, Mortgage Purchase Revenue Bonds, AMT,
Series C-2, 6.875% due 11/15/2023 $ 3,927
====================================================================================================================================
Maryland--1.3% Maryland State Energy Financing Administration, Solid Waste Disposal
Revenue Bonds, AMT:
A1+ VMIG1@ 1,900 (Cimenteries Project), VRDN, 4.75% due 5/01/2035 (a) 1,900
A- NR* 2,000 Limited Obligation (Wheelabrator Water Projects), 6.45% due 12/01/2016 2,045
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) 1,188
====================================================================================================================================
Massachusetts--4.8% AAA Aa1 8,600 Massachusetts Bay, Massachusetts, Transportation Authority, Revenue
Refunding Bonds (Special Assessment), Series A, 5.25% due 7/01/2030 8,154
AA- Aa2 1,000 Massachusetts State College Building Authority Project, Revenue Refunding
Bonds, Senior-Series A, 7.50% due 5/01/2011 1,216
AA Aa3 6,000 Massachusetts State Water Resource Authority Revenue Bonds, Series A,
6.50% due 7/15/2019 6,793
AAA Aaa 3,000 Massachusetts State Water Resource Authority, Revenue Refunding Bonds,
Series A, 6% due 8/01/2016 (c) 3,200
====================================================================================================================================
Michigan--4.2% AA- NR* 2,355 Michigan State, HDA, Rental Housing Revenue Refunding Bonds, Series A,
6.65% due 4/01/2023 2,444
AA+ NR* 2,945 Michigan State, HDA, Revenue Refunding Bonds, AMT, Series D, 6.85% due
6/01/2026 (f) 3,002
AA Aa2 5,775 Michigan State Hospital Finance Authority, Revenue Refunding Bonds
(Ascension Health Credit), Series A, 6.125% due 11/15/2026 5,824
A1+ VMIG1@ 300 Royal Oak, Michigan, Hospital Finance Authority, Hospital Revenue Bonds
(William Beaumont Hospital), VRDN, Series L, 4.60% due 1/01/2027 (a) 300
A1+ VMIG1@ 450 University of Michigan, University Hospital Revenue Refunding Bonds, VRDN,
Series A, 4.60% due 12/01/2019 (a) 450
AAA Aaa 5,000 Wayne State University, Michigan, University Revenue Refunding Bonds,
5.125% due 11/15/2029 (c) 4,668
====================================================================================================================================
Minnesota--2.7% Minneapolis and Saint Paul, Minnesota, Metropolitan Airports Commission,
Airport Revenue Bonds (c):
AAA Aaa 1,250 AMT, Series B, 5.25% due 1/01/2022 1,178
AAA Aaa 5,000 Series A, 5.125% due 1/01/2031 4,663
Minnesota State, HFA, S/F Mortgage Revenue Bonds, AMT:
AA+ Aa1 1,970 Series L, 6.70% due 7/01/2020 2,044
AA+ Aa1 2,860 Series M, 6.70% due 7/01/2026 2,966
====================================================================================================================================
Missouri--0.5% AAA NR* 2,000 Missouri State Housing Development Commission, S/F Mortgage Revenue Bonds
(Homeowner Loan), AMT, Series A, 7.50% due 3/01/2031 (j) 2,215
====================================================================================================================================
Nebraska--1.6% Nebraska Investment Finance Authority, S/F Housing Revenue Bonds, AMT (j):
AAA NR* 2,235 Series C, 6.30% due 9/01/2028 (k) 2,273
AAA NR* 4,150 Series D, 6.45% due 3/01/2028 4,281
====================================================================================================================================
Nevada--3.4% NR* Aaa 4,545 Clark County, Nevada, School District, GO, RIB, Series 378, 7.29% due
6/15/2015 (d)(e) 5,139
BBB+ Baa1 5,000 Henderson, Nevada, Health Care Facility Revenue Bonds (Catholic Healthcare
West--Saint Rose Dominican Hospital), 5.375% due 7/01/2026 4,068
AAA Aaa 1,080 Nevada Housing Division Revenue Bonds (S/F Program), AMT, Senior Series E,
7% due 10/01/2019 (f) 1,126
AAA Aaa 2,500 Washoe County, Nevada, Gas Facilities Revenue Bonds (Sierra Pacific Power
Company), AMT, 6.65% due 12/01/2017 (b) 2,615
A1+ P1 500 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra Pacific Power
Company Project), VRDN, AMT, 4.70% due 12/01/2020 (a) 500
====================================================================================================================================
New Jersey--1.9% NR* Aa1 4,000 New Jersey State, GO, RIB, Series 316, 6% due 5/01/2013 (e) 4,649
AAA Aaa 2,700 New Jersey State Housing and Mortgage Finance Agency, Home Buyer Revenue
Bonds, AMT, Series M, 6.95% due 10/01/2022 (d) 2,840
====================================================================================================================================
New York--9.7% NR* Aa2 3,375 New York City, New York, City Transitional Finance Authority Revenue
Bonds, RIB, Series 283, 7.89% due 11/15/2015 (e) 3,912
New York City, New York, GO, Refunding:
A A2 3,530 Series A, 6.50% due 5/15/2012 3,924
AAA Aaa 5,000 Series A, 6.375% due 5/15/2015 (c) 5,508
A A2 4,250 Series H, 5.125% due 8/01/2025 3,906
New York State Dormitory Authority, Revenue Refunding Bonds:
BBB+ Baa1 4,500 (Mount Sinai Health), Series A, 6.75% due 7/01/2020 4,799
AAA NR* 7,000 RIB, Series 305, 7.39% due 5/15/2015 (d)(e) 7,985
A A3 5,000 (State University Educational Facilities), 5.125% due 5/15/2021 4,677
AAA Aaa 3,500 New York State Urban Development Corporation, Revenue Refunding Bonds
(Correctional Capital Facilities), Series A, 6.50% due 1/01/2011 3,968
====================================================================================================================================
Oregon--1.1% Oregon State Health, Housing, Educational and Cultural Facilities Authority
Revenue Bonds, VRDN, Series A (a):
NR* VMIG1@ 200 (Guide Dogs for the Blind), 4.40% due 7/01/2025 200
A1 NR* 2,000 (Sacred Heart Medical Center), 4.38% due 11/01/2028 2,000
NR* Aaa 2,000 Portland, Oregon, Airport Way Urban Renewal and Redevelopment Tax
Increment, Tax Allocation Refunding Bonds, Series A, 6% due 6/15/2013 (b) 2,148
====================================================================================================================================
Pennsylvania--1.1% NR* Aaa 2,000 Delaware River Port Authority of Pennsylvania and New Jersey Revenue Bonds,
RIB, Series 396, 7.44% due 1/01/2019 (e)(h) 2,221
AAA Aaa 2,040 Pennsylvania State Higher Education Assistance Agency Revenue Bonds,
6.125% due 12/15/2015 (d) 2,195
====================================================================================================================================
South Carolina--2.3% AAA Aaa 2,420 Anderson County, South Carolina, School District Number 002, GO, Series B,
5.125% due 3/01/2025 (d) 2,290
AAA Aaa 2,725 Clemson University, South Carolina, University Revenue Bonds, 6.25% due
5/01/2015 (b) 2,957
BBB+ Baa1 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 3,074
NR* Aa2 720 South Carolina Housing Finance and Development Authority, Mortgage Revenue
Bonds, AMT, Series A, 6.70% due 7/01/2027 738
====================================================================================================================================
Texas--10.8% AAA Aaa 2,290 Austin, Texas, Revenue Refunding Bonds, Sub-Lien, Series A, 4.62%** due
5/15/2013 (d) 1,151
AAA Aaa 2,895 Corpus Christi, Texas, Utility System Revenue Refunding Bonds, Series A,
6% due 7/15/2017 (h) 3,042
AAA Aaa 2,500 Cypress--Fairbanks, Texas, Independent School District, GO (Schoolhouse),
5.25% due 2/15/2022 2,398
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 2,594
</TABLE>
8 & 9
<PAGE>
MuniVest Fund II, Inc., October 31, 2000
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
<TABLE>
<CAPTION>
S&P Moody's Face
STATE Ratings Ratings Amount Issue Value
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Texas NR* NR* $ 1,500 Harris County, Texas, Health Facilities Development Corporation, Hospital
(concluded) Revenue Bonds (Memorial Hospital System Project), Series A, 6.60% due
6/01/2004 (g) $ 1,621
NR* Aa3 5,000 Harris County, Texas, Health Facilities Development Corporation, Revenue
Refunding Bonds, RITR, Series 6, 7.095% due 12/01/2027 (e)(i) 5,224
AAA Aaa 5,000 Houston, Texas, Water and Sewer System Revenue Bonds, Junior Lien,
Series C, 5.375% due 12/01/2027 (c) 4,824
AAA Aaa 9,500 Houston, Texas, Water and Sewer System Revenue Refunding Bonds, Junior
Lien, Series B, 5.25% due 12/01/2023 (c) 9,072
AAA Aaa 2,425 Jefferson County, Texas, GO, 6.25% due 8/01/2015 (h) 2,627
AAA Aaa 1,000 Lower Neches Valley Authority, Texas, Industrial Development Corporation,
Environmental Revenue Bonds (Mobil Oil Refining Corporation Project), AMT,
6.35% due 4/01/2026 1,034
A1+ NR* 1,400 North Central Texas, Health Facility Development Corporation Revenue Bonds
(Methodist Hospitals--Dallas), VRDN, Series B, 4.60% due 10/01/2015 (a)(d) 1,400
AAA Aaa 2,500 Texas United Independent School District, GO, 5.125% due 8/15/2026 2,320
AAA Aaa 2,850 Williamson County, Texas, GO, Series A, 6% due 8/15/2013 (h) 3,050
AAA Aaa 2,735 Ysleta, Texas, Independent School District Public Facility Corporation,
School Facility Lease Revenue Bonds, 6% due 11/15/2014 (b) 2,907
====================================================================================================================================
Virginia--0.8% BBB+ Baa1 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 3,143
====================================================================================================================================
Washington--6.8% AAA Aaa 2,425 Chelan County, Washington, Public Utility District Number 001, Consolidated
Revenue Refunding Bonds (Chelan Hydro), AMT, Series D, 6.35% due
7/01/2028 (d) 2,529
AAA Aaa 3,245 Douglas County, Washington, Public Utility District Number 001, Wells
Hydroelectric Revenue Bonds, Series B, 6% due 9/01/2029 (d) 3,379
AAA Aaa 2,000 King County, Washington, Sewer Revenue Bonds, 5.25% due 1/01/2030 (c) 1,883
AAA Aaa 5,000 Washington State, GO, Trust Receipts, Class R, Series 6, 7.22% due
1/01/2014 (e)(h) 5,573
Washington State Public Power Supply System Revenue Refunding Bonds,
Series B:
AA- Aa1 4,950 (Nuclear Project No. 1), 7.25% due 7/01/2009 5,569
AA- Aa1 5,000 (Nuclear Project No. 1), 7.125% due 7/01/2016 5,902
AAA Aaa 1,900 (Nuclear Project No. 3), 7.125% due 7/01/2016 (d) 2,243
====================================================================================================================================
Wisconsin--0.3% AA Aa2 1,135 Wisconsin Housing and Economic Development Authority, Home Ownership
Revenue Refunding Bonds, AMT, Series D, 6.65% due 7/01/2025 1,154
====================================================================================================================================
Wyoming--2.1% BBB- Baa2 5,000 Sweetwater County, Wyoming, Solid Waste Disposal Revenue Bonds (FMC Corp.
Project), AMT, Series B, 6.90% due 9/01/2024 5,037
AA Aa2 1,500 Wyoming Community Development Authority, S/F Mortgage Revenue Bonds, AMT,
Series H, 7.10% due 6/01/2012 (f) 1,566
AA Aa2 1,685 Wyoming Community Development Authority, S/F Mortgage Revenue Refunding
Bonds, Series B, 6.70% due 6/01/2017 1,709
====================================================================================================================================
Total Investments (Cost--$381,584)--99.1% 396,410
Other Assets Less Liabilities--0.9% 3,759
--------
Net Assets--100.0% $400,169
========
====================================================================================================================================
</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,
2000.
(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, 2000.
(f) FHA Insured.
(g) Prerefunded.
(h) FSA Insured.
(i) Escrowed to maturity.
(j) FNMA/GNMA Collateralized.
(k) FHLMC Collateralized.
* Not Rated.
** Represents a zero coupon bond; the interest rate shown reflects 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.
Quality Profile (unaudited)
The quality ratings of securities in the Fund as of October 31, 2000 were as
follows:
--------------------------------------------------------------------------------
Percent of
S&P Rating/Moody's Rating Net Assets
--------------------------------------------------------------------------------
AAA/Aaa .............................................................. 48.1%
AA/Aa ................................................................ 25.8
A/A .................................................................. 11.3
BBB/Baa .............................................................. 7.0
BB/Ba ................................................................ 2.4
NR (Not Rated) ....................................................... 1.1
Other+ ............................................................... 3.4
--------------------------------------------------------------------------------
+ Temporary investments in short-term municipal securities.
10 & 11
<PAGE>
MuniVest Fund II, Inc., October 31, 2000
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
<TABLE>
<CAPTION>
As of October 31, 2000
=========================================================================================================
<C> <S> <C> <C>
Assets: Investments, at value (identified cost--$381,583,568) .. $396,410,367
Cash ................................................... 79,926
Interest receivable .................................... 7,656,728
Prepaid expenses and other assets ...................... 6,738
------------
Total assets ........................................... 404,153,759
------------
=========================================================================================================
Liabilities: Payables:
Securities purchased ................................. $ 3,249,229
Dividends to shareholders ............................ 386,941
Investment adviser ................................... 163,160 3,799,330
-------------
Accrued expenses and other liabilities ................. 185,000
------------
Total liabilities ...................................... 3,984,330
------------
=========================================================================================================
Net Assets: Net assets ............................................. $400,169,429
============
=========================================================================================================
Capital: Capital Stock (200,000,000 shares authorized):
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 ................... 2,311,548
Accumulated realized capital losses on investments--net (31,503,107)
Unrealized appreciation on investments--net ............ 14,826,799
-------------
Total--Equivalent to $13.32 net asset value per share of
Common Stock (market price--$11.625) ................... 265,169,429
------------
Total capital .......................................... $400,169,429
============
=========================================================================================================
</TABLE>
* Auction Market Preferred Stock.
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended October 31, 2000
====================================================================================================================
<C> <S> <C> <C>
Investment Interest and amortization of premium and discount earned ......... $ 23,380,969
Income:
====================================================================================================================
Expenses: Investment advisory fees ......................................... $ 1,959,825
Commission fees .................................................. 341,297
Accounting services .............................................. 131,968
Transfer agent fees .............................................. 91,759
Professional fees ................................................ 76,300
Printing and shareholder reports ................................. 53,026
Custodian fees ................................................... 29,755
Listing fees ..................................................... 28,303
Directors' fees and expenses ..................................... 23,854
Pricing fees ..................................................... 13,473
Other ............................................................ 34,138
------------
Total expenses ................................................... 2,783,698
------------
Investment income--net ........................................... 20,597,271
------------
====================================================================================================================
Realized & Realized loss on investments--net ................................ (8,420,590)
Unrealized Change in unrealized appreciation/depreciation on investments--net 19,269,130
Gain (Loss) on ------------
Investments--Net: Net Increase in Net Assets Resulting from Operations ............. $ 31,445,811
============
====================================================================================================================
</TABLE>
See Notes to Financial Statements.
12 & 13
<PAGE>
MuniVest Fund II, Inc., October 31, 2000
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Year Ended October 31,
------------------------------
Increase (Decrease) in Net Assets: 2000 1999
=======================================================================================================================
<C> <S> <C> <C>
Operations: Investment income--net ............................................ $ 20,597,271 $ 20,843,405
Realized loss on investments--net ................................. (8,420,590) (7,450,489)
Change in unrealized appreciation/depreciation on investments--net 19,269,130 (33,277,841)
------------- -------------
Net increase (decrease) in net assets resulting from operations ... 31,445,811 (19,884,925)
------------- -------------
=======================================================================================================================
Dividends to Investment income--net:
Shareholders: Common Stock .................................................... (15,726,573) (16,419,996)
Preferred Stock ................................................. (5,525,154) (4,340,484)
------------- -------------
Net decrease in net assets resulting from dividends to shareholders (21,251,727) (20,760,480)
------------- -------------
=======================================================================================================================
Net Assets: Total increase (decrease) in net assets ........................... 10,194,084 (40,645,405)
Beginning of year ................................................. 389,975,345 430,620,750
------------- -------------
End of year* ...................................................... $ 400,169,429 $ 389,975,345
============= =============
=======================================================================================================================
*Undistributed investment income--net .............................. $ 2,311,548 $ 2,966,004
============= =============
=======================================================================================================================
</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: 2000 1999 1998 1997 1996
===================================================================================================================================
<C> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year ............ $ 12.81 $ 14.85 $ 14.59 $ 14.12 $ 13.93
Operating -------- -------- -------- -------- --------
Performance: Investment income--net ........................ 1.04 1.05 1.08 1.13 1.10
Realized and unrealized gain (loss) on
investments--net .............................. .54 (2.05) .26 .46 .18
-------- -------- -------- -------- --------
Total from investment operations .............. 1.58 (1.00) 1.34 1.59 1.28
-------- -------- -------- -------- --------
Less dividends to Common Stock shareholders
from investment income--net ................... (.79) (.82) (.84) (.88) (.85)
-------- -------- -------- -------- --------
Effect of Preferred Stock activity:
Dividends to Preferred Stock shareholders
from investment income--net ................. (.28) (.22) (.24) (.24) (.24)
-------- -------- -------- -------- --------
Net asset value, end of year .................. $ 13.32 $ 12.81 $ 14.85 $ 14.59 $ 14.12
======== ======== ======== ======== ========
Market price per share, end of year ........... $ 11.625 $ 11.75 $14.4375 $ 13.875 $ 12.625
======== ======== ======== ======== ========
===================================================================================================================================
Total Investment Based on market price per share ............... 5.93% (13.49%) 10.37% 17.32% 11.43%
Return:* ======== ======== ======== ======== ========
Based on net asset value per share ............ 11.33% (8.31%) 7.96% 10.31% 8.47%
======== ======== ======== ======== ========
===================================================================================================================================
Ratios Based on Total expenses** .............................. 1.08% 1.01% .96% 1.00% 1.01%
Average Net Assets ======== ======== ======== ======== ========
Of Common Stock: Total investment income--net** ................ 8.00% 7.36% 7.32% 7.78% 7.93%
======== ======== ======== ======== ========
Amount of dividends to Preferred Stock
shareholders .................................. 2.15% 1.53% 1.61% 1.64% 1.73%
======== ======== ======== ======== ========
Investment income--net, to Common Stock
shareholders .................................. 5.85% 5.83% 5.71% 6.14% 6.20%
======== ======== ======== ======== ========
===================================================================================================================================
Ratios Based on Total expenses ............................... .71% .68% .66% .68% .68%
Total Average ======== ======== ======== ======== ========
Net Assets:+** Total investment income--net ................. 5.24% 4.99% 5.06% 5.30% 5.30%
======== ======== ======== ======== ========
===================================================================================================================================
Ratios Based on Dividends to Preferred Stock shareholders ..... 4.08% 3.22% 3.52% 3.50% 3.55%
Average Net Assets ======== ======== ======== ======== ========
Of Preferred Stock:
===================================================================================================================================
Supplemental Net assets, net of Preferred Stock, end of year
Data: (in thousands) ................................ $265,169 $254,975 $295,621 $290,345 $281,036
======== ======== ======== ======== ========
Preferred Stock outstanding, end of year
(in thousands) ................................ $135,000 $135,000 $135,000 $135,000 $135,000
======== ======== ======== ======== ========
Portfolio turnover ............................ 110.66% 114.06% 140.55% 57.80% 46.58%
======== ======== ======== ======== ========
===================================================================================================================================
Leverage: Asset coverage per $1,000 ..................... $ 2,964 $ 2,889 $ 3,190 $ 3,151 $ 3,082
======== ======== ======== ======== ========
===================================================================================================================================
Dividends Series A--Investment income--net .............. $ 1,067 $ 816 $ 897 $ 880 $ 898
Per Share on ======== ======== ======== ======== ========
Preferred Stock Series B--Investment income--net .............. $ 990 $ 810 $ 875 $ 872 $ 879
Outstanding: ======== ======== ======== ======== ========
Series C--Investment income--net .............. $ 1,012 $ 786 $ 869 $ 869 $ 886
======== ======== ======== ======== ========
===================================================================================================================================
</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, 2000
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 conformity with accounting
principles generally accepted in the United States of America, 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 (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 instruments--The Fund may engage in various portfolio
investment strategies to increase or decrease the level of risk to which the
Fund is exposed more quickly and efficiently than transactions in other types of
instruments. 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.
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, 2000 were $417,858,694 and $419,150,303, respectively.
Net realized losses for the year ended October 31, 2000 and net unrealized gains
as of October 31, 2000 were as follows:
--------------------------------------------------------------------------------
Realized Unrealized
Losses Gains
--------------------------------------------------------------------------------
Long-term investments ............................ $(8,420,590) $14,826,799
----------- -----------
Total ............................................ $(8,420,590) $14,826,799
=========== ===========
--------------------------------------------------------------------------------
As of October 31, 2000, net unrealized appreciation for Federal income tax
purposes aggregated $14,826,638, of which $17,504,248 related to appreciated
securities and $2,677,610 related to depreciated securities. The aggregate cost
of investments at October 31, 2000 for Federal income tax purposes was
$381,583,729.
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, 2000 and
October 31, 1999 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, 2000 were as follows: Series A, 4.11%; Series B, 4.11%; and Series
C, 3.75%.
Shares issued and outstanding during the years ended October 31, 2000 and
October 31, 1999 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, 2000, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, an affiliate of FAM, earned $143,638 as commissions.
5. Capital Loss Carryforward:
At October 31, 2000, the Fund had a net capital loss carryforward of
approximately $29,211,000, of which $9,489,000 expires in 2003, $10,964,000
expires in 2007 and $8,758,000 expires in 2008. These amounts will be available
to offset like amounts of any future taxable gains.
6. Subsequent Event:
On November 8, 2000, the Fund's Board of Directors declared an ordinary income
dividend to Common Stock shareholders in the amount of $.065000 per share,
payable on November 29, 2000 to shareholders of record as of November 20, 2000.
16 & 17
<PAGE>
MuniVest Fund II, Inc., October 31, 2000
INDEPENDENT AUDITORS' REPORT
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, 2000, 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 auditing standards generally accepted
in the United States of America. 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, 2000 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, 2000, the results of its operations, the changes in its
net assets, and the financial highlights for the respective stated periods in
conformity with accounting principles generally accepted in the United States of
America.
Deloitte & Touche LLP
Princeton, New Jersey
December 8, 2000
IMPORTANT TAX INFORMATION (unaudited)
All of the net investment income distributions paid by MuniVest Fund II, Inc.
during its taxable year ended October 31, 2000 qualify as tax-exempt interest
dividends for Federal income tax purposes. Additionally, there were no capital
gains distributions paid by the Fund during the year.
Please retain this information for your records.
MANAGED DIVIDEND POLICY
The Fund's dividend policy is to distribute all or a portion of its net
investment income to its shareholders on a monthly basis. 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.
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
Roscoe S. Suddarth, Director
Richard R. West, Director
Arthur Zeikel, Director
Edward D. Zinbarg, Director
Vincent R. Giordano, Senior Vice President
Kenneth A. Jacob, Vice President
Fred K. Stuebe, Vice President
Donald C. Burke, Vice President and Treasurer
Jodi M. Pinedo, 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
MuniVest Fund II, Inc. seeks to provide shareholders with as high a level of
current income exempt from Federal income taxes as is consistent with its
investment policies and prudent investment management by investing primarily in
a portfolio of long-term, investment-grade municipal obligations the interest on
which, in the opinion of bond counsel to the issuer, is exempt from Federal
income taxes.
This report, including the financial information herein, is transmitted to
shareholders of MuniVest Fund II, Inc. for their information. It is not a
prospectus. 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--10/00
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