- -----------------------------------
Municipal Partners
Fund II Inc.
Annual Report
JUNE 30, 1999
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
July 22, 1999
Dear Shareholders:
We are pleased to provide this annual report for the Municipal Partners Fund II
Inc. ("Fund") as of June 30, 1999. Included are market commentary, a schedule of
the Fund's investments as of June 30, 1999 and financial statements for the year
ended June 30, 1999. The Fund distributed income dividends to common
shareholders totaling $0.75 per share during the period. The table below shows
the annualized distribution rate and the twelve-month total return based on the
Fund's June 30, 1999 net asset value ("NAV") per share and its New York Stock
Exchange ("NYSE") closing price:
Price Annualized Twelve-Month
Per Share Distribution Rate* Total Return
---------- ------------------ --------------
$13.71 (NAV) 5.47% 0.17%
$12.3125 (NYSE) 6.09% 2.27%
During the first half of 1999, a strong domestic economy, rising oil prices and
reviving economic activity overseas combined to force interest rates up across
the U.S. Treasury yield curve. U.S. economic growth continued at a robust pace
during the first half of the year as evidenced by the 4.3% and 2.3% annualized
Gross Domestic Product ("GDP") growth rates for the first and second quarter,
respectively. Domestic labor markets remained extremely tight, with the
unemployment rate near a 29-year low. Collectively, the aforementioned
heightened obstinate worries about the prospect for higher inflation in the
near-term. The Federal Reserve Board ("Fed") tempered some of those concerns
when it increased its short-term lending rate by 25 basis points to 5.00% at the
conclusion of its mid-year Federal Open Market Committee meeting. The Fed also
cited that "conflicting forces in the economy" led it to adopt a neutral stance
concerning its near-term policy action, therefore dropping its previous
tightening bias. However, the Fed has signaled its willingness to raise rates if
there are any signs of inflationary pressures. Inflation -- as measured by the
Consumer Price Index ("CPI") -- was relatively well behaved during the first
half of the year. Productivity gains and moderate global demand were credited
with keeping inflation at a tepid rate.
Municipal bond performance, although negative during the first six months of the
year, outpaced most taxable fixed income asset classes. Positive fundamentals,
decreased supply and generous municipal yields compared to U.S. Treasuries,
influenced the municipal market favorably. State and local governments issued
approximately $115 billion of debt so far in 1999, about 23% shy of the same
period last year. New project funding continues to outpace refunding issues. The
need for municipal new project funding comes from the demands of a growing
economy along with general disrepair of municipal infrastructures from decades
past. Burgeoning tax receipts are helping to improve the financial standing of
many municipal authorities. Evidence of this improvement is the soaring number
of rating upgrades for many municipal authorities from both Moody's Investors
Service, Inc. and Standard & Poor's Ratings Service, two major credit rating
organizations.
Investment Strategy and Portfolio Changes
We are managing our exposure to the healthcare sector in favor of transportation
and education bonds and selectively would add to positions in the utility
sector. At June 30, 1999, the Fund consisted of 57
- -----------------
* The annualized distribution rate assumes a current monthly income dividend
rate of $0.0625 per share for twelve months.
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
issues throughout 25 different states. The Municipal Partners Fund II Inc. had
an average effective maturity of 9 years and an average duration of 6.4 years.
The average credit quality of the Fund's portfolio is at a strong double-A.
The portfolio is well diversified with the greatest industry sector weightings
in transportation, healthcare and housing.
Market Outlook
We expect the U.S. economy will remain stable for the remainder of the year as
low unemployment and strong consumer confidence will support demand for goods.
Additionally, the Fed has engineered a good balance of strong economic growth,
low inflation and favorable interest rates. While we are generally optimistic
about the prospects for the municipal bond market, challenges remain.
Traditionally, the demand for municipal bonds has come from three main sources:
property and casualty insurance companies, retail investors and mutual funds.
Yet, non-traditional buyers became another important source of market demand in
1998 because municipal yields were very attractive versus taxable securities. In
the first half of 1999, some sources of demand for municipal bonds faded as
institutional investors gravitated toward taxable fixed income spread products.
Net demand for municipal securities from property and casualty and mutual funds
is in a trough.
In a continuing effort to provide timely information concerning the Fund,
shareholders may call our toll free number at 1-888-777-0102, Monday through
Friday from 8:00 am to 6:00 pm EST for the Fund's net asset value, market price
and other information regarding the Fund's portfolio holdings and allocations.
All of us at Salomon Brothers Asset Management Inc appreciate the confidence you
have demonstrated in the past and hope to continue to serve you in future years.
Cordially,
/s/ William D. Cvengros /s/ Heath B. McLendon
William D. Cvengros Heath B. McLendon
Co-Chairman of the Board Co-Chairman of the Board
/s/ Robert E. Amodeo
Robert E. Amodeo
Executive Vice President
Special Shareholder Notice. In September 1998, Robert E. Amodeo became
portfolio manager of the Fund, primarily responsible for the Fund's day-to-day
investments. Mr. Amodeo is a Director of Salomon Brothers Asset Management Inc,
which he joined in 1992, and has been involved in the portfolio management of
the Fund since its inception.
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Schedule of Investments
June 30, 1999
<TABLE>
<CAPTION>
Face
Amount Rating(a) Security Value
- ----------------------------------------------------------------------------------------------------------
Long-Term Investments -- 98.8%
<S> <C> <C> <C>
California -- 8.0%
$3,000,000 AA- California State Housing Finance Agency Home
Mortgage Revenue, Series H, 6.15% due 8/1/16............... $ 3,153,120
2,175,000 Aaa* California State Public Works Board, Lease Revenue
Refunding Bonds (Department of Corrections),
Series A, 6.875% due 11/1/14, Pre-Refunded 11/1/04......... 2,475,128
2,900,000 Aaa* California State Public Works Board, Lease Revenue
Refunding Bonds (Various University of California Projects),
1993 Series A, 7.00% due 3/1/14, Pre-Refunded 3/1/04....... 3,276,710
1,000,000 A2* West Covina, CA COP (Queen of the Valley Hospital),
6.50% due 8/15/14, Pre-Refunded 8/15/04 ................... 1,114,290
-----------
10,019,248
-----------
Georgia -- 0.2%
180,000 AAA Fulton County, GA Housing Authority Single-Family
Mortgage, 6.60% due 3/1/28 ................................ 187,889
-----------
Hawaii -- 0.8%
1,000,000 A Hawaii State Department of Budget & Finance Special
Purpose Revenue, 6.00% due 7/1/11 ......................... 1,048,140
-----------
Illinois -- 17.4%
6,050,000 AAA Chicago Heights, IL GO, Series A, FGIC-Insured, 5.65%
due 12/1/16 ............................................... 6,197,015
4,255,000 AAA Chicago, IL Board of Education (Chicago School Reform),
MBIA-Insured, 6.00% due 12/1/16 ........................... 4,431,795
3,500,000 AAA Chicago, IL O'Hare International Airport Special Facility
Revenue (International Terminal), MBIA-Insured,
6.75% due 1/1/18 .......................................... 3,722,180
1,000,000 AAA Cook County, ILGO Public Improvement, Series A,
FGIC-Insured, 5.25% due 11/15/14 .......................... 990,580
1,000,000 AAA Illinois Health Facilities Authority Revenue (Highland
Park Project B), FGIC-Insured, 5.55% due 10/1/06 .......... 1,040,430
2,000,000 AAA Illinois Health Facilities Authority Revenue
(Servantcor Project), Series A, FSA-Insured,
6.00% due 8/15/12, Pre-Refunded 8/15/06.................... 2,180,500
1,850,000 AAA Illinois Health Facilities Authority Revenue Refunding
(SSM Health Care), MBIA-Insured, 6.55% due 6/1/13 ......... 2,085,302
</TABLE>
- -------------------------------------------------------------------------------
See notes to financial statements.
Page 3
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Schedule of Investments (continued)
June 30, 1999
<TABLE>
<CAPTION>
Face
Amount Rating(a) Security Value
- ----------------------------------------------------------------------------------------------------------
Illinois -- 17.4% (continued)
<S> <C> <C> <C>
Illinois Health Facilities Authority Revenue (South
Suburban Hospital Project):
$ 395,000 A 7.00% due 2/15/18, Pre-Refunded 2/15/02.................. $ 427,477
605,000 A 7.00%, Escrowed to Maturity 2/15/18...................... 698,485
-----------
21,773,764
-----------
Indiana -- 3.6%
2,000,000 AA+ Indiana Transportation Finance Authority
Airport Facilities Lease Revenue, Series A,
5.50% due 11/1/17........................................... 2,011,780
2,500,000 AAA Indianapolis, IN Airport Authority Revenue Refunding,
Series A, FGIC-Insured, 5.60% due 7/1/15................... 2,532,425
-----------
4,544,205
-----------
Iowa -- 2.9%
3,350,000 NR Iowa Finance Authority Hospital Facility Revenue Refunding
(Trinity Regional Hospital Project), 7.00% due 7/1/12,
Pre-Refunded 7/1/02 ....................................... 3,648,318
-----------
Louisiana -- 4.9%
6,000,000 BBB+ Louisiana Public Facilities Authority Hospital Revenue
Refunding (Touro Infirmary Project), Series B,
6.125% due 8/15/23 ........................................ 6,136,020
-----------
Massachusetts -- 1.7%
1,000,000 AA Massachusetts State Special Obligation Revenue,
Series A, 5.50% due 6/1/13 ................................ 1,034,430
1,000,000 A Massachusetts State Health & Educational Facilities
Authority Revenue (Dana Farber Cancer Project),
Series G-1, 6.25% due 12/1/22 ............................. 1,052,010
-----------
2,086,440
-----------
Michigan -- 1.6%
2,000,000 AAA Jenison, MI Public Schools Refunding, FGIC-Insured,
5.25% due 5/1/16........................................... 2,002,060
-----------
Missouri -- 2.1%
2,500,000 AA Missouri State Environmental Improvement & Energy
Research Authority PCR Refunding (Associated Electric
Coop Thomas Hill), 5.50% due 12/1/10....................... 2,583,400
-----------
</TABLE>
- -------------------------------------------------------------------------------
See notes to financial statements.
Page 4
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Schedule of Investments (continued)
June 30, 1999
<TABLE>
<CAPTION>
Face
Amount Rating(a) Security Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nevada -- 5.6%
$3,000,000 AAA Clark County, NV IDR Refunding (Nevada Power Project),
AMBAC-Insured, 7.20% due 10/1/22........................... $3,276,030
1,000,000 AAA Clark County, NV Passenger Facility Revenue (Macarran
International Airport), MBIA-Insured, 5.75% due 7/1/23..... 1,016,650
1,600,000 AAA Clark County, NV School District Refunding, FSA-Insured,
5.50% due 6/15/11 ........................................ 1,655,280
1,030,000 AAA Nevada Housing Division, Single-Family Program,
Series C, AMBAC-Insured, 6.35% due 10/1/12 ................ 1,082,561
-----------
7,030,521
-----------
New Jersey -- 1.3%
500,000 AAA New Jersey EDA Revenue Refunding (Trenton Office Complex),
FSA-Insured, 5.25% due 6/15/12 ............................ 506,560
1,000,000 AAA New Jersey EDA Water Facilities Revenue (New Jersey
American Water Co., Inc. Project), FGIC-Insured,
6.875% due 11/1/34 ........................................ 1,100,170
-----------
1,606,730
-----------
New York -- 16.7%
3,000,000 Aaa* The City of New York, GO Bonds, Fiscal 1994 Series B,
Subseries B-1, 7.00% due 8/15/16, Pre-Refunded 8/15/04..... 3,372,330
Long Island Power Authority, NY Electric Systems Revenue:
1,250,000 AAA MBIA-Insured, 5.125% due 4/1/12............................ 1,238,938
1,435,000 AAA Series A, FSA-Insured, 5.50% due 12/1/12 .................. 1,478,954
2,500,000 AAA Metropolitan Transportation Authority, NY (Transit Facilities),
Series O, MBIA-Insured, 6.375% due 7/1/20,
Pre-Refunded 7/1/04........................................ 2,749,725
2,000,000 AAA New York State Dormitory Authority Revenue (Manhattan
Eye, Ear & Throat Hospital), 5.125% due 7/1/07............. 2,035,040
1,500,000 A+ New York State Local Government Assistance
Corporation Revenue, Series A, 6.00% due 4/1/16 ........... 1,597,275
1,000,000 AAA New York State Thruway Authority, Highway and Bridge
Toll Revenue,Series B, FGIC-Insured, 5.375% due 4/1/11 .... 1,021,340
4,400,000 AAA Port Authority of New York and New Jersey Construction,
Ninety-Sixth Series, FGIC-Insured, 6.60% due 10/1/23....... 4,759,436
2,570,000 Aa3* Triborough Bridge & Tunnel Authority, NY General
Purpose Revenue, Series Y, 5.50% due 1/1/17 ............... 2,648,927
-----------
20,901,965
-----------
</TABLE>
- -------------------------------------------------------------------------------
See notes to financial statements.
Page 5
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Schedule of Investments (continued)
June 30, 1999
<TABLE>
<CAPTION>
Face
Amount Rating(a) Security Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ohio -- 5.3%
$2,500,000 AA Franklin County, OH Hospital Revenue (Holy Cross
Health Systems Corporation), 5.875% due 6/1/21............. $ 2,583,050
515,000 AAA Ohio State Turnpike Revenue Refunding, Series A,
FGIC-Insured, 5.50% due 2/15/16 ........................... 531,444
3,300,000 A- Ohio State Water Development Authority Solid Waste
Disposal Revenue (Broken Hill Proprietary Co., Ltd.),
6.45% due 9/1/20 .......................................... 3,501,531
-----------
6,616,025
-----------
Pennsylvania -- 4.5%
5,500,000 AAA Delaware Valley, PA Regional Finance Authority Local
Government Revenue, Series A, AMBAC-Insured,
5.50% due 8/1/28 .......................................... 5,628,920
-----------
South Carolina -- 2.1%
2,500,000 AA Greenville, SC Hospital Systems Hospital Facilities Revenue,
Series B, 5.70% due 5/1/12 ................................ 2,572,475
-----------
Tennessee -- 1.7%
1,950,000 AA- The IDB of Humphreys County, TN Solid Waste Disposal Revenue
(E.I. duPont de Nemours and Company Project),
6.70% due 5/1/24........................................... 2,104,772
-----------
Texas -- 6.1%
4,500,000 AAA Austin, TX Airport System Revenue, Series A, MBIA-Insured,
6.20% due 11/15/15......................................... 4,752,045
2,665,000 A+ Port Corpus Christi Authority, TX Nueces County PCR
(Hoechst Celanese Corporate Project), 6.875% due 4/1/17.... 2,851,443
-----------
7,603,488
-----------
Utah -- 2.8%
3,340,000 AAA Utah State Housing Finance Agency Single-Family
Mortgage, Issue H-2, 6.25% due 7/1/22 ..................... 3,482,985
-----------
Virginia -- 3.5%
2,000,000 AA Fairfax County, VA EDA Lease Revenue (Government
Center Properties), 5.50% due 5/15/18...................... 2,011,220
Virginia State Housing Development Authority
Commonwealth Mortgage:
1,015,000 AAA Subseries A-4, MBIA-Insured, 6.20% due 7/1/12............ 1,074,743
1,300,000 AA+ Subseries I-1, 6.55% due 7/1/17 ......................... 1,355,923
-----------
4,441,886
-----------
</TABLE>
- -------------------------------------------------------------------------------
See notes to financial statements.
Page 6
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Schedule of Investments (continued)
June 30, 1999
<TABLE>
<CAPTION>
Face
Amount Rating(a) Security Value
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Washington -- 0.8%
$1,000,000 AA+ Washington State GO, Series C, 5.50% due 7/1/16.............. $ 1,030,160
------------
West Virginia -- 1.4%
1,555,000 A- West Virginia State Water Development Authority,
Loan Program II, Series A, 7.00% due 11/1/31,
Pre-Refunded 11/1/01....................................... 1,681,561
------------
Wisconsin -- 2.1%
2,485,000 AA Wisconsin Housing & EDA Revenue Refunding (Home
Ownership), Series G, 6.30% due 9/1/17..................... 2,594,241
------------
Wyoming -- 1.7%
2,000,000 AA Wyoming Community Development Authority Housing
Revenue, Series 1, 6.10% due 12/1/14....................... 2,081,300
------------
Total Long-Term Investments (Cost-- $117,547,722)............ 123,406,513
------------
Short-Term Investments - 1.2%
Indiana -- 0.9%
1,200,000 A-1+ Princeton, IN Industrial PCR Refunding Revenue, VRDD,
3.45% due 3/1/19 .......................................... 1,200,000
------------
North Carolina -- 0.1%
100,000 A-1+ Halifax County, NC Industrial Facilities and Pollution Control
Financing Authority Revenue, VRDD, 3.70% due 6/1/21........ 100,000
------------
Wyoming -- 0.2%
250,000 A-1+ Sublette County, WYPCR (Exxon Project), Series A,
VRDD, 3.50% due 7/1/17 .................................... 250,000
Total Short-Term Investments (Cost-- $1,550,000)............. 1,550,000
------------
Total Investments-- 100% (Cost-- $119,097,722**)............. $124,956,513
============
<FN>
- -----------------------
(a) All ratings are by Standard & Poor's Ratings Service, except those which
are identified by an asterisk (*) are rated by Moody's Investors Service, Inc.
**Aggregate cost for Federal income tax purposes is substantially the same.
See pages 8 and 9 for definition of bond ratings and certain security descriptions.
</FN>
</TABLE>
- -------------------------------------------------------------------------------
See notes to financial statements.
Page 7
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Long-Term Securities Ratings (unaudited)
Standard & Poor's Ratings Service ("Standard & Poor's") -- Ratings from "AA" to
"BB" may be modified by the addition of a plus (+) or minus (-) sign to show
relative standings within the major rating categories.
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard &Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA -- Bonds rated "AA" have a very strong capacity to pay interest and repay
principal and differs from the highest rated issue only in a small degree.
A -- Bonds rated "A" have a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Bonds rated "BBB" are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than in higher rated categories.
BB -- Bonds rated "BB" have less near-term vulnerability to default than other
speculative issues. However, they face major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.
Moody's Investors Service, Inc. ("Moody's") -- Numerical modifiers 1, 2 and 3
may be applied to each generic rating from "Aa" to "Baa," where 1 is the highest
and 3 the lowest ranking within its generic category.
Aaa -- Bonds rated "Aaa" are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- Bonds rated "Aa" are judged to be of high quality by all standards.
Together with the "Aaa" group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in "Aaa"
securities.
A -- Bonds rated "A" possess many favorable investment attributes and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.
Baa -- Bonds rated "Baa" are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
NR -- Indicates that the bond is not rated by Moody's or Standard & Poor's.
Page 8
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Short-Term Securities Ratings (unaudited)
SP-1 -- Standard &Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to
possess overwhelming safety characteristics are denoted with a plus
(+) sign.
A-1 -- Standard &Poor's highest commercial paper and variable-rate demand
obligation ("VRDO") rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong; those
issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to the
advent of the VMIG 1 rating.
Security Descriptions (unaudited)
<TABLE>
<S> <C> <C> <C>
ABAG - Association of Bay Area Governors GO - General Obligation Bonds
AIG - American International Guaranty HDC - Housing Development Corporation
AMBAC - American Municipal Bond Assurance HFA - Housing Finance Authority
Corporation IDA - Industrial Development Authority
BAN - Bond Anticipation Notes IDB - Industrial Development Board
BIG - Bond Investors Guaranty IDR - Industrial Development Revenue
CGIC - Capital Guaranty Insurance Company INFLOS - Inverse Floaters
CHFCLI - California Health Facility ISD - Independent School District
Construction Loan Insurance LEVRRS - Leveraged Reverse Rate Securities
CONNIE LOC - Letter of Credit
LEE - College Construction Loan Association MBIA - Municipal Bond Investors Assurance
COP - Certificate of Participation Corporation
EDA - Economic Development Authority MVRICS - Municipal Variable Rate Inverse
EDR - Economic Development Revenue CouponSecurity
FGIC - Financial Guaranty Insurance Company PCR - Pollution Control Revenue
FHA - Federal Housing Administration PSFG - Permanent School Fund Guaranty
FHLMC - Federal Home Loan Mortgage RAN - Revenue Anticipation Notes
Corporation RIBS - Residual Interest Bonds
FLAIRS - Floating Adjustable Interest Rate RITES - Residual Interest Tax-Exempt Securities
Securities SYCC - Structured Yield Curve Certificate
FNMA - Federal National Mortgage Association TAN - Tax Anticipation Notes
FRTC - Floating Rate Trust Certificates TECP - Tax Exempt Commercial Paper
FSA - Financial Security Assurance TOB - Tender Option Bonds
GIC - Guaranteed Investment Contract TRAN - Tax and Revenue Anticipation Notes
GNMA - Government National Mortgage VA - Veterans Administration
Association VRDD - Variable Rate Daily Demand
VRWE - Variable Rate Wednesday Demand
</TABLE>
Page 9
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Statement of Assets and Liabilities
June 30, 1999
ASSETS:
Investments, at value (Cost-- $119,097,722).............. $124,956,513
Cash .................................................... 30,020
Interest receivable ..................................... 2,066,742
Receivable for securities sold........................... 440,000
Prepaid expenses ........................................ 31,653
------------
Total Assets ............................................ 127,524,928
------------
LIABILITIES:
Management fees payable.................................. 63,188
Accrued expenses......................................... 96,373
------------
Total Liabilities ....................................... 159,561
------------
Total Net Assets ............................................. $127,365,367
============
NET ASSETS:
Preferred Stock (Note 4)................................. $ 45,000,000
------------
Common Stock ($.001 par value, 100,000,000 shares
authorized; 6,007,094 shares outstanding).............. 6,007
Additional paid-in capital............................... 83,244,145
Undistributed net investment income...................... 740,823
Accumulated net realized loss on investments ............ (7,484,399)
Net unrealized appreciation on investments .............. 5,858,791
------------
Net Assets Applicable to Common Stock.................... 82,365,367
------------
Total Net Assets.............................................. $127,365,367
============
Net Asset Value Per Share of Common Stock
($82,365,367 / 6,007,094 shares outstanding)................ $13.71
======
- ------------------------------------------------------------------------------
See notes to financial statements.
Page 10
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Statement of Operations
For the Year Ended June 30, 1999
INVESTMENT INCOME:
Interest................................................. $7,380,872
----------
EXPENSES:
Management fees (Note 2) ................................ 788,760
Auction agent fees....................................... 122,056
Audit and tax services .................................. 64,100
Shareholder communications............................... 41,849
Directors' fees and expenses ............................ 24,369
Legal ................................................... 21,769
Listing fees............................................. 16,170
Transfer agent .......................................... 16,001
Shareholder annual meeting............................... 9,376
Custodian................................................ 6,001
Amortization of deferred organization costs (Note 1)..... 1,490
Other.................................................... 13,734
----------
Total Expenses........................................... 1,125,675
----------
Net Investment Income......................................... 6,255,197
----------
REALIZED AND UNREALIZED GAIN(LOSS)
ON INVESTMENTS (NOTE 3):
Net Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales................................... 25,536,344
Cost of securities sold............................... 25,752,694
----------
Net Realized Loss........................................ (216,350)
----------
Change in Net Unrealized Appreciation on Investments:
Beginning of year..................................... 9,998,554
End of year........................................... 5,858,791
----------
Decrease in Net Unrealized Appreciation.................. (4,139,763)
----------
Net Loss on Investments....................................... (4,356,113)
----------
Increase in Net Assets From Operations........................ $1,899,084
==========
- -----------------------------------------------------------------------------
See notes to financial statements.
Page 11
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Statement of Changes in Net Assets
For the Years Ended June 30,
<TABLE>
<CAPTION>
1999 1998
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income ............................................... $ 6,255,197 $ 6,214,711
Net realized gain (loss)............................................. (216,350) 355,280
Change in net unrealized appreciation................................ (4,139,763) 3,952,033
------------ ------------
Increase in Net Assets From Operations .............................. 1,899,084 10,522,024
------------ ------------
DIVIDENDS PAID FROM
NET INVESTMENT INCOME TO:
Common shareholders.................................................. (4,505,322) (4,505,321)
Preferred shareholders............................................... (1,628,268) (1,733,919)
------------ ------------
Decrease in Net Assets From Dividends (6,133,590) (6,239,240)
------------ ------------
Increase (Decrease) in Net Assets (4,234,506) 4,282,784
NET ASSETS:
Beginning of year.................................................... 131,599,873 127,317,089
------------ ------------
End of year*......................................................... $127,365,367 $131,599,873
============ ============
*Includes undistributed net investment income of.......................... $740,823 $619,216
======== ========
</TABLE>
Statement of Cash Flows
For the Year Ended June 30, 1999
<TABLE>
<S> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Proceeds from sales of portfolio securities............................................. $26,775,999
Purchases of portfolio securities....................................................... (27,404,907)
Net sales of short-term securities...................................................... 450,000
-----------
(178,908)
Net investment income .................................................................. 6,255,197
Accretion of net discount on investments................................................ (57,033)
Amortization of deferred organization costs............................................. 1,490
Net change in receivables/payables related to operations................................ 82,681
-----------
Net Cash Provided by Operating Activities............................................... 6,103,427
-----------
CASH FLOWS USED BY FINANCING ACTIVITIES
Common stock dividends paid............................................................. (4,505,322)
Preferred stock dividends paid.......................................................... (1,628,268)
-----------
Net Cash Used by Financing Activities................................................... (6,133,590)
-----------
Net Decrease in Cash......................................................................... (30,163)
Cash, Beginning of Year...................................................................... 60,183
-----------
Cash, End of Year............................................................................ $ 30,020
===========
</TABLE>
- -------------------------------------------------------------------------------
See notes to financial statements.
Page 12
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Notes to Financial Statements
Note 1. Significant Accounting Policies
Municipal Partners Fund II Inc. ("Fund") was incorporated in Maryland on June
21, 1993 and is registered as a diversified, closed-end management investment
company under the Investment Company Act of 1940, as amended. The Board of
Directors authorized 100 million shares of $0.001 par value common stock. The
Fund's primary investment objective is to seek a high level of current income
which is exempt from regular federal income taxes, consistent with the
preservation of capital. As a secondary investment objective, the Fund intends
to enhance portfolio value by purchasing tax exempt securities that, in the
opinion of Salomon Brothers Asset Management Inc ("Investment Adviser"), may
appreciate in value relative to other similar obligations in the marketplace.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles
("GAAP"). The preparation of financial statements in accordance with GAAP
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual amounts could differ
from those estimates.
SECURITIES VALUATION. Tax-exempt securities are valued by independent pricing
services which use prices provided by market-makers or estimates of market
values obtained from yield data relating to instruments or securities with
similar characteristics. Short-term investments having a maturity of 60 days or
less are valued at amortized cost which approximates market value. Securities
for which reliable quotations are not readily available are valued at fair value
as determined in good faith by, or under procedures established by, the Board of
Directors.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
recorded on the trade date. Realized gains and losses on sales of securities are
calculated on the identified cost basis. Interest income is accrued on a daily
basis. The Fund amortizes premiums and accretes discounts on securities
purchased using the effective interest method.
FEDERAL INCOME TAXES. The Fund has complied and intends to continue to comply
with the requirements of the Internal Revenue Code of 1986, as amended,
applicable to regulated investment companies, and to distribute all of its
income and capital gains, if any, to its shareholders. Therefore, no federal
income tax or excise tax provision is required.
DIVIDENDS AND DISTRIBUTIONS. The Fund declares and pays dividends and
distributions to common shareholders monthly from net investment income, net
realized short-term capital gains and other sources, if necessary. Long-term
capital gains, if any, in excess of loss carryovers (See Note 7) are expected
to be distributed annually. Dividends and distributions to common shareholders
are recorded on the ex-dividend date. Dividends and distributions to preferred
shareholders are accrued on a weekly basis and are determined as described in
Page 13
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Notes to Financial Statements (continued)
Note 4. The amounts of dividends and distributions from net investment income
and net realized gains are determined in accordance with federal income tax
regulations, which may differ from GAAP.
DEFERRED ORGANIZATION COSTS. Organization costs amounting to $93,817 were
incurred in connection with the organization of the Fund. These costs have been
deferred and amortized ratably over a five-year period from commencement of
operations. As of June 30, 1999, the amortization of the deferred organization
costs had been completed.
CASH FLOW INFORMATION. The Fund invests in securities and distributes dividends
from net investment income and net realized gains from investment transactions.
These activities are reported in the Statement of Changes in Net Assets.
Additional information on cash receipts and cash payments is presented in the
Statement of Cash Flows. Accounting practices that do not affect reporting
activities on a cash basis include carrying investments at value and amortizing
premium or accreting discount on debt obligations.
Note 2. Management and Advisory Fees and Other Transactions
The Fund has entered into a management agreement with Value Advisors LLC
("Investment Manager"), a subsidiary of PIMCO Advisors L.P. ("PIMCO"), pursuant
to which the Investment Manager, among other things, supervises the Fund's
investment program and monitors the performance of the Fund's service providers.
The Investment Manager and the Fund entered into an investment advisory and
administration agreement with the Investment Adviser, a wholly owned subsidiary
of Salomon Brothers Holding Company Inc., which in turn is wholly owned by
Salomon Smith Barney Holdings Inc. ("SSBH"), pursuant to which the Investment
Adviser provides investment advisory and administrative services to the Fund.
The Investment Adviser is responsible on a day-to-day basis for the management
of the Fund's portfolio in accordance with the Fund's investment objectives and
policies and for making decisions to buy, sell, or hold particular securities
and is responsible for day-to-day administration of the Fund. The Investment
Adviser has delegated certain administrative services to SSBC Fund Management
Inc. ("SSBC"), formerly known as Mutual Management Corp., an affiliate of the
Investment Adviser, pursuant to a Sub-Administration Agreement between the
Investment Adviser and SSBC.
The Fund pays the Investment Manager a monthly fee at an annual rate of 0.60% of
the Fund's average weekly net assets for its services, and the Investment
Manager pays the Investment Adviser a monthly fee at an annual rate of 0.36% of
the Fund's average weekly net assets for its services. For purposes of
calculating the fees, the liquidation value of any outstanding preferred stock
of the Fund is not deducted in determining the Fund's average weekly net assets.
Page 14
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Notes to Financial Statements (continued)
Certain officers and/or directors of the Fund are also officers and/or directors
of the Investment Manager, or the Investment Adviser.
At June 30, 1999, the Investment Adviser owned 4,161 shares of the Fund.
The Fund pays each Director not affiliated with the Investment Manager or the
Investment Adviser a fee of $5,000 per year, $700 for attendance at each board
and audit committee meeting and reimbursement for travel and out-of-pocket
expenses for each board and committee meeting attended.
Note 3. Investments
For the year ended June 30, 1999, the aggregate cost of purchases and proceeds
from sales of investments (including maturities, but excluding short-term
securities) were as follows:
Purchases ...................................................... $24,899,342
===========
Sales .......................................................... $25,536,344
===========
At June 30, 1999, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
Gross unrealized appreciation .................................. $ 6,578,757
Gross unrealized depreciation .................................. (719,966)
-----------
Net unrealized appreciation .................................... $ 5,858,791
===========
Note 4. Preferred Stock
On October 1, 1993, the Fund closed its public offering of 900 shares of $.001
par value Auction Rate Preferred Stock ("Preferred Shares") at an offering price
of $50,000 per share. The Preferred Shares have a liquidation preference of
$50,000 per share plus an amount equal to accumulated but unpaid dividends
(whether or not earned or declared) and, subject to certain restrictions, are
redeemable in whole or in part.
Dividend rates generally reset every 28 days and are determined by auction
procedures. The dividend rates on the Preferred Shares during the year ended
June 30, 1999 ranged from 3.240% to 3.858%. The weighted average dividend rate
for the year ended June 30, 1999 was 3.569%. The Board of Directors designated
the dividend period commencing June 8, 1999 as a Special Rate Period. Pursuant
to this Special Rate Period, the dividend rate set by the auction held on June
7, 1999 remains in effect through September 6, 1999 when the regular auction
procedure resumes, subject to the Fund's ability to designate any subsequent
dividend period as a Special Rate Period. The dividend rate for this Special
Rate Period is 3.340%.
Page 15
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Notes to Financial Statements (continued)
The Fund is subject to certain restrictions relating to the Preferred Shares.
The Fund may not declare dividends or make other distributions on shares of
common stock or purchase any such shares if, at the time of the declaration,
distribution or purchase, asset coverage with respect to the outstanding
Preferred Shares would be less than 200%. The Preferred Shares are also subject
to mandatory redemption at $50,000 per share plus any accumulated or unpaid
dividends, whether or not declared, if certain requirements relating to the
composition of the assets and liabilities of the Fund as set forth in its
Articles Supplementary are not satisfied.
The Preferred Shares, which are entitled to one vote per share, generally vote
with the common shares but vote separately as a class to elect two directors
and on certain matters affecting the rights of the Preferred Shares.
Note 5. Concentration of Risk
Since the Fund invests a portion of its assets in issuers located in a single
state, it may be affected by economic and political developments in a specific
state or region. Certain debt obligations held by the Fund are entitled to the
benefit of insurance, standby letters of credit or other guarantees of banks or
other financial institutions.
Note 6. Common Stock Dividends Subsequent to June 30, 1999
On July 1 and August 2, 1999, the Board of Directors of the Fund declared a
common share dividend from net investment income, each in the amount of $0.0625
per share, payable on July 30 and August 27, 1999 to shareholders of record on
July 13 and August 17, 1999, respectively.
Note 7. Capital Loss Carryforward
At June 30, 1999, the Fund had, for Federal income tax purposes, approximately
$7,409,000 of loss carryforwards available to offset future capital gains. To
the extent that these carryforwards losses are used to offset capital gains, it
is probable that the gains so offset will not be distributed. The amount and
expiration of the carryforwards are indicated below. Expiration occurs on the
last day in June of the year indicated:
2003 2004 2005 2007
- ------------------------------------------------------------------------------
Carryforward Amounts $3,377,000 $3,081,000 $810,000 $141,000
- ------------------------------------------------------------------------------
Page 16
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Financial Highlights
Data for a share of common stock outstanding throughout each year ended June 30:
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year....... $ 14.42 $13.70 $ 12.92 $ 12.58 $ 12.02
-------- ------ ------- ------- -------
Income (Loss) From Operations:
Net investment income................. 1.04 1.03 1.05 1.05 1.07
Net realized and unrealized gain (loss) (0.73) 0.72 0.75 0.29 0.57
-------- ------ ------- ------- -------
Total Income From Operations............. 0.31 1.75 1.80 1.34 1.64
-------- ------ ------- ------- -------
Dividends Paid From
Net Investment Income To:
Common shareholders................... (0.75) (0.75) (0.74) (0.71) (0.79)
Preferred shareholders................ (0.27) (0.28) (0.28) (0.29) (0.29)
-------- ------ ------- ------- -------
Total Distributions...................... (1.02) (1.03) (1.02) (1.00) (1.08)
-------- ------ ------- ------- -------
Net Asset Value, End of Year............. $ 13.71 $14.42 $ 13.70 $ 12.92 $ 12.58
======== ====== ======= ======= =======
Per Share Market Value, End of Year...... $12.3125 $12.75 $12.375 $ 10.75 $ 10.75
======== ====== ======= ======= =======
Total Return, Based on
Market Price (1)....................... 2.27% 9.20% 22.80% 6.62% 2.97%
Ratios to Average Net Assets of
Common Shareholders (2):
Operating expenses.................... 1.30% 1.36% 1.42% 1.44% 1.50%
Net investment income................ 7.23 7.27 7.90 8.09 8.99
Net Assets of Common Shareholders,
End of Year (000)..................... $82,365 $86,600 $82,317 $77,628 $75,541
Preferred Stock Outstanding,
End of Year (000)..................... $45,000 $45,000 $45,000 $45,000 $45,000
Portfolio Turnover Rate.................. 19% 20% 7% 55% 24%
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) For purposes of this calculation, dividends on common shares are assumed to
be reinvested at prices obtained under the Fund's dividend reinvestment plan
and the broker commission paid to purchase or sell a share is excluded.
(2) Ratios calculated on the basis of income and expenses relative to the
average net assets of common shares and excludes the effect of dividend
payments to preferred shareholders.
Page 17
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Report of Independent Accountants
To the Board of Directors and Shareholders
of Municipal Partners Fund II Inc.:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations, of
changes in net assets and of cash flows and the financial highlights present
fairly, in all material respects, the financial position of Municipal Partners
Fund II Inc. (the "Fund") at June 30, 1999, the results of its operations and
cash flows for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at June 30, 1999 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
August 6, 1999
Page 18
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Selected Quarterly Financial Information (unaudited)
Summary of quarterly results of operations:
<TABLE>
<CAPTION>
Net Realized
Net Investment and Unrealized
Income Gain (Loss)
----------------- -------------------
Quarter Ended* Total Per Share Total Per Share
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
September 30, 1997........................................... $1,586 $0.26 $2,321 $0.39
December 31, 1997............................................ 1,534 0.26 1,829 0.30
March 31, 1998............................................... 1,562 0.26 (186) (0.03)
June 30, 1998................................................ 1,533 0.25 343 0.06
September 30, 1998........................................... 1,571 0.26 1,972 0.33
December 31, 1998............................................ 1,601 0.27 (1,640) (0.28)
March 31, 1999............................................... 1,533 0.25 (895) (0.15)
June 30, 1999................................................ 1,550 0.26 (3,793) (0.63)
<FN>
- ----------------------------------------------------------------------------------------------------------
*Totals expressed in thousands of dollars except per share amounts.
</FN>
</TABLE>
Tax Information (unaudited)
For Federal tax purposes the Fund hereby designates for the fiscal year ended
June 30, 1999:
* 100% of the dividends paid by the fund from net investment income as tax
exempt for regular Federal income tax purposes.
Page 19
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Other Information (unaudited)
Year 2000. The investment management services provided to the Fund by the
Investment Adviser depend in large part on the smooth functioning of its
computer systems. Many computer software systems in use today cannot recognize
the year 2000, but revert to 1900 or some other date, due to the manner in which
the dates were encoded or calculated. The capability of these systems to
recognize the year 2000 could have a negative impact on the Investment Adviser's
provision of investment advisory services, including handling of securities
trades, pricing and account services. The Investment Adviser has advised the
Fund that it has been reviewing all of their computer systems and actively
working on necessary changes to its systems to prepare for the year 2000 and
expects that given the extensive testing which it is undertaking, its systems
will be year 2000 compliant before such date. In addition, the Investment
Adviser has been advised by certain of the Fund's service providers that they
are also in the process of modifying their systems with the same goal. There
can, however, be no assurance that the Investment Adviser or any other service
provider will be successful in achieving year 2000 compliance, or that
interaction with other non-complying computer systems will not impair services
to the Fund at that time.
Page 20
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Dividend Reinvestment Plan (unaudited)
Pursuant to certain rules of the Securities and Exchange Commission, the
following additional disclosure is provided.
Pursuant to the Fund's Dividend Reinvestment Plan ("Plan"), holders of Common
Stock whose shares of Common Stock are registered in their own names will be
deemed to have elected to have all distributions automatically reinvested by
State Street Bank and Trust Company ("Plan Agent") in Fund shares pursuant to
the Plan, unless they elect to receive distributions in cash. Holders of Common
Stock who elect to receive distributions in cash will receive all distributions
in cash by check in dollars mailed directly to the holder by the Plan Agent as
dividend-paying agent. Holders of Common Stock who do not wish to have
distributions automatically reinvested should notify the Plan Agent at the
address below. Distributions with respect to Common Stock registered in the name
of a bank, broker-dealer or other nominee (i.e., in "street name") will be
reinvested under the Plan unless the service is not provided by the bank,
broker-dealer or other nominee or the holder elects to receive dividends and
distributions in cash. Investors who own shares registered in the name of a
bank, broker-dealer or other nominee should consult with such nominee as to
participation in the Plan through such nominee, and may be required to have
their shares registered in their own names in order to participate in the Plan.
The Plan Agent serves as agent for the holders of Common Stock in administering
the Plan. After the Fund declares a dividend on the Common Stock or determines
to make a capital gain distribution, the Plan Agent will, as agent for the
participants, receive the cash payment and use it to buy the Fund's Common Stock
in the open market, on the New York Stock Exchange or elsewhere, for the
participants' accounts. The Fund will not issue any new shares of Common Stock
in connection with the Plan.
Participants have the option of making additional cash payments to the Plan
Agent, monthly, in a minimum amount of $250, for investment in the Fund's Common
Stock. The Plan Agent will use all such funds received from participants to
purchase shares of Common Stock in the open market on or about the first
business day of each month. To avoid unnecessary cash accumulations, and also to
allow ample time for receipt and processing by the Plan Agent, it is suggested
that participants send in voluntary cash payments to be received by the Plan
Agent approximately ten days before an applicable purchase date specified above.
A participant may withdraw a voluntary cash payment by written notice, if the
notice is received by the Plan Agent not less than 48 hours before such payment
is to be invested.
The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in an account, including information
needed by shareholders for personal and tax records. Shares of Common Stock in
the account of each Plan participant will be held by the Plan Agent in the name
of the participant, and each shareholder's proxy will include those shares
purchased pursuant to the Plan.
In the case of holders of Common Stock, such as banks, broker-dealers or other
nominees, who hold shares for others who are beneficial owners, the Plan Agent
will administer the Plan on the basis of the number of shares of Common Stock
certified from time to time by the holders as representing the total amount
registered in such holders' names and held for the account of beneficial owners
that have not elected to receive distributions in cash.
Page 21
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Dividend Reinvestment Plan (unaudited) (continued)
There is no charge to participants for reinvesting dividends or capital gains
distributions or voluntary cash payments. The Plan Agent's fees for the
reinvestment of dividends and capital gains distributions and voluntary cash
payments will be paid by the Fund. However, each participant will pay a pro rata
share of brokerage commissions incurred with respect to the Plan Agent's open
market purchases in connection with the reinvestment of dividends and
distributions and voluntary cash payments made by the participant. The receipt
of dividends and distributions under the Plan will not relieve participants of
any income tax which may be payable on such dividends or distributions.
Participants may terminate their accounts under the Plan by notifying the Plan
Agent in writing. Such termination will be effective immediately if notice in
writing is received by the Plan Agent not less than ten days prior to any
dividend or distribution record date. Upon termination, the Plan Agent will send
the participant a certificate for the full shares held in the account and a cash
adjustment for any fractional shares or, upon written instruction from the
participant, the Plan Agent will sell part or all of the participant's shares
and remit the proceeds to the participant, less a $2.50 fee plus brokerage
commission for the transaction.
Experience under the Plan may indicate that changes in the Plan are desirable.
Accordingly, the Fund and the Plan Agent reserve the right to terminate the Plan
as applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to notice of the termination sent to all participants in the
Plan at least 30 days before the record date for the dividend or distribution.
The Plan also may be amended by the Fund or the Plan Agent upon at least 30
days' written notice to participants in the Plan.
All correspondence concerning the Plan should be directed to the Plan Agent,
P.O. Box 8209, Boston, Massachusetts 02266-8209.
Page 22
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Additional Shareholder Information (unaudited)
On October 28, 1998, the Annual Meeting of the Fund's Stockholders was held for
the purpose of voting on the following matters:
1. The election of Heath B. McLendon and Dr. Riordan Roett as Directors of
the Fund; and
2. The ratification of the selection of PricewaterhouseCoopers LLP as the
Fund's independent accountants for the fiscal year ending June 30, 1999.
The results of the vote on Proposal 1 were as follows:
Preferred % of Shares Preferred % of Shares
Name of Directors Votes For Voted Votes Against Voted
- -------------------------------------------------------------------------------
Heath B. McLendon 848 100.0% 0 0.0%
Dr. Riordan Roett 848 100.0 0 0.0
- -------------------------------------------------------------------------------
The results of the vote on Proposal 2 were as follows:
% of Shares % of Shares Votes % of Shares
Votes For Voted Votes Against Voted Abstained Abstained
- -------------------------------------------------------------------------------
5,118,290.094 97.7% 33,386.000 0.6% 89,884.751 1.7%
- -------------------------------------------------------------------------------
Page 23
<PAGE>
MUNICIPAL PARTNERS FUND II INC.
Directors
CHARLES F. BARBER
Consultant; formerly Chairman,
ASARCO Incorporated
WILLIAM D. CVENGROS
Co-Chairman of the Board;
Chief Executive Officer, and
President of Value Advisors LLC and
Chief Executive Officer and
President of PIMCO Advisors L.P.
HEATH B. MCLENDON
Co-Chairman of the Board;
Managing Director, Salomon Smith Barney Inc.
President and Director,
SSBC Fund Management Inc.
and Travelers Investment Advisers, Inc.
RIORDAN ROETT
Professor and Director, Latin American
Studies Program, Paul H. Nitze
School of Advanced International Studies,
Johns Hopkins University
ROBERT L. ROSEN
General Partner,
R.L.R. Partners
Officers
WILLIAM D. CVENGROS
Co-Chairman of the Board
HEATH B. MCLENDON
Co-Chairman of the Board
STEPHEN J. TREADWAY
President
ROBERT E. AMODEO
Executive Vice President
LEWIS E. DAIDONE
Executive Vice President and Treasurer
NEWTON B. SCHOTT
Executive Vice President
ANTHONY PACE
Controller
CHRISTINA T. SYDOR
Secretary
Municipal Partners Fund II Inc.
7 World Trade Center
New York, New York 10048
Telephone 1-888-777-0102
INVESTMENT ADVISER
Salomon Brothers Asset Management Inc
7 World Trade Center
New York, New York 10048
INVESTMENT MANAGER
Value Advisors LLC
800 Newport Center Drive
Suite 100
Newport Beach, California 92660
AUCTION AGENT
Bankers Trust Company
4 Albany Street
New York, New York 10006
CUSTODIAN
PNC Bank N.A.
200 Stevens Drive
Lester, PA 19113
DIVIDEND DISBURSING AND TRANSFER AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
NEW YORK STOCK EXCHANGE SYMBOL
MPT
<PAGE>
[This Page Intentionally Left Blank]
<PAGE>
State Street Bank and Trust Company
P.O. Box 8200
Boston, Massachusetts 02266-8200
-----------------
BULK RATE
U.S. POSTAGE
PAID
S. HACKENSACK, NJ
PERMIT No. 750
-----------------
MPTANN 6/99
