-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HeAYSW1M3Jn2mWRL7F+4Ql55ihRXLPJoerC2Tjiwuer5gP5wHJpiiOFAmOz0lHvj 3BzyPw0/f0rnmo1+jBt6ig== 0001005477-99-002886.txt : 19990621 0001005477-99-002886.hdr.sgml : 19990621 ACCESSION NUMBER: 0001005477-99-002886 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990430 FILED AS OF DATE: 19990618 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MUNIVEST FUND II INC CENTRAL INDEX KEY: 0000897269 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MD FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07478 FILM NUMBER: 99649077 BUSINESS ADDRESS: STREET 1: 800 SCUDDERS MILL RD CITY: PLAINSBORO STATE: NJ ZIP: 08536 BUSINESS PHONE: 6092822800 MAIL ADDRESS: STREET 1: PO BOX 9011 CITY: PRINCETON STATE: NJ ZIP: 08543-9011 N-30D 1 SEMI-ANNUAL REPORT MUNIVEST FUND II, INC. [GRAPHIC OMITTED] STRATEGIC Performance Semi-Annual Report April 30, 1999 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 share holders are significantly lower than the income earned on the fund's long-term investments, and therefore the Common Stock share-holders are the beneficiaries of the incremental yield. However, if short-term interest rates rise, narrowing the differential 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. Managed Dividend Policy The Fund's dividend policy is to distribute substantially all of its net investment income to its shareholders on a monthly basis. However, in order to provide shareholders with a more consistent yield to the current trading price of shares of Common Stock of the Fund, the Fund may at times pay out less than the entire amount of net investment income earned in any particular month and may at times in any particular month pay out such accumulated but undistributed income in addition to net investment income earned in that month. As a result, the dividends paid by the Fund for any particular month may be more or less than the amount of net investment income earned by the Fund during such month. The Fund's current accumulated but undistributed net investment income, if any, is disclosed in the Statement of Assets, Liabilities and Capital, which comprises part of the financial information included in this report. MuniVest Fund II, Inc., April 30, 1999 DEAR SHAREHOLDER For the six months ended April 30, 1999, the Common Stock of MuniVest Fund II, Inc. earned $0.410 per share income dividends, which included earned and unpaid dividends of $0.066. This represents a net annualized yield of 5.67%, based on a month-end per share net asset value of $14.60. Over the same period, the total investment return on the Fund's Common Stock was +1.19%, based on a change in per share net asset value from $14.85 to $14.60, and assuming reinvestment of $0.415 per share income dividends. For the six months ended April 30, 1999, the Fund's Auction Market Preferred Stock had an average yield of 3.53% for Series A, 3.43% for Series B and 3.05% for Series C. The Municipal Market Environment During the six months ended April 30, 1999, long-term bond yields generally moved higher. From November 1998 through mid-January 1999, long-term bond yields traded in a relatively narrow range. However, during February, a number of economic indicators were released that suggested that economic growth in the United States would likely remain strong throughout most of 1999. Consequently, long-term US Treasury bond yields rose more than 60 basis points (0.60%) to 5.70% by early March. During the remainder of the six-month period, US Treasury bond yields traded between 5.50% and 5.70% as the lack of inflationary pressures offset much of the concerns generated by continued strong economic growth. During most of the period, long-term, uninsured tax-exempt bond yields exhibited far less volatility and were largely stable. Long-term municipal bond yields rose just 5 basis points to 5.29% at the end of April 1999, as measured by the Bond Buyer Revenue Bond Index. In recent months, the tax-exempt market was better able to withstand much of the upward pressure on bond yields because of its stronger technical position. While the continued positive inflationary environment limited some of the recent increases in taxable bond yields, a deteriorating supply/demand position helped push taxable bond yields significantly higher than municipal bond yields. Much of the US Treasury bond market's underperformance in recent months can be attributed to the large amounts of taxable corporate issuance. Large taxable corporate underwritings reduced the demand for US Government securities in recent months, pushing US Treasury bond yields higher. On the other hand, the tax-exempt bond market enjoyed only limited new-issue supply. During the six months ended April 30, 1999, more than $123 billion in new long-term tax-exempt securities was under written, a decline of 10% compared to the same period a year ago. Municipalities issued less than $60 billion in long-term tax-exempt securities during the three months ended April 30, 1999, a decline of 25% compared to the April 30, 1998 quarter. More recently, the rate of new tax-exempt issuance has declined even further. During April 1999, just over $15 billion in long-term tax-exempt securities was marketed, a decline of over 33% compared to April 1998 levels. As municipal bond yields fell and stabilized in recent quarters, the ability of municipalities to refinance existing higher-couponed debt declined. This led to a significant decrease in refunding issuance and an overall drop in new municipal bond supply. When coupled with ongoing, moderate retail and institutional demand, the tax-exempt bond market was able to avoid much of the yield volatility exhibited by US Treasury securities. Looking ahead, the expected combination of moderate economic growth in the United States and continued negligible inflation suggests a relatively stable interest rate environment. However, in recent years, bond yields reached their annual peaks in early May and declined for the remainder of the year. A meaningful decline in fixed-income bond yields would require either evidence of a significant slowdown in the US economy or the resumption of concerns regarding renewed shocks to the world's economic system. Currently, neither condition exists or seems likely in the immediate future. In our opinion, this suggests a continuation of the narrow trading ranges seen in recent months. Portfolio Strategy During the last several months, we adopted a more neutral investment strategy, since indicators pointed to a continuation of healthy domestic economic growth and benign inflation. In addition, we believed that long-term tax-exempt bond yields would continue to trade in a relatively narrow range, centered around present levels. Consequently, we focused on income-producing securities rather than those issues with the potential for capital gains. Should the tax-exempt bond market perform as expected, coupon income will be the more important component of the Fund's performance. MuniVest Fund II, Inc. remained fully invested for most of the past several months. We expect to maintain this position going forward in order to seek to enhance shareholder income. Short-term tax-exempt yields exhibited considerable volatility in recent months. Interest rates paid to the Fund's Preferred Stock shareholders traded below 3% in December 1998, reflecting heightened investor demand at year-end. Current short-term interest rate levels reflect tax season-related pressures, which we expect to abate soon. During the six-month period ended April 30, 1999, leveraging generated a significant incremental yield to the Fund's Common Stock shareholders. Because we believe that the Federal Reserve Board's monetary policy is likely to remain in a narrow range for the remainder of the year, we expect short-term tax-exempt interest rates to remain at, or slightly below, current levels. However, should the spread between short-term and long-term interest rates narrow, the benefits of the leverage will decline and, as a result, reduce the yield to 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 serving your investment needs in the months and years ahead. Sincerely, /s/ Terry K. Glenn Terry K. Glenn President /s/ Vincent R. Giordano Vincent R. Giordano Senior Vice President /s/ Fred K. Stuebe Fred K. Stuebe Vice President and Portfolio Manager June 3, 1999 ================================================================================ After more than 20 years of service, Arthur Zeikel recently retired as Chairman of Merrill Lynch Asset Management, L.P. (MLAM). Mr. Zeikel served as President of MLAM from 1977 to 1997 and as Chairman since December 1997. Mr. Zeikel is one of the country's most respected leaders in asset management and presided over the growth of Merrill Lynch's asset management business. During his tenure, client assets under management grew from $300 million to over $500 billion. Mr. Zeikel will remain on MuniVest Fund II, Inc.'s Board of Directors. We are pleased to announce that Terry K. Glenn has been elected President and Director of the Fund. Mr. Glenn has held the position of Executive Vice President of MLAM since 1983. Mr. Zeikel's colleagues at MLAM join the Fund's Board of Directors in wishing him well in his retirement from Merrill Lynch and are pleased that he will continue as a member of the Fund's Board of Directors. ================================================================================ YEAR 2000 ISSUES Many computer systems were designed using only two digits to designate years. These systems may not be able to distinguish the Year 2000 from the Year 1900 (commonly known as the "Year 2000 Problem"). The Fund could be adversely affected if the computer systems used by the Fund's management or other Fund service providers do not properly address this problem before January 1, 2000. The Fund's management expects to have addressed this problem before then, and does not anticipate that the services it provides will be adversely affected. The Fund's other service providers have told the Fund's management that they also expect to resolve the Year 2000 Problem, and the Fund's management will continue to monitor the situation as the Year 2000 approaches. However, if the problem has not been fully addressed, the Fund could be negatively affected. The Year 2000 Problem could also have a negative impact on the securities in which the Fund invests and this could hurt the Fund's investment returns. 2 & 3 MuniVest Fund II, Inc., April 30, 1999 SCHEDULE OF INVESTMENTS (in Thousands)
S&P Moody's Face Value STATE Ratings Ratings Amount Issue (Note 1a) ================================================================================================================================== Alabama--2.4% AAA NR* $ 2,500 Jefferson County, Alabama, Sewer Revenue Bonds, RIB, Series 124, 6.39% due 2/01/2036 (c)(e) $ 2,594 NR* Aaa 7,250 Jefferson County, Alabama, Sewer Revenue Bonds, RITR, Series 7, 6.32% due 2/01/2027 (e) 7,520 ================================================================================================================================== Arizona--1.8% A1+ P1 4,600 Coconino County, Arizona, Pollution Control Corporation Revenue Bonds (Arizona Public Service--Navajo Project), VRDN, AMT, Series A, 4.25% due 10/01/2029 (a) 4,600 AAA Aaa 2,315 Maricopa County, Arizona, GO, Unified School District No. 3 Refunding Bonds (Tempe Elementary), 7.50% due 7/01/2010 (c) 2,911 ================================================================================================================================== Colorado--2.3% NR* Aa2 1,285 Colorado HFA, Revenue Bonds (S/F Program), AMT, Senior Series F, 8.625% due 6/01/2025 1,373 BBB+ Baa1 5,940 Denver, Colorado, City and County Airport Revenue Bonds, AMT, Series C, 6.75% due 11/15/2002 6,407 A1+ VMIG1+ 2,100 Moffat County, Colorado, PCR, Refunding (Pacificorp Projects), VRDN, 4.15% due 5/01/2013 (a)(b) 2,100 ================================================================================================================================== Delaware--0.6% AAA Aaa 2,250 Delaware Transportation Authority, Transportation System Revenue Bonds (Senior), 7% due 7/01/2004 (c)(g) 2,612 ================================================================================================================================== Florida--2.5% BBB Baa1 3,655 Escambia County, Florida, PCR (Champion International Corporation Project), AMT, 6.90% due 8/01/2022 4,034 AAA Aaa 6,490 Florida State Board of Education, Lottery Revenue Bonds, Series A, 5.125% due 7/01/2012 (c) 6,743 ================================================================================================================================== Georgia--5.0% Georgia Municipal Electric Authority, Power Revenue Refunding Bonds (Crossover): A A3 6,000 Series W, 6.60% due 1/01/2018 7,035 A A3 11,035 Series Y, 6.50% due 1/01/2017 12,862 A A3 1,250 Georgia Municipal Electric Authority, Power Revenue Refunding Bonds, Series X, 6.50% due 1/01/2020 1,456 ================================================================================================================================== Hawaii--2.2% A A 2,000 Hawaii State Department of Budget and Finance, Special Purpose Revenue Bonds, 6.25% due 7/01/2021 2,168 AAA Aaa 7,800 Honolulu, Hawaii, City and County, Wastewater System Revenue Refunding Bonds, Second Bond Resolution (Junior Series), 4.50% due 7/01/2028 (c) 7,006 ================================================================================================================================== Idaho--0.6% NR* Aaa 2,255 Idaho Housing Agency, S/F Mortgage Revenue Refunding Bonds, AMT, Series E-2, 6.90% due 1/01/2027 2,409 ================================================================================================================================== Illinois--16.3% Chicago, Illinois, GO, Refunding Bonds (Project and Refunding) (c): AAA Aaa 6,550 5.25% due 1/01/2028 6,540 AAA Aaa 5,000 Series A, 5.375% due 1/01/2024 5,083 A1 NR* 2,500 Chicago, Illinois, GO, Refunding, RIB, Series 126, 6.38% due 1/01/2034 (c)(e) 2,566 AA- Aa3 6,925 Chicago, Illinois, Gas Supply Revenue Bonds (Peoples Gas), Series A, 6.875% due 3/01/2015 7,521 AAA NR* 2,075 Chicago, Illinois, Sales Tax Revenue Bonds, RIB, Series 92, 6.355% due 1/01/2030 (c)(e) 2,130 NR* Aaa 3,000 Chicago, Illinois, Sales Tax Revenue Bonds, RITR, Series 24, 6.32% due 1/01/2027 (e) 3,099 AAA Aaa 10,000 Cook County, Illinois, GO, Refunding, Series B, 5.375% due 11/15/2018 (d) 10,140 AA Aa1 2,550 Illinois HDA, Residential Mortgage Revenue Bonds, AMT, 6.874% due 2/01/2018 2,697 A+ A1 6,900 Illinois HDA, Revenue Refunding Bonds (M/F Housing), Series A, 7.375% due 7/01/2017 7,504 A+ A1 6,500 Illinois HDA, Revenue Refunding Bonds (M/F Program), Series 5, 6.75% due 9/01/2023 7,047 Regional Transportation Authority, Illinois, Revenue Bonds, Series A: AAA Aaa 1,500 7.20% due 11/01/2020 (b) 1,915 AAA Aaa 7,000 6.70% due 11/01/2021 (c) 8,564 Regional Transportation Authority, Illinois, Revenue Bonds, Series C (c): AAA Aaa 2,500 7.75% due 6/01/2020 3,385 AAA Aaa 1,000 7.10% due 6/01/2025 1,142 ================================================================================================================================== Indiana--11.4% Indiana Bond Bank Revenue Bonds (State Revolving Fund Program), Series A: AAA NR* 2,750 6.875% due 2/01/2012 3,139 AAA NR* 5,750 6.75% due 2/01/2017 6,494 AA Aa3 2,500 Indiana Health Facility Financing Authority, Hospital Revenue Refunding Bonds (Clarian Health Partners Inc.), Series A, 6% due 2/15/2021 2,680 NR* Aaa 5,545 Indiana State, HFA, S/F Mortgage Revenue Refunding Bonds, Series A, 6.80% due 1/01/2017 (f) 5,843 Indiana Transportation Finance Authority, Highway Revenue Bonds, Series A: AA- Aa2 2,000 7.25% due 6/01/2015 2,499 AA- Aa3 3,775 6.80% due 12/01/2016 4,588 Indianapolis, Indiana, Local Public Improvement Bond Bank Revenue Bonds, Series D: AA NR* 8,750 6.75% due 2/01/2014 10,421 AA NR* 11,800 6.75% due 2/01/2020 12,936 ================================================================================================================================== Louisiana--2.9% 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 2,257 B- NR* 10,000 Port New Orleans, Louisiana, IDR, Refunding (Continental Grain Company Project), 6.50% due 1/01/2017 9,970 ==================================================================================================================================
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. ACES(SM) Adjustable Convertible Extendable Securities AMT Alternative Minimum Tax (subject to) GO General Obligation Bonds HDA Housing Development Authority HFA Housing Finance Agency IDA Industrial Development Authority IDR Industrial Development Revenue Bonds M/F Multi-Family PCR Pollution Control Revenue Bonds RIB Residual Interest Bonds RITR Residual Interest Trust Receipts S/F Single-Family VRDN Variable Rate Demand Notes 4 & 5 MuniVest Fund II, Inc., April 30, 1999 SCHEDULE OF INVESTMENTS (continued) (in Thousands)
S&P Moody's Face Value STATE Ratings Ratings Amount Issue (Note 1a) ================================================================================================================================== Maine--1.5% AA Aa2 $ 6,085 Maine State Housing Authority, Mortgage Purchase Revenue Bonds, AMT, Series C-2, 6.875% due 11/15/2023 $ 6,581 ================================================================================================================================== Maryland--0.8% A- NR* 2,000 Maryland State Energy Financing Administration, Solid Waste Disposal Revenue Bonds, Limited Obligation (Wheelabrator Water Projects), AMT, 6.45% due 12/01/2016 2,179 AAA Aaa 1,000 Maryland State Health and Higher Educational Facilities Authority Revenue Bonds (University of Maryland Medical Systems), Series B, 7% due 7/01/2022 (c) 1,264 ================================================================================================================================== Massachusetts--2.0% AA- Aa3 1,000 Massachusetts State College Building Authority Project, Revenue Refunding Bonds, Senior Series A, 7.50% due 5/01/2011 1,268 A A1 6,000 Massachusetts State Water Resource Authority Revenue Bonds, Series A, 6.50% due 7/15/2019 7,060 ================================================================================================================================== Michigan--6.4% AAA Aaa 2,500 Avondale, Michigan, School District, GO, Refunding, 4.75% due 5/01/2022 (b) 2,363 AAA Aaa 1,650 Holly, Michigan, Area School District, GO, Refunding, 4.75% due 5/01/2025 (c) 1,549 AA Aa2 5,000 Michigan State Building Authority, Revenue Refunding Bonds (Facilities Program), Series 1, 4.75% due 10/15/2021 4,716 AAA Aaa 2,375 Michigan State, HDA, Rental Housing Revenue Bonds, AMT, Series A, 5.30% due 10/01/2037 (d) 2,359 AA- NR* 2,355 Michigan State, HDA, Rental Housing Revenue Refunding Bonds, Series A, 6.65% due 4/01/2023 2,515 AA+ NR* 2,590 Michigan State, HDA, Revenue Bonds, Series A, 6.875% due 6/01/2023 2,662 AA+ NR* 4,260 Michigan State, HDA, Revenue Refunding Bonds, AMT, Series D, 6.85% due 6/01/2026 (f) 4,493 BBB Baa2 3,500 Michigan State Hospital Finance Authority, Revenue Refunding Bonds (Detroit Medical Center Obligation Group), Series A, 6.50% due 8/15/2018 3,607 AAA Aaa 2,500 Plymouth--Canton, Michigan, Community School District, GO, 4.75% due 5/01/2023 (h) 2,360 AA VMIG1+ 300 Royal Oak, Michigan, Hospital Finance Authority, Hospital Revenue Bonds (William Beaumont Hospital), VRDN, Series L, 4.20% due 1/01/2027 (a) 300 A1+ VMIG1+ 500 University of Michigan, University Hospital Revenue Bonds, VRDN, Series A, 4.15% due 12/01/2027 (a) 500 ================================================================================================================================== Minnesota--2.0% AAA NR* 1,780 Minnesota Agriculture and Economic Development Board, Health Care Revenue Refunding Bonds (Benedictine Health), Series A, 5% due 2/15/2010 (d) 1,834 Minnesota State, HFA, S/F Mortgage Revenue Bonds, AMT: AA+ Aa2 2,495 Series L, 6.70% due 7/01/2020 2,650 AA+ Aa2 3,675 Series M, 6.70% due 7/01/2026 3,903 ================================================================================================================================== Nebraska--1.1% AAA Aaa 2,100 American Public Energy Agency, Nebraska, Gas Supply Revenue Bonds (Nebraska Public Gas Agency Project), Series A, 5.25% due 6/01/2009 (b) 2,220 AAA Aaa 2,200 Lancaster County, Nebraska, Hospital Authority No. 1, Hospital Revenue Bonds (Bryan Memorial Hospital Project), 6.70% due 6/01/2022 (d)(i) 2,484 ================================================================================================================================== Nevada--3.1% AAA Aaa 2,500 Clark County, Nevada, School District, GO, 6.75% due 12/15/2004 (c)(g) 2,874 A A2 5,000 Henderson, Nevada, Health Care Facilities Revenue Bonds (Catholic Healthcare West), 5.375% due 7/01/2026 4,898 AAA Aaa 1,305 Nevada Housing Division, S/F Program, AMT, Senior Series E, 7% due 10/01/2019 (f) 1,402 AAA Aaa 2,500 Washoe County, Nevada, Gas Facilities Revenue Bonds (Sierra Pacific Power Company), AMT, 6.65% due 12/01/2017 (b) 2,739 A1+ P1 1,400 Washoe County, Nevada, Water Facility Revenue Bonds (Sierra Pacific Power Company Project), AMT, VRDN, 4.30% due 12/01/2020 (a) 1,400 ================================================================================================================================== New Jersey--1.6% AAA Aaa 3,000 New Jersey Health Care Facilities Financing Authority, Revenue Refunding Bonds (Saint Barnabas Health), Series B, 5.25% due 7/01/2013 (d) 3,119 AAA Aaa 3,435 New Jersey State Housing and Mortgage Finance Agency Revenue Bonds (Home Buyer), AMT, Series M, 6.95% due 10/01/2022 (d) 3,742 ================================================================================================================================== New York--15.5% AAA Aaa 2,500 Long Island Power Authority, New York, Electric System Revenue Bonds, Series A, 5.50% due 12/01/2029 (d) 2,578 AAA Aaa 2,500 Metropolitan Transportation Authority, New York, Commuter Facilities Revenue Refunding Bonds (Service Contract), Series Q, 5.125% due 7/01/2014 (b) 2,567 AAA Aaa 2,000 Metropolitan Transportation Authority, New York, Dedicated Tax Fund Revenue Bonds, Series A, 5.25% due 4/01/2026 (d) 2,026 AAA Aaa 2,840 Metropolitan Transportation Authority, New York, Transit Facilities Revenue Refunding Bonds, Series B, 4.75% due 7/01/2026 (c) 2,671 AA Aa2 5,000 Municipal Assistance Corporation for City of New York, Revenue Refunding Bonds, Series O, 5.25% due 7/01/2008 5,345 A- A3 2,500 New York City, New York, GO, Refunding, Series C, 5.875% due 2/01/2016 2,694 A- Aaa 4,000 New York City, New York, GO, Series B, 7.25% due 8/15/2004 (g) 4,665 NR* Aaa 6,250 New York City, New York, Municipal Water Finance Authority, Water and Sewer System Revenue Bonds, RITR, Series 10, 6.32% due 6/15/2026 (e) 6,567 AAA Aaa 2,250 New York City, New York, Municipal Water Finance Authority, Water and Sewer System Revenue Bonds, Series B, 5.50% due 6/15/2027 (d) 2,350 A A1 5,000 New York City, New York, Municipal Water Finance Authority, Water and Sewer System Revenue Refunding Bonds, Series B, 5.25% due 6/15/2029 5,010 New York City, New York, Transitional Finance Authority Revenue Bonds (Future Tax Secured): AA Aa3 7,000 Series B, 4.75% due 11/01/2023 6,585 AA Aa3 3,595 Series C, 5.25% due 5/01/2013 3,754 AA Aa3 5,000 Series C, 4.75% due 5/01/2023 4,707 New York State Dormitory Authority Revenue Bonds (Mental Health Services Facilities Improvement) (b): AAA Aaa 3,500 Series F, 4.50% due 8/15/2028 3,148 AAA Aaa 1,550 Series G, 4.50% due 8/15/2018 1,437 NR* NR* 4,000 New York State Energy Research and Development Authority, Gas Facilities Revenue Bonds, RITR, Series 9, 6.57% due 1/01/2021 (e) 4,340 AAA Aaa 3,000 New York State Urban Development Corporation Revenue Bonds (Correctional Facilities Service Contract), Series B, 5.25% due 1/01/2014 (b) 3,128 AAA Aaa 2,500 Triborough Bridge and Tunnel Authority, New York, Special Obligation Revenue Refunding Bonds, Series A, 5.125% due 1/01/2015 (d) 2,563 ================================================================================================================================== Pennsylvania--0.8% NR* VMIG1+ 855 Allegheny County, Pennsylvania, Hospital Development Authority Revenue Bonds (Presbyterian University Hospital), ACES, Series B-3, 4.05% due 3/01/2018 (a) 855 NR* Aaa 2,360 Montgomery County, Pennsylvania, GO, 5.40% due 9/15/2019 2,424 ==================================================================================================================================
6 & 7 MuniVest Fund II, Inc., April 30, 1999 SCHEDULE OF INVESTMENTS (continued) (in Thousands)
S&P Moody's Face Value STATE Ratings Ratings Amount Issue (Note 1a) ================================================================================================================================== South Carolina--1.0% A- A2 $ 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 $ 3,237 NR* Aa2 880 South Carolina Housing Finance and Development Authority, Mortgage Revenue Bonds, AMT, Series A, 6.70% due 7/01/2027 942 ================================================================================================================================== Tennessee--1.0% AAA Aaa 4,500 Metropolitan Government, Nashville and Davidson County, Tennessee, Water and Sewer Revenue Refunding Bonds, Series A, 4.75% due 1/01/2022 (c) 4,272 ================================================================================================================================== Texas--4.5% AAA Aaa 2,290 Austin, Texas, Revenue Bonds, 4.62%** due 5/15/2013 1,149 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 2,730 Harris County, Texas, Health Facilities Development Corporation, Hospital Revenue Bonds (Memorial Hospital System Project), Series A (g): NR* NR* 1,500 6.60% due 6/01/2004 1,698 NR* NR* 1,500 6.625% due 6/01/2004 1,700 NR* Aa3 5,000 Harris County, Texas, Health Facilities Development Corporation Revenue Bonds, RITR, Series 6, 6.995% due 12/01/2027 (e) 5,453 NR* Aaa 6,000 Houston, Texas, Water and Sewer System Revenue Bonds, RITR, Series 5, 6.32% due 12/01/2027 (c)(e) 6,293 ================================================================================================================================== Virginia--1.9% A- A2 3,115 Isle Wight County, Virginia, IDA, Solid Waste Disposal Facilities Revenue Bonds (Union Camp Corporation Project), AMT, 6.55% due 4/01/2024 3,363 BBB- Baa3 5,000 Pocahontas Parkway Association, Virginia, Toll Road Revenue Bonds, Senior Series A, 5.50% due 8/15/2028 4,928 ================================================================================================================================== Washington--3.4% Washington State Public Power Supply System, Revenue Refunding Bonds (Nuclear Project No. 1), Series B: AA- Aa1 4,950 7.25% due 7/01/2009 5,848 AA- Aa1 5,000 7.125% due 7/01/2016 6,240 AAA Aaa 1,900 Washington State Public Power Supply System, Revenue Refunding Bonds (Nuclear Project No. 3), Series B, 7.125% due 7/01/2016 (d) 2,372 ================================================================================================================================== Wisconsin--1.0% AA Aa2 1,975 Wisconsin Housing and Economic Development Authority, Home Ownership Revenue Refunding Bonds, AMT, Series D, 6.65% due 7/01/2025 2,095 NR* A3 2,000 Wisconsin State Health and Educational Facilities Authority, Revenue Refunding Bonds (Saint Claire Hospital Project), 7% due 2/15/2002 (g) 2,203 ================================================================================================================================== Wyoming--2.4% BBB- Baa2 5,000 Sweetwater County, Wyoming, Solid Waste Disposal Revenue Bonds (FMC Corp. Project), AMT, Series B, 6.90% due 9/01/2024 5,489 AA Aa2 1,500 Wyoming Community Development Authority Revenue Bonds, S/F Mortgage, AMT, Series H, 7.10% due 6/01/2012 (f) 1,614 AA Aa2 3,105 Wyoming Community Development Authority, Revenue Refunding Bonds, S/F Mortgage, Series B, 6.70% due 6/01/2017 3,199 ================================================================================================================================== Total Investments (Cost--$395,172)--98.0% 417,270 Other Assets Less Liabilities--2.0% 8,328 -------- Net Assets--100.0% $425,598 ======== ==================================================================================================================================
(a) The interest rate is subject to change periodically based upon prevailing market rates. The interest rate shown is the rate in effect at April 30, 1999. (b) AMBAC Insured. (c) FGIC Insured. (d) MBIA Insured. (e) The interest rate is subject to change periodically and inversely based upon prevailing market rates. The interest rate shown is the rate in effect at April 30, 1999. (f) FHA Insured. (g) Prerefunded. (h) FSA Insured. (i) Escrowed to maturity. * Not Rated. ** Represents a zero coupon bond; the interest rate shown is the effective yield at the time of purchase by the Fund. + Highest short-term rating by Moody's Investors Service, Inc. See Notes to Financial Statements. Quality Profile The quality ratings of securities in the Fund as of April 30, 1999 were as follows: - -------------------------------------------------------------------------------- Percent of S&P Rating/Moody's Rating Net Assets - -------------------------------------------------------------------------------- AAA/Aaa ............................................................. 39.9% AA/Aa ............................................................... 28.7 A/A ................................................................. 17.3 BBB/Baa ............................................................. 5.7 B/B ................................................................. 2.3 NR (Not Rated) ...................................................... 1.8 Other+ .............................................................. 2.3 - -------------------------------------------------------------------------------- + Temporary investments in short-term municipal securities. 8 & 9 MuniVest Fund II, Inc., April 30, 1999 STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
As of April 30, 1999 ============================================================================================================================ Assets: Investments, at value (identified cost--$395,171,529) (Note 1a) ... $417,269,635 Cash .............................................................. 82,166 Receivables: Securities sold ................................................. $ 8,318,591 Interest ........................................................ 7,419,985 15,738,576 ------------ Prepaid expenses and other assets ................................. 20,267 ------------ Total assets ...................................................... 433,110,644 ------------ ============================================================================================================================ Liabilities: Payables: Securities purchased ............................................ 7,005,877 Dividends to shareholders (Note 1e) ............................. 299,882 Investment adviser (Note 2) ..................................... 186,923 7,492,682 ------------ Accrued expenses and other liabilities ............................ 19,674 ------------ Total liabilities ................................................. 7,512,356 ------------ ============================================================================================================================ Net Assets: Net assets ........................................................ $425,598,288 ============ ============================================================================================================================ Capital: Capital Stock (200,000,000 shares authorized) (Note 4): Preferred Stock, par value $.05 per share (5,400 shares of AMPS* issued and outstanding at $25,000 per share liquidation preference) ......................................... $135,000,000 Common Stock, par value $.10 per share (19,907,055 shares issued and outstanding) .................................. $ 1,990,705 Paid-in capital in excess of par .................................. 277,543,484 Undistributed investment income--net .............................. 2,887,219 Accumulated realized capital losses on investments--net (Note 5) .......................................................... (13,921,226) Unrealized appreciation on investments--net ....................... 22,098,106 ------------ Total--Equivalent to $14.60 net asset value per share of Common Stock (market price--$13.8125) ............................. 290,598,288 ------------ Total capital ..................................................... $425,598,288 ============ ============================================================================================================================
* Auction Market Preferred Stock. See Notes to Financial Statements. STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 1999 ============================================================================================================================ Investment Interest and amortization of premium and discount earned .......... $ 11,940,760 Income (Note 1d): ============================================================================================================================ Expenses: Investment advisory fees (Note 2) ................................. $ 1,068,632 Commission fees (Note 4) .......................................... 164,762 Accounting services (Note 2) ...................................... 44,388 Transfer agent fees ............................................... 39,221 Professional fees ................................................. 37,155 Custodian fees .................................................... 15,433 Printing and shareholder reports .................................. 12,538 Listing fees ...................................................... 11,700 Directors' fees and expenses ...................................... 9,418 Pricing fees ...................................................... 7,551 Other ............................................................. 19,729 ----------- Total expenses .................................................... 1,430,527 ------------ Investment income--net ............................................ 10,510,233 ------------ ============================================================================================================================ Realized & Realized gain on investments--net ................................. 1,710,802 Unrealized Gain Change in unrealized appreciation on investments--net ............. (6,737,404) (Loss) on ------------ Investments--Net Net Increase in Net Assets Resulting from Operations .............. $ 5,483,631 (Notes 1b, 1d & 3): ============ ============================================================================================================================
See Notes to Financial Statements. STATEMENTS OF CHANGES IN NET ASSETS
For the Six For the Months Ended Year Ended April 30, October 31, Increase (Decrease) in Net Assets: 1999 1998 ============================================================================================================================ Operations: Investment income--net ............................................ $ 10,510,233 $ 21,617,028 Realized gain on investments--net ................................. 1,710,802 9,035,426 Change in unrealized appreciation on investments--net ............. (6,737,404) (3,923,226) ------------- ------------ Net increase in net assets resulting from operations .............. 5,483,631 26,729,228 ------------- ------------ ============================================================================================================================ Dividends to Investment income--net: Shareholders Common Stock .................................................... (8,261,727) (16,701,482) (Note 1e): Preferred Stock ................................................. (2,244,366) (4,752,270) ------------- ------------ Net decrease in net assets resulting from dividends to shareholders (10,506,093) (21,453,752) ------------- ------------ ============================================================================================================================ Net Assets: Total increase (decrease) in net assets ........................... (5,022,462) 5,275,476 Beginning of period ............................................... 430,620,750 425,345,274 ------------- ------------ End of period* .................................................... $ 425,598,288 $430,620,750 ============= ============ ============================================================================================================================ * Undistributed investment income--net .............................. $ 2,887,219 $ 2,883,079 ============= ============ ============================================================================================================================
See Notes to Financial Statements. 10 & 11 MuniVest Fund II, Inc., April 30, 1999 FINANCIAL HIGHLIGHTS
For the Six The following per share data and ratios have been derived Months from information provided in the financial statements. Ended For the Year Ended October 31, April 30, --------------------------------------------- Increase (Decrease) in Net Asset Value: 1999 1998 1997 1996 1995 ========================================================================================================================= Per Share Operating Performance: Net asset value, beginning of period ...................... $ 14.85 $ 14.59 $ 14.12 $ 13.93 $ 12.56 --------- --------- --------- --------- --------- Investment income--net .................................... .54 1.08 1.13 1.10 1.11 Realized and unrealized gain (loss) on investments--net ... (.26) .26 .46 .18 1.37 --------- --------- --------- --------- --------- Total from investment operations .......................... .28 1.34 1.59 1.28 2.48 --------- --------- --------- --------- --------- Less dividends to Common Stock shareholders from investment income--net .................................. (.42) (.84) (.88) (.85) (.85) --------- --------- --------- --------- --------- Effect of Preferred Stock activity: Dividends to Preferred Stock shareholders from investment income--net ................................ (.11) (.24) (.24) (.24) (.26) --------- --------- --------- --------- --------- Net asset value, end of period ............................ $ 14.60 $ 14.85 $ 14.59 $ 14.12 $ 13.93 ========= ========= ========= ========= ========= Market price per share, end of period ..................... $ 13.8125 $ 14.4375 $ 13.875 $ 12.625 $ 12.125 ========= ========= ========= ========= ========= ========================================================================================================================= Total Investment Return: ** Based on market price per share ........................... (1.53%)+ 10.37% 17.32% 11.43% 25.68% ========= ========= ========= ========= ========= Based on net asset value per share ........................ 1.19%+ 7.96% 10.31% 8.47% 19.27% ========= ========= ========= ========= ========= ========================================================================================================================= Ratios to Average Net Assets:*** Expenses .................................................. .67%* .66% .68% .68% .69% ========= ========= ========= ========= ========= Investment income--net .................................... 4.92%* 5.06% 5.30% 5.30% 5.55% ========= ========= ========= ========= ========= ========================================================================================================================= Supplemental Data: Net assets, net of Preferred Stock, end of period (in thousands) .......................................... $ 290,598 $ 295,621 $ 290,345 $ 281,036 $ 277,230 ========= ========= ========= ========= ========= Preferred Stock outstanding, end of period (in thousands) .......................................... $ 135,000 $ 135,000 $ 135,000 $ 135,000 $ 135,000 ========= ========= ========= ========= ========= Portfolio turnover ........................................ 45.98% 140.55% 57.80% 46.58% 95.62% ========= ========= ========= ========= ========= ========================================================================================================================= Leverage: Asset coverage per $1,000 ................................. $ 3,153 $ 3,190 $ 3,151 $ 3,082 $ 3,054 ========= ========= ========= ========= ========= ========================================================================================================================= Dividends Per Share on Preferred Stock Outstanding: Series A--Investment income--net .......................... $ 440 $ 897 $ 880 $ 898 $ 967 ========= ========= ========= ========= ========= Series B--Investment income--net .......................... $ 427 $ 875 $ 872 $ 879 $ 891 ========= ========= ========= ========= ========= Series C--Investment income--net .......................... $ 380 $ 869 $ 869 $ 886 $ 1,070 ========= ========= ========= ========= ========= =========================================================================================================================
* Annualized. ** Total investment returns based on market value, which can be significantly greater or lesser than the net asset value, may result in substantially different returns. Total investment returns exclude the effects of sales loads. *** Do not reflect the effect of dividends to Preferred Stock shareholders. + Aggregate total investment return. See Notes to Financial Statements. NOTES TO FINANCIAL STATEMENTS 1. Significant Accounting Policies: MuniVest Fund II, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a non-diversified, closed-end management investment company. The Fund's financial statements are prepared in accordance with generally accepted accounting principles which may require the use of management accruals and estimates. These unaudited financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim period presented. All such adjustments are of a normal recurring nature. The Fund determines and makes available for publication the net asset value of its Common Stock on a weekly basis. The Fund's Common Stock is listed on the New York Stock Exchange under the symbol MVT. The following is a summary of significant accounting policies followed by the Fund. (a) Valuation of investments--Municipal bonds are traded primarily in the over-the-counter markets and are valued at the most recent bid price or yield equivalent as obtained by the Fund's pricing service from dealers that make markets in such securities. Financial futures contracts and options thereon, which are traded on exchanges, are valued at their closing prices as of the close of such exchanges. Options written or purchased are valued at the last sale price in the case of exchange-traded options. In the case of options traded in the over-the-counter market, valuation is the last asked price option (options written) or the last bid price (options purchased ). Securities with remaining maturities of sixty days or less are valued at amortized cost, which approximates market value. Securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Board of Directors of the Fund, including valuations furnished by a pricing service retained by the Fund, which may utilize a matrix system for valuations. The procedures of the pricing service and its valuations are reviewed by the officers of the Fund under the general supervision of the Board of Directors. (b) Derivative financial instrument--The Fund may engage in various portfolio strategies to seek to increase its return by hedging its portfolio against adverse movements in the debt markets. Losses may arise due to changes in the value of the contract or if the counterparty does not perform under the contract. o Financial futures contracts--The Fund may purchase or sell financial futures contracts and options on such futures contracts for the purpose of hedging the market risk on existing securities or the intended purchase of securities. Futures contracts are contracts for delayed delivery of securities at a specific future date and at a specific price or yield. Upon entering into a contract, the Fund deposits and maintains as collateral such initial margin as required by the exchange on which the transaction is effected. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. o Options--The Fund is authorized to write covered call options and purchase put options. When the Fund writes 12 & 13 MuniVest Fund II, Inc., April 30, 1999 NOTES TO FINANCIAL STATEMENTS (concluded) 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 0.50% of the Fund's average weekly net assets, including proceeds from the issuance of Preferred Stock. Accounting services are provided to the Fund by FAM at cost. Certain officers and/or directors of the Fund are officers and/or directors of FAM, PSI, and/or ML & Co. 3. Investments: Purchases and sales of investments, excluding short-term securities, for the six months ended April 30, 1999 were $189,519,905 and $186,342,281, respectively. Net realized gains for the six months ended April 30, 1999 and net unrealized gains as of April 30, 1999 were as follows: - -------------------------------------------------------------------------------- Realized Unrealized Gains Gains - -------------------------------------------------------------------------------- Long-term investments .................... $ 1,239,502 $22,098,106 Financial futures contracts .............. 471,300 -- ----------- ----------- Total .................................... $ 1,710,802 $22,098,106 =========== =========== - -------------------------------------------------------------------------------- As of April 30, 1999, net unrealized appreciation for Federal income tax purposes aggregated $22,098,106, of which $24,311,592 related to appreciated securities and $2,213,486 related to depreciated securities. The aggregate cost of investments at April 30, 1999 for Federal income tax purposes was $395,171,529. 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 six months ended April 30, 1999 and the year ended October 31, 1998 remained constant. Preferred Stock Auction Market Preferred Stock ("AMPS") are shares of Preferred Stock of the Fund, with a par value of $.05 per share and a liquidation preference of $25,000 per share, that entitle their holders to receive cash dividends at an annual rate that may vary for the successive dividend periods. The yields in effect at April 30, 1999 were as follows: Series A, 3.20%; Series B, 3.20%; and Series C, 3.15%. Shares issued and outstanding during the six months ended April 30, 1999 and the year ended October 31, 1998 remained constant. The Fund pays commissions to certain broker-dealers at the end of each auction at an annual rate ranging from 0.25% to 0.375%, calculated on the proceeds of each auction. For the six months ended April 30, 1999, Merrill Lynch, Pierce, Fenner & Smith Incorporated, an affiliate of FAM, earned $73,400 as commissions. 5. Capital Loss Carryforward: At October 31, 1998, the Fund had a net capital loss carry forward of approximately $9,489,000, all of which expires in 2003. This amount will be available to offset like amounts of any future taxable gains. 6. Subsequent Event: On May 6, 1999, the Fund's Board of Directors declared an ordinary income dividend to Common Stock shareholders in the amount of $.065819 per share, payable on May 27, 1999 to shareholders of record as of May 21, 1999. OFFICERS AND DIRECTORS Terry K. Glenn, President and Director Ronald W. Forbes, Director Cynthia A. Montgomery, Director Charles C. Reilly, Director Kevin A. Ryan, Director Richard R. West, Director Arthur Zeikel, Director Vincent R. Giordano, Senior Vice President Kenneth A. Jacob, Vice President Fred K. Stuebe, Vice President Donald C. Burke, Vice President and Treasurer William E. Zitelli, Secretary - -------------------------------------------------------------------------------- Gerald M. Richard, Treasurer of MuniVest Fund II, Inc. has recently retired. His colleagues at Merrill Lynch Asset Management, L.P. join the Fund's Board of Directors in wishing Mr. Richard well in his retirement. - -------------------------------------------------------------------------------- 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: IBJ Whitehall Bank &Trust Company One State Street New York, NY 10004 NYSE Symbol MVT 14 & 15 This report, including the financial information herein, is transmitted to the shareholders of MuniVest Fund II, Inc. for their information. It is not a prospectus, circular or representation intended for use in the purchase of shares of the Fund or any securities mentioned in the report. Past performance results shown in this report should not be considered a representation of future performance. The Fund has leveraged its Common Stock by issuing Preferred Stock to provide the Common Stock shareholders with a potentially higher rate of return. Leverage creates risks for Common Stock shareholders, including the likelihood of greater volatility of net asset value and market price of shares of the Common Stock, and the risk that fluctuations in the short-term dividend rates of the Preferred Stock may affect the yield to Common Stock shareholders. Statements and other information herein are as dated and are subject to change. MuniVest Fund II, Inc. Box 9011 Princeton, NJ 08543-9011 16807--4/99 [RECYCLE LOGO] Printed on post-consumer recycled paper -----END PRIVACY-ENHANCED MESSAGE-----