UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-07478
Name of Fund: BlackRock MuniVest Fund II, Inc. (MVT)
Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809
Name and address of agent for service: Donald C. Burke, Chief Executive Officer,
BlackRock MuniVest Fund II, Inc., 800 Scudders Mill Road, Plainsboro, NJ
08536. Mailing address: P.O. Box 9011, Princeton, NJ 08543-9011
Registrant's telephone number, including area code: (800) 882-0052, Option 4
Date of fiscal year end: 10/31/2008
Date of reporting period: 11/01/2007 - 10/31/2008
Item 1 - Report to Stockholders
EQUITIES FIXED INCOME REAL ESTATE
LIQUIDITY ALTERNATIVES BLACKROCK SOLUTIONS
BlackRock BLACKROCK
MuniVest Fund II, Inc. (MVT)
ANNUAL REPORT | OCTOBER 31, 2008
NOT FDIC INSURED
MAY LOSE VALUE
NO BANK GUARANTEE
Table of Contents
================================================================================
Page
- --------------------------------------------------------------------------------
A Letter to Shareholders ................................................. 3
Annual Report:
Fund Summary ............................................................. 4
The Benefits and Risks of Leveraging ..................................... 5
Derivative Instruments ................................................... 5
Financial Statements:
Schedule of Investments ................................................ 6
Statement of Assets and Liabilities .................................... 11
Statement of Operations ................................................ 11
Statements of Changes in Net Assets .................................... 12
Financial Highlights ..................................................... 13
Notes to Financial Statements ............................................ 14
Report of Independent Registered Public Accounting Firm .................. 19
Important Tax Information (Unaudited) .................................... 19
Disclosure of Investment Advisory Agreement and Subadvisory Agreement .... 20
Automatic Dividend Reinvestment Plan ..................................... 24
Officers and Directors ................................................... 25
Additional Information ................................................... 29
2 BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008
A Letter to Shareholders
Dear Shareholder
It has been a tumultuous period for investors, marked by almost daily headlines
of deepening turmoil in financial markets and a darkening economic outlook. The
news took an extraordinarily heavy tone late in the period as the credit crisis
boiled over and triggered unprecedented failures and consolidation in the
financial sector, stoking fears of a market and economic collapse and prompting
a series of new government programs designed to contain and combat the fallout.
The Federal Reserve Board (the "Fed") has taken decisive measures to restore
liquidity and stabilize the financial system. Key moves included slashing the
target federal funds rate 250 basis points (2.50%) between November 2007 and
April 2008 and providing massive cash injections and lending programs. In
October, as credit conditions further deteriorated, the central bank cut the key
interest rate by 50 basis points on two separate occasions -- on October 8 in
coordination with five other global central banks, and again during its
regularly scheduled meeting on October 29. This left the key short-term rate at
just 1.0%, its lowest level since 2004. While the U.S. economy appeared fairly
resilient through the second quarter of 2008, the third quarter saw a
contraction of 0.5%, and a more significant decline is expected for the fourth
quarter. Moreover, on December 1, the National Bureau of Economic Research
confirmed that the U.S. had entered a recession in December 2007.
Against this backdrop, U.S. equity markets experienced intense volatility, with
periods of downward pressure punctuated by sharp rebounds. Losses were
significant and broad-based, though small-cap stocks fared moderately better
than their larger counterparts. Non-U.S. markets decelerated at a considerably
faster pace than domestic equities -- a stark reversal of recent years' trends,
when international stocks generally outpaced U.S. stocks.
Treasury issues also traded in a volatile fashion, but rallied overall (yields
fell and prices correspondingly rose) and outperformed other fixed income assets
as investors continued their flight to higher quality and more liquid
securities. Tax-exempt issues generally underperformed, as problems among
municipal bond insurers and the collapse in the market for auction rate
securities afflicted the group throughout the course of the past year. At the
same time, the above mentioned economic headwinds and malfunctioning credit
markets plagued the high yield sector, with the third quarter of 2008 marking
one of the worst periods in history for the asset class.
Facing unprecedented volatility and macro pressures, the major benchmark indexes
generally recorded losses for the six- and 12-month reporting periods:
Total Returns as of October 31, 2008 6-month 12-month
==============================================================================================================
U.S. equities (S&P 500 Index) (29.28)% (36.10)%
- --------------------------------------------------------------------------------------------------------------
Small cap U.S. equities (Russell 2000 Index) (24.39) (34.16)
- --------------------------------------------------------------------------------------------------------------
International equities (MSCI Europe, Australasia, Far East Index) (41.21) (46.62)
- --------------------------------------------------------------------------------------------------------------
Fixed income (Barclays Capital U.S. Aggregate Index*) (3.63) 0.30
- --------------------------------------------------------------------------------------------------------------
Tax-exempt fixed income (Barclays Capital Municipal Bond Index*) (4.70) (3.30)
- --------------------------------------------------------------------------------------------------------------
High yield bonds (Barclays Capital U.S. Corporate High Yield 2% Issuer Capped Index*) (24.86) (25.41)
- --------------------------------------------------------------------------------------------------------------
* Formerly a Lehman Brothers Index.
Past performance is no guarantee of future results. Index performance
shown is for illustrative purposes only. You cannot invest directly in an
index.
Through periods of market turbulence, as ever, BlackRock's full resources are
dedicated to the management of our clients' assets. For our most current views
on the economy and financial markets, we invite you to visit
www.blackrock.com/funds. As always, we thank you for entrusting BlackRock with
your investments, and we look forward to continuing to serve you in the months
and years ahead.
Sincerely,
/s/ Rob Kapito
Rob Kapito
President, BlackRock Advisors, LLC
BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008 3
Fund Summary as of October 31, 2008
Investment Objective
BlackRock MuniVest Fund II, Inc. (MVT) (the "Fund") seeks to provide
shareholders with as high a level of current income exempt from federal income
taxes as is consistent with its investment policies and prudent investment
management by investing primarily in a portfolio of long-term, investment grade
municipal obligations, the interest on which, in the opinion of bond counsel to
the issuers, is exempt from federal income taxes.
Performance
For the 12 months ended October 31, 2008, the Fund returned (25.18)%, based on
market price and (19.33)% based on net asset value ("NAV"). For the same period,
the closed-end Lipper Insured Municipal Debt Funds (Leveraged) category posted
an average return of (14.93)% on a NAV basis. All returns reflect reinvestment
of dividends. The Fund's discount to NAV, which widened during the period,
accounts for the difference between performance based on price and performance
based on NAV. The Fund maintained a relatively neutral duration exposure for
much of the period. Fund underperformance resulted from the widening of credit
spreads, as prices on the Fund's lower-rated holdings fell significantly more
than higher-rated municipal bonds. These lower-rated bonds, however, have
continued to generate substantial income for the Fund, allowing it to distribute
a well-above-average dividend yield.
The views expressed reflect the opinions of BlackRock as of the date of
this report and are subject to change based on changes in market, economic
or other conditions. These views are not intended to be a forecast of
future events and are no guarantee of future results.
Fund Information
Symbol on New York Stock Exchange ............................. MVT
Initial Offering Date ......................................... March 29, 1993
Yield on Closing Market Price as of October 31, 2008 ($9.75) 1. 8.74%
Tax Equivalent Yield 2 ........................................ 13.45%
Current Monthly Distribution per Common Share 3 ............... $ 0.071
Current Annualized Distribution of Common Share 3 ............. $ 0.852
Leverage as of October 31, 2008 4 ............................. 47%
- --------------------------------------------------------------------------------
1 Yield on closing market price is calculated by dividing the current
annualized distribution per share by the closing market price.
Past performance does not guarantee future results.
2 Tax equivalent yield assumes the maximum federal tax rate of 35%.
3 The distribution is not constant and is subject to change.
4 As a percentage of total managed assets, which is the total assets of the
Fund (including any assets attributable to Auction Market Preferred Shares
("Preferred Shares") and tender option bond trusts ("TOBs")) minus the sum
of accrued liabilities.
The table below summarizes the changes in the Fund's market price and net asset
value per share:
- --------------------------------------------------------------------------------
10/31/08 10/31/07 Change High Low
- --------------------------------------------------------------------------------
Market Price ............... $ 9.75 $13.91 (29.91)% $15.30 $ 6.77
Net Asset Value ............ $10.95 $14.49 (24.43)% $14.62 $10.32
- --------------------------------------------------------------------------------
The following unaudited charts show the portfolio composition and credit quality
allocations of the Fund's long-term investments:
Portfolio Composition
Sector 10/31/08 10/31/07
- --------------------------------------------------------------------------------
Industrial & Pollution Control ............................ 19% 18%
Hospital .................................................. 17 29
Transportation ............................................ 13 4
City, County & State ...................................... 11 8
Education ................................................. 10 7
Power ..................................................... 8 10
Tax Revenue ............................................... 8 9
Tobacco ................................................... 5 6
Housing ................................................... 4 5
Water & Sewer ............................................. 3 2
Lease Revenue ............................................. 2 2
- --------------------------------------------------------------------------------
Credit Quality Allocations 5
Credit Rating 10/31/08 10/31/07
- --------------------------------------------------------------------------------
AAA/Aaa ................................................... 29% 25%
AA/Aa ..................................................... 22 19
A/A ....................................................... 16 22
BBB/Baa ................................................... 14 17
BB/Ba ..................................................... 2 2
B/B ....................................................... 1 1
Not Rated ................................................. 16 6 14
- --------------------------------------------------------------------------------
5 Using the higher of Standard & Poor's or Moody's Investors Service
ratings.
6 The investment advisor has deemed certain of these securities to be of
investment grade quality. As of October 31, 2008, the market value of
these securities was $9,997,993, representing 2% of the Fund's long-term
investments.
4 BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008
The Benefits and Risks of Leveraging
The Fund may utilize leverage to seek to enhance the yield and NAV of its Common
Shares. However, these objectives cannot be achieved in all interest rate
environments.
To leverage, the Fund issues Preferred Shares, which pay dividends at prevailing
short-term interest rates, and invests the proceeds in long-term municipal
bonds. In general, the concept of leveraging is based on the premise that the
cost of assets to be obtained from leverage will be based on short-term interest
rates, which normally will be lower than the income earned by the Fund on its
longer-term portfolio investments. To the extent that the total assets of the
Fund (including the assets obtained from leverage) are invested in
higher-yielding portfolio investments, the Fund's Common Shareholders will
benefit from the incremental yield.
To illustrate these concepts, assume the Fund's Common Shares capitalization is
$100 million and it issues Preferred Shares 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 3% and long-term
interest rates are 6%, the yield curve has a strongly positive slope. In this
case, the Fund pays dividends on the $50 million of Preferred Shares 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.
Conversely, if prevailing short-term interest rates rise above long-term
interest rates of 6%, the yield curve has a negative slope. In this case, the
Fund pays dividends on the higher short-term interest rates whereas the Fund's
total portfolio earns income based on lower long-term interest rates.
In this case, the dividends paid to Preferred Shareholders are significantly
lower than the income earned on the Fund's long-term investments, and therefore
the Common Shareholders are the beneficiaries of the incremental yield. However,
if short-term interest rates rise, narrowing the differential between short-term
and long-term interest rates, the incremental yield pickup on the Common Shares
will be reduced or eliminated completely.
Furthermore, the value of the Fund's portfolio investments generally varies
inversely with the direction of long-term interest rates, although other factors
can influence the value of portfolio investments. In contrast, the redemption
value of the Fund's Preferred Shares does not fluctuate in relation to interest
rates. As a result, changes in interest rates can influence the Fund's NAV
positively or negatively in addition to the impact on Fund performance from
leverage from Preferred Shares discussed above.
The Fund may also, from time to time, leverage its assets through the use of
tender option bond ("TOB") programs, as described in Note 1 of the Notes to
Financial Statements. TOB investments generally will provide the Fund with
economic benefits in periods of declining short-term interest rates, but expose
the Fund to risks during periods of rising short-term interest rates similar to
those associated with Preferred Shares issued by the Fund, as described above.
Additionally, fluctuations in the market value of municipal securities deposited
into the TOB trust may adversely affect the Fund's NAV per share.
The use of leverage may enhance opportunities for increased returns to the Fund
and Common Shareholders, but as described above, it also creates risks as short-
or long-term interest rates fluctuate. Leverage also will generally cause
greater changes in a Fund's NAV, market price and dividend rate than a
comparable portfolio without leverage. If the income derived from securities
purchased with assets received from leverage exceeds the cost of leverage, the
Fund's net income will be greater than if leverage had not been used.
Conversely, if the income from the securities purchased is not sufficient to
cover the cost of leverage, the Fund's net income will be less than if leverage
had not been used, and therefore the amount available for distribution to Common
Shareholders will be reduced. The Fund may be required to sell portfolio
securities at inopportune times or below fair market values in order to comply
with regulatory requirements applicable to the use of leverage or as required by
the terms of leverage instruments, which may cause a Fund to incur losses. The
use of leverage may limit a Fund's ability to invest in certain types of
securities or use certain types of hedging strategies, such as in the case of
certain restrictions imposed by ratings agencies that rate preferred shares
issued by the Fund. The Fund will incur expenses in connection with the use of
leverage, all of which are borne by the holders of the Common Shares and may
reduce returns on the Common Shares.
Under the Investment Company Act of 1940, the Fund is permitted to issue
Preferred Shares in an amount of up to 50% of its total managed assets at the
time of issuance. Under normal circumstances, the Fund anticipates that the
total economic leverage from Preferred Shares and TOBs will not exceed 50% of
its total managed assets at the time such leverage is incurred. As of October
31, 2008, the Fund had leverage from Preferred Shares and TOBs of 47% of its
total managed assets.
Derivative Instruments
The Fund may invest in various derivative instruments, including swap agreements
and futures, and other instruments specified in the Notes to Financials
Statements, which constitute additional forms of economic leverage. Such
instruments are used to obtain exposure to a market without owning or taking
physical custody of securities or to hedge market and/or interest rate risks.
Such derivative instruments involve risks, including the imperfect correlation
between the value of a derivative instrument and the underlying asset, possible
default of the other party to the transaction and illiquidity of the derivative
instrument. The Fund's ability to successfully use a derivative instrument
depends on the Advisor's ability to accurately predict pertinent market
movements, which cannot be assured. The use of derivative instruments may result
in losses greater than if they had not been used, may require the Fund to sell
or purchase portfolio securities at inopportune times or for prices other than
current market values, may limit the amount of appreciation the Fund can realize
on an investment or may cause the Fund to hold a security that it might
otherwise sell. The Fund's investments in these instruments are discussed in
detail in the Notes to Financial Statements.
BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008 5
Schedule of Investments October 31, 2008
(Percentages shown are based on Net Assets)
Par
Municipal Bonds (000) Value
===============================================================================
Alabama -- 2.9%
Prattville, Alabama, IDB, Environmental Improvement
Revenue Bonds (International Paper Company
Projects), AMT, Series A, 4.75%, 12/01/30 $ 3,500 $ 1,968,890
Selma, Alabama, IDB, Environmental Improvement
Revenue Bonds (International Paper Company
Project), AMT, Series A, 4.75%, 12/01/30 5,000 2,812,700
Tuscaloosa, Alabama, Special Care Facilities Financing
Authority, Residential Care Facility Revenue Bonds
(Capstone Village, Inc. Project), Series A,
5.875%, 8/01/36 (a)(b) 2,900 1,750,904
-------------
6,532,494
===============================================================================
Arizona -- 2.4%
Maricopa County, Arizona, IDA, Education Revenue
Bonds (Arizona Charter Schools Project 1), Series A,
6.75%, 7/01/29 1,000 772,320
Maricopa County, Arizona, Tempe Elementary Unified
School District Number 3, GO, Refunding,
7.50%, 7/01/10 (c)(d) 2,315 2,487,352
Pima County, Arizona, IDA, Education Revenue Bonds
(Arizona Charter Schools Project), Series C,
6.75%, 7/01/31 1,975 1,627,143
Pima County, Arizona, IDA, Education Revenue
Refunding Bonds (Arizona Charter Schools
Project II), Series A, 6.75%, 7/01/21 510 457,312
-------------
5,344,127
===============================================================================
California -- 3.5%
California State, GO, 5.50%, 4/01/14 (c) 5 4,865
Chula Vista, California, IDR (San Diego Gas and
Electric Company), AMT, Series B, 5%, 12/01/27 2,500 1,962,275
Golden State Tobacco Securitization Corporation of
California, Tobacco Settlement Revenue Bonds,
Series A-3, 7.875%, 6/01/13 (e) 5,010 5,876,079
-------------
7,843,219
===============================================================================
Colorado -- 5.2%
Colorado HFA, Revenue Refunding Bonds
(S/F Program), AMT, Senior Series A-2,
7.50%, 4/01/31 135 142,173
Elk Valley, Colorado, Public Improvement Revenue
Bonds (Public Improvement Fee):
Series A, 7.35%, 9/01/31 3,025 2,606,582
Series B, 7.45%, 9/01/31 440 375,302
North Range Metropolitan District Number 1,
Colorado, GO, 7.25%, 12/15/11 (e) 1,310 1,456,969
Pitkin County, Colorado, IDR, Refunding (Aspen
Skiing Company Project), VRDN, AMT, Series B,
1.25%, 4/01/14 (f)(g) 2,100 2,100,000
Plaza Metropolitan District Number 1, Colorado,
Tax Allocation Revenue Bonds (Public
Improvement Fees):
8%, 12/01/25 3,300 3,041,280
8.125%, 12/01/25 820 716,204
Southlands Metropolitan District Number 1,
Colorado, GO, 7%, 12/01/14 (e) 1,000 1,174,260
-------------
11,612,770
===============================================================================
Connecticut -- 1.2%
Connecticut State Development Authority, Airport
Facility Revenue Bonds (Learjet Inc. Project), AMT,
7.95%, 4/01/26 1,165 1,049,816
Mohegan Tribe Indians Gaming Authority, Connecticut,
Public Improvement Revenue Refunding Bonds
(Priority Distribution), 6.25%, 1/01/31 2,000 1,544,180
-------------
2,593,996
===============================================================================
Florida -- 5.5%
Fiddlers Creek, Florida, Community Development
District Number 2, Special Assessment
Revenue Bonds:
Series A, 6.375%, 5/01/35 2,350 1,787,739
Series B, 5.75%, 5/01/13 400 367,248
Hillsborough County, Florida, IDA, Hospital Revenue
Bonds (H. Lee Moffitt Cancer Center Project),
Series A, 5.25%, 7/01/37 3,500 2,535,470
Midtown Miami, Florida, Community Development
District, Special Assessment Revenue Bonds,
Series A, 6.25%, 5/01/37 4,000 2,973,040
Orlando, Florida, Urban Community Development
District, Capital Improvement Special
Assessment Bonds:
6.25%, 5/01/34 1,135 851,806
Series A, 6.95%, 5/01/11 (e) 1,000 1,090,250
Palm Coast Park Community Development District,
Florida, Special Assessment Revenue Bonds,
5.70%, 5/01/37 1,240 826,857
Park Place Community Development District, Florida,
Special Assessment Revenue Bonds,
6.75%, 5/01/10 (e) 900 960,759
Preserve at Wilderness Lake, Florida, Community
Development District, Capital Improvement Bonds,
Series A, 7.10%, 5/01/33 905 822,564
-------------
12,215,733
===============================================================================
Georgia -- 5.3%
Fulton County, Georgia, Residential Care Facilities,
Revenue Refunding Bonds (Canterbury Court
Project), Series A, 6.125%, 2/15/26 2,000 1,524,540
Gainesville, Georgia, Redevelopment Authority,
Educational Facilities Revenue Refunding Bonds
(Riverside Military Academy), 5.125%, 3/01/37 600 340,590
Portfolio Abbreviations
To simplify the listings of the Fund's portfolio holdings in the Schedule of
Investments, the names and descriptions of many of the securities have been
abbreviated according to the list on the right.
AMT Alternative Minimum Tax (subject to)
EDA Economic Development Authority
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue Bonds
PCR Pollution Control Revenue Bonds
S/F Single-Family
VRDN Variable Rate Demand Notes
See Notes to Financial Statements.
6 BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008
Schedule of Investments (continued) (Percentages shown are based on Net Assets)
Par
Municipal Bonds (000) Value
===============================================================================
Georgia (concluded)
Georgia Municipal Electric Authority, Power Revenue
Refunding Bonds:
Series W, 6.60%, 1/01/18 (h) $ 380 $ 425,547
Series W, 6.60%, 1/01/18 5,615 6,033,767
Series X, 6.50%, 1/01/20 1,250 1,336,700
Houston County, Georgia, Hospital Authority Revenue
Bonds (Houston Heart Institute Project),
5.25%, 10/01/35 2,500 1,899,700
Main Street Natural Gas, Inc., Georgia, Gas Project
Revenue Bonds, Series A, 6.25%, 7/15/33 (a)(b) 2,200 341,000
-------------
11,901,844
===============================================================================
Idaho -- 0.0%
Idaho Housing Agency, S/F Mortgage Revenue
Refunding Bonds, AMT, Series E-2, 6.90%, 1/01/27 85 86,846
===============================================================================
Illinois -- 9.4%
Chicago, Illinois, S/F Mortgage Revenue Bonds, AMT,
Series C, 7%, 3/01/32 (i)(j)(k) 190 194,106
Chicago, Illinois, Special Assessment Bonds (Lake
Shore East), 6.75%, 12/01/32 800 673,048
Chicago, Illinois, Tax Allocation Bonds (Kingsbury
Redevelopment Project), Series A, 6.57%, 2/15/13 1,000 963,660
Hodgkins, Illinois, Environmental Improvement
Revenue Bonds (Metro Biosolids Management
LLC Project), AMT, 6%, 11/01/23 2,800 2,405,312
Illinois Development Finance Authority Revenue
Bonds (Community Rehabilitation Providers
Facilities), Series A, 6.50%, 7/01/22 1,000 963,990
Illinois Development Finance Authority, Revenue
Refunding Bonds (Community Rehabilitation
Providers Facilities), Series A, 6%, 7/01/15 635 617,976
Illinois State Finance Authority Revenue Bonds:
(Friendship Village of Schaumburg), Series A,
5.625%, 2/15/37 500 317,270
(Landing at Plymouth Place Project), Series A,
6%, 5/15/37 1,035 707,888
McLean and Woodford Counties, Illinois, Community
Unit School District Number 005, GO, Refunding,
6.375%, 12/01/16 (l) 365 393,667
Regional Transportation Authority, Illinois,
Revenue Bonds:
Series A, 7.20%, 11/01/20 (m) 1,500 1,715,565
Series A, 6.70%, 11/01/21 (c)(d) 7,000 7,796,950
Series C, 7.75%, 6/01/20 (c)(d) 2,500 2,929,125
Village of Wheeling, Illinois, Revenue Bonds (North
Milwaukee/Lake-Cook Tax Increment Financing
Project), 6%, 1/01/25 1,580 1,238,372
-------------
20,916,929
===============================================================================
Indiana -- 7.8%
Indiana Health and Educational Facilities Financing
Authority, Hospital Revenue Bonds (Clarian Health
Obligation), Series A, 5.25%, 2/15/40 2,200 1,618,034
Indiana Transportation Finance Authority, Highway
Revenue Bonds, Series A:
7.25%, 6/01/15 2,000 2,196,668
6.80%, 12/01/16 3,775 4,139,174
Indianapolis, Indiana, Local Public Improvement
Bond Bank, Revenue Refunding Bonds, Series D,
6.75%, 2/01/14 8,750 9,465,925
-------------
17,419,801
===============================================================================
Louisiana -- 8.0%
Louisiana Public Facilities Authority, Hospital Revenue
Bonds (Franciscan Missionaries of Our Lady Health
System, Inc.), Series A, 5.25%, 8/15/36 8,260 6,319,313
Port New Orleans, Louisiana, IDR, Refunding
(Continental Grain Company Project),
6.50%, 1/01/17 10,000 8,628,200
Sabine River Authority, Louisiana, Water Facilities
Revenue Refunding Bonds (International Paper
Company), 6.20%, 2/01/25 3,600 2,917,800
-------------
17,865,313
===============================================================================
Maryland -- 1.8%
Maryland State Community Development
Administration, Department of Housing and
Community Development, Residential Revenue
Refunding Bonds, AMT, Series D, 4.90%, 9/01/42 1,500 1,047,510
Maryland State Health and Higher Educational
Facilities Authority Revenue Bonds:
(King Farm Presbyterian Community),
Series B, 5%, 1/01/17 1,100 861,058
(University of Maryland Medical System),
Series B, 7%, 7/01/22 (c)(d) 1,000 1,013,930
Montgomery County, Maryland, Special Obligation,
GO (West Germantown Development District),
Series A, 6.70%, 7/01/27 (n) 1,205 1,108,817
-------------
4,031,315
===============================================================================
Massachusetts -- 7.1%
Massachusetts State College Building Authority,
Project Revenue Refunding Bonds, Senior-Series A,
7.50%, 5/01/11 (o) 1,000 1,105,800
Massachusetts State, HFA, Housing Revenue Bonds,
AMT, Series A:
5.10%, 12/01/27 2,000 1,633,920
5.20%, 12/01/37 3,000 2,281,770
Massachusetts State, HFA, Housing Revenue
Refunding Bonds, AMT, Series D, 4.85%, 6/01/40 2,770 1,897,561
Massachusetts State, HFA, S/F Housing Revenue
Bonds, AMT, Series 130, 5%, 12/01/32 2,720 2,065,214
Massachusetts State Water Resource Authority
Revenue Bonds, Series A, 6.50%, 7/15/19 (h) 6,000 6,812,940
-------------
15,797,205
===============================================================================
Michigan -- 10.5%
Flint, Michigan, Hospital Building Authority, Revenue
Refunding Bonds (Hurley Medical Center),
Series A, 6%, 7/01/20 (p) 3,100 2,489,827
Macomb County, Michigan, Hospital Finance
Authority, Hospital Revenue Bonds (Mount Clemens
General Hospital), Series B, 5.875%, 11/15/13 (e) 2,320 2,574,179
Michigan State Hospital Finance Authority, Revenue
Refunding Bonds:
(Henry Ford Health System), Series A,
5.25%, 11/15/46 7,050 5,246,469
(McLaren Health Care Corporation),
5.75%, 5/15/38 8,560 7,639,458
(Trinity Health Credit), Series A, 6%, 12/01/20 2,200 2,205,368
Pontiac, Michigan, Tax Increment Finance Authority,
Revenue Refunding Bonds (Development Area
Number 3), 6.375%, 6/01/12 (e) 3,000 3,331,650
-------------
23,486,951
===============================================================================
See Notes to Financial Statements.
BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008 7
Schedule of Investments (continued) (Percentages shown are based on Net Assets)
Par
Municipal Bonds (000) Value
===============================================================================
Mississippi -- 12.7%
Lowndes County, Mississippi, Solid Waste Disposal
and PCR, Refunding (Weyerhaeuser Company
Project), Series A, 6.80%, 4/01/22 $ 5,850 $ 4,818,879
Mississippi Business Finance Corporation, Mississippi,
PCR, Refunding (System Energy Resources
Inc. Project):
5.875%, 4/01/22 7,200 5,802,264
5.90%, 5/01/22 5,215 4,210,070
Mississippi Business Finance Corporation, Mississippi,
Solid Waste Disposal Revenue Refunding Bonds
(Mississippi Power Company Project), VRDN, AMT,
0.95%, 5/01/28 (f)(g) 13,520 13,520,000
-------------
28,351,213
===============================================================================
Missouri -- 0.2%
Missouri State Health and Educational Facilities
Authority, Health Facilities Revenue Refunding
Bonds (Sisters of Mercy Health System), VRDN,
Series A, 1%, 6/01/16 (f)(g) 500 500,000
Missouri State Housing Development Commission,
S/F Mortgage Revenue Bonds (Homeowner Loan),
AMT, Series A, 7.50%, 3/01/31 (i)(j) 85 89,516
-------------
589,516
===============================================================================
Nevada -- 0.2%
Clark County, Nevada, Improvement District Number 142,
Special Assessment Bonds, 6.375%, 8/01/23 610 506,764
===============================================================================
New Jersey -- 4.6%
New Jersey EDA, Cigarette Tax Revenue Bonds,
5.50%, 6/15/24 4,250 3,369,103
New Jersey EDA, Special Facility Revenue Bonds
(Continental Airlines Inc. Project), AMT,
6.25%, 9/15/29 3,000 1,688,220
New Jersey Health Care Facilities Financing Authority
Revenue Bonds (Pascack Valley Hospital
Association), 6.625%, 7/01/36 (a)(b) 1,680 55,944
New Jersey State Housing and Mortgage Finance
Agency Revenue Bonds, Series AA,
6.375%, 10/01/28 1,300 1,321,385
Tobacco Settlement Financing Corporation of
New Jersey, Asset-Backed Revenue Bonds,
7%, 6/01/13 (e) 3,285 3,787,375
-------------
10,222,027
===============================================================================
New Mexico -- 1.3%
Farmington, New Mexico, PCR, Refunding (Tucson
Electric Power Company -- San Juan Project),
Series A, 6.95%, 10/01/20 3,160 2,807,944
===============================================================================
New York -- 8.2%
Long Island Power Authority, New York, Electric
System Revenue Refunding Bonds, Series B,
5.75%, 4/01/33 1,600 1,531,216
Metropolitan Transportation Authority, New York,
Revenue Bonds, Series C, 6.50%, 11/15/28 9,405 9,929,705
New York City, New York, City IDA, Civic Facility
Revenue Bonds:
Series C, 6.80%, 6/01/28 690 648,828
(Special Needs Facility Pooled Program),
Series C-1, 6.50%, 7/01/17 890 783,725
New York City, New York, City IDA, Special Facility
Revenue Bonds (British Airways Plc Project), AMT,
7.625%, 12/01/32 1,920 1,387,622
New York City, New York, GO, Refunding, Series A,
6.375%, 5/15/15 (c) 40 42,121
Westchester County, New York, IDA, Civic Facility
Revenue Bonds (Special Needs Facilities Pooled
Program), Series E-1, 6.50%, 7/01/17 1,000 880,590
Westchester County, New York, IDA, Continuing Care
Retirement, Mortgage Revenue Bonds (Kendal on
Hudson Project), Series A, 6.50%, 1/01/13 (e) 2,690 3,043,654
-------------
18,247,461
===============================================================================
North Carolina -- 1.1%
Gaston County, North Carolina, Industrial Facilities
and Pollution Control Financing Authority, Revenue
Bonds (National Gypsum Company Project), AMT,
5.75%, 8/01/35 1,675 982,254
North Carolina Medical Care Commission, Retirement
Facilities Revenue Refunding Bonds (Carolina
Village Project), 6%, 4/01/38 2,000 1,401,520
-------------
2,383,774
===============================================================================
Ohio -- 4.4%
Allen County, Ohio, Hospital Facilities Revenue Bonds
(Catholic Healthcare Partners), VRDN, Series B,
1.25%, 10/01/31 (f)(g) 200 200,000
Buckeye Tobacco Settlement Financing Authority,
Ohio, Tobacco Settlement Asset-Backed Bonds,
Series A-2, 6.50%, 6/01/47 14,000 9,598,960
-------------
9,798,960
===============================================================================
Oregon -- 5.2%
Oregon State Department of Transportation, Highway
User Tax, Subordinate Lien Revenue Bonds, VRDN,
Series B-2, 3.25%, 11/15/27 (f)(g) 11,500 11,500,000
===============================================================================
Pennsylvania -- 4.0%
Allegheny County, Pennsylvania, IDA, Environmental
Improvement Revenue Refunding Bonds,
5.50%, 11/01/16 1,235 1,068,275
Bucks County, Pennsylvania, IDA, Retirement
Community Revenue Bonds (Ann's Choice Inc.),
Series A, 6.125%, 1/01/25 880 665,878
Lancaster County, Pennsylvania, Hospital Authority
Revenue Bonds (Brethren Village Project), Series A,
6.50%, 7/01/40 1,000 771,760
Montgomery County, Pennsylvania, IDA, Revenue
Bonds (Whitemarsh Continuing Care Project):
6.125%, 2/01/28 470 340,637
6.25%, 2/01/35 1,090 774,892
Pennsylvania Economic Development Financing
Authority, Exempt Facilities Revenue Bonds
(National Gypsum Company), AMT, Series B,
6.125%, 11/01/27 2,000 1,212,300
Pennsylvania State Higher Educational Facilities
Authority Revenue Bonds (University of
Pennsylvania Medical Center Health System),
Series A, 6%, 1/15/31 1,250 1,182,538
See Notes to Financial Statements.
8 BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008
Schedule of Investments (continued) (Percentages shown are based on Net Assets)
Par
Municipal Bonds (000) Value
===============================================================================
Pennsylvania (concluded)
Philadelphia, Pennsylvania, Authority for IDR,
Commercial Development, 7.75%, 12/01/17 $ 1,265 $ 1,198,018
Sayre, Pennsylvania, Health Care Facilities Authority,
Revenue Bonds (Guthrie Healthcare System),
Series B, 7.125%, 12/01/11 (e) 1,350 1,602,545
-------------
8,816,843
===============================================================================
Rhode Island -- 0.6%
Rhode Island State Health and Educational Building
Corporation, Hospital Financing Revenue Bonds
(Lifespan Obligation Group), 6.50%, 8/15/12 (e) 1,140 1,258,161
===============================================================================
South Carolina -- 2.2%
South Carolina Housing Finance and Development
Authority, Mortgage Revenue Bonds, AMT, Series A,
6.70%, 7/01/27 145 147,822
South Carolina State Public Service Authority, Revenue
Refunding Bonds, Series A, 5.50%, 1/01/38 5,000 4,769,500
-------------
4,917,322
===============================================================================
Tennessee -- 1.9%
Johnson City, Tennessee, Health and Educational
Facilities Board, Retirement Facility Revenue Bonds
(Appalachian Christian Village Project), Series A,
6%, 2/15/24 1,000 758,700
Shelby County, Tennessee, Health, Educational and
Housing Facility Board, Hospital Revenue Refunding
Bonds (Methodist Healthcare), 6.50%, 9/01/12 (e) 3,175 3,533,870
-------------
4,292,570
===============================================================================
Texas -- 11.9%
Austin, Texas, Hotel Occupancy Tax, Subordinate Lien
Revenue Refunding Bonds, VRDN, Series A,
4%, 11/15/29 (f)(g) 4,560 4,560,000
Brazos River Authority, Texas, PCR, Refunding (TXU
Energy Company LLC Project), AMT, Series A,
7.70%, 4/01/33 1,500 1,107,225
Brazos River, Texas, Harbor Navigation District,
Brazoria County Environmental Revenue Refunding
Bonds (Dow Chemical Company Project), AMT,
Series A-7, 6.625%, 5/15/33 5,800 4,762,496
Dallas-Fort Worth, Texas, International Airport, Joint
Revenue Bonds, AMT (d):
Series B, 6.25%, 11/01/28 4,500 4,137,390
Series C, 6.25%, 11/01/28 3,450 3,171,999
Dallas-Fort Worth, Texas, International Airport, Joint
Revenue Refunding Bonds, AMT, Sub-Series A-2,
6.10%, 11/01/24 (d) 1,500 1,369,935
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%, 4/01/26 2,500 2,489,450
Judson, Texas, Independent School District, School
Building, GO, 5%, 2/01/37 (q) 2,000 1,778,820
Port Corpus Christi, Texas, Revenue Refunding Bonds
(Celanese Project), AMT:
Series A, 6.45%, 11/01/30 800 612,824
Series B, 6.70%, 11/01/30 2,500 1,929,875
Texas State University, System Financing Revenue
Refunding Bonds, 5.25%, 3/15/27 700 695,877
-------------
26,615,891
===============================================================================
Virginia -- 4.5%
Chesterfield County, Virginia, IDA, PCR, Refunding
(Virginia Electric and Power Company), Series B,
5.875%, 6/01/17 1,000 1,041,290
Fairfax County, Virginia, EDA, Residential Care
Facilities, Mortgage Revenue Refunding Bonds
(Goodwin House, Inc.):
5.125%, 10/01/37 1,000 710,170
5.125%, 10/01/42 3,440 2,422,138
Richmond, Virginia, IDA, Educational Facilities
Revenue Bonds (Church Schools in the Diocese of
Virginia), VRDN, 0.95%, 5/01/35 (f)(g) 5,950 5,950,000
-------------
10,090,598
===============================================================================
Washington -- 7.5%
Energy Northwest, Washington, Electric Revenue
Refunding Bonds (Columbia Generating):
Series A, 5.75%, 7/01/18 (d) 1,000 1,041,290
Series B, 6%, 7/01/18 (m) 2,250 2,375,978
Washington State, GO, Series B, 6%, 1/01/10 (e)(l) 5,000 5,215,700
Washington State Public Power Supply System,
Revenue Refunding Bonds:
(Nuclear Project Number 1), Series B,
7.125%, 7/01/16 5,000 5,899,500
(Nuclear Project Number 3), Series B,
7.125%, 7/01/16 (d) 1,900 2,236,395
-------------
16,768,863
===============================================================================
Wisconsin -- 1.9%
Wisconsin Housing and EDA, Home Ownership
Revenue Refunding Bonds, AMT, Series A,
5.625%, 3/01/31 2,895 2,442,627
Wisconsin State Health and Educational Facilities
Authority Revenue Bonds (SynergyHealth Inc.),
6%, 11/15/32 2,215 1,858,097
-------------
4,300,724
- -------------------------------------------------------------------------------
U.S. Virgin Islands -- 2.2%
Virgin Islands Government Refinery Facilities,
Revenue Refunding Bonds (Hovensa Coker
Project), AMT, 6.50%, 7/01/21 6,000 4,973,639
- -------------------------------------------------------------------------------
Total Municipal Bonds -- 145.2% 324,090,813
===============================================================================
===============================================================================
Municipal Bonds Transferred to
Tender Option Bond Trusts (r)
===============================================================================
Connecticut -- 2.5%
Connecticut State Health and Educational Facilities
Authority Revenue Bonds (Yale University),
Series Z-3, 5.05%, 7/01/42 6,000 5,684,220
===============================================================================
Florida -- 3.2%
Miami-Dade County, Florida, Aviation Revenue
Refunding Bonds (Miami International Airport), AMT,
5%, 10/01/40 (f)(q) 9,975 7,168,393
===============================================================================
Illinois -- 6.1%
Chicago, Illinois, Water Revenue Refunding Bonds,
Second Lien, 5.25%, 11/01/33 (l) 1,320 1,214,597
Kane and De Kalb Counties, Illinois, Community
Unit School District Number 302, GO,
5.75%, 2/01/14 (c)(e) 4,200 4,646,628
Kane and De Kalb Counties, Illinois, Community
Unit School District Number 302, GO,
5.75%, 2/01/19 (c) 1,000 1,106,340
See Notes to Financial Statements.
BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008 9
Schedule of Investments (concluded) (Percentages shown are based on Net Assets)
Municipal Bonds Transferred to Par
Tender Option Bond Trusts (r) (000) Value
===============================================================================
Illinois (concluded)
Metropolitan Pier and Exposition Authority, Illinois,
Dedicated State Tax Revenue Refunding Bonds
(McCormick Place Expansion Project), Series B,
5.75%, 6/15/23 (d) $ 6,400 $ 6,552,384
-------------
13,519,949
===============================================================================
Maryland -- 0.9%
Maryland State Transportation Authority,
Transportation Facilities Projects Revenue Bonds,
5%, 7/01/41 (l) 2,290 2,107,281
===============================================================================
Massachusetts -- 4.3%
Massachusetts State School Building Authority,
Dedicated Sales Tax Revenue Bonds, Series A,
5%, 8/15/30 (l) 10,000 9,478,200
===============================================================================
New York -- 2.6%
New York City, New York, City Municipal Water Finance
Authority, Water and Sewer System, Revenue
Refunding Bonds, Series DD, 5%, 6/15/37 6,299 5,687,990
===============================================================================
North Carolina -- 2.6%
North Carolina Capital Facilities Finance Agency,
Revenue Refunding Bonds (Duke University Project),
Series A, 5%, 10/01/41 6,239 5,757,819
===============================================================================
Ohio -- 0.9%
Ohio State Higher Educational Facilities Commission,
Hospital Revenue Bonds (University Hospitals
Health System), Series A, 5.25%, 01/01/2033 2,400 2,036,616
===============================================================================
Texas -- 7.6%
Harris County, Texas, Health Facilities Development
Corporation Revenue Refunding Bonds (School
Health Care System), Series B, 5.75%, 7/01/27 (h) 10,000 10,485,800
Texas State Department of Housing and Community
Affairs, S/F Mortgage Revenue Bonds, AMT,
Series B, 5.25%, 9/01/32 (i)(j)(k) 4,972 3,936,195
Texas State University, System Financing Revenue
Refunding Bonds, 5%, 3/15/30 (l) 2,743 2,552,345
-------------
16,974,340
===============================================================================
Washington -- 8.4%
Central Puget Sound Regional Transportation
Authority, Washington, Sales and Use Tax Revenue
Bonds:
Series A, 5%, 11/01/32 (l) 7,693 7,050,072
Series A, 5%, 11/01/34 5,000 4,514,300
Series A, 5%, 11/01/36 4,000 3,611,440
Energy Northwest, Washington, Electric Revenue
Refunding Bonds (Columbia Generating),
Series A, 5.75%, 7/01/18 (d) 3,500 3,644,515
-------------
18,820,327
- -------------------------------------------------------------------------------
Total Municipal Bonds Transferred to
Tender Option Bond Trusts -- 39.1% 87,235,135
===============================================================================
Total Investments (Cost -- $457,862,443*) -- 184.3% 411,325,948
Other Assets Less Liabilities -- 5.7% 12,738,083
Liability for Trust Certificates, Including Interest
Expense and Fees Payable -- (22.4)% (49,964,900)
Preferred Shares, at Redemption Value -- (67.6)% (150,889,417)
-------------
Net Assets Applicable to Common Shares -- 100.0% $ 223,209,714
=============
* The cost and unrealized appreciation (depreciation) of investments as of
October 31, 2008, as computed for federal income tax purposes, were as
follows:
Aggregate cost ......................................... $ 408,583,147
=============
Gross unrealized appreciation .......................... $ 9,513,086
Gross unrealized depreciation .......................... (56,387,837)
-------------
Net unrealized depreciation ............................ $ (46,874,751)
=============
(a) Non-income producing security.
(b) Issuer filed for bankruptcy or is in default of interest payments.
(c) FGIC Insured.
(d) MBIA Insured.
(e) U.S. government securities, held in escrow, are used to pay interest on
this security, as well as to retire the bond in full at the date
indicated, typically at a premium to par.
(f) XL Capital Insured.
(g) Security may have a maturity of more than one year at the time of
issuance, but has variable rate and demand features that qualify it as a
short-term security. Rate disclosed is as of report date. Maturity shown
is the final maturity date.
(h) Security is collateralized by Municipal or U.S. Treasury Obligations.
(i) FNMA Collateralized.
(j) GNMA Collateralized.
(k) FHLMC Collateralized.
(l) FSA Insured.
(m) AMBAC Insured.
(n) Radian Insured.
(o) Commonwealth Guaranteed.
(p) ACA Insured.
(q) Assured Guaranty Insured.
(r) Securities represent bonds transferred to a tender option bond trust in
exchange for which the Fund acquired residual interest certificates. These
securities serve as collateral in a financing transaction. See Note 1 of
the Notes to Financial Statements for details of municipal bonds
transferred to tender option bond trusts.
See Notes to Financial Statements.
10 BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008
Statement of Assets and Liabilities
October 31, 2008
===============================================================================
Assets
- -------------------------------------------------------------------------------
Investments at value -- unaffiliated (cost -- $457,862,443) ..... $ 411,325,948
Cash ............................................................ 317,257
Investments sold receivable ..................................... 11,007,576
Interest receivable ............................................. 7,914,537
Other assets .................................................... 11,565
Prepaid expenses ................................................ 27,249
-------------
Total assets .................................................... 430,604,132
-------------
===============================================================================
Accrued Liabilities
- -------------------------------------------------------------------------------
Investments purchased payable ................................... 4,754,107
Income dividends payable -- Common Shares ....................... 1,447,355
Interest expense and fees payable ............................... 347,348
Investment advisory fees payable ................................ 196,097
Other affiliates payable ........................................ 2,444
Officer's and Directors' fees payable ........................... 437
Other accrued expenses payable .................................. 139,661
-------------
Total accrued liabilities ....................................... 6,887,449
-------------
===============================================================================
Other Liabilities
- -------------------------------------------------------------------------------
Trust certificates 1 ............................................ 49,617,552
-------------
Total Liabilities ............................................... 56,505,001
-------------
===============================================================================
Preferred Shares at Redemption Value
- -------------------------------------------------------------------------------
Preferred Shares, par value $0.05 per share (1,551 Series A
Shares, 1,551 Series B Shares, 1,551 Series C Shares) and
$0.10 per share (1,379 Series D Shares) issued and
outstanding at $25,000 per share liquidation preference,
plus unpaid dividends ......................................... 150,889,417
-------------
Net Assets Applicable to Common Shares .......................... $ 223,209,714
=============
===============================================================================
Net Assets Applicable to Common Shareholders Consist of
- -------------------------------------------------------------------------------
Common Shares, par value $0.10 per share (20,385,281 shares
issued and outstanding) ....................................... $ 2,038,528
Paid-in capital in excess of par ................................ 276,572,159
Undistributed net investment income ............................. 1,127,498
Accumulated net realized loss ................................... (9,991,976)
Net unrealized appreciation/depreciation ........................ (46,536,495)
-------------
Net Assets, $10.95 net asset value per Common Share ............. $ 223,209,714
=============
Statement of Operations
Year Ended October 31, 2008
===============================================================================
Investment Income
- -------------------------------------------------------------------------------
Interest ........................................................ $ 27,492,399
-------------
===============================================================================
Expenses
- -------------------------------------------------------------------------------
Investment advisory fees ........................................ $ 2,340,694
Commissions for Preferred Shares ................................ 431,016
Accounting services ............................................. 145,530
Professional .................................................... 144,766
Printing ........................................................ 38,329
Officer and Directors ........................................... 29,230
Custodian ....................................................... 28,609
Transfer agent .................................................. 19,812
Registration .................................................... 9,083
Miscellaneous ................................................... 99,925
-------------
Total expenses excluding interest expense and fees .............. 3,286,994
Interest expense and fees 2 ..................................... 1,434,369
-------------
Total expenses .................................................. 4,721,363
-------------
Net investment income ........................................... 22,771,036
-------------
===============================================================================
Realized and Unrealized Gain (Loss)
- -------------------------------------------------------------------------------
Net realized loss from:
Investments ................................................... (4,694,610)
Futures and swaps ............................................. (1,192,179)
-------------
(5,886,789)
-------------
Net change in unrealized appreciation/depreciation on:
Investments ................................................... (65,443,827)
Swaps ......................................................... 427,302
-------------
(65,016,525)
-------------
Total realized and unrealized loss .............................. (70,903,314)
-------------
===============================================================================
Dividends to Preferred Shareholders From
- -------------------------------------------------------------------------------
Net investment income ........................................... (6,547,531)
-------------
Net Decrease in Net Assets Applicable to Common
Shareholders Resulting from Operations ........................ $ (54,679,809)
=============
1 Represents short-term floating rate certificates issued by tender option
bond trusts.
2 Related to tender option bond trusts.
See Notes to Financial Statements.
BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008 11
Statements of Changes in Net Assets
Year Ended
October 31,
-------------------------------
Increase (Decrease) in Net Assets Applicable to Common Shareholders: 2008 2007
===================================================================================================================================
Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income .......................................................................... $ 22,771,036 $ 23,451,287
Net realized gain (loss) ....................................................................... (5,886,789) 2,851,750
Net change in unrealized appreciation/depreciation ............................................. (65,016,525) (19,973,083)
Dividends to Preferred Shareholders from net investment income ................................. (6,547,531) (6,403,711)
-------------------------------
Net decrease in net assets applicable to Common Shareholders resulting from operations ......... (54,679,809) (73,757)
-------------------------------
===================================================================================================================================
Dividends to Common Shareholders From
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income .......................................................................... (17,375,256) (17,386,821)
-------------------------------
===================================================================================================================================
Capital Share Transactions
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvestment of common dividends ............................................................... 1,428,596 1,322,155
-------------------------------
===================================================================================================================================
Net Assets Applicable to Common Shareholders
- -----------------------------------------------------------------------------------------------------------------------------------
Total decrease in net assets applicable to Common Shareholders ................................. (70,626,469) (16,138,423)
Beginning of year .............................................................................. 293,836,183 309,974,606
-------------------------------
End of year .................................................................................... $ 223,209,714 $ 293,836,183
===============================
End of year undistributed net investment income ................................................ $ 1,127,498 $ 2,310,698
===============================
See Notes to Financial Statements.
12 BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008
Financial Highlights
Year Ended October 31,
-------------------------------------------------------
2008 2007 2006 2005 2004
===================================================================================================================================
Per Share Operating Performance
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ...................................... $ 14.49 $ 15.35 $ 15.13 $ 15.21 $ 14.76
-------------------------------------------------------
Net investment income 1 ................................................. 1.12 1.16 1.16 1.19 1.17
Net realized and unrealized gain (loss) ................................. (3.49) (0.84) 0.35 0.04 0.44
Dividends to Preferred Shareholders from net investment income .......... (0.32) (0.32) (0.29) (0.18) (0.07)
-------------------------------------------------------
Net increase (decrease) from investment operations ...................... (2.69) -- 1.22 1.05 1.54
-------------------------------------------------------
Dividends to Common Shareholders from net investment income ............. (0.85) (0.86) (1.00) (1.10) (1.09)
-------------------------------------------------------
Capital charges with respect to issuance of Preferred Shares ............ -- -- -- (0.03) --
-------------------------------------------------------
Net asset value, end of year ............................................ $ 10.95 $ 14.49 $ 15.35 $ 15.13 $ 15.21
=======================================================
Market price, end of year ............................................... $ 9.75 $ 13.91 $ 16.29 $ 15.40 $ 15.15
=======================================================
===================================================================================================================================
Total Investment Return 2
- -----------------------------------------------------------------------------------------------------------------------------------
Based on net asset value ................................................ (19.33)% (0.02)% 8.36% 6.88% 10.94%
=======================================================
Based on market price ................................................... (25.18)% (9.56)% 12.98% 9.21% 14.38%
=======================================================
===================================================================================================================================
Ratios to Average Net Assets Applicable to Common Shares
- -----------------------------------------------------------------------------------------------------------------------------------
Total expenses and excluding interest expense and fees 3,4 .............. 1.16% 1.12% 1.11% 1.07% 0.99%
=======================================================
Total expenses 4 ........................................................ 1.67% 1.67% 1.61% 1.35% 1.16%
=======================================================
Net investment income 4 ................................................. 8.03% 7.74% 7.70% 7.76% 7.86%
=======================================================
Dividends to Preferred Shareholders ..................................... 2.31% 2.11% 1.90% 1.14% 0.46%
=======================================================
Net investment income to Common Shareholders ............................ 5.72% 5.63% 5.80% 6.62% 7.40%
=======================================================
===================================================================================================================================
Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to Common Shareholders, end of year (000) ......... $223,210 $293,836 $309,975 $303,701 $303,448
=======================================================
Preferred Shares outstanding at liquidation preference, end of year (000) $150,800 $175,000 $175,000 $175,000 $135,000
=======================================================
Portfolio turnover ...................................................... 49% 43% 60% 64% 20%
=======================================================
Asset coverage per Preferred Share, end of year 5 ....................... $ 62,019 $ 67,004 $ 69,307 $ 68,389 $ 81,194
=======================================================
1 Based on average shares outstanding.
2 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 effect of sales
charges.
3 Interest expense and fees relate to tender option bond trusts. See Note 1
of the Notes to Financial Statements for details of municipal bonds
transferred to tender option bond trusts.
4 Do not reflect the effects of dividends to Preferred Shareholders.
5 Prior year amounts have been recalculated to conform with current year
presentation.
See Notes to Financial Statements.
BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008 13
Notes to Financial Statements
1. Organization and Significant Accounting Policies:
BlackRock MuniVest Fund II, Inc. (the "Fund") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as a non-diversified,
closed-end management investment company. The Fund is organized as a Maryland
corporation. The Fund's financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America, which
may require the use of management accruals and estimates. Actual results may
differ from these estimates. The Fund determines and makes available for
publication the net asset value of its Common Shares on a daily basis.
The following is a summary of significant accounting policies followed by the
Fund:
Valuation of investments: Municipal investments (including commitments to
purchase such investments on a "when-issued" basis) are valued on the basis of
prices provided by dealers or pricing services selected under the supervision of
the Fund's Board of Directors (the "Board"). In determining the value of a
particular investment, pricing services may use certain information with respect
to transactions in such investments, quotations from dealers, pricing matrixes,
market transactions in comparable investments and information with respect to
various relationships between investments. Financial futures contracts traded on
exchanges are valued at their last sale price. Swap agreements are valued
utilizing quotes received daily by the Fund's pricing service or through
brokers. Short-term securities are valued at amortized cost.
In the event that application of these methods of valuation results in a price
for an investment which is deemed not to be representative of the market value
of such investment, the investment will be valued by a method approved by the
Board as reflecting fair value ("Fair Value Assets"). When determining the price
for Fair Value Assets, the investment advisor and/or sub-advisor seeks to
determine the price that the Fund might reasonably expect to receive from the
current sale of that asset in an arm's-length transaction. Fair value
determinations shall be based upon all available factors that the investment
advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets
is subsequently reported to the Board or a committee thereof.
Derivative Financial Instruments: The Fund may engage in various portfolio
investment strategies both to increase the return of the Fund and to hedge, or
protect, its exposure to interest rate movements and movements in the securities
markets. Losses may arise if the value of the contract decreases due to an
unfavorable change in the price of the underlying security 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 financial futures contracts for
investment purposes or to manage its interest rate risk. Futures contracts
are contracts for delayed delivery of securities at a specific future date
and at a specific price or yield. 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 margin variation and are recognized 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. The use of
futures transactions involves the risk of an imperfect correlation in the
movements in the price of futures contracts, interest rates and the
underlying assets, and the possible inability of counterparties to meet
the terms of their contracts.
o Forward interest rate swaps -- The Fund may enter into forward interest
rate swaps for investment purposes. In a forward interest rate swap, the
Fund and the counterparty agree to make periodic net payments on a
specified notional contract amount, commencing on a specified future
effective date, unless terminated earlier. Forward interest rate swaps are
marked-to-market daily and changes in value are recorded as unrealized
appreciation (depreciation). When the forward interest rate swap is
terminated, the Fund will record a realized gain or loss equal to the
difference between the proceeds from (or cost of) the closing transaction
and the Fund's basis in the contract, if any. Forward interest rate swap
transactions involve, to varying degrees, elements of credit and market
risk in excess of the amounts recognized on the Statement of Assets and
Liabilities. Such risks involve the possibility that there will be no
liquid market for these agreements, that the counterparty to the
agreements may default on its obligation to perform or disagree as to the
meaning of the contractual terms in the agreements, and that there may be
unfavorable changes in interest rates and/or market values associated with
these transactions. The Fund generally intends to close each forward
interest rate swap before the effective date specified in the agreement
and therefore avoid entering into the interest rate swap underlying each
forward interest rate swap.
Forward Commitments and When-Issued Delayed Delivery Securities: The Fund may
purchase securities on a when-issued basis and may purchase or sell securities
on a forward commitment basis. Settlement of such transactions normally occurs
within a month or more after the purchase or sale commitment is made. The Fund
may purchase securities under such conditions only with the intention of
actually acquiring them, but may enter into a separate agreement to sell the
securities before the settlement date. Since the value of securities purchased
may fluctuate prior to settlement, the Fund may be required to pay more at
settlement than the security is worth. In addition, the purchaser is not
entitled to any of the interest earned prior to settlement. When purchasing a
security on a delayed-delivery basis, the Fund assumes the rights and risks of
ownership of the security, including the risk of price and yield fluctuations.
14 BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008
Notes to Financial Statements (continued)
Municipal Bonds Transferred to Tender Option Bond Trusts: The Fund may leverage
its assets through the use of tender option bond trusts ("TOBs"). A TOB is
established by a third party sponsor forming a special purpose entity, into
which one or more funds, or an agent on behalf of the funds, transfers municipal
securities. Other funds managed by the investment advisor may also contribute
municipal securities to a TOB into which the Fund has contributed securities. A
TOB typically issues two classes of beneficial interests: short-term floating
rate certificates, which are sold to third party investors, and residual
certificates ("TOB Residuals"), which are generally issued to the participating
funds that made the transfer or to affiliates of the Fund. The TOB Residuals
held by the Fund include the right of the Fund (1) to cause the holders of a
proportional share of the floating rate certificates to tender their
certificates at par, and (2) to transfer, within seven days, a corresponding
share of the municipal securities from the TOB to the Fund. The cash received by
the TOB from the sale of the short-term floating rate certificates, less
transaction expenses, is paid to the Fund, which typically invests the cash in
additional municipal securities. The Fund's transfer of the municipal securities
to a TOB is accounted for as a secured borrowing, therefore the municipal
securities deposited into a TOB are presented in the Fund's Schedule of
Investments and the proceeds from the transaction are reported as a liability
for Trust certificates.
Interest income from the underlying security is recorded by the Fund on an
accrual basis. Interest expense incurred on the secured borrowing and other
expenses related to remarketing, administration and trustee services to a TOB
are reported as expenses of the Fund. The floating rate certificates have
interest rates that generally reset weekly and their holders have the option to
tender certificates to the TOB for redemption at par at each reset date. At
October 31, 2008, the aggregate value of the underlying municipal securities
transferred to TOBs was $87,235,135, the related liability for trust
certificates was $49,617,552 and the range of interest rates was 2.479% to
4.475%.
Financial transactions executed through TOBs generally will underperform the
market for fixed rate municipal bonds when short-term interest rates rise, but
tend to outperform the market for fixed rate bonds when interest rates decline
or remain relatively stable. Should short-term interest rates rise, the Fund's
investment in TOBs likely will adversely affect the Fund's investment income and
dividends to Common Shareholders. Fluctuations in the market value of municipal
securities deposited into the TOB may adversely affect the Fund's net asset
value per share.
Segregation and Collateralization: In cases in which the 1940 Act and the
interpretive positions of the Securities and Exchange Commission ("SEC") require
that the Fund segregate assets in connection with certain investments (e.g.,
when-issued delayed delivery securities, swaps and futures), the Fund will,
consistent with certain interpretive letters issued by the SEC, designate on its
books and records cash or other liquid securities having a market value at least
equal to the amount that would otherwise be required to be physically
segregated. Furthermore, based on requirements and agreements with certain
exchanges and third party broker-dealers, the Fund may also be required to
deliver or deposit securities as collateral for certain investments (e.g.,
swaps).
Investment Transactions and Investment Income: Investment transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend date.
Interest income is recognized on the accrual method. The Fund amortizes all
premiums and discounts on debt securities.
Dividends and Distributions: Dividends from net investment income are declared
and paid monthly. Distributions of capital gains are recorded on the ex-dividend
dates. Dividends and distributions to holders of Preferred Shares are accrued
and determined as described in Note 4.
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 provisions are required.
Effective April 30, 2008, the Fund implemented Financial Accounting Standards
Board ("FASB") Interpretation No. 48, "Accounting for Uncertainty in Income
Taxes -- an interpretation of FASB Statement No. 109" ("FIN 48"). FIN 48
prescribes the minimum recognition threshold a tax position must meet in
connection with accounting for uncertainties in income tax positions taken or
expected to be taken by an entity, including investment companies, before being
measured and recognized in the financial statements. The investment advisor has
evaluated the application of FIN 48 to the Fund, and has determined that the
adoption of FIN 48 does not have a material impact on the Fund's financial
statements. The Fund files U.S. federal and various state and local tax returns.
No income tax returns are currently under examination. The statute of
limitations on the Fund's U.S. federal tax returns remains open for the years
ended October 31, 2005 through October 31, 2007. The statutes of limitations on
the Fund's state and local tax returns may remain open for an additional year
depending upon the jurisdiction.
Recent Accounting Pronouncements: In September 2006, Statement of Financial
Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157"), was issued
and is effective for fiscal years beginning after November 15, 2007. FAS 157
defines fair value, establishes a framework for measuring fair value and expands
disclosures about fair value measurements. The impact on the Fund's financial
statements disclosures, if any, is currently being assessed.
In March 2008, Statement of Financial Accounting Standards No. 161, "Disclosures
about Derivative Instruments and Hedging Activities -- an amendment of FASB
Statement No. 133" ("FAS 161"), was issued. FAS 161 is intended to improve
financial reporting for derivative instruments by
BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008 15
Notes to Financial Statements (continued)
requiring enhanced disclosure that enables investors to understand how and why
an entity uses derivatives, how derivatives are accounted for, and how
derivative instruments affect an entity's results of operations and financial
position. In September 2008, FASB Staff Position No. 133-1 and FASB
Interpretation No. 45-4 (the "FSP"), "Disclosures about Credit Derivatives and
Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB
Interpretation No. 45; and Clarification of the Effective Date of FASB Statement
No. 161," was issued and is effective for fiscal years and interim periods
ending after November 15, 2008. The FSP amends FASB Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities," to require
disclosures by sellers of credit derivatives, including credit derivatives
embedded in hybrid instruments. The FSP also clarifies the effective date of FAS
161, whereby disclosures required by FAS 161 are effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008. The impact on the Fund's financial statement disclosures, if any, is
currently being assessed.
Deferred Compensation and BlackRock Closed-End Share Equivalent Investment Plan:
Under the deferred compensation plan approved by the Fund's Board,
non-interested Directors ("Independent Directors") defer a portion of their
annual complex-wide compensation. Deferred amounts earn an approximate return as
though equivalent dollar amounts have been invested in common shares of other
certain BlackRock Closed-End Funds selected by the Independent Directors. This
has approximately the same economic effect for the Independent Directors as if
the Independent Directors had invested the deferred amounts directly in other
certain BlackRock Closed-End Funds.
The deferred compensation plan is not funded and obligations thereunder
represent general unsecured claims against the general assets of the Fund. The
Fund may, however, elect to invest in common shares of other certain BlackRock
Closed-End Funds selected by the Independent Directors in order to match its
deferred compensation obligations.
Other: Expenses directly related to the Fund are charged to the Fund. Other
operating expenses shared by several funds are pro-rated among those funds on
the basis of relative net assets or other appropriate methods.
2. Investment Advisory Agreement and Other Transactions with Affiliates:
The Fund entered into an Investment Advisory Agreement with BlackRock Advisors,
LLC (the "Advisor"), an indirect, wholly owned subsidiary of BlackRock, Inc., to
provide investment advisory and administration services. Merrill Lynch & Co.,
Inc. ("Merrill Lynch") and The PNC Financial Services Group, Inc. are principal
owners of BlackRock, Inc.
The Advisor 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 the Advisor a monthly fee at an annual rate of 0.50% of the Fund's average
daily net assets. Average daily net assets is the average daily value of the
Fund's total assets minus the sum of its accrued liabilities.
The Advisor has entered into a separate sub-advisory agreement with BlackRock
Investment Management, LLC. ("BIM"), an affiliate of the Advisor, under which
the Advisor pays BIM for services it provides, a monthly fee that is a
percentage of the investment advisory fee paid by the Fund to the Advisor.
For the year ended October 31, 2008, the Fund reimbursed the Advisor $7,622, for
certain accounting services, which is included in accounting services in the
Statement of Operations.
Certain officers and/or directors of the Fund are officers and/or directors of
BlackRock, Inc. or its affiliates. The Fund reimburses the Advisor for
compensation paid to the Fund's Chief Compliance Officer.
3. Investments:
Purchases and sales of investments, excluding short-term securities, for the
year ended October 31, 2008, were $227,296,446 and $285,354,746, respectively.
4. Capital Share Transactions:
Common Shares
The Fund is authorized to issue 200,000,000 shares of stock, including Preferred
Shares, par value $0.10 per share, all of which were initially classified as
Common Shares. The Board is authorized, however, to reclassify any unissued
shares of stock without approval of Common Shareholders.
Common Shares issued and outstanding for the years ended October 31, 2008 and
October 31, 2007 increased by 104,666 and 87,529, respectively, as a result of
dividend reinvestment.
Preferred Shares
The Preferred Shares are redeemable at the option of the Fund, in whole or in
part, on any dividend payment date at $25,000 per share plus any accumulated
unpaid dividends whether or not declared. The Preferred Shares are also subject
to mandatory redemption at $25,000 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 the
Fund's Articles Supplementary, are not satisfied.
16 BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008
Notes to Financial Statements (continued)
The holders of Preferred Shares have voting rights equal to the holders of
Common Shares (one vote per share) and will vote together with holders of Common
Shares (one vote per share) as a single class. However, holders of Preferred
Shares, voting as a separate class, are also entitled to elect two Directors for
the Fund. In addition, the 1940 Act requires that along with approval by
shareholders that might otherwise be required, the approval of the holders of a
majority of any outstanding Preferred Shares, voting separately as a class would
be required to (a) adopt any plan of reorganization that would adversely affect
the Preferred Shares, (b) change the Fund's subclassification as a closed-end
investment company or change its fundamental investment restrictions or (c)
change its business so as to cease to be an investment company.
The yields in effect at October 31, 2008 were as follows: Series A, 3.488%;
Series B, 2.988%; Series C, 2.988%; and Series D, 4.105%.
Dividends on seven-day Preferred Shares are cumulative at a rate which is reset
every seven days based on the results of an auction. Dividends on 28-day
Preferred Shares are cumulative at a rate which is reset every 28 days based on
the results of an auction. If the Preferred Shares fails to clear the auction on
an auction date, the Fund is required to pay the maximum applicable rate on the
Preferred Shares to holders of such shares for each successive dividend period
until such time as the shares are successfully auctioned. The maximum applicable
rate on the Preferred Shares, for Series A, B and C, is the higher of 110% of
the AA commercial paper rate or 110% of 90% of the Kenny S&P 30-day High Grade
Index rate divided by 1.00 minus the marginal tax rate and for Series D is the
higher of 110% plus or times the Telerate/BBA LIBOR or 110% of 90% of the Kenny
S&P 30-day High Grade Index rate divided by 1.00 minus the marginal tax rate.
During the year ended October 31, 2008, the Preferred Shares of the Fund were
successfully auctioned at each auction date until February 13, 2008. The low,
high and average dividend rates on the Preferred Shares for the Fund for the
year ended October 31, 2008 were as follows:
- --------------------------------------------------------------------------------
Series Low High Average
- --------------------------------------------------------------------------------
A ........................................... 2.535% 12.565% 4.081%
B ........................................... 2.579% 8.651% 3.683%
C ........................................... 2.000% 12.565% 3.706%
D ........................................... 3.090% 10.377% 4.277%
- --------------------------------------------------------------------------------
Since February 13, 2008, the Preferred Shares of the Fund failed to clear any of
their auctions. As a result, the Preferred Shares dividend rates were reset to
the maximum applicable rate, which ranged from 2.480% to 12.565%. A failed
auction is not an event of default for the Fund but it has a negative impact on
the liquidity of Preferred Shares. A failed auction occurs when there are more
sellers of a fund's auction rate preferred shares than buyers. It is impossible
to predict how long this imbalance will last. A successful auction for the
Fund's Preferred Shares may not occur for some time, if ever, and even if
liquidity does resume, holders of the Preferred Shares may not have the ability
to sell the Preferred Shares at their liquidation preference.
The Fund may not declare dividends or make other distributions on Common Shares
or purchase any such shares if, at the time of the declaration, distribution or
purchase, asset coverage with respect to the outstanding Preferred Shares is
less than 200%.
The Fund pays commissions to certain broker-dealers at the end of each auction
at an annual rate of 0.25%, calculated on the aggregate principal amount. For
the year ended October 31, 2008, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, a wholly owned subsidiary of Merrill Lynch, earned commissions of
$221,296.
Between June 4, 2008 and June 17, 2008, the Fund announced the following
redemptions of Preferred Shares at a price of $25,000 plus any accrued and
unpaid dividends through the redemption date:
- --------------------------------------------------------------------------------
Redemption Shares Aggregate
Series Date Redeemed Principal
- --------------------------------------------------------------------------------
A .................................. 7/03/08 249 $6,225,000
B .................................. 7/10/08 249 $6,225,000
C .................................. 6/26/08 249 $6,225,000
D .................................. 6/24/08 221 $5,525,000
- --------------------------------------------------------------------------------
The Fund financed the Preferred Share redemptions with cash received from TOB
transactions.
Preferred Shares issued and outstanding for the year ended October 31, 2007
remained constant.
5. Income Tax Information:
Reclassifications: Accounting principles generally accepted in the United States
of America require that certain components of net assets be adjusted to reflect
permanent differences between financial and tax reporting. These
reclassifications have no effect on net assets or on net asset values per share.
The following permanent differences as of October 31, 2008 attributable to
amortization methods on fixed income securities and the expiration of capital
loss carryforwards, were reclassified to the following accounts:
- --------------------------------------------------------------------------------
Decrease paid-in-capital ....................................... $(7,499,156)
Decrease undistributed net investment income ................... $ (31,449)
Increase accumulated net realized loss ......................... $ 7,530,605
- --------------------------------------------------------------------------------
BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008 17
Notes to Financial Statements (concluded)
The tax character of distributions paid during the fiscal years ended October
31, 2008 and October 31, 2007 was as follows:
- --------------------------------------------------------------------------------
10/31/2008 10/31/2007
- --------------------------------------------------------------------------------
Distributions paid from:
Tax-exempt income .............................. $23,845,376 $23,790,532
Ordinary income ................................ 77,411 --
--------------------------
Total distributions .............................. $23,922,787 $23,790,532
==========================
As of October 31, 2008, the components of accumulated losses on a tax basis were
as follows:
Undistributed tax-exempt income ............................... $ 1,365,666
Undistributed ordinary income ................................. 129,654
------------
Total undistributed earnings .................................. 1,495,320
Capital loss carryforward ..................................... (7,838,255)
Net unrealized losses ......................................... (49,058,038)
------------
Total accumulated net losses .................................. $(55,400,973)
============
* The difference between book-basis and tax-basis net unrealized losses is
attributable primarily to the tax deferral of losses on wash sales, the
tax deferral of losses on straddles, the difference between book and tax
amortization methods for premiums and discounts on fixed income securities
and the difference between the book and tax treatment of residual
interests in tender option bond trusts.
As of October 31, 2008, the Fund had a capital loss carryforward of $7,838,255
available to offset future realized capital gains which expires October 31,
2016.
6. Concentration Risk:
The Fund's investments are concentrated in certain states, which may be affected
by adverse financial, social, environmental, economic, regulatory and political
factors.
Many municipalities insure repayment of their bonds, which reduces the risk of
loss due to issuer default. The market value of these bonds may fluctuate for
other reasons, including market perception of the value of such insurance, and
there is no guarantee that the issuer will meet its obligation.
7. Subsequent Events:
The Fund paid a tax-exempt income dividend to Common Shareholders in the amount
of $0.071 per share on December 1, 2008 to shareholders of record on November
14, 2008.
The dividends declared on Preferred Shares for the period November 1, 2008 to
November 30, 2008 were as follows: Series A, $81,852; Series B, $84,446; Series
C, $55,283; and Series D, $75,299.
On September 15, 2008, Bank of America Corporation announced that it has agreed
to acquire Merrill Lynch, one of the principal owners of BlackRock, Inc. The
purchase has been approved by the shareholders and directors of both companies
and certain regulators. Subject to other regulatory approvals, the transaction
is expected to close on or about December 31, 2008.
In December 2008, commissions paid to broker-dealers on preferred shares that
experience a failed auction were reduced to 0.15% on the aggregate principal
amount. The Fund will continue to pay commissions of 0.25% on the aggregate
principal amount of all shares that successfully clear their auctions.
18 BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
BlackRock MuniVest Fund II, Inc.:
We have audited the accompanying statement of assets and liabilities of
BlackRock MuniVest Fund II, Inc. (the "Fund"), including the schedule of
investments, as of October 31, 2008, and the related statement of operations for
the year then ended, the statements of changes in 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. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
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, as well as evaluating the
overall financial statement presentation. Our procedures include confirmation of
securities owned as of October 31, 2008, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
BlackRock MuniVest Fund II, Inc. as of October 31, 2008, the results of its
operations 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 accounting
principles generally accepted in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
December 24, 2008
Important Tax Information (Unaudited)
The following summarizes the taxable per share distributions paid by BlackRock
MuniVest Fund II, Inc. during the taxable year ended October 31, 2008:
- --------------------------------------------------------------------------------
Ordinary
Payable Date Income
- --------------------------------------------------------------------------------
Common Shareholders 12/31/2007 $0.002752
- --------------------------------------------------------------------------------
Preferred Shareholders:
Series A 12/20/2007 $3.10
Series B 12/27/2007 $3.13
Series C 12/06/2007 $3.04
Series D 12/18/2007 $3.07
- --------------------------------------------------------------------------------
All of the other net investment income distributions paid by the Fund qualify as
tax-exempt interest dividends for federal income tax purposes.
BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008 19
Disclosure of Investment Advisory Agreement and Subadvisory Agreement
The Board of Directors (the "Board," the members of which are referred to as
"Directors") of the BlackRock MuniVest Fund II, Inc. (the "Fund") met in April
and May 2008 to consider approving the continuation of the Fund's investment
advisory agreement (the "Advisory Agreement") with BlackRock Advisors, LLC (the
"Advisor"), the Fund's investment advisor. The Board also considered the
approval of the Fund's subadvisory agreement (the "Subadvisory Agreement" and,
together with the Advisory Agreement, the "Agreements") between the Advisor and
BlackRock Investment Management, LLC (the "Subadvisor"). The Advisor and the
Subadvisor are collectively referred to herein as the "Advisors" and, together
with BlackRock, Inc., "BlackRock."
Activities and Composition of the Board
The Board of the Fund consists of thirteen individuals, eleven of whom are not
"interested persons" of the Fund as defined in the Investment Company Act of
1940 (the "1940 Act") (the "Independent Directors"). The Directors are
responsible for the oversight of the operations of the Fund and perform the
various duties imposed on the directors of investment companies by the 1940 Act.
The Independent Directors have retained independent legal counsel to assist them
in connection with their duties. The Chairman of the Board is an Independent
Director. The Board has established four standing committees: an Audit
Committee, a Governance and Nominating Committee, a Compliance Committee and a
Performance Oversight Committee.
Advisory Agreement and Subadvisory Agreement
Upon the consummation of the combination of BlackRock, Inc.'s investment
management business with Merrill Lynch & Co., Inc.'s investment management
business, including Merrill Lynch Investment Managers, L.P., and certain
affiliates, the Fund entered into the Advisory Agreement and the Subadvisory
Agreement, each with an initial two-year term. Consistent with the 1940 Act,
after the Advisory Agreement's and Subadvisory Agreement's respective initial
two-year term, the Board is required to consider the continuation of the Fund's
Advisory Agreement and Subadvisory Agreement on an annual basis. In connection
with this process, the Board assessed, among other things, the nature, scope and
quality of the services provided to the Fund by the personnel of BlackRock and
its affiliates, including investment advisory services, administrative services,
secondary market support services, oversight of fund accounting and custody, and
assistance in meeting legal and regulatory requirements. The Board also received
and assessed information regarding the services provided to the Fund by certain
unaffiliated service providers.
Throughout the year, the Board also considered a range of information in
connection with its oversight of the services provided by BlackRock and its
affiliates. Among the matters the Board considered were: (a) investment
performance for one-, three- and five-year periods, as applicable, against peer
funds, as well as senior management and portfolio managers' analysis of the
reasons for underperformance, if applicable; (b) fees, including advisory,
administration and other fees paid to BlackRock and its affiliates by the Fund,
as applicable; (c) Fund operating expenses paid to third parties; (d) the
resources devoted to and compliance reports relating to the Fund's investment
objective, policies and restrictions; (e) the Fund's compliance with its Code of
Ethics and compliance policies and procedures; (f) the nature, cost and
character of non-investment management services provided by BlackRock and its
affiliates; (g) BlackRock's and other service providers' internal controls; (h)
BlackRock's implementation of the proxy voting guidelines approved by the Board;
(i) execution quality; (j) valuation and liquidity procedures; and (k) reviews
of BlackRock's business, including BlackRock's response to the increasing scale
of its business.
Board Considerations in Approving the Advisory Agreement and Subadvisory
Agreement
To assist the Board in its evaluation of the Agreements, the Directors received
information from BlackRock in advance of the April 22, 2008 meeting which
detailed, among other things, the organization, business lines and capabilities
of the Advisors, including: (a) the responsibilities of various departments and
key personnel and biographical information relating to key personnel; (b)
financial statements for BlackRock; (c) the advisory and/or administrative fees
paid by the Fund to the Advisors, including comparisons, compiled by Lipper Inc.
("Lipper"), an independent third party, with the management fees, which include
advisory and administration fees, of funds with similar investment objectives
("Peers"); (d) the profitability of BlackRock and certain industry profitability
analyses for advisors to registered investment companies; (e) the expenses of
BlackRock in providing various services; (f) non-investment advisory
reimbursements, if applicable, and "fallout" benefits to BlackRock; (g)
economies of scale, if any, generated through the Advisors' management of all of
the BlackRock closed-end funds (the "Fund Complex"); (h) the expenses of the
Fund, including comparisons of the Fund's expense ratios (both before and after
any fee waivers) with the expense ratios of its Peers; (i) an internal
comparison of management fees classified by Lipper, if applicable; and (j) the
Fund's performance for the past one-, three- and five-year periods, as
applicable, as well as the Fund's performance compared to its Peers.
20 BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008
Disclosure of Investment Advisory Agreement and Subadvisory Agreement
(continued)
The Board also considered other matters it deemed important to the approval
process, where applicable, such as payments made to BlackRock or its affiliates
relating to the distribution of Fund shares, services related to the valuation
and pricing of Fund portfolio holdings, and direct and indirect benefits to
BlackRock and its affiliates from their relationship with the Fund.
In addition to the foregoing materials, independent legal counsel to the
Independent Directors provided a legal memorandum outlining, among other things,
the duties of the Board under the 1940 Act, as well as the general principles of
relevant law in reviewing and approving advisory contracts, the requirements of
the 1940 Act in such matters, an advisor's fiduciary duty with respect to
advisory agreements and compensation, and the standards used by courts in
determining whether investment company boards of directors have fulfilled their
duties and the factors to be considered by boards in voting on advisory
agreements.
The Independent Directors reviewed this information and discussed it with
independent legal counsel prior to the meeting on April 22, 2008. At the Board
meeting on April 22, 2008, BlackRock made a presentation to and responded to
questions from the Board. Following the meeting on April 22, 2008, the Board
presented BlackRock with questions and requests for additional information.
BlackRock responded to these requests with additional written materials provided
to the Directors prior to the meetings on May 29 and 30, 2008. At the Board
meetings on May 29 and 30, 2008, BlackRock responded to further questions from
the Board. In connection with BlackRock's presentations, the Board considered
each Agreement and, in consultation with independent legal counsel, reviewed the
factors set out in judicial decisions and Securities and Exchange Commission
("SEC") statements relating to the renewal of the Agreements.
Matters Considered by the Board
In connection with its deliberations with respect to the Agreements, the Board
considered all factors it believed relevant with respect to the Fund, including
the following: the nature, extent and quality of the services provided by the
Advisors; the investment performance of the Fund; the costs of the services to
be provided and profits to be realized by the Advisors and their affiliates from
their relationship with the Fund; the extent to which economies of scale would
be realized as the Fund Complex grows; and whether BlackRock realizes other
benefits from its relationship with the Fund.
A. Nature, Extent and Quality of the Services: In evaluating the nature, extent
and quality of the Advisors' services, the Board reviewed information concerning
the types of services that the Advisors provide and are expected to provide to
the Fund, narrative and statistical information concerning the Fund's
performance record and how such performance compares to the Fund's Peers,
information describing BlackRock's organization and its various departments, the
experience and responsibilities of key personnel and available resources. The
Board noted the willingness of the personnel of BlackRock to engage in open,
candid discussions with the Board. The Board further considered the quality of
the Advisors' investment process in making portfolio management decisions.
In addition to advisory services, the Directors considered the quality of the
administrative and non-investment advisory services provided to the Fund. The
Advisors and their affiliates provided the Fund with such administrative and
other services, as applicable (in addition to any such services provided by
others for the Fund), and officers and other personnel as are necessary for the
operations of the Fund. In addition to investment management services, the
Advisors and their affiliates provided the Fund with services such as: preparing
shareholder reports and communications, including annual and semi-annual
financial statements and the Fund's website; communications with analysts to
support secondary market trading; assisting with daily accounting and pricing;
preparing periodic filings with regulators and stock exchanges; overseeing and
coordinating the activities of other service providers; administering and
organizing Board meetings and preparing the Board materials for such meetings;
providing legal and compliance support (such as helping to prepare proxy
statements and responding to regulatory inquiries); and performing other Fund
administrative tasks necessary for the operation of the Fund (such as tax
reporting and fulfilling regulatory filing requirements). The Board considered
the Advisors' policies and procedures for assuring compliance with applicable
laws and regulations.
B. The Investment Performance of the Fund and BlackRock: As previously noted,
the Board received performance information regarding the Fund and its Peers.
Among other things, the Board received materials reflecting the Fund's historic
performance and the Fund's one-, three- and five-year total returns (as
applicable) relative to its Peers (including the Peers' median performance). The
Board was provided with a description of the methodology used by Lipper to
select the Fund's Peers. The Board noted that it regularly reviews the
performance of the Fund throughout the year. The Board reviewed a narrative and
statistical analysis of the Lipper data that was prepared by BlackRock, which
analyzed various factors that affect Lipper rankings.
BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008 21
Disclosure of Investment Advisory Agreement and Subadvisory Agreement
(continued)
The Board noted that in general the Fund performed better than its Peers in that
the Fund's performance was at or above the median of its Peers in at least two
of the one-, three- and five-year periods reported.
C. Consideration of the Advisory Fees and the Cost of the Services and Profits
to be Realized by BlackRock and its Affiliates from their Relationship with the
Fund: In evaluating the management fees and expenses that a Fund is expected to
bear, the Board considered the Fund's current management fee structure and the
Fund's expense ratios in absolute terms as well as relative to the fees and
expense ratios of its applicable Peers. The Board, among other things, reviewed
comparisons of the Fund's gross management fees before and after any applicable
reimbursements and fee waivers and total expense ratios before and after any
applicable waivers with those of applicable Peers. The Board also reviewed a
narrative analysis of the Peer rankings prepared by Lipper and summarized by
BlackRock at the request of the Board. This summary placed the Peer rankings
into context by analyzing various factors that affect these comparisons.
The Board noted that the Fund paid contractual management fees lower than or
equal to the median contractual fees paid by the Fund's Peers. This comparison
was made without giving effect to any expense reimbursements or fee waivers.
The Board also compared the management fees charged and services provided by the
Advisors to closed-end funds in general versus other types of clients (such as
open-end investment companies and separately managed institutional accounts) in
similar investment categories. The Board noted certain differences in services
provided and costs incurred by the Advisor with respect to closed-end funds
compared to these other types of clients and the reasons for such differences.
In connection with the Board's consideration of the fees and expense
information, the Board reviewed the considerable investment management
experience of the Advisors and considered the high level of investment
management, administrative and other services provided by the Advisors.
D. Profitability of BlackRock: The Board also considered BlackRock's
profitability in conjunction with its review of fees. The Board reviewed
BlackRock's profitability with respect to the Fund Complex and other fund
complexes managed by the Advisors. In reviewing profitability, the Board
recognized that one of the most difficult issues in determining profitability is
establishing a method of allocating expenses. The Board also reviewed
BlackRock's assumptions and methodology of allocating expenses, noting the
inherent limitations in allocating costs among various advisory products. The
Board also recognized that individual fund or product line profitability of
other advisors is generally not publicly available.
The Board recognized that profitability may be affected by numerous factors
including, among other things, the types of funds managed, expense allocations
and business mix, and therefore comparability of profitability is somewhat
limited. Nevertheless, to the extent available, the Board considered BlackRock's
operating margin compared to the operating margin estimated by BlackRock for a
leading investment management firm whose operations consist primarily of
advising closed-end funds. The comparison indicated that BlackRock's operating
margin was approximately the same as the operating margin of such firm.
In evaluating the reasonableness of the Advisors' compensation, the Board also
considered any other revenues paid to the Advisors, including partial
reimbursements paid to the Advisors for certain non-investment advisory
services, if applicable. The Board noted that these payments were less than the
Advisors' costs for providing these services. The Board also considered indirect
benefits (such as soft dollar arrangements) that the Advisors and their
affiliates are expected to receive which are attributable to their management of
the Fund.
E. Economies of Scale: In reviewing the Fund's fees and expenses, the Board
examined the potential benefits of economies of scale, and whether any economies
of scale should be reflected in the Fund's fee structure, for example through
the use of breakpoints for the Fund or the Fund Complex. In this regard, the
Board reviewed information provided by BlackRock, noting that most closed-end
fund complexes do not have fund-level breakpoints because closed-end funds
generally do not experience substantial growth after their initial public
offering and each fund is managed independently consistent with its own
investment objectives. The Board noted that only three closed-end funds in the
Fund Complex have breakpoints in their fee structures. Information provided by
Lipper also revealed that only one closed-end fund complex used a complex-level
breakpoint structure. The Board found, based on its review of comparable funds,
that the Fund's management fee is appropriate in light of the scale of the Fund.
22 BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008
Disclosure of Investment Advisory Agreement and Subadvisory Agreement
(concluded)
Other Factors: In evaluating fees, the Board also considered indirect benefits
or profits the Advisors or their affiliates may receive as a result of their
relationships with the Fund ("fall-out benefits"). The Directors, including the
Independent Directors, considered the intangible benefits that accrue to the
Advisors and their affiliates by virtue of their relationships with the Fund,
including potential benefits accruing to the Advisors and their affiliates as a
result of participating in offerings of the Fund's shares, potentially stronger
relationships with members of the broker-dealer community, increased name
recognition of the Advisors and their affiliates, enhanced sales of other
investment funds and products sponsored by the Advisors and their affiliates and
increased assets under management which may increase the benefits realized by
the Advisors from soft dollar arrangements with broker-dealers. The Board also
considered the unquantifiable nature of these potential benefits.
Conclusion with Respect to the Agreements
In reviewing and approving the continuation of the Agreements, the Directors did
not identify any single factor discussed above as all-important or controlling,
but considered all factors together, and different Directors may have attributed
different weights to the various factors considered. The Independent Directors
were also assisted by the advice of independent legal counsel in making this
determination. The Directors, including the Independent Directors, unanimously
determined that each of the factors described above, in light of all the other
factors and all of the facts and circumstances applicable to the Fund, was
acceptable for the Fund and supported the Directors' conclusion that the terms
of each Agreement were fair and reasonable, that the Fund's fees are reasonable
in light of the services provided to the Fund and that each Agreement should be
approved.
BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008 23
Automatic Dividend Reinvestment Plan
How the Plan Works -- The Fund offers a Dividend Reinvestment Plan (the "Plan")
under which income and capital gains dividends paid by the Fund are
automatically reinvested in additional Common Shares of the Fund. The Plan is
administered on behalf of the shareholders by BNY Mellon Shareowner Services
(the "Plan Agent"). Under the Plan, whenever the Fund declares a dividend,
participants in the Plan will receive the equivalent in Common Shares of the
Fund. The Plan Agent will acquire the shares for the participant's account
either (i) through receipt of additional unissued but authorized shares of the
Fund ("newly issued shares") or (ii) by purchase of outstanding shares of Common
Shares on the open market on the New York Stock Exchange or elsewhere. If, on
the dividend payment date, the Fund's net asset value per share is equal to or
less than the market price per share plus estimated brokerage commissions (a
condition often referred to as a "market premium"), the Plan Agent will invest
the dividend amount in newly issued shares. If the Fund's net asset value per
share is greater than the market price per share (a condition often referred to
as a "market discount"), the Plan Agent will invest the dividend amount by
purchasing on the open market additional shares. If the Plan Agent is unable to
invest the full dividend amount in open market purchases, or if the market
discount shifts to a market premium during the purchase period, the Plan Agent
will invest any uninvested portion in newly issued shares. The shares acquired
are credited to each shareholder's account. The amount credited is determined by
dividing the dollar amount of the dividend by either (i) when the shares are
newly issued, the net asset value per share on the date the shares are issued or
(ii) when shares are purchased in the open market, the average purchase price
per share.
Participation in the Plan -- Participation in the Plan is automatic, that is, a
shareholder is automatically enrolled in the Plan when he or she purchases
Common Shares of the Fund unless the shareholder specifically elects not to
participate in the Plan. Shareholders who elect not to participate will receive
all dividend distributions in cash. Shareholders who do not wish to participate
in the Plan must advise the Plan Agent in writing (at the address set forth
below) that they elect not to participate in the Plan. Participation in the Plan
is completely voluntary and may be terminated or resumed at any time without
penalty by writing to the Plan Agent.
Benefits of the Plan -- The Plan provides an easy, convenient way for
shareholders to make additional, regular investments in the Fund. The Plan
promotes a long-term strategy of investing at a lower cost. All shares acquired
pursuant to the Plan receive voting rights. In addition, if the market price
plus commissions of the Fund's shares is above the net asset value, participants
in the Plan will receive shares of the Fund for less than they could otherwise
purchase them and with a cash value greater than the value of any cash
distribution they would have received. However, there may not be enough shares
available in the market to make distributions in shares at prices below the net
asset value. Also, since the Fund does not redeem shares, the price on resale
may be more or less than the net asset value.
Plan Fees -- There are no enrollment fees or brokerage fees for participating in
the Plan. The Plan Agent's service fees for handling the reinvestment of
distributions are paid for by the Fund. However, brokerage commissions may be
incurred when the Fund purchases shares on the open market and shareholders will
pay a pro rata share of any such commissions.
Tax Implications -- The automatic reinvestment of dividends and distributions
will not relieve participants of any federal, state or local income tax that may
be payable (or required to be withheld) on such dividends. Therefore, income and
capital gains may still be realized even though shareholders do not receive
cash. The value of shares acquired pursuant to the Plan will generally be
excluded from gross income to the extent that the cash amount reinvested would
be excluded from gross income. If, when the Fund's shares are trading at a
market premium, the Fund issues shares pursuant to the Plan that have a greater
fair market value than the amount of cash reinvested, it is possible that all or
a portion of the discount from the market value (which may not exceed 5% of the
fair market value of the Fund's shares) could be viewed as a taxable
distribution. If the discount is viewed as a taxable distribution, it is also
possible that the taxable character of this discount would be allocable to all
the shareholders, including shareholders who do not participate in the Plan.
Thus, shareholders who do not participate in the Plan might be required to
report as ordinary income a portion of their distributions equal to their
allocable share of the discount.
Contact Information -- All correspondence concerning the Plan, including any
questions about the Plan, should be directed to the Plan Agent at BNY Mellon
Shareowner Services, P.O. Box 358035, Pittsburgh, PA 15252-8035, Telephone:
(866) 216-0242.
24 BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008
Officers and Directors
Number of
BlackRock-
Position(s) Length of Advised Funds
Name, Address Held with Time Served Principal Occupation(s) and Portfolios
and Year of Birth Fund as a Director 2 During Past Five Years Overseen Public Directorships
====================================================================================================================================
Non-Interested Directors 1
- ------------------------------------------------------------------------------------------------------------------------------------
Richard E. Cavanagh Chairman of Since 2007 Trustee, Aircraft Finance Trust 113 Funds Arch Chemical
40 East 52nd Street the Board since 1999; Director, The 110 Portfolios (chemical and allied
New York, NY 10022 and Director Guardian Life Insurance Company products)
1946 of America since 1998; Trustee,
Educational Testing Service
since 1997; Director, The
Fremont Group since 1996;
Formerly President and Chief
Executive Officer of The
Conference Board, Inc. (global
business research organization)
from 1995 to 2007.
- ------------------------------------------------------------------------------------------------------------------------------------
Karen P. Robards Vice Chair Since 2007 Partner of Robards & Company, 113 Funds AtriCure, Inc.
40 East 52nd Street of the Board, LLC (financial advisory firm) 110 Portfolios (medical devices);
New York, NY 10022 Chair of since 1987; Co-founder and Care Investment
1950 the Audit Director of the Cooke Center for Trust, Inc. (health
Committee Learning and Development (a care REIT)
and Director not-for-profit organization)
since 1987; Formerly Director of
Enable Medical Corp. from 1996
to 2005; Formerly an investment
banker at Morgan Stanley from
1976 to 1987.
- ------------------------------------------------------------------------------------------------------------------------------------
G. Nicholas Director Since 2007 Chairman and Chief Executive 113 Funds None
Beckwith, III Officer, Arch Street Management, 110 Portfolios
40 East 52nd Street LLC (Beckwith Family Foundation)
New York, NY 10022 and various Beckwith property
1945 companies since 2005; Chairman
of the Board of Directors,
University of Pittsburgh Medical
Center since 2002; Board of
Directors, Shady Side Hospital
Foundation since 1977; Board of
Directors, Beckwith Institute
for Innovation In Patient Care
since 1991; Member, Advisory
Council on Biology and Medicine,
Brown University since 2002;
Trustee, Claude Worthington
Benedum Foundation (charitable
foundation) since 1989; Board of
Trustees, Chatham University
since 1981; Board of Trustees,
University of Pittsburgh since
2002; Emeritus Trustee, Shady
Side Academy since 1977;
Formerly Chairman and Manager,
Penn West Industrial Trucks LLC
(sales, rental and servicing of
material handling equipment)
from 2005 to 2007; Formerly
Chairman, President and Chief
Executive Officer, Beckwith
Machinery Company (sales, rental
and servicing of construction
equipment) from 1985 to 2005;
Formerly Board of Directors,
National Retail Properties
(REIT) from 2006 to 2007.
- ------------------------------------------------------------------------------------------------------------------------------------
Kent Dixon Director and Since 2007 Consultant/Investor since 1988. 113 Funds None
40 East 52nd Street Member of 110 Portfolios
New York, NY 10022 the Audit
1937 Committee
- ------------------------------------------------------------------------------------------------------------------------------------
Frank J. Fabozzi Director and Since 2007 Consultant/Editor of The Journal 113 Funds None
40 East 52nd Street Member of of Portfolio Management since 110 Portfolios
New York, NY 10022 the Audit 2006; Professor in the Practice
1948 Committee of Finance and Becton Fellow,
Yale University, School of
Management since 2006; Formerly
Adjunct Professor of Finance and
Becton Fellow, Yale University
from 1994 to 2006.
- ------------------------------------------------------------------------------------------------------------------------------------
Kathleen F. Feldstein Director Since 2007 President of Economics Studies, 113 Funds The McClatchy
40 East 52nd Street Inc. (private economic 110 Portfolios Company
New York, NY 10022 consulting firm) since 1987; (newspaper
1941 Chair, Board of Trustees, McLean publishing)
Hospital from 2000 to 2008 and
Trustee Emeritus thereof since
2008; Member of the Corporation
of Partners Community
Healthcare, Inc. since 2005;
Member of the Corporation of
Partners HealthCare since 1995;
Member of the Corporation of
Sherrill House (health care)
since 1990; Trustee, Museum of
Fine Arts, Boston since 1992;
Member of the Visiting Committee
to the Harvard University Art
Museum since 2003; Trustee, The
Committee for Economic
Development (research
organization) since 1990; Member
of the Advisory Board to the
International School of
Business, Brandeis University
since 2002.
- ------------------------------------------------------------------------------------------------------------------------------------
James T. Flynn Director and Since 2007 Formerly Chief Financial Officer 113 Funds None
40 East 52nd Street Member of of JPMorgan & Co., Inc. from 110 Portfolios
New York, NY 10022 the Audit 1990 to 1995.
1939 Committee
- ------------------------------------------------------------------------------------------------------------------------------------
BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008 25
Officers and Directors (continued)
Number of
BlackRock-
Position(s) Length of Advised Funds
Name, Address Held with Time Served Principal Occupation(s) and Portfolios
and Year of Birth Fund as a Director 2 During Past Five Years Overseen Public Directorships
====================================================================================================================================
Non-Interested Directors 1 (concluded)
- ------------------------------------------------------------------------------------------------------------------------------------
Jerrold B. Harris Director Since 2007 Trustee, Ursinus College since 113 Funds BlackRock-Kelso
40 East 52nd Street 2000; Director, Troemner LLC 110 Portfolios Capital Corp.
New York, NY 10022 (scientific equipment) since
1942 2000.
- ------------------------------------------------------------------------------------------------------------------------------------
R. Glenn Hubbard Director Since 2007 Dean of Columbia Business School 113 Funds ADP (data and
40 East 52nd Street since 2004; Columbia faculty 110 Portfolios information services);
New York, NY 10022 member since 1988; Formerly KKR Financial
1958 Co-Director of Columbia Business Corporation (finance);
School's Entrepreneurship Duke Realty
Program from 1997 to 2004; (real estate);
Visiting Professor at the John Metropolitan Life
F. Kennedy School of Government Insurance Company
at Harvard University and the (insurance);
Harvard Business School since Information
1985 and at the University of Services Group
Chicago since 1994; Formerly (media/technology)
Chairman of the U.S. Council of
Economic Advisers under the
President of the United States
from 2001 to 2003.
- ------------------------------------------------------------------------------------------------------------------------------------
W. Carl Kester Director and Since 2007 Mizuho Financial Group Professor 113 Funds None
40 East 52nd Street Member of of Finance, Harvard Business 110 Portfolios
New York, NY 10022 the Audit School and Deputy Dean for
1951 Committee Academic Affairs since 2006;
Unit Head, Finance, Harvard
Business School from 2005 to
2006; Senior Associate Dean and
Chairman of the MBA Program of
Harvard Business School from
1999 to 2005; Member of the
faculty of Harvard Business
School since 1981; Independent
Consultant since 1978.
- ------------------------------------------------------------------------------------------------------------------------------------
Robert S. Salomon, Jr. Director and Since 2007 Formerly Principal of STI 113 Funds None
40 East 52nd Street Member of Management LLC (investment 110 Portfolios
New York, NY 10022 the Audit adviser) from 1994 to 2005.
1936 Committee
------------------------------------------------------------------------------------------------------------
1 Directors serve until their resignation, removal or death, or until December 31 of the year in which
they turn 72.
2 Following the combination of Merrill Lynch Investment Managers, L.P. ("MLIM") and BlackRock, Inc.
("BlackRock") in September 2006, the various legacy MLIM and legacy BlackRock Fund boards were
realigned and consolidated into three new Fund boards in 2007. As a result, although the chart shows
directors as joining the Fund's board in 2007, each director first became a member of the board of
directors of other legacy MLIM or legacy BlackRock Funds as follows: G. Nicholas Beckwith, III since
1999; Richard E. Cavanagh since 1994; Kent Dixon since 1988; Frank J. Fabozzi since 1988; Kathleen F.
Feldstein since 2005; James T. Flynn since 1996; Jerrold B. Harris since 1999; R. Glenn Hubbard since
2004; W. Carl Kester since 1998; Karen P. Robards since 1998; and Robert S. Salomon, Jr. since 1996.
26 BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008
Officers and Directors (continued)
Number of
BlackRock-
Position(s) Length of Advised Funds
Name, Address Held with Time Served Principal Occupation(s) and Portfolios
and Year of Birth Fund as a Director During Past Five Years Overseen Public Directorships
====================================================================================================================================
Interested Directors 1
- ------------------------------------------------------------------------------------------------------------------------------------
Richard S. Davis Director Since 2007 Managing Director, BlackRock, 184 Funds None
40 East 52nd Street Inc. since 2005; Formerly Chief 295 Portfolios
New York, NY 10022 Executive Officer, State Street
1945 Research & Management Company
from 2000 to 2005; Formerly
Chairman of the Board of
Trustees, State Street Research
Mutual Funds from 2000 to 2005;
Formerly Chairman, SSR Realty
from 2000 to 2004.
- ------------------------------------------------------------------------------------------------------------------------------------
Henry Gabbay Director Since 2007 Consultant, BlackRock, Inc. 184 Funds None
40 East 52nd Street since 2007; Formerly Managing 295 Portfolios
New York, NY 10022 Director, BlackRock, Inc. from
1947 1989 to 2007; Formerly Chief
Administrative Officer,
BlackRock Advisors, LLC from
1998 to 2007; Formerly President
of BlackRock Funds and BlackRock
Bond Allocation Target Shares
from 2005 to 2007; Formerly
Treasurer of certain closed-end
funds in the BlackRock fund
complex from 1989 to 2006.
------------------------------------------------------------------------------------------------------------
1 Mr. Davis is an "interested person," as defined in the Investment Company Act of 1940, of the Fund
based on his position with BlackRock, Inc. and its affiliates. Mr. Gabbay is an "interested person" of
the Fund due to his consulting arrangement with BlackRock, Inc. as well as his ownership of BlackRock,
Inc. and PNC securities. Directors serve until their resignation, removal or death, or until December
31 of the year in which they turn 72.
BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008 27
Officers and Directors (concluded)
Position(s) Length of
Name, Address Held with Time
and Year of Birth Fund Served Principal Occupation(s) During Past Five Years
====================================================================================================================================
Fund Officers 1
- ------------------------------------------------------------------------------------------------------------------------------------
Donald C. Burke Fund Since 2007 Managing Director of BlackRock, Inc. since 2006; Formerly Managing
40 East 52nd Street President Director of Merrill Lynch Investment Managers, L.P. ("MLIM") and Fund
New York, NY 10022 and Chief Asset Management, L.P. ("FAM") in 2006; First Vice President thereof
1960 Executive from 1997 to 2005; Treasurer thereof from 1999 to 2006 and Vice
Officer President thereof from 1990 to 1997.
- ------------------------------------------------------------------------------------------------------------------------------------
Anne F. Ackerley Vice Since 2007 Managing Director of BlackRock, Inc. since 2000; Chief Operating Officer
40 East 52nd Street President of BlackRock's U.S. Retail Group since 2006; Head of BlackRock's Mutual
New York, NY 10022 Fund Group from 2000 to 2006; Merrill Lynch & Co., Inc. from 1984 to
1962 1986 and from 1988 to 2000, most recently as First Vice President and
Operating Officer of the Mergers and Acquisitions Group.
- ------------------------------------------------------------------------------------------------------------------------------------
Neal J. Andrews Chief Since 2007 Managing Director of BlackRock, Inc. since 2006; Formerly Senior Vice
40 East 52nd Street Financial President and Line of Business Head of Fund Accounting and
New York, NY 10022 Officer Administration at PNC Global Investment Servicing (U.S.) Inc. (formerly
1966 PFPC Inc.) from 1992 to 2006.
- ------------------------------------------------------------------------------------------------------------------------------------
Jay M. Fife Treasurer Since 2007 Managing Director of BlackRock, Inc. since 2007 and Director in 2006;
40 East 52nd Street Formerly Assistant Treasurer of the MLIM/FAM-advised Funds from 2005 to
New York, NY 10022 2006; Director of MLIM Fund Services Group from 2001 to 2006.
1970
- ------------------------------------------------------------------------------------------------------------------------------------
Brian P. Kindelan Chief Since 2007 Chief Compliance Officer of the BlackRock-advised Funds since 2007;
40 East 52nd Street Compliance Anti-Money Laundering Officer of the BlackRock-advised Funds since 2007;
New York, NY 10022 Officer of Managing Director and Senior Counsel of BlackRock, Inc. since 2005;
1959 the Fund Director and Senior Counsel of BlackRock Advisors, Inc. from 2001 to
2004 and Vice President and Senior Counsel thereof from 1998 to 2000;
Formerly Senior Counsel of The PNC Bank Corp. from 1995 to 1998.
- ------------------------------------------------------------------------------------------------------------------------------------
Howard B. Surloff Secretary Since 2007 Managing Director of BlackRock, Inc. and General Counsel of U.S. Funds
40 East 52nd Street at BlackRock, since 2006; Formerly Inc. General Counsel (U.S.) of
New York, NY 10022 Goldman Sachs Asset Management, L.P. from 1993 to 2006.
1965
------------------------------------------------------------------------------------------------------------
1 Officers of the Fund serve at the pleasure of the Board of Directors.
- ------------------------------------------------------------------------------------------------------------------------------------
Custodian
The Bank of New York Mellon
New York, NY 10286
Transfer Agent
Common Shares and
Preferred Shares:
BNY Mellon Shareowner
Services
Jersey City, NJ 07310
Accounting Agent
State Street Bank and
Trust Company
Princeton, NJ 08540
Independent Registered Public
Accounting Firm
Deloitte & Touche LLP
Princeton, NJ 08540
Legal Counsel
Skadden, Arps, Slate,
Meagher & Flom LLP
New York, NY 10036
28 BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008
Additional Information
Proxy Results
The Annual Meeting of Shareholders was held on September 12, 2008 for
shareholders of record on July 14, 2008 to elect director nominees of BlackRock
MuniVest Fund II, Inc.:
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Voted Shares Withheld
For From Voting
- ------------------------------------------------------------------------------------------------------------------------------------
Approved the Directors as follows: G. Nicholas Beckwith, III 18,161,026 344,988
Kent Dixon 18,156,130 349,884
R. Glenn Hubbard 18,154,376 351,638
W. Carl Kester 4,576 1 862 1
Robert S. Salomon, Jr. 18,155,980 350,034
Richard S. Davis 18,166,170 339,844
Frank J. Fabozzi 4,576 1 862 1
James T. Flynn 18,153,530 352,484
Karen P. Robards 18,156,338 349,676
Richard E. Cavanagh 18,157,526 348,488
Kathleen F. Feldstein 18,153,385 352,629
Henry Gabbay 18,162,358 343,656
Jerrold B. Harris 18,156,305 349,709
- ------------------------------------------------------------------------------------------------------------------------------------
1 Voted by holders of Preferred Shares only.
Section 19 Notices
The amounts and sources of distributions reported are only estimates and are not
being provided for tax reporting purposes. The actual amounts and sources for
tax reporting purposes will depend upon the Fund's investment experience during
the year and may be subject to changes based on the tax regulations. The Fund
will send you a Form 1099-DIV each calendar year that will tell you how to
report these distributions for federal income tax purposes.
- ------------------------------------------------------------------------------------------------------------------------------------
Total Fiscal Year to Date Percentage of Fiscal Year to Date
Cumulative Distributions by Character Cumulative Distributions by Character
----------------------------------------- -----------------------------------------
Net Net
Net Realized Return Total Per Net Realized Return Total Per
Investment Capital of Common Investment Capital of Common
Income Gains Capital Share Income Gains Capital Share
- ------------------------------------------------------------------------------------------------------------------------------------
BlackRock Munivest Fund II, Inc. ....... $0.851 $0.00272 -- $0.854 100% 0% 0% 100%
- ------------------------------------------------------------------------------------------------------------------------------------
BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008 29
Additional Information (continued)
Dividend Policy
The Fund's dividend policy is to distribute all or a portion of its net
investment income to its shareholders on a monthly basis. In order to provide
shareholders with a more stable level of dividend distributions, 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 Net Assets, which
comprises part of the financial information included in this report.
Fund Certification
The Fund is listed for trading on the New York Stock Exchange ("NYSE") and has
filed with the NYSE its annual chief executive officer certification regarding
compliance with the NYSE's listing standards. The Fund filed with the Securities
and Exchange Commission ("SEC") the certification of its chief executive officer
and chief financial officer required by section 302 of the Sarbanes-Oxley Act.
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q
are available on the SEC's website at http://www.sec.gov and may also be
reviewed and copied at the SEC's Public Reference Room in Washington, DC.
Information on the operation of the Public Reference Room may be obtained by
calling (800) SEC-0330. The Fund's Forms N-Q may also be obtained upon request
and without charge by calling (800) 441-7762.
Electronic Delivery
Electronic copies of most financial reports are available on the Fund's website
or shareholders can sign up for e-mail notifications of quarterly statements,
annual and semi-annual reports by enrolling in the Fund's electronic delivery
program.
Shareholders Who Hold Accounts with Investment Advisors, Banks or Brokerages:
Please contact your financial advisor to enroll. Please note that not all
investment advisors, banks or brokerages may offer this service.
30 BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008
Additional Information (concluded)
General Information
The Fund does not make available copies of its Statements of Additional
Information because the Fund's shares are not continuously offered, which means
that the Statement of Additional Information of the Fund has not been updated
after completion of the Fund's offering and the information contained in the
Fund's Statement of Additional Information may have become outdated.
During the period, there were no material changes in the Fund's investment
objectives or policies or to the Fund's charters or by-laws that were not
approved by the shareholders or in the principal risk factors associated with
investment in the Fund. There have been no changes in the persons who are
primarily responsible for the day-to-day management of the Fund's portfolios.
The Fund will mail only one copy of shareholder documents, including annual and
semi-annual reports and proxy statements, to shareholders with multiple accounts
at the same address. This practice is commonly called "householding" and it is
intended to reduce expenses and eliminate duplicate mailings of shareholder
documents. Mailings of your shareholder documents may be householded
indefinitely unless you instruct us otherwise. If you do not want the mailing of
these documents to be combined with those for other members of your household,
please contact the Fund at (800) 441-7762.
Quarterly performance, semi-annual and annual reports and other information
regarding the Fund may be found on BlackRock's website, which can be accessed at
http://www.blackrock.com. This reference to BlackRock's website is intended to
allow investors public access to information regarding the Fund and does not,
and is not intended to, incorporate BlackRock's website into this report.
Articles Supplementary
Effective September 13, 2008, following approval by the Fund's Board and the
applicable rating agencies, the Board amended the terms of the Fund's Preferred
Shares in order to allow the Fund to enter into TOB transactions, the proceeds
of which were used to redeem a portion of the Fund's Preferred Shares.
Accordingly, the definition of Inverse Floaters was amended to incorporate the
Fund's permissible ratio of floating rate instruments into inverse floating rate
instruments. Additionally, conforming changes and certain formula modifications
concerning inverse floaters were made to the definitions of Moody's Discount
Factor and S&P Discount Factor, as applicable, to integrate the Fund's
investments in TOBs into applicable calculations.
BlackRock Privacy Principles
BlackRock is committed to maintaining the privacy of its current and former fund
investors and individual clients (collectively, "Clients") and to safeguarding
their non-public personal information. The following information is provided to
help you understand what personal information BlackRock collects, how we protect
that information and why in certain cases we share such information with select
parties.
If you are located in a jurisdiction where specific laws, rules or regulations
require BlackRock to provide you with additional or different privacy-related
rights beyond what is set forth below, then BlackRock will comply with those
specific laws, rules or regulations.
BlackRock obtains or verifies personal non-public information from and about you
from different sources, including the following: (i) information we receive from
you or, if applicable, your financial intermediary, on applications, forms or
other documents; (ii) information about your transactions with us, our
affiliates, or others; (iii) information we receive from a consumer reporting
agency; and (iv) from visits to our websites.
BlackRock does not sell or disclose to non-affiliated third parties any
non-public personal information about its Clients, except as permitted by law or
as is necessary to respond to regulatory requests or to service Client accounts.
These non-affiliated third parties are required to protect the confidentiality
and security of this information and to use it only for its intended purpose.
We may share information with our affiliates to service your account or to
provide you with information about other BlackRock products or services that may
be of interest to you. In addition, BlackRock restricts access to non-public
personal information about its Clients to those BlackRock employees with a
legitimate business need for the information. BlackRock maintains physical,
electronic and procedural safeguards that are designed to protect the non-public
personal information of its Clients, including procedures relating to the proper
storage and disposal of such information.
BLACKROCK MUNIVEST FUND II, INC. OCTOBER 31, 2008 31
This report is transmitted to shareholders only. It is not a prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. The Fund has leveraged its Common Shares,
which creates risks for Common Shareholders, including the likelihood of greater
volatility of net asset value and market price of shares of the Common Shares,
and the risk that fluctuations in the short-term dividend rates of the Preferred
Shares, currently set at the maximum reset rate as a result of failed auctions,
may affect the yield to Common Shareholders. Statements and other information
herein are as dated and are subject to change.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free (800) 441-7762; (2) at
www.blackrock.com; and (3) on the Securities and Exchange Commission's website
at http://www.sec.gov. Information about how the Fund voted proxies relating to
securities held in the Fund's portfolio during the most recent 12-month period
ended June 30 is available upon request and without charge (1) at
www.blackrock.com or by calling (800) 441-7762 and (2) on the Securities and
Exchange Commission's website at http://www.sec.gov.
BlackRock MuniVest Fund II, Inc.
100 Bellevue Parkway
Wilmington, DE 19809
BLACKROCK
#16807-10/08
Item 2 - Code of Ethics - The registrant (or the "Fund") has adopted a code
of ethics, as of the end of the period covered by this report,
applicable to the registrant's principal executive officer,
principal financial officer and principal accounting officer, or
persons performing similar functions. During the period covered by
this report, there have been no amendments to or waivers granted
under the code of ethics. A copy of the code of ethics is available
without charge at www.blackrock.com.
Item 3 - Audit Committee Financial Expert - The registrant's board of
directors or trustees, as applicable (the "board of directors") has
determined that (i) the registrant has the following audit committee
financial experts serving on its audit committee and (ii) each audit
committee financial expert is independent:
Kent Dixon
Frank J. Fabozzi
James T. Flynn
W. Carl Kester
Karen P. Robards
Robert S. Salomon, Jr.
The registrant's board of directors has determined that W. Carl
Kester and Karen P. Robards qualify as financial experts pursuant to
Item 3(c)(4) of Form N-CSR.
Prof. Kester has a thorough understanding of generally accepted
accounting principles, financial statements and internal control
over financial reporting as well as audit committee functions. Prof.
Kester has been involved in providing valuation and other financial
consulting services to corporate clients since 1978. Prof. Kester's
financial consulting services present a breadth and level of
complexity of accounting issues that are generally comparable to the
breadth and complexity of issues that can reasonably be expected to
be raised by the registrant's financial statements.
Ms. Robards has a thorough understanding of generally accepted
accounting principles, financial statements and internal control
over financial reporting as well as audit committee functions. Ms.
Robards has been President of Robards & Company, a financial
advisory firm, since 1987. Ms. Robards was formerly an investment
banker for more than 10 years where she was responsible for
evaluating and assessing the performance of companies based on their
financial results. Ms. Robards has over 30 years of experience
analyzing financial statements. She also is a member of the audit
committee of one publicly held company and a non-profit
organization.
Under applicable securities laws, a person determined to be an audit
committee financial expert will not be deemed an "expert" for any
purpose, including without limitation for the purposes of Section 11
of the Securities Act of 1933, as a result of being designated or
identified as an audit committee financial expert. The designation
or identification as an audit committee financial expert does not
impose on such person any duties, obligations, or liabilities
greater than the duties, obligations, and liabilities imposed on
such person as a member of the audit committee and board of
directors in the absence of such designation or identification.
Item 4 - Principal Accountant Fees and Services
- -----------------------------------------------------------------------------------------------------------------------------------
(a) Audit Fees (b) Audit-Related Fees(1) (c) Tax Fees(2) (d) All Other Fees(3)
- -----------------------------------------------------------------------------------------------------------------------------------
Current Previous Current Previous Current Previous Current Previous
Fiscal Year Fiscal Fiscal Year Fiscal Fiscal Year Fiscal Fiscal Year Fiscal
Entity Name End Year End End Year End End Year End End Year End
- -----------------------------------------------------------------------------------------------------------------------------------
BlackRock MuniVest
Fund II, Inc. $32,500 $52,850 $3,500 $3,500 $6,100 $6,100 $1,049 $1,042
- -----------------------------------------------------------------------------------------------------------------------------------
1 The nature of the services include assurance and related services
reasonably related to the performance of the audit of financial statements
not included in Audit Fees.
2 The nature of the services include tax compliance, tax advice and tax
planning.
3 The nature of the services include a review of compliance procedures and
attestation thereto.
(e)(1) Audit Committee Pre-Approval Policies and Procedures:
The registrant's audit committee (the "Committee") has adopted
policies and procedures with regard to the pre-approval of services.
Audit, audit-related and tax compliance services provided to the
registrant on an annual basis require specific pre-approval by the
Committee. The Committee also must approve other non-audit services
provided to the registrant and those non-audit services provided to
the registrant's affiliated service providers that relate directly
to the operations and the financial reporting of the registrant.
Certain of these non-audit services that the Committee believes are
a) consistent with the SEC's auditor independence rules and b)
routine and recurring services that will not impair the independence
of the independent accountants may be approved by the Committee
without consideration on a specific case-by-case basis ("general
pre-approval"). The term of any general pre-approval is 12 months
from the date of the pre-approval, unless the Committee provides for
a different period. Tax or other non-audit services provided to the
registrant which have a direct impact on the operation or financial
reporting of the registrant will only be deemed pre-approved
provided that any individual project does not exceed $10,000
attributable to the registrant or $50,000 for all of the registrants
the Committee oversees. For this purpose, multiple projects will be
aggregated to determine if they exceed the previously mentioned cost
levels.
Any proposed services exceeding the pre-approved cost levels
will require specific pre-approval by the Committee, as will any
other services not subject to general pre-approval (e.g.,
unanticipated but permissible services). The Committee is informed
of each service approved subject to general pre-approval at the next
regularly scheduled in-person board meeting. At this meeting, an
analysis of such services is presented to the Committee for
ratification. The Committee may delegate to one or more of its
members the authority to approve the provision of and fees for any
specific engagement of permitted non-audit services, including
services exceeding pre-approved cost levels.
(e)(2) None of the services described in each of Items 4(b) through
(d) were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not Applicable
(g) Affiliates' Aggregate Non-Audit Fees:
--------------------------------------------------------------------
Current Fiscal Previous Fiscal
Entity Name Year End Year End
--------------------------------------------------------------------
BlackRock MuniVest Fund II, Inc. $298,149 $295,142
--------------------------------------------------------------------
(h) The registrant's audit committee has considered and determined
that the provision of non-audit services that were rendered to the
registrant's investment adviser (not including any non-affiliated
sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by the registrant's investment
adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services
to the registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal accountant's independence.
Regulation S-X Rule 2-01(c)(7)(ii) - $287,500, 0%
Item 5 - Audit Committee of Listed Registrants - The following individuals
are members of the registrant's separately-designated standing audit
committee established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(58)(A)):
Kent Dixon
Frank J. Fabozzi
James T. Flynn
W. Carl Kester
Karen P. Robards
Robert S. Salomon, Jr.
Item 6 - Investments
(a) The registrant's Schedule of Investments is included as part of
the Report to Stockholders filed under Item 1 of this form.
(b) Not Applicable due to no such divestments during the semi-annual
period covered since the previous Form N-CSR filing.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - The board of directors has
delegated the voting of proxies for the Fund securities to the
Fund's investment advisor ("Investment Adviser") pursuant to the
Investment Adviser's proxy voting guidelines. Under these
guidelines, the Investment Adviser will vote proxies related to Fund
securities in the best interests of the Fund and its stockholders.
From time to time, a vote may present a conflict between the
interests of the Fund's stockholders, on the one hand, and those of
the Investment Adviser, or any affiliated person of the Fund or the
Investment Adviser, on the other. In such event, provided that the
Investment Adviser's Equity Investment Policy Oversight Committee,
or a sub-committee thereof (the "Oversight Committee") is aware of
the real or potential conflict or material non-routine matter and if
the Oversight Committee does not reasonably believe it is able to
follow its general voting guidelines (or if the particular proxy
matter is not addressed in the guidelines) and vote impartially, the
Oversight Committee may retain an independent fiduciary to advise
the Oversight Committee on how to vote or to cast votes on behalf of
the Investment Adviser's clients. If the Investment Adviser
determines not to retain an independent fiduciary, or does not
desire to follow the advice of such independent fiduciary, the
Oversight Committee shall determine how to vote the proxy after
consulting with the Investment Adviser's Portfolio Management Group
and/or the Investment Adviser's Legal and Compliance Department and
concluding that the vote cast is in its client's best interest
notwithstanding the conflict. A copy of the Fund's Proxy Voting
Policy and Procedures are attached as Exhibit 99.PROXYPOL.
Information on how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 is
available without charge, (i) at www.blackrock.com and (ii) on the
SEC's website at http://www.sec.gov.
Item 8 - Portfolio Managers of Closed-End Management Investment Companies -
as of October 31, 2008.
(a)(1) BlackRock MuniVest Fund II, Inc. is managed by a team of
investment professionals comprised of Theodore R. Jaeckel, Jr., CFA
and Walter O'Connor. Each is a member of BlackRock's municipal
tax-exempt management group. Each is jointly responsible for the
day-to-day management of the Fund's portfolio, which includes
setting the Fund's overall investment strategy, overseeing the
management of the Fund and/or selection of its investments. Messrs.
Jaeckel and O'Connor have been members of the Fund's portfolio
management team since 2006.
Mr. Jaeckel joined BlackRock in 2006. Prior to joining BlackRock, he
was a Managing Director (Municipal Tax-Exempt Fund Management) of
Merrill Lynch Investment Managers, L.P. ("MLIM") from 2005 to 2006
and a Director of MLIM from 1997 to 2005. He has been a portfolio
manager with BlackRock or MLIM since 1991.
Mr. O'Connor joined BlackRock in 2006. Prior to joining BlackRock,
he was a Managing Director (Municipal Tax-Exempt Fund Management) of
MLIM from 2003 to 2006 and was a Director of MLIM from 1997 to 2002.
He has been a portfolio manager with BlackRock or MLIM since 1991.
(a)(2) As of October 31, 2008:
-----------------------------------------------------------------------------------------------------------------------
Number of Other Accounts and
Number of Other Accounts Managed Assets for Which Advisory Fee is
and Assets by Account Type Performance-Based
-----------------------------------------------------------------------------------------------------------------------
Other Other Other Other
Name of Registered Pooled Registered Pooled
Portfolio Investment Investment Other Investment Investment Other
Manager Companies Vehicles Accounts Companies Vehicles Accounts
-----------------------------------------------------------------------------------------------------------------------
Theodore R.
Jaeckel, Jr. 81 0 0 0 0 0
-----------------------------------------------------------------------------------------------------------------------
$16.75 Billion $0 $0 $0 $0 $0
-----------------------------------------------------------------------------------------------------------------------
Walter O'Connor 81 0 0 0 0 0
-----------------------------------------------------------------------------------------------------------------------
$16.75 Billion $0 $0 $0 $0 $0
-----------------------------------------------------------------------------------------------------------------------
(iv) Potential Material Conflicts of Interest
BlackRock, Inc. and its affiliates (collectively, herein
"BlackRock") has built a professional working environment, firm-wide
compliance culture and compliance procedures and systems designed to
protect against potential incentives that may favor one account over
another. BlackRock has adopted policies and procedures that address
the allocation of investment opportunities, execution of portfolio
transactions, personal trading by employees and other potential
conflicts of interest that are designed to ensure that all client
accounts are treated equitably over time. Nevertheless, BlackRock
furnishes investment management and advisory services to numerous
clients in addition to the Fund, and BlackRock may, consistent with
applicable law, make investment recommendations to other clients or
accounts (including accounts which are hedge funds or have
performance or higher fees paid to BlackRock, or in which portfolio
managers have a personal interest in the receipt of such fees),
which may be the same as or different from those made for the Fund.
In addition, BlackRock, its affiliates and any officer, director,
stockholder or employee may or may not have an interest in the
securities whose purchase and sale BlackRock recommends to the Fund.
BlackRock, or any of its affiliates, or any officer, director,
stockholder, employee or any member of their families may take
different actions than those recommended to the Fund by BlackRock
with respect to the same securities. Moreover, BlackRock may refrain
from rendering any advice or services concerning securities of
companies of which any of BlackRock's (or its affiliates') officers,
directors or employees are directors or officers, or companies as to
which BlackRock or any of its affiliates or the officers, directors
or employees of any of them has any substantial economic interest or
possesses material non-public information. Each portfolio manager
also may manage accounts whose investment strategies may at times be
opposed to the strategy utilized for a fund. In this regard, it
should be noted that a portfolio manager may currently manage
certain accounts that are subject to performance fees. In addition,
a portfolio manager may assist in managing certain hedge funds and
may be entitled to receive a portion of any incentive fees earned on
such funds and a portion of such incentive fees may be voluntarily
or involuntarily deferred. Additional portfolio managers may in the
future manage other such accounts or funds and may be entitled to
receive incentive fees.
As a fiduciary, BlackRock owes a duty of loyalty to its clients and
must treat each client fairly. When BlackRock purchases or sells
securities for more than one account, the trades must be allocated
in a manner consistent with its fiduciary duties. BlackRock attempts
to allocate investments in a fair and equitable manner among client
accounts, with no account receiving preferential treatment. To this
end, BlackRock has adopted a policy that is intended to ensure that
investment opportunities are allocated fairly and equitably among
client accounts over time. This policy also seeks to achieve
reasonable efficiency in client transactions and provide BlackRock
with sufficient flexibility to allocate investments in a manner that
is consistent with the particular investment discipline and client
base.
(a)(3) As of October 31, 2008:
Portfolio Manager Compensation Overview
BlackRock's financial arrangements with its portfolio managers, its
competitive compensation and its career path emphasis at all levels
reflect the value senior management places on key resources.
Compensation may include a variety of components and may vary from
year to year based on a number of factors. The principal components
of compensation include a base salary, a performance-based
discretionary bonus, participation in various benefits programs and
one or more of the incentive compensation programs established by
BlackRock such as its Long-Term Retention and Incentive Plan.
Base compensation. Generally, portfolio managers receive base
compensation based on their seniority and/or their position with the
firm. Senior portfolio managers who perform additional management
functions within the portfolio management group or within BlackRock
may receive additional compensation for serving in these other
capacities.
Discretionary Incentive Compensation
Discretionary incentive compensation is a function of several
components: the performance of BlackRock, Inc., the performance of
the portfolio manager's group within BlackRock, the investment
performance, including risk-adjusted returns, of the firm's assets
under management or supervision by that portfolio manager relative
to predetermined benchmarks, and the individual's seniority, role
within the portfolio management team, teamwork and contribution to
the overall performance of these portfolios and BlackRock. In most
cases, including for the portfolio managers of the Fund, these
benchmarks are the same as the benchmark or benchmarks against which
the performance of the Fund or other accounts managed by the
portfolio managers are measured. BlackRock's Chief Investment
Officers determine the benchmarks against which the performance of
funds and other accounts managed by each portfolio manager is
compared and the period of time over which performance is evaluated.
With respect to the portfolio managers, such benchmarks for the Fund
include a combination of market-based indices (e.g., Barclays
Capital Municipal Bond Index), certain customized indices and
certain fund industry peer groups.
BlackRock's Chief Investment Officers make a subjective
determination with respect to the portfolio managers' compensation
based on the performance of the funds and other accounts managed by
each portfolio manager relative to the various benchmarks noted
above. Performance is measured on both a pre-tax and after-tax basis
over various time periods including 1, 3, 5 and 10-year periods, as
applicable.
Distribution of Discretionary Incentive Compensation
Discretionary incentive compensation is distributed to portfolio
managers in a combination of cash and BlackRock, Inc. restricted
stock units which vest ratably over a number of years. The
BlackRock, Inc. restricted stock units, if properly vested, will be
settled in BlackRock, Inc. common stock. Typically, the cash bonus,
when combined with base salary, represents more than 60% of total
compensation for the portfolio managers. Paying a portion of annual
bonuses in stock puts compensation earned by a portfolio manager for
a given year "at risk" based on BlackRock's ability to sustain and
improve its performance over future periods.
Long-Term Retention and Incentive Plan ("LTIP") -- The LTIP is
a long-term incentive plan that seeks to reward certain key
employees. Beginning in 2006, awards are granted under the LTIP in
the form of BlackRock, Inc. restricted stock units that, if properly
vested and subject to the attainment of certain performance goals,
will be settled in BlackRock, Inc. common stock. Messrs. Jaeckel and
O'Connor have each received awards under the LTIP.
Deferred Compensation Program -- A portion of the compensation
paid to eligible BlackRock employees may be voluntarily deferred
into an account that tracks the performance of certain of the firm's
investment products. Each participant in the deferred compensation
program is permitted to allocate his deferred amounts among the
various investment options. Messrs. Jaeckel and O'Connor have each
participated in the deferred compensation program.
Other compensation benefits. In addition to base compensation and
discretionary incentive compensation, portfolio managers may be
eligible to receive or participate in one or more of the following:
Incentive Savings Plans -- BlackRock, Inc. has created a
variety of incentive savings plans in which BlackRock employees are
eligible to participate, including a 401(k) plan, the BlackRock
Retirement Savings Plan (RSP), and the BlackRock Employee Stock
Purchase Plan (ESPP). The employer contribution components of the
RSP include a company match equal to 50% of the first 6% of eligible
pay contributed to the plan capped at $4,000 per year, and a company
retirement contribution equal to 3% of eligible compensation, plus
an additional contribution of 2% for any year in which BlackRock has
positive net operating income. The RSP offers a range of investment
options, including registered investment companies managed by the
firm. BlackRock contributions follow the investment direction set by
participants for their own contributions or, absent employee
investment direction, are invested into a balanced portfolio. The
ESPP allows for investment in BlackRock common stock at a 5%
discount on the fair market value of the stock on the purchase date.
Annual participation in the ESPP is limited to the purchase of 1,000
shares or a dollar value of $25,000. Each portfolio manager is
eligible to participate in these plans.
(a)(4) Beneficial Ownership of Securities. As of October 31, 2008,
the dollar range of securities beneficially owned by each
portfolio manager in the Fund is shown below:
-----------------------------------------------------------
Portfolio Manager Dollar Range of Equity
Securities Beneficially Owned
-----------------------------------------------------------
Theodore R. Jaeckel, Jr. $10,001 - $50,000
-----------------------------------------------------------
Walter O'Connor None
-----------------------------------------------------------
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable due to no such
purchases during the period covered by this report.
Item 10 - Submission of Matters to a Vote of Security Holders - The
registrant's Nominating and Governance Committee will consider
nominees to the board of directors recommended by shareholders when
a vacancy becomes available. Shareholders who wish to recommend a
nominee should send nominations that include biographical
information and set forth the qualifications of the proposed nominee
to the registrant's Secretary. There have been no material changes
to these procedures.
Item 11 - Controls and Procedures
11(a) - The registrant's principal executive and principal financial
officers or persons performing similar functions have concluded that
the registrant's disclosure controls and procedures (as defined in
Rule 30a-3(c) under the Investment Company Act of 1940, as amended
(the "1940 Act")) are effective as of a date within 90 days of the
filing of this report based on the evaluation of these controls and
procedures required by Rule 30a-3(b) under the 1940 Act and Rule
13a-15(b) under the Securities Exchange Act of 1934, as amended.
11(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act)
that occurred during the second fiscal quarter of the period covered
by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over
financial reporting.
Item 12 - Exhibits attached hereto
12(a)(1) - Code of Ethics - See Item 2
12(a)(2) - Certifications - Attached hereto
12(a)(3) - Not Applicable
12(b) - Certifications - Attached hereto
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BlackRock MuniVest Fund II, Inc.
By: /s/ Donald C. Burke
-------------------
Donald C. Burke
Chief Executive Officer of
BlackRock MuniVest Fund II, Inc.
Date: December 19, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Donald C. Burke
-------------------
Donald C. Burke
Chief Executive Officer (principal executive officer) of
BlackRock MuniVest Fund II, Inc.
Date: December 19, 2008
By: /s/ Neal J. Andrews
-------------------
Neal J. Andrews
Chief Financial Officer (principal financial officer) of
BlackRock MuniVest Fund II, Inc.
Date: December 19, 2008