Company: BLE
Filing Date: 2025-10-03
Form Type: N-CSR
Source: 0001193125-25-230217
Chunk: 1

Company: BLACKROCK MUNICIPAL INCOME TRUST II
Filing Date: 2025-10-03
Form: N-CSR
Chunk 1
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 Advisory Agreements            | 109 |
| Investment Objectives, Policies and Risks               | 113 |
| Automatic Dividend Reinvestment Plan                    | 127 |
| Director and Officer Information                        | 128 |
| Additional Information                                  | 131 |
| Glossary of Terms Used in this Report                   | 133 |

2

Municipal Market Overview For the Reporting Period Ended July 31, 2025

Municipal Market Conditions Municipals enjoyed positive returns in the early portion of the period as weakening economic data gave the Federal Reserve (the “Fed”) a runway to begin their long-awaited easing cycle in September 2024. A strong third quarter of 2024 was followed by an underwhelming fourth as markets recalibrated future policy easing expectations amid renewed economic strength, a subsequent “higher for longer” rates ideology, and municipal-specific policy concerns. The first half of 2025 was defined by extreme levels of tariff-related volatility in April that reset rich municipal valuations to very attractive levels. Markets have ultimately stabilized, but supply continues to act as a drag. July notably saw net positive supply for the first time since 2008. The front and intermediate parts of the curve and the IDR/PCR and housing sectors performed best. Relative to the rest of the fixed income universe, the asset class underperformed quite significantly in the second half of the period.

| Bloomberg Municipal Bond Index(a) 
 Total Returns as of July 31, 2025 |         |         |
|:----------------------------------|:--------|:--------|
| 6                                 | months: | (1.04)% |
| 12                                | months: | 0.00%   |

During the 12-months ended July 31, 2025, municipal bond funds experienced net inflows totaling $52 billion (based on data from the Investment Company Institute), as demand shifted from long-term and open-end funds to short-term funds and ETFs. At the same time, the market absorbed $549 billion in issuance, a large increase from the $434 billion issued during the prior 12-month period, boosted by an increased need for infrastructure spending and a pull-forward
in perceived vulnerable sectors to front-run potential new legislation. A Closer Look at Yields AAA Municipal Yield Curves Source: Thomson Municipal Market Data. From July 31, 2024, to July 31, 2025, yields on AAA-rated 30-year municipal bonds increased by 99 basis points (bps) from 3.68%